Everyone knows that clever accountants can manipulate numbers to make a company’s financial picture seem better or worse than it really is.   It probably happens a lot more than anyone realizes, but Groupon recently got blasted for doing so after they filed in early June to go public.  Apparently they used an unorthodox method called “adjusted consolidated segment operating income” to mask losses related to marketing and acquiring new subscribers.  CEO Andrew Mason argues that those are one-time expenses that will not continue once they end their current period of rapid expansion.

I’m not an accountant so I can’t really say for sure how common this practice is, but it does seem to go against common sense.  And when a company’s bottom line changes from a $60 million profit to a $420 million loss, I’d say that’s something investors would want to be aware of.

To all you accountants out there…is this a standard practice and nothing to worry about, or an example of shady accounting?

These are the types of things that drive me absolutely bonkers.   A New Jersey town reportedly spent $17,000 in court fees defending a $5 fee it charged for a compact disc of a local council meeting.

Tom Coulter filed a complaint with the New Jersey Government Record Council in October 2008, saying he should pay the actual cost of the CD to get the recording.

The state council this year sided with Coulter and found he should have paid about 96 cents.

Bridgewater paid more than $14,000 in legal fees defending the case. It had to pay $3,500 to Coulter for his legal fees and give him a $4.04 refund.

I don’t live in Bridgewater, or Somerset County for that matter, but I do live in New Jersey.  Is it just us?  Do other states deal with these things too?   Because NJ has some of the highest property taxes in the country and stories like this are a good reason why.

A little common sense could go a long way folks.

The other day I spotted an interesting headline on a NY Post article which suggested thin women earn significantly more than women who are are either average or overweight.

A study published by the Journal of Applied Psychology found that women who are 30 pounds below the average American woman’s weight earn $10,719 above the average salary.  Women who are 30 pounds overweight earn $9,873 less than the average, which means those 60 pounds could cost about $20,000 a year!

Interestingly, they found the exact opposite was true of men in the workplace.  Men who are overweight earn $7,775 above average while men who are underweight earn $8,436 less than average.

In your experience, do you think the study’s results ring true?

Is weight really a good indicator of job performance?  Or is this just a result of our culture’s views on what is considered beautiful or ideal?

Yahoo Finance/Bankrate had an interesting article on 6 money habits that are illegal.  Here is their Earth-shattering list…

1. Signing Someone Else’s Name on a Check.
2. Using Someone Else’s Identity to Obtain Credit
3. Lying on a Home Loan Application
4. Writing ‘Bad’ Checks
5. Copying U.S. Currency
6. Defacing U.S. Currency

Does anyone really question the illegal nature of these activities? 

Seriously, raise your hands if you think it is ok to write bad checks or steal someone’s identity to falsely obtain credit.  Anyone? 

Doesn’t everyone use their printer to make counterfeit money to spend?  I thought that was sound financial advice.  I mean, if anyone had told me that sort of thing was frowned upon…

Saving Money Today on the Web

Here’s a few carnivals that SMT was recently featured in…

http://www.budgetsaresexy.com/2010/08/best-of-money-carnival-sexty-two/  Editor’s Pick!!  Woo Hoo!

http://www.moneybeagle.com/2010/08/carnival-of-money-stories-august-2-2010.html

http://successfulgardens.com/2010/07/28/a-gardening-carnival-july-28-2010/

http://notmadeofmoney.com/blog/2010/08/yakezie-challenge-carnival-roundup.html

The NFL recently announced that the 2014 Super Bowl would be hosted by New York/New Jersey and played in the new stadium being built for the Giants and Jets.  If you’re not a sports fan you may not realize that although they are considered New York teams, both franchises actually play in Northern New Jersey. 

I live about 10 minutes away from the stadium and needless to say there has been a lot of excitement in the area ever since the announcement was made.  Everyone is talking about how much the local economy stands to gain by hosting the Super Bowl. 

Forgetting the fact that the event is still over 3 years away and no one knows where the economy will be by that time, my initial reaction was that it should give the local economy a nice boost.  After all, there will be 100,000 plus visitors staying at hotels, eating in restaurants and sports bars, using taxi or car rental services, and taking in other attractions during their stay.  Plus the state could benefit from increased collection of sales taxes, hotel fees, etc.

The story I heard on the local news claims that the Super Bowl will inject $550 million into the local economy.  But as I’ve since learned, most independent studies show these estimates to be grossly over-exaggerated.  In fact, a study completed by Robert Baade of Lake Forest College and Victor Matheson of Williams College found that on average Super Bowls only generate about one-fourth of the economic impact projected by the NFL and supporters. 

Now that is a pretty big difference ($550 million vs $137.5 million).  But why?

According to Baade and Matheson, the NFL bases its numbers on simple projections of money that will come in as a result of the Super Bowl.  But while that seems like a straightforward way of looking at it, you’ll soon realize that they are leaving out some rather important factors. 

First, there is the crowding-out effect in which locals who don’t want to deal with all of the hoopla simply take their business elsewhere.  They may decide to eat at home rather than dining out with rowdy football fans.  Or they may leave town altogether to be free of the traffic headaches and chaos that the Super Bowl brings with it.

Secondly, projections often overestimate the multiplier effect which is “the notion that direct spending increases induce additional rounds of spending due to increased incomes that occur as a result of additional spending.”

For example, let’s say an influx of customers leads to a record profit for the local sports bar.  The owner then spends that extra money fixing up his bar which benefits the local contractor.  The contractor uses that extra money to buy a new van from the local car dealership, who then has the money to…and so forth.  The initial round of spending multiplies and goes through the local economy again and again in a tidy, little circle.

But there may be significant leakages in the flow of payments.  For example, the hotel industry stands to gain a lot from 100,000 or so visitors to the area in need of a place to stay.  But if the hotel is a nationally owned chain then most of those profits are getting passed on to the shareholders and big wigs in the corporate offices, not the maids and bellhops who live in the neighborhood. 

Now in the end I still think hosting the Super Bowl could be good for the NY Metro area.  Although the added traffic might just kill me, I’m willing to accept 2 weeks of craziness if it really is a boon to the local economies. 

I’m just not convinced the impact will be anywhere near as great as being advertised.

Yesterday I came across an article titled 7 Stressors Sapping the Middle Class. It describes some of the main concerns that middle class families have in today’s economy.

1. Falling income.  This is one that I have experienced first hand.  My family took a major income hit when my wife quit her job to stay home with the kids and it was a tough adjustment.  And last year my company didn’t give out raises because of the bad economy.

2.  Reduced savings/net worth.  Our home’s value has dropped significantly since the housing bubble burst, and we have been forced to tap into savings a few times.

3.  High healthcare costs.  I feel this one too…I’m paying higher premiums for less coverage.  My plan’s deductibles have gone up and instead of covering 90% after deductibles they now only cover 80% in most cases.

4.  Child care/elder care expenses.  Since my wife stays home to raise the kids we don’t have to worry about day care.  Actually she stays home largely because day care is so expensive that it isn’t worth it because pretty much her whole salary would go to pay for it.

Elder care is on our minds a lot as my father-in-law’s health deteriorates.  We’ve moved him in with us and we’re trying to convert our garage into a bedroom for him but dealing with our town has been infuriating…I’ll save that post for another day.

5.  College costs.  My oldest is almost 6 so I have some time before I have to worry about her going off to college.  But with 3 kids to educate this will be a huge concern of mine in about 12 years.

6.  Housing Costs.  We bought our house in 2003 and fortunately we’re not upside down in our mortgage like some people we know.  But our original plan was to move after 5 years and that didn’t work out so well.  We were a two-income family with our first child on the way then.  Now we’re a single income family with 3 kids to feed.  And living in Northeast New Jersey is expensive both in housing costs and property taxes.  We’re thinking of moving to Central or South Jersey where it’s a little cheaper.

7.  False expectations.  Gone are the days where you stayed with a company for thirty or forty years and retired with a sizable pension and a gold watch.   Working hard and getting an education guarantee you nothing in today’s world.

What do you think?  What other concerns do you have?

I’m sick with a fever and my daughter is home from kindergarten with pneumonia so I’m kind of kicking back my feet a bit and catching up on some reading.  This morning I was browsing around the halls of Reddit when I noticed this fascinating article from New Scientist that claims Google pulls in half a BILLION dollars each year thanks to typos.

I have no idea if those numbers are accurate but I wouldn’t be surprised.  There’s a whole industry that revolves around typed in domain names.  “Domainers” as they’re sometimes called buy up lots of lots of domains with no intention at all of developing them into a website.  Instead they simply leave them “parked” and when visitors arrive at them all they see are a bunch of ads. 

The whole business model revolves around domains that are either:

1. Typos of well known sites. If you’re trying to visit Copyblogger.combut forget a “g” you’ll be taken to a site that consists solely of ads.  If your site becomes big enough you’ll start to see copycats trying to steal some of your traffic like this too.  

2. Keyword phrases that naturally get lots of searches and potential type in traffic.  For example, let’s say you are going to a show in Manhattan and you want to find a nice place to eat while you’re there.  You might open your browser and type in a phrase like “restaurantsinny.com”.  If you do you’ll be taken to another site with nothing but ads. 

When you click on any of the ads on these sites the owner gets paid.  And if they’re using AdSense ads then Google gets a cut too.

Now, historically Google has always demanded that AdSense publishers deliver unique, quality content.  In fact you could be denied participation in the program if your site isn’t up to snuff.

But with the launch of Google AdSense for Domains the Big G seems to have changed its tune.  There’s no content at all on these parked sites yet they are allowed into the club.  I guess half a billion dollars is too good to pass up…even for Google.