Chrysler Declares Bankruptcy

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You’ve probably heard about it now, but Chrysler LLC earlier today filed for bankruptcy protection. The company will continue to operate and has an agreement with Italian carmaker Fiat to utilize some technologies, cars, etc. to help Chrysler going forward.

As far as I’m concerned, it was about time, and probably a little too late. Chrysler should have filed for bankruptcy before they used my (and your) tax dollars to avoid the inevitable. The U.S. government (we) already gave Chrysler $4 billion! And now they’re going to get another $8 billion?!

I don’t know about you, but I want to have a say about where my tax money is going. And I definitely don’t want to invest it in a bankrupt company who obviously didn’t have enough cash and too much debt to run. So you and I own Chrysler. Not by choice.

What has America become? End rant. And by the way, America’s still the best country in the world, but if we keep making bad decisions, I don’t know where we’re headed as a nation, as a culture, and as a people.

Black Friday Violence

Well, I arrived at 12:30 am at a local Super Wal-Mart on Black Friday and didn’t expect anything different than any other year. I’m a Black Friday veteran, having done this for the last five years.

I normally camp out at Best Buy, but this year’s deals weren’t appealing to me. So I decided to go to Wal-Mart this year. And I picked a Super Wal-Mart near my house since they usually have more quantities of doorbusters than regular Wal-Mart’s. I had my tent ready, but guess what? Super Wal-Mart’s actually open at midnight instead of 5 am on Black Friday!

So my friends and I walked around the store not looking for anything or shopping. I just wanted the doorbusters. The Wal-Mart employees were actually still getting ready by bringing pallets of stuff wrapped in black plastic out in between the aisles. We read some magazines in the magazine aisle trying to pass the time. There were no lines at all except for some bunches of people around certain pallets. At about 2 am we decided we’d read enough magazines and decided to walk around again.

We went by the electronics and, behold, there was a line! So we lined up and waited. And waited. And waited. And did some more waiting. It’s really tough waiting in line inside the store because everyone was standing up. I wasn’t about to stand to stand for three hours so I bucked the trend and sat right on the floor. Honestly, I would’ve rather camped outside and been able to sleep in my cozy tent.

Well, 5 am hit and the black plastic began to be ripped off! It was chaos everywhere! Of course, I was stuck in the electronics line that wasn’t moving, but I could see all the action from where I was! People were scrambling to get everything and there was barely any room to breathe, much less move. All of a sudden, I could hear the screams of some women. Apparently, a fight broke out in the grocery section between two women! The guy in front of me said that he saw another fight in the toy section between two women with boxes and toys flying everywhere! He even said that one box hit him in the head! I had never seen such chaos in my life! Best Buy never got this crazy.

There was much worse violence in stores around the country, however. At a Toys ‘R Us in Palm Desert, California, two gunmen shot and killed each other after the women they were with started fighting. Apparently, it was not shopping-related violence. Two women fighting in a toy store on the busiest shopping day of the year wasn’t shopping-related? Yeah, right!

A Wal-Mart employee was also killed at a local Wal-Mart in Valley Stream, New York on Friday. He was trampled to death by a crazy mob trying to get in the store. It is just not worth it.

I am considering doing Black Friday completely online next year and skip out on the crazy mess and chaos. I will definitely not go to Wal-Mart on Black Friday again. It is just too disorganized and took way too long. I mean, they had just one register for the entire electronics line that wrapped around the store. We were probably number 50 in line and it still took most of the morning trying to get out of there. Insane.

What Does the Bailout Mean for Me?

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By now, most of us have heard about the news of the $700 billion bailout signed into law by President Bush on October 3rd, 2008. The bill is designed to bailout the numerous banks throughout the country that were making bad mortgage loans. The government (read: we, the taxpayers) are now going to own $700 billion worth of homes and hopefully sell them later for a profit. How much later is in question.

Do I support the bailout? It doesn’t matter. It has already passed. What I can do is try to analyze the effects of the bailout to you and I. Joe Doughnut. The average American. I definitely don’t like the idea of using taxpayer money to bailout any huge corporation that made bad decisions. They should be allowed to fail. This is a free market capitalist country. I’m afraid America is moving more and more toward socialism and that’s scaring me. But enough of that.

The real question is why does it matter to me personally? After all, this is a personal finance blog. Along with the huge amount of “bad” in the bailout, there some “good” thrown in there as well. For example, the bill increases the FDIC insured limit from $100,000 to $250,000 deposits at all banks and credit unions (that are FDIC insured). That means more protection for you! Hopefully it will get you to save more and spend less, too! This expires December 31, 2009.

Also included in the bill is about the alternative minimum tax. It was expected to hit 20 million taxpayers with an unexpected tax increase this year but it was originally supposed to affect 155 high-income households who owed little or no taxes at the time when it was introduced.

So what does the bailout mean for me? What does it mean for you? It means that I’m doing everything I can to get out of debt and avoid my own “credit crisis”. If I don’t have any debt and a have whole bunch of cash, I won’t have a credit crisis! If I don’t need to borrow, I don’t need credit! What a concept!

WaMu Taken Over by JP Morgan Chase

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As many of you know, I bank at Washington Mutual (WaMu). As many of you also know, WaMu actually failed and the government sold it to JPMorgan Chase for $1.9 billion on Friday. This was the largest bank failure ever in the United States. So what caused the downfall of the nation’s largest bank?

The major reason is the huge amount of subprime (bad) mortgages that WaMu made over a period of time. Subprime mortgages areĀ mortgages made to people with less than stellar credit. These people are most likely not able to afford the mortgages that they were put into. However, the bank could charge a higher interest rate and make more money on them. The problem started when house prices took a dive nationwide. The same people were now underwater with their homes and many walked away because they couldn’t make the payments.

But the bigger problem and the catalyst that caused the failure was the many people who took out all of their money based on fear and false rumors. In the ten day period following the collapse of Lehman Brothers, WaMu customers took out $16.7 billion in deposits. This caused WaMu to not be able to conduct day to day business because of the lack of cash.

I keep repeating this over and over. It is not a time to panic. Fear and worry doesn’t solve any problems. Only action solves problems. No one lost any money when WaMu went down. No one, including everyone with more than $100,000 at the bank, did not lose any money at all. Let me say that again; nobody lost any money, period.

So what does this mean to you?

If you bank at WaMu, you now bank at JPMorgan Chase (technically). In the short term, this means business as usual. You continue to use the same account numbers, branches, checks, debit cards, online banking, ATMs, etc. All JPMorgan Chase ATMs are now available to you fee free. JPMorgan has a nice page explaining everything about your banking after the buyout.

The merger is going to take some time. I would say that within the next 6-9 months, JPMorgan will begin to consolidate and get rid of the Washington Mutual name. I’m going to continue to bank there. I’m not taking out my money. I’ll continue to use the online bill pay and have my paycheck direct deposited there as I always have.

If you don’t bank at WaMu, it just means one less bank to choose from. It means less competition. It probably means higher prices. Higher interest rates on loans and less attractive rates on savings devices. Less competition is never good. But the lesson here is, don’t panic. Your money is safe and sound. Just remember to keep less than $100,000 in any account at any one bank. Unfortunately, I do not have that particular “problem”. God bless!

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