Let’s be clear, I am not an alarmist, extremist, or any kind of -ist for that matter.  I tend to tread in the middle road on many things.  Even though I am a conservative politically and morally speaking, I am very much one to mix with all types and be happy with the melting pot.

I think we can all pretty clearly agree that our national economic situation America is downright screwed up.

We, as a country, have been borrowing against the future in a big tremendous way in order to enjoy the current prosperity.  Politicians continue to do it because it just isn’t easy to get elected without giving people the easy answer to making their our what we all want.  It has been easy to let it happen because frankly we all enjoy the good times, and the negative backlash has seemed so far in the future that we all figure some kind of fix will be figured out along the way.  Not my problem, right?

Wrong.

All indicators and difficulties of our current recessive backsliding underway, we are headed for a major bursting of our financial bubbles.  It drives me insane to see us continue to operate at a deficit as a country in such enormous sums that the average citizen simply cannot wrap his or her mind around it to be concerned.  It’s like the individual that is so deep in debt that they just ignore the bills out of the sheer feeling of futility of doing anything about it.

One life getting fouled up with band financial decisions is a bad thing, an entire country is in an entirely different scope.

I truly believe that our generation needs to be the one to take this problem by the horns and do something about it.  Even if it means a decade of some very difficult times, it isn’t going to get any easier the longer we put it off.  We are well past the point of thinking we can just maintain status quo and it will somehow resolve itself.

An article today about yet another big drop in the Dow for a variety of reasons reminded me of just how volatile the market can be, and why I don’t like to take risks with it.

Generally speaking, I don’t think of myself as stupid; in fact, I think I am smarter than the average guy right along with Yogi Bear. Typically if I don’t know something, I can research and educate myself. Perhaps I have never done enough research on markets, but there are some subjects I have decided I am just not wired for. Along with chemistry, trading and taxes rank right up there. Thankfully my wife handles the taxes and I no longer have to deal in the nuts and bolts of chemistry (I stunk at it in college, trust me).

Way back when I did a little buying and selling of stock with companies I was involved in some fashion. I pretty much ended up even after some good gains and then some losses that humbled me. That was enough to scare me away.

I feel comfortable with subjects that have a level of predictability and logic I can understand. Oh, you stock types like to think you can predict the markets, but most of you are just making good guesses more often than not, which gets you ahead. Any given day the market can, and often does, take unexpected turns that defy logic. I have seen it numerous times when a company makes a huge announcement that should drive their price up, only to see it tumble as people are selling off all at once thinking they were going to reap a windfall along with everyone else.

Even in my meager attempts socking away for the future I haven’t had much success. I started up a 401k and Roth IRA this year right before the market took some tumbles. The result? I ended with a loss in my first quarter of retirement savings. Gee, now I feel great about putting that money in at just the right time. I know, I know; I am still doing the right thing; but, nothing like a punch in the gut to make me feel better about it.

Any of you have been luck with it? You have any secret I should know about? Please, do share.

First, and perhaps foremost, is the reminder that so much of my information is of public record.  When these mailers come in, they have not only my name, address, and phone information, but also my loan amount.  I hate that they know this much about me and can mail to their heart’s content.  They mock me and rub it in by printing that loan amount right in the letter!

Second is the fact that they are so quick to mail, and so plentiful for that matter.  I get tons of them, then repeats and follow ups from the same people.  I have worked for companies that have done mass mailing, so I understand the practices and proven patterns of success with follow up mailers, but it still bugs me.  I had outfits mailing me within a couple of months of my initial home purchase.  If I am that hard up to refinance already, then I really botched my initial loan negotiation.

Third, and this goes for mass mailing in general, I hate knowing how much waste is taking place with such marketing attempts.  As I have mentioned, I have some understanding of what goes on behind the scenes on this kind of marketing.  It is a pure numbers game, and the numbers may surprise you.  If they get even a 1% response rate on their mailing, that is typically considered a successful campaign.  That means that 99% of the people receiving that mailer are chucking it with no interest.
Fourth, and now that I think about it definitely foremost, is the tactic to try and trick you into these interest-only loans.  Interest only seemed like a good idea for a bit, but the reality has quickly sunk in for millions of now homeowners.  These loans were incorrectly used to get unqualified people in way over their heads with immense loans.  We have an incredible beginning to burst of sub-prime loans about to foreclose because of this situation.  Our current housing market is artificially lifted to astronomical levels, and everyone now realizes we are headed for an abrupt and painful correction.

We can’t all blame the deceitful tactics of the lenders that got people in the bad situation.  People should be intelligent enough to read the terms and understand the implications of that 3 or 5/1 ARM loan that is going to raise your monthly payment over time.  If you had to pull trickery to qualify for your loan at the outset, there is a good likelihood it is going to come back and bite you later on.  If you were counting on a fortuitous financial future (that sounded kind cool now that I wrote it out) and extended yourself into a better home, as so many realtors and lenders encourage you to do, you have taken a risky step.  Best of luck to you that everything works out as you have hoped.

I have to admit I first had an interest only loan on this new home when I bought it.  I quickly saw where the market was headed and in a couple of years converted it to a fixed rate.  There are reasons to use various loan types, but as an average home owner those reasons are not for me.

Those emails for incredible loan rates sound too good to be true…trust me, they are.  I have actually seen what happens to people that respond to those kind of emails.  Your contact info gets sold 4-20 times to various loan officers hungry to sell you a refinance or new loan.  They pay upwards of $30-60 each to get your info too.  You will be called by tons of people trying to sell you on their services, but you are no better off than simply talking to any local lender and educating yourself on what is currently available.

Don’t fall for the tricks of “get a 200,000 loan for only $500/mo payment!”  There is a trick, and it is being played on you.

Taxes are an easy punching bag, which is likely why I have avoided it as a topic for a bit. I can’t think of anyone, and I mean anyone who likes paying taxes. No matter what country you are from, there is some sort of taxation to fund our governing bodies. It is an unfortunate constant we all experience. It is necessary, don’t get me wrong, I am a realist. But of course waste in the government makes this bitter pill all the more foul tasting.

I read an article this morning (online of course) titled Uncle Sam Spoils Dream Trip to Space which covers Brian Emmett’s unfortunate situation of not being able to afford going on his “free” trip he won into space. You see, Brian was just an average Joe computer programmer who won a trip into space. How cool is that?! On top of this, he has always wanted to go into space, even as a child like most young kids. So why isn’t he going you ask? Because he would have to pay $25,000 in taxes to accept the trip. You see the trip is worth $138,000, and because it was won in a prize drawing it must be reported on personal taxes in a category that qualifies for a very large tax penalty. This just doesn’t seem right.

We have all seen this when people win big lottery prizes. Usually the article announcing the winner talks about how much “take home” prize they actually end up with. It doesn’t seem like as big of a deal because, heck, they just won millions upon millions, so who is complaining. Yet in this situation, how many times has the government collected money on those winnings before even distributing it to this new winner? How many times do they get to stick their hands in the pockets to put the money right back in their coffers.

The prize one really gets me, but not as much as inheritance taxes. Grandma El finally kicks the can, and low an behold the family finds she had nestled away some savings noone knew about. It isn’t that much – nothing to make anyone rich – but enough that everyone is actually a little excited to get it. Then comes the surprise, Uncle Sam is taking a big chunk of it. Depending on how much it is and where you live, the government can take as much as half of it. What kind of business just took place that give the government the right to get their filthy little hands even dirtier by grabbing a piece of the loot. This tax was really put out there as a way to equalize the rich a bit by not letting subsequent generations simply live of the spoils of being rich…but it doesn’t work. The rich are the ones that can afford to shelter their money in ways that keep the government out of it, so this form of taxation just ends up hurting those that would benefit from a gift left behind from their loved ones.

This puts a whole new spin to the saying, “The only two sure things in life are death and taxes.” Perhaps it should be that “death brings taxes.” Seems like a bad case of adding insult to an already difficult situation.

There has to be a better way for our government to get the cash they need to run. Not only is the US government chewing through every penny they can milk out of the public, but they are running up a tab bigger than any of us can truly fathom With a national debt past 8 trillion, yes trillion, there has to be a change – and quick.

Why can’t the government find ways to generate income to help self fund? I realize ours is a free market society and we don’t want to be competing against a behemoth organization, but I would accept it in some markets and to some degree if it meant a much more beneficial tax situation. Maybe I’m just naive, but there has to be a better way than what we are doing now. Unfortunately I have little faith that any group in our current governmental setup is going to pull it off. Sure, the Democratic Congress would like you to believe that big changes are underway because they have seized power…and I have a bridge to sell you too. Don’t believe the rhetoric.

I’m a bit cynical on this, but cynical with an ounce of hope. I truly hope a better plan can be found within my lifetime, and that things can be fixed. A good start would be to quit raining on the prize winning parade and pushing down the families with recent deaths. At least we would all be a little happier as a result.