The Ugly Truth
Total = $56,722
Yes 7, count them 7 credit cards! What was I thinking? No wonder I'm 38, in a well paying job and don't have a home of my own. As today is the first day of Spring here in Australia, what better time to 'spring clean' my finances, and put that debt on a diet once and for all.
The Plan
Based on the snowball calculator I used, I should have eliminated 6 of the 7 credit cards by my 40th birthday in May 2009, and completely debt free by May 2010.
Now, to work the plan in reality.
end.For more than 3 years this person has worked at this Subway Restaurant. She was always on time or early for her shift and was always willing to work as many hours and shifts as needed but, it seems that no matter who asked, or how many times they asked her not to talk on her cell phone while helping customers she wouldn't stop.
I can still remember the first night that I worked with her. I could help but notice that after a few hours working together she had one of those Bluetooth headsets in her ear. The next thing I knew she was serving a customer and asking him to hold on a second while she answered a call from someone. I couldn't believe what I was seeing. It turns out that this wasn't the first time that she'd done this. Not knowing this at the time I even tried warning her that it wasn't a good idea that she does this, especially while serving someone. At the time she gave me some long drawn out explanation about her kids being at home alone and how she needed to talk to them on a regular basis. Having children of my own, I told her to let me or someone else knows when she had to take an emergency call so, we could serve the customer. But, even after this she continued to make idle conversations on her cell while serving customers. Well, it turns out that she had done this during our day shift one time too many and the owner called to tell me that I was to tell her tonight at the end of her shift that her employment with is terminated.
Although she was at fault I felt very bad doing this because, I have a daughter with children very close to her age, and the last thing I would want to happen to her is to become unemployed.
I hope everyone is excited for the long Labor Day Weekend. Enjoy a few quite moments reading the top stories from Value Investing News this weekend. Here are this week’s top stories:
Enjoy your weekend!
The Carnival of Personal Finance is now looking for volunteers for hosting the Carnival in the months of October, November, and December. There are only 14 slots available, and they will go fast. If you’re interested in hosting, take a look at the requirements—they’re a little different than your average Blog Carnival—and provide your information here.
The 116th Carnival of Personal Finance will be hosted next Tuesday rather than Monday due to the Labor Day holiday in the United States. Advanced Personal Finance will be doing the honors. This is KMC’s first time hosting the Carnival. To submit an article, use this form, which now supports categories, possibly making life easier for the host.
The deadline for submissions is 6:00 PM Eastern Time on Sunday.
The month of August, has been another eventful one for us to say the least!
For a while whenever I came home I was almost expecting to learn something else shocking.
Late last night my wife and I sat down at the kitchen table with the intent of having another simple and short budget-meeting for the month of September. But, what started out to be simple very quickly became long and drawn out. Then, the next thing we knew it was almost sunrise and we were still debating on how much we should allocate for food, groceries and personal items. One of the sticking points was specifically how much we should allocate for our two teenage nieces in the area of personal items, etc. Especially since they are both "of age...”
We've raised one daughter who is married and living on her own. And, we still have one teenage daughter living with us so its not like we haven't had any experience with girls but, for some odd reason my wife felt that we needed to create a special line item for female personal needs since my cousin and her two teenage daughter would be staying with us for the next two or three months. As usual I eventually agreed but, by that time we were both to o sleepy to complete the budget.
Last August marked the beginning of this site and was a time when I spent a good deal of time writing to myself as there were not many visitors.
Therefore I would like to take you back in time to a few posts that I feel are worth re-reading from one year ago this month:
Enjoy your trip back in time!
Things are going down but nowhere as quickly as I would like it to. I’m at least where I was before June and all those events happened. Instead of trying to pay off debt I am trying to avoid increasing it. On the other hand my wife isn’t helping us opening a store credit card and buying a bunch of clothes with it. Debt reduction seems counter productive when this happens. Here’s where I currently stand:
| Credit Cards | Balance | Credit Line | APR |
|---|---|---|---|
| Bank of America | $4,067.98 | $5,500.00 | 17.24% |
| Associates | $1,297.89 | $1,700.00 | 18.99% |
| Citi Dividend | $5,346.00 | $8,700.00 | 9.90% |
| Zales | $1,000.00 | $5,000.00 | 9.90% |
| Totals: | $11,711.87 | $20,900.00 | |
| Debt-to-Credit | 56.04% | Change | 1.28% |
I’m glad I got the Zales account down to the 1k because that means it will fall below that next month. If I could figure out a way to budget four focused payments of $250 I could kill that by the end of the year. I also opened a new credit card myself that offers 0% APR for 12 months and $100 gift card with initial purchase. So when I get the card I’ll have to wait before doing the balance transfer to it and buy gas or something with it, pay it off, collect my gift card, and then transfer a balance to it. It will be nice to not pay interest and focus every dollar on principle. Just have to figure out what to do about this store card my wife opened now.
ARCI is this week's Chart of the Week. This stock was ranked #1 this week in the Trade 4 Cash Top 20, a listing of the the top ranked stocks in my fundamental/ technical ranking system.Bush made some half-steps yesterday. I guess providing insurance is a good thing. I just feel that the reason some of these folks can’t get a good mortgage right now (to refinance out of their current one) is that they are a bad credit risk. So I’m not sure I (as a taxpayer) want to be on the hook for their mistakes. But I don’t want a total market meltdown either. Eh, whatever.
Despite the assertion that affecting the markets is not the goal, one administration official said Thursday evening that concern about Wall Street’s reaction did affect the timing of the briefing. He said there was a fear that if the White House announced in the morning that Mr. Bush would be making an announcement on housing, there could be confusion as buyers and sellers of mortgage securities guessed what the announcement would be.
But secondarily, this official said, helping homeowners keep their homes and refinance or renegotiate the terms of the mortgages could have a stabilizing effect on the financial institutions that have these mortgages in their portfolios, and help them write down the value of the mortgages or sell them off at a loss.
Yeah, it will be nice if things stabilize. It doesn’t seem to take much these days for things to going into a death spiral.
“This is helpful. But you had millions of people taking loans they should not have been taking, and investors lending money at too low interest rates,” Mr. Davidoff said. “Nothing is going to make those bad decisions go away.”
Unfortunately he’s right. There are going to be repercussions and such in the housing and stock markets for a while. There will be over-reactions and over-tightening of mortgage standards. I just hope they don’t enact legislation that’s too restrictive on mortage origination. Legislation is hard to change and sticks around for a while.
I was trying to figure out what is causing Mothers Work (MWRK) to climb more than 13% today. All I could find was James Altucher’s Daily Blog Watch, which mentions a blog article by Blogvesting questioning whether Mothers Work is a value trap. Altucher’s Blog Watch is always an interesting read but it’s not really stock price moving news. On top of it all, the blog post mentioned by Altucher is bearish on Mothers Work.
What really caught my attention was that the post by Blogvesting discusses and directly links to my analysis of Mothers Work. I love it that another blogger is challenging my stock analysis. The debate helps me to focus on the weaknesses of my research and improve my overall approach to value investing. However, in this case, I have quite a few issues with the author’s take on Mothers Work.
First, I want to note that my thesis was not that Mothers Work fell below its intrinsic value because Bear Stearns had a cash crunch. Blogvesting seems to be under the impression that that was in fact my thesis. I actually bought my position in Mothers Work before the sale of MWRK by Bear Stearns was made public. I also noted that the my main attaction to Mothers Work was based on my observation at the mall that women are wearing clothing styles that are very similar to maternity clothes and that this current style is probably causing sales at Mothers Work to drop temporarily.
Second, I acknowledge that Mothers Work has a considerable amount of debt. However, given that interest rates were very low for the past few years, loading up on debt to grow a wide moat company was probably a smart move. The debt to equity ratio is still below one and will likely fall over the next few years. The debt levels are something worth keeping an eye on but I believe Mothers Work’s debt level is still managable and might even create long term value.
Next, Blogvesting examines the intrinsic value of Mothers Work. He comes up with an intrinsic value of between $25 and $30 based on a PE ratio of 10-12. I believe using PE ratios to value companies is the wrong way to go. Regardless, does an intrinsic value estimate of $25 - $30 per share for stock that has been trading for $18 or less over the past few weeks sound like a value trap? It doesn’t to me.
The Blogvesting post then goes on to analyze the management compensation at Mothers Work. I agree with the assessment that management is richly compensated. I am dissapointed that the founders have given themselves so much salary and stock option compensation. It would be better if they aligned their interests better with shareholders by having a larger equity stake and using their equity gains as compensation. It is also interesting to note that the company granted the Mathiases a pension fund in their last 10Q. This might signal the possibility that the Mathiases are contemplating retiring soon. This might actually be a good thing if they are replaced with management that is experienced in international expansion.
I also disagree with the Blogvesting’s take that the maternity market is not a growth market. I think there is plenty of room for Mother Works to grow internationally. My understanding is that the maternity market is very fragmented and underserved internationally.
In conclusion, I agree that Mothers Work’s management could be treating their public shareholders better. However, I do not believe that the founders of the company would damage the long term value of the company that they created. I think many of the troubles the Mothers Work is working through are temporary in nature and that this company’s dominance in the maternity market will continue to generate significant free cash flows into the future. It appears that Mr. Market agrees with my analysis today, but it will take many months to see if I’m really right on this one. Stay tuned.
Full Disclosure: I own shares of Mothers Work (MWRK).
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Head hunters, take notice!
“For a moment, I want to put my state of mind into context on June 11. For 8 months leading up to June, my family and I had been relentlessly and viciously harassed by the Idaho Statesman. If you’ve seen today’s paper, you know why. Let me be clear: I am not gay and never have been.”
“Still, without a shred of truth or evidence to the contrary, the Statesman has engaged in this witch hunt. In pleading guilty, I overreacted in Minneapolis, because of the stress of the Idaho Statesman’s investigation and the rumors it has fueled around Idaho. Again, that overreaction was a mistake, and I apologize for my misjudgment. Furthermore, I should not have kept this arrest to myself, and should have told my family and friends about it. I wasn’t eager to share this failure, but I should have done so anyway.”
I got overpaid on my latest paycheck by several hundred dollars. When we had guests at our house this month I took off some days without pay because I had run out of vacation days. I filled out my time sheet correctly, but it looks like payroll wasn't paying attention. At first I was delighted, then confused, then dismayed. I considered keeping the money (it's their mistake and obviously nobody had noticed, maybe I could just not notice either?) but my conscience compelled me to do the right thing. I sent a note to payroll and expect the money to be deducted from my next paycheck.
Le sigh.
Wisebread has a pretty funny article on frugal things my mom does - packet squeezing. If you check it out, make sure you read the comments too.
Family Man discusses growing up now and then. He’s only a few years older than me, so his whole post hits close to home. Oh, and if you watch the last video he posted…you might want to grab some tissue. Good stuff.
Lastly, a fellow shout-out to a fellow personal finance blogger who is the new person behind About.com’s Financial Planning subject. Congrats to Jeremy from Generation X Finance!
I don’t know about all of you, but this weekend we are using the extra day off to do quite a few things around the house (shhh…don’t tell my husband, he doesn’t know yet LOL). Don’t worry, we’ll have some fun too 
Hope you enjoy your weekend!
Hugo Chavez, a student of Zimbabwenomics, believes in fairness and the sun is no exception. He has found the sun to be inequitably delivering its sun beams and has decided to do something about it. Chavez plans to Venezuela’s time zone back 30 minutes.
Now the leftist reformer, highly popular for redistributing oil income, is seeking to move the country’s time zone to offer a more equitable distribution of sunlight.
Venezuela in September will turn clocks back by 30 minutes as it switches time zones to boost the amount of natural light to residents, a government official said on Thursday.
Next month Venezuelan clocks will be set at Greenwich Mean Time (GMT) minus 4-1/2 hours, compared to the previous GMT minus four hours, Science and Technology Minister Hector Navarro told reporters at a news conference.
He said the measure sought “a more fair distribution of the sunrise,” which would particularly help poor children who wake up before dawn to go to school.
…
Navarro said the government is planning to announce additional measures to “make more effective use of time.”
Recommendation: Long the sun, long time. Short Venezuela.
Bill Stickley, Ijlal Inner Circle member from Milford, Michigan send me these very cool pics from his road trip to Bentonville, Arkansas and Sam Walton's 10 Rules for Building A Business.
Hi Mark,I was exploring in Bentonville Arkansas today, visiting Sam Walton's first store. (see attached photos of outside of store and his office inside.) This is the store that enabled him to launch Wal-Mart
While looking at his original office that has been moved into the back of the original store I came across this gem that he wrote. Sam Walton, outlined his 10 rules for building a business so that anyone could learn from them. The rules are as follows:
Rule 1
Commit to your business.
Believe in it more than anybody else. I think I overcame every single one of my personal shortcomings by the sheer passion I brought to my work. I don't know if you're born with this kind of passion, or if you can learn it. But I do know you need it. If you love your work, you'll be out there every day trying to do it the best you possibly can, and pretty soon everybody around will catch the passion from you -- like a fever.Rule 2
Share your profits with all your associates, and treat them as partners.
In turn, they will treat you as a partner, and together you will all perform beyond your wildest expectations. Remain a corporation and retain control if you like, but behave as a servant leader in a partnership. Encourage your associates to hold a stake in the company. Offer discounted stock, and grant them stock for their retirement. It's the single best thing we ever did.
Rule 3
Motivate your partners.
Money and ownership alone aren't enough. Constantly, day-by-day, think of new and more interesting ways to motivate and challenge your partners. Set high goals, encourage competition, and then keep score. Make bets with outrageous payoffs. If things get stale, cross-pollinate; have managers switch jobs with one another to stay challenged. Keep everybody guessing as to what your next trick is going to be. Don't become too predictable.Rule 4
Communicate everything you possibly can to your partners.
The more they know, the more they'll understand. The more they understand, the more they'll care. Once they care, there's no stopping them. If you don't trust your associates to know what's going on, they'll know you don't really consider them partners. Information is power, and the gain you get from empowering your associates more than offsets the risk of informing your competitors.
Rule 5
Appreciate everything your associates do for the business.
A paycheck and a stock option will buy one kind of loyalty. But all of us like to be told how much somebody appreciates what we do for them. We like to hear it often, and especially when we have done something we're really proud of. Nothing else can quite substitute for a few well-chosen, well-timed, sincere words of praise. They're absolutely free -- and worth a fortune.Rule 6
Celebrate your successes.
Find some humor in your failures. Don't take yourself so seriously. Loosen up, and everybody around you will loosen up. Have fun. Show enthusiasm - always. When all else fails, put on a costume and sing a silly song. Then make everybody else sing with you. Don't do a hula on Wall Street. It's been done. Think up your own stunt. All of this is more important, and more fun, than you think, and it really fools the competition. "Why should we take those cornballs at Wal-Mart seriously?"Rule 7
Listen to everyone in your company.
And figure out ways to get them talking. The folks on the front lines -- the ones who actually talk to the customer -- are the only ones who really know what's going on out there. You'd better find out what they know. This really is what total quality is all about. To push responsibility down in your organization, and to force good ideas to bubble up within it, you must listen to what your associates are trying to tell you.Rule 8
Exceed your customers' expectations.
If you do, they'll come back over and over. Give them what they want -- and a little more. Let them know you appreciate them. Make good on all your mistakes, and don't make excuses...apologize. Stand behind everything you do. The two most important words I ever wrote were on that first Wal-Mart sign, "Satisfaction Guaranteed." They're still up there, and they have made all the difference.Rule 9
Control your expenses better than your competition.
This is where you can always find the competitive advantage. For 25 years running -- long before Wal-Mart was known as the nation's largest retailer -- we ranked No. 1 in our industry for the lowest ratio of expenses to sales. You can make a lot of different mistakes and still recover if you run an efficient operation. Or you can be brilliant and still go out of business if you're too inefficient.
Rule 10
Swim upstream.
Go the other way. Ignore the conventional wisdom. If everybody else is doing it one way, there's a good chance you can find your niche by going in exactly the opposite direction. But be prepared for a lot of folks to wave you down and tell you you're headed the wrong way. I guess in all my years, what I heard more often than anything was: A town of less than 50,000 population cannot support a discount store for very long.
Following these rules Sam Walton built a company that will have revenues in excess of 300 Billion dollars this year. To put that in perspective that is over $40.00 in sales for every man, woman and child on the Planet! I am going to make a copy of these rules to put up on my office wall.Bill Stickley
Lost in the noise of "will he or won't he" surrounding Fed Chief Ben Bernanke's speech was what he didn't say: He said NOTHING about creating new types of mortgages that could help bail out or help jump-start the mortgage market, as he did in a letter to Sen. Charles Schumer, per my post earlier this week. The speech, however, did have a wonderful professorial history of the mortgage markets and how we got where we are. Also, for what it's worth: I believe he was as noncommittal as Greenspan and really did little more than say the obvious: We'll do what we have to do if we have to do it.
The beat goes on...
We are now back to our regular schedule of Friday updates to TopRank’s BIGLIST of SEO blogs. Not to be confused with qwerty’s “The Kind of Smallish List of Sort of Search Marketing Blogs“. 
