Feb

8

The Federal Reserve and the Banks are keeping Americans from being able to save. I recently got a “act quick” from Ameritrade. If I put $25,000 into a CD I could get 2.2%. Whoah, where do I sign-up.

Current savings rates for accounts under $10,000 are between 1.2 and 1.4%.

Inflation is currently over 5%. Putting your money into a savings account at these rates is not really an option. Given the volitility of the stock market I would not recommend putting your money there unless you have time to pay very close attention to it (which I have been doing, and it has been a fair amount of work.)

What are you supposed to do?

Well, if you have credit card debt start paying it off. With interest rates at outrageous levels (even for folks with good credit) paying off this debt is really a good investment.

Pay down your mortgage. Make payments towards the principle. Doing this can save you a ton of money.

Think about creating a pantry with a few months of food staples that you can rotate through. With rising food prices this is not a bad investment at the moment.

You can buy Series I savings bonds which are paying 3.36%.

Keep in mind it is always good to have a few months of living expenses in the bank. Just do not expect to get much of a return on that money.

 

Jan

6

We recently purchased a new car. Our credit is good. I had no doubt walking in that we would be approved and we were. If your credit is good you can borrow money.

Banks have begun lending to people and businesses that are a good credit risk. This is a good thing. People in debt are paying off their debts. This is a very good thing. Savings rates which were actually zero have dramatically gone up in the past 14 months. This is actually a good thing as banks are allowed to loan money based upon a multiplier (this is called leverage) based upon the deposits they have on  hand.  Manufacturing is up which is a good thing.

They call all this capitalism, something we have failed to practice in the last decade. 

On the flip-side. Most the banks have paid the government TARP money back. They have done this based upon these 0 interest rate loans that they invested back into the stock market that is now up. Unfortunately they still are holding many of these stocks. If the market takes another dip, guess what? We are back in the same boat.

The behavior of wall street is still reckless. We still have a mortgage crisis in both the commercial and residential sectors. This is not so good. We need to kick some ass and take names on this front.

We are still fighting and paying for two wars, this is not good.

Government deficits are out of control with no end in sight. To add to this we are between a rock and hard place in the respect that to get out of this mess for the next few years we need to keep spending more than we have. This is not good.

The biggest challenge we face is medicare and medicade expenditures. This is why healthcare reform is so damn important. The Democrats less the blue-dogs holding the party hostage actually have the 51 votes in Congress to pass real reform that will help us reign in costs in both the short term and for the future. Unfortunately the Democrats are too stupid to use reconciliation. They say doing so would take to long. Hmmmmmm, you mean like the Republicans did to you to get through tax cuts during the Bush administration when we were running two wars. They seemed to be able to do it pretty quick. For those of you with short memories Dick “Lucifer” Cheney cast the deciding vote to break the 50-50 deadlock. Hmmmmm, Tea-party people where was your outrage back then on this?

To be fair here are the republicans that voted no.

Olympia Snowe and Susan Collins of Maine,
Gordon Smith of Oregon,
Mike DeWine of Ohio and
Lincoln Chafee of Rhode Island.

Voting no on a tax cut in the midst of running two wars, low unemployment, and huge federal deficits is beyond insane. These five did the right thing. Three are out of office now. That was their reward. Only the Maine Senators remain. Obviously Maine has their head screwed on straight. Maybe when we stop voting people out of office for doing the hard but right thing more of our elected officials will be inclined to do the right thing.

Anyone that tells you that they are going to increase spending and lower taxes and it will all balance out is an idiot. Anyone that thinks that makes sense is an idiot. Maybe it is time that we stop listening to idiots.

Out #1 immediate priority is to drop unemployment back to pre meltdown levels. This will require more deficit spending but is needed. On the day we accomplish this the next priority is to have a tax increase that affects every American making more than the poverty level.

Yes, a tax increase!

We also need to cut federal spending and to take the excess and pay down our debt owned to foreign nations. The only way we are going to pull this off is to give the president line item veto like Clinton had. He was able to have 4 years of budget surpluses. It worked back then it will work again. He was the last president since Eisenhower that had budget surpluses.

It is time to pull our heads out and quit living on fantasy island. I am completely aligned with the tea-party on this one. But this includes all Americans and all of our elected officials irrespective of political party.

Once we pull our collective heads out many of you could go out to your vehicles and scrape off the bumper sticker that says “We are spending are children inheritance.”

Spending tomorrows money today screws future generations. It is not funny. It is selfish. It is immoral. Knock it off.

Dec

8

The AP reported that Consumer Credit fell by 3.51 billion in October. They went on to report that demand for revolving credit fell 9.3%. But, the number is even better as auto loans are included in this category and actually rose by 2.6%. Revolving credit has fallen for the past 13 months. (Source: NY Times Dec 8th, page B7)

The report implied that this trend could be a problem to the economy recovering I about fell over. Are you kidding?

Americans, you need to be commended for paying down your debt. Spend what you make and nothing more. In fact, you are saving more and this too is a good thing, as Banks actually get to loan X number of dollars based on the $$$ of deposits they have on hand. So actually, savings is good for our recovery!!!

While we are not close to being out of the woods, and I still think something smells funny with the banks , but, lets take a quick inventory of the good.

Last October we were in the face of a complete and total meltdown of the economy. At that time your government, both parties, stepped up to the plate and took steps to stop the bleeding.

After the Obama election our President and the Democratic party have continued working on this matter. Much work is still left, but…

- We have received back 500 billion of the 700 billion in TARP money.
- Americans are saving more
- Americans are shedding debt that is bad (credit cards!)

Our government has done what was needed to help a complete meltdown. Now, hopefully they will reapply this TARP money to stimulate job growth in meaningful and enduring ways, like building up green infrastructure and investing in education. Frankly the government has acted far more like capitalists than our captains of business and industry. Hopefully big business they will continue to become more responsible with their balance sheets.

The road to change is about being fiscally responsible, from the government down to each one of us. We have a long way to go, but we must continue this pattern of behavior in sustaining ways.

If we can get people back to work, we can soon begin paying down our deficit again, which if you recall President Clinton started doing during his administration.

Good work America. Keep it up.

Nov

22

I am still employed as are the vast statistical majority. But, jobs still needs to soon become a national priority. Done correctly, with the future in mind it is not going to be an easy problem to solve.

Why?

Our economy for the past decade has been fueled and supported largely on credit.

We can spend a book or two pointing fingers and laying blame, but I do not want to digress here. I do want to say that this is not a soley a Republican or Democratic created problem, a private business sector problem, an individual consumer problem. It is an American problem to which we are all responsible.

The only quick solution to the unemployment problem would be to go back to a debt based economy. This is not an option, this is the very reason we are in the mess we are in. In took us a long time to get into this position and it is not going to turn around over night.

…BUT…

With a little foresight there is great opportunity.

We are facing a crumbling national infrastructure; we are facing oil supply and dependency issues; we are facing global climate change; our education system has problems.

If you look closely at our history you will see a society that between both public and private investment was able to make a difference in so many areas at critical times within our Republic..  

How did the following come into existance:

- Current energy grid and natural gas pipelines

- State and National road system

- Phone, Cable, Cellular, Satellite infrastructure

- Air travel infrastructure

- Rail infrastructure

They came into being through a combination of both private and public involvement in building something that was sustainable and that had some longevity to it.

What does the America of the next twenty years look like? What is the national vision for our nation? Do we have one?

We have huge problems to face regarding …

- Healthcare

- Energy

- National Infrastructure (roads, bridges)

- National Security (manufacturing, internet, infrastructure)

- Global Climate

- Education

Each one of these represents an opportunity for job growth that can be fueled by cooperation by both the public and private sector.

Take health care as an example. In a 60-Minutes segment aired October 25th “Experts estimate that $60 billion is paid out in fake claims every year”.  [Statement pertaining directly to Medicare claims]

That is a lot of money. Figuring out how to stop this fraud will require people.

I smell jobs.

The passage of a health care bill that will allows millions of uninsured to have access to care (other than the overtaxed ER’s) is going to mean we need more health care infrastructure.

I smell jobs.

Reducing our dependence on foreign oil is going to mean great captial investment (both private and public) on our soil.

I smell jobs.

If we can see through the obstructionist lobbyists serving the needs of entrenched American business that seem unwilling to change. If we could actually get more Republicans like Olympia Snowe to start engaging in problem solving we can start creating some of these jobs.

Jobs create revenue. Revenue increases the tax base. We can then focus on reducing our national debt.

 

May

15

In my lifetime I never recall a Governor talking about succeeding from the Union. I find this just remarkable.

I do recall Govenor Wallace blocking the steps of the University of Alabama in an effort to stop two black students from registering. I also recall the showdown between him and Deputy Attorney General Nicholas Katzenbach (with the National Guard in tow, and Alabama State Troopers surrounding the building for George). George W. wisely backed down.

Maybe Rick P. needs to pull his head out and back down as well. 

Apr

22

Commercial: CITI
“If you are stuggling to make payments your credit card is here to help”

Who exactly are these jokers talking to?

Those of us that do not use credit card all that much?

–or–

The people that have a problem with credit they fed more and more credit to for years and now have jacked up their rates to over 30%?

Many people that carry balances have found their credit line slashed (not such a bad thing) and their monthly interest rates raised above 30%.

Credit card companies have a captive audience they can now feed upon like loan sharks for awhile. These organizations screwed you by providing you access to cheap credit. Now they are screwing you by charging you massive interest.

What does 30% interest look like on a 10,000 balance?

If you plan on paying off the card in 36 months it looks like this:
Monthly Payment: $424.52
Interest Paid: $5,287.57

Back when you had a 12% rate it would have cost you $332.14 a month to pay off the balance over three years.

If you continue to make the minimum monthly payment (4% per month on the unpaid balance) here is what that looks like
Payment Period: 10 years
Interest Paid: $13,949.00
Balance still owed after 10 years: $1630.60

You monthly payment at $10,000 is $400.00. The balance declines each month. But, the credit card company is counting on you to continue using your card to keep the balance at or around $10,000.

A serious question for you…

Are your planning on no longer using your card?

Welcome to financial slavery.

It is time to cut up those cards and start paying them off. If you can trasnfer the balance to a lower interest card do so. But pay it off. Even if you can get a 20% rate it will only cost you $371.64 to pay it off over 4 years. That saves you a bit over $50 a month.

You will find more information and a link to a free Excel spreadsheet you can use to figure out how to get out of credit card debt.
http://www.everydollarmatters.com/your_debt.php

 

Apr

19

I recently added a page talking about buying stocks on 2009. We all pretty much took a beating anywhere from 30-50%.

This does not mean we should completely abandon the market. When investing it is always prudent to take the long view. Warren Buffet does and it works for him.

But, I want to caution you. The medias mentality is still “day to day.” They advice us as if we are all mutual fund or hedge fund managers that need to show some substantial gain each quarter.

Anyhow, the objectives for being in the market for 2009 are…

  • Buy solid companies with solid futures
  • Preferably buy companies that consistantly pay dividends
  • Only commit money if you can afford to hold the security for 3 years or more
  • If your securities rise, put trade triggers in place to guarantee a profit. If you are interested in more of the details click here

    •  

    Mar

    3

    I often feel compelled to site statistics in my post. Mostly to address the disinformation we have been receiving from the media.

    The other day I stopped into our local Thriftway across from the park-n-ride. It is closing. A good business, run by good people. Some of the checkers were looking though a scrapbook of pictures telling stories. Real people, real lives. Sad.

    Recently my work had a big reduction in force. People I have known for more than a decade gone. Good people. Hard workers, families to support, people that depend on them. Sad.

    I go into my local Home Depot and McClendons hardware, both stores with great service in a time where service is usually an after-thought. Like most retail businesses they are struggling. Sad.

    I listen to baffoons at CPAC, publicly saying they hope our President and Congress fails. I wonder what America these people are living in. Good, hard working peoples lives have been turned upside-down by the greed of a few. They are worried about the end of capitalism? Maybe capitalism ended when our financial institutions took our money and turned their businesses into Casino’s?

    If you have the means, support your favorite stores. I am not talking about going into more consumer debt spending. I am saying if you have the resources maybe this is a good time to paint your living room, or treat yourself to dinner at your favorite local restaurant.

    Keep working for us Mr. President. Enough of us are with you that we can make a difference.

     

     

    Feb

    12

    How about if the Federal Government gave us a healthy tax credit for charitable giving. I am talking about for every dollar of giving, getting a .35 cent straight reduction off our taxes.

    In a time when there are going to be many in need this would be a great partnership between Washington and the People.

    Jan

    5

    This is a lifestyle change that is long term. I can tell you this from first hand experience. Once you start doing it, at least after the inital early struggle, you begin to find how free you feel, how much better you sleep at night.

    I am talking about managing your money in a manner that is free of debt. Living within your means.

    It is really great to turn on the TV and read people in the mainstream media now professing this philosophy. But the mainstream media is all about popular culture, and as such does not endure for long. It is merely a snapshot of the current status quo. This is not to say that the advice being pedaled right now is not good advice. Things like…

    - Spend no more than you make
    - Save some of what you make
    - Have a cash emergency fund
    - Keep at least three months minimum of living expenses in cash accounts
    - Save for your retirement
    - Do not use the equity in your home as a personal piggy bank
    - Credit card debt sucks

    But this is a lifestyle change you are making. The tightening of credit is going to force many to make this change whether they want to or not. Maybe it will help us to collectively realize that there is more to life than just collecting stuff. I hope this is the case.

    — keep looking »

    Blogroll