MONEY: Imagine that your car insurance was tied to your job?

Sunday, November 18, 2012

http://finance.yahoo.com/news/retirement-plan-shift-is-creating-a-generation-of-workers-unable-to-retire.html

Retirement Plan Shift Is Creating a Generation of Workers Unable to Retire
CBS MoneyWatchBy Steve Vernon | CBS MoneyWatch – Fri, Nov 9, 2012 3:55 PM EST

*** begin quote ***

We can no longer afford to ignore the long-term consequences of short-term thinking about our retirement programs.

Yahoo! Finance/Thinkstock – We can no longer afford to ignore the long-term consequences of short-term thinking about our retirement programs.

Large U.S. employers continue to eliminate traditional pension plans that pay retired workers a monthly lifetime pension in favor of defined contribution and hybrid plans that offer lump-sum payments at retirement, according to a recent survey HR consulting firm Towers Watson.

Among Fortune 1000 companies, only 11 percent still offer a traditional pension plan to newly hired salaried workers, down from 14 percent in 2011 and continuing a long slide from 90 percent in 1985. Conversely, in 1985 only 10 percent of those companies offered only a defined contribution plan to salaried workers — today that figure stands at 70 percent.

The primary reason for this trend has been financial: Employers don’t want the exposure to unfunded liabilities if capital markets perform poorly. At the same time, until recently employees generally hadn’t expressed a preference for traditional pension plans and, in fact, have largely embraced 401(k) and other defined contribution plans.

But this trend has its consequences in the workplace, as large numbers of baby boomers have 401(k) balances that are inadequate to fund a traditional retirement. To make matters worse, most retiring workers don’t know how to turn their nest eggs into reliable retirement income. Employers also haven’t provided much help by offering retirement income options in their defined contribution plans.

*** end quote ***

Well, the Gooferment has been messing up the economy and distorting the employer – employee relationship since it first ERISA rule attempted to prevent Lockheed from stealing pension benefits from older aerospace engineers. 

They only made the problem worse.

Suppose that they stopped giving their corporate cronies tax breaks that weren’t available to individuals and let individuals fend for themselves for “benefits”, no problem.

Imagine that your car insurance was tied to your job?

It’s just dumb!

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MONEY: Sometimes it’s smart to take the offer?

Saturday, November 10, 2012

http://www.doughroller.net/insurance/dont-make-these-mistakes-when-buying-life-insurance/

Don’t Make These Mistakes When Buying Life Insurance
by ROB BERGER
in INSURANCE

*** begin quote *** 

3. Holding Out for A Better Offer

The most recent and biggest screw up we saw had to do with a 30 year old female applying for a $1 million term policy. After asking all the basic medical conditions, she gave us the impression that she would get approved at a Preferred rate. With her age and the amount she needed, we anticipated her rate to be about $70 per month.

After the initial paramedical exam, they found that her cholesterol was a little on the high side; and not just a little on the high side, high enough where instead of being Preferred she was rated a Standard Table B (essentially that means she was knocked down four table classes). That means her rate went from $70 a month to $162 a month. The insurance company made this offer without requesting her APS, otherwise known at the Attending Physician Statement. Your APS contains your entire medical background. If you have any medical history, then there is a pretty good chance that the life insurance company will request your APS.

*** end quote ***

I’ve been always been a firm adherent to the “take the deal”. Have to bird in the hand; rather than two in that bush over there.

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MONEY: Stay at home spouse should think outside the box

Monday, November 5, 2012

http://blogs.smartmoney.com/advice/2012/10/22/should-stay-at-home-spouses-get-their-own-credit-cards/?cid=djem_sm_dailyviews_t

OCT 22, 2012, 2:03 PM

Should Stay-at-Home Spouses Get Their Own Credit Cards?

By AnnaMaria Andriotis

*** begin quote ***

An effort to loosen credit-card standards for stay-at-home spouses would seem to benefit millions of consumers, but critics say the change could actually push some families deeper into debt and derail their finances.

Last week, the Consumer Financial Protection Bureau proposed loosening regulations to make it easier for the nation’s more than 16 million stay-at-home spouses to qualify for credit cards, largely undoing more stringent requirements put into place in October 2011. Prior to then, consumers could sign up for a credit card by stating their household income, even if all of that income came from their spouse. But the Credit Card Accountability Responsibility and Disclosure Act required the Federal Reserve to amend several lending provisions for credit card issuers, including a new rule that issuers had to ask for individual income on a credit card application, and could no longer rely on household income.

If enacted, the CFPB’s proposal would allow credit card issuers to ask card applicants 21 and over for income to which they have a “reasonable expectation of access,” which could include a spouse’s salary. The bureau says it’s aware of several issuers that have denied card applications from otherwise creditworthy individuals based on the applicant’s stated income.

***

Not everyone agrees that this problem would outweigh the benefits. Some say the old rules were more fair for consumers. “Stay-at-home parents shouldn’t be penalized because they don’t personally bring in income,” says Scott Bilker, founder of DebtSmart.com.

*** end quote ***

Having had a spouse pass, maybe I am a little sensitive to this issue.

I see this area fraught with issues over and above the very real and present danger that the couple may get into credit card debt.

The value of a two income family is that, if properly diversified by company (i.e., both spouses don’t work for the same big company) as well as by locale (i.e., dad works on Wall Street and mom works on Broad Street in a different sector), then that provides a lot of safety. As long as they “live” on one income, then they are relatively insulated when one of them loses their employment. (Notice I said “when”; not “if”!)

There is a HUGE danger when the two checks are not “independent”. Or, if they need both to “live”.

(Either of those cases are a much bigger problem than the risk being explored here!)

The stay at home spouse, for whatever reason, was deemed the “lesser of two evils”. Maybe, most likely, they earned less and the loss of income is substantively made up for by the lack of day care costs. Net of taxes, commuting, lunches, and “wear ‘n’ tear”, the couple decides to forgo some income, which when net of costs is considered, isn’t so bad.

From my pov, this has several risks to this approach.

Number One is that the stay at home spouse’s skills will “age” badly. For all intents and purposes, I’d guesstimate the spouse’s renetry rate at just the minimum burger flipper wage. “Everyone” can go to MickeyD’s?

Life insurance is a hidden expense in this equation. Having had a dependent spouse, much of my fiscal planning was around if I got hit with the proverbial Mack Truck, what does she do?

One, that I’ve seen but not experienced, is what happens if the stay at home spouse — male or female — gets divorced. The TV prototypical example is Doc X who gets married in med school; typically to a nurse. Becomes a big doc and has an affair with the sexy secretary. Stay at home spouse is <crude vernacular for the act of procreation>. The stay at home spouse is muchly at the mercy of the working spouse.

I’m not sure how you handle these things.

I’m sure the working spouse would be insulted at any suggestion that the stay at how spouse would be eft high and dry.

BUT!

Sorry, but it has to be considered.

Stay at home spouse BEFORE they agree to become the “wife” (boy or girl):

(1) Need life insurance that names them as the beneficiary and lock it in stone;

(2) Need a legal document that outline any promises or expectations (written by a pre-divorce lawyer); and

(3) Funds on deposit in the “stay at home” person’s name that can’t be touched. (Think Titanic’s lifeboat).

Too many people — gay or straight — married or living together — traditional or non-traditional — don’t think outside the box.

—

I write this not for the adults, but for the children who always seem to get the short end of the straw.

—30—

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MONEY: Walmart and AmExp announce “BlueBird”

Monday, October 29, 2012

https://bluebird.com/?povid=cat1099170-env474392-module474393-lLink6

Why Bluebird?
Bluebird is brought to you by American Express and Walmart, giving you:

The features you want
You can make direct deposits, pay bills online, deposit checks with your iPhone® or AndroidTM device, and set up Sub-Accounts — a great new way to manage family spending.

The value you expect
We believe your money belongs with you. That’s why there are no annual, monthly, overdraft, or minimum balance fees.

The service you deserve
Our award-winning American Express Customer Service is there for you 24 hours a day, 7 days a week. And it’s super easy to open a Bluebird Account since there are no credit reviews.

It feels good to Bluebird.

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Interesting. Is this the long awaited foray into the “banking business”?

Seems beneficial to sign up for it to get “grandfathered in”, when stuff changes.

Could be a great deal. Especially for us “non-rich”.

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MONEY: Financial planning with old memes

Sunday, October 21, 2012

http://www.businessinsider.com/the-coming-retiree-crisis-2012-10

Take Action Now To Prepare For The Great Retiree Crisis

Jeff Voudrie, See It Market | Oct. 10, 2012, 8:30 AM

***** begin quote *****

The financial planning community has largely relied on assumptions regarding equity, debt and inflation percentages that have been experienced over the last 30 years.

There are 3 problems with these assumptions:

Equity returns the last 30 years have been extraordinarily high as a result of the longest and greatest Bull market in the history of U.S. stock markets. Accordingly, many financial plans used projections that assumed equity returns of 8-10% a year.

Debt returns over the same period are equally skewed. Remember the double-digit interest rates of the 1980’s? In 1989, as a young broker, I was selling 30-year TVA bonds yielding 10%! Financial plans the last 5-10 years have used interest rate assumptions around 5-6% a year.

The scenarios that led to the historic markets the last 30 years are very unlikely to EVER be repeated in today’s retiree’s lifetime. And those who are taking distributions based on these outdated assumptions may soon run out of money.

For instance, let’s assume that someone retired 5 years ago at age 60 with a $500,000 investment portfolio. Based on financial plans popular at that time, the retiree is taking $2500 a month in distributions—money they need to maintain their current standard of living. Since the plan anticipated the ability to average a 7% return on a portfolio with close to 50% in equities, the retiree expects to be able to take those distributions and never run out of money.

Adjusting those assumptions based on what many believe resembles more reasonable assumptions going forward requires decreasing the rate of return assumption for a similar-risk portfolio to around 4% and increasing the inflation assumption from 1-2% a year to 3-4% a year (which may still be too conservative). Suddenly, the portfolio that should last forever is now projected to be exhausted in only 16.8 years! That means that the entire nest egg and what it earns cannot sustain the current withdrawal rate. Since the retiree started the withdrawals five years ago, now they are down to 11.8 years—running out of money around age 76!

***** end quote *****

Clearly, the political class has screwed up the American economy.

Pity the poor, the elderly, the middle class, those on fixed income.

Inflation is grossly understated by the “official” stats.

Are we headed to be like Europe or pre-WW2 Germany?

Clearly, everyone needs to update their financial plans.

I’ve recommended to my turkeys that they adjust their “money reserve requirements”.

Everyone better plan to work for a longer time.

— 30 —

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MONEY: Tax hikes coming!

Saturday, October 20, 2012

http://www.financial-planning.com/news/How-Advisors-Can-Use-2012-Tax-Breaks-Before-They-Disappear-2681313-1.html?ET=financialplanning:e11881:34803a:&st=email

Dear Team:

I don’t see much news I can use?

  • Possibly pre-pay medical premiums (e.g., Maybe 7200$ x and y premiums; see if I can prepay z premiums?).
  • ROTH conversion rarely makes any sense (i.e., pay taxes now to maybe save them later)?
  • Take cap gains in taxable accounts (i.e., doesn’t fit with the Edelman style of investing).

Did I miss anything?

fjohn

*****

This is a recent email sent out. Recognize that if the Congress critters do nothing, which is their MO, we get slammed with a gigantic tax hikes in 1/1/13.

Don’t think there is much to do, but revolt.

–30–

f

 

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MONEY: The falling dollar hurts real people; an ebb tide lowers all boats

Friday, October 19, 2012

http://www.mybudget360.com/us-standard-of-living-falling-us-dollar-impact-us-dollar-benefits/

Standard of living, meet falling US dollar – how a falling US dollar benefits banks at the expense of working Americans.

*** begin quote ***

There is certainly a cost to a falling US dollar. Many Americans are living the consequences of this multi-decade long trend. The Federal Reserve has only added fuel to this trend but many families are now realizing that there does come a cost to unrelenting debt based solutions to fiscal problems. Shopping at the local grocery store I’ve noticed that some items have doubled in the last few years. Fueling up is also more expensive. The issue with living on a low dollar policy is that eventually, you end up in a low wage capitalist system. The easy money slowly inflates away especially on global items. We are seeing this in the US in various arenas especially with higher education. The end result is that the standard of living for the vast majority of Americans has fallen dramatically in the last few decades.

*** end quote ***

The seems to be a basic stupidity in human beings as to the devastating impacts of “inflation” (i.e., counterfeiting by a central bank).

As an injineer, we can’t have a “standard” that varies. 

As a football fan, imagine if a yard was redefined each football season as 2% less. 35.28 inches. Easier to make a first down. Records would be meaningless. And, eventually, in 30 years, they’d play on a one inch field.

Absurd.

So why is it different for money?

In my lifetime, the “dollar”, whatever that is, has lost 99% of it’s value. Gasoline that was 30¢ per gallon was $3.75 last night. Has gasoline become more expensive? Those evil oil companies. No!!! Based on the price of silver, gas is actually ~30% cheaper. 

<<Those three silver dimes in 1960 bought a gallon of gas. Today those three dimes are worth about $6 (conservatively) to $10.50 (speculation). So either 28% cheaper or 65% depending upon your value of those dimes.>>

Why can’t “We, The Sheeple” see it?

And, in the general inflation (i.e., loss of value of the money), wages don’t go up. Those on fixed income are so screwed. And, the poor get poorer. Savings are a joke.

Also even the stock market gets “hurt”. Sure the stock prices go up, but never as much as the inflation rate. We’ve seen this in the Carter disaster. Then, stocks went up in the single digit %s, but the inflation was 25 or 30%. Hence the real value went down.

How does a tin foil hat view the world? Always price things in silver or gold. Makes it obvious.

A new men’s outfit in Rome was two ounces of gold. Today, you can buy a nice outfit for 3500$! Clothing has gotten “cheaper”.

A new car in the 60’s was 6 ounces of gold. (I know a bought a Chevy Nova brand new for 1200$). Today, 10,500$ won’t get you a new car. Cars have become more “expensive”. Gas we’ve already said has gotten “cheaper”.

What do you buy that’s changed?

Gooferment!!!

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MONEY: PT is less than AU?

Thursday, October 18, 2012

KITCO Metals quotes

 

 

Take a look at the price of platinum versus gold.

What does this signal?

Price manipulation in the commodities markets in advance of the election?

Wonder when we’ll hear about the derivative contracts that are used to move the market.

Argh!

—30—

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MONEY: Commodities tell us that the politicians are lying. (What’s news there?)

Wednesday, October 17, 2012

http://www4.thedailybell.com/28133/Peter-Schiff-Riding-Into-the-Sunset-or-a-Brick-Wall

Riding Into the Sunset or a Brick Wall?
Tuesday, October 09, 2012 – by Peter Schiff

*** begin quote ***

If everyone starts to carry rolls of cash everywhere, it’s not a big leap to carry coins. A silver coin the size of a dime is currently worth about $3.50. Two could buy you lunch.

*** end quote ***

As someone, who remembers 29 cent per gallon gas — with a glass, trading stamps, and a guy to wipe the window, it’s not a far stretch to imagine a country using gold and silver coins as money.

Paper should be bank warehouse receipts. No fractional reserve banking should be permitted.

We shouldn’t let the elite effete political class define money. Money should be a weight of something. The free market will assign it a value.

In the debate Ron Paul gave a classic line about “in the Sixties, three silver dimes would buy a gallon of gas and those same three silver dimes would buy more gas now”. Still true. Even in California.

Now if you are reading this, just ask yourself: “What’s changed?”

Three silver dimes = gallon of gas in 1960’s = more than a gallon of gas in 2012.

Yet, gas is now over $3 per gallon. 5 in California.

What’s changed?

Could it be that the value of the dollar has changed? Not the value of silver or gasoline?

What’s the yardstick?

This makes the case that gasoline is actually CHEAPER now.

Argh!

And, the politicians tell us there is no inflation!

No wonder the oil sheiks are screaming like stuck pigs. They are getting robbed like the rest of us.

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MONEY: Governments have always robbed their subjects by debasing the currency

Thursday, October 11, 2012

http://dailyreckoning.com/paper-money-despotism

Paper Money = Despotism
By Wendy McElroy | 10/08/12

*** begin quote ***

In his invaluable book What Has Government Done to Our Money? the Austrian economist Murray Rothbard addresses the strange reluctance to consider private currencies, “Many people, many economists, usually devoted to the free market, stop short at money. Money, they insist, is different; it must be supplied by government and regulated by government.” (Note: Technically, the currency is generated through a banking cartel with government support.)

History frowns upon that theory. Before the United States Mint issued its first coin in 1793, the 13 colonies were awash with an assortment of currencies that included both private and government-issued ones. Current fiscal reality also frowns on this. Privatizing zealot Martin Durkin calls the idea of government guaranteeing the quality of money “the sickest joke in economic history. Governments have always robbed their subjects by debasing the currency, but this abuse, in recent years, has burst all bounds of decency and sanity.”

*** end quote ***

Had a similar conversation this weekend with Luddite.

We were talking about “secession”.

Among the challenges that came up was “money”.

A State, that secedes, would want to abandon the “Federal Reserve Note”. If it was smart, it would use what ever the free market dictated and allow it all to float. 

Second best would be to demand gold and silver in what it collects and what it pays.

Luddite was stunned that folks might have to change money.

LOL!

Guess he’s never traveled internationally that much.

If the seceding State used gold or silver, I’d want some of that. Rather than the trash we have now.

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MONEY: CD rates are the answer to the wrong question

Thursday, October 4, 2012

BANKING
Is It Stupid to Save? 5 Alternatives
With low interest rates here to stay, we look at options that can beat putting money in the bank.
http://www.smartmoney.com/plan/banking/is-it-stupid-to-save-5-alternatives-1348525179055/?cid=djem_sm_WeekontheStreet_t

#####

I find it amusing when articles give financial advice without any context. No that I’m a financial guru. But at least I’d stratified my advice into some tiers:

dirt poor — you should be focusing on burn rate and “months of cushion”

poor — you should be focused on pyramid and how you establish a basis going forward

young family man — should be thinking insurance and home ownership

youngsters — save your nickels and develop 10 part time jobs

… … before you start worrying about savings rates!!!

#####

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MONEY: Understanding the tax on stupidity

Friday, September 28, 2012

http://www.ricedelman.com/cs/pressroom/pressroom_detail?pressrelease.id=3268

Against All Odds

For Immediate Release
September 21, 2012

If you insist on playing the lottery, make sure you know the true risks and downsides.

*** begin quote ***

When you step outside your home, are you afraid of being struck by lightning? Of course not. You know the chances are remote.

But you were more likely to be hit by lightning twice than you were to win the top prize in the Mega Millions lottery jackpot when it paid a record $640 million recently. Indeed, you were 176 times more likely to be struck and killed by lightning than to win that jackpot, four times more likely to be killed by fireworks and nine times more likely to die from a television falling on your head.

Just so we’re clear, I’m not a big fan of buying lottery tickets. Essentially they are a tax on the stupid. Because of the infinitesimal odds against winning, you’re giving dollars to the government for nothing in return.

*** and ***

Sadly, those who spend hundreds of dollars annually hoping to become an overnight multimillionaire will never achieve the riches they seek. But if they instead placed that money into the average stock mutual fund every day for 45 years, they would indeed become wealthy.

It’s true: $3 invested every day for 45 years, assuming it grows at the historic 10% annual return that the S&P 500 Stock Index has earned on average since 1926 according to Ibbotson Associates, would be worth nearly $1 million.

*** end quote ***

An excellent and perceptive argument against the chronic lottery player.

Some folks are “lucky”. But many “gamblers” I know, even “lucky” ones, avoid the lottery in any form because they are “not lucky at it”.

Most persuasive part of Rick’s indictment is that $3 / day makes you a millionaire in 45 years!

I didn’t realize that. Wish I had 45 years ago.

I do remember some NYC bank had the adage “small leaks sink great ships” embossed on its passbook savings. Maybe it should have been “three bucks a day makes you a millionaire in 45 years”.

Do Americans save ANYTHING any more?

I also noticed today driving through a “poor  section” of town that everyone I saw was smoking. Hmmm, a causal relation?

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MONEY: Only spend 80% of what you make!

Monday, September 24, 2012

http://www.doughroller.net/personal-finance/5-things-i-did-in-my-20s-that-made-me-rich/

5 Things I Did In My 20′s That Made Me Rich In My 40′s
by Rob Berger
in Personal Finance

*** begin quote ***

My wife and I just sent our first child off to college, and we’ll send our second to college next year. Through all the things that go with this time of life, I’ve been very focused on teaching my children sound money management principles. And the process made me realize just how much the decisions my wife and I made in our 20′s affect our finances today in our 40′s.

Despite the headline of this article, we’re not quit-your-job rich. But we are comfortable. We have no debt other than our mortgage. We paid cash for our last car (a used Toyota Camry hybrid). We have money set aside for our children’s college education. And we are on track to retire.

So if you are in your 20′s or know somebody who is, here are five decisions that made all the difference.

Decision #1–Earned a VALUABLE degree

Decision #2–Avoided consumer debt

Decision #3–Began investing early:

Decision #4–Bought modest vehicles: 

Decision #5–Maintained good credit: 

*** and ***

If you are in your 20′s, I hope you’ll give some thought to the above as you make decisions for you and your family. Trust me, you’ll thank me twenty years from now.

*** end quote ***

Not sure if I agree with #3.

And, I’d say that “#0 — Only spend 80% of what you make!” Wish I’d known and done that. My wife taught me that one. She’s save all the bonus money, raises, windfalls, tax refunds, … and a portion of all “big” casino wins. 

(If you’re NOT lucky like me, don’t gamble.)

And, NEVER EVER play the state run lotto or numbers. It’s really a tax on stupidity.

Argh!

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MONEY: Don’t think your employer pays anything; you do!

Friday, September 14, 2012

Ignore taxes and benefits and anything other than the value equation.

Assume for a minute that an employee generate $100 of value for an employer.

And, that is the basis of the deal they strike.

Let’s say the employer is generous and give the employee ½ and keeps the other ½.

Employee winds up with $50.

Now lets factor in ONLY social security tax. (12.4% “split” 50/50)

Same value equation.

The $50 “earned” by the employee.

$6.20 split 50/50? 3.60 each.

So the employee gets $46.40, the Gooferment gets $6.20, and the employer retains a value of $46.40.

If to do the deal the employee has to give the employer $50 of value, then the employee has to be willing to take less.

So the employee has to be willing to take $43.80 so that the employer gets $50.

Cut through the illusion that the employer “pays half”!

The employee’s value equation is reduced by the tax that the employer pays.

Each deduction from your pay obviously you pay. But, every dollar your employer puts out on your behalf, ALSO, comes out of YOUR pocket.

Benefits are a bigger scam.

Remember that EVERYTHING comes out of your (the employee’s side of the value equation).

So any benefit that the employer “gives” you, you’re paying for.

And, for example, in the case of health benefits, the employer gets a tax deduction.

But, if you buy them, you don’t. (Yeah schedule A maybe after the % take back.)

How about life insurance? Same thing! They get a tax deduction on your money. And, that’s not deductible to you ever.

Argh!

It’s a rigged game and employees think the employer is being “magnanimous”.

Every item is like that: pension, 401k contribution, … everything has an angle that favors the employer.

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MONEY: Error Employees Make

Saturday, August 25, 2012

http://www.ricedelman.com/cs/pressroom/pressroom_detail?pressrelease.id=3234

The Most Common Error Employees Make

For Immediate Release
August 10, 2012

*** begin quote ***

Unfortunately, only 9% of the nation’s 60 million workers who are eligible to participate in 401(k) plans contribute the maximum, according to the Employee Benefit Research Institute. The Plan Sponsor Council of America says only 5% of employees do so. And a recent survey by CouponCabin found that 73% of Americans aged 18–34 — the group whose long-time horizon offers them the best chance of creating wealth by retirement — don’t invest for retirement at all.

*** end quote ***

I’m not a “financial advisor”. Nor do I play one on TV. 

Remember the sources of my education: I’m just a fat old white guy injineer with: Law “degree” from watching Judge Judy; Medical “degree” from watching Doctor Phil; Building “degree” from watching “Holmes on Homes”; Investing “degree” from reading about Bernie Made-off; and creating caring human relationships from studying the movie roles of Gunny Ronald Lee Ermey!

And, while generally and usually agree with Ric, and by way of disclosure I am a Customer of Ric’s, I think I’d like to quibble with him a little.

Not that folks should be worried about the future and saving everything they can. He and Dave Ramsey together are good pundits. But I disagree with both around the edges.

But back to Ric and 401Ks.

There are at least three specific incidents where the 401K advice hits a boundary.

(1) Some 401Ks REQUIRE you to rollover into the company’s 401K. There is the infamous case of the guy who rolled a million dollar PGE IRA into Enron and is now living on welfare or social security.

(2) Some 401Ks are really “house organs”. The CFO makes a sweetheart deal and the employees get screwed. High fees, limited choices, and you name it.

(3) Some 401Ks are not worth chasing to get the limited match.

Then there are some TINFOILHAT considerations:

(A) The Gooferment desperate for money needs 13T$. The IRA / 401K holding is 14T$. All the politicians and bureaucrats have to do is to twist the arms of ~2500 “custodians” and give the “owner” an “enhanced social security benefit” and all their portables are solved. For YOUR OWN GOOD of course. (Yeah, it can’t happen here — the FDR gold grab, GM bailout, … … the Japanese Internment, Trail of Tears, … … yeah trust your Gooferment.

(B) The 401K is in dollar denominated assets.What if the Fed does QE3+4+5 … and we get a Carter stagflation? Remember 21% Treasury Bills that were losers in a 30% inflation world? The dollar has lost 99% of its purchasing power in 30 or 40 years at a few percent. No doubt that I like nickels, silver and gold.

All I’m saying is do trust. Have a Plan B, Plan C … and some bullion in your basement.

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MONEY: What is the value of a fiat currency?

Wednesday, August 15, 2012

http://www.silverdoctors.com/cnbc-are-fiat-currencies-headed-for-a-collapse/

Are Fiat Currencies Headed for a Collapse?
Published: Friday, 27 Jul 2012 | 5:27 AM ET
By: Lisa Oake
Anchor, CNBC Asia-Pacific

*** begin quote ***

Shockingly, CNBC even points out in the article that “Every single fiat currency in history has collapsed, this time will be no different.”

*** and ***

A fiat currency derives its worth from the issuing government – it is not fixed in value to any objective standard. That means central banks can print as much money as they want. If an economy is struggling, injecting more notes into the system juices activity but lowers the value of the currency in question.

Mark Mobius, Executive Chairman of Templeton Emerging Markets Group, says investors will soon start to demand fiat currencies be backed by gold or other hard assets.

“It’s already happening, you’re beginning to see that trend with central banks stocking up on gold. The estimate is that at least half of the buying is central bank buying. They are looking to the day when they can say okay, our currency is backed by gold and therefore we’re a strong country,” Mobius told CNBC Asia.

*** end quote ***

Argh!

All one has to do is study a little history and you have to be afraid.

Weimar Republic, Zimbabwe, Iraq — come immediately to mind.

We’ve been the guinea pigs in a hundred year experiment in a fiat currency. Now the free ride is coming to an end.

The fun question is how does it unwind?

With a thud!

Does the Carter-style inflation return? Or does it just start to accellerate, continue, and never stops until the value is zero?

When the wild ride starts, it’s too late to covert to hard assets.

Argh!

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MONEY: Ahhhhh, the ignorance of yute; what DO they learn in Gooferment Skrules

Tuesday, July 31, 2012

On Fri, Jul 20, 2012 at 7:27 AM, CLUELESS_RELATIVE WROTE wrote:

Do I need an emergency fund?

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On Fri, Jul 20, 2012 at 7:37 AM, UNCLE_GRUMPY WROTE wrote:

MONEY: Changing my position on “emergency funds”

Uncle Grumpy

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On Fri, Jul 26, 2012 at 7:27 AM, CLUELESS_RELATIVE WROTE wrote:

Oh I have navy federal credit union, usaa and state department federal cu. Any one in particular u think is better?

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On Jul 27, 2012 12:31 AM, UNCLE_GRUMPY wrote:

Do a spreadsheet comparison of the factors that matter to you:

cu1 cu2 cu3

* Easy to do biz (atm location, fees)

* Share interest rate

* Can I have sub accounts

* Auto loan rates

* Home loan rates

Then pick one and stick to it. I’d keep a minimum deposit in the others to preserve your eligibility. That a mistake I’ve made.

Then you need (imho):

(1) Emergency Fund (Roach motel — money goes in but never comes out). Priority One uber alles. You’re a hard case to figure out the right amount. But at the minimum, I call it one year at your Minimum Burn Rate (see blog).

(2) Car amortization fund (See blog post on 6 year car payment so that you have the money to buy a new one when your current ride dies.)

(3) If you’re a “monthly” paycheck to paycheck (which is what it sounds like to me), then annual and quarterly bills need a “monthly” “bill”. For example if car insurance is $1200 per year, then you must “pay” the subaccount $100 / per month.

If you’re a “weekly” gal, subsitute as needed. If you’re a bi-weekly, the math is slighly more complex. In the example, $1200 / 26 = $38.50.
And, “monthly” bills are multiplied by 12 then divide by 26. (Hint: It’s 46%) You must get to the point, where you’re ahead to annualize.

Getting off the paycheck to paycheck is essential.

(3) You like to travel, you need a subaccount to “tax” yourself for you next trip. Take your last trip, if you know what it actually cost I’d be surprised. Guesstimate divide by the number of paychecks and that’s your “tax” for that. You may not be able to afford that, so either scale back the trip or stretch the duration until the next one.

(4) “Sinking funds” for any expenses that can’t be accurately estimated (very few of those) and who’s frequency can’t be predicted (very few of those).

Hope that helps,
Uncle Grumpy

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—
—-
Ferdinand John Reinke
Kendall Park, NJ 08824
(732) 798-0508
http://www.reinke.cc (Personal page)
http://www.reinkefj.com (Professional page)
https://reinkefj.wordpress.com (Personal blog)

On Fri, Jul 20, 2012 at 7:27 AM, CLUELESS_RELATIVE WROTE wrote:

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MONEY: French tax grab on holiday homes

Monday, July 9, 2012

http://www.telegraph.co.uk/finance/personalfinance/offshorefinance/9377307/Francois-Hollande-announces-French-tax-grab-on-holiday-homes.html

Home»Finance»Personal Finance»Offshore Finance
Francois Hollande announces French tax grab on holiday homes
British owners of holiday homes in France are to be hit with punitive tax rises under plans announced by the new Socialist government.
By Henry Samuel, Paris
9:49PM BST 04 Jul 2012

*** begin quote ***

Approximately 200,000 Britons own second homes in areas such as the Dordogne and other parts of France, particularly those serviced by budget airlines.

Now, however, holiday home owners find themselves in the sights of President François Hollande as he seeks to tax the better-off to reduce France’s large budget deficit.

On Wednesday (July 4th), the French government announced it was to increase taxes on foreign-owned second homes. Tax on rental income would rise from 20 per cent to 35.5 per cent, and capital gains tax on property sales would rise from 19 per cent to 34.5 per cent. The extra in each case is being labelled a “social charge”.

A Treasury source said on Wednesday night: “We will need to study the details. But we will of course challenge any proposal which breaches European single market laws and anti-discrimination rules.”

*** end quote ***

I can’t imagine a dumber attack on property rights.

Why should “We, The Sheeple” care?

Because one Gooferment’s bad idea quickly migrates around the world. Gooferment, like vampires for blood, have an insatiable desire for wealth to spend on this program or that. Without concern for morality, effectiveness, or efficiency. 

Every unit of wealth extracted from the serfs has a “broken glass” effect. It can’t be used by the serf how they’d like to use it. It can’t sate a personal need, saved, or invested. 

We, here in Pepuls Republik of Nu Jerzee, are a classic example of Gooferment creep. Property taxes drive old people from their homes. Income taxes were imposed to provide “property tax relief”. What joke! All the taxes are higher. 

No, the only answer is to resist any and all taxes. No matter how reasonable the excuse, the answer must always be the same: “No!”

And one should insert some salty language to assure that everyone understand just how serious you are.

Then, the follow up should be: “And, while we are on the subject, how can we lower all taxes 10%?” If they politicians and bureaucrats begin to sputter and turn red or blue, then raise the ante. “OK, if you can’t do 10, how bout 20%?” When they turn white, then you’ve got them. They’re dead!

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MONEY: Plan to work until your 90?

Monday, June 11, 2012

Bloomberg news: AIG Chief Sees Retirement Age as High as 80 After Crisis

Jun 4 (3 days ago)

American International Group Inc.
Chief Executive Officer Robert Benmosche said Europe’s debt
crisis shows governments worldwide must accept that people will
have to work more years as life expectancies increase.

http://bloom.bg/LdwGLe

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Anyone surprised?

Reality has to set in sometime!

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MONEY: Recovery or Collapse?

Tuesday, June 5, 2012

http://globalresearch.ca/index.php?context=va&aid=30960

Recovery or Economic Collapse? Bet on Collapse
The Financial Crisis could Destroy Western Civilization
by Dr. Paul Craig Roberts
Global Research, May 21, 2012

*** begin quote ***

With an eye on the approaching dollar crisis, which will wreck the international financial system, the presidents of China, Russia, Brazil, South Africa, and the prime minister of India met last month to discuss forming a new bank that would shield their economies and commerce from mistakes made by Washington and the European Union. The five countries, known as the BRICS, intend to settle their trade with one another in their own currencies and cease relying on the dollar. The fact that Russia, the two Asian giants, and the largest economies in Africa and South America are leaving the dollar’s orbit sends a powerful message of lack of confidence in Washington’s handling of financial matters.

It is ironic that the outcome of financial deregulation in the US is the opposite of what its free market advocates promised. In place of highly competitive financial firms that live or die by their wits alone without government intervention, we have unprecedented financial concentration. Massive banks, “too big to fail,” now send their multi-trillion dollar losses to Washington to be paid by heavily indebted US taxpayers whose real incomes have not risen in 20 years. The banksters take home fortunes in annual bonuses for their success in socializing the “free market” banks’ losses and privatizing profits to the point of not even paying income taxes.

In the US free market economists unleashed avarice and permitted it to run amuck. Will the disastrous consequences discredit capitalism to the extent that the Soviet collapse discredited socialism?

Will Western civilization itself survive the financial tsunami that deregulated Wall Street has produced?

Ironic, isn’t it, that the United States, the home of the “indispensable people,” stands before us as the likely candidate whose government will be responsible for the collapse of the West.

*** end quote ***

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MONEY: FED screws retirees

Thursday, March 29, 2012

http://finance.yahoo.com/news/how-the-fed-hurts-retirees.html

How the Fed Hurts Retirees
CNNMoney.com
By Annalyn Censky | CNNMoney.com
Fri, Mar 23, 2012 1:08 PM EDT

*** begin quote ***

The Federal Reserve has kept interest rates near zero since 2008, but the economic boost comes at the expense of these savers.

*** end quote ***

This is basically saying that the time preference for delaying consumption is ZERO!

When folks were planning their retirement decades ago, who would have guessed a zero interest rate scenario? Any financial advisor, who did, would looking for a job. There was always talk of the after tax interest rate minus the rate of inflation. That was figured at anywhere from 5 to 8%.

Yeah, right.

Now the after tax rate is ZERO and the inflation rate is guesstimate at 5%. (Pay no attention to the smoke and mirrors being blown up your <synonym for donkey> by the “news anchors”, the FED, politicians, and bureaucrats. You’ve seen the price of gas, the national debt, the amount of “dollars” being held by the various bailed out banks.)

The reason that the FED is holding the interest rate down is to allow the Gooferment to carry the national debt with ease.

The retirees are only one group that is being hurt.

There’s a long list; not the least of which is anyone considering making a capital investment. What is the true cost of capital? (I know some businesses that are making a 12% assumption. Based on historical averages in previous business plans.)

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MONEY: Cashless society

Tuesday, March 27, 2012

http://www.cbsnews.com/8301-202_162-57399610/sweden-moving-towards-cashless-economy/

March 18, 2012 5:09 PM
Sweden moving towards cashless economy

*** begin quote ***

But there are pockets of resistance. Hanna Celik, whose family owns a newspaper kiosk in a Stockholm shopping mall, says the digital economy is all about banks seeking bigger earnings.

Celik says he gets charged about 5 Swedish kronor ($0.80) for every credit card transaction, and a law passed by the Swedish Parliament prevents him from passing on that charge to consumers.

“That stinks,” he says. “For them (the banks), this is a very good way to earn a lot of money, that’s what it’s all about. They make huge profits.”

*** end quote ***

Big Brother?

Imagine that “the authorities” can see everything you do and, if not that, then every cent you spend.

There’s a value in anonymous transactions.

Not the least of which is the energy for storing all that data.

Gooferment must LOVE this.

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MONEY: Never retire … unless you play golf!

Friday, March 23, 2012

http://finance.yahoo.com/news/6-reasons-why-never-retire-164549581.html

6 Reasons Why You Should Never Retire
U.S.News & World Report LP
By Philip Moeller | U.S.News & World Report LP – Wed, Mar 14, 2012 12:45 PM EDT

*** begin quote ***

Threats to retirement security are everywhere. The list is topped by the recession-fueled impact on retirement confidence: People haven’t set aside nearly enough money to fund their retirements. Next on the list is the regular drumbeat from critics that the Social Security system is running out of money and won’t be able to honor its current promises to people nearing retirement. Perhaps the third stake in the heart of retirement is that people are living longer and longer, raising legitimate fears they will outlive their money.
All well and good, perhaps. But these concerns have obscured the compelling arguments against ever retiring, except for physical reasons. The short list of reasons never to retire include:

1. There is no physical reason to retire.

*** end quote ***

Yeah, sarcastically get a job and retire there. Have you ever seen <Insert favorite Gooferment agency here>?

Seriously, why retire? To sit around and rust out.

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MONEY: When does the inflation come?

Monday, March 12, 2012

http://dumpdc.wordpress.com/2012/03/10/flash-editorials-march-3-2012-2/

Flash Editorials March 10, 2012
By Russell D. Longcore

*** begin quote ***

The Nation III: The Federal Reserve now owns more United States Treasury bonds (debt) than China. Think about what a mega-Ponzi scheme this is. The very entity that prints greenback dollars…creating money from paper and ink…prints up a few hundred billion and hands them to the US Treasury to buy debt, thereby propping up the government. It’s the highest form of counterfeiting ever witnessed in human history. The tragic part of this story is that the Fed cannot stop printing and buying. If other nations around the planet want to dump DC debt, the Fed will be forced to buy it so that the bond market does not crash. Get ready for hyperinflation, ladies and gentlemen. It’s coming to a wallet near you.

*** end quote ***

Paper money always fails eventually.

Who gets hurt? The poor, those on fixed incomes, the very young, and the very old.

Who makes out? The elite, the mobile, those with real skills / real capital, and those who “saved” in metals.

So, when?

That’s the 64k$ question!

We have to think it comes with a “tipping point” event (i.e., trouble in the Middle East; OPEC shifts to sell oil for gold; China further “diversifies” out of US debt).

We’re like the old sailors approaching the edge of the earth. Who knows what lies over the horizon?

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MONEY: Roth IRA Conversions are problematic?

Wednesday, February 22, 2012

http://mortonlaw.typepad.com/my_weblog/2012/02/roth-may-become-more-compelling-planning-option.html

February 13, 2012
Roth may become more compelling planning option

*** begin quote ***

If the current proposal before congress to eliminate the stretch IRA provisions from the tax code go into effect, it presents an even more compelling reason to convert traditional IRA’s into Roth IRA’s.  While most people are reluctant to pay taxes now on a tax deferred account, the ability to pay taxes now under current rates, rather than under future rates which are likely to be higher.  Now with the potential loss of the ability of beneficiaries to stretch withdrawals when they inherit, thereby paying the taxes on the account within 5 years of their inheritance, the case for the Roth becomes more compelling.

*** and ***

Their growth and distributions would be tax free – unless, of course, congress eliminated the tax free character of the Roth IRA.  But they would never break a promise like that (unless, of course, you count their original promise not to tax social security benefits).

*** end quote ***

Wow, even more cynical people.

Converting to Roth now ENSURES that a tax is to be paid. Waiting MAY cause a higher tax to be paid.

What’s the time value of money in a zero interest rate environment?

That argues BOTH ways.

* Since money today has ZERO value, why not pay the tax (i.e., there is no better use of the funds; the NPV of the tax loss in the future is huge; confiscation of IRA / 401Ks for the “enhanced socsec benefit)?

* Since money today has zero value, why not try to convert it into something that will become valuable (i.e., real estate; gold; dividend paying growth stock)?

Pretty good argue with myself and lose twice.

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MONEY: The stretch IRA to be killed

Monday, February 20, 2012

http://www.forbes.com/sites/deborahljacobs/2012/02/08/congress-may-crush-key-tool-for-ira-inheritors

Personal Finance
2/08/2012 @ 3:40PM
Congress May Crush Key Tool For IRA Inheritors
Deborah L. Jacobs, Forbes Staff

*** begin quote ***

Let’s hope there’s enough of a public outcry that this legislation doesn’t pass. If it does, owners of traditional IRAs will have one more reason to convert them to Roth accounts. For more about Roth conversions, see my post, “Smart Moves For Battered IRAs” and two sophisticated strategies described here and here by Forbes Associate Editor Ashlea Ebeling. Meantime, stay tuned.
Hat tip to financial planner Michael Kirsh and CPA Robert Keebler for calling the pending legislation to my attention.

*** end quote ***

More bad advice. Pay taxes now rather than later? Guess what tax rates in the future or ROIs will be. I never liked IRAs or 401Ks just because it put you at the mercy of the future politicians and bureaucrats. Argh!

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