Dollarbytes

Most of us don’t think we’re rich because we compare ourselves to the uber-rich. But if you make at least $47,500 per year, you’re richer than 99% of the people on Earth according to GlobalRichList.com. The site calculates your rich list position so you can see how you rank to the other 6 billion earthlings.
Only the top 10% of the ‘richest people’ earn more than $25,000 per year, while the bottom 85% earn $2,182 per year or less. The site is designed to make people think about their relative wealth. Click the link below and let us know how rich you are.

Global Rich List 

Bank of America blocked my ATM card on the fourth of October, without calling or emailing me. Apparently their fraud department detected “something suspicious.” Bank of America has blocked my card before, but that was when I was hopping around Asia- I can see how it can look suspicious if there are purchases in three different countries in one day. I wasn’t able to withdraw cash over the weekend which sucked, but I managed by using my business ATM card and borrowing some cash from that account. It took 48 minutes on the phone with a BofA rep and a game of 20 questions to sort it out and unblock my card.

Things got really interesting when I called BofA today. The first rep I spoke with said I had to be transferred to the fraud department, I told him I had a question about something else before I was transferred, but he rudely cut me off before I could finish my question.

“Could you please transfer me to a supervisor or someone else whom may be able to assist me with my question?” I asked.

He transferred me to BofA’s main menu. Thanks a lot buddy. I had to navigate through all the voice prompts and punch in all my info all over again.
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We’ve all been bombarded by continous ads  for mortgages that sound too good to be true. And too many homebuyers have taken the bait, biting off more house and debt than they can chew.  Foreclosures are up 163% in California and things are likely to get worse according to a CNN Money article.

This is yet another example of how out of whack the real estate market is. What’s worse is there seems to be a steady supply of buyers who are completely ignorant about how much house they can afford. A mortgage friend of mine met with a single 20-something woman who wanted him to pre-approve her for a mortgage for a $500,000 loft in San Francisco. She had a few thousand in the bank, a mediocre credit score and a $42k salary. The would be homebuyer was angered when broker explained that it just wouldn’t be possible without a cosigner or her parents.
Bottom line is there’s hundreds of thousands Americans facing mortgage timebombs cause they are buying more than they can afford.

In the past two years, homeowners took out 1.3 million ARMs with teaser rates below 2 percent, according to Cagan’s research.
Of those, 21.5 percent have negative equity, where the market value of the home is less than the amount owed. The number of people in that spot could go up significantly if home prices fall as forecast or if homeowners with teaser-rate-ARMs experience job loss, illness, divorce or a death in the family, which are the main causes of mortgage default.

An ARM charges an initial discounted rate for a period of time, after which it adjusts to market levels. When some types of ARMs with teaser rates of 2 percent or less reset, the rates are likely to jump to more than 6 percent - and even as high as 9 percent.

link to CNN Money story

I’ve bought my fair share of electronics from retailers that push expensive extended warranties. I’ve always thought of them as a rip-off, but the Washington Post published a great article that goes into great detail. The whole ‘extended warranty’ business is just overpriced insurance that is rarely used, about 20% of revenues are paid out as claims. Most electronics we buy today will be obsolete long before your extended warranty expires. You’re better off saving your money for your next purchase.

“Warranty Week, an industry publication, last year estimated that of the $15 billion in premiums charged consumers in 2004, $7.5 billion went straight into the pockets of the stores that sell warranties as their cut.
Of the remaining $7.5 billion, the publication estimated that $3 billion was paid in claims by the insurance companies that back the plans. On the other hand, according to the Insurance Information Institute in 2004, the U.S. auto insurance industry paid out $66 in claims for every $100 in premiums.”

One of the story’s sources makes an excellent point that good companies will fix their products. This summer my high-end Nikon digital camera just stopped working after two years of light usage. I called Nikon’s repair center and they happily offered to repair it even though it was well out of warranty. Not only did they fix the camera, they also gave it a thorough cleaning, updated the software, shipped it back with a complimentary carrying strap and extra battery. I think Nikon qualifies as a good company and a good example of how buying is always the best way to go for expensive purchases.

The decision to buy an extended warranty, however, defies the recommendations of economists, consumer advocates and product quality experts, who all warn that the plans rarely benefit consumers and are nearly always a waste of money.

Don’t let the salespeople pressure you into overpriced warranties and remember that almost all products come with a one year warranty. If the product they’re selling you is good, why would you need an extended warranty?

link (Washington Post)

Every year, Neiman Marcus kicks off the holidays with a catalog full of luxury goods, cars and experiences most can only dream of buying. People gasp and shake their heads, declaring how ridiculous these gifts are.

Oh my God!! A pen for $160,000

A trip into space for $1.7 million!

$295 for a set of boxer shorts…nobody even sees your boxer shorts!

If you take a closer look at the catalog and the people who it is targeted to, maybe it isn’t so ridiculous after all. We live in the richest nation in the world, a country with at least 400 billionaires. A country where many financial advisors won’t give you the time of day unless you have a $10 million portfolio. And to ‘those people’ and many, many others- these gifts are affordable. In fact, there are lots of people that can afford to buy one of each thing in the catalog. Here’s a list of them (link).

I’m not advocating these luxury gifts are affordable for Joe and Jane America, but they are in fact more affordable to the rich (whom Neiman targets) than the crappy gifts the vast majority of us buy each other. The Neiman gifts are affordable, because people who buy trips to space are not skipping mortgage payments, running up credit car debt or pulling money out of their kids’ college funds.

People who buy the most expensive things in the catalog can AFFORD it. For a mere $1.7 million dollars, or less than .17% of your net worth if your one of the 400 richest Americans, you can go to space with five loved ones. Less than .17% of your net worth to fulfill a dream isn’t bad at all.

One of the most talked about items in this year’s catalog is limited edition BMW M6. Only 50 are available at a price of$139,000 and they will probably sell out in less than an hour (this is quite normal for cars in past catalogs). Is it really that shocking there are 50 people that can easily afford to snatch them up? Not really when you consider all those multimillionaires and billionaires need to buy gifts for each other , just like the rest of us. Imagine how hard it is to buy a unique gift for your wife if her monthly allowance is five or six figures.

The real story about extravagant gifts are far removed from the Neiman catalog. They lie in the lowly aisles of Wal-Mart and Toys-R-Us , where low-wage earners blow hundreds of dollars on plastic toys that kids break or get bored of before the Christmas trees come down.

It’s all perspective I guess, but the catalog is affordable for lots of people.