Friday, November 02, 2012
Can you afford to be rich?
A lot of time we are asking ourselves, can I afford a better car, a bigger house, a boat, a big vacation, fancy clothes, etc. When was the last time you asked, can I afford to be rich? This all based off a simple number I ran the other day. If you saved $150 a month for 40 years (compounded at 10%) you would have $956,000 dollars. At $150 a month we are not talking a better car, a bigger house, a boat, we are talking cell phone, cable tv, eating out often, packing lunches or not, etc. Most of my friends laughed at me when I brought this up, because you don't really need to get rid of your cell phone to save $150 a month. Most can just do it by working a little more and saving a little more. So if you can afford Jordan's or Tv or internet or a cell phone with data, you choose that over being rich. So why don't you choose to be rich?
Thursday, June 21, 2012
Two kids are getting ready to go to college.
Kid A has a job with the city making $10,000 per year and has saved $20,000 to help pay for college.
Kid A's parents have 6 kids, and 3 are going to college right now. They have also saved by putting away $10,000 in a 529 for Kid A that has grown to $20,000. They have struggled long and hard to make that money available for their child.
Kid B had a job but quit his senior year. He has $40,000 saved up but had it moved to his grandparents name.
Kid B's parents have 1 kid. They have $1.2 Million in 401k's and IRA's and have $3.4 in cash value life insurance. Kid B's grandparent's are wealthy and have a 529 plan for Kid B in the amount of $50,000.
Kid A and Kid B go to the same school and Kid B gets a pell grant and other need based scholarships, Kid A gets nothing, his Expected Family Contribution is higher than Kid B's.
How?
This is all about knowing the rules of the game. Kid B's more wealthy parents are more likely to have access to a financial planner who knows how to hide assets. Yes in theory the calculation behind EFC are supposed to benefit the poor and they do, only those poor that plan poorly. They have to plan poorly in a specific way, by not having any savings and the student not having any income. If they plan poorly but do everything in their power to prepare (saving and getting a job), then they lose out on "aid". Classic welfare trap. The smart poor would save but move assets to a grandparent's name or other trusted individual and do other "shifting" tactics. The problem is the smart poor don't remain poor so a small minority of individuals would actually take advantage of this.
Those who have thought this out have 3 decisions:
1) Don't take personal responsibility and take a chance aid will be sufficient
2) Take personal responsibility but don't plan and hurt how much aid you receive
3) Take personal responsibility, plan, and don't remain in poverty.
Sadly, most of the poor have no idea of the regulations and political web and don't take advantage of programs to help them out of poverty.
Kid A has a job with the city making $10,000 per year and has saved $20,000 to help pay for college.
Kid A's parents have 6 kids, and 3 are going to college right now. They have also saved by putting away $10,000 in a 529 for Kid A that has grown to $20,000. They have struggled long and hard to make that money available for their child.
Kid B had a job but quit his senior year. He has $40,000 saved up but had it moved to his grandparents name.
Kid B's parents have 1 kid. They have $1.2 Million in 401k's and IRA's and have $3.4 in cash value life insurance. Kid B's grandparent's are wealthy and have a 529 plan for Kid B in the amount of $50,000.
Kid A and Kid B go to the same school and Kid B gets a pell grant and other need based scholarships, Kid A gets nothing, his Expected Family Contribution is higher than Kid B's.
How?
This is all about knowing the rules of the game. Kid B's more wealthy parents are more likely to have access to a financial planner who knows how to hide assets. Yes in theory the calculation behind EFC are supposed to benefit the poor and they do, only those poor that plan poorly. They have to plan poorly in a specific way, by not having any savings and the student not having any income. If they plan poorly but do everything in their power to prepare (saving and getting a job), then they lose out on "aid". Classic welfare trap. The smart poor would save but move assets to a grandparent's name or other trusted individual and do other "shifting" tactics. The problem is the smart poor don't remain poor so a small minority of individuals would actually take advantage of this.
Those who have thought this out have 3 decisions:
1) Don't take personal responsibility and take a chance aid will be sufficient
2) Take personal responsibility but don't plan and hurt how much aid you receive
3) Take personal responsibility, plan, and don't remain in poverty.
Sadly, most of the poor have no idea of the regulations and political web and don't take advantage of programs to help them out of poverty.
Wednesday, February 22, 2012
Unspinning the positive spin on Obama's tax words
Quote from a article praising Obama's new tax plans.
"Done right, they could raise revenue in a progressive manner without raising taxes."
How does that make sense? It only has two possible meanings.
1. Pure stupidity but classic Progressive banter. There no way to raise revenue (taxes received by Gov't) without raising taxes (Taxes paid by the people). Sounds great right? Like magic, right? Well it would be, but it sounds great and that is as far as idiots think.
2. Pure greasyness. Raise revenue in a progressive manner means what? A progressive manner means taking more from less and less from more. More taxes on the top. Though I know "without raising taxes" is an outright lie that sounds good, if total taxes paid doesn't change that means more unfair tax code that makes people making money pay more and people not paying money pay even less. Slick talk that sounds good but is more of the same class warfare rhetoric.
Oh P.S. Knowing this administration, wait until the real tax plan or changes are implemented or totally changed before taking any stock in what is said. This will either never happen and only serve as a campaign talking point, be severly watered down to push some other progressive idealogue, or happen fully tricked out with a bunch of other crap that is unpopular and we had no idea was going to happen.
"Done right, they could raise revenue in a progressive manner without raising taxes."
How does that make sense? It only has two possible meanings.
1. Pure stupidity but classic Progressive banter. There no way to raise revenue (taxes received by Gov't) without raising taxes (Taxes paid by the people). Sounds great right? Like magic, right? Well it would be, but it sounds great and that is as far as idiots think.
2. Pure greasyness. Raise revenue in a progressive manner means what? A progressive manner means taking more from less and less from more. More taxes on the top. Though I know "without raising taxes" is an outright lie that sounds good, if total taxes paid doesn't change that means more unfair tax code that makes people making money pay more and people not paying money pay even less. Slick talk that sounds good but is more of the same class warfare rhetoric.
Oh P.S. Knowing this administration, wait until the real tax plan or changes are implemented or totally changed before taking any stock in what is said. This will either never happen and only serve as a campaign talking point, be severly watered down to push some other progressive idealogue, or happen fully tricked out with a bunch of other crap that is unpopular and we had no idea was going to happen.
Tuesday, January 31, 2012
Obama, GM, and Bain Capital
Comparing the GM bailout and Bain Capital is usefull and ludicrous. First of all both did the same thing, both present infusions of cash usually and a dramatic restructuring of the company. Both normally cause layoffs in order for the company to remain viable for the future. Both have risk. Both seem to be a mixture of success and failure.
It is ludicrous though because of where the cash came from. Bain has cash as a company and took investments from willing investors who believed leadership could make a profit, they chose to take the risk. Obama's money came from take payers who are forced to give money to the government and do not understand or choose to risk their money and do not stand to make a profit (nor did they.) Layoffs and hurt came to GM but not to the unions and union bosses who Obama took great pain to time when and who could sell stock before the price fell. Employees and factory workers took the fall. Democrat allies, not so much. Some of Bain's moves ended in both people losing jobs and losses. Some is the price that willing investor's pay. GM is looking to lose about $23B of taxpayer's dollars.
I know that Obama is going to attack Romney's business credentials. People will love it when he points out that people lost jobs and people will love it when he points out that Romney made money. That is the success and failure of Bain and people think negatively of both. Insane. Also notice how Obama will say, "I saved x number of jobs at GM." First of all, overall jobs went down, second of all you didn't save them, you paid for them with tax payer dollars. Give me $23 billion and I'll create thousands of jobs, and make a really large and beautiful park or thousands of new schools or something. Obama like to claim his results are better than the worst possible scenario, forgetting the same goes for Bain, who steps in on companies going bankrupt. What is the best possible scenario if the company followed what Mitt proposed? Would we be seeing the same results without the $23 billion loss to taxpayers? If there was a $23 billion loss, it would be investors who willingly put their money at risk, not me, who abhors giving any money to a government to poor at managing money.
It is ludicrous though because of where the cash came from. Bain has cash as a company and took investments from willing investors who believed leadership could make a profit, they chose to take the risk. Obama's money came from take payers who are forced to give money to the government and do not understand or choose to risk their money and do not stand to make a profit (nor did they.) Layoffs and hurt came to GM but not to the unions and union bosses who Obama took great pain to time when and who could sell stock before the price fell. Employees and factory workers took the fall. Democrat allies, not so much. Some of Bain's moves ended in both people losing jobs and losses. Some is the price that willing investor's pay. GM is looking to lose about $23B of taxpayer's dollars.
I know that Obama is going to attack Romney's business credentials. People will love it when he points out that people lost jobs and people will love it when he points out that Romney made money. That is the success and failure of Bain and people think negatively of both. Insane. Also notice how Obama will say, "I saved x number of jobs at GM." First of all, overall jobs went down, second of all you didn't save them, you paid for them with tax payer dollars. Give me $23 billion and I'll create thousands of jobs, and make a really large and beautiful park or thousands of new schools or something. Obama like to claim his results are better than the worst possible scenario, forgetting the same goes for Bain, who steps in on companies going bankrupt. What is the best possible scenario if the company followed what Mitt proposed? Would we be seeing the same results without the $23 billion loss to taxpayers? If there was a $23 billion loss, it would be investors who willingly put their money at risk, not me, who abhors giving any money to a government to poor at managing money.
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