As featured in The Wall Street Journal, Money Magazine, and more!

November 2005


This is Part 2 in a series about The Number by Lee Eisenberg. Part 1 is here.

Lee Eisenberg is not a fan of rules of thumb. In his new book, The Number, he takes a look at a few of these rules and effectively thumbs his nose at them. The author says:

[M]any financial writers are content to continue to crank out simple but useless rules of thumb. Feel free to ignore them. A solid, reliable Number will not fall out of the pages of a magazine or newspaper. If you’re looking for certainty in a Number, a large factor of you must be added into the equation.

Lee takes a look at a popular calculation whose proponents claim that in order to determine your necessary annual income in retirement for an “acceptable existence,” multiply your latest annual salary by a factor of 0.7. Lee points out that this simplifcation neglects several important factors that can greatly affect the Number, thus greatly affecting the strategy necessary to attain that number.

Here are the missing, difficult-to-quantify variables:
Read the full article →

Kiyosaki’s rich dad told him not to diversify — rather, seek out “the best” investments. The author attempts to use anecdotal evidence (“I knew a guy who… therefore everyone…”) to villify the financial planning industry.

Suddenly, people without much financial education became “professional financial advisors.” School teachers, used car salesmen, housewives, and insurance agents found new careers as financial advisors selling investments to people just like themselves… When one retired pilot was asked what he was going to do now that his pension had been cut from $11,000 a month to $2,300 a month, the 62-year-old pilot said, “I’m going to become a financial planner.”

The 62-year old pilot could have become a participant in any number of professions. I hope that when Kiyosaki is 62, he doesn’t plan on learning any new skills as it would go against his view of human cognitive ability. Moreover, the sentiment that teachers and housewives, etc. are less intelligent breeds is quite offensive. Anyone can learn to become a financial planner. Cedrtainly it takes time and effort to become moderately adept, but it’s not rocket science.

Kiyosaki’s not in the real estate investing business, he’s in the authorship and seminar business.

Regardless of his attitude, I could agree to a degree with some of his statements about diversification. Kiyosaki’s reasons for justifying diversification: First, it’s a good plan for passive investors — those who don’t want to or can’t put in the effort to researching good investments. Second, if one cannot focus on research, diversification helps manage risk.

Reading Materials

This article was written by in Investing, Saving. Comments Off

Here are some articles worth the look.

* Jeff Brown from the Philadelphia Inquirer calls for an end to quarterly guidance.

* Four ways to simplify your life and save from MSN Money.

* Just when you thought real estate in New York City was getting a little pricey, now you have to worry about staking a claim to air.

* Also from CNN, more people are considering mystery shopping for making some extra money. I signed up for one of these, but the amount of effort isn’t worth the payout in my opinion.

How to Feel a Little Richer

This article was written by in Uncategorized. Comments Off

I originally posted this in September 2003, but it never hurts to revisit the issue to raise the feeling self-worth a little bit. If you’re feeling down about not being able to afford to live on your income, just pop on over to the Global Rich List, enter your income, and voila! — instant satisfaction with your job.

If you want to feel even better, keep in mind the affluent are worse off when it comes to inflation. The luxury items to which the rich grow accustomed are much more affected by inflation then the necessities of life for the lower classes. The CLEW (“Cost of Living Extremely Well”) index measures inflation of the prices of certain items favored by rich folk. From 2004 to 2005, the index rose 4% while the Consumer Price Index rose only 3.6%.

This is a good thing, according to the article:

As long as luxury goods are inflating faster than the regular stuff, the economy is cooking. There is a good chance that just about everyone is doing OK. When luxury goods go on sale, everyone is in trouble.

If you’re still not encouraged about your own situation, take a look at the income graph. (It’s a shame that every individual in the world does not have the same expenses; if they had, this graph might actually mean something.)
Read the full article →

Bat-Mitzvah For The Rich And Not Really Famous

by Luke Landes

If you have ten million dollars lying around and your daughter happens to be preparing for her Bat Mitzvah, why not drop the cash on a fancy party for her and her friends? While you’re at it, go ahead, invite some popular entertainters, such as Aerosmith, Tom Petty, and 50 Cent. Well, this is pricely ... Continue reading this article…

2 comments Read the full article →

The Elevator Economy

by Luke Landes

Home sales hit new record. Sales of new homes in the U.S. rose by 3.4 percent in October. Housing boom past its peak? The pace of new home building slowed sharply in October, the weakest month in 2005. Home builder sentiment falls. The National Association of Home Builders says November was a bad month. Consumer ... Continue reading this article…

Read the full article →

Taking a Pay Cut Sometimes Pays Off

by Luke Landes

At the moment I’m writing this entry, 85 percent of respondents to an informal CNN Money survey say they’d be willing to take a pay cut if the situation was right, while the other 15 percent would not consider such a move. According to Jeanne Sahadi, who speaks from personal experience, there are situations where taking a ... Continue reading this article…

Read the full article →

Cable Channels a la Carte

by Luke Landes

The FCC now believes that consumers can save money by picking and choosing which cable channels they’d like to receive, with each channel priced separately. Would this new pricing plan change your viewing habits? I’m paying $14 per month for the most basic cable television service at the moment. I’d like to add a few ... Continue reading this article…

2 comments Read the full article →

Bite-Sized Nuggets of Advice

by Luke Landes

Business 2.0 has rounded up catchphrases, rules of thumb, and otherwise compressed thoughts by 49 of the most popular leaders in the business world. Regular readers are probably aware of my love for taking a philosophy and expressing its entire scope in ten words or less, if by “love” I mean “disdain.” Thankfully, the feature ... Continue reading this article…

Read the full article →

Review of The Number by Lee Eisenberg, Part 1

by Luke Landes

Over the next week or so, I’ll be taking an in-depth look at a book to be released next year entitled The Number, written by Lee Eisenberg. Before I get to the book, let me explain how the book came into my possession. At the end of October, I blogged about Lee’s article in New ... Continue reading this article…

2 comments Read the full article →

Ten Percent of Income Over One Hundred Thousand Dollars

by Luke Landes

Will you take this pledge? Can you assert that you will give 10 percent of your income over $100,000 to charity — any charity? This is what hundreds of people have done, and I’d imagine many more will, at ten over one hundred. We’re making this committment because we think it will help make the world ... Continue reading this article…

5 comments Read the full article →

Abortion and Crime – Freakonomics Disputed

by Luke Landes

I have not yet read Freakonomics, but I have heard good things about the book from friends. Apparently one chapter within the book discusses the effect of correlation between the legalization of abortion in the 1970s on and the amount of crime in the 1990s. An article in the Wall Street Journal [free] explains the ... Continue reading this article…

4 comments Read the full article →

Will China Make Americans Better or Worse Off?

by Luke Landes

Due to increasing skills and knowledge worldwide as well as labor costs that are a fraction of costs in the United States, there is some fear that the competition will mean less prosperity for people of my generation and younger. The concern is the younger generation may not be able to live as “well off” ... Continue reading this article…

5 comments Read the full article →

Carnival Time

by Luke Landes

It’s the first day back at work for me, although I don’t feel like I had much of a vacation. This is despite spending almost an entire week in California spending time with family. Let’s get back into the swing of things with this week’s Carnival of Personal Finance, hosted by Financial Fruition, which includes ... Continue reading this article…

Read the full article →

Microsoft’s Xbox 360 Strategies

by Luke Landes

Just like for the older Xbox, the new Xbox 360 costs more to manufacture than Microsoft charges for the system. The retail price is $399 (which will eventually be cut down, which is the pattern for video game consoles) but the cost for all of the components is $552.27. Microsoft must believe that people who ... Continue reading this article…

6 comments Read the full article →

Happy Thanksgiving!

by Luke Landes

I hope everyone has a happy holiday! There are many, many things I’m thankful for. Sure, it’s great to have a job and have money coming in. Most importantly, I’m thankful for the wonderful, supportive people I’ve met online through this blog as well as through my other blogs. I met my girlfriend through one ... Continue reading this article…

4 comments Read the full article →

Gift Giving Among a Circle of Friends

by Luke Landes

I have a group of ten or so friends that comprise the “usual crowd.” We get together for people’s birthdays, movie nights, game nights, that sort of thing. At some point, we’re supposed to get together for Christmas/Hanukkah/etc. There seems to be an avoidance of what to do about the gift-giving arrangement. In the past, ... Continue reading this article…

5 comments Read the full article →

Interview With Flexo

by Luke Landes

A few weeks ago, Paul from 10 Questions asked me to take part in an interview. That interview has now been published online, so if you want to learn a little more about me, take a look.

1 comment Read the full article →

Dinged Rental Cars, Dinged Wallet

by Luke Landes

At the most, I would rent a car once or twice a year when I find myself traveling to remote cities for friends’ weddings, for example. Luckilly, this has not yet happened to me. According to the New York Times, it’s common for rental car companies to charge mutiple customers for the same dings or ... Continue reading this article…

4 comments Read the full article →

Thank Your First Commenter Day

by Luke Landes

In honor of Thank Your First Customer Day, I’d like to thank Darren R. Sussman, who was the first commenter on Consumerism Commentary (out of 1,127 comments), and he commented on the entry entitled, Owning a Home, Owing Money. Here is what he wrote: Well, of course. Buying a house is an investment, and a ... Continue reading this article…

4 comments Read the full article →
Page 1 of 41234