The Crazy Cyprus Deposit Tax: Could it Happen Here?

 Current Events  6 Responses »
Apr 012013
 

The stereotypical ultra risk-averse move, in terms of handling savings, is to “stuff money under the mattress”.  It’s there, under your control, and not subject to anything crazy happening.  Of course, when people could simply put money in a federally insured bank account, why would anyone stuff money under the mattress?

While the rates today at banks aren’t exciting too many people, they’re at least a bit higher than keeping money in cash at home.  At least you’ll lose money relative to inflation at a slower rate!  Chalk one up for the banks versus the mattress.

However, based on what has been happening with the Cyprus deposit tax controversy, perhaps banks in some places might not offer better rates of return.  With potential deposit taxes having discussed as quite high for owners of high deposit amounts, it seems like that would be a low ROI situation.  Chalk one up for the mattress versus the banks.

Now, the idea of taxing deposits is one that may be alarming a lot of people across the globe.  Just thinking about the idea of hard-earned money just being taken from a bank in the form of a tax, to bail out a larger entity, is enough to cause great concern to many people.  Of course, those of us here in the U.S. (and Canada, I would think) aren’t likely to immediately view this as something that will happen here.  Rather, it just seems like a desperate attempt to help a desperate situation elsewhere across the world.

That being said, could it ever happen here? What are the chances?

Hard to say, and who knows what would ultimately happen there. Regardless, this turn of events overseas is one to pay a little bit of attention to.  Thinking about it, if money is needed for bailout purposes, what is to stop a percentage being taxed in this way? Or, in reality, taken away from the person who earned it?  It seems like a crazy and dangerous notion today might eventually seem more “normal”.  Maybe we just haven’t been sensitized to this yet.

So, if there are assets that are traceable and recorded, they could be taken away in this type of scenario.  It gets me thinking about whether or not hard assets such as gold and silver may maintain some extra importance in this type of future.  I’ve asked before if gold is overrated, and if silver is a good investment.  The thing is, the notion of a world where a member of the European Union was a part of deposit taxes wasn’t in mind the time I wrote those pieces

What Does This All Mean?  Well, there might not be any reason at all to overreact.  Perhaps it’s just something to be aware of, that tough circumstances can lead to bad things like this becoming possible. 

Oh, and maybe we can still laugh at the notion at stuffing money under the mattress – but just not laugh quite as much as we once did.

My Questions for You

What are your thoughts about the idea of a deposit tax?

Do you think this is something that could actually happen where you live?

Would this development at least get you to think about the possibility of defensive measures with money?

TV Commericals Glorifying Materialism

 Current Events  7 Responses »
Mar 142013
 

Have you ever seen any of the State Farm “Discount Double Check” ads on TV?  The one that might come to mind is the original one with the Green Bay quarterback seeing his signature move being used along with the discount double check.  He gets hazed a bit from some customers who don’t believe he’s a real quarterback in this one.  There have been subsequent commercials as well, with other Green Bay players, as well as him in a school.  Pretty good commercials, I think!

Then, I came across a commercial where the discount double check is mentioned again, but this time it’s in the context of two women shopping at some trendy clothing/accessories store.  A far cry from a pro quarterback, right?  Well, in this one, the women run over to a few attractive purses that they spotted by a window, clearly impressed by the bags.  One of the ladies says the usual “like a good neighbor…” line.  Lo and behold, POOF! - out of the blue and agent show up.

She then asks the agent how much her discount double check saved her, and the guy tells her $150.  Her next move – to immediately and enthusiastically say “Done!”, while prancing over to the cashier to presumably buy the purse.  The message that some my get from this – save money on one expense, and then you’ll have more to spend on something fun!

Now, I’m all for having fun and getting things we want.  However, in this case the clear connection I made was that money saved was now available for a splurge.  I’m not linking to it here, but you can easily find it on YouTube to see what I mean. 

It reminds me of how some popular songs seem to glorify spending.  There was the song involving Katy Perry mentioning maxing out credit cards, and another artist bringing up music and money in the context of not paying rent.  Not exactly sending messages about the merits of frugality and personal finance!

I’d like to see a revised commercial, where the woman holding the purse drops it upon hearing about the $150 savings.  Then, maybe she could exclaim things along the lines of:

  • “Oooh…Emergency Fund!”
  • “Cha-ching! More for retirement!”
  • “Paying down that remaining debt, baby!”

You know, some excitement over having extra money – and how great it is to use it for personal finance goals!

I suppose that’s advertising that might not be such a hit with the masses.  But it would be a winner with me :)

My Questions for You

Have you seen this ad – or did you search for it to check it out? What are your thoughts?

What do you think of the notion of celebrating saving and financial responsibility, instead of materialism?

What would you think about doing with $150 you just found out you saved on another purchase?

Why Do People Blame Presidents for Their Money Problems?

 Current Events  13 Responses »
Dec 172012
 

The concept of personal accountability is something that makes sense to me.  I’m not saying I’m perfect at applying it at all times, but I do believe in it and try to follow it.

That being said, sometimes people do like to blame others.  Blame their career, blame their spouse, blame their parents, blame the dog, blame anybody.  To the person who makes excuses, it’s always somebody else’s fault when things don’t go according to plan.  Sometimes, people even blame the President (regardless of his poitical party) for their problems – or any money problems!

A few examples:

Sold-Out Holiday Gifts are the President’s Fault?

I was at a retailer recently, where I was doing a little bit of shopping for a few household items as well as holiday gifts.  I was walking by the toy aisle, when a store employee told a customer that they were out of a certain toy, and that they might not get any for a while since the company might not be making (or shipping?) as many this season.

The customer, a 30-something lady, said (paraphrased): “well, that’s what we get when we re-elect Obama…companies don’t make enough toys for the holidays because they think people want handouts!”

Huh? I’m missing the connection between who our president is, and why this lady wasn’t able to buy the right gifts for her kids. Maybe you can try to help me with this one.

Expensive Food is The President’s Fault?

I was talking recently with somebody who we’ll just describe as somebody I come into contact with frequently.  We were discussing how expensive lunch was becoming, and how it seemed like just a few years ago you could easily buy one for just $3 or $4 without it being unhealthy junk.  The guy said (again, paraphrased): “After 4 more years of Obama, I’m not going to be able to afford to eat lunch anymore!”

So tell me….why is it the President’s fault that you’re not able to eat lunch outside as often as you would like?  Could it be that your salary is modest? Or could it be that you spend money on other things that take away from available funds to spend on eating out?  Not sure how the President gets the blame here.

Your Home Losing Value is the President’s Fault?

For this one, we go back to before the current President was elected, to the George Bush days.  There were plenty of people out there who lost money on their homes, or at least saw the market value of them decline.  Frankly, I was one of them.

Luckily, I never took on an excessive mortgage at the wrong time.  However, there were people that stretched to buy their homes, and ended up underwater or at least burned badly on their purchase.  Some people learned their lessons, and realized that a basic home should have been good enough, instead of the dream home they bought by stretching for a big mortgage.

However, others looked to blame somebody.  I remember one person who saw his home value decline at the time saying that “Bush drove my retirement into the ground.  All this money spent on problems outside our country…”.

Sure, the guy was probably losing money in the market too, but why blame President Bush for that?  Why not just admit that he thought he was entitled to a dream home with all the bells and whistles, and that he made a bad decision to take on a massive loan that gave him very little room for error.

Politicians are not primarly to blame or credit for our individual financial situations!

I’m not saying that there aren’t specific circumstances where leaders can impact our respective person situations.  National debt, anyone? However, isn’t it better to accept full responsibility for our own actions? We can choose to get an education (or not), we can choose to work hard (or not), we can choose to live frugally (or not), and so on.  Sometimes we do legitimately find ourselves in bad situations out of our direct control, but life goes like that sometimes, and can occasionally be quite unfair.  Then again, we can choose how to respond.

Maybe I’m a little detached from some things in the political world, or maybe I’m just not sensitive enough to certain things.  Who knows? But I just think that it’s comical when some folks want to blame their own financial decisions on the leader of the free world.  After all, if they make good decisions, will they take credit for them or will they give all credit to the President?

Just live our lives, and try our best no matter what.  And try to take responsibility for our own sucessess and failures!

My Questions for You

Do you see it the same way, that many people tend to attribute too many financial problems to the President (regardless of political affiliation), or to whatever party is control at the time?

Have you ever heard anybody go overboard or be irrational in this way?

Career Lessons from the Football Replacement Refs Situation

 Current Events  18 Responses »
Sep 302012
 

One of the great thing about the onset of the fall season is that football is back.  Now, I realize for some of you, it’s not a big deal. In fact, it may be an annoyance, as some spouses/significant others might find their attention swayed by the game many weekends.  For me, it’s a fun pastime, even though I have less free time these days.

Anyway, the draw for me – and suspect most people – is the actual game action.  Not to mention being a part of a fantasy football league, which is fun :) But one part of football that I had rarely thought about was the referees.  They have always been a necessary part of the game, but not in any way the attraction. They were just there to facilitate the game being played within the rules.  They were never noticed unless they messed up.

Well, at the beginning of this current pro football season, the regular refs were not on the field.  Locked in negotiations for a labor deal, they didn’t have the right deal in place at the beginning of the season.  Thus, they were replaced on the field on an interim basis by “replacement refs”, as commonly described by fans and many in the media.

The thing is, the replacement refs were not the “real” refs. Their work on the field, in the view of those aforementioned fans and the media, was often considered to be sub-par compared to the usual standard.  When questionable calls started to influence the outcome of games, many people got highly critical.

When progress was made on the labor deal, and the real refs came back, people were happy.  They actually got an ovation at their first game back.

I took away a few lessons from this:

1) Sometimes, the people you take for granted can be more valuable than you think.

This can apply in business, or even life in general.  With the business perspective, think of an employee who does work that is counted on by everyone, but whose position isn’t really seen as what’s bringing in revenue or a senior leadership role.  That person may be taken for granted, and not really thought of as essential.

However, when this individual is out on vacation, extended leave, or quits – work starts to break down.  People who took “old reliable” for granted, or didn’t value the role itself, find themselves scrambling to cover for him or her.  They quickly start to realize how much they really relied on that person.

Bottom line – no matter what your role in a company, try to do it exceptionally well, while differentiating yourself and becoming indispensable.

2) A negative situation can snowball quickly

In the case of the replacement refs, they clearly weren’t the real thing.  However, this wasn’t something that caused the average fan much angst.  But when a few sketchy calls were made in important situations, and started to potentially impact results, people took notice.  Blame was assigned as people got up in arms.

It snowballed within a few weeks, to the point where these people were viewed highly negatively by many.  They were quite unpopular, it seemed, with many fans, journalists, and maybe even people active in the game.

The thing is, what exactly did they do wrong? They didn’t create any possible labor disputes between the real refs and their employers.  It was those other groups who couldn’t come up with a deal.  Their inability to do so was the real issue, and where the real blame for the situation resided.  The replacement refs were just a byproduct of those apparently unsuccessful negotiations.

Yet, they became the target.

Bottom line – when things go bad, things can quickly snowball.  Fingers can be pointed unfairly, as life isn’t always fair. Be street smart about recognizing the potential for such things to happen.

My Questions for You

Have you ever experienced a situation – while working or otherwise – where a person was generally taken for granted, but his or her true value was discovered later when gone?

Have you ever situation where things went bad quickly, blame was assigned, and stuff got out of hand?

 

Music and Money: It’s Apparently Not Cool to Be Frugal

 Current Events  10 Responses »
Aug 232012
 

How often do you hear people in mainstream media celebrate frugality, as opposed to sensationalizing people spending money on lavish homes, cars, engagement rings, and the like?

While there are some instances where frugality is discussed, such as home makeover or couponing type shows, we hear a lot more about lavish lifestyles celebrities have.  The idea of having money and spending it on fun things just seems more interesting, and worthy of celebrating, than being frugal. Actually, more so than even simply being financially responsible and paying bills on time!

I had previously shared my thoughts on a Katy Perry song “Last Friday Night”, where it discussed maxing out credit cards.  Actually, the lyrics said “maxed our credit cards”, but you get the idea.  A fun song about a fun night out just had to include references to spending like that.  Nothing about getting a deal, saving for retirement, etc.  Clearly, my expectations are way too boring :)

Well, I recently heard another song that included a reference to money that wasn’t exactly celebrating frugality or a conservative approach to financial responsibility.  Did I say my expectations are boring?  Anyway, this time the song was by Nicki Minaj, called “Starships”.  In the song, the following lines jumped out at us:

And I ain’t paying my rent this month

I owe that

Clearly, my definition of cool is way different than what I assume it is for the typical audience.  Except my young daughter, who upon hearing that line (in a thankfully clean version on the radio) immediately brought it to my attention.  She said “Daddy, did you hear that? Maybe you can write about it.”

So, here I am after listening to her.

At the obvious risk of sounding old, I wonder why in the world these popular songs that clearly resonate with younger listeners have to include references to maxing out credit cards and not paying rent that’s owed? Music and money seem to go together when it comes to spending. What about lyrics on something like what expenses to cut, or celebrating the ability to spend wisely?

Again, being responsible must be too boring :)

My Questions For You

  • What do you think of such lines in music, listened to by impressionable kids?
  • Why do you think it is that spending seems to be glorified in many cases?
  • Have you ever heard a song where people talked about saving money or getting a deal? I can’t recall one off hand!

Fewer Millionaires in the U.S. – Does this Surprise You, and What Does it Mean?

 Current Events  20 Responses »
Jun 042012
 

Doesn’t everyone want to reach 7 figures?

Becoming a millionaire has historically been a mark of great financial accomplishment.  While it may not be quite the same grand accomplishment of days gone by due to the time value of money, millionaire status is something that many people would like to reach.  However, there were apparently less millionaires in the U.S. in 2011 according this interesting CNN Money article.

The article reference data that estimated 129,000 fewer millionaires in the U.S., despite a global increase of 175,000.  4.3% of people were estimated to be millionaires, versus 17% in Singapore.   Additionally, when looking at ultra high net worth people, the percentage in the U.S. did not make the top 15.

Surprised? Actually, I am a bit surprised.

Now, I do realize that there have been economic troubles here in the last few years, as I have personally felt some effects.  However, there are people out there making money, as there are some technology companies we know and love (maybe) that have been in the news for making serious money. Plus, it seems like the barriers to entry for entrepreneurs have come down, with opportunities opening up for many.

Nevertheless, there are some parts of the country that have been hit so hard in recent years that it may be hard to recognize when living elsewhere.  The extreme plight of someone in a rust belt city like Detroit might be completely lost on some people from, say, the San Francisco area, who are in the midst of growth and business creation and don’t see the utter devastation of a formerly prosperous area.  Maybe to some people, this is hardly a surprise at all!

It gets me thinking about two things:

  1. Is it truly harder to get ahead these days versus in days past?
  2. Will the financial and lifestyle expectations of our kids and future generations will be different than they had been in the past?

You know, it seems as if there are still many opportunities to grow net worth.   A starting point is getting a good education, as there is much evidence that education helps wealth (just be very careful with student loan debt).   Beyond this, being disciplined and making good career decisions, saving a solid percentage of income, and discerning wants from needs can all help one reach aspirational goals.  We can of course be derailed by bad health, bad luck, and other misfortunes – but making good decisions and following time-tested advice should help us go a long way, right?

According to the referenced data, 4.3% of the U.S. population is at millionaire status. While I’m in the other 95.7%, I still think that depending on where one lives and what choices are made, there are opportunities out there to succeed.  I want to think positively :)

My Questions for You:

  1. Does the data on millionaires (less in 2011, plus lower percentages in the U.S. than other countries) surprise you?
  2. Do you think it’s harder to get ahead these days than in days past?
  3. Do you think the expectations of future generations might be lower than today or a generation ago?

Congestion Pricing: Paying Extra for the Fast Lane

 Current Events  39 Responses »
May 312012
 

I like jam, but not the traffic variety

Have you ever been stuck in traffic, wishing that you could get someplace quicker? I’m sure at some point, each of us has been in that situation. For those living in major metropolitan areas, it’s probably a thought that occurs a bit more frequently, especially if you have a fairly long commute.

As an option to help solve this driving time problem, what do you think about the idea of congestion pricing?

I’m not talking about the cost of relieving nasal congestion here:) Rather, it’s the notion of paying more in order to shorten your driving time. This won’t reduce your commuting costs, which may already be high. However,   as we know, time is money. If you can save time for a little extra expense, it just might be very well worth it.

I’ve heard some conversation lately about this topic, and thought it would be a concept that some people would consider buying into.  In practice, I suppose this could work any number of ways.  However, the way I would envision it is a special lane designated as a premium express lane, only for people willing to pay to drive.

For example, this special restricted lane might have a toll that would need to be paid, say $2.  During rush hour, perhaps the price would go up, say to $4.  The idea is that by setting this variable pricing, people had the option of getting to work or an appointment quicker if they really needed to.  There are times when we just can’t be late to due surprising traffic problems, and it could be worth it to pay up for more.

Of course, I do see some downsides to this as well.  One would be the idea that variable pricing could result in some really high prices at certain times.  Another is that utilizing an existing lane for this premium express lane might hurt existing traffic more, and increase travel times.  Those who don’t have high enough income may get even more inconvenienced at the expense of those who could pay up.

In the end, many things have a price, for better or worse. If there’s an opportunity for making money, it will be found and taken advantage of.  Frankly, I can see how this idea of congestion pricing via a premium toll could work in many areas. It just might be in place in some areas already for all I know, aside from general tolls that some highways have.

My Questions for You:

What do you think of this idea of congestion pricing, and premium prices for driving the fast lane?

Have you seen this in practice anywhere (aside from regular tollways).

How much extra, if any, would you pay to drive in a fast lane that could cut your drive from 50 minutes to 30 minutes?

Will Less Teens Driving Today = Fewer Expensive Car Purchases in the Future?

 Current Events  24 Responses »
Jan 202012
 

Now THIS is a car for a teenager

When I was a teenager, I couldn’t wait to drive. It seemed like most people I knew were like that. Driving meant freedom, independence, and taking a step closer to adulthood. Also, it meant more opportunities for meeting up with friends, having fun, and socializing.

A recent article I saw on Moneyland discussed how this level of excitement might not be at the same level these days. More specifically, the article referenced a study that indicated that fewer teenagers have driver’s licenses presently versus 25 years ago. Actually, the comparison was 2008 vs. 1983, but close enough, right? In 25 years, the percentage of 17 year olds with a driver’s license dropped from 69% to 50%.

What’s behind this? A hypothesis noted in the article revolves around the idea of teens having more opportunities to interact with one another, though online methods as well as texting. Additionally, the high cost of gas might play a role as well.

I think there’s something to that.  As I mentioned earlier, a big part of getting a driver’s license as a teenager had been the opportunity to socialize. Sure, getting to school and part-time jobs was helped by having a license.  But the social aspect of it was there too. Now, at least some socializing is able to done without driving. Plus, gas is currently expensive relative to historical prices and inflation, as we have discussed here before.

Thinking of implications in terms of spending money, it seems as though it might lessen the so-called need for teenagers to have a decent ride. The topic of cars for teenagers has been one that has elicited some strong opinions from those who think that many teens have oversized appetites for expensive cars.  Count me in that group!

Of course, in light of this data on decreased percentages of teenage drivers, maybe we’re seeing the beginning of a trend in terms of the types of cars they drive. I mean, if they aren’t clamoring for a car as much, why would it matter as much what car it is that they ultimately get?

Taking it a step further, I wonder if we’re looking at the beginning of a trend where the next generation of buyers might not be as interested in overspending on new cars? After all, today’s teenagers are tomorrow’s new car buyers. If they’re not as socialized into making a part of their self-identity shaped by the vehicle they drive, perhaps this will be less likely to happen as they get older.

That would be a good thing, provided there isn’t a corresponding shift toward overspending in other areas (technology, anyone?). As far as car purchases go, I personally think that cars are necessities for many adults, but are also usually financial liabilities. Instead of spending on a luxury car brand that’s expensive, why not take on a very modest car loan to buy a less expensive yet highly rated and reliable brand? You can save the difference, and put it toward retirement. Additionally, driving a car for many years is a good way to avoid additional expenses, provided you take care of it. I drove a car well past 200,000 miles and avoided big expenses in the process, so I know it can be done!

We’ll see where this trend takes us, and whether it’s a leading indicator to some type of change in overall perceptions of wants vs. needs with types of car purchases.

My Questions for You:

What do you think of this data on teenagers driving less?

Do you think teenagers only need functional and safe cars, if they have one at all?

Do you think this might be a harbinger of things to come, with less interest in expensive car purchases in the future?

The Tim Tebow Hype and Money Lessons

 Current Events  18 Responses »
Dec 172011
 

At any point in time, there are usually a few people, products, or just topics in general that simply generate a ton of buzz.  Lately, there has been a lot of hype over Tim Tebow, who you may know is a pro football quarterback who has been mentioned in the media quite a bit.  This is a celebrity who seems to generate opinions and commentary from many fans and media, regardless of their views.  As a personal finance enthusiast, I’ve managed to see this “Tebowmania” phenomenon and pull out a few personal finance lessons!

First off, this post isn’t about any kind of judgement on Tebow, or those who either like the hype or don’t like the hype. That’s outside the scope of personal finance and this blog. So, I won’t go there.  Rather, what caught my attention – and what I’ll discuss below – are 2 money lessons that I think we can take from the Tebow hype.

Where there’s hype, there’s opportunity

This came to mind as I just happened to randomly come across a link to a story on Deadspin, which was about someone’s attempt to make some money off Tebowmania.  Apparently, an ad was placed on Craigslist that offered for sale a set of 4 envelopes that were postmarked on the day Tebow was born – August 14, 1987. These envelopes seemingly have no actual direct connection with Tebow, other than having a postmark sharing that particular date.  The way it was described, one had a Florida postmark, another was West German, another Dutch, and the final one was from the U.K.  Again, they aren’t specific to the athlete – just postmarks from that particular date.

According to the article, the asking price was $90.

As I saw that, I thought “hey – that’s a real entrepreneurial, opportunistic move!”

Clearly, there’s hype, and it’s built up to the point where there’s a market for stuff like this. We’ve seen stuff like this before with products – beanie babies come to mind.  Random stuffed animals were sold for astronomical figures and become “collector’s items” to many people. This happened with Cabbage Patch dolls many years ago too. We’ve also seen this with tech stocks in the late 90′s, and real estate in the early 2000′s.  Some things just get red hot in popularity at certain times.

This reminds me of a story I read (or heard) a few years back, when gas prices shot up and people were concerned about prices potentially going up to astronomical levels. This increased interest in hybrid cars, and at that time where the buzz was around gas prices, some people were actually reselling used hybrids for a profit. That goes against conventional practices with cars, as they usually depreciate with use – and can do so quite quickly. But in that time of hype, some people capitalized by using these cars for a while and then selling them for more later. Pretty nifty, right?

If you ride the wave, you can profit from the hype!  The hype may not be long-lived, and items may end up crashing in value and popularity quite suddenly.  The wave doesn’t continue forever. However, while momentum picks up in the early to mid stages of it, you can jump on board and opportunistically make money!

The lesson: watch what’s trending, hustle, and you might find quick opportunistic money making situations!

Being Polite has high ROI

One thing I’ve noticed about Tebowmania is that no matter what people think of him, no matter how polarizing he might be, most people seem to acknowledge that he come across as being polite and well-mannered. He’s not foul-mouthed, surly, or getting in trouble like some other celebrities. That alone just has to help with popularity, right? There are other talented athletes out there who have been successful in their profession for years, but don’t seem to get this type of attention.  Taking this to fan attention, just look at the example I provided above on postmarked items that were reportedly per that story being hawked for $90.

The lesson: if you’re likable, you open more opportunities than if you aren’t likeable. Being pleasant and personable doesn’t cost much, but can offer good rewards for minimal investment. So, why not be pleasant!

My Questions for You:

Have you ever taken advantage of any hype or buzz, and profited from it? This could include collectibles, real estate, or just about anything that was riding a wave of great popularity at any point in time.

Do you also agree that just being likeable can open up many more opportunities for a person exhibiting that characteristic? Do you see it as a high ROI action that most of us could take?

 

The Albert Pujols $254 Million Contract, and Views on The Pursuit of Money by the Top 1%

 Current Events  12 Responses »
Dec 142011
 

It’s often interesting to see just how much money some highly successful individuals make per year. Many times, our attention in this realm gets focused on what certain celebrities get paid to entertain us with their special talents.  It’s safe to say that these people fall into that proverbial “Top 1%” group on high earners.

Recent news in the sports world got me thinking about this a little bit further. Albert Pujols, a tremendous baseball player who has been one of the most productive hitters of the last decade, just signed a deal that made his the highest paid first baseman in the game. The deal jolted fans and media everywhere in it’s totality, as it was a 10 year contract for $254 million dollars (source: ESPN)

Yep, 10 years, $254 million. On average, we’re talking about a $25.4 million annual salary.

Of course, that figure itself gets my attention. It’s quite an impressive haul. In addition, however, I also find it interesting how some people have reacted to that contract as well as the player’s decision to sign the contract.

First of all, I had a converstaion about this with someone who shook her head at how much these “dumb baseball players” (her words) are making. I do agree that it seems like a huge amount of money, that’s hard to deny. However, I also wonder why we have to begrudge these guys for making this money? I mean, most of us do work hard and would like to have that type of income, but it’s a matter of supply and demand.  Two people could be equally determined and hard working, yet one can make a salary that’s astronomical to the other person because of the nature of the work.

Might as well accept the reality that some people will make tons more money for the same effort, and that they also deserve to make tons more. They’re providing a service that’s more in demand.  Sometimes we simply don’t have the ability to do that kind of work (baseball players for example), but sometimes we do (owning a small business). Better to accept reality, find different ways to better ourselves, and stop complaining about how certain others are making a lot of money. It’s not like the top 1% are all bad, you know:)

The other thing about the Pujols signing that I found interesting is that some folks seem to have the notion that he did something somewhat dishonorable by walking away from his team of many years, the St. Louis Cardinals, in order to make more money elsewhere – in this case, with the Los Angeles Angels.  Isn’t money a good enough reason to walk away? What’s wrong with that?

As alluded to earlier, reports indicate that the contract he got from Los Angeles was for 10 years and $254 million. Again, that’s an average of $25.4 million annualy. Reportedly, from what I’ve seen in the wake of this signing, people are saying that he got an offer from St. Louis (his old team) to resign with them for 9 years and about $200 million.  That comes out to $22.22 million per season to return back to his existing team, which is also a great offer it would seem!

It seems like some people have gotten a bit dramatic, thinking that this is an example of how there’s no loyalty anymore, how could he turn his back on all his fans just for money, etc.  Come on, let’s get real here.

When you take the difference in the 2 salary offers, it’s a $3.2 million difference per year. Also keep in mind that the L.A. offer was for an extra year, but if you ignore that aspect, the simple $3.2 million annual difference is pretty significant.  Multiplying over 9 years, it clearly adds up.

Let’s break it down to just the one year difference of $3.2 million. If you took that amount, an divided it up into a weekly difference, it comes out to over $61,000 extra per week. Remember, we’re just talking about an incrmental figure here, the difference between the 2 salary offers.  When you break it out by day, it’s about $2,000 per day more. By hour – waking or asleep – we’re talking about over $80 more. So even while sound asleep, he would get $80 per hour more to sign with LA than St. Louis, all things considered and on average.

See where I’m going with this? I think that it’s ludicrous to blame somebody for signing a contract that will pay him this much more money! Why in the world should he turn this money down, just to make his loyal fans of the last 10 years happy? Why should he choose their happiness over that much extra money? It’s just not reasonable to expect someone to do that.  If you’re the athlete in this case, should you turn away an extra $3.2 million per year just so all the fans who have your jersey at home, or have watched many of your games  on TV, collected your baseball cards, etc – could be happy instead?

I say good for him for taking more money for himself, and not bypassing that staggering amount, just so fans would be happy. Money isn’t the most important thing, as I say very often here, but sometimes we actually do have to make the occasional big decision based on money. I mean, would you rather make more money, or less money but win “Employee of the Month”?

Glad to see that Albert Pujols made a good choice, and hopefully some of his longtime fans can resist critiquing that presumed member of the 1% who’s just simply trying to make a living. As a member of the 99%, I’m cool with his move!

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