Category Archives for "Preserve"

The Most Important Post You May Read Today: Banks, the Economy, and You

The economy stinks. If you own stocks, you wish you didn’t. Money doesn’t stretch as far as it used to. A gallon of gas is over $4, gold is at $1000, and oil is at $150.

WaMu (WM) has lost 92 percent of its value. IndyMac was taken over by the FDIC. Freddie Mac and Fannie Mae have all but been taken under receivership by the federal government.

Layoffs are only going to get worse. More banks will fail. You may lose your livelihood.

I hope you’ve been paying attention.

You have an emergency fund. You have cash in the bank. Are you concerned that your cash will vanish, just like the equity in your home and in your stock portfolio?

DON’T.

That’s right. Don’t. I’ll say it again, to make it crystal clear:

DO NOT WORRY ABOUT ANY CASH YOU HAVE IN A BANK

Why not, you ask? Because if you have $100,000 or less in a given institution that is FDIC-insured, your money is guaranteed.

Don’t make matters worse by trying to pull your money out of your bank. Putting your money under your mattress makes no sense at all!!!

I repeat: Do not exacerbate the situation by withdrawing your money from your bank.

The Great Depression turned from a bad day in the stock market to a total economic meltdown partly because there was a run on the banks. The federal government made the situation even worse by not providing the liquidity the market needed. In fact, it tightened credit.

Right now, if the government had to, it would turn on the (figurative) printing presses. Money creation is not a problem, and it is my belief that the Fed, the controllers of the supply of money, will create the money necessary to keep us out of a depression.

The Federal Reserve may say it’s concerned about inflation, but it’s deathly fearful of the opposite possibility, a deflation. One only needs to compare the 1930s to the 1970s to determine which is worse.

I even think that there’s a possibility that the worst is over. But it may take a year or two of economic doldrums to see an upturn; in short, we may be in this current situation for a couple of years. I don’t think this will be a prolonged downturn (i.e., Great Depression).

However, it will be painful. It’s time to tighten the belt and go on a diet, literally and figuratively. Cut out all unnecessary spending: Movies, soda, magazine subscriptions. Put some money in the bank. If you have a home equity line of credit, I’d suggest pulling out enough to keep yourself awash in cash for 6 months. The interest you pay will be trivial, especially if you lose your income.

Get rid of junk. Sell what you no longer need. Downsize. Clear clutter. Simplify.

Work on earning extra money.

Earn more than you spend.

Prepare your own meals. Buy local. Buy 87 octane gas. Drive sparingly. Shop at secondhand stores. 

Reduce. Reuse. Recycle.

If you don’t absolutely need it, don’t buy it.

I’m dead serious about all of this. The banks will be fine as long as people don’t turn into a mob. You will be fine if you’ve prepared for this.

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The Problem With the Corporate Tax

I wrote this post almost a year ago, long before the “tea parties” and “tea-bagging” made it to the vernacular of the American public, tired of paying too much of their incomes in taxes.

I feel compelled to call it out again because the topic is much more in the media than when I wrote it.

In its shortest form, I’d like to see the corporate tax abolished. In fact, I’d like to see ALL taxes on income OR profit abolished.

I want a consumption tax. Not necessarily a “fair tax.” But a tax system that is based on what you buy. Necessities will not be taxed. “Nice to haves” will be taxed at low rates, and “luxury” items will be taxed at a much higher rate.

So-called “sin taxes” can be left alone, or at least put in line with my 3-tier system. We’re smart enough to figure out how to extract enough taxes to pay the government’s bills without killing prosperity,  without squeezing poor people out of the economy, and without killing innovation.

It’s really just a mathematical problem. Solve for “x” as I was always told in Algebra.

*************

One of my favorite conservative economists, Greg Mankiw, recently wrote a piece about corporate taxes in the New York Times. There are two basic schools of thought when it comes to corporate taxes: Either treat corporations like individuals, where they’re obligated to pay taxes, or treat them like a pass-through entity, where they, in effect, pay zero taxes.

It is my opinion that the double taxation that currently exists because of the corporate income tax is onerous to the economy and to individual taxpayers. I think we should abandon both forms of taxation, both corporate and individual, and use a value-added tax (also known as a sales tax).

We are smart enough to figure out how to make this fair and equitable. But we won’t because our system is so political that the special interests will fight it out until nothing happens.

It’s too bad too, because this is the time when I think real change is not only acceptable, but sought-after.

Economic View – The Problem With the Corporate Tax – NYTimes.com

Money Hacks Is Featured in 80 How-To Sites Worth Bookmarking

Welcome Stepcase Lifehack readers! I’m flattered that Money Hacks has been featured as one of 80 How-To Sites Worth Bookmarking; in fact, it was in the top 10 for “Hack Your Wallet and What’s In It” — amongst such esteemed sites as

and — GET THIS —

Wow, I’m terribly flattered to be included in the same breath as any one of these sites!

This is an excellent list, too, not just because my humble site is mentioned, but because it’s chock-full of great sites about all sorts of topics.

It may behoove you to open every single one of the 80 links and not only bookmark them, but add their RSS feeds to whatever feedreader you use (check out Google Reader, a free Google product).

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Lenny Dykstra: Hard As Nails on Field and Off

Lenny DykstraWhen I was a kid, Lenny Dykstra was a baseball phenom. Small, but he could hit like hell and he fielded with reckless abandon. I liked him a lot. Always with that big ole cheek full of chewing tobacco, he epitomized the over-achiever. Turns out, he’s great in business, too.

Brash. Opinionated. Smart. Caring. Those are the words that came to mind when I read this story: The Sporting Scene: Nails Never Fails: Reporting & Essays: The New Yorker.

He’s now trying to give back. His biggest endeavor at the moment is creating the Players Club magazine. In it, he hopes to guide athletes down the path of continued riches, rather than down the path many of them seem to take, like Evander Holyfield and Mike Tyson.

Even giving back, Dykstra is abrasive. But it works. Tough love? You be the judge. Speaking of pro athletes:

“You’ve got the ten per cent who are going to find their way no matter what,” Dykstra said of the athlete population. “And you get the ten per cent that are f—heads no matter what—we’ll paste an ‘L’ to ’em.” The rest need guidance, and Dykstra, who will write a regular column called “The Game of Life,” is prepared to give it. “This will be the world’s best magazine,” he said.

Give ’em hell, Lenny!

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Kids and Money: Best Posts, 5 of 7 Wills

KCLau wrote a post about wills that I thought I’d bring to your attention. I must admit, writing wills for both my wife and I has been on our list for about 3 years now. We started thinking about it before our first child was born.

Not taking the time to write our wills is more about denial (I will never die, nor will my wife, which is a ridiculous thing to think because we all die, one day, usually sooner than we want) than about time getting the best of us.

So this article actually has triggered something in me that is compelling me to really take on the task of writing our wills.

Now that we have two young children at home, it’s more important now than ever to do this.

Here is the gist of the exercise:

Write a will for both my wife and me. List all our assets and how they are to be disbursed upon my or her death, or both.

We also need to determine who will care for our kids (we have). One of the keys here is to talk with the lucky future (potential) guardians and let them say “No,” if they’re so inclined. After all, taking on children that aren’t yours at a moment’s notice, for the rest of time, is a daunting, scary task.

For many folks, writing a will is fairly easy: We don’t have lot of complex assets like real estate or partnerships and most of our assets, if not all, are in joint tenancy. There’s software that will facilitate the endeavor, too. Quicken’s WillMaker comes immediately to mind.

You’ll have to get it notarized. Make sure you store it in at least three places. For example, one at home, one in the safe deposit box, and perhaps one with your nearest relative that doesn’t live with you.

KCLau‘s post had an interesting illustration (to the left) that showed when a person ought to reconsider re-writing his or her will. This is a very good list to keep in mind as your life goes on. It’s important to update your will whenever something changes materially that affects your property or beneficiaries.

Read KCLau‘s post for the full story ([Rockwills] Professional Will Writing Service: When Should You Rewrite Your Will? | Personal Finance Money Tips).

Thanks for piquing my interest in this crucial topic!

Look for a future post about estate planning that I’ll be writing in the near future.

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