60 Minutes piece on how speculation drove up oil

I'm sure everyone fondly remembers the days of $140 barrels of oil. A while back I wrote about Why does oil cost so much? At the time I discussed how I thought that political turmoil, low dollar and speculation were the causes of the drastic increase in the price of oil last year. Well 60 Minutes has a piece discussing the role that speculation played in increasing oils prices.

My Financial Story : Part 3 - College Do-Over, 3 More Years

This is the next entry in my multi-part personal financial story. In the first two parts I discussed my childhood years and my college years. Today I'll talk about my second try at college and the years around that.

After I graduated from college I found myself at home with no job prospects and several thousand dollars in debt. I bummed around for a month or two and felt sorry for myself. I eventually got a temporary job that lasted about a month, just to keep busy and make some sort of income. Eventually my Mom suggested that I might consider going back to college for further study and she generously offered to pay the tuition bill at the local state school. At the time tuition at the state school was around $2500 a year. I decided to get a second B.S. degree and this time I would study computer science.

This time around in school I applied myself to my studies. I got near perfect grades the entire time. I did all my homework and studied a good amount. I didn't goof off or party much if at all. I went to all my classes even if they were the early classes at 8:00 A.M. I applied myself and it showed in my grades.

I also worked part time during school. I worked on campus in computer labs the whole time I was in school. For a couple quarters I worked a second job at UPS. For those quarters I was taking a full time class load, working two jobs for around 30 hours a week and commuting around 45 minutes each way from school and back. I worked and saved money and I didn't gain debt and even managed to whittle down some of my credit card debt a little bit.

While I was in school I started checking the on campus career office to find work. I frequently checked for internship jobs related to my field. I also attended career fairs and actively applied for both summer and full time positions. I finally found a good internship job in the next state which I applied for and got. The job was nine months and paid very well at the time. I was making over $15 an hour and it was at a very good company. I managed to pay off all my credit card debts from that job and save a bit of money. Most of all however the internship job was very valuable work experience related to my career field.

After the internship I returned to school to finish off a few quarters of classes and get my second B.S. It took me about three years total to get my second degree. At the end of my studies I was actively applying for jobs in my career. I applied and interviewed for a couple positions at the company that I had my internship. I also applied for and got another job offer from a company in town. That internship directly resulted in me getting a full time job offer from my former internship employer.

In contrast to my first four year degree in college I applied myself and it paid off. In my second college degree I worked hard in school and got good grades. I actively sought and got an internship job directly related to my field. Ultimately I got a good job offer in my field and graduated with a job waiting for me.

My Financial Story : Part 2 - Four Years of College and financial errors

This is the second installment of a multi-part series on my own personal financial story. The first part of the series was about my childhood experiences with money. Today I will be talking about my experiences with money during college. I made many financial mistakes in college but I learned a lot from those errors.

When I got to college I had a relatively fixed budget and mostly fixed expenses. I had scholarships, grants and some loans to cover most of my expenses. My parents helped out some but their contribution was just one portion and less than my loans overall. I also worked on campus part time. Generally I had enough money coming in to cover all my needs plus a bit of spending money.

Like many people college was the first time that I had real experience handling my money myself and budgeting expenses and bills. I was probably an average college kid in this respect. I wasn't extremely irresponsible with my spending but I wasn't the most responsible either. I made sure to pay my housing bills and always fed myself. I only recall a couple times in college where I had was late paying a bill. I generally spend my college years living paycheck to paycheck and blowing any extra money that came my way and gradually accumulating debt.

College students are a major target for credit card companies. They push credit cards on students with easy applications and qualifications. I fell for this trap myself. I don't remember the circumstances of my first credit card application or why I got it for sure. However I do remember my first major purchase that I bought with credit. I bought a stereo receiver for about $250 and paid with my credit card. At the time I figured that I could just pay it off later but I'd have the stereo NOW and it seemed like having my cake and eating it too. I assumed I'd be making good money once I graduated so I was not at all worried about having some debt since I figured I'd just pay it off once I got a good job. Terms with over 20% interest didn't really frighten me and it didn't register in my mind how much it would cost me and I didn't know how long it would take to pay off with minimum payments.

Once you've started using credit cards its easy to keep using them more and more. I had my cool stereo and all I had to do was pay $20 a month to the credit card. So why not buy some CD's too since its just a few dollars more. Gradually I started deficit spending and putting more and more expenses on my credit card. In my Sophomore, Junior and Senior years I gradually partied more and screwed off more and more. That meant spending more money on things I didn't need and couldn't afford. A lot of that spending went on credit cards. I started drinking and smoking too. By my Junior year I was smoking a pack a day at about $2 per pack ( at the time). I stopped drinking and partying heavily by my Senior year. When I graduated my credit card debt was several thousand dollars and I had an addiction to cigarettes.

In addition to partying a bit I also goofed off. The majority of my goofing off was in front of a computer screen. In the early 1990's I discovered this thing called the "Internet". At the time the World Wide Web did not exist and the net consisted of green text on a black computer terminal screen. But even without fancy pictures there were fun games to play and interesting people from around the world to talk too. I spent more and more of my free time playing on the Internet terminals on campus. At one point I had over 2000 hours logged on one university mainframe. I got heavily involved in online games my Junior year and it was a heavy addiction which distracted from my studies.

The partying and goofing off didn't' help my studies either. My grades dropped and I didn't apply myself much. In my freshman year my GPA was around 3.7. But by the time I graduated my overall GPA was around 3.4-3.5 range. This is not bad at all, but I could have done better if I'd worked harder and applied myself more.

While my grades weren't that great, I did make good progress in my classes and degree completion. I had 15 credits from A.P. exams that gave me a step ahead in college. I decided on my major by my Sophomore year and I didn't change majors. I planned out my schedule quarter to quarter and I took the right classes at the right time. I only repeated one course in the entire four years due to a bad grade and never dropped or withdrew from a course due to grades. I managed to finish school with a B.S. in four years through good planning and avoid additional costs from extra unneeded quarters or years of school.

In my Junior year I started to question my choice in major. I wasn't that thrilled with the program and the topics and work never really 'clicked' for me as what I wanted to do for the rest of my life. I thought about switching majors for a while but with some consideration I decided to stick it out and finish my major. If I'd switched majors at that point I would have been in school 1-2 extra years or I could just spend the next year and finish in four years.

Most summers I went back home and bummed around all summer. I didn't work over the summers and I didn't work hard to try and find internships related to my field. The summer between my junior and senior year I stayed at school and worked on campus as a computer lab aid. It was OK pay for that type of job for the time but I had to pay rent and expenses so I really didn't come out ahead for the summer. Over four years of college I either didn't work summers or worked but didn't save any money. I didn't have any internships related to my field so I had no useful work experience for my resume.

When I graduated I had around $5000 in student loan debt and probably about that much or more in Credit card debt. I had no work experience had wasn't very interested in my chosen major field. The economy wasn't doing well at that point either.

While I was in the end of my senior year I got a "job" at a small start up software company. The company was ran by a man and his wife along with a partner. This was their first business venture and they were new to running a business. I took the job with the agreement that I would work primarily for a % of the eventual profits. I worked the end of my senior year and then most of the summer after graduation for them. They paid me some money to help with my bills but I don't think it ever amounted to more than $1000 or $2000 total. I don't believe the software title ever made a profit so I never saw anything from my % stake in it.

I attempted to find employment after graduation. I applied to a few companies and got little response. I think in total I received one polite rejection letter. I had no experience, ok grades and the economy was not well. Worst of all however was that I never really applied myself or tried very hard to find a job. I didn't apply to many places and I don't think I even looked far out of state for work. It was a half hearted attempt.

Through my college years I made several major errors that directly or indirectly impacted my financial success thereafter.

I started spending on credit cards and piled up credit card debt. I partied and goofed off too much which both increased my spending and hurt my grades. I failed to get any internship or other work experience related to my field of study. Then I took a profit sharing based job with a start up software company.

At the end of four years I ended up with a degree, over $5k in student loans, over $5k in credit cards and no prospects for employment. I returned to live with my parents at the end of the summer after I graduated.

My Financial Story : Part 1 - Important lessons of Childhood

A little over fifteen years ago I was 22 years old, unemployed, living with my parents and in debt with credit cards and student loans. Today I'm gainfully employed making over $100k, married, own my home as well as rental properties and we have a net worth over half a million dollars. I've made good progress in the past 15 years. Though I'm no Bill Gates or Oprah, I'm doing better than average. How did I get where I am and what shaped my journey? To understand my perspective I think its best to hear the entire story including all the mistakes and successes I've had along the way. Over the next few days I am going to write about my own personal financial story. I'm going to cover my own experiences with money from early childhood through present. Today I'll start with my childhood years.

I believe we learn our financial habits primarily from the example set by our parents. My parents set a very good example for me and taught me good money skills. Most of my financial story growing up through childhood was the various money lessons I learned.

When I was very young my first recollection of money was about saving. I remember being at the toy store and wanting to buy an item that cost more than my 50¢ allowance. My mother told me that if I wanted the toy I could save up my money from more than one allowance period and then buy it later. I think I must have been around 4-6 years old at the time.

Another strong lesson about money I learned a while later in childhood was from my father. I'm guessing I was around 8-10 years old. Dad had offered my sister and I some money to do some work around the house. If I recall right he offered to pay us the mighty sum of 75¢ each to do the job. The work turned out to be harder, more boring and time consuming than we thought. My sister and I wanted to quit and get paid at least partial payment for the work. However my Dad would not let us do half the job and he insisted that we finished the work we started per the agreement in order to get the pay. At the time we thought he as a heartless ogre but he knew what was right. I learned a few things from this. I learned that making money took hard work and I learned that you need to honor contracts.

In general my parents were always pretty frugal. My dad didn't buy new cars. We never bought expensive clothing and eating out was an infrequent treat. My parents didn't spoil us and the words "we can't afford that" were often used. Mom shopped for bargains and clipped coupons. My parents didn't carry credit card debts and I remember Dad being pretty against debt in general. I learned to control spending from my parents and they taught me that its not necessary to have new expensive stuff and keep up with the Jonses in order to be happy. However as a child at times I felt embarrassed by the run down old car we drove, my used bicycle or the off brand clothes I wore. I sometimes felt my parents were 'cheap'.

I grew up in a single income household. My mother didn't work when I was growing up and she was a stay at home mom. My Dad and uncle both worked in a skilled construction trade and were members of the union. They had a hard time finding work in the 1980's due to the economy. At times Dad worked only half of the year and he had to travel to other states for months at a time in order to find work at all. I saw how hard it was for him to keep a steady pay check when the economy got rough and I learned how work isn't something you can always count on. When Dad wasn't working our income was fairly low. We never wanted for any necessities. Thankfully we had no mortgage or consumer debt and our spending was low as well so we never really hurt from it but it was still a struggle for them to get by in those lean years. I learned the value of keeping spending and debts low.

Starting in the 1980's my parents invested in rental real estate properties. They bought rentals with a down payment and then carried mortgages on them which were paid by the rent income. Over the years they bought more properties. Generally this didn't net much cash flow at least initially and it was mostly a tax dodge and a long term investment. So many years went by that my Mom and Dad spent a lot of their spare time working on rentals and dealing with renters for little direct benefit. However gradually as time went by the rents kept going up and the mortgages stayed the same resulting in slowly increasing cash flow. Then after many years the mortgages were paid off one by one. Now in retirement my father has several rental properties all debt free providing him a significant annual income. I saw how well rental real estate can be as a long term investment and I saw exactly how much work and costs it can entail.

My parents always encouraged applying myself in school. I did well in school academically and somewhere along the line I learned that good grades and applying yourself in school are important for your future. Even though my parents were pretty frugal they did splurge on one item and bought us a personal home computer. At the time in the early 80's there were numerous 8-bit based computers being marketed to home consumers. My parents bought our family a computer and this played an important factor in my future career. I recall that a big part of the reason they bought it for us was so that it could be used to help our education.

When I got into high school I started to compete in academic competitions. This was mostly for fun and as an extra curricular activity. Some of the competitions actually had cash prizes. In my junior and senior years I won several hundred dollars in regional and state academic competitions.

Pretty early I decided I wanted to become an engineer. This decision was mostly based on my interests and aptitudes and it was mostly a happy coincidence that engineering jobs are paid well. My parents never pushed any particular direction me career wise but they encouraged that I look at jobs with good demand and earnings. I joined the Explorer scouts in high school and I learned about careers in engineering. One evening after the meeting I was waiting in the parking lot for my Mom to pick me up with some other kids. We saw a Porsche in the parking lot. One of the engineers from the program came by and saw us admiring the car and he told us how his coworker had bought it with cash.

I knew that my parents didn't have a lot of money and really hadn't had a chance to save towards my college education. It was clear that I'd have to get scholarships and/or financial aid in order to afford college. I applied to about seven schools and got scholarships and substantial aid packages from most of them. Ultimately I was only able to afford two of the schools. One was a private school in my home town and the other was a large public school on the other side of the state. I could afford both schools given the scholarship and aid packages. I ended up choosing the public school since the loans would be lower and it was out of town. So off I went to college where my first real dealings with personal finance started.

In my childhood I learned a lot of important very lessons about money: I learned the value of saving. I learned the value of hard work. I saw directly how low expenses are important in tough times. I learned frugality from my parents. I saw how rental real estate can be a very successful long term investment.

In the next part of my personal financial story I'll talk about my money experiences in my college years.