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Over the past few weeks, Sandy and I have been reorganizing our living space to create a client friendly home office where clients can discuss personal finances in comfort and privacy.  I did much of the work for this project on our front patio where the American flag flies 24/7/365.

As I was painting, sanding, unpacking, and doing other tasks on the patio, the ever-present Colorado sun distracted me by waving a shadow of the flag over the patio.  I would stop work to see who or what—unnoticed except for the shadow—was annoyingly approaching me.
As the days went by, it dawned on me that I have lived my entire life in the protective shadow of the American flag…

  • From birth, through WWII, Korea, the turmoil of the ’60s–the assassinations of John, Bobbie, and Martin–the financial and social trauma of the ’70s, Vietnam—during which I served behind a desk in Dayton, OH—the inflation ravaged Carter years, the rebirth of the American spirit during the Reagan Presidency, the extraordinary boom of the ’90s and the equally extraordinary financial failures of the 2k0s, the terror of 9/11, the historic election of a black American President in 2008, and the failure of that President to fulfill the promise his election held for America.
  • During the thirty-seven years that I have been a licensed life insurance agent, The Shadow of the American Flag has also protected the thousands of insurance and financial advisory practices that ethically and honestly serve American families and small businesses.  (The financial services industry has brought both credit and discredit to the American entrepreneurial spirit.  It has produced some of the greatest models of American ingenuity and some of its most infamous frauds.  You can fill in the names.  Regardless, ethical advisors and their clients survive and thrive.)

Now, it’s time for insurance agents, financial advisors, and their clients to assure that the Shadow of the American Flag continues to protect every American’s personal finances in the decades to come.  It is not enough to make a living or make a killing in our business and for our clients.  Insurance and financial advisors and their clients are in a unique position to raise their voices and employ their resources to revitalize America and restore the promise of the American Flag—in whose shadow we and our clients have all lived, survived, and thrived.

We can only make this real by…

  • becoming actively involved in the political process
  • supporting candidates and issues that…
    • empower individual Americans and diminish the power of bureaucrats and politicians
    • reduce the intrusion into the lives of individuals and the workings of small business by government takeovers, over-regulation, healthcare that interferes with the doctor-patient relationship and imposes an impossible burden on small business, and special treatment for large financial institutions like Fannie Mae and Freddie Mac and their Wall Street cronies

Let’s get to work.

PS – If you are not an insurance agent or financial advisor, you are likely the client of one.  Join us and pass this on.  Ask your agent/advisor to join in the effort to restore America.

The question arises: Where can you deposit your money and be guaranteed that: it will grow every year, will convert to a secure income in the future, will allow ready access without hassles, applications, or proving your worth, assure your family that they will be OK no matter what happens to the greater economy? Read the rest of this entry »

Inaccurate Is Not OK…

A client recently sent me a copy of an email received from an insurance agent promoting whole life insurance policies from a specific life insurance company.  The primary goal of the original email seemed to be to demonstrate that one form of dividend calculation on whole life insurance policies is better than another.

The email from the agent was inaccurate and therefore misleading. I have no doubt the agent was convinced that the information in the email was correct or that s/he was operating in good faith.  However, my client asked me to confirm or deny the claims in the email and I felt compelled to clarify the inaccuracies as much as possible.

The exercise of clarifying the issues raised in the email are meaningful so I am repeating my response here and expanding on it as needed.

The original email content is in standard type. My responses are indented, bold, in italics, and preceded by my initials in brackets thus [JR].

Two Types of Mutual Insurance Companies…

There are two types of Mutual Insur­ance com­pa­nies . They are called direct recog­ni­tion and non-direct recog­ni­tion. I have poli­cies in both these types of companies.

[JR] Actually there are direct recognition mutual companies and mutual holding companies and non-direct recognition mutual companies and mutual holding companies.

If a company is structured as a mutual company or a mutual holding company is as significant as whether it pays dividends on a direct recognition or non-direct recognition basis.

Direct Recognition VS Indirect Recognition

Non-Direct Recognition…

Non-Direct means the pol­icy owner receives the same div­i­dend rate no mat­ter how many dol­lars he has bor­rowed from the insur­ance com­pany using his death ben­e­fit as col­lat­eral.

[JR] Well, that’s not exactly correct. Actually, the policy’s cash value is the primary collateral used when a policy loan option is exercised by a policy owner.  One cannot borrow more than a whole life policy’s currently unencumbered cash value.

Death benefit only comes into play in the event of death.

So you may have bor­rowed $10,000 whereas another pol­icy owner bor­rowed $100,000 but you both earn the same div­i­dend rate.

[JR] The statement is true as far as it goes.  However, it ignores the fact that the policy owner that borrowed $100,000 would pay a lot more interest to the insurer than the policy owner that borrowed only $10,000.

In both cases, the interest paid by the policy owners–one to a greater extent than the other–would add to the surplus of the insurer; and the company pays dividends from its’ surplus is where dividends come from

Or you may not have bor­rowed any­thing but you would still earn the same div­i­dend as some­one else who has bor­rowed and is using that bor­rowed money to earn even more profit some­where else.

[JR] The unasked question is, “Why is that a bad deal for anyone?”  Some indirect recognition companies have followed this pattern for over a century.

(As an aside, what the devil difference does it make what the policy owner is doing with the money s/he borrowed from the policy that s/he owns?  Sorta sounding like a Robin Hood argument.)

Direct Recognition…

Direct means the com­pany deter­mines the div­i­dend rate accord­ing to pol­icy hold­ers fair share

[JR] This statement is irresponsible. It assumes the indirect companies dividend paying practices are unfair to their policy owners.

Should indirect recognition companies like Mass Mutual  be ashamed after over 100 uninterrupted years paying top dividends? How unfair!

accord­ing to how many dol­lars he has bor­rowed from the insur­ance company’s gen­eral fund using his death ben­e­fit as col­lat­eral.

[JR] There you go again Mr/Ms Agent…it’s cash value not death benefit that is the primary collateral used to back a policy loan.

The higher the amount of dol­lars on loan to you does mean you will receive a lower div­i­dend rate.

[JR] Ah! A moment of clarity. It’s true. Direct recognition companies apply a lower dividend rate to those policies that have loans outstanding.

The obvious conclusion according to this agent is that a policy owner that plans to exercise the right to take policy loans granted by his or her policy–a binding contract–an indirect recognition company may not be the best option.

Now, why does this mat­ter? Well, it doesn’t really mat­ter a whole lot

[JR] Another brief moment of clarity.  Often the difference between the performance of non-direct recognition policies and direct recognition policies is not significant enough to make it a deciding factor on a buying decision.

But…if it doesn’t matter, why the epistle?

but some insur­ance agents use the fact that a com­pany is a non-direct com­pany as a sell­ing point when try­ing to sell some­one a pol­icy.

[JR] OK…now i know why. Mr/MS Agent in this epistle uses the direct recognition dividend practices to promote the sale of policies for their direct recognition companies.

The Banking Concept

But it is good to under­stand that an insur­ance com­pany makes money using the veloc­ity of cash flow,

[JR] If a policy owner-borrower is being what R. Nelson Nash, formulator of the Infinite Banking Concept™, calls “an honest banker,” the insurer has very good cash flow.

If the policy owner fails to repay the loan and the interest, the insurer uses the policy’s cash value, which was used as collateral, to repay the interest and protect the other policy owners/borrowers. If the policy cash value is all used to pay premiums and/or interest, the policy lapses.

just like a bank does.

[JR] Insurance companies, like banks, use the money that policy owners pay in premiums and interest to make loans and enter safe and conservative joint ventures. That much is accurate.

However, insurance companies do not act “just like banks.”  Banks work for shareholders not depositors.  Mutual insurance companies and a holding company’s mutual insurance company work exclusively for the benefit of policy owners.

If you have your money sit­ting in a 5 or 10 year CD at the bank, the bank knows that it has a set amount of money that it can lend over and over and over again dur­ing that set period of time. An insur­ance com­pany does the same thing

[JR] Banks operate on a completely different set of principles and rules than insurance companies.  Insurers do not do “exactly” the same thing.

Banks operate on money that they derive from depositors . In addition, they have access to a form of  ”matching funds” from the Federal Reserve Bank.  Therefore, the banks can actually lend up to ten time the amount of money they have received from depositors!

Insurance companies limit themselves to using only the money they have on hand.

The Velocity of Money – Sorta…

You pay your pre­mium and it can lend an amount of money over and over and over again for a life­time. How­ever, if YOU bor­row money from your life insur­ance com­pany, now they can no longer veloc­i­t­ize that money.

[JR] An insurance company can only lend up to the limit of its cash available excluding reserves.  Insurance companies cannot leverage FED funds to increase the amount they can lend. That’s not at all the same as a bank.

In fact, if the insurer lends money to Home Depot they cannot “velocitize” (not a recognized word in any dictionary) the money either, nor can they leverage through fractional banking like a commercial bank.

Instead, you are now in con­trol to veloc­i­t­ize your own money.

[JR] The insurance company is in fact “velocitizing” the money by charging the policy owner a competitive interest rate and—again—by contract, the policy owner is always in control of the cash value in a whole life insurance policy.

Moreover, because a whole life policy is a contract with borrowing provisions decided by the insurer, the burden is contractually on the insurer to make sure it makes money for all of its policy owners and not one more than others—and that’s true for both direct and indirect recognition companies.

The Attempted Deception Falls apart

How­ever, one must con­sider this fact. How long will an insur­ance com­pany be able to stay in busi­ness if a large por­tion of their pol­icy own­ers are receiv­ing an unfair share of the prof­its?

[JR] Hmmm – how is it possible for a policy owner to receive an “unfair share of the profits” by being charged a fair interest rate under contract terms determined by the insurer.  Robin Hood again?

Again, does that put Mass Mutual—100+ years old—and never missing a dividend at more risk than a direct recognition company like Northwestern Mutual—also over a century old with a great dividend record?

Who actu­ally owns the insur­ance com­pany again? The pol­icy own­ers. That would be YOU.

[JR] This is accurate when description of mutual companies. Although mutual holding companies “operate” as mutuals, the holding company–not just policy owners–holds significant interests in the mutual insurance company.

That is not an indictment of the mutual holding companies. It’s merely an attempt to bring clarity where none exists.

Some of the non-direct recog­ni­tion com­pa­nies restrict the num­ber of loans, or the amount one can take as a loan or the num­ber of poli­cies one can own etc.

[JR] I’ve not experienced that in 40 years of dealing with a wide variety of insurance companies of both types except when the insurance company was in receivership–and that happened only twice that I know of.

(Tell me who you are talking about so I can avoid them.)

Do you want to have a pol­icy that restricts your cap­i­tal avail­abil­ity?

[JR] This is a cheap shot and poor salesmanship.  I know of no direct or non-direct company that issues a contract that says the owner of a whole life policy cannot access to all of their cash value on demand.

Some non-direct recog­ni­tion com­pa­nies fire the agents that tell their clients about bank­ing

[JR] This too is uncalled for. If an insurance company were to take this action, it would be grounds for a significant law suit by both the agents and the insureds. The insurer cannot deny rights granted by the insurer in a recognized contract.

and also some have been bought by stock com­pa­nies and are in the process of con­vert­ing from mutual to stock because too many of their cus­tomers were bor­row­ing from their poli­cies.

[JR] I’d like to know the names of those companies so I can confirm the claim, avoid doing business with them, and make sure the agents and advisors I deal with all across the US know about it.

The com­pany I rec­om­mend is a direct recog­ni­tion company.

[JR] Well – who woulda guessed!  This agent is surely operating in good faith, but is in dire need of information, knowledge, and wisdom.

by Jeffrey Reeves MA, EUREKONOMIST™

Web Site of Extreme Value…

I have frequently quoted or referred to Mises.org

The Ludwig von Mises Institute was founded in 1982 as the research and educational center of classical liberalism, libertarian political theory, and the Austrian School of economics

I am especially interested in the economics aspects of the institute.  The following article by Robert P. Murphy is one of the clearest explanations of the insurance function that I have personally ever read…and I’ve read many.

The Social Function of Insurance

Legal requirements and prudence require most adults to carry various insurance policies. Although we may often take insurance for granted, it serves a valuable social function.

Read the article here…

The Social Function of Life and Disability Insurance Products

You and I daily face the risks of our own death and disability. That creates great risk for our families, our co-workers, our social, civic, and religious networks.

You and I are not indispensable, but we are contributors and we are often unaware of the significance of the contributions we make.  Our families in particular rely on us in ways that death benefits or disability income checks can never replace.

Not owning adequate life and disability insurance ignores the reality that we support our families spiritually, emotionally, physically, and financially.  It also ignores the painful reality that our families would face in every aspect of their lives if we left them with inadequate financial support when we die or–perhaps worse–burdened them with care-giving responsibilities and not enough money to either give care to a disabled family member or take care of the basic needs of the household.

In addition, we often are completely unaware of the value we bring to our social, civic, and religious communities.  Have you never found an unexpected vacuum created by the untimely death of one of your colleagues at work or a member of your social circle?  Sometimes we don’t recognize contributions until they are no longer made.

Insurance provides us with a simple and inexpensive way to assure that the work we do every day can continue after our death or in the event of our disability.  Businesses have realized this for over a century through the use of key person insurance policies that assure the business will continue to thrive if the contributions of its most important contributors is cut short.

I encourage you to make sure you provide the same assurance to your family and the communities that depend on you.

by Jeffrey Reeves MA, EUREKONOMIST™

Fed Governor: Crisis Scared Winners, Too

Published 3/25/2011

Read the entire article here…

http://www.lifeandhealthinsurancenews.com/News/2011/3/Pages/Fed-Governor-Crisis-Scared-Winners-Too.aspx?page=1

Commentary…

As usual, the economist author of a study looked at the results derived from following conventional wisdom.  What about those folks that relied on safe equity in their homes and whole life insurance policies, and their savings in local banks and credit unions.  I assure you, those folks haven’t changed their practices and are not “scared.”  They continue to apply the economic principles and follow the economic practices the Founders and Builders of America’s economy paid forward. Unfortunately, Washington and Wall Street have used Madison Avenue advertising and marketing schemes to convince Americans that creating equity in their homes and whole life insurance policies and saving money in their local banks and credit unions is a bad idea…better, the tell us, to give control of our money to some anonymous ‘money manager’ on Wall Street and subject our future income to the whims of the IRS.

There are links to more examples of just how bad the economy really is below.  Just remember common sense: get out of debt, keep lots of ready cash, avoid the IRS–that means opt out of qualified retirement plans–and don’t forget to remember to pay something forward to those you care most about.

by Jeffrey Reeves

OTHER FEDERAL RESERVE BOARD COVERAGE FROM NATIONAL UNDERWRITER LIFE & HEALTH:

The foolishness of refinancing to "save" money is one of the most insidious of the conventional wisdom shibboleths. Radio, TV, the internet, even your smart phones attack you with this flawed idea. Read the rest of this entry »

Economic Education

Economic education takes time and attention to common sense thinkers and writers. You often find these folks on the outs with conventional wisdom. You regularly find them on sites and forums like Mises.org Here is an example.

Money, Power, and Old Age

by Jan Iwanik on February 18, 2011
I suspect that funded retirement plans like American 401(k)s British private pensions, or Polish open pension plans (OFE) cannot survive in a centralized democracy. The only alternatives are unfunded schemes such as American social security, British state pensions, or the Polish Social Insurance Institution (ZUS). But such systems naturally lead to a conflict of interest between age groups, out of which the older generations emerge victorious. As a result, an internal gerontocracy is formed within the democratic system. This new and more oppressive system may prove to be more sustainable than the democracy itself.

Read the rest here - http://tinyurl.com/Mises-org-2-18-11

It’s a sad day when insurance and financial advisors stoop to deception in order to sell their wares.

An agent I am mentoring in EUREKONOMICS™ principles and practices placed a well-structured participating whole life policy on the life of a small business owner.  Another agent slithered through a crack somewhere and misled the client to believe the policy in hand was of lesser value than the one the other agent is proposing to sell the client.

Here is my response to my mentee with bracketed descriptions replacing [names].

Hi [Agent,]

I’ve reviewed the “Supplemental Illustration” from [the large foreign-owned stock insurance company] you emailed to me that [another agent] recommended to [your client] as a replacement for [your client's] whole life policy.

I suggest you point out to [your client] that [the other agent]…

  • failed to show the entire illustration, which includes the guaranteed values, which is required by law in all fifty states
  • wants [your client] to contribute a total of $172,600 to a life insurance policy over 16 years
  • claims [your client’s] premium payments over those 16 years would grow to $233,697
  • says [your client] could then expect that $233,697…
    • to repay the entire amount of [your client's] contributions—$172k—in less than 7 years at the rate of $25,820 per year
    • then produce $25,820 in income each year thereafter from policy loans for as long as he lives (that assumes somewhere in the neighborhood of a 12% return forever based on a calculator on BankRate.com)

Common sense tells us that these numbers are unrealistic, but a financial calculator could tell you the precise impossible-to-achieve rate of return that the other agent is using to create these post age 72 income amounts from policy loans.

You may want to create a spread sheet showing the current actual value of the [mutual company] guaranteed cash values and death benefit and non-guaranteed illustrated dividends of the current policy compared to the hypothetical values being illustrated for [the large foreign-owned stock insurance company] product.

You could either leave the guaranteed column empty on [the large foreign-owned stock insurance company] portion or—better yet—call a brokerage house and have them run [the large foreign-owned stock insurance company] illustration showing the same results and fully disclosing the guarantees—or lack thereof—and the return assumptions.  You could then use their hypothetical numbers on your spreadsheet—with emphasis on hypothetical.

I hope this helps you demonstrate to [your client] that selling from an incomplete illustration that only shows untested hypothetical results is unethical at best and unworthy of consideration.  It’s also worth noting that it could be a reportable violation of NAIC rules and state laws.

Every EUREKONOMICS™ Agent is fully committed to adhere to the legal, moral, and ethical standards of the insurance and financial advisory vocation without, however, being restricted by the constraints of conventional wisdom and artificially imposed regulation from quasi-professional governmental and certification granting organizations that serve more to constrain creativity than to protect the public.

Financial Literacy

A thirty-something client recently posed the following questions…

Estate Taxes

Q…I have been reading a book that talked about getting a revocable trust for my estate planning and having my insurance policy setup so that my trust is the beneficiary so that my insurance policy when paid out is not taxed with estate taxes.

A…The kind of trust that removes your policy and its values from estate tax liability is called an ILIT—Irrevocable Life Insurance Trust. This kind of trust removes the policy and its values from your control. It doesn’t seem that is something you would want to do at this stage. Estate taxes do not come into play until your estate is in the $5mil range.

Estate Plans

Q…Would you have a suggestion for whom to contact to get a trust setup? I have been looking at legalzoom.com and other websites like it but I am interested in an A/B trust.

A…I would think your church would be able to refer you to an attorney that specializes in estate planning. I suspect that s/he would not recommend an A/B trust, which aims primarily to minimize estate taxation—unless of course you have been withholding information from me and you have millions stashed away. S/he may also suggest that you consider a less complicated and more effective approach by setting up a revocable living trust that can own your policy as well as other assets but over which you exercise full control. This type of trust has many benefits but one of them is not sheltering assets from estate taxation.

Annuities In Your Financial Strategies

Q…Another part of the book suggests setting up an annuity as well. Do you know much about those as an investment vehicle?

A…An annuity is a great savings/investment vehicle but requires a long term commitment. For example, if you were to inherit $100,000.00, wanted to have that money grow tax free, and didn’t plan to use it until age 60 or later, an annuity would be a good choice. However, since cash withdrawals from annuities can incur penalties and are taxed differently than life insurance loans and surrenders, you have to be committed to let the money grow unattended until age 59½. If you don’t want to or not sure you can wait that long to access some or all of the money there are other savings and investment strategies that would work better.

Thank you for your help.

It always adds joy to my day when I am able to help. Thanks for allowing me to do so. jr

by Jeffrey Reeves MA, EUREKONOMIST

The Collective Economy Has Americans Bamboozled

We have been deceived…

We have been deceived by Madison Avenue into thinking that the economy is some esoteric weapon wielded by Behemoths in Washington and on Wall Street over which we have little or no control.

We have been convinced that our role is simply to earn, borrow, spend and repay debt.

We have been brainwashed into believing that the Behemoths know better than individual Americans and their families how we should deal with the money that comes into our lives…and they do it by picking our pockets…and we let them do it…willingly!

Have we Americans lost our minds?

The RESULT of this kind of economic thinking has been the consolidation of financial resources and the concentration of the money–which belongs rightfully in the pockets of everyday Americans–in a limited number of accounts that are owned and controlled by Behemoths. The Behemoths have created a Collective Economy where we Americans are expected to give over control of our money to strangers that work for financial Behemoths and hope that they care for it as thoughtfully and prudently as we would.

That’s Not the Worst of it.

This flawed thinking is the CAUSE of the economic failures of the first decade of the 21st century…

  • Two stock market crashes that decimated the wealth Americans…wealth that was trusted to a Behemoth
  • A real estate debacle of monumental proportions that has destroyed the personal economies of countless American families; a crisis that was hatched by the arrogance of Barney Frank and other insiders in Washington and the deception of America by…
  • Government protected Behemoths Fannie  Mae and Freddie Mac
  • Impenetrable financial monoliths like AIG and Lehman Brothers
  • Wall Street wizards that are no more wizards than Oscar Zoroaster Phadrig Isaac Norman Henkel Emmannuel Ambroise Diggs–the “man behind the curtain”–the Wizard of Oz
  • The failure of hundreds of banks and the loss of billions of dollars of equity by shareholders in those banks
  • The failure of GM and Chrysler and the loss of the long established precedent protecting the ownership rights of bond holders over the demands of corrupt union officials for more money and power
  • The accretion of power and control over our money and our everyday lives by…
  • China, the Oil States, Japan and other foreign investors–some of whom want nothing more that to see the demise of the United States of America
  • An out-of-control Federal Reserve Bank that prints money as the solution to every problem and is undermining the very fabric of our free economy in support of the Collective Economy
  • Undercover and unaccountable “Czars” imposing unvetted regulations on every aspect of our daily lives
  • A healthcare law that will destroy the best healthcare system in the world and vest power over our personal health with bureaucrats in Washington
  • A financial regulatory law that puts even more control of our money in the hands of the greedy for power Dolts in DC and the greedy for wealth on Wall Street

That Americans could ever fall into the treacherous sink hole of a Collective Economy created by the stupid idea that government bureaucrats with corrupted power and financial Behemoths with billion dollar ad budgets are better equipped than we to manage our money and our lives is surprising…but it happened.

The Questions Now Are, “How did this happen?” and “How can we fix it?”

In 1974 the US Congress passed ERISA and began convincing Americans that saving money was a bad idea.  The law they passed convinced us that investing [aka gambling] in an IRA or 401(k) was better than putting our money into guaranteed return savings vehicles.  Americans listened.  Wall Street and the IRS rejoiced.

In 1977 a high school coach convinced thousands of naive amateurs that they were financial advisors and taught them to strip every penny possible from secure whole life insurance policies and – you guessed it  – buy term insurance and invest [aka gamble] everything else in mutual funds.  Americans listened.  Wall Street and the IRS rejoiced.

A few years later one of the Wall Streeters invented a new kind of life insurance that took the money that whole life insurance saved in guaranteed accounts and moved it into accounts that were not guaranteed but that the Wall Streeter could profit from even if the policy owner didn’t.  These kinds of policies destroyed dozens of successful insurance companies and cost billions in  lost savings to American families.  Americans listened.  Wall Street and the IRS rejoiced.

In the ensuing decades Americans listened to advice to invest [aka gamble] in dotcoms and invest [aka gamble] our home equity in all sorts of schemes.  Americans were convinced that carrying debt equal to their investments [aka gambles] made some sort of sense.  Americans listened.  Wall Street, the IRS, and money lenders rejoiced.

BUNK – A THOUSAND TIMES OVER – BUNK!

“THE FACT THAT AN OPINION HAS BEEN WIDELY HELD DOESN’T MEAN THAT IT’S NOT UTTERLY ABSURD.” Bertrand Russell.

America has been listening to the wrong people for almost 40 years.  The results are apparent.  The Collective Economy has left American families and the American government bankrupt.

You and I can’t stop the Dolts in DC and the IRS from trying to convince us that they can handle our money better than we can.  Nor will we sway the wonks on Wall Street from trying to sell us products that make them wealthy and us poor.

We can, however, stop listening to the wrong people.  Re-discover the old ways of creating wealth, preserving assets, and taking care of your families.

EUREKONOMICS™…

EUREKONOMICS™ is a personal economic model that is working for millions of American families today and worked for the entire country during its first two centuries.  EUREKONOMICS™ is a set of economic principles and financial practices that have withstood the economic failures of the 1820 to 1840 depression, the Civil War that cost over 600,000 American lives, the Crash of 1907, the Great War, the Great Depression, WWII and the downturn that followed, Korea, the severe economic downturns of the ’70′, ’80s, 2001, and 2008-2009.

Unlike many pseudo-models of personal economics, EUREKONOMICS™ does not rely on planning, which is often no more than a selling system put in a fancy binder. Planning may also be described as map making. It provides useful information based on a snapshot in time, but planning is not the journey.

EUREKONOMICS™ relies on preparation. Preparation is more comprehensive.  Preparation, the basis of EUREKONOMICS™, is more akin to provisioning.  It uses the information on the map as a guide but also acquires the resources to assure success on the journey without incurring significant risk.  As a result, Americans that apply the economic principles and financial practices of EUREKONOMICS™ to their personal economies have experienced guaranteed growth of their assets.  Any speculative or investment losses they incurred were offset by guaranteed gains.

The Four Pillars…

Albert Einstein said, “The significant problems we have cannot be solved at the same level of thinking with which we created them.”

The 50 page leather bound financial plan that you receive from the well known company with the large advertising budget is at best a snapshot of a fantasy; it represents the “level of thinking” that has America in debt up to its eyeballs. It is out of date when you receive it and out of touch with the reality of your life’s daily challenges.

The Typical Financial Plan Wants for Wisdom…

Think about it. Do you rush to the bookshelf to pull out your neatly bound financial plan when your family faces a crisis and you need money?

Ask yourself how you’d feel if, instead of unfounded fantasies in a fancy leather binder…

  1. You were free from debt-to-others; no mortgage, no car payments, no credit card bills or store charge card balances, no home improvement balances at the home improvement center…no debt of any kind
  2. You had an income you didn’t have to work for, you couldn’t outlive, was protected from inflationary pressures, and wasn’t decimated by interest payments and taxes every month
  3. You had ready money to take care of yourself and your family when some planned or unplanned life event required it – job loss, college for the kids, illness or disability, a long awaited second honeymoon, long term nursing home expense
  4. You had a secure tax free legacy of your wisdom and your wealth that you could pay forward on your terms to those you care about.

These are the Four Pillars that are the framework of all stable personal economies because they rest on a foundation of money that you – and you alone – control.

This is EUREKONOMICS™.   This is the antidote to the Collective Economy that has America and Americans trapped in a dungeon of debt built by the Behemoths.

It's time for the Forgotten Generation to step forward and reclaim its destiny as the protectors of the American values that were passed on to it but which will pass out of existence if the Forgotten Generation does not act to restore them and pass on the legacy of wisdom that it received from its forebears. It's also time for the Boomers and Beyonds to discard the falsehoods and foolishness that can lead us to America's ruin. Its time for them to put renewed faith in the finacial founding fathers who wrote, spoke and lived the Four Pillars. Read the rest of this entry »

An Open Letter…

Dear Kay,

At www.youBEthebank.com we are committed to re-educate America about the power, flexibility, and versatility of dividend paying whole life insurance and the extraordinary benefit of participating with like-minded people in ownership of mutual insurance companies.  To this end, we have sacrificed the past several years of our life to write and publish books, blogs, and articles that aim to enlighten and inform.

Whole Life Insurance from Mutual Life Companies…

Gaining the insight and information about whole life insurance and mutual life insurance companies is difficult for insurance and investment advisors.  Many, if not most of them have been misinformed and even lied to about this product and its application.

It is even more difficult for everyday Americans to uncover these secrets when their source of information is produced by detractors in the ill-informed popular press, from talking heads like Suzie Orman and Dave Ramsey, and from often inaccurate internet sites.

Uncovering Green Shoots of Ideas and Ideals Shrouded by Behemoths…

I wish the ideas and ideals we write and talk about–ideas that are the foundation of the wealth and growth of the personal economies of Americans over the past two plus centuries–were not burdened with decades of deceit and disinformation from Behemoth detractors and competitors whose only goal is to filch control of your money or sell you their next book.  Unfortunately, they are.

Many seem to be struggling to escape the conventional wisdom that denies the value and benefit of whole life insurance and mutuality.  We understand that.  We can continue our dialogue.  Unfortunately, there isn’t enough time left to me in life to answer every individual consumer question and mentor every advisor that seeks my guidance.

The Source Book of EUREKONOMICS™…

So, here’s my suggestion.  If you wish to pursue a relationship and take advantage of my 40+ years experience helping Americans achieve true financial independence, then I ask you to read and study Money for Life! before posing your questions about EUREKONOMICS™.  I am confident that Money for Life! addresses the vast majority of your concerns.

In other words, I am willing to address your concerns if you are willing to study the EUREKONOMICS™ Model for Creating and Managing Your Personal Economy with the same diligence that you are employing to unearth reasons to deny the validity of what we teach.

By Jeffrey Reeves, MA, EUREKONOMIST  www.EUREKONOMICS.com

Answer to a Financial Advisor’s Question…

An insigthful Money for Life Guide recently asked…

“There is one concept in the book Money Now, Money Later, Money for Life that I am interested in being better able to more fully understand, teach and implement, ‘Save from income and invest from assets.’ Basically, my understanding is to save from income, purchase assets with savings & leverage, and use the income from assets to replenish the savings…”

Your understanding seems to be basically correct but also contains two assumptions that are alien to The  EUREKONOMICS™ Model for creating wealth and managing personal finances.

  • First, your question seems to assume “leverage” as a part of the investment equation. Leverage–in the minds of most people–implies borrowing from others, so it implies that the source of borrowed money is not under the control of the borrower. The EUREKONOMICS™ Model rests on the idea that individuals and families need to control the money that flows through their lives. When individuals and families borrow from an outside source, they are falling into the Debt Paradigm trap that chants the mantra “You cannot have what you need and want unless you borrow from others to get it.”
  • Second, your question seems to assume that assets produce income. Some assets do not produce income; your home, your car, collectibles, precious metals, and so on. Moreover, some assets that are supposed to produce income do not; GM bonds, most mutual funds, some real estate, and so on.
  • In addition, the unspoken conclusion of that sentence seems to be that the assumed income from the assets would reduce or eliminate the debt created to acquire those assets. (Ask anyone who has been tricked into one of the many get rich quick and easy schemes of the past about relying on formulas based on an ever increasing value of assets.)  There are two malicious Debt Paradigm shibboleths embodied in this conclusion.  The Debt Paradigm encourages having stuff you don’t own and owning investments you don’t control.
  • Other People’s Money – The Debt Paradigm would have you believe that what it calls leverage, borrowing from others, is really “arbitrage.” Not so. Arbitrage is the process of buying in one market and selling in another to take advantage of varying prices [Oxford Dictionary]. A money lender uses arbitrage when it borrows from savers and pays them 3%, knowing that someone else will borrow the same money from the money lender at 6% for a mortgage, 8% for a car loan, or 18% on a credit card. It is not arbitrage when one borrows from a money lender. It’s debt and a burden on the resources of the individuals and families that are borrowing.
  • Assets Increase in Value – No need to belabor this point today. The Debt Paradigm acts on the assumption that 1907, 1929-1942, 1973-6, 1979, 1982-4, 2002-3, 2008-20nn will never happen again or that the investor should only consider the long-term. DUH.

A More Accurate View of Wealth Creation and Financial management…

Let’s take a look at how the EUREKONOMICS™ Model for creating wealth and managing personal finances sees this issue.

Saving…

The EUREKONOMICS™ Model for creating wealth and managing personal finances tells one to save from income.  Saving doesn’t imply investing in a 401(k), IRA, or equivalent plan.  We’ve all seen what’s been happening to the money that Americans ‘saved’ in those kinds of plans.

Saving means putting money in a secure financial vehicle that guarantees a reasonable return for as long as the money remains an asset of the financial vehicle. The   EUREKONOMICS™ Model for creating wealth and managing personal finances calls these savings vehicles Money for Life Accounts.  Generally Money for Life Accounts are whole life insurance policies, annuities, credit union savings accounts, and other savings vehicles with guaranteed interest rate returns.

Investing…

If and when individuals and families using the EUREKONOMICS™ Model for creating wealth and managing personal finances want to invest, they would borrow the money for the investment from their Money for Life Accounts.  The loan would be made with the commitment that the Money for life Accounts would be repaid from income on the same schedule a money lender would impose.

If the investment turns out to be a total bust and all of the money was lost, the owner of the Money for Life Account would still repay the loan and the Money for Life Account from which it was borrowed would be fully restored, including the earnings that derive from interest.  The investment, in other words, would not have damaged the wealth and well being of the individuals and families that made it.

Is Investing Necessary?

Many who follow the Money for Life Model for Creating and Managing a Personal Economy find it entirely unnecessary to take the risk to invest in anything.  They commit all of their money to building multiple Money for Life Accounts to assure that the Four Pillars of every successful personal economy are erected on an unassailable foundation of money that they control.

Jeffrey Reeves

Predictable Financial Failures

Pundits and politicians are bemoaning the entirely predictable failure of America’s financial triplets’ [the banking, insurance and investment Behemoths] irresponsible financial behavior over the past two decades: Bear Stearns, Indymac, Lehman Brothers, AIG, Fannie and Freddie, WAMU, Morgan Stanley, other lesser-knowns and others yet to come.

The Economist print cover

The pundits want to explain the situation by pointing at everything from executive compensation to over-regulation.  The Dem’s want to blame it on Bush and the Republicans want to trace it back to Clinton.  You won’t find an answer that makes sense listening to any of those folks and their agenda driven drivel.

Here’s the straight skinny.

During the Clinton years, which coincided with [but did not create] a long and strong bull market, the line between and among banks, broker-dealers, investment advisories and insurance companies got blurred and in some cases erased.  This blurring continued into the 21st century and the Bush years.

But, the Bull Market Didn’t.

During the bull market the financial services industry came to the realization that the more money they could extract from Americans like you and me, the more money they could make for themselves. Moreover, they found that ‘invested’ dollars were more profitable for them than any others.  This led The Behemoths to create the myth that every American should be investing.

The Investment Myth

This myth was easy to perpetuate because of the bull market’s seemingly relentless growth.  When the bull market ended, however, the myth was in jeopardy.  Americans were running out of money and were less inclined to ‘invest’ and that meant the financial services folk might have to take a cut in pay.

The Easy Mortgage

The Behemoths needed a way to perpetuate the myth.  Enter the easy mortgage, the HELOC, the concept of ‘harvesting equity,’ the emphasis on massive and misguided 401(k) contributions [see final thoughts below] and a variety of other strategies to extract money from Americans.

The result for many Americans is that they have no money and the investments they bought with the money they borrowed from their home equity – or their credit cards – are worth less than they paid for them.

Now the Problem Arises.

  • Americans have a ton of debt.
  • They had been led to believe that using debt to buy ‘investments’ was a good idea.
  • It wasn’t.
  • Now, Americans can’t repay the debt they incurred to buy ‘investments.’
  • Now the companies that convinced Americans to ‘invest,’ and also loaned them the money to do so, can’t collect because Americans have no money – they only have ‘investments’ that are worth less than the debt they incurred to buy them.
  • Crash, boom, bang!

KAL’s cartoon

Sep 18th 2008
From The Economist print edition

One final thought. If you think your 401(k) [or any investment plan for that matter] is a good deal because you are putting a large amount of money into it, think again.  If you put $10,000 in a 401(k) and incur the same amount of debt in the same year, you will likely pay more in debt service than you earn in your retirement savings account.

And another…Tax detectability is a monkey trap that many Americans fall into and never escape.

by Jeffrey Reeves MA, EUREKONOMIST

The Economic Value of Time…

By Benjamin Franklin, Commentary by Jeffrey Reeves

Father Abraham’s recounting of the advice delivered by Poor Richard’s Almanac during its twenty five years of publication continues with some admonitions about chasing a life of leisure. These observations may be even more appropriate today than they were 250 years ago, when they were written.

“Methinks I hear some of you say, `Must a man afford himself no leisure?’ I will tell thee, my friend, what Poor Richard says, Employ thy time well, if thou meanest to gain leisure; and, since thou art not sure of a minute, throw not away an hour.”

Right off the bat Father Abraham chastises the questioners. Leisure is the result of work but not its aim. If you want to have leisure time, beware wasting time at work because the hour spent on the internet, or reading the paper, or discussing last night’s game will lengthen your day at work and reduce your time of true relaxation with family and friends.

Self employed folks recognize this relationship more readily perhaps than those employed by others. It’s easy to measure the value of time wasted when it translates directly into lost opportunity, lost sales or extended hours completing a critical project for a revenue producing client.

It’s easy to measure the lost leisure time when the ‘leisure’ time spent at work keeps you from a golf date with friends, your child’s sports event or musical recital; when the long awaited anniversary dinner has to be postponed at the last minute; when the weekend barbecue goes on without the host, who had to go into the office.

There’s more from Father Abraham…

“Leisure is time for doing something useful;

Now there’s a mind bender for the modern American. Who thinks of leisure being ‘useful?’

As a starting point, let’s define ‘work’. The Merriam-Webster dictionary defines it this way; ‘activity in which one exerts strength or faculties to do or perform something.’ Hmmm. According to that definition, everything is work. Playing tennis, watching TV, reading, wrestling with the kids, laying in the hammock taking a nap all require you to ‘exert,’ to ‘do.’

Father Abraham got it right again. All of those activities are useful all by themselves and all of them are work. Their leisure value comes from your intention and attitude, not from the activity itself. Their ‘useful’ aspect derives from the benefit you derive from the activity – the work – and perhaps from the control you exercise over the choice of activity.

There’s more…

“this leisure the diligent man will obtain, but the lazy man never; for A life of leisure and a life of laziness are two things.

The option of having a choice about how to spend your time and energy results from being diligent. You’ve seen it a hundred times; the slacker remains a slacker all his or her life; the hard worker grows in stature at work and in the community. The slacker ends up with few choices and the diligent person with many.

Leisure is the reward of work and laziness is trying to gain the reward without doing the work, which – by way of observation – is just as much work as that done by the diligent person.

There’s more from Father Abraham on this topic…

“Many, without labor, would live by their wits only, but they break for want of stock; whereas industry gives comfort, and plenty, and respect.

Following Father Abraham’s thoughts from the last entry, it only makes sense that those who ‘live by their wits only’ and avoid labor eventually come to a bad end. Consider where the petty thieves, drug dealers, con artists, even organized crime bosses end up. ‘They break for want of stock.’ There’s nothing of value in their choices or their ‘work.’

Those who work diligently, on the other hand, and take control of their money, their time and their lives arrive at a different place.

Sometimes my workload writing, helping clients and mentoring other advisors is so heavy that I have to hire out some chores around the house. My favorite chore to hire out is mowing the lawn and trimming around the sidewalks, trees, planters and bushes.

The 72 year old man that does this work for me is a fine example of a person who has diligently made his way through life for the past four decades on his own terms. He is respected and admired by everyone who employs him, works only when he chooses based on his age and energy level, but lacks for neither money nor leisure.

Father Abraham makes one more point…

“Fly pleasures, and they will follow you. The diligent spinner has a large shift; and now I have a sheep and a cow, everybody bids me good morrow.”

I recently attended the 50th reunion of my high school graduating class. I was amazed and surprised that so many of my classmates remembered me for who and what I was 50 years ago. Some of those memories were accurate and others were not. The party girls from ’58 were still seen as party girls. The jocks were still the jocks. The elite still elite.

If you start out as a pleasure seeker you may never recover to be anything better in the eyes of the world. The ‘diligent spinner’ started, I’m thinking, with just one sheep. He worked hard, made wool enough to also buy a cow and now ‘everybody bids [him] good morrow.’

Here’s wishing you Health, Abundance, Love and Light as you work diligently toward fulfilling your mission in this life.

Jeffrey Reeves

The Way to Wealth…

By Benjamin Franklin, Commentary by Jeffrey Reeves

Having laid the groundwork for continuing his verbal treatise, Father Abraham translates the premises he’s postulated into a series of calls to action.

“Let us, then, up and be doing, and doing to the purpose;

These simplest of words carry profound meaning when it comes to you building your wealth. During the last thirty-five years Americans have lost track of the basic truth that working hard and following conventional wisdom – doing what everyone else does with their money just because that’s the way everyone else is doing – just isn’t enough. You need to invest your activity and decisions with meaning. You need to be ‘doing to the purpose.’

What purpose? Every successful personal economy has four essential goals: to be debt free, to develop an income stream that requires neither work nor active management, to have plenty of cash at hand when confronting life’s surprisingly unsurprising surprises, and, perhaps most importantly, to pay forward a legacy of both money and the secret wisdom about the way to wealth so future generations aren’t burdened with property they don’t own and investments they don’t control.

Father Abraham has other admonitions about how to travel the way to wealth.

“so by diligence shall we do more with less perplexity.

Diligence on the way to wealth means persevering with attention and care at building your personal economy. Diligence makes life simpler and less perplexing. That lets you get more done in less time and with less stress. Life is only a struggle for those who struggle with living.

Dr Benjamin Franklin’s Father Abraham has more insights…

“Sloth makes all things difficult, but industry all easy;

Motivational speakers, authors and coaches get paid millions of dollars every year to tell you the simple compelling truths that Americans have embraced for over 250 years and that Dr Benjamin Franklin’s Father Abraham popularized in the final installment of Poor Richard’s Almanac in 1758.

It’s no surprise that Dr Benjamin Franklin has become such an iconic person in history and folklore. He practiced what Father Abraham preached. He worked diligently at a wide range of tasks and became one of the wisest, most accomplished and most beloved men in history because of it…and he made it look easy.

Let’s consider a few more of Father Abraham’s ideas.

“and He that riseth late must trot all day, and shall scarce overtake his business at night; while Laziness travels so slowly, that Poverty soon overtakes him. Drive thy business, let not that drive thee;

I know a man that claims to be a ‘night person.’ He stays up late, sleeps late, gets to the office late, then works late. His family suffers, his health suffers, his business suffers, he complains about being overwhelmed on a regular basis. This man reads motivational books, attends seminars, studies Dr Benjamin Franklin’s works, yet he refuses to consider the possibility that his sleeping and work habits have anything to do with his everyday challenges.

Is this laziness? I don’t judge it, but Father Abraham implies as much and predicts the natural consequence – poverty. In America we may measure such a man as a success. He has a nice home in a nice neighborhood, drives a nice car and so on.

The hidden reality, however, is that he could be a better parent, a better spouse, a better provider, and of greater service to his clients. His income, his charitable giving, his health, life and peace of mind could all improve if he would put his business in perspective and give up the failed idea that he is a ‘night person.’

Father Abraham ends this discussion of “Do or do not…there is no try” with perhaps the most commonly quoted aphorism from Poor Richard’s Almanac;

“and Early to bed, and early to rise, makes a man healthy, wealthy, and wise, as Poor Richard says.

Bill Newman was one of the founders of the human potential movement and one of my mentors. He taught me by example that this approach to time and life management worked well.

I had hired Bill to conduct his PACE seminar for a group of my employees. I invited him to stay with my family for the two nights he would be in town. When he retired the first evening it was quite early and I asked him when he’d like me to awaken him. He said he would awaken at 5:30 and I need not worry. He did. He did so without the aid of an alarm. Bill had become so accustomed to rising early that doing so was automatic for him. I’m betting the same was true for Dr Benjamin Franklin and for thousands of other successful people for centuries and millennia.

I’ve personally followed this advice and practice for decades. I know that my life, my perception of the world, my peace of mind, my relationships, and every aspect of my life has improved since I adopted this approach to managing my work and my sleep. I also believe that, had I known about and followed this practice earlier in life, I would have avoided many of the mistakes I’ve made before, the many I’ve made since, as well as some I’ve yet to make.

Jeffrey Reeves

 

“Louis, I think this is the beginning of a beautiful friendship.” CASABLANCA, 1942

This is going to be a brief but replete post.

Investment Real Estate

This post outlines a strategy that protects you against unforseen loss and guarantees a profit to your estate if you die owning investment real estate.

Every time you buy an investment property you have to establish a fund to assure that the taxes and insurance get paid, the maintenance gets done and that contingencies don’t derail the investment’s potential.

Whole Life Insurance

These expenses get taken care of If you put that money into a savings vehicle and draw it out as needed. If, however, you use a whole life insurance policy as your repository, there are other advantages that accrue. Here are just few:

  1. You can borrow the money from your policy to pay for these expenses and the policy will continue to earn interst and be credited with dividends as if you had not borrowed a penny.
  2. A single policy can support multiple properties’ money needs at once.
  3. With proper ownership and borrowing arrangements the money that flows through the policy will be entirely tax free.
  4. You can repay the money you borrow and perpetuate the usefullness of the policy for decades.
  5. At death your named benficiary will receive the face amount of the policy – less any outstanding loans – as a tax free death benefit.

There are, of course, many other benefits that a real estate investor can derive from the proper use of whole life insurance (not universal life insurance at this time) in support of an investment program. Consult a properly informed financial guide before launching such a program.

The EUREKONOMICS™ “Soulution“…

The Oxford dictionary defines the word solution this way: “the act or a means of solving a problem or difficulty.”

The EUREKONOMICS™ Model for dealing with financial issues modifies both the spelling and the meaning of this word:Soulutions” adds, ”with awareness of the personal aspects of both the problem or difficulty and the act or means employed in solving the problem or difficulty.”

The Operating Manual for EUREKONOMICS™…

Money Now, Money Later, Money for Life…How to thrive in good times and bad deals with practical, workable, easy to understand solutions to money and financial problems. In addition, one of the main goals of this blog and of the book Money Now, Money Later, Money for Life…How to thrive in good times and bad is to guide you to a greater awareness of the non-material and personal issues relating to money, finances and your personal economy. One of the soulutions that can make you more aware is reflected in this quote:

“The cave you fear to enter holds the treasure you seek.” Joseph Campbell

Conventional wisdom – which is no wisdom at all – guides us on paths that are contrived by Behemoths – large corporations, unions and government. When you follow this path, you are heading toward a destination that makes Behemoths wealthy but weakens your personal economy; a path that makes bad decisions feel good.

It’s scary to follow a path other than the one that you, your peers, co-workers, family and friends recognize from TV, radio, print, employer sponsored programs and so on. It’s uncomfortable to embrace your fear of being different and following your own path. But, that is the cave you must enter because that is where you will discover your treasure.

Shams of Tabriz, mentor and companion of the Sufi mystic Rumi, expressed the same idea another way: “If you’re not building rooms where wisdom can be openly spoken, you’re building a prison.”

If you don’t allow yourself to explore alternatives to conventional wisdom you are simply creating your own financial prison and your architects are the Behemoths whose only goal is to transfer your money from your pockets into their accounts.

There is a better way.

You can cut a clearer path for your self than any Behemoth can contrive.

Money Now, Money Later, Money for Life…How to thrive in good times and bad does not define a path and ask you to follow.

Money Now, Money Later, Money for Life…How to thrive in good times and bad provides the insight, wisdom, tools, and guidance that lets you to create your own path; lets you control the money that flows through your life; lets YouBeTheBank.

The few dollars you spend to buy Money Now, Money Later, Money for Life…How to thrive in good times and bad is less than the cost of pizza and beer or a night at the movies. A night out at the pizza parlor or the multi-plex promises neither a solution nor a soulution to money problems or a malfunctioning personal economy.

This book promises both.

Jeffrey Reeves MA, EUREKONOMIST™

America’s Security at Risk…

The National Debt…

Can you say trillions? A trillion is one thousand billions.  A billion is one thousand millions.

The true national debt at the time of this writing is fifty-five trillions; that’s 55,000 billions or 55 million millions.  That means America will pay China, the Oil States, and others not so friendly to the US $3.5 trillion in interest alone–not counting what we pay to buy their products and oil!

American’s misuse of credit looms as the single largest threat to our economy and therefore to our security, for it is our economy and the freedoms upon which it is founded that draws the world to us.

Shock yourself.  Visit http://www.usdebtclock.org/

Our Personal Debt…

While it is the nation’s economy that keeps America secure, it is our industry as individuals that keeps America’s economy strong.  Over the past forty years Washington and Wall Street have used Madison Avenue advertising to mislead Americans into unmanageable debt.  Take away the incentive to work by overpowering an individual with debt – particularly unsecured credit card debt – and you have the likelihood that such a person will give up and give in.

It’s time for every individual American family to address the Debt Paradigm.

Credit card debt is huge.

Here are a few statistics from early 2011…

  • Average credit card debt per household with credit card debt: $14,750*

  • 609.8 million credit cards held by U.S. consumers. (Source: “The Survey of Consumer Payment Choice,” Federal Reserve Bank of Boston, January 2010)

  • Average number of credit cards held by cardholders: 3.5, as of yearend 2008 (Source: “The Survey of Consumer Payment Choice,” Federal Reserve Bank of Boston, January 2010)

  • Average APR on new credit card offer: 14.73 percent (Source: CreditCards.com Weekly Rate Report, Feb. 9, 2011.)

  • Average APR on credit card with a balance on it: 13.67 percent, as of November 2010 (Source: Federal Reserve’s G.19 report on consumer credit, November 2010)

  • Total U.S. revolving debt (98 percent of which is made up of credit card debt): $796.5 billion, as of November 2010 (Source: Federal Reserve’s G.19 report on consumer credit, March 2010)

  • Total U.S. consumer debt: $2.40 trillion, as of June 2010 (Source: Federal Reserve’s G.19 report on consumer credit, November 2010)

  • U.S. credit card 60-day delinquency rate: 3.23 percent. (Source: Fitch Ratings, January 2011)

  • Read more: http://www.creditcards.com/credit-card-news/credit-card-industry-facts-personal-debt-statistics-1276.php#ixzz1H9tdTWho (You need to scroll down to bypass the offers.)

    Too Late To Wait…

    American families must rein in the use of credit or embrace the reality that other nations–some not so friendly to us–will soon be in a position to deny us the American Dream and dictate how we live our lives.  It’s not enough to blame the Congress and the President–although they certainly deserve it.

    Every American needs to discard the conventional wisdom of the failed Debt Paradigm and re-awaken to the economic principles and financial practices that the Founders and Builders of America paid forward to us in the Declaration of Independence, the US Constitution, and works like Benjamin Franklin’s The Way to Wealth.

    Until common sense about financial management returns to the psyche and the front-of-mind of everyday Americans, we will continue to send Debt Paradigm Dupes to DC; stimulus laws that only stimulate  bigger unions and bigger government; budget cuts that are cosmetic at best; bridges to nowhere built with money America doesn’t have–all, at our own peril.

    Health, Abundance, Love and Light