Money, responsibility, and a plan.

People who take personal responsibility for their lives are less affected by financial crisis and political events.

Some people actually believe they need the redistributive polices that Obama plans to enact, while others understand that people who buy into that are selling themselves and their opportunities to succeed. If someone believes they're chained, they don't behave in the same manner as someone who understands their liberty. I'm really saddened when I see people making this mistake.... it is never to their benefit.

Personal responsibility, on the other hand, invigorates the soul. In all likelihood, should President Elect Obama have his way, I will pay less taxes next year (at least until the Bush tax cuts phase out in 2010 and taxes on us middle-class go right back up 3% or so as they are scheduled to do...). If this is true, I have a plan for that money (I'll use it to offset some of the inflationary prices of daily goods and services which always accompany such policy... but I digress :razz: ).

The simple truth about money, regardless of your political persuasion or the system of government your country has, is that it leaves the possession of people who have no specific plan for it, and it goes to the hands of those who do. Don't miss that. Money leaves people who have no intentional plan for it and it goes to people who have crafted such a plan. The most extreme socialist tenants cannot change this fact any more than a newly written law can change the effect gravity has on our universe.

Some of the people with a plan are crooks (credit card companies, payday loaners, etc.). Most folks with a plan (at least the ones I know) are not crooks -- they just have a plan. But folks who have not planned and chosen ahead of time how they will spend their money (meaning a written budget -- agreed upon by both of your if you're married) are destined to bleed money at the drop of a hat with each whim and financial ‘emergency’ (most of which never happen to folks with a good budget they stick to). Letting people keep more of their money in the form of a tax cut, or giving money to people who don't pay taxes (welfare) doesn't really help improve, in any significant way, the lives of these folks, and it's a shame.

Without education for, and a little ambition on the part of the recipients of such policies, even the best intentions come to no practical good. A $1000 annual bonus from the government just becomes a large-screen TV or a down payment on a car one cannot afford when given to someone without a plan. These are not really life-improving things, and the latter will actually worsen a person’s predicament… where’s the compassion in that?

Having, and sticking to, a sane budget is very much like getting a significant, immediate raise. I've helped many people create budgets and then massage them over months into an effective tool for building personal financial stability, and even wealth. Without exception, everyone who I’ve helped do this has commented that they feel like they got a raise. When you have a plan for your money it goes farther. Period.

People who have a plan hold onto their money. It’s not greedy or selfish… it is wise and responsible. It’s acting like an adult. Money leaves people with no plan and goes to those with a plan. The cool thing is that anyone can develop a plan!! And IMO if the government really wanted to be useful, they should be about the business of helping people develop and implement personal budgets. But then again, government doesn’t even keep its own budget, so it’s up to us to do this at a grass-roots level.

And one last thought: the systemic use of credit is a sure-fire wealth killer. I do not have credit cards at all, only debit cards. When you plan how to use your money before you start spending it, you can actually plan to keep some, and over time you accumulate enough to handle most every emergency without needing to fall back on the use of someone else's money for which you always pay a premium. It is stupid to me to pay someone for the privilege of using their money when, with some planning, effort and a little time, everyone can accumulate enough money to never need to borrow money again, certainly not for day-to-day purchases.

And just imagine the stabilizing effect this would have on world makets!

My 2-cents.

Peace to all,

JC

I agree in principle, and practice a plan, but there are times when OPM is good, like for big purchases. Try to whip out a wad for a house or a car.
I love "six months interest free". You make a five month payment schedule part of the plan. They expect you to let it slide, and you have to pay back-interest, or take years to finish it.
And a few credit cards in the wallet are just good sense. Some debit cards cannot be used easily to rent a car, book a hotel, plane ticket, etc. and a stolen debit card can be used to wipe your "plan" away. A credit card limits you to $50 liability, and you can challenge a charge which you cannot do with a debit card. Use an ATM only card, and a credit card that you pay-off every month. The reality is that all store prices include the cost of the store accepting credit cards, so you are paying for it anyway. There is nothing wrong with using one responsibly. "Play the delay" is part of my plan.

In the grander scheme of commerce, credit is also useful and necessary. Abuse is irresponsible on any level. Are you confusing it with entitlements?
Mike

[quote author="rascalseven"]the systemic use of credit is a sure-fire wealth killer. I do not have credit cards at all, only debit cards. When you plan how to use your money before you start spending it, you can actually plan to keep some, and over time you accumulate enough to handle most every emergency without needing to fall back on the use of someone else's money for which you always pay a premium. [/quote]
Well that used to be Japan where everyone had (on average) 2+ years salary in a post-office savings account. And they still got screwed!!

It is stupid to me to pay someone for the privilege of using their money when, with some planning, effort and a little time, everyone can accumulate enough money to never need to borrow money again, certainly not for day-to-day purchases.

Click to expand...

These days you have to pay a bank to hold your money (at least that's what happens here in Oz). If you start an account for your kid and stick in Grandma's $20 birthday present in 4 months it's gone and the account over drawn! How does that work? Apparently very well for the bank! :evil:

You are correct on budgets however I'm guessing you're either very very scary or have no dependents.

Personally I was never poor (even when I was on student allowance) until I acquired a wife and two kids. If you have a method of restraining three females (two almost adult and one already adult) financially please let me know!! :wink:

The worrying thing is the money simply evaporates with nothing to show for it. Two years ago I spent 3 months in London for work. My expenses (ex accommodation) came to ~10GBP per day and that included LOTS of nice red wine and other "fiddling". Guess I'm a cheap date... :green:

I have one credit card with not a lot of debt on it, If I want something then I usually only go for
it if either :

1 - I have the money to buy it outright

2 - I can take advantage of one of those "0" % credit for 6 months deals ( you do have to watch
these as when the 6 months is done, if it's NOT paid off, you enter into very expensive loans that
can span another 24/36 months and cost an absolute fortune !! so pay it off at least a few weeks
before the end date )

I have a specific bank account that pays my mortgage and other bills, I constantly "overpay" into
it every month and that builds up.
This covers stuff like unexpected Car repairs and central heating/plumbing problems etc and we
honestly hardly notice this "extra" payment as we have got totally used to it.

The Mortgage rate has been falling for quite some time and has just taken a 1.5% drop this week.
I have always left it at the higher rate as far as my payments go ( repayment rather than an endowment
mortgage was my preferred deal ) - so I am paying it off at a faster rate this way.

I see that in the UK there is this "you can have whatever you like" attitude and a very irresponsible
way of spending "someone else's money", even for very young people, with no money of their own.
We have many thousands of 25 year old's ( eg ) who have 10 credit cards and £30,000 worth of debt !!
That would scare the bejeesus out of me !!

Banks are to blame and , hey look at the result folks !!!!

Why is the world would you give students / young working people on a budget or struggling single
mothers, MULTIPLE credit cards :shock: :shock: :shock:

MM.

I can't and won't argue against personal savings for "emergencies".

BUT...

I know that no matter how much I try to save it will never be enough to save me from unemployment through a depression. The Tech sector has always been one that gets screwed during recessions/depressions and businesses are dropping like flies.

So with everyone's infinite wisdom, how do you overcome the need for indefinite monetary security during layoffs?

Also, I'm getting a little tired of hearing about how "personal responsibility" is the answer to every less fortunate citizen's problem. While I AM an advocate of "personal responsibility" I also KNOW that most of the time those two words are being used in a context of dismissive indifference, same as "get a job, Bum".

All we hear about from various sources is how some kid bought rims for his hooptie with foodstamps and welfare checks, usually from some stupid chain email or otherwise biased source, like the bigot that works in the office across from you or your brother in law that lives across the street from a crack house. Unfortunately for most people, they've been tricked/bamboozled/hoodwinked into thinking that this is the normal state of things.

That's BS.

Just the other day I was helping a friend with her yardsale. A nice African American woman wearing her uniform from a local diner came by to look and purchased a small desk with her tip CHANGE. She didn't have a car big enough for the desk so we offered to load it up in another person's truck and drive it down to her apartment for her. As we drove down the street a vivid realization came to mind, almost like a punch to the face, we were headed for a certain notorious "housing project". Although I'm only half Caucasian, I still felt a little uneasy about this due to the large number of nightly news reports that cover this place and of course the large number of folks that talk shit like "if you're white and walk in there you're going to get shot" and other such crap. Although I don't prescribe to bigotry, sometimes you just feel uneasy.

So here we were, in the middle of a notorious project. The lady walked up to her apartment and unlocked the door while the two of us started to unload the desk. I noticed that there was the stereotypical "hooptie with rims" sitting across the street and a large number of "thug-like" men standing around staring at us.

Again, I felt a little uneasy, thinking about those shooting reports and such. We had no sooner untied all of the ropes when we were almost surrounded by those "thug-like" men. Again, I felt quite uneasy.

I was starting to feel a LOT uneasy at this point actually.

That was until one of them stepped up and offered to help us lift the desk off the back of the truck.

The lady was working TWO jobs to pay for college classes. She was so proud of her grades that she showed us her transcripts and talked almost excessively about her classes. The other part of this was that she had a small child and an apartment that cost 1/3rd of what I pay in mortgage yet two minimum wage jobs could barely pay for it. She was getting food stamps that payed for the child's food and some of her own. She was getting welfare for part of the apartment and living expenses.

This was a driven young woman and she was using the system that most "personal responsibility" advocates trumpet as being unfair and broken, yet I saw it working exactly as designed, with college transcripts, a roof over her family's head and food on the table to prove it.

There are two morals to this story.

One: Don't believe everything you hear on the news, from friends, etc, without being cautious and realistic. I bought into the whole nightly-news bullshit about how this neighborhood was one of the worst in the city and how strangers would get mugged/shot/killed/etc. What I found were people who weren't like that at all. One or two troublemakers get themselves on the news and the rest of the community has to suffer the stigmata that ensues for no real reason whatsoever. I found that giving respect gets respect is true anywhere you go regardless of income level.

Two: The system CAN work. The problem is that "personal responsibility" is not enough. Hard times fall on everyone and the system is the only thing big enough to help you back on your feet if you find that your bank account is dry after 6 months of looking for a job. In the realm of personal responsibility we've stopped disciplining our children and allow game machines to babysit them for us instead of instilling self-reliance into them from birth.

I'm waiting for the recession to hit me. I don't have enough savings and probably never will the way that prices keep going up on everything. It hit me hard after 9/11, I spent 6 months looking for a job and spent every single dime I had in savings trying to live. I couldn't get a job at any old place, most places like home improvement stores said that since I was a "professional" that they wouldn't hire me because they knew I would just leave as soon as I got a another job, I couldn't get a minimum wage job or two because I wouldn't be getting enough to pay my bills AND I wouldn't have any more time to look for a job working 10-16 hour days to just pay for my housing and food. I was stuck and so were a lot of folks at that time. Who would help us? Nobody did. I got unemployment that barely made a dent in my debts and I did a couple small contractor jobs when I could get them. I was on the phone and internet every single day during that 6 months. I was even at the unemployment office a couple days a week trying to network with others. Lucky for me I found a job 1 week before my unemployment benefits wore out.

Debt can be a useful tool, when properly understood and used prudently.

In an inflationary environment, people with debt get to payback that debt with a cheaper currency, while people holding real assets lose net worth. Additionally the US tax system offers generous deductions for home interest payments. Housing, unlike most purchases does not rapidly lose value the minute you purchase it. So the combination of long term home price increases, favorable tax treatment, and payback with cheaper dollars, makes using debt to buy homes "common" wisdom.

This common wisdom has recently been turned upside down with distortions in credit markets that inflated home values way above true value, and allowed people to get into homes without any skin in the game. Kind of like buying an option on the future value of the home, but not even paying for the option. I find it a little strange that people entered into such contracts so casually that they have no qualms about walking away but people are different.

From here, I still think home values have room to fall, and we are in a deflationary environment (for the short term). I think once this crisis firms up, we will dramatically flip to an inflationary bias, and hopefully our central bankers have learned their lesson from past bubbles and will withdraw liquidity as rapidly as they dumped it in.

I consider buying a home a valid use of credit, and now might be a good time to buy a home for the long term. Buying a home should never be a short term bet. In the near term I worry that home prices may get messed with again buy some artificial stimulus. So the short term gamble, that I don't advocate is that upside is higher than downside so a fair bet, but I repeat buying a home is not a bet.

I am not very big on personal budgets and planning, but I developed habits as a young adult when growing a business on thin capital that stuck with me. One habit that was very effective was to resist impulse purchases. I would always tear the page out of some catalog, for something that I liked, and set it aside. If a really wanted it I could order it later. It is surprising how many things I liked enough to consider, I never liked enough to actually revisit and buy later. This shopping pattern is so strong that when I bought my first nice (for me) car, a '86 mustang GT, I took my test ride and left the dealership. I only got about two blocks away in my Pinto station wagon, when I turned around and bought the GT (with cash).

Buying things that will drop in value (like new cars) with credit, is a little like paying for dope after you've smoked it... If you can't afford to buy the non essential "fluff" with cash, don't buy it.

JR

[quote author="rascalseven"]
The simple truth about money, regardless of your political persuasion or the system of government your country has, is that it leaves the possession of people who have no specific plan for it, and it goes to the hands of those who do.

JC[/quote]


I'm not sure I buy this premise at all. Sure, it helps if you have some idea of what you want & how you're going to make it happen, but that's not the whole story by any means.

& if you don't think the govt. can have a positive role in people's lives, go ask the folks who worked for the CCC. Go ask artists like Orson Welles, whose work was supported by the govt. through the Depression.

If you only want to see "welfare queens in Cadillacs," as Reagan put it, then I guess that's all you will see. But the reality is a lot more varied, complex & nuanced than that.

There is an old joke that has an element of truth to it... It goes something like "If you take all the money from the wealthy on Monday, and give it to the poor on Tuesday, by Friday the wealthy would have most of it back again." People don't get wealthy by spending money foolishly, and some wealthy people I've known are surprisingly tight.

I recall from being in the military back when we were paid less than $100 a month as privates, and I think I may have peaked around $250/mo at the end of my brief career. Since we had free room and board, that pay was all discretionary income that we could blow in one week or make it last four. There were always the same troops, broke a week or more before payday, borrowing money $5 for $10 or $10 for $20 to be paid back on payday. I can't even calculate the interest rate that comes to. Doubling your money for a few days makes normal loan sharks look like Mother Teresa. Of course these guys who were partying the weekend before payday on credit, now have to pay back their loans, usually only steps away from the pay line and start the next month with that much less money... I remember one guy who bought a nice ring, that he was so proud of because he could hock it for $50. Of course that ring spent most of the month in the pawn shop. He'd wear it for about one week a month. I recall him re-enlisting for the re-up bonus and assignment to Hawaii. Since Hawaii was probably twice as expensive as the cost of living in Ks where we were at the time. I doubt his future lived up to his rosy expectations. I actually figured out that checks I cashed using my checking account from a nearby town, took several days to clear if I cashed them at the PX. So I could write myself free loans on the float. just imagine how much money I could make lending this free money out at 2:1, but that's just wrong and taking advantage of peoples weakness. I did lend a few friends my real money at 1:1, but even that is dangerous as people often transfer out owing as much money as they can to the sharks.

I am not suggesting that all people in economic straits brought it upon themselves but I have one more observation about jobs and employee/employer relationships. There is only one person in the world who cares about your future and that is you. The employer likewise cares about "his" future, which is put at risk by paying employees more than they contribute to the bottom line. The employer is also affected by external events so when his shit gets weak, your shit gets going.

The only way to insure some form of stability is to work for yourself and be willing to work for slave wages as long as it takes to get to a good place. This is called sweat equity where you work for nothing to build a business. About the only job that looks secure in this environment is a government employee. I don't see this administration cutting back at federal level, but local governments are hurting too.

Good luck to us all...

JR

PS: I lost more money in the stock market than the government paid me my first year in the Army. I found it difficult to manage my investments while taking basic training at Ft Dix.

The simple truth about money, regardless of your political persuasion or the system of government your country has, is that it leaves the possession of people who have no specific plan for it, and it goes to the hands of those who do.

Click to expand...

I'd like to say that I fully agree with this statement, and in fact, I have raised more money in less time (even in the "hard economic times") with this method than any other way I have figured out in the past.

[quote author="rascalseven"]

The simple truth about money, regardless of your political persuasion or the system of government your country has, is that "it leaves the possession of people who have no specific plan for it, and it goes to the hands of those who do".

JC[/quote]

I completely agree with this statement as a general rule, of course unforseen disasters cause exceptions to every rule, but those who budget and plan their money use will always find themselves in a better position than their peers who spend randomly and have no savings plan.

[quote author="rascalseven"]People who take personal responsibility for their lives are less affected by financial crisis and political events.

Some people actually believe they need the redistributive polices that Obama plans to enact, while others understand that people who buy into that are selling themselves and their opportunities to succeed. If someone believes they're chained, they don't behave in the same manner as someone who understands their liberty. I'm really saddened when I see people making this mistake.... it is never to their benefit.

Personal responsibility, on the other hand, invigorates the soul. In all likelihood, should President Elect Obama have his way, I will pay less taxes next year (at least until the Bush tax cuts phase out in 2010 and taxes on us middle-class go right back up 3% or so as they are scheduled to do...). If this is true, I have a plan for that money (I'll use it to offset some of the inflationary prices of daily goods and services which always accompany such policy... but I digress :razz: ).

The simple truth about money, regardless of your political persuasion or the system of government your country has, is that it leaves the possession of people who have no specific plan for it, and it goes to the hands of those who do. Don't miss that. Money leaves people who have no intentional plan for it and it goes to people who have crafted such a plan. The most extreme socialist tenants cannot change this fact any more than a newly written law can change the effect gravity has on our universe.

Some of the people with a plan are crooks (credit card companies, payday loaners, etc.). Most folks with a plan (at least the ones I know) are not crooks -- they just have a plan. But folks who have not planned and chosen ahead of time how they will spend their money (meaning a written budget -- agreed upon by both of your if you're married) are destined to bleed money at the drop of a hat with each whim and financial ‘emergency’ (most of which never happen to folks with a good budget they stick to). Letting people keep more of their money in the form of a tax cut, or giving money to people who don't pay taxes (welfare) doesn't really help improve, in any significant way, the lives of these folks, and it's a shame.

Without education for, and a little ambition on the part of the recipients of such policies, even the best intentions come to no practical good. A $1000 annual bonus from the government just becomes a large-screen TV or a down payment on a car one cannot afford when given to someone without a plan. These are not really life-improving things, and the latter will actually worsen a person’s predicament… where’s the compassion in that?

Having, and sticking to, a sane budget is very much like getting a significant, immediate raise. I've helped many people create budgets and then massage them over months into an effective tool for building personal financial stability, and even wealth. Without exception, everyone who I’ve helped do this has commented that they feel like they got a raise. When you have a plan for your money it goes farther. Period.

People who have a plan hold onto their money. It’s not greedy or selfish… it is wise and responsible. It’s acting like an adult. Money leaves people with no plan and goes to those with a plan. The cool thing is that anyone can develop a plan!! And IMO if the government really wanted to be useful, they should be about the business of helping people develop and implement personal budgets. But then again, government doesn’t even keep its own budget, so it’s up to us to do this at a grass-roots level.

And one last thought: the systemic use of credit is a sure-fire wealth killer. I do not have credit cards at all, only debit cards. When you plan how to use your money before you start spending it, you can actually plan to keep some, and over time you accumulate enough to handle most every emergency without needing to fall back on the use of someone else's money for which you always pay a premium. It is stupid to me to pay someone for the privilege of using their money when, with some planning, effort and a little time, everyone can accumulate enough money to never need to borrow money again, certainly not for day-to-day purchases.

And just imagine the stabilizing effect this would have on world makets!

My 2-cents.

Peace to all,

JC[/quote]

Say, you dont happen to work for Mr. Dave Ramsey now do you??? :wink:

Yeah Im pretty good at not going out to eat and all mainly for me I'll get a good routine going with financial discipline untill I actually have extra money and then I start up here and there with the unessential stuff and its
ALWAYS the small things that REALLY can eat away at someone wallet like energy drinks and DIY which has been really killing me..untill recently I cut my spending down due to some other more serious financial obligations such as anticipating that something is going to screw up with my car even though every mechanic says every checks out fine you really cant trust those american made automobiles

Say does someone have any tricks to maintaining the finances involved in DIY???:wink:

just out of interest, having planned and saved all that cash, then the recession hits and theres no work, but you have too much savings to get well fare wheres your cash going.

with banks being bailed out on a weekly basis wheres actually safe to store it.

and when you get hit by a bus whos gonna spend your savings

theres a time for prudence, but this is not a read through,

gotta say though, the original post seemed a bit 'holier than thou'

Iain

[quote author="ENS Audio"]

Say does someone have any tricks to maintaining the finances involved in DIY???:wink:[/quote]

I find if you design and build things that solve some problem for people, they will often pay you more than the parts cost for one. The fun of building them does tend to wear thin after a while, then you design a new one.

JR

[quote author="lofi"]
gotta say though, the original post seemed a bit 'holier than thou'

Iain[/quote]

Couldn't agree more.

There's lots of folks who are busy just living their lives. Many never get the choice to have "personal responsibility" because their too damn tired or poor or sick or depressed or opressed or constrained by circumstances.

Rich folks might be rich because they save box tops and only ever use four squares of toilet paper but who wants to live like that?

my 2c

The wealthy get that way by screwing the little guy. Everywhere you look that's how it's done. No exceptions.

[quote author="Svart"]The wealthy get that way by screwing the little guy. Everywhere you look that's how it's done. No exceptions.[/quote]

wondered why it hurt to sit down ....

i'll get me coat

[quote author="Svart"]The wealthy get that way by screwing the little guy. Everywhere you look that's how it's done. No exceptions.[/quote]
On the other hand there's plenty of folks who stay poor because they're too busy screwing others for pennies. I'm thinking of most of the musicians I used to hang with - still on the dole 30 years later (but in the "probably mad" category so not hassled too much these days). I have a relative like this - too busy hussling to make a decent living.

Can't agree with your "no exceptions" - what about inherited wealth? There's folks in the UK who haven't had to work since the 12th century. What about folks who write a hit - who are they screwing? Lottery winners? Inventors? Geeze... plumbers and brick layers are usually rich in Oz.

I'm confused now... :? Time for a beer - but just the one... :sam: :green:

[quote author="Svart"]The wealthy get that way by screwing the little guy. Everywhere you look that's how it's done. No exceptions.[/quote]

Nah... I know one guy who has screwed people since he became rich, but he got rich by working his ass off for many years and provided opportunity for many people at the same time. I know other guys who never screwed a soul in their life and made their money the old fashioned way.. brains and sweat.

You have more choices in life than either being a screwer or screwee. I believe most of us, are personally responsible for our success or failures in life. There is opportunity in change, and we have a heaping pile of change coming down the pike...right about now. It's possible to succeed without screwing people.

JR

[quote author="lofi"]just out of interest, having planned and saved all that cash, then the recession hits and theres no work, but you have too much savings to get well fare wheres your cash going.

with banks being bailed out on a weekly basis wheres actually safe to store it.

and when you get hit by a bus whos gonna spend your savings

theres a time for prudence, but this is not a read through,

gotta say though, the original post seemed a bit 'holier than thou'

Iain[/quote]

Recently, I was listening on the radio to a financial planner/money expert who owns a firm locally in my town and he was saying in the US during the time of the Great Depression a total of 2,000 banks closed down and in the
S n Loans Bank crash during 88' there were about 250+ banks failed and now so far the total amount of banks that failed is in the 50+ range and they are saying that it may rival the crash of 88' but with that being said according to prior trends the economy tends to do better under a democratic presidency.

Doesnt it seem its like the 1990's repeating itself again??

Im not trying to be an overoptimist but simply want to look at the facts and also what do you all think about the alt. energy industry thats being initiated atm?

I know it may be some time but I cant help but to think that we will eventually see the fall of the "oil tycoons" as they will join the steel/railroad tycoons that once controlled the capitalist system but now lie in the abyss of time.

Then Mr. T Boone Pickens can start building his wind mill empire :green:

The concern is that this will be a replay of '30s not '90s.

Alternative energy was inflated by government support. One of the hot ethanol companies filed bankruptcy (grew too fast and then oil dropped in half). I think T boone has lost more than $B in his energy investments this year.

I wouldn't worry too much for the oil tycoons. They were supposed to be put out of business by cheap nuclear decades ago... Someday it will happen., or not.

I expect more small bank failures and part of the TARP program strategy seems to be capitalizing the survivor banks so they can buy up the weak sisters.

This is as severe as it appears, and we may have two different firemen trying to put out the same fire, I hope they can play nice together until we get back down to only one again. We'll find out pretty soon.

JR