Reinke Faces Life

http://www.worldnetdaily.com/news/article.asp?ARTICLE_ID=51320

>You can use them to scrape the frost off your windshield in winter …

True the best use for them.

>No, there’s NEVER a good reason to hold a credit card! Get a debit card. You can use it for virtually anything a credit card
>will do like get a hotel room, buy stuff online or rent a car almost anywhere. A few rental car companies do have pretty silly
>requirements for debit card use or only accept them in certain parts of the country, but those guys are too expensive, anyway!

Now don’t get me wrong, I am not a fan of credit cards. They are the “crack cocaine” equivalent for the financially naive.

BUT I do think they have a place and use.

FIRST, legally, there is a distinct difference between debit and credit cards. You have rights under the various state and federal laws, statutes, regulations, and policies. They treat a credit card differently than a debit card.

SECOND, financially, with DEBIT, you’re money is gone and you are arguing from a position of weakness.  With a CREDIT card, the bank’s money is gone and you are arguing from a position of strength about accepting the bank’s opinion.

Not that I want to depend on either to protect me, but, there is anecdotal evidence that it can come in handy.

Assuming that a credit card is Zero Fee AND that it is paid off at the end of month, (you can still get these IF you shop wisely), then you have a tool.

I personally have three such cards. Obviously all zero balance. One I use for household expenses. One I use for computer related expenses corresponding to a budget of 1% of my net for this purpose. One I use for books and learning materials, and such corresponding to a budget of 1% of my net for this purpose.

By using these cards in this way, it makes the accounting simple. BUT, were they to change the terms and charge a fee, over the side they go.

Again, I think you may have underestimated the value of having one no-fee zero-balance card in one’s wallet. A debit card is not as good for the above reasons.

IMHO,
Keep up the good work of bringing sanity back to American money management,
Now, can you convince the gubamint to do the same?

http://www.moneyweek.com/file/15985/the-five-major-trends-reshaping-the-world-economy.html

energy costs, the world’s reserve currency, business cycle, west 2 east, end of the American empire

All things that should be considered in financial planning.

http://money.cnn.com/2006/07/27/news/funny/monopoly/index.htm?section=money_latest

Monopoly ditches cash for Visa
New British version of classic board game will replace traditional paper dollars with a debit card to reflect modern lifestyles.
July 27 2006: 2:01 PM EDT

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NEW YORK (CNNMoney.com) — The days of spending cash are over, if a British version of Monopoly has anything to say about it.
Parker Brothers said a new edition of the board game released this week in the United Kingdom and Australia switches to a Visa debit card and electronic transaction calculator from its traditional paper money.

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I recently heard that the average consumer has 19.5 credit cards. The average credit card debt sounds like a minimum wage job’s annual earnings.

Maybe it was my depression era grandparents and their children, my aunt and uncles, particular love of zero debt, a full savings account, and a “never spend more money than is in your pocket” ethic. I learned those lessons later in life. But I marvel at people’s thinking.

Unfortunately, Parker Brothers is not living in the real world.

(1) It doesn’t charge 21% interest for loans. While it may eliminate cheating by the Banker player, it doesn’t reflect the real world where the  politicians, non-regulating insider regulators, the fat cat insiders, and the Federal Reserve (a private corporation that is no more “federal” than I am) ARE cheating us. They are robbing us blind!

(2) It doesn’t take 35% of your $200 when you pass go to waste. There should be one player representing the gubamint that just takes from everyone.

(3) It doesn’t, if one circuit around the board is a year, take an inflation tax of all you cash. That’s real life.

(4) It doesn’t take the opportunity to teach us that cash is better than credit and cash ain’t a store of value.

http://www.mises.org/story/2254

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Of course, with the continuing possibility of inflation with fiat money, we will one day find “give a nickel, take a nickel” trays, and perhaps even “give a dollar, take a dollar” trays, at the convenience store.
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Remember when pennies would buy something? I do. The joke of the penny is on us. We have allowed the gubamint to institutionalize their theft of our money. Prior to FDR’s gold grab, money was a “store of value” as we were taught in economics class. Now it’s a depreciating good that silently and transparently rots. At least you can see a sinking ship, you can’t see the gubamint “clipping coins”, like the kings and prices of old. They’ve automated the process. The dollar bill in your wallet shrinks in value 5% to 10% every year and you don’t realize it. Inflation sticks it to the savers, the old folks on fixed incomes, and the not-rich (i.e., the poor and middle class). Wonder why there’s a real estate boom? Cause they can’t print any more of it. And, when the Japanese get tired of sending us Toyotas for little green pieces of paper, when the Chinese get tired of that trade imbalance, and when the Arabs get their gold dinar, what do you think happens to all those pretty green pieces of paper? Yup, the chickens come home to roost. Read about what you can do with a Confederate dollar or the hyper inflation in post WWI Germany. It’s coming here sooner rather than later.

http://www.kk.org/cooltools/archives/001308.php

When I’ve been outside the USA, I’ve always have normal copies of the passport on white paper. Always afraid of it getting lost or stolen. This seemed like a good idea.

It’s like the throw away wallet that I carry. (An old NYC trick. A wallet that is a real wallet, has some money in in it, old expired drivers license, expired credit cards, and “stuff”. The real one is not a wallet but a billfold, or an envelope, or an altoids box, or an empty card deck or cigarette pack! Really doesn’t matter what it looks like as all long as it doesn’t look like a wallet.)

http://financialplan.about.com/od/personalfinancebasics/a/TopMoneyTips.htm

http://tinyurl.com/owqrc

Bills aim to keep big retailers out of banking
Sun Jul 9, 2006 11:47am ET
By John Poirier

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WASHINGTON (Reuters) – U.S. House of Representatives lawmakers this week will propose restricting ownership of banks by commercial companies in a legislative push to derail the efforts of retailing giants to move into financial services.

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Yeah, it’d be terrible if WalMart came in and competed with the banks! WalMart might “cheat”. Imagine the WalMart credit card that charged 12% interest instead of the 24% that some Visa cards do. Imagine that WalMart could immediately give a customer a 6% discount if you use their card as opposed them giving the 6% fee to Visa. Imagine that WalMart Certificates of Deposits paying more so that they didn’t have to borrow money from banks and Wall Street to finance tehir operations. Yup, just imagine the possibilities.

And, who would make all those campaign contributions to the politicians?

So, I am sure “our” politicians are just “protecting” us from the evil WalMart.

Message to the politicans, please don’t protect us any more. I can’t afford it!

http://www.resourceshelf.com/2006/07/05/statistics-retirement-savings-by-the-numbers/

Statistics: Retirement Savings: by the Numbers
July 5, 2006 at 12:01 am · Filed under Business and economics, Social and cultural issues, Statistics, United States
New Research Report: Retirement Savings: by the Numbers
52 pages; PDF. From a summary:

Source: Securities Industry Association (SIA)

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Reports of how poorly Americans are preparing for retirement have understated this looming problem — and the situation is getting worse, according to a research report released today by the Securities Industry Association (SIA). Nearly half of American households are not saving at all; and two thirds are not saving enough to retire adequately. The SIA study, Retirement Savings: By The Numbers, examines both the causes for the decline in saving and the consequences.

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It’s a PDF so you can’t quote from it.

I r an injineer who worked in Wall Street’s IT. So, my interest is like a Renaissance Man, with some exposure to underside of Wall Street. I’m not an economics major, but I do have an MBA.

With those caveats, I would respectfully point out two, what are to me, glaring oversights.

Inflation! and, Taxes!

There is no doubt that they are correct that the US savings rate is nothing like it was for my parent’s and grandparent’s generation. They saved prodigiously. The question is that bad. Given that inflation robs 95% of the value of savings over 30 years, then one has to wonder if saving like that makes sense. Further, the tax bias against savings versus debt also begs the same question.

SO!

What options does the average Joe six pack have for retirement?

Depends upon your age?

There are really only two ages — prior to SoSick going broke and after it.

For the prior to age group, plan for it (the Social Security Insurance Ponzi scheme) and whine to the politicians if the even hint of reneging.
For the after age group, plan accordingly.

SO how does one preserve value in this economic scenario. Buy things that would retain value in financial catastrophe.

• Buy Real Estate! They ain’t printing no more of it.
• Buy real education that allows you to earn “more”! They can’t take what you learn away from you.
• Save prodigiously. Invest wisely. Maximize income. Minimize expenses. Reduce complexity. Shed things.
• Think outside of the box in savings. Not everything shows up in a traditional financial balance sheet. For example, a good car, well maintained, driven gently, while it financially depreciates, can be a store of value. For example, the Mormons stockpile a year’s food for the Rapture! That’s a store of value.
• Buy bullion coins.
• Buy collectibles, bearing in mind that this is very very tricky!
• Develop “side lines”. My example is Public School Principal who runs an eBay business. Combine a white collar education and blue collar skill.
• Surf the financial markets. Ride the waves up and try to avoid the down turns.
• Study history because it does repeat itself. Specifically, the German pre-WWII hyper inflation cause by the WWI reparations, the Great Depression caused by the Smoot Hawley tariff, and the American Dust Bowl migrations. Plan for a financial catastrophe and be pleasantly surprised if it doesn’t happen.

I think that people are rational in their responses. The failure to save for retirement, in a manner measurable by the Securities Industry Association, may only mean that people, adapting to the twin monsters of inflation and taxes, are “saving for retirement” in non-traditional fashion.

http://tinyurl.com/mzbxm

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Still, retirement experts agree that women won’t be able to improve their fate in old age entirely on their own. They’ll need changes in Social Security, employer-sponsored retirement plans, and labor laws.

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What a bunch of liberal Barbara Streisand!

It’s well known that the “social security insurance” ponzi scheme favors rich white women over poor minority men.

Anecdotal evidence aside. The gubamint ponzi scheme is bad for everyone. It also doesn’t factor in the gubamint’s inflation, which is also concealed by their phony stats. (Do you think that energy is excluded from the COLA calculations so that they don’t have to give all the ssi seniors more? And, you probably believe them when they say they stopped publishing M3 to save your money! Not that it would show just how much fiat money the fed was creating!)

If Chile could shift from a socialist social security ponzi scheme, why can’t we? It was led by a fellow educated in USA!

Perhaps, the gubamint skools don’t do a very good job larning these individuals to take care of themselves.

Perhaps we should help all of the Ponzi scheme victims by shutting down social security insurance.

Perhaps we can just put all levels of gubamint out of messing in employment. Kill the minimum wage. End the rules. Wage and hour. And, anything else. It’s a free market. If you don’t like how an employer treats you, leave. Or, better yet, start a competing business.

Perhaps we can finally unwind the nonsense that was created by the wage and price controls of ww2 by eliminating company paid pension and medical insurance plans. During the wage and price controls of ww2, companies created these programs to attract the talent they wanted. The powers that be allowed it because it wasn’t a wage. AND, it gave the gubamints the excuse to create similar plans for the politically connected. So, end pensions; the private sector has done that already for the most part. Put the companies out of the medical insurance business. Make people buy their own medical insurance out of their own pockets.

Perhaps we can just tell people that “sorry, you are on your own” because when the gubamint is involved, you really are on your own. Depending upon the gubamint, as we learned from Katrina, can get you killed.

Women … to weak? Needing the gubamint to change ssi, pension rules, and working conditions.

Please, don’t make me laugh. My paternal grandmother traveled the Oregon Trail, raised 13 kids without a husband, and canned stuff until she went to a nursing home for her last six months of her 97 year life. She was proud “poor” woman who never took “nuthing from nobody and certain wasn’t taking any shit from anyone”.  My maternal granmother raised an extended family during the Great Depression, worked for in hotel nights while her husband worked days, and again never took anythign from anyone. Weak! Can’t do anything! You have to be joshing me.
Most women I know can take lemons and make lemonade. Maybe if the gubamint didn’t take literally everything, then everyone would have more in their “golden years”.

When you look at the tax load, I think it is truly incalcuable. The men over at Free talk Live http://freetalklive.com even get it wrong.

(1) All taxes paid by businesses are really paid by the individuals who buy their stuff. That tax burden is hidden.

(2) Sales taxes are paid with after earnings are taxed by the various income taxes.

(3) Interest and dividends are taxed as well.

(4) “Capital Gains” are taxed even when they are nothing more than “inflation gains”.
(5) Gasoline and energy, which are factored in everything, get special added taxes.

(6) Wages are taxed by “social security insurance” which is nothing more than a Ponzi scheme. There is a hidden component, the “employer’s portion” which directly reduces what an employer will pay an employee. There are other hidden taxes for unemployment, and anything else the polictians can sneak by.

(7) Other employer benefits get a tax treatment like “excess life insurance”. Some benefits are made much more expensive by government action and regulation.

(8) Gubamint at all levels regulate things that cost, but are not recognizable as a tax.

(9) If you do manage to save something, inflation (i.e., the gubamint counterfeiting scheme) steals the value of your savings.

(10) AND, if you actually die with some assets, then the gubamint reaches in to the grave to pick you pocket.

That’s why we need to take up the pitchforks and torches!

Interesting conversation with the car wash lady yesterday. Obviously a J&J retiree. Worried about the FED rate increase. And, tells me her portfolio is heavy into J&J. I gently remind her of the FIVE PERCENT RULE (i.e., never more than 5% in ANYTHING ever). She tells me that the capital gains taxes would kill her!

Now there’s a “cognitive bias” in action. I have seen it before in my own family.

One can focus so much on the impact of taxes that one loses sight of the objective reality.

I have seen an elderly relative take a million bucks and make it into zip in less than five years. AND, not for lack of me trying to “help” them.

It was an 80 $ per share stock. 100k+ shares! Virtually all gain.  So the proceeds would have been 680k. She was frozen by the thought of paying 120k in taxes. Instead, she rode it as spun crashed and burned into the countryside.

Arghh.

I tried sell half, sell quarter, or options.  I drew pictures. I cited experts. I vcred an executive of the company talking about the fundamental change of the company from “widow & orphans” to a “high flying tech stock”. (What an idiot!)

The lesson is that 5% rule is for your own sanity.

The poor person cited above was offered an option strategy that would have preserved the gain at a modest cost. Like Fire Insurance for stock certificates. I paid attention during my time on the Street. Don’t fall in love with any thing!

Arghhh arghh

Our self-imposed limits are the most devastating.

Young elephants are captured. A large rope secured to a huge treevis attached to one of the animal’s legs. Over time, the elephant learns it can’t break free and begins to struggle less. As the elephant becomes more docile, the massive rope around its leg is replaced with a dog’s leash. The elephant learned to be weak!

So, we can “train” ourselves into weakness.

When that weak muscle is our brain, we are in big trouble.