18 December 2018 FT — Articles to Read

18 December 2018


Question: According to MSN: Money, what are 40 money habits that can leave you broke?


China economists dare to disagree with Xi’s vision – Pg. 3

–          Unlike the largely anonymous summer carping about Mr Xi’s elimination of term limits in March, which positioned him to be president for life if he chooses, in recent weeks economists have argued publicly whether the president’s rapid centralization of power over the past six years would enhance or construct the next phase of development

–          Despite the most repressive political culminate in Beijing since the 1989 Tiananmen Square massacre put Deng’s reforms on hold for three years, an increasing number of Chinese economists have dared to disagree openly with policies associated with Mr Xi

–          Edmund Phelps, a Columbia professor and 2006 Nobel Prize winner for economics, added: “China needs broad innovation from ordinary people with the government can’t help much with that”

–          Such arguments have seemingly been bolstered by slower economic growth in China and Donald Trump’s punitive tariffs on Chinese exports, which have depressed market sentiment and business confidence.  As China’s stock markets declined a further 8% over the past three months, falling share prices forced many private sector companies to sell shares pledged as collateral against state bank loans


UK’s student funding is overdue radical reform – Pg. 8

–          The aim of bringing more students into higher education, via loans repaid on future salaries, was sell intentioned.  But the poor design of the system has resulted in rising costs and questionable outcomes from some graduates

–          The office for National Statistics announced it will put the long-term costs of student loans on to the government’s books.  That means 12.3bn (sterling) will be added to the annual deficit – wiping out much of the Treasury’s fiscal headroom and potentially breaching the chancellor’s “fiscal mandate” to keep borrowing under 2%

–          Student loans are higher as a percentage of the UK’s GDP than in comparable countries, such as Australia

–          The ONS will now separate the UK’s loan book into two: loans that will be repaid will be counted as genuine government lending, while those to be written off will be counted as government spending.  This clarity is welcome, if overdue


US financial stocks slide into bear territory as growth worries intensify – Pg. 17

–          The S&P 500 financial sector index fell as much as 0.9% yesterday as volatile trading, leaving it down almost 21% form a late January peak

–          Although the US economy has remained in robust shape, the bond market has already begun to anticipate a weaker picture for both growth and inflation.  Central to banks’ fortunes is the yield curve, which illustrates the differences between short-term and long-term borrowing costs

–          The yield on the benchmark 10-year US government bond has fallen from 3.25% in early November to 287% while the drop in the yield on the two-year Treasury has been cushioned by expectations that the US Federal Reserve will tomorrow raise its official interest for a fourth time this year

–          The gap between two-year and 10-year Treasury yields this month hit its narrowest since 2007


Answer: (1) Your App addiction (Prof Note: small dollars add to large dollars); (2) Not checking your credit report (Prof Note: Look what happens to mortgage rates with lower credit scores); (3) Having wine with dinner (Prof Note: a soft drink is often $3.00); (4) Leasing your car (Prof Note: There are cases to lease but remember that equity is not being built); (5) Ignoring your 401(k) match (Prof Note: “Free” money); (6) Going out for lunch; (7) Using store credit cards; (8) Overdrawing your account; (9) Keeping your gym membership; (10) Accepting bad checks; (11) Not having health insurance, (12) Ditching your change; (13) Not checking in with your partner; (14) Smoking cigarettes; (15) Signing up for a Premium auto loan; (16) Falling for a bait-and-switch (Prof Note: A 50% sale still means one is spending!); (17) Not using a budget; (18) Making impulse purchases; (19) Carrying credit card debt; (20) Paying yourself last; (21) Drinking fancy coffee; (22) Not keeping an emergency fund; (23) Buying groceries without a list; (24) Not tracking ‘invisible’ expenses; (25) Letting FOMO get the better of you; (26) Paying for monthly subscription services; (27) Splitting lunch with a friend; (28) Not automating your payments (Prof Note: NOOOOO…pay all bills with checks on a set schedule.  This way one does not lose track of expenses); (29) Keeping up with the Joneses; (30) Increasing your standard of living (Prof Note: Fight the creep!); (31) Window shopping; (32) Assuming life will always be like it is today; (33) Not keeping track of your cash flow; (34) Not asking for a raise; (35) Your brand loyalty; (36) Going to happy hour (Prof Note When I worked for Booz*Allen my boss came to me one day stating that it would help my career as a “Boozer” if I attended more social functions.  I explained to him that while I was happy for the advice, on a $35,00/year salary, a drink at a bar was at the cost of affording dinner.  When he understood the consequences, he never mentioned again and apologized for being insensitive); (37) Using an out-of-network ATM; (38) Not planning for expected needs; (39) Neglecting maintenance; (40) Not allowing yourself some wiggle room