Double Journey

I decided to put my money where my mouth and sell America.  I did this by buying TBT which shorts the twenty year US treasury.  I am not a fan of this market as I think the market should be going down and the rally we are in is very persistent.  I went into this trade because it works for two reasons.

• In the short term, if the market continues to rally, treasuries will do badly as people become less risk averse
• In the long term, the U.S. is taking too much debt and is going to find it hard to continue to sell treasuries

Not everyone will understand the first point so I will explain it a little further.  People buy U.S. treasury bonds as a defensive play.  That is, if you think the market is going down, you buy U.S. treasuries because there is little change the U.S. will default on its debt.  The reverse is true too.  As the market rallies, people look to take on more risk.  They sell bonds so they can buy stocks.

I think the correction in treasuries is going to come fast and it is going to come soon.  I now have a medium sized position in TBT and will look to get an even larger position in the next few weeks.

I always wonder why people like to portray credit card companies as evil.  Today, Obama came out against credit card companies.   I will admit, I am not your average credit card user.  I have actually only carried a balance on my credit card once, and that was because I had forgotten to pay the bill. So perhaps I am not the best person to comment on credit card company practices.  But the way I see it, people do not have the right to credit.  You do not have the right to borrow money at a low rate.  These companies are providing you something you would not otherwise have and nobody can force you to buy something on credit.

Obama wants to limit the amount that credit card companies can raise rates and make sure that the language in their contracts are clear and easy to understand for the consumers.  I’m all for the latter, as I think people need to interact with each other in clear and transparent ways, but I am again not sure this is going to give us what the President is after.  The law of uintended consequences is bound to take hold here.  If credit card companies can not charge high rates, they will be less likely to lend to people of questionable credit worthiness since they cannot make money on these people.  These are often the people who most need to have some form of credit available to them because it is not available otherwise at any price.

Now, this might end up being a very good thing for our society as a whole.  I think we all need to have a little less debt.  Especially credit that costs as much as credit card companies charge.  But on an individual level, I can see this playing out badly.  People who truly need to use the emergency funds that credit card companies can provide will be unable to.  Where will that leave them?

Moving anywhere with no money can be a pretty daunting tasks.  Moving to a state like California can seem downright impossible if you do not have any money.

One of the more popular ways people come to this site is looking for information on how to move to California if you have no money.  I have actually never blogged about this, I blogged about the advantages California has as a place to live, but I think it is a pretty interesting idea so I decided to actually write a blog post about it.

First let me say I think it is impossible to move anywhere with absolutely zero money.  There are just cost associated with any move so you are going to need some amount of money, even if it is just to pay for the bus ride here. So rather than talk about moving to California with absolutely no money, I am going to talk about what would be the absolute cheapest way to get and live here.

I also want to address one other issue.  Are you sure you want to move here?  I have left and come back to California three different times so I am well aware of the advantages of living here.  If you are planning on moving here with no money, it seems you are pretty desperate to move here and are probably running away from something than running to California.  While I love living here, I have lived in many other places and would say that most places are livable.   It is a much better idea to continue to live in your current area, save some money, and move to California when you have some means than to try and move here with nothing.  Moving to California will not be some sort of magical cure that fixes all of life’s problems.  In fact, moving here with no money will cause you a lot of problems that will probably be worse than almost anything you are now facing.  It may not seem like it, but being broke in an expensive place to live is no fun either.

If you are still set on moving to California, keep reading. Be prepared to leave everything behind. I do mean everything.  If you really have no money to move to California, you do not have the money to haul your stuff over here either.  Not having stuff means you can save on moving cost and you can have a smaller place.  It also means you can sell all your stuff and raise some money to actually get here.  Put all your stuff on sale on Craigslist.  If you own the computer you are reading this on, you should put it up for sale.  If you own an iPod, you should put it up for sale.  You might not get a great deal for your stuff but it will put money in your pocket and that is the most important thing right now.

So now you have nothing to burden you down and you (hopefully) have at least a few bucks in your pocket.  The very first thing you have to worry about is not getting here but where you are going to live when you get here.  This is your biggest problem.  You have to have somewhere to live.  It is not OK to come here and go live on the street.  If at all possible, you want to find a temporary place to live that will not cost you anything.  Why?  Because to get a place to live you have to have a job.  But to get a job, you often have to have a place to live.  It is a vicious catch-22.  Find or make a friend here that you can crash on their couch for a while.  Find a long lost relative who might be willing to put you up for at least a month.  Whatever it takes, you need to find a place where you can live for very very little money.  This likely has to be with someone you know because no landlord is going to take you in with no job.  Your only other alternative is to find a place where you can live week to week.  There are many motels that you can do this at, but it is not going to be a pleasant, or even cheap option.  If you can find somewhere you can live rent free, your life is going to be MUCH MUCH easier.  Rent is by far the biggest expense that you cannot avoid.  Eliminating this as an expense means you can go much longer on a lot less money.

An alternative is to scour the classifieds for work that will provide housing.  This is often the case with nanny type positions.  While looking after kids might not be your ideal job, it is better than living in the street.  If you are desperate enough to move here without money than even the thought of looking after someone else’s kids should not scare you.

The next order of business is to get a job.  If you have no money and no job options, it does not matter what type of job you get.  Even if you are going to have to take minimum wage, do it.  You need to have cash flow.  You are in no position to hold out for just the right job.  You have no money and are probably bumming off of people so swallow your pride and take what you can get.  If the job pays minimum wage than it will not be a big deal to leave the job once you line up something else.  But under no circumstances should you continue without a job.  Even a minimum wage job at 30 hours a week will put about $200 in your pocket.  That’s nothing to sneeze at when you have nothing.

Spend on nothing but the necessities.  There are only so many things you actually need.  You need to have a roof over your head but you should have taken care of that by now.  You need to have food.  That is pretty much it.  Anything else, you need to cut out from your life.  Contrary to popular belief, you do not need a car.  I know people in California who get by just fine, albeit inconveniently, on public transportation.  Cars are expensive to maintain.  You need to do repairs, pay for gas, pay for registration, and pay for insurance.  This is not an option if you have no money.  If you have a car, you should have already sold it by now to raise money.  You do not need to have cable TV.  You do not need to have a cell phone (you do need somewhere that you can be reached if you are looking for a job).  You do not need internet access.  Almost anything you think you need can either be cut or obtained some other way (use the internet at the local library). If something is not actually helping you to survive you do not need it.

After you have secured a job, you need to find a better job.  You need to spend every waking hour doing something toward this goal.  You should be searching job sites, fixing your resume, or obtaining skills or knowledge that will help you find a job.  Searching for a job is a full time job.  If you are not spending 40 hours a week doing it, you are not trying hard enough.  This plus your day job means you are just working 80 hours a week.  That is no big deal.  Just do it.

While this plan may sound unpleasant or even frightening it can be done.   My strong advice is to still not do it.  If you can hold out, not move, and save money you should be doing that.

This may seem obvious to a lot of people but it wasn’t so obvious to me until today. You see, I don’t sign up for a lot of credit cards. In fact, I have only one credit card. Ironically, I was talking about this very fact with Jenny today. We discussed some statistics that showed that a group of people had as many as ten credit cards each. It was shocking to someone like me because I have no need nor do I have any desire to have more than one credit card.

But today, I wanted to add my girlfriend to my credit card so that I could better manage our expenditures and I can pay for things when she is the one actually going to the store. A pretty common thing for us which we have gotten around the last few years by me just paying her back. I decided I had enough of tracking all of this, so decided to just sign her up on my account. The process couldn’t have been more easy. I logged in to my account online, filled out about 5 questions, and they are going to send me a second card with her name on it.

I was dumbfounded by how easy they made the process. Having been in charge of a sign-up process in the past, I can appreciate how hard they actually worked to make it as simple as it was. Of course they make it this simple because it is crucially important to them to make sure people have as many credit cards as they want. The more steps you put in any process, the more likely someone is to drop out. In reality, I’m glad the process was easy, I wanted to get one and I don’t like being bothered with things that are hard to do. But it made me think of a television show I recently watched about how easy it was for people to get cards and how they got themselves into trouble. Now don’t get me wrong, I don’t feel a lot of sympathy for these people. I’m all about personal responsibility and hate it when people blame the big bad credit card companies for doing what they are supposed to do, make money.

How about you, how many cards do you have? Do you find it really easy to just sign up for new ones?

I was driving in my car when I heard an ad for debt consolidation. These ads are everywhere, so it must be pretty good business. Anyway, something I heard on the radio really struck a nerve with me. To paraphrase the commercial it basically stated, “Have too much Credit Card Debt? Don’t you realize that the credit card companies are after you by charging you high interest rates? It’s not your fault. Blame the big bad credit card companies who are out to get you!”

Now I won’t dispute the fact that credit card companies are trying to make a lot of money off of you. After all, they are a business. However, this commercial really just bothered me. Seriously folks, when you have credit card debt, you really have nobody to blame for yourself. There are times where there is a legitimate emergency, and you have to use credit to get out of it. But these are few and far between. Even in these cases, I would argue it is still YOUR fault if you have EVER purchased something you didn’t need on a credit card and left a balance because you should have been saving the money to put into an emergency fund in the first place.

So instead of blaming other people for your problem, why don’t you stop buying things you can’t afford? Don’t let the credit card companies charge you interest in the first place. Be in control of your own finances, and you will be in control of your own destiny. I know it can be easier to just point the finger of blame at someone else. But when you point that finger back at yourself, you will find that more often than not, accepting responsibility for your own mistakes will be far more productive.

Don’t try to keep up with the Jonses. After seeing a post on MoneyNing about working on Chirstmas, it got me to thinking about how people always try to compare themselves to other people. While MoneyNing’s post was about working on Christmas Eve, I think the advice is true in ALL aspects of life.

I used to really care what other people thought. Thank god I got over that before I actually started earning my own living. Ever since I was on my own, I cared much more that I was doing well and not so much that people thought I was doing well. Don’t get me wrong. Sometimes I look around at my peers and want the things that they have. Would I like the nice car or the newest gadget? Of course. But I would also like to stop working at a young age, and I won’t be able to do that if I accumulate stuff rather than wealth.

It’s just a cycle you can’t win. So stop trying to buy whatever it is that you think you have to buy just to look like you can. Believe me, the Jones’ probably can’t afford it either, and you are trying to win a fool’s race.  All that will happen is that you will push yourself into debt.  And you won’t even accomplish what you want, because the Jonses really don’t care what you have, they have their own problems.

Be rich, don’t look rich.

Tomorrow is Christmas. Not to sound so cynical, but it really is one of those things that has turned into a consumer driven holiday. Given that, it gives great insight to where we are as a nation economically and where we might be headed for the next year.

This year looked to be a bad year for retailers. Many people were blaming the subprime mess and credit crisis for the problems. Others believed that the consumer was worried about a recession. But it looks like there may have been a slight last-minute rush to the stores.  However, I wouldn’t rush to crown this a great success.  Other reports I read are that Credit Card debt is rising, so much of this consumption may indeed be borrowed from the future.

This holiday season will be crucial to myself because it will dictate a lot about where I think the economy is actually going this year, and thus my investment strategy.  You see, people vote with their wallets.  It is an important psychological thing for people to buy things during this time of year as to not disappoint their loved ones.  If people aren’t spending, they are worried about the future.  If they are worried about the future, they must see things on the horizon that really worry them.

I’ve been a natural bear for a while, so I need to temper whatever news comes out about the consumer with my own internal bias.   I would be shocked if this holiday season turns out to be a success as I think the wealth effect will be working in reverse.  People are starting to realize that their home is not an ATM.  I think it is happening slower than it should, but it is happening.  If people feel poorer, they will spend less, and the economy numbers will be affected.