April 24, 2009

Personal Finance | Are Crocs Shoes a Good Buy?

As a self-proclaimed personal finance guru (and believe me, no one else claims that!) I'm always looking for ways to do two things, make money and save money. And if I can accomplish both goals at once, then it's all the better. Today, I'm focusing on the save money side, and it has to do with shoes.

See, I really love shoes. No, really, if I had enough money, I would be buying at least one pair of shoes every day. It's almost a sickness. But, I don't have all of that money, and despite being a self-proclaimed personal finance guru, I don't at the moment, have a lot of extra cash floating around. So, instead of buying as many shoes as I can, I look for value. How do I find value in a pair of sneakers or sandles that I want to buy? It's simple, really. I want to find a shoe that looks great, that is made well, and that is priced right. Now, notice what you didn't hear - name brand or high end shoe store.

In my search for these great buys, I've done quite a bit of research. And for the past week or so my research has been on croc shoes, otherwise known as crocs. These croc shoes are an interesting phenomenon. Let's be honest here, the shoes are ugly. They don't look good at all. Almost like modified sandles with a toe covering that has had a bunch of holes punched out of it. And the colors - bright green, bright pink, bright red, purple, blue. These shoes are definitely not the most aesthetically pleasing thing on the market. But people seem to be buying crocs by the boatload. And people always say that croc shoes are the most comfortable shoes that they have ever had.

So I tested them out. I went to my local shoe store, found a pair of crocs that fit, and bought them. I must admit, they are extremely comfortable. But man are they ugly. Every time I looked down at me feet I honestly got to feeling a little bit nauseous. And the price was decent. At $30 it's hard to say no to these guys.

At the end of the day, do I think crocs are a good buy? I would say yes, but only if you are going to wear them around the house, to do yard work, and things of that nature. If you plan on wearing croc shoes anywhere but at home, you've crossed an imaginary line of mine I'm not willing to cross. But to each his own.

April 22, 2009

Building Wealth | Mortgage Refinance Options

The past year has wreaked havoc on the United States, particularly in the real estate industry. Many people have purchased homes that they can't afford, banks are foreclosing like crazy, and many people are in a state of financial crisis. But, there is a silver lining, particularly if you are one of the people that didn't buy your home at the height of the bubble (and are therefore still right side up on your house - meaning it is worth more than you owe on it) or enter one of those pesky sub-prime mortgages or adjustable rate mortgages that reset last year.

As I've mentioned before, one way to build wealth is to create more money for yourself. Another way to build wealth is to save money doing what you are already doing. The post today is about saving money doing what you are already doing, namely paying for your house.

If you weren't aware, mortgage rates, because of the housing crisis, are at the lowest rates they have been at in some 20 or thirty years. This means that instead of paying 6-7% interest on your mortgage, you can now pay around 4% (if you qualify, which is easier said than done these days). This can lower your monthly payment by hundreds, even thousands of dollars (and you could continue to pay what you pay now into the principal in your house and pay off your house super fast while saving a bunch of money!).

For example, let's say you own a house in Austin, Texas, and you want to refinance your mortgage to save some cash. If you go in, qualify, and get your interest rate lowered 1-2 percentage points, your Austin mortgage refinance will save you great amounts of money.

But why do it now? Interest rates aren't going to get much lower, and if you have the time you should get it done. Why waste money paying interest that will never help you pay off your house or save for retirement? Get your home mortgage refinanced today and save big time dollars!

March 23, 2009

Our First House Sold! And We Only Lost a Little Money!

In the never ending saga that is building wealth, trying to get rich, and now a day just trying to survive, our first house flipping adventure is over with the sale of house number one. It closes on Friday, and everything appears to be a go. Although we did end up losing a little money ($6,000 or so), it could have been so much worse, and is worse for so many others out there. I think the difference was, we weren't necessarily trying to get in and out to make money on the bubble. We created value and just happened to get a time in the housing market when everything went down. Oh well.

Now that we have sold the house, we are looking for a different place, much smaller, in a different city (Seattle - new job). Before we get a new house, however, I think we are going to rent for a bit. One of the major downfalls of our new living spaces will be a new lack of closet space. Before we had a huge walk in closet with a large amount of space. Now we have nothing but a little dinky 8 by 3 foot closet. So organizing the closet is going to take a little work. I think instead of looking all over the place for a book on space I'm just going to buy some closet organizers and use them to do all of the work for me.

I guess though, if the closet space is my biggest worry, then that isn't too bad. And as far as our next house, I think we are going to continue to look for value that we can add and then sell, but maybe not quite the undertaking we did the last time. I'm thinking appliances, some paint, but not the entire house. Nothing that costs over $5,000. And it will have a ton of closet space, which will be nice.

I'll continue to keep you up to date on all of my financial workings, hopefully in a little more detail than I have been. But in the meantime, remember that the key to financial success, to working toward the "big closet" if you will, is to keep costs low, keep returns high, and keep your nose to the grindstone.

March 16, 2009

Building Wealth | Can Anyone Start a Hedge Fund?

As the economy gets worse and worse, and it appears as though much of it is tied to the banking industry, whether through bad real estate loans, poor management of funds, or out and out fraud (i.e. Bernie Madoff), I recently wondered if just anyone can start a bank, financial institution, or hedge fund.

When I googled how to start a hedge fund I got a wide variety of answers. I must admit, I know little to nothing about hedge funds, except they are notorious for making the creators of the fund and those allowed to buy into the fund tremendous amounts of money (except recently). If what I have heard is true, hedge funds are very hard to get into, take a lot of money to get started, don't necessarily have a lot of risk associated with them, and pay out handsomely. That is a combination I think anyone would go for, if you had the money.

I guess I might want to figure out what a hedge fund is before I figure out if I can start one. It appears that hedge funds are very similar to other investment vehicles, like mutual funds, investment companies, etc. Unlike mutual funds, however, hedge funds aren't registered with the government, and, like I thought, inclusion in the club is by invitation only (hedge funds are not traded publicly like stocks). Also, hedge funds can have all sorts of fun stuff in them, including: fixed income securities; currencies; exchange traded futures; over-the-counter derivatives; futures contracts; commodity options; and other non-securities investments. It appears that hedge funds are aptly named - the money put together in the fund is used as an investment tool to "hedge" against large swings in the market.

Knowing what I now know about hedge funds, I don't think I'm capable enough to participate in one, much less create one. I think I'll just have to stick with my mutual funds, individual stocks, and bonds. Although they aren't as lucrative, they don't take as much cash up front to get started, which means I can participate today.

January 8, 2009

Update on House #1

It's been a while since I've put an update here on house number one, which, before the real estate housing bubble burst, was supposed to be the beginning of a real estate empire. A lot has changed since then. The house is finished, and it looks great, but there just aren't a lot of buyers out there.

Do I know it's January and there probably aren't a lot of home buyers out there looking right now? Yes, I do. But I was forced to put the house on the market because my wife got a job out of town, so we had to split and put the house up for sale, even though it wasn't the most opportune time (we moved to Seattle, by the way - great city). And, you guessed it, we also had to move all of our stuff out of it. So, not only do we have a house up for sale in January (that has been so for several months) we have a house up for sale in January that is empty. And trust me, it looked a lot better with things in it (people that saw it before we moved commented that it looked like it had been staged).

The one thing I'm not worried about, however, is the home's security. Although we have secure exterior doors, I'm a little worried someone could just break it down and destroy the house. To feel a little we put a security system in, and with the help of the home security installation FAQ I was able to set everything up with no problems. We also have the realtor checking on it every few days, just to make sure no pipes burst or anything like that (the one thing a home security system cannot help with). So, at least while I am in Seattle I'm not worried about the home getting broken into.

So, as far as building wealth, creating wealth, and retiring early goes, we are at a bit of a standstill right now, as is most of the country. But don't lose hope, don't get out of the stock market, and start looking for deals. If you have cash, now is the time to buy in.