Tesla Stock Tanks

Facing a cash payment of over $900,000,000 that is due and payable today (March 1st), yesterday Elon Musk took to Twitter and announced that Tesla was reshuffling the deck chairs. Tesla announced that they were eliminating their brick and mortar showrooms and opting for an online only purchasing option. Buy now and take delivery in June, (he hopes).

Tesla also announced that it is shifting sales worldwide to online only to “achieve these prices while remaining financially sustainable.”
“Shifting all sales online, combined with other ongoing cost efficiencies, will enable us to lower all vehicle prices by about 6% on average, allowing us to achieve the $35,000 Model 3 price point earlier than we expected,” the company said in a statement.
“Over the next few months, we will be winding down many of our stores, with a small number of stores in high-traffic locations remaining as galleries, showcases and Tesla information centers,” the statement continued. “The important thing for customers in the United States to understand is that, with online sales, anyone in any state can quickly and easily buy a Tesla.”

Tesla unveils $35,000 standard Model 3, shifts worldwide sales to online-only

Somehow this attempted misdirection was supposed to make Wall Street forgot that a huge chunk of their cash reserves evaporated today.

Tesla Inc. (TSLA – Get Report) shares traded sharply lower Friday after founder and CEO Elon Musk said a move to offer a cut-down version of its flagship Model 3 sedan will likely result in a first quarter loss, only weeks after telling investors he would turn the clean energy carmaker into the black.

“Given that there was just a lot happening in Q1, and we’re taking a lot of one-time charges and there are a lot of challenges getting cars to China and Europe, we do not expect to be profitable in Q1,” Musk told journalists on a conference call late Thursday. “But we do think that profitability in Q2 is likely.” That view was reiterated in a Securities and Exchange Commission filing Friday.

Tesla Extends Declines as $35,000 Model 3 Unveiling Raises Q1 Profit Questions

After my last post on February 6th, I was given a lot of grief about being pessimistic on Tesla but three weeks later their shares went from an opening of $316.50 on 02/06/2019 to a close today 03/01/2019 of $294.79.

Tesla week of 02-25-19

Please note the share price yesterday on the graphic as opposed to today’s close.

Elon is also being accused of violating securities laws because of his behavior yesterday.

Tesla short-seller Gabe Hoffman says Elon Musk broke security laws again

Highlights of the video above include:

  • Tesla Model 3 sold 6.5K in January and < 6K in February
  • Car production is fixed price, how can they move their prices around and still make a profit?

Other Tesla news can be found below.

Tesla to shell out cash for big $920M bond payment

Tesla’s cash flow numbers after this bond payment are going to get very difficult: Gasparino

Elon is keeping it afloat but his empire is listing badly and the bleeding continues.

Carma-geddon or Car-mageddon?

William, the Blog Father, and I met for lunch a couple years ago and both us had our “tin foil hats on” according to the cheerleaders of this disaster of an economy. A ton of issues were discussed but one item I brought up could reign supreme very soon, the topic of the car loan market. More specifically I spoke about the fact that the market was being flooded with subprime auto loans (not standard loans, think the No Income, No Job, No Assets, No Problem loans for homeowners during the meltdown a decade ago).

For a time, my prediction seemed baseless and unsubstantiated. There was nary a word from any media at all, until Wednesday, when CNBC had an article about it. As predicted at our lunch many years ago, its jaw dropping folks. William runs this site and perfection is not asked for, it’s demanded. We stand behind our predictions, and in this case I wish I was issuing a retraction. Here are some brutal highlights from the article:

  • 7 million American borrowers are at least 90 days behind on their car loan
  • 1 million more than 2010, when we went through the credit crisis
  • Total auto loan debt has increased by 584 billion, the highest levels ever recorded by the FED

Link: A record number of Americans are 90 days behind on their car payments

When I digest these numbers, even I myself, the “Nostradamus” of this crisis, am somewhat dumbfounded….aren’t we told that we are in a period of major economic growth and expansion? I am told the stock market is making new highs almost weekly; wage growth should be keeping up as well right? Problem is while most of the above is true, the results say otherwise. We have had economic growth, largely due to low interest rates; this carries over to the stock market increasing to all-time highs. What I am saying is you cannot earn a decent return in a savings account so as a result you invest the money, driving the market up. Corporations, can make loans on the cheap through a bank to finance a large acquisition, like Kuerig buying Dr. Pepper Snapple, or Pinnacle Foods being bought by Conagra. I cannot blame these corporations just like the ones who borrowed money just to juice earnings returns, but back to the car aspect of this blog.

During the last 9 years, banks were able to borrow money from the Federal Reserve Bank for 0% interest. Subsequently, they lent it out at far higher rates of return depending on your credit or FICO score. To sum this up, the bank is taking zero risk, and you the borrower are at their mercy.

So how does this pertain to the above article? Well you walk onto a car lot or dealership because you need a means to get to work. Just like that, you are circled by the vultures posing as car salesman. I say posing because they don’t care about you, they see you as a sale not a person. Don’t believe me then go see for yourself. These dealers will literally hire anyone. Still don’t believe me, these people make money only when they sell, not so much when they are standing around, so when they find a live warm body, you’re dinner! You’re literally their meal ticket because they are on commission and without selling to someone like you, they don’t eat.

Since you need a ride to get to work, they don’t want you to see the affordable compact commuter car. Oh, you have a family then you need that SUV, or crossover, or full size car….think about going to the beach, or snow, or grandma’s house then get our all-wheel drive car over there! You test drive several, and you make a decision. You decided to buy a little more car than you needed but it’s ok because it will pay off in the long run. The sales guy made you feel like a million bucks, sadly, you don’t have said millions so you finance the purchase.

The finance guy (known as “The Closer) sets up a payment plan…0% APR right? Isn’t that what the ad said? Well not in your case but we can probably do it for 15%. Then he runs your credit. You can’t make the payment over 48 months, so….let’s make it 72 months, and maybe it becomes 29%, but you need to get to work and the payment works so you sign. Congratulations Chief, you are now the proud owner of a new car or used car. It’s a ton of payments but we know you can afford $475 a month. Read the last part again. You got taken but you don’t realize it yet. You whip out the credit card for the down payment, you need the car now but it won’t be ready until tomorrow.

Excitedly, off you go in your new vehicle. Typically you get 45 to 60 days before the first payment is due. The first couple payments are a bit of a struggle but you make them. Eventually a life event happens or other bills just increase as they always do. (Seen what rental prices are doing lately?) All of a sudden a couple years into the loan, you realize you bit off too much but too bad. The car sales guy, he may or may not work there anymore, the finance person, ditto however both got paid up front. Keep in mind there is no fiduciary duty law in this business.

Paul Blanco Auto–got a pulse, get a car

A local car dealership (Paul Blanco) literally runs ads saying we will get you in a car even with bad or no credit…and hence we have this auto loan issue. Frantically you call seeking to work out a payment plan…sorry the car is worth less than you owe, no refinance options exist Chief. Surely your credit union/bank can do something for you, you have been with them for years…negative Ghost Rider. Sadly your car is worth more repossessed even if you keep making payments on it. Surely this is usury or something, there has to be a way out…sorry, no one can help you. By the way, your car will be repo-ed and they will sell it again to another sucker, lather, rinse, repeat.

“Whatcha gonna do when they come for you”

If you pursue legal action, you have no leg to stand on since you signed the papers. You also will find out the law firm hired by the finance company is Dewey, Skrewem, and Howe…while the in-house finance company hires law firm Howie, Keepum, Kurent. You were took, and are now on the hook, just another statistic in the actuary’s book. The sad cold hard reality is you need a car to get to work, you bought too much car, and got saddled with a high rate loan on a vehicle whose value depreciated tremendously upon leaving the lot. We never learned our lesson from 2008, and we are going to repeat it yet again, in a way that is going to be cataclysmic to the economy and credit markets. As pointed out earlier on this website, you won’t be getting that large tax refund to bring your payments current.

In this case I do wish I was wrong, however I was Really Right.

Johnnie Does Firehouse Subs

Recently, I found myself at a chain restaurant called Firehouse Subs. I have visited this location twice, both unannounced. Here is my full report and experience.

The Firehouse Subs location that I visited was on Truxel Road in north Sacramento County. Upon walking in, a crew leader or watchperson calls out “12, 10…3..2..1”…..and every employee yells “Welcome to Firehouse.” This greeting is a copycat of Moe’s Southwest Restaurant. Frankly it is too much; especially since it’s called out each time someone walks in. When you dine at a chain restaurant and this kind of racket is breaking out every few minutes or someone is having a birthday and the siren goes off every ten minutes, its overkill. Stop copying the concept…. find something new.

Once you enter the place, you’ll notice that the décor is awesome. It’s all firehouse and emergency service: photos and gear like hoses and ladders. It looks like a firehouse!

Also donning the walls were copies of checks donated to the local firefighters and county sheriff departments; really nice touch. The employees were all gracious and dressed in shirts giving credit to their favorite sub…. pretty cool if you ask me. For the ambiance, décor etc. solid 4/5, just change the welcome to firehouse thing.

The menu board is semi-intimidating because some of the sandwiches have a firehouse/exotic name. Just to name a couple: Hook & Ladder, Engineer, and Firehouse Hero. Other subs have a standard/traditional name like turkey, bacon ranch, or meatball. The sub’s veggies can all be modified; you can even add/subtract things for no additional charge, unlike Togo’s or Subway where there is a fee.

All subs are served hot on toasted bread and warmed meat via a steamer but can also be ordered cold. The subs come in small 4”, medium 6”, and large 8” size, I ordered the medium both times and was satisfied. On my first visit, I ordered the Hook and Ladder which is turkey, ham, and Monterey jack cheese, which I was told comes “fully involved” meaning I get a pickle on the side in addition to my sandwich…nice touch.

You order, swipe, and take a seat, and your food is brought out to you in a neat little firehouse basket.

I devoured my sandwich, it never stood a chance. The sandwich was perfectly cooked, and the perfect temperature…..again, it never stood a chance. I found the warm bun and meat paired with cool veggies and mayo was right on point. The other visit I ordered the Firehouse Cajun Chicken which was cut chicken, cooked with Cajun spices, on a sub with hot peppers, onions and homemade Cajun mustard…..WOW, I loved it!!!!! 5/5 no question asked. Firehouse also offers soups, chili, chips, and soda, like most other sandwich places, I have yet to try the signature chili. There is also a hot sauce bar with roughly 30 hot sauce bottles all ranked 1-10, great touch. I tried several, came away impressed!

As far as price goes, the medium size subs are $8.99 which after tax puts you right around $10 which is the sweet spot for lunch. The price is a little more than a cheap Subway but less than a Togo’s and the flavor makes it very worthwhile. They offer a daily special like every other chain, have a rewards club, and have seasonal specials like the Cajun chicken sub for $5.55. 5/5 on price, very affordable and great value.

Overall solid 14/15

Bloggers note: On the 2nd trip to Firehouse, the regional manager from corporate was there, and I have to say it was a fairly awkward visit with him there. It was too bad really. I get it it’s a franchised operation and quality assurance must be made; however, this guy looked like Chuck “The Shermanator” Sherman from American Pie.

It was awkward. He did the strangest stuff during the lunch rush like pulling the ice dispenser in front the soda machine, taking photos and storing it on his iPad, or grabbing and squeezing every bag of chips…really weird. Firehouse needs to clean this up…. other than that, I love the place.

Yardhouse is next….

Financial Literacy is at an All Time Low

While conversing with an old college friend the topic of money and debts came up, my degree being in finance I offered to lend a hand. My friend also graduated with a degree in finance from the same college I did. My friend told me she was barely making ends meet. She is single and lives in the Bay Area and makes a decent salary of about 60k a year. She had amassed 35k in credit card debt, and has about $150k in student loan debt; credit card debt notwithstanding this is about normal for a young professional in their 30’s nowadays.

We are told Credit Cards are the way to happiness

We cannot focus much on the student loan debt, because truth be told, without that degree you cannot even apply for a job at most places. This person is gainfully employed, so they have a paycheck going in their favor. What is the credit card debt about? This was a very painful discussion that initially ended with me saying if you’re not going to be forthcoming, the discussion would move on to another topic.

She began to open up. She revealed that she doesn’t cook so she eats out twice a day. The cardinal sin isn’t so much she is eating out, it’s that she is going to happy hour. Happy hour involves alcohol, and salt filled appetizers at a great teaser rate. I know this too well; you grab a tall one, then order up the wings, egg rolls and chips and salsa for just $11.99. Then upon finishing your appetizer you want another tall beer, then maybe one more, before deciding you probably better order food because its dinner time now…..$15 happy hour just became $70, possibly more with tax and tip……don’t worry just put it on the card! You get up tomorrow morning and need something to cure the hangover so you grab fast food, and spend another $10…lather rinse repeat. Those charges add up.

Reluctantly she went on that she spent quite a bit of money trying to keep up with the Jane’s and Kardashians of the world. I cannot relate to this, I am a guy, and as William can attest I usually have the same shirts, jeans or whatnot until it is ready for Goodwill…but I digress. In addition, I found a premium cable package, gotta watch the soaps every week, and binge watch on weekends. A home phone? ….if you’re under ago 60….lose it ASAP. A brand new iPhone, with a cancellation proof guarantee of a three year contract built in. A gym membership……where she went one time. This friend was in desperate need of help, I was there to advise, but I told her she isn’t going to like what she hears, but it’s got to be done.

The truth of the matter is she doesn’t need a diet, she needs a lifestyle change, and poor decisions have begat more poor decisions. A couple notes prior to me telling the advice that I gave her; she drives an old car and lives in a decent area, by no means high rent district. No car payment, and it’s not my place to tell a girl to live on skid row or somewhere not safe in order to save a buck.

My advice to her was her ditch the gym membership and commit to going for a walk during her break or lunch and park near the back of the parking lot at work. Ditch cable and the home phone. If you don’t think you can live without cable, try Hulu or Netflix or both. The cell phone is problematic however you have agreed to a contract so maybe try to negotiate a lower plan or something, this is the danger of brand new items. Take cooking classes, watch YouTube cooking videos, or I guess if you keep cable watch Food Network. The amount of money you spend eating out daily ads up quickly. What you spend in the course of just one week would likely covered groceries for a month. The key here is McDonald’s dollar menu seems cheap, but the food is loaded with chemicals that make you crave it for lunch, then dinner and a possible late night snack. Your waistline will thank you as well. In addition don’t think eating out for healthy food is the answer either. Salads cost more than $11. Subway may sound good and in some cases can be healthy but costs can add up quickly. The goal here is that we found quite a bit in monthly savings and we could apply this to debt service, starting with the 25% interest rate credit card debt. In her case the student loans were subsidized at 5.5% and honestly the least of her worries.

We found a potential of $800 per month in savings if she can implement the lifestyle changes that we discussed. This doesn’t sound like much but if she remains diligent, it will substantially cut into the credit card debt. Contrary to most people’s opinions, I told her keep the cards, do not cut them up, and in fact keep using them. Dave Ramsey won’t agree, but the way I see it, cash has a way to disappear with no accountability, with a credit card your charges are all itemized out each statement cycle. This is a way of keeping yourself honest, while also paying down the balance.

This plan is a roadmap to achieving a level of financial freedom and other people may have issues with the particulars but if the plan is maintained, it will work. I have to give my friend some kudos, she had her degree, and even found some additional work to provide a little more $$$ on the side. However this is where the kudos end, and cold reality of the world we live in sets in. The plan was not followed….well it was for about 6 months. Reality is a doozy in this case, but well here is the rest of the story as Paul Harvey used to say.

Paul Harvey

In the case of my friend, she reduced her credit card debt to $17k in just 6 months’ time, everything was going well, then she went back to her old ways. It’s true, you aren’t going to meet anyone to form a relationship with sitting at home eating a can of chicken noodle soup, just like it isn’t true living like a miser will make you happy. However if going out to the bar is recipe for eternal happiness I would rather die alone. Credit card debt maxed out now at 45k and the issuer is having no part of a deal involving reduced payments or more credit extensions. All the while rent in her area has skyrocketed and goes up about $150 a month twice a year, further constraining a budget, now the minimum payment cannot be made! That car…well it’s systematically breaking down and becoming a large money pit, you have no option but to keep sinking money into it. The rent issue? Well you need a roof over your head, so you have to keep paying. The student loans? While you don’t have to pay, you cannot discharge these through bankruptcy. She does not have rent money for next month….adding insult to injury, the complex manager is looking for the last 3 months rent. She is at the end of the treadmill of debt…it’s now over, decisions she made and subsequently have continued to make have finally come home to roost. Even worse rather than seek out help or try something productive, she gambles at the local Indian Casino, and plays the lottery, essentially falling for the lie that the easiest way to double your money is betting it all on black. Suffice it to say, she blames me for telling her to keep the credit card, we no longer have a relationship.

Now I will add some commentary. I prefer using my credit card to track my spending and purchases, maybe it was not a great idea, but ask anyone who is a waiter/bartender/valet, cash tends to disappear quickly and there is no paper trail. While I firmly believe in separating needs and wants, the bigger issue is you can be seduced by a want, and you could convince yourself it’s a need….you need a budget. Make a shopping list wherever you go, grocery stores love it when you insist on going up and down every aisle, it’s easier to trick your mind by those fancy SALE stickers. By the way ever notice those sale prices are not as good as the actual sale prices a week later? Impulse buying perhaps?

When it comes to tackling your debt, pay off largest balance/highest interest rate first. The one that costs you the most needs to be paid down first, then apply additional money to next highest interest rate etc. until paid off in full. Take advantage of local non-profits that are there to help/guide you, ditch that “financial advisor” eager to pitch their latest product to you. Suze Orman and Dave Ramsey are two of the best on the radio, free! They also offer classes for a nominal fee and it is well worth it as blogged about earlier. Additionally, this idea of hording a bunch of money in a savings account, when you have existing debt is ridiculous. Just think about it, your credit card issuer is charging you 30%, your savings is earning 2% at best if you use an internet bank…..William said it best, the house always wins. Having a rainy day fund is ok but deal with your debt.

Playing the lotto and gambling is even worse because the atmosphere is created to make you addicted and play more.

If you need to file bankruptcy and start over, so be it, but understand the difference between dischargeable debt (mortgage, credit card, auto loan) and undischargable debt (student loans). Perhaps worse, she started reading a tax website and decided to start looking into buying a house….get this…..for the mortgage interest deduction. Yes, she thought spending $$$ on a house payment each month and getting a bigger tax refund would get her out of debt. Then worse yet, she joined several dating websites ($$$) looking for a special someone. Again seduced by a child tax deduction and a marriage tax break…news flash the marriage tax break is double that of a single one, however your taxable income will be higher. The goal of marriage is not to share the misery of your past mistakes by expecting someone else to fix them so you can double-down on continuing to make stupid life choices. Truthfully, what guy worth having would willingly enter into a relationship with someone carrying all your financial baggage?

The bottom line is that my friend has no chance anymore, except bankruptcy, and even then the road back will be rough. Good luck living anywhere decent. You won’t be driving a new vehicle for a while and worse your credit will stink for many years. However there is good news, we have some of the most generous bankruptcy laws in the world, so fear not in about 7 years you will get to start all over again! I have a customer who’s family is doing just that, they owned a really nice house in my parents old neighborhood, went into foreclosure, filed bankruptcy, and now they are right back at it 7 years later. Bought a house in that same neighborhood, also near the peak of the market, by the way, bought a huge new boat, 3 new cars, and I’m sure this story will once again end poorly soon, but hey it’s America! By the way didn’t Citibank used to have a catch phrase of “Live Richly?”

Buy now, pay later

I guess I may be missing out?

No Tax Refund: Financial Media Proves We’re ReallyRight

Finally, several weeks later and after two different articles written by me on this blog, the Wall Street Journal and CNBC are catching up to the fact that many people are either not getting a tax refund at all this year or a smaller one based on changes stemming from Trump’s tax cuts.

First the WSJ article.

FYI, I found that saving said articles from WSJ as PDF files is important because after their first day on the web, they are embargoed behind a pay firewall. As usual, I quote extensively to prove my comments and analysis art in context, something the Main Stream Media will not do.

WASHINGTON—The first tax-filing season under the new tax law got off to a slower start than last year and filers so far are seeing smaller average refunds, according to early Internal Revenue Service data released Friday.
With about 10% of households filing their returns, the percentage of households getting tax refunds is similar to last year, but average refund size is down 8%, to $1,865. The number of returns filed so far—16 million—is down 12% from the similar point a year ago.

The article points out that early filers are typically the ones expecting a refund and those numbers are down. Yep, no kidding.

Please note the next section carefully, overall you may have gotten a tax cut but that is not the same as a large refund because you had less withheld over the year and thus had more spendable money through-out the year.

About two-thirds of households are getting tax cuts for 2018 under the law, and just 6% are paying more, according to the Tax Policy Center. But the size of those tax cuts may not be reflected in refunds, which are just the end-of-year reconciliation of what a taxpayer owes and what was withheld or paid during the year.
Many taxpayers received much of the benefit through reduced paycheck-withholding throughout 2018. On average, refunds should be larger than usual according to estimates from Evercore ISI and Morgan Stanley .
Still, tax experts and preparers expect many households to be surprised by the size of their refunds—in both directions—and, on balance, millions of people may shift from getting refunds to owing taxes.

Early Data Show Slower Start to Tax Season

CNBC also has a similar article up today.

Though the 2018 filing season only started on Jan. 28, some early filers are discovering that they either owe the IRS or they’ll be getting a smaller-than-expected refund from the taxman.

About 30 million people, or 21 percent of U.S. taxpayers, are expected to owe money to the IRS this tax season, according to a report from the Government Accountability Office, a legislative agency that provides data to Congress.
“The people who are most likely to be surprised this year are the ones who lost some deductions they had last year and who didn’t make changes to their withholding,” said Nathan Rigney, lead tax research analyst at the Tax Institute at H&R Block.

If you owe this season, consider it a lesson learned and do what you can to head off the same troubles in 2019.
It’s generally a good practice to review your withholding, especially if you’ve been through major life changes, including getting married or having children.

If you failed to withhold enough tax in 2018, the IRS has a nasty surprise for you

If you do owe Federal taxes, TurboTax will let you eFile now and schedule payment anytime until April 15th.

Occasionally here, our posts do beat the Drudge Report, Wall Street Journal, local television stations and others by hours or even days. For a guy that runs this blog in my spare time, I think that’s kinda cool. Oh, and in fairness I do have a little help.

Oh No! Another PG&E Fire

Today we had a tragedy in San Francisco, no the land was not sold to the Chinese as has been rumored.  A large explosion took place…pandemonium ensued.

  • Was this an attack by the Russians ordered by President Trump
  • Was Leland Yee orShrimp Boy” Chow involved? 
  • Was this truly the “big one”?
  • Did the toxic waste at Hunter’s Point go critical?
  • Reports surfaced it was just hot air……. but I don’t recall Aaron or George Park visiting San Francisco to give a speech, so I was dumbfounded. 

I needed answers, I was told London Breed would make a statement soon…. my reaction was London what? Was this a type of dog, new brand of malt liquor, a clothing line for homeless people, a rap singer or something else entirely? What does a breed of anything from London know about an explosion in San Francisco?

Classic London Breed

Well it turns out that San Francisco voters—documented and otherwise—elected a Mayor named “London Breed”, I’m more of a corgi guy myself.

The explosion was a result of natural gas—in this instance, said gas was not created from the contributions of local homeless people accumulating on public sidewalks—but from a ruptured pipeline belonging to PG&E that caught fire and burned several buildings.  Yeah there’s that company again.

Three-story flames could be seen leaping into the air in television images. Police spokesman Robert Rueca says the fire was reported around 1:10 p.m. and there were no immediate reports of injuries.
KPIX-TV reported that the fire started at a construction site.

The Latest: San Francisco blast, fire ignites 5 buildings

  You hate to see it.  Thankfully no one was hurt or killed, but I can’t help but fault this corporation for their blatant stupidity.  They easily could have torched their headquarters and collected insurance money…I may know a guy btw!  It would have been a real shame if the maintenance records and other documents the Public Utility Commission has been trying to subpoena for the last few months were located in said building, but alas your company couldn’t even blow up the right structure…. SAD!

I don’t even know how this works since technically or I guess “allegedly” you filed bankruptcy a week ago.  So, I guess the “ratepayers” are on the hook for this?  I ask because I haven’t seen a gas leak like this since I ate an “extra loaded bean and cheese burrito” at a certain Mexican joint in Elk Grove!  But really, PG&E, I am asking for a friend, do I pay you this month or do I just pay myself since I guess the ratepayers kind of own you now?  However I am glad you found a way to pay out $130 million in bonuses to your top executives!  I hate the idea of taking food off the table from them!

Sadly, this is just more tone deafness from a corporation surprised that “Paradise Lost” is already a movie…. imagine the revenue that idea could have produced. 

Pacific Gas and Electric stock trend for last 3 months

This caps off one heck of a quarter for PG&E, too bad something worthwhile couldn’t have been blown up…like, I don’t know, Berkeley?

Conversations with the Naïve II

This took record time but in our second installment we already have a repeat offender. 90 Day Calendar Guy appears to want the title of most naïve person alive. This one is painful but here goes….

90 Day Calendar Guy talks himself up like he is some kind of savant when it comes to purchasing items online through various platforms like EBay, and Amazon.

He recently bought a Spigen case for his iPhone off EBay, and it showed up in the office today via USPS mail. I have never seen a grown man rip open an envelope so quickly, one would have thought it was A Publishers Clearing House check for life…it was a stupid cell phone case!

Publishers Clearing House Prize Patrol–how Boomers got rich before the lottery was legal

He put it on his iPhone and then sadness, the “parts that cover the volume and power buttons on the phone were hardened rubber, not flexible rubber.” He called me over, and was perplexed. This was real Spigen so how could it be defective? I told him, “That’s not real, it’s a cheap knockoff.” He rebutted saying, “Why does it say Spigen then?” I guess no one on earth is allowed to use that word except the manufacturer? Naivety folks….big time naivety.

Spigen Case

Even worse, I asked him where he bought it from. He said he wanted to keep the money local so it was a local buyer. (For those who wanted to know return address was Zhandou, China.) I asked him how much money he saved and he replied about $5…. Yes folks, for the price of $5 in gas you can drive to about 10 cell phone accessory stores within minutes of our office! Oh and he would have acquired a real Spigen case, not a cheap knock off.

He took the case off, and tried to play it off as nothing. I taunted him with, “Hey you saved $5 though…keep it big picture.” I told him to file a complaint with EBay. His response…the guy had all 5 star reviews. (Yes moron, all from people like you who thought you saved a pant load) He logged into his account on EBay and said the seller had his account suspended by EBay…shocker, really stunned by that outcome!

Here is what makes this all that much funnier, he then took everything I said and called it his own for the rest of the day. Saying Trump needs to crack down on the Chinese for copyright infringement…..yes counterfeit Spigen cases seems like a good one for some international court. Then he said its EBay’s fault for allowing a counterfeit seller….again how can they possibly guarantee authenticity? Unbelievable.

Here is the issue, he needs to get his blinders off in regard to price… The man will literally run through traffic to catch a nickel rolling out of his wallet. It is hard to watch, but at the same time you get what you pay for. Anyone should have a spidey sense that goes off telling them something is not right, why is this product being sold cheaply?

Spidey Sense — that little voice in your head that tells you something bad is about to happen

Why is someone from China shipping to USA for free? The truth is the product was likely a cheap knockoff not counterfeit, and dude you bit the hook so hard you were the world’s easiest catch! You have never learned a lesson. You have also replaced your flat screen TV 3 times. I have had my flat screen longer then all 3 of yours have lasted… The reason, you are enamored with saving a dollar. You are the poster child for penny wise and pound foolish. Again this person spends hours of his time watching TV and searching the Internet….not a great look. Buyer beware! With the advent of the internet, the scammers can now take their game to untold heights, and they will continue to get away with it. But hey look at the bright side, you saved a couple bucks!!!!!!!

Unreal, but naïve people are out there among us, and some will never learn their lesson.

Tesla Declines and Its Getting Worse

Elon Musk is great at separating Liberals from their money. He flits around like a butterfly from one pipedream to another. Electric cars, solar power, batteries, space flights to Mars, and mag-lift travel at the speed of sound. Whatever crazy thing he can get other people to invest in. He will make prototypes or other devices to get others to invest, but please note, its other people’s money at risk not his. Musk takes a cut for himself off the top and then piles more investors into the bottom of the pyramid.

He bought Solar City, and it was financially unsustainable so what does he do? Why he folds the debt into his Tesla car scheme. Tesla isn’t panning out financially so what then? Oh, I know, why doesn’t he act like a crazy guy and get kicked off the board. Then when the bills come due and it collapses Musk won’t be on the board. Then he can blame the Musk-less board for not having the vision, passion, and dedication that he had to make it succeed. If only he had been there…

Look back to last summer. Remember Musk having a Twitter tantrum about the rescuer of the kids in the cave. He called the guy a pedophile or something like that. Then he smokes marijuana on that pod cast and then pulls the stunt of taking the Tesla private. Net result, Musk gets kicked off the board of his own company.

Is he nuts of crazy like a fox? He has access to information investors and other don’t plus he can read the handwriting on the wall. Get out before the stuff hits the fan that way he can save face and blame others. This allows him to go fleece his next group of Liberals with his reputation still intact.

Elon Musk with the look that says, “It’s not personal, it’s business”

Here’s more proof the Ponzi scheme is in trouble.

Tesla has lowered the price of its Model 3 by $1,100 amid reports that U.S. sales fell precipitously in January despite a $2,000 reduction that went into effect at the beginning of the month.
InsideEVs estimates that Tesla sold 6,500 Model 3s in the U.S. in January, which would represent a more than 70 percent drop from the prior month.

Tesla Model 3 price cut again, now starts at $42,900

Cutting prices and a 70 percent drop in sales in one month is bad enough but the other shoe is about to drop.

Tesla has a billion dollar debt coming due, and it could wipe out nearly a third of the company’s cash if the stock price doesn’t improve.
About $920 million in convertible senior notes expires on March 1 at a conversion price of $359.87 per share. But Tesla’s stock hasn’t traded above $359 for weeks. If the shares are about $359.87, then Tesla’s debt converts into Tesla shares. If not, Tesla will have to pay the debt in cash.
Tesla reported cash and cash equivalents of $3 billion at the end of its September quarter. The company continues to reveal pressure to maintain profitability, and announced Friday it would cut 7 percent of its full-time workforce.

Tesla has $920 million in debt that’s coming due — and it could wipe out a large chunk of the company’s cash

Please note that the 3 billion cash and equivalents was in September. They are burning thru cash at a crazy rate and to pony-up one billion in cash in three weeks is a tall order.

Below is a chart of Tesla stock for the last six months. Do you really think that the stock price will be above $359.87 by March first when January sales are off 70 percent? No way Jose. Stock opened trading today at $316.50

Tesla Stock for last six months

Tesla is in deep trouble but never worry because Musk got in the lifeboat months ago to distance himself from the dumpster fire that’s coming.

What The Government Shutdown Should Teach About Personal Finance

The infamous government shutdown has come and gone and in a rare blog, I’m not going to get or be political at all. I want to focus on personal finance and how close most Americans are to financial ruin. Hopefully you will learn something, if not go study Socialism 101 and hopefully Alexandria Ocasio Cortez wins in 2020.

For the rest of us, the core of our financial problem in American is called a “paycheck.” You know, one bestowed upon any hard-working person; received once, twice, weekly, or bi-weekly every month. “A day’s work for a day’s pay”, or as some would call it, “money received for services rendered.” However, we as Americans have overestimated the paycheck. We take it for granted. We no longer see it as wages earned, but as money to spend; or in some cases, as alluded to earlier in a separate blog, money needed to pay past debts.

Really, in most respects we never learned our lesson from the bank/real estate/credit crisis starting in 2006. People lost homes, cars, jobs, and other material investments. Your 401k became a 104k, and we as a country swore, we would learn our lesson. Truth is we never did.

The year is 2019 and we experienced a government shutdown. Federal employees were forced to work without pay or told to stay home and you would not be paid. Additionally, in the case of TSA workers, they staged sick outs to avoid the punishment of actually having to show up to work. The workers rebelled because they were no longer receiving a paycheck. (FYI once it was over, they were all paid retroactively to the beginning of the shutdown.)

Changing our lifestyle is a lesson we should have learned a decade ago. Companies had mass layoffs, banks and investment firms went bankrupt, the government bailed out Wall Street. We never learned our lesson. How many stories, articles, interviews etc. did you see featuring government workers forced to go to a local soup kitchen or fill out food stamp applications, workers claiming they were about to be thrown out of their apartments, houses? They never learned their lesson. While my heart breaks for these workers I find it very hard to believe they spend their entire paycheck on just housing and food, and if they do, we are in way bigger trouble as a country then I have ever imagined.

The truth is, these people are liars. They have 2 car payments, possibly a boat/rec vehicle payment, credit card debts, and likely spend far too much on entertainment or dining. However, that doesn’t make for a great narrative so we must focus on the single mom of three who is being evicted and somehow that is my fault because I’m undertaxed?

Poor financial choices have been harming Americans for decades. We are fiscally illiterate people. The biggest problem is we have stopped seeing the paycheck as a means of income. Instead, we now see it as a way to pay-off last month’s debts.

Madison Avenue marketing in all its forms, encourages us to swipe a piece of plastic because we won’t see the bill for 30 days and can afford the minimum payment… buy now, pay later anyone?

The truth is, if we actually had to reach into our wallets and pull-out cash every time that we made a purchase, we would behave in a much different manner. But because our money is just so many pixels on a computer or cellphone screen, there is a lack of restraint on our behavior. Our paycheck is not “real.” Its is an ethereal, untouchable, intangible thing.

The crux of the shutdown matter is this: “Does the Government work for us or do we work for the government?” Once that question is answered we will be able to chart our future. If you are a federal, state, county, city, union, etc. employee take heed of my words; you are 100% at the mercy of the taxpayer base. We have a tendency to vote with our feet, and at some point, we may get transportation out of said country. You have just received an early warning, next time you may not be so lucky. The day of reckoning is coming; unfunded mandates are not easily curable by simply raising taxes or increasing the employee contribution for new hires. As a famous person once said, “socialism is great until you run out of other people’s money” …I doubt that person was Alexandra Ocasio -Cortez.

While this should be a kick in the pants for all workers, especially the previously untouchable federal workers, it won’t be. The shutdown is over…crisis averted…I guess? Actually, this is temporary, the next one may be very protracted. We as workers must come to grips with a very stark conclusion, we are beholden 100% to our employer. If you work in the private sector—we all know our paychecks are tied to ebbs and flows in company profits, if you work for the government—your wages are tied to union agreements. In either case, it’s a scary place.

My advice is to get your financial house in order ASAP, not next week, not tomorrow, ASAP. Immediately get all debt under control and limit spending based on needs, not wants.

  • Limit pleasure trips and forgo trading in your car for a brand new one, equipped with a higher payment.
  • Use your cell phone until its obsolete, resist the urge to spend over $1,000 on a new one.
  • Cable is awesome, when you watch it…. consider cutting the cord, you may be amazed how little you miss it.
  • Stop looking at ads in the mail/paper/or in store, they are designed to make you become an impulse buyer, your freezer is full, your pantry is overflowing, you don’t need another flat screen, let it go.
  • That gym membership you signed up for but keep waiting until next week to actually use…. cancel it.

Once you start following these pieces of advice you will find yourself with extra money at the end of each month, resist the urge. This money is not your next payment, it’s found money to save. Extinguish debt, or invest in retirement; however, I prefer starting savings, make a goal of 10% of each paycheck.

Get that savings up to 6-10 months of expenses, now you are your own boss. Something unexpected happens at work, you can take a job you want, as opposed to taking a job for the paycheck to once again, pay off debts. Invest in yourself, learn new skills, and become adaptable, your future you will thank you. Just FYI, calling out sick when you aren’t sick gets you fired in the real world. The fact you drive a basic car, not the latest C class Mercedes will pay off in the future. Have a plan, don’t be the 80-year-old guy or girl working at Home Depot or Walmart because you have too.

Why You Won’t Get a Tax Refund This Year

The bad news is you won’t get a tax refund from the IRS this year. The worse news is you will be writing Uncle Sam a large check.

But why? Didn’t we get a tax cut this year?

I will get to that in a moment but first let’s talk about a financial planner’s view of tax withholding.

Zero Due—In Theory

If you always get a tax refund, you are not having the correct amount withheld from your paycheck each month. Really you are making an interest free loan to the government in order to get a large refund.

On the other hand, if you always write a check on April 15th then you are not setting aside enough throughout the year for your taxes.

A financial planner would advise you to try to owe zero each year; not too much either way. Like you, I tended to ignore this advice and enjoyed a large refund. Sadly, those days are gone.

Trump Tax Cut

Trump did two things that will rock your fiscal world.

First, he reduced the amount withheld for Federal Taxes each month. This resulted in you having more take-home pay in 2018. Tax rates were cut; in addition, however, some deductions were also limited or abolished. This leads to the second point.

Second, a cap was placed on the deductibility of local taxes. This cap is $10,000. If you live in states that voted for Hillary, then you are likely in trouble. If you live on either Coast: California, Oregon, Washington, New York, New Jersey, etc. then buckle-up. If you are employed and own a home, you will hit the $10K limit. Here’s how it works.


Above is a portion of 2018 Schedule A
Line 5a Supposed you had $6,500 withheld from your wages for California Payroll Tax and State Disability
Line 5b You paid $4,578 in property taxes on your house in 2018
Line 5c Remember the portion of your DMV bill that is deductible?
Line 5d Congratulations, you are above the $10K limit

You now owe Federal Income Taxes on anything above the $10K limit. In the past all this was deductible. This was viewed as a subsidy to people living in high tax states. Why? Because the state could tax the snot out of you and the Feds allowed this taxation to be deductible. Thus, it awarded high local taxation.

The only other items on the Schedule A are Mortgage Interest and Charitable Giving. Unless these two are more than $14,000, you and the wife will get the standard deduction of $24K.

Also missing from the new Schedule A is Unreimbursed employee expensesjob travel, union dues, job education.

Also gone from the Form 1040 is the Individual Deduction.

If you are married, you can claim the Standard Deduction $24K plus a tax credit of $2K per child and that’s about it.

Impact

Last year between itemized and the individual deductions, a client was able to deduct $42K off their gross income. This year for the same client deductions total only $26K ( Standard Deduction plus one child). The one-year difference on the Schedule A is $18K. The net result of all tax changes is that their taxable income increase $22K over last year. Thus on April 15th, their refund is gone, and instead they get to write a large check to Uncle Sam.

Sample above was created using TurboTax–some numbers rounded for simplification

In 2018, you did enjoy more take home pay with the new and lower tax withholding. Under the new tax tables, the couple in the example above got about $250 more in their paychecks each month; but clearly, they need to visit their HR department and have more withheld in 2019 if they don’t want to write another large check next year.