Sowing Wealth

Stimulus Plan Could be a Big Boost to Home Buyers

I've read a few articles on the latest massive stimulus package coming down the pike. One item that's caught my eye is the proposed $15,000 credit for new home buyers that isn't just for first-timers. This could be a real boon for people in the market right now. I know of one friend who's looking. This should be the incentive he needs to make a move once this is put in to action after the Pres signs the bill on Tuesday.

Of course, there will be stipulations around it and you should talk with a CPA to make sure you fully understand the program before going out and buying a home based on it. Sure does sound like a winner at this point though. If this program were to be combined with 4% interest rates, which I've heard talked about we could see some serious buying action throughout this year. Wish I could participate.

Could Banks Be Nationalized?

I listen to the weekly public radio show called Marketplace Money through Audible.com on a semi-regular basis. On last week's show there was a story on the recent reversal of fortune with some of the banking giants. Both Citi and Bank of America were down over 50% since January 1, 2009. I actually didn't even know that BofA was down to the $5.00 level. What a shock to hear that.

BofA has since risen to $6.58 while Citi is now at $3.55. You might think that at these prices there's little downside risk and plenty of upside potential for the stocks. However, you might not be thinking that these banks could be nationalized. This is when a bank is taken over by the Federal Government for a period. After the bank is stabilized, then it's returned back to the private sector through a sale. The Marketplace Money story said this happened in Sweden once and it worked out well. Of course, Sweden's financial system is a little less complex than ours.

Anyway, if a bank is nationalized the depositors' money is still just as safe as it always was. They might experience changes in level of service as the government seeks to solve liquidity issues. The people that would totally lose out are the shareholders. They would lose everything in a takeover.

My point is that we don't think much about such a possibility, but anything could happen at this point and it's far from completely out of the question. Something to think about if you're thinking about picking up some Citi at $3.58.

No More Texting Behind the Wheel in California

If you're a driver in California you probably already know about the new law that forbids texting while driving. Too bad we actually had to pass a law about this since it's so obvious to the person doing it that it's not safe. I read recently that texting actually impairs a driver more than alcohol or marijuana. Now that's saying something!

Here's my sowing wealth spin on this new law. One of the worst ways to set your future wealth back big time is to get ticketed or worse, get in to an accident that's your fault. Either route can cost you a fortune. If your accident ends up in a lawsuit you could be bankrupted. It's really that risky for you to break the law while driving or not pay close attention to what's going on around you on the road.

Many of us are not sitting on piles of extra cash and a few are even living on a very precise budget. Interesting thing is no one who creates a budget ever has a category called accidents/tickets. At least I've never seen one. You don't plan for such occurrences. You just don't expect them to happen.

Here's how to best ensure they don't: Drive defensively, follow the laws and pay attention at all times. You'll save a lot of money in the long run. In fact, you might end up saving something even more precious than money by driving this way.

amazon.com Makes a Rare Mistake

I don't know that I can ever recall a time when amazon.com made a mistake. They just seem so together, don't they? Well, nobody's perfect. In the latest issue of Maximum PC magazine amazon.com has a four-page ad featuring lots of pc gear you might want for the holidays. The item that caught my eye was the last one in the ad - a 16gb memory stick for just $19.99 after rebate. Is that a smoking deal or what? I recall paying about that for a 1gb stick a few years ago.

Anyway, I was prepared to promote this purchase via this blog except for one little hitch. It's not available as advertised. At first I had trouble finding it on the site. When I put in the name of the item in their search box it didn't come up. If I put in the item #, it comes up but not at the pre-rebate price of $39.99. Instead it's $42.83 and it's from ANTOnline with no rebate. Huh?

Dig a little deeper and you find amazon.com is one of the merchants that's offering it used or new beginning at $39.99. This is really weird. If you're an amazon regular you know that they always feature products they carry and the other merchants after them. In this case although their price is better they feature Ant first. Very strange. Worse, when you do uncover the amazon listing for the product you see that the rebate is only $10 and the product won't ship for 1-2 months.

Now let me get this straight, amazon decides to promote this product in a national magazine ad, doesn't have it in stock and promises the wrong price. When you look for it you find it for more with no rebate from another merchant. I love amazon, I truly do, but I gotta call it like I see it - they blew it on this one. I tried calling their customer service line to see if I could indeed get it as advertised, but the person on the other end didn't know what I was talking about and I got disconnected while he was researching it. I didn't have the energy to call back.

If you think a 16gb stick for $29.99 is worth waiting 1-2 months for, then it is available now for a purchase made by 11/30/08 here.

PG&E Lowering Their Prices!

I heard on the radio last week that gas and electric prices are coming down in certain parts of the country due to falling commodity prices. That made me wonder if I might enjoy some lower prices on my future bills. I went to www.pge.com and couldn't see any notice about lowered prices. I decided to call and ask.

I spoke to a very kind representative who looked in to it and, sure enough, prices were coming down 12% this month! That's a nice reduction. And this is on top of a 2% reduction last month. If you have maintained your current energy consumption at home, then you should see a lower bill the next time you're invoiced.

Why not make it better than that though? Why not actually look for ways to use less electricity? Here are a couple of tips on how to do just that. The first one is to unplug all devices that are not being currently used. Amazingly it turns out that even if your phone charger is not charging your phone, it's drawing small amounts of electricity just by being plugged in. I didn't know this until very recently. Makes me want to go around the house unplugging everything, which isn't really too convenient. However, if you plug devices in to a power strip and simply flip the switch on that, then you should be able to more easily stop drawing power from that outlet.

The second tip is to replace old appliances. I recently replaced a 12-year old water heater because it had started to leak. What I didn't know until I replaced it is that it was an electricity hog. My home is all electric unfortunately. Anyway, the old water heater had been drawing inordinate amounts of electricity to provide my family with hot water. I wondered for years why my electric bills were so high. I never suspected it was the water heater. I wish I had. It turns out the new one will pay for itself in just one year.

If you think your bill is much too high for your consumption pattern, then it's likely that you have a device on your network that's using inordinate amounts of electricity. The only way to know for sure is to actually look at your meter and watch what happens as you unplug and replug item after item. The culprit could have a short inside, which causes it to suck lots of power while still apparently working. Or it's just grossly inefficient.

Last thing I'll say about PG&E is that they have a Balanced Payment Plan, which averages your bills from a certain period, then uses that average amount as your price going forward. They check your usage every four months to see if your average has readjusted a lot whereupon they would start a new monthly amount. As we go in to the winter season when most people start using lots more power to heat their homes, this plan could ease the spike in bills. I do this and it's nice to be able to budget a certain amount monthly for my power bill.

I hope this information has been useful to you today. Let others know about this occasional blog.

The Latest Bill to Save the Financial System

You may have heard about the current bill that's passed the House and likely to pass in the Senate tomorrow. President Bush said he'll sign it when it gets to his desk. Who will be helped by this bill? Well, supposedly homeowners facing foreclosure. But this is true only if their lender buys in to it. From what I understand lenders would have to voluntarily choose to write down the value of the outstanding loan by at least 15% in order to get a government backed new loan for the homeowner. That's a big write down and many lenders may instead choose to simply go the foreclosure route.

What's good for our system overall is that a door is going to close on an easy way to buy a house with no money down. That should have been the law years ago. So many people in trouble now bought their homes with no money down. The truth is that so did I. Surprised? There's more to it. I put the money I could have put down in to much needed renovation of the home I bought. That investment then raised the value of the home thereby creating equity. So, it wasn't as risky as what many in trouble now did at the time of purchase.

Back to the bil, I do hear that there could be some good stuff in there for first-time buyers. If you're in the market as a first-time buyer, then I definitely recommend that you read up on this bill and figure out how you might take advantage of the provisions that can help you. This is really proving to be a great time to be a first-time buyer. Just take your time and be sure of what you're doing.

A key part of the bill is the newly strengthened government support of Fannie Mae and Freddie Mac. This will help the entire country out as these two companies might otherwise have gone belly up and that would have precipitated a crisis much worse than what we have now. These two firms supposedly back more than 60% of the housing loan market. They can't fail. So, love or hate your government, but in my opinion at least they're doing something to prevent a further meltdown. I'd rather have an imperfect bill than no bill at all. Now I do agree with the astute writers in the latest Newsweek that say that our leaders must learn from what's happening here and keep this same scenario from happening again.