Getting rich on a $20,000 salary
This 69-year-old parking-lot attendant used earnings from odd jobs to start investing. Now he coaches others on how they can invest.
Earl Crawley, 69, better known as Mr. Earl, earns $20,000 a year as a parking-lot attendant. But he has amassed a stock portfolio worth more than $500,000.
How did you get started investing?
Soon after I started working for Mercantile Bank in Baltimore 44 years ago, one of the bankers took me aside and told me I didn't have enough education to go very far at the bank. He suggested I invest in stocks.
Where did you get the money?
I did it with good old-fashioned nickels and dimes. My mother taught me how to budget, which made me appreciate how a little money can grow. I saved what I could from odd jobs, such as lawn cutting and window washing, that I did in addition to my day job. I used that money to buy one share of IBM (IBM, news, msgs)stock back in 1981, which cost $400.
How did you learn how to invest?
I really didn't know enough to be scared. In school I was considered a slow learner -- dyslexic, it's called now. My true gift from God is my ability to listen,and that's how I'm able to ask questions and use tips from the brokers, financial planners and bank customers I see every day.
Do you have a formula for picking stocks?
When I first started out, I had to be conservative and take my time because I couldn't afford to lose money.Now I look for companies with stability that pay dividends. I read the stock pages but don't claim to know everything about them. I have a broker, but many times I'll go where my spirit leads me.
Any stocks you're excited about now?
I've been buying shares of ExxonMobil (XOM, news,msgs).
We've heard that you're helping others invest.I started an investment club at my church. And I've been coaching a couple of young men, such as bar-and-grill cook Antawn Davenport and Dana Mouse Smith, who toured with the late rapper Tupac Shakur.They can help spread the message that people can do whatever they set their minds to do.
Crawley was interviewed by David Benjamin for Kiplinger's Personal Finance Magazine.
While house prices were soaring, fueled by low interest rates and risky borrowing practices, wages barely kept pace with inflation.
An Associated Press analysis of new census data provides insight into the reasons for the slumping housing market: Since 1990, homeowners have faced a growing gap between their incomes and the price oftheir homes.
The widening gap in all but a handful of the nation's500 largest cities helped make the recent boom in housing prices unsustainable, according to analysts.The rising prices were fueled largely by low interest rates and risky borrowing, rather than increasing incomes.
"We had an artificial economy," said Brad Geisen,founder of Foreclosure. com, a Web site that lists foreclosure properties. "There was all this wealth created in real estate, and it wasn't really created.
"Nationally, the median household income grew by about 60% from 1990 to 2006, roughly matching inflation. At the same time, the median home value -- the point at which half were more and half were less -- more than doubled, to $185,200.
The gap between incomes and home values was even bigger in many cities. For example, incomes in Miami roughly kept pace within flation -- meaning they were effectively stagnant --while the median home value quadrupled, to $315,900. In places such as Bend, Ore., and North Las Vegas,Nev., incomes about doubled, but home values increased fivefold.
Mark Zandi, chief economist at Moody's Economy.com,likened the current housing market to the dot-com boom and bust a few years ago, when stock prices for many high tech companies soared -- before some of them ever turned a profit -- and then crashed."The parallels are quite similar," Zandi said. The Census Bureau today released 2006 housing data forevery state, county, metro area and city with a population of at least 65,000. Income data were released last month.
Together, the figures provide a snapshot of the nation's economy just as housing prices were peaking in many areas. Since then, housing prices have decreased in many markets, fueled by a crisis in the subprime loan market and dwindling credit even forsome wealthier borrowers.
Long-term trends converge
The AP compared the 2006 figures with data from the1990 Census for the 499 cities that were included in both reports, providing an analysis of long-term trends that helped create today's housing slump. The analysis showed that homeowners in nearly every city are spending significantly bigger shares of their incomes on housing costs. From 1990 to 2006, the share spent on housing costs increased in all but 13 of the cities examined. Nationally, the share increased from 21% to nearly 25% for homeowners with a mortgage.
Many of the cities with large increases in home values were fast-growing cities or places with thriving economies. However, there were also large disparities in incomes and home values in some distressed cities,mainly because incomes effectively dropped.
Home ownership rates are among historic highs, at 67.3% nationally. And booming home values have increased wealth for many families, allowing them touse the equity in their homes to take out second and third mortgages to finance home improvements, pay for college or buy automobiles.
Dreams on hold
But many others who bought at the height of the market will have a harder time realizing their financial dreams.
Shawn Talbot and Gerry Woodruff bought a three-story condominium just outside San Diego in 2005, hoping to stay for about three years before trading up to a single-family home.
They were first-time homebuyers, paying $431,000 and financing it with two loans. They didn't have a downpayment, but they hoped the value would increase enough to give them a sizable one for their next house.
That dream is now on hold, as the market value of their condo is in flux. The couple both have good-paying jobs -- Talbot works for a trade association and Woodruff is a financial analyst for an aerospace company. But the median home value in San Diego was $579,000 in 2006, among the most expensive in the country.
"Houses out here are almost like a 401(k)," Talbot said in a telephone interview. "It grows and grows until you get older and you need it.
"But a year or so ago all that changed," she said."I'm not sure we will ever be able to afford a single-family home in San Diego."
Source : msn
Posts
