DailyFinance.comhttp://www.dailyfinance.comDailyFinance.comhttp://o.aolcdn.com/os/df/2013/img/2-dailyfinance_logo_m.pngDailyFinance.comhttp://www.dailyfinance.comen-usCopyright 2013 Weblogs, Inc. The contents of this feed are available for non-commercial use only.Blogsmith http://www.blogsmith.com/Want a Comfortable Retirement? Move to Australiahttp://www.dailyfinance.com/2013/05/03/australia-retirement-system-privatization/http://www.dailyfinance.com/2013/05/03/australia-retirement-system-privatization/http://www.dailyfinance.com/2013/05/03/australia-retirement-system-privatization/#commentsFiled under: , , ,

Retirement in Australia
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Australia is not only the home of the koala, the kangaroo, and the duck-billed platypus, but may also be home to that other rare and exotic animal: the secure retirement.

What does Australia have that America lacks? For starters, its retirees enjoy more financial security, better tax laws, and a generally higher standard of living than we do on this side of the globe. That's thanks to a few key differences in government policy -- and some twists and turns the country has taken in the course of history.

As an American who has just moved to Australia for a long assignment -- and, maybe decades hence, a comfortable place to retire -- I've had a chance to look into what's behind the great retirement divide.

The Bull Market Down Under

The Australian shares market (aka, its stock market) has been on a massive bull run for roughly the last 100 years. In fact, according to data compiled by Credit Suisse, between 1900 and 2009, the Australian shares market was the best-performing market in the entire world.

More recently, over the past 30 years, Australian shares have returned on average 11 percent per year. Returns like that can certainly create some sizable nest eggs.

Of course, with the global financial crisis in 2008 and 2009, portfolios shrank on both sides of the Pacific. But Australia was spared two of the most devastating economic blows from that crisis -- specifically, a huge housing crash and a surge in unemployment.

In Australia, home prices didn't dive like ours, and there was no mass wave of foreclosures. That can be traced largely to a few local factors: Australia's desert geography holds major development to the coasts, so the great waves of suburban sprawl that fed housing booms -- and busts -- elsewhere never happened there. (Whereas, for example, North America's Sonoran Desert can support a massive, ever-growing metropolis like Phoenix, most of Australia's arid Outback simply couldn't.) Local regulation has also kept the Aussie housing supply from expanding too rapidly. And even for those who found themselves in trouble, Australia's banks are far more inclined, by law as well as by disposition, to do short sales rather than foreclosures. But fewer Aussies got into mortgage trouble: By and large, Australia's lenders never jumped on the sub-prime bandwagon either.

Meanwhile, unemployment there never rose above 6 percent. The heart of Australia's economy lies in its massive resource deposits, and thanks to nearby China's hunger to buy them, the global financial crisis never really became local news Down Under.

A "Super" System

Another thing that Aussies needn't fret as much about is the state of their future financial security.

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In the U.S., those near retirement age are worried about the "security" in Social Security, and many people well below retirement age wonder if it will even exist by the time they reach their golden years. Australians long ago tackled the key issues we face now -- issues of government liabilities, private employment, and retirement savings.

Some 20 years ago, foreseeing the aging of the population and the untenable strain this would put on its pension system, the Australian government instituted a retirement savings policy known as "superannuation." This requires employers to pay 9 percent of each employee's salary -- above and beyond each employee's take-home pay -- into a savings account. (Employer contributions are set to rise to 12 percent by 2020.)

Accounts are invested, either at the discretion of the employee (i.e., a "self-managed super fund") or placed into a larger fund pool and managed by investment professionals.

Employees can contribute additional money if they wish. Accounts are taxed annually, but upon retirement, funds can be withdrawn free of tax -- a setup similar to our Roth IRAs.

The superannuation system was meant to gradually replace the government pension program, with privatization less the aim than simply the outcome. Today, those nearing retirement in Australia have balances averaging in the $210,000 range for men and $100,000 range for women. This compares to an average 401(k) balance of $143,300 for American citizens in their 50s, according to Fidelity Investments.

The system is still young, however. No group of Australian workers has yet spent their entire careers within the superannuation system, and balances should one day be far higher for workers nearing retirement age. And retirees may also still receive income from the government in the form of that frankly named "old age pension," which is means- and income-tested for those whose super-funds don't cover the full costs of their retirements, who suffered investment losses, or who weren't employed long enough. This is Australia's rough equivalent to Social Security.

According to a 2013 HSBC survey, "the average Australian currently expects 30 percent of their retirement income will come from the pension," in comparison to American retirees, who expect to receive about 38 percent of their income from Social Security.

More Taxing Problems

Outside of these retirement plans, Australians who invest enjoy better tax treatment than Americans who buy similar types of stocks.

Dividends, for example, are a common source of income for retirees in the U.S. and Australia. But a key difference in Australian tax law means Australians often receive more generous amounts.

In the U.S., corporations pay taxes on their profits, and have the option of paying out a portion of these profits to shareholders in the form of dividends. Shareholders then are required to pay taxes on those dividends they receive, typically at a rate of around 15 percent.

Not so in Australia, where companies are allowed to pay taxes on profits and then pass on the tax benefits to shareholders, eliminating the "double taxation" of the U.S. (The government effectively gives investors back the tax the company pays, then taxes the investor on the lot, a kind of "look-through taxation" in which the investor just pays the difference between what the company paid and what he or she owes.) Correspondingly, in part, dividend yields tend to be high Down Under, with yields in the 8 percent or 9 percent range not uncommon.

So should the U.S. go the way of the Aussies?

Of course, this summary of the Australian and American systems is both rough and oversimplified. It would take hundreds of pages, maybe a dissertation or two, to detail the differences and similarities. But a few basics are worth pointing out: Australian taxes are higher than U.S. taxes, but salaries are much higher, too -- the minimum wage is nearly $16 an hour. There's good universal health care, and child care is heavily subsidized for working parents, among other things. Bill Bryson has called it the Norway of the South Pacific.

Still, the direct comparison raises intriguing points. Could the U.S. benefit from examining and possibly adopting some Australian financial policies? Share your thoughts in the comments section below.

Motley Fool contributor Catherine Baab-Muguira recently moved to Australia for a long assignment. She misses American ketchup.

Gallery: Best Cities for Retirees

5. Pittsburgh4. New York City3. Palm Bay, Fla.2. Corvallis, Ore.1. New Orleans

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]]>AustraliaFinanceGreat Recessionmortgage crisisNorwayprivatizationRetirementretirement planningsocial safety netsocial securityuniversal health careCatherine Baab-MuguiraFri, 03 May 2013 13:39:00 EST2013 Money Resolutions: 3 Tales From the Personal Financial Trencheshttp://www.dailyfinance.com/2013/01/28/new-years-resolutions-personal-finance-money/http://www.dailyfinance.com/2013/01/28/new-years-resolutions-personal-finance-money/http://www.dailyfinance.com/2013/01/28/new-years-resolutions-personal-finance-money/#commentsFiled under: , , , ,

Cherie Lowe with her family (Courtesy Photo)

Nearly half of Americans considered setting a financial New Year's resolution for 2013, according to a survey conducted by Fidelity Investments. Encouragingly, the survey also found that, last year, resolve to keep financial resolutions hit an all-time high, with 62 percent of people saying they kept to the financial resolutions they made in 2012.

We're almost a month into 2013, and however well you're doing with your money resolutions, we thought now would be a good time to give you an inspiration booster. So, check out these stories of three real people on the way to achieving ambitious financial goals this year.

Her Goal: Build an Emergency Fund Without Getting Derailed by Emergencies

Cherie Lowe, a blogger and mother of two who lives outside Indianapolis, resolved to build an emergency fund this year after spending the last four years paying off $127,000 in debt (from $80,000 in student loans to a $100 balance on a Kohl's charge card).

"To keep up with our goal, we have been intentional about immediately removing designated funds from our checking account as soon as salary checks clear," Lowe says. "If you don't immediately remove such income from your checking account, it will grow legs and walk to Target."

As is so often the case, the best-laid plans can be derailed by real life. When she and her husband Brian, an attorney, recently discovered water in the crawl space of their home, they had to tap the new emergency fund for $1,000 to fix the problem.

"Thank the Lord for the emergency fund," says Lowe. "In past years, I would have panicked. It doesn't hurt any less to spend the money, but at least it's there and we still have some left over, too."

Undaunted by this setback, Lowe already has financial resolutions for 2014 and beyond on her mind. "Once the three-to-six-month emergency fund is filled," she says, "we'll begin specific savings accounts like 'College Planning,' 'New Car,' 'Vacation,' etc."


(Courtesy Becky Blanton)Her Goal: Fix Her Credit

"My resolution is to clean up and repair my credit report," says Becky Blanton, a single, self-employed woman who lives near Charlottesville, Va.

Her resolution is perhaps more urgent than most because she lives in a rural area and her only means of transportation, a 1975 Chevy van, failed to pass inspection. "I knew if I didn't clean up my credit now, when it finally dies I won't be able to get a loan for a new car," she says.

But there is an even deeper, more personal, backstory behind Blanton's goal.

Blanton, who was once homeless and whose debts are primarily medical, says that the process of dealing with creditors can be demoralizing and frustrating. Plus, "So many people evaluate us based on credit scores and vehicles that it's easy to buy into their fantasy that a great credit score makes you a better person," says Blanton. "It doesn't, but it does go a long way to making you a person with more options, and that's what I'm after."
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Today, Blanton says she is past the feelings of shame and embarrassment. "It's like being on 'The Biggest Loser.' You know the whole world is going to see how fat you are, but in the end, your life is going to change for the better so you learn to tough out the process: the embarrassment, the shame, the feeling stupid about not understanding how all this credit and financial stuff works. It's a matter of mind over money."

Focusing on the positive, she says, has helped her stay committed to achieving her goal. Early progress has also been encouraging: "In less than six weeks, I've had seven items removed, and bumped my score up almost 40 points from removing inaccurate items from my report."


(Courtesy Adam Duke)His Goal: Pay Off $25,000 in Debt -- or Else

Adam Duke, a single entrepreneur in Las Vegas, has set for himself the lofty goal of paying off all his debts in 2013.

"I graduated college in 2006 and have always had student loan debt hanging over my head. I have had credit card debt for years after foolish spending in my early 20s," he says. But in 2013, "I want to pay it all off, never borrow money again (besides a mortgage) and live a debt-free life."

Duke's debt accumulated over the last several years. All told, he owes about $25,000 in the form of two student loans and three credit cards. The endless bill-paying has become tiresome, Duke says, and he's had enough.

"My primary motivation is the writing checks each and every month to these student loan companies and credit card companies," he says. "I am sick of writing checks and cannot wait to write the 'big one' to pay them all off."

To accomplish his goal, Duke is trying to generate more business. He has also enlisted the help of an accountability partner. "We are in the same line of work, so we are colleagues and share ideas about running our consultancy businesses," he says. "We have little 30-day goals that we lay out and share with each other and we keep each other updated weekly."

Even better, there are stiff consequences if Duke and his partner fail to keep their resolutions. "Mine is wearing a pink thong and taking a picture in front of the 'Welcome to Las Vegas' sign," he says. "You don't think that motivates me? It does, big time."

Did you make a financial New Year's resolution, DailyFinance reader? Share your goal and how you're accomplishing it in the comments section below.

Catherine Baab-Muguira is a contributing writer to The Motley Fool.

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]]>catherine baab-muguiracatherinebaab-muguiracredit card debtcredit repaircredit report repairemergency fundfinancial resolutionsmoney new years resolutionmoney resolutionsmoneynewyearsresolutionmotivation to achieve goals academicmotivationtoachievegoalsacademicnew years resolutionspaying down debtpersonal financepersonalfinancepowerofplanningrepair bad creditstudent loan debtwater emergency on the foolwateremergencyonthefoolCatherine Baab-MuguiraMon, 28 Jan 2013 06:00:00 ESTWhen Investment Properties Attackhttp://www.dailyfinance.com/2012/10/09/when-investment-properties-attack/http://www.dailyfinance.com/2012/10/09/when-investment-properties-attack/http://www.dailyfinance.com/2012/10/09/when-investment-properties-attack/#commentsFiled under: ,

For rentDuring the heady days of the housing bubble, many Americans bought second homes and investment properties, believing that the value of these properties would increase. Then came the bust, and some owners turned to renting out those recently acquired homes, condos, and apartments. Zillow.com (Z) has referred to these folks as "accidental landlords."

If you're finding yourself in an accidental-landlord situation, take it from those who have tried it: While renting out properties can help to cover mortgage payments, provide a stream of income, and sometimes even a tax shelter (when properties generate taxable losses or decrease in value), the landlord business also has a pricey dark side.

Courtesy Tara Kennedy-Kline"What a Huge Mistake!"

Tara Kennedy-Kline, an entrepreneur in Shoemakersville, Pa., says that she and her husband once saw renting property as way to invest in their sons' futures. But the dream quickly turned sour.

"What a huge mistake! Our first tenants left as a result of an eviction notice after four months of not paying rent, and they trashed the place," says Kennedy-Kline. The next renter they found didn't turn out any better than the first. "The second tenants stopped paying rent in May and we couldn't get them out until November and that was by forced eviction by a constable."

Steven Glassberg is an attorney with offices in New York City and Port Washington, N.Y., whose practice includes all aspects of real estate. He says that being a landlord is harder than most people think it will be.

Kennedy-Kline took the both tenants to court and won. But winning in court isn't the same as getting paid. Now Kennedy-Kline and her husband are into the collections process for more than $5,000. "Even the sheriff can't get our money," she says.

Non-payment isn't the only issue people face with their investment properties, Glassberg says. "Add in maintenance, insurance, carrying costs, and it is not a business for most people."

Here are some other tales from the front line of landlording.

The Tenant Who Tried to Burn the House Down

Problem tenants aren't just an issue for inexperienced landlords. "I got a real estate license in 1992 and bought my own first property that same year," says John Braun, a landlord in Minneapolis and St. Louis. "I now have a little portfolio of eight units, which I view as my retirement account. I take great pride in having helped to gentrify my neighborhood, which is a much more attractive place now than it was 20 years ago."

John Braun meeting with a model tenant

Improving the neighborhood has had its costs, however. "I have had an angry tenant move out leaving diapers smeared to the wall by their contents and feminine products stuck to the bathroom fixtures in the same way. That was someone I evicted because I surprised her one afternoon while she was smoking a bong in her living room with her 2-year-old on her knee and an electronic home-monitoring bracelet on her ankle."

What could be worse? Plenty, Braun has found: "I had one tenant who tried to burn my house down on New Year's Eve."

Ruined Appliances, Outsize Water Bills, and Legal Expenses

Josh Scharf, a landlord with several properties in Brooklyn, N.Y., tells a similarly horrifying -- and expensive -- story.

In 2010, new tenants moved into one of his apartments. "Soon after [they moved] in, the water usage in the building skyrocketed from $60-$70 per month to over $300 and even approaching $400," he says.

Scharf discovered that the tenants were selling showers and even taking on other renters. "Effectively, they monetized every part of the apartment at my expense -- showers, toilet usage, cooking rental, etcetera."

Evicting the tenants proved difficult. "Eviction for non-payment in NYC can sometimes take six months or more, and landlords rarely recoup that money," Scharf says. "I was able to get these tenants out of the apartment in three months after they started to not pay rent."

Scharf settled for two months payment -- but he was still left with the water bill, legal expenses, and the costs of cleanup, which were substantial.

When Rental Property Becomes a Crime Scene

Landlords expect some amount of wear and tear on their property. But few expect their rental units to become toxic. That's what happens when someone uses a property to cook meth.

Dawn Turner runs the website MethLabHomes.com and sometimes hears from landlords whose properties have become highly contaminated crime scenes after being used to manufacture methamphetamine.



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"From the meth lab cook's perspective, if the property gets contaminated by meth and meth lab chemicals, it's the landlord's problem, not theirs," Turner says. And, she adds, they're right: "Like private homeowners, landlords are responsible for the cost of decontaminating the property they own, when it's financially feasible to salvage it."

While there are no statistics available about how many landlords have had their properties turned into meth labs, Turner says that those thinking of getting into the landlord business should be aware of the danger: "Meth lab testing and decontamination costs can add up very quickly, which is one reason that some investors may think twice about buying or owning rental property."

Steven GlassbergBall's in Your Court

Real estate lawyer Glassberg notes that the courts are "notoriously slow to enforce a landlord's rights." Depending upon the lease, the landlord may be able to hold the tenant personally responsible for the damage, but "this is extremely difficult and exceedingly rare," he says. "The landlord is usually stuck with the bill to fix his property."

Glassberg has seen one reliable way landlords can protect themselves, however. Landlords can insist upon "a personal guarantee from a third party for any damage in excess of the deposit." However, "I have only seen this in context of a student in college renting an apartment that their parent is paying [for]. The parent is the guarantor."

What's your take, DailyFinance reader? Have you lost money as a landlord -- or as a tenant? Share your story in the comments section below.

Catherine Baab-Muguira writes Fool.com. The Motley Fool owns shares of Zillow. Motley Fool newsletter services have recommended buying shares of Zillow."


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]]>apartmentscondosinvestment propertylandlordrenting out a homerenting out a roomRenting out roomsrenting propertiesCatherine Baab-MuguiraTue, 09 Oct 2012 13:45:00 ESTSafety Net Success Stories: Four Former 47%-ers Speak Outhttp://www.dailyfinance.com/2012/10/02/safety-net-success-stories-four-former-47-ers-speak-out/http://www.dailyfinance.com/2012/10/02/safety-net-success-stories-four-former-47-ers-speak-out/http://www.dailyfinance.com/2012/10/02/safety-net-success-stories-four-former-47-ers-speak-out/#commentsFiled under: , ,

Shila and Chad Morris with Misty and Gary Young (Johnstone Studios)

At some point in your life, were you a 47%-er?

On the heels of a leaked videotape in which GOP presidential candidate Mitt Romney spoke harshly of those who pay no federal income tax, some now-successful Americans have been stepping forward and publicly answering this question in the affirmative.

In his remarks, Romney identified the "47%" as those "who are dependent upon government, who believe that they are victims, who believe the government has a responsibility to care for them, who believe that they are entitled to health care, to food, to housing, to you-name-it... These are people who pay no income tax."

It's widely recognized that Romney was alluding to a Tax Policy Center statistic revealing that, as of July 2011, 46.4% of Americans do not pay federal income taxes. He also seemed to be lumping that larger group in with the smaller set of Americans enrolled in programs such as SNAP (formerly known as food stamps), the Special Supplemental Nutritional Program for Women, Infants and Children (known as WIC), as well as Medicare, Medicaid and others.

Romney continued, saying of the 47% that, "I'll never convince them they should take personal responsibility and care for their lives."

But, in fact, many of those who are today or were once in the 47% have practiced a great deal of personal responsibility and care for their lives, pulling themselves out of difficult circumstances.

Regardless of who you vote for this November, the fact stands that many Americans have received an important leg up from government assistance programs. Here are four.

From Rags to Restaurants

Misty Young, who owns four Squeeze In restaurants in California and Nevada, offers this tale from her days in the 47%: "Twenty-six years ago, my husband and I were on WIC and food stamps, standing in line for government cheese and chunky chicken in a big silver can. Our baby daughter was our everything," she says. The family lived in an area where gunshots, breaking windows, late-night fights, and sirens were the everyday sounds of the neighborhood.

"With the help of Pell grants, student loans and scholarships, I went to college, the first of the seven kids in my family to do so," she says. "I made progress. I went to work for a U.S. senator, then a state attorney general and a governor. The same government that helped me start helped me grow professionally. I went into the private sector and learned about business."

Today, Young and her family own four restaurants, and their business is growing. "We live in comfortable homes with no gunshots ringing out and we drive reliable cars," she says. "I was the 47%, and now I'm in the middle class .... I'm very, very thankful for the help I received and do my best to 'pay it forward' with jobs, health insurance to my eligible associates and a generous and giving approach to life."

And that baby daughter? She's a business partner in the family enterprise. Now grown up, Shila Morris says her parents' tale is an "amazing triumph and example of the American Dream."

"The overall tone of my growing up was constant improvement and increasing success," says Shila, "and it's yet to stop."

From Childhood Hunger to the Middle Class

Olivia Ghafoerkhan of Dale City, Va., says she was also once part of the 47%, when she was growing up in a trailer in north Florida with her mother and sister.

"Looking back, it's hard to pinpoint for certain if my story is one of abuse, or poverty," says Ghafoerkhan. "My mother received $600 a month in child support, and did not receive any other assistance at that time. There was food in the kitchen, but how much? I think now she decided to not feed me in order to feed my sister, who is 11 years younger than me."

The free breakfast and lunch program at school was an important source of food for Ghafoerkhan. "But if the bus was late in the morning, as it often was, I wouldn't get breakfast," she says. "Or if I got in line for lunch too late, there wouldn't be enough time to eat lunch. Occasionally I'd shove leftovers into my pockets as classmates watched and snickered."

Ghafoerkhan maintains that her teachers and the adults at her church -- she was baptized into the Mormon Church at 15 -- were also important sources of help and support.

"Today, my life may seem pretty boring and mundane. I'm a stay-at-home mother with three children. I drive a minivan," she says. Until recently, "I've never really talked about my early life, my struggles when I was a teenager, but recently, I've been meeting a lot of people who question if hunger and poverty are really serious problems, and if the programs aimed at ending them really make a difference."

While her life today is far more comfortable, Ghafoerkhan hasn't left her past behind altogether, and she says she's glad to pay higher taxes, if necessary, to support the programs that helped her out of poverty.


Julianna BaggotBest-Selling Author: "We Represent the 47 Percent"

Julianna Baggott of Tallahassee, Fla., watched the leaked tape and felt that Romney's depiction of those "struggling to make ends meet," as she puts it, was wrong and sad.

"The reality is, most people don't stay on government assistance forever," says Baggott. "The 47% isn't even necessarily the poor. It's soldiers, those on disability, and those who consider themselves middle class."

The best-selling author and Florida State University associate professor was inspired to start a blog, We Represent the 47 Percent, her first foray into political activism. There, she posted her own open-letter style response and responses from fellow writers, including Pulitzer Prize winners Richard Russo and Connie Shultz, as well as contributions from teachers and members of the military. Some of the posts are charged with political anger, while others are wrenching accounts of childhood poverty.

Baggott says, "What we're hoping for is to humanize the 47% ... I believe that there's an instinct to blame those on government assistance. It's a way to distance yourself. If the poor are poor because it's their fault then we don't have to worry about them -- or ourselves."

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Though Baggott is now successful -- her most recent novel, the young adult thriller "Pure," has sold in 15 countries and is in development with movie studio Fox 2000 -- the author is no stranger to money struggles.

When she and her husband, Dave Scott, were first married, they earned very little, had student loans to repay, and two young children to raise. For about four years, Baggott says, her family paid payroll taxes, but not income taxes.

"My husband was making $17,000 as an editor of small-town weekly newspaper in Delaware. I was at home with two children. We rented out rooms to foreign students, and I provided breakfast and dinner to them. We gave up things like privacy and dignity to help make ends meet," Baggott recalls.

Nowadays, Baggott finds herself "squarely in the 53%" but maintains of her early struggles that "it was important for me to grow my empathy in that way."

Lisa MilicajFrom Food Stamps to a GOP Political Career

In the late 1990s, Lisa Milicaj of Pleasant Valley, N.Y., found herself on food stamps for about two years. "I had left an abusive arranged marriage and was in in such financial disarray, so I applied," Milicaj says, "and I would have to say it was the lowest point of my life."

"It was very difficult to survive on what was provided and the waiting list was extremely long (years) to be able to get any other additional assistance," says Milicaj. Eventually, she found a job on her own and started making ends meet.

Today, this mother of three not only owns her own insurance agency -- "I started my own company almost five years to the day after coming off of public assistance," she says -- she was also recently elected to her town council. Of her entry into the political world, she says: "I had a full time job, I just wanted to make a difference."

A Republican and a Romney supporter, Milicaj is concerned about abuses of government assistance programs. But, she also says, "My views are that without a doubt government assistance is important. This should be used when there is absolutely no other way to survive, but not used when [one] can stand up on their own. There are some people that are truly disabled and just cannot provide for themselves and understandably, in these types of severe circumstances, it is necessary."

What's your take, DailyFinance reader? If you are now or used to be a member of the 47%, share your story in the comments section below.

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]]>47 percentfood stampsgovernment assistanceincome taxJulianna BaggottLocalMiddle ClassMitt Romneypayroll taxPell Grantpovertyrags to richessafety netsocial safety netTax Policy CenterU.S.welfareCatherine Baab-MuguiraTue, 02 Oct 2012 10:20:00 ESTFinancially on Track by 30? For Too Many, It's a Pipe Dreamhttp://www.dailyfinance.com/2012/09/08/financially-on-track-by-30-for-too-many-its-a-pipe-dream/http://www.dailyfinance.com/2012/09/08/financially-on-track-by-30-for-too-many-its-a-pipe-dream/http://www.dailyfinance.com/2012/09/08/financially-on-track-by-30-for-too-many-its-a-pipe-dream/#commentsFiled under: , , ,

courtesy of Alyssa HaleThe big 3-0: For many people, turning 30 means being solidly in the adult world in a tangible way -- whether that includes getting married or finding a long-term partner, having children, buying a home, or achieving career and financial goals.

But the recession put some speed bumps on many people's career tracks -- or sent them off their tracks altogether -- and today, a large number of early 30-somethings find themselves in a profoundly different position than they'd expected.

For instance, The Wall Street Journal recently pointed out that the Great Recession led to disproportionate unemployment among young people and also affected their long-term incomes. The article cites a Bureau of Labor Statistics study showing that most workers have historically enjoyed the greatest income growth before age 30.

It's a pattern that does not bode well for those turning 30 now.

Patrick EichholdPatrick Eichhold, a freelance designer and entrepreneur in Indianapolis who turned 32 on Sept. 3, says that he feels he has been "'just starting out' for nine years."

"I have not been satisfied with my career or income since the day I graduated college," says Eichhold. He graduated with lofty goals, "but no experience or plan on how exactly I was going to achieve them."

"So naturally, I am far behind where I thought I would be at this age," he says.

Struggling to find work

Alyssa Hale (pictured above) of Boston tells a similar story. After graduating college in 2001, she struggled to find a job. "After a couple years I finally found a sales job for a printing company," she says, "and then 2007-2008 hit."

"I had climbed to $57,000 in annual income," says Hale. "I was 28 years old. As the financial sector crashed, so did the start-ups, and funding disappeared. I was out of work for a year before I just started teaching yoga and looking for work."

"Now, at 31 years old, I make about $55,000 working for a marketing firm," she relates. "I have a house, a child, and a husband bringing in a little more than me, and it's almost impossible to balance our budget if an unexpected expense hits."

Far from Financial Independence

Mark Gerlach works as a career counselor in Niagara Falls, N.Y., but says that, "At 30 years old, the closest I have been to financial independence was one year when my mother paid for my cell phone and loaned me $3,000 for a car."

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Gen Xers had an easier time of finding jobs, he contends. "On the older side are people who got degrees in things like Romantic Victorian Children's Literature, and because the economy was generally in a decent state of growth, they got jobs straight out of college," Mark says.

In his view, his own generation did not have the same opportunities. "We got the rhetoric that a degree, any degree, was worth having. Some of us racked up $75,000 or more in debt to get that degree, and our first job out of college paid maybe $10 an hour," Gerlach says.

Worse still, he says, "A lot of my friends lost what little traction they'd gained on the corporate treadmill when they got laid off during the recession. Yes, they are starting back at the beginning."

Crushing Student Debt

Allison and Jim VanNestEven those who are happy with their careers still have financial issues, says Allison VanNest, who works at a start-up in the Bay Area and lives with her husband, an engineer, in East Oakland, Calif.

VanNest says felt mixed emotions when she turned 30 in July 20: "On one hand, I am very proud of my career and income, and this is exactly where I hoped I would be when I envisioned my future in college. However, due to what feels like insurmountable student loan debt, I don't feel like I will ever feel comfortable with my monetary situation."

"My husband attended Berklee College of Music in Boston and has more than $120,000 in student loan debt. I attended Emerson College (B.S.) and Lesley University (M.A.), also in the Boston area, and have more than $80,000 in student loan debt."

"I want to be debt-free and retirement-ready by the age of 50," says VanNest. "But I'm not even sure that I will be finished paying off my student loans by that time ... It's sad that everyone says that higher education is the way to go, but no one tells you how horrible paying off your loans will be. I mean, who signed off to give two 18-year-old kids more than $200,000 in loans that they had no way of paying back? It's crazy."

Facing an uncertain future

Rodric Hurdle-BradfordRodric Hurdle-Bradford, a PR consultant in Scottsdale, Ariz., urges his fellow 30-somethings to accept the new reality. "You have to stay hustling," he argues.

"Our parents had the luxury of knowing they could be with the same company for 20 years," says Hurdle-Bradford. "Nobody goes into a job now thinking they are going to work there for 20 years. Heck, some of my jobs have barely lasted 20 months."

"I had been on unemployment four times from three different states by the time I was 30," he says. "Despite that, every job change has been for the better."

Today, in addition to PR work and running his own Las Vegas valet-service company, Hurdle-Bradford freelances as a magazine writer and bartender. As he puts it, "The future comes faster than you know."

"Most of the people I know are living well below their means and relying on their entrepreneurial skills," he argues. "They're fully aware that the days when Americans lived on credit, and in a false reality, are clearly over."

That goes for 30-somethings and everyone else, he says.

What's your take, DailyFinance reader? Did you or will you achieve your financial and career goals by age 30? Share your thoughts in the comments section below.


Catherine Baab-Muguira is a contributor to The Motley Fool.

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]]>30-somethingsBureau of Labor Statisticscareerscollege tuitionGeneration YGreat Recessionstudent debt crisisStudent Loansunderemploymentunemploymentwage growthCatherine Baab-MuguiraSat, 08 Sep 2012 06:00:00 ESTThe Child-Free by Choice Speak Out: 'Kids Are Too Expensive'http://www.dailyfinance.com/2012/07/13/child-free-by-choice-kids-are-too-expensive/http://www.dailyfinance.com/2012/07/13/child-free-by-choice-kids-are-too-expensive/http://www.dailyfinance.com/2012/07/13/child-free-by-choice-kids-are-too-expensive/#commentsFiled under:

Child-free
If you want to keep a conversation light, everyone knows to avoid three hot-button topics: politics, religion, and sex. You might also want to add "having kids" to that list.

The public can't seem to get enough of debate between those who choose to have children and those who choose not to: the childless or, as some prefer, the "child-free."

Anne-Marie Slaughter, a Princeton law professor and former State Department official, spurred a fresh debate -- and heap of backlash -- when she explained in The Atlantic, "Why Women Still Can't Have It All," at least "not today, not with the way America's economy and society are currently structured."

With the average cost of raising a child now $234,000 (not including college), according to the Department of Agriculture, it's certainly true that parenthood is one of the most significant financial decisions most Americans ever make.

Slaughter chose to leave her high-profile government job so she could spend more time with her two teenage sons. But her choice -- having kids and stepping off the career treadmill for a while -- represents only one side of the divide.

What about people -- both men and women -- who have chosen to skip parenthood and concentrate on career and, to the extent possible, financial security?


Doug and Lindsey CarnettYou Can Have a Rewarding Life Without Children

"Could we afford kids? Yes," says Lindsey Carnett, 29, a PR firm president who lives in Los Angeles with her husband, Doug, 30, a public servant. "However, with all of the traveling I do, the nanny bills alone would be astronomical."

"So I'd rather continue traveling the world," she says, "running my business, getting massages, getting pedicures and manicures, working out with my trainer, enjoying great dining experiences and enjoying life to the fullest."

For Todd Greene, a 45-year-old entrepreneur who lives in Santa Monica, Calif., the choice not to have children is as much a matter of worldview as it is of personal finance. "After college, having dated the same woman for three years, we discussed the 'next step' which would mean engagement, marriage, kids," he says. "I remember how many of my friends had the 'married by 25, kids by 30 plan.' I realized shortly after college that it wasn't my plan. We broke up about a year after that.

"Then I read a bunch of books that really made me think about what I really wanted. Books like Razor's Edge, The Fountainhead, The Alchemist," he says. "Obviously none of them were about kids, but it really made me want to see the world... The greatest advantage is mobility and flexibility in life."

DeAara LewisThe Price of Waiting vs. the Cost of Young Motherhood

For DeAara Lewis, 33, a TV producer in Memphis, Tenn., the decision not to have children (at least thus far) has, ironically, come at a high cost all its own.

"Choosing not to have children because I want to be more financially stable and my career more secure has cost me some romantic relationships," she says. "Being from the South, it is often just assumed I want children right away, regardless of my own personal goals."

Still, friends' examples have helped stay committed to her choice. "Many of my peers had their children as teenagers ... before their own lives were established or clearly defined," Lewis says. "The lack of maturity and readiness resulted in some of the fathers leaving, my peers' own dreams being put on hold or halted altogether, and regret."

Who's Going to Help You Program the DVR?

It's natural that both childless people and parents are concerned with the possibility that they'll later regret their choices. But the choice of parenthood -- at least in practical terms -- is best made before you reach your golden years. And those golden years are exactly the time when those who decided not to have children will feel the impact of those early life decisions the most.

Gallery: The 7 U.S. Cities That Spoil Their Kids the Most

No. 1: New York CityNo. 2: MiamiNo. 3: MinneapolisNo. 4: TulsaNo. 5: Dallas
"People may complain about having too many kids," Bryan Caplan says, "but no one ever complains about having too many grandkids."

Caplan, an economics professor at George Mason University, is the father of four young children and the author of Selfish Reasons to Have More Kids. When it comes to deciding on having kids, Caplan says, "don't just think about how you're feeling right now, think about what the effect will be over your whole life."

It's common sense to go out of your comfort zone now to have a better retirement, he says. "Most people don't sit around saying, what do I do to make my life better when I'm 60 or 70? But it's too late to have kids when you're 60 or 70."

What's more, Caplan argues that the hefty price tag affixed to American children today is more a matter of choice than it is a matter of fixed costs. "Children cost far less than parents pay," he has written, "because parents overcharge themselves."

That $234,000 price tag does vary according to the parents' income, as Caplan points out. Families that make more tend to spend more on their children.

The USDA reports that households with before-tax income below $60,000 spend on average between $8,000 and $10,000 each year per child, while households with before-tax income above $100,000 spend between $20,000 to $25,000 each year per child -- with extra costs including luxuries from private schools to iPads.


Endless Expenses Even for Low-Maintenance Parents

Still, even those who choose what might be termed lower-maintenance parenthood contend that it is incredibly expensive.

Julie, a 40-year-old mother of three in Richmond, Va., (she asked that her last name not be used), readily admits that she and her husband have struggled with the expenses of raising children.

Gallery: Baby Gear: Top of the Line vs. Cheap Chic

Is Your Baby A StrollersCar SeatsHigh ChairsDiaper Bags
"They always need something. Clothes, diapers, preschool, activity fees, school clothes, braces, shoes, makeup, doctor visits, bikes, etc.," she says. "It's something new every day. There are times as parents that we need or want something, and you sometimes don't get what you need or want because the money goes to what your kids need or want. And it only gets worse when they get older. There have been times that we didn't go out to eat, that we didn't take vacations, that we didn't do anything other than what was necessary."

That sounds a lot like not having it all -- but Julie isn't aggrieved. Her approach to life comes across as easygoing and improvisational.

"I had my first child at 26," she says. "We didn't plan it, but we were immediately excited and welcomed her. I can't remember ever thinking that I would not have kids. It's been something that I've always wanted."

What's your take, DailyFinance reader? Does it cost too much to have a kid? Did the cost affect your decision to become, or not become, a parent? Sound off in the "comments" section below.


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]]>Anne-Marie SlaughterBryan Caplanchildless by choicecost of childrencost of raising kidsEntertainmentprice of collegeThe AlchemistThe FountainheadThe Razor's EdgeCatherine Baab-MuguiraFri, 13 Jul 2012 14:27:00 ESTDoes Johnson & Johnson Need a Lot More than Just a Band-Aid?http://www.dailyfinance.com/2012/06/19/does-johnson-and-johnson-need-a-lot-more-than-just-a-band-aid/http://www.dailyfinance.com/2012/06/19/does-johnson-and-johnson-need-a-lot-more-than-just-a-band-aid/http://www.dailyfinance.com/2012/06/19/does-johnson-and-johnson-need-a-lot-more-than-just-a-band-aid/#commentsFiled under: , ,

Johnson & JohnsonIf you've ever put on a Band-Aid, popped a Tylenol, or used a cotton swab, then you know Johnson & Johnson (JNJ). Most of us recognize that familiar name stretched across a bottle of baby shampoo.

But what people don't realize about this brand is that Johnson & Johnson is primarily a pharmaceutical and medical device company. In fact, it's actually the largest medical device company in the world, and the eighth-largest pharmaceutical company.

Those consumer products we all know and love -- Listerine, Bengay, and Neutrogena, to name only a few -- make up just 23% of this giant company's revenues. Medical devices, such as glucose monitors, and pharmaceutical drugs, including Risperdal and Velcade, account for the majority of dollars, at more than 37% and 40% of revenue respectively.

This particular combination of a strong, trusted brand plus a diversified health-care business has long made Johnson & Johnson a favorite of investors.

But in recent years, a series of drug recalls and management missteps at the fabled blue chip have had investors scratching their heads and asking: Is Johnson & Johnson broken?

Lawsuits and Recalls and Smells, Oh My

In 2010, the Department of Justice filed a civil False Claims Act against Johnson & Johnson, alleging that the company had illegally paid kickbacks to nursing-home pharmaceutical supplier Omnicare to induce Omnicare to use Johnson & Johnson drugs.

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"We will pursue those who break the law to take advantage of the elderly and the poor," said Tony West, assistant attorney general for the Civil Division of the Department of Justice, in a press release. "Kickbacks such as those alleged here distort the judgments of health care professionals and put profits ahead of sound medical treatment."

Later that year, Johnson & Johnson was twice forced to recall dozens of its over-the-counter medicines, many of them intended for use by children, including children's Benadryl, Motrin, Zyrtec, and Tylenol. The recalls came as the result of "manufacturing deficiencies" at a Pennsylvania plant as well as a "musty odor" associated with drugs manufactured at a Puerto Rican facility. (It is important to note that no deaths or ill effects were ever attributed to the recalled drugs.)

These issues arose at an especially fraught time within the wider health care arena -- most notably, President Obama's controversial Patient Protection and Affordable Care Act was signed into law in the spring of 2010 -- making investors even more wary.

Gallery: 'Ultimate Stock Pickers' Portfolio

Since 2010, Johnson & Johnson has trailed the larger indexes, such as the S&P 500 and the Dow, of which it is a component. Certainly, past performance is no indication of future returns. But it's clear investors are spooked by Johnson & Johnson's missteps.

Weigh In: What's your take, DailyFinance reader? Do you still trust Johnson & Johnson? What are your thoughts on the company as a consumer -- and as an investor?

Related Articles

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Motley Fool contributing writer Catherine Baab-Muguira does not have a financial interest in any of the companies mentioned here. The Motley Fool owns shares of Johnson & Johnson. Motley Fool newsletter services have recommended buying shares of Johnson & Johnson and creating a diagonal call position in Johnson & Johnson.


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]]>Band-AidBenadrylBengayDepartment of JusticeFalse Claims ActFinanceJohnson & Johnsonjohnson and johnsonJohnsonAndJohnsonNeutrogenaOmnicare IncoutlookPatient Protection and Affordable Care Actstocks to watchStocksToWatchCatherine Baab-MuguiraTue, 19 Jun 2012 14:26:00 ESTKraft's $2 Billion Cookie Turns 100http://www.dailyfinance.com/2012/05/23/oreo-krafts-2-billion-cookie-turns-100/http://www.dailyfinance.com/2012/05/23/oreo-krafts-2-billion-cookie-turns-100/http://www.dailyfinance.com/2012/05/23/oreo-krafts-2-billion-cookie-turns-100/#commentsFiled under: ,

OreosRemember how you used to eat Oreos when you were a kid? ("Twist, lick, dunk" was never my style. With four hungry younger brothers, I had to dunk the cookies whole and eat them in one bite if I wanted to get my share.)

Most of us have an Oreo memory. That's because eating the sandwich cookie is a ubiquitous American experience. Consider that in the year 2000, nine out of 10 U.S. households enjoyed Oreos.

Of course, it can be hard to tell where the memory begins and the marketing ends. The Oreo experience is both a real thing and a wildly successful advertising campaign.

Today the chocolate, cream-filled cookie grosses a stunning $2 billion a year, and just recently the cookie turned 100 years old, with parent company Kraft (KFT) celebrating Oreo's centennial in March. But the Oreo is no longer just "Milk's favorite cookie," or America's, for that matter -- it's a global powerhouse.

Orange-Mango Oreo, Anyone?

There are Oreos in China, Venezuela, Indonesia, and Mexico -- more than 85 markets across the globe. In Europe, Oreo sales grew by 40% just last year.

While U.S. consumers spend $1 billion a year on Oreos, this year Kraft expects sales in emerging markets to exceed that and and cross the $1 billion mark.

The Oreos sold overseas might look strange to American eyes. In China, for instance, the American version, introduced in 1996, didn't suit local tastes at first. Kraft had to reformulate the cookie to balance the bitter/sweet ratio and introduce flavors more popular among the Chinese, including green tea and orange-mango.

Some of these Oreo innovations have found their way back home; those straw-shaped Oreos now selling on the shelves of your local grocery store were first introduced in China.

So you might say the Oreo has come full circle. Or full cylinder.



Kraft Is Doing the Splits

Oreo isn't Kraft's only billion-dollar brand. As the world's second-largest food company, Kraft boasts 12 brands in total -- Maxwell House, Trident, Nabisco, and Oscar Mayer, to name just a few -- with more than $1 billion in annual sales each.

Sponsored Links

Changes are afoot, however. Before the end of 2012, the company will split in two, with the global snacks business, which will be called Mondelez International, spinning off from the North American grocery business, which will retain the Kraft name.

Whether this is a case of empire building or empire stripping remains to be seen. Market giants Warren Buffett and Bill Ackman have recently reduced their positions in Kraft, perhaps as a result of the announced split. Some investors worry that Kraft's management is making the move just for the sake of it, or because they find running such a large company to be difficult and unwieldy.

On the flip side, it's possible that the giant food company will actually be in a better position to allocate capital and manage operations as two independent units. Already, the North American business is streamlining its sales force and operations, in a move that looks to deliver greater profitability from the core grocery brands. While it's terrible to hear of jobs being eliminated (over 1,000 in the U.S.), this should make the North American business leaner and meaner.

Whereas the global snacks business, Mondelez, should deliver big growth for years to come. For instance, sales of the powdered beverage mix Tang have doubled since 2006.

The takeaway for investors? Owning both companies could give you a strong stake in the global food business.

But perhaps you're more interested in simply enjoying an Oreo than you are in owning stocks, in which case, go ahead and twist, lick, dunk to your heart's content. And while you're at it, share your unique Oreo-eating style in the comments section below.

Motley Fool contributor Catherine Baab-Muguira has no financial interest in any of the companies mentioned here.


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]]>centennialcookie salesCookieSalesemerging marketsEmergingMarketsFinanceKraft Foodskraft revenueKraftRevenueNorth AmericaOreoOreo salesOreo turns 100OreoSalesOreoTurns100Catherine Baab-MuguiraWed, 23 May 2012 14:36:00 ESTReefer-tirement Plan: Grandma Allegedly Ran Massive Drug Ringhttp://www.dailyfinance.com/2012/04/23/reefer-tirement-plan-grandma-ran-massive-marijuana-ring/http://www.dailyfinance.com/2012/04/23/reefer-tirement-plan-grandma-ran-massive-marijuana-ring/http://www.dailyfinance.com/2012/04/23/reefer-tirement-plan-grandma-ran-massive-marijuana-ring/#commentsFiled under: ,

darlene mayesInside a small rancher home in Vinita, Okla., police found a revolver, a semiautomatic pistol, four pounds of marijuana, and more than $276,000 in cash in vacuum-sealed garbage bags. Clearly this was the abode of a hardened criminal. A dangerous man. Perhaps some disenfranchised scion of a South American drug cartel.

But no. The drugs, guns and cash belonged to 73-year-old Darlene Mayes, a grandmother with fluffy white hair, oversize eyeglasses, and a gentle expression.

As Mayes explained to the cops when they busted her earlier this month, the cash was her retirement fund.

IRA, DEA, OMG!

Today, Mayes is accused of running a drug-dealing network that ranged across Oklahoma, Arkansas, Kansas and Missouri. Police say she supplied almost half of the area's pot. Her son, Jerry, is believed to have been one of her many dealers.

Mayes is charged with possession of marijuana with intent to distribute, maintaining a dwelling where drugs are kept or sold, and possession of a firearm in commission of a felony. An officer involved in the bust said she may have been operating the drug ring for as long 20 years.

Yet, for Mayes as a retiree, there may be a small silver lining: At least jail offers free room and board.

Tea and Cookies and Class B Drugs

Many seniors have had to retire early or have seen their investment accounts substantially reduced by losses in the stock market. Many more have only Social Security as a means of income.

Sponsored Links

However, it's safe to say not many senior citizens have turned to drug dealing to help make ends meet -- though the reality of today's retirement life certainly makes the illicit drug-dealing life more attractive, criminality be damned.

As Chuck Saletta recently pointed out here on DailyFinance, the average expected retiree's Social Security benefit is a meager $1,229, or $14,748 a year. That's before any Medicare premiums are deducted.

That's hardly enough to cover basic necessities like food and shelter, much less vacations or gifts for grandchildren. No wonder Mayes was drawn to the highly lucrative world of drug dealing.

For cash-strapped seniors on the brink, however, there are a few viable alternatives that don't involve a risk of prison time.

Three Legal Ways to Make Ends Meet in Retirement

  • Share expenses. Consider joining forces with a friend, family member, or neighbor, and moving in together. This can help with saving on rent and groceries, two of seniors' biggest expenses.
  • Ask for help in your community. People around you might be happy to help, if only they know you needed it. Consider letting your pastor or rabbi, doctor, social worker or neighbors know in what ways you are needy. Call your local United Way or Catholic Charities to learn about the full suite of services available at your doorstep.
  • Seek part-time work. Bag groceries at your local supermarket, flip burgers at the nearest fast food restaurant, or work from home as a freelance writer. Sell old household items on eBay or hold a yard sale. For homeowners, a reverse mortgage can be a last-ditch option when work isn't available.

Sure, these tips won't bring you trash bags full of $50 bills, but they won't land you in handcuffs in the back of a squad car either. If you've been an honest, upright citizen up until your retirement, now is no time to go all drug kingpin.

While it's hard to beat $276,000 for peddling illicit plants, freedom in your golden years is truly invaluable.

For more on making ends meet before and in retirement, see:


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]]>ArkansasCatholic CharitiesDarlene MayesDarleneMayesdrug dealing grandmaDrug Enforcement Administrationdrug ringDrugDealingGrandmaDrugRinggrandmagrandmotherLocalmarijuanapot smokingPotSmokingretirement planningRetirementPlanningselling potSellingPotSocial SecurityU.S.Catherine Baab-MuguiraMon, 23 Apr 2012 16:15:00 ESTWhy America Really Hates Goldman Sachs (Hint: It's Not About 'Muppets')http://www.dailyfinance.com/2012/03/21/goldman-sachs-real-PR-problem/http://www.dailyfinance.com/2012/03/21/goldman-sachs-real-PR-problem/http://www.dailyfinance.com/2012/03/21/goldman-sachs-real-PR-problem/#commentsFiled under: , ,

Goldman SachsLast week's headline-grabbing developments at Goldman Sachs (GS) -- including the very public resignation of a disgruntled employee -- came at a moment when the storied investment bank seems to be making a concerted effort to ingratiate itself with Main Street.

Despite the to-do, the public's real issue with Goldman Sachs wasn't addressed at all.

In Case You're Just Tuning In ...

On Wednesday, a Goldman employee -- Greg Smith, executive director and head of the firm's equity derivatives business in Europe, the Middle East, and Africa -- resigned with a flourish. In an op-ed in The New York Times, Smith told off his former employer, accusing the firm of seeking only to make money off its clients.

"I attend derivatives sales meetings where not one single minute is spent asking questions about how we can help clients," Smith wrote. "It's purely about how we can make the most possible money off of them."

Smith went on to say that he no longer felt he could take part in Goldman Sachs' recruiting activities, "I knew it was time to leave when I realized I could no longer look students in the eye and tell them what a great place this was to work."

The Firm's Response ... Amid a Recent Makeover Attempt

Goldman responded the same morning with a rather formal and chilly internal memo, which read, "The assertions made by this individual that do not reflect our values, our culture and how the vast majority of people at Goldman Sachs think about the firm and the work it does on behalf of our clients."

Golman Sachs

GoldmanSachs.com


Indeed, Goldman seems lately to have been making a concerted effort to portray its values and cultures in a positive light. CEO Lloyd Blankfein recently appeared in commercials supporting gay marriage in New York state, a move that may be intended to ingratiate himself and the firm among those concerned with equal rights for gay Americans.

Goldman has also been running ads lately about its 10,000 Women Initiative, now a joint venture with the State Department, entailing "a $100 million, five-year worldwide campaign to drive economic growth by providing 10,000 women a business and management education as well as access to capital, networks and mentors," according to a Goldman press release issued March 8.

The Real Elephant in the Room

None of this -- not Greg Smith's public resignation over client and culture issues, nor Blankfein's efforts on behalf of gay marriage rights, nor even Goldman's support for women's entrepreneurship in the developing world -- begins to address the real elephant in the room.

Sponsored Links

Who actually believed -- before Smith's opinion piece was published -- that Goldman Sachs is more focused on serving its clients than on making money? Who really is surprised by these suggestions that Goldman Sachs cares a whole lot about profits?

A Harris Interactive poll from last month showed that 83% of Americans have a negative impression of the financial services industry. And Goldman Sachs is one of the most despised financial services companies of all, ranking just behind AIG. That's because during the financial crisis, Goldman Sachs became virtually synonymous with the high-stakes risk-taking that resulted in the Troubled Asset Relief Program.

The real issue is the bailouts.

America's Memo to Goldman

Imagine if the American people were to issue a memo to Goldman Sachs. It would probably read like this:

Attention Mr. Blankfein and assorted cronies:

We don't care about your infighting or your recruiting efforts. Your philanthropic efforts may be nice, but they aren't the big deal here.

How about you stop taking so much risk that we -- the public -- have to bail you out when your bets go bad? That's what we really want from you and the rest of Wall Street. And we don't think it's too much to ask.

Motley Fool contributor Catherine Baab-Muguira has no financial interest in any of the companies mentioned here. Motley Fool newsletter services have recommended buying shares of Goldman Sachs.




NEXT:

Gallery: The 5 Bank Stocks Facing the Biggest Legal Risks

5. JPMorgan Chase4. Citigroup (C)3. Bank of America2. Regions Financial (RF)1. Synovus Financial (SNV)




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]]>bailoutbank bonusesBankBonusesFinanceGoldman SachsGoldmanSachsGreg Smithinvestment bankingInvestmentBankingLloyd BlankfeinriskTARPWall StreetWall Street bailoutWallStreetBailoutCatherine Baab-MuguiraWed, 21 Mar 2012 08:45:00 ESTHow Many Stars Would You Rate Yelp's IPO?http://www.dailyfinance.com/2012/02/25/how-many-stars-would-you-rate-yelps-ipo/http://www.dailyfinance.com/2012/02/25/how-many-stars-would-you-rate-yelps-ipo/http://www.dailyfinance.com/2012/02/25/how-many-stars-would-you-rate-yelps-ipo/#commentsFiled under: , ,

YelpWith all the sturm und drang surrounding Facebook's upcoming May IPO, few media outlets are giving much oxygen to the IPO of online review hub Yelp, due March 2.

The San Francisco-based Web startup hopes to raise as much as $100 million. Shares will be priced between $12 and $14 and trade under the ticker YELP.

A stock price in this range will give Yelp a market cap of around $800 million. That's quite a sticker price for a company whose purpose is to help you discover what your neighbors think of the Chinese takeout place down the road.

Useful, Sure, but Worth a Billion Dollars?

Yes, Yelp.com is both utilitarian -- and quite popular. The site boasts 25 million user-generated reviews and receives more than 60 million monthly unique visitors.

But here's the kicker: The company isn't profitable. Last year, Yelp had revenues of $83 million and losses of almost $17 million.

Yelp's revenues come solely from ads purchased by small businesses such as boutiques, salons and restaurants that seek to catch consumers' attention as they cruise through reviews of local hot spots. In other words, this is an "ads and eyeballs" business, not a model that makes most investors want to call up their brokers.

One More in a Sea of Frothy Valuations

Perhaps investors have gotten over their sticker shock when it comes to Web 2.0 companies. After all, Zynga (ZNGA), Pandora (P), Groupon (GRPN), and LinkedIn (LNKD) have all recently gone public at seemingly frothy valuations. And there's always the possibility that Yelp could grow into its rather ambitious market cap.

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At least one big industry player has taken notice of Yelp. In December 2009, the blog TechCrunch reported that Google (GOOG) and Yelp were in "advanced acquisition negotiations" with the search giant offering a reported $500 million-plus. However, for undisclosed reasons, the deal was never completed.

Yelp's Fraught Relationship with Search Engines

While Yelp seems to have maintained a positive relationship with Google, any change in this relationship could prove problematic: Half of Yelp's traffic comes from the search engine. That doesn't exactly put Yelp in control of its own destiny.

In fact, the company points out as much in its S-1. "We rely on traffic to our website from search engines like Google, Yahoo! and Bing, some of which offer products and services that compete directly with our solutions. If our website fails to rank prominently in unpaid search results, traffic to our website could decline and our business would be adversely affected."

That's not terribly reassuring.

Rate This IPO

So who will buy piping-hot Yelp stock on its Friday coming-out party? Probably not the discerning, budget-conscious, and sometimes-fussy consumers who post all those reviews on Yelp.com. That leaves the professional investing class -- namely, hedge funds and institutional investors. At least the pros can afford to lose a bit in case Yelp's prospects never pan out.

Disagree, DailyFinance reader? Rate Yelp's IPO in the comments section below.






Motley Fool contributor Catherine Baab-Muguira does not have any financial interest in any of the companies mentioned. The Motley Fool owns shares of LinkedIn and Google. Motley Fool newsletter services have recommended buying shares of Google and LinkedIn.



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]]>FinanceGoogleLinkedInmarket capMarketCaponline reviewsOnlineReviewsratingsrestaurantssearch enginesSearchEnginesstocks to watchStocksToWatchYelp IPOYelpIpoCatherine Baab-MuguiraSat, 25 Feb 2012 07:10:00 ESTA 'Devil Wears Prada' Take on the Wall Street Boy's Clubhttp://www.dailyfinance.com/2012/02/06/a-devil-wears-prada-take-on-the-wall-street-boys-club/http://www.dailyfinance.com/2012/02/06/a-devil-wears-prada-take-on-the-wall-street-boys-club/http://www.dailyfinance.com/2012/02/06/a-devil-wears-prada-take-on-the-wall-street-boys-club/#commentsFiled under:

Bond girlLike many people working on Wall Street, Erin Duffy was laid off during the recession.

"I guess I saw it coming," Duffy says of her August 2008 pink slip from Merrill Lynch, "in that they were obviously firing lots of people, so no one had any job security at that point."

But there was an unexpected upside to the layoff: Unemployment gave Duffy time to write a novel. She churned out 700 pages in eight months. "It was like really cheap therapy," she says. "I did it to keep myself sane."

Her years working in the boys' club of Wall Street (she was in fixed-income sales) left Duffy plenty of fodder to fill those pages. "I had all this material -- these people-wouldn't-believe-this-if-I-told-them stories. Like the time I saw a guy eat the entire contents of a vending machine, on a bet. For several thousand dollars. Which he won."

Duffy kept writing and revising the novel even after finding another bond-sales job, this time with Bank of Nova Scotia. The result is Bond Girl, a fun and seemingly highly autobiographical recounting of one young woman's adventures in love and bond sales on Wall Street.

Erin Duffy'I work in a giant adult sandbox from hell'

Duffy says her job was like "working in a fishbowl with 700 men." But, having been raised with three brothers, she was comfortable with being one of the very few women in her department.

"The camaraderie is amazing ... but there's not a lot of coddling," says Duffy, who graduated with a degree in English from Georgetown University in 2000. On the job, Duffy witnessed her share of shenanigans. The vending machine episode seems like child's play compared to other workplace incidents.

She recalls one coworker who was punished for a mistake by being made to go to the Bronx to purchase -- out-of-pocket -- a $1,000 50-pound cheese wheel. ("He deserved it," she says.) Then there was the time when someone in the office said he was hung over and wanted a cheesesteak. This led to the order to send an intern to drive round-trip before lunch to Philadelphia to get cheesesteaks for the office.

"I used to tell myself, 'I work in a giant adult sandbox from hell.'"

Just before her book was published, Duffy climbed out of the Wall Street sandbox: Jan. 19 was her last day selling T-bills before leaving the bond desk to become a full-time writer. Bond Girl, which came out on Jan. 24, is now selling briskly.

From trading desk to writing desk

"It's The Devil Wears Prada on Wall Street," writes one Amazon.com reviewer. "Bond Girl," according to Entertainment Weekly, "is a sparkling debut, smart and snappy but never weighed down by financial terminology."

"So, uh, now I'm a full-time writer," Duffy says, interrupting herself to exclaim: "Oh my gosh. That sounds so weird."


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]]>Bond girlbond tradersBondTradersbook reviewBookReviewEntertainmentfictionMerrill LynchThe Devil Wears PradaWall StreetWallStreetCatherine Baab-MuguiraMon, 06 Feb 2012 14:25:00 ESTTime is Running Out: Bid on Lunch With Financial Titanshttp://www.dailyfinance.com/2011/12/15/time-is-running-out-bid-on-lunch-with-financial-titans/http://www.dailyfinance.com/2011/12/15/time-is-running-out-bid-on-lunch-with-financial-titans/http://www.dailyfinance.com/2011/12/15/time-is-running-out-bid-on-lunch-with-financial-titans/#commentsFiled under:

Financial HeadsMaybe, like so many Americans, you have lately found yourself awake at night, plagued by big questions about the economy: Will Europe ever emerge from its debt crisis? Is the stock market rigged against individual investors? Why the heck did I take out those double-digit student loans for that graduate degree I'm not even using?

Grabbing lunch with some of the nation's top financial minds would be an ideal way to get answers. If you've got the cash to pick up the tab, get our your calendar.

Charitybuzz.com is auctioning off a meal in New York City with a cabal of top thinkers, movers and shakers, including Paul Volcker, Mort Zuckerman, Robert Wolf, and Austan Goolsbee. (Proceeds will go to benefit the Robert F. Kennedy Center for Justice and Human Rights, so there may be a tax write-off in this for you, too.)

Distinguished Economists... Some of Them Sexy

In case those names are less familiar to you than, say, Jon Stewart's or Glenn Beck's, bear in mind that these potential fellow diners are a pretty storied bunch.

  • Paul Volcker, most recently chairman of President Obama's Economic Recovery Advisory Board since earlier this year, was chairman of the Federal Reserve under presidents Jimmy Carter and Ronald Reagan.
  • Mort Zuckerman is the chairman and editor-in-chief of U.S. News & World Report (the publication well-known for making you feel inadequate about where you got that expensive graduate degree).
  • Robert Wolf, a Salomon Brothers veteran, is the president of UBS Investment Bank (UBS).
  • Austan Goolsbee, a professor at the University of Chicago and once chief economist of President Obama's Economic Recovery Advisory Board, was most notably one of Salon.com's 15 Sexiest Men of 2010.

Notions of sexiness aside, if anyone could answer your burning questions about all our financial futures, it's probably these guys. And just imagine the networking possibilities!

Check, Please

At the time of this writing, the top bid for this lunch was $13,000. But expect that number to rise between now and the auction's close on Dec. 15.

For a serious and yet highly readable account of the financial crisis, check out Motley Fool columnist Morgan Housel's $0.99 e-book, Everyone Believes It; Most Will Be Wrong: Motley Thoughts on Investing and the Economy.


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]]>Austin GoolsbeeAustinGoolsbeemort zuckermanMortZuckermanpaul volckerPaulVolckerRobert WolfRobertWolfCatherine Baab-MuguiraThu, 15 Dec 2011 13:15:00 ESTAre Wall Streeters Just Like Us? One Trader's Tell-All Memoirhttp://www.dailyfinance.com/2011/11/08/are-wall-streeters-just-like-us-one-traders-tell-all-memoir/http://www.dailyfinance.com/2011/11/08/are-wall-streeters-just-like-us-one-traders-tell-all-memoir/http://www.dailyfinance.com/2011/11/08/are-wall-streeters-just-like-us-one-traders-tell-all-memoir/#commentsFiled under: , ,

"It was a massive carnival scene right outside our front door. I was on the second floor. You could look out the window and see all these people. It was like being in a bunker. You just didn't want to go outside," says Jared Dillian.

A former Wall Street trader, Dillian is speaking not of the Occupy Wall Street protests, but of the collapse of Lehman Brothers in September 2008.

At that time, Dillian had worked on Wall Street for eight drama-soaked years. That drama was external -- he witnessed firsthand the terrorist attacks of Sept. 11, 2001 -- and it was also internal, directly personal for Dillian as well.

Stressed out from his high-stakes ETF trading role, drinking heavily and suffering from undiagnosed bipolar disorder, in 2006, he suffered a nervous breakdown that led him to spend weeks in a psych ward. When he emerged from the mental hospital, it was only to witness Lehman Brothers' bankruptcy, with reporters massing on the street outside and eagerly confronting the banks' employees.

The Human Side of Wall Street

Dillian recounts his experiences in a gripping and admirably candid memoir, Street Freak, just published by Touchstone. As an insider's look at the workings of a storied investment bank, the memoir is similar to Michael Lewis' classic Liar's Poker. But it's also grittier and more emotional, supplying a human face for an opaque and powerful institution at a time when Americans' frustration with Wall Street may be at an all-time high.

"Wall Street people don't do a very good job of humanizing themselves," says Dillian, "but I'm not into the whole invincibility thing."

A Horatio Alger Tale

A "freakishly ambitious" guy, Dillian wasn't born to a Wall Street dynasty. Growing up in a middle class family, he played the organ at a church as a part-time job. He attended the Coast Guard Academy, double-majoring in math and computer science. After graduating, he served five years in the Coast Guard.

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While stationed in a small town in Washington state, he happened into a used bookstore and read Burton Malkiel's A Random Walk Down Wall Street, which inspired him to get an MBA in finance.

Bootstrapping his way into the job at Lehman Brothers, Dillian nonetheless found himself out of his league in another sense: He wore cheap suits from Men's Wearhouse, while his colleagues sported designer clothes. Even though he'd achieved insider status, he was still an outsider.

His story goes straight to the heart of a cherished American ideal: a deserving smart kid, without undue advantages, working his way up to the top, overcoming whatever obstacles he encounters along the way. And yet, it begs the question: How much can we identify and sympathize with someone who made almost $1 million a year?

"Some people have read the book and told me that's an unbelievable amount of money. Others have told me I was being underpaid," says Dillian, who discloses in Street Freak how much money he made each year. In his final year at Lehman, he made $850,000.

Economic Rewards, Outsized Salaries

Warren Buffett has said that ours is "an economy that rewards someone who saves the lives of others on a battlefield with a medal, rewards a great teacher with thank-you notes from parents, but rewards those who can detect the mispricing of securities with sums reaching into the billions."

But as Dillian puts it, "People who work on Wall Street are just people. My story is not an uncommon story." And he would know, having lived to tell it.

What's your take, DailyFinance reader? Is it right for our society to reward "those who can detect the mispricing of securities with sums reaching into the billions"? Is $850,000 a year worth a stay in a mental ward? Share your opinions in the comments section below.

Motley Fool contributor Catherine Baab-Muguira has no financial interest in any of the companies mentioned.

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]]>A Random Walk Down Wall StreetbankruptcybookJared DillianJaredDillianLehman Brothers Holdings IncmemoirStreet FreakStreetFreaktradersCatherine Baab-MuguiraTue, 08 Nov 2011 11:10:00 ESTIt's Sad to See Friendly's Fail, but It Was Inevitablehttp://www.dailyfinance.com/2011/10/05/its-sad-to-see-friendlys-fail-but-it-was-inevitable/http://www.dailyfinance.com/2011/10/05/its-sad-to-see-friendlys-fail-but-it-was-inevitable/http://www.dailyfinance.com/2011/10/05/its-sad-to-see-friendlys-fail-but-it-was-inevitable/#commentsFiled under:

Friendlly's files for bankruptcyA Friendly's "Jim Dandy" sundae is meant to be shared, and no wonder: It contains five scoops of ice cream, a split banana, pineapple topping, hot fudge, marshmallow sauce, walnuts, and sprinkles.

But on my 10th birthday, I was allowed to order a whole Jim Dandy for myself, and my three guests got their own, too. I was barely able to reach high enough to scoop out bites. But I felt awfully grown up, sharing a booth with just my friends while my parents gave us our privacy by sitting in the next booth over.

Times Have Changed

It was a low-key birthday party by today's standards, yet the pleasure and excitement I experienced at Friendly's were some of the purest I've ever had.

I'm sure I'm not alone in harboring affection for the Friendly's of yore. (It started as a Depression-era ice cream shop, and then was purchased by Hershey Foods (HSY) for $164 million in 1979. After another sale and an IPO, Friendly's was purchased for $559 million in cash and assumed debt in 2007 by private equity firm Sun Capital Partners, which owns it today.)

Today's Friendly's is different. The restaurant smells like a bus station. Food takes a long time to arrive at the table, no matter how painfully empty the dining room is. The salad looks like it was assembled a few weeks before I ordered it. Only the nostalgia keeps me coming back.

When visiting home, I'll still go to breakfast at that same location (the one on Pump Road and Patterson Avenue in Richmond, Va., to be exact), to meet old friends or my younger brothers. It's the place we gathered after my niece was born, and the last place I ate with my brother Luke before he was deployed to Afghanistan.

Soon, though, there may not be a restaurant to return to.

Bound for Bankruptcy

Wednesday, Friendly's parent company filed for Chapter 11 bankruptcy protection.

The chain, headquartered in Massachusetts, owes its creditors some $250 million, and although it has secured $70 million in bridge loans to keep operating, it has already shuttered 63 stores and shed more than 1,000 employees.

The challenging marketplace for a tuna melt and milkshake joint like Friendly's comes as no surprise. Competitors like T.G.I. Friday's, Chili's, Applebee's, IHOP, and Denny's have been eating its lunch for years, so to speak.

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Friendly's has been losing market share and gaining debt since the 1990s, and the number of its stores has declined to less than 500 from a peak of almost 700. More recently, with the recession, consumers have moved toward lower-priced "fast casual" restaurants like Chipotle (CMG) and Panera (PNRA), a trend that Friendly's has tried to ride, opening Friendly's Express stores.

Of course, plenty of consumers -- especially those who've lost their jobs -- have stopped eating out altogether.

We've Seen This Coming, But It Still Hurts

A turnaround for Friendly's will probably require an extreme makeover. Much as I'd hate to see my old favorite restaurant shed its diner vibe, it may prove necessary to offer customers guacamole and rocket, or tapas and spring rolls, to ditch some of the typical diner offerings and focus on freshness (or at least attempt to market its offerings as fresh, as Ruby Tuesday (RT) has done).

But this revamped Friendly's wouldn't be Friendly's anymore, would it? I want to think there'd be enough of a market in delighting kids with gigantic sundaes. Sadly, maybe there isn't. At least the memories are sweet.

Motley Fool contributor Catherine Baab-Muguira has no financial interest in any of the companies mentioned. The Motley Fool owns shares of Panera and Chipotle. Motley Fool newsletter services have recommended buying shares of Chipotle and Panera.


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]]>chipolte mexican grillChipolteMexicanGrillFriendlysFriendlys bankruptcyFriendlysBankruptcypanera breadPanera Bread CompanyPaneraBreadPaneraBreadCompanyRestaurant businessRestaurantBusinessRuby TuesdayRuby Tuesday IncorporatedRubyTuesdayRubyTuesdayIncorporatedservice industryServiceIndustrysun capital partnersSunCapitalPartnersCatherine Baab-MuguiraWed, 05 Oct 2011 16:00:00 ESTThe Groupon Backlash Has Begunhttp://www.dailyfinance.com/2011/08/02/the-groupon-backlash-has-begun/http://www.dailyfinance.com/2011/08/02/the-groupon-backlash-has-begun/http://www.dailyfinance.com/2011/08/02/the-groupon-backlash-has-begun/#commentsFiled under: , , ,

GrouponPop quiz: How many online daily deal services can you name off the top of your head?

Groupon, obviously. Then its competitors: LivingSocial, Trubate, Offermatic, Gilt Groupe, Bloomspot, HomeRun, and Capital Deals, plus TravelZoo (TZOO) Deals, Facebook Deals, Bing Deals, Google (GOOG) Offers ... I'm losing count here.

Daily deal services are popping up faster than lottery winners' long-lost relatives. What was once a reasonable way to save money has become a national obsession.

Not only do we like getting a good deal, we also like watching television shows about other people pursuing bargains, too. TLC's "Extreme Couponing" follows coupon connoisseurs whose moments of triumph boil down to this sentiment: I got a lot of stuff I don't really need or want for next to nothing!

Stockpiling Has Become the New Norm

Money magazine describes America's preoccupation with coupons like this: "It began nearly three years ago as a sensible response to an economic catastrophe but has since morphed into something more complex -- a national fixation with refusing to pay retail that has turned otherwise normal families into coupon-clipping ... stockpilers who march through grocery stores with bulging binders of coupons and fill shopping carts with more free jars of mustard and cat food than they could ever use in a lifetime."

What's surprising in all this is how many of those who obsessively "coupon" (a verb now, like Google), don't need to.

One "Extreme Couponing"-obsessed family interviewed by Money -- the Liggetts, a family of three from Missouri -- make six figures. They have in their pantry 288 rolls of toilet paper, 80 jars of tomato sauce, and 40 bottles of men's body wash. They claim to coupon for kicks.

But if the public's sudden, huge enthusiasm for coupons was indeed a reaction to the recession, it follows that the vast majority of us should stop using coupons when the recession passes.

Backing Away from the Sunday Circular

There are signs that such a backlash is already brewing. People are starting to realize that saving money can cost a small fortune.

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Websites that facilitate the sale of unwanted daily deals have been sprouting up almost as fast as new flash deal sites themselves. They are a way for purchasers to recoup some (if not all) of the money they spent in impulsively clicking for savings.

Groupon may or may not approve of their shadow market, but that the outlets exist at all highlights a major business-model flaw.

About a fifth of daily deal purchasers don't end up using the deals they buy. As Rice University prof Utpal Dholakia recently pointed out to BNet, "when 21.7% of deal buyers don't redeem vouchers ... the daily deal was a bust for shoppers and issuers alike."

So Much for Helping Local Businesses

The worst outcome of the coupon craze is that it may actually be hurting the local businesses people think they're supporting with their patronage.

Even when buyers redeem their vouchers, the customers brought in by daily deal sites rarely spend on other items or return for full-price purchases. It's no wonder that, according to Dholakia's research, fewer than half of the businesses who have participated in daily deals were certain that they'd do it again.

It's hard to make your money back when you're giving away cupcakes and wax jobs for $0.50 on the dollar. Gawker has pointed out that many local merchants are losing more than they can afford to the couponers. For Gawker readers, which number in the millions, the word is out, and the daily deal is no longer guilt-free.

For now, maybe, it's just hoof beats in the hipper parts of Brooklyn. But rest assured that the backlash is coming. When it does, it'll be swift, and it'll be painful for the Groupons of the world.

Motley Fool contributor Catherine Baab-Muguira has no financial interest in any of the companies mentioned in this article. The Motley Fool owns shares of Google. Motley Fool newsletter services have recommended buying shares of Travelzoo and Google.



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]]>couponsdaily deal sitesDaily DealsDailyDealsDailyDealSitesgoogle offersGoogleOffersgrouponGroupon backlashGroupon dealsGrouponBacklashGrouponDealslivingsocialtravelzooCatherine Baab-MuguiraTue, 02 Aug 2011 13:15:00 EST