If you’ve been listening to the media lately you may have heard something about the Hindenburg Omen. It sounds kind of ominous, and I guess it should because it predicts a severe market crash. The Omen has been behind every market crash since 1987, but significant stock-market declines have followed only 25% of the time. So there’s a high likelihood that the Omen could be nothing more than a false signal.

Who is Behind This Technical Indicator?

The Hindenburg Omen (not originally given that name) was dreamed up by Jim Miekka, a blind mathematician who edits a newsletter called the Sudbury Bull & Bear Report. Though Miekka put this out there a number of decades ago, it stems from an indicator called the High Low Logic Index, which Norman Fosback, editor of Fosback’s Fund Forecaster, devised in the 1970s.

Miekka himself likens the appearance of the Hindenburg Omen to a funnel cloud sighting. Not all funnel clouds turn into tornadoes, but all tornadoes come from a funnel cloud. So, if you see a funnel, there’s a strong possibility of a tornado forming. He says the omen is the same, and while it may not mean a devastating market crash is certain, but it’s like an ominous storm cloud that signal a crash is possible.

The market saw the Hindenburg Omen tripped back on August 12, and again just last Friday (August 20). Because of this, Miekka acknowledged he has pulled out of stocks entirely.

How the Hindenburg Omen is Calculated

The Hindenburg Omen is calculated using data from the Wall Street Journal. It makes sense to use one data source so that you’re comparing apples to apples, but other sources can be used. The criteria for the Hindenburg Omen is:

1. The daily number of NYSE new 52 week highs and the daily number of new 52 week lows are both greater than or equal to 2.8 percent (typically, 84) of the sum of NYSE issues that advance or decline that day (typically, around 3000).
2. The NYSE index is greater in value than it was 50 trading days ago. Originally, this was expressed as a rising 10 week moving average, but the new rule is more relevant to the daily data used to look at new highs and lows.
3. The McClellan Oscillator is negative on the same day.
4. New 52 week highs cannot be more than twice the new 52 week lows (though new 52 week lows may be more than double new highs).

What Do You Think?

So, where do you stand? Is this just a fancy way to play with numbers and get the media buzzing, or is there some still unknown science behind this that means we should really buckle up for a rough ride? Personally, I’m a bit torn. On one hand it’s hard to deny the fact that the omen was behind the market crashes in recent history, but at the same time it has only accurately predicted significant crashes 25% of the time. So, this may certainly mean we’re in for a downturn, there’s also a greater possibility based on historical accuracy that it won’t indicate a full-blown crash.

The real problem is that things like this often turn into a self-fulfilling prophecy. A relatively benign technical indicator shows up and people start talking about it. Then more people begin believing what it is predicting, so they start selling off their stock. This creates downward pressure in the market that just reinforces the fears that others might have, so they too sell. Before you know it, a snowball effect has started and in the end people make the omen come true on their own. We all know how irrational most investors can be, so that’s the real danger in my opinion.

About the Author: Jeremy is a retirement planning specialist and founder of Generation X Finance and the guide to Financial Planning at About.com. To learn more, follow Jeremy on Twitter.

Poll: What’s Your Take on the Hindenburg Omen?

We’ve come a long way in just a few years. Not long ago banking consisted of having a local branch that you used and the idea of mobile banking was to use an ATM or your debit card. Then, we saw a flood of what were considered online banks hit the market in the past few years. Banks such as FNBO Direct and ING hit the web and in a sense created virtual banks. Instead of using a branch you managed your money entirely on the web and money magically changed hands electronically. In addition, even the typical brick and mortar banks have now added a wealth of online banking tools that allow you to do almost all of your banking from the comfort of your computer 24 hours a day.

Now banks are taking things one step further with mobile banking. Instead of relying on your computer, many banks now have the capabilities to allow you to transact bank business right from your cell phone. In its earliest form this was little more than receiving text alerts regarding account status, but today you can actually send text messages to your bank and instruct it to provide a balance, transfer funds, or even pay a bill. Forget to pay the cable bill before heading out on a camping vacation? Pay it on the road with your phone!

Beyond banking by text, the popularity of powerful web-based phones has also introduced full mobile versions of a bank’s online banking site. With the ability to surf the web from your phone you can essentially get everything in the palm of your hand that used to take a computer. Some banks have even gone as far as creating custom iPhone or Android apps specifically for their banking platform. This makes it incredibly easy to stay on top of your money at any time.

Mobile Banking Risks

Although this can be a useful feature, do you trust that your information is secure? This is one area that is still somewhat up in the air. Granted, banks typically use secure and/or encrypted transmission methods when dealing with information over the web, but given you’re using a cell phone that’s broadcasting packets of information through the air can you be certain that the information isn’t being picked up elsewhere and somehow exposed by someone else? While experts suggest this is unlikely, hackers are always finding ways.

But what’s even more of an issue are phones that utilize WiFi. You may not think twice about it, but if you frequent a coffee shop or something that has an open and free wireless connection and your phone decides to use it, that banking app running in the background could be transmitting data that someone can get their hands on.

Or what about if you just use your mobile browser to login to your bank and have the login/password automatically saved? If you lose your phone or even leave it unattended and don’t have the phone locked down someone could easily pick it up and get into your account, or at the very least get some personal information.

Do You Use Mobile Banking?

Given how convenient mobile banking can be it’s no wonder people are quick to use it. I’ve done some mobile banking myself, but usually it’s just to get a quick balance when I’m not around a computer and don’t feel like waiting on hold. I also like the text alerts that Chase has where you can monitor your accounts and set alerts when they fall below a certain amount. I tested this last week and I set an alert to notify me when a checking account went under $500. I moved money around so that the balance in that account was about $550 and then went grocery shopping. The total came to about $80 so I swiped that debit card so that it would put me under my alert limit. Amazingly enough, my cell phone buzzed with a text alert from Chase before my groceries were even bagged! I thought that was pretty handy.

So, what about you? Are you a fan of mobile banking or are you a little uneasy about conducting financial business wirelessly from the palm of your hand?

About the Author: Jeremy is a retirement planning specialist and founder of Generation X Finance and the guide to Financial Planning at About.com. To learn more, follow Jeremy on Twitter.

Poll: Do You Use Mobile Banking?

Can you believe what mortgage rates are these days? As of this post Bankrate shows a 30-year fixed at around 4.6% and a 15-year down to almost 4%. That’s pretty amazing when you think about what rates were just five years ago. Back then you were probably looking at rates closer to 7%. So, all this mortgage rate talk in the news has a lot of people thinking about refinancing their mortgage. I just wrote about that yesterday and made an argument that even though rates may be much lower today than your current rate it still might not be beneficial to refinance.

I know firsthand. We are stuck with two mortgages right now and it doesn’t make much sense to refinance either one. On our old house that we’re trying to sell we’re paying 6.75%. That sucks, and while a lower rate would certainly trim some money from the monthly payment, the few thousand we’d be paying up-front to do the refinance and/or the points we’d initially be paying would be a waste if the house does sell inside of a couple years before we break even. So, it’s a bit of a gamble. If it takes a long time for the house to sell, we may still come out ahead. If the house sells in the coming months we could lose out on some money.

Then we have our current house which was purchased less than a year ago. Rates were pretty good last year and we got this one for 5.25%. Even though it’s good, I’d love to be paying 70 fewer basis points to be sure. Even if we were able to get one of the lowest rates the savings would only be about $50-60/month, which stretches out the break even point pretty far. But there’s a good chance the numbers wouldn’t work out to show enough equity for a traditional refinance anyway given the wonderful Michigan real estate market.

So, I get to sit on the sidelines while people are taking advantage of these record low rates. What about you? Are these low rates getting you to think about refinancing, or have you already?

About the Author: Jeremy is a retirement planning specialist and founder of Generation X Finance and the guide to Financial Planning at About.com. To learn more, follow Jeremy on Twitter.

Poll: Are You Thinking About Refinancing Your Mortgage?

For those of us who don’t live in a city with public transportation, owning a car and paying for gas is usually a necessity. Thankfully, gas prices have remained relatively stable over the past year and we haven’t seen the crazy prices of just a few summers ago. Even so, gas isn’t cheap and it can take up a pretty large chunk of the monthly budget. Since buying gas often becomes a weekly routine it’s easy to forget about how much it’s actually costing. So, I wanted to see what other people are typically paying and compare it to what we are paying each month.

So, I went to my favorite financial spending site Bundle and pulled up the latest information on gas spending. To give me a more accurate picture to compare my personal spending data to I set the filters to show data for those who are married and have kids and were in my age group. After loading my location and the entire U.S. here’s what I found (click the image to go directly to the data):

The national average for gas spending is about $220 a month and married couples my age with kids tend to spend about $250. That’s interesting, but how does my personal gas spending stack up? Unfortunately, we’re above average, even for our particular location. We typically spend right around $275-$290 each month on gas. It makes sense that people in our area spend more than the national average because it’s one of the most rural counties in the state. Most people are driving 10-30 miles each way just to get to and from work and most residents will have to drive upwards of a half hour to forty-five minutes away just to find the nearest major shopping center. Combine the long distances with a large population of farming families and the tremendous snow in the winter and you have a lot of four-wheel drive vehicles on the road using up even more gas.

So, that brings me to today’s poll question. How much do you spend on gas each month? The numbers can be interesting, but they are even more useful when you compare them directly to similar households in your specific location. So, I encourage you to head over to Bundle and enter in your location and similar demographics to see how well you compare. But for the sake of the poll below I think it would be interesting just to see the range of gas spending among readers. If you plugged in your own data and found something interesting please share below in the comments!

About the Author: Jeremy is a retirement planning specialist and founder of Generation X Finance and the guide to Financial Planning at About.com. To learn more, follow Jeremy on Twitter.

Poll: How Much Do You Spend on Gas Each Month?

Utilities are a part of life for almost everyone. Whether you own or rent, you’re responsible for paying for utilities such as electricity, gas, water, sewer, etc. Granted, renters occasionally find leases where some or all utilities are included, but ultimately you’re still paying for them as they are tied into the monthly rent. For those of you who do have to pay for utilities each month based on what you use, how much of your monthly budget is going toward keeping the lights on?

I’m a fan of statistics and love poking around with numbers to see what people are spending their money on and how I compare, so the other day I was looking at the U.S. average in utility spending. So, I hopped over to Bundle to take a look at the total U.S. average. Here are the results encompassing all age and income groups.

Average U.S. Utility Spending: March 2010

As you can see, there’s quite a range. Low spenders are getting by on just $30 a month while others are spending over $400. The average household is spending around $200 and the median household is at $115 a month. It also reflects that people on average are spending 5% of their monthly budget on utilities.

That’s interesting, but where do I fit? That’s what I was curious about after receiving our latest electric and gas bills. Here’s our average monthly utility breakdown:

• Electricity – $65
• Gas – $40
• Sewer – $23

That brings our total to about $128 a month. Of course the electric and gas numbers are averages and they do fluctuate with the seasons. But for us, in the summer when we run the AC but aren’t running the heat, the electric bill may go up to about $90 and the gas may drop to $20 and in the winter the electric bill drops quite a bit while the gas bill goes up. In the end, it tends to average out as a whole. We also have a well so there’s no bill for city water.

So, given our current utility spending it is comforting to know that we are right in the meaty part of the curve. Considering we have long cold winters, some hot months during the summer, and a reasonably large house to maintain it looks like our energy costs are actually pretty good.

Now it’s your turn. How do your utility bills stack up? Does it seem like you’re paying a lot more than you should be? Once you compare yourself to the national average above, be sure to change the data to compare it with your specific location which can give you a far more accurate pictures and put your costs in perspective with your neighbors. For the sake of the poll below, just try to ballpark an average monthly number since there are obviously extremes from one season to the other. And only include things such as electricity, gas, sewer, water, etc. Don’t include things like cable, internet, phone service, etc.

About the Author: Jeremy is a retirement planning specialist and founder of Generation X Finance and the guide to Financial Planning at About.com. To learn more, follow Jeremy on Twitter.

Poll: How Much Do You Spend on Utilities Each Month?

For most homeowners a mortgage is just a fact of life. You get a loan and then make monthly payments for what seems like an eternity. It’s not all that bad because it does put a roof over your head and you’re using leverage to buy something that could otherwise take decades to save up for and you may even get a nice little tax break or two. But in the end, a typical 30-year mortgage is incredibly expensive.

Take a simple $175,000 loan at 5% over thirty years. Over the life of the loan you’ll pay nearly $165,000 in interest alone. Even if it’s spread out over three decades, that’s a lot of money. There’s always the option of refinancing, but that often reduces your monthly payment just a little and then extends your loan even further into the future. The good news is that with low refinance mortgage rates you can save more now than you could in the past. One way people save is by opting for a shorter term loan like a 15-year mortgage. You pay off the loan in half the time, save about half the interest otherwise spent on a 30-year, but the monthly payment goes up quite a bit. This can be a problem when you run into problems with income. That monthly payment can be hard to keep up with if you lose or have to change jobs.

So, how can you take a typical 30-year mortgage and still pay it off in less time, save money on interest, yet have the flexibility so that you might not be in such a bind if you have income trouble? Just make extra payments! As long as your loan doesn’t have a ridiculous prepayment penalty you can apply extra money to each of your monthly payments, make lump sum payments, or any combination of those and have it applied directly to the principal of your loan. This means you end up paying less interest and the loan gets paid off sooner. But how much can it really help?

Using the $175,000 loan at 5% example above, let’s say you make the equivalent of just one extra full payment each year. You might spread this out so you’re only paying an extra $80 each month or once a year make a lump sum payment for about $950 or so, but either way, if you do this every year you’ll shave about 4 years off of the loan and save yourself nearly $30,000 in interest! If you were to pay a flat $200 extra on each monthly payment for this loan you’d shave about 10 years and $60,000 off the loan! That’s certainly not chump change. And even if you don’t remain in the house for the life of the loan, remember, all this extra money is being applied to the principal and building equity. So even if you do have to sell after a few years that means even more money in your pocket when you do sell.

All that being said, I’m curious to see how many people are currently making extra payments on their mortgage. We’re making small added payments to our primary residence right now, but since we still have another house (and mortgage) we’re trying to sell it’s pretty tough to make the size payments we’d like. But as soon as we can free up that money I’d like to apply most of that to the current mortgage and be on track to pay off this house in just 10 years or so. So, what do you do?

About the Author: Jeremy is a retirement planning specialist and founder of Generation X Finance and the guide to Financial Planning at About.com. To learn more, follow Jeremy on Twitter.

Poll: Do You Pay Extra On Your Mortgage Each Month?

Where do you turn for financial advice? These days you have a lot of options. The traditional media feeds us money advice 24/7, there are hundreds of personal finance blogs such as this one offering tips and commentary, you still have friends and family to turn to, or maybe you don’t want to be bothered trying to learn it all and have a financial professional standing behind you. Whatever your choice for advice it’s important you do the right thing because it is your money we’re talking about.

A lot of people have started to take more interest in their finances and that’s a good thing. After all, the more you understand about how money works, where you spend it, and where you should invest it, the better off you’ll usually be. At the same time, it isn’t always necessary that you try to learn everything yourself. Tax laws, investing rules, and the state of the markets are constantly changing. Trying to stay up on everything can be a full time job. So, that’s why most of us usually turn to the media, websites, friends and family, or financial professionals for some help.

That’s exactly why I hired an accountant for my taxes a few years ago. I might be a finance guy and love dealing with money and writing about it on a daily basis, but when it comes to taxes I have to turn to someone else. I have a pretty good understanding of my tax situation but it’s one of those areas that I can’t keep up with all the changing tax laws and don’t deal with taxes on a regular basis so I can miss some key deductions or make some expensive tax planning mistakes.

So, where do you get your financial advice? I realize many people go to various sources for their advice so for this poll I’ve enabled multiple voting options. Feel free to share your thoughts because I think it will be interesting to see where people who read a site like this generally turn to for advice.

About the Author: Jeremy is a retirement planning specialist and founder of Generation X Finance and the guide to Financial Planning at About.com. To learn more, follow Jeremy on Twitter.

Poll: Where Do You Turn for Financial Advice

Most of us can’t do without a phone. It’s a connected world and having a phone in your pocket everywhere you go is just the way it is these days. Unfortunately, connectivity costs money. If you have a phone that does more than make calls there’s a good chance you’re spending more money on added data plans, text messages, and more. An even bigger money drain is when you have mobile phones and a traditional land line. A lot of people have started making the transition to become a mobile only household, but for a number of reasons a land line may still be important which is going to add to your total cost.

This topic came up because my wife and I just recently updated our phones and the financial implications were two-fold. First of all, we had to buy new phones which was an initial investment. But in the end we were combining our service with one company so it ultimately works out to a savings each month. As you might expect, since my work completely revolves around being online it’s very helpful to have a phone that allows the kind of internet connectivity that can make my life easier. Being able to quickly respond to emails, approve a comment, and share sites on social media. So, that means sticking to a smart phone. I had a BlackBerry before and while it was great, it just felt a little old-fashioned given some of the technology out there today.

So, that led us to the new HTC Incredible. An amazing phone to say the least and it’s leaps and bounds ahead of my BlackBerry. The problem is, they run $199 each. Ouch. That’s a pretty steep investment just to have a fancier phone, but it won’t be as bad as it looks. I can sell both of our BlackBerries on eBay and probably make about $150-$200. So, it should end up like we only had to buy one new phone. But the best part is the monthly savings by combining plans. Before, my wife and I were on different networks so we had two separate plans. It was king of ridiculous and our total bill each month approached $200. By both being on Verizon and getting a family plan we now get even more features and pay about $40 less each month. That is fairly significant as that’s nearly a $500 savings over a year. So, even though we invested in expensive new phones it will pay for itself  in just six months and from there the savings will continue to pile on.

How does that stack up against others? I was curious to see what people spend on phone service so I pulled up the most recent spending data on Bundle. It looks like the national average is $108/month with the biggest spenders dropping $235/month.

I played with the data a bit and was looking at what the difference is for married households and they obviously have a higher average, but only at $125. So, given the numbers I guess our phone spending isn’t far from the average. I guess if we had Vonage or another land line we’d probably have to tack on another $30-$50 a month which would put the numbers pretty high.

What do you spend each month for phone service? Do you feel it’s comparable to others? Let’s hear it. Have you ditched your land line? Are you dropping big bucks on an unlimited iPhone plan or do you get by with the bare minimum voice plan?

About the Author: Jeremy is a retirement planning specialist and founder of Generation X Finance and the guide to Financial Planning at About.com. To learn more, follow Jeremy on Twitter.

Poll: How Much Do You Spend on Phone Service?

Many families take an annual summer vacation to get away for a week or two. In some cases it’s just a quick trip up to the lake, while others make it a cross-country adventure. Whatever the vacation, it costs money. If you drive, it’s gas and maybe a rental car. If you fly, you obviously have airfare. And unless you own the place you’re staying or will be staying with relatives you have to worry about lodging costs and of course food.

So, with the typical expense of a family vacation and trying to dig out of this recession, are people scaling back on vacation plans this year? I talked a little bit about staycations earlier this year as I think a lot of people are looking for ways to save money, but I wonder how accurate that is. Some people seem to go on vacation whether they can afford to or not. Not the best financial move, but I can understand why some people feel they have to get away no matter what.

We don’t have a regular vacation routine or anything, but we did go to Florida this spring, but that was mainly for business. We did set a little time aside to see some sights, but the weather wasn’t very good. Other than that, we’ll probably head out to Kansas City this summer to visit my parents who recently moved out there and we’ve never been, so it should be fun. Plus it’s free lodging, so it’s frugal! But with a one-year old and another on the way it isn’t like we’re going to be up for any big adventures anyway.

What are your vacation plans this year and how have they changed, if at all, thanks to the economy?

About the Author: Jeremy is a retirement planning specialist and founder of Generation X Finance and the guide to Financial Planning at About.com. To learn more, follow Jeremy on Twitter.

Poll: Are Your Vacation Plans Different This Year?

And so it begins. For a number of weeks now the media has been obsessing over this milestone. When will we hit it? Is it a point of resistance and will it signal the start of a double-dip recession? Is it going to propel the bull market to new highs? So much speculation around a silly number, but we can’t help but pay attention to it. I guess it depends on how you view the market. If technical analysis matters, then surging over this level was a good sign. If you rely on fundamentals, then you couldn’t care less about what the Dow is at. And of course, you have the psychological effect. As meaningless as it may be, people see these big round numbers as some sort of milestone whether it means anything or not. It then often turns into a self-fulfilling prophecy as people react to the milestone.

It’s hard to believe, but I’ve been writing here for quite a while. In fact, I wrote a post back in October of 2006 when we hit the 12,000 milestone. At the time, it seemed like nothing but good times were ahead and the market was on an amazing rally. How did the world look in October of 2006? See for yourself:

As you can see, back in late 2006 most of us were comparing the market to what happened since about 2000 and the subsequent tech crash. Relatively speaking, 12,000 did look pretty good and people were obviously optimistic. But how did things really turn out after hitting that milestone?

Obviously, it wasn’t all rainbows and roses. While we did continue to rally another 15-20% in the next year you can see how quickly things turned south. On the way down we crossed 12,000 fast, 10,000 faster, and to almost everyone’s surprise, closed in on 6,000 all in a little over a year.

So, now what does this week’s 11,000 milestone look like? As you can probably see, it’s anyone’s guess, but it gives the media something to talk about. That being said, I’m curious to see what regular folks think about the state of the market these days. Are better times ahead? Is this all just a big fake out that’s going to turn into another recession? I want to know what you think.

About the Author: Jeremy is a retirement planning specialist and founder of Generation X Finance and the guide to Financial Planning at About.com. To learn more, follow Jeremy on Twitter.

Poll: The Dow at 11,000. Now What?