You can do the same math with MagicJack, but the call quality is simply not acceptable to most humans.  Read the reviews.  Vonage perfected the technology of VOIP (voice over internet protocol) years ago, but the business model is good for Vonage.  You still get to pay monthly, only the fee is less.  ooma lets YOU pocket the savings of using VIOP.

Fork over the one-time cost of $250 and enjoy local and long distance calling with a local number forever over your broadband line.  See GeekBrief.tv for additional product review.

I bought my ooma Telo (base unit) and handset the InvestmentBuddy way, over ebay and saved enough money to buy the $49 handset and still be under $250.  Units may also be found at Amazon, or buy searching Froogle.com and sorting by price.

I ported my number I had held for over 25 years and presto … callers now dial the same number they have dialed for years and their voice arrives via my VIOP connection.  ooma has a variety of optional services that are available for nominal upcharges, like a second line, converting voice messages to text messages to your cellphone and a host of others.  The basic (FREE) version, however, compares favorably with the $50 landline package from AT&T with caller ID and three-way calling.

In the transition period as my old landline number was being ported (transfer) to ooma, there were some strange messages for about 3 days.  You also have to have a stable internet service provider (ISP) and I recommend a battery power backup for your router, ooma Telo and your cable or dsl modem.  You should want that anyway.  Bottom line, buy your ooma Telo and handset.  Port your number for another $40 and never have another phone bill, ever!  Save thousands, like the InvestmentBuddy.

Back in 1995 I was in in a Target looking for a TV for an apartment I was using in a major US city where I was working for a few months.  I wanted a TV that would be about 21″ (measured diagonally) Before I arrived, the store had marked-down the floor models.  The TVs had fingerprints on the screens, which could easily be cleaned with a squirt of Windex(R).  Some had a few scratches on the case.  I inquired about a 27″ model that had already been unplugged from the cable and electrical connection.  The salesman told me I could return it for a full refund if it did not work.  I asked him if he could provide me with the remote and cord, which were not with the TV.  He called for the manager.  I am not sure what he told the manager, but the manager walked up to me and said, “We can’t take more than 40% off the price on the clearance tag.” Hmm.  Well, that had nothing to do with my question, but OK.

So, there was a $499.00 TV that was marked down to $300.  Now I could check out for $180 and have plenty of money left for the remote.  They found the cord.

The TV became our primary TV in our primary residence.  I figured I would replace it with one of those HDTVs when it blew up, but it never did.  After being the last guy on the planet without a HDTV, except perhaps you, I decided to buy a HDTV for my wife for Mother’s Day.  I searched all the big box stores and scoped out the market.  Then I went to WalMart to see what they had.  The space I had to work with is 41″ horizontally, so I could fit what most manufacturers call a 42″ (measured diagonally) TV.

During my trip to WalMart, I noticed that they had marked down their entire line of Phillips(R) HDTVs.  I could not conclude if they were ending their relationship with Phillips, like they did years ago with Rubbermaid, or if this represented a change in the line, or a model year change.  Nevertheless, the $750.00, 42″  HDTVs that WalMart usually sells for $628.00 were marked down to $498.00.

I told them I would take one.  The clerk went to the back of the store and came back with the “sad-face.” The computer said they had three 42″ Phillips HDTVs, but none were found.  I asked her if she could check other stores in the area, and she said she would.  A store across town showed three also, so she called. Further check indicated only one.

I rushed over to find that the only one was the display model.  A quick inquiry indicated that they could take 30% off for the floor models, that were actually “wall-models.”  I started to have a flashback.  They looked for the remote.  Nothing there either.  Shortly thereafter, I walked out with a 42″ HDTV for $348.00 plus $7.00 for the remote.  Oh, they did not have the stand either.  I was originally planing to mount it on the wall.  The InvestmentBuddy says “Don’t buy the $100 wall mounts bought locally.”  They are the same as the $25 mounts sold online.  Check eBay and Amazon.com.

When you are done, rent Ernest Goes to Camp in High Definition and enjoy.

We will assume for this session that you adhere to the guidelines about personal cleanliness and character.  We will not cover those issues.  They tend to develop well with age. Somewhere buried in her instructions were the following words,

“Don’t blindly follow the crowd.  Just because Johnny does something, doesn’t mean that you have to follow.”

Her simple instructions are very applicable when it comes to savings.  Now this will sound a little harsh, so get a cup of tea and relax.  I mean really relax, and listen to the InvestmentBuddy before you get too excited.  There will be opportunities to spend money on life’s pleasures and thrills that will be appropriate and natural.  Like everything else in life, there are inexpensive options and expensive options.  You will be presented with both.  These “opportunities” often are pitched by family members and are almost never presented as optional.  Evaluate each on it’s merit.  Go along on the ones that make sense.  For the ones that are outrageous, the con goes something like this:

“Dad, Sally and Mary are flying to Boston for Spring Break.  They will be staying with friends there so we won’t have any expenses.  ….  I need $2,500.00.”

“What!?”

“We we have to fly.  Spring Break is only a few days and we will do some shopping, visiting, dining and take in a concert while we are there.  Since Sally’s friends live there they have already planned the trip and were kind enough to include me in the plans.  All I need to do is to buy three or four outfits before I go.  The weather in Boston will be unpredictable next month.  Can I use your gold card this afternoon?”

Trust me, you are about to be accused of being the Anti-Christ.  Every family’s financing is different.  Every financial threshold is different.  But the InvestmentBuddy is speaking to the upper middle income families here.

Big Ben and Double Decker Buses in London

When my children were in college, I was asked (by all three) if they could study in Great Britain. My oldest daughter was naturally the first to ask.   She and five other girls were renting a three bedroom home near campus.  All of the other five girls in her residence had either gone or were scheduled to go to Great Britain.  The university has a well established program with intense study and touring for two weeks.

This trip had been a traditional treat for many of the families involved.  They had sent their older children, and the act of sending the younger children was simply a mechanical routine.  The Money Removal Routine … Open vault.  Remove money.  Send it to the registrar’s office at the university.  A routine they could all easily afford.  That made our decision NOT to send our daughter particularly painful.  Fortunately our family was contemplating a trip to Italy to visit the homeland of my mother’s parents.  What I am about to tell you will not easily be believed.  You will have to check this out for yourself.

Over the next two weeks, I worked with a travel agent to book our airfare and hotel rooms for our family of five for three full weeks for less than it would have cost our one daughter to “study” in Great Britain for two weeks.  Why the difference?

College cost is like health care cost.  Usually somebody else is paying for it.  There is less scrutiny on the nickels and dimes that add up to thousands of dollars.  The other aspect of an all-inclusive tuition/travel/lodging/touring package is that you are not allowed to analyze any of the component costs because they are not broken down into understandable elements.

Leaning Tower of Pisa

Did my children think my wife and I were cruel and made a harsh decision? Yes – for a while.  But I can confidently tell you that the three weeks we spent in Sicily, Rome, the Tuscan Countryside, Sorento, Venice, Florence, Pisa and Milan will always be remembered as the family vacation of a lifetime.

Don’t always follow the crowd.  Sometimes you can find a MUCH better alternative.

Now the old InvestmentBuddy will not just speak in generalities here.  I’ll give you specifics about how you can save thousands of dollars on your daughter’s wedding.  I am writing from experience.  This is real how-to information.

I am the father of two daughters and a son.  The first daughter got married first, as it should be.  We wrestled with the cost of the flowers. We discussed the cost of the cake, how much it costs per slice, how much it costs per person, how unreasonable the total cake cost is, etc.  Discussions about the dress made my head almost explode.  This was before WeddingDressMarket.com. We debated the cost of the catering.  How much food is enough?   How much food is excessive?  We discussed the candles, ribbons, and the ring pillows.  The girls would eventually flee whenever I entered the room.

The mother of the bride (my wife) and my first daughter simply did not want to discuss the details with me.  I, on the other hand, knew that it was ALL ABOUT THE DETAILS.  If you overspend on every item, you will overspend on the entire wedding.  This was certain.

Daughter #1 eventually got married and spent approximately $12,500.  The costs were recorded in Quicken in a specific category.  Unless the girls “rat-holed” money for the wedding for a long period of time and spent it in the time period preceding the wedding, which I don’t think they did, I was reasonably sure we threw a $12,500 wedding.

These weddings were in the South.  Money goes a long way and the guest are usually treated to finger food at the church reception hall, and not to sit-down drinking and dining at the country club.  There is some of that here but that is covered in another post about not following the crowd.

Several years after our first daughter was married, our second daughter got married.  I was quickly reminded of how much “help” I was for Wedding Number 1.  We quickly devised an win-win plan.  At an early age, we started a Uniform Gifts to Minors Act (UGTMA) account for our children.  See UGTMA article.  For our second daughter, we had invested in Johnson Controls (JCI) which had appreciated and paid dividends quite well.  There was approximately $20,000 in the account, a result of contributing initially $30, and ultimately $50 per month (Involuntarily Investing) into this Dividend Reinvestment Plan (DRIP.)

Our second daughter was on a full scholarship at a major university, and other than living expenses and sorority dues (ouch), her college expenses were taken car of through the scholarships and grants.  We paid living expense and sorority costs with our monthly bills, and her college nest egg continued to grow through reinvestment of dividends and appreciation through her college years.

Halfway through her senior year of college, she announced her engagement.  We met briefly to discuss the budget.  I think we would have all preferred to have root canals.  Immediately the thought surfaced to pay our second daughter a lump sum for wedding expenses equal to what our first daughter received a few years earlier.  Everyone liked the idea because I would be out of the details.  I liked the idea, because I would be out of the details.  The wedding vendors such as the photographers and florists liked the idea ….. You get the picture.

None of our children realized that the UGTMA account was fully theirs at age 18.  That is the law in Texas.  They could have asked for it on their 18th birthday and we could not have denied their request.  It was their money.   This is simply a technicality that we never mentioned and they never inquired about.  They knew we were saving it for THEIR future.   Consequently we were able to give our daughter and her new husband enough money for the wedding plus several thousand dollars to help them begin their new life together.  They watched every penny, as if it were their own … because IT WAS their own.

In summary, the InvestmentBuddy wedding budget formula is simple:

1. Determine through experience or research what a reasonable budget for your wedding should be.
2. Cut the check to the bride-to-be.
3. Go away until you have to walk the aisle and give her away.

In the words of an attorney friend of mine, his wife gave him three instructions: Put-up, stand-up and shut-up.

Well, how did the InvestmentBuddy’s plans work out?  Both of our daughters’ weddings were beautiful, Spirit-filled, meaningful and large.  Several hundred guests attended both.  Several years have passed since the last ceremony, yet our family continues to hear that those two weddings were two of the best our town have ever produced.  Final hint from the InvestmentBuddy, it’s not about the money.

My son is in the military.  He has struggled with academics most of his life, achieving high marks in some schools and reaching certain goals and struggling with others.  The military has been very good for him, and he is a great young man.  After a few years fighting for our country, he became an officer.

My wife and I traveled 600 miles to see him be presented with his stripes.  After the ceremony, fly-over and reception, we went to lunch at a famous local establishment.  There he proceeded to tell me the good news.  After struggling for five years to make ends meet, his pay would almost triple.  What?  Yes, he would be making almost three times what he had been making earlier that day.

I congratulated him again.  His mother teared-up, and I brought the conversation back down to a very serious tone.  “Son, I have been wanting to tell you the Secret of Life for several years and now I have the opportunity. You are about to be faced with an incredible desire for your spending to catch-up to your earnings.  It will be SOOOO easy for you to once again spend, invest, blow, etc all of your income.  As soon as you return to the base you should create a budget out of your existing expenditures and add, say 15% so you can enjoy the fruits of your great accomplishments.”

There was not a pause.  There was not a reflection. There was not an immediate acceptance of the value of this advice.  What returned is, “You don’t understand.  There is NO WAY I can live on what I HAD BEEN making! I was living a dirt poor existence.”

Then I reflected … did I approach him too fast?  Should I have approached him differently?  Our relationship is like that of many parents of young teens and adults.  They cannot be easily taught, but once they learn the facts the old fashioned way, through hard knocks, they realize how smart their parents are.  We have had the “rebound conversation” several times on other issues, so I know one day we will revisit the Secret of Life discussion.

Our connection remains strong and positive.  If he “gets-it” soon, his practice of increasing his savings at a young age could have a substantial effect on his retirement date, retirement status and his quality of life in his senior years.  Your paycheck may not ever triple, but the formula should be the same.  Whenever you receive a windfall, whether a one time payment or a salary increase, save most of it. Pull a token $100 and enjoy a good meal and a cheap bottle of wine.  Draw down $100 and go on a day-trip to a surrounding city and see some sights you have been putting off, but return to normal life and save the rest.  You will be amazed at how fast it will grow through compounding.

There was a great deal of optimism about paying the taxpayers off five years early.  WAIT A MINUTE!!!  Car sales are lousy.  Truck sales are lousy.  Profits are not being discussed with any seriousness.  It has just been a few months since GM filed for bankruptcy, slaughtering the bondholders and stock holders.  Now they are in high cotton.  Not so fast!

A recent article in Forbes highlights one of the only accounts of what is actually happening.  Investigative reporter, Shikha Dalmia, reports that of the $49,000,000,000 that GM borrowed, that’s $49.5 billion, they only paid back the portion that was a pure loan.  How did they pay it back?  With part of the working capital that the Obama administration provided them. The Obama administration allowed them to hold another $13.4 billion for walking-around money.

So they paid back the the loan you made them with other money you loaned them.  Hmm.  Time for an analogy.   Your high school son needs $6.70 for an afternoon date at the Starbucks.  You don’t have the small change, but you do have a $50 Bill.  You loan him the fifty and remind him that you are investing in his future and that approximately half of it ($25.00) is to be used for his college preparation textbook.  But he still needs to pay you back the $6.70 along with the change, another $18.30.   He returns later that day, pays you back the $6.70 and brags about paying you back early.

A regular dad, not even a smart one, would say, “Hey you owe me the fifty, less the book cost.  You owe me $25.”  Does the government not get it?  Does the media not get it.  Does anyone think that GM is making windfall profits right now?  This writer for InvestmentBuddy.com lives in a pretty good area of the US. Things are OK here in Texas.  The economy is holding up pretty well here, yet no one is buying GM cars or trucks.  The public gets it.  GM is broke again, even after shedding all the “old debt.”  A dealer friend recently tried to convince me that GM is on it’s way to great things.  Onerous union contracts, tremendous debt, a mature industry, and fancy math got GM into trouble the first time.  It looks like they will do it again, only this time our grandchildren will take a third job to pay for it.  We must hold them accountable to pay back ALL the money.

If you want dealer prices on all brands of cars and trucks, foreign and domestic, check out eCarQuotes.

There are many types of Life Insurance available.  The primary life insurance products are Term Insurance and Whole Life.  Whole Life is also called Universal Life.

The big skyscrapers in major metropolitan areas are primarily owned by insurance companies.  How did they get so smart about investing in real estate.  They didn’t.  They got smart about selling whole life insurance policies.  Premiums are drafted month-after-month.  The premiums are huge.  The value of the life insurance diminishes as time goes on.  Please read that last sentence again.  The value of the insurance goes down?  That is correct!

Whole Life Insurance = Diminishing Coverage

Companies that survived the massacre lost 90% to 99% of their stock value.  In the last six to nine months the patients have been moved from the ER and are mostly stabilized.  Many are still under-capitalized and not financially healthy by conventional standards.  Could that change?  There is one factor that the InvestmentBuddy thinks may have been overlooked.  Inflation. These firms borrow money from savers and those that buy packaged securities.  They loan it out in the form of loans to homeowners, businesses and to the government in the form of bonds.  What happens if the government prints enough money to cause massive inflation.  The cause and effect are well documented.  Any country that cranked-up the printing presses caused inflation.  It is the effect of more dollars (or other currency) chasing the same amount of goods and services.  There is also the substantial debt that can lead the nation’s economy into the inflation spiral.

What is the result of inflation on the “Zombie Stocks?”  Inflation makes the value of the underlying collateral (homes, equipment, business) worth more.  Not more relative to real currency like gold, but worth more in dollars.  Since the loans are in dollars, the borrowers are more likely to pay their notes.  If home become worth more and more (dollars), borrowers will be less likely to default.

The drop in the value of the zombie stocks is based on two primary fears, loss of profits and the threat of survival.  What if the threat of survival were eliminated by the influence of inflation?  Well, it is unlikely their common stock prices will rise all the way to the levels of their pre-2008 prices.  What if the new influence of inflation caused these stocks to bounce back to 25% of their former highs?

InvestmentBuddy’s Top Zombie Picks

• CapitalTrust (CT)
• Fortress Investment Group (FIG)
• Freddie Mac (FRE)
• SLM Corp – Sally Mae (SLM)
• E*Trade Financial (ETFC)
• MBIA Inc (MBI)
• Ambac Financial (ABK)

If a stock had lost 95% of its value in 2008 and 2009, a $50 stock would be worth $2.50 today.  If that equity were to retrace to a level of 25% of its former value, it would rise to $12.50.  That would be a 500% increase from the current quote.  Possible?  InvestmentBuddy does not know.  What if 1/2 of your zombie protfolio makes the climb back, and 1/2 of your zombie portfolio dies through bankrupcy or government take-over/liquidation?  The combined result would be a 250% appreciation in your zombie portfolio.  That would be a great return even if it takes 10 years to accomplish.  We don’t know the chance of that happening.  Let us know what you think.

If we had to describe a billion as “a thousand million dollars”  then $850,000,000,000 would be 850 thousand million dollars! That is about $6,800 for every working American.  The Investment Buddy would rather have the cash.  That would boost the economy this quarter!

There are a few “Freebies” that the US Government provides for investors.  This may also change in the next few years as the government looks for ways to pay for entitlement programs, the Stimulus Plans of 2009 and 2010 and President Oboma’s healthcare plan.  None of the items above have been paid for, and we are working off of borrowed money.

The most valuable way to save for your child’s college, wedding or emergency is through a plan called the Uniform Gifts to Minors Act account (U.G.T.M.A.) The program is simple.  The child pays taxes on the passive income that the account accumulates at the child’s tax rate.  REPEAT:  Passive income, such as interest and dividends, is taxed at the CHILD’S TAX RATE.  This should be 0% unless you have contributed an obnoxious sum of money into the account.

So, here is the plan:

1. Take baby home.
2. Locate food, diapers, etc.
3. Love and care for baby.
4. Open a Uniform Gifts to Minor’s Account for your precious one.

We did this for our three children before they were in elementary school.  It provided a tremendous savings account by simply making a number of small monthly contributions.  There are many instruments that can be used, including savings accounts, mutual funds, bonds and common stocks.

We chose to buy stock through a Dividend Re-Investment Plan (DRIP) for each child.  Our first child accumulated McDonald’s stock.  The second one, Dow Chemical, and the third one, Johnson Controls.  They were initially purchased through the National Association of Investment Clubs (NAIC) Dividend Reinvestment Plan.  This plan was made available to individual investors and is now called the Better Investing Community.

Compounding and reinvesting is a phenomenal principle.  Although all the of our selections did well, McDonald’s and Johnson Controls “hit it out of the park.”  As always, don’t make investing a monthly decision.  Decide one time to invest automatically through a bank draft or automatic process.  Set it and forget it … just like Ron Popeil’s Showtime Rotisserie.

Start early.  Start small.  Reinvest dividends and earnings. Watch it grow tax free, in most cases.  remember UGTMA accounts are taxed at the child’s tax rate.   After you see the value of appreciation, you will WANT TO make the monthly contributions larger, and you will.  Good Luck from your InvestmentBuddy.