Handling Finances

This week has been very interesting with the ongoing discussion of federal bailouts for investment banks. The act certainly helped avoid a panicked run on investment banks causing numerous more bankruptcies. At the same time, when taxpayers are essentially insuring the industry, government regulation is generally in place to ensure that the taxpayers’ money isn’t being subject to extremely high risks. I certainly hope Bernake decides to clarify his bailout of Bear Sterns so we know whether it was intended as a one-time thing or as a precedent. Whatever happens, we’re likely to see some regulation of investment banks — just the extent and nature of the regulation remains to be seen. Regulation generally has two effects — it makes an industry slower and more expensive, and it makes the industry less risky or dangerous. I do think regulation is necessary to curb wild subprime lending since lending to people who can’t repay the loans is just unethical in my view. At the same time, history has shown that regulation is highly reactionary — it might prevent the exact problem we just encountered, but people will always find new ways to take advantage of others and there will always be loopholes that won’t be plugged until the next time the financial sector gets itself into trouble.

Last week, I posted a riddle about some guys who went on vacation. They were involved in a confusing transaction and it seemed as if $2 had disappeared. In fact, it all worked out and it was just the question that was faulty. Each of the three paid $9 for a total of $27. The hotel got $26 and the bellhop snagged $1 on his way to return the amount they had overpaid. Having an incredible amount of trouble finding money-related riddles that don’t require a strong grasp of math, I’ve decided to retire that project for now. I love complex math problems, but I know few people who share this interest so I suspect that simply coming up with challenging problems won’t be worth much to my readers.

The Roundup

My post Cheaper Financing is a Funny Route to the American Dream was included in Carnival of Personal Finance #145. Check out the carnival for articles from across the internet on personal finance.

PaidTwice posted about how she took way too long to raise her (husband’s) 401(k) contribution to the 6% required to receive the full 20% match.  If your employer offers a matching contribution, the immediate 20%-100% return (depending on your employer) for the first 6% is amazing, free money.  While you might prefer to contribute the majority of your retirement savings to a Roth IRA, make sure you qualify for any employer match first!

Patrick at Cash Money Life discussed job searching while employed.  This is something I need to get into as while I love my job and intend to stay there for the next five years or more, it’s much easier to stay on top of job opportunities when you’re still employed and not desperate for income.  It also helps you keep on top of potential opportunities that you might not notice if you kept your head down in your company.

Finally, Lynnae discusses some cheap homemade cleaners at beingfrugal.net.

This entry was posted on Saturday, March 29th, 2008 at 7:34 pm and is filed under Uncategorized. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.