Reinke Faces Life

MONEY: Buy gold, euro collapse?

buy gold, euro – Money Week
http://www.moneyweek.com/file/3095/buy-gold-to-cash-in-on-unstable-euro.htm

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The euro, like any other paper currency, is an illusion. For a currency to work, people must suspend any belief that notes are worthless pieces of paper and have faith that these pieces of paper can be exchanged for valuable goods and services. That belief in turn rests on the faith that the value of paper money will be upheld by a government.

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And, we have this illusion here as well.

What happens when the nice Japanese workers stop sending us Toyotas for the little green pieces of paper? We really stuck it to them when they bought lots of US landmarks like Rockefeller Plaza (i.e.: home of radio city music all and the rockettes) last time.

We have seen hyper-inflation, stagflation, and the Japanese malaise. These are economic tsunamis destroying individual lives, nation states of varous sizes, and societies.

If it is truly a global economy … and I’m not sure that is so … consider that these economic epidemics often stop at the water’s edge … global outsourcing is coming home to roost as stuff is being brought back … then if the euro fiction falls, will the American version go with it? And, exactly what gets swept away with it?

So, if we are postulating the potential for a financial collapse, then what do we do about it. Like Y2K, it is easy to take some steps to prepare. There are two type of expenses in taking out “insurance”. We can divide the protective actions we are considering into (a) the things that are total losses (i.e., people who planned to hide out in rural retreats losing every thing spent on it) and (b) those things that can have other uses or are recoverable. To what extent the things we do make sense regardless of the financial weather.

What worked in the German hyper-inflation? What worked in the Carter stagflation? What worked in the Japanese malaise?

So we have some homework to do.

Wal-Mart to offer $4 generic prescription drugs

By ALISON BERT THE JOURNAL NEWS
Powered by Topix.net
(Original publication: September 21, 2006)

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Wal-Mart and Sam’s Club pharmacies will offer 291 generic prescription medicines for $4, the company announced this morning.

The program, which begins in Tampa, Fla., today and in the rest of Florida in January, is slated to be rolled out nationwide next year, said Bill Simon, executive vice president for the professional service divisions at Wal-Mart Stores Inc.

The price is for a 30-day supply.

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Perhaps the American voter should put WalMart in charge of Medicare, as opposed to the gubamint?

http://www.harvard-magazine.com/on-line/010682.html

The Middle Class on the Precipice
Rising financial risks for American families
by Elizabeth Warren
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So where did their money go? It went to the basics. The real increases in family spending are for the items that make a family middle class and keep them safe (housing, health insurance), that educate their children (pre-school and college), and that let them earn a living (transportation, childcare, and taxes).

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It’s interesting that the author in this summary includes taxes as part of the basics.  It’s also interesting that there is no action plan for how to get out of this mess.

I’d suggest to those at risk:

(1) Increased awareness of the risks. Having been caught unaware in my life, I know that wake up call is a real slap in hte face.

(2) Knowledge is power. Know where every dime goes. Put every nickle to work. Cash management will be rewarded. Do people have any idea what their current run rate is? What is the minimum cash burn if nothing was coming in? What is the life boat run rate? It’s amazing how many people don’t even have these concepts in their vocabulary.

(3) An emergency fund suitable for your risk level. A year’s worth of run rate, invested in short term certificates, is probably the minimum. The size of the fund has to be adjusted for age. Over forty? Getting a job is twice as hard as under. Over fifty? Four times as hard. Over sixty? Forget it. Corporate Amerika doesn’t want you.

(4)  Cut expenses to the bone like the ww2 generation did. Manage long term mortgage debt like an investment portfolio. Minimize the amount you’re paying. Notice – I didn’t say take cash and pay it off like some radio talk show hosts advise. One raving looney said sell the house to pay it off. That might be correct in SPECIFIC cases, but not as a general rule. A home mortgage is like sleeping in your bank. Following his strategy, you might wind up paying more in taxes and have nothing to fall back on. To be free and clear and debt free? not sure tht’s the best advice for everyone. But also, if you have an adjustable, then you have a problem.

(5) Simplify.

(6) Develop alternate earning streams, skills, and investments. (An investment is something that gives you a return.)

http://www.boston.com/business/personalfinance/articles/2006/09/14/insurance_biz_urges_hard_coverage_look?mode=PF

Insurance biz urges hard coverage look
By Eileen Alt Powell, AP Business Writer  |  September 14, 2006

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NEW YORK –Insurance agent Clif Rosenberry knows firsthand what can happen when a family’s breadwinner dies without life insurance: His brother was killed at the age of 39 in a work accident, and he didn’t have his own policy.

“He had a wife, two kids, a brand new house … and not one speck of life insurance,” Rosenberry said. “The family wound up having to sell the house, having to move. It was an absolute mess.”

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This I never understood.

To this day, I don’t understand it.

I remember someone saying “A man, who dies without insurance for his family, doesn’t die; he absconds!”

Now an insurance salesman ranks down there just above politician, lawyer, and used car salesman. With apologies to the used car salesmen. And, it’s akin to going to the dentist. Or, getting a will.

I’m not talking about any kind of insurance — anything other than low cost term life insurance.

Not what you get at work, cause if you lose your job, then you lose the insurance.

I’m talking a minimum of 2M$ of 20 year level premium term life insurance.

No annuities. No whole life. No babies or infants insurance from Gerber pitched by some dumb celebrity. No geriatric insurance to bury you when you die, or to leave 10k for your final expenses, or leave a little something for the kids.

Get it.

Ask at your credit union. If you don’t have a credit union, ask me I think you can join “mine”. It is as exclusive as rain anymore.

Ever heard of SBLIC savings bank life insurance. Cheap. Easy.

Get it! Today! Don’t drive home without getting a binder.

Please!

http://www.boston.com/business/personalfinance/articles/2006/09/08/having_different_accounts_for_different_purposes_can_make_sense?rss_id=Boston.com+%2F+Business+%2F+Personal+Finance+-+Money+Management+-+Financial+Management+-+Boston.com

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Q. I have a checking account that earns 5 percent and is used solely for mortgage payments. How much must I have in the account so that I’d need to make no further deposits to pay off a mortgage with a $58,497 balance and $905.14 monthly payment?

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But if he has that much, why not just pay off the $58,497 balance and get free of the mortgage right now? After all, by making 75 more monthly payments, he’d end up paying nearly $68,000, including interest.

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It’s a little more complicated. You forgot everyone’s favorite uncle! Samuel.

TAXES!!!!   :-(

So the correct solution depends on facts not yet in evidence, judge.

Project the taxable income over the problem time domain. Figure that the checking account’s 5% is reduced by as much as a third and as little as zero depending upon the marginal tax rate. The home mortgage interest deduction and property taxes MAY be available depending if there is enough deductions and the AMT isn’t triggered.

Now I’m an ingineer by training and an IT geek by vocation, I am neither an economist, accountant, nor lawyer. Nor do I play one on TV! So I have nothing but some math skills, a few advanced tax courses from my mba, and some common sense. In the absence of some overpowering rationale, I’m a Dave Ramsey fan, and say pay the thing off under almost any circumstance. IMHO.

Get a HELOC for an emergency fund, if you really need that cash for a emergency fund. Get it from a credit union for the best deal.

imho, fwiw, faiwwypfi!

I’m the administrator of an estate. Lucky me! So I went and had the will admitted to probate. The clerk and I was chatting and she told me about an entertaining barely-legal scam going on in the poorer section of Middlesex County.

Nearby the clerk’s satellite office, a lawyer has a sign offering a $25 simple will. She didn’t go into details as to what constituted simple. But the scam was that wills in nj can be written with what is called a “self-affirming affidavit”.

Basically the lawyer and witness all state under oath at the time the will is made that these are their signatures and that of the person making the will. It’s not required to be a valid will. The catch is that if it’s not there than after the person dies, the witnesses have to affirm that it is their signature on the will.

Back to our 25$ will lawyer. He writes the will for $25 but doesn’t make it “self affirming”. The when the poor family tried to probate the will, for which no lawyer is needed, especially on small estates, with simple wills, they need his affidavit affirming his signature. They gotta have it.

You can guess what happens now … … right.

Yup, that signature costs them $350!

So much for a cheap will!

HE must be politically connected, because if he wasn’t, he’d be disbarred.

Makes me wish I went to law school so that when I retire I could go “compete” with him. I do wills for $25 just to meet people. Oh well! Arghh!!

… a friend dies with an estate, and the NJ state grave robbers will take 15%. When will people realize that this is grave side robbery. Proper estate planning should result in the deceased leaving nothing for the state to tax. Arghh, give it away, spend it, buy gold coins, whatever!

http://www.usatoday.com/money/companies/regulation/2006-08-17-pension-overhaul_x.htm

Bush signs massive pension overhaul
Updated 8/17/2006 1:51 PM ET

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With its hundreds of pages, the bill seeks to strengthen traditional defined-benefit plans and requires companies to tell workers more about the health of their pension programs. It also nudges workers into putting more money away for their own retirement.

It aims to boost the 30,000 defined-benefit plans run by employers that are now underfunded by an estimated $450 billion. Those plans must reach 100% funding, up from the current 90% requirement, in seven years.
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Hey sounds good right?

Now let’s look behind the curtain.

Defense contractors, exception.  Two big airlines, big exception. Shortfallers get 7 years to catch up (or go bankrupt!). A little pork project to make it palatable and worthwhile for one representative to vote for it! Automatic 401k enrollments because your too stupid to make your own decisions. And, plans with over 120% funding can fund retiree healthcare (a little relief to Medicare?).

Whatta bunch of Barbara Streisand!

This is about helping out their friends in the Airline industry, Defense Contractors, and making sure that the federal Pension Guarantee doesn’t have to pay out too much.

It’s not about rectifying the mistake made in WW2 when the Federal Government winked so that Companies could pay more than the government’s published wage and price controls allowed. We’ve been paying for that mistake ever since.

Here’s a novel idea. Let people make their own decisions.

Pension plans should be “spun out”. Take the assets and divide it among the recipients. Allow them to decide what to do next. I am sure that the Insurance Companies, Stockbrokers, and Mutual Funds can help them with plans that they won’t have to worry about.

(Look up a Vangard Guaranteed Annuity, and see how little one has to pay in fees for that! Then see how everyone is being ripped off by the collusion of the politicians and the companies.)

Bet the airline pilots would have like to have that before those tow special airlines welshed on them!

Unintended consequences.

When the government “protects” me from something, why should I be afraid? I should just be terrified!

I received a “long time” customer offer from Verizon. It said that I was paying 80 bucks for my two lines and 400 minutes. For the same money, I could have 700 minutes. So I called. In fact, I am paying 60 bucks. So, if I don’t want to pay more, (and who does?) I could have 500 minutes but have to commit for 2 years more. Arghh, waste of fifteen minutes of my life. Just goes to show, there’s no free lunch. And, marketing lies!

http://www.eons.com/money/feature/644?section=growthenestegg

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If you know either the interest rate or the time period desired to achieve a financial goal, the Rule of 72 will help to estimate the unknown element. For example, if the interest rate is known, say 9 percent, the time period to double our investment is estimated by dividing 72 by the rate (72/9). It would take about 8 years to double our investment at 9 percent.

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I use 4% for the rate of return assumption, and 6% for the rate of inflation (that hidden tax increase). So that means that every dollar I’m holding is worht 2% next year UNLESS I do something with it. Arghhhh!