DITCH your FAX MACHINE!

These things were long-ago obsolete!

NOTE:  This is an older posting from 2009 - more than a decade ago.   I ditched my fax machine and went to a virtual fax service called MAXEMAIL for several years.  But eventually, I found I was no longer sending and receiving faxes anymore - the USPTO went to online submissions, and my clients all went with e-mail attachments.  Only the medical industry (and it is an industry) still is stuck in the fax era today.  And we wonder why health care costs so much!  Nevertheless, it is interesting how once in a while, I see someone with a "fax number" on their business card, or a company asking me to fax something to them - even still!

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In this era or Internet communications, the fax machine seems almost like a quaint anachronism. In the next 5 to 10 years, you will see the fax machine go the way of the floppy disc, the LP album, and the 8-track tape (UPDATE: And the flip-phone, the CD, the DVD, the iPod, and just about any piece of tech these days more than 18 months old...)

However, in the meantime, there may be occasions where you may need to send or receive a fax, particularly if you run a business. Some people still refuse to go online, and others, out of habit, prefer to send faxes, as opposed to attaching a .pdf file to an e-mail.

For some folks, the inexpensive "all in one" printer serves as a useful fax machine. These printers, typically made by Hewlett-Packard, combine an inkjet printer, scanner, and fax interface. They can be used to scan in documents (which can then be stored as jpeg or pdf files). They can also be used as primitive photocopiers, printers, and also as a fax machine.

However, while such devices may be useful for the occasional fax or copy, they are horribly expensive as printers, due to the high cost of the printer cartridges and the low quantity produced by each cartridge. As a result, each page printed can cost 25 to 50 cents or more. This may sound fairly inexpensive at first, until you come back into your office and find a 30-page "junk" fax in your machine from some helpful fellow selling fax cartridges.

I kid you not in this last regard. When I had my Office in Alexandria, a local fellow decided to SPAM FAX all of Northern Virginia with his 20-page price list for fax paper and tonor. I guess his strategy was to run everyone's machine out of paper and then sell them more. Such faxes are illegal, and the remedy authorized by Congress allows individual victims to sue the perpetrators for up to $250 to $500 per fax. I sued this fellow and won $1000 (after the third fax. I warned him twice, and he told me to fuck off both times).

Of course, that didn't put an end to junk faxes - they just moved overseas. So I continued to get faxes from unknown numbers advertising "$100 DISNEY CRUISES!" or "LOW COST HEALTH INSURANCE!". As set forth in my "SCAMS" article, anything that is sent in such a manner is not a good deal, and often an outright fraud.

Now of course, today, the volume of junk faxes has died way down, as the fax machine has lurched toward the junkyard. Junk e-mails are cheaper and easier to send. Actually, they cost nothing to send and can be sent to millions of addresses in a nanosecond. A junk fax, on the other hand, requires the cost of a phone call and can take minutes to transmit. So the "junk fax" business is nearly dead at this point.

Even without the problem of junk faxes, however, the fax machine has other difficulties. These devices require that they be connected to your phone line. Some of the more advanced units will monitor the line when your answering machine picks up and if an incoming fax is detected, pick up and accept the fax. However, this may mean you have to give out your main number as your fax number, resulting an a lot of ear-splitting calls from fax machines, when you pick up the phone.

Adding a second phone line for faxes is very expensive, and can cost $18 to $50 a month in added fees to your phone bill. Since few people actually use faxes anymore, why bother?

But since the fax is not totally dead yet, many small businesses are stuck between a rock and a hard place. They cannot get rid of their fax line, as they still get occasional orders and documents from it. On the other hand, they are paying $50 a month for the fax line and maintaining an aging machine that sits idle most of the time. How can this cost be reduced or eliminated?

The Virtual Fax is the answer for more and more people. The idea behind the virtual fax is simple: You pay the virtual fax company a fee, and in return, they assign you a fax number. when faxes are send to this fax number, they are converted to .pdf files and e-mailed to your e-mail address. You can save the pdf files on your hard drive for later use. For things like sketches and drawings, this works out well, as I can often take these faxes and incorporate them right into a Patent Application, for example.

In this manner, you can receive faxes from anywhere you receive an e-mail. I have received and read faxes on my laptop at the airport. It works well. To send a fax, it is a little more complicated. You can either create a WORD document or a PDF file and then upload these through their website. You then select a recipient, either by entering their fax number, or selecting their name from your address book. Then you hit "send" and it goes. You can also add a cover page and cover page text from the website.

When virtual faxing started out, there were a number of players in the field, and some of them were not very nice to their customers. One of the most aggressively marketed was efax. And as I noted on my SCAMS page, anything that is aggressively marketed is usually a bad deal, and it was in this case.

I was all set to sign up for efax when I decided to type in "efax sucks" in my GOOGLE search box. I'm glad I didn't sign up. For what efax wanted a month, other services charged per year. Moreover, efax charged pretty onerous fees for sending and receiving faxes. They also reserved the right to charge unspecified extra fees if I had "excessive" faxes, but failed to state what this limit was, in terms of pages or number of faxes. Worst of all,they used a negative option signup, which made it hard to quit the service, and a number of complaints on the various sites related to credit card charges made long after people said "I quit".

At the time, too, efax was using a proprietary format for the faxes, so when you got a fax, you had to use their viewer to view it. This meant that it was hard to import faxes into other programs, such as adobe. My understanding is that they have switched away from that model, due to customer demand. But even then, their pricing is onerous:

"eFax Plus costs only $16.95 (USD) per month, with a one-time $10.00 (USD) fee to activate your number. You get 130 pages of incoming faxes free each month. Outgoing faxes cost $0.10 (USD) a page to numbers in the U.S. Incoming faxes cost $0.15 (USD) a page."

$16.95 per month? What's the savings in that?

After searching around, I found a better service, maxemail (http://www.maxemail.com/). They charge $14.95 a year (as opposed to $16.95 per month) and charge minor fees for sending faxes as well. Maxemail is about 1/13th as much as efax!

I have had the maxemail service for 5 years now, and it has worked out well. I sold my fax machine at a garage sale, and got rid of a phone line ($50 a month) and the need to buy all that fax paper and toner (which I sold on eBay).

Of course, as time progresses, my need for maxemail will decline. I have one client who refuses to use the Internet, and prefers to send everything by fax. He's 78 years old. When he dies, probably my need for maxemail will die with him. But, as a stop-gap solution to keep a "legacy application" going, maxemail works out well. I have a dedicated fax line for only $14.95 a year.

Sometimes a company delivers its promises on a product or service, and when that happens, all too often, we take it for granted. I am very happy with maxemail because they simply did what they said they would - delivered a product as specified. Kudos to them.

Note that there are other virtual fax sites out there and I am told that some are even cheaper than maxemail. Since I am happy with my service and the cost is reasonable, I do not plan to switch. But if you are in the market, you might consider shopping such a service around. There is no reason to be overcharged for virtual fax service!

Isn't it interesting that two competing companies can coexist, where one charges over THIRTEEN times for the same service as the other? It just goes to show you, you can save a BUNDLE if you are willing to shop around!

Grocery Shopping at Wal-Mart

 Should you shop at Wal-Mart?  Why Not?

During the recent financial downturn, many folks are looking to save money on purchases. For many, cutting monthly expenses, such as food bills, is a first place to start. Some are discovering that discount stores, such as Wal-Mart, can really provide significant savings in their monthly expenses. Others view Wal-Mart and other discount stores as either low-class or as unfair to workers or to competing businesses.

Taking EMOTION out of the equation, let's examine Wal-Mart shopping from a financial viewpoint and see if it really is a good deal.


1. I'm too good for Wal-Mart

One friend of mine refuses to shop there, even though he is on a strict budget and really needs to save money. His reason is purely emotional. To him, only "poor people" shop at Wal-Mart, and he doesn't want to be stigmatized as "poor". His preconceived notion is that there are no good products to be had there, other than off-brands of foods, food past its "sell-by" date, and dented cans of generic soup. Pride goeth before the fall.

The reality is, in many areas, the best produce and products can often be found at Wal-Mart supercenters. In New York State, we have a chain called Wegmans.  If you are lucky to be near a Wegmans, you understand what I am talking about. They have a great selection of food and the prices are, well, somewhat reasonable compared to the boutique stores such as Whole Foods (whole paycheck), Harris Teeter, and the like. But prices at even Wegmans can be fairly high compared to other chains, such as Publix, Safeway, IGA, and the like.

In rural Georgia, Wal-Mart is often the best bet for produce and baked goods. Why is this? Well in produce, volume is key. If you don't sell a lot of produce, it is hard to keep it fresh and to keep prices reasonable. If you have to throw out half your stock every day, prices are going to be high. On the other hand, if you have a large volume of customers, it is not hard to keep fresh produce or freshly made bread in stock. Our local Wal-Mart supercenter in Brunswick Georgia has the best selection of produce and the freshest produce of any of the markets around - even the "high end" stores like Harris Teeter. And ironically, it is one of the best places to get fresh-baked specialty breads. Who knew?

And selection of other foods is often surprising. The expectation from food snobs would be that all they would carry is bags of potatoes and chicken feet, or frozen entrees. The reality is, while they do sell a lot of prepared foods, many "gourmet" items are now found on the shelves at Wal-Mart, mostly because these items have entered the mainstream.

So the myth that Wal-Mart has crappy food aimed only at trailer trash is just that - a myth. Refusing to shop at Wal-Mart because "I'm too good for that" is purely an emotional argument, and an idiotic one at that.


2. They Treat the Workers Poorly at Wal-Mart

This is also an emotional argument, although on the surface, it may appear to be factual. Some folks view their responsibilities as shoppers as a political statement in addition to a financial transaction. As I have noted before in my blog, using non-business criteria to make business decisions is often fraught with peril. And often, the motivations to make such decisions based on non-transactional criteria are driven by special interest groups who are using you (See, "They're BAITING you!" and "Organizations") to promote their own agenda.

For example, during this recent downturn, the hoary old arguments about "buy American!" are being raised yet again, with some very unsmart people promoting the idea that we should (if we are true PATRIOTS) buy only "American" made products, particularly cars. The problem with this argument is twofold. First, these orchestrated "buy American!" programs are very obviously run by the United Auto Workers union, and thus, by participating, you are basically promoting their political agenda using your own personal finances. Second, if the cars made by American automakers (and UAW labor) were so great (as they claim) then why don't they sell more of them? Falling into someones political game means only that you end up squandering your own money advancing someone elses cause. And given the horrible depreciation and quality of American cars, you will spend quite a lot of your own money helping the UAW. If this is worthwhile to you, go for it.

Similarly, it should come as no surprise that Wal-Mart is engaged in a long-running battle with unions, and thus, the stories about workers being mistreated and abused are bandied about. Wal-Mart is the largest employer in the United States (perhaps the world) and a chance to organize the place would be a unionist's dream. Refusing to shop at Wal-Mart because of someones union agenda seems like an odd thing to do.

And are the worker's really being "abused?" The common complaint from the Unions is that someone working at Wal-Mart "can't support a family of four" on their income. For some reason, we are to be lead to believe that all jobs in the world should pay sufficiently to allow someone to get married, have children and be the single breadwinner for the family. The idea that some folks might want to work part-time to make some extra cash, or that young people (without children or even housing expenses) need that kind of income to survive.

While it is true that no one at Wal-Mart is being overpaid, neither are they being overworked. A friend of mine went to work there and quit after a day. He quit, not because he was overworked, but because the work was too boring and silly. He reported that the amount of goofing off and standing around, other than for the checkout clerks, was astounding. And from my experiences in the store, I can report this is true. Does it really take five clerks to re-stock one shopping cart of misplaced items? (with one clerk saying "I'm not re-stocking that, it ain't my department!"). If Wal-Mart does unionize, it probably won't change much other than the wages.

The truth of the matter is that the bag-boy at the "gourmet" store probably makes about the same as the greeter at Wal-Mart - about minimum wage. There are a few union grocery stores out there (Safeway, for example) where workers are paid a little more. But for the most part, no one gets rich, or even supports "a family of four" working as a checkout person in a grocery store. And the reasons for this are very simple: It takes little or no skill to work in a grocery store as a clerk. Most folks learn on the job. You don't need to go to college. As a result, the wages are correspondingly low.

If you believe that unskilled labor should be paid as much as skilled labor, perhaps boycotting Wal-Mart might have some effect. But as we shall see, you will end up paying almost twice as much for your groceries as a result. On the other hand, if you believe that people should have an incentive to get an education (better pay and better jobs) maybe it doesn't bother you as much that crappy jobs have crappy pay.


3. Wal-Mart Drives the Competition Out of Business

This argument has a kernel of truth to it. A friend of mine ran a small chain of grocery stores in Indiana. He was pretty successful and plowed all his money back into his business. Then Wal-Mart came to town. In retrospect, he says he should have cut back and closed down or sold out right away. As it unfolded, he ended up selling off one store (which later closed) and closed down his whole chain over time. He lost a significant amount of money.

It is true that Wal-Mart is aggressive in pricing and strategy, and the chain was founded on this principle. They carefully research their markets, they get the best prices they can for items, using their size as leverage, and they carefully study their competition to see how they can snag more business from them. Using computers and technology, they try to provide the products their customers want at prices lower than the competition. And it is a formula that works.

To a capitalist, this is how the system is supposed to work. The competitor who provides the best service at the lowest prices "wins" in the marketplace - and should be rewarded with winning. To others, this seems "unfair" as the small competitor cannot compete with the bulk pricing discounts that Wal-Mart can obtain.

However, smaller chains and stores still continue to flourish across the country. Why is this? Successful competitors survive by not trying to compete. If you want to go head to head with Wal-Mart in the general grocery business, you'll probably get creamed. But if you are running a specialty shop that sells things Wal-Mart doesn't (and can't afford to carry) chances are, you'll do well.

For example, a friend of mine ran a stereo store. Back in the day, every town had a stereo store (or two or three) where you went to buy "HiFi" equipment. But the design and manufacture of such equipment changed over the years. Solid state components (i.e., receiver-on-a-chip) and CD sound meant that once "high end" audio was within the reach of everyone. Moreover, since such equipment could be mass-produced very cheaply and was pretty generic, there was no longer any need to go to the "stereo store" and spend thousands of dollars on audio equipment. Big box stores such as Best Buy and Circuit City could offer such products for a fraction of the cost. Wal-Mart could offer them for even less (Goodbye, Circuit City!).

My friend quickly realized that "low end" audio was not going to be profitable for him, as he could not afford to buy in the bulk quantities that the "big box" stores did. However, the demand for ultimate high-end home theater and audio systems, as well as custom installation services and acoustical space tuning, were something that Wal-Mart could not, and could never provide. Moreover, the mark-up on such products meant that he could make a good living selling them in an area where a lot of well-paid Engineers lived.

Niche markets still exist, and entrepreneurs can still exploit them. But arguing that the little guy can't compete with the bulk seller is "unfair" strikes me as a loser's argument. And the solution so such "unfairness" - propping up small sellers by inflating prices, is not workable.

Japan tried such a technique for decades. If you wanted to buy a television in Japan, you went to the neighborhood television shop. He ordered the television from a local distributor, who in turn ordered it from a regional distributor, who in turn ordered it from a national distributor, who in turn ordered it from the factory. The idea was to provide "full employment" by creating make-work jobs. Japan's "elevator ladies" were a prime example of this. They would ride the elevators in hotels and press the buttons for you. No real work was done, but someone was kept off the unemployment line.

To some, this form of quasi-socialism is a good thing. And that's a fine political and emotional argument, but not a very sound financial one. If you are concerned about your own finances, you have to seek out the best deals at the best possible prices.


4. Are There Any Real Savings at Wal- Mart?

Yes, surprisingly, there are. If the savings were mere pennies or nickels, it probably would not make much of a difference. But in the six months we've tried Wal-Mart, our grocery bill has been cut nearly in HALF.

The secret to shopping at Wal-Mart, of course, is to carefully look at prices, particularly prices per pound (or other unit of measure) before buying. Sometimes you have to look closely, and sometimes this means experimenting with off-brands (house brands, Sams club, etc.). In most cases, we've found that the house or discount brands are as good as, if not better, than the "Brand name" product. In only a few instances, have we been burned.

For example, Triscuit crackers are over $3 a box at most stores. The basic cracker is hard to find, as new flavored versions (and triangular ones) populate the shelves. Wal-Mart brand "double cross" crackers are $1.50 for the same size and weight box. Not only are they half the price of the brand name, they have much less SALT than the Triscuit brand, and thus in my opinion, are superior. They taste more like the Triscuits of 1970 than the gussied-up "flavored" brands of today.

It helps to keep in your head the prices of items when shopping, so you can spot a good deal and understand whether it is a good deal or not. Like any good merchant, Wal-Mart often puts out "impulse buy" items, usually in the center of the aisles, to temp you to buy something that "seems like a good deal". However, in many instances, the heavily promoted items are not as good a deal as you'd think. And since it is something you didn't plan on buying anyway, definitely not a bargain. See my article "SHOP 'till you DROP!"

It is distressing, but not unexpected, to see many of the poor people shopping in Wal-Mart stocking up on prepared foods (By poor people, I mean folks paying with food stamps). Frozen entrees and the like are never a "bargain" in terms of cost per serving. Many "convenience" foods can cost 2-5 times as much as the basic foodstuff.

For example, sharp New York State cheese in a brick may run $4 a pound. Pre-sliced or shredded, it runs $8 a pound. Want "organic" pre-sliced? A staggering $18 a pound (at Wegmans). Checking the cost per pound can save you from costly mistakes. A few moments with a cheese grater or knife can save you hundreds of dollars a year.

One of the funniest items I saw sold at Wal-Mart was buttered potatoes. For nearly $4, a package of about eight small red potatoes was packaged with a dollop of butter, in the refrigerated section. The scheme was that the user was supposed to microwave this package, and then have a ready-to-eat meal of buttered potatoes. Of course, for $4, you can buy an entire sack of potatoes (one of the cheapest foodstuffs there is) and a pound of butter as well - enough to feed a family of four for a week, instead of one person for one meal.

But many folks fill their carts with frozen entrees (such folks are called "Eskimos" in grocery parlance), soda pop, potato chips, cookies, candy, and other junk food. Not only is this food very costly, it is also horribly bad for your health. You don't have to eat organic or "free range" or vegan to be healthier, you only need to eat real food, not prepared garbage.

Of course, Wal-Mart sells other things as well. Again, some can be bargains, and others not so much. Buying "stuff" and "shopping" is a sure way to waste money at Wal-Mart. And you should carefully investigate the quality of items before purchasing. I recently bought a roll of Wal-Mart duct tape, and kick myself for not getting the brand name. The store brand was thin and poorly made and did not serve my needs.

However, other things, such as Mercruiser brand oils, are offered for prices about 1/4 of the boating specialty stores. Basic consumer-grade electronics can be had for far less than specialty stores or even competing "big box" stores. Where else can you buy a laptop for $500? And not a "stripped" one, either.

Note that recently, Wal-Mart appears to be changing its strategy from "always the low price, always" with the smiley face, to a more TARGET type star logo, with the phrase "Live Better". Perhaps with unionization on the horizon, Wal-Mart is trying to reposition itself as less the "low price king" than the "better living" chain. As a result, low-end poorly made products seem to be disappearing from the shelves. Badly made junk from China is no bargain, no matter how low the price is.

The Nightly NOOZE

 The nightly news is entertainment, not information.  Don't confuse the two!

Ten years after the Columbine massacre, the television news reports to us that, well, everything they've reported to us over the last ten years about that "story" was, um, wrong.   The story about two Goth teens in the "Trench-coat Mafia" who were bullied by "jocks" and out to get "Christians" was, well, wrong.   No such "Trench-coat Mafia" existed at the time, the two kids were not members of it, they were not "Goth" freaks, they were not bullied, and they did not single out any specific person or group.  Rather, they were just two mentally ill people with guns.  Not a very exciting story is it? Just tragic.

Yet most of us believe the other story - the made-up one, as it has a lot of "hooks" in it.  It was sold to us by the media, and we bought it.  Why is this?

As I noted in my other articles, "Kill Your Television", "They're BAITING you!" and "Emotional Vampires", the television is the largest source of time-wasting and squandering of emotional energy in most people's lives.  And it was designed this way.  Turning it OFF is the best way you can improve your life and finances.   Energy, both physical and emotional, drained away from you by up-to-the-minute news watching represents a real financial drain on your life as well.   The energy you squander watching the "news" can be better spent improving your life.

When I told my neighbors and friends I gave up watching television, many of them were aghast. "How will you keep up with the NEWS?" they asked. To them, watching the "nightly news" was the most important part of their day, as they needed to "stay informed" as to "what was going on".

But as the Columbine example illustrates, the late-breaking news stories are often the least accurate and thus a highly suspect source of information.   Moreover, knowing what is going on at this very minute is often not useful information.  If you are a sailor on a tanker in the Gulf, knowing about a pirate incident is probably useful information.  But if you are a housewife in Idaho, the odds of a pirate attack for you are slim.  So why do we want to know what is going on "right now"?

To some extent, this was not always the case. Before the "News" there was something called JOURNALISM.  As its name implies, Journalism was more of a sedate profession, where one could write long and reflective articles on a subject.  Many great authors started out as Journalists, and in fact, back then, most Journalists were not professionals at their trade. The idea of studying Journalism or going to school for it were fairly alien.  Journalists were people who had experiences in life and wrote about them.

Back in the day, most "Newspapers" devoted only a small portion of the paper to "News".  Since constant communication was not the norm, or even physically possible, getting "up to the minute news" was hardly practical or even in demand.  If you read some of the old newspapers from the turn of the Century (the last one, not this one) it will astound you as to how long the articles are, and how complex the vocabulary is.

But television changed all that. And the change occurred, I believe, around 1965. Vietnam was the first "televised war" and every evening, I recall the "body counts" reported, much in the same way we report the Dow Jones Industrial Average.   In financial matters and in wars, the day-to-day fluctuations of the market or battles is not really the indicia of victory or defeat.  As financial advisers keep telling us, you can't time the market, and monitoring the market on a daily basis is of little use to the long-term investor.

Yet with Vietnam we lapped up these nightly stories, which, being only a few minutes in length, often did not give us any real insight as to what was going on. The Tet offensive was a defeat for the North Vietnamese, tactically.  But as reported on the nightly news, it was a victory for them. The compelling images made it out to be more than it was.   Similarly, if you went by the nightly body counts, there was no reason we should have been losing that war.  Every night, it seemed, the stacks of dead VC were piling up - they would HAVE to give up soon, right?  But it didn't work out that way.

Financial news reporting fell into a similar trap. We now monitor the market on a day-to-day basis, often hour-to-hour, or minute-to-minute, and the shouting man screams at you which stocks to buy.   Long term trends, which are far more important and revealing, are often forgotten or played down.  How the Dow did last week is more important.  Such "information" is of little use to the investor, and in fact, gives all the wrong signals to the investor.  As a long-term player (which we all should be) the overall trends are more important.  As a result, we have become a nation of short-term investors and day-traders. How a company does in one quarter is more important than its long-term prospects.  Our economy, fueled by this demand for short term gain, tanked as a result.

In short, there is nothing in the "News" that you need. My neighbor's horror that I would somehow be "uninformed" was unfounded.   In fact. my neighbor is the one who is more likely to be poorly informed by her nightly 22-minute "newscasts" which are full of misinformation, rumor, and "facts" that turn out later to be wrong.  And the stress levels caused by television watching, particularly the "news" can be rather high.  The heart rate increases, but no exercise is done. It is a recipe for a heart attack.

A week after any event, reading about it is often more informative and in-depth. Most of the initial speculation, rumors, and outright lies, have been stripped away and you can find out all you need to know. A month later, you learn even more.   And, as in the case of Columbine, a decade later, we learn the whole story.  When you step back, you learn more - you learn the big picture - and more comes into focus.

The mainstream media isn't going to change its stripes.  The advent of the 24-hour news channel promised an era of more in-depth reporting -taking the 22-minute format of the Nightly News and expanding it to include more in-depth reporting.  The reality is, the 24-hour news channels have ended up just repeating the same 22-minute format over and over again, spicing things up with more short-attention-span theater, such as car chases and plane crashes. We are poorly informed, but "up to the minute" on "what's happening".

Many folks watch this stuff for hours at a time.  And of course, nearly every airport, bar, and lounge plays these 24-hour news channels continuously (often with the sound off). The "news" is not only available to us, it is inflicted on us.   And you can't ignore it.  A television playing in a restaurant is like a small child with a trumpet saying "hey, look at me!  watch me! look here!"  And the reporting is all done at the equivalent of a sixth grade level - dumbed down and stripped of real facts and details.

Since the news channels are not about to change, the only thing you can do is just walk away from it. The latest hostage drama will be resolved without your intervention.   The latest "controversy" will evaporate in a day or two and no one will remember it, anyway.  And you will have all that ENERGY you wasted on "keeping up to the minute" on things that really don't directly affect your life on a day-to-day basis.

READING about events, later on, however, will provide you with real insight into what is going on, and make you a better informed citizen and voter.   It will also provide you with useful information to be a better consumer and to manage your finances better.   Moreover, it will take far less time and cause a lot less stress.

Who knows?  Maybe if enough people do this, the media will see ratings drop and they will change their tune.  I doubt it, though.

* * * 

UPDATE:  January, 2010

In case you don't believe me, even the news organizations consider their shows to be nothing more than "entertainment" that is not to be taken seriously.  Take this Federal Trademark Registration for Fox News, for example:

Word Mark	FAIR & BALANCED
Goods and Services	IC 041. US 100 101 107. G & S: entertainment services in the nature of production and distribution of television news programs. FIRST USE: 19961007. FIRST USE IN COMMERCE: 19961007
Mark Drawing Code	(1) TYPED DRAWING
Serial Number	75280027
Filing Date	April 23, 1997
Current Filing Basis	1A
Original Filing Basis	1B
Published for Opposition	March 3, 1998
Registration Number	2213427
Registration Date	December 22, 1998
Owner	(REGISTRANT) Fox News Network, LLC CORPORATION DELAWARE 1211 Avenue of the Americas New York NEW YORK 10036
Type of Mark	SERVICE MARK
Register	PRINCIPAL
Affidavit Text	SECT 15. SECT 8 (6-YR). SECTION 8(10-YR) 20080823.
Renewal	1ST RENEWAL 20080823
Live/Dead Indicator	LIVE

The PET Trap

I love my greyhound, who is a wonderful, loving pet.  But realize that even a small dog or cat will cost hundreds of dollars a year in vet bills, pet food, and pet medications.  If you are on a strict budget, think hard before getting a pet.  And watch out for pet hoarding - if you have four, five, or six pets, perhaps you need to step back a bit and think about where this is going - and whether you have a mental health problem.

I love pets, don't get me wrong. So in a way, I hate to write this next post. However, many folks fall into the Pet Trap, and it can be an expensive trap at that. Think carefully before you start acquiring pets. As in my "Hobbies Run Amok!" article, pets can go from being an inexpensive hobby to a financial nightmare in a hurry.

Logically, one does not "need" a pet, of course. Pets don't provide food, clothing, or shelter. For many of us, pets fill in an emotional need that is as real as our physical needs. However, for some, pets become an obsession that takes over their lives.

Before taking on a pet, assess the real costs involved, both in terms of immediate and long-term cost, as well as the opportunity cost. Purchasing a pet is often an inexpensive transaction. Since so many are discarded (usually because their owners cannot afford them - a lesson right there) you can inexpensively acquire a dog or cat at your local shelter. Paying large sums of money for a "designer" breed is, to me, a horrible waste of money, when in many shelters, these breeds are available for free.

In addition, by purchasing a pet from a store or breeder, you are adding to the animal population problem - by encouraging people to breed pets for sale. Many breeding operations are little more than "puppy mills" where dogs or cats are cranked out to satisfy the current whims for accessory animals (when fashions change, these animals end up at the shelter). As a result, many of the "popular" breeds are inbred and prone to expensive and heartbreaking genetic disorders, which can add significantly to the cost of owning a pet.

But the question of designer animals brings up another point: What is your real reason for adopting the animal in the first place? If the color, size, and type of the animal is more important than its character and nature, then are you buying a pet as an expensive show-off accessory, or because you want a companion? It is an ugly question, but in most instances, the answers are equally as ugly.

The sad fact remains that many folks obtain pets for reasons other than the desire to have a pet. They want a show-off dog to impress other people with, or to impress people at the local kennel club. The idea that living beings can be a hobby is, to some folks, somewhat perverse.

The same is true of the rural Bubba (on urban dweller) who buys a large, aggressive dog and chains him to a tree in the front yard. He wants a dog that will "impress" others with its ferocity - in an attempt to bolster his own status and perhaps cover up some personal insecurities. If you are buying a dog to impress people with its breeding, you are no better than the person who buys a pit bull to frighten people.

There are some folks who buy aggressive dogs as a form of security - to protect their family. And believe it or not, there is an industry of folks who breed and train security dogs and then sell them for very high prices. These dogs are trained to be kind to children, but also to rip the throat out of anyone coming over the fence. I guess for some folks, such security measures might be necessary. But for the bulk of us, who struggle to pay the monthly bills, the prospect of a home invasion is pretty dim (and the pickings for a home invader pretty slim!).

Regardless of whether you pay $5000 for a show puppy or the $250 adoption fee at the shelter, the initial buy-in is only part of the overall cost. Veterinarian bills will run about $200 to $500 a year for a dog or cat, for basic shots, flea prevention, heart worm prevention, and the occasional illness or injury. Vet bills can skyrocket, as we shall see below.

Dogs and cats can go through a surprising amount of food, and animal food is not cheap. Our greyhound probably eats up $50 to $100 of kibble, canned food, and treats a month. Over the 10-15 year lifespan of a dog, this can amount to thousands of dollars. For cats, add in the cost of litter on the other end of the transaction as well.

Accessories, such as collars, food bowls, litter boxes, leashes, blankets, beds, clothing, and toys can also run into the hundreds if not thousands of dollars over the lifetime of the animal. And these things are not cheap, either. People will spend surprisingly large amounts of money on pets and the pet industry knows this.

If you ever have to leave home, boarding your pets can be as expensive as staying in a cheap motel. Most veterinarians charge $50 to $100 a day or more. Most boarding places charge at least $15 to $50 a day. If you want to take a two-week vacation to Mexico, the cost of boarding your pets may exceed the airfare.

Thus, for a typical medium-sized dog, which may live to be 10-14 years, you could easily spend $10,000 or more in initial purchase price, veterinarian bills, food, accessories, boarding and the like. Considering that a typical automobile should last the same amount of time, buying even one dog is about the same cost as having a second car. If you can't afford a second car, think long and hard before getting a dog or cat.

A special note on horses: A lot of folks obtain horses as pets. These are hugely expensive compared to cats or dogs. Buying a horse often costs as much as a car, and the upkeep can easily exceed that of an automobile (this is one reason cars replaced horses as a means of transportation). And horses live a long time, too. I have a friend who bought a horse, and discovered he could not ride it, as it had a bad back. Because of that, he cannot sell the horse, as no one will buy it. His wife refuses to have the horse put down. He pays monthly boarding fees and annual vet fees and hopes the horse doesn't live too long. They haven't seen the horse in years. Explain to me what the point of that was, again? Poor fellow will have to work an additional 5-10 years to make up for the loss in his 401(k). Think long and hard before buying a horse. If you do not own the land on which to keep the horse, chances are, it will be a very, very expensive proposition.

Another special note on exotic animals: Some other folks like to obtain exotic animals (snakes, ferrets, rare birds, etc.) as pets. Usually this is to impress other people or for other, not so nice reasons (watching snakes eat mice or kittens, for example, I kid you not). In many cases, these animals end up at shelters once the novelty aspect has worn off.

Now of course, there are ways to minimize pet ownership costs, and I highly recommend them. Veterinarians are scandalous when it comes to billing. Most vets charge more per hour than most human doctors do, and that isn't right. It does pay to shop around for routine services such as vaccinations, flea and tick treatments, and the like.

Recently, while on a trip, I realized our dog's rabies vaccination had expired.   A current certificate was required to stay in a Florida park.   I used our GPS to find a local vet, and hit "call" which made the call through the bluetooth on my $100-a-year GoPhone (sometimes this technology shit actually works).   I found a local vet that would do the shot for $35 (for a three-year certificate - likely the last my dog will need).   The technician, not the vet, did the shot, and as a result, I avoided the $80 "office visit" fee they normally charge.   The same was recently true for a Bordetellla shot ($25) and a heartworm test ($20) - both performed by a low-cost animal hospital, by a technician, not a veternarian.

My old Vet would have charged $80 or more for an "office visit" for each shot - a scandalous amount of money to feel the dog's glands and to weigh her.

It is possible that we over-medicate our pets as well.  I had a cat live to 20 years old. I took him to the vet for his rabies shots and the like and the vet said "If I give your cat these shots, it will probably kill him". I asked about whether this would mean my cat would spread rabies or feline distemper or whatever. She just smiled and said, "This cat is so old and spends all its time indoors, what is it going to catch?" At that point, I started to wonder if the whole vet thing was a financial racket.

At least that vet was pretty honest about it. My previous vet ran a lucrative practice in a wealth suburb of Washington DC. He had several expensive cars - Mercedes, Porsche, BMW, etc. and each one had a license plate with his initials and a number on it (indicating how many cars he had). When I saw a Porsche with "XYZ 10" on it, I realized I was giving him (or the Porsche dealer) too much money. He charged $70 for each office visit, plus $100 for each shot (feline distemper, rabies, etc. etc. plus testing for "feline leukemia", heart worm, etc.). Three cats, you do the math.

Like anything else, pricing is all over the board, and there are considerable savings to be had.  The most expensive vets charge three to five times as much (if not more) than the least expensive.   And the level of care is about the same.

The reality is, the vet business is big business, and we treat our animals for more diseases that we treat ourselves. The rationale is very simple. As pet owners, we feel responsible for the care and health of our animals. When they become sick, it breaks our heart, and we feel helpless. We'd do ANYTHING to see fluffy purr again. And unscrupulous vets know this.

I've seen heartbroken old women spend thousands (if not tens of thousands) of dollars on chemotherapy for a 15-year-old cat. The cat dies anyway, of course. They only live to about 15-20 years, at best. But an unscrupulous vet will suggest to the owner that it is their duty to spend enormous amounts of money trying to heal a sick animal, when the best course of action is probably euthanasia.

Which brings us to the sticky part. Whenever you buy a pet, be it a kitten, dog, or goldfish, chances are, you will outlive the pet. Each pet comes with it, the unpleasant and heart-wrenching experience of having to have it 'put down' later on or to see it suffer. Animals age quickly, and in the time it takes to pay off a car loan, that young puppy has turned into a middle-aged and arthritic old dog. Making the decision when it is appropriate to put a dog or cat down is difficult. Again, as the steward of this life entrusted to your care, you want to see the animal live as long as possible. But often, animals reach an age where they can no longer function. In the wild, they would be killed by other animals or die of exposure or starvation. As pets, it is up to use to decide, and it is not a pleasant decision to make.

While I love my dog, living with a dog does limit your lifestyle choices. In the US, we are somewhat dog-phobic in public places, so often you have to leave your dog at home. In Europe, you can take your dog to a restaurant in many places. In America, only some outdoor restaurants allow pets, and even then, some patrons will complain if the pets are unruly. To some extent, this is a self-fulfilling prophesy. If your pet is with you constantly, chances are, it is well trained and obedient and calm. However, pets left at home alone for long periods of time tend to develop behavior problems and thus be inappropriate for public spaces.

When planning any activity, you have to plan for the pet. Will the pet stay home or come? If they come, then you need to take a car the pet can fit comfortably into. If you plan on going into places where pets are not allowed, you cannot leave the pet in the car, if it is a hot day. It does limit your freedom. If you are contemplating getting a pet, consider this aspect carefully. If you are used to picking up on a moment's notice and flying to Cancun, things will change once you have a pet.

Now some folks take the pet thing too far. Like hoarding disorder, pet ownership can become psychological problem in some cases.  Newspapers are full of stories about old ladies found with 50 cats in their home, many starved to death or dying, or some in the freezer (??) and the whole house filled with cat waste. Or they may have a similar number of dogs - or even horses. Most of these stories have unhappy endings. The animals have to be put down, and the crazy old lady has to go into a home. In some instances, they clear out all the animals, only to come back a year later and find the house filled yet again. It is very sad.

But for every crazy lady living in cat waste, there are probably five people who have large numbers of pets who are well fed and cared for. Every neighborhood has a "crazy cat lady" who has a dozen cats or more. A friend of mine fell into this mold. She had several cats, and once it became known she had cats, everyone in the community started dumping litters of unwanted kittens on her doorstep. She became the "crazy cat lady" not by choice, but by public acclaim. Finally, she had to put her foot down, as the cost was driving her to the poorhouse. She took the unwanted litters to the humane society, as much as it pained her, and also chased away "cat dumpers" from her property when she could.

Another friend has a collection of eight dogs and eighteen cats, along with other animals. What started out with one dog, quickly morphed into a major problem. How this happens is anyone's guess, but I suspect it is related to hoarding disorder - the desire to accumulate things, even if they have no intrinsic value or cost the hoarder money (my friend has a hoarding problem as well). While the animals are well cared for, the cost is rather staggering, even with all the money-saving tips they have tried. They found a local vet who gives them a bulk discount, and they administer a lot of their own immunizations and drugs themselves. However, having that many pets can be problematic.

As a greyhound owner, I get to meet other greyhound owners at various meets and events. Some folks have two, three or more dogs, which is quite a challenge. But others go even further. I met one lady, in her late 70's who had seven greyhounds! No matter how you slice it, that is a lot of dogs for an elderly person to take care of.

For example, if you lose your job (a distinct prospect in this day and age) how will you take care of your pets? Sadly, shelters are being flooded with animals from people who say they "cannot afford" their pets or who have been evicted from their homes and cannot find an apartment or home that accepts pets. For my friend with the 8 dogs and 18 cats, it has created a problem for them in that they cannot move anywhere. No landlord will accept that many animals, and most houses they have found to buy or rent are too close to busy highways and other dangers for the animals. Then animals live a long time, so suddenly they are stuck in a position of having to stay where they are, as the pets have basically locked them in.

Having a pet thus has an opportunity cost. If you get a new job in a new city, you have to find a new home, often renting, and this means you have to find a place that allows pets. If you are young, it pays to be mobile and have freedom of movement. And yet many young people chose to get large dogs, which limits their freedom of movement. Believe it or not, I've met young people who have turned down lucrative job offers, because they felt that could not move to a big city and find a place to accept their pet, and also be able to work long hours and leave the pet home alone.

And in that regard, owning a pet as a young person is particularly problematic. When I was in college, a friend of mine's cat had a litter of kittens. Typical of an irresponsible college student, he failed to get the pet spayed. So now he had a litter of "cute" kittens to get rid of. They thought it was "cool" to have a pregnant cat and watch the kittens be born, but once they arrived in the world, it became clear that the cute kittens would quickly become a nuisance - that is unless they wanted to have eight cats as pets.

Foolishly, I let them talk me into adopting one. Having a cat when you are in college is never a good idea. Trying to find an apartment that allows them is hard. Sneaking them into the dorm is difficult, too. Constantly moving is hard on the animal, who prefers to stay in one place. Not surprisingly, the cat ran away during a move, and was never seen again. I still have nightmares about that cat.

Multiply that experience by about a million, and you'll have an idea of what the pet population problem in the US is like. Visit your local animal shelter sometime and see how many animals are dumped there. Animals that were indifferently bred by folks who had no common sense or thought as to what would happen once the animals were born.

For that reason, if you decide to get a pet, have it neutered or spayed immediately. It is not "cool" to leave the animals intact and let them breed uncontrollably. And breed they will, as that is how nature works. I have some other friends who thought they should leave their dogs "intact" so "the dog could enjoy a sex life". The intentionally let the dog breed with another friend's dog (who was also not neutered, for the same stupid reason). The resulting litter of mutts was "cool" they thought, until it became time to find homes for them. As you might expect, they asked us to take on one of the puppies (no, thanks) and as you might expect, they ended up keeping more than one.

I was angry at them for bringing five more dogs into the world for the only purpose of briefly amusing themselves. While they are otherwise nice people, they are horribly irresponsible in many respect. Dogs live a good long time. Creating life so that your dog can get laid is, to me, pretty lame. Spay and neuter your pets, please. The world doesn't need another litter of mutts or kittens.

A final note on pets has to do with age. As I noted earlier, in most instances, you will easily outlive your pets. A cat may live to be 20, tops, and a dog maybe 15. So if you buy a pet, you will probably outlive it. However, for older folks, this may not be the case. If you are 60, 70, or even 80 years old, a pet may outlive you. Moreover, as your health and abilities decline with age, you may find caring for a pet beyond your capabilities.

I had a parent, over 80, once say that they were thinking of getting a puppy. This was the same parent who had our family cats put down once I left for college, as they were a "nuisance." A rambunctious puppy is hard to handle at age 30, much less at 80. Once the dog gets larger, if not trained, it could knock you down and break your hip. But worst of all, the dog will likely outlive its owner, which means arrangements must be made to care for the dog when the owner inevitably dies or has to go to assisted living (nursing homes generally do not allow pets).

Yet, oddly enough, the elderly are consistent pet owners. Small yappy dogs appear to be most popular with the over-60 set, as these dogs will lie in your lap for hours, sort of as an infant substitute. For seniors living on a fixed income (i.e., Social Security), the cost of a pet should be carefully taken into consideration.

Of course, it is perfectly understandable why seniors are pet owners - for the same reason we all get pets. A pet can be a companion and help stave off loneliness and provide emotional support. Daily walking of a dog can be the only exercise a senior gets. One suggestion I would have, if you are elderly and thinking of getting a pet, is to consider adopting a adult pet from the shelter. Such animals are generally already house trained (and trained in general) and thus will be less likely to pee on your rug or eat your couch. And also, since they may already be 5-10 years old, they may be less likely to outlive you. There are a large number of such pets readily available for adoption, simply because many elderly pet owners pass away and leave pets behind.

A word about Greyhounds: We adopted a retired racing greyhound, and I have to say they are great pets. They come to you as an adult, so you don't have to deal with the whole puppy and training thing. No chewed furniture, no messes on the rugs, and a dog that knows how to walk on a leash better than its owners know how to walk it. They also sleep all day long and thus are fairly low maintenance. However, they do want to be with you at all times, and they are very emotional animals. A Greyhound left alone for long periods of time can become psychotic. If you are not home for 10-12 hours a day, consider whether getting any pet at all makes any sense.

A word about "Puppies": Many folks want "puppies" and that is fine and all, but consider carefully before buying a puppy. Puppies are "cute" but they often turn into less-cute adult dogs. Children are attracted to puppies for all the wrong reasons. For example, one friend of mine had an 8-year-old son. They had a dog (a very nice dog at that) that was grown. Their neighbor adopted a golden retriever puppy, which needless to say was as cute as a button. My friend's 8-year-old said "Mom, can't WE get a puppy as well?" oblivious to the fact that his own dog was laying at his feet.

Now you may say the kid was a brat, and that may be true. But his direct emotional reactions (unfiltered) at least were honest. He was jealous that his friend has a "oh so cutesy-wootsy" puppy, while he was stuck with a smelly old dog. Of course, an 8-year-old can't reason as well as an adult (or can they?) and realize that puppy-hood lasts only a few months at best. Perhaps someday, they will genetically engineer a dog that remains a puppy for 15 years and then keels over dead. If they do, it will sell like hotcakes.

The sad fact is, even adults fall for the while "ooooh!, Puppies! Cuuuuute!" thing, and often will adopt (or worse yet, buy) a puppy, thinking in the back of their minds, that it will always remain small, soft, fluffy, and lovable. But a Labrador Retriever puppy quickly grows up into a large, wiry-furred, stinky and flatulent animal, which may not be as cuddly as a puppy. At that point, it ends up being ignored and neglected, which is sort of sad.

Again, don't get me wrong, pets are a fine thing. Just go into it with your eyes open. Make sure you have $10,000 to spend on a dog before you get one (because over a decade, that's what it will cost). Consider your own motives carefully, and make sure you will be happy with an adult dog before you impulsively buy a puppy. Look to your local shelter for an adult dog. Rescued adult dogs are often very grateful and graceful companions, and cost less to own.

And if you are living "from month to month" or living on Social Security, ask yourself if you can afford $50 to $100 a month in pet costs, before you acquire a pet.  You don't want to add to the shelter population of abandoned animals when you realize you cannot afford to care for the animal - or when it outlives you.

Good Luck!

UPDATE:  This posting on Reddit analyzes the cost of having a "bearded dragon" reptile as a pet.   The parents realized that over a decade, it could cost $10,000 or more, for an exotic pet that their child would likely lose interest in long before its lifespan was over.   That is perhaps another aspect of pets - be aware they may live a very, very long time, and when the kids lose interest in the puppy (when it grows up and isn't as cute) you still have to care for it.  

My parents had cats, and when I went away to college, my Dad secretly had them euthanized.  This was after two incidents when the cats "ran away" and then showed back up months later covered in dirt and burdocks.  I suspect my Dad put them in the car and drove them miles away and released them.   He's dead now.

What was interesting about the posting was the expected response - emotional thinkers shouting down his financial analysis and calling him a rotten parent for not getting a lizard for his kid - when the kid didn't even ask for it.   Others chastised him for "putting a price on pets!" but fail to realize that pets do indeed have a price, and if you can't afford a pet, why get one?

Sadly, the poor seem to accumulate pets they can ill-afford, which is another stupid poor-people trick.  They complain about being broke all the time, but did you see my new 'tat and lizard?

We loved our cats and our dogs.   We could afford them (sort of), but overall, we spend tends of thousands of dollars over their lifetimes on food, vet bills, boarding, and other expenses.   It is only late in life, now that we have no pets, did I realize how much we spent on pets!

Think carefully before getting a pet.  If more people did this, the shelters would be less full.

GREED and FEAR

Many stock market analysts often quote the old adage that what drives the market is GREED and FEAR. People buy into rising stocks because they are GREEDY and then sell them when they tank, based on the FEAR they will go lower. In this manner, many folks are tempted to BUY HIGH and SELL LOW, often defeating their own investment plans.


The concept of GREED and FEAR can be applied to other finanical transactions as well. As we shall see, FEAR and GREED cause many people to forego even the smallest risks (FEAR) in exchange for a false sense of security (GREED).


The basic premise is this: Most folks let EMOTIONS (GREED and FEAR) dictate their purchases, investments, and other financial matters and usually this results in disasterous consequences. Smart investors use logic, calculation, and cold hard facts to make decisions, and usually come out ahead. And some of this logic is understanding that others are making their decisions based on emotions. Breaking free of economic dependency starts when you take emotions out of your finanical equations.

1. Car Transactions: GREED and FEAR at its worst.

Buying a car brings out the worst aspects of FEAR and GREED in people. Buying a car is usually based on GREED, period. People think about how cool they will look driving their new wheels around. Oh sure, no one will admit to this, but everyone does it, and car salesmen pick up on it. Cars are sold on emotions, primarily, and if the salesman can appeal to your emotional GREED, they can sell you anything.


GREED also manifests itself in this idea that somehow you can get a super-bargain on a car. It seems everyone is convinced they got a "great deal" or can put one over on a car salesman. It rarely happens, if ever. But no one wants to admit they are a poor negotiator, or that the deck is not stacked in their favor. Getting out the "bargain" mindset is important if you want to strike a reasonable deal.

Car salesmen even try to use FEAR to consumate transactions. "You know, they didn't make many in this color, and another fellow was looking at it today," I've heard them say. The reality is, cars come off an assembly line every few minutes - there is little or nothing to fear about "the one that got away". Similarly pressure to "act now" to avoid losing a good deal, rebate, or special sale pricing is another FEAR tactic to force people to buy. There is no logical reason that a car price should increase substantially after some arbitrary cutoff date.


FEAR manifests itself in the form of reliance on extended warranties, buying from dealers, or buying new cars. For example, a friend of mine recently went to buy a car. As I always preach, I advised them to find a late model used car from an individual who babied it. They resisted this suggestion very forcefully. They argued that buying a car from a used car dealer was a "safer" transaction, as the car dealer would "stand behind the sale". Of course, the car was still under factory warranty, and the only "standing behind" the dealer would do is the same thing they would do for a similar (under warranty) car purchased from a 3rd party.


Extended warrantiees are another example of FEAR at work. Many folks are convinced (and salesmen are sure to play on this) that their car will suddenly and mysteriously require tens of thousands of dollars in repairs, bankrupting them. They will be forced, yes, forced, to spend $10,000 repairing their old clunker and end up in the poorhouse.


As I have noted before, once a car repair exceeds the value of the car, the car is junked. You cannot be "forced" to spend more than the car is worth, repairing it. Facotry warranties are very long now, and most items that will fail, fail under such warranties. Spending $2000 or more on the premise that you "might" have a repair for the next few years, is often a waste of money - particularly on a car worth less every year. You are better off putting that money in the bank and saving it for actual repairs than gambling with an extended warranty. And as I have noted before, many 3rd party extended warranties are basically worthless and the companies often go bankrupt.


FEAR also manifests itself in trade-ins. Suprisingly, many folks are convinced they will be "stuck" with a car they can never, ever sell, and thus will dump a perfectly good car in trade for a pittance. It takes only a few minutes to list a car on Craigslist, and it takes only common sense to consumate a transaction without difficulty. But many folks are convinced they will "never sell that old clunker" and as a result, dump it to the first person to call (usually a used car dealer) or trade it in at a fraction of its value (dealers often "inflate trades" to make customers feel better, but they tack on the cost of the inflated trade on the price of the car).




2. The Real Estate Meltdown: Classic GREED and FEAR at work.


Many folks are wondering "what happened" to the Real Estate market in the last decade. How did everyone get snookered in to paying too much for Real Estate and then losing it all when the market collapsed. Most folks want to blame someone else for the problem - the banks, the predatory lenders, the government, Wall Street, whoever. But no one wants to think that THEY might be part of the problem.


GREED caused people to "invest" in houses, thinking that the market would always go up and they would always make a lot of money. So people who never invested in Real Estate before (nd had no real experience) bought homes, convinced that they were going to make money because "everyone else is". The reality, of course is that proper Real Estate investing is a fairly cautious and calculated game, where the profits are often made in the margins, and close attention to detail is important. You cannot buy and flip and make money consistently, unless you pay close attention.


FEAR lead people to stay in the market or get into it because "If I don't buy NOW, I'll be priced out of the market forever!" The spector of being a perpetual renter and never, ever having the chance to own a home lead some folks to overpay. But the reality is, if it is cheaper to RENT than to OWN, then by all means, RENT. It is a sure sign the market is overpriced and that prices will soon come down.


FEAR also lead people to do stupid things like get into bidding wars with other buyers over houses, based on the FEAR that they would never be able to buy a home.


GREED made many more buy homes they could not afford, using dubious financial instruments to finance. They wanted granite countertops and two-story foyers, and to heck with what it costs down the road. The urge to show off trumped common sense.


FEAR is now rampant in the business and causing people to make more mistakes. There are very good bargains in the housing sector now, but folks are shying away out of FEAR. This is driving prices down further as a result. The calm, collected and analytical investors are snapping up the good deals. The emotional investors are cowering in the corner in the fetal position and hoping it all goes away soon.


FEAR is also causing some folks to "walk away" from homes where the value has dropped. Now, granted, for some folks who let emotions sucker them into buying overpriced homes on dodgy loans, walking away or a short sale IS the most rational thing they can do. But others who are perhaps only slightly "underwater" are panicking and dumping properties "before the prices go any lower".


As an exaple of this last phenomenon, I purchased a home at forecloser for $95,000 during the last meltdown. The owner owed $140,000 on the home and since prices had dropped to about $110,000 or so, he was convinced he was "upside down" on the loan and would never recover. But the loan money he took out he had used to add an addition to the property and remodel the kitchen. And the market would recover that value within a few years, if he sat tight. And recover it did, with the values reaching over $200,000 within a few years. He "walked away" from a sure deal because his short-term (6-12 month) outloook was bad. FEAR at work.


3. GREED and FEAR in the Stock Market

As noted above, the phrase "Greed and Fear" originated in the stock market. Many smaller investors get into a stock based on GREED - they see the stock going UP, UP, UP and want to "get in on a good deal". They hang on too long out of GREED - they want to make more and think the stock will keep going up. They refuse to sell because they FEAR missing out on huge profits. The stock then tanks, and out of FEAR they will lose it all, the sell for less than they bought. Many a portfolio has been reducted to tatters this way.

GREED and FEAR also act in the stock market to enable con games. Day traders buy seminar tapes out of GREED - they think they can make easy money on the computer a few hours a day. Most lose their shirts in this legalized form of gambling. Ponzi schemes such as the now-infamous Madoff scheme were based on GREED (a chance to make big money) and the FEAR they would be "left out" of the investment pool.

Both EMOTIONS blind people to the realities of the market. While big killings do occur, in most cases, the average investor is better off hoping for a resonable return on investment over time. The big swings in stock prices are hard to predict and for the amateur investor, nearly impossible.

It is the amateur investors that drive up stock prices beyond reasonable rates - and generate huge profits for other investors.

The best way to avoid this GREED and FEAR cycle with stocks is to buy good stocks with reasonable returns and hang onto them over time. Trying to make a killing in the short term means only that you will be killed. And for many older folks, stocks are probably a bad bet anyway - they would be better off getting into government bonds and money market accounts as retirement approaches. Sexy? No, of course not. But secure.


4. GREED and FEAR in everyday transactions

In everyday purchases, GREED and FEAR come into play as well. When in a store, it is temping to impulse purchase items you don't really need. Flashy items, attractively priced, play to our GREED for THINGS. Similarly, low sale prices or "Buy One, Get One Free (BOGO)" play upon both the GREED to get a good deal and the FEAR that one would "miss out" on a good deal if you don't buy now!

With regard to BOGO's, bear in mind that in most States, you are not required to buy both items to get the same price. If you buy one of the items, you get it at half price. So just because it says "Buy One, Get One Free" on boxes of cereal, it doesn't mean you HAVE to buy both boxes. It has been proven that in most cases, people up their consumption in response to increased purchases. One way to reduce consumption is to buy less.

While the "great BOGO deal" might not be there next week, trust me that some similar product will be offered at a discount when you return to the store. Note also that many stores resort to these eye-catching displays to boost sales and traffic. You are really making no bargain when you pay more for everthing else in your cart, and get only a few bargains in the BOGO bins. Our local Publix plays this game. The BOGOs are good deals, the rest of their prices and selection are dismal.

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These are just a few examples of where FEAR and GREED have caused people grief. There are many other areas in your life, I am sure, where you can find these two largely useless emotions ruining things. Taking emotions out of finanical equations is the key to making sound financial decisions. Remove GREED and FEAR from your decisions and you'll find it much easier to make financial progress.