So as of noon today the transition has been made from Bush to Obama, and what a day it has been.  I have to say that I usually do not watch these things as close as I did today, but I have to say that I thought the speech was very impressive.  It is the first time in a long time that I have felt so good to be an American.  I am looking forward to see what the country can accomplish with Obama at the helm.

  Long live the best country in the world!

  If the Madoff scandal has taught us anything, I think it should be that as investors we need to diversify.  It is one thing to look at our investments and to make sure that they are diversified among different asset classes, different localities, and different sizes.  It is another thing though to make sure that it is not invested through the same individual or investment company.  There is always the possibility that some day the individual or fund may not turn out to be what it advertised it was, or that someone has cleaned out the fund or your account?

  In this case if you are diversified, then you can mitigate the damage to yourself.

  When you read the statistics, it is just staggering to hear how much money the average person has in Credit Card debt.  Some reports say the number is $5,000, and other report that it is as high as $10,000.  So why are the numbers so large, why is it that American's are accumulating such a large amount in credit card debt?

• Hard to track - When you spend money on a credit card it is hard to track how much you spend, until the end of the month when you get the bill.  This makes it very hard to budget as you go along, and leads to spending more than you would like.
• Ease of debt - The credit card companies make it  so easy now a days to take out a loan to buy things that you can not afford.  They give you a fairly liberal maximum amount, which lets you spend without even thinking that you are taking out a loan every time you buy something.  Years ago when consumers would use layaway to buy something that they could not afford at the current moment, it made it much more of a conscious effort to buy something that was more than the amount of money that you had.
• Credit Card Company practices - Credit card companies are out there to make money, so they have taken practices which have made it easier for you hold on to the dept, and also added fees which can be very harsh on the consumer.

  So what is the Answer?

  I say, "Go cash, and never go back", and thus fight the urge to use plastic.  We can just as easily put a budgeted amount of cash in our pocket every week, and just use that instead.  This has many advantages.  First of all it is proven that people will spend less money when using cash over credit cards, because people have more of a hesitation and it is more deliberate when it is not a symbolic piece of plastic.  Secondly, this also means that 100% of the purchase price is being sent directly to the merchant, instead of having 2 or 3% taken by the credit card comapnies.  This over the long run reduces the prices of the good and services that we pay for, by taking out the "middle man".  Third of all you will never again spend any of your precious time with the credit card comapny on the phone arguing about what a particular charge is for, and trying to remember if it was yours of not.

  Best of all, at the end of the month, no bill comes in, and you owe nothing, how great does that feel!

Some data from the article taken from the following:

• Credit card industry facts, debt statistics 2006-2008 (http://www.creditcards.com/credit-card-news/credit-card-industry-facts-personal-debt-statistics-1276.php)

  It is the beginning of a new year, and I thought when would be a better time to start a blog?  I am not sure of everything that this will contain, but I thought it would be a good place to publish updates on how the family is doing, technology, the stock market, and the economy.

  So, how are things going?

Family - They are all doing well, so that is the good news.

The Economy - Eww, this is just a bad thing to talk about now a days.  We have recently been classified in a recession, so that is where we currently are.  Personally I think things are just going to keep getting worse and worse for a while, there just doesn't seem to be a clear end in sight.  We have a jobless claims rate that drops every time we hear it, we have a dollar which continually keeps getting weaker and weaker, we have a society in which people are leveraged more then they ever have before, and we have people losing their homes at an alarming rate.  The only bright side I see is that energy is at really low rates, and people are able to get mortgages at low rates.  ...Just don't forget that the primary reason for the last two is because of how weak the economy is.  Now Obama is probably going to improve a lot of these in the short term with all the speding he has planned, but unfortunately non of this can be dome without raising our dept and hence making our US economy even weaker in the long term.

The Stock Market - Now this has been quite the roller coaster recently.  If you are in the market, you have probably lost a good amount of money, and that has been very challenging for people along with the fact that the volatility of late is quite scary.  Now as a whole, the stock market only goes where it thinks the economy is going to go (if it thinks revenues for companies will increase in 6 months, then it thinks a stock is worth more than it is currently today).  So because I don't see much on the plus side for the economy in this new year, I don't think there will be much to cheer about in the stock market, at least until maybe the third quarter in which is could start foreseeing some good news down the road.  The good news though is that stocks have been so hard hit over the past year, that I don't think they will go down much more, and this is really the time to invest, so that when it rebounds, you are there to capture those returns.

Technology - Technology always has cool new gadgets to use and sell, the only thing though is with the economy it is going to be harder and harder to find someone to sell them to.  The goods news though, is that if you are in technology, that is the place that companies always look to reduce costs and be more profitable.  So that usually means they are willing to spend money there, if it can reduce their bottom line.  So if you are one of those guys doing the technology work, it is a good place to be.

  So my suggestion would be to get ready for that rainy day, because it may be hitting closer than you would like in the near future, and let's all hope that we don't have to endure this correction for too long.