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How Does Wal-Mart Make Any Money?

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Over the last few months, I’ve found myself going to Wal-Mart more and more for a variety of different items. This post may sound like a ringing endorsement of Wal-Mart over other stores in the market and while I do think that Wal-Mart beats much of the competition, understand that I shop at a wide variety of stores. So let’s get to the point…

My local Wal-Mart has a small grocery section where I can buy extremely inexpensive canned and boxed goods as well as some cold items like cheese for sandwiches and grated cheese for pasta. Despite the lower prices, the quality is as good as much of the other food stock available out there – in fact, I’d put Wal-Mart’s canned corn up against any of the major canned brands. It’s really good!

Then Wal-Mart has the clothing section. Losing 85 pounds over the last few months has allowed me to shift away from only being able to shop at the Casual Male XL stores and back into mainstream stores like Old Navy, GAP, and the outlet stores. But Wal-Mart beats all of these places in terms of pricing. I can spend $35 – $50 buying a pair of jeans at Old Navy or I can spend $15 to get a similar pair of jeans at Wal-Mart. Again, the quality is not in question (although the belt loops on every single one of my Old Navy jeans have snapped at one point or another). Wal-Mart sells a few brands of jeans including the Wrangler brand, which has undergone a transformation since the last time I wore their jeans more than a decade ago.

I purchased a new leather belt at Wal-Mart the other day. It cost me about $14. The same belt at an online retailer cost between $30 and $44 without including shipping. How can you not buy the damn belt at Wal-Mart for those prices?!

My local Wal-Mart has a large seasonal/holiday section and a decent sized household/homewares area, too. In the last year I’ve purchased pillowcases, cleaning detergent, luxury washcloths, a pedometer, DVDs, books, magazines, a bar stool, and even a car battery from Wal-Mart. Those who know me know that I’ve always been a critical shopper and that I go to great lengths to be sure that I’m getting the best quality item at the best possible price. Every single item that I named above (and countless others) are all for sale at Wal-Mart at prices that beat the competition.

Yes, I know that some people have a problem with the corporate structure at Wal-Mart and they claim that it destroys local businesses while others have a problem with their non-union workforce. I understand those concerns and, in some areas, I may agree with the issues raised by malcontents. On the other hand, Wal-Mart has been a corporate leader in the environmentally-friendly movement to the surprise of many. Plus, they bring jobs to populations (geographic and physical) that may not otherwise be employed. This is to be commended.

All of this being said, there are times when I walk into the Wal-Mart, retrieve certain items for purchase, and see that there are 2 cashiers on duty each with 15 people in line. At that point, I always put down my items and leave the store. Good prices on good quality items does not give a store the right to make their customers wait in obscenely long and unnecessary lines. Big box places like Wal-Mart and Home Depot have grown too dependent on the self-checkout lines, which I’ve blogged about in this space before.

To reiterate my first point above, I hate to sound like a cheerleader for any major corporation, but I’m a fan of shopping at Wal-Mart…for now. I feel obliged to add “for now” to that sentence because I used to be a fan of shopping at Circuit City until their prices skyrocketed. Same goes for Toys R Us and GAP. But for now, I find myself shopping at Wal-Mart for more and more items.

How to Fix the Major Automakers’ Dilemma

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Cut prices. That’s it. It’s a very simply solution, actually. Cut the prices of your vehicles so they are affordable during the current economic recession and tightening credit atmosphere and you’ll sell more product. Selling more product equals more income. More income equals a greater chance that your companies will see net revenues instead of deficits.

Is this stuff really that hard? Couldn’t any high school student educated in basic economics come up with a solution to the “problem” that the major automakers are facing? Hey, we can even get more in-depth about a solution and tell the automakers to cut expenses – a novel idea! Or how about this one? The automakers should be making more products that the consumers want to buy. Eureka! We’ve figured it out!!!

Seriously, it is a disgrace that the big three automakers are facing the problems that they are today. These companies deserve what they’re getting – they didn’t produce fuel efficient cars in mass quantities when the consumers demanded them as far back as ten years ago and are currently doing nothing to sell the excess quantities of their product. There are a lot of people out there (like me) who would LOVE to buy a new car. In fact, you could say that someone like me is constantly in the market to buy a new car.

But most of the people in my situation are realists. We know that we can buy a good used car that is only one or two years old for 60% – 75% of the price of the same model if it was brand new. Why would anyone pay the premium to purchase the new car in this economy? With all of the executives driving the buses at these companies (pardon the pun) can it be that none of them realize that they need to cut prices in order to stimulate sales? I’m a big fan of Chevrolet (and I have no idea why since I’ve paid more to have my Blazer fixed than the thing could ever be worth). I’d love to buy a 2009 Chevy Impala. Yahoo! Autos suggests that the model I would like to buy starts at $28,000 and that the 5-year cost to own this car is $52,000.

Why would I ever buy that car in today’s grim economy? Is there no one at Chevrolet who is looking at this and saying, “Hmmm… We need to fix this problem.” Better yet – do the people at Chevrolet even see this as a problem? Here’s why they should.

I can go to Enterprise Rent-a-Car and get a certified pre-owned (used) 2008 Chevy Impala for $15,000. Read that again. I can get a one-year old Impala for about HALF of what a new one costs.

How can you fix the problem that today’s automakers are facing? Simple. Cut prices and move product. If this doesn’t happen, then you and I better get ready to pay a little bit more in taxes because you know another government bailout won’t be too far behind.

“Significant” Progress on My Student Loans

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Regular readers of this blog will know that I am in some major student loan debt. As detailed in my front page USA Today article from June 2006, I graduated from Rutgers University with a Master of the Arts in Public Policy…and over $116,000 in student loan debt. For a young guy (I was 25 at the time that I graduated), this was almost like being handed a financial death sentence just as I was getting access into new doors of opportunity by virtue of my degree. Well, I’m here to report some type of “significant” progress on paying back my student loans.

When I graduated, I had some $49,000+ in NJHESAA loans (a private organization), $59,000+ in Direct Loans (loans from the US Department of Education), and more than $8,000 in a private student loan from CitiBank. Since graduation, I’ve completely paid back the CitiBank student loan and I’ve lowered my total outstanding loan balance to slightly more than $107,000. I’m not sure if someone would call this “significant” progress on paying back the student loans, but I think bringing down my overall balance by about $10,000 in two and a half years isn’t so bad! If I didn’t have to pay any of my other expenses, I could have had more than half of the loans paid off by now, but I’m satisfied with my progress.

My short-term goal is to break below $100,000 by March or April of 2009. I think this is completely doable so long as I continue to not have major automobile problems. If I have to buy a new car, then my goal will be to break $100,000 by the end of 2009. Getting below the six figure range will be a great mental victory in paying back these loans and I’m looking forward to it!

In any event, though, there’s a progress report on my student loan repayments. I’m doing a pretty good job of putting all of my available extra cash into paying down my student loan and not squandering it on unnecessary expenses. I win!

Was the Bailout the Right Move?

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No! Talk about making the wrong move. Not only is the American government taking an historic step in bailing out some of the greediest people in the history of the planet, they’re doing so with YOUR tax dollars! Better yet, one news agency is reporting that Americans, by a 90-to-1 margin, wanted nothing to do with the bailout bill. From the CBS News website, courtesy of Bob Schieffer:

Yet when Congress first confronted the issue early in the week and decided to do nothing, the vote told us that beyond Washington many Americans just didn’t see it that way.

The president, Democratic leaders, the two presidential candidates all called for immediate action. Yet some members of Congress told me their phone calls and e-mails were running 90-to-1 against the rescue plan.

Get it? Americans did NOT WANT this bailout plan! Everyday Americans did NOT NEED this bailout plan! People working for greedy organizations on Wall Street wanted the bailout and because money talks while (apparently) everyday Americans walk, they got what they wanted. It’s bull.

Americans need to take action on this disgusting bailout immediately.

This means that you, as a taxpaying citizen, need to demand the best from your legislators. They just took $700 billion of YOUR dollars to give to gigantic, multibillion dollar banks. Hold them accountable. If you’re so disgusted with the bailout bill then vote against anyone in your district who voted for it. Send a message. If you don’t want to go that route, then stay in touch with your elected leaders and make sure that they are exerting the proper amount of oversight and that they overseeing the funds in a way that YOU want them overseen.

Americans need to become re-engaged with their government. This is definitely the election year to do so. This bailout bill was unnecessary – greedy people had what they had coming to them and the government bailed them out. Where’s the bailout for student loans? Where’s the bailout for the Americans who CAN make their mortgage payments, but just barely? Why would ANYONE continue to make mortgage payments now that they know the government is there to pick up their slack?

Disgusting.

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The Bailout is Doomed

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Far be it from me to be the harbinger of bad omens, but this bailout stuff is going to fall flat on its face. Maybe not today and maybe not tomorrow, but sooner or later we’re going to look back on the bailout and be disgusted with the entire fiasco. Some observations…

Capitalism. What a country we live in, huh? You have the opportunity to do anything that you want in America. Some folks are fortunate that they are born into wealthier families and thus they have less financial pressures. Other people are born into highly religious families and they are usually happier and more content. Yet some still are born into poor families with strong family bonds and they learn the power of relationships. We have it all in America including an economy where you can either make it on your own (Bill Gates) or climb up the corporate ladder to find success. That’s what a capitalist system is based on!

But in a capitalist system, you can also fail. There are many reasons for failure, not the least of which is greed, deception, and bad decision-making. Many of the failing financial institutions were marred by these characteristics and – in a capitalist system – this will lead to failure. Whether it’s a loan officer who is closing a loan that he knows is not good for the borrower so he can make some extra income (greed), an internal manager who fudges the numbers so his bosses won’t get mad at him and his division for under-performing (deception), or a company hiring the wrong people to the wrong positions (bad decision-making) – this is what happens in our system!

And in a capitalist system when you fail – YOU FAIL. Imagine if the casinos in Atlantic City and Las Vegas gave you your money back after you blew it throughout the night. Unacceptable.

The Smell Test. I don’t know about you guys, but when I hear that the people who already proved that they are not good at running their organizations will be getting government dollars (i.e. taxpayer dollars) to bail their companies out, that pisses me off. This country was not founded on bailing out greedy scumbags with taxpayer dollars. In fact, you can make a case that taking money from taxpayers and using it for ignoble purposes is what spurred the American Revolution. What the hell am I paying taxes for? To pay the $20 million payout package of the CEO who failed at WaMu?

This bailout idea does not pass the smell test. How can you give money back to the people who squandered it? NO ONE in their right minds would do that! Would you give a murderer a gun while he’s in the courtroom? Good grief!

Consumer Debt. This one pisses me off the most. A portion of this $700 billion is supposed to go towards a housing trust fund to help bailout those mortgagees who are in over their heads. What a crock of shit this one is!

What about those people who have already lost their homes? How are they supposed to be helped from this bailout? They already lost in this game! What about those punks who knowingly went out there and bought up too much house for their income? They are to be rewarded for not living within their means?!? Well what the F is that all about!? Maybe I should go out and buy a million dollar mansion really quick since I know the taxpayers are about ready to pay it off for me.

And why are we only looking at mortgages? I heard a rumor that some of this bailout will be aimed at those with high consumer debt. So if you’ve overextended yourself with credit cards or other loans, you might not have to worry about making the payments! Do student loans fall into that category? I doubt it. What a bunch of bullshit that is??! I go out of my way to spend money on a venture that increases my knowledge and is a proven method of making society “better” (it’s a cost-benefit analysis thing) and yet I’m now being asked to spend MORE money for those who make bad decisions? Are you out of your f’ing mind?!

What if all of us who have ridiculous student loans start bitching and moaning? Will we get a bailout, too?

Artificial Timelines. Why does a bailout bill need to be reached by midnight tonight? Why does something need to be done before the markets open on Monday? This is crazy. The market will do what the market does. Do we really have to take $700 billion in taxpayer dollars and spend it on bailing out the system? NO!

This entire bailout thing is such a complete joke. There is no way to make everyone happy. The real shame, though, is that there are real people in this country who were duped into making the wrong decision and their situations are different. They are being lumped into this bailout mess and it’s not right. Those people who were out there scamming homeowners and new homeowners should be found and prosecuted to the greatest extent possible. It’s a disgrace.