AskDong

I don’t know when they fixed it, but I can once again download all my Yodlee transactions in one fell swoop.  I had written a few months ago that Yodlee has ceased that functionality.  Of course what I found even more irking at the time was that they denied that there was any problem.

As a result over the last few months, I didn’t track my spending.   I didn’t know exactly how much I was spending on food.  I didn’t know how much gas I was using, or how much my rounds of golf were costing me.   I wasn’t in the dark, but I felt like I was in the shade.   Did I end up spending more?  Not at all.    Tracking my spending is useful, but ultimately I do it because for some warped reason I actually enjoy it.   At this point my budget is more unconscious habit than anything else.  I have a vague sense pretty much at all times about how much I should be spending.  You don’t need to breakdown every cent to do that properly.  Most of the time just knowing what your balances are is more than enough.

I still have one rather big gripe about Yodlee.   For whatever reason, I can’t seem to access Yodlee on my Mac these days.   Both FireFox and Safari on my mac endlessly try to reload the home page.   The page never gets loaded.  It’s very odd, but works fine on my PC at work and laptop.

The worst of the credit crisis is probably over.  Governments around of the world have taken dramatic action to avoid a Great Depression like outcome.  However, tough economic times are almost certainly ahead.  People have and will lose their jobs.  Small business will feel the pinch of slowing consumer spending.

In light of these tough economic times, my first tendency is cut my own spending and hunker down.  From the perspective of the economy this is absolutely the wrong attitude.   The largest part of the economy is consumer spending.  When I cut my spending I effectively contribute to the oncoming recession.   As a nation, we cannot avoid this recession by merely spending more.   The root problem is that we’ve already spent more than we have.  This includes both the Government and its citizens.   The bill needs to be paid now.

So while consumer spending in general cannot save us from recession, I probably should be doing my best to spend more.   I am gainfully employed, and actually have more than enough savings considering I have no depedents.  I’m exactly the type of person who can risk spending more.   A modest tick up in my own spending does not endanger my finances, and would probably do a great deal of good on per capita basis for the economy.  In the end, I cannot deny my own nature.  I’m not going to ratchet up my spending, but there is at least one place I can do a little more.

GDP = C + I + G + (X-M)

Above is the basic equation of the Economy.  Gross Domestic Product = Consumption + Investments + Government Spending + (Net Exports).   I’m not much into consumption, and as much as I know I should be spending more, I doubt I will.   I’m by no means a miser, but I just don’t really have much of desire to spend much more than I already do.   However, I can add to “I” side of the equation.   Investments as definied economically is not investing in stocks or bonds.  Investing is considered capital expenditures as building a factory.  I can’t build a factory, but I could remodel my home, or look at investing in new business opportunities.    Ultimately that’s the key to turning round this current economic malaise, is to spend money or rather invest with eye toward better times.

While I don’t commute daily, I’m big proponent of FastLane, Masschusett’s version of EZ-PASS.   In the past year I’ve paid over $250 in tolls, and in the process saved an estimated and estimated $75 this past year in tolls.  That savings easily pays for the $20.95 I paid for the transponder.

Fastlane is great.  I love the convenience and the savings.  However, Fastlane must have one of the worst online systems that I’ve ever seen.  Funny, given it’s technological nature.  Not only does the fastlane system have an account website that looks like it was designed as high school project from 1999, but offers no meaningful information.   I only logged into the account this past week for the first time in probably over 2 years.

I had gotten an email a week ago saying that my credit card had expired, and I needed to update the account.  Of course, because I haven’t logged into the account in 2 years I didn’t know what my account number to login was.   Luckily today, I was sent a letter with instructions on how I could update my account information my mail.  That letter had my account number. With that number in hand, I was able to log into my account.

In the two years since my last login, the website has not improved one ioata.  I still get no account details.  It still looks like it was designed by an elementary school student, a talented elementary school student but a 2nd grader none the less.  Very disspointing.

A friend of me pointed to this article on NPR on the benefits of taking turns paying the tab. I’ve always been a fan taking turns. My friends and I almost always do it with drinks, and sometimes with smaller meals, but hardly with more expensive meals. Maybe we should start.

The basic premise is that whenever we have to spend money, we feel a little bit of pain regardless of how much that is. As a result it’s better to take turns paying the bill because only one person feels that pain. In addition that person who picks up the tab gets the opportunity to feel good about him or herself. It’s good feelings all around.

This is all great, but from purely financial perspective there can be pitfalls. There of course is the free loader problem, something I feel fortunate in not suffering from amongst my group of friends. However, usually there will be at least one person if not a few individuals who will take advantage of the generosity of others, purposely or by thoughtlessness. This problem can be avoided by not associating with these individuals which is generally advisable anyways.

The bigger problem is overspending. Because taking turns is really quite effective in minimizing the pain of spending money, we often spend too much. I know this is the case, and there is no place more obvious than at a bar when taking turns buying rounds of drinks…

I hope everyone had a great 4th of July weekend. I personally spent some time at “the Beach”, though not actually at the beach. The weather was not cooperative, and to be quite truthful I’m not much of a beach person. I like going to beaches in far away and “exotic” locales, but don’t like going to the beach just to go to the beach.

Everytime, I go away for the weekend within driving distance, I wonder if having a summer or winter home makes sense. Would I use it? Would it be a good investment? I have only mulled the question without really coming up with an answer.

Would I use it?
This is the most important question. While making a great investment is all good and dandy, the real reason to own a place is to enjoy it’s use. Living in boston I’m within two hours of both the mountains and the beach. I firmly believe that if it takes more than 4 hours to get “there,” it’s not worth it. Both summer beach homes and winter ski lodges are really only useful 3 to 4 months of the year. The question is, would I use it enough to make it worthwhile? Given my current habits, I know I wouldn’t. However, I can envision changing my habits. I would have to go on fewer long vacations and replace them with shorter trips to the vacation home.

Is it a worthwhile Investment?
The question of evaluating a property as investment is much more straightforward, or at least on the surface. But really the question can’t be fully answered without also taking into account the personal benefits. Vacation homes are rarely good investments in themselves, but can be a fantastic investment when they also provide weekends spent with family and friends. With the housing market in turmoil, this might be a great time to get a great deal on a place, or not.

The one area that Vacation homes can provide unique benefits is in the area of taxation. The IRS provides a great deal of flexibility on how a vacation home is treated depending on how much it gets used as personal property or as rental property. While I have my own personal reservations on why the Government should be giving tax breaks on mortgage interest, let alone second home mortgage interest, I can hardly argue against anyone for taking advantage of the rules as they are.

A Home on the Cape:
For example a 2 bedroom home on the Cape near the beach would cost me about 300-380kk. If I were able to put down the full 20% down of a 320k home that would leave me with a mortgage of about 256k and monthly payments of $1620 a month (assuming a 30 year term and 6.5% rate) or about a little over 19,000 a year, and more like $21,000 after considering property taxes. A realistic scenario would allow me to rent out the unit for 8 weeks of the year for $1000 a week. Renting it out for about 8 weeks would then leave me with 2 “prime” summer weeks, and another 4 weeks slightly out of season. Without considering the tax consequences or other complexities; the question is $13,000 worth 6 weeks of a vacation home? I could spend $13,000 and have a fantastic 4 week exotic vacation for my girlfriend and I.

The last part is the rub really. A vacation home is much more worthwhile when you have a family to share it with. Being unmarried and without children that benefit is greatly diminished. Without expectations of inflated real estate returns, the economics do not make sense. A vacation home is best used when more people are able to take advantage of it. That’s why, I’ve actually never seriously considered purchasing a vacation home on my own. I would much rather go into such an endeavor with either family or friends at this stage in my life.