I can remember as a young child watching “The Jackson Five” on our 4 station television (ABC, NBC, CBS, PBS) and from the beginning, everyone knew that Michael was the star. Later, when I was in high school and he began his solo career, his stardom rose to dizzying heights. When his album, Thriller, was released, MTV was just coming of age and Michael was able to ride that wave to super-stardom.

Looking back on his life, I’ve realized some of the immense differences between him and myself, and no, I’m not just talking the obvious differences in ability (dancing, singing, songwriting, etc.), I’m talking about the differences in how we chose to live our lives and how we viewed ourselves. Indeed, there were some stark differences and some rules to live by to avoid becoming a rich, detached soul.

Rule #1: Stay normal. Normal can mean a wide array of things, but no one can convince me that it’s normal to live with a chimpanzee, grab your crotch in public, or leak untruths to tabloids just for the publicity.

There’s nothing wrong with pushing the envelope, but part of the growing up process means you know when you’re taking it too far.

Rule #2: Stay young but grow up. I can be young at heart and stay playful, youthful, and healthy, but I have to grow up and make wise decisions based on experience and what I learn from others. Part of growing up is realizing I have to be the one to make a decision and stop relying on others to make it for me.

Grown-ups make grown-up decisions and maturity doesn’t equate with infirmity. Grown-ups handle disappointment and learn lessons through experience and counsel.

Rule #3: Love doesn’t mean attention. Just because you garner attention for your off-the-wall antics doesn’t mean people care about you as a person. If you’re an oddity, and you pursue that public persona, don’t be surprised if they lose interest when you start acting like a grown-up.

All publicly rich people get lots of attention … it’s because other people want their money. Attention doesn’t mean admiration, respect, and care.

Rule #4: Be more of an open book. When you consciously decide to create an aura of mystery around yourself, rather than just BE yourself, you lose sight of who you really are. Once you lose sight of that, you can be convinced of almost anything.

Rule #5: Money and fame cannot buy self esteem. Every famous and wealthy person will attest that no amount of money or fame can quell that still small voice inside that constantly wonders, “Am I good enough? Am I loved? Am I worth anything?” Self-esteem comes from knowing who you are on the inside and making the conscious decision to be comfortable with it.

Money reveals who you are … and amplifies it

Fame and fortune don’t force you to become someone different, they only reveal who you really were all along. If you were unsure of yourself before, $500 million dollars won’t help. If you were a poor money manager before, loads of cash will only highlight your poor management abilities. As a matter of fact, a lack of money can be the best thing to happen to you if it forces you to learn and use self discipline!

Star studded entertainers and celebrities have life thrust upon them – money, fame, advisers, publicists, agents, and a herd of people who claim to have the star’s best interest at heart when they probably have their own best interests at heart. Later, the celebrity finds that they can’t trust anyone. It must be miserable.

The key for me is to slow down, ask myself what I really want out of life, answer that question truthfully, and work out a plan to achieve it, all while being true to myself and my values and keeping my feet firmly planted in reality.

What about you? What lessons can you learn?

My condolences go out to the Jackson family and to the children.

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The drunken party is over, now it’s time for the hangover, and for some, a couple of cups of coffee might not be available anyway. Starbucks, the former darling of Wall Street, is closing up to 600 stores. [UPDATE: STARBUCKS PLANS TO CUT AN ADDITIONAL 1,000 HOME OFFICE STAFF] Circuit City, Linens ‘N Things, The Sharper Image, and Mervyn’s stores have also been thrown out of the bar. Clothing retailer Goody’s is shuttering several hundred stores, and a recent report in Forbes (the link doesn’t want to work so here’s the URL: http://www.forbes.com/2009/01/20/retail-bankruptcy-economy-biz-commerce-cx_tvr_0120closings_slide.html?thisSpeed=15000) highlights a boatload of retailers that are struggling. Most are examining their income statements and balance sheets, realizing that they operated on the premise that the good times never end. That’s a fatal strategy.

One-third of U.S. women recently surveyed by America’s Research Group said they plan NO clothing purchases–NONE–in 2009. Normally, it’s just 4%. That means the market is still far too saturated with stores.

Recessions have been fairly predictable

We experienced recessions in 2001, 1990, 1981, and 1973. It looks like we get one every 8 or 10 years, like it or not. So why can the executives at these companies not see that we have a relatively consistent business cycle? Shouldn’t they use some common sense and prepare?

What can we learn from their mistakes?

If you learned that your income would drop 50% once every 10 years, how would YOU prepare? What preparations would you implement? Well, consider yourself forewarned! We will probably have another recession between 2017 and 2020 — regardless of what the Federal Reserve does, regardless of who’s the President, regardless of who’s in Congress, regardless of who won American Idol season 19.

Dig your well before you’re thirsty!

Time is the best way to get through a hangover and the best way for us to get through the recession is PATIENCE. Couple that with massive debt reduction, a pumped up saving account, and personal frugality, and we might have the recession hangover cure!

In the meantime, if you’re holding a gift card from one of these retailers, it might be a good idea to go ahead and use it now. Here’s the list (sounds like the average mall minus the anchor stores):

• Eddie Bauer
• Lane Bryant
• Fashion Bug
• Catherine’s
• Shoe Pavilion
• Goody’s
• Timberland
• Ann Taylor
• Zales
• Piercing Pagoda
• Pep Boys
• Sprint Nextel
• Starbucks
• Pacific Sunwear
• Gap
• Tweeter
• Value City
• Steve & Barry’s
• Boscovs

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Why do so many politicians suddenly look indignantly at the President and his Administration when they were warned repeatedly about the potential collapse of the mortgage markets, yet failed to do anything about it?

For many years the President and his Administration have not only warned of the catastrophic consequences of financial turmoil at Fannie Mae and Freddie Mac (called government-sponsored enterprises or GSE) but also proposed plans to reduce the risk that either would encounter such difficulties. President Bush publicly called for reform 17 times in 2008 alone before Congress acted. Unfortunately, these warnings went unheeded, as the President’s repeated attempts to reform the supervision of these entities were thwarted by the legislative maneuvering of those who emphatically denied there were problems.

“These two entities, Fannie Mae and Freddie Mac, are not facing any kind of financial crisis. The more people exaggerate these problems, the more pressure there is on these companies, the less we will see in terms of affordable housing.” said Representative Barney Frank of Massachusetts, the ranking Democrat on the Financial Services Committee in the New York Times in September of 2003.

Or how about Rep Melvin L. Watt, Democrat of North Carolina, who said, “I don’t see much other than a shell game going on here, moving something from one agency to another and in the process weakening the bargaining power of poorer families and their ability to get affordable housing.”

Or how about Christopher Dodd who told the Washington Post that he thought the 2005 reform bill would only hurt low income families qualify for home loans.
Recently, he had the gall to say to Bloomberg, “I have a lot of questions about where was the administration over the last eight years.”

Mr. Dodd, where have YOU been? Rest assured YOU won’t face any storm of contempt over your short, selective memory even though you’re the Chairman of the Senate Banking Committee!

Where has the Administration been Mr Dodd? Try this on for size:

2001
April: The Administration’s FY02 budget declares that the size of Fannie Mae and Freddie Mac is “a potential problem,” because “financial trouble of a large GSE could cause strong repercussions in financial markets, affecting Federally insured entities and economic activity.”

2002
May: The President calls for the disclosure and corporate governance principles contained in his 10-point plan for corporate responsibility to apply to Fannie Mae and Freddie Mac. (OMB Prompt Letter to OFHEO, 5/29/02)

2003
January: Freddie Mac announces it has to restate financial results for the previous three years.

February: The Office of Federal Housing Enterprise Oversight (OFHEO) releases a report explaining that “although investors perceive an implicit Federal guarantee of [GSE] obligations,” “the government has provided no explicit legal backing for them.” As a consequence, unexpected problems at a GSE could immediately spread into financial sectors beyond the housing market. (“Systemic Risk: Fannie Mae, Freddie Mac and the Role of OFHEO,” OFHEO Report, 2/4/03)

September: Fannie Mae discloses SEC investigation and acknowledges OFHEO’s review found earnings manipulations.

September: Treasury Secretary John Snow testifies before the House Financial Services Committee to recommend that Congress enact “legislation to create a new Federal agency to regulate and supervise the financial activities of our housing-related government sponsored enterprises” and set prudent and appropriate minimum capital adequacy requirements.

October: Fannie Mae discloses $1.2 billion accounting error.

November: Council of the Economic Advisers (CEA) Chairman Greg Mankiw explains that any “legislation to reform GSE regulation should empower the new regulator with sufficient strength and credibility to reduce systemic risk.” To reduce the potential for systemic instability, the regulator would have “broad authority to set both risk-based and minimum capital standards” and “receivership powers necessary to wind down the affairs of a troubled GSE.” (N. Gregory Mankiw, Remarks At The Conference Of State Bank Supervisors State Banking Summit And Leadership, 11/6/03)

2004
February: The President’s FY05 Budget again highlights the risk posed by the explosive growth of the GSEs and their low levels of required capital, and called for creation of a new, world-class regulator: “The Administration has determined that the safety and soundness regulators of the housing GSEs lack sufficient power and stature to meet their responsibilities, and therefore…should be replaced with a new strengthened regulator.” (2005 Budget Analytic Perspectives, pg. 83)

February: CEA Chairman Mankiw cautions Congress to “not take [the financial market's] strength for granted.” Again, the call from the Administration was to reduce this risk by “ensuring that the housing GSEs are overseen by an effective regulator.” (N. Gregory Mankiw, Op-Ed, “Keeping Fannie And Freddie’s House In Order,” Financial Times, 2/24/04)

June: Deputy Secretary of Treasury Samuel Bodman spotlights the risk posed by the GSEs and called for reform, saying “We do not have a world-class system of supervision of the housing government sponsored enterprises (GSEs), even though the importance of the housing financial system that the GSEs serve demands the best in supervision to ensure the long-term vitality of that system. Therefore, the Administration has called for a new, first class, regulatory supervisor for the three housing GSEs: Fannie Mae, Freddie Mac, and the Federal Home Loan Banking System.” (Samuel Bodman, House Financial Services Subcommittee on Oversight and Investigations Testimony, 6/16/04)

2005
April: Treasury Secretary John Snow repeats his call for GSE reform, saying “Events that have transpired since I testified before this Committee in 2003 reinforce concerns over the systemic risks posed by the GSEs and further highlight the need for real GSE reform to ensure that our housing finance system remains a strong and vibrant source of funding for expanding homeownership opportunities in America… Half-measures will only exacerbate the risks to our financial system.” (Secretary John W. Snow, “Testimony Before The U.S. House Financial Services Committee,” 4/13/05)

2007
July: Two Bear Stearns hedge funds invested in mortgage securities collapse.

August: President Bush emphatically calls on Congress to pass a reform package for Fannie Mae and Freddie Mac, saying “first things first when it comes to those two institutions. Congress needs to get them reformed, get them streamlined, get them focused, and then I will consider other options.” (President George W. Bush, Press Conference, The White House, 8/9/07)

September: RealtyTrac announces foreclosure filings up 243,000 in August – up 115 percent from the year before.

September: Single-family existing home sales decreases 7.5 percent from the previous month – the lowest level in nine years. Median sale price of existing homes fell six percent from the year before.

December: President Bush again warns Congress of the need to pass legislation reforming GSEs, saying “These institutions provide liquidity in the mortgage market that benefits millions of homeowners, and it is vital they operate safely and operate soundly. So I’ve called on Congress to pass legislation that strengthens independent regulation of the GSEs – and ensures they focus on their important housing mission. The GSE reform bill passed by the House earlier this year is a good start. But the Senate has not acted. And the United States Senate needs to pass this legislation soon.” (President George W. Bush, Discusses Housing, The White House, 12/6/07)

2008
January: Bank of America announces it will buy Countrywide.

January: Citigroup announces mortgage portfolio lost $18.1 billion in value.

February: Assistant Secretary David Nason reiterates the urgency of reforms, says “A new regulatory structure for the housing GSEs is essential if these entities are to continue to perform their public mission successfully.” (David Nason, Testimony On Reforming GSE Regulation, Senate Committee On Banking, Housing And Urban Affairs, 2/7/08)

March: Bear Stearns announces it will sell itself to JPMorgan Chase.

March: President Bush calls on Congress to take action and “move forward with reforms on Fannie Mae and Freddie Mac. They need to continue to modernize the FHA, as well as allow State housing agencies to issue tax-free bonds to homeowners to refinance their mortgages.” (President George W. Bush, Remarks To The Economic Club Of New York, New York, NY, 3/14/08)

April: President Bush urges Congress to pass the much needed legislation and “modernize Fannie Mae and Freddie Mac. [There are] constructive things Congress can do that will encourage the housing market to correct quickly by … helping people stay in their homes.” (President George W. Bush, Meeting With Cabinet, the White House, 4/14/08)

May: President Bush issues several pleas to Congress to pass legislation reforming Fannie Mae and Freddie Mac before the situation deteriorates further.

“Americans are concerned about making their mortgage payments and keeping their homes. Yet Congress has failed to pass legislation I have repeatedly requested to modernize the Federal Housing Administration that will help more families stay in their homes, reform Fannie Mae and Freddie Mac to ensure they focus on their housing mission, and allow State housing agencies to issue tax-free bonds to refinance sub-prime loans.” (President George W. Bush, Radio Address, 5/3/08)

“The government ought to be helping creditworthy people stay in their homes. And one way we can do that – and Congress is making progress on this – is the reform of Fannie Mae and Freddie Mac. That reform will come with a strong, independent regulator.” (President George W. Bush, Meeting With The Secretary Of The Treasury, the White House, 5/19/08)

“Congress needs to pass legislation to modernize the Federal Housing Administration, reform Fannie Mae and Freddie Mac to ensure they focus on their housing mission, and allow State housing agencies to issue tax-free bonds to refinance subprime loans.” (President George W. Bush, Radio Address, 5/31/08)

June: As foreclosure rates continued to rise in the first quarter, the President once again asks Congress to take the necessary measures to address this challenge, saying “we need to pass legislation to reform Fannie Mae and Freddie Mac.” (President George W. Bush, Remarks At Swearing In Ceremony For Secretary Of Housing And Urban Development, Washington, D.C., 6/6/08)

July: Congress heeds the President’s call for action and passes reform of Fannie Mae and Freddie Mac as it becomes clear that the institutions are failing.

There you go Mr. Dodd. The real question is: Where have YOU been?

[tags]mortgage crisis, credit crisis, mortgage, meltdown, bailout[/tags]

photo credit: Matti Mattila

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As the season’s first major hurricane, Gustav, bears down on the Gulf coast, I thought it might be appropriate to review the Federal government’s information on preparedness. Those living in coastal communities should plan what they will do if they are told to evacuate.

This information comes directly from the government website at Ready.gov .

Step 1: Get A Kit / "To-Go Bag"

• Get an Emergency Supply Kit,which includes items like non-perishable food, water, a battery-powered or hand-crank radio, extra flashlights and batteries. You may want to prepare a portable kit and keep it in your car. This kit should include:
  • Copies of prescription medications and medical supplies;
  • Bedding and clothing, including sleeping bags and pillows;
  • Bottled water, a battery-operated radio and extra batteries, a first aid kit, a flashlight;
  • Copies of important documents: driver’s license, Social Security card, proof of residence, insurance policies, wills, deeds, birth and marriage certificates, tax records, etc.

• Make sure you have a “to-go bag” ready in case you need to evacuate, include:
  • Water and non-perishable food;
  • Battery operated radio and batteries so you can get important information from local officials;
  • First aid kit;
  • Flashlight;
  • Maps
  • Important documents such as proof residence, pictures of your family including pets, insurance policies, and tax records;
  • Comfortable clothing and blankets;
  • Unique family needs such as prescription medications, pet supplies, infant supplies or any other unique need your family may have;

Step 2: Make a Plan

Prepare your family

• Make a Family Emergency Plan. Your family may not be together when disaster strikes, so it is important to know how you will contact one another, how you will get back together and what you will do in case of an emergency
• Plan places where your family will meet, both within and outside of your immediate neighborhood.
• It may be easier to make a long-distance phone call than to call across town, so an out-of-town contact may be in a better position to communicate among separated family members.
• You may also want to inquire about emergency plans at places where your family spends time: work, daycare and school. If no plans exist, consider volunteering to help create one.
• Plan to Evacuate
  • Identify ahead of time where your family will meet, both within and outside of your immediate neighborhood.
  • Identify several places you could go in an emergency, a friend’s home in another town, a motel or public shelter.
  • If you do not have a car, plan alternate means of evacuating.
  • If you have a car, keep a half tank of gas in it at all times in case you need to evacuate.
  • Take your Emergency Supply Kit.
  • Take your pets with you, but understand that only service animals may be permitted in public shelters. Plan how you will care for your pets in an emergency.
• Take a Community Emergency Response Team (CERT) class from your local Citizen Corps chapter. Keep your training current.

Step 3: Be Informed

Some of the things you can do to prepare for the unexpected, such as making an emergency supply kit and developing a family communications plan, are the same for both a natural or man-made emergency.

However, there are important differences among potential emergencies that will impact the decisions you make and the actions you take. Learn more about the potential emergencies that could happen where you live and the appropriate way to respond to them.

In addition, learn about the emergency plans that have been established in your area by your state and local government.

Emergency preparedness is no longer the sole concern of earthquake prone Californians and those who live in the part of the country known as “Tornado Alley.” For all people everywhere, preparedness must now account for man-made disasters as well as natural ones. Knowing what to do during an emergency is an important part of being prepared and may make all the difference when seconds count.

Are you prepared? Take this quiz to determine your Readiness Quotient.

[tags]communication, decision, emergency, family, friend, friends, gas, review, responsibility, quiz, hurricane, hurricane gustav, ready.gov, preparedness, emergency plans, hurricane evacuation plans, hurricane evacuation[/tags]

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Social Security has developed a new calculator that will estimate your benefits. If you would like to see what YOUR benefits would be (assuming Social Security is still around!) you can visit the Social Security website.

The Social Security Retirement Estimator produces estimates that are based on your actual Social Security earnings record, but remember that retirement estimates are just that, estimates. The actual numbers will vary from the actual benefit you may receive in the future since:

• Your Social Security earnings record is constantly being updated
• The calculators use different parameters and assumptions
• Your actual future Social Security benefit will be adjusted for inflation

Here are MY estimated Social Security benefits:

At my current earnings rate, if I stop working and start receiving Social Security benefits…

At age 62, my monthly Social Security benefit will be about…$1,547.00.

At full retirement age (67 Years and 00 Month(s) for me), my monthly benefit will be about…$2,318.00.

At age 70, my monthly Social Security benefit will be about…$2,931.00.

So what does this mean? It means that if I save enough money to retire at 62 (assuming all is spent and disregarding inflation), the crossover point for me is at age 76 vs. retiring at 67. If I waited until 70 the crossover points are 78 vs retiring at 62 and 80 vs retiring at 67.

In other words, if I started receiving Social Security benefits at age 67 instead of 62, it would be about 15 years before it caught up with me. If I waited until 70, it would be 19 years compared to retiring at 62 and 11 years compared to retiring at 67.

Receiving my Social Security benefits 5 to 8 years sooner takes a while to catch up!

So what do I plan to do? Nothing. I’m 20 years away from being 62 and who knows what changes will be made to keep the Social Security system solvent?

Recommendation: Play with the calculator, but unless you’re very near to retirement, don’t sweat it. If you ARE nearing retirement, don’t rely on the Social Security website to make your decisions. Seek professional financial help as soon as possible.

Care to share your Social Security benefits?

[tags]Social Security, Social Security benefits,Social Security calculator, new Social Security calculator, retiring, retire, retirement, benefits, 62, 65, 67, 70[/tags]

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