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Here is just a quick rave for Progressive Insurance. I recently moved and I have been doing my best to update my address with all companies that I can remember I have an account with. When I went to update my address at Progressive Insurance, they noted that my move would result in my insurance premium dropping by about $50/ 6-month period. Just a few days after I changed my address, I noticed a pro-rated amount of of my overpayment being deposited back into my bank account. Thanks Progressive! I don’t know if other companies are as quick as you guys to return funds, but I must say that I am impressed with the speed that the funds were delivered back to me.

The other day my girlfriend and I went to this new restaurant up on Capitol Hill in Seattle called Boom Noodle. I had heard about it for quite some time and I wasn’t really sure what to expect. Fitting in with the Capitol Hill area, it was definitely a trendy restaurant. The design is really hard to explain. There was a lot of bright green in the surrounding colors. They also had the air ducts exposed in the ceiling. This seems to be a popular design these days.

The seating was a bit odd to me. They had these long, skinny tables that were about 20-30 feet in length. These were about the only option for seating unless you sat in the bar. To me, this reminded me of my days of eating in our school cafeteria. Just hope that you get sat next to some normal people because quarters are somewhat slow. We ended up going during a slow period, so this wasn’t an issue for us.

On the menu they had a wide variety of choices of dishes ranging from about $7.50 up to about $11.50. Their drinks ranged from about $7-$9. I ordered a beef yakisoba. It showed up within about five minutes of ordering and had a nice presentation. The portions were large as well. Although our waiter was a bit odd, I thought that we got a fair value for our money.

I am not sure if I would go to Boom Noodle any time soon, but I would say that I left satisfied.

Here is a map that was taken from the Seattle P-I.

I recently finished reading another book from the Seattle Public Library titled “What No One Ever Tells You About Investing in Real Estate” by Robert J Hill. As someone who would very much like to invest in real estate some day, I felt that this would be an interesting read. For the most part is was an interesting read. I would call it entertaining and informative.

This book, written by Robert J Hill, Esq, tells about many different real life situations that have happened to real life real estate investors. Some are horror stories that would make you never want to consider purchasing a home. Others give you a real life example of why you might want to purchase title insurance or any other product along those lines. Robert also threw enough real estate successes in there to convince you that maybe real estate investing could be the thing for you.

In this book , the author uses “real-life advice from 101 successful investors” to tell 112 different stories of things that they have had go right or wrong. Many of these stories came as submissions from his website realestatestories.com. Essentially, the author summarized the stories that the investors had given him, and then added his own personal comments and commentary. This made this book a very easy read. Because of the way the book is laid out with all the different stories, it makes it so that one can easily just pick it up and start reading right away without any need to refresh their memory.

Overall I really enjoyed this book. It was something that I could easily just pick up at any time and start reading. The author also put many major examples that clearly show that real estate investing can have some major pitfalls and is not all fun and games. I would highly recommend this book to someone who is thinking about getting into real estate investing, but doesn’t have the time to read a giant instruction manual. I feel my time was well spent reading this book.

As I was surfing the internet tonight I came across an issue that I had briefly read about earlier in the election system. What I came across was the official website for the “Fair Tax.” If my memory is correct, I recall a president candidate or two running with a major part of their platform being the “Fair Tax” system. According to the site, John Cox, Alan Keyes, Ron Paul and Mike Gravel all supported the Fair Tax. John McCain did not support the Fair Tax. Barack Obama and Hillary Clinton did not give and official answer one way or another. The official website can be found here.

Here is my official view of this proposed tax policy.

Under the Fair Tax system, there is no income tax. If you make $10/hour and work 80 hours during your pay period you will get a paycheck for $800, instead of the tax adjusted amount. The government has to get their money from somewhere though, and the Fair Tax system suggests that they should get it from sales taxes. The Fair Tax systems is actually entirely consumption based. Those who like to spend a lot of money will pay the most in taxes. Those who are savers will be rewarded by paying less in taxes. Compared to the current income tax based system, the Fair Tax would be the equivalent of a 23% income tax. Compared to a sales tax, the Fair Tax system would have a 30% sales tax.

Fairtax.org makes some compelling arguments for why a switch to this kind of system would be a good idea. Their main arguments are:

• Enables workers to keep entire paychecks
• Enables retirees to keep entire pensions
• Refunds in advance the tax on purchases of basic necessities
• Allows American products to compete fairly
• Brings transparency and accountability to tax policy
• Ensures Medicare and Social Security funding
• Closes all loopholes and brings fairness to taxation
• Abolishes the IRS

The people in favor of the Fair Tax feel that too much time money and confusion is spent each year attempting to file taxes. With a flat rate sales tax, this would cover all government expenses without all the confusion.

Some critics argue that the Fair Tax system would eliminate the deduction that is taken on interest payments on a home. Fairtax.org argues that since you will have more take home income this would offset the deduction that you would normally take. They also claim that “With the fair tax, mortgage interest rates fall by about 25 percent (about 1.75 points) as bank overhead falls.” Homes also become more affordable since “first-time buyers save for that down payment much faster, as savings are not taxed.”

The Fair Tax system has created what they call a “prebate.” This is essentially a prepayment by the government to offset the estimated amount of taxes that one would pay on essential goods and services. For example, a household with two adults and two children would receive a prebate of $537/month. This is based on the assumption that they will spend $28,000 on essential goods and services. Hawaii and Alaska oddly enough have a different prebate table, which actually result them receiving a greater amount in prebate money.

Some people argue that the prebate is pointless, and food and medicine items should just not be taxed. FairTax.org responds to this by saying, “the wealthy spend much more on unprepared food, clothing, housing, and medical care than do the poor. Exempting these goods, as many state sales taxes do, actually gives the wealthy a disproportionate benefit.” They also feel that “exempting one product or service, but not another, opens the door to the army of lobbyists and special interest groups that plague and distort our taxation system today.”

Although the system was designed to be free of loopholes, there is one that really stands out to me. The Fair Tax only taxes new goods. The theory behind this is that the item was taxed already when it was first purchased and should not be taxed a second time as a used item. Therefore, people who purchase used goods will not have to pay the tax. This could could have a couple of benefits/drawbacks. Poor people are more likely to buy used than the rich, and therefore will be saving 30% automatically on all used goods. At the same token, used goods could be sold at a 30% premium because it is common knowledge that these items aren’t going to be taxed, and therefore the missing tax gets passed on to the business owner in the form of higher profits. Having no tax on used items is something that would make any environmentalist happy. With a automatic 30% markdown on all used items, it would encourage people to buy used rather that new and would help to reduce consumption and encourage reusing old items.

Having no tax on used goods could have a major negative impact on companies though. Imagine a car manufacturer like Ford. Why would someone want to pay a 30% tax on a new $30,000 car ($9000 in taxes added on). The $30,000 car would actually cost $39,000 after taxes. It is a common theory that vehicles lose 20-25% of their value as soon as you drive them off the lot. At 20% we could conservatively say that the $30,000 car would be worth $24,000 not long after it was first purchased. Let’s say that the value drops by 20% by the end of the first year of ownership. Why would someone want to pay a $15,000 premium for a car that is a year newer? Remember that the slightly used car would not be taxed and the new one would. This would not make any sense at all from a consumer’s standpoint. I think that this Fair Tax system would have a very negative impact on big ticket item manufacturers.

I think one major advantage of the Fair Tax system is that it would help to reduce tax evasion and illegal immigrants. People can definitely evade taxes in this system by buying used goods, but there are times when you have to buy new goods. Food, medicine, motor oil and gasoline are some major items that quickly come to mind. The Fair Tax system would increase the amount of money that is put into the tax system by illegal immigrants. The system would also give a large incentive for illegal immigrants to become citizens. The prebate is given out to “all valid Social Security cardholders who are U.S. residents.” Illegal immigrants would not fall into this category and would not qualify for the prebate. They would be forced to either qualify for citizenship, or pay the 30% tax for food without a prebate.

Overall I think that the Fair Tax system has the potential to be an effective system. It has a few issues with it that could use a little more ironing out, but as our current tax system becomes more an more confusing I could see an increasing movement towards this type of system. For those who are interested in reading more about the Fair Tax, there is a book dedicated to the subject written by Neal Boortz and John Linder.

For a link to the official Fair Tax Act of 2007 – HR 25/S 1025 plain English summary, click here.

Overview: Target (TGT) is a large nationwide discount retailer. As of the end of the third quarter 2007 they had 1,591 stores nation wide. Of these stores, 210 were Super Targets. Since third quarter 2006, the company has built 97 new stores, an increase of 6.5%. Target has also had an increase of 34 Super Targets since Q3 of 2006. This is an increase of 19.3%. The Target corporation sells just about any type of household product imaginable from clothing to food to electronics. They have also supplemented their income with a strong credit card program. The company’s main competitor is Wal-Mart (WMT).

Review:

The Good: Target is a large well known company that is not going anywhere. They have a strong balance sheet and provide quality products to consumers. Target is a brand that consumers have come to know and trust for their everyday shopping needs.

Although Target competes with Wal-Mart, there are many people who despise Wal-Mart and have no problem paying a tiny bit more at a company that they feel has a better image. Many people feel that Wal-Mart exploits their workers and have other questionable business practices. Target makes a natural option for those who are opposed to shopping at Wal-Mart.

Their credit card program has been growing. Target currently offers a Target card through Visa. In comparing the 9 months ended for 2006 with 2007, the credit card contribution to earnings before taxes grew from $374 million to $463 million, a 23.8% gain. The company’s earnings before taxes as a whole for 9 months ended 2007 was $2,959 million. This means their credit card operations attribute to 15.6% of their total earnings. In contrast, credit card contributions to earnings before taxes were only 13.9% of total earnings. A strong credit card program like this means that they don’t need to rely solely on selling a ton of thinly margined items to turn a profit.

Within the company’s credit card business they have been highly effective in receiving their payments. As of Q3 2007, only 3.8% of accounts were over 60 days past due, and only 2.6% were over 90 days past due.

The company has had a share repurchase program in place since 2004. This is good for shareholders, because when the company retires shares of stock, they own a larger portion of the company. This will also help to boost earnings per share. In 2004 they initially declared they were going to repurchase $3 billion worth of shares. This number has grown to $8 billion in stock. To date they have repurchased $90.7 million shares of their stock for a total of $4.646 billion. This leaves about $3.3 billion left in repurchases.

Target pays a decent dividend which is currently yielding 1.05%. The past three quarters they have paid out $.14 per share.

The stock has slid from a recent high of $67.57 on October 5th, 2007 to its’ current price of $53.40. This is likely due largely in part to the fact that the economy didn’t have the strongest holiday quarter and investors have factored that into the stock’s price. Wal-Mart recently reported better than expected sales data which helped to push Target’s price up $1.18/share today. This good news from Wal-Mart comes at a convenient time for Target. Their Fiscal year for 2007 ends February 3rd, 2008. This means that that company should be releasing their annual report somewhat soon. Over the past few months the company has reaffirmed to investors that they should be meeting analyst expectations.

The Bad: The economy will play a large part in how Target performs over the long haul. They appear to have weathered the economic downturn fairly well, holding their stock price within the $60 - $65 range in 9 of the last 12 months, although the stock definitely took a turn for the worse when a lot of the negative economic news was starting to come out.

Although their credit card business has provided them with a boost in income, their net write offs as a percentage of average receivables increased from 4.8% for the 9 months ended 2006 to 5.7% for the 9 months ended 2007. The total net write-offs for each period increased from $215 million to $296 million, an increase of 37.8%.

A continued decline in the economy could create potential problems for their credit card program. If more and more people cannot repay their debts, then the company may have to write off even more bad accounts.

Rising costs of producing goods may cause the company to decrease margins in order to stay competitive with other companies, or increase prices to a point that consumers no longer want to buy their goods, or buy in less quantities.

Opinion: The main hindrances to Target’s growth are its’ increase in write-offs through its credit card program, and the fact that the economy has been going down the drain lately. They can’t really do a whole lot to turn the economy around, but they can affect bad debts and write-offs to a degree. If the economy is bad, they should make qualifying for their card a bit more difficult. If people with low credit scores typically have iffy payment history in a good economy, imagine what they will be like during the not so good times. If they are going to give credit to a barely qualified applicant, they should give a very low initial limit to therefore reduce the amount that these risky borrowers can default.

With Wal-Mart’s recent earnings surprise, it is possible that Target could follow suit, although they have been stating all along that they should be meeting and not exceeding analyst expectations. Either way this is good though considering the state of the economy. Now might be a good time for the company to reduce their rapid expansion. The economy is probably not ready for additional Target stores.

Rating:

Market Sector: The retail sector has been fairly weak as of late. I don’t really foresee that changing any time soon. Wal-Mart reported an earnings surprise, so that gives me a bit more confidence for this sector, but I am still a bit sketchy about how it will fare in the slower upcoming months.

Potential: This company is not going to be your four-bagger stock. Their price has tailed off over the past few months, but it could be due for a resurgence if good news is reported. Based on past trading history, it appears that it has hit a bottom of $50/share. Their lowest close was $48.08 on 1/4/2008. During that period, it spent a total of six trading days closing below $50. It closed below $50 three additional times, with the last being on 1/17/2008 at $49.94. Since its’ low on 1/4/08, the stock has gained 11%. $55 would be the next hurdle for it to get over, which I don’t really see happening in the near future, but this discounted price could be an excellent time to get in on this solid company. A return to $60 would be a nice 11% gain in addition to the dividends received.

Risk: There is a high risk that the economy could continue to fall and the company may not continue to grow as fast as investor expectations. This could lead to a sell-off and a reduction in price. It is fairly likely that this could happen over the course of the next few months. This could create excellent buying opportunities for this company at a discounted price. At a P/E of 15.64, which is slightly lower than Wal-Marts, I feel that anything below $50 is a great bargain.

Conclusion: 3.2 Target is a solid and sound company with a loyal customer base. The company has continued to expand operations, as well as participate in a large stock repurchase program. They also have a decent dividend to boot. The only thing keeping me from giving this company a higher rating right now is the fact that the economy is in such a worrisome condition. Poor economy = reduced consumer spending = reduced earnings for Target = depreciation in stock price. The short term outlook for this company might not be blue skies and rainbows, but over the long term an investor should benefit nicely with this stock in their portfolio.

I was at Barnes and Noble earlier today when I came across a “new” book written by Suze Orman. Now when I say that the book is new, I mean that it is new to me. The book has actually been out since March of 2005, so it is actually about three years old. Nevertheless, the information that is inside does not really change from year to year. For those of us who do not know who Suze Orman is, she writes articles for Yahoo! Finance and also has her own show on CNBC called the Suze Orman Show. Her specialty is personal finance.The book that I found was called The Money Book for the Young, Fabulous & Broke. The book is geared towards the younger generation who is in their twenties up until their early thirties. It is most directed to those who have accumulated a pile of debt going through college, and now that they are out they are struggling to make ends meet with a low paying job, high cost of living and endless debt. Even if you aren’t hopelessly in debt, a younger person can find this book to be especially beneficial. In this book, Suze covers a variety of topics over the course of 10 chapters and 360 pages.

Here is a summary of the table of contents:

1. Know the score (Credit scores)
2. Career moves
3. Give yourself credit (Get the most out of credit cards)
4. Making the grade on student debt
5. Save up
6. Retirement rules
7. Investing made easy
8. Big ticket purchase: Car
9. Big ticket purchase: Home
10. Love and money

The thing that I really liked about this book when I was browsing through it was how simple the author makes things seem. Suze puts all her points into really simple terms that people can relate to and understand, even if they have never taken a finance class before. If you or someone you know is going through a financial rough patch, this could be really helpful to get them to understand where the best places would be to put their money. Currently you can buy this book for only $6.25 at Abebooks.com