Taxes

Gift Tax Sale…

Gifting has always been a very effective estate planning tool. Not only does a completed gift generally remove the gifted asset from the donor’s estate, it also removes any future appreciation from the estate and may offer income-shifting advantages.

Important changes for 2011 and 2012:

  • The lifetime gift tax/estate tax exclusion is increased to $5 million per person ($10 million per couple) with a top tax rate of 35 percent. This increase is unprecedented and creates a rare opportunity for large gift-tax-free wealth transfers.
  • The generation-skipping transfer-tax exemption is increased to $5 million.
  • The gift and estate tax is reunified. Simply put, to the extent the exclusion is used for gifts during the donor’s lifetime, it is unavailable for bequests upon death.
  • Beginning in 2012: The exclusion amount is subject to indexing
  • As the law stands today, these limits will be reduced beginning in 2013

Rare Opportunity to Transfer Wealth!

A case study…

  • Ron and his wife are both in their middle-50s and have one son. Their net worth is over $8 million. Ron wants to provide a safety net for his wife and leave a legacy for their son and any future grandchildren, all the while minimizing transfer taxes.
  • Ron establishes an irrevocable life insurance trust (ILIT), with spousal lifetime access provisions to the cash value. He gifts $1 million to the ILIT, using a portion of his lifetime gift tax exclusion and generation skipping transfer tax exemption.
  • The trustee then uses the $1 million to purchase a 10-year certain immediate annuity. The annual after-tax guaranteed income payment is slightly more than $103,000.
  • The trustee then uses $102,000 of the annual payment to purchase a universal life policy with a death benefit of approximately $4,400,000.
  • Upon Ron’s death, the proceeds of the life insurance policy are to be held by the trustee, with income to be paid to his wife for life.
  • Upon her death, income is to be paid to his son for life, and then to his son’s children for life, etc.
  • The funds in the trust will escape estate taxation at each death.
  • Also, any transfers out of the trust to skip persons (generally persons two or more generations younger than the grantor) will be exempt from any generation skipping taxes.

Discussion…

Gifts may be transferred outright or in trust. An outright gift gives the donee unrestricted control of the property. This may not be suitable if the donee is a minor or a spendthrift. Gifts in trust offer the donor the ability to control the distribution of income and principal, while providing asset management and creditor protection for the trust’s beneficiaries.

Properly structured gifts of life insurance policies and/or premiums offer the donor the ability to leverage the value of the gift by removing the death proceeds from the donor’s estate.

The unlimited marital deduction for gifts and bequests to spouses remains unchanged, as does the annual gift tax exclusion permitting donors to give up to $13,000 ($26,000 for a married couple) worth of gifts to any number of persons each year without incurring a gift tax.

The annual gift-tax exclusion amount is indexed for inflation and is available for certain present-interest gifts to trusts requiring the use of a special notice each time a gift is made to the trust. However, use of the gift tax lifetime exclusion, instead of using the annual gift tax exclusion, means no special notices are required.

Gifting strategies for 2011 and 2012…

Using a cash value life insurance policy to fund the trust provides flexibility in uncertain economic times and amid changing tax laws. Flexibility in drafting trust documents, such as spousal lifetime access or trust protector provisions, can also be beneficial. Taking advantage of the two-year gift tax sale by making gifts in 2011 and 2012 up to the maximum amount of your available gift tax exclusion may result in your heirs receiving significantly more wealth.

by Jeffrey Reeves MA, EUREKONOMIST™

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.

 

 

 

 

 

 

Personal Financial Management and Economics Simplified

Imagine this result of Personal Financial Management…

  • A successful 45 years old
  • A couple of children about to go off to college
  • The stay-at-home spouse is about to re-enter the work force even though the family doesn’t need the income
  • The mortgage is paid off
  • No auto loans, credit card debt, or home improvement loans
  • Several years of living expenses set aside in cash value life insurance and the local credit union to deal with life’s surprisingly unsurprising surprises
  • A legacy of wisdom and wealth for those they care most about

Imagine that!

If you think you have to win the lottery or marry rich to achieve these goals, you are-as they say-drinking the Kool Aid. The Behemoths of big government, big investment houses, big banks, big stock insurance companies, the FED, the SEC, big unions, and big whatever have you bamboozled.

Behemoths

Behemoths have Americans convinced that cash and home equity, which are the two most basic elements in a successful personal financial management program and personal economy, are of no significant value.  According to the Behemoths, Americans should surrender their wealth and well being to them  for safekeeping.  Americans should ignore credit union membership, eschew tax advantaged whole life insurance policies from mutual companies, and convince themselves that eliminating the mortgage is a really bad idea.

BUNK!  Baloney! Bull!

Look more closely America. You’ve been misled. When you buy anything from a Behemoth, whether investments, 401(k)’s, IRAs, mutual funds, or stocks and bonds, the Behemoths guaranteed themselves a profit and guarantee you only that they guarantee you nothing.

As Benjamin Franklin wisely stated over 250 years ago, when you commit to a mortgage or any other form of debt you “give to another power over your liberty.”

Twenty Years Is All It Takes…

It doesn’t take a lifetime to lay a foundation and erect the Four Pillars of the EUREKONOMICS™ Model for creating wealth and managing personal finances…

  • Freedom from debt – including the mortgage
  • Plenty of ready cash to deal with life’s surprises
  • Secure income they don’t have to work for and can’t outlive
  • A legacy of wisdom and wealth

American families that use common sense and put their money into whole life insurance policies and local savings institutions where they can control it, can expect to create the financial management system described above in twenty years of earning and saving using the EUREKONOMICS™ Model.

Unclear Thinking

It is unrealistic and unclear thinking for American families to plan for and uncertain retirement when they have only a few months of expenses saved, they have little or no discretionary income at the end of each pay period, are “up to your eyeballs in debt,” and have an unpaid mortgage.

Tax Deductibility Is A Trap…

PS – “But, I get a tax deduction from the IRS when I put money aside for retirement.”

True. However, the IRS is a Behemoth and a tax deduction now defers both  the tax and the tax rate.  When you take post-retirement income the IRS will collect the taxes on that money and the tax they’ll levy will most likely be a lot higher than the relief you gained from your deduction early in your career.

If the IRS gives you a dollar today, they’ll take ten or more tomorrow.

by Jeffrey Reeves MA, EUREKONOMIST

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.

No matter what President Obama says and regardless of his eloquence saying it, it would be a dire mistake, completely lacking in common sense, wisdom, and – mostly – regard for the US Constitution, for “We the People” to allow or accept any health care or health insurance program created by the US Congress and run by the US Government bureaucracy.

The record of accomplishment for US Government run programs is abysmal.

  • Congress established The U.S. Post Service in 1775 – they’ve had 234 years to get it
    right.
  • o It is seven billion dollars in debt again this year and will need another “bailout” (a word that is becoming all too common these days).
  • Congress established Social Security in 1935 – They’ve had 74 years to get it right.
  • o It is broke. It survives only on funds the US Government has borrowed from the next generation of Americans.
  • Congress established Fannie Mae in 1938 – They’ve had 71 years to get it right
  • o It is broke. Moreover, it is taking millions of Americans to bankruptcy court while it survives on (here’s that word again) bailout money.
  • Congress established War on Poverty started in 1964 – They’ve had 45 years to get it right.
  • o The IRS confiscates over a trillion dollars of our hard earned income each year to distribute to Washington bureaucracies to help poor Americans escape poverty, but the poor still abound. The US Government is losing that war.
  • Congress established Medicare and Medicaid in 1965.  Both are health care and health insurance programs. - They’ve had 44 years to get it right.
  • o Both are broke. They survive only on funds the US Government has borrowed from the next generation of Americans.
  • Congress established Freddie Mac in 1970 – They’ve had 39 years to get it right.
  • o It is broke. Moreover, it too is taking millions of Americans to bankruptcy court with it.
  • In 2009 Congress established a fund of trillions of dollars in the massive political payoff called the TARP Fund.
  • o It shows NO sign of working the way the Congress and the White House (both Bush and Obama) presented it to “We the People.”
  • In the first weeks of the Obama administration, the US Congress passed an almost one trillion-dollar pork-barrel bill disguised as a stimulus package that would, we were told, moderate the recession and reduce unemployment.
  • o DUH! Did we really believe that?
  • And now—a new record: Congress established “Cash for Clunkers” (welfare for the auto industry) in 2009 and it went broke in 2009!
  • o So much for the ability of the US Congress to think ahead – it simply doesn’t exist.

 

So, with a perfect 100% failure rate, can Americans truly believe the US Government can
be trusted with a government-run health care system that the Congress designed?

 

“We the People” pay for every one of the failed programs listed above.  Add another trillion or so (remember, a trillion is one thousand billions) of our hard earned dollars to the money the US Congress can waste, and it most certainly will be wasted.

 

The health care system in America is undeniably the best in the world.  It became the best because “We the People” are in charge, and because the free enterprise system works.  However, “We the People” also know that the system is imperfect and that the delivery system for health care relies on insurance companies whose self-interest is often opposed to the interests of “We the People.”  It is also plagued by the irresponsible behavior of attornies that sue the medical commuity at the drop of a hat.

 

The health care and health insurance challenges that face America in 2009 have many more workable and less expensive solutions than the ones the Washington insiders are promoting.  None of these alternatives requires giving the US Government another opportunity to fail.

 

This blog is too short to enumerate them.  I encourage you to do some research on the internet where you will discover that the systems being modeled in Washington…

  • are failing across the globe
  • are loaded with political payoffs

By Jeffrey Reeves MA, youBEthebank.com, ltd and Ron Jennings, http://www.moneylearningcenter.com/

“The Ghost of Christmas Yet to Cometakes the form of a grim spectre, robed in black, who does not speak and whose body is entirely hidden except for one pointing hand. This spirit frightens Scrooge more than the others, and harrows him with a vision of a future Christmas with the Cratchit family bereft of Tiny Tim. A rich miser, whose death saddens nobody and whose home and corpse have been robbed by ghoulish attendants, is revealed to be Scrooge himself: this is the fate that awaits him.”  http://en.wikipedia.org/wiki/A_Christmas_Carol#Stave_IV:_The_Last_of_the_Spirits

There are many promises from the Congress and the President about how wonderful Insurance Reform (formerly Health Care Reform) will be for the American people.

If we want an insight into what will likely happen if these folks get their way, we need only look at what they are doing right now.

Over ten million American seniors – myself included – are enrolled in Medicare Advantage plans.  These are plans that mirror the program the proponents of reform say the “government option” will look like.  So, you’d think the Pres and Pelosi would hold them out as a stellar example.

Not so.  Instead they want to elimimate them and toss ten million Americans out on their keesters – OUCH!  What;s going on.  Here’s a program that delivers ALL of the benefits that are claimed to accrue from “reform” but the reformers want to terminate – along with a bunch of us old folks – because the program is “too expensive.”   Just like the hip replacement I anticipate in about ten years when I’m 80 will be too expensive because the wonderful government program needs the money for something else.

Wake up America!  The issue isn’t helath care, cap and trade, or immigration, the issue is LIBERTY.  The Founders of America broke with England because the British government confiscated the liberty of individuals through oppressive legislation and governance.

While we all want improvements to the way we deliver and pay for our health care, few truly want the Government to take over.  Say NO to any national health insurance scheme that directly or indirectly through “co-ops” cedes control to any agency or organization other than YOU and your family.

Beware of promises that are promised only to win your support.  If the Pelosi/Obama plan passes your future health care will be diminished as will you LIBERTY and your personal economy will suffer severly.

For a workable alternative that doesn’t allow the federal governmant to take over, seeNO! below or view the diagram at Adobe.com

Dennis Prager recently commented that he has been carrying American values around in his pocket for his entire adult life.  To clarify he reminded his audience that those values appear on the coins and currency of the United States: Liberty, E Pluribus Unum, In God We Trust. He referred to these values as the American Trinity.

These observations seem most appropriate at this time in the history of America.  It’s also most interesting that Dennis Prage linked these values to the US of A’s coinage and currency.  Particularly, the idea of liberty relates directly to money.  When the government controls the money that Americans rely on for life, liberty, and the pursuit of happiness, those inalienable rights of Americans are diminished.

In fact, throughout the recorded history of mankind, when governments control the citizenry by controlling the money that those citizens produce, those governments become facist, autocratic, repressive – even murderous.  We need only observe what’s going on in Zimbabwe, Venezuala, Iran, and North Korea today.

What’s going on in Washington DC is also disturbing.  America is on the brink of the greatest loss of liberty in its 233 year history; a loss that would be mourned equally by Democratic icons Jefferson and Jackson and equally by Lincoln, the soul of the Republicane party.  The more of our money that the US Congress and the Executive Branch controls, the less liberty we have.

It makes me proud to see and hear American citizens shouting down the puppets of the political parties and demanding the transparency and honesty we were promised during the 2008 campaign.  It will make me ecstatic when the US Congress backs away from the failed strategy that is on the table now, August, 2009.

That will only happen if Americans continue to challenge the Washington oligarchy that continues to deny we the people our voice.

A gift of humor and wisdom from Brad Sugars of Action Coaches

Suppose that every day, ten men go out for beer and the bill for all ten comes to $100. If they paid their bill the way we pay our taxes, it would go something like this…

The first four men (the poorest) would pay nothing.
The fifth would pay $1.
The sixth would pay $3.
The seventh would pay $7.
The eighth would pay $12.
The ninth would pay $18.
The tenth man (the richest) would pay $59.

So, that’s what they decided to do.

The ten men drank in the bar every day and seemed quite happy with the arrangement, until one day, the owner threw them a curve. “Since you are all such good customers,” he said, “I’m going to reduce the cost of your daily beer by $20.” Drinks for the ten now cost just $80.

The group still wanted to pay their bill the way we pay our taxes. So the first four men were unaffected. They would still drink for free. But what about the other six men? The paying customers? How could they divide the $20 windfall so that everyone would get his fair share?’ They realized that $20 divided by six is $3.33. But if they subtracted that from everybody’s share, then the fifth man and the sixth man would each end up being paid to drink his beer.

So, the bar owner suggested that it would be fair to reduce each man’s bill by roughly the same amount, and he proceeded to work out the amounts each should pay.

And so the fifth man, like the first four, now paid nothing (100% savings)

The sixth now paid $2 instead of $3 (33% savings).
The seventh now pay $5 instead of $7 (28% savings).
The eighth now paid $9 instead of $12 (25% savings).
The ninth now paid $14 instead of $18 ( 22% savings).
The tenth now paid $49 instead of $59 (16% savings).

Each of the six was better off than before. And the first four continued to drink for free. But once outside the restaurant, the men began to compare their savings.

“I only got a dollar out of the $20,”declared the sixth man. He pointed to the tenth man,” but he got $10!”

“Yeah, that’s right,” exclaimed the fifth man. “I only saved $1 dollar, too. It’s unfair that he got ten times more than I!”

“That’s true!!” shouted the seventh man. “Why should he get $10 back when I got only two? The wealthy get all the breaks!”

“Wait a minute,” yelled the first four men in unison. “We didn’t get anything at all. The system exploits the poor!” The nine men surrounded the tenth and beat him up.

The next night the tenth man didn’t show up for drinks, so the nine sat down and had beers without him. But when it came time to pay the bill, they discovered something important. They didn’t have enough money between all of them for even half of the bill!

And that, boys and girls, journalists and college professors, is how our tax system works. The people who pay the highest taxes get the most benefit from a tax reduction.

Tax them too much, attack them for being wealthy, and they just may not show up anymore. In fact, they might start drinking overseas where the atmosphere is somewhat friendlier.

For those who understand, no explanation is needed.

For those who do not understand, no explanation is possible.

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.

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

It is rare for me to quote someone else’s blog in full detail. However, Greg Moore is helping many Americans escape from the Debt Paradigm and his emails are always worth reading. I hope this one inspires…

 

Dr Agon Fly - www.YouBetheBank.com

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Getting Into the 0% Interest Loan Game…

The U.S. Government is getting into the 0% Interest Loan Game. Actually, if you consider income tax refunds are really 0% loans taxpayers make to the government, the government is already in the 0% game.

Only this time, instead of you receiving 0% on money you lend to the government, the government will lend you money at 0%.

I’m referring to the new Housing and Economic Recovery Act of 2008, specifically, the “First-Time Home Buyer Tax Credit” portion of this bill.

You can read the “current” details of this provision here:

http://www.federalhousingtaxcredit.com/

I say, “current,” because, as you’ll read, some details are still being worked out.

In a nutshell, the FTHBTC provides a “refundable” tax credit up to $7,500 for first-time home buyers on homes purchased between April 9, 2008 and July 1, 2009.

Tax credits reduce your tax liability dollar for dollar, so, for example, if you have a $10,000 tax liability and you were eligible for — and took — all $7,500 of this credit, you would only owe $2,500. The “refundable”

part means you will receive this credit even if you have no tax liability. If you owe nothing, you will receive a check up to $7,500. If you expect a refund, your refund check will be increased by the amount of the credit.

Now, before you begin scheming on all of the ways you can put this credit to work in your debt-elimination, wealth-building, or flat screen TV plans… wait!

The amount of your credit must be PAID BACK over a period of 15 years. “Tax-credit” in this case means you have an IRS loan at 0% for 15 years.

This is just a wee bit different than a traditional tax-credit…

Michelle Singletary, personal finance columnist for the Washington Post had a few questions for an IRS spokesperson…

Michelle: Since this is a loan from the IRS, will the IRS be sending an annual loan statement to taxpayers?

IRS: The details of how the IRS will collect this money or inform people have not been worked out. A line would probably be added to the standard 1040 tax form to indicate that the credit should be paid as part of your tax liability.

Michelle: Can I pay off the loan early?

IRS: The IRS hasn’t yet come up with a system to accommodate an early payoff.

Michelle: What happens if someone does not pay back the debt on time or at all?

IRS: The unpaid loan will be treated like any delinquent tax obligation, meaning standard IRS interest and penalties apply.

Yep. Just like any 0% loan you default on, the 0% rate disappears, which places it in the same category as 0% credit cards, with one exception…

Do you really want to have the IRS as a creditor?

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Greg Moore is the Architect of the Debt Freedom System, ‘DebtIntoWealth — Lessons from My Journey to Debt Freedom.”

http://www.debtintowealth.com/debttrap.html

DEBTINTOWEALTH.COM

 

By Ben Franklin and Dr Agon Fly

 

COURTEOUS Reader,

I have heard that nothing gives an author so great pleasure as to find his works respectfully quoted by others.

Dr Agon Fly agrees.

Judge, then, how much I must have been gratified by an incident I am going to relate to you. I stopped my horse lately, where a great number of people were collected at an auction of merchants’ goods.

Today we park our cars in multilevel parking facilities at multilevel malls where a great number of people are collected for “sales.”

The hour of the sale not being come, they were conversing on the badness of the times;

Just like last week, of month or year, times and topics remain consistent. Some see the world as full of shadows and others see it as full of light. Those who live on the dark side tend to engage in negative talk and behavior while those on the side of light focus on more positive thoughts and activities – as you will discover was the case in 1758 as it is today. Read on.

and one of the company called to a plain, clean old man, with white locks,

A picture of wisdom.

“Pray, Father Abraham, what think you of the times? Will not these heavy taxes quite ruin the country? How shall we ever be able to pay them? What would you advise us to do?”

Today, as in 1758, people look to those with experience and the wisdom of years for advice and counsel. The difference between 1758 and 2008 is that current America has mistakenly clothed government – including its most incompetent branch; the Congress – corporations, unions and bureaucracies with the mantel of both knowledge and wisdom.

Father Abraham stood, up and replied, “If you would have my advice, I will give it you in short; for ‘A word to the wise is enough,’ as Poor Richard says…”

Ah! The first words of Poor Richard and how profound. There’s much more to come. Read on.

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

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“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

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While those in the US Congress – three running  for president – are proposing a meaningless gasoline tax relief program, it’s important to remember that it won’t effect them at all and won’t really help the average American.

http://themoneyforlifeblog.com/?p=119#comment-29

Gain control of your money before the Behemoths do –> www.TheMoneyForLifeBook.com

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“Greed, for lack of a better word, is good.” Wall Street, 1987

Wes thought himself a pretty well informed financial advisor and planner. For years he’s told his clients to max out their 401(k) plans and put as much as possible into IRA’s and other tax sheltered programs. His premise is that taxes saved today are better than taxes paid later; that tax rates in retirement will be less than tax rates during one’s working career; that using the government’s money is always better than using one’s own money.

He followed his own advice in this regard and was now about to retire. To test the theory behind his 40+ year practice, Wes looked back over the strategies he used during his working life. He was shocked when he realized that the taxes he saved were nothing more than loans that the government was granting him and millions of other Americans. He finally sees that the taxes - also known as ”interest” – he would pay during retirement greatly exceeded the benefit he gained from the deductions – also known as “loans” – the government granted him earlier in life.

Wes had charts and graphs and hypothetical illustrations that “proved” his theories – theories promoted by the vast majority of financial advisors and planners. But, now Wes is faced with the reality that his successes are going to cost him much more in post retirement taxes than the taxes he saved.

But wait! The issue isn’t really about taxes. Isn’t the real issue net income after taxes?

Yes and no. Wes saw that his sophisticated planning and disciplined investing created a significant pool of money over the years and his retirement income would be more than adequate to his needs. He also saw, however, that had he followed a less sophisticated and less government dependent approach he could have had an equivalent or even better retirement income and pay few if any taxes, and he would be able to pay forward his money-wisdom and a much greater portion of his wealth to those he cared about.

“Greed, for lack of a better word, is blind.” Dr Agon Fly, 2008

Using other people’s money – even if it’s the government’s – is never ever a wise financial move. Learning to control the money that flows through your life in a way that let’s You Be The Bank is safer, steadier and more secure.

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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 recieve an autographed copy of the paperback when it is release. No special codes are needed. Don’t be an April fool; make the purchase befor April 30th. Shipping and handling charges will still apply. –> 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.

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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

“I’m mad as hell, and I’m not going to take this anymore!” Network, 1976

The economy is in a slump. The housing market is in a mess. The money markets are in confusion. The typical American family has been led into a dungeon of debt.

Not so with the members of the US Congress. They are getting richer and now they want to raise your taxes. They say it’s a tax increase for the richest Americans.

The truth is, increasing the current tax burden on Americans will not affect the richest in a significant way. If you are earning a million or two or more a year – and there are many earning more than that - your lifestyle will not be dramatically affected by a tax increase. Yeah, you’d be mad as hell but you wouldn’t end up at the soup kitchen.

But, if you are a typical American family, you could be driven to the poor house by the irresponsible tax and spend US Congress. Here’s what you can expect if the unconcerned and politically motivated Washington elite get their way:

“Why this large tax increase? The tax code changes enacted in 2001 and 2003 are scheduled to expire at the end of 2010. If they do, statutory marginal tax rates will rise across the board; ranging from a 13% increase for the highest income households to a 50% increase in tax rates faced by lower-income households. The marriage penalty will be reimposed and the child credit cut by $500 per child. The long-term capital gains tax rate will rise by one-third (to 20% from 15%) and the top tax rate on dividends will nearly triple (to 39.6% from 15%). The estate tax will roar back from extinction at the same time, with a top rate of 55% and an exempt amount of only $600,000. Finally, the Alternative Minimum Tax will reach far deeper into the middle class, ensnaring 25 million tax filers in its web.” The Coming Tax Bomb, The Wall Street Journal, 4/8/2008 (emphasis added by the blog)

We do not have much to say about the workings of the US Government other than our vote. As powerful as that is, when you have an entrenched aristocracy like the one in DC, even the right to vote does not allow for dramatic changes.

It is incumbent upon each American to develop individual financial programs and practices to protect him or her self from the wild and unpredictable misadventures of the Behemoths – the Federal Government being one of them. There is a way.

You can handle your money and your personal economy so that you can be your own banker and exercise much greater control of the money that flows through your life. This way is clearly defined in Money for Life…in good times and bad.

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 recieve an autographed copy of the paperback when it is release. No special codes are needed. Don’t be an April fool; make the purchase befor April 30th. Shipping and handling charges will still apply. –> www.TheMoneyForLifeBook.com

Insuring Against Recession

Check your life insurance policy to ensure it’s right for today’s troubled economy.

“A whole life insurance policy is the Swiss Army knife of the insurance world.”

Beth PiskoraManaging Editor, U.S. Editorial

The Outlook, Copyright © 2008, The McGraw-Hill Companies.

“Unemployment currently stands at 5%, but David Wyss, the chief economist for Standard & Poor’s, sees it creepingup to 5.5% by the end of this year. That means up to 750,000 Americans could potentially lose their jobs in 2008.

“Are you prepared — financially, if not emotionally — if you lose your job? If not, you might, with a financial advisor, consider buying more insurance. Even if you are retired, or feel very strongly that your income stream is safe, there are some stable long-term savings options in many insurance plans that you might want to consider in these volatile times in the stock and bond markets.

“While term life insurance is overall a more popular product, whole life insurance is enjoying a resurgence of demand. To understand if whole life is right for you, it’s best to know a lot about the product.

“A whole life policy can act as a buffer against estate taxes and probate costs, and provides a death benefit along with a living cash benefit, a feature unique to whole life. In addition, a whole life policy allows someone at the time of retirement to remain insured while spending the other assets they’ve accumulated or pursuing a more aggressive investment strategy for those assets.

“A whole life insurance policy is the Swiss Army knife of the insurance world,”…  read the rest here –> http://themoneyforlifebook.wordpress.com/why-whole-life-insurance-works-in-tough-times/

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Money For Life…in good times and bad – How to Thrive in the 21st Century addresses the issues raised in this article in detail.

buy it today at –> www.TheMoneyForLifeBook.com

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“Mama always said life was like a box of chocolates. You never know what you’re gonna get.” Forrest Gump, 1994

Jeff and Beth are 40 and have a plan. They manage their money wisely, could be the poster kids for prudent mortgage management, steer clear of credit card and consumer debt, promptly pay off any debt they incur out of necessity, put about $21,000 each year into their individual and their children’s “banks” and now, suddenly, are about to become the proud parents of twins.

“You never know what you’re gonna get.” and twins are going to force some changes to the “plan.” The first change is a significant reduction of income because Beth plans to semi-retire from her well paid corporate position to care for the newborns, and Jeff’s burgeoning university teaching career is just burgeoning but not yet in full bloom. This change creates others; funding for the “banks” has to be reduced, relocation is assured, the family home has to be sold in a down market, and, on the up side, two more tax deductions.

Since the “banks” are an essential piece of Jeff’s and Beth’s plan for the future, that’s the piece of chocolate we’ll address in this post. Jeff’s whole life policy is just entering its third year. Almost all of the premium that is paid into the policy this year is credited to the cash value account. This allows Jeff and Beth to pay the annual premium of $13,200 using a loan from Beth’s 401(k).

Once the premium has been paid using the 401(k) loan and credited to the cash value account in the policy, Jeff and Beth can immediately borrow it back from the policy and pay off the 401(k) loan. This leaves them with a debt to themselves that they can repay on their own schedule and with the money they have available.

In fact, they could borrow the premium from the policy every year for the next ten years and not make any payments out of their income and the policy would remain in force and retain some cash value. Jeff and Beth could, of course, pay the interest to themselves and assure that the policy would remain in force for decades and grow in value.

That won’t happen. Jeff and Beth will bite into another piece of chocolate and discover another surprisingly unsurprising surprise that will change their lives and their plans; they could win the lotto or lose an investment. The constant financial fact that allows them to go forward with confidence is the power and flexibility inherent in their personal economy because of their “banking” system.

“You never know what you’re gonna get.” but you can make sure you can handle it. Discover how –> www.TheMoneyForLifeBook.com

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Thu Mar 13, 2008 5:04pm EDT By Kevin Drawbaugh

WASHINGTON (Reuters) – The personal wealth of members of the U.S. Congress has soared in recent years, leaving lawmakers on average far more well-to-do than most Americans as of 2006, said a study on Thursday.

The median net worth of senators was estimated at $1.7 million and House of Representatives members at $675,000, said the Center for Responsive Politics, a Washington watchdog group that monitors the influence of money on government…”They have millions of dollars invested in politically influential industries that they also regulate,” such as real estate, banking, pharmaceuticals and energy, the center said.

http://www.reuters.com/articlePrint?articleId=USN1330776120080313

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Gain control of the money that flows through your life before your Congress Person does –> www.TheMoneyForLifeBook.com

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I am grateful that I live in America where I can complain without recrimination about paying money to the government in taxes .

I am also grateful that the government to which I pay those taxes protects me from crime, foreign invasions, charlatans of all kinds and – at times – from myself.

The taxing business of paying money for taxes results from our always-self-interested elected fools – especially those in DC – who are spending our tax money to get re-elected. I wish the dim-wits in the US Congress…

  • ~ would eliminate the IRS,
  • ~ enact a flat tax of some sort,
  • ~ enact a balanced budget amendment,
  • ~ give the President the line item veto,
  • ~ fix Social Security (including placing themselves and all other federal workers in the system),
  • ~ commit to energy independence,
  • ~ solve the illegal immigration problem,
  • ~ figure out a free enterprise solution to the health insurance mess…

In other words, our legislators should solve our country’s problems instead of spending their time trying to demean and impeach each other for the sake of their own perceived political gain.

The US Congress has become an impediment to solving the problems of the people they are sworn to serve. It is they who have divided the country. It is they who have thrown the gauntlet and created the duel between the branches of government. It is they and their political agendas that have stymied progress in so many areas. It is they who are wasting our money and making the business of paying taxes – taxing.

The behavior of the US Congress is unethical and immoral. I’m not talking about the few who stashed money in their freezers or took lobbyist money and got caught or behaved badly in some airport. I’m talking about the entire US Congress that is stealing from America and putting America at risk by ignoring the people’s business in favor of partisan infighting and personal aggrandizement.

We can rant about the Collective of Clods on Capitol Hill and hope our words sting some enough to create the substantive change America needs. We can’t create that change.

We can individually create the changes in our personal money practices that allow us to maintain peace of mind about our money regardless of the shenanigans of the Weak-Backed Wimps in Washington. I encourage you to discover how –> www.TheMoneyForLifeBook.com

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Eliot Spitzer, soon-to-be former governor of New York, spent most of his recent professional career tilting against windmills on Wall Street and chasing the operatives of organized crime. He won a few battles and gained power in the process. Money wasn’t an issue for this privileged man who is heir to a $500 million estate. The money allowed the public man to erect a facade of rectitude while the private man supported criminal institutions - his real crime – by spending tens of thousands of dollars – perhaps even some of the people’s dollars – on high priced prostitutes.

“Power tends to corrupt, and absolute power corrupts absolutely. Great men are almost always bad men.” The historian and moralist, John Emerich Edward Dalberg Acton, first Baron Acton (1834–1902), who was otherwise known simply as Lord Acton, expressed this opinion in a letter to Bishop Mandell Creighton in 1887. Eliot Spitzer could be the poster child for Lord Acton’s assertion.

There is a lesson we can learn about our own money from Spitzer’s downfall. I don’t buy the claim that this is “a personal matter”, which implies that it affects only the person who abused. When money is misapplied – as was the case here – it demonstrates disrespect for spouse, children, co-workers, the law and lawmakers, bureaucrats and enforcement personnel, and the people – that’s you. That’s far from “personal.”

It is important to respect money just as we respect other property and persons. When we misapply our money  we adversely affect others. We create dependency on others, which deprives them of resources. We create a downward financial spiral. Following the Debt Paradigm is a form of disrespect of money. It creates a facade of concern about self and family but is really self indulgence, fired by basic human tendencies and desires. But, just as Spitzer deluded himself into believing that he could evade reality, that his behavior was just a “personal matter,” so we delude ourselves about spending practices that incur debt and that serve the aims of Behemoths instead of ours and those of our families.

Money for Life…in good times and bad is a book about money and – tangentially – about morality. It deals with ways to respect yourself, your family, your life and your money with the certitude that such respect requires and reinforces ethical behavior. Take a look at the Table of Contents for the book at www.TheMoneyForLifeBook.com and see if there isn’t the glimmer of and idea there that might be of interest to you.

See http://themoneyforlifebook.wordpress.com/about-money-for-lifein-good-times-and-bad/

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PS – Pointing at the ethical and moral failures of others is risky business since no one – excepting a few saints – is free of failure or perfect in execution. I have made my share of mistakes in life as have most. I use Eliot Spitzer’s failures as the example instead of my own because his high office and visibility add drama and credibility to the point being made that an obscure financial writer and guide cannot equal.

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PPS – I believe passionately that people who follow the practices described in Money for Life…in good times and bad will reap benefits that diffuse throughout their lives and will create abundance for them, their families and their heirs. — www.TheMoneyForLifeBook.com

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It’s always nice to find support for an idea. Here’s a great article that elaborates with elegance and clarity on the lack of economic wisdom in the stimulus program that the DC insiders have foisted upon us and which we commented on a few days ago.

Ben Franklin said “If you do what you should not, you must hear what you would not.” I hope the folks in DC hear what Yaron Brook has to say…

Forbes.com

Commentary
To Stimulate The Economy, Liberate It
Yaron Brook 02.14.08, 10:28 AM ET

While some in Washington are quibbling about the details of the economic stimulus package, nearly everyone agrees with its basic idea: that our ailing economy needs Uncle Sam to play doctor and hand out some $150 billion in consumer spending money. But this sort of government intervention is not the cure for our economic troubles. It is the cause.

To understand why, we must first recognize that the key economic activity that causes growth is not consumer spending but production.

Read the rest of this very insighful article here –> http://www.forbes.com/2008/02/14/yaron-economy-regulation-oped-cx_ybr_0214yaron_print.html

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If the Legislative and Executive branches of our government followed the wise counsel of our Founding Fathers they would not make many of the mistakes they do. Ben Franklin also said “The ancients tell us what is best; but we must learn of the moderns what is fittest.” If you would hear the wisdom of the Founders expressed in terms that fit the 21st Century go to www.TheMoneyForLifeBook.com and get your copy of Money for Life…in good times and bad – How to Thrive in the 21st Century. You’ll never regret knowing more or owning more.

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The economic thinking – or lack of it – that comes out of Washington DC gets more perplexing as time goes by. Value-challenged do-nothing Democrats and  weak-kneed Republicans who have lost their way passed legislation that dumps $160 million into the economy from which it was taken in the first place. They call that economic stimulation.  It sounds alot more like electioneering to me. Why else would the Hatfield Democrats and McCoy Republicans agree?

In the meantime the US Senate is spending thousands of hours and dollars talking at (not to) professional sports personages and ignoring the clear and present danger to the economy posed by our dependence on international idiots like Chavez and Ahmadinijad; pretending that the Social Security and Medicare Systems can be fixed with higher taxes - and “universal health care” can be added in - eventually requiring a 50% rate on all earnings including capital gains just to support these three programs; turning their backs on any kind of true tax reform; trying to convince us that Congress can redistribute wealth through the tax system so the poor get richer and the rich get poorer – all the time diguising and protecting their own wealth accumulated from lobbyists, lucrative speaking engagements, book deals for books about nothing, insider information that turns many Congress Persons into multi-millionaires; and pork barrel set-asides that seem to magically create Congressional wealth as they slither through the legislative process.

I am not a pessimist about much. I am very doubtful of the good intentions and the intelligence of the US Congress. The Democrats are paralyzed by the unreasonable and irrational “Bush Derangement Syndrome” – if an idea comes from the White House or could make the President look good, it’s gotta be bad. The Republicans have so lost their way that they fail to hold to their most basic economic principles and spend our money as if they are in Las Vegas and our tax dollars are their personal dollars to be gambled away.

Nothing of importance is getting done, the economy and the American people are being damaged while the bullies in Congress are forcing money into their pockets or their re-election campaign accounts with vigor and impunity. What to do? You can hold your personal rep responsible, vote for someone else – it’s a challenge on the political side.

On the personal side you can change your mind about money and adopt a personal economic plan that lets YouBeTheBank – www.TheMoneyForLifeBook.com -and gain control of the money that flows through your life. You can put your money in protected whole life insurance policies

  1. where it grows tax free
  2. is available as a source of borrowing where all the payback is to yourself
  3. as a source of ready cash for emegencies or dream fulfillment
  4. as a source of tax free or at least tax advantaged income whenever you want it
  5. is a way to pay your wealth forward tax free  when you die to those you care about.

www.TheMoneyForLifeBook.com could do more to save the American economy than all the legislation the inept US Congress can create out of its collective fantasies. You owe it to yourself to know more and to own more.

The 2008 tax year offers couples who earn less than $65,100 ($32,550 for singles) a zero percent (o%) capital gains tax rate. That’s right – NO TAX. Therefore, the senior who sells an asset that would normally create a taxable event can get by with no tax at all.

While I’m not a great fan of structuring your personal economy around the tax laws, it only makes sense to take advantage of a tax laws that keeps your money in your pocket instead of siphoning it off to the IRS. Let’s use an example. Assume you have some stock that you’ve been holding for a few years (or decades). You could sell the stock and make $30,000 as a capital gain. At the 5% capital gains rate you’d save $1,500 in taxes. Now, you can take that entire $30,000 and buy another investment and postpone the gain, or perhaps buy an annuity and convert the enitire amount into a guaranteed income and receive that income entirely tax free. (Of course, you’d need the advice of an independent investment professional and perhaps your accountant to make sure all the rules are followed.)

This is one more example of how an advisor who is familiar with Money for Life strategies and tactics can save you money and then convert the money saved into a benefit for you.

Forbes on-line recently published a clear article on this topic. It mihgt be worth your time to review it

http://www.forbes.com/2008/02/13/capital-gains-taxbreak-pf-education-in_dp_0212investopedia_inl_print.html

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www.TheMoneyForLifeBook.com makes a great gift for someone who is struggling with their personal economy and finances.

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The Financial Satisfaction Survey is creating some very interesting insights. Take just two minutes and put in your two cents worth –>

USA Today, CNN, Fox, the out-of-touch networks ABC, CBS and especially NBC, all conduct “polls” that address one aspect or another of your satisfaction with your life and your personal economy. The problem that arises with these “surveys” is that the questions are narrowly constructed to either justify a position or support a belief.

I’d like to ask the visitors to this blog to take a very brief and fun survey about their personal economy during the month of February. I’d also like to ask you to invite as many of your friends and family as you feel comfortable contacting, to take the survey also.

At the end of the month I will publish the results

Click Here to take survey

No topic is more divisive than National Health Insurance. Everyone wants it in some form or another but there is no consensus – even among the strongest supporters.

No risk is greater to Americans’ personal economies than the cost of health care, long term care and end of life care. Entire estates, which have taken a lifetime to create, can be decimated by these expenses in a matter of months or just a year or two – and often are. 78% of bankruptcies among seniors can be traced to these causes. But it’s not just seniors that are at risk; half of all bankruptcies and business failures result from a money drain created by medical disabilities or expenses.

This is a problem that needs a solution.

There are hundreds of competing lobbyists that invade Washington every hour of every day promoting one solution or another and 535 gullible legislators soaking up their bad ideas and good booze. There is, however, a simple (relatively speaking) free enterprise solution that has been available for decades but which doesn’t make any business richer or bureaucracy stronger – so it’s ignored.

In the most simplistic terms it would work like this.

  • ~ All individuals would be covered by individual health insurance, eliminating group insurance plans and employer involvement in individual choice. Employers could, voluntarily or by union agreement, continue to  subsidize individual employee premiums but would not choose the plans or options.
  • ~ Individual health plans would not provide preventative or wellness care under the risk management insurance plan. These non-risk based services would be available as optional benefits and would tend to reduce the cost of the insurance benefit but raise the overall cost.
  • ~ Insurance companies would be required to accept all applicants and to charge everyone in the same risk class the same rate. They could charge extra for risks that are related to individual choices like smoking, or obesity that is not caused by medical conditions.
  • ~ The government, preferably at the state level, would help the indigent, unemployed and those below certain income levels pay the cost of the insurance.
  • ~ Insurance companies would also contribute to a government regulated but privately owned and operated reinsurance fund that would compensate an insurance company that experienced claims above a certain level on a given individual – called stop loss coverage in the insurance business. This would correspond to FDIC, FNMA, and other non-governmental organizations that exist today and function in the free market.

Obviously this is an oversimplified discussion of a very complex problem  After 30+ years watching the health insurance industry and the federal and state governments wrestle unsuccessfully with this problem, however, it’s time for some new thinking…

  • ~ that keeps the government out of the management of this problem
  • ~ but allows government to play its legitimate role as a regulator
  • ~ and allows the free enterprise system to do what it does best – deliver services in a competitive market

Pass this on to your friends and your congress persons. Maybe it will start a discussion that will solve a large problem for each of us.

You can find where this fits in a personal economy on the Four Pillars page and get much more detail on how to manage this problem in the current environment in the Money for Life book.

www.TheMoneyForLifeBook.com

Please take the two minute Satisfaction Survey described on the page in the right column –>

USA Today, CNN, Fox, the out-of-touch networks ABC, CBS and especially NBC, all conduct “polls” that address one aspect or another of your satisfaction with your life and your personal economy. The problem that arises with these “surveys” is that the questions are narrowly constructed to either justify a position or support a belief.

I’d like to ask the vistiors to this blog to take a survey about their personal economy during the month of February. I’d also like to ask you to invite as many of your friends and family as you feel comfortable contacting to take the survey also.

At the end of February the results will be published on the blog.

Thanks for your cooperation and support.

Click here to take the survey…

Visit  www.TheMoneyForLifeBook.com

Rarely I will post a link to expand on a discussion.

On other occasions I post a link because its content is so compelling that my comments may seem trivial in comparison. This is one of those times. Take a few minutes to read this post – it is apolitical – and you’ll gain a deeper appreciation for the problem and its impact on all of us.

http://www.investorsinsight.com/otb_va_print.aspx?EditionID=647

I’ll post again later this morning.

www.TheMoneyForLifeBook.com

Every now and again the market creates something out of nothing. The “801(k) Plan” sales letter you might receive in your inbox creates nothing out of something.

A sales letter published by Stansberry Research touting the “801(k) Plan” seems to be describing what are commonly called:

Dividend Re-Investment Plans or DRIPs

The claim of Stansberry Research that these plans are somehow “secret” is a stretch at best. So also are their claims that you can make millions with such plans investing only a few dollars a month.

DRIPs have a place and can be a valuable addition to your money plans. Beware, however, that if you were relying on a DRIP from ENRON or MCI your drip became a drop and then evaporated. Investment advisors do not normally recommend this approach because there are no commissions involved so you’ll need to do some research to discover if it is right for some small portion of your savings and investment dollars. DRIPs are designed to be consistently funded and can have fees associated with them that make buying and selling DRIP shares less profitable.

More importantly, you’ll want to have clearly defined set of money practices in place before you ever embark on any investment program. A DRIP, for example, that is funded by tax free dividends from a participating whole life insurance policy can produce very good tax advantaged returns without putting a single dollar of your guaranteed accounts at risk. Advisors who practice and teach Money for Life know of these strategies. Most others don’t.

You’ll never regret knowing more than you do now or owning - without debt-to-others – more than you do now…

www.EUREKONOMICS.com

Is there any truly tax free money?

Judge Learned Hand, in an opinion written decades ago for the US Tax Court of Appeals wrote, “There are two systems of taxation in the country – one for the informed and one for the uninformed.” The IRS – along with most of the Federal establishment – doesn’t seem to work for us as much as we seem to work for them. There are, however, some pockets of opportunity in the 66,000 page tax code that are available to anyone who is aware of them and this short post is going to tell you about two of them that are available to almost everyone who is informed.

Health Savings Accounts (HSA’s) allow you to put money aside to pay for your health insurance deductibles and co-pays and dozens of other medical, dental and eye care expenses that may not be covered by your health insurance plan. You can deduct whatever you put aside, up to a generous annual limit, from your income each year. More importantly, the tax deductible dollars you deposit in your HSA, and don’t use from year to year, grow tax free. When you reach retirement age the money in your HSA can still be used – tax free – to pay for medical and long term care expenses that are not covered by Medicare, Medicare supplement insurance or other private insurance plans. If you start now – even if you are in your 50′s or early 60′s – you can offset at least some of the estimated $200,000+ medical expense that you can expect to face after you retire but before you die – or kick the bucket, whichever comes first. If you are lucky enough to have money remaining in your account when you die, that money will pass to your spouse tax free and can be used by him/her for medical expense. If you are the second to die the money in your HSA would pass to your named beneficiary. It would be taxable as ordinary income to the beneficiary.

Perhaps the most misunderstood and overlooked tax free benefits allowed by the IRS Code are the ones you get with whole life insurance.  The money you deposit in a whole life insurance contract grows tax free, the dividends that are  paid on whole life contracts are tax free and the death benefit paid when Uncle Harry kicks the bucket is entirely tax free – no income tax, no capital gains tax, no estate tax…no tax of any kind. Properly structured and managed whole life policies also deliver tax free income whenever you choose – no age restrictions, no waiting a certain period of time, no tax.

These are just two of the tools you will learn to use effectively if you adopt the Money for Life Practices that are thoroughly and clearly described and explained in www.EUREKONOMICS.com

The pundits in the press, radio and TV are unable to come to any agreement about our financial future thru the end of 2008. A good number predict a recession. Another few predict significant growth in the equity markets. Some say the real estate market will rebound by mid-year while others tell us it won’t happen till sometime in 2009.

The presidential candidates use smoke and mirrors to try to convince us that they know what’s needed to assure a great 2008. They claim we are either dumb, oppressed, incompetent or fully capable; then they tell us that they know exactly what we need – regardless of the catagory we represent. The  congress – bless their stupid little hearts – and the president are going to give back some money they collected in 2007. Think about that one. I wonder if we’d be in the shape we’re in had the IRS not demanded it in the first place?

Here are Dr Agon Fly’s predictions:

  • * if you practice Money for Life…in good times and bad you will thrive in 2008 and have more money in your “banks” at the end of the year than you have when you start;
  • * if you make cash value life insurance the foundation of your financial future, you will have a future;
  • * if you rely on guarantees instead of “maybe, if everything goes just the way we’ve shown it,” you will be far ahead two, five, ten and twenty years from now;
  • * if you change your mind about money and discard the tenets of the current financial model, which is designed to make others wealthy at your expense, you will actually achieve wealth – and wisdom, too.

Wake up America! The pudits and politicians (especially the congress) both rely on popularity for their jobs. The truth is subject to scrutiny based on that alone. I live in a congressional district where the rep has never voted other than the party line and has risen in the ranks because of it. How dumb is that? The TV icons who gain popularity by regurgitating whatever is the latest greatest fantasy of the hottest “guru of whatever,” lead America down rabbit holes, and, when they emerge in the den of the fox the TV advisors lose nothing. They made their money giving bad advice – which they often don’t follow themselves – and now move on to the next “latest-greatest.”

Release of Money for Life…in good times and bad – How to Thrive in the 21st Century e-book is imminent. To order an advance copy and receive a FREE signed copy of the paperback when it is released late in the 1st quarter visit  www.TheMoneyForLifeBook.com

Tax deductibility is a trap…all by itself. It rarely creates a real benefit and often creates real problems – even when you do it right. Your IRA deduction is probably costing you money without you knowing it, but at least it’s fully legitimate.

Relying on tax deductibility becomes even more dangerous when the advisor who proposes a tax deductible scheme is either ignorant or greedy (or both) and relies on “loopholes” to justify his or her sales ideas. The article below is just one more example of how foolish it is to rely on advice that is focused on tax deductibility when common sense (and often, common decency) is a much better guide.

Money for Lifein good times and bad is based on common sense practices that have been tested and proven for thousands of years. Paying attention to IRS rules and other tax laws is important. Making them the measure of your success is misguided.

Source: ProWEB Wire (Industry News)

“The Internal Revenue Service is preparing to release regulations aimed at curbing investor abuse of 529 qualified tuition plans to circumvent gift taxes.The advance notice of these rules highlights issues of abuse such as when someone contributes a large sum of money for themselves, only to later change the beneficiary to a family member in the same or older generation, which would not trigger the gift tax, according to reports.Finally, it is reported that the IRS plans to allow states and institutions 15 months to make the changes the new rule will propose, but the agency could, as officials warn, also demand that the rule be applied retroactively.” (emphasis added)
BEWARE! The more clever the tax avoidance scheme, the more likely the IRS will regulate it into non-existence at the expense, not of the advisor, but of the advised.
There are better ways of dealing with money goals – much better ways. Find out for yourself at www.TheMoneyForLifeBook.com