It's Just Money

So, what's the problem with Multi Level Marketing scams (er, business models)

Recently, I wrote a post about the product, Mona Vie, which is sold through a Multi-Level Marketing system.  In case you are not familiar with the product, it is a super juice of some sort with exotic ingredients, such as Acai Berries and Kyrptonite.  I questioned the ability for the juice to cure all the ailments that is claimed by the many distributors out there, and the viability of the business model to actually make money for those same distributors.

The number of comments on that post was pretty incredible.  Many of the comments, not surprisingly, defended the quality of the juice.  The juice was credited with healing, curing or aiding in the following areas:  multiple sclorosis, weight loss, joint pain, high blood pressure, mood swings, something about ORAC values in Leukemia cells, insomnia, headaches, stomachaches, arthritis and gas reduction.  I'm serious.  It does all this.  Read the comments for yourself.  They don't lie.

Of course, there were comments that defended the business model, and in fact the MLM business model in general.  Frankly, being a money blog, this is what interested me.  I could give a damn about the juice.  If it tastes good, doesn't kill people, and can sell, maybe I'll sign up to make some money.  But do I really want to be one of those MLM people out there?

So, here were the arguments in favor of multi-level marketing.

Teen Teaches Financial Literacy to Adults

I freaking love this.  One of the topics that I have seen frequently on the PF blogosphere is how little financial education there is for America's youth, and how that leads to poor decision making as adults.

In a reversal of roles, High School Freshman and Teen Columnist, Emily Hu, writes For Adults, It's Payback Time.

A brilliant nugget from Miss Hu's article: 

"It comes down to this: Once upon a time, when people were forced to really consider what they could afford and credit actually counted for something, people bought houses they could live in for a few years."

Isn't this how we got in this mess?

I found this Kiplinger's "Truth or Bunk?" Quiz on Free Money Finance's site.  I haven't even finished the quiz, but I ran into this question and it bugged me:

"True or false:  Never buy a home that costs more than 2.5 times your annual income."

I knew they would consider the answer false, as it's become a somewhat outdated rule of thumb.  Interest rates are lower than they used to be when this was widely used.  But I answered "True" anyway.  Here was the response:

SORRY, WRONG!

Your answer A. True is incorrect.

The right answer is B. False

Good luck even finding such a house in many major cities.  Instead of the price, what counts is your monthly payment.  And that's affected by your down payment and the terms of your loan.

I didn't add the emphasis.  They bolded, "what counts is your monthly payment."

Seriously, isn't that how we got into this mess?

Passing the CFP exam

Since announcing that I passed the CFP exam, I have received requests for advice on passing the exam.  So, I'll do my best, but everyone's experience may differ.  Here you go Zook.

First, let me explain how I went about the process.  I began the process without a sense of urgency.  The company that I was working for neither paid for the classes, nor was very supportive about it.  They were strict money managers, and financial planning was viewed as an elaborate ruse to get people to buy life insurance.  Ignorant, I know.  But they are very old school.

So, watching my budget, I went with the online only classes through the College for Financial Planning.  It was cheaper than any actual classroom version.  Besides, the "at your own pace" sounded attractive.  Initially, I went at it pretty diligently.  I had some friends who were studying at the same time, so we formed a small group to keep each other on track.  However, as they began to drop off, that support dissolved.

From the time that I enrolled, to the time that I took the test, it was almost two years.  In my opinion, too long.  See, I thought that my prior experience in financial services would allow my to walk through the coursework in the self study mode.  It turns out that there is a tremendous amount of detail that is covered, and knowing what to study is probably the most important thing of all.

After finally completing the coursework, I enrolled in a CFP Exam Review course.  There are courses offered by a host of companies, some with classroom, some without.  Here, in Los Angeles, there are two ladies, Linda Hewitt and Nancy LeClair, who teach classes at UCLA extension, and UCI extension.  They are a two weekend, Friday, Saturday and Sunday deal.  It's not cheap, something like $1,200, but man it's worth it.

They take all that you have studied, and say, "okay, don't worry about all that, here's what you need to know, and here's how you should approach the test."  They have been teaching CFP classes for years, so they know what to expect, and they know how to prepare you.  This was the most important thing that I did.

So, what I would have done differently. 

Presidential Candidate Subprime Bailout Position

In case you haven't heard, it's an election year.  This means endless and tiresome political commercials, mailings, and even phone calls.  This is not a political blog, as god knows there are enough of them out there.  But, as politics can have a major impact on our collective and individual pocketbooks, I'm going to venture into some political ground.

About two years ago, there were a handful of housing bubble blogs and risky finance blogs out there warning us of the impending housing and mortgage meltdown.  Most notably, The Housing Bubble Blog and Another F'd Borrower.  The housing industry dismissed such talk as doom and gloom.  A bunch of Chicken Littles.

Then it began.  Sales slowed.  The rate of price increases slowed.  Then flattened.  Soon, the subprime mortgage holders who were relying on price increases in order to refinance or sell at a profit found themselves in trouble.  And we all know what followed.  Government intervention.

I made my position on the matter known in an open letter to my senator.  As expected, the idea of a bailout is predominantly a Democrat issue.  Surprisingly, however, it has crossed the aisle.

So, as we continue into the primaries, and try to educate ourselves on the candidates and their positions, I have taken some time to research where each of them stand on the subprime bailout.

Goals 2007 Review

Wow, where did the year go?  2007 was an eventful year, and overall a really good one.  Way back in January, I laid out my goals for the year.  Let's see how I did:

Financial:  My goal was to increase my net worth to $200,000 from $154,321.  Overall, that would have represented an increase of 31%.  Well, as of Friday, December 28, my net worth stood at $196,020.73, a 27.02% increase.  Technically, I did not reach this goal.  Frankly, I'm not too disappointed, as I am still satisfied with my results.

Professional:  I aimed to complete the CFP coursework and pass the comprehensive CFP exam.  Check!

Spending:  I used to maintain a daily expense tracker.  My goal was to restart the tracker, and keep myself accountable on a daily basis.  This didn't happen.

Non-Financial:  Lose the gut!  Yikes, long way to go.  The weight loss blog has been neglected.  The good news?  I have lost some weight.  I still have a long way to go, but I am about ten pounds lighter than I was a year ago.

There we have it.  Not a perfect year, but overall a successful 2007.

I started the year as an avid blogger.  As my CFP studies required more of my time, I began to neglect the blog.  At times, I thought I was going to close shop.  I appreciate those who have stuck with me, and continued to read what I have to say.  I don't anticipate that I will become the avid blogger in 2008 that I was a year ago, but I will definitely keep it alive.

Happy New Year to all of you.  Best wishes for a safe, happy and successful year.

2007 Year End Net Worth Update +$4,541.20

I suppose I have a few more days before the year is officially over, but I wanted to do my end of year tally to see how I am finishing.  My last update was at the end of October, so the change in value is for two months.  Not a bad increase of $4,541.20, especially given the decline in market value of most of my mutual funds in December.  However, in general a net worth increase of less than $2,500 per month is not enough.

Totals and notes below...

Volunteered a bit of my time last night

And I really do mean a bit.  About a week ago, I got online and decided that I wanted to find an organization or two that does work with homeless, poverty stricken families, or kids from low income communities to help them learn about finding work, managing their money, and all that stuff.

I began my search online at volunteermatch.org and idealist.org.  I found a few organizations that sounded really cool, so I emailed about four different organizations.  One contacted me back right away.  They have been around for a few years, but are very much a start up.  The director runs everything out of her apartment.  I'm not sure what will come of that at this point.

Two others have not contacted me.  The other one that wrote back is a group called Chrysalis.  Their mission is exactly what I was looking for.  They do resume, job training, budget and money management classes for homeless and economically disadvantaged individuals and families.