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The TED Spread and What It Means to You

Posted by 12 February, 2009 (4) Comment

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You may or may not follow the market. Personally, I try to stay out of the day to day activities partially for my sanity, but also because it doesn’t matter if I look at it or not because we aren’t selling anytime soon. While I try to stay away from all of the “hoopla” mentioned in the news, I do want to be educated so I know what I am doing and have a plan of action. One item that I had heard about previously in news articles, and in a podcast (Plant Money from NPR) I listen to while running, is the TED spread.

The TED spread is the difference between the three-month U.S. Treasury yield and the three-month Libor rate. The Libor rate is the rate at which banks charge each other on the London interbank exchange. NPR and The Big Money have in fact stated that we should be following the TED spread and not the Dow.

So, how do you know what number is good or bad for the Ted Spread?

CNN states that “A jump in the spread shows how panicky banks are, in that they are charging each other a bigger interest-rate premium than money lent to the U.S. government“. This basically means that banks are afraid to lend to one another out of fear that the firm borrowing the money will fail or the firm lending the money might need the money for it’s own crisis.

To give you an idea of what the TED Spread has looked like more recently and in the past, I found a nifty chart via Bloomberg.

Ted--Spread

If you look at the chart above, you’ll notice that the TED Spread typically stays at around 50 points or less, but since late 2007, it’s been a different story. In fact, it’s been more than double over it’s average for over the last year.

For more information on the TED Spread, there are several resources below. The article from Slate, “Now, Dow” and the Vinny Catalano Interview are great resources in understanding the TED Spread.

The current TED Spread trend seems to be going in the right direction. Do you think the economy is on it’s way back?

Photo by: Azrainman

External Resources:

What is the TED Spread?
TED Spread by Investopedia
The TED Spread Alliance by NPR Money
Vinny Catalano on NPR discussing the credit markets, Treasury yields, Libor and the TED Spread
Now, Dow?

Other Posts:

Interview: FairRepair.com
A Sure Fire Non-Money Maker!
What’s the Best Financial Decision You’ve Made?
10 Reasons Why I Want You to Be Financially Independent
529 or an IRA for College Savings

Categories : Personal Finance,Uncategorized Tags : ,

Cool Links for Week of January 12th

Posted by 12 January, 2009 (5) Comment

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Woohoo! Post #100!

Leadership: Introduction by Mike King – This is a great series that Mike has put together. This Leadership Series is highly recommended to anyone with an interest in improving their skills in leadership. The first two have been released. Here is his RSS feed to keep up with these stories as they are posted.

Understanding What It Is
Know Yourself and Your Capabilities
Skill Development
Remember, It’s About People
Willingness to Take Risks
Accepting Mistakes
Give Direction
Humility

Success Factors by Derek – This is a really neat series about how people and companies achieve success. He is posting a few article every day in January. Here is his RSS feed so you can keep up with the articles as they are released. This is a sample of the articles he’s written so far:

Best of ProBlogger – 2008 by Darren Rouse – This is a great list of articles that I’ve actually read through a few times. If you are serious about blogging, read these articles and take ACTION.

The Psychology of Happiness: 13 Steps to a Better Life by J.D. – This is a great article on what you can do to lead a better life.

How Much is That Printer, Really? by Falling Man – This is a great blog post about not only the cost of a printer, but the total cost of using the printer including printer cartridges.

Photo by: Wili Hybrid

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Green Triangle

Posted by 29 June, 2008 (0) Comment

I read about the Green Triangle briefly in Getting a Life. It was an interesting concept that I hadn’t really thought about. The Green Triangle is the relationship between health, money, and environment. It draws a connection between them and, in Callenbach‘s words, “Any time you do something beneficial for one of them, you will inevitably also do something beneficial for the other two, whether you’re hoping to or not”.

My wife and I have been very interested in all three of these areas for a while, but we’ve only recently been taking action. My wife and I have been tracking our expenses and have been looking very carefully at how we spend our money. We’ve also been consistently running for the past few months. In addition to that, for the sake of saving money initially, we’ve been eating at home more often. The food we’ve been eating hasn’t been freshly prepared from scratch like we’d want it, but we’ve been consciously trying to exclude bad things from our diet such as fast food, high fructose, and foods with hydrogenated oils. The next step for us is to hopefully prepare meals in advance and freeze them and pull them out and quickly prepare as needed.

I apologize for the short post. I hope to “stockpile” a few posts this week as I will be going on a business trip a week from today.

Categories : Life Balance,Uncategorized Tags :

Check Yourself Before You Wreck Yourself

Posted by 5 June, 2008 (0) Comment

Basically, I need to find balance in my life. I was on the swing at the park swinging as high as I could without a care in the world. I didn’t want to come down from the swing. It was nice to remember my 8 year old self and how I didn’t have anything to worry about.

I’m a naturally serious, competitive person. It took my childhood for me to lighten up and not turn everything into a competition. As a child at a roller skating party, circa 1985, I would ensure that I not only won all of the contests during the rolling skating party, but that I went around the rink more times and faster than everyone else.

Fast forwarding to today, I keep a pretty full plate. I tend to get so wrapped up in various goals and achieving them as quickly as possible that I tend to forget I need to need to actually enjoy life… because you never know how long you have.

There are a few steps I am taking to ensure that I enjoy myself. I’ve begun running on a regular basis (yeah endorphins!). I’ve always run, biked and have been playing soccer since age 4. However, I haven’t played soccer in 2 years and I have not been very consistent with running or biking. Another step I’m taking to ensure I enjoy myself is that I’m making time to hang out with old friends and I’m trying to make new friends.

My wife and I have begun entering 5K races. There are a few reasons for us entering races, but mainly we want to be consistent in our running. Our biggest problem in life is that we are inconsistent and tend to not keep up with activities – leisure or otherwise. If we enter into races and pay the entry fees a month ahead of time, we feel we will be “forced” to follow through. It also encourages us to jog a few times a week so that we run each race in a respectable time. In between running I’ve been biking in order to give my joints a rest, but still get some exercise in. For my wife and I, running is a way for us to stay in shape as well as make time to take care of ourselves and realize we need to take time out for us.

I’ve also recently started playing soccer again. I’ve been kicking the soccer ball around the park lately and have realized how much I miss it. Being proactive, I joined a team and our first game was last night. In the past, I would have easily given my present performance on the field a big thumbs down, but I’m trying to be easier on myself and enjoy everything instead of taking myself so seriously that activities ceases to be fun. My team lost, but I was able to cut myself a break and concede that my performance was okay considering I haven’t played in two years. Oh, and did I mention I scored a goal?

Soccer is a great way for me to relieve stress, but I hope it leads to friendships. Slowly but surely I’m trying to make new friends. Over the past few years, I’ve had friends that I’ve had since childhood go their separate ways. I think it was more a matter of growing apart than anything else. Right now I look forward to meeting people with similar interests. I recently met a fellow throughLinkedin (a professional networking website). He is involved in an MLM company and he had contacted me to see if I was interested in joining his group. I spoke with him over the phone and eventually met him at Starbucks. While I did not join his organization, he earned my respect after my speaking with him. We both have a similar passion for bettering our situations and being financially free.

While these are all small strides I am taking, I think it’s important to acknowledge that I need balance on my life. I also would like to note that while financial goals and aspirations are important, if you don’t take of yourself they are all for not.

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Posting Schedule

Posted by 29 May, 2008 (0) Comment

I have been testing out the waters as far as posting to this blog and I’ve come up with a schedule that gives me the opportunity to succeed. Often times, I tend to over extend myself and fall short of my goals. I plan to post every Thursday and Sunday night. Two days a week should be doable. I plan to have posts in reserve that’ll enable me to accomplish my goals in the event my schedule gets a little hectic.

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