The worst day in Wall Street …. again.

After four hours of negotiation in the House today, representatives shot down the proposed $700 billion bailout plan that President Bush and Federal Reserve Chairman Ben Bernanke have been saying would rescue our ridiculous mess of an economy. Gotta love the quick fix. The response: oh you know, the Dow Jones drops another 778 points - the highest daily point drop in history.

Need a quick breakdown? (mostly via CNN/Money) After last week’s disaster on Wall Street (remember when I said that was the worst day on Wall Street, just kidding), banks and other financial institutions have basically stopped lending to each other all together. It might sound like a good idea to let things sit for a while (I mean, when you figure out you’re over spending - you just stop for a week or so, right?) but unlike the everyday consumer, these institutions determine the amount of capital available to the business world. So in recent weeks, there has been virtually no money made available for mortgage loans, business loans and consumer borrowing.

So the economy is at a standstill, right? Not exactly, when the House rejected the bailout plan today - investors who were counting on the plan to rescue the money they had in these companies panicked and withdrew funds, chaos ensued and the market plummeted.

Need some background? This all started when banking institutions were giving out loans to people who couldn’t really afford them, when pricing in the housing market went up unexpectedly, the foreclosure rate skyrocketed, leaving the institutions with all these outstanding loans.The bailout plan would basically have bought out all mortgage backed securities, taking that burden off the financial institutions and allowing them to go on with business as usual.  The bailout plan would also have put the government’s hand into the administration procedures of these institutions, a part of the plan many were skeptical about.

Need to lighten things up? Read more

I love the smell of gasoline in the morning

My car hit a new record last weekend …. it drove an estimated 60 miles on practically empty. Driving from Long Island back to upstate New York, the fact that I could fill up my tank in New Jersey for so much less than anywhere else on the way influenced my judgement and instead of doing the smart thing (stopping ANYWHERE else) I just kept on driving …. while my gas gauge had hit E miles ago (like when I left my house.)

So as I was driving over the George Washington Bridge with a lot of angry tri-state area drivers and imagining myself stranded in the middle of the bridge, I tried to remember everything I’d read about gas economy so I could get myself that few extra miles.

Here’s what I’ve got (supported by some research since I actually didn’t remember that much):

DRIVE SLOWER. I used to be a big speeder. But then I realized how much gas I was wasting/my PBA card expired and I got 2 speeding tickets. Cars get the best fuel economy at 55 to 60 mph, as much as another 2 to 4 miles to the gallon. Also take it easy on the brake pedals, slow to a stop. You’ll save money on repairs, as well.

SUFFER THROUGH THE COLD. I take a certain pleasure in reporting this since my parents would always scold me for not warming up my engine in the winter. But Consumer Guide says most cars only need about 30 seconds to warm up. Letting it run idle just wastes gas.

THINK AERODYNAMIC. There’s a lot of debate about driving with your windows up or down but driving with them up just makes more sense if you think about it. Especially on highways when the air is rushing past your car at higher speeds, keeping the windows down can decrease your fuel economy by 10 percent. Also stay away from roof racks (plus they’re silly-looking) and opening your moon/sun roof.

MAINTENANCE. Keep your tires inflated to the right pressure (you can find it for your specific make in the user’s manual), which can increase fuel economy by about 3 percent, and make sure your air filter is clean, which can increase fuel economy by about 10 percent.

…. last but not least….

BE THE EARLY BIRD. Try to fill your tank on cool mornings when gas is denser. Gas pumps measure by volume, so if you fill up when it’s denser, you get more for your money. Also, try to avoid filling up when Mr. Delivery Man is refilling the pumps - it will stir up the sediment and what-not that’s left over from the old gas which will end up in your tank.

For other fun tips, go to www.howstuffworks.com.

How to protect yourself from the economy

So I was a little ambitious in thinking I could get you some answers to your crazy economy questions the next day. But basically, everyone can chill out (I mean, if you were ever upset, which chances are you weren’t, unless your parents work(ed) for Lehman). Since Lehman and Merrill have bajillions of dollars in insurance, chances are your money (and your parents’) is fine. I mean, the economy is still in some kind of rut, but for the time being no panic is necessary.

Need more? Here’s our friend Ramit in his vlog debut, explaining the state of your funds and how to protect yourself against future loss - regardless of how it hits.

Also, I just made up the phrase money crush, as in, I have a big money crush on Ramit because the more he talks about money the cuter he gets.

My favorite lines: “Stop asking stupid questions!” (Finally, someone who gets what I’m saying) and his sound advice to just “save more than anybody else,” and “just do a great job at work.”

OMFG Wall Street

Today’s headlines:

Wall Street’s turmoils sends stocks reeling - The New York Times

Wall Street fears pummel stocks - The Wall Street Journal

Wall Street Wreckage - CNNMoney.com

Dow Jones index plummets more than 500 points - The L.A. Times

Fed holds AIG crisis talks - The Financial Times

So, in summary, today was the worst day on Wall Street since 2002. Two of the biggest investment banks in the country are seriously screwing with the market, Lehman Brothers filed for bankruptcy and Merrill Lynch was sold to Bank of America. The stock on one of the biggest insurance agencies in the country, AIG, is down more than 70 percent. The Dow Jones is down more than 500 points, or 4.4 percent. People are freaking out.

Unfortunately, I didn’t get to talk to anyone today about what this all really means to us.

Fortunately, MSNBC did. Read this for now, I’ll try to tailor this to students tomorrow. But if you don’t understand any of this right now and are wondering what sort of response you should have when people mention it to you, the title of this post would be appropriate.

Interview: Laurie A. Linn, marketer and entrepreneur

I spoke with Laurie Linn today, who will be speaking at 7:30 tonight in the Park Auditorium at Ithaca College. She’s the president of local design and marketing firm Communiqué and has more than 20 years of experience in marketing, including work with major financial institutions like Citibank, Chase and Bank One. She’s also served as chair of the Tompkins County Chamber of Commerce and was recently named Woman of the Year by the National Association of Professional and Executive Women.

I spoke with Laurie about her first years out of college, the best money advice she ever got and starting her own business.

Read more

FYI: APYs

I told you I’d help you find the best bank rates (aka Annual Percentage Yield).

I’ve been to bankrate.com before, the best part about it is the little blue box on the right side of the page where you can enter your zip code and get the best rates in your area for things like CDs, auto loans and money market accounts.

Besides that handy blue box, if you click the tap for Checking/Savings, you can find the national rates for MMA (Money Market Accounts)/Savings.

The big find of the day is Money-rates.com. They put all the best national savings rates in a convenient list : Currently making the top-ish of the list are Washington Mutual, at 3.75%, and Capital One and HSBC, both at 3.50%.

They’ve got some other great resources too, including the Find a Better Bank tab where you can input your zip code and preferences and find the best bank for your needs in your area.

Who Wants to Be a Millionaire?

I found these cool calculators on YoungMoney.com where you can enter information about how much you’re currently saving at what interest rates and find out things like: when you could be a millionaire or reach another specific savings goal.

Apparently, at my current savings rate of about $400 a month with a bank-interest rate of about 1% (according to ym.com that’s the average rate for banks, or less) I could be a millionaire by the time I’m 121. And with medical technology these days, I mean, it could happen.

But seriously, more interesting was the fact that if I put my money into a fictional high-interest CD at a 5% interest rate and only saved $20 a month, I cut 10 years off that time period. Completely fictional numbers obviously, but I think you get the point: PAY ATTENTION TO INTEREST RATES. Congrats to you if you’re managing to save money while you’re in college but make it worth something - shop around for the best interest rates in your area.

I’ll see what I can do about helping you with that process, keep checking back.

Dropped your camera in the toilet, again?

Here’s a little known perk: your credit card may offer extended warranties on your recent electronics purchases. Talk about beating the system.

Now, I’ll be the first to say that credit cards intimidate me (so you can expect to see plenty of posts in the near future on how to choose one and how to make sure it’s working for you rather than against you) but I’m definitely all about taking my perks where I can get them.

Here’s a video from the CNBC show On The Money about a few credit card perks you might not know about, including the extended warranty bit. Honestly, a lot of these probably don’t apply to you as a student, but the best advice: Call up your credit card company and ask them to send you a one page summary of your perks. Take advantage, they’re working for you, remember?

Click on the image to check out the video, p.s. the guy being interviewed writes the I Will Teach You To Be Rich blog in my blogroll (which works now).

FREE MONEY

It got your attention, right? Now you’re saying “where? why don’t I know about this?” Yeah, that’s how I felt when I heard about IDAs.

Okay, Individual Development Accounts (matched savings accounts) aren’t some new trend so maybe this isn’t groundbreaking news - but are you taking advantage of this?

Just as an example, at Alternatives Federal Credit Union in Ithaca, if you save $1,000, they’ll GIVE you $2,000. GIVE. I wasn’t sure if you got that.

There are some qualifications: The money almost always has to go towards higher education, buying a home or starting a small business (but if you’re doing one of the last two you probably don’t need to be taking advice from me) and the most important is you have to be low income. A student would most likely qualify - but you’d have to be independent from your parents. So this is really ideal for a student from a low income family or a non traditional student, like a 30-year old who’s back at school.

But seriously, if you qualify, you’d be insane not to do this, it really is free money.

At the least, you should talk to someone about it because who knows what you could qualify for, or what your own bank or credit union might have to offer in the terms of GIVING.

If you’re in Ithaca - maybe you should talk to Brendan, he deals with all this IDA stuff over at Alternatives. Send him an e-mail at Brendan@alternatives.org or call at 607-216 3445.

Or if you still don’t get it and can’t pick up a phone, try this, and be flattered that I even thought for a second that anyone will actually read that whole article.

Pay less for dinner … unless you eat too much

I was with friends at Chili’s the other night and was surprised that our waiter Dan offered to separate our check - there were 12 of us. Being the skeptic I am, I wondered if the restaurant actually makes out better that way because of separate tax and separate tipping and the fact that everyone usually just rounds up or throws in an extra single here or there. The fact that Dan could just be kind did not occur to  me.

So I made up a fake bill for five people who ordered meals with the following prices: $10, $7, $12, $24 and $12.

Next I calculated the total bill if all meals were on one check: with an 8.625% tax and 20% tip, the total is $83.61.

If all meals were on separate checks with the same tax and a 20% tip for each meal, the totals are (in the same order as previously listed): $12.86, $9, $15.44, $30.87 and $15.44 - which equals …… $83.61. It’s exactly the same. It was a really disappointing push of the equal sign on the calculator for me.

BUT when the total bill is on one check, each person adds about $4 onto the cost of their meal to cover tax and tip. When the bill is separated into 5 checks, the person with the most expensive meal adds more than $7 (if you’re that person, ignore this post and make your friends combine the bill) while everyone else adds less than the $4 they would have with a combined bill.

It’s not quite the significant savings I had hoped for, but at least now you all know.

So basically, whenever you can, try to separate the check and you’ll probably save at least a few bucks. Oh, and don’t tip on the tax! Divide the SUBTOTAL by 5 to figure out how much to tip (for 20%).

Also, if you’re at the Chili’s in Ithaca, ask for Dan - it turns out he was just a nice guy.

—

Sidenote: before I get comments about how you shouldn’t mind throwing in the extra money to support the waiter I’d like to point out that both outcomes leave Dan with a 20% tip, the difference is who pays it.