Frank the Financially Savvy Atheist - The F.S.A.

Really Random: Recursive Kanye

2009-09-17T21:35:00.001-04:00

I don't know why, but I find myself thoroughly amused by this whole stupid Kanye West incident. It has now spawned a meme across the internet and here is a particularly funny version of it. Just a random thought of the night.

Youtube Sunday - The Truth is so much more Remarkable

2009-08-23T19:27:00.002-04:00

I've been on a Feynman kick lately. I just finished reading Surely You're Joking Mr. Feynman and loved it just as much as his second book. Here's a collection of clips with him. Such an awesome person.

Another milestone with the number 100

2009-08-18T21:56:00.000-04:00

Gotta love this base ten number system of ours. I logged into mint to check on my accounts and I saw this: Investments $100,000. That's right, our investments are over at $100k. Of course right now it's fleeting because it is primarily based on whatever the stock market is doing at the time. If stocks fall tomorrow, then I'll be below it. In either case, I noticed it because I was just mentioning about being 100% vested. The more interesting milestone will be when that number is over $1,000,000.

Another plus when reading my 401(k) statement

2009-08-12T17:54:00.002-04:00

With the market up YTD, it's nice to look at my 401(k) statement and see a positive number for the return calculation. What's also nice is seeing this statement (more or less): "You are 100% vested". Pretty freaking sweet.

Youtube Sunday - IN UR MANGER KILLING UR SAVIOR

2009-07-26T20:04:00.001-04:00

This is old, but still quite hilarious.

Fun with math - pizza time

2009-07-26T09:52:00.001-04:00

A pizza with the radius z and thickness a has the volume pi*z*z*a.

Thank you reddit

This was too good to pass up posting on

2009-07-12T11:24:00.000-04:00

Wells Fargo Bank NA has filed a suit which includes...wait for it...Wells Fargo Bank NA. HT: CR. Oh man, as CR so snarkily puts it: our TARP money, hard at work.

Where does the money go - the US consumer expenditures

2009-07-09T20:00:00.004-04:00

Based on this post apparently it goes in these places (I had a hard time reading the infographic so I made a simple chart instead)

No surprise that housing takes the cake. It was a bit surprising to me the healthcare is above entertainment, but it is what it is.

Things are getting "less worse"

2009-07-08T11:24:00.000-04:00

For some time now, whenever the stock market had an "up" day after some negative economic news people would say that "things are getting less worse", or the "second derivative is turning positive". While I can understand that people are looking for an inflection point in the data to try and tease out when the economic recovery might be starting, I just don't buy this second derivative argument.

Case in point, the Case-Shiller home price index. There are several ways to look at the 20-city composite index. I will highlight three ways.

The first way is to show the price of the index itself, which says we are back to early 2003 price levels and represents a 33% decline peak-to-trough.

The other way people look at it, is the Year-over-Year (YoY) change in the index. So they look at that and say, oh look, it's getting less worse. The YoY change is flattening out.

And finally, they say, hey, the Month-over-Month (MoM) change in the index is definitely looking better now.

Things are getting less worse, stocks go up, everybody wins. Allow me to pour a dash of reality on this optimistic viewpoint:

First, the MoM change looks very seasonal to me, which makes sense because spring and summer are the peak selling seasons for homes. People are moving to try and get their kids into schools at the right time, here in the north it's warm and there isn't snow on the ground, so prices tend to be higher during this peak selling season.

Not only that, but keep in mind that right now we have an unprecedented amount of government manipulation (quantitative easing?) in the mortgage market. The Fed is actively purchasing mortgage-backed-securities and treasury notes in order to make the 30 year mortgage rate as low as possible. However, the jig is up and while early in their campaign they were successful, now mortgage rates have increased and they lack the firepower to make it much lower. What does this mean for housing? It means the government is artificially increasing demand which has worked, and one could argue that it took the worst case scenario off the table (or at least made it much less probable), but once rates rise to 6% or higher, then the marginal buyer will be out of the market and demand will continue to fall. Moreover, the first-time home buyers credit is set to expire later this year which also removes another marginal buyer from the housing market.

Plus, if things are getting less worse, that doesn't mean things are getting better anytime soon. Even if prices are going to stop falling now, that doesn't mean that we're going to go straight back to post-bubble levels. I would also argue that we won't be going back up to historical means either, because by most historical measures, housing is nominally "overly" affordable.

Lastly, there is more supply around the horizon in the housing market. While the Fed and the Administration are goosing demand right now (via the first time home buyers credit and lower mortgage rates), nothing can stop the supply coming down the pipeline. Foreclosures continue unabated as mortgage servicers realize that you can't modify loans for every single person who calls in with some story or another. In CA, Option Arms* recasts will be coming in 2010, and in general, more prime borrowers will be resetting. Moreover, unemployment will continue to rise and if you don't have an income, then how can you afford your home even if you can negotiate a lower payment?

Taken together, I forsee a continued drop in home prices and after that, a very flat environment before prices begin to increase. In addition, I would also expect that regional dynamics to start to play a more significant role and I would fully expect for some markets to recover faster than others. Until then, I am going to ignore the second derivative argument until I think it has some merit.

* Option Arms are especially troubling due to the fact that many of them are in CA, the epicenter of this housing crisis, and they have a Negative Amortization feature, where borrowers can make less than the principal and interest due and the difference is added to their existing balance. So talk about a double whammy, your house has depreciated significantly and your loan balance is greater than what you took out originally.

We are "underwater"

2009-07-01T11:24:00.000-04:00

A few months ago with mortgage rates once again ridiculously low (thanks to government manipulation) we set out to try and refi our current mortgage. This required us to get a fresh appraisal on our property and needless to say, I wasn't feeling optimistic about it. In fact, it was worse than I feared and we are actually about $30-60K underwater. Sucks to be us.

I wonder if we should just walk-away, it seems to be the modus operandi now. However, even a godless atheist like me can't justify walking away. Don't get me wrong, from a rational point of view, I could improve my own personal situation by just forgetting about this house, but I signed on the dotted line and I gotta pay this thing back. Unfortunately, since our mortgage DTI is less than 20%, we don't get any help from the Obama plan either.

Damn it, what was I thinking with being responsible and not buying too much house. I should have know the government was going to step in and bail me out, I should have levered up when I could. Oh well. /sarcasm

So it kind of sucks. Underwater on the house, not being paid as much as I was expecting at work, working longer hours and having more responsibility. At least the stock market is trending upward...for some inexplicable reason.

Hishashiburi - Long time no see

2009-06-28T00:44:00.002-04:00

It's been a while hasn't it. Several months in fact, since I last posted on the blog. I could report on many things, but suffice it to say that I have been busy at work. Getting promoted into new responsibilities has been trying at times with the new demands on my time. Plus, I've yet to receive any financial incentive for my hard work (which is a source of contention between my wife and I), but it is what it is. Kids are doing fine, financially we could be doing better. Overall things are just ho hum at this point. Just wanted to check in and let people know that.

You have to be kidding me

2009-03-11T21:17:00.002-04:00

I'm starting to believe that everyone in power over the last few decades were all completely incompetent: FDIC collected little in premiums.

Do these people have any idea how fucking insurance is suppose to work? You collect premiums to pay out later when you need it, and like most insurance companies you can be exposed to the six/ten/twenty sigma events that could destroy many past years of profits. For the love of non-existent god man:

a booming economy left banks flush with cash, and by 1996 the insurance fund was considered so large that it could grow through interest payments and fees charged only to banks with high credit risk. Congress agreed that premiums didn't need to be collected if the fund was sustained at a level that was considered safe. Thus, about 95 percent of banks paid no premiums from 1996 to 2006

Emphasis added.

Seriously?!?! So why not just collect more premiums and put it away until you freaking need it. More premiums are a good thing. Jesus tap-dancing christ on a crutch.

ht: CR

Carol Carter, you are a moron

2009-02-05T21:07:00.002-05:00

From: Carol Carter

Friday, January 30, 9:30 AM

Subject: FW: Amazing!

I'm confused

How can 2,000,000 blacks get into Washington, DC in 1 day in sub zero temps when 200,000 couldn't get out of New Orleans in 85 degree temps with four days notice?

Carol Carter

source

To reiterate, Republican Carol Carter, you are a moron

Quick thought of the day

2009-01-23T12:28:00.001-05:00

I'm living so far beyond my income that we may almost be said to be living apart

e e cummings

So proud of my wife

2009-01-16T10:00:00.002-05:00

My wife is officially done with Harvard. After many long sleepless nights (for her, not me) she is all done with her Masters. I have never been more proud of her. I really am one lucky SOB. No all we need to do is start paying down those student loans. You know what they say about marriage, what's mine is yours :P. Good think I have my excel financial calculators to see how fast it's going to take to pay of off.

I want to start a hedge fund

2009-01-08T01:33:00.003-05:00

I'm not feeling very motivated at work. Like many in the financial industry, I had a significant bonus cut this year and I haven't felt like putting in any effort as a result. I feel this way because I'm pretty much at the bottom of the totem pole and when things get better I don't really share in the upside as the people who are more senior.

And yea I got a promotion, but it's easy in this environment to give me more responsibilities, a title change with no additonal compensation or even an office or anything else...except for new business cards.

So I've been contemplating/day-dreaming about starting my own hedge fund. The thing is that some securities are so cheap right now that you don't need to be that smart about it. Prices are so low that you can craft asininely draconian scenarios and still come out making money.

However, as I go down this route I just think about how difficult it would be for someone like myself (with not that much experience, no connections, and no rich relatives) to raise the necessary capital to run a fund. Add into that the Madoff scandal, the fact that all kinds of sophisticaed investors are backing away from established hedge funds and I stand a microscopic chance of actually being able to pull it off.

Still, it would be sweet to open a fund with a 3-5 year lock-out period, work my ass off in those intervening years and make a few million.

A guy can dream can't he.

Last Post for Now - Update to my Excel based financial calculators

2009-01-01T21:02:00.002-05:00

This is the last post from me for a while. I have updated my suite of excel based financial calculators and added a multiple debt payoff tool. This post will walk you through the mechanics of the tool:

1. There are 5 inputs for each debt you have:
- Debt Name: What do you want to call this? (example, MasterCard, Mortgage, Auto Loan)
- Current Balance: How much do you currently owe? (example, $5,000)
- Current Interest Rate: What rate are you being charged (shoould be annual amount)? (example, 9%)
- Currently Monthly Payment: how much are you paying a month? (example, $256.90)
- Use Monthly Payment Towards Other Debt: This is either Y or N. Example of how this work:, you have two credit cards that you are paying $100/month and $200/month. You finish paying off the card that was $200/month, so you now apply $100 plus $200 for a total of $300/month to the other card. This allows you to pay it off faster. I hope that explanation makes sense.

2. After you've entered your debts, you then choose how you want to repay it:
- Highest Interest Rate First: This is the mathematically optimal way of doing it
- Lowest Balance First: This is the Dave Ramsey Snowball method
- Shortest Term: Which one would you pay off the fastest

3. Next, you enter any extra payments you would like to apply towards your debts and how often:
- Amount: how much is the extra payment ($100, $5,000)
- Start Month, Start Year: When do you want to start applying it?
- Frequency: How oftern do you want this debt to be applied? Monthly, Quarterly, Semi-Annually, Annualy, or is it a One Time payment?

4. From there, you click the Calculate button and it should go through and show you a few things:
- The order in which your debt will be paid off (based on your repayment method chosen).
- Summary Statistics

Those should be relatively self explanatory.

Much thanks to mapgirl for some helpful suggestions on this tool a while back.

As always you can download my suite of excel based financial calculators here.

Thanks and Happy New Year to everyone and maybe this tool will help you with your goal to get rid of debt in 2009.

I got a promotion at work

2008-12-19T15:06:00.000-05:00

Or, another reason this blog will be on hiatus indefinitely.

I received a promotion at work (one of those, more responsibility same pay kind of promotions) and between the added responsibilities and three young kids, I am putting the blog on hiatus indefinitely. I will update with the newest version of the calculator in a separate post but I don't think I will be updating on a regular basis any time soon. Please keep me in your rss readers and in your thoughts. Thanks, and I hope everyone has a great holiday season.

Hulu Test

2008-12-09T11:14:00.000-05:00

Thought for the day: On Prayer

2008-12-01T14:23:00.001-05:00

“I prayed for twenty years but received no answer until I prayed with my legs.” –Frederick Douglass

via

Some SQL humor - From Reddit

2008-11-26T13:02:00.001-05:00

A SQL query goes into a bar, walks up to two tables and says, "Can I join you?"

So it goes

2008-11-26T10:35:00.000-05:00

And so it goes...life that is. I felt a little better that Madame X over at my open wallet had just made the same mistake that I did, namely forgetting to pay a bill or two. I had the same sentiment that she did: what is wrong with me? At least I was able to reverse most of the related charges.

I feel so out of it nowadays. Hardly have any energy left. Maybe it's because I really am getting old(er). Not sure what it is, but I need to break out of it. At least I'm in good company.

My poor neglected blog

2008-11-13T14:40:00.002-05:00

Oh my poor neglected blog. Where have all my time gone to have left you here all alone without posts. Well, lets see. Things are hectic at work, and with my wife finishing school, things are hectic at home too. All in all, I'm left with very little time to sleep much less blog about this that and the other. I still need to post my debt reduction tool as well. I will get to it, eventually. If anyone wants a crack at it, just send me an email and I will get it to you.

Net Worth Update - End of October 2008 Conference Call Edition

2008-11-07T09:08:00.001-05:00

Good Morning, and welcome to the monthly update on the FSA household finances net worth conference call. In these challenging times, the FSA household management team has shown resilience in the face of adversity. Even though times are difficult, the management team (comprised of Mr. and Mrs. FSA) has stepped up to the plate and shown initiative to try and maximize shareholder value.

It is with that note that I would like to announce that we have launched a debt restructing and capital replenishing initiative designed to shore up the balance sheet. We have sold one of our cars online which allowed us to receive the maximum value for it (instead of trading it into a dealership at a loss) and will soon purchase a much more affordable mode of transportation for Mr. FSA. Until that time, Mr. FSA is carpooling with co-workers which saves on gas, insurance, and maintenance costs, and allows for paitience so that the best deal can be obtained on a quality used car. We will keep you posted on that initiative going forward.

Furthermore, with the end of year approaching, we anticipate that bonus income from continuing operations to be paid out in a timely manner. This income will be used to fund savings in the form of a Roth IRA and general savings, and will also be used to pay down outstanding debt. While we still anticipate taking out a 0% balance transfer to fund expenses for 2009, we anticipate net debt levels to decrease by about $10,000.

These are unprecedented times, and almost all major investment asset classes reflected this by declining. 401(k) numbers were down 16% MoM, and 529 numbers were down almost 20%. Total assets declined 12.62%%, part of which was the effect of the debt restructuring initiative of selling Mr. FSA's car.

Liabilities were also down significantly due to said debt restructuring in addition to regular debt payments. One thing that we have instituted this month was a reshuffling of debt payments to ensure that the current highest interest rate debt was being paid the fastest to maximize interest savings.

Overall, total net worth stands at $4K. This is a substantial drop, but giving the unprecedented times we find ourselves in with almost all major asset classes declining, the management team believes that having a positive net worth is something to be proud of.

I will now open the confernce call to any questions.

Whew, finally got it done

2008-11-02T23:19:00.003-05:00

I was finally able to finish up another tool for my suite of excel financial calculators. This time it is a multiple debt payoff tool. I was going to have it done sooner, but per mapgirl's introductio of a the free debt reduction tool powerpay that could do all kinds of fancy things like having extra payments that weren't monthly, and that forced me to redo mine.

So for my tool, you can enter your debts and you can also decide whether or not you want the monthly payment to be applied to other debts after the current debt is paid off. Moreover, my tool can also do different kinds of extra payments now (Monthly, Annually, etc). So take that, Powerpay.

Full post with screenshoots coming later. Right now, I need to get some sleep.