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Archive for July, 2008

Goals Review - July

July 30th, 2008 at 07:05 am

My boat's capsized
it's gonna sink to the bottom
I can see the lights on the shore
getting farther away

I don't if I'll make it home tonight
but I know I can swim
under the Tahitian moon

Yes my boat did capsize. And as it was sinking, the lights on the debt free shore were getting farther away. So, I don't know when I'll be done, but I know I can swim. And what better place to swim then under a Tahitian moon?

All in all, a good month and looking forward to August. 2 things I have to be aware of in August: My wife's birthday party and saving for vacation in September. The vacation is paid for and all set. But if I don't work, I don't get paid. So I got to save a little to make sure the bills get paid.

So let's get started.

My goals for 2008 are:

1) Pay off debt (except mortgage) by October 1st
. DONE a) Pay off CC by April 1st
. DONE b) Pay off Car 1 by June 1st
. DONE c) Pay off Car 2 by Aug 1st
. d) Pay off wife’s braces by June 1st
. e) Pay off son’s medical by October 1st
2) Invest $15,000 by year end
3) Invest $15,500 in 401(k)
DONE 4) Review and reallocate retirement funds by end of Q1
DONE 5) Will by end of Q2
DONE 6) Life Insurance by end of Q2
7) Save $4,000 for college by end of Q4

1) Pay off all debt but the mortgage by October 1st

Total Debt
07/30/2008 - $16,060 ($1,585 paid)

Car 2 (3.9% interest rate)
07/30/2008 - $0 ($929 paid)

All paid off!!!

Wife's braces (0% interest rate)
07/30/2008 - $1,560 ($156 paid)

Son's medical (0% interest rate)
07/30/2008 - $14,500 ($500 paid)

Wife's medical (Not included in total)
06/01/2008 - $4,498.52
06/25/2008 - $1,498.52 ($3,000 paid)
07/30/2008 - $0 (1,498.52 paid)

So all I have left is the wife's braces and the son's medical. I paid off the wife's medical form 2007 and the second car (I'll send in the payment next week).

All in all, not bad. I am getting back on track and looking forward to pay off the braces this month.

2) Invest $15,000 by yearend
This will be started in Q4.

3) Invest $15,500 in 401(k)

Invest $15,500 in 401(k)
07/30/2008 - $11,787 invested

Right on target to finish this up in October. Just chugging along.

4) Review and reallocate retirement funds by end of Q1

DONE

5) Will by end of Q2

DONE

6) Life Insurance by end of Q2

DONE. Just received a letter that everything looks good from my physical and I have been approved for a policy. Just waiting for the bill.

7) Save $4,000 for college by end of Q4

Looking for 4th quarter on this.

Summary

So, even though Murphy took the wind out of my sails, I am starting to make progress again. Even though good old Murph threw me off about 5-6 weeks, I didn't change my goals for the year. They were very aggressive before and should be all but impossible now. But, the aggressive goals keep me focused and on point. I feel you need to keep them out of reach but not impossible.

Rough Goals for 2009? Already?

July 28th, 2008 at 10:37 am

At one time in my life, I managed a staff of 35 with a budget of $10 million. This time each year I would start preparing my budget. I would list what I needed to do for the remainder of the year and what big projects I would do in the next year. Some of the stuff that was budgeted was additional phases for existing projects, others were new projects, and some was maintenance.

This caused me to focus and what I really needed to get done in the last 5 months of the year and what I could do now to achieve my goals for 2009. It could be educating myself about some project before it started. It could be altering a current project slightly to make a future project easier.

The point was to line everything up and start removing any roadblocks that I could see in the road. And with that, I am starting to think about my goals for 2009. Some of tmy goals for 2008 may spill over, but hopefully not.

So there are basically two types of goals: tactical and strategic. My strategic goals are my long term goals of financial freedom (not having to work for a living), starting a real estate investment business, and spending more quality time with my family.

Now my tactical goals are what do I need to accomplish to move me towards these goals.

My 2008 goals were to set down a solid foundation (get out of debt, emergency fund, college savings, will, and life insurance) as well as some maintenance goals (max 401(k) contributions and rebalancing portfolio).

So for 2009, the maintenance goals will move forward. (max 401(k) contributions, rebalancing portfolio, and college savings). That's the no brainer as far as goals go.

The next step of goals is to start thinking about the next tactical steps to achieving my long term goals. The first few will be to continue saving.

The first goal will be to fully fund the college account for both kids. I will add $14,000 to their college fund over the year. In other words, I am going to catch up to where the accounts should be if I was contributing $2,000 per kid per year.

The second goal would be to save an additional $15,000 into investment accounts. This I can use for the business eventually or other big ticket items. I am thinking of saving 100k for the business. I want to go in cash heavy to start off cash flow positive with capital left (kind of like a business emergency fund).

The next goal is to continue to pay down debt. In this case, paying down on my mortgage at a rate of $2,000 – $3,000 a month. If I do $2,000, it will be paid off on 12/1/2017. If I do $3,000, it will be paid off on 10/1/2015.

So the last goal is to educate myself. This would include personal finance, how to run a business, real estate market, land lording, etc.

That's how my goals for 2009 are shaping up. I'll probably finalize them in Sept/Oct and then post them on the left.

So what are your goals next year and what are you doing today to help you to achieve them? You only have 5 months left.

He ventured forth to bring light to the world

July 25th, 2008 at 08:03 am

And it came to pass, in the eighth year of the reign of the evil Bush the Younger (The Ignorant), when the whole land from the Arabian desert to the shores of the Great Lakes had been laid barren, that a Child appeared in the wilderness.

The Child was blessed in looks and intellect. Scion of a simple family, offspring of a miraculous union, grandson of a typical white person and an African peasant. And yea, as he grew, the Child walked in the path of righteousness, with only the occasional detour into the odd weed and a little blow.

When he was twelve years old, they found him in the temple in the City of Chicago, arguing the finer points of community organisation with the Prophet Jeremiah and the Elders. And the Elders were astonished at what they heard and said among themselves: “Verily, who is this Child that he opens our hearts and minds to the audacity of hope?”

In the great Battles of Caucus and Primary he smote the conniving Hillary, wife of the deposed King Bill the Priapic and their barbarian hordes of Working Class Whites.

And so it was, in the fullness of time, before the harvest month of the appointed year, the Child ventured forth - for the first time - to bring the light unto all the world.

He travelled fleet of foot and light of camel, with a small retinue that consisted only of his loyal disciples from the tribe of the Media. He ventured first to the land of the Hindu Kush, where the

Taleban had harboured the viper of al-Qaeda in their bosom, raining terror on all the world.

And the Child spake and the tribes of Nato immediately loosed the Caveats that had previously bound them. And in the great battle that ensued the forces of the light were triumphant. For as long as the Child stood with his arms raised aloft, the enemy suffered great blows and the threat of terror was no more.

From there he went forth to Mesopotamia where he was received by the great ruler al-Maliki, and al-Maliki spake unto him and blessed his Sixteen Month Troop Withdrawal Plan even as the imperial warrior Petraeus tried to destroy it.

And lo, in Mesopotamia, a miracle occurred. Even though the Great Surge of Armour that the evil Bush had ordered had been a terrible mistake, a waste of vital military resources and doomed to end in disaster, the Child's very presence suddenly brought forth a great victory for the forces of the light.

And the Persians, who saw all this and were greatly fearful, longed to speak with the Child and saw that the Child was the bringer of peace. At the mention of his name they quickly laid aside their intrigues and beat their uranium swords into civil nuclear energy ploughshares.

From there the Child went up to the city of Jerusalem, and entered through the gate seated on an ass. The crowds of network anchors who had followed him from afar cheered “Hosanna” and waved great palm fronds and strewed them at his feet.

In Jerusalem and in surrounding Palestine, the Child spake to the Hebrews and the Arabs, as the Scripture had foretold. And in an instant, the lion lay down with the lamb, and the Israelites and Ishmaelites ended their long enmity and lived for ever after in peace.

As word spread throughout the land about the Child's wondrous works, peoples from all over flocked to hear him; Hittites and Abbasids; Obamacons and McCainiacs; Cameroonians and Blairites.

And they told of strange and wondrous things that greeted the news of the Child's journey. Around the world, global temperatures began to decline, and the ocean levels fell and the great warming was over.

The Great Prophet Algore of Nobel and Oscar, who many had believed was the anointed one, smiled and told his followers that the Child was the one generations had been waiting for.

And there were other wonderful signs. In the city of the Street at the Wall, spreads on interbank interest rates dropped like manna from Heaven and rates on credit default swaps fell to the ground as dead birds from the almond tree, and the people who had lived in foreclosure were able to borrow again.

Black gold gushed from the ground at prices well below $140 per barrel. In hospitals across the land the sick were cured even though they were uninsured. And all because the Child had pronounced it.

And this is the testimony of one who speaks the truth and bears witness to the truth so that you might believe. And he knows it is the truth for he saw it all on CNN and the BBC and in the pages of The New York Times.

Then the Child ventured forth from Israel and Palestine and stepped onto the shores of the Old Continent. In the land of Queen Angela of Merkel, vast multitudes gathered to hear his voice, and he preached to them at length.

But when he had finished speaking his disciples told him the crowd was hungry, for they had had nothing to eat all the hours they had waited for him.

And so the Child told his disciples to fetch some food but all they had was five loaves and a couple of frankfurters. So he took the bread and the frankfurters and blessed them and told his disciples to feed the multitudes. And when all had eaten their fill, the scraps filled twelve baskets.

Thence he travelled west to Mount Sarkozy. Even the beauteous Princess Carla of the tribe of the Bruni was struck by awe and she was great in love with the Child, but he was tempted not.

On the Seventh Day he walked across the Channel of the Angles to the ancient land of the hooligans. There he was welcomed with open arms by the once great prophet Blair and his successor, Gordon the Leper, and his successor, David the Golden One.

And suddenly, with the men appeared the archangel Gabriel and the whole host of the heavenly choir, ranks of cherubim and seraphim, all praising God and singing: “Yes, We Can.”

source: http://www.timesonline.co.uk/tol/comment/columnists/gerard_baker/article4392846.ece

Mid July Update

July 18th, 2008 at 10:01 am

Well, I have been comparing my journey to get out of debt to the Boston marathon.

I first phase is to find a good pace. You don’t want to come out too fast or you’ll just run out of stem and quit. You don’t want to come out too slow because you’ll never finish. For each of us the journey is different. Some of us will finish in 2 hours and some of us will take 8 hours. And much like the Boston marathon people will be cheering us on regardless. “Come on!! You’re almost there!! You can do this!!!”

The second phase is when we find that pace. Ah, life is good, things are turning around. I CAN do this. We are cruising along and we can see the road ahead of us. The crowds are cheering and we feel good.

The third phase are the Newton hills. It’s really a stretch of 5 miles of four hills. The last hill is .4 miles long and rises 88 feet. This is where I am and am about to crest the hill. That’s right. This weekend I will be putting the last money towards my wife’s $4,400 medical expense that we just got billed on from last year.

The last phase of the marathon is 5 miles of little nasty hills, where your body is broken down and it just your mind pushing you on. I can see some of this course coming up. I have to allocate some money for a vacation in September because if I don’t work then I don’t get paid, by wife’s birthday party in Boston in August (I should be able to cash flow it), and my wants.

Yes I said it – My wants. I want a riding lawn mower for my acre of yard, I want a shed, I want a sprinkler system, my wife wants new furniture, my wife wants new clothes …. We know what we must do, but we still feel the pull and it’s getting greater the closer we get to the end of this phase.

Getting out of debt may not be rocket science, but it sure ain’t easy.

Time for team Merch to have a pep talk and keep the focus.

“Truckin, like the do-dah man. once told me you’ve got to play your hand
Sometimes your cards aint worth a dime, if you dont layem down,

Sometimes the lights all shinin on me;
Other times I can barely see.
Lately it occurs to me what a long, strange trip its been.”

The facts on bank failure

July 16th, 2008 at 02:24 pm

With the failure and government bailout last week of IndyMac, the fifth bank to fail this year, here are some questions and answers about what happens when a bank fails.

Q.What happens when the government takes over a bank?

A. In such a scenario, called a conservatorship, a bank's regulator takes control of the company and oversees the operations. The move is to maximize the value of the institution for a future sale and to maintain banking services in the communities formerly served by the bank.

Q.Is my bank at risk?

A. John Bovenzi, the former chief operating officer of the Federal Deposit Insurance Corp., which guarantees bank deposits up to $100,000, has said that bank failures have been rare in the past, and that if more banks do fail, the government has enough in reserve. According to regulatory policy, there is no advance notice given to the public before a bank's assets are seized by federal regulators.

Q.How can I make sure my money is safe?

A. All deposit accounts worth $100,000 and less are automatically insured by the FDIC. Many retirement accounts, such as IRAs and 401(k)s, are insured up to $250,000 per person. But since it's a person's aggregate deposits, and not their individual accounts, that are insured, any amounts over $100,000 deposited at any one bank are not covered.

In a joint account, each depositor is insured up to $100,000.

The FDIC has information about its insurance on its website, at http://www.fdic.govdeposit/deposits/insured/yid.pdf.

Q.How much money does the FDIC have?

A. The FDIC has nearly $53 billion in insurance funds. Beyond that figure, Bovenzi said the FDIC would have go to other banks to raise more money, adding that in such a case, consumers could expect to see some of that amount passed on to them in the form of higher fees.

The current estimated loss to the FDIC resulting from IndyMac's failure is between $4 billion and $8 billion.

Q.How big does FDIC like to keep its deposit insurance fund?

A. The FDIC board of directors has set a designated deserve ratio of 1.25 percent. That means their ''target'' balance for the fund is 1.25 percent of estimated insured deposits. As of March 31, the fund was $52.843 billion and insured deposits were $4.431 trillion, which resulted in a reserve ratio of 1.19 percent, 0.06 percentage point below the Board's target. If the fund falls below 1.15 percent of estimated insured deposits, the FDIC is required by law to adopt a restoration plan that will bring the reserve ratio back to 1.15 percent within five years.

Q.Do banks have to pay into the deposit insurance fund?

A. Yes. The total amount depends upon the assessment rate assigned to the institution and the size of its assessment base -- which is roughly equal to an institution's total domestic deposits. Assessment rates are assigned to institutions based upon the risk they pose to the fund, and currently range from 0.05 percent to 0.43 percent, with the vast majority if institutions -- almost 94 percent -- paying between 0.05 percent and 0.07 percent.

Q.Does the government's decision to aid Fannie Mae and Freddie Mac help the nation's banks?

A.Tony Plath, an associate professor of finance at the University of North Carolina at Charlotte, says yes. ''As mortgage money becomes harder to get and real estate prices go down even more, the solvency of many banks is called into question,'' Plath said. ``The Fed is moving to protect the solvency of the banking industry by maintaining integrity.''

Source: http://www.miamiherald.com/business/story/606067.html

The 10 Biggest U.S. Bank Failures

July 16th, 2008 at 02:18 pm

With an estimated $32 billion in assets, IndyMac Bank of Pasadena, Calif., which federal regulators seized Friday, is poised to become the third-largest bank failure in American history. Here is a list of the top 10 failures, based on total assets, according to Federal Deposit Insurance Corp. data covering 1934 through 2007.

1. Continental Illinois National Bank and Trust, Chicago (1984)
Total assets: $40.0 billion

2. First Republic Bank, Dallas (1988)
Total assets: $32.5 billion

3. American S&LA, Stockton, Calif. (1988)
Total assets: $30.2 billion

4. Bank of New England, Boston (1991)
Total assets: $21.7 billion

5. MCorp, Dallas (1989)
Total assets: $18.5 billion

6. Gibraltar Savings, Simi Valley, Calif. (1989)
Total assets: $15.1 billion

7. First City Bancorporation, Houston (1988)
Total assets: $13.0 billion

8. Homefed Bank, San Diego (1992)
Total assets: $12.2 billion

9. Southeast Bank, Miami (1991)
Total assets: $11.0 billion

10. Goldome, Buffalo (1991)
Total assets: $9.9 billion

Source: Federal Deposit Insurance Corp.

Bank Failure Facts

According to the FDIC, from 1934 through 2007, there were only two years with no bank failures, 2005 and 2006.
The year during that period with the most bank failures was 1989, when 534 banks closed their doors.
During the savings-and-loan crisis (1986-95), 2,377 banks failed, representing 67 percent of the 3,559 bank failures from 1934 through May 2008. At the peak of the crisis (1988-1989), 1,004 banks failed, a rate of one failure every 1.38 days.
Bank Failures by Decade

2000-2007: 32
1990-1999: 925
1980-1989: 2,036
1970-1979: 79
1960-1969: 44
1950-1959: 28
1940-1949: 99
1934-1939: 312
Source: FDIC Historical Statistics on Banking, 1934-2008

Source: http://www.usnews.com/articles/business/economy/2008/07/15/the-10-biggest-us-bank-failures.html

What’s next?

July 16th, 2008 at 07:39 am

I was reading a few blogs over the last few days and it seems that everyone seems to be hitting one of those patches where life is a little tougher then normal. I don’t know whether it’s the news, the economy, the weather, gas prices, food prices, whatever.

I could say “hey, everyone’s in the same boat.” Or “Yeah it sucks it’s _____ fault.” Please fill in the blank with president, congress, big oil companies, republicans, democrats, banks, or whatever.

The point is that we all get in these funks and the purpose is not stay in them. I truly believe that in the end, you are the one holding you down. Sure, you may have hit a stretch of bad luck. Sure Murphy is in my house taking up residence.

So how do I usually get out of my funks.

I first throw a pity party for one. I complain how life is not fair. I shouldn’t be in this spot. Everyone is out to get me.

Then, I will usually look at my long term goals (5 years out). Is this truly where I want to be? Does my plan still make sense? Are the steps to get there still correct? Do I have to add some steps because of this rough patch?

What’s next?

Work the plan. I need to take my first step. Is it a phone call? Is it a tough conversation in need to have? Is it doing more research on an issue?

What’s next?

I am executing a task list. I am starting to get back on track. Hope is starting to be restored.

This is where I am today. I got derailed with some medical bills of $4,400. It caused me to have a little pity party. Blaming hospitals and the insurance companies for screwing me. Then, I made a plan with a couple of tasks and started executing.

What’s next?

End of this week, I’ll be back on track moving towards my goals.

You don’t have to live the life you are living. But you do need a plan to turn it around. Never lose focus of your big goals.

And two of my favorite words are “What’s next?” I find that if I keep asking myself what’s next?, it keeps me moving forward, building the momentum.

So, what’s next?

Back to the Future

July 15th, 2008 at 07:24 am

Remember 1989 – 1992? The housing market fell an average of 15%. 747 Savings and Loans went out of business. The unemployment rate in June 1992 was 7.8%. Inflation was over 6%. Does this sound familiar?

What is the saying, those who don’t study history a bound to repeat it?

So, let’s compare to today. The housing market on average is off 15%. It will probably deteriorate a little more. You could also argue that a handful of areas are skewing the results. In particular, CA, NV, FL,MI, OH, and AZ account for most of the foreclosures. But in any case, the current market is down 15% and will probably continue to drop.

I am looking at the prices to start bottoming over the next 6 months and linger. An L curve is what I would be expecting. The market has excess inventory that just need to work its way out and that will take time, just like the 90s.

Analysts are estimating 150 banks are in or going to be in distress. That seems like a large number until we compare it to the 747 S&Ls that went out of business.

Just like the early 1990’s, real estate loans were to blame. RTC noted this was the number one contributing factor to the S&L crisis. Other factors included the high short term interest rates in late 70s and early 90s. Some might also say the deregulation of the industry. I would argue the deregulation allowed more time for the S&Ls to try to get out of the mess by being allowed to take on higher margin products (or riskier investments).

So, what happened? Well, the deposits were insured but the fiduciary did not have enough to cover all of these deposits. So, the fed stepped in to cover the gap ($124 billion).

Now, it is a little different. Banks have to be more capitalized and the insurance premiums that banks pay for that FIDC insurance have gone up. So, your money in the bank is safe. Just make sure you stay within the insurable limits.

Unemployment might go up to 6% in the short term and inflation may hit 5% or a little more. But to add perspective that 1992 saw 7.8% and 6% respectively.

So to summarize, I see this as more of 1989 – 1992. And just proves that these things run in cycles.

Don't call it a comeback

July 10th, 2008 at 09:58 am

So, June turn into July and I still have the blahs. The main reason is my debt snowball has stopped. Why? Well, I got hit with about $4,400 in medical bills from last August. (Just showing up now, come on!!)

I decided to just cashflow rather then add it to my debt snowball. So, it basically took me about a month to pay off, but I’ll complete this either this week or next week at the latest. So, logically I understand I am doing what I need to do and realalisticly this will throw me off a month. Whoopie, no big deal.

But my emotional side feels like I’ve been sucker punched to the gut. All my breath and forward momentum have been zapped.

I have reached my heartbreak hill.

But, it’s that guy in the mirror who rides me like a rented mule and keeps me focused and going.

Mirror: Hey! What’s going on?
Me: I don’t know. It’s been a tough month. I was suppose to have the car paid off and the braces. Sigh, none of that happened.
Mirror: Murphy showed up right?
Me: Yea, the guy just comes around at the worst times.
Mirror: Yea, he’s like that. He likes to throw you off your game. Shake you up.
Me: Yea I had a great pace and now I have to stop to clean up this crap that I thought was already taken care of. All my timeframes are shot. I am missing short term goals left and right. AAARRRRGGGGHHHH!!!!
Mirror: You’ve lost focus.
Me: What? No, well maybe.
Mirror: Should we scale back the goals?
Me: No, I think I need to just vent and let it out.
Mirror: You set now? ‘Cause, I got work to do!

So as I turned and walked away, I swore I heard:

C'mon man
And with the local DBT news, LL Cool J with a triumphant comeback
[mumbling]
but tonight...
Don't call it a comeback
I been here for years
Rockin my peers and puttin suckas in fear
Makin the tears rain down like a MON-soon
Listen to the bass go BOOM
Explosion, overpowerin
Over the competition, I'm towerin
Wreckin shop, when I drop these lyrics that'll make you call the cops
Don't you dare stare, you betta move
Don't ever compare
Me to the rest that'll all get sliced and diced

And with that Mr. Murphy:

Don't you call this a regular jam
I'm gonna rock this land
I'm gonna take this itty bitty world by storm
And I'm just gettin warm

Rant or Puppies - Your choice

July 9th, 2008 at 10:22 am

OK, time for another random Merch rant. I’ve your having a plesant day, please skip to the bottom (after END RANT) to continue your pleasant day..

Last warning…. OK, I warned you.

-----Begin RANT-----------

So lately, I have been getting more and more irritated by people in general. I don’t know what’s causing this in society or what. Maybe because we get our news from the internet or maybe it is that all news has hidden opinions or people are too lazy to research things. I don’t know.

But my issues are basically: 1) If something is repeated a certain number of times it is considered fact 2) People reinvent the definition of words 3) Feelings are more important then facts.

So let’s take a quick example. We are in a recession. I have heard this on the news and read it on the internet countless times. To the point where a recent survey found that the 75% of Americans believe we are in a recession.

Well, the definition is 2 quarters of negative growth. We haven’t even had one quarter of negative growth.

Well, that’s on definition of recession. No, that is the definition of recession.

Well, I feel like I am in a recession, so we are. OK, I admit I can’t argue feelings with logic.

Or another example. Inflation is out of control. And yes, I hear this on the news and read this on the internet all the time. The unadjusted 12 month CPI (April 2008) was 3.9%, which is hardly out of control. Source: http://www.bls.gov/cpi/cpid0804.pdf

The average since 1947 has been 3.85% so inflation seems about normal year over year. Source: http://bigpicture.typepad.com/comments/2006/06/chart_of_the_we_3.html

Well you know, the government isn’t taking into account oil or food properly so the methodology is wrong.

Really? Here’s what is measures:
§ FOOD AND BEVERAGES (breakfast cereal, milk, coffee, chicken, wine, service meals and snacks)
§ HOUSING (rent of primary residence, owners' equivalent rent, fuel oil, bedroom furniture)
§ APPAREL (men's shirts and sweaters, women's dresses, jewelry)
§ TRANSPORTATION (new vehicles, airline fares, gasoline, motor vehicle insurance)
§ MEDICAL CARE (prescription drugs and medical supplies, physicians' services, eyeglasses and eye care, hospital services)
§ RECREATION (televisions, pets and pet products, sports equipment, admissions);
§ EDUCATION AND COMMUNICATION (college tuition, postage, telephone services, computer software and accessories);
§ OTHER GOODS AND SERVICES (tobacco and smoking products, haircuts and other personal services, funeral expenses).
And:

-------BORING CPI STUFF--------------
Each month, BLS data collectors called economic assistants visit or call thousands of retail stores, service establishments, rental units, and doctors' offices, all over the United States to obtain information on the prices of the thousands of items used to track and measure price changes in the CPI. These economic assistants record the prices of about 80,000 items each month representing a scientifically selected sample of the prices paid by consumers for the goods and services purchased.
During each call or visit, the economic assistant collects price data on a specific good or service that was precisely defined during an earlier visit. If the selected item is available, the economic assistant records its price. If the selected item is no longer available, or if there have been changes in the quality or quantity (for example, eggs sold in packages of 8 when they previously had been sold by the dozen) of the good or service since the last time prices had been collected, the economic assistant selects a new item or records the quality change in the current item.
The recorded information is sent to the national office of BLS where commodity specialists who have detailed knowledge about the particular goods or services priced review the data. These specialists check the data for accuracy and consistency and make any necessary corrections or adjustments which can range from an adjustment for a change in the size or quantity of a packaged item to more complex adjustments based upon statistical analysis of the value of an item's features or quality. Thus, the commodity specialists strive to prevent changes in the quality of items from affecting the CPI's measurement of price change.
The CPI is a product of a series of interrelated samples. First, using data from the 1990 Census of Population, BLS selected the urban areas from which data on prices were collected and chose the housing units within each area that were eligible for use in the shelter component of the CPI. The Census of Population also provided data on the number of consumers represented by each area selected as a CPI price collection area. Next, another sample (of about 16,800 families each year) served as the basis for a Point-of-Purchase Survey that identified the places where households purchase various types of goods and services.

---------END BORING CPI STUFF-----------

Well, I feel that we are in a high inflation period.

I don’t really understand what happened when feelings can override facts and people just except it. I feel that this is becoming more and more common place but I don’t have any facts. (Did I just fall into my own trap?)

------END RANT------------

And for those just coming back to my blog.

Puppy dogs, warm spring days, and a cool breeze. Don’t you feel better? I do.