My wife has a friend coming over tomorrow to discuss our personal finance goals for 2009 including life insurance and I believe our investments as well. I’ve never heard of Primerica, did a quick google search, and found that they have been in business for years selling life insurance policies. Primerica also is part of Citigroup, so I’m surprised I’ve never heard of them before. My wife did not give me any other info other than we are meeting with her to discuss financial goals. Since I’m a “hand on” personal finance type, I’m curious what she will want to discuss. Since it’s the beginning of 2009, I figure now is a good time to review our insurance policies for home, autos, and life. Not sure what she can do with our investments, but won’t hurt to ask.

Has anyone used Primerica for life insurance or investments?

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photo credit: joguldi

Are you looking for a cheap foreclosure or short sale investment opportunity? Some properties may not be in desirable areas or might be far from your house and require some travel. What about an opportunity in your own neighborhood or on your same street? I’m not talking about buying the house, but putting in some sweat equity. I’ve had two properties near my house that have gone from ordinary sales to bank owned foreclosures and wondered if they could have sold if the homes had some minor maintenance issues fixed. One had a front yard that was neglected for 6 months and had weeds, branches, leaves, and overall yard cleanup issues. Would you help clean a neighbors yard? What if it meant a better price for the home and an increase in your own home value? Some homes are having the water turned off and lawns are dying. Would you every consider watering a neighbors yard with your hose? That green lawn could equate to some additional green in your wallet if you needed to sell your house.
Home values have decreased 40% in our neighborhood and blood is in the streets as home values are declining every month. Once the bank owns the home, the incentive will be gone to upkeep the house and the neighborhood could see another 5-10% decline in house values. What would you do? Have you considered doing some yard maintenance or painting to help sell a neighborhood home?

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Washington Mutual is the largest bank failure in U.S. history. Federal regulators took over Washington Mutual today and shut down the firm due to inadequate liquidity. According to the Wall Street Journal depositors had withdrawn $16.7 billion in assets since September 15th. The large withdrawals caused Wamu to drop below fdic minimum requirements. What does this mean for your deposits. Apparently the deposits of Wamu are secure and some $300 billion in assets were purchased by J.P. Morgan today. Under the brokered deal between the federal government and J.P. Morgan, customer deposits and bank branches would be transferred to J.P. Morgan. The Wall St. Journal reports that the FDIC insurance would not be used and that assets above $100k would still be liquid. Still many details need to be worked out, but it appears that Wamu branches will now be run by J.P. Morgan.

Do you think Wamu could have survived had the $700 billion bailout passed? If you are a Washington Mutual customer, what are you planning to do with your savings and checking accounts? The assets appear to be guaranteed by both J.P. Morgan and the FDIC. Would you move your assets to another firm or stay with J.P. Morgan?

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Today I watched several more financial stocks getting hammered with speculation about bad debt and unfavorable balance sheets. Yes, I was glued to CNBC for most of the day and watched companies like Goldman Sachs (GS) and Morgan Stanley (MS) shed 30% in market value. As I’m writing this post news agencies are reporting that talks between several banks and brokerage firms are being held late tonight to head off another government bailout. All of this feels a bit surreal and can overwhelm our ability to think rationally. How are you dealing with the financial stress of paying your monthly bills and the thought that your portfolio may lose even more value in the coming days?

Here are a few things I’m trying to remind myself to stay calm:

1. I am a long term investor. The money in my 401k and IRA are not needed for over 30 years and markets will go up and markets will go down. Lehman Brothers might fail in 2008, but another investment bank will flourish in the next 30 years. We will always need credit and investments.

2. Turn off the tv and stop listening to the chatter of the moment. I find myself watching tv and watching my blood pressure rise with every new announcement. The stock traders are probably watching the same CNBC show and feeding off the same nervous energy.

3. Take a walk. Get some fresh air and clear my head. People are still working and shopping and kids are still going to school. My two dogs need to go for a walk and don’t care that Goldman Sachs (GS) is trading below $100.

4. Don’t call my bank again and ask about FDIC insurance. I’ve done it already and received the standard FDIC insurance mailing that every bank sends out. If you want some extra reassurance you can visit a new website that Susie Orman and the FDIC put together. It’s called My FDIC Insurance and you can check your particular bank.

5. Don’t be tempted. It’s tempting to try and jump on some fire sales on companies like General Electric (GE), Bank of America (BAC), or Goldman Sachs (GS). These might be fantastic companies in 30 years, but can I handle another 10-20% decline in stock price? I shouldn’t jump in a stock for a quick trade when I would be violating rule #1 above.

I need to remind myself to follow my own advice. I’m sure the first thing I will do is check CNBC when the market opens at 6:30am Pacific Time. I probably should just take the dogs for a walk and leave the tv off for the rest of the week. What kind of emotions are you feeling with these 400-500 point declines in the stock market? Are you checking your account balances daily? Has the sense of fear and doom hit your outlook for the market? Do you take a walk and just ignore the markets?

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To say this has been a wild ride for finance stocks, would be a huge understatement. Lehman Brothers, Merrill Lynch, and now AIG being rescued by the federal government for 85 billion dollars. The U.S. government through this bailout shows that AIG is too big to fail. What does this mean? Why can’t it fail? Well, apparently if AIG were to go out of business the financial impact would be felt from airline companies to life insurance recipients. AIG insures large and small businesses and the domino effect would be detrimental to the global economy. It should also be noted that AIG is a Dow 30 stock and held by thousands of individual and institutional investors. If you own a mutual fund, your portfolio manager might hold AIG stock. Well, the question of who’s next comes to mind. What made AIG unique from other insurance companies? Apparently they had similar exposure to investments tied to home foreclosures. What other U.S. companies are too big to fail? Do you agree? Should government be laissez faire or “hands off” with companies and allow them to fail?

Here’s a quick list of several U.S. global companies that may be too big to fail:

1. General Electric (GE)
2. American Express (AXP)
3. JPMorgan Chase (JPM)
4. General Motors (GM)
5. Ford (F)
6. Citigroup (C)
7. Washington Mutual (WM)
8. Wachovia (WB)
9. Bank of America (BAC)
10. ???? What would you add to this list?

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