Never Cosign a Loan

never-cosignI have come to the conclusion that cosigned loans are only advantageous to the lender, possibly advantageous to the borrower, and never advantageous to the cosigner. If a potential borrower does not have good enough credit, or enough savings, collateral, or income to take out a loan, then they should not be trying to get the loan in the first place.

The AARP has a list of 7 loans that should not be cosigned. These are

  1. Private student loans
  2. Mortgages
  3. Business loans
  4. Car loans
  5. Construction loans
  6. Balloon loans
  7. Payday loans

MyFICO has a story of warning, titled, “Cosigning Student Loans – Learn From My Mistakes.” This was written by someone who cosigned on a $60k student loan with Sallie Mae. And of course, the person with the loan defaulted and left the cosigner holding the bag. They became the responsible party, and paid off the student loan. The author has 9 tips related to avoiding problems with loans.

  1. Do not cosign a student loan
  2. Loan only what you can lose
  3. Unpaid loans grow
  4. Sallie Mae does not care
  5. Don’t delay payments
  6. No legal recourse
  7. Would i do business with this person?
  8. Protect yourself
  9. People can be irresponsible

Suze Orman says, “Never cosign a loan. Once you have cosigned, you cannot get out of it–even on your deathbed.”

As the title of this article suggests, I have never, nor will I ever, cosign a loan. There are just too many possible problems for the cosigner. You could end up being on the hook for payment of the loan. Your credit score will be tied to this debt. Any late or missed payments will adversely affect your credit score. Bill collectors may come after you. And finally, other than guilt, you have no ability to make the person who took out the loan pay you back.

If my son were to come to me and ask me to cosign a loan for him, I would sit down with him and try to figure out why he needs the loan, and why does it require a cosigner. If it is that his credit score is bad, or non-existent, then he will need to wait on the loan and fix his credit score. If he were trying to get a student loan, I would tell him he will just have to find other financial means for college.

My wife and I have saved enough that our son should be able to get through his undergraduate studies at a state university with money left over. We have already told him how much we have saved, and how much we expect to have when he starts college, which will be approximately $250k. If he ends up needing more money than that, he will have to either get scholarships, work a part-time job, or some combination of the two.

Have you ever cosigned a loan?

USAF Band of the Golden West

US-Air_Force-of-the-West-program-coverWe just attended a free concert of the US Air Force Band of the Golden West. It was great fun.

The Band of the Golden West plays for free all around the western United States. Their spokesperson said they hold live performances from the West Coast to the Rockies, and from the Canadian border to the Mexican border. They have four engagements in California scheduled during the month of October.

The performance did not just incorporate John Philip Sousa, although they did play a few of his rousing pieces. Their music selections varied from “The Girl from Ipanema” played mostly on a flugelhorn, to the Irish tune “Danny Boy,” to an operatic waltz from La Boheme. Their two operatic singers finished their part with a rendition of “Somewhere Over the Rainbow,” accompanied by a ukelele.

It was great fun and again, it was free.

The USAF Band of the Golden West has a website and are also on Facebook and Twitter.

Of course there are other military bands serving other parts of the country, as well as around the world. A few of their web sites are

The United States Air Force Band

The United States Army Band

The United States Navy Band

The United States Marine Band

Note that most of these groups not only have concert bands, but also have sub-groups that hold their own events. The USAF Band of the Golden West includes a mobility band that “is an upbeat group of talented musicians bringing you rock, jazz and blues favorites, new and old.” They also have a Ceremonial Marching Band that “participates in official military ceremonies, military and civilian parades, and patriotic events for the general public.” They also have groups called the Golden West Winds, Travis Brass, the Commanders, the Blue Yonders, and the Wild West Winds.

Check the various websites to see if any military bands or ensembles will be performing in your area. You will not be disappointed.

Worst Week Since May 2012

2-carsThere have been lots of headlines like the title of this post. My wife and I lost more than the value of two new cars over the past few weeks — on paper at least. But that’s nothing. In the recession of 2000, I lost the value of a nice house in my retirement account — again on paper.

I didn’t sell in 2000, nor will we sell now. I don’t know what the market will do in the future, but I do know that trying to time the market is a fool’s errand. Selling when the market is down, even just a few percent, would be locking in losses.

I wrote last week how some of the best returns were made by people who forgot they had an investment account. These investments stayed invested through both up and down markets. (I assume in the best cases, that dividends were set to automatically reinvest.)

That is the key to getting the best returns through both up and down markets: keep investing new money, reinvest dividends, and stay the course no matter what the market does.

People who say they can predict the market and give you buy and sell signals may be right some of the time, but they can also easily be wrong. No one really knows how the market will perform. All we know is how it has performed in the past. And as most newsletters and investment advisers say, “Past performance does not necessarily predict future results.”

My wife and I are staying the course. We continue to invest part of every paycheck. We know that eventually we will get the value of those two new cars back, and hopefully a lot more.

Get the Best Performance From Your Portfolio

don't touchThe Market has fallen from its high! There has been widespread selling over the past few days! The Fed may raise interest rates soon! September was a down month! What should I do as an investor? The answer for most people is to do nothing.

In an August 30, 2014 Masters of Business podcast from bloomberg.com, Barry Ritholtz talked with James O’Shaughnessy of O’Shaughnessy Asset Management about how people often mess up their investments.

O’Shaughnessy talked about a Fidelity study that found that the accounts that had done the best were the accounts of people who forgot they had an account at Fidelity. He said it comes down to our behavioral biases, where we are apt to buy high and sell low.

Ritholtz told how families fighting over inherited assets might not be able to touch these assets for something like 10 or 20 years while they worked out their disagreements. Of course they later found that those 10 or 20 years of untouched assets gave them better performance than their closely watched portfolios.

I wrote about this over a year ago when I discussed how often a person should look at their portfolio. My conclusion was that it’s OK to look as long as you don’t touch. Rebalancing once a year is enough to make sure your investment risks are where you want them to be.

I posted a link in that article to an interview with John Bogle, the founder of Vanguard, who likened investing to visiting a casino. He said, “You go into the casino. You buy every stock in the casino. And then get the heck out and never darken its doors again. Don’t trade. Don’t do anything.” This is sort of a colorful way of saying that people should invest with index funds, and once purchased, leave them alone. He also said, “Owning all the companies in America, and holding them forever is, and will be, and must be, the winning strategy.”


Are you nervous about the market? Have you thought about selling?

Don’t Keep Secrets

When my wife and I were dating, I told her all about myself without any secrets, not that there was much to tell. Ever since, the only secrets I keep are little things that she wants me to keep, like the contents of presents I’ve bought or the time I threw her a surprise party. (Even though she acted surprised, I don’t think that party was really a secret.)

Money problems and secrets may not be the main cause of divorce in America, but they are a contributing factor. I searched the smartmarriages archive for the word “money.” The search turned up more than 1000 matches that described money problems in marriage.

To keep our marriage happy, I try to keep my wife informed. I don’t bug her with day-to-day trivia, unless she asks, but I make sure there are no surprises. From a personal finance perspective that means that she has equal access to all accounts that are not my retirement accounts. If she asks about our finances, I will gladly bore her. She has equal input on our investment portfolio. She knows as much as she cares to about my retirement accounts. And I know about hers and what investments she holds in them.

We maintain the rule that purchases over $100 (excluding things like groceries) should be discussed before they are made. There are times when we might make a larger purchase without a preceding discussion, but they are typically for things like our annual PTA dues. These charges always show up after the fact in our checking account statement or in our credit card account. I realize joint accounts will not work in all marriages, but separate accounts can still be open to examination and discussion.

A January 2014 survey by the National Endowment for Financial Education (NEFE) found that 33% of respondents said they’d either committed or experienced an act of financial deceit with their spouse. The survey also found that when financial deceptions occurred, 76% said there had been an effect on their relationship.

The survey also found that three in 10 adults who have combined finances have hidden either a purchase, bank account, statement, bill, or cash from their partner or spouse. And 13 percent said they have committed more severe deceptions, like lying about the amount of debt that they owe or even the amount of income that they earn.

If you or your spouse has been keeping financial secrets, you must both be willing to come clean. This could start out with a simple statement like, “I’ve done some spending you don’t know about and I want to make sure we get on the same page and create goals today that we can stick to.”

According to the NEFE, after you or your partner has come clean about committing financial infidelity, you must accept that it will take time to rebuild the trust you once had. It will take sustained transparency in all communication, and it takes a commitment from both to stick to the goals that you’ve set together.

The bottom line for a lasting marriage is to keep communication open at all times, be able to compromise, and don’t keep secrets.

We Cut the Cable

cable-cutHappy first day of Fall. We are celebrating this first day of Fall by completely cutting our television cable.

About a year ago, I wrote about how we cut our cable TV service back to the “Basic Plan” to reduce our monthly payments by $50. Well after having weened ourselves off everything but the local channels, we decided to save another $42/month by getting completely rid of cable TV.

I still like to watch nonsensical shows like Arrow and The Flash, but I have found that I can watch these for free on CW’s website. My wife likes to watch talent shows like The Voice, American Idol, and Dancing with the Stars. She is also OK with watching current episodes on their respective network TV websites. We can also watch earlier episodes on Netflix, Amazon Prime, or Hulu.

When I called AT&T to tell them we didn’t want their TV service anymore, the customer service representative took on a combative tone. I said that we did not want television service anymore, but that we wanted to keep our Internet service. He said that since we were unbundling from TV, that our internet cost would increase from $46/month to $58/month. He also said we had 10 days to return our DVR receivers or we would be charged for them. There’s nothing like dealing with a company that is happy to bite the hand that feeds it.

We have been AT&T customers since we bought our house 16 years ago. We got their U-Verse service shortly after it came out. Yet they apparently were not very worried about customer loyalty. They appear to be more worried about charging as much as the market will bear.

Anyway, after talking to the AT&T customer service rep, and canceling our television service, I went to the Comcast website to see if they could give me a lower price than AT&T for Internet service. They were advertising a teaser rate of $30/month for Xfinity Internet for 12 months, which Comcast says provides speeds of up to 50 Mbps. I have read many horror stories, online, about much lower speeds with Comcast, and lots of trouble getting the service installed and working correctly. As a matter of fact, several months ago, one of my younger brothers converted our mother over from AT&T to Comcast for their higher Internet speed. Her internet speed is better with the new Comcast connection, but it only measures out to be around the same 16 Mbps as our AT&T internet, and her phone line keeps cutting out.

Our AT&T Internet connection provides a measured 16 Mbps for the newly increased cost of $58/month. (When I say measured, I mean that I connected to several of the online internet speed test websites, and they reported back the “measured” speed.)

Anyway, while I was on the Comcast website, a sales rep came online and asked if he could help me. I asked what their price for Xfinity Internet would be after the first year. He said it would go from $30/month to $68/month; $10 higher than what we will be paying AT&T. I asked if Comcast would beat or at least match AT&T’s $58/month, and he said no.

I would like to get out from under the thumb of either company, and can’t wait until Google fiber comes to town, but until then, we will stick with what is working and keep our Internet with AT&T. We are still saving $38/month over what we were paying, and that feels good.

Have you completely cut your TV cable service?

Grey Charge That Appeared Out of Nowhere

free-with-fish-hookSome time ago, I wrote about grey charges. These are charges where people thought they were signing up for something they thought was free and accidentally signed up for a recurring charge. The charges keep recurring on whatever credit card the consumer signed up with.

Due to things like this, as well as identity theft, I make it a habit to check our credit card charges at least once a week. Last week I saw a recent charge from macaffe.com for $24.99 that should not have been there. Macaffe Software sells anti-virus and anti-malware software. Our workplace has installed an enterprise version of Macaffe anti-virus software on all of the corporate computers.

However, my family does not run any version of Macaffe software on any of our computers. I called the phone number shown on our credit card statement and after going through several menus to get to a billing agent, I was eventually connected with a live person.

I told the billing agent that there was a $24.99 charge to my credit card that I wanted removed because we do not run any Macaffe software on any of our computers. He responded by asking what my Macaffe user number was. I told him I did not have a user number because I did not run the software. I then gave him my credit card number.

He eventually linked that to a “free” copy of Macaffe anti-virus software that I had downloaded from Fidelity Investments about a year ago. It occurred to me that I had downloaded the “free” Macaffe software from a link on the Fidelity website. A free version of their software seemed like a pretty good deal. I could never get the software to install correctly on my laptop running Windows 7 so I just reinstalled the free version of Avast anti-virus software that I had been running.

I never gave my credit card number to Macaffe to download or install their “free” software. Here’s the kicker, our main credit card is also tied to Fidelity Investments. Macaffe was apparently given my credit card information when I downloaded their software from the Fidelity site. The first charge to appear for the Macaffe software was the $24.99 grey charge to renew their software one year later.

Anyway, I got the billing agent to refund the $24.99 and to cancel any future subscription grey charges. The bottom line is to make sure you check your credit card statements before you pay them. I like to check our credit card charges online at least once a week to make sure all current charges are valid.

How often do you check your credit card charges? Have you found and canceled any grey charges?

Cheap Technology Geek

Apple-techLots of people I know are all atwitter about what Apple will announce on September 9th. The pundits think it will be a larger iPhone. Some people are wondering if we will hear about the next generation iPad. And many are wondering when they can get their hands on the new iPhone.

My take on this, as it is for most all new technology, is “Meh. Do I really need this stuff?”

My cell phone is a dumb Tracfone. I can use it in emergencies and it can take pictures if I am ever in an accident to help prove who hit whom. I typically pay $100 per year for something like 1,200 minutes, which is way more than I ever use. Our 13-year-old son also has a Tracfone that we pay $11/month to give him more minutes than he uses. He broke his phone last year, and a replacement only cost $12 from Tracfone. That’s the type of technology that I like.

Sure, it would be nice to have Google maps on my cell phone, but we already have navigation built into our car, and my wife’s Galaxy 3 phone does have Google maps when we are out and about. Her Samsung Galaxy 3 phone was bought at Walmart along with Straightalk’s unlimited service for $45/month. If I had the need or desire to have a smartphone, I would also use Straightalk’s phone’s and service.

The newest, latest and greatest technology is almost always going to be the more expensive than slightly older technology. There is a point in the cost versus technology curve where you can get the most technology for the least amount of money. I typically do not try to purchase technology when it is at its minimum cost because it is bound to become obsolete and unsupported in a short period of time. I try to buy technology that is just above the cusp. That is, I look for technology items that are perhaps a year or two old that will likely still be supported for some years to come, but are not on the bleeding edge of technology, where you almost always pay a premium price.

cost-vs-technology

The server that hosts saveandconquer.com is running Linux on an old Core 2 Duo with 4 GB of RAM. For what our family is using it for (hosting websites, email, and video), the server does not have to be any more powerful. We buy affordable technology to fit our needs.

Do you purchase the latest and greatest technology gadgets? Or do you wait a year or so to get an optimal price?

Happy Labor Day

labor-dayHappy Labor Day!

According to Wikipedia, “Labor Day in the United States is a holiday celebrated on the first Monday in September. It is a celebration of the American labor movement and is dedicated to the social and economic achievements of workers. It constitutes a yearly national tribute to the contributions workers have made to the strength, prosperity, and well-being of their country.”

What this really means is that it is a day to celebrate trade and labor organizations (i.e., labor unions).

Neither my wife nor I are associated with any labor unions, but I feel that most workers in this country owe a debt of gratitude to some of the major labor unions. Collective bargaining between the unions and employers, as well as occasional strikes, led to decent wages, workplace safety, child labor laws, the 40 hour work week, lunch breaks, and paid time off for vacations and sickness.

The AFL-CIO, which is one of the largest labor unions in the country, lists the following 36 reasons why we should thank a labor union.

  • Weekends
  • All Breaks at Work, including your Lunch Breaks
  • Paid Vacation
  • Family and Medical Leave Act (FMLA)
  • Sick Leave
  • Social Security
  • Minimum Wage
  • Civil Rights Act/Title VII (Prohibits Employer Discrimination)
  • 8-Hour Work Day
  • Overtime Pay
  • Child Labor Laws
  • Occupational Safety & Health Act (OSHA)
  • 40 Hour Work Week
  • Worker’s Compensation (Worker’s Comp)
  • Unemployment Insurance
  • Pensions
  • Workplace Safety Standards and Regulations
  • Employer Health Care Insurance
  • Collective Bargaining Rights for Employees
  • Wrongful Termination Laws
  • Age Discrimination in Employment Act of 1967
  • Whistleblower Protection Laws
  • Employee Polygraph Protect Act (Prohibits Employer from using a lie detector test on an employee)
  • Veteran’s Employment and Training Services (VETS)
  • Compensation increases and Evaluations (Raises)
  • Sexual Harassment Laws
  • Americans With Disabilities Act (ADA)
  • Holiday Pay
  • Employer Dental, Life, and Vision Insurance
  • Privacy Rights
  • Pregnancy and Parental Leave
  • Military Leave
  • The Right to Strike
  • Public Education for Children
  • Equal Pay Acts of 1963 & 2011 (Requires employers pay men and women equally for the same amount of work)
  • Laws Ending Sweatshops in the United States

So when you enjoy this Labor Day holiday with family and friends, please take a moment to realize what the day is about, and how organized labor improved the lives of most all working people.

Earthquakes, Tornadoes, Floods – Where Is Your Emergency Kit?

There was a 6.1 magnitude earthquake late Saturday night near the city of Napa, which is about 60 miles north of us. We were woken up by the quake, and felt our bed move back-and-forth for about 15 seconds. It was nothing new for long-time residents of California, but it did have us thinking of the people who suffered damage and injury in Napa. It also got us thinking about the status of our home emergency kit.

napa-earthquake

My wife put together a nice emergency kit some years ago, but a can of chili exploded in the kit and covered everything with moldy chili. Everything had to be thrown out. This latest earthquake has us thinking that it is time to renew our home emergency kit.

A good home emergency kit should have

  • Water—one gallon per person, per day (3-day supply for evacuation, 2-week supply for home)
  • Food—non-perishable, easy-to-prepare items (3-day supply for evacuation, 2-week supply for home)
  • Flashlight
  • Battery-powered or hand-crank radio (NOAA Weather Radio, if possible)
  • Extra batteries
  • First aid kit
  • Medications (7-day supply) and medical items
  • Multi-purpose tool
  • Sanitation and personal hygiene items
  • Copies of personal documents (medication list and pertinent medical information, proof of address, deed/lease to home, passports, birth certificates, insurance policies)
  • Cell phone with chargers
  • Family and emergency contact information
  • Extra cash
  • Emergency blanket
  • Map(s) of the area

Additional supplies to keep at home or in your survival kit based on the types of disasters common to your area

  • Whistle
  • Dust or surgical masks
  • Matches
  • Rain gear
  • Towels
  • Work gloves
  • Tools/supplies for securing your home
  • Extra clothing, hat and sturdy shoes
  • Plastic sheeting
  • Duct tape
  • Scissors
  • Household liquid bleach
  • Entertainment items
  • Blankets or sleeping bags

Besides having an emergency kit, the American Red Cross says you should

  • know what emergencies or disasters are most likely to occur in your community.
  • have a family disaster plan and have practiced it.
  • have an emergency preparedness kit.
  • have at least one member of the household trained in first aid and CPR/AED.
  • have taken action to help your community prepare.

We know that earthquakes will happen in California. We also know that fire, floods, and landslides may happen in California, as well as anywhere else in the country. Tornadoes and hurricanes typically occur in other parts of the country. Everyone needs to be prepared for the types of disasters that may happen in their communities.

Please check your emergency kit now to make sure the supplies are still good. And if you do not have an emergency kit, please purchase or put one together. (A search for “home emergency kit” on Amazon came up with 20 pages of kits and supplies.)