Well, gas prices have pretty much stabilized (but still way too high), but everything else seems to be going down in flames. The economy has been sputtering somewhat for a year or so, but not to the point of qualifying as a recession. The things I have noticed most are gas prices and food prices. The recent bank failures concern me, though. It is unbelievable that major financial houses have put themselves and us (you and me, Joe Taxpayers) in jeopardy with high risk loans in the housing market. Tracy and I have been talking about this for years. We bought the house where she grew up in 2005. It is about 1800 sq ft, it is 40 years old, and it cost $172,000. Our payment is $1135 a month, which is high to me. I decided years and years ago that if a car payment is over $300, then I can’t afford that car. I also believed that a house payment should not exceed $1000 per month. I have gone over those numbers slightly, but only in recent years, and not by a lot. Those limits have actually served us well. All of the tens of thousands of new homes built in Colorado Springs over the last decade have been in the $200,000 to $600,000 on average, with some developments being upwards of $1,000,000. People I have worked with, people we know from church, other families from our children’s schools were buying these new houses. Tracy and I actually had conversations wondering what we were doing wrong. How is it that people in our ‘financial range’ are buying houses for $350,000??? Well, it is apparent now how they were doing it. Interest only, adjustable rate mortgages without income verification. There are so many people here, and throughout Colorado losing their homes. The problem is, they could never afford the homes to begin with. The first year or two at 2% interest only worked out great. After that, they are in trouble. Meanwhile, the mortgage reps made a fortune over the last 5-8 years on processing fees. Instead of buying more expensive houses, we would just buy a moderate house and rent out our existing home. We did that twice, and it resulted in us having two rental houses (one of which we sold in April this year). I couldn’t even begin to count the number of pre-approved home loan and home improvement loan offers I received in the mail. They offered $300,000 loans for $900 a month, or they offered to loan up to 125% of the value of our house. It took about 2 seconds to realize those programs are a bad idea. All of them went into the shredder. Do you realize that if you do a 125% loan on your house, and it burns down, you are going to owe the 25% (or more)? The insurance company isn’t going to give you an extra 25% just to be nice. Mortgage brokers sold people on this by telling them their property values will grow so rapidly that in a few years their 125% loan will wind up being a 100% or 90% loan. All they had to do was wait. Well, they waited, and now they are bankrupt and homeless. You and I are going to pay for their poor decisions via out taxes, after Uncle Sam bails out all of these failing companies.
Do you know that when the government bailed out and took over Fannie Mae and Freddie Mac last week, the CEO’s of both companies were sent on their way with multi million dollar severance packages? Could somebody out there explain this to me? It has been uncovered that the organizations cooked the books to make the companies look healthier than they really are in order for CEO’s and other company management to receive the highest possible incentives and bonuses. They ran the companies into the ground, for self benefits, and then are given millions in severance pay when they get fired? Why are they not in jail???? I want answers!! You should to.
OK, enough ranting…
How about Nemo’s? Sales have been off a little since the Labor Day holiday, but they bounced back this week. Believe it or not, the property owners still have not resolved the issue with our new overhead lighted sign. We finally came to an agreement (which consisted of the owner’s refusing any of our requests/demands) this past week. The property manager is now working with a sign company on specifications and design criteria. We should have a lighted sign back up again by November.
In the meantime, I ordered two signs that are 4’ x 8’ (same size as a sheet of plywood). I am going to mount them to plywood in the back of my truck and park it in the lot out by Pikes Peak. It will be impossible for people to miss it! I would expect to pick up some morning commuters. After a month or two, I am going to change the signs to say Lunch at Nemo’s and see if we can grow our lunch crowd.
I hired an accountant the other day. Tracy and I are both too busy to stay on top of things the way it should be. I will still do payroll and actually pay our vendors and bills, but the accountant will take all of our documentation for each month, reconcile everything, categorize everything, and provide us with reports including a P&L statement. He will also be completing all of our tax filings, including quarterly filings for employer withholding from payroll, sales tax payments to city, county, and state, unemployment insurance taxes, etc…. Trust me… It will be money well spent!
Construction has begun on the outside café. It looks like it is going to be a good size, and will be right outside our shop. The good thing about it is the property manager is considering it community space for the entire complex, not Nemo’s space exclusively. As a result, we will not have to purchase tables and chairs or maintain it. However, most of the usage will be by our customers…
I have been pretty busy lately with video and photo projects. I recorded 15 training sessions for my company, and created DVD’s with navigation menus for each of the sessions. I designed a custom DVD case insert, and made DVD labels to match. The end product was very nice! My pricing came in at $3000, but I discounted it to only $750. A few people who work in video have told me I’m crazy, but there are a couple of reasons for it. First of all, I taped the sessions during my normal work day, so I was paid my normal wages for being at work. Secondly, RKMI has done this type of thing before by sending an intern out with a camcorder, copying the movie file to a CD or DVD, and turning it over to the customer. The quality was poor, but it met the contract requirements and required very little effort or cost on RK’s part. Even though my DVD’s with navigation menus and custom labels are much nicer, RK is not going to pay thousands of dollars for it. If I charge them a rate that is 25% of industry standard, they will have me do it over and over again. I get to put a little extra cash in the bank, and they get a good deal. Sounds OK to me…
We have been without internet service at home for quite some time. Our Comcast cable internet kept going dead. I finally cancelled it, as well as their cable TV, and our Vonage internet phone service. I got a bundled deal from Qwest including DSL at 7.5MBPS service, phone service, and Direct TV with DVR for $50 a month less than my other CRUMMY services combined (Vonage was pretty good, though). I am setting up our wireless network tonight. With internet service at home again, I will be able to make posts more often…
Gotta run…
Everybody have a good weekend.
JD
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