Money, responsibility, and a plan.

[quote author="JohnRoberts"]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[/quote]

And of course this can turn out like the great depression but from what I understand they didnt have unemployment insurance nor did the number of banks fail at the rate that we have currently going on.

Worst case senario will bring the best out of all of us and society...

like a great wild fire, it burns everything to ash and taking with it all the deadwood and when the fire burns out then theres new space for which the seeds that bursted out of the acorns which burned as a result gave the new seeds to sprout a new beginning

Im still whats considered a young adult, been near homeless before which was during in which I was in my absolute worst state of mind this was many years ago and through and through have had many ups and downs

and especially all of you people probably have more skill, talent than your "joe the plumber" so even if things get worse and you run out of money im
sure most of you will fare better than many.

Crisis is what keeps me personally from being complacent in my life, what triggers my "survival instinct" is what also triggers my creativity and the absolute in my fiber and when things are going "easy" is when I screw off and at best the most impulsive and irresponsible.


Funny how that works eh??? :wink:

[quote author="JohnRoberts"]The concern is that this will be a replay of '30s not '90s.[/quote]
Yes, my view is the best that various bailouts and other 'safety valves' can do is keep this a repeat of 1987 and not the 1930's, hopefully.

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.

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Ethanol from corn is a bad idea, was a bad idea then, too. Energy will, of course, be an issue because of geopolitical reasons, and less about 'running out' or anything like that. Most numbers that I have seen indicate that the world won't be 'out of oil' any time in the next couple of centuries, though consumption will have to taper down - and most numbers I have seen indicate this will have to start within the next two or four decades. Alternatives will become competitive at some point, as EROI is always declining, and before we 'run out', alternatives will just be plain cheaper. The trick is balancing the development of new technologies so that the timing of costs work out. In other words, even though we may want to go solar, or wind (which power companies hate, by the way, for very sound technical reasons), basically it does not make sense unless there is a legislated (not the best approach), or a capitalist fundamental (better) reason to do it.

On the other hand an alt-energy 'bubble' - a leap of technology that may be able to revitalize industries and our way of life - may be one approach to getting through this 'correction' or 'recession' or 'depression' - whichever it is. It also would reduce, in some ways, the need to meddle much in the middle east - and reduce the 'power' that the various not-so-friendly countries have.

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.

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See above. Agreed. Some oil companies are fiddling with alt energies (Shell, BP), and those divisions aren't doing well now, but someday they might - at least a few companies want to be there if it does take off, but they still have their core business as their major income stream now. They may be smart, or they may be dumb. I can't imagine that the big oil companies are idiots in terms of URR and UDN figures on both their own fields and the world in general. The funny thing is we still don't 'know' where oil comes from. We have theories, but practically speaking, I am not aware of a concrete answer. The theory of evolution by natural selection has more concrete proof (a half century of antibiotic and pesticide use has made extremely resistant strains) - and that's a stretch IMHO.

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.

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Hopefully.

-Dale

Wow. I've been out of touch for a couple of days and just got back to all of this.

Firstly, let me say that my post was not meant to be 'holier than thou,' though I can understand how it could be taken as such.

My wife has become quite the health freak (lots of running and exercise), and she dearly wants me to join her (she feels better, sleeps better, has more energy, more patience, will likely live longer, etc. etc.) and she knows I can enjoy the same benefits if I simply follow suit, which is true, though I am not so pumped about the discipline involved at this point in my life. I'll likely join her (in fact, I just ran a mile with her this morning), but her talk about it really does sound rather preachy, and I find myself wanting her to shut up a bit. For all her good intentions it does come across a bit like she has all the answers, and I think the same is true here. The bottom line is she loves me and wants to see me benefit, and similarly, I love to see people succeeding in life, particularly when they, like myself, grew up believing success for them was not a practicality (if not a complete impossibility).

I truly believe in the content my opening post. I am certain that everyone would benefit from proactively tackling the issue of personal finance, and yes, that means 'responsibility' (I'm sorry if that word means other things to people or triggers a negative emotional response, but I just don't know of a better word). I started this thread with the hope that it would give hope to people who have thus-far, felt powerless, or at least clueless, and would embrace some good direction.

In the aftermath of 9/11, my entire 2002 sucked, income-wise. I am a full-time producer/engineer, and clients just dried up for the next 9 months -- I literally had almost nothing to do. On top of that our first children, twin boys, were born on August 25th, about 2-weeks before 9/11, so I had much more in the way of expenses from there on out. Nevertheless, my wife and I had been practicing what I preached in my first post for the whole six years of our marriage to that point, and we were able to get through 2002 on savings until my business improved.

I don't make a ton of money, but we choose to spend even less and put the rest away. We keep about 6 month's worth of living expenses in a liquid account (money market) and put everything else into investments for retirement.

I'm not a 'wealthy' person (yet). Our lifestyle is not something that is envied by people watching us -- I drive a 2000 Ford Explorer and my wife drives a 1998 Chrysler T&C, we live in a typical, middle-class 2500 sq. ft house in the burbs and we don't take note-worthy vacations (like Disney World, etc.), but we sleep well knowing that with the exception of our mortgage (15-year fixed rate which will be paid off in 5 more years) we have no debt at all. I don't say this to brag, I say it to let people know that there is a great deal of benefit in learning to say 'no' to things that would rob your financial security. I would love to have an HDTV or other cool toys, but I'm not willing to forfeit my future for those things (DIY has been a dream for me, since I can have stuff I want for MUCH LESS $).

I'm afraid there are folks out there who honestly think government will someday fix their financial situation, but it simply hasn't the power to do it, regardless of the sincerity of lawmakers and politicians. Such policy just doesn't jive with human nature. Human nature is rewarded by specific intent and hard work... things for which people can be truly proud. That's the stuff that builds self-esteem.

And please don't think that I am against government programs to help people get back on their feet.... we NEED these programs, specifically because bad things DO happen to all people. But such programs should be geared to help get people back on their feet -- not to encourage inactivity, which far too many currently do. They should include sound financial education as well as assistance for finding compatible work.

And just a thought for those who like to use 6-months (or whatever) "same as cash" type programs. It is NOT the same as cash. If you wanted to purchase a $3000 furniture set, and you walked into the store with 27 $100 bills, you could probably walk out of the store with the $3k furniture for $2700. Cash, in hand, is useful for negotiating good deals on big-ticket items. You can't do that with financing. It does require, of course, having the cash, which takes time to get, particularly if you're in debt (still paying for stuff you currently have). Raising money for purchases is much easier when you're not weighted down by debt, but it is sooooo worth it either way!

Another tip (and yes, ENS Audio, I did learn this one from Dave Ramsey!) try using cash for typical, daily transactions. My wife and I have long been in the habit of using a credit card to pay for things and then paying it off, completely, at the end of the month, thereby not carrying a balance (so no interest charges), and we patted ourselves on the back for our wisdom. But a couple of years ago I heard that using cash only causes you to spend less, so we decided to try it out. We put cash in envelopes (grocery, gas, eating out, fun money, etc.) at the beginning of each month, and when the money is gone, we don't spend any more in that category until the next month. It took a few months to get it right, but one thing that happened immediately is that we started spending less. Want to know why??

Studies have shown that spending cash stimulates the same part of the brain that pain stimulates. Swiping plastic (yea, even a debit card) doesn't have the same impact. The reason McDonalds and every other fast-food chain started accepting VISA, etc, was because with plastic the average sale increased around 40%!!! Buying with plastic just doesn't feel the same, emotionally, as buying with cash, so we spend more without even realizing it.

Try it for one month, cash only, and see if it doesn't affect how you spend money! It's fun and eye-opening!

So we cancelled our CC's and now have only debit cards.

FWIW, you need to have some liquid savings of about $500-$1500 dollars before you do this, however, as you need to be able to take care of emergencies when they crop up. Most CC users are in the habit of putting emergencies on their plastic, so it is important to have a buffer saved up to guard against problems before you cancel the cards.

I truly don't mean to offend. I'm just a convert that really wants to see my fellow humans have better lives, and I believe this can help. Waiting for someone else to fix your problems just won't help at all. I'm sorry if that sounds offensive, but I stand by the statement.

Much peace to all,

JC

[quote author="rascalseven"]

And just a thought for those who like to use 6-months (or whatever) "same as cash" type programs. It is NOT the same as cash. If you wanted to purchase a $3000 furniture set, and you walked into the store with 27 $100 bills, you could probably walk out of the store with the $3k furniture for $2700. Cash, in hand, is useful for negotiating good deals on big-ticket items. You can't do that with financing. It does require, of course, having the cash, which takes time to get, particularly if you're in debt (still paying for stuff you currently have). Raising money for purchases is much easier when you're not weighted down by debt, but it is sooooo worth it either way!
[/quote]

except if they are offering interest free finance, then they are selling the debt and wont budge on the price ... tried it once

going through a bad time of it here ... dunno if i am going to be able to pull through, but if i dont then all i can think is that i wasted all of the cash i saved on day to day expenses rather than just blow it putting a smile on the families face and folding earlier ...

I can see where your coming from, just way to close to home i am afraid

due to the forth coming recession the light at the end of the tunnel has been turned off

Iain

[quote author="rascalseven"]The bottom line is she loves me and wants to see me benefit, and similarly, I love to see people succeeding in life, particularly when they, like myself, grew up believing success for them was not a practicality (if not a complete impossibility).[/quote]

Sounds like you pulled yourself out of the "mediocrity rules" mindset. I grew up in an area with a similar overall mindset. My wife grew up in an even worse area. I was lucky because my parents always told us we could succeed, my wife was lucky because her parents were migrants and bought their work ethic with them from Germany/Estonia.

What you say puts an entirely different spin on your first post.

I truly believe in the content my opening post. I am certain that everyone would benefit from proactively tackling the issue of personal finance, and yes, that means 'responsibility' (I'm sorry if that word means other things to people or triggers a negative emotional response, but I just don't know of a better word). I started this thread with the hope that it would give hope to people who have thus-far, felt powerless, or at least clueless, and would embrace some good direction.

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My problem with what you said was it's close to what the cost cutters and economic rationalists use as justification for trampling the weak. I can see now you're saying "hey you can succeed too" not "it's all your own fault so FU". But your path is not for everyone.

Try it for one month, cash only, and see if it doesn't affect how you spend money! It's fun and eye-opening!

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My wife already does this but it DOES NOT WORK for her anyway. Oh if only if only it did!! I'd have a BMW and a water view! Like I said in my first response "do you have any dependents?" :?

I truly don't mean to offend. I'm just a convert that really wants to see my fellow humans have better lives, and I believe this can help. Waiting for someone else to fix your problems just won't help at all. I'm sorry if that sounds offensive, but I stand by the statement.

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You're correct for those who are actually waiting. You're wrong for those who are too weak, busy, sick, stupid, exploited, deluded, damaged, oppressed or constrained to help themselves. Often these folks aren't even claiming their entitlements!

So we're both right (sometimes) IMHO :green: :thumb:

cheers
Nick

[quote author="lofi"][quote author="rascalseven"]

And just a thought for those who like to use 6-months (or whatever) "same as cash" type programs. It is NOT the same as cash. If you wanted to purchase a $3000 furniture set, and you walked into the store with 27 $100 bills, you could probably walk out of the store with the $3k furniture for $2700. Cash, in hand, is useful for negotiating good deals on big-ticket items. You can't do that with financing. It does require, of course, having the cash, which takes time to get, particularly if you're in debt (still paying for stuff you currently have). Raising money for purchases is much easier when you're not weighted down by debt, but it is sooooo worth it either way!
[/quote]

except if they are offering interest free finance, then they are selling the debt and wont budge on the price ... tried it once

going through a bad time of it here ... dunno if i am going to be able to pull through, but if i dont then all i can think is that i wasted all of the cash i saved on day to day expenses rather than just blow it putting a smile on the families face and folding earlier ...

I can see where your coming from, just way to close to home i am afraid

due to the forth coming recession the light at the end of the tunnel has been turned off

Iain[/quote]

Saving money is what any responsible person would do, but what does a person do when they are told that within a year or two their money/currency will be worthless due to hyperinflation. IMO the best thing to do is have some money for emergencies and if you feel that your money isnt safe then just buy 6mo to 1 year or non perishables (rice, canned goods, e.t.c) and extra set of shoes clothes, you know basic stuff so at least you'll have the basic essentials before your pile of cash becomes worthless.

[quote author="ENS Audio"]


Saving money is what any responsible person would do, but what does a person do when they are told that within a year or two their money/currency will be worthless due to hyperinflation. IMO the best thing to do is have some money for emergencies and if you feel that your money isnt safe then just buy 6mo to 1 year or non perishables (rice, canned goods, e.t.c) and extra set of shoes clothes, you know basic stuff so at least you'll have the basic essentials before your pile of cash becomes worthless.[/quote]

I've seen plenty if inflation over my lifetime but thankfully never hyper-inflation here in the US. There are numerous reported cases of hyper inflation around the world. I think Zimbabwe might be the current poster boy @ 2.2 Million %. I can't imagine hyper inflation ever occurring here.

I am apprehensive about central bankers driven by political pressure to use inflation to bail out underwater home buyers. Prudent arbitrage against anticipated inflation is not to just spend money. Some food prices have actually fallen recently (milk, eggs?). Gold and commodities should track inversely with and hedge against currency inflation. There are also inflation protected debt instruments like TIPS that can be purchased from the treasury. Interest rates are modest but principal is safe. In the current deflationary period these inflation hedges are losers.

I'm a little reluctant to mention this but taking on more debt in anticipation of inflation means you could pay back loan with cheaper dollars, if you guess right. I suspect many short term traders have lost their ass betting on inflation that hasn't happened (yet). We are currently experiencing deflation due to all the selling of assets to reduce big bank and corporate leverage, and still falling home prices. If, or should I say when, the government puts some artificial support under home prices, that will be inflationary so head for TIPS,Gold, or whatever then becomes apparent.

Now might be a good time to buy a home if someone wants to bet on government bailing out over extended home buyers, but the job market will get more dicey in the near term so don't take on any installment debt you can't comfortably handle.

JR

rascalseven said:

And just a thought for those who like to use 6-months (or whatever) "same as cash" type programs.  It is NOT the same as cash.  If you wanted to purchase a $3000 furniture set, and you walked into the store with 27 $100 bills, you could probably walk out of the store with the $3k furniture for $2700.  Cash, in hand, is useful for negotiating good deals on big-ticket items.  You can't do that with financing.  It does require, of course, having the cash, which takes time to get, particularly if you're in debt (still paying for stuff you currently have).  Raising money for purchases is much easier when you're not weighted down by debt, but it is sooooo worth it either way!

Click to expand...

But you are looking at things like a zero-sum equation: it is either in the Medaglia D'Oro can or spent on something.  The amount of movement you can get out of $1k in six months is limited only to your imagination.
Right now the movement is more towards the action of shrinking, but you get the picture ;D

That's cool, you like extra security, so you lock into an idea to purchase something in the future and start to lock money away to pay for it when you get enough.  Using financing allows your money to move.  Or a credit card enabled me to stick-it to a crook that sold a garbage bedroom set, and would not budge after the sale.  Visa refunded me in full and they had to get the stuff back on their dime.  THAT was sweet, and could never have happened if I had "gotten a good deal" with a Planters Peanuts can full of cash.  Vendors always put the customer first when you say "I will dispute the charge".  You are paying for this privilege, using cash or not.

I float materials for jobs on my CC, and 80% of them pay before the bill is due, and paid in full- so I get a no interest loan of over 20 grand some months when I am busy.  I would have to have a huge wad tied-down all the time if I used cash.

My 2002 Exploder was a "9/11" car, bought when all the dealers were offering 0% down because everybody was afraid to leave their home and get anthrax poisoning, let alone buy a car.  I would STILL be saving the $36K to buy a car for cash, but instead paid $960 per month for 36, and did not have thousands locked-down for "the shiny new car at the end of the rainbow".  The first drive was just as sweet as if I had plunked-down a Zero Halliburton case full of cash for it in 2015.  There won't BE any Exploders for sale then!

Whatever the plan, let's just all keep our powder dry into the future. . .
Mike