Friday, June 26, 2020

Young Investors Club Invests In Stocks With Real Money, Lessons Learned

As a teacher, I've had the opportunity to be part of The Stock Market Game, a stock market investing simulation pitting same grade level teams against each other for ultimate bragging rights.  Each team gets the same amount of virtual money at the start, and they decide which stocks to buy and sell throughout the duration of the tournament.  The team with the most realized gains at the end, wins.  It's an exciting and great way to learn, with no true risks involved.

I never imagined finding a group of teenagers investing real money in the market and conducting themselves like an active fund, but that I did just recently.  And I have them here for you today! Enjoy!




Hi!  My name is Warren Weissbluth, and I am the current President of Young Investors Club (YGN).  Young Investors Club is an investment club where each participant invests real money in the stock market, and democratically decides how to go about investing.  The club's mission statement is, "To educate young adults about investing in the stock market."  We want to give our participants the tools to make informed investing decisions on stocks as well as to increase the financial literacy of our members.

YGN's History

Back in 2016, Jack Rosenthal founded YGN, noticing a lack of opportunities for teens to learn about investing, and get hands-on experience.  In order to develop something of value, Jack persuaded both Gersteinfisher and Young Presidents Organization (YPO) to sponsor an investing club for teens.  Jack focused on growing and promoting the club in order to increase the size of the portfolio and number of members.  Less than two years later, the club had expanded across the nation, gaining more than 40+ new members.  Today, the club has more than 90 members across the U.S.

I joined in 2017, and worked closely with Jack to develop a more interactive and educational agenda at the club.  By my sophomore year of high school, I was promoted to Chief Operating Officer.  Mid-way through my junior year, Jack resigned (he went off to college), and I became the club's President.

As President, I focused on the club's stability.  Between a myriad of issues, including accounting and legal accountability, as well as a lack of education and engagement, the club had lots of room for improvement.  At the start of 2020, a YPO parent, Yaniv Blumfeld, and I worked hard to restructure the club and help fulfill the club's mission.

For several weeks, we worked together to create a governance document, stating clearly in writing the inner workings of the club.  To improve transparency, we also wrote down how the club manages its portfolio of over $100 thousand dollars.  We created a management system, found a more experienced Board of Directors, and outlined everyone's responsibilities.  Finally, we developed an election process, and determined term limits on all club positions.

With more organized tasks such as club emails, calendars, websites, and holding reports, things could be effectively executed through the delegation process.  This transition breathed new life into the club, and sparked engagement.  Our regular communications now include Google Meets voice chats, full record of all decisions posted on the website, voting forms for all participants (even if they can't make the call), and thoughtful research reports on our investments.  The club has never been more engaging and exciting to be a part of!

Why Teens Need Financial Education

The skills one learns from financial education can help teens avoid blunders later in life.  Whether it be credit card debt, one's credit score, retirement, savings, and investing, there are many facets to adult life that are not inherent to young people.  While YGN only intends to educate on a portion of these goals, we hope that an early introduction into the world of finance will kick-start an interest in money management.  Similarly, being exposed to the marketplace as a young person can give valuable insight toward the way things are valued, and the nature of investments.

As President, I hope all members will be able to walk away from the club knowing that they have learned something useful to take forward as they head to college.

Joining or Replicating

YPO continues its sponsorship of the Young Investors Club.  As a result, the club is limited to YPO members and their children.  If you are part of YPO, please check out our website or reach out to younginvestorsclubllc@gmail.com for more information.  If you are not a YPO member, here is the link to join

Additionally, if you would like to learn more about starting your own local club, I am happy to provide guidance and insight!  It would be my pleasure to help anyone aspiring to build their own investing club.  Reach out to me if you have any questions!

Sincerely,

Warren Weissbluth     

Sunday, June 14, 2020

My First Seller-Financed RE Deal, Under Contract

What an incredible year it has been.  And we're only half way through.  Before I talk about my first seller-financed RE deal, the why, how, etc., I want to make something clear for anyone new to my blog:

I support BLM, police reform, science, education, the LGBT and immigrant communities, am pro-choice (not pro-abortion as some may like to spin), pro-capitalism, not very religious...actually not religious at all, but I support everyone's right to be religious, etc., AND I cut my sandwiches into rectangles.  There, now you know.  If that puts you off...see ya!

  House is 3 bedrooms, 1 bath and roughly 1,200 sq. ft.


Why RE Investors Seek Out Seller-Financed Deals 

There comes a time when a RE investor will have too many properties in the books for their income, and banks (who dole out conventional loans/financing) will consider the buyer "over-leveraged."  Even if a RE investor has very little in the form of debt (car is paid off, no other credit card balances, e.g.), if their W2 income hasn't gone up, they will cap out eventually.  It's also relevant to note that banks only count a certain percentage of rents as "income" for their debt-to-income calculation.

For example, as a middle-school teacher, my salary is around $94K.  Unless I ramp that up, by returning to administration (I don't want to do this) for example, I'm no longer able to get financing conventionally, despite having four rental properties each cash-flowing and providing me with "other" income.  If I add my wife, Jessica, to the loan application, our collective income is higher, improving my numbers.  Jessica is currently on month 18 of her new career as a realtor, however, so there is not much track record of her income yet.  Only one year's taxes so far.  Everyone's situation is different, of course.  But all RE investors face this "problem" of financing at some point.  This is where finding seller financing comes in handy.



What is Seller-Financing?

Simply stated, seller-financing is the equivalent of a home seller choosing to become the bank.  Other ways of saying this OR of looking for it online in searches include, "seller will carry" and "seller will hold."  For personal or business reasons, a seller may choose to carry/hold a note (mortgage) for a buyer.  The buyer pays the seller (not directly, usually a loan servicing company is involved) a monthly payment of principal plus interest.  Just like in a conventional loan, the buyer is responsible for insuring the property, paying property taxes on it, etc.  Unlike bank financing, the seller can negotiate a higher interest rate, length of the loan, and other lending terms with the buyer.  Because a bank is not involved, both buyer and seller pay less in closing costs.  Buyers also don't have to meet the stringent lending standards of a bank.  The seller decides what he/she needs in the form of financial support/statements/checks to qualify the buyer, i.e., the borrower.



My Deal...How I Came To It

About 10 days ago, I got on Craigslist in Little Rock, Arkansas.  Craigslist is a good place to find off-market RE deals.  First question:  Why Little Rock?  I have done business with two "turnkey" RE companies in the Memphis, TN area.  One of these companies started selling turnkey properties in Little Rock, and is heavily pushing the area to its vast network of out-of-state investors.  So, just reading the future here.  If this company keeps selling in Little Rock, at slight premiums, the market will go up in the area.  This company also asks that after your fourth deal, you do 25% down payment for each subsequent deal.  They work with banks that demand this of investors after deal number 4.  I don't like paying more than 20% on RE deals, preferably less if possible.

Now, because I'm not in the area, and I don't like flying across the country, especially to a hot and humid place like Little Rock in the middle of the summer, I look for particular properties on Craigslist:

1) They must be ready to be rented out...like in turnkey rehab condition.  Images will show this.
2) The owner must be the one posting the ad.  You must confirm this.  I cannot stress this enough: MAKE SURE THE SELLER OWNS THE PROPERTY OUTRIGHT.  It won't work if the seller still has a mortgage on the property.
3) Communicate with seller by phone after the seller replies to your inquiry.  Get a feel for the property from the seller, e.g., the type of area it is in, what they rent the property for (if currently rented), and how the seller arrived at their sales price.  It's your job (once you have the property address) to find area property values, appreciation potential based on market outlook, and if anything major in terms of repairs are needed on the property.  *Note, sellers may volunteer all this info, but only a property inspection by a legit inspector can tell you for sure.



I found one property that met my visual and description criteria.  There were several pictures backing up what the seller was stating in the blurb.  I emailed him,

"Hi, X,
I'm interested in your 3, 1 home.  Would you consider a seller financing deal?  I could swing up to 20% down ($15K) and we can discuss terms for the remaining $60K?"

In retrospect, I should've left off how much I was willing to do for the down.  But, the reason I offered 20% immediately was because the seller hadn't specified he'd do seller-financing.  The ad mentioned two contractual options, a) cash purchase, or b) rent-to-own.  The seller boasted having put in a new roof, HVAC system, and kitchen cabinets.  He mentioned having had the hardwood floor resurfaced, adding new kitchen tile flooring, and installing a new water heater.  Lastly, he also stated that he had just painted both inside and outside.  This gave me the impression that the seller/flipper had perhaps over spent on the rehab and needed some money back badly.  I doubt he would've taken less than 20% down.  This allowed me to get his attention too.

To my surprise, the seller agreed to consider the possibility of carrying the paper.  He gave me his telephone number and name so we could talk off Craigslist.  Why was I surprised?  Many sellers don't want to take on the responsibility of loaning to random people.  They may not understand the process, and are fearful about being scammed.  I lucked out though.  The seller would convey to Jessica and me while on the phone that he looked up seller financing on Google, learning how it works, prior to sending me his reply via Craigslist.  That was a great sign.  One of the difficulties of doing these types of deals is having to educate the seller.  Many sellers turn to family, accountants, friends, etc., who may not understand anything about real estate, and end up getting misinformed.

Deal Terms

On the phone we talked terms.  First a little friendly conversation to relieve the tension.  Jessica and I shared a little about ourselves and our goals.  The seller was willing to share a little about himself too.  Then we got to business.  Questions we asked him:

1)  Why are you looking to sell?
2)  How did you arrive at your selling price?
3)  Do you own the property outright?
4)  If we did a title search would there be any liens to his knowledge?

The seller was savvy enough (to his credit) to understand his position of leverage.  Namely, how to get a better rate on the note.  For example, we started by offering him 5% on a 30-year amortized schedule for payments with a balloon payment due at the end of the 5th year.  This would've been the best case scenario for us.  We had already agreed to the 20% down so we were stuck there.  He countered: "For 30-year amortized payments, I will need at least 7.5% on the loan with 5-year balloon payment."  See...he was smart enough to know the amortization was his leverage.  If you're lost, a 30-year amortization leads to smaller monthly payments.  Sellers in a seller-financed deal can ask for 15-year amortization or even 10-year!  The payments would've been too high for us.  As an investor, you want to pay the least amount every month so you can cash-flow.  Jessica and I countered with 7% rate, but he wouldn't take it.  Thus an agreement was reached with terms being:

Sales Price: $75K
The property is in a B to C class neighborhood, so it appraising right now at this price is probably not happening.  Comparing similar properties in the area, sales that is, I think the property is worth at least $65K, maybe a bit more.  Again, without an appraisal, there is no knowing for sure.  The Zillow forecast (I know you can't trust Zillow) calls for 11% appreciation for 2021.

Down Payment: $15K
Loan: 5-year, 7.5% interest rate, on a 30-year amortized schedule
Earnest Deposit: 1% of sales price or $750, to be applied to down payment

Now What?

We had no idea how to proceed beyond this.  This was our first seller-financed offer.  The seller too was doing this for the very first time.  I knew a written offer was next.  But how to go about getting a legal sales contract for the state of Arkansas?  I looked online.  I found some decent templates.  Jessica and I thought about just doing it ourselves.  But then we reconsidered.  We considered hiring a RE attorney next.  One RE attorney gave us a quote: $2,000 retainer and $300/hr. thereafter.  Ha!  No way.  In theory, hiring a lawyer for your very first time sounded like the prudent thing to do.  But they charge way too much.  If the deal had been for a $500K or more property, then maybe.

Then Jessica got the idea of talking with a local Keller-Williams realtor.  Jessica works for Keller-Williams in Carlsbad.  She found an agent there.  The agent happened to also be an investor.  That's what you want!  If you're not going to travel to the state to visually check out the property yourself, having an investor-realtor is the next best thing.  Not only will they advocate for you, but they will be present during the inspection, and tell you if the property is a dud or not.  Just because you agree to terms doesn't mean you can't back out.  The sales and purchase contract specifies all sorts of contingencies (termite clearance, etc.).

We hired the agent (agreeing to 2% commission) and she came with a network.  For example, she asked us to work with Stewart Title.  Stewart Title has an in-house lawyer who charged only $200 for the promissory, mortgage note portion.  The seller normally pays for this since it behooves them to have ownership of this part of the process.  Both buyer and seller have closing costs, and we agreed to pay our own side.  Our closing costs are roughly $954.  That's it!

Bottom Line

I expect to put at least $20K into this deal.  Here is a breakdown:

1) Down payment: $15K
2) Title and closing costs: $954
3) Home Inspection: $500
4) Realtor: $1500
5) New dishwasher: $500-$700
6) New stove: $500-$700

I used Bret Whissel's amortization calculator to estimate my principal AND interest payment: $419.53.

My cost to insure the property will be: $718/year or $59.83/month.

The property management company I will hire charges 8% of the rent amount.

Properties in the area rent for $750 to $800.  So, let's say it rents for $775.  Prop. mgt. fee would be 0.08 x 775 or $62.

Property taxes are currently $444.0/year or $37/month if impounded.

Total monthly costs (not including any maintenance) are:

419 + 59 + 62 + 37 = $577/month

Cash-flow: $775 (using conservative rent amount) - $577 = $198, call it $200.

Cash on Cash return =

$200 x 12 = $2400.
$2400/$20000 = .12 x 100 = 12%.  Not bad.  And it would've been better if I didn't have to buy the two appliances.

Realize this.  Most of the above expenses, with the exception of the down payment, will be tax deductible!  Also, my exit is going to be a conventional refi loan in about two years.  Will interest rates be crazy high in 2022?  Heck no!  We're barely starting our Covid19 depression.  So, in two years or less, I will seek out a cash-out mortgage (to pay off the balance of the loan to the seller) and lower interest rate, improving my cash-flow position.  Maintenance expenses aren't going to be that bad with all the new upgrades to the house. 

 I will keep you all up to date on this deal.  I've learned so much already, and I hope that by reading this, so have you!  Until next time.

Tuesday, June 2, 2020

The Berenstain Bears Help Kids Manage Their Allowance, Write Checks

The end of the school year is here.  Hooray!  Even as a middle school teacher I've struggled to keep my elementary age kids on task.  My son, a first grader, invented a whole new game: ditch "daddy school" when daddy isn't looking.  It involved him signaling his older sister, a second grader, when to make a mad dash up the stairs.  My yelling for them to stop and come back only made them giggle harder.

Even though they had a full compliment of activities, thanks in part to their awfully committed teachers (some days I wished they were less committed), we managed to finish the "school day" by noon.  They had plenty of time on hand to do other things before dinner like play, clean-up around the house, and watch television.  I didn't like the YouTube channel they watched, consisting of a family (mom, dad, and elementary age son) playing video games together.  Since I restricted how long they could play video games, they thought watching others play wouldn't violate any of my rules.  They thought wrong, obviously.



I had to stop that time-wasting nonsense and replace it with something more productive and constructive.  So I challenged my kids to earn money by reading books of my choosing.  I would buy them a set of books, and every time they finished one, they'd earn $1.  I went on eBay and found several money centered books for kids, but I'd like to focus on just two:

1.  The Berenstain Bears' Trouble With Money
2.  The Berenstain Bears' Dollar$ and $en$e

As everyone knows, Stan and Jan Berenstain have educated kids now for decades.  They have a slew of books on various topics.  My kids in fact have several other "Berenstain Bears" books that they love to read over and over.  Sticking to authors they're already familiar with helps pique their interest in any new book.



The Berenstain Bears' Trouble With Money

Quick summary:  Brother and Sister Bear spend their money at the Bear Country Mall just as soon as they get it or earn it.  Mother suggests to Papa that the cubs should have an allowance.  Papa believes the cubs are too young still.  Plus, Papa wants the cubs to learn how to work for money and save it for a rainy day.  The cubs start hustlin' like crazy, earning wads of cash doing side-gigs every day.  They surprise Papa by gifting him all their earned money, since he's constantly worrying about not having enough.  Papa comes to his senses and agrees to start the cubs on a regular allowance.  But first they take the cubs to the Bear Country Bank and open accounts for Sister and Brother.

Financial topics you can discuss with your kids from this book:  A) How to spend money, B) Why you need to save some of your money, C) Entrepreneurship, D) What a bank account is, E) What interest is.

Read "Trouble with Money" before...



The Berenstain Bears' Dollar$ and $en$e

Quick summary:  Papa Bear gives Brother and Sister Bear a weekly allowance to teach them to be responsible with money.  He tells them they can spend or save their allowance however they see fit.  The cubs repeatedly spend all of their allowance on the same day it is given, and consequently have no money left over for the rest of the week.  Mama has an idea that will help the cubs make better decisions with their allowance.

Great idea if you have kids who mismanage their allowance!

Mama found old checkbooks in a drawer.  She explained to the cubs what checks are for, namely, paying people, keeping balance records, or making them out to "Cash."  She made them write out a check to Cash in the amount they wished to withdraw from the bank (Mama, in this case).  This strategy helped the cubs think twice before making any new purchase.  Example,

Instead of spending $5 on baseball cards, half of his allowance, Brother changed his mind and bought a $3 baseball book.  The check he made out was for $3, and the record showed he had $7 "Allowance Left."

Financial skills learned: A) Making smarter purchasing decisions, B) How checks are utilized, C) How to write out a check.

Why I don't believe in an allowance for chores

There are many families that pay their kids an allowance for doing daily or weekly chores.  I'm not down with that.  I don't want to teach my kids to be employees, working for money by the hour or upon completion of a certain task.  I make my kids do chores, but only to teach them life skills they will need one day.  I prefer to pay my kids for reading, especially financial literacy books.

But it doesn't really matter how you decide to compensate your children for their efforts.  The fact remains that many of them will rush to spend their money without regard for saving, or the "needs vs. wants" mental processing.  Keeping your kid's cash as their bank, and forcing them to write out a check in order to withdraw, might help instill in them a better sense of money management.

Great job Stan & Jan Berenstain! 
     

Wednesday, May 20, 2020

Wells Fargo Kills My Rental Prop Refi Due To Last Minute Change In Lending

I was minding my own business one day in early March, prior to even the earliest of measures to stay-at-home, when I received a phone call.  It was a Well Fargo agent by the name of Will.  I won't share his last name because that wouldn't be nice.  Will wanted to know if I was interested in refinancing one of my rental properties.  Wells Fargo owns the note so I thought, Hey...why not.  I was already in the process of refinancing my personal residence with Blue Spot Home Loans and that was going great.  I locked in at 3.3%, down from 5.125%.


Mortgage Refinance 101: What It Is and When You Should Do It ...


The rental property details

The rental property in question is my best performer.  I'd once already refinanced it, using Well Fargo, and taken $24K in cash-out.  This was back in 2018.  The refi process had resulted in an increased rate to 6.25%, 2018 rates.  This was high, but I was still cash-flowing nicely due to the rental market in Cordova, TN rising.  The property had appraised at $155K back in 2018.  I quickly looked on Zillow and other sites to see if there was any other additional appreciation to be had.  Comparable sales showed that properties in the same neighborhood had sold for $170K!  Holy smokes!  I said to myself.  I could do a cash-out refi once again and get a lower interest rate at the same time.

Will said I could get 5.125% now.  So I turned myself into a document uploading machine.  Wells Fargo would send me an email requesting documents, and I'd complete the "task," that same day.  It took like three weeks to get my first actual, non-automated response from Wells Fargo.  The Mortgage Processor, a woman by the name of Leticia, introduced herself and said she'd be taking over my application.  This was in late March.  I knew things were slow because of all the people attempting to do what I was doing.

In early April I started to worry.  Leticia had gone silent.  The reports of Covid19 leveling every industry in sight alarmed me.  I emailed Leticia and requested that she order the appraisal of my rental property asap!  I explained to her that I didn't want the value of my property to go down because of people losing jobs.  Finally, some time in late April, the appraisal was ordered.  I spent about $650 and crossed my fingers.  Remember...appraisals make or break deals.  If the property doesn't appraise at the price you need it to, the deal has to be re-structured.  I wanted $14K in cash-out and needed the price to come in at $170K.

Boom!  The property appraised at my price.  Leticia gave me an update, stating we would close by the end of May.  This was the slowest refi process I had ever been a part of.  It would be almost three months from start to finish.  But again, Covid19.

Then there was confusion.  Will called me in early May to tell me we could lock in at 5% now because the rates had gone down.  I inquired about the $14K cash-out, as had been stated in the disclosure forms that Well Fargo sent me.  I had a copy of it.  Will had not seen it.  He pulled it up on his screen and noticed it.  He said that the application was supposed to be simply to lower the rate, and not pull cash out.  He had to talk to Leticia and his boss to see if he could change it to a cash-out app.  Mind you, this was in the disclosure forms that both my wife and I signed, and agreed to!

Another week went by.  Will hadn't gotten back to me with an answer.  Leticia emailed me on Friday of last week.  She stated in her email that Will would call me and explain the outcome.  To this point, I only imagined one of two options: 1) I get the 5% rate and $14K cash-out or 2) I get the 5% rate only.  Will called me on Monday of this week.

He starts to explain to me that due to recent changes, Wells Fargo couldn't approve my cash-out loan.  Okay, no biggie, I thought.  I'll just take the 5% rate refi.  When I asked about just getting my rate lower, Will begins to explain that he couldn't do that for me either.  I was pissed now!

He explains that Wells Fargo decided to not approve any current or future applications where a borrower declares income from rental properties. 

Son of a bitch!  I'd spent at least 4 hours of my life finding docs and making sure they were PDF, uploading them, Docusigning legal documents, and answering emails FOR NOTHING.  I told Will that I was not happy, considering that a) it was he who had called me out of the blue and b) I was ready to close back in April had Leticia been faster at her job and not ghosted me for weeks.  (Once I left a message with her supervisor).

Will was apologetic and I could tell I was not his first let-down call.  He said to me that he would talk to his boss about the possibility of getting the cost of the appraisal refunded to me.  That's where we parted.

Mortgage Refinance Activity On the Decline

Out today is an article that explains why refinance activity was down 6.3% with the week ending on May 15th.  Sure enough, there is mention of lending standards changing among lenders.

Look, I get that banks want to ensure they take on performing loans.  I get that they see many people not being able to pay their rents, affecting landlord's bottom lines.  But to make a decision that affects every single real-estate investor, regardless of their individual circumstances, isn't right!  I have had all of my tenants pay their rent up to this point.  My rental properties are in a state that had limited closures.  Thank you great state of Tennessee!

Many real-estate investors have both W2 (salary from a job) and 1099 (from rental properties) income.  Responsible real estate investors keep enough cash on hand to cover their rents for several months.  I'm one of them!  I know I'm not the only one out there that this happened to.

Wells Fargo has all the right to change their lending standards.  It's good business in times like these.  But don't waste people's time.  They should've allowed loans in process to close and alerted new borrowers, those applying in mid-April for example.  This is just another example of Wells Fargo horrible customer service.  They had their reputation completely blighted by the news of their agents up-selling products and also creating fake accounts in late 2016.  Now they go and do this.

Shame on Wells Fargo!  Lousy, lousy, lousy, customer service.  Avoid doing business with them if at all possible.

If you had something similar happen to you with Wells Fargo, please comment below.  Thanks for reading.

Saturday, May 16, 2020

Harry Styles Might Just Be A Freakin' Marketing Genius

When my wife, Jessica, started talking to me about this all-boy Pop band of the past called, One Direction, I did what I usually do: pretended to listen.  Don't take me wrong.  I listen to my wife very often.  It's just that she's always going from one infatuation to another, and I have to be conservative with my attention or I'll never remember anything she says.

Is Harry Styles' 'Watermelon Sugar' Video Finally on Its Way ...

Anyway, the initial introduction to this remarkably good lookin' group of young men took place like four months ago.  Jessica claimed to have fallen down a rabbit hole online, discovering all sorts of genius about One Direction, regretting not having known of them when they were actually together.  I didn't get it.  In my defense, I'm a dude that never liked boy bands.  My aversion to them began in the mid-eighties when all the young ladies at my middle school started jockin' New Kids On The Block.  God I hated their merch.  Now I understand I was an insecure and immature little kid.

My African-American Wife Loves A Young White Man From England

Let's not get too racial up in this piece, but...

my soon to be 40-year-old wife liking a white, young man from England speaks volumes about the reach this, "Harry Styles," has worldwide.  I was a little jealous at first.  Jessica kept going off about him and some other member of the group, Zayn Malik.  She gave me the rundown on the theories about this pair in particular.  Theories she'd picked up from watching countless hours of YouTube.

And so some of the hype that is Harry Styles is brilliantly and creatively generated by the tension between him and other group members.  Tension that is never allowed to rest or come to a head.  From what I've learned myself, studying the guy, Harry is a master at stoking insinuation.  Whether it be through his lyrics or the art on his body, the kid has got the hang of sly.  If looks were enough, then every pretty boy in the world would be big shit.  Clearly, it takes more than looks to make it huge.  FashionJournal.com calls H.S. (Can I call him, H.S.? Don't want to offend anyone) a fashion icon of a generation and apparently they can prove it.

A Marketing Genius?

Jessica loves Styles' music.  She listens to him when she showers, drives around, cooks, and exercises.  At first I thought his music was okay.  Not the strongest vocals.  But you don't have to be Whitney Houston to be successful as a singer in the music industry these days.  A couple of his songs are quite catchy: Fine Line and Watermelon Sugar.  The lyrics of some of his songs are, let's just say, interesting.  Nonetheless, songwriting is where Harry Styles elevates himself into a marketing powerhouse.

Lyrics that are raw AND at the same time cryptic, can be frustrating to listen to.  Harry makes a sport of it, and his fans obsess like scientists trying to make sense of data.  The easy to decipher, yet clever, titles of his songs, and the fantasy ecosystems he creates in his videos, are pure fire.  Digital and content marketers need to start paying attention to what this dude is doing!  But even the small time side-hustler could learn a thing or two.  I'm going to break down some of Harry Styles' marketing strategies next.

Personal Brand, Engagement, and Product Launch

1.  Song titles become products.  One of his songs: Treat People With Kindness or "TPWK" is on beanies, hoodies, and shirts at Harry Styles' merchandise store.  Other songs have been stamped on various merch as well.

2.  Engagement with Fans.  H.S. is known for his gratitude.  He consistently thanks fans, and gives them all the credit for his personal fame.  You might be thinking, Well, that's what every good artist should do.  Except that H.S. is better at it.  He throws up websites like DYKWYA to engage his fan base.  No strings attached (no email capture, funnels, products being sold, etc.).  Just fun.



3.  Song Lyrics, More Websites and Fun Engagement.  At Ijustwannatasteit.com we get a glimpse of the marketing prowess behind the H.S. brand.  So this is a one page website like DYKWYA with domain relating back to a song's lyrics.  However, what's different is that it is updated every so often with something new added to the table.  The original image was the table.  Then came the items on top one at a time.  Why?  It's H.S. and company hinting when the Watermelon Sugar video will drop!  Brilliant.  This is essentially how a great marketer would build anticipation for a product launch.  With so much buildup, the video will surely get millions of views.

How Can I Use This?

First, you don't need to have 27.5 million followers on Instagram to effectively utilize some of H.S.'s marketing strategies.  

If you're an author, you can create buildup for your book with a one page website.  Don't over complicate it.  Engage your following by placing an instant thank-you card message like Harry does at DYKWYA.

If you're an influencer or creative, consider using your most liked content to make merch.

If you're a small business owner, use social media, especially Instagram, to unveil a new, "coming soon" product a section at a time. 

Everyone can improve on engagement.  Too often we focus on selling.  "Always Be Closing," right?  Not so fast!  Sometimes just conversing with your following or target customer is what's needed.  Reply to every posted comment on your social media pages in a friendly and professional manner, no matter what.  Be thankful!

 I'm definitely thankful that you took the time to read this post.  I'm extremely thankful that you're here.  I also hope you enjoyed the reading.  If you did, and want to make sure you get my latest, please subscribe before you go.  You can also follow me on my Instagram: Cosvaldogomez.   

Wednesday, May 13, 2020

Should You Be Selling Items Locally On OfferUp or Craigslist During the Covid19 Pandemic?

It might be a natural thing to want to avoid people these days.  Or it might not be.  That about sums up the political ideology regarding the Covid-19 pandemic.  Let me just say this...

I get it, things are bad.  Don't think for a second I believe the economic figures being printed in the media.  14.7% unemployment?  Bah!  The real numbers are scarier.  So the urgency in people to want to reopen, go back to work, resume a semblance of their old lives, and so on, is to be expected.  People are desperate, and desperate times call for risk-taking.  This doesn't mean you should not look after yourself or your family, of course.  If you don't need to be out and about, or at work, then staying home is the best you can do for society.

I put that out there cuz I'm not tryin' to be judged here.  Feel free to judge me, but remember I can bark back.

Found Two Wheelsets!

As you may know if you've read some of my other posts or About Me page, I love to road cycle.  I haven't stopped doing it!  And I don't wear a mask.  I tried, but didn't like my warm breath on my face, so I took it off for good.  I ride solo, no longer drift off other cyclists, and keep my distance from others when I pass.  The city of Oceanside, County of San Diego, does NOT require masks while exercising outdoors, walking, running, whatever.  I'm not breaking any laws.  Am I taking a risk?  Sure.  But that's my choice.  Since I'm a teacher, I haven't had close contact with other people besides my family since March 13th, until this week that is.

Last Sunday I was coming home from a sweet bike ride, traveling down a gentle slope at around 30 mph when I saw this from the corner of my right eye:

Bontrager RL Wheelset 1660 grams with Shimano Ultegra 11-27 cassette
Tires were worn out
Spun silky smooth and freewheel purred like a kitten!


Fulcrum Racing 5 Wheelset 1760 grams with Shimano Ultegra 10-25 cassette
Two replaced spokes on each wheel; Continental & Michelin tires in good shape
Spun true and freewheel sounded great

  
On the bench of a public bus stop were two wheelsets!  I came to a smooth stop, so as not to kill myself flipping over the bike, and proceeded to ride back to the bus stop.  At first I thought it was a prank.  I repeatedly screamed, "Hello!"  But no one came out of the bushes or from behind any trees.  I expected to be zapped or shocked by a prankster's apparatus upon touching the wheels to examine their condition, but nothing happened.  Someone had left them.  Wtf?  I thought to myselfWhy would anyone leave seemingly good cycling wheels, of decent cash value, just sitting on a bus bench?  Whoever had left them was apparently too rich to care.  They weren't going to waste their time selling these on Craigslist, Facebook, eBay, OfferUp, etc.

I put my ride on pause and called my homie, asking him to come to my position immediately.  I waited for at least 30 minutes.  Still, no one came by.  Well, the bus finally did and I had to wave the driver off.  I couldn't believe my luck though.  I did some quick eBay searches while waiting and found the same Bontrager wheelset with cassette being sold for $199.  The Fulcrum Racing 5, a 2010 product, was being sold for about $100 for a set.  Because the Fulcrums I found had two replaced spokes on each wheel, I knew I would have to sell them for under $100.  Still, I figured I'd found about $250 in value.

Once home, I cleaned the wheels and checked spoke tension.  All was good!  The Bontragers were better than the set of wheels I was riding on!  So I decided to keep them.  I rode with them today and boy was I happy.  These wheels were extremely responsive.  Can you say..."ACCELERATION"!  Here are the Bontrager wheels on my 2007 Bianchi:




What the heck does this have to do with selling items locally?

Well, now that I was up to my neck in wheels (I had a spare set of my own already at the house), I had to sell some to leave space for my wife's SUV.  Just kidding...there was plenty of room in the garage.  Just being dramatic.

I don't like Craigslist.

It's too cumbersome.  There are still so many steps to take before you can post your crap.  First, you have to find the correct link.  In my case, "bike parts."  Then you need to click, "post."  Then specify the area, and the type of posting.  Then fill out the form.  I can go on and on.  The online platform hasn't changed in years!  They just recently built an app which I have yet to try so things could be looking up.  Ecommercebytes.com has a great review on Craigslist and rank it as the 8th best spot to sell your stuff.  Buying and selling things locally is your best bet with Craigslist.  You don't have to worry about getting shipping costs correct, or losing your money to a scam sending someone a payment, if you stay local and follow their safety guidelines.

Of course eBay is ranked number one.  You can't go wrong as both a buyer or seller on eBay.  Yes there may be issues, but eBay is the most reliable platform online in my mind.

OfferUp sucks, yo!  It has appalling reviews.  Wait, appalling is too nice.  88% of 433 users rated the service as "Bad."  That's bad!

I've sold and bought items locally using OfferUp and have never had an issue.  When my son needed used Tae Kwon Do sparring equipment, I used OfferUp and got what I needed.  Then when my son was over Tae Kwon Do, I used OfferUp to sell that same gear.  No issues.  Sure, there were flaky people who said they were coming to my house to pick up items but never did.  So what...I didn't lose anything.  Not even time because I kept on with my life.  I always gave potential buyers a time frame when they could come to the house.  

I like how easy it is to get a product to sell posted on the OfferUp app.  In four easy steps, you can have your item up on the platform for viewers to see.  That's convenience.  It's also very easy to edit your post.  If I need to bring down the price, I can within a matter of seconds.  I also like that I can rate my buyers.  Immediate feedback is great.

But I see from the reviews that OfferUp has some serious issues as a platform.  It's seemingly dangerous to buy anything not locally.  The number of issues, scams, fake posts, never getting a product, horrible customer service, etc., do not make OfferUp a virtual place to go to for frugal buyers.

Sold Two Items This Week On OfferUp

This week already I've sold one of my spare rear wheels, and a small kid's bike that belonged to my son.  This means I had to meet two adults outside of my garage door and speak with them, albeit, for a short time period.  Before stepping outside my house, I put on a mask.  Surprisingly, both visitors weren't wearing a mask.  How do they know I don't have Covid-19?  Hey, I took care of me.  That's on them if they don't want to take care of their own health.

The 2010 Fulcrum Racing 5 wheels are still sitting unsold at $60.  I've had 107 views so far.  So people are interested.  I'm not going lower than $50.  We'll see if I get a buyer soon.

Should You Be Selling Locally On Facebook, OfferUp, or Craigslist Right Now?

I'm not going to tell you how to live your life.  I'm not hard up for cash, getting paid monthly still by my school district and other income sources (rental properties), yet I sold items.  Probably out of boredom.  But you might be in a worse economic state.  You might need cash quick.  If you're going to take the plunge, here are my tips for safer interactions:

1.  Wear a mask.  Preferably a surgical mask.  Double up on cloth ones and cover your eyes with shades or glasses.
2.  Don't shake any person's hand when you meet.
3.  Try to talk to the buyer from 6 feet away.
4.  Place the item you're selling somewhere first and let them inspect it while you wait at least 6 feet away.
5.  After the deal is made and you walk inside your house, immediately wash your hands since you touched cash.
6.  Take your mask and eye wear off carefully.
7.  For extra peace of mind, change your clothes.
8.  Wipe down your product if you didn't get a sale.  This means you'll have to wash your hands again afterward.


Now, I'm not a doctor.  So don't take my previous tips as effective ways that can help you avoid getting infected by the Coronavirus.  Again, I understand these are difficult times.  People need to make rent, pay bills, and eat.  So, if you're reading this, and don't agree, keep it moving.  It's hard to judge someone if you've never been in their shoes.  And with that...I'm out!    

Friday, May 8, 2020

The Best Identity Theft Protection For Families

There are three major players in the identity theft protection industry, Lifelock, Experian, and Aura Identity Guard.  Obviously, each of these three companies have their own unique proprietary software for keeping people's identity safe from despicable online credit card fraudsters and identity thieves.  They're worse than rats, I tell ya!  Remember the breach at Equifax back in 2017?  Man, I totally freaked out and took action to immediately freeze my credit.  I also gladly accepted Equifax's free identity theft protection.  You damn right I took it!

How To Get Your Life Back On Track After Identity Theft  


My Research

After doing a bunch of research, I've come to find that Aura Identity Guard is the best for families.  But before we get into AIG (Wait...that's an insurer with a not so great reputation...let's not use these initials--how about, IG instead?--Yeah, that works)--I wanted to put this question out there:  Is Identity Theft Protection Worth It?  Nerdwallet.com has a great summary of who should consider getting an identity theft service.  As someone who froze their credit for some time, I can tell you it sucked.  I had forgotten that I'd done this and when it came time to apply for a mortgage on a rental property, I had to go through the process of undoing all my handy dandy protective work.  As a Wells Fargo customer, I get a new credit score update every month or so via an email update.  Wells Fargo isn't doing too well right now, but at least they can get this right!  Anyway, that's how I monitor my credit.  Are you monitoring your credit?  So there's definitely a reason to go the extra mile for yourself in the space of personal data protection, especially if you've already been victimized!  Now back to IG.

From the reviews on Lifelock, I've gathered that it is best for high-income earners.  It has a separate coverage plan for lawyers and "experts," real-time alerts, and 24/7 live customer support.  Nerdwallet.com's review explains that Lifelock's cons are that it is a bit expensive AND they don't offer a family plan option.  They have three plans: Standard ($9.99/mo.), Advantage ($19.99/mo.), and Ultimate Plus ($29.99/mo.).  But these fares are only good for the first year!  Moreover, if you're married, your spouse has to purchase a separate package.  Boo!  And you gotta shell out another $5.99/month for each kid too.  Son of a...

Experian meanwhile has two basic plans: Identity Works Plus ($9.99/month) and Identity Works Premium ($19.99/month).  It's considered one of the most affordable options online.  Experian also does have a family plan ($19.99/mo.).  Great, right?  Not so fast!  In looking at the Experian reviews, many customers mentioned the long wait times when calling customer support.  If you don't have much money in your budget to spare, but need the service, Experian might be your best option.  At U.S. News.com, Experian got a 3.3 out of 5 stars.  No bueno.


Is Identity Guard Legit? | 2020 Reviews
shop IDG Save 33% today! Limited time only!


Now, Aura Identity Guard stands in between the pricey, Lifelock, and the budget friendly, Experian.  What's cool about IG is that they have partnered with IBM and have Watson (the artificial intelligence that creamed a whole bunch of Jeopardy contestants) looking out for you.  Consumeraffairs.com gives IG the nod for having the most powerful, comprehensive identity theft protection.  IG has three plans: Value ($7.50/mo.), Total ($16.67/mo.), and Premier ($20.83/mo.).  The family plan is a not too shabby, $27.99/mo.

Your Family's Best Bet

Look, identity theft protection is all about peace of mind, right?  I mean, people want to know that someone, a reliable and effective company, has got their back!  But at the same time, we don't want to pay an arm and a leg for something we need.  That's why I believe Aura's Identity Guard is the best bet for individuals and families.  They have great plans and customer satisfaction.  If you're in need of identity theft and credit protection, get Aura's Identity Guard.

Since Homie G (that's my alternate persona) keeps it real, I'm gonna let you know that there are affiliate links to IG in this post.  But that doesn't mean I don't think IG is the best service for consumers!  My research is legit and so is what I think of the company.  So if you're a fan of my work, and do need identity and credit protection, do me a solid and click to IG via these here links!  I have the worst luck when it comes to using affiliate links so it would be awesome if I got my first referral.  Gracias! 

5/28/2020 Post script.  I wanted to also direct you to another great article on identity theft protection written by Ruben Ramos over at Money magazine.  Good luck!

Save 33% today!
Identity Guard "Watson" - YouTube   

shop IDG Limited Time Only!

Monday, May 4, 2020

Analyzing Why Warren Buffett Dumped Airline Stocks

We learned over the weekend that Warren Buffett dumped the remaining stake of his airline stocks.  Were you surprised?  If you were, then you weren't interpreting the signs correctly.  Buffett let his hand be known in early April when he sold 13 million shares of Delta (DAL) and 2.3 million shares of Southwest (LUV).  I'm not playing Monday QB here.  He sold just enough of his shares to get under the 10% holding amounts and not have to publicly report any more of his sales per SEC regulations.  If you are new to stock market investing, you might be wondering: Why not sell all of his stake at once?

Warren Buffett says the coronavirus cannot stop America, or ...

Selling so many shares at once would've created a flash crash in the stock price, resulting in even more losses for Berkshire Hathaway.  Once below the 10% threshold, Buffett and his team could better execute an exit strategy for the remaining shares, selling in blocks of millions of shares during intraday highs on any given trading day, for example.  For fans of the Oracle of Omaha, as Buffett is known, the sale of his entire airline position was a bit of a bummer, causing all sorts of arguments online.

I myself questioned Buffett's decision.  I wondered at first if he had lost his mojo.  I mean, in the context of other mistakes (IBM, and Kraft Heinz), selling Delta and Southwest seemed more emotional in nature.  As if, dare I say, Buffett had allowed fear and panic cloud his traditionally stoic judgement.  I might be going too far here.  Who knows if Buffett let his emotions get the best of him?  He's got a team to work with and it's assumed a consensus was reached before pulling the plug.

So let's now analyze the trade(s).  In selling all of their airline holdings, Berkshire and Buffett are essentially telling us that they priced in far too much risk to the downside for the airlines, and not enough risk to the upside to justify a HOLD.  In other words, the odds of losing more money (according to their modeling scenarios) far outweighed the odds of recuperating money already lost, albeit, unrealized.  I wish I were a fly on the wall during their meetings to see how much more downside, worst case scenario, their models predicted.  What...another 10%, 20%?  The airlines going bankrupt?

Now, let's look at Berkshire's latest airline buy order.  On Feb. 27 of this year, Berkshire bought 976K shares of Delta, or about $45.3 million dollars' worth, at an average per-share price of $46.40.  This put the company's total holding at 71.9 million DAL shares, an 11.2% stake in the company at the time.  Mind you, this was at a time when the share price had fallen, meaning that Berkshire's cost-basis was obviously higher than $46.40.  Last week, DAL traded in the mid-twenties, reaching a high of $27 and change.  So, assuming Berkshire's cost-basis on DAL alone to be near $50 or even higher, Buffett would've needed a 100% rally in the price of the stock just to break even!

Buffett clearly doesn't believe that's going to happen any time soon.  Maybe not even in his lifetime!  He chose to cut his losses, stash whatever cash he had left in those trades, and live to fight another day.  Yes, the short-term capital losses will hurt, and indeed they sank Berkshire to one of the worst Q1 financial losses of any S n P company in history (-$41.9 billion...ouch!).  Stock holders have nothing to fear, however.  Berkshire has plenty of cash on hand, and they will figure out how to deploy it soon enough.  We might just see one last big move by Buffett, pulling another rabbit out of a hat like he's done so many times.

Thanks for reading!            

Friday, May 1, 2020

WTF Is Up With Elon Musk?

OMG!  Is Elon off his meds?  I've never seen him act this erratic and strange before.  Well...I've never actually seen him, seen him, like in person, but the tweets have been Trumpian bizarre lately.  The investor conference call on Wednesday was a mess any time Elon went off topic.  I was left wondering, is it okay for a company CEO to go on an expletive laced rant publicly?  Well...no.  But what if he's Elon Musk?

Before discussing the ethics of the usage of profanity for all to hear while running a publicly held company, let's go over some of Elon's dumbest moves while CEO of Tesla.

Some of Elon Musk's Dumbest Moves

In 2018, he broke the law by tweeting he had Funding Secured for a buyout of TSLA at $420 a share by a Saudi fund.  This would've taken the company private.  Outcome: He settled with the SEC ($20 million fine) and lost his role as Chairman.

The previous situation came on the heels of Musk's war with short-sellers.  Fiercely attacking your critics on social media is NOT a good look.  Reminds me of someone...

In 2019, Elon decided to poke the sleeping bear.  You see, what had happened was...Elon needed approval from legal before tweeting anything about TSLA.  On February 19th, Elon tweeted out that TSLA would make around 500,000 cars, a "blatant violation" of the 2018 settlement, according to the SEC.

2020 has been a strange year, hasn't it?  If seeing the price of a barrel of oil go negative weren't strange enough, we're all still semi-confined at home, and in constant danger of catching a deadly disease (unless you already have) that wasn't around a year ago.  Now we gotta witness Elon losing his shit!  The market didn't care.  TSLA's Q1 numbers looked good.  

Probably Not A Good Idea

Expressing an opinion about the handling of the Covid19 pandemic is bad people!  Nothing good comes of it.  Sure, YOU can take to FB and vent all you want.  You might lose some of your "friends" over it.  At worst, you might lose your job.  But most of us plebs aren't going to diminish the market value of the company we work for.

Bring on Elon's tweets from today.  More patriotic ramblings related to his stance on the handling of Covid19 AFTER "Tesla stock price is too high imo".

             

 First thought...wtf is Elon doing?  I was a shareholder in February of this year, and got out before the Covid19 bloodshed.  If I were a shareholder today, I'd be pissed off!  The stock tumbled as much as 13% and wiped out $14 billion of Tesla's value.  Is it not enough that today's investors have to factor in the market risks associated with a Twitterer in Chief?

It's not a secret that TSLA burns wads of cash.  It always has.  The Tesla story has always been about growth.  And Elon.  But now it's mostly about Elon.  He's a total loose cannon.  Cursing, obsessively tweeting, getting deeper into politics than ever before, attacking critics over social media, what's next?

Look, I like Elon when he's focused.  The man is trying to save the human race by getting us all to Mars.  Respect.  However, it's not his job to let investors know the stock is overbought!  He did the shorts a favor today.  Oh the irony.      

Saturday, April 25, 2020

5 Reasons Why Black And Latino Content Creators Need To Collaborate More

Fellow content creators, I ask:  Have we hit a wall of our own making?  The idea that a successful content creator targets a specific audience has long been content marketing mantra.  Focus on a niche, be in a specific ecosystem where you can easily find your customers, are all suggestions that I've been following for years.  They make sense, to a certain extent.

A couple days ago I got a LinkedIn notification.  It was time for "Tea with GaryVee."  I don't tune in all the time, but I was done being my kid's teacher for the day, so I thought: let me see what type of good shit GaryV is dishing out today.  I checked my FB stream one last time (I'm a compulsive notification eliminator) and to my surprise, saw that Gary was going live on FB too!  Dude was on both platforms simultaneously.  Probably been done by others, but I hadn't noticed.  Call me a tech square.


I use Emojime and Over to make quotes for my student/teen followers on IG

There was all sorts of wisdom Gary dished out.  Among these, to be human.  Engage with ALL your followers at first so long as they're not simply cutting and pasting comments into your posts.  Now this next part he didn't specifically air out verbally, but it's quite obvious to any critical thinker.  His Zoom guests for that Tea w/GV episode came from all walks of life, represented various social media platforms, and created different types of content.  Well, duh?  You might be thinking: Gary helps anyone!  That's exactly my point.  His end of program offers (his dad's wine club subscription, raffle tickets, etc.) is how he monetizes his sessions with viewers.  And I don't think he cares who's buying what he's selling.

Latino and Black Content Creators Need to Partner Up More

There are a shit ton of great Black and Latino content creators out there.  Bloggers, Podcasters, YouTubers, Instagramers, and Twitch channel streamers.  By the way, Twitch is dope!  Last night I listened to Deftones' Chino Moreno do a live DJ set and it was exactly what I needed on a pandemic Friday night.  But I digress.  But really I don't.  I mean, the younger generation just doesn't seem to care as much who's on their chat.  The era of creative expression and live entertainment embraces a more flexible approach to growth that gives little credence to the "target a specific audience" mantra.

While certain platforms like blogs, podcasts, and recorded videos perhaps require more content specificity, there are still ways we, people of color (and I'm only saying that in the sense of the word cuz I'm one white looking Mexican), can reach wider audiences, and grow our subscriber base.  It doesn't involve trying to out-compete each other!  In fact, it's quite the opposite: collaboration.  As an example of mutually beneficial collaboration, I offer the following two cases.



Last week I was a guest on Minority Money PodcastOn the episode, I talked the state of education, family finances, and how minority families can grow their wealth.  The host, Emlen, was kind enough to have me, and to link to my sites, including to those of my products.  What I liked about Emlen's podcast is that he brings in the perspectives of all people in an attempt to help minorities improve their money mindset and finances.  He never asked me to include this blurb here and link to his podcast, by the way.  I did it because that's how collaboration works.  I help you, you help me.

Before working with Emlen, I collaborated with Tony Elion JrI reached out to him on LinkedIn and proposed we swap book reviews on Amazon.  He agreed, and his review of my stock market book for minority teens is amazing!  As someone with integrity, I specifically told him to read my book and give it an honest feedback, and that I'd do the same for him.  Win-win!

Now here are five reasons why Black and Latino content creators should collaborate more often with each other:

1.  To avoid being typecast.  Okay, if your platform is for Blacks, or for Latinos exclusively because that's your mission in life, to help your peeps, then okay.  I get it.  But if it isn't, and you see your following looking and talking like you, then maybe you're not doing a good job of reaching out to other minorities?

2.  To avoid stalling out your growth.  Growth is everything.  If you see that you're not picking up subs or followers at the same rate as you were before, meaning, you've stalled out, perhaps you need new blood, features, or idea exchanges with other people of color?

3.  To avoid an earnings plateau.  If people aren't buying your merch anymore, or you're not getting sponsorships as you used to, it could be that your value add to your followers has hit a predictable zone.  Time to change things up!

4.  To get fresh ideas.  Content creation is not easy.  It can feel like a burden sometimes.  Trust me, I know!  When you collaborate with other people, especially other people of color, you get invigorated because you see yourself as part of a greater cause.  The energy you get leads to new ideas that can end up helping your followers even more!

5.  To network.  When you collaborate with a person of color outside your race, you are officially family.  This means the homie here is gonna hook you up with the homegirl there.  Or the brotha here will connect you with sistah over there.  We fam afterwards!

Look, we can't come up in this society if we behave like crabs in a bucket.  Not saying we are all doing this.  But, we can certainly do more to lend each other a hand.  We're all minority people here in this country, and when one of us helps to lift another, we all benefit!  Believe that.

Before I go, I want to talk about a worthy cause.  One of my homies from high school, Lloyd Pierce, coach of the NBA's Atlanta Hawks, and his wife, Melissa, have started an organization, The Atlanta Pledge, to support communities in Atlanta.  The ATL Pledge has chosen to help two Atlanta-based non-profits, Hope Thru Soap, and Atlanta Community Food Bank.  I realize that at this time there are many non-profits throughout the country that can use donations.  All I ask is that you check out the website linked in this paragraph, and read.  If you find that you can get behind the mission of either non-profit, that you consider making a donation. You can donate any monetary amount, and your donation is secure.

Thank-you and take care amigos!         

Thursday, April 23, 2020

Why Buy Now Pay Later Transaction Platforms Like Afterpay And Klarna Do More Harm Than Good

First, wtf are buy now, pay later transaction platforms?  They remind me of 1980's layaway programs for poor folk.  That's how my parents were able to get me a Nintendo Entertainment System for Christmas, using layaway at K-mart.  But seriously, now you can pay for shit you don't need in installments.  Wait?  Can't we do that now with credit cards?  Well, yes.  What's different about BNPL services like Afterpay and Klarna is that you can pay for a purchase in a set number of installments INTEREST FREE!




Say you can't afford something you really want.  Okay, you CAN afford it, if you paid for it a little at a time.  So does this count as being able to afford it?  Not in my book, but people have a whole host of ways of rationalizing big purchases.  Afterplay and Klarna are taking Australia and now the US, by storm.  Consumers, fed up with having to pay interest to a credit card company any time they don't pay off their entire balance, are flocking to these two point-of-sale disruptors.  It makes sense in some ways.  Like if you're young or stupid, or both!

Anything To Keep You From Having To Grow Up

First, here's a great article on the traps you should avoid if you sign up for Afterpay and use their services at eCommerce sites worldwide.  The article mentions having to pay fees if you don't have enough money in your checking account to cover the installment.  Fees may as well be an interest payment, had you used a credit card instead.  Linking your Afterpay to a credit card account defeats the entire purpose!  So, if you are using an Afterpay to credit card scheme, you're awfully foolish.

Don't compare Afterpay or Klarna to Apple Pay.  While all three eliminate the need to swipe or insert a debit or credit card, only Apple Pay use makes you a grown up.  Afterpay and Klarna are worse than starting with a prepaid credit card!  At least with a prepaid credit card, you can feel the impact of every purchase.  Afterplay and Klarna normalize debt.  They may as well be offering you a 9% alcohol by volume bottle of stout, and telling you, "shop forth my child."

These apps and services include algorithms to keep you from making one too many purchases.  How nice!  And you fell for that, didn't you?  Those algorithms are meant to protect each company from class-action lawsuits!  They're not coding in a way to stop your shopping spree because they care about you.  If they don't install these circuit breakers, their business model couldn't exist.  Use your heads young people.

Probably the worst part of using Afterpay and Klarna are that you sidestep credit altogether.  You don't build credit history.  The good type.  Your credit score stays dormant.  If you're young, like in your 20s, your timing is impeccably bad.  These are your formative years!  You're supposed to be building great credit, by using your credit cards responsibly.  Make a purchase using your credit card, stay below the 30% utilization ratio, payoff your balances as quickly as possible, and repeat.  It's that simple.  Why, young people, I ask, do you insist on making things harder than they have to be?

I love you little homies, but u gots to grow the "f" up.  There is absolutely zero need to use Afterpay and Klarna.  And don't you dare make this about poverty.  You don't need to buy expensive cosmetics, clothing, or trendy shit.  This is your shopping addiction getting the best of you.  Rule of thumb for any purchase using a credit card: if you can't pay off the balance in 1-2 payments, then you can't afford it.  Period.  End of story.  Save until you can or don't buy it at all.

*Note to Afterpay and Klarna:  Please don't sue me.  This post won't stop people from downloading your app and using your services.  I'm just keepin' it real.  Oh, as a token of my lack of appreciation, I made the links to your site dofollow.  You're welcome!