Archive | January, 2008

Economic Stimulus Package

So the lawmakers are trying to push through an economic stimulus package. It is not a “tax rebate” because the money can go to people who do not pay taxes. It breaks down like this (at this point in time, after it goes through the senate it could theoretically change)

If you are Single:

  • If you made over $3,000 and did not pay taxes, you get $300
  • If you made over $3,000 and did pay taxes, you get $600
  • $300 more for each kid you have
  • If you made more than $75,000 you lose 5% for every $1,000 over $75,000. Over $87,000 you don’t get anything.

If you are Married:

  • If you made over $3,000 and paid no taxes, you get $600 (total)
  • If you made over $3,000 and paid taxes, you get $1200 (total)
  • $300 for each kid you have
  • If you make more than $150,000, you lose 5% for every $1,000 over $150,000, stopping at $174,000

I got these numbers from bargaineering.com

I’m not quite sure whether this is based on 2006 or 2007 income, but I’ve heard multiple times that it is based on 2007 income. Also, I’m not sure whether or not you can get a check if you are claimed as a dependent on someone elses taxes.

I encourage everyone who gets a check to buy stuff, that’s what it’s for. Don’t save it, or you could pay down some debt (which actually, with the credit squeeze, will help more than in previous rebates) Ideally, you would use this money to buy things you wouldn’t usually buy, that was made/developed in the USA. This is the ultimate consuming with this money.

I’m rambling on now, and I’m not sure whether or not I’m making sense, but I thought I would just tell everyone some details about this. I’ll keep you updated.

If I get a check (I made enough/paid taxes, but I am a dependent) then I will probably buy an xBox and a TV. That’s my plans. I could just be a dick and wait to spend it till I go to England this summer 🙂

If you have any updates to these numbers, please feel free to e-mail me, and I’ll fix them.

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Is Dorm Room Business Legal

Here’s something everyone should consider before trying to run a business out of your dorm room: Is it even legal? I don’t mean as far as the actual laws go, but read your housing contract, see if you’re allowed to run any sort of business. I just read an article about an NYU student who sold beer paraphernalia out of his dorm room; he was kicked out of student housing. You can find it here: Click Here

I think some businesses should definitely be allowed in dorm rooms, provided they don’t get out of hand. This is an example where the University may have been justified in their actions, seeing as he was apparently over-running the mail room with boxes of merchandise. I encourage everyone to read that article, it’s a good one.

I would love to hear about any dorm businesses any of you have started out there! Small or big, anything would be great to hear about. Click on the submit a guest post on the right hand navigation bar and send an e-mail detailing your dorm room business. If you would like to keep it confidential just let me know and I won’t post it online.

Well, it’s tax season! I was thinking about volunteering with an organization on campus that helps low income and foreign students with their income taxes. It’s a community service, and it seems it would help with my interests. I figure it would be a good experience, and it’s a good looking community service. Any thoughts?

This is going to be a short one, I just thought I would throw out a few thoughts for today. Looks like my e-Bay auction didn’t so well…I didn’t really expect it to, just taking a little gamble.

Have a safe and wonderful day.

As usual, if you are reading this on my imported facebook blog, you can find my full blog at wwww.dormroombiz.com

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I’d like to talk about Debt

I was watching a commercial for one of those debt consolidation services, and I began to think, “This service shouldn’t even have to exist,” The amount of unnecessary debt out there sickens me. I understand taking out a loan to pay for a house, or car, but when people go into debt on their credit cards, well that’s just sickening.

Based on what I hear from these commercials, 6 out of 10 Americans are in some sort of debt. There are somewhere around 40 million Americans under the age of 19 (US Census 2000) so if our population is around 300 million, that means 260 million Americans are of legal age to own a credit card and take out a loan. 260,000,000 x 0.6 = 156,000,000 Americans in debt…approximately. If you ask me, this is 100% unacceptable. If you can’t afford the new shoes that are $80…DON’T BUY THEM! I know this could weaken our consumer economy, but we can survive it.

What is the point of owning someone money? So you can owe them more money? With the rates on credit cards rising to near extortion levels, why would you want to owe someone money. If you have a 12% credit card (college student cards can rise to near 30%) then using the rule of 72, in 6 years, your debt will double. That sounds like a long time, but so many people are simply sitting on their debt, and allowing this to happen. It’s a record boom for the Credit Card industries, the only loan industry that’s hurting right now is the Home Mortgage industry (and it is hurting BAD)

American Express made $3.7 Billion last year. Some of that profit comes from charges retailers incur when you make a purchase with your AmEx, but a lot of that is probably finance charges and fees. MasterCard made $3.3 Billion last year for many of the same reasons. Discover is sitting pretty at $561 Million for…you guessed it, the same reason. Do you realize that when you don’t pay a credit card in full, you are simply giving up your money for a frivolous purchase?

Now, let’s set some things straight, I don’t dislike credit cards, I think they’re great; they can give you an advance when you don’t have your cash yet, and the rewards can be great. The issue people run in to is simply paying the minimum each month. The credit card companies would like you to do no more than simply pay the minimum each month; that is their optimal customer. Why? Because you will rack up finance charges like crazy. For the rewards alone, credit cards are worth it, airline miles, cash back on Discover, hotel rewards, but in order to get these rewards, you will have a higher APY, which means higher finance charges, which means it costs more to buy things than it should. I pay EVERY credit card I have in full every month, and I have NEVER had to pay more than anything is worth.

This takes a little more work than simply buying on a whim and worrying about it later, but it saves a lot of money too. I spend around $400 a month on my credit cards probably. If I simply paid the minimums, that would be $325 a month that gets charged. With an Average Daily balance, and an APR of 12,%, that comes out to 325(1+.033)^30 = 358.76 for the first month. After the second month, with another $325 of purchases, it comes out to $754.80. I am now paying $904.80 total on only $800 worth of stuff. Do you see how much difference paying off your cards in full makes?

The ultimate idea to take away from this is: If you don’t have the money to spend…DON’T SPEND IT. Our country spends more money than it makes, which means someone has 6 out of 10 of us by the balls. Don’t overspend. Don’t go into debt, and don’t overindulge. It’s simple common sense.

I didn’t even get into our national debt, which is ultimately a good thing, just not at it’s current levels. I’ll talk about that at a later date.

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A Note on e-Bay Forex Arbitrage and Risk in General

For everyone who read my post on Foreign Exchange Arbrirage on e-Bay, I would suggest you do not try this right now. Since the Dollar is so uncertain right now, and foreign exchange rates are going nuts, this is not the best time to do this. If you have Euro’s, now may be the time to sell, but I would not suggest purchasing Euros from a third party to sell on e-Bay currently. This is still a decent strategy, but in this uncertainty, there is a much higher risk than there would normally be.

Whenever you are looking potential business deals, or exchanges, always look at the risk. Higher risk usually means higher reward, but this is not always the case, so you need to consider both risk and reward. If you need to risk $100, but stand to make another $600, that’s a much better risk than say risking $100 to make another $100. This is more apparent in the bond markets; higher risk doesn’t always guarantee a higher potential reward. Furthermore, a lower risk does not always mean a lower reward. There are safe investments that can produce 4-6% returns, which is not as high as many high risk investments, but it is still ahead of inflation.

I know I must sound like I’m strictly talking about Equities, Bonds, Forex, etc. investing, but in any business, you must consider the risk. With a new restaurant, there is high risk (something like 98% failure rate) but do you stand to make a lot of new money? Not really, unless you become wildly successful and can create a chain. Why do people do this then? Usually because of a passion: I would not typically view a restaurant as a wise investment (excluding chain restaurants)

I just thought I would throw out a few thoughts on risk. It never pays to be cautious, but it can be even more costly to be overly risky. If you have a desire to learn more about managing risk in the markets, there are MANY good investment books out there; check out Amazon.

I finished reading the book Liar’s Poker recently, and it was great, it was basically a narrative of one bond trader’s excursion through the industry; how a bond trader is part investor, part gambler. It’s quite a good read, I would suggest it for anyone interested in learning about the behind the scenes of the Bond market in the 1980’s. He also discusses in detail the formation of Mortgage bonds at his company (Salomon Bros.)

That’s all for today; I really like being able to write about other things besides just starting businesses in your dorm room, it gives me much more to think about.

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Products online now!!!

I’ve now got some products online. Admittedly this is not a huge product line, but it’s a start, and hopefully it will motivate me to start doing more to get stuff online.

I put my 5 photo holder online, on e-Bay, but online nonetheless.

You can see it here! 5 Photo holder

I would really appreciate anyone who would look at it. This really is a great product, and I use multiple copies of this product, I think it is absolutely great! I can hang tons of photos on the wall without having to buy frames or stick the photos directly on the wall like I did last year.

I have developed a website that I hope to have up and running by the end of the month.

Well, that’s enough of that.

I’m really sorry I haven’t been posting lately. I have decided that from now on, this blog will be more dedicated to business in general, instead of just business in dorm rooms. I think this is a better, broader topic, and brings me out of my myopic focus. I simply didn’t have much to post blogs about, since I haven’t been developing my business lately. I hope this will change.

I’ve purchased a few books and gotten some from Christmas that I hope will be really great. I have

  • The Book of the Five Rings by Miyamoto Musashi
  • The Book of Family Traditions by Yagyu Munenori
  • The Art of War by Sun Tzu
  • The World is Flat by Thomas Friedman
  • The Art of Seduction by Robert Greene

These are all meant to help with business, The first 3 are more about battle, and business at a higher level. The world is flat is the new bible in business it seems. Every class talks about this book sometimes. The Art of Seduction is supposed to help with sales, however, I don’t think I’ll read this in public, that could look kind of embarrassing. I’ll go ahead and stay in my room when I read that one.

I got thinking about the role of these books. I have read a few books based on business in the past couple years, and they really are much better than any classes I’ve taken (with the exception of my International and Comparative Dimensions of Business class). Why do people choose not to read these books. There is a definite edge in the business world based on knowledge. When someone knows more about the business world and can react faster, there is undoubtedly an edge, and I don’t think anyone would doubt that.

“It’s not what you know, it’s who you know!”

That could not possibly be true, it is important to have connections, but unless you’re just going to work a nothing job for a relative, your connections can only get you in the door. Please don’t get me wrong, connections in business are important, because you DO need to get in the door, but that’s as far as they will go. Without the ability to impress an interviewer, and the knowledge to excel at your particular job, you will not last long. Just remember, you do need to know something about business, and economics, and psychology, and how to work with people, and many other things. Your dad’s a CEO? Well you better know something about that business to get a job with him, because if you don’t, a good CEO will fire you without hesitation.

I get so sick of people relying only on their connections in business for jobs. No one cares if you know more executives than they do, you can only get an interview with your connections, so go to class, stop wasting your opportunities in life. If you’re in school studying business, YOU’VE DONE SOMETHING RIGHT! Don’t let the seat in your class go to waste. That fact goes for everyone really.

Anyway, that’s enough of a rant.

I watched the Detroit Auto show today, quick review: My award for coolest car goes to the Audi R8 (look it up)

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