Gas Prices

Yesterday the US House of Representatives passed a bill giving the Federal Trade Commission power to investigate the Oil company profits. President Bush's Admistration says they will veto any such bill if it passes the Senate.

The representative that introduced this bill, Bart Stupak, D-Mich., should be commended for his hard work on this issue. On his website he says this...

While consumers are being forced to pay up to $3.00 a gallon for gasoline, oil companies continue to reap record profits. Last year, Exxon Mobil posted $36 billion in profits, the largest profit for any corporation in United States history. Moreover, over the past year, refineries have increased their prices 255 percent. As these profits increase, so does the potential for price gouging.

When talking about refinery profits, economists refer to the “crack spread,” which is the price difference between a barrel of crude oil and an equal amount of refined gasoline. Typically, a crack spread of $4-5 per barrel will cover a refinery’s costs. Anything over this amount is usually profit, although this can differ from one refinery to another. If a refinery has a crack spread of $8-9 per barrel, economists consider this spread as a good, consistent profit. It has been estimated that refineries’ current crack spreads are as much as $20 to $30 per barrel. Refinery companies are raking in these excessive profits at the expense of working Americans. This is price gouging, and Congress should give the Federal Trade Commission the tools to investigate these profits and prosecute those refineries that engage in unfair practices.

Read The Whole Article

Student Loans

One thing is for sure, when I started college I had no idea how BIG of a part my student loans were going to play in my first 10 years of life. Most 17-18 year old students applying for loans have no idea that when they choose a vendor they are choosing who to marry for the next 10-15 years.

Most student loan companies are scum, many will:

• Advertise at your school
• Buy their way into your school's finance office
• Sell your loan
• Change your rates (Usually up)
• Charge you fees
• Make it difficult to pay
• Forget to bill you for the first 3 months when you are off deferment

God Forbid you default:

• Your interest rates more than double
• Refer you to a collection agency... who will violate your rights
• Forbid you from consolidating
• Offset all of your tax refunds (steal them back, legally)
• Garnish your wages without a COURT ORDER!

You see if you are a loan company you want to be in the student loan business because the loans are guaranteed by the US Government. If you fail to pay, they can get the money by the government. And since the Government is cheap when it comes to they will get their money!

Forever Stamp

Today starts the Forever Stamp and the new 41 Cents Per stamp rate hike. Also, there are new rules about how THICK an envelope may be... must be under 1/4"... failure to do so will result in a fee for not being flat machineable. (80 cents instead of 41 on a First Class Stamp)

So, go on out there and pickup your new stamps. Wahoo! $20 says there will be some type of "emergency" rate hike before the year ends due to gas prices... stay tuned.

BTW, UPS raised their "Fuel Surcharge" on May 7th from 3.5% to 4%.

Trapped like a Lobster...

A couple of weeks ago I wrote an article about, "Are You Financially Ready?" And I know this is a money blog, but I think it is important to point out some changes in our borders that recently happened. As of December 2006, you pretty much need a passport to enter the country, no matter from witch country you travel.

In other words, if there were a national emergency, you needed to leave the country and you didn't already have your passport you will be waiting in line behind all those who didn't plan either!!!

My recommendation, even if you don't plan on entering or exiting the country anytime soon... get a passport. These booklets are excellent forms of identification in the case of an emergency, often times used as backup or primary sources of ID!

What you need to know:

• If you have never applied before you will need to apply in person.
• You fill out the form online, print it out... DO NOT SIGN IT!!!!
• You will need to present proof of US Citizenship (Birth Certificate)
• You will need to provide Proof of Identity (Drivers License)
• Two identical photos of you (Walgreens/Kinkos - Cost around $15)
• $97.00 (Check/Money Order)
• Go to a "Passport Acceptance Facility" (Usually a Post Office)
• You can check the status.

If you haven’t received your passport and are traveling within the next 7 days... call or email the National Passport Information Center.

Financial Peace University - Dave Ramsey

I am going to be a table leader at the upcoming Financial Peace University at Westside Family Church in Lenexa, KS. The class I will be at is on Tuesday nights starting in June. (See information below) I am sure that you might have heard our Dave Ramsey story before, so I'll tell you a new one.

This week, my Jeep's starter went out. In the past, my life would have been devistated with the repair costs. I would have put off the repair until I had the money. I would have had trouble sleeping because I knew that I was going to bounce checks. I would have put the repair on my credit card.

Today though, I live a different life. Even though I still have not completed all the steps from Financial Peace University, I plan on doing so soon. Thanks to these steps, my wife and I have $1000 in an emergency fund plus another $500 in a car emergency fund. It was no big worry when the car didnt start. This time I procrastinated getting it repaird because I wasn't concerned, not because I didn't have the money. It's an wierd feeling to no longer worry about car issues... I like being weird!

Financial Peace University
91 Days To Beat Debt & Build Wealth!
FPU is a video driven 13-week life-changing program that empowers and teaches you how to make the right money decisions. To achieve your financial goals and expirence a total money makeover. It will be offered on site at Westside Family Church. Material cost is $96.25 (couples share) and should be ordered through the church since the materials are more expensive direct from Dave Ramsey. See a Video

Lenexa Campus - 8500 Woodsonia Drive
1. Sundays beginning June 3 from 6:30 to 8:30PM (Orientation on May 20 at 6:30 PM)
2. Tuesdays beginning June 5 from 7:00 to 9:00PM (Orientation on May 22 at 7:00PM)

Overland Park Campus - WFC Offices at 9154 W 135th St
Sundays beginning June 3 from 7:00 to 9:00PM (Orientation on May 20 at 7:00PM)

For More information visit Dave Ramsey's Website or Westside Family's registration page if you are ready to register. Also, you may contact Niki Ezzell at nezzell@westsidefamilychurch.com or 913-890-4243.

How Much Money is in the Federal Reserve?

Trick question! The Federal Reserve System is neither Federal nor a Reserve! The Federal Reserve system was developed in secret by the BANKing industry and DELIVERED to congress for approval over many years of legislation and lobbying.

The Federal Reserve loans money to "member banks" so that they can lend more money than they actually have in reserve. The Federal Reserve chairman can produce more or less money as well as increase or lower interest rates charged to the "member banks." Doing these two things can help control inflation.

Inflation is the DEVALUATION of the dollar so that consumer good's prices seem to appear to increase. Inflation is caused by the basic economic principle of Supply and Demand. The more money available to the public, the less valuable it is.

Little known fact: When the government needs money to fund things like the war, they can go to the Federal Reserve Chairman and request those funds. The chairman then writes a check to the US Treasury for the amount needed and CREATES those dollars. Thus flooding the market with money that did not exist the day before.

3 Common Money Floods: (Causes of Inflation)

• As stated previously, borrowing by the government.
• Borrowing by the "member banks". Member banks can loan up to 9 times for every actual dollar they have in reserve. So, if they choose to streatch their dollar, they are actually creating dollars for the loan.
• Frozen Money. Money is frozen for many reasons; stuck in retirement funds, overseas in government vaults, savings by businesses for trade.

When you hear these three things on the news, remember, it's your TAX dollar that is paying for these! When we as a nation are at the highest national debt ever, you and I are being taxed. When the US citizens have more debt than ever, you and I are being taxed. When China buys US debt, they are doing so to help the dollar (since we are their biggest importer), when they sell it... it will tax us. Inflation is a tax!

Most Americans have no understanding of inflation. My statements are not political, if we must go to war... then we must go, but do not under any circumstance believe that it's paid for by anyone but YOU!

It is important that if you are saving money that your savings plan has at least a 6% gain over the long term. (3% inflation plus 3% taxes) Failure to do this means you could be moving backwards by saving.

Gas Prices (First Post of Many)

Well... there are a milion issues when we talk about gas prices. While there are a ton of issues that effect Gas prices, the issues are all Supply and Demand related. Sometimes even a 1% possibility of a supply change will cause our pump prices to increase.

According to CNBC... Gas prices are at an all-time high, averaging over $3.07 per gallon, the previous record high was $3.03 on August 11, 2006.

Things to know about Gas:

• There are two different supply chains.
  -The supply of Crude Oil from various sources including the Middle East.
  -The supply of refined Gasoline.
  This is the fundimental part most people don't understand. It is possible for us to have a great supply of oil and still not have enough refined gasoline, because that Crude oil is shipped to us and we have to convert it to gasoline for use.
• While we blame the Middle East for many of our gas supply problems, in reality/as of late, our gas prices are more effected by local production.
• When Crude Oil is refined, the oil is broken down into:
  -Natural Gas
  -Propane Gas
  -Automotive Gasoline (Liquid)
  -Kerosene (Liquid)
  -Jet Fuel (Liquid)
  -Disel Fuel (Liquid)
  -Industrial Fuel Oil (Liquid)
  So, when "gas prices" are up, usually all of the the above are effected in one way or another.
• The gas in the pump has already been paid for, the price you pay is based on what the station owner believes they will be paying to replace the gas you take.
• Supply and Demand says... When supply is up and demand stays the same, the price will go down. When deman is up and supply stays the same, the price will go up.
  In this graph, you can see that our demand [consumption - red line] is higher than last year's demand. Assuming that production is the same then, the prices must be higher than last year. (And they are) Graph: AG Edwards - Gasoline Chartbook - 05-02-2007 - Eric Wittenauer

Find Gas Prices in your Area at: Gasbuddy.com A cool new feature of the web site is the Gas Temperature Map.

When Will Gas Prices Affect Your Driving Habits?
When asked, “How high will gas prices need to get before you drastically alter the amount of driving you do?” 42% of respondents stated that they had already altered their driving, 25% said they would alter their driving at $4 per gallon, 20%stated they would alter their driving at greater than $5 per gallon and 13% said they would alter their driving at $5 per gallon.

Dave Ramsey Book Signing

Tonight there was a book-singing by Dave Ramsey. He is in town because he is having a live event on Saturday. We had him sign our Financial Peace University book for us.

Lotto Winner goes from $5.5 Million to Broke

Lotteries, two big problems. I've had the debate a million times with a friend of mine, you know who you are.

Lotteries target people who are poor at managing money, it's not the amount of money you have... it's your ability to live within your means.
Lotteries target people who are bad at math. Odds are you aren't going to win!

So, let's look at the first, "Lotteries target people who are poor at managing money." We know this because if you investigate the numbers, the average person who plays the lottery spends $35 a month. Anyone who is good at money management would never spend this amount for no return. (Just the chance of a return.)

An article appeared on April 30 JS Online about a guy who won $5.5 million dollars in the lottery has now had to sell his house and lives on a pension because he's broke.

His fiscal downfall followed what has emerged as something of a pattern among lottery winners nationally: Someone with little training in dealing with vast sums of money gets a sudden windfall, only to see it tumble maddeningly into the wind.

The second, $35 into a growth stock mutual fund monthly over a 40 year time span will give you a Million Dollars EVERY TIME! Why would you spend that money on the "hope".

Dave Ramsey says... "If people were good at math, they wouldn’t be in debt in the first place." This is also a case where Dave's "selling crock pots, not microwaves."

JS Online - Lottery winner blames bad advice for his losses

When reducing mail don't forget about Charitiable Giving

If you have ever sent a gift to a charity or non-profit orginization you know that you will get soliticitations and "updates" from them until you die. I ran across a blog post today from USA Today where the author suggests...

"Try Internet giving sites. Network for Good and Justgive.org are non-profit groups that process online donations to thousands of charities. Both websites let you make anonymous contributions to the charity of your choice."

"Make privacy a condition of your gift. Look for charities that have a written policy stating that they won't sell or trade your information. Some charities let donors "opt out" of receiving solicitations. "

Either way, I suggest you always be careful when giving out your personal information, getting on the wrong list could make your phone ring for years.

What my wife and I do is practice cheerful giving while not telling the complete truth. (God is understanding.) We have a fake phone number we use for all of our bills, utilities, credit, movie rentals, and chairties. We use the same number so its easy to re-reference us by our phone number... you just can't call us there. We also each have a junk e-mail address.

USA Today Blog - Charitable givers can kiss a lot of junk mail goodbye if they're careful

Also, see this previsous post on Reducing Mail and Telemarkers.

When was the last time you READ your Bills?

The Wall Street Journal had a blog post yesterday by Nathan Koppel about a Sanford Professor that did a study about billing abuse by attorneys. He pulled 5000 attorneys and found that many of them pad the bills and preform "unnecessary" tasks to bump up the rate.

Ross polled 5,000 attorneys from various walks of life throughout the country, and 251 responded. He worked with Reed Business Information to generate a random sampling of lawyers who work at law firms. Two-thirds said they had “specific knowledge” of bill padding ─ a finding virtually identical to one reached by Ross in a 1995 billing survey. Also, 54.6% of the respondents (as compared with 40.3% in 1995) admitted that they had sometimes performed unnecessary tasks just to bump up their billable output.

Now this post is about Attorneys, but really... how often do you read your bills in detail? Do you know what your credit card rates are, would you know if they changed one month? Do you know what your banking fees are and if you were charged $2 extra for "POS Debit Fee" would you have any idea if you were supposed to?

Having worked in the phone industry, doing contract negotiation, I know that many of the "regulatory fees" are actually phone company charges that stay right in the phone companies pocket.

Chances are you are being ripped of by someone! You should read your bills in detail every month, often, if you pay the bill then you agreed to it's contents and getting credits for longstanding "mistakes" is very difficult.

My recommendation, start negotiating more of your bills. When you call and discuss your utility bills and what you can do to get it reduced you will learn a lot about what you're actually getting billed. Take this negotiation as an opportunity to learn about the business, the better educated you are the better you will understand how to protect your budget. And... think of it as a game, what's the worst that could happen?

Ask questions that have nothing to do with why you are calling... get out of your comfort zone... ask the phone rep if he is paid by the sale or just hourly. Ask if they get in trouble for discounting your bill. Ask if they have a record of how many credits they have already given you, even better, if they have a limit. (annual, monthly, daily, percent) All of these little tid-bits of information will drive you to better negotiate and better understand your bill so you won't get ripped off anymore.

I'll give you one more tip... read these... I know the bill you are negotiating might not be your cell phone bill but read these posts they will give you a real understanding about how customer service reps are paid and think.

• 18 Confessions Of 2 Former T-Mobile Reps
• 10 Things We've Learned From 'Confessions of A Wireless Sales Rep'
• 8 Confessions Of A Former Verizon Sales Rep
• 7 Confessions of a Cingular Sales Rep
• 6 Confessions Of A Former Sprint Sales Rep
• 11 Confessions of a T-Mobile Sales Rep
• 8 Confessions of an Alltel Sales Rep

Facts About Credit Cards

This article from Blueprint for Financial Prosperity offers some of the old history of Credit cards which still exist today. Extremely interresting read.

7. The Visa logo colors were chosen because the blue represented the sky and the gold represented color of the hills in California where Bank of America was founded.

13. Wonder why minimum payments are so low? It allows consumer to carry more debt while keeping to the same low minimum payment. You can give someone with the ability to pay $100 per month a credit limit as high as $5,000 if they only had to pay 2% a month. If the minimum payment were 5%, they could only have a credit limit of $2,000. The lower the minimum payment, the deeper in debt someone could be in.

Blueprint for Financial Prosperity

Are you ready for a Financial Emergency?

I wrote the title of this post and didn't realize exactly how extra ordinary that question is. Are you ready? Do you have your and your family's documents in place, an emergency plan, emergency stash of food and money? What would happen if, God forbid, your family was suddenly hit with an emergency and had to leave in a matter of minutes?

House Deed?
Birth Certficates?
Last Year's Taxes?

These are all items you would need to get your life re-set after a catastrophic event. Having this information ready for a split second move could mean the difference between waiting hours for aid or years.

My suggestion, my wife and i have a complete Emergency Financial First Aid Kit and we each have a Personal Disaster Preparedness Guide . As the operation hope website says...

The Emergency Financial First Aid Kit is a simple tool to help Americans minimize the financial impact of a natural disaster or national emergency. It helps users identify and organize key financial records and serves as a quick reference to their most important financial documents. The companion piece to the EFFAK is the Personal Disaster Preparedness Guide (PDPG) which guides individuals through the survival and recovery steps to be taken prior to an emergency.

Both of these premade forms are extremely enightening and will quickly make you aware of what financial information you do not have ready. Additionally, it will make you find documents that you don't regularly look for.

My recomendation, fill out the whole thing. Put all the supporting documents in a three ring binder and slicky inserts. Copy the entire thing twice. Keep one copy in a locked cabinet or locker at work. Give the other copy to a close relative or friend in a sealed envelope explaining that it has very detailed personal information in the case of an emergency. Retain the originals in a fireproof safe in your basement or in a safety deposit box. However, remember, you should keep a small amount of cash with this kit so if you choose a safety deposit box, find a good place to hide your emergency-emergency fund.

Operation Hope

Compound Interest

Question: Why are we so blind?
Answer: We were taught this way... P = C (1 + r/n) ^nt where P = future value, C = initial deposit, r = interest rate (expressed as a fraction: eg. 0.06), n = # of times per year interest in compounded, t = number of years invested

I mean really? Were we ever expected to actually use, apply, and remember for the future what this meant? This was taught between 4th and 6th grades. When you were 12 did you even have an understanding for credit or savings? When I was 22 I still didn't have an understanding for credit or savings.

You need to spend some time actually calculating this again now that you are an adult! You will be amazed what numbers really mean. Did you know that when you are saving, the difference between a 6% mutual fund preformance and a 12% mutual fund preformance is not DOUBLE!

Compound interest is a product of the banking industry. It is designed to confuse you and make their pockets bigger. If it wasn't, who in their right might mind would ever pay 18% interest to borrow money on a credit card, while they were only getting back 1.22% interest on their savings account?

Using this link, you can put a credit card balance in, the amount you owe and how much it will be worth if you pay minimum interest. (kind of) As well, you can put savings amount in, expected interest, and see where you will be.

Pictured, Albert Einstein explaining the rule of 72, it's a great picture but I am not sure Einstein is credited for this formula... I don't think picture is real. The rule of 72 is a quick way to find how many periods of time it takes for your money to double. (Or the banks debt on you.)

Dave Ramsey is Bad at Math or is He?

If you have ever done any Internet searches for Dave Ramsey, you know that an article appears called "Dave Ramsey is Bad at Math" from fivecentnickle.com. When I first read this article I did what most Dave Ramsey fans would do... I quoted Dave in my head...

It’s not about the math! If people were good at math, they wouldn’t be in debt in the first place.

To date, this article appears in searches for Dave Ramsey. The author has even done a follow up article where he explains how Dave Ramsey uses psychology. Both articles are good reads.

The author is correct, mathematically the debt snowball isn't the best way to pay off debt. But, in reality, most people won't stick with the plan unless they are motivated to do so.

Not familiar with Dave? Read my past posts. Try this online debt snowball calculator.

Drive Free. Retire Rich.

It's amazing the look you get when you tell people that you intend on living debt free. I actually had a person tell me that "in today's society, it is impossible to get ahead without debt." This would only be true if we were talking about my bank. Debt is a product (financial asset) for my bank, not me!

Check out this video from Dave Ramsey on how to get a free car... Drive Free. Retire Rich.

AAA Fuel Cost Calculator

So you are out of debt and deserve a trip. (Because you saved up for it.) How do you budget your fuel costs? The AAA has a new solution for you, a Fuel Cost Calculator.

Just enter your start and end point and then your type of vehicle.

FuelCostCalculator.com

PS. "That is one fine automobile."