Credit Score Rant

I saw a friend post this link on facebook today. This quote basically sums up the post, "I've come to the realization that it's [credit score] complete bullshit."

I’m going to go ahead and second this guy’s thoughts. He lays out a lot of the points I would make myself. Basically, your current credit score, depending on how you handle your money is not an accurate reflection of your credibility as a borrower (not for me anyways). I say this because I have a shitty credit score (low 700’s on two, under 600 on one--and that’s the highest it’s been in years), even though I’m now making and saving more money than I ever have.

I have no student loans, no car loans, I basically don’t owe anyone anything. And that counts against me. The fact that I manage my money responsibly and avoid living beyond my means or accruing debt has done nothing to help my credit score. Black marks on my credit score include: an unpaid $175 early termination fee I refused to pay to Verizon on principle (which I eventually paid anyways), and which was eventually part of a class action lawsuit, which Verizon settled. And the fact that I have no credit cards. Can I get a credit card? Nope. Why? Because my credit score is low. Even my bank, who can see my deposits and the balance I carry, wouldn’t help me with a credit card. Yet, amazingly, I get tons of junk mail offering me credit cards. Which I apply for and get rejected. How am I still on these mailing lists? Idiots.

I've also heard that checking, or having people check your credit score counts as a negative mark against you. So trying to get a credit card is a negative thing, but not having one is also a negative thing? Perfect.

Part of me wants to say “fuck off” to the whole system, never have a credit card, and deal with everything in cash. That part of me is extremely unrealistic and would probably also own a gun, so instead I’m working to fix my credit score. Even though I don’t believe in it and I hate it.

(Full disclosure: I do have a credit card now, because I’m on my wife’s AMEX account. My unemployed wife who has a sparkling credit report and $25k in student loans. If anyone has connections in the education world in NYC, let us know...)

Ex-Employee Draft: The Brooklyn Lions

Tonight, on the heels of a frustrating, three-hour, last-minute meeting at my new job, I had a draft at 9:30pm. Of course, I also had dinner plans with my wife at our friend’s house, so when I arrived at 9pm, shoveled some healthy Mexican casserole into my face, grabbed a glass of wine and their laptop and took a seat to tune out for the next hour, my wife was not pleased. I had also missed the first three picks of the draft, which thankfully were not mine. Not a good start to a night of “investing.”

Approach: Frantic last-minute picking while trying to maintain the appearance of being sociable. No real vision as to the type of team I was building. Poor.

Draft Summary: I had pick number six in the draft and waited until after my first pick to review the draft rules, which let me know this wasn’t a point per reception (PPR) league. Which is unfortunate, since my first pick, Ray Rice, gets a nice bonus in that format. The top five went AP, Vick, Foster, Brady, Charles. So was left with Rice, Chris Johnson or a reach pick, like McFadden or a WR. Rice was the safe pick. On the way back I had no plan, but had waited forever in another draft to take a QB, so I grabbed Rivers. I went WR, WR, TE, WR after that, waiting to grab some value RB’s at the end.

I’m still not sure in what order to take your first five picks. In a format where you MUST play 2 RB, and there’s no PPR, they seem much more valuable and should probably have gone with 2 on my first two picks and waited to grab Matt Ryan or someone a few rounds later. And my gut says, “Don’t take a TE until the end!” Which I promptly ignore as soon as Antonio Gates is off the board.

Best get: My late round RB depth. Beanie Wells in the 7th round. I needed a 2nd RB and with Ryan Williams going down, he’s got a stranglehold in ARI. Reggie Bush in round 9 would be better if this were PPR, but if the Fins really try to make him a RB1 and he holds up, he’s a steal. And then Wells’ former timeshare partner, Tim Hightower in round 11 wasn’t bad for some extra RB depth.

Worst pick: Taking Phillip Rivers made me angry. I guess he’s fine, and when he hits Vincent Jackson for a TD, it’ll give me a great boost. When SD doesn’t score, I’m screwed. I basically punted DEF and Kicker.

Just missed: I really was hoping DeSean Jackson or Mike Wallace would fall to me in round 3. They didn’t. I would have been happier with Rice, Nicks/Jackson/Wallace and Matt Ryan. I also put off taking Felix Jones to take Dez Bryant. I wanted Jones, but thought he would fall in round six. I also just missed stealing Javon Ringer by four picks.

Team Outlook: I’m a little too dependant on the Chargers’ offense, and I’ve once again gambled on Dez Bryant and Kenny Britt. If the chargers produce and my young WR’s come through, I should make a good run at the title.

Level of team hatred: 40%, which is actually pretty low. I normally have a high level of self-loathing for my teams. Aside from the Rivers/Jackson back to back picks, I felt really good about who I was getting and where.

Football vs. Finance Outlook: The market was not kind to me today, luckily, I haven’t put the $1000 for this experiment in yet. So my real life investments took a hit, which in-turn kind of makes me feel like I “made money” by not having this $1000 in yet. Due to work and this draft, however, I did not learn anything about stocks or the market. I did read an article about a money market manager while taking a shit, though. I don’t think that counts.

Fantasy Football: The Setup

I’ll start by getting my $1000 fantasy football investment into action. To make this work, I need to use a trustworthy site that actually rewards paying winners with cash prizes. The four main sites I’ve seen used by fantasy football players are ESPN, Yahoo, NFL, and CBS. Of these, CBS has the best pay-to-play cash reward system (as the other three don’t really offer that option, and I haven’t found any better site for that). The only problem with CBS public leagues is that they only pay out 1st place. If I wasn't so lazy, I might search out a site that pays out the top three, thus offering a greater chance at seeing a return on my investment.

I’m already in five other leagues, one with work friends through Yahoo, one with high school friends through CBS, and three with college friends through ESPN. The breakdown of these leagues is as follows:

The Brooklyn Lions
Work Friends, Yahoo, 12 team league
Roster (QB, WR, WR, RB, RB, TE, non-QB Flex, K, D)
Cost: $100
Payouts: 1st - $670, 2nd - $300, 3rd - $100, $10 weekly high score winner x 13 weeks

Megatron & Bumblebee
High School Friends, CBS, 12 team league
Roster (QB, RB, RB, WR, WR, TE, K, D)
Cost: $100
Payout: 1st - $480, 2nd - $240, Best Record - $100

Yeezy Taught Me
College Friends (co-owned with two other people), ESPN, 20 team lifetime keeper league
Roster (QB, RB, WR, WR, TE, WR/TE, WR/RB, Flex, K, DL, DL, DL, DL, LB, LB, LB, CB, CB, S, S, DB, DP, DP)
Cost: $100
Payout: 1st - $600, 2nd - $400, 3rd - $400 (would be split three ways)

Bring On The Best
College Friends, ESPN, 20 team lifetime keeper league
Roster (QB, RB, WR, WR, WR/TE, TE, Flex, K, DL, DL, DL, DL, LB, LB, LB, CB, CB, S, S, DP)
Cost: $50
Payout: 1st - $600, 2nd - $400, 3rd - $200

Alligators Eating Swans
College Friends, ESPN, 20 team lifetime keeper league
Roster (QB, RB, WR, WR, TE, Flex, K, DL, DL, DL, DL, LB, LB, LB, CB, CB, S, S, DP)
Cost: $50
Payout: 1st - $600, 2nd - $400, 3rd - $200

So that’s approximately $400 already invested. I’m not going to duplicate that effort, since I count these teams and leagues as “acquired knowledge” and taking on ten brand-new teams would basically ruin my life. To fill out the remaining $600, I’ll be drafting six $100 CBS teams. Each of those teams will look something like this:

CBS, 12 teams
Roster (QB, RB, RB, WR, WR, WR/RB, TE, K, D)
Cost: $100
Payout: 1st - $600 (they only pay the winner)

For each team, I’ll take a slightly different approach, from WR-heavy investments, to RB-heavy, to QB-focused, all depending on my draft position. It also allows me to try different approaches for each team, which if this becomes a yearly event, will help me learn what’s most successful. Each of the other league also has slightly different scoring systems, which I won't really get into. But trust that I know the systems and the differences (unlike the differences between stocks I own).

If you look on CBS, you'll see they offer higher payouts and higher fees for leagues, but I figure my best bet is to play against people who have a low level of commitment ($100 fee instead of $300 means they might be less confident and less committed). Each league will give me a 1-in-12 shot at $600 (not counting the 20 team leagues). And I only need to win two leagues to finish ahead of the game. So the odds aren’t exactly in my favor.

Potential ROI: $6550
Potential Net Profit: $5550
Odds that’ll happen: 0%
Anticipated winnings: $1500
Anticipated Profit: $500
% gain: +50%

Even though I went to business school, I’m not really sure I’m using the right terms or ways to evaluate the success/risk of this investment. Maybe as I learn about the stock market my knowledge and assessment of the situation will improve. I should also monitor my “time” investment. Because if I spend 100 hours and only make $500, that’s not really a good use of my time.

Either way, I'm excited to have a reason to play 10+ fantasy football teams. I'd also like to apologize in advance to my new wife, who is already displeased with the amount of time I spend on fantasy sports.

Football vs. Finance

As a man who has recently gotten married, started a new job, and is preparing to start a family, it has become a priority to get a handle on my finances and start investing properly. Not only does it seem important, but it seems like a good way to turn a little bit of money into more money. I mean, how hard can it be to pick stocks? Buy low, sell high, right? That's a pretty easy principle.

I’ve been putting money into the market since just after it crashed in 2008. Prior to that, I had a 401k, which I basically ignored, and some CD’s, which made money at a painfully slow pace (1.5%). As those CDs matured, I decided, it was time to get into the stock game. I started out by buying stock in companies I like or believe in, trusting my gut instinct that a business will be successful in the long run. I also bought stock in a few companies recommended by my financial advisor. And overall, because the whole market went up after the crash, I did pretty well. I won big on a few picks (Valassis, Ford, Playboy) and went bust on more than a few (GM, Blockbuster, various penny stocks, like Spongetech, which I bought after seeing a commercial during a 2am airing of SportsCenter).

Riding the resurgence of the stock market had given me artificial confidence. During a time when you can’t help but make money in the market, I was making money in the market. And so I kept on buying stocks. And still am. Then last weekend I mentioned buying some stock to my financial advisor, who asked me something about the market cap or valuation or whatever and I realize, "I don't have a clue what he's talking about." It's at that point that it dawned on me: I have no business investing my own money.

Any gains I make by buying and selling stocks is purely luck. I had been relying on my non-existent knowledge of an increasingly complex marketplace to turn my meager wages into wealth. I had essentially been gambling with my savings, because to a degree that’s what investing is. You’re making a bet that something you buy now will be worth more in the future. If that happens, the bet pays off and you win. What I had been doing is playing craps without really understanding the rules. I was throwing my money on various numbers, rolling the dice and somehow winning more than losing.

In the midst of coming to terms with this, I also had a conversation with a friend who is three fantasy football leagues with me. Leagues that at times consume our lives. During this conversation I suggested that if we spent as much time researching companies and studying the market as we did thinking about building our fantasy football teams, we'd be rich. Sure, we would have a lot to learn, but if we treated it like a sport, maybe it would be fun.

Then I had a better idea.

Instead of investing in the market, maybe I should invest in fantasy football. When you play fantasy football, you’re “investing.” You’re betting that your knowledge of football, over the course of 17 weeks, will be superior to that of 11 other people. Your draft strategy, understanding of match-ups, and waiver wire work should ultimately put you in a position to be league champion, and thus take home the money. Why shouldn’t I be able to make money by “investing” in my fantasy football teams? I know way more about football than I do about finance.

And thus Football vs. Finance was born.

Before the start of the NFL season, I will invest $1000 in the stock market, and $1000 in fantasy football teams. I’ll spend a year with the investment, giving equal time to fantasy drafts and team management as to learning about the market, picking and moving stocks. And we’ll see, what’s a better investment strategy for building my family’s future wealth...football or finance?