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July 2008 - Posts - The Dollar Stretcher
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The Dollar Stretcher

The Dollar Stretcher blog will explore people and money.

July 2008 - Posts

  • They're Hiding Something

    Sometimes I can be contentious. At least that's what my wife says. I prefer to think that I stand up for what I believe is true. Even if someone else needs some evidence to be convinced.

    Prime example this weekend. It was an argument that I've heard often. It says that the oil and auto companies are buying up inventions that would make travel much cheaper. You know the 200 mpg car. Or the car that runs on water.

    I don't find their arguments of a conspiracy very compelling. Even if they know someone who was related to someone who knew the person who sold their patent to a major oil or auto company. Mostly because it doesn't make sense to me. 

    For instance, suppose that I had invented a device that would make it possible for the average car go to 200 miles on a gallon of gas. First I would patent the device so that  no one could steal my idea. Then I'd either begin production of the device or sell it to a car maker. Let's suppose that I sold it to GM. Do you really think that they wouldn't produce the device? Think of how many cars and trucks they could sell if they were getting 10 times the mileage of other car companies. Their sales would sky rocket. So would their profit.

    My friend says that the oil companies would buy it up to protect the oil still left in the ground. But the facts don't support that. The Economist magazine pointed out that the true players in oil are the nationalized oil companies. 

    Yet Big Oil is pretty small next to the industry's true giants: the national oil companies (NOCs) owned or controlled by the governments of oil-rich countries, which manage over 90% of the world's oil, depending on how you count. Of the 20 biggest oil firms, in terms of reserves of oil and gas, 16 are NOCs. Saudi Aramco, the biggest, has more than ten times the reserves that Exxon does.

    You can read the rest of the article here.

    I suppose that you could argue that I'd sell the secret patent to the Arabs, but I'm pretty sure that there are laws about selling technology overseas.  But, even if I could and did sell to the Arabs, do you really think that I could keep it a secret? When Paris Hilton can't go to the grocery store without the whole world knowing how short her shorts were, do you really think that all the investigative reporters would overlook a multi-multi-million dollar deal of this type? Especially one that could save consumers thousands of dollars?

    Guess I'm not big on conspiracies. But I do believe in good old fashioned engineering and invention. We saw it with fuel injection. First tried (and failed) in the 1950's, it became standard 20 years ago. Much more efficient than carbureators. Computer controls were another step in improving internal cumbusion engines. We have both power and mileage that would have been impossible a generation ago.

    Improvements came gradually. I suspect that will also be true now. Sure, there will be some breakthroughs. But much of the solution to the energy crisis will come a little bit at a time. One year Toyota will come up with something good. The next year GM will have something even better. The year after that ExxonMobil will introduce something that takes advantage of whatever Toyota and GM introduced.

    Maybe I'm missing something. I'm often reminded that I'm not perfect (unfortunately true). If you have some compelling argument or (better still) some proof that big companies are buying up inventions so they can't be used, I'd love to hear it. Shoot, at this point I'm sure that the whole world would like to hear it!

    Keep on Stretching those Dollars!

    Gary 

  • Preparation - military style

     Got an email from a friend poining out a blog that's a little different. It talks about finances, but also has stuff for survivalists and adventurers! You can check it out here

    Right now they have a lot of different information on financial preparedness. Seems like that might be our theme this week. And while I'm not to the point that I think the economy is going to force me to be able to survive without my local grocery store, it is a good time to get ready in case things get tougher economically.

    Keep on Stretching those Dollars!

    Gary

     


  • Recession or Depression?

    What's the difference between a recession and a depression?
    Which one are we in now?
    Is it possible that the other will happen?
    Thanks, Carrie

    Perhaps an article on the definition of a recession would be helpful. Love the Stretcher, but you seem to accept that we are in a recession. Not by 
    the numbers - not yet, at least. We are experiencing inflation. But maybe not a recession. Time will tell. Just makes a great website and 
    newsletter look less than stellar when you buy in to the conventional wisdom instead of stating facts...
    Jennifer

    Carrie & Jennifer,

    Let's start with the facts. A recession is when the economy shrinks for 2 consecutive quarters.A depression is when the economy shrinks by more than 10%.

    So far we have not even had 1 quarter where the economy has shrunk. So we're not in either a recession or a depression.

    It's possible (likely?) that we'll go into a recession. We haven't had even 1 quarter of economic decline since Q3 2001 (9/11) and no recession since before 2000. So it's remarkable that we haven't had one before now. Based on past economic cycles we are long, long overdue.

    As to forecasting the future? That's something that I really don't think I can do.

    Do I buy the 'conventional wisdom' that we're already in a recession? No, I really don't. I think that the media will always promote a potential crisis. It helps them to keep readers/viewers and to make money. You'll never see a big headline saying "Everything Is OK". That doesn't sell newspapers or keep TV watchers from reaching for the remote. In fact, I get bugged when they hype a recession that doesn't exist. Frankly, they've got a lot of people scared who don't need to be.

    But just because we're not officially in a recession, that doesn't mean that we shouldn't discuss being prepared for hard times. Even when times are good. Just like the Boy Scouts we believe in being prepared. For a job loss, unexpected illness or other unexpected expense. That's just being smart in my book. We've been encouraging people to save for a rainy day since we started in '96. I've been telling individuals the same thing back when I was a financial planner for the last 25 years.  It's always been good advice.

    Does that make us look like we're going along with the 'conventional wisdom'? Perhaps. But, that's really not the motivation.

    It's important for us to remember that not everyone is in the same place in life. Some of our readers are doing just fine. Sure, they're not happy about higher gasoline or bread prices. But, paying for them won't break their budget.

    That's not true for everyone. Some folks are really struggling with the higher gas prices. They can hardly afford to drive to work.  Others may have lost a job or faced a sudden illness. For them it doesn't matter whether the economy is in a recession. Their family is in a recession. And, that's all that matters to them.

    It's our job to try to provide tools for those who need them and are willing to use them. That means that we'll probably always pay a little more attention to the black cloud instead of looking at the silver lining. Personally I tend to be an optimist. But I think that being prepared for the worst actually gives you more freedom to be optimistic about the future. Instead of worrying about it, you know that you've taken appropriate steps. 

    That really would make a good motto. "Expect the best, prepare for the worst." (I googled it and find that it's attributable to Zig Ziglar - it does sound like something that he'd say). But, it's good advice. Especially for those of us who want to be in control of our financial futures.

    Keep on Stretching those Dollars!

    Gary 


  • You Wouldn't Believe...

    It all started three weeks ago. A group of friends and I were doing the BBQ for a fairly large charity event (expected crowd 300 to 500 people) on a Saturday. We were bringing out our trailered smoker and 8 burner gas grill. On the menu: burgers, dogs, pulled pork and corn-on-the-cob. In volume. The first guys headed out about 8am. I followed about 9:30.Figured to start serving about 11:30am.

    We were really smoking (literally!) until about 10:30. We had plenty of help and the guys were all just enjoying working together for a good cause (in this case, a home for foster children). That's when it became obvious to us that rain clouds were heading our way. Massive rain clouds.

    You can probably guess what happened next. The skies opened up on us. And, there's no downpour like a Florida downpour. A little like standing under a waterfall. But we had people to feed. So we kept on cooking. And cooking. For about 3 hours in a very steady hard rain.

    Still the guys were all fine about it. In fact, we even had some fun with it. By the time I got home around 3pm I was soaked to the skin. Couldn't have been any wetter if I had jumped in a lake with my clothes on. I had a few dollars folded in one pocket. Soaked. My wallet? Just about the same. First thing I did when I got home was to get out of the wet clothes and take a shower. Tossed my wallet in it's usual place figuring it would dry out soon enough.

    Fast forward a couple of weeks. I'm shopping and pull a bill from my wallet. It's still a little damp. And my wallet has a distinct musty aroma! Now that wouldn't be a big deal unless you're known as the Dollar Stretcher. And, although I'll admit to be careful spending money, there's no truth to the rumor that my wallet is opened so seldom that mold is growing on the inside. Really, I promise you that it's just not true! 

    Moral to the story? If you're cheap and get very wet you need to make sure that your wallet gets properly dried. Failing that I wonder if putting one of those pine tree car fresheners in my wallet would work...

    Keep on Stretching those Dollars!

    Gary 

     

     

     (musty smelling wallet)

  • $2.42 per gallon?

     As regular readers know, I'm a car guy.  Always have been. Always will be. In fact, I plan on taking my Impala to an old car show tonight. Can't wait! 

    Part of being a car guy is learning about cars. And, I've learned that the internal combustion engine wasn't always the only choice for power. Back in the early days (until the 1920's), both steam (Stanley Steamer and others) and electric (primarily the Detriot Electric) were options. But there have always been some alternative fuel vehicles. The Checker Motor Co. (makers of cabs from the 20's until the 80's) experimented with a propane car in the 70's. There were others. But, eventually the internal combustion engine always had more going for it than the others. The main advantages were that you didn't have to wait for the car to be ready (like steam) and you could drive anywhere that gasoline was sold (unlike the electric which had a limited range).

    Just today I was fascinated to read a blog entry from someone who's been driving a CNG Honda. CNG stands for Compressed Natural Gas. He claims to be paying the equivalent of $2.42 per gallon of gasoline or $15 a fillup! Thought that you might find it interesting reading. You can check it out here .

    I'm not sure what the future of personal transportation will be. Tonight I'll be driving a 327 Chevy putting out about 300 hp on high test. I won't spin the tires even though I could. But, I wouldn't be surprised to find that someday people will look at my '65 and wonder why people used internal combustion engines as long as they did.

    Right now CNG is only practical if you live in certain places and can find a fillup when you need one. But, if that's the case you might find that it's a great way to avoid problems caused by rising gasoline prices! 

  • Surprises

     I love the little surprises of the day. Especially the ones that make me smile or think. Really especially the ones that make me do both! 

    This morning I was introduced to a new blog. It's called "Only Knives" and the entry that drew my attention was "10 Reasons to Shave with a Straight Razor". You can read it here

    Now most guys would pretty much laugh at that type of thing. After all, who wants to go back 100 years or more. And, the thought of putting something sharp near your jugular vein conjures up all kinds of horror films.

    But, I am kind of a retro guy. Much of our furniture is 50's style (mid-century modern). For fun I drive a '65 Chevy. And, much of the music I love is back in the tape or record era. So maybe it's something I should think about.

    In any case, it's an interesting read. Even if you have no intention of letting anything more lethal than a Bic disposable razor anywhere near your neck! And, even if the only shaving you do is on those beautiful legs of your's. It may not make you think the way I did, but it will make you smile! And, if you decide to take a swipe at it (ok, wrong choice of words) it could save you some money!

    Keep on Stretching those Dollars!

    Gary

  • Modeling

    The other day I saw an interesting t-shirt at the Y. A simple message. "Professional Role Model." A young mother was wearing it. And, I believe that she was exactly right. She is a role model for the two youngsters that were following her.

    That's also true in financial affairs. Even if we don't make a conscious effort to teach our children about money, they still watch what we do. And, very often they will imitate it.

    So if you spend more than you make and struggle with the bills each month, don't be surprised if your kids do, too. On the other hand, if you use a budget and manage your finances there's a good chance that you won't be the last generation to do so.

    We're all "Professional Role Models" in more ways than we probably want to think about. But, that's part of what parenting is all about.

    Keep on Stretching those Dollars!

    Gary                   

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Gary is a former financial planner and purchasing manager who edits The Dollar Stretcher website <www.stretcher.com> and newsletters. You can follow Gary on Twitter.com/gary_foreman
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