Sorry, how is this the US government's fault? The current conservatives pride themselves on small government, compassionate conservatism, non-intervention and so on. They were voted in by Americans. And yet American voters re-supported sending billions of tax-payer dollars to rebuild an overseas country.
The USA is not a nanny state, where the government "looks after" the populace from cradle to grave. Sure the government has responsibilities, and the rest of America has "rights". But Americans collectively have responsibilities too.
American citizens, voters and populace did this to themselves. Through lack of vigilance, distractions, immediate gratification, conspicuous consumption etc.
I love America and Americans. But the sooner this is understood, and collective behaviour changes, the easier it will be to climb out of the ditch.
Hear phrases like tough love, cold turkey, weaning, sacrifice AND humility in the next few years.
Americans unite in the face of external enemies: the USSR, communists, resurgent Japan, Arabs, Iran, Al Qaeda; even "manufactured" enemies like "liberals", gays, the French, "old Europe" etc. Now, look at your national debt as an enemy, and attack it. Debt in moderation is a good thing. But not when it is that magnitude.
Attack political corruption. Attack waste. Attack the addiction to foreign oil. Attack the over-emphasis on wedge issues. Attack willful ignorance.
I am confident that Americans can maintain their individualism, and yet, pull together in a common-ish direction -- Upwards. I'm confident that Americans can gain satisfaction not from consumerism, but by gaining knowledge on the impact of their actions. I'm confident that America can convert it's metaphorical financial flab into muscle, and regain its own confidence in doing so.
America is at a critical juncture. Competitors are not standing still. Contrary to some ideas, the world largely views Americans favourably, and would love to see America regain strength. But the world will carry on, if America fades into irrelevance.
A rising tide lifts all boats, but only when you are above water.
Philip: I would add that not only is the graph instructive, but that you've written one of the most cogent explanations of what needs to happen that I've read anywhere - and I've been reading all kinds of financial blogs & articles on this topic all over the 'net for months now (over a year now, actually).
You hit the nail on the head: the problem is not lack of lending and borrowing. The problem is that people borrowed too much and saved too little. Instead of borrowing more $Billions from the likes of China to try to encourage banks to lend, we should be encouraging people to save again. Higher interest rates for savings would be a good place to start (which would mean higher interest rates in general). Perhaps the government could consider exempting the first $2000 of interest income from taxes?
After having been primarily worried about inflation (based on money-supply growth and actual price increases), I wrote earlier this month about inflation going away for a while.
Even so, I'd be very leery of positioning my finances to expect just deflation. In just the past couple of months, the compound annual rate of growth in the monetary base surged from its normal range (where it would vary between -4% to 9%) to an utterly insane 140% or thereabouts. That portends a truly awesome amount of inflation that might come surging through the economy at any time.
Working together is great, but a few rules(!) can help with this:
1. Before marriage, no mix of assets but joint account for possible joint costs (vacation, rent etc.)
2. Before marriage, full disclosure of financial situation on two lists, possible prenup
3. During marriage, full transparancy about all account levels
4. Personal discretionary accounts, whose level are known to both, but the kind of expenses are kept private
Marriage is built on love, but children and money should be discussed thoroughly before tying thhe knot.
I have a large dent in my front bumper of my 2007 Mazda 3 from hitting a large raccoon on night. I've been trying to figure out how to get it out, it's a very clean dent, no damage to the car or paint ... just the dent, but it's in the plastic bumper, not the metal of the car.
If we follow the recent advice of Warren Buffet, which in essence is to go against the popular opinion, then those of us who have been saving the past few years, like myself, are about to make out like bandits when deflation hits, and hits hard.
Rather than a huge drop in borrowing down to current savings levels, I believe we'll see a huge rise in savings, along with a decline in borrowing until the two are correlated more naturally as they were prior to 1998.
Since more and more people will be hoarding their cash, retailers are about to start slashing prices, especially with the slash happy holidays fast approaching.
The only complaint I have about my individual catastrophic plan is that since the Democratic Party took over the Insurance Commissioner's office and the State Legislature of my state (Washington), they've been tacking on all kinds of required benefits, like acupuncture, chiropractic, naturopathic, massage therapy, mental health benefits, etc., which has more than doubled the premiums even allowing for the fact that I've changed age categories. And for a while, it looked like they were going to drive all private insurers out of the state with mandates to extend coverage with no limits for pre-existing conditions - kind of like allowing a homeowner to buy homeowner's coverage after the fire started.
My deductible has varied between $2,500 and $1,500 depending on the plan choices I've made (right now it's $1,750) and my total potential maximum out of pocket per year has varied from about $5,000 to $6,500. After my deductible, my coverage is 80% up to the out of pocket maximum and 100% above that. So a medical bill of $4,000 would cost me $2,200. The next $15,250 of bills would be covered at 80%, so I'd pay $3,050, and above that the insurance company would pay 100%.
Many years ago, I was in an HMO for a year and HATED it. Everything was a bureaucratic maze, totally wasteful of my time and ignoring my convenience and with other people making all the choices for me. Yes, it covered everything, but you had to work for that coverage and wait for your turn, so if you had a merely annoying medical problem that made your daily life miserable but wasn't going to kill you, you could wait for weeks to wade through all the screening appointments to get to the person who could actually diagnose and treat it.
The freedom of choice, the fact that doctors actually treat you like a valued customer (because you are) and respect your time, and the ability to go right to the appropriate specialist without having to go through "gatekeepers" are all extra value associated with many of these plans.
Love it, love it, love it. Dread the thought of what politicians will do to it under "universal health care," and don't tell me it won't do anything because I've seen what their "help" has already done in the way of added cost.
It doesn't matter if we have joint accounts.
It doesn't matter if we have separate accounts.
It doesn't matter if it's his, mine, or ours.
It doesn't matter if we split everything 50/50 or 60/40 or throw it all in a pot or bury it in the backyard.
None of that matters.
The only thing that matters when handling finances between two people is that they work together.
I wish people would stop fighting about this topic like the other side is trying to insult their marriage. It's a personal choice which way you swing your finances. A couple should discuss the options, be aware of the consequences of the different methods, and go with what works for them.
Nora, this is the best article relating to any topic of finance that I've read in a long, long time. I commend you for addressing this subject; it's a very timely issue. You need to see about getting this published elsewhere. This should be on the MSN homepage, in my opinion. Investopedia.com would readily pay you to publish this. If you don't want to submit this article yourself, can I have your permission to write one of my own on this issue and use your article as a source?
The fact that my retirement investments have dropped nearly 25% in the last three months, essentially wiping out the last 4 years of my contributions, interest, dividends and gains, didn't scare me. I always knew there was no guarantee of perpetual growth, and I'm still far better off than if I had never invested at all.
The fact that my home value has probably dropped 15-20% from its high of 18 months ago didn't scare me. In four years it'll be paid off, it's still worth at least three or four times what I paid for it, and it gives shelter to me and two relatives who have fallen on hard times (in lieu of them going on welfare).
The fact that my rental house has been on the market without an offer for over six months doesn't scare me. It's rented and not over-leveraged.
The fact that my business is facing some growing receivables and lower demand doesn't scare me. My business expenses are lean, and my household can live on less than $3,000 a month including private school tuition for the teenager, who has a weekend job, and help for a kid in college who also works nearly full-time. I'll have to keep working longer than I had hoped, but that's life.
The fact that so many people commenting here seem to think that we would be better off by adopting even more socialist policies than we already have - that DOES scare me.
We've had several decades of relentless anti-business, class-warfare rhetoric from the Democrats and a fair number of Republicans, and abysmal economic education at every level below graduate school. That, plus a normal amount of human self-regard, has given us a high proportion of our population that is convinced that it has a moral right to a comfortable middle-class existence no matter how foolish its choices or whether it contributes anything useful to society or not, complete with McMansions, new cars, daily "fair trade" lattes at Starbucks and produce worth its weight in silver because it's "local" and "organic." A sizable segment believes the only thing keeping it from that existence is racial or ethnic prejudice and/or greedy businesses (as if its own sense of entitlement wasn't just as greedy).
These are the kind of people who, like Al Gore did a few years ago, demand that the government pay for their parents' prescription drugs or their kids' college educations instead of pulling out their own often well-padded checkbooks. And they are the kind of people who don't see a "moral issue" in walking away from a mortgage because their house declines in value.
This social divide, between the "leave me alone unless I'm starving" crowd, like me and my family, and the "as long as there's a single rich person left alive, we're all entitled to share in his wealth" crowd, like Obama and his followers, is not a recipe for a slow, gentle economic decline like that which socialism has brought to Sweden, but for a swift devastating decline like the one it brought to Zimbabwe, although granted it will take awhile longer since we have farther to fall.
People who believe that the "rich" people Obama plans to soak will still create as many jobs, invest in new businesses, and keep our economic engine going while Obama screws them, are dreaming. He has promised goodies to so many people, he will have to deliver on some of it, and to do that, he will have to tax the middle class directly or indirectly, because there simply aren't enough "rich" people to pay the piper. So if you are middle class, you can count on one of two things happening: The "rich" people who created the job you now hold will find it in their interest to yank it and you can join the unemployment ranks, or you WILL pay higher taxes.
Socialism is indeed, as Obama promises, about "sharing the wealth" - whatever wealth there is. Capitalism is about creating it. Obama is offering to give you a fine dinner of roast goose, but you only get to dine on the goose once. It's a fine meal, but after that, you won't get any more golden eggs.
You have nothing to apologize for by merging your finances with your husband's. But you are married, and the rules are different for you than for unmarried couples. You have made a formal committment to each other, and that makes a difference. When people try to live and act like they're married whey they aren't it always leads to trouble. I'm a financial planner by training myself and in my opinion, married couples should share EVERYTHING financially and have joint accounts whenever possible. The only exceptions should be retirement accounts (that can't be titled jointly) and mortgages, when one spouse's credit history would prevent approval.
I think one thing to remember, re: the Feinstein video, is that the US is not a true democracy. We live in a representative government. We elect officials (ideally) based on whether we think their values and goals are inline with ours. The US government does not expect its citizens to read through hundreds of pages of legislation and be expert in complicated economic theories in order to make an informed decision about whether or not a $700 Billion bailout is good or bad. I have read, watched, listened to so many descriptions and views of what is happening and what caused, and I am decidedly undecided on how I feel about it. I would rather leave this decision up to the "experts".
My feeling about housing prices dropping is that I think people need to stop panicking, and stop complaining that folks in foreclosure or who are getting their mortgages reset are better off for it. Their not. And as for your house value, if you stay in your house for the next 10 years, stop thinking of it as an ATM and start thinking of it as shelter, the value will eventually go back up. That's the real problem... we Americans need to stop wanting instant gratification, and stop coveting everything our neighbors get, be it an HD television or a mortgage bailout.
Before anyone goes and follows this advice, keep in mind that we are in an election year... Politicians Lie. Obama and McCain will say anything to win but I guarantee you not one red cent will go to any struggling home owner ( and it shouldn't ). People want to blame greedy banks for what happened, just remember it was Bill Clinton's plan that made these sub-prime shark loans possible and ultimately, it comes down to the homeowner to know what the hell they are signing for.
It always amazes me how people want to take an eminently practical matter like the mechanics of personal finance and make it emblematic of things like trust and commitment.
1. Sad Guest, becoming "one in the flesh" is symbolic. As a practical matter, you can't eat while your husband doesn't and expect him to survive. Personal finance is practical as well, and your assumption that having separate accounts points to a lack of trust says more about your relationship than anyone else's.
2. Sad Guest Too, if you have to "force discussion about money and goal-setting," sorry, your relationship's already doomed, separate accounts or not.
3. LizMendoza, I'm not clear why you need a joint account to discuss money. In addition to separate bank accounts, my wife and I are both professionals with separate 401K's. We go over our statements and discuss our strategies when it's time to rebalance, and if one of us has done really well, maybe the other will adopt that approach. Money is a casual and frequent topic of conversation as it should be in a healthy marriage regardless of the account structure.
In the case of marriage, it's generally "community property" anyway, so use whatever works: joint, separate or both. But recognize that it's a practical decision, because once you make it a symbolic statement about your marriage, it's much harder to make sound financial decisions.
Once more thing: diversity in personal finance as in investing can help reduce risk. Recently as WAMU started to go under and real questions about depositor rights loomed, our anxiety was reduced by having ~50% of our liquid funds stored in another (stronger) institution. It's seldom a good idea to keep all your money in one location whether a coffee can or a bank.
Very interesting posts. It is unfortunate that there is so much buzz in the industry today about permanent insurance being a "bad thing". Again, most of you are right that term can fill temporary need but it is only "rental" of insurance coverage. Why rent when you can own? The trivial discussion regarding the cost of pure insurance offered under permanent vs. term is a shortsighted argument. The REAL issue is that permanent insurance works best as an investment for retirement. If you don't want choices for retirement then go the cheap route and buy term insurance. Invest all of your excess funds in your IRA to the maximum and then put the rest in safe accounts that offer little to no return. Here is where you will be at retirement age (say 65). You will have no insurance coverage and no way to get it if needed. Inflation will have outstripped your safe investments negating wahtever interest you may have reinvested during the period of those investments. Your IRA's will be full of cash but heres the wake up call...that money is not all yours, its just temporarily on your letterhead. The government will decide how much of your IRA you will keep by setting the tax rates. Does anyone here think our tax rates will be lower in the future? If so I have bridges for sale. In 1982 the highest personal income tax rate was 70%, so go ahead and save your money for the government....I can't think of a better investment strategy! (sarcasm of course)
Permanent insurance works best for people that have an insurable need above $250k, AND would like to save money for tax free retirement. Indexed products are great becaiuse there is no risk of loss of principal, and earnings that are capped and floored. This means in good market times, you will earn the cap, and in bad time such as now you will not lose principal and you will likely not make any investment returns. OK so, is there anyone out there that is sick about watching their retirement accounts shedding 40% of their value? Are you comfortable with that? I can't understany why if you are.
Insurance and investments are not about the numbers, it is about choices. The more choices you have the better off you are. Why? Because who knows what is going to happen in the future. A good insurance guy will monitor your insurance every year and compare it to what was sold to you, if it is not performing they need to fix it, if it is performing, you need to know that...every year!
If your need for the death benefit goes away, then drop the face on the policy to the minimum and this drive wup the cash value. A properly sold and monitored policy will ALWAYS outperform buying term and investing the difference. The problem in this industry is that many policies are not sold properly nor are they monitored like they should be. If your agent does not report back to you every year and give you a synopsis of your investment then he is not a good agent at all. Commissions are paid up front, responsible agents reserve part of their earnings to fund the ongoing monitoring costs. Very seldom does this occur so here we are, wiith permanent insurance taking on a bad image. Its not the financial vehicle you choose, its the person behind it. Buyer beware and don't hand all of your retirement cash to uncle sam, there are better ways to use your own money.
my rating did go down in June after i bought airline tickets to texas.. i do pay for the credit monitering service on one of my CC, not sure if i should cancel. it's $8 a month.
I have been with my husband 37 years married 31 years and we have always had our money seperate.We always have the option of "pooling" " joint payments" "treat" but from the time we started dating to living together to married, thru buying cars/houses/paying for college or a wedding we negotiated the financial aspects.I think the best system is one you both come to agree on whether it is 3 pots or joint or seperate etc.there is nothing sexy about debt, betrayl,hurt feelings etc.
Stop the war in Iraq. Stop encouraging war everywhere else. Stop spending money for destruction. Don't spend money creating more advanced weapons. Ppl die and the world hate US goverment. Use the money for good cause. Feed the hungry. Americans can have better life from that money.
"It also pays 100% after my deductible, meaning that once I pay my 5K, I'm done for the year."
I don't know what company/state you were in, but our plan with BCBS of California ($2500 deductible) did not cover everything above the deductible and they don't cover all tests/procedures, either, if you are not on a full coverage plan. Just for those in CA, be aware - my high-deductible plan cost us over $4000 a year for both of us, and then an additional $10K in other bills for my meds/tests/biopsies, ct scans, etc. Hopefully its not like that in every other state.
With so much uncertainty as to what the future of the economy will be it is imperative that one has their complete financial house in order. A vast majority of families today know little about personal finance. Many think long-term security is impossible on their income. But, the truth is, no matter what a family’s income level, they can achieve financial security. Families today just have to take the time to learn a few simple principles about how money works. How much do you know about personal finances? If you’re like most people, you might think that financial education is only for the wealthy or well educated. Every day people just like you should learn “how money works” so they can make better decisions about their personal finances. http://www.primericabusinessopportunity.com/ http://www.womeninprimerica.com/
My partner and I moved in together about six months ago. She had left a bad relationship, and this is the first truly serious relationship I'd ever had.
She lost her job right after we moved in together, leaving me with her bills, mine, and the responsibilities of just having bought a new home. We made an agreement that she would take care of my son while she looked for a new job and save ourselves the cost of daycare. That snowballed into her babysitting other kids in our home. Overall, this works for us, but the loss of a second income meant mine was stretched more and more. We merged our bank accounts against my better judgement. She wanted to do this because I kept overdrawing my account, trying to pay for everything.
She and I come from very different backgrounds as far as money. I grew up middle class, and she was very poor. So now that we have a joint account, she makes me feel guilty for every little purchase. She receives state aid because she makes under the poverty level, and she gets upset if I go grocery shopping without using her food stamp card, even though I can afford it.
I just got a large raise at work, and I'm considering siphoning the extra money off to a savings account. My partner doesn't see the benefit of saving, other than for a vacation, but I like to have "emergency money" and money to put in my IRA. She actually got upset with me when I wanted to put my son's child support funds into his 529 account.
I've tried discussing this with her, and she continues to act as though we are drowning and never going to get out of the hole, even though I've been paying off debts. She plans lavish weekends for us, and then wonders where our money goes.
Personally, I think all couples should have a 3 pot system. A joint account for household expenses, and separate accounts for each person to be spent as they want. It avoids the guilt over spending "our" money.
Unfortunately, my partner can no longer get a checking account, so this system doesn't work for me. And I find I've inherited a lot of debt that I'm going to be paying for in addition to my own. Finances should definitely be discussed long before making committments to one another.
Sorry, how is this the US government's fault? The current conservatives pride themselves on small government, compassionate conservatism, non-intervention and so on. They were voted in by Americans. And yet American voters re-supported sending billions of tax-payer dollars to rebuild an overseas country.
The USA is not a nanny state, where the government "looks after" the populace from cradle to grave. Sure the government has responsibilities, and the rest of America has "rights". But Americans collectively have responsibilities too.
American citizens, voters and populace did this to themselves. Through lack of vigilance, distractions, immediate gratification, conspicuous consumption etc.
I love America and Americans. But the sooner this is understood, and collective behaviour changes, the easier it will be to climb out of the ditch.
Hear phrases like tough love, cold turkey, weaning, sacrifice AND humility in the next few years.
Americans unite in the face of external enemies: the USSR, communists, resurgent Japan, Arabs, Iran, Al Qaeda; even "manufactured" enemies like "liberals", gays, the French, "old Europe" etc. Now, look at your national debt as an enemy, and attack it. Debt in moderation is a good thing. But not when it is that magnitude.
Attack political corruption. Attack waste. Attack the addiction to foreign oil. Attack the over-emphasis on wedge issues. Attack willful ignorance.
I am confident that Americans can maintain their individualism, and yet, pull together in a common-ish direction -- Upwards. I'm confident that Americans can gain satisfaction not from consumerism, but by gaining knowledge on the impact of their actions. I'm confident that America can convert it's metaphorical financial flab into muscle, and regain its own confidence in doing so.
America is at a critical juncture. Competitors are not standing still. Contrary to some ideas, the world largely views Americans favourably, and would love to see America regain strength. But the world will carry on, if America fades into irrelevance.
A rising tide lifts all boats, but only when you are above water.
Philip: I would add that not only is the graph instructive, but that you've written one of the most cogent explanations of what needs to happen that I've read anywhere - and I've been reading all kinds of financial blogs & articles on this topic all over the 'net for months now (over a year now, actually).
You hit the nail on the head: the problem is not lack of lending and borrowing. The problem is that people borrowed too much and saved too little. Instead of borrowing more $Billions from the likes of China to try to encourage banks to lend, we should be encouraging people to save again. Higher interest rates for savings would be a good place to start (which would mean higher interest rates in general). Perhaps the government could consider exempting the first $2000 of interest income from taxes?
After having been primarily worried about inflation (based on money-supply growth and actual price increases), I wrote earlier this month about inflation going away for a while.
Even so, I'd be very leery of positioning my finances to expect just deflation. In just the past couple of months, the compound annual rate of growth in the monetary base surged from its normal range (where it would vary between -4% to 9%) to an utterly insane 140% or thereabouts. That portends a truly awesome amount of inflation that might come surging through the economy at any time.
Working together is great, but a few rules(!) can help with this:
1. Before marriage, no mix of assets but joint account for possible joint costs (vacation, rent etc.)
2. Before marriage, full disclosure of financial situation on two lists, possible prenup
3. During marriage, full transparancy about all account levels
4. Personal discretionary accounts, whose level are known to both, but the kind of expenses are kept private
Marriage is built on love, but children and money should be discussed thoroughly before tying thhe knot.
I have a large dent in my front bumper of my 2007 Mazda 3 from hitting a large raccoon on night. I've been trying to figure out how to get it out, it's a very clean dent, no damage to the car or paint ... just the dent, but it's in the plastic bumper, not the metal of the car.
can anyone tell me if you need a antenna to make the converter box work?
If we follow the recent advice of Warren Buffet, which in essence is to go against the popular opinion, then those of us who have been saving the past few years, like myself, are about to make out like bandits when deflation hits, and hits hard.
Rather than a huge drop in borrowing down to current savings levels, I believe we'll see a huge rise in savings, along with a decline in borrowing until the two are correlated more naturally as they were prior to 1998.
Since more and more people will be hoarding their cash, retailers are about to start slashing prices, especially with the slash happy holidays fast approaching.
Bargain hunting here I come! (I hope)
The only complaint I have about my individual catastrophic plan is that since the Democratic Party took over the Insurance Commissioner's office and the State Legislature of my state (Washington), they've been tacking on all kinds of required benefits, like acupuncture, chiropractic, naturopathic, massage therapy, mental health benefits, etc., which has more than doubled the premiums even allowing for the fact that I've changed age categories. And for a while, it looked like they were going to drive all private insurers out of the state with mandates to extend coverage with no limits for pre-existing conditions - kind of like allowing a homeowner to buy homeowner's coverage after the fire started.
My deductible has varied between $2,500 and $1,500 depending on the plan choices I've made (right now it's $1,750) and my total potential maximum out of pocket per year has varied from about $5,000 to $6,500. After my deductible, my coverage is 80% up to the out of pocket maximum and 100% above that. So a medical bill of $4,000 would cost me $2,200. The next $15,250 of bills would be covered at 80%, so I'd pay $3,050, and above that the insurance company would pay 100%.
Many years ago, I was in an HMO for a year and HATED it. Everything was a bureaucratic maze, totally wasteful of my time and ignoring my convenience and with other people making all the choices for me. Yes, it covered everything, but you had to work for that coverage and wait for your turn, so if you had a merely annoying medical problem that made your daily life miserable but wasn't going to kill you, you could wait for weeks to wade through all the screening appointments to get to the person who could actually diagnose and treat it.
The freedom of choice, the fact that doctors actually treat you like a valued customer (because you are) and respect your time, and the ability to go right to the appropriate specialist without having to go through "gatekeepers" are all extra value associated with many of these plans.
Love it, love it, love it. Dread the thought of what politicians will do to it under "universal health care," and don't tell me it won't do anything because I've seen what their "help" has already done in the way of added cost.
Thank you for sharing those words . . . .how very true
It doesn't matter if we have joint accounts.
It doesn't matter if we have separate accounts.
It doesn't matter if it's his, mine, or ours.
It doesn't matter if we split everything 50/50 or 60/40 or throw it all in a pot or bury it in the backyard.
None of that matters.
The only thing that matters when handling finances between two people is that they work together.
I wish people would stop fighting about this topic like the other side is trying to insult their marriage. It's a personal choice which way you swing your finances. A couple should discuss the options, be aware of the consequences of the different methods, and go with what works for them.
Nora, this is the best article relating to any topic of finance that I've read in a long, long time. I commend you for addressing this subject; it's a very timely issue. You need to see about getting this published elsewhere. This should be on the MSN homepage, in my opinion. Investopedia.com would readily pay you to publish this. If you don't want to submit this article yourself, can I have your permission to write one of my own on this issue and use your article as a source?
The fact that my retirement investments have dropped nearly 25% in the last three months, essentially wiping out the last 4 years of my contributions, interest, dividends and gains, didn't scare me. I always knew there was no guarantee of perpetual growth, and I'm still far better off than if I had never invested at all.
The fact that my home value has probably dropped 15-20% from its high of 18 months ago didn't scare me. In four years it'll be paid off, it's still worth at least three or four times what I paid for it, and it gives shelter to me and two relatives who have fallen on hard times (in lieu of them going on welfare).
The fact that my rental house has been on the market without an offer for over six months doesn't scare me. It's rented and not over-leveraged.
The fact that my business is facing some growing receivables and lower demand doesn't scare me. My business expenses are lean, and my household can live on less than $3,000 a month including private school tuition for the teenager, who has a weekend job, and help for a kid in college who also works nearly full-time. I'll have to keep working longer than I had hoped, but that's life.
The fact that so many people commenting here seem to think that we would be better off by adopting even more socialist policies than we already have - that DOES scare me.
We've had several decades of relentless anti-business, class-warfare rhetoric from the Democrats and a fair number of Republicans, and abysmal economic education at every level below graduate school. That, plus a normal amount of human self-regard, has given us a high proportion of our population that is convinced that it has a moral right to a comfortable middle-class existence no matter how foolish its choices or whether it contributes anything useful to society or not, complete with McMansions, new cars, daily "fair trade" lattes at Starbucks and produce worth its weight in silver because it's "local" and "organic." A sizable segment believes the only thing keeping it from that existence is racial or ethnic prejudice and/or greedy businesses (as if its own sense of entitlement wasn't just as greedy).
These are the kind of people who, like Al Gore did a few years ago, demand that the government pay for their parents' prescription drugs or their kids' college educations instead of pulling out their own often well-padded checkbooks. And they are the kind of people who don't see a "moral issue" in walking away from a mortgage because their house declines in value.
This social divide, between the "leave me alone unless I'm starving" crowd, like me and my family, and the "as long as there's a single rich person left alive, we're all entitled to share in his wealth" crowd, like Obama and his followers, is not a recipe for a slow, gentle economic decline like that which socialism has brought to Sweden, but for a swift devastating decline like the one it brought to Zimbabwe, although granted it will take awhile longer since we have farther to fall.
People who believe that the "rich" people Obama plans to soak will still create as many jobs, invest in new businesses, and keep our economic engine going while Obama screws them, are dreaming. He has promised goodies to so many people, he will have to deliver on some of it, and to do that, he will have to tax the middle class directly or indirectly, because there simply aren't enough "rich" people to pay the piper. So if you are middle class, you can count on one of two things happening: The "rich" people who created the job you now hold will find it in their interest to yank it and you can join the unemployment ranks, or you WILL pay higher taxes.
Socialism is indeed, as Obama promises, about "sharing the wealth" - whatever wealth there is. Capitalism is about creating it. Obama is offering to give you a fine dinner of roast goose, but you only get to dine on the goose once. It's a fine meal, but after that, you won't get any more golden eggs.
You have nothing to apologize for by merging your finances with your husband's. But you are married, and the rules are different for you than for unmarried couples. You have made a formal committment to each other, and that makes a difference. When people try to live and act like they're married whey they aren't it always leads to trouble. I'm a financial planner by training myself and in my opinion, married couples should share EVERYTHING financially and have joint accounts whenever possible. The only exceptions should be retirement accounts (that can't be titled jointly) and mortgages, when one spouse's credit history would prevent approval.
I think one thing to remember, re: the Feinstein video, is that the US is not a true democracy. We live in a representative government. We elect officials (ideally) based on whether we think their values and goals are inline with ours. The US government does not expect its citizens to read through hundreds of pages of legislation and be expert in complicated economic theories in order to make an informed decision about whether or not a $700 Billion bailout is good or bad. I have read, watched, listened to so many descriptions and views of what is happening and what caused, and I am decidedly undecided on how I feel about it. I would rather leave this decision up to the "experts".
My feeling about housing prices dropping is that I think people need to stop panicking, and stop complaining that folks in foreclosure or who are getting their mortgages reset are better off for it. Their not. And as for your house value, if you stay in your house for the next 10 years, stop thinking of it as an ATM and start thinking of it as shelter, the value will eventually go back up. That's the real problem... we Americans need to stop wanting instant gratification, and stop coveting everything our neighbors get, be it an HD television or a mortgage bailout.
Before anyone goes and follows this advice, keep in mind that we are in an election year... Politicians Lie. Obama and McCain will say anything to win but I guarantee you not one red cent will go to any struggling home owner ( and it shouldn't ). People want to blame greedy banks for what happened, just remember it was Bill Clinton's plan that made these sub-prime shark loans possible and ultimately, it comes down to the homeowner to know what the hell they are signing for.
It always amazes me how people want to take an eminently practical matter like the mechanics of personal finance and make it emblematic of things like trust and commitment.
1. Sad Guest, becoming "one in the flesh" is symbolic. As a practical matter, you can't eat while your husband doesn't and expect him to survive. Personal finance is practical as well, and your assumption that having separate accounts points to a lack of trust says more about your relationship than anyone else's.
2. Sad Guest Too, if you have to "force discussion about money and goal-setting," sorry, your relationship's already doomed, separate accounts or not.
3. LizMendoza, I'm not clear why you need a joint account to discuss money. In addition to separate bank accounts, my wife and I are both professionals with separate 401K's. We go over our statements and discuss our strategies when it's time to rebalance, and if one of us has done really well, maybe the other will adopt that approach. Money is a casual and frequent topic of conversation as it should be in a healthy marriage regardless of the account structure.
In the case of marriage, it's generally "community property" anyway, so use whatever works: joint, separate or both. But recognize that it's a practical decision, because once you make it a symbolic statement about your marriage, it's much harder to make sound financial decisions.
Once more thing: diversity in personal finance as in investing can help reduce risk. Recently as WAMU started to go under and real questions about depositor rights loomed, our anxiety was reduced by having ~50% of our liquid funds stored in another (stronger) institution. It's seldom a good idea to keep all your money in one location whether a coffee can or a bank.
Very interesting posts. It is unfortunate that there is so much buzz in the industry today about permanent insurance being a "bad thing". Again, most of you are right that term can fill temporary need but it is only "rental" of insurance coverage. Why rent when you can own? The trivial discussion regarding the cost of pure insurance offered under permanent vs. term is a shortsighted argument. The REAL issue is that permanent insurance works best as an investment for retirement. If you don't want choices for retirement then go the cheap route and buy term insurance. Invest all of your excess funds in your IRA to the maximum and then put the rest in safe accounts that offer little to no return. Here is where you will be at retirement age (say 65). You will have no insurance coverage and no way to get it if needed. Inflation will have outstripped your safe investments negating wahtever interest you may have reinvested during the period of those investments. Your IRA's will be full of cash but heres the wake up call...that money is not all yours, its just temporarily on your letterhead. The government will decide how much of your IRA you will keep by setting the tax rates. Does anyone here think our tax rates will be lower in the future? If so I have bridges for sale. In 1982 the highest personal income tax rate was 70%, so go ahead and save your money for the government....I can't think of a better investment strategy! (sarcasm of course)
Permanent insurance works best for people that have an insurable need above $250k, AND would like to save money for tax free retirement. Indexed products are great becaiuse there is no risk of loss of principal, and earnings that are capped and floored. This means in good market times, you will earn the cap, and in bad time such as now you will not lose principal and you will likely not make any investment returns. OK so, is there anyone out there that is sick about watching their retirement accounts shedding 40% of their value? Are you comfortable with that? I can't understany why if you are.
Insurance and investments are not about the numbers, it is about choices. The more choices you have the better off you are. Why? Because who knows what is going to happen in the future. A good insurance guy will monitor your insurance every year and compare it to what was sold to you, if it is not performing they need to fix it, if it is performing, you need to know that...every year!
If your need for the death benefit goes away, then drop the face on the policy to the minimum and this drive wup the cash value. A properly sold and monitored policy will ALWAYS outperform buying term and investing the difference. The problem in this industry is that many policies are not sold properly nor are they monitored like they should be. If your agent does not report back to you every year and give you a synopsis of your investment then he is not a good agent at all. Commissions are paid up front, responsible agents reserve part of their earnings to fund the ongoing monitoring costs. Very seldom does this occur so here we are, wiith permanent insurance taking on a bad image. Its not the financial vehicle you choose, its the person behind it. Buyer beware and don't hand all of your retirement cash to uncle sam, there are better ways to use your own money.
just add 1tbsp + 1tsp cream of tartar to keep it fresher, just like a homemade playdoh recipe (an alternative to tea tree oil)
my rating did go down in June after i bought airline tickets to texas.. i do pay for the credit monitering service on one of my CC, not sure if i should cancel. it's $8 a month.
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I have been with my husband 37 years married 31 years and we have always had our money seperate.We always have the option of "pooling" " joint payments" "treat" but from the time we started dating to living together to married, thru buying cars/houses/paying for college or a wedding we negotiated the financial aspects.I think the best system is one you both come to agree on whether it is 3 pots or joint or seperate etc.there is nothing sexy about debt, betrayl,hurt feelings etc.
Stop the war in Iraq. Stop encouraging war everywhere else. Stop spending money for destruction. Don't spend money creating more advanced weapons. Ppl die and the world hate US goverment. Use the money for good cause. Feed the hungry. Americans can have better life from that money.
"It also pays 100% after my deductible, meaning that once I pay my 5K, I'm done for the year."
I don't know what company/state you were in, but our plan with BCBS of California ($2500 deductible) did not cover everything above the deductible and they don't cover all tests/procedures, either, if you are not on a full coverage plan. Just for those in CA, be aware - my high-deductible plan cost us over $4000 a year for both of us, and then an additional $10K in other bills for my meds/tests/biopsies, ct scans, etc. Hopefully its not like that in every other state.
italics Thanks for the heads-up
With so much uncertainty as to what the future of the economy will be it is imperative that one has their complete financial house in order. A vast majority of families today know little about personal finance. Many think long-term security is impossible on their income. But, the truth is, no matter what a family’s income level, they can achieve financial security. Families today just have to take the time to learn a few simple principles about how money works. How much do you know about personal finances? If you’re like most people, you might think that financial education is only for the wealthy or well educated. Every day people just like you should learn “how money works” so they can make better decisions about their personal finances.
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My partner and I moved in together about six months ago. She had left a bad relationship, and this is the first truly serious relationship I'd ever had.
She lost her job right after we moved in together, leaving me with her bills, mine, and the responsibilities of just having bought a new home. We made an agreement that she would take care of my son while she looked for a new job and save ourselves the cost of daycare. That snowballed into her babysitting other kids in our home. Overall, this works for us, but the loss of a second income meant mine was stretched more and more. We merged our bank accounts against my better judgement. She wanted to do this because I kept overdrawing my account, trying to pay for everything.
She and I come from very different backgrounds as far as money. I grew up middle class, and she was very poor. So now that we have a joint account, she makes me feel guilty for every little purchase. She receives state aid because she makes under the poverty level, and she gets upset if I go grocery shopping without using her food stamp card, even though I can afford it.
I just got a large raise at work, and I'm considering siphoning the extra money off to a savings account. My partner doesn't see the benefit of saving, other than for a vacation, but I like to have "emergency money" and money to put in my IRA. She actually got upset with me when I wanted to put my son's child support funds into his 529 account.
I've tried discussing this with her, and she continues to act as though we are drowning and never going to get out of the hole, even though I've been paying off debts. She plans lavish weekends for us, and then wonders where our money goes.
Personally, I think all couples should have a 3 pot system. A joint account for household expenses, and separate accounts for each person to be spent as they want. It avoids the guilt over spending "our" money.
Unfortunately, my partner can no longer get a checking account, so this system doesn't work for me. And I find I've inherited a lot of debt that I'm going to be paying for in addition to my own. Finances should definitely be discussed long before making committments to one another.