How I would save GM… The Great Auto Lotto of 2009!

Photo courtesy of jhoweaa

GM is a car company right? So how would I save a car company? I would sell it’s cars! Put on your thinking caps boys and girls, it’s time to do some math!

Our Government has committed roughly $50 billion to bail out this automaker. So let’s say the average GM car cost $26k…

($50,000,000,000 divided by $26,000 = 1,923,076 brand new cars)

Let’s keep the math neat by rounding the figure to 1.9 million… that’s a lot of cars right? So then the question becomes, “Who would those cars go to?” And I would answer that question easily, “The GOVERNMENT… duh!”

In my scenario essentially, the government just contracted out GM to operate their entire fleet of vehicles. Everything from FBI cruisers, surveillance vehicles, even the *motorcades of Diplomats and elected officials can be covered by this $50b ‘contract’. (*President Obama already has a stable of tricked out limos produced by Cadillac, a GM brand, so there ya go!)

Next question: “What if the government doesn’t need all 1.9 million vehicles for it’s own use?” Answer: They raffle off the excess vehicles to the public… after all WE did pay for this bail out with our own money right? Any US citizen with the means could essentially enter a lottery to get a crack at the leftover inventory of vehicles. They could buy as many tickets as they like to increase their chances of getting a brand new vehicle for a DIRT CHEAP price.

For example if the government used 1 million of the vehicles to replenish/upgrade it’s stock of fleet vehicles, 900k would be left. Again, to keep the math clean, let’s say that 300k have a price range of $0 - $10,000. They would be raffled off at $100 per vehicle. That would equal $30 million instantly pouring back into the economy. Then let’s say that 300k have a price range of $10,000 – $30,000. These would be raffled off at $500 per vehicle. The proceeds would equal $150 million for this group of vehicles! Then lastly, we have a final group of 300k vehicles with a price range of $30,000 to $50,000. The raffle price for these would be $1000 per vehicle because of the premium/luxury nature of the lines offered at this price. This group would bring in $300 million.

Now keep in mind this is just a basic experiment and it only takes into account one raffle ticket sold per vehicle… but as I said earlier, the buyers could buy as many tickets as they like. The total revenue from the scenario we just did comes out to $480 million, and THAT does not take into account taxes, tags, and freight charges on the vehicles themselves – which again goes back to the government. I would also add a stipulation for any raffle winner that they could sell their current vehicle for no more than equal value of the raffle ticket they purchased! This would again, instantly create a secondary car market and most likely DOUBLE the figures I just gave at the very least.

And what’s more, GM isn’t the only auto company in need of this type of “bailout”. This would serve as the perfect catalyst to reinvent both the US auto market and the overall rules of engagement for the consumer they sell to.

Now, I’m sure some one reading this is going to ask, “What’s the point of the Government spending $50 billion on this example just to make back a minimum of $480 million?!” But to that I ask this question: “What’s the point of the Government bailing out GM with $50 billion and having no plan other than to ‘keep it afloat’ operationally while the company still slowly bleeds to death in this economy?!”

GM is a car company… and something needs to be done with the cars right? I don’t care how much you say you don’t like American made cars… if you could get a brand new one for $100 to $1000 you’d be down for it!

What would you do?
@W

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@Risk Theater: Crisis of Credit (Visualized)

Photo courtesy of Students of Calvary

http://www.crisisofcredit.com/



"The Short and Simple Story of the Credit Crisis.Crisisofcredit.comThe goal of giving form to a complex situation like the credit crisis is to quickly supply the essence of the situation to those unfamiliar and uninitiated. This project was completed as part of my thesis work in the Media Design Program, a graduate studio at the Art Center College of Design in Pasadena, California.For more on my broader thesis work exploring the use of new media to make sense of a increasingly complex world, visit jdjarvis.com"


Hi guys, It's been a while since I posted a video and I found just the thing today.

This is a quick, easy and sleek explanation of the financial collapse we all now have front row seats for.

Enjoy!





Any Questions?

@W


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Tired of Rejection, Consumers Turn to Credit Companies For Approval

Photo courtesy of Todd Heisler/The New York Times

A strange thing is happening here in America. People are beginning to use credit-worthiness as a measure of self-esteem. It reminds me of a saying I just made up; Someone is always willing to give you what you want, as long as you pay for it. (Wow, I like that!)

Growing weary of being rejected for choice jobs and being denied by choice colleges, Americans young and old are trying to buy their dreams on credit. What they dont realize is that sometimes they end up paying with their life. Now hold on a minute I'm not saying they're being killed by credit directly, you should know me better than that. But what I am saying is that the stress and pressure of living the "good life" without a "good income" is taking more of a toll on us than we are openly willing to admit.

The New York Times is doing a brilliant series on consumer debt called The Debt Trap and it's as hard hitting and exhaustive in exposing the consumer debt crisis as CNN's Black in America series is in addressing the state of African-Americans in the US. I highly recommend checking them both out!

I keep asking the question "How did we get here?" And no one seems to have the answer. So I guess I'm taking it upon myself to find and provide the answer for all of you.

The more I see stories like the current one on NYT about Diane McLeod, the more I'm aware of the burden I've been given regarding the debt-free message.

Diane started out debt-free just like the rest of us, but the article goes on to explain how marriage, divorce, illness, unemployment, underemployment, wildly irresponsible spending, and now foreclosure have driven her nearly $250k into debt! Strangely enough though, she still continues to get "Pre-approved" offers from a steady stream of credit card companies, even though her credit is now decimated and she cant afford to pay her existing debts!

Here is a excerpt from the article:

"Recently an envelope arrived offering a “pre-qualified” Salute Visa Gold card issued by Urban Bank Trust. “We think you deserve more credit!” it said in bold type. A spokeswoman at Urban Bank said the Salute Visa is part of a program “designed to provide access to credit for folks who would not otherwise qualify for credit.” The Salute Visa offered Ms. McLeod a $300 credit line. But a closer look at the fine print showed that $150 of that would go, as annual fees, to Urban Bank."

Hmmm, quick question: If you cannot 'otherwise qualify' for credit, why are you still being provided with access to it?!? Greed is to blame for most of this mess. Both the greed of consumers to have what they want, when they want it, and live beyond their means as a way of "survival". And the greed of companies to sell you things you cannot afford so that you have to pawn your birthright, your values and your spiritual inheritance to purchase them.

Again, how did we get here?! What happened to our values?

I'm getting into the daily habit of reading a chapter of Proverbs. I read the chapter that matches the date. Yesterday was the 23rd and while reading I read this:

"Do not wear yourself out to get rich; have the wisdom to show constraint."
Proverbs 23:4 (NIV)

I love what this text is saying without saying it. My personal translation would say, "If you show constraint and build your wealth the right way, you will be healthy enough to enjoy what you have earned." No borrowing on credit, no loans, no get rich quick schemes.

Showing constraint in your finances is called a wise thing in this verse...

Aha, that's the answer to my question! I now know how we got here! We're not reading our bibles, duh!

Thanks for reading,

@W

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Pending Transactions or "When $16.05 costs you $86.05" Part II... Finally!

Photo courtesy of TW Collins

Here it is folks! The long awaited sequel to the smash hit article "Overdraft Fees, or "When $16.05 costs you $86.05" Part I" !!

There's an old adage that goes a lil something like this: "Cash is King!"

For years I refused to accept it while I was using my debit card to purchase everything under the sun that I both could and could not afford. But more recently I've come to know and love that saying in a very special way.

Dave Ramsey calls it the Envelope System, and it's just as simple as it sounds... If you know how much you're budgeting towards an expense, withdraw that amount in cash, place it in an envelope, and spend it.... but once it's spent, you get no more until the next check shows up. If your budget is $100/week for food, and you eat out on Monday spending $75... then it looks like you'll be eating PB&J for the next few days!

Yes it takes discipline to place yourself on this type of system, but not nearly as much as you would think. Now, back to that saying "cash is king"... here's where it comes into play with the envelope system. As you spend your money out of that envelope, it allows you to instantly assess, inventory, and prioritize that next purchase. As you see that money dissolve in real-time out of your envelope, it forces you to question whether you really NEED to spend money on that next item you intend to purchase.

But what I truly love is that the envelope system is maybe the closest you can get to experiencing personal-finance-instant-gratification! There are no pending payments, no waiting for a payment to clear your account, and no getting caught up in the ODF cycle. You take the Russian out of the Roulette! And you gain a big portion of your financial control back! All by stuffing your cash in some envelopes and sticking to the script.

I've become somewhat of a celebrity at my local bank branch because of the envelope system. Ok, so maybe I just threw in the celebrity part, but each time I come around they know me by name. They've given me the nickname "Cash-man". So what if it's not the freshest moniker, at least they know me for something positive!

See when I walk in, I already have a very specific breakout of how I'd like to receive my cash. I know the exact number of $100's, $20's, $10's, $5's, and $1's I'd like to withdraw. Unlike many people I don't just let the bank give me 100's and 20's, if that's not exactly what I NEED. After all if I'm banking with them, then I'm their customer, and that means that them giving me the exact amount I need is part of servicing the customer! ( WHAT A CONCEPT, eh?!)
I'm writing this as a follow up to an incident that happened to us in April (read the title of this post to get the gist) because banks are literally milking us for all we're worth as a nation. My wife and I are sick of being caught in this vicious cycle where only the banks and oil companies are having all of the fun with this money thing!

Too many of us are living right on that line of financial ruin. If that whole Overdraft experience had happened to us before we got on Dave Ramsey's TMM, things would've quickly spiraled WAY out of control. One overdraft fee would cause some other pending payment to come up short, which would cause another overdraft fee and on and on...That's what living check to check and far beyond our means has done to us as a society. It's the root of the credit crisis, the mortgage crisis, the stock market volatility and it just spreads like mold from there. They are making Trillions off of us because of the trap we've allowed them to spring on us.

I tell ya what, if this sounds a little too drastic for you to try all at once, Dave Ramsey suggests starting out with putting only your Food money under the envelope system. So this means that on payday, you decide how much you realistically want to spend on food for the week, you withdraw that money in cash, mark an envelope with the word FOOD, and ALL food purchases are made from this envelope for that pay period. If you run out of money before the next payday, tough luck! 1) It means you need to evaluate where your food money is going. 2) you should explore more cost effective ways to stretch that dollar amount. Or 3) you need to increase your Food amount but decrease some other aspect of your spending. After doing that for about 3 pay periods, you will know how much you can realistically spend out of your pay check towards food. And this knowledge will help you curb the habit of chronic overspending.

Dave Ramsey's program is all about achieving Financial Peace. And I really must say there is a profound sense of peace in knowing how far we've come in just a few months of doing the program. That experience was not nearly as damaging as it could've been because we now envelope virtually all of the money that we budget from each check. None of the panic of worrying what check might bounce next. Why? Because we withdrew all of our expenses in cash to avoid that. Now we just have peace...

Financial peace....

Peace,

@W

To get the full impact of this follow-up article, please take a moment to go back and re-read the original post about how our bank made $55.00 in profit off of us from only $16.05 in purchases.

Overdraft fees, or "When $16.05 costs you $86.05" Part I

Photo courtesy of Snappy Larry

Ok so I couldn't sleep Monday morning. I woke up around 4am and just had a sense that i wouldn't be getting back to sleep. So I flipped open my Sprint Mogul and started typing out this post. I had some exciting topics lined up to write about this week until I realized that I was basically ignoring an extremely relevant and interesting story to share with you all. So the other topics will have to go on the back burner for now cause nothin else is cookin till I work my way thru this pressing subject matter.


So what is this all about? Well as much as I hate this subject I think I should dedicate a post (or two) to the wonderful world of Overdraft Fees. How they are not considered to be predatory lending I will never know.

Yup as you can probably tell by the title today, we got hit over the weekend by this snare of the Enemy. (no not the devil, I'm only dealing with banks today... But feel free to use them interchangeably if you wish.)

This time there's the added sting that this is our first ODF (Overdraft Fee) since we started our Total Money Makeover (TMM) in October. On the bright side, this is still only the second ODF of our marriage though. Quick shout out to my wife of 9 months and 7 days I love you... *cough basicallywright.blogspot.com cough*

So anyway, yeah this one hurts on a few levels. Like to hear them -- here they go:

The average bank charges a flat $35 fee per overdrafted transaction in addition to 'covering' the expense(s) that put your account in the negative. That means they get $35 whether yo go over by $100.00 or just $1.00. In our case we had two... A $1.05 redbox charge that was pending on the account since Wednesday -- stay tuned, the next post in this mini-series is dedicated to pending purchases -- and a $15.00 charge for gas that was pending since Thursday.

Now before I go any further I REALLY need to testify to how good God has been in my life! He's really changed my heart in so many places!

Back when my wife and I were dating I really had a disdain for banking institutions because of stuff like this. The nickle and dime fee's they'd hit you with to diminish your stacks, and the truly minuscule interest rates they'd break you off with while they were piling their stacks! I mean it would really be enough to throw me into fits of rage. But Saturday night when I checked the account from my phone and saw the negative amounts IT DIDN'T EVEN PHASE ME! I simply turned to her and said "Can you pull up the account on the laptop? Its saying we're overdrawn and we need to have a quick finance meeting to talk this thru." And that was it. No kicking, screaming, attitudes or drive-bys.


Yes we lost out on some much needed funds, and yes it was a hard lesson learned and a very hard time to learn it, but at the same time it was a blessing. Now I say that because it was a painful reminder of why we've gotta get out of our current financial situation for good! It's also a blessing because I get to share it with you in a positive way that hopefully will encourage you to join me in getting out of this mess. I can honestly say that I'm thankful to God for the way He's allowed me to view it this time around.

Ok I'm getting long winded again so let me bring this to a close.

So back to the $35.00 fees. Like I said there was one for redbox and one for a gas purchase, which totals $70.00. They made $55 dollars of pure profit off of me for $16.05 dollar worth of transactions. The redbox charge was fine because we budget for it each check. ($5 total) It was the gas that jacked us up here. Our gas envelope from the previous check got us through to Wednesday night, but we didn't get paid till Thursday morning. This left no opportunity to get to the bank and envelope the money like we normally would, so instead I used the check card... First time in a long time and hopefully the last time for as long as we can help it.

In my thinking banks would be better served by charging a 10% fee. That way if you go over by $16.05 you pay a $1.61 fee but if you go over $600 (say, if your car note doesn't clear), you pay a $60.00 fee. This would punish the behavior and not the individual. For good measure they could even have a sliding scale where the first ODF transaction would be 10% and each following transaction would be increased in increments of 5% per transaction. The bank would still make PLENTY of money and PLENTY of people would still keep their accounts in the negative... And they'd both continue to live the 'American' dream.

@W

My next post will be part 2 of this expose... 'Pending Transactions'