Thursday, January 27, 2011

[1589] THE KINGS SPEECH- Okay- I didn’t see the movie yet [though it’s supposed to be good] and I also didn’t watch President Obama’s speech the other night- but of course I heard the usual spin from the right and the left. From the snippets I did catch- it seems like the President did the best he could do with what he has to work with. Okay- I think the ‘high speed rail’ thing is kinda beating a dead horse at this stage of the game- sure- would I like to zip real fast around the country without having to go thru the plane molestation procedure- yeah. But in reality, even if we managed to accomplish it- it would basically serve the needs of the ‘blue states’ the most. I love the North East- grew up in Jersey- but its kinda playing to your base when you promote a major investment that will primarily benefit the home team. All in all there really isn’t a whole lot the President can do to turn things around. Though the stock market broke the 12,000 mark yesterday- in reality we have a long way to go before the country as a whole experiences real recovery. This year we are probably going to have more home foreclosures than last year. Last year we topped just over a million- this year it’s projected to be around a million and a half- we start the year with 5 million home owners 3 months or more behind in their payments- not good. Unemployment is still very high- 9.4 %- and we are still spending way more than we can afford as a country. The 3 main expenses of our govt. are the military- Medicare/aid and social security. Now I realize social security is not ‘part of the budget’ in the sense of borrowing and spending- yet we do have to address the reality that too few workers are expected to support too many retired folk- we need to change some things- and politicians in general don’t have the stomach for it. The military budget is another taboo- we can’t keep spending the amount we have been- this doesn’t mean we need to back down on national defense- but do we really need to keep hundreds of thousands of troops all around the globe- 50 thousand still in Germany- we need to retool this thing. Overall we have some major adjustments that need to be made- and we can’t just say ‘cut’ nor do I think the answer is ‘spend more’ we need to spend more wisely- and cut wisely. When talking about saving millions/billions by taking away a benefit from a person who is really in need- or saving a billion in one slice from some plane the military says they don’t even need- then of course- don’t keep the plane! Yet at the same time- there are lots of cases of people gaming the system. Look- I have lots of friends- for many years- who have gotten disability checks- or sold food stamps- or used the food card- to buy drugs. One of my buddies- been gone for a while now [Fla.] used to get his monthly check from the govt. [S.S. disability] and the entire check [around 500] was spent on crack- gone in 2-3 days. Okay- we have a problem with this system. Many years ago- while working as a firefighter- I got into the whole ‘buy a cheap house- fix it- rent it- sell it’. It was okay- made some money. After a while I made a conscious decision to get out of the whole thing- though I had lots of ‘preacher’ friends- who were ‘preaching money’ all the time- I mean the whole message was wealth- yet out of the whole bunch- I probably was the ‘richest one’ and I was the only one preaching against it! So I finally got out. I had a buddy at the Fire House- a new guy who came all the way from California just to take the job [it was a little strange for someone to move from Ca. to our little town for the job] and he was a few years older than me- but I had worked as a firefighter a lot longer. So as time rolled by he told me he still had a condo in Ca. and his renters were tearing up the place- lots of problems- things I was all too aware of. I advised him to sell- because Ca. has this screwed up system [because of their property tax] where the value of the residence is much more than what you could make on rent [I think he was getting around 800 a month on a condo worth 250 thousand] I told him- from a purely financial view- that this was a bad investment. That if I were him- I would ‘get out while the getting’s good’ [it was right before the big drop in the Ca. market] and that I would maybe buy a rental or 2 from the money- residentials were going for around 80 thousand at the time- nice rental homes that you could rent for 1000 a month- and that I would simply stick the rest of the money in some safe return instrument. Sure enough he sold- made the money- and told me all about these financial seminars he was attending. He also refused my advice- he was taught that you should spend every penny of the profit from the previous sale- to avoid paying taxes on the profit. I told him ‘yes- in theory it sounds good- but I’m giving you practical advice from experience- you should not blow all the profit- you need to keep some back for expenses’. So he didn’t listen- spent it all on 3 homes in San Antonio and later told me as the end of the year came up- that he was having trouble paying the huge tax bill. He also was going to invest all the rental profit into a life insurance policy- and instead of making interest income that would be taxed- he would take a loan from his policy- tax free- and then pay the loan back [with more rental income] in order to avoid the taxes. I told him ‘brother- we are in the middle of the worst insurance company meltdown in the history of the world [AIG] who are these geniuses telling you to put all your cash in an insurance company?’ he took my advice this time. The point? There are real financial difficulties that the country is facing- and there are not any quick fixes to get out- it’s going to be tough for a long time. We should all do our best- be charitable- it helps others, as well as yourself- and seek first the kingdom of God [not money!] and all the things you need will be taken care of- at the end make smart financial decisions and trust God as well- it does work.

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