Tag Archives: personal-finance

The Keating Five

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I am sure that the Democrats would love for us all to forget this chapter in American history. I would hope that those of us that know, especially those of us that remember first hand will never let them forget it. Let us keep reminding them on a regular basis. We do not want this memory to fade away.

We should have learned some important lessons, and we ought not to forget them. First, heroes do not always make good senators. Second, just because a man is a good pilot does not automatically make him a good representative or senator. Third, it also does not insure their honesty or integrity.

John Glenn was a hero and an astronaut. John McCain was a notable figure from Vietnam. However, the two of them, along with Alan Cranston, Dennis DeConcini, and Donald Riegle, hatched a financial plot that rocked the financial fodations of the country to the point that we no longer have savings and loans. There is no doubt in my mind that they should have all gone to prison. The three non-heroes did, but not for long. My best guess is that they didn’t want to incarcerate a war hero and an astronaut. If it were all revealed, my guess is that none of them would have spent another day inn the Senate.

They interfered with investigations involving large savings and loan establishments, which eventually collapsed. Conveniently, Glenn and McCain were cleared and served no time. My money is on the fact that their hero status kept them out of prison. Well, there may have been some conversation and some bribery going on. That part we will never know. I can’t even hazard a good guess. However, I wouldn’t doubt for a minute that large sums of money exchanged hands.

The net result is that the Savings and Loans went the way of the dodo bird, which, for the most part forced us all to go to banks for doing all of our savings and receiving all of our loans. This was something of a windfall for the banks, especially since the savings and loan establishments were the primary compilation for the banks. When this all happened, I had to move my checking account from my savings and loan to a bank, which was not at all happy with. My S & L just went away. They never asked what I wanted. I don’t think they wanted to know.

And, the Keating five. Well I don’t think they cared either.

It would seem the feds just can’t resist the urge to get their mitts into the financial institutions and cause mismanagement every couple of decades. And it’s us that suffer. Those in government that mess things up never pay the costs.

Neither Glenn nor McCain did either.

The Fantastic 401k (and things like it)

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I don’t remember when I got my first 401k but it had to be a long time ago. So, maybe you can gain from what I learned. There are many things I learned from many different aspects. However, there are two things I need to say before I go into it.

First and foremost, it is quite plausible that you can benefit from the plans. Actually, both my wife and I have. However, it is in spite of the system rather than because of it.

Second, all expertise I have, or at least for the most part, is from the college of hard knocks. You just may benefit from it.

Now, the first and most important thing I need to say is that there are real possibilities of losses. I know. They do caution you about this before you sign on the dotted line. However, what they don’t tell you is that once you take out a 401k agreement, you have, in essence have agreed to help hold up the stock market.

Let me explain. Over the years, the stock market took nose dives and leveled off. Then it gradually started going back up. Why shouldn’t it go that way. People like me were underwriting the stock market. We kept our money in, which, as you can imagine, helped the stock market to hold it’s value.

It would appear that the feds have discovered a way to keep the market from crashing, the 401ks. In case you haven’t noticed, it works. Though the market has threatened, it has never crashed since the 401k. Aren’t we all having fun playing Atlas holding the financial world on our shoulders.

Now why is it that we are doing this? Is it out of the goodness of our heart? Of course not. We keep our money in the accounts for two reasons, which the gov was careful to put in there. First, there is a penalty, a substantial one, which they make sure we know about. It is about the same as a threat, you know.

However, if that is not enough, the IRS will take a chunk too. Naturally, the amount is dependent is on a number of things. What tax bracket you’re in, how much you withdraw, and how many tax dodges your accountant can come up with.

So. If you lose your job, then you lose your car, then you lose your house, you make sure to keep that money in the account to keep from paying the penalties. It’s okay. You can buy a good tent with what you get from your wife’s wedding ring.

Okay. I’m am painting an extreme picture. However, it is to get your attention. I just want to get through to you that once you put a dollar or two in the system, it can be difficult to get it out, no matter how much you need it. The Feds don’t really care how much Tiny Tim needs that expensive operation, you see.

They do want you to keep it in there. Imagine if you will, the stock market takes a dive. The next day, all those with 401ks pull their dollars out and the market collapses faster than the Trade Center Towers.

I know. A bad comparison. I realize it. However, I won’t apologize. It could have nearly the same results. May I remind you, people were throwing themselves from buildings in the great depression too.

The point is this, before you set up your 401k account, be aware as to what might happen. It will be difficult to get it back out… and you might want it back out.

Secondly, be aware that your money just might be going to finance things you really don’t like. For instance. you might be one of those who now has a bad taste in your mouth out of what Disney has been doing. For sure I do. And, right now, I have money behind that outfit and I don’t like it one bit. However, I can’t do a thing about it, that is, unless I am willing to take a big loss. Too bad for me. I should have thought about that before I put my money in the account. I cannot tie an instruction on my money, this dollar must not go to Disney.

Then too, a little over a year ago, I decided to buy a new electric car. I could have paid cash for it, if I took the money out of my account. However, the instant I did that, I would have had to make a big check out to Uncle Sam, specifically, to IRS. So, instead, I am paying 9% interest on the car loan for 8 years. Now isn’t that neat. I have all that money sitting there in an account and I can’t pay cash for a car.

They want you to keep your money in that 401k, don’t you know. (They) being the federal government.

Remember, I am not making suggestions. I am just letting you take advantage of my mistakes.

Competition for Dollars

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I don’t much care for repeating this, but those that read my posts vary. So I feel the need to an explanation for some before I proceed.

I am not rich. I basically live off Social Security. With that, I do have to pay for utilities, food and transportation. Mostly, the highlight of the day for my wife and I is going out to eat. Here in Desoto County, we have a wide variety of reasonably priced restaurants that are really pretty good. Many of the people that work at these places have gotten to know me enough to wave at me as they see us entering. We would eat at home but for two things. With just the 2 of us, a lot would get wasted. It is difficult to prepare portions for two. Then too, would you deny us of our one highlight of the day.

Now to get to what I wanted to say. Did you know that there are about 1 million official charities in the US. That means, if I had 1 million dollars and gave one dollar to each charity, I’d be broke again. It is, as I have said, they are all competing for my dollars. And, as mentioned, I don’t have many dollars.

Even if I meticulously pare down all the charities to those I would like to give to, that’s about 20. If I were to give ten dollars to each, that’s $400. Sorry. Can’t afford that. I would have to give up eating for a few days a month. And by the way, there’s a lot of inflation going on out there. I’m having to pay $40 for what I used to pay $25. I am already having to cut back, back at the store and the restaurant. These days, we have to pass on salads and desserts.

The radio station I listen to is a important to me. I have already done away with cable and if the prices keep going up, I’ll have to go to a restaurant to gain access to the internet. However, every time I turn around, someone on the station is coming up with this reason for me to send them money. I’m not going to get specific for these reasons, but I am sure you have an idea.

This time of the year, there are dozens of folks looking for contributions for campaigning. I understand. Really I do. I would like to give them the money. They all have good reasons. On the other hand, over the years, I have also become fond of eating. I hope you understand.

The thing is, they don’t limit themselves to charities. They have businesses that are paying their bills. They are called sponsors. They pay the bills for the radio stations and for the productions. They also pay the salaries of the talk show hosts and their staffs. They all live better than me, I’m sure. So I am quite reluctant to let go of mine.

Still, I have no use for many of the the things they advertise. I mean there are ads tempting me to get security systems. May I remind you, I don’t have much. If a burglar were to break into my house, he’d be tempted to leave me a dollar or two when he saw the way we live. Not much to steal here.

Even so, you must understand. It is a competition for what little I have. If I give to the charities and candidates they want me to give to, I have no money to buy the security system. Even if I had a little money, I would have to be careful, you see. I can’t contribute to the charities and candidates and make the purchases of what all they advertise.

I don’t think I am alone in this. Some are worse off than me. My little house is small and it isn’t worth much. It does need some serious attention, but it is paid for. Some of us living on Social Security can’t say that. Some might be making big house payments too. Some may not yet be on Medicare so they are paying $1800 a month on Obama care.

The truth is, as they compete for the dollars, there are some of us who just don’t have many of the dollars for anything other than paying the bills. I don’t write this out of self-pity, but rather to enlighten those seeking money from those of us who simply don’t have it. It has been my experience that when I say I can’t afford that security system, they think I am lying to them. It’s not my problem if they have a hard time with that.

You can thank Obama care for some of that. Before my wife got on Medicare, I paid out 35,000 on Obama care for my wife. If I hadn’t had to do that, just maybe I would have been just a little more generous. For that, we can thank AARP for backing the plan just enough to get it passed. (I wonder who got a dollar or two for that one. You think maybe AARP and Obama had a few face to face meetings. Does AARP represent the elderly who pay their dues, or Obama?)

If it Were Only So Easy

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I must say I really like and respect Habitat for Humanity. It is one thing that Jimmy Carter ever did that was worth while. However, even this organization is careful. They require that those who are going to get the house take a real part in building the house. Houses are never just given to people so that they really appreciated them.

The great majority of homes provided are held onto by the original owner for ten or so years. However, not all can be foreseen and sometimes things didn’t work out.

There was one case I heard of over the news. A family helped to build a home and it was truly appreciated. Even so, the family lost the home in less than a year. They could not come up with the taxes required for the property tax. You see, when you build a house in NY,NY, you really need to make a lot of money to pay the property taxes, especially when it was a nice home as this one was.

And so it was NY, NY took the house and auctioned it off. Those who had been given the home was again homeless. It is more than a sad story, though it is that. It also has a lesson. You can’t fix the homeless problem just by building homes and giving them to the homeless. It doesn’t always work, especially if if it costs them nothing. They don’t appreciate it and in the long run, nothing is solved.

As I said, I do respect and appreciate what Habitat for Humanity does. However, even they will admit that it does not always work. Though they do screen those they give the homes to carefully, sometimes things do not work. For this I say it is a shame. In the case I cited, it was because of the government. However, there are a thousand things that can go wrong.

In fact, it did. Perhaps, if you were ten years old at the time, you remember. There was a time when the government provided loans to millions with no down payment to people who could not make the loan payments. Yeah. I remember it. Thousands, maybe millions of people defaulted on their loans. Many times it was on purpose.

People would apply for one of the give-away-loans, never intending to make more than 1 or 2 payments. They lived in the house, in essence free of charge. Then, eventually, the home was repossessed.

The people that lived in the home free for a year while frequently not maintaining it, then went their way. The bank that wrote the loans were stuck with the paper on the house and they were having a very difficult time recovering it.

Well. It was actually more complex than that. It won’t fit in a post. You wouldn’t want to read it and I’m not sure I could keep it accurate. The thing is, the mortgages were sold to other financial institutions and then they were sold again. After all, the loans were insured by the feds you see. They, in theory had value. I wrote checks to three different banks before I refinanced my home.

Then I wrote checks to two different banks on that loan. It is very common for a 30 year loan to be carried by 3 or 4 banks. It is a little frustrating. The bank that originally carried my loan was local. I could rush down to the bank the date the payment was due and give them a check. The other outfit was in Tupelo and I had to make sure to mail the check 5 or 6 days early or be in danger of a late charge.

Going back to the bank tragedy of which I was writing. As you can imagine, it went along swimmingly for a couple of years. Then, as usual, we tax payers had to come to the rescue and bail out all the financial institutions. The reason we had to bail them out, I don’t really understand. They said that if we didn’t, the banking institutions would collapse.

The point is this, Kamala can’t solve the homeless problem by throwing money at it. We tried it and ended up with an enormous banking institution disaster. It is one of the reasons that financial institutions usually require a sizable down payment.

People who have a large down payment in their house will work hard to keep it up and keep the payments up. It is considered a good investment by the bank and everyone wins. When the loan is not secured, it is a risk, not an investment. And it is quite possible the bank, the government, or most likely the tax payers end up paying for it.

It is also why Old Joe should have never let 20 million people in this country. They have their hands out for hand-outs and their only real loyalty is to themselves or the county they came from.

Just as with the people that walked away from homes they didn’t pay for, the illegal aliens will quickly leave this country should things start turning bad. It is the sort of thing that people try when they have no practical experience in running real things, like banks, like businesses, like restaurants. Kamala has her head in the clouds in the clouds when she says, we will fix it by throwing money at it. We will fix it by giving things away.

Those who go around with their heads in the clouds are doomed to fall and fail one day. Gravity will have its affect one day. Gravity always works. The real rules of economics will eventually work. The many man made rules will eventually be overtaken and the natural ones will prevail.

Something for nothing never works…not for long anyway.