There was a very interesting story from the Boston Globe on Sunday about how a few folks managed to virtually guarantee winning hundreds of thousands of dollars on a Massachusetts lottery ticket game due to how the jackpot rolled over if it went unclaimed long enough. The statistics worked out well if you bought at least $100,000 in tickets during a 3-day window every few months.
Just three “investment groups” collected 1,105 of the 1,605 prizes statewide after a May drawing – two of which were run by former Computer Science students at MIT and Northeastern University. One couple bought over $600,000 worth of tickets this year and have won over $1,000,000 in return. See kids, math is cool!
Also of interest was the fact that state officials have known about this “loophole” for years, but have only done something to stop it after negative media attention arose. After the story broke, it was quickly announced that any lottery sales agent could only sell $5,000 of tickets in a single day. Finally, the entire game was announced to be phased out next year.
Some quick online research reveals that what I thought was just another funny option is all too real – lotto tickets. According to a 1999 survey by the Consumer Federation of America, 40% of Americans with incomes between $25,000 and $35,000 thought their best shot at paying for their retirement was winning the lottery. Along the same lines, a recent Consumerist article has low-income households spending a whopping 9% of their annual income on lottery tickets.
I wonder what would happen if on a certain number of the losing scratch-off cards, scratching off the latex ink won you free personal finance and budget management services.
In most states that have them, lotteries are justified because the revenues goes towards education. But what I’ve seen happen is every $1 that comes from the lottery just means the government can cut $1 of funding from somewhere else. The quality of education stays the same, if not worse. According to this article, a study found that states without lotteries maintained or increased their education spending more than states with lotteries.
Hmm… I got sidetracked on this “fun” post and landed in sad town. Doh!
We’ve all probably seen enough YouTube videos about the housing crash to last us a lifetime, but this one still made me smile. Hitler as a real estate flipper? It’s embedded below, but here is the direct link for those RSS readers who can’t see it. Via LH on Bogleheads. Over 2 million views!
Apparently, this is a popular meme based on a scene from the movie Downfall about the final days of Hitler.
I ran across this funny image on Imgur and just had to recreate it with a bit more detail. All of these books are by the same author, David Lareah, along with the publishing dates of each book. (The first two books are essentially the same book with different titles.)
Hover your mouse cursor over each book cover below to see the full titles, the progression is both funny and sad. Or, you can click on each book cover to see the corresponding Amazon book page. Comparing old and new reviews for the books can also be a nice lesson in investor psychology.
Now, which popular books of today will be the jokes of tomorrow?
WaPo has a story about a college student who makes $50,000 a year from jailbreaking iPhones for strangers. By opening up the operation system to tweaks, “jailbreaking” allows iPhone users to do some cool stuff like share 3G connections, switch to T-Mobile, and install non-Apple-approved apps. I can see how non-techy iPhone owners would happily pay money to enhance their iPhone, given that they are already paying $70-$100+ a month for service.
The article doesn’t provide proof or details, but with some simple reverse math, here’s how it might work. $50k a year is about $1,000 a week. If he says he can do 40 unlocks a week, that means he had to charge $25 a pop. Not bad for a cash business with zero overhead besides having an iPhone. Now, there are some risks of data loss, but I’m pretty sure that with some careful reading any college student could figure it out. There are plenty of sites that will guide you through it. In case you’re wondering, in July 2010 the courts ruled that jailbreaking was legal.
This reminds me of when I was in college, I supported my gadget desire by taking advantage of the dot-com boom and the emergence of eBay. A new start-up would offer up stuff with a “we-lose-money-but-make-it-up-in-volume” discount, and I would sell them on eBay for a profit. For example, a Palm Pilot (remember those?) might be on sale for $100, and I could sell it for $150. If I bought three, that meant I could sell two and keep one for free. If I was more motivated by actual money then (I wasn’t) I should have bought 10 or 20, and made some real money.
The main problem with this plan? Supply and demand. Just one day after this article hit, a guy is offering to jailbreak your phone for just five bucks in San Jose. I guess that’s where you’ll have to start using stuff like marketing and finding a good location to stand out. Hello real-world experience!
XKCD is a popular online comic strip, and recently there was a funny one about what really goes on behind time management and productivity blogs. I decided to take advantage of their creative commons license and adapt the original comic to personal finance blogs.
Sometimes it just seems like we just compete on how frugal we are. Sometimes I like to imagine in reality we’re squatting in McMansions and driving our leased luxury SUVs to buy shiny toys with our Kardashian-themed credit cards. Hey, somebody has to do it.
Cartoon site Oatmeal released their State of the Web a while back, and it included a bit about the deal-a-day site Groupon.
So true! But who doesn’t like a deal. Their customer service is solid too, I had a problem with a local Groupon recently and they refunded it immediately without hassle. I don’t quite get how they’re worth $15 billion, but who knows. Here’s another spot-on Oatmeal observation about websites for restaurants.
Trying to think of a good name for your retirement fund? Here’s a funny Dilbert comic about a colorful option:
In fact, the origins of the term “F— You Money” can be traced to actor Humphrey Bogart. The following quote is attributed to him:
The only good reason to have money is this: so that you can tell any SOB in the world to go to hell.
There is also this story from some biographical accounts of his early years:
Long before he was Hollywood’s most famous tough guy, Bogart began his acting career on the stage. After serving in the United States Navy during WWI, he got his start playing a handful of very juvenile roles in drawing-room and country-house comedies. In 1920, he scored a leading roll in the comedy “Cradle Snatchers” and received a bevy of positive notices. It was during this time that he was said to have kept $100 dollars in his dresser drawer at all times, calling it his “F” you money. Instead of taking a part he didn’t want, he could just say “F” you.
I looked it up and $100 in 1920 was about $1,000 in today’s dollars.
I like Bogart’s definition better. He basically says “I’ve now got the financial independence to be picky in how I spend my time.” You don’t need a million bucks. Even a smaller sum of money tucked away can make a big difference in your mood and outlook on life. The first $25,000 I saved up freed me up to pursue my real passions and make the next $250,000.
I’m catching on some personal finance magazine reading and find myself again rolling my eyes at their respective “Best Mutual Funds” lists. I’ve had subscriptions to all the major magazine for about 5 years now. Here’s how I translate them through my jaded eyes:
Best Mutual Funds of 2011
Here are our picks for the best mutual funds. We don’t chase performance like those other guys. We put tons of hours into finding the best mutual funds with good management skill and experience and other things that sound good in theory. Oh, and they have to have really good performance over the last several years. But again, no performance chasing here. Nuh-uh.
Where were we? Oh yeah, so to start we had to drop some funds from our list this year, due to their recent drop in performance. I’ll also add some other tangential reasons to hide this fact a bit. We really don’t know how that happened, sorry about that. It was completely unforeseeable.
Oh, but not to worry, we replaced them with other excellent funds that did some really smart things during the last crisis/boom/cycle. Now, if we could just have told you before they did awesome, instead of recommending those crappy funds we dropped in the last paragraph…
Finally, we decided to add more low-cost index funds to our list. For some reason, they keep performing well over long periods of time and are gaining customers as a result. The Vanguard Group recently became the largest mutual fund company in the world by assets, surpassing even Fidelity with their 401k monopoly and their famous Magellan and Contrafund-style active funds. Shh… here’s the secret that nobody else knows: low costs are important.
– Love, your favorite personal finance magazine.
Any magazine with a Top Stocks or Top Funds list should always have to include the same list from 10 years ago. So with the Top Funds of 2010 you’d have to see the Top Funds of 2000. That would be interesting.
It’s my third day of being sick, so I will simply wish you a great weekend and share an amusing t-shirt I found in Target.
It would be more funny, except it’s kind of true for half of Californians:
More than half of the state’s homeowners with a mortgage—51.4 percent—spend more than 30 percent of their monthly income on housing costs, according to 2005-2009 estimates from the U.S. Census Bureau’s American Community Survey. Renters in California are in the same boat, with 51.8 percent spending more than 30 percent of their income on rent and utilities.
The 30 percent threshold for housing costs has long been a conventional marker of affordability.
You’ve probably heard the term quantitative easing. You might even have read news or blog articles about what it means. I’ve always thought all that blah-blah-blah about the Federal Reserve buying Treasury Bonds sounded a lot like printing money. How else do you explain a government essentially buying it’s own bonds? Think about it…
Don’t believe me? Well, let’s have Ben Bernanke explain it himself. Once while covering his butt, and once when it was okay to tell the truth. Via The Daily Show:
Hey, maybe it’ll turn out to be a good idea, but at least tell us the truth. Increasing the money supply is as you said Ben, “effectively” printing money.
Somehow I thought it was a good idea to fly on Thanksgiving Eve. No TSA nightmares. Flight was full. Volunteered quickly for the bump (you can ask to put your name on the list when checking in), and got $400 each in transferable flight credit for the two of us, plus first class re-booking on the next flight 3 hours later. Now I’m pecking away on my smartphone. I hope everyone else has safe travels.
Happy Thanksgiving! It’s still my favorite holiday.
MyMoneyBlog.com is for informational purposes only. This website does not provide investment advice, nor is it an offer or solicitation of any kind to buy or sell any investment products. Rates and terms set on third-party websites are subject to change without notice. Please note that MyMoneyBlog.com has financial relationships with some of the merchants mentioned here. MyMoneyBlog.com may be compensated if consumers choose to utilize some of the links located throughout the content on this site and generate sales for the said merchant. I thank you for supporting this site. This is an independently-owned site and all opinions expressed are my own.