Debt

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 »

The Debt Paradigm

Barack Obama might, unwittingly and unknowingly, be right about solving our economic problems from the bottom up.

America’s economy – and the world’s economy for that matter – runs on debt.  Just as our country and the world is addicted to oil based fuels, our economies are addicted to debt.  The government cannot impose a solution to this problem any more than a parent can coerce a child into rehabilitating from a drug habit.

Bailouts Don’t Reduce or Eliminate Debt

For the government to give money through rebates, stimulus plans, tax credits, and bailouts to Americans who have run into debt in the hopes that they will no longer be addicted to debt is just as foolish as a parent giving money to a drug-addicted child in the hope that the money would not be used to feed the addiction.

Debt, Ben Franklin, and the Declaration of Independence

Ben Franklin said. “But, ah! Think what you do when you run into debt; you give to another power over your liberty.” That same concept applies to taking government money. Accepting money from the government as a way of life creates at the very least a psychic debt and gives the government power over your liberty–the very abuse that led the Founders to revolt and write the Declaration of Independence and the amazing US Constitution. The welfare mistakes of the past have taught us this lesson several times over.

If Barack Obama expects the mythical ‘middle class’ to climb out of the dungeon of debt and lead America to a more stable future, he needs to rethink his approach.

Here’s what needs to happen.

Individual Americans and American families need to adopt a new personal economic model that emphasizes saving over debt and over investing, which is nothing more than debt in disguise. [We will dedicate an entire blog entry to this concept at some future date.]

It’s unlikely that will happen spontaneously. Americans have been bamboozled into thinking that they should relegate their cash to consumption and forfeit control of their future to the government and Wall Street.

The Financial Behemoths have buried the idea that saving is a good idea under an onslaught of advertising, misinformation, and disinformation in support of investing for the past thirty years. America has been wrongly convinced that ‘investing’ is a form of savings.  Worse, America has been misled into believing that using debt to fund investments is a wise decision.

The US Tax Code

President Obama and the Dolts in DC need to realize that top-down legislation, executive orders, and the tax code is rewarding the wrong thing when it rewads debt and investing over saving.

The tax code cannot be revised, tweaked, overhauled or manipulated.  It is broken beyond repair.  It needs to be scrapped and replaced with a more humane and holistic system.

Financial Management Principles

If you would change America for the better Mr. President, you cannot impose policies and programs that have proven ineffective failures all over the globe.  You have to rely on the economic principles and financial practices of the Founders and Builders of America that got us here in the first place.

 

 

 

 

 

 

This past weekend my wife and I attended a presentation of the musical South Pacific at the Temple Buehl Theater in Denver. The character Bloody Mary sings a song about Bali Ha'i early in the play and the words struck me as being apropos to the ongoing theme of this blog: helping Americans are find a better way to deal with their personal economies. Read the rest of this entry »

The primary aim of this blog is to inform and educate Americans about ways to use the EUREKONOMICS™  model to create and manage personal economies that thrive in good times and bad.

Unfortunately, the Federal Government and the US Congress pose the greatest threat to our collective financial security.  Their greed for the accretion of power and unparalleled confiscation of our money - especially the debt they lay on us and generations yet to be born - seems insatiable.

The Principles of the Founding Fathers

That’s not how America rose from nothing to the greatest and most exceptional nation on earth.  American government and economics are based on clearly articulated ideas about limited government, personal liberty, and the freedom to create and manage our own personal economies…

  • “life, liberty, and the pursuit of happiness,” not the guarantee of happiness
  • the opportunity to succeed, not the guarantee of success
  • liberty to succeed or fail on our own without the interference of government.

“We the People…”

Today we are seeing our liberties erode from the intrusion of big government into the lives and personal economies of individual Americans.  Money and power in the hands of even the most beneficent government reduces the money and power in the hands of “We the People…”

  • Every dollar that goes to Washington DC comes out of the pocket of a working American
  • Every czar that acts as a lieutenant of the executive branch of government as an unaccountable enforcer of unwritten law drains the national treasury
  • Every trillion dollar (remember, that’s 1,000 billions) law that Congress rushes through the legislative process with the excuse that “it’s imperative” being used to bypass “We the People” steals another bit of our liberty and a whole lot of our money
  • Every surreptitious connection to…
    • big banking
    • big Wall Street firms
    • big unions like the SEIU
    • corrupting organizations like Acorn
    • pseudo-advocates like AARP, Pharma, the AMA
    • and other shadow groups that hide from the light of scrutiny

transfers money and power to the government and strips “WE the People…” of our voices, our liberties, and our ability to create and manage our personal economies.

If you haven’t read the Declaration of Independence in a while, here’s your chance.  I encourage you to take just a few minutes and consider the sacrifices our Founders made to give us today’s America…

“And for the support of this Declaration, with a firm reliance on the protection of Divine Providence, we mutually pledge to each other our Lives, our Fortunes, and our sacred Honor.”

Ideas and Ideals of 1776

Recognize, please, that the ideas of 1776 are what makes America great.  Honestly ask and answer yourself: Is what is happening today distorting the principles in The Declaration?

Is what is happening today undermining your ability to create and manage your personal economy?

Read the Declaration of Independence [below]. Pay attention to both the principles it illustrates and the specific complaints against the overbearing arrogance of the British King.  Know that it’s time to act if that looks to you at all like the behavior of the Dolts in DC today.  Isn’t it time for modern Americans to pledge their lives, their fortunes, and their sacred honor to save our country from a fate worse than British rule in the 1700′s?

_________________

The Declaration of Independence…

IN CONGRESS, JULY 4, 1776

The unanimous Declaration of the thirteen united States of America

When in the Course of human events it becomes necessary for one people to dissolve the political bands which have connected them with another and to assume among the powers of the earth, the separate and equal station to which the Laws of Nature and of Nature’s God entitle them, a decent respect to the opinions of mankind requires that they should declare the causes which impel them to the separation.

We hold these truths to be self-evident, that all men are created equal, that they are endowed by their Creator with certain unalienable Rights, that among these are Life, Liberty and the pursuit of Happiness. – That to secure these rights, Governments are instituted among Men, deriving their just powers from the consent of the governed, – That whenever any Form of Government becomes destructive of these ends, it is the Right of the People to alter or to abolish it, and to institute new Government, laying its foundation on such principles and organizing its powers in such form, as to them shall seem most likely to effect their Safety and Happiness. Prudence, indeed, will dictate that Governments long established should not be changed for light and transient causes; and accordingly all experience hath shewn that mankind are more disposed to suffer, while evils are sufferable than to right themselves by abolishing the forms to which they are accustomed. But when a long train of abuses and usurpations, pursuing invariably the same Object evinces a design to reduce them under absolute Despotism, it is their right, it is their duty, to throw off such Government, and to provide new Guards for their future security. – Such has been the patient sufferance of these Colonies; and such is now the necessity which constrains them to alter their former Systems of Government. The history of the present King of Great Britain is a history of repeated injuries and usurpations, all having in direct object the establishment of an absolute Tyranny over these States. To prove this, let Facts be submitted to a candid world.

He has refused his Assent to Laws, the most wholesome and necessary for the public good.

He has forbidden his Governors to pass Laws of immediate and pressing importance, unless suspended in their operation till his Assent should be obtained; and when so suspended, he has utterly neglected to attend to them.

He has refused to pass other Laws for the accommodation of large districts of people, unless those people would relinquish the right of Representation in the Legislature, a right inestimable to them and formidable to tyrants only.

He has called together legislative bodies at places unusual, uncomfortable, and distant from the depository of their Public Records, for the sole purpose of fatiguing them into compliance with his measures.

He has dissolved Representative Houses repeatedly, for opposing with manly firmness his invasions on the rights of the people.

He has refused for a long time, after such dissolutions, to cause others to be elected, whereby the Legislative Powers, incapable of Annihilation, have returned to the People at large for their exercise; the State remaining in the mean time exposed to all the dangers of invasion from without, and convulsions within.

He has endeavoured to prevent the population of these States; for that purpose obstructing the Laws for Naturalization of Foreigners; refusing to pass others to encourage their migrations hither, and raising the conditions of new Appropriations of Lands.

He has obstructed the Administration of Justice by refusing his Assent to Laws for establishing Judiciary Powers.

He has made Judges dependent on his Will alone for the tenure of their offices, and the amount and payment of their salaries.

He has erected a multitude of New Offices, and sent hither swarms of Officers to harass our people and eat out their substance.

He has kept among us, in times of peace, Standing Armies without the Consent of our legislatures.

He has affected to render the Military independent of and superior to the Civil Power.

He has combined with others to subject us to a jurisdiction foreign to our constitution, and unacknowledged by our laws; giving his Assent to their Acts of pretended Legislation:

For quartering large bodies of armed troops among us:

For protecting them, by a mock Trial from punishment for any Murders which they should commit on the Inhabitants of these States:

For cutting off our Trade with all parts of the world:

For imposing Taxes on us without our Consent:

For depriving us in many cases, of the benefit of Trial by Jury:

For transporting us beyond Seas to be tried for pretended offences:

For abolishing the free System of English Laws in a neighbouring Province, establishing therein an Arbitrary government, and enlarging its Boundaries so as to render it at once an example and fit instrument for introducing the same absolute rule into these Colonies

For taking away our Charters, abolishing our most valuable Laws and altering fundamentally the Forms of our Governments:

For suspending our own Legislatures, and declaring themselves invested with power to legislate for us in all cases whatsoever.

He has abdicated Government here, by declaring us out of his Protection and waging War against us.

He has plundered our seas, ravaged our coasts, burnt our towns, and destroyed the lives of our people.

He is at this time transporting large Armies of foreign Mercenaries to compleat the works of death, desolation, and tyranny, already begun with circumstances of Cruelty & Perfidy scarcely paralleled in the most barbarous ages, and totally unworthy the Head of a civilized nation.

He has constrained our fellow Citizens taken Captive on the high Seas to bear Arms against their Country, to become the executioners of their friends and Brethren, or to fall themselves by their Hands.

He has excited domestic insurrections amongst us, and has endeavoured to bring on the inhabitants of our frontiers, the merciless Indian Savages whose known rule of warfare, is an undistinguished destruction of all ages, sexes and conditions.

In every stage of these Oppressions We have Petitioned for Redress in the most humble terms: Our repeated Petitions have been answered only by repeated injury. A Prince, whose character is thus marked by every act which may define a Tyrant, is unfit to be the ruler of a free people.

Nor have We been wanting in attentions to our British brethren. We have warned them from time to time of attempts by their legislature to extend an unwarrantable jurisdiction over us. We have reminded them of the circumstances of our emigration and settlement here. We have appealed to their native justice and magnanimity, and we have conjured them by the ties of our common kindred to disavow these usurpations, which would inevitably interrupt our connections and correspondence. They too have been deaf to the voice of justice and of consanguinity. We must, therefore, acquiesce in the necessity, which denounces our Separation, and hold them, as we hold the rest of mankind, Enemies in War, in Peace Friends.

We, therefore, the Representatives of the united States of America, in General Congress, Assembled, appealing to the Supreme Judge of the world for the rectitude of our intentions, do, in the Name, and by Authority of the good People of these Colonies, solemnly publish and declare, That these united Colonies are, and of Right ought to be Free and Independent States, that they are Absolved from all Allegiance to the British Crown, and that all political connection between them and the State of Great Britain, is and ought to be totally dissolved; and that as Free and Independent States, they have full Power to levy War, conclude Peace, contract Alliances, establish Commerce, and to do all other Acts and Things which Independent States may of right do. -

And for the support of this Declaration, with a firm reliance on the protection of Divine Providence, we mutually pledge to each other our Lives, our Fortunes, and our sacred Honor.

Financial Literacy

Knowledge, understanding, and wisdom are complimentary and synergistic.  However, it should be clear that only wisdom embodies the qualities of all three.  It is possible to have an abundance of knowledge, deep understanding, and a complete lack of wisdom.

NAZI Germany (and successors totalitarian governments around the world today) demonstrated this gap most shockingly when it applied knowledge of what is required to sustain human life and understanding of how to eliminate those requirements to annihilate six million Jewish and other human beings.  Wisdom was absent.

When discussing knowledge, understanding, and wisdom as they relate to personal economics, considering the role of education is essential.  21st century Americans do not understand money.  One of America’s leading commentators on money, wealth, and business in general said this:

“In most cases, when people make more money, they get deeper in debt.” – Robert Kiyosaki

These folks have knowledge and understanding but a serious deficit in wisdom.

Nonsense from VP  Joe Biden and Others

Our educators, legislators, unions, big businesses, and government bureaucracies have led Americans down a similar path to financial ruin.  Many Americans’ personal economies are already broken and the US government is following a fools path to financial ruin with its insistence that “We the people” need more debt.

“Now, people when I say that look at me and say, ‘What are you talking about, Joe? You’re telling me we have to go spend money to keep from going bankrupt?’. The answer is yes, that’s what I’m telling you.” – VP Joe Biden

Debt Equals Loss of Liberty

The foundation for a personal (or national) economy is money that you control.  Debt is money that others control.  Worse still, it is money that you actually pay those others to control.  You give up your libertyand pay others to do so as if it were a privilege.

Alternative to Debt

EUREKONOMICS™ teaches that money serves you in four – and only four – ways.

  1. It serves to eliminate debt and regain control of money that was previously ceded to others.
  2. It serves as ready cash to deal with life’s surprisingly unsurprising surprises – unexpected expenses and opportunities.
  3. It serves to deliver inflation protected income at a time of your choosing that you don’t have to work for and you can’t outlive.
  4. Finally – in every sense – your money and your wisdom about money allow you to deliver a legacy to those you care most about.

Debt is financial death and the death of liberty.  Presidents, Vice Presidents, legislators, union bosses, big business execs, and individual Americans that fail to recognize this fact lack knowledge, understanding, and wisdom.

Jeffrey Reeves

Jobs in the 21st Century

Change We can Believe In?

NOT!

Chains We Will Grieve In?

INDEED!

Chains on the Citizens of America?

President Obama and the Democrats in the US Congress are tinkering with the motherboard of economics without knowing anything at all about the printed circuitry that makes it work.

Chains on Jobs

They have to stop!  They have to stop BEFORE they takeover health care.  If they don’t, pretty soon the only jobs in America will be…

  • government jobs
  • jobs for businesses that the government runs

That’s not Free Enterprise.

That’s not “life, liberty, and the pursuit of happiness.”

That’s not the America envisioned by the Founders.

That’s not the America Americans want.

Redefining America and “American”

America needs neither the terrifying tsunami of new programs overwhelming it from the White House nor the violent volcanic eruption of legislative magma and ash under which the Congress is burying us…can you say “DEBT?”

Who Is In Charge?

Some Americans voted for “change” during last years presidential sweepstakes – clearly a gamble.  However, a very small but not inconsequential minority of far left politicians, union bosses at the helm of sinking ships loaded with the gold of working Americans  they claim as their own, and cabinet members turned bureaucrats conspire to takeover the US economy.

There are other contributors to and beneficiaries of these catastrophic changes:

  • ACORN, a secretive organization that manipulates good-hearted Americans for the benefit of its intentionally obscure ideology and the financial benefit of its dishonest leaders
  • The union bosses of the SEIU, AFL/CIO, AFSCME and others who confiscate dues from their members to elect their puppets and line their own pockets
  • AARP- Americas largest insurance seller masquerading as the voice of older citizens while it lobbies for programs that will enhance its bottom-line and increase the political power it wields in the White House and on Capitol Hill
  • Al Gore’s army of uninformed global warming crusaders who would willingly weaken the US economy – and therefore the personal economy of every US citizen – while China, India, the Oil States and other economic powerhouses buy America with money made by ignoring the same unrealistic and unnecessary protocols the Dolts in DC impose on American citizens and businesses
  • Other vocal interests in the non-profit and for profit sectors that hope to benefit from the “re-interpretation” if the US Constitution, the restructuring of the US economy, and the re-definition of what it means to be an American.

Put Yourself In Charge of Your Personal Economy

The question – or perhaps answer – the title to this article addresses is…

“How can you protect yourself and your family from the almost certain economic crises financed by the unimaginable debt these ill-advised and programs incur?”

The answer:  Change your mind about money. Americans have been taught to compartmentalize money issues.  We’ve been led to believe that we can fix our personal economic problems by focusing on one issue at a time: the mortgage, the 401(k), creating the mythical six months savings account, taxes.  As an example, a TV commercial running currently suggests that you can fix your monthly budget by changing from your existing satalite TV company to theirs – a savings of a few dollars per month.

Personal economies don’t work that way.

Personal economic success results from adopting a personal economic model that allows you to address all of the challenges you face during your lifetime; that allows you to flexibly and creatively deal with them as they arise without losing focus on the big picture.

Here’s how: Focus on four – and only four – uses of your money.

1.  Ready cash…There is a myth in America that you should have three to six months of expenses set aside to deal with emergencies.

BUNK!

Consider how many American families today are facing foreclosure, repossession of their cars and furniture, bankruptcy…all because they believed in the myth and ran out of money way too soon.

Consider how many of these same folks would have spent the Fourth of July sitting on the patio, drinking a beer, and watching the kids play if they had based their personal economies on cash instead of credit.

American’s need to base their personal economies on cash money and not monthly interest charges that make others wealthy from their repayments of borrowed money.

In addition, they need enough ready cash to deal with life’s surprisingly unsurprising surprises not just emergencies.

2.  Income you don’t have to work for and you won’t outlive.

There’s another myth that plays into the failure of personal economies.  Most Americans are convinced that retirement is both desirable and achievable.

BUNK!

Most Americans believe that they are saving for retirement by putting money into a tax qualified retirement plan like a 401(k), IRA, or the like.

First of all, chances are better than even that money in a tax qualified plan will not produce the income it was projected to deliver when it was sold to you 20, 30, or 40 years earlier. It is the purchase of an investment that guarantees only that it guarantees nothing. It is not a savings plan.  Moreover, it is equally likely that the taxes on that income will be higher than those shown in the hypothetical illustration from decades earlier.

Everyone dies.  People who retire, i.e., dissolve into inactivity, die sooner.  Life expectancy has increased dramatically over the past fifty years.  If you are reading this, are in decent health, and don’t engage in stupid life-threatening activities, you can expect to live to be 100 years old – or older.

What’s the point?  Most retirement income plans (including tax qualified plans) and planners use life expectancy tables to determine how you should allocate your resources from the time you retire until the date of your death at average life expectancy, which is most likely a decade or two less than your actual life span will be.  Sounds like bad planning to me.

Better to have a proven model that makes sure you have the income you need whether you work or not but doesn’t strap you with the limitations and probable failures of a hypothetical plan that neither guarantees nor promises specific results.

3.  Freedom from debt…There are pundits and advisors who would have you believe that there is such a thing as “good debt.”

BUNK!

It is essential to reduce and eliminate debt to others.  This may not be the first item on the “to do” list if you have a mortgage, auto loans, credit card debt, etc. but is equally as important as the others.

The USA Today article referenced above illustrates that America is “in debt up to [its] eyeballs” and has no reasonable chance of escaping the dungeon it’s creating for itself.  As Peggy Lee sang a few decades ago, “Is that all there is?…If that’s all there is, my friend, then let’s keep dancing.  Let’s bring out the booze and have a ball, if that’s all there is…”

Reliance on debt for the essentials and perks of living in the US is financial nihilism; keep using it until you can’t, embrace failure, and start again.  Unfortunately, there are thousands of homeless Americans that discovered that it is nearly impossible to regain what they lost to debt.  There are millions more that find themselves in diminished circumstances or relying on public assistance and charitable largess.

None of the above denies that there are occasions when incurring debt can be useful.  Our economy permits it and encourages it when there are no other reasonable alternatives; the home mortgage being the prime example.  However, relying on debt to build your personal economy is just as silly as relying on a poor diet to assure your health.

4. Your legacy…There is a class of Americans that believe you should die broke and leave no legacy to your heirs or anyone else.

BUNK!

I personally feel that leaving a legacy of wisdom and wealth (if you have it) is one of the main reasons God put us here.  The Declaration of Independence and the US Constitution embody the economic wisdom we need to pass on based on their Judeo-Christian value system.

Creating family wealth has allowed America to grow into the most powerful economy in history.   The simple truths found in the finaicial admonitions of Benjamin Franklin, Alexander Hamilton, and other lesser knowns are why Americans have amassed more wealth in 200 years than the rest of the world did in two millennia.

Perhaps those who have received no legacy find it difficult to comprehend these ideas.  If that’s you, let me ask you to imagine your life had you received the guidance of wise counsel and the benefit of a financial foundation.  If you do so honestly, you will recognize the value of legacy – and do something about it.

These four pillars are essential to every successful personal economy.

Money is the essential foundation for that success.  Debt may play a role, but it erodes the foundation and weakens the structure so must be used sparingly and cautiously.

Remember the paradox of frugality:  When individuals strengthen their personal economies by following the practices of the EUREKONOMICS™ Model they weaken the hold of The Debt Paradigm on the economy that is being promoted in Washington and on Wall Street.

The “soulution” to the thrift paradox may be as elusive as Nessie (the Lock Ness monster) to the Dolts in DC and the Wonks on Wall Street, so I expect the US economy to muddle along until we replace them with representatives that actually understand economics and have a modicum of wisdom.

In the meantime, take care of yourself.  Build your personal economy on a solid foundation that supports the Four Pillars.

Jeffrey Reeves

Going Broke in Style

While the Chinese, Middle Eastern, and Indian economies achieve new levels of diversity based on productive labor, America’s economic charm seems to lie in the misguided and misanthropic measures flowing out of the US Congress at the behest of President Obama.  America is putting on heavy chains of debt, locking it in for decades and giving the keys to foreign governments that have our demise as one of their primary goals.

Where Is The Fourth Estate?

Don’t the successless sychophants in the mainstream media recognize that the Federal Government is following precisely the same path illustrated in the famous (or perhaps infamous) Stanley Johnson commercial?  The Congress and the President have us up to our eyeballs in debt, and it’s debt to the wrong people.

What does that mean for your personal economy?

  • It means that money that you have faithfully deposited into retirement accounts is at great risk.
  • It means that every penny of debt you have personally, compounds the debt you have as a US citizen.
  • It means that the advice you received over the past thirty years is wrong.
  • It means the rules have changed, or at least reverted to the more sensible guidlines that allowed our forebears to live and die comfortably without relying on debt-to-others.
  • It means – most of all – that those who change their way of creating and managing their personal economies and personal wealth will have a much better chance of escaping the swamp into which our “leaders” are guiding us.

Keep Your Eye on the Prize

Personal economics is like a jigsaw puzzle.  If you don’t know what the final picture looks like, you’ll have a great deal of difficulty solving it.  Americans have lost sight of the end result - creating and managing their personal economies – and have been deluded into thinking that the pieces of the puzzle – investments, mortgages, IRA’s, etc. – are what’s truly important.

The problems in DC and the problems in your household are the same.  The pieces make up the puzzle, but no one piece is the solution.  Instead, we recommend that you find a “soulution” that fits you and your family.

by Jeffrey Reeves MA, EUREKONOMIST

It is the month of August, on the shores of the Black Sea. It is raining, and the little town of Bombasticus looks totally deserted.  It is tough times, everybody is in debt, and everybody lives on credit.

 

Suddenly, a rich tourist comes to town. He enters the only hotel, the Ritzski, lays a 100 Euro note on the reception counter, and goes to inspect the rooms upstairs in order to pick one.

  • Pierreski, The hotel proprietor quickly takes the 100 Euro note and runs to pay his debt to Thumbless Joe the butcher
  • Thumbless Joe the Butcher takes the 100 Euro note, and runs to pay his debt to Porky the Pig Farmer.
  • Porky the Pig Farmer takes the 100 Euro note, and runs to pay his debt to Fred at the Pig Feed Store.
  • Fred at the Pig Feed Store takes the 100 Euro note and runs to pay his debt to the Irma, the town’s prostitute that, in these hard times, gave her “services” on credit.
  • Irma runs to the hotel, and gives the 100 Euro note to Pierreski the hotel proprietor to pay for the rooms that she rented when she brought her clients there.

The hotel proprietor then lays the 100 Euro note back on the counter so that the rich tourist will not suspect anything. At that moment, the rich tourist comes down after inspecting the rooms, and takes his 100 Euro note, after saying that he did not like any of the rooms, and leaves town.

 

No one earned anything. However, the whole town is now without debt, and looks to the future with a lot of optimism…

And that, ladies and gentlemen, is how the United States Government is doing business  today.

It’s March 2009.

Americans are struggling with the cost of everything from mortgages to groceries.  The struggle is the outcome of three decades of misinformation about how to handle the money that flows through the lives of American individuals and families.

Your personal economy succeeds when you control the money that comes into your life.

The Behmoths on Wall Street, Behemoth banks and insurance companies, and the Behemoth US Congress [the Dolts in DC], and the IRS…

  • Have convinced you that they know better than you what is best for you and your family
  • Have convinced you to divert your money into accounts that they control
  • Have convinced you that a maybe dollar in twenty or thirty years is worth more than a real dollar today
  • Have convinced you that you can only have the things you need and want today by using credit and mortgaging your future income and your current net worth.

BUNK!  BUNK!  TRIPLE BUNK! and BUNK ONCE MORE!

Everything you learn from this blog, and from our published works, aims to reveal and clarify the most basic secret of your success with your Personal Economy…

“Keep control of the money that flows into your life.  Give control of as little of your money as possible to the Behemoths.”  Dr Agon Fly

In addition, the experienced Money for Life Guides listed on YouBEtheBank.com will teach you strategies and tactics to help you gain and keep control of your money.  They know how to guide you on a path that assures the success of your personal economy regardless of the bursting of real estate bubbles, the crashing of markets, and the dishonesty of the Behemoths.

“Starting today, we must pick ourselves up, dust ourselves off, and begin again the work of remaking America.” President Barack Obama’s Inaugural Address, January 20th, 2009

Dear Mr. President,

There are among us hundreds, perhaps thousands of dedicated, intelligent, passionate people that have been diligently working for decades at “remaking America.”  One group of professionals in particular has helped a multitude of American families and small businesses escape the dungeon of debt that has become the resting place of millions of their fellow countrymen.

These professionals have helped their clients build personal economies that are thriving today while most other Americans bemoan their losses.  You might ask how they helped their clients build economies that thrive in good times and bad.  If you were to ask that question you would discover that there is one consistent answer.

Economies built on capital [I like to think of that as money] that is controlled by the individual as opposed to the banks, investment houses, government, unions or any other Behemoth remain solid in all economic conditions.  Economies like America’s in the late 20th and early 21st century are based on debt.  The reliance on debt is based on the faulty notion that debt trumps capital in the national economy and in personal economies.

Look around you, Mr. President.  Is there a single institution, business, government, of family that has an economy based on capital that is in serious trouble.  No.  On the other hand, every economy that is based on debt – especially the one you just became responsible for – is failing and needs to pick itself up, dust itself off and begin again.

Pelosi’s Pork Barrel adds nothing to the economy.  It adds immensely to the debt.  It doesn’t pick us up.  It drives us further down.  It does not help us begin again.  It forces America to continue its downward spiral.  It creates no new jobs but assures cronies are paid off.  It moves the economy backwards as it elevates political hacks.

Pelosi’s Pork Barrel would prove a black mark on the start of your administration, President Obama.  Looking forward, accepting the Pelosi Pork Barrel would be a terrible mistake for the economy, for you presidency and – most imprtantly – for America.

By Jeffrey Reeves

www.YouBeTheBank.com

Much later, according to a new poll of holiday shoppers by Consumer Reports.

 

In my book Money for Life…How to thrive in Good Times and Bad a great deal of time is spent discussing the Debt Paradigm; a system of thinking about money that suggests that you can have everything you need and want as long as you have enough credit [that really means you have debt].

  • According to the survey, 23% of Americans will not pay off their holiday debt until March or later, equaling $14.6 billion in interest-accruing debt.
  • Over one-quarter of Americans (26%) use credit cards most often when holiday shopping, contributing to the $63.6 billion charged on credit cards throughout the shopping season.
  • Among those using credit cards to pay for holiday gifts, 17% or more plan on accumulating $1,000 or more in holiday charges.

Here are two ideas from the same survey that might help you avoid this insidious trap:

  • With little more than a day to go until Christmas, re-gifting becomes an attractive option. A noteworthy proportion of consumers (13%) are planning on re-gifting. Men are more likely to re-gift (17%) than women (10%).
  • After the holidays, 16% of consumers plan on returning some of the gifts they received. Men (21%) are more likely than women (12%) to return some of their gifts.

Holiday shopping makes people usually spend more than they intend to.  In addition they rack up major credit card bills looking for bargains, after the season.

 

Don’t fall into the trap.  Or, if you already have, seek out a financial guide that can show you how to be your own banker and never get trapped again.  You can find a guide who is trained in this financial discipline at http://www.youbethebank.com/find-an-advisor.html

 

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

 

Published: September 7, 2008
WASHINGTON — The Bush administration seized control of the nation’s two largest mortgage finance companies on Sunday, seeking to shrink drastically their outsize influence on Wall Street and on Capitol Hill while at the same time counting on them to pull the nation out of its worst housing crisis in decades. 

______________

The plan represents a cease-fire in a decades-long ideological battle over the proper role of the companies. Free-market conservatives see the companies as extensions of “big government,” while Democrats have protected them as the main vehicle to promote affordable housing for middle- and lower-income people.

http://www.nytimes.com/2008/09/08/business/08fannie.html?_r=1&hp&oref=slogin

___________________

www.YouBeTheBank.com

Here’s a story that should make you madder than h… and wake you up to the reality that is the credit card business.

A businessperson applied for and received an Advanta credit card with a low permanent rate of 7.99% – not an introductory rate, a low permanent rate.

  • The card was used to pay all of the businesses expenses and was paid in full periodically as cash flow allowed; ususally each month or so.
  • All payments were made on time and the credit limit was never exceeded.
  • There were no cash advances taken and the “courtesy checks” that came with almost every bill, and which carry usurious rates, were summarily shredded as they were received.
  • The businesspersons’s credit score was in the high 700′s and the business itself had never had any kind of negative report from any credit reporting agency or vendor.

So, what did Advanta do? They raised the rate to over 20% with a two week notice and with no justification other than “We adjust rates based on a variety of factors.”

Here’s the reality.

  • You have NO CONTROL of the money that is tied up by credit card companies or of the rates they can charge you for the use of that money.
  • Credit card issuers can raise your rate for NO REASON AT ALL and with minimal notice.
  • Unlike the fixed or variable rate mortgage on your home, the terms of the mortgage on your paycheck that credit card companies hold can be changed by them without cause or limit – that’s right, they can charge you 100% if they wish.

Credit is a trap. You cannot win the credit game and you cannot escape unless you learn to be your own credit grantor; to be your own bank. It’s not as hard as it sounds or appears. You have to change your mind about money and adopt The Money for Life Plan thatl lets You Be The Bank. I know this is a commercial of sorts, but I also know that those who follow this approach are rocking comfortably on the front porch while others are sneaking out the back door to avoid the bill collectors.

By the way, the businessperson cancelled the credit card, paid off the balance and now relies entirely on her own bank.

____________________________

www.YouBeTheBank.com

____________________________

“Prepare not a path for your children. Prepare your children for a path.”
Dr Agon Fly

The Bike…

Here’s an example of how one man prepared his child for a path and passed on a Legacy.

 

Mr. and Mrs. Smith started a “bank” for their only son when he was born. They used whole life insurance and funded it in anticipation of the boy’s future needs.

When Junior was 11 years old, he came to Dad very excited about a bike he had seen advertised. (I remember that feeling. For me it was a Schwinn with a chrome headlight prominently displayed in a store window.)

“Dad” he said, “there’s this really cool bike at the ABC Bike Store, and Dad, if I had this bike, it’d be the coolest bike on the street and I really want it Dad.”

“How much does this bike cost, Junior?” Dad asked.

“Welllllll…ummmm…I think it’s kinda ‘spensive, Dad” Junior replied and he handed Dad the newspaper ad.

“Nine hundred dollars is a lot of money for a bike, Junior,” said Dad with a bit of surprise in his voice.

The First Lesson…

Then, after a long pause, Dad said, “I think it’s time for you to learn about money, Junior. When you were born, your Mom and I started a very special savings account for you. We still own the account, but the money in this account is there to help you learn about money. Let’s call this account your personal “bank.” It’s time for your first lesson.”

Dad explained to Junior that he could borrow the money for the bike from his “bank,” and that Junior would have to repay the money borrowed. Then he taught Junior the basics of interest and payments in the life insurance policy.

When Junior objected that he didn’t have any way to make the payments, Dad reminded him that he received an allowance to buy his lunches, to buy birthday gifts, go to the movies and so on. He could decide to use that money differently if he really wanted the bike more than those other things. Dad also offered to pay Junior extra money if he agreed to do some chores on a regular schedule. Junior would have enough income to pay back his “bank” at the rate of $33.00 per month – including interest – in just less than three years and still have some money left over for other things.

The bargain was struck, and Junior got the coolest bike on the street. When the other kids saw the bike they were amazed and wanted one just like it.

“How much did your Dad pay for it?” they wanted to know.

“Dad didn’t buy it for me” Junior replied, “I borrowed the money from my own ‘bank’ and bought it myself for over nine hundred dollars.”

 

The Real Value of the “Bank”…

 

Imagine how Junior felt. His bike made him feel proud. His “bank” enhanced his self-esteem. You know which of those is truly important. The bike will rust. Self-esteem turns into gold: not just financial gold but moral, ethical and relationship gold as well. Junior went on to finance his first car at 16 and repay himself. He then used the “bank” to fund a large part of his college costs and repay himself. He’ll soon be buying a new car…and financing it himself…while the money in his “bank” is growing tax-free. In addition, Junior always recovered both the principal and interest in his “bank” that he – or his dad – would otherwise have paid to a commercial lender.

Think about how much tax-free money Junior will control in another 50 years and the kind of financial kick-start his children and grandchildren will have because he learned about Money for Life when he bought the bike at age 11.

“What is important for kids to learn is that no matter how much money they have, earn, win, or inherit, they need to know how to spend it, how to save it, and how to give it to others in need.” Barbara Coloroso

That is legacy.

 

Jeffrey Reeves

If the price of gasoline doesn’t wake up America to the foolishness of its reliance on debt for lifestyle and “rate of return” and tax deferral for wealth creation, then we may all be speaking Arabic or Chinese within a few decades.

This blog and the book Money for Life…(thrive) in good times and bad are dedicated to helping Americans – and perhaps some in foreign lands too – escape the dungeon of debt where they are imprisoned and recapture the money that they are literally giving away to credit grantors, investment companies and the government.

Think about it. It’s as simple as 1,2,3…

  1. Debt will never make you rich.
  2. Bear-Stearns, one of the largest investment banks in the world, went broke chasing “rate of return”
  3. Every time you take a tax deduction from the government for a retirement contribution you are effectively taking out a loan that you’ll have to repay when you “retire.”

There is today, and has been for millennia, a better way to handle your money. You need to control the money that flows through your life, become your own banker and recover, in your own “bank,” the interest and principal that you currently pay to others, reduce or eliminate your dependence on the Pirates of Manhattan and the government’s hold on your future and declare yourself independent, just as the Founding Fathers did over 200 years ago.

Start today. Start here–> www.youBEthebank.com

___________________________

“Carpe diem. Seize the day boys. Make your lives extraordinary.” Dead Poets Society, 1989

America! We have been bamboozled by BS from Behemoths (the name given to large corporations, unions and government.) As long as we adhere to their paradigm and wander like zombies through our financial lives, we are doomed to be, as Benjamin Franklin warned 200+ years ago, their servants.

Russ Wiles, a writer for the Arizona Republic, wrote this just a day or so ago:

May 18, 2008
Financial issues still baffling Americans

Are doctors and auto mechanics really easier to understand than financial professionals? One recent survey says so – the latest indication there’s a literacy gap out there when it comes to money issues.

Most Americans have a lot of financial burdens to carry, whether it’s simply paying the monthly bills or investing for retirement, drafting an estate plan or borrowing prudently. Yet many signs suggest millions of people aren’t up to the task.

The article goes on to discuss our lack of literacy, excess credit, failure to educate our youth and a variety of other observations. It’s time Americans take back their personal economies from the Behemoths and their minions. It’s time to “seize the day”; learn more about personal economies, own more of what we use every day instead of just using things that we finance; relying on debt for our well being instead of building wealth.

Carpe diem! –> www.TheMoneyForLifeBook.com

(Read the entire article here http://www.clarionledger.com/apps/pbcs.dll/article?AID=/20080518/BIZ/805180347/1005)

“Frankly, my dear, I don’t give a damn.” Gone With the Wind, 1939

America is committing suicide by Congressional Cowardice!

The Congress doesn’t “give a damn.” It has completely abrogated its sworn responsibility to provide vision, wisdom and leadership. Some in Congress have given their votes and their minds over to the insane claims of fringe groups who really hate America. Others have relinquished their power to the Behemoths; corporations, unions, lobbyists that disguise themselves as spokespersons for some group or cause, and government agencies whose only function is self preservation regardless of the cost to the Country and its People – that’s you and me and 300 million other Americans.

All in Congress have put political party goals above the needs of America.

The presidential candidates are members of Congress, too. Each of them has “caved” to one or more of the caveats of their constituents during the campaign. All of them have failed the “vision, wisdom and leadership” test when it comes to recognizing and dealing with the realities of the 21st century.

Obama naively clings to an exclusive far left agenda while promising to be a uniter. Clinton is strident as she proposes specific, liberal, tax-increase based solutions to every imaginable challenge masked in so much detail that even an advanced degree in economics wouldn’t help one understand – or believe; just like HillaryCare of 1993. McCain offers only partial insights into his thinking and programs as he tries to convert his image from that of an independent minded conservative to that of a ”sorta” party loyalist.

There are two intimately related issues that should drown out the cacophony of claims by the crazies and the wimps and overshadow every other concern:

  1. America is at war. Insane Islamic zealots believe that only they possess the truth, and that destroying the western world in the name of Allah is the path to their heaven. It’s war declared on America - not criminal activity.
  2. America’s – and the world’s – economy is based on oil.  If America doesn’t tap into its own oil reserves – as every other country in the world is doing – America will soon become a slave to the OPEC nations like Saudi Arabia and Venezuela – the birthplaces of the Islamic and other crazies. At the same time, America needs to have the vision to commit significant resources to oil alternatives.

If our leaders deal with these two issues, every other concern will resolve itself.

Some will argue that the current economic malaise is driven by failures in both the oil and the financial industry. The financial industry, however, is becoming more and more dependent on oil rich countries to supply it with the fuel for its engine, and that means dependence on oil by proxy.

Your personal economy depends on America being a leading economic power. If America fails to maintain its status as the engine of liberty through its economic strength, you and I will become servants to some foriegn power.

We need to elect leaders who recognize and deal with these harsh realities instead of those in Congress today who pander to every Behemoth that promises a contribution to their campaigns to stay in office – translate that as “to stay in power.”

In the meantime, you need to find ways to save money that allows you to control the money in your life. At the micro level you can switch to energy efficient light bulbs, drive more slowly and less often, buy more fresh food and less prepared food; that will help you and the rest of us too.

At the macro level you need to gain control of your money, to apply principles and practices that have been tested and proven over centuries and millenia and that apply equally today. This blog attempts to shed light on them. For a fuller understanding –> www.TheMoneyForLifeBook.com

_________________________

“Today, I consider myself the luckiest man on the face of the earth.” The Pride of the Yankees, 1942

The final proof of Money for Life,,,in good times and bad was sent to the printer today. Now the work of getting this amazing document that recalls the teachings of the world’s wisest financial minds from millennia past into the hands, minds and hearts of Americans begins in earnest
Thanks to all who read this blog for your support and encouragement.

I am exhausted today from the emotional and intellectual effort of proofing so I am ending this blog post early.

______________________________

Money for Life…in good times and bad – How to Thrive in the 21st Century will be released on May 1st, 2008. Everyone who buys the e-book version before May 1st will also receive an autographed copy of the paperback when it is release. No special codes are needed. Don’t be an April fool; make the purchase before April 30th. Shipping and handling charges will still apply. –> www.TheMoneyForLifeBook.com

“After all, tomorrow is another day!” Gone With the Wind, 1939

For some folks, every day is April Fools Day.

Don and Mary went to the auto show intending to learn about hybrid cars and SUV’s. They planned to buy a vehicle when the new 2009 model year created the opportunity to buy a low mileage 2008. They hoped that would help them keep their budget for both payments and fuel under control.

They left the auto show with a gas guzzling 2008 luxury SUV that they bought on a whim because it was being sold for less than the dealer’s cost. They thought that they could figure it all out in the days ahead; after all, tomorrow…

Every day American’s are overwhelmed with “opportunities” to buy the latest and greatest products – everything from the miracle sponge being hawked in the 60 second infomercial to the house with the price reduced to $1,000,000. Every day some American’s are fooled by the cacophony of claims in consumer products advertising  and the oft repeated but rarely accurate promises of financial success chanted by Wall Street’s merchants of misinformation.

Over 250 years ago- almost 100,000 tomorrows - Benjamin Franklin said “Many a man thinks he is buying pleasure, when he is really selling himself to it.” Every day creates new April fools of people who believe they can buy their way to wealth and well being.

Don’t let it happen to you. Learn how to manage the money that flows through your life. Don and Mary woke up the tomorrow after their folly, exercised their right of recision on the purchase of the SUV and breathed a sigh of relief. “After all, tomorrow is another day!” doesn’t have to be a fatalistic mantra. It can also mean that you can change your mind about money matters and change your behavior in positive ways.

SPECIAL OFFER! –> The paperback version of  Money for Life…in good times and bad – How to Thrive in the 21st Century will be released on May 1st, 2008. Everyone who buys the e-book version before May 1st will also receive an autographed copy of the paperback when it is release. No special codes are needed. Don’t be an April fool; make the purchase before April 30th. Shipping and handling charges will still apply. –> www.TheMoneyForLifeBook.com

_____________________________

“Elementary, my dear Watson.” The Adventures of Sherlock Holmes, 1939

Peter Bernstein is one of the elder statesmen in the world of economic thought.  At age 87, his expectations and thoughts about the future have been accurate for decades. It is rewarding to find someone of his stature and experience indirectly endorsing the strategies and practices that are presented in Money for Life…in good times and bad – How to Thrive in the 21st Century. Here’s a brief excerpt form his recent letter to John Mauldin, another analytic economist that hits the nail on the head more often than not. I encourage you to read all of this letter and consider how you are going to manage your money in the future based on the thinking of these informed and insightful comments.

The Shape Of The Future
By Peter L. Bernstein

The root of today’s problems in the financial markets and in the economy as a whole is the household sector.  The point needs no elaboration, but its significance cannot be minimized. As we have argued on more than one occasion, the shrinkage in the personal savings rate is not the result of consumer profligacy, as other commentators persist in describing it. Rather, the savings rate has been suppressed by a slowdown in the growth of household incomes. The shortfall between income and outlay has been met by borrowing, and in particular by borrowing against the family real estate. Now the opportunity to borrow has shrunk dramatically, an outcome that will profoundly change the household’s spending power and spending patterns.  But the impact is not just on the household. A slowdown in the growth of consumer spending has ominous implications for the entire global economy – and, along the way, the U. S. federal deficit, soon to be overburdened by spiraling benefit obligations. This predicament is not a short-run matter, unless home prices abruptly reverse themselves and head back into the stratosphere – which is hardly likely.”

Read – and re-read – the entire letter here –> http://www.investorsinsight.com/otb_va_print.aspx?EditionID=670

______________________________________

 

www.TheMoneyForLifeBook.com addresses this issue at its core. It shows you how to thrive while others just survive or worse, descend into the dungeon of debt that never releases its prisoners without first inflicting great pain and leaving deep scars.

__________________________________________

“There’s no place like home.” The Wizard of Oz, 1939

Gino and Bernice managed their money carefully, saved a down payment and bought their home after a few years of marriage and the birth of their son. Gino’s income as a unionized cement worker depended on the weather and the good will of his employers but, because he was skilled and reliable, he was able to work regularly.

Within fifteen years Gino and Bernice paid off the mortgage – early. The money that they spent on mortgage payments was then redirected into their “banks”. When, many years later at age 63 , Bernice was diagnosed with pancreatic cancer, the family was able to cover her out of pocket medical costs and provide Gino with support services as Bernice languished for 18 months and died peacefully in her home on her 65th birthday.

A few years after Bernice died, Gino’s 65+ years of heavy smoking and drinking wore out his heart and lungs. While he was on oxygen for emphyzema he had a heart attack and survived open heart surgery. He lived for several more years as a semi-invalid and his son and daughter-in-law provided him with support around the house and in the yard.

When Gino finally died, his son inherited the house free and clear, plus thousands of dollars from Gino’s “banks” and savings accounts. The son, Pat, still rents the house. Within a few years Pat was able to use the inheritance and rental money to help pay off his own mortgage well before its final payment due date. The rent from the family home and the monthly mortgage payment, which he no longer has to pay, go into “banks” for himself, his wife, and his three children.

When Pat is 67 and ready to retire, he will have two properties, both paid for; one producing income and the other costing only taxes, insurance and maintenance. His three children will have college educations with no college loans.  He will have a stable retirement income from his and his wife’s retirement plans from work, social security, income from the rental, and substantial income from his savings plans, with much of it tax free from his “banks”. Their retirement income, by the way, will exceed their working career income.

There is no such thing as “good debt” for an individual or family. There are occasions and situations where debt is useful or necessary. That doesn’t make the debt good. A mortgage is a debt; sometimes useful and often necessary, but still a debt.

Those who would have you believe that mortgaging your home to the hilt so you can “invest” the equity with them are selling a dream that that will put money in their pockets and could easily become a nightmare for you and your family. They want to convince you that this strategy is followed by the “wealthy” and if you just do the tricks they teach, you too will be wealthy.

BUNK!

Measure such “plans” against this template before you buy into them:

  1. Does their plan have guarantees?
  2. Are the guarantees strong enough to support the end result that is being illustrated?
  3. Could you get results that were substantially better than the guarantees without buying into the plan being sold?
  4. Are the non-guaranteed elements of the plan based on both back-testing and actual performance of the companies and products you are being asked to purchase?
  5. If non-guaranteed results are based only on back-testing because the products and/or companies have only been around for a few years, does the back-testing cover at least 100 years to include the depressions of 1907 and 1929 and the doldrums of the late 1940′s and early 1950′s or does it go back only far enough to incorporate the longest and strongest bull market in the history of markets?

Your financial life can be like that of Gino, Bernice and Pat. They did not have to take great risks or buy into esoteric schemes to succeed with the money that passed through their lives. They employed simple, treid, tested and proven strategies that allowed them to live comfortabley without relying on debt. You can too. –> www.TheMoneyForLifeBook.com

“You don’t understand! I coulda had class. I coulda been a contender. I could’ve been somebody, instead of a bum, which is what I am.” On the Waterfront, 1954

George is 53 years old. His home is mortgaged to the hilt with first and second mortgages. The homes in his neighborhood are losing value because of the high number of foreclosures. Two of the family’s three cars are financed. The new kitchen appliances came from a big box store “Same as cash. No payments or interest for six months.” His True Net Worth is in the tank because he is upside down on everything.

George has an active 401(k) account at work into which he contributes 3% of his $43,000 salary in order to get the employer match. The 401(k) is worth about $47,000 – down from a high of $62,000. His wife, “Fitzie,” has just over $13,000 in two inactive IRA accounts – down from $16,500. She is currently unemployed so she can stay home with the four children who attend attend public school. They have $7,500 in savings. The children are looking forward to college but they will have to rely on loans, grants and scholarships to pay their way.

Add up the value of this family’s 35 years of work and you have an all too common snapshot of an American family. George and “Fitzie” followed the raodmap drawn by the Behemoths and ended up in the swamp of financial failure. They own very little. Everything they have is covered in debt. What they do own is of little value; a used car, furniture, retirement accounts that are inaccessible without significant loss to penalties and taxes, a modicum of savings that would disappear in a New York minute if George lost his job or “Fitzie” was diagnosed with cancer or one of the children got into trouble with drugs, alcohol or worse.

It’s not too late, however, for George and “Fitzie” to escape the Financial Swamp and teach their children how to avoid it too. Money for Life describes a path that leads to freedom from debt-to-others, passive income for retirement, ready money for emergencies and the opportunity to pass on a legacy of wisdom and wealth to those you care about – regardless of where you start from or how old you are. It is not a get rich quick scheme or a multi-level marketing program. It is 150 year old a tried, tested and proven approach to handling money.

Start by learning your True Net Worth with the FREE report Why Budgets Don’t Work. You can get the report at www.TheMoneyforLifeBook.com

____________________________________________

A recent study found that spending cash - tens and twenties and fifties -  was emotionally painful while flipping out the credit or debit card was not only not painful but created a sense of well being – unless, perhaps, you were entertaining at a high class restaurant and shivering in fear because you were unsure if there was enough credit left on your card to pay the bill.

I can relate to the pain of spending cash. I hate spending money. Taking actual cash out of my pocket and giving it to someone else galls me. I recently had the opportunity to buy a 2004 Mercedes Benz ML350 (a small suv) with only 29,000 miles on it for a great price. I have the money to finance it myself, but I just couldn’t bring myself to part with thousands of dollars even knowing that I would repay every penny of principal and interest into my own “bank.” It was too painful. Plus, my 1993 Geo is still running strong and getting 30+ miles per gallon so spending money on the Mercedes wouldn’t be the end of giving my money away. I’d have to spend more on gas, and service would be more expensive too - more money out of my pocket.

Borrowing the money from a bank to buy the Mercedes was tempting. That way I’d give my money away in smaller chunks and it might not hurt as much. It would cost a lot more, but I could rationalize and say I was using the bank’s money. The bank would smile at me, but giggle in the back room because the bank would know how much money they were going to make off of me over the finance period, and the bank would also know that the car was really theirs until the last payment arrived in 24, 36, 48, 60, 72 or 84 months – the longer the better - for the bank.

The Debt Paradigm has America convinced that individual citizens can apply the same rules to their personal economies that governments and major corporations apply to their much larger and more robust economies. American’s are subjected to seminars and other training programs that portray the behavior of the “wealthy” as the ideal and insist that the average American can live like Donald or Oprah if only they follow the magic path to riches that the other wealthy folks are traveling.

BUNK!

There is a way that any American, who wants to, can build a personal economy that lasts starting from wherever he or she is today and without mastering some esoteric system that was perfected by the “wealthy.” —> www.TheMoneyForLifeBook.com and you owe it to yourself to give it a look.

___________________________________-

If you rely on the media for guidance about money and investing you will soon find yourself lost in a forest of financial misinformation. Both the financial media and the mass media develop their information from sources within the financial community – lobbyists for a specific point of view that serves the bottom line of Behemoths, not your best interests.

Even worse, the well known “advisors” who appear on television and the radio are performers and pundits, not trained financial guides. Their goal is to sell advertising to support their “show” and books and tapes and seminars and speaking engagements to sell their next book, tape, seminar and speaking engagement. I have no problem with that; it’s free enterprise and it makes us all stronger. I do it myself, but in addition, I put my 35+ years of experience helping individuals, families and businesses small and large with money issues into the equation.

That’s not the point of this post, however. Watching the news this morning to catch up on the primary results I realized that over 60% of the commercials on three different cable networks – CNN, FOX and MSN – were focused on negotiating tax relief with the IRS, negotiating debt reduction with credit card companies, acquiring new credit cards, borrowing to buy things and “interest free” purchases. Another 20% focused on capturing your money in 401(k) rollover accounts, planning for your “dreams” (interesting choice of words), on-line stock trading or other investment schemes, health insurance or mortgage rates. (I guess the politicians are wisely watching the commercials instead of the “shows.”)

The commercials do not address the same topics as the pundits and performers. They do address the issues my clients talk about every day, “How can I have the things I need and want without the risk of debt overtaking my personal economy?” or ”How do  I run my business so the profits come to me and not the IRS?” or any of dozens of other questions about current concerns; paying for college, or health care, or retirement, or housing, or vacations, or cars, or…you get the picture.

My point is this: American’s are trapped in an outmoded pattern of thinking I call The Debt Paradigm, which recites its mantra non-stop: “You can have everything you need and anything you want as long as you have enough credit.” We are even using credit to pay for our retirement when we finance the things we need and want and, at the same time, put money aside in an IRA, a 401(k) or its equivalent instead of paying for what we buy with money from our own “bank”.

The Point! The media and the pundit performers always operate in their own best interest not yours. They continue to tell the story of The Debt Paradigm as if it were the gospel. Even when they decry debt, they still promote the corrolary to the main mantra, which is that investing is better than saving. They are wrong.  Americans  have lost thier way. The past offers wisdom and the 21st century offers powerful financial products that serve you and not the Behemoths.

You owe it to yourself, your family and your future to discover the secrets to Money for Life…in good times and bad. If you don’t want to spend the $29.95 to buy the book, at least get a head start on your future and get the FREE white paper Why Budgets Don’t Work at www.TheMoneyForLifeBook.com

_____________________________________

Financial Satisfaction Survey Results posted on a separate page –>

_____________________________________

Societies throughout history are prone to rely on shibboleths as guides. (Shibboleths are oft repeated statements that are considered true just because they are oft repeated.) The millennia old myth of a “sorcerer’s stone” that can turn lead into gold persisted for centuries and led many great thinkers astray. No European would dare sail westward in the 15th century for fear of falling off the end of the earth until an Italian sailor proved the shibboleth to be what it was – an empty fear carried on the wings of empty words. Winged flight was an impossible dream until two bicycle makers from Dayton, Ohio proved otherwise at the beginning of the 20th century.

Here’s a modern shibboleth that is as untrue as those just listed: Whole life insurance is a bad investment. Let me briefly explain why this shibboleth is false and share a few insights as to why whole life insurance should be the foundation of your personal economy.

First off, whole life insurance is not an investment. This makes the statement that “whole life insurance is a bad investment” untrue from the start. It also makes false the implication that whole life insurance is in some way the same thing as an investment and can, therefore, be fairly compared to an investment. Whole life insurance is whole life insurance.

  • ~ Whole life insurance (and its cousin, fully funded Universal Life insurance) is unique among financial products. It does what no other financial product can; it lets YouBeTheBank.
  • ~ Whole life insurance guarantees that you will have more money at the end of each year than you started with at the beginning of that year – guarantees it.
  • ~ You can use the cash values of whole life insurance to finance major purchases like furniture and appliances, to finance home improvements, to finance your cars, even to finance your mortgage.
  • ~ Your money grows tax free in a whole life policy and, with the proper guidance, you can get it out tax free when you need an income in the future.

Re-read the Dazzling Dozen page –> and the 14 previous posts on the Dazzling Dozen and you’ll get a more comprehensive, though not complete, understanding of the power and potential of whole life insurance. Better yet – go to www.TheMoneyForLifeBook.com and buy the book Money for Life…in good times and bad. You’ll discover a complete guide that lets you apply the tested and proven capabilities of whole life insurance combined with the power of 21st century financial thinking and advanced financial practices to create a personal economy that lasts – in good times and bad.

____________________________________

The Financial Satisfaction Survey will be closed this Friday. We’d love to have your anonymous responses – it takes only two minutes –>

____________________________________

Part I of this discussion ended by stating the mantra of the failed Debt Paradigm that so many Americans have been duped into subscribing to; “You can have everything you need and anything you want as long as you have enough credit.” This installment deals with the alternative to the Debt Paradigm we call the Money for Life Model.

The Debt Paradigm tells you that earning and borrowing have equal value in the wealth equation. This thinking, however, creates a money siphon that mortgages your future income and ultimately leads to severe financial stress or even bankruptcy. If I were more adept at blogging there would be a diagram here to illustrate this concept but let me at least try to elucidate with words.

Picture a bucket into which water is flowing - that’s your income going into your checking account. As time goes by, you dip water out of the bucket to take care of your needs and wants just as you take money out of a checking account to pay your bills. Eventually (in the Debt Paradigm) the money flowing into the bucket is less than the money flowing out. The bucket becomes empty. What happens next – and it usually happens before the bucket is empty – is the use of a new money source – credit – to pick up the shortfall of money flowing into the bucket. Aaah! Relief.

But is it really relief? It seems to be so because the new money source is large and friendly (at this point) and you are able to get the things you need and want. But, while this new money source is pouring money into your bucket, it is also installing a siphon with a variable valve attached to take money out. If you follow this paradigm to its logical conclusion, the siphon will eventually take most of the money out before you can spend it and the money source will stop pouring new money in and you will be left with a bucket that has an open siphon that takes your money before you can use it – bankruptcy.

The Money for Life Model changes this verbal picture only slightly. The Money for Life Model installs the siphon when you start pouring money into your bucket and siphons some of the money that comes into income your bucket into your “bank”. When the money coming in is less than the money going out you dip into your “bank” to make up the difference and open the siphon into your “bank” a bit more to replace wht you’ve taken out. This approach recycles your money instead of allowing debt dollars to flow in from credit grantors.

This approach to wealth building is much more than the outmoded “pay yourself first” axiom suggests. It is based on this idea but goes way beyond. If you would like to learn more about your debt siphon, visit www.TheMoneyForLifeBook.com and request your FREE copy of the exclusive white paper Why Budgets Don’t Work.  (Of course you will also learn about the groundbreaking book Money for Life…in good times and bad.  If your time is short, you can scrroll to the bottem of the page to order the report.)

_________________________________________

Financial Satisfaction Survey page –> will close in about a week. We appreciate your contribution of two minute of your time to anonymously answer a few questions.

_________________________________________

“The use of money is all the advantage there is in having money.” Benjamin Franklin, Poor Richard’s Almanac

Americans has been duped into thinking that the things they buy are “the advantage there is in having money” – the luxury automobile, the house in the hottest neighborhood, the membership in the exclusive club, the time-share in Aspen or Spain, the investment that everyone’s talking about, and on and on. These things give the appearance of wealth. The reality is that every penny of debt that an American has offsets the value of the stuff they own.

Don’t imagine that the equation on the commercial bank’s credit application or the inventory for your homeowner’s insurance company applies here. When you have debt – any debt – the cost to you of the money you borrow is greater than the value of the thing you bought. Let’s wrap some numbers around this statement to illustrate.

Suppose you buy a home entertainment center for $10,000 cash. Right out of the chute your home entertainment center would be worth no more that 50 cents on the dollar if you had to sell it. Now, let’s suppose you also have an outstanding $10,000 home equity line of credit at 6% interest. Clearly, you are paying interest on the entire purchase price through a debt you had prior to the purchase, and that discounts the value of what you bought even further. Add to that the interest that could have accrued if you had saved and…

It gets worse. If you are like many Americans you also have unsecured credit card debt – typically about $10,000 – and an interest rate of about 14%. Imagine what that does to the value of your entertainment center. Pretty soon, if you follow this exercise to its logical conclusion, you’ll come to realize that your entertainment center that is worth less than half the advertised price actually cost you twice the advertised price or more.

It gets worse still. You have a couple of autos that are financed, perhaps some education loans and a few thousand dollars in retail store charges. Add it all up and any money you are earning on your 401(k) or IRA is being wiped out.  In addition, you’ll soon come to recognize that all this debt has discounted your future earnings. Before you ever receive your next paycheck, it is diminished by the payments – both principal and interest - on your secured and unsecured debt.

When Benjamin Franklin – or any other money sage throughout history – talks about “the use of money,” they are not talking about “the spending of money.” The word “use” here means “employ.” It refers to creating wealth not just the appearance of wealth.

If you and your family are not on a path to eliminate all of your debt while concurrently laying a foundation of ready cash to deal with the surprisingly unsurprising surprises that life deals out every hour of every day, you are on track to fail financially.

The current failed paradigm, which adheres to the mantra that “you can have everything you need and anything you want as long as you have enough credit,” leads only to one end. It isn’t a pretty one, and it isn’t one toward which Dr. Ben Franklin or Dr Agon Fly would guide you.

There is a much better way.  Get your copy of Why Budgets Don’t Work, the FREE White Paper developed exclusively for our newletter subscribers at www.TheMoneyForLifeBook.com 

 __________________________________

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