The 5+% days are no more for high yield saving. All the banks had dropped their interest rates according to the federal rate cut, and more cut could be on the way. As such, it is becoming less apparent as to where to put my money.

On one hand, I want to keep adequate liquidity(cash) in order to save up a down payment in foreseeable future. On the other hand, it’s quite depressing that these money is growing at only sub-3% interest rate. Shall I say screw down payment so I can invest the money? Shall I invest everything and keep renting? Or shall I wait and expect the Fed to raise the rate soon enough, or perhaps with the cash, I may have a chance to purchase a place to call my own?

Now if I say screw down payment, I ponder if I should put some of the saving, if not all, into investment to grow at a faster pace. I have been eye’ing the Vanguard Wellesley Income Fund (VWINX) and Vanguard Wellington Fund (VWELX). Wellesley appears to be a conservative version of Wellington with 60/40 bond vs. stock ratio while Wellington is 40/60 — different fund manager aside. The tough part is that Wellington has a hefty $10,000 minimum, and I don’t want so much money locked up, due to long-term horizon. Also if not it’s a $3,000 minimum instead of $10,000, I may be able to keep enough to still save adequately for a down payment in time. Together with the volatility in the market, that’s why I am leaning toward having Wellesley added to my portfolio, but Wellington’s rate of return does beat Wellesley in the long run. Any one with experience with these two funds?

*SIGH* I feel kind of stuck. I’m still a good distance from a full 20% down for a Bay Area property, and I hate to see money uninvested and losing value to inflation.

Shall I give up buying for a year or two?
Shall I suck up the sub-3% interest rate?
What’s your thought?
What’s everyone doing out there with their money?

I came across the MSN article today — Foreclosure ‘crisis’ is overblown — amidst all the doom-and-gloom financial news.

Excerpt with the main points to save you some reading time:

Though the national rate of foreclosure increased by a whopping 79% between December 2006 and December 2007, the rate was still only 1.033%. Because about 30% of all homes are owned mortgage-free, this means that for all the noise about a crisis, only seven-tenths of 1% of all homes were in foreclosure.

In the top 100 housing markets, the average foreclosure rate was somewhat higher — 1.38% — and it was up 78% over the previous year. But if you rank-ordered the list of the top 100 areas, only 34 had foreclosure rates above the group average. Fifty-one areas had rates of 1% or less.

Foreclosure rates actually fell in 14 of the 100 areas. More important, many of the areas with the highest increases in foreclosure rates were rising off rates that were tiny. The Bethesda, Md., area, to offer the most extreme case, saw foreclosures rise 1,288% — to a rate of 0.682%…

Does this mean we can stop worrying and planning and saving? No, it does not mean that we can overlook the entire real estate ordeal and what’s really happening. However, I think this demonstrate that we need to be skeptical and understand the bias of the authors of the materials we read, despite whatever useful information exist in them. Further more, we must understand the possibility of some financial writers/analysts who exaggerate and write with the agenda to destory/hike a stock for their affiliated short/long position.

This is definitely an emotional time as people’s livelihood may be on the line as the market rises and falls like roller coaster these days. Yet, it remains important to not get carried away by our own emotions and thoughts. Don’t just take other people’s words for granted. Go find out on your own. Keep reading. Keep learning.

Since I said what I did, shall I even trust the article? I’m stumped.

Sorry to disappoint you if you arrive today to read about personal finance or self-development or to nose about me. Nope, today’s none of those. Instead, I want to point out some silliness I observed about the social hype of going green.

Hybrid Vehicles

If you are going to get stuck in traffic for hours with a hybrid, you are still burning fuels like all other cars, albeit less. And don’t even get me started on those hybrids driving 80 mph on the highway. You know the urge from watching a motorbike that haplessly swerves by you and wanting to run him into the boulder? It’s the same feeling.

How about drive less, carpool, plan your driving trips, walk/bike when possible, or not buy a house that comes with a 10-hour commute just to own more square footage…

Solar Panels

Solar panel itself is a solution. But guess what, these panels have to be produced, and guess where over half of them are being produced? Yep, none other than the almighty China. With loose regulation, by-products from the production of solar panels – chlorine and hydrochloric acid – are freely dumped in nature.

Go for it if the thought of many to-be-dead Chinese excites as much as going green.

Carbon Offsets

Personally, I think this is the dumbest idea of all, where you pay a company to “go green” for you and you say “Oh, I’ll pay someone else to do my responsibility to save the environment”. How irresponsible is that. It’s like paying someone to not cheat so you can cheat on your husband/wife.

On top of that, carbon offsets companies are not required to disclose what they do with your money. Half of the money probably end up in their pockets while the other half will go into investment of other “green technology”. The left over money will probably be used to hire gorgeous interns naively excited about “going green” while you think a tree must have been planted by now. But honestly speaking, most of the money will be used to pay for administration and personnel cost.

I’m not saying the above three things matter naught. Each of them can be part of the solution if people truly adjust their behaviors. To truly minimize pollution to the environment, we have to begin by minimizing our wasteful behaviors, where each humble citizen of Mother Earth should be mindful of what their actions mean to the environment and act accordingly – recycle, turn off lights, lower the heat and A/C, stop littering… We must understand how we are all connected and stop thinking selfishly.

I wish people can stop being silly, but I’m afraid Einstein is yet correct.

Debt and conspicuous consumption are symptoms of a much fundamental problem.

The subprime crisis, consumer debt issue, and negative national saving rate don’t happen together out of sheer chance like giving birth to triplets. They demonstrate the change in people’s values and perception from past decades. What is the difference?

It is a fact that life can be a bitch and some are very unfortunate to be much handicapped to begin with. However, it is also a fact that they are the minority of the population who have no choice being in poverty. Here today, let’s focus on the majority of the population who has the luxury of the freedom to choose.

At the end of the day, people deep down know what they need to do for themselves regarding their finance, but somehow somewhere along the timeline, people stop admitting to reality and ignore what they know. They prefer to be denial, and may even do their best to stay in ignorance, so they can justify themselves. Ah, ignorance is a bliss… but not really. There is always a choice, and people choose to be ignorant so they can be superficially happy through materialism and instant gratification. They like taking the easy way out, though it is only temporary, but they don’t care if it’s only temporary.

Being in denial, people try to become something they are not. And whether they know it or not, that builds up a void within… you can think of it as a spiritual void or a feeling of emptiness. Call it what you want. As this void gets bigger, people try to fill it with external things, which are paid for with money or credits — money they don’t have. These external things provide instant gratification and the perfect noise to mask that void. As time goes on, they lose a great deal of responsibility, integrity, discipline, and compassion with such behaviors.

I don’t think people should blame credit cards. Credit cards are merely financial tools and dead object. Like subprime mortgage, like all other forms of intelligent(dumb)financing program. Like money. They are all dead objects. How can they be held accountable? Companies make them available, and people choose to use them.

I think life is structured a way that allows us to make many mistakes. We can make a lot of mistakes at different times, as long as we recover from each. And frankly, we all make mistakes in life. We need to do our best to stay aware and catch and correct mistakes as quickly as we can. I cannot fathom that it is one big mistake that brought everyone down to their knees. Humans are tough and adaptive creatures. The key lies in being aware and always learning — the opposite of being in denial and ignorant.

It only becomes the big issues today as people remain in denail and continuously make the same mistakes, until one day — WHAM!!! — they found out they are holding on to a thread hanging off a cliff. They tried to chase after the something that they vaguely see and believe that will bring happiness but won’t and now they need to catch themselves before they fall. They need to recover from their mistakes, and they will if they choose to.

Indeed, we need external things for survival and for pleasure. It’s a part of life. But when you look to ONLY externals for happiness, you are chasing after shadows.

I believe happiness happens when you look within yourself first. When I said to look within yourself, I mean to find the values in life that are important to you. You need to get to know yourself. Know what you want in life. To each person, there are many important values, so you must prioritize, and I dare claim that no one should have money and fame at the top of the list. With such a list, you shall know what is “enough” and hence, be able to distinguish between “wants” and “needs”. You can then simplify your life and not have excessive externals yet be content, though remember being content does not mean being satisfied and complacent.

Problem happens when people never stop to find out their values. Again, they try to become what they are not. I don’t believe it is entirely the people’s fault because of how they become conditioned the way their are — constantly being distracted by advertisements, bombarded with information, and conditioned about money/appearance/fame. As a result of those: They think they will be happy when others see them as rich. They think they will be happy when they have that next-best-thing. They think they will be happy when they beat their neighbors.

However, there comes a time for each of us to come to understand that such a culture doesn’t work and therefore, learn not to buy into such a culture. It is not easy, but it is what we need to do. This is where discipline comes into play, and where we take responsibility for ourselves.

So at the same time you are learning and reading about all those “methods” on how to get rid of debt or to build your wealth, why not take a pause to learn about yourself and get your values straightened out? Because if you don’t, your changes will likely be short-lived because your character has not changed.

You can shred your credit cards, but if you don’t fix the problem by fixing the fundamentals, the problem will come back as easily as it is to shred the credit cards.

All things will come to pass. The good things and the bad things. The important part is always trying your best without holding on to the moments – just keep doing what you need to do that you value. Every moment is life, no more and no less.

Trying to hold on to the good things – by wishing it never ends – will cause suffering. Trying to hold on to the bad things – by worrying unnecessarily – will cause suffering. Those actions add unnecessary elements to each moment in life that cause us suffering by creating hopes and dramas. “Good” and “Bad” are very subjective human thoughts. It is imperative that we notice that, to simplify and to have peace in life.

That’s my little bit of wisdom for the day.

As I stated in last post, life has gotten a bit tangly for me, but couple things had been untangled that grants me some relief:

1. I finally found a roommate, and so far we are very compatible. Woohoo! It’s also a big relief that I don’t have to afford the outrageous rent in the Bay Area by myself, so I can continue to save, invest, and pay my student loan as usual.
2. I finally sent in my tax forms. It is nice to see my tax planning(guessing) paid off, I will be getting about $600 back from the fed and paying CA state a grand total of $1. I will also look forward to my $600 check from the economic stimulus package. Now, should I blow that money to stimulate the economy? Or should I tug it under my bed? Or should I change the $600 into pennies and chuck them at Bush? Any suggestion?
3. There is some huge management restructuring going on at work, but I got over the hurdle of “knowledge transfer” between the managers. The assertiveness and confidence that I have gained from many different areas and activities are definitely paying off. It’s also very helpful to have connections with many people. Keep that in mind.
4. I have mentioned before that I’m taking a singing class. For the quarter end, I took the challenge to learn a new (Italian) song for the final performance, which is more difficult and more lyrics. I did wonderfully and am very satisfied with my own improvement. Didn’t I say I gain confidence from differnet activities? This is one of it.