OMG! Was George Bush Right?

Could this idiot have been right about the Middle East?  Scary thought!

About a decade ago, Saudi Arabian terrorists headquartered in Afghanistan flew airplanes into the Pentagon and the World Trade Center and tried to fly a fourth into the Capitol.  In response, we invaded..... Iraq.

At the time, George Bush and the neo-cons said that removing the dictator Saddam Hussein and installing a Democracy would cause the people of the Arab world to rise up and overthrow their dictatorial governments and a new era of Peace and Democracy would flourish in the Middle East.

Ten years later, and, well, across the Arab world, people are, well.... rising up and overthrowing their dictatorial governments...

Was George Bush right?  Scary thought, no?

Of course, it remains to be seen exactly what sorts of governments will emerge in Egypt, Libya, Syria, Yemen, or Bahrain - or whether the popular uprisings will succeed or be crushed.

And of course, when Bush was talking about people rising up against their governments, he was hoping it would be Iran, not the countries whose Dictators we had either cozied up to or had in fact, installed.

It must have been embarrassing to Hillary Clinton to see people she was just talking to the week before, being overthrown.

And that is the interesting thing.  We had at least made peace or some sort of arrangements with most of these governments, which put us in the awkward position of wanting to support the overthrow of a dictator - while at the same time, having awkwardly supported or at least maintained relations with, the same dictator.

Compounding this problem is that it is not very clear who will prevail in the aftermath of these revolutions.  If the Dictator prevails, and crushes the opposition, he will be none too pleased with our support of that opposition.   It will be Saddam Hussein all over again.

And who is the opposition - or more succinctly, if they prevail, who will take over?  The Military?  The Muslim Brotherhood?  A Democracy?  Probability dictates that the latter is highly unlikely, given the history of the Middle East and the inherent weakness in Democratic movements.

But I wonder if perhaps Bush was right.  The nascent Democracy emerging in Iraq - at such a great cost in terms of human lives and money - may be an example to others in the region.  Once they see, firsthand how Dictators can topple - and how the alternative may not be so bad - they are motivated to create change.

But then again, we're talking George Bush, here. 

Should You PATENT Your Invention?

You can get a Patent on anything, such as my famous BEERBRELLA Patent.  But whether or not this makes financial sense is another matter.

In this blog, I talk a lot about how people think emotionally and not logically.  And nowhere is this more true that with Inventions.

Everyone, it seems, at one time in their life, comes up with what they think is a "great invention" and then they fantasize about Patenting it and making a billion dollars from it.

And yes, I get a lot of phone calls from people wanting to know how to get a Patent.  And yes, there are con artists out there known as "invention brokers" who cater to people who have these ideas, and take them for $5,000 to $10,000 or more.  And usually people are too embarrassed to say anything when it all goes South, as they don't want to be perceived as foolish.

Should you get a Patent?  Probably not.  But if you are bound and determined to do so, nothing I can say will stop you - like people who say they want to lease a car.

Oftentimes, however, the urge to become the next Edison wears off, after a few days, weeks, or months.  Usually it quickly wears off when I tell a client that it may cost $5,000 to $10,000 to get a Patent.

I've tried to be "helpful" sometimes and offer to help an inventor get a Patent "on the cheap" - but again, altruism is always suspect - and problematic.  If I can't get the person a Patent - or a broad Patent, they end up getting upset - even if I charged them a pittance of my normal fees.

And I've tried to steer inventors away from the Invention Brokers - with near-comical results.  One fellow approached me after seeing a "20/20" expose on TeeVee about the invention brokers.  While he was on the phone, I searched his invention online and found three "dead on" references, which I sent to him, free of charge.  I gave him the usual warnings about invention brokers and told him to walk away from them.

P.T. Barnum had it right - the suckers never value that which they don't pay for.

Anyway, he calls me back a week later, telling me I am full of hot air and that the Invention Broker told him that his invention was a "sure thing" and he would make millions.  I told him to be careful and wished him luck.

Two years later, he calls back, whining about how the Invention Broker "ripped him off" and why didn't I warn him about the invention brokers?

So you see, you simply can't help people - most people.  Most people think emotionally, not logically, and are willing to believe in all sorts of ridiculous nonsense.  And chances are, you'll believe it, too.

Perhaps we all do.  But the secret to getting ahead in the world is to stop looking for easy answers and something-for-nothing solutions - to stop scapegoating and externalizing our own problems and obsessing about politics.  If you can do that, chances are you will do well.

50-Something Growing Pains

When you are in your 40's and 50's, you may experience some interesting health issues, such as neck and back problems.  It is all a part of growing up and growing old.

Welcome to the second half of your life.  Actually, the last third, if the actuarial tables are any good.  And when you are in your late 40's and early 50's, you may discover that your body has decided to defect from the cause.

What the heck is going on here?  For the most part, it is called getting old, and many people freak out when it happens.  And in many cases, you can throw thousands of dollars of medical treatments at it, and not much changes.  And living here on Old People Island, you get an interesting perspective on it.  You tell some oldster about your ailment and they say, "Yea, I had that when I was your age."

So you ask them what happened.

"I grew out of it," they reply.

Grow out of it?  Yea, a lot of what you may think are medical problems end up being transitory things that either your body adjusts to, or you accommodate over time.  You get used to it, I guess.

You have reached the peak of the roller-coaster and now can go "whee!" all the way down.  Because your life is running out and your body is running down.  And no, "this doesn't go on forever" - but that's OK.  Life is still a good deal - and the finite aspect of it makes you appreciate it that much more.

This is not to say you shouldn't see a doctor, but don't be surprised if he yawns and says you're just fine.  They'll run tests, of course, but unless you have some sort of cancer, chances are, they won't do much.

For example, in my late 40's, I started having neck problems.  I had always had a pinched nerve in my neck from my 20's, due to a motorcycle mishap and an over-enthusiastic young friend of mine who decided he wanted a "shoulder ride" and jumped on my neck, causing a loud cracking noise and numbness for two days.

But as I hit 45, my left arm started going numb and my left index finger got numb as well.  I wrote off the latter as a side-effect of an incident with a pneumatic nail gun (don't ask) but the former scared me - was I having a heart attack?

I went to the doctor and he yawned and said, "sounds like a compressed or ruptured disc on the C5 vertebrate pinching a nerve"

As it turns out, this is a common problem, although I thought I had some exotic disease.  And a MRI confirmed the diagnosis and relieved the doctor of a malpractice suit (for failing to diagnose neck cancer or something).

And as it turns out, there was little to do in terms of curing it.  Trying to operate would be problematic - it might "fix" the problem, or possibly paralyze me for life.  Some of those nerves are important - such as the C4 nerve, which drives your diaphragm and makes you breathe - "cut the C4, live no more" as they say in medical school.

So they send you home with muscle relaxants and a prescription to relax and get a massage.  And in a few years, yea, I largely "outgrew" the problem - although most of this was just my body adjusting to the pain and changes in mobility and my brain getting used to not feeling as much from some fingers.

And yes, some of these types of medical problems are stress-related.  It is amazing how better I feel since we paid off our debts - and how much less pain or difficulty I have with these "50-something" growing pains.

Mark had a similar problem with his back.  Again, same deal, we go to the doctor, he immediately diagnoses where the rupture or compressed disc is, a $2000 MRI is needed to confirm this, and the cure is.... nothing.

He tried some sort of injection from a "Dr. Feelgood" here in Brunswick - whose office was full of remarkably healthy-looking people getting scrips for pain-killers.  But the injection backfired and sucked the spinal fluid out of his brain, leaving him with killer migraines.  A "blood patch" seemed to fix the problem.  Lesson learned - never go to a doctor who advertises on billboards!

And of course, the Doctor offered to prescribe pain-killers, including Oxycontin, but we politely refused.

So what fixed the problem?  Massage and heat (from the hot tub) and a massage chair from Sharper Image that I bought online for $89.  Really.  That and better posture and seating and walking habits.  And getting older and "growing out of it".

Again, you could get operated on, but oftentimes the cure is worse than the disease. They can put plastic discs in your back, but it may not make things better - and in fact make them far, far worse.  I've heard horror stories from people who went this route and ended up in chronic staggering pain, as opposed to discomfort.

Of course, many Americans feel that they are entitled to an operation, and in fact, insist on it.  Their body is "broken" and they want it "fixed, good as new" and so are willing to go under the knife and risk horrible outcomes to cure a minor problem that is chronic to most people their age.

Or they want a solution in a pill, and end up like Rush Limbaugh, addicted to pain killers.

A friend of my Mother's had the surgery, and it didn't go well.  She was in a lot of pain over that.

And it goes without saying that losing weight can affect these sorts of problems.  Mark lost 15 pounds and, funny thing, his back problems mostly went away.  A lot cheaper than surgery!

I have other ailments, of course, and for the most part, they are "chronic" and cannot be fully "cured" but rather just "managed".  Diverticulitis could possibly be cured through a bowel resection - but the risk of the operation is far greater than the inconvenience of taking a Metamucil caplet every day.  And besides, some have reported the condition comes back after the operation.  Not worth the risk of peritonitis, frankly.

So, what does this have to do with finances?  Two things.

1.  First, throwing money at medical conditions often doesn't cure them.  Medical Science is not as advanced as you may like to think - we are still at the monkeys-fixing-cars-with-hammers stage in Medical Science.  They whack something and sometimes it seems to help.  But in many cases, they can't really help a lot of conditions.  And this is an interesting observation from both a personal financial view (after having spend $5000 or more on MRIs and treatments) and from a political one (the high cost of health care).

2.  Second, you are very likely to become infirm as you get older, and having your finances in order after age 50 is important.  When you get older, you may not be able to work - or work as well.  So the idea of "working until I'm 70" may sound great, but if you get sick, you'll wish the mortgage was paid off and you didn't have jet-ski payments to make.  Being able to not work is something you should plan on.  And in addition, so many illnesses are stress-related or aggravated by stress, so being debt-free and stress-free can also mean you are healthier.

Of course, the examples I have discussed above apply to our personal medical situation.  CONSULT YOUR DOCTOR for advice on your conditions.  I am not giving medical advice here or promoting non-treatment of medical conditions!

However, if your doctor tells you that basically there is no treatment for a 50-Something malady, don't be surprised.  It happens.

And who knows?  Maybe you'll "grow out of it".

Make Money in Real Estate?

You can make money in Real Estate, but it takes hard work.

This article on CNN talks about a couple buying Rental Real Estate properties on the Texas Gulf Coast.

Can you make a lot of money in Real Estate as a landlord?  Yes, you can.  But it is not easy money, nor is it free.  You need to work hard, have a little intelligence, and a little luck.

And yes, in the present market and for the next few years, we should see some bargain properties come on the market.

Why do I say this?  Because I saw the same thing happen between 1989 and 1998.

In 1989, we had a Real Estate meltdown - housing prices plummeted after several years of double-digit increases.  Then a number of savings and loans went insolvent.  Many "little people" lost a lot of money, and there was a call for tighter regulation of both the housing and banking industries.

Sounds very familiar, don't it?

I bought most of my investment properties from 1995-1998, when the market bottomed out.  That's right, it took nearly a decade for the Real Estate Market to hit bottom.  But by 1998, things started turning around, with a vengeance.

Today, I think we will see the same thing.  There is talk of a "double dip" in housing prices, as a backlog of foreclosures hits the market and buyer incentives and other efforts to prop up the market expire.  Housing will remain flat for a year or two more - at least.

Why is this?  Not strictly economics, but emotions.  Markets are irrational, and home buyers - individuals - are the most irrational of the lot.  Back in 1995 when I bought properties, my friends all said, "You're crazy!  I lost my shirt doing that!  You need to get into this "Dot Com" deal instead!"

And of course, they were wrong. 

Today, I think the same thing will happen - people will be "scared off" by their bad experiences in Real Estate.  People who went bankrupt or lost their life's savings will shy away from owning an investment property.

And this is probably a good thing, too.  Those are the folks who drove up prices and bought properties with huge negative cash-flows and sometimes never even rented them out!  They thought the equity was the whole deal, and neglected the income aspect of it.  They never should have been investors in Real Estate.

Can you make money in Real Estate?  Yes, but there are some caveats:

1.  You have to have a neutral or positive cash flow:  If you buy a house or apartment or other rental unit that has a monthly carrying cost of $2000, then you have to have at least $2000 in rental income to offset that.  The idea that you will make it all back in appreciation (or through reduced taxes in depreciation) is nonsense.  You cannot guarantee a rate of return on equity, but you can with income.

2.  Vacancy Kills:  If you buy a place, fix it up, and then decide to double the rent - good luck!  Because you can't dictate rents to the market.  But if you can rent out a unit at an attractive price, it will stay rented all the time and you will make a modest amount of money.  One month's vacancy every year is enough to sink your ship, so make sure you factor this in to your cash flow calculations.

3.  You Have to Have Good Tenants:  Being an amateur landlord isn't easy.  Being an amateur slumlord is murder.  Walk away from renting homes in the ghetto or in bad neighborhoods.  You will have vacancy, vandalism, and evictions - but never rent paid on time!  Prosperous areas and vacation rentals are far safer bets, and what I would recommend for the smaller investor.

4.  You Have to Be Handy:  Or at least know a good handyman.  But if you can fix a leaky faucet or replaced a recalcitrant light fixture, you can save hundreds of dollars in service calls.  And while this may not seem like a lot, it often is the difference between profit and loss.  Can't change a light bulb?  Think carefully before buying five houses.

5.  You Have to Be a Good Bookkeeper:  Keeping track of the books is essential, to know whether you are making money, and also for tax purposes.  So much is deductible from your taxes, so you cannot simply pay for things out of pocket and say "It was a small expense, no need to log it".  You'll go broke that way.  Understanding the tax code and how the Depreciation Deduction works is key - you can get a lot knocked off your taxes by owning rental properties.  Of course, they recapture this on the back end, in terms of Capital Gains taxes.  There are, of course ways around this (turn a rental into a personal residence, for example).

6.  You Have to Be a Ruthless Landlord:  This does not mean abusing your tenants, but rather not letting them abuse you.  We never had any problem tenants, but if you do, you have to evict and be businesslike about it.  You cannot be "friends" with your tenants, or use your position as a chance to enact any of your cock-eyed social or political ideas.  You'll go bankrupt in short order - and problem tenants will flock to you, sensing your weakness.

Should you jump into investment Real Estate and make a million bucks?  I did, but then again, I wasn't afraid to sheet-rock a kitchen or install a new toilet.

In the coming years, we may see some opportunities to buy properties and rent them at a profit from nearly the get-go.  It is not necessarily a bad gig - and when the prices drop to the point where you think, "This is a ridiculously cheap property, I can rent this at a profit!" it might not be a bad time to buy.

But it can be a risky business, and you should think carefully before you jump in.  If you over-pay for a property and over-estimate the potential rental income (two newbie mistakes) you could end up with a negative cash flow that could drag down your personal finances and end up bankrupting you if you can't sell the property for more than you paid for it.

Landlording is a RISK-TAKING business, and if you are approaching retirement, think carefully as to whether you can afford to take the risk.

I'm Right, You're Wrong, Get Over it!

I'm right.  You're wrong.  Get over it.

A reader writes:

I like your blog, but I don't agree with much of what you say.

Well, piss off, then!

Sorry, but no room here for emotional thinkers who feel sorry for people and have bleeding hearts and think they are "helping the world" while at the same time being totally evil by enabling horrible behaviors.

Whether it is "feeling sorry" for (feeling superior to) minorities, welfare recipients, or "the less fortunate" or thinking that if only the government could become more involved in our lives, you are dead fucking wrong.  End of story.  No room for debate.

Oh wait, I said a swear word and that offends you?  Piss off, then!

Sorry, but I wrote this blog for ME, not YOU, and don't go lurking here like some commie creep-o.

Log on to the "lame emo dumbass blog" instead.  No doubt your values will be validated there.

Sorry, this is a no-weak-thinking zone.

Goodbye!