How Is Your Stress?

That question was recently posed to MasterPo by a nurse.

You see, MasterPo gets his health insurance from Mrs. MasterPo's work policy (better plan and cheaper than at MasterPo's work). This year, as a cost reduction approach, the plan offers an voluntary "wellness consultation" program. An RN is assigned to you and each month she calls to discuss some issue or goal of health like weight loss. In return, you get a couple hundred $$ off your health insurance premium. MasterPo likes that part!

The RN assigned to MasterPo is a pleasant woman, seems knowledgeable, and has a decent bed-side manner. MasterPo knows the health issues to be worked on, knows how to get there, and really doesn't need a health care hand-holder. But for a discount MasterPo will endure the indignity of it all.

Recently (as of writing this) was this month's wellness call. Out of the blue the RN asks "How is your stress?"

Now that is a loaded question!

MasterPo inquired "In what terms?"
She responded "Work, family life, life in general."

Now, if you don't have stress in your life (especially these days) you either have just won a 9 figure lottery or are totally clueless!

So MasterPo responded thusly:

"I'm trying to hold on to my job at a time everyone around me is loosing theirs.I have a 30 year mortgage and a 10 month old baby.And every time I turn on the TV the news gets worse and worse!Do you think I have stress??!!??!!"

MasterPo is sure that answer caught her by surprise.

So how's your stress these days?

The Fall of Rome and the United States (or, Iceberg! Iceberg!)

MasterPo has written about this before but it needs to be said again.

Rome fell because too many people at the bottom taking from those at the top. Or, to put it in another way, the non-producers out ranked the producers.

At the height of their power Rome decreed that any Roman citizen (at least you had to be a Roman Citizen, not any shmoe who walked over the boarder!) who wanted to could quit their daily work and Rome herself would provide for all their basic needs of life (food, housing, clothing etc. – not sure if healthcare was part of that but let's presume so).

This was done for two reasons:

1) It was hoped that people who took this offer would then use all their new free time to explore the arts, philosophy and sciences thereby adding to the intellectual and cultural base of Rome.

2) It was a symbol to the world of Roman power and affluence that it could provide all the basic needs of people without every single person making a daily material contribution to Roman society.

Problem was: Citizens actually took Rome up on the offer!

And worse: Of those who did take the offer precious few who dedicated themselves to the intellectual and cultural pursuits Rome had hoped for. Instead they indulged in sports, travel, debauchery and generally living the Life of Reilly.

Who'da seen that coming?! (not!)

Then (as is happening now) the government tried very hard to hide the problem by proposing all sorts of national programs and incentives to get people to work, and by distractions of games and events (Bread and Circuses). But it was just holding back the tide with a broom.

Rome fell when the population became a mob because the Roman government could no longer provide food, shelter etc. for aaaaaaallllllll the people who were no longer contributing to the nation.

On a Yahoo Finance Tech Ticker article a user named Lucy posted this comment:

"lucy - Friday March 19, 2010 09:06AM EDT
50 years of welfare has started to bring down western civilization. We do not have the internal fortitude to reverse the process. What are we afraid of? It is a repeat of the Roman mob bringing down emperors. A civilization fails when it loses it s nerve. Obviously we have lost ours. People have the responsibility to fend for themselves. The big lie that the socialists put forth is that they will take care of everything. There isn't enough money in the world for that to happen. When are the sheep going to realize it?"

While MasterPo agrees that possibly some of the nanny-state programs might have a benefit, the cold hard reality is we as a nation and society simply can no longer afford the luxury of all these handouts based on the hope that someone somewhere will benefit. The reality is that people only benefit when they have to put in an effort for themselves.

Sink or swim time, as cold as it may sound.

If I Am Not For Myself, Who Will Be?

"If I am not for myself, who will be for me?
If I am not for others, what am I?
And if not now, when?"
(Rabbi Hillel Jewish scholar & theologian (30 BCE - 9 AD) )

This quote attributed to a man that lived over 2,000 years ago is just as meaningful and important today as it was then. Especially in the America of the early 21st century.

It is about standing up for yourself.
It's about putting yourself (including your family and your other direct responsibilities) first and foremost in your life.
It's about taking hold of the reigns of control in your life and guiding events for yourself.
It is about being proud of your accomplishments, not ashamed of being successful after long hard work.

Since when did it become "selfish" or "greedy" to take care of yourself and your own responsibilities first?

When did making sure your own family has food, clothing, shelter, medicine, education etc. before looking around at others?

Where is it written that I must hurt myself and my family in order to provide support to someone else? Even life guards and first responders are trained not to put themselves into immediate harms way to save someone else.

This is not about being selfish or self centered. Look at the second line of the quote. Rabbi Hillel clearly indicates you are to consider the plight of other people too. But consider others after you have taken care of yourself and your own charges.

This above all else I believe is what is wrong with 21st century America thus far. That too many people who have not succeeded in caring for themselves and their charges first are way too interested in telling others how they should live their lives, what they can and cannot do, what they should spend their money on etc.

Fix your own life first!

There's another old saying:

Those who can, do.
Those who can't tell others what to do.

Which are you? A do'er or a tell'er?

Faith of Finance?

MasterPo has noticed a curious, perhaps even troubling, trend.

Of late, on several personal financial blogs MasterPo frequents, more and articles are appearing that discuss personal money matters with in the context of faith and religion. Most try to tie together making personal financial decisions with charity, helping others, not being "greedy" (the definition of which is certainly open to debate at a later time), and even sighting passages from the Bible (New Testament mainly) about frugality, hard work and charity.

MasterPo agrees these are all good concepts. And if everyone shared similar views (regardless of their specific faiths) the country and the world would be a far better place.

But let's not blow smoke here.

While there may be lessons on achievement, savings and charity in scripture MasterPo finds it unsettling that in this particular time of American history people are turning to faith for personal finance guidance. The old saying "There are no atheists in fox holes" rings true. And that's the point.

Seen as a symptom of the problem, people are loosing/have lost trust in those people and institutions that previously were seen as reliable (or at least stable) guides in life. It's not a matter of parties or ideologies, just simple truth and honesty. People are loosing trust and hope in the very foundations of the country and society. As such they are turning to what they believe to be back-to-basics sources of truth and honesty for financial (and perhaps more) guidance in life.

When people loose that much trust in their leadership and base institutions of a nation that faith seems a more reasonable source of guidance for, of all things, personal finance that speaks volumes as to the psychological state of the state. Correct or not, people are more and more fearful and feel they are running blind.

This is dangerous.

On one level it is a danger because people who do not have trust in the leadership and institutions of a society feel disconnected from the whole of the society. "Dis-enfranchised" as the saying goes. As such a society might cease to be a functioning society and fall into groupism, pitting the goals of one group against the other rather than working together for a common benefit and future. A house divided can not stand.

On another level it is a danger because when people loose trust and hope in their society they look for it else where and grasp whatever they can find. The danger isn't that people won't believe in nothing, but rather they will believe in anything! That is, people will latch on to a person (or group) or idea that offers a solution just to have an answer and may not really consider the full ramifications of going down that path.

Time will tell if this truly a tend or just a momentary fad.

Cross your fingers.

Work: For Love or Money? (or Love of Money?)

"Work". It's a four-letter word you can't avoid (present political climate not withstanding).

But why exactly does someone "work"?

The answer is simple: For the money!

It's not politically or socially correct to say it but everyone who works does it for the money. It is true that many people like their work, find it rewarding on some level, get a sense of achievement or accomplishment, etc. All good things. But never over look the money!

Anyone who says the money doesn't matter to them is either a fool or a liar! (or both!)

Finding work you like (or at least can tolerate) is important. Trust MasterPo when he says that working a job or field that you can't stand is the worst thing in the world – no matter how much you are being paid! But a warm feeling and an empty wallet is worth only the empty wallet. Sometimes you have to suck it up and deal as best you can with a bad situation that pays.

Now MasterPo is sure some readers are shaking their heads like a dashboard bobble head doll at what was just said. But think about it:

If money wasn't important then why do people teachers and nurses and police/fire go on strike?

After all, isn't helping people what their work is all about?
Shouldn't they want to be in the field to help others more then themselves?

(MasterPo is not picking on teachers, nurses, police or firemen!!)

You can have a job you love or a job that pays well.

Ideally, find one that has both.

But if it comes down to it, take the job that pays.

Money Talks!

There's a saying: "Money talks and bullshit walks."

It means that someone with money is more likely to be serious about entering into a transaction than someone without money. While everyone, "rich" as well as not "rich", wants the best deal they can get the real conflict comes from wanting white glove service and a bargain basement price.

The reality is that very often the products or services you want just don't come cheap. You have to pay good to get good.

And it is for that very reason that money – specifically, keeping the money your own hard work has brought you - is THE key to your personal freedom and liberty!

Tyranny by taxation – taking away your hard earned money – is the worst form of oppression!

Not being able to buy the products or services you need (or simply want, no crime in that!), not because you don't make enough to buy it, but because the government confiscates it by taxes is nothing less than "stealth tyranny". When you work hard, take the risk of the hard work (because hard work per se is never a guarantee of success) and reap the rewards of that hard work only to have a large chunk taxed away where is your freedom?

There is no valid argument for taking the fruits of a persons' labors just because those labors did in fact bear fruit.

The end result of no being able to purchase the products and services you desire is you end up relying on the sheer generosity of whatever the government (in it's very finite wisdom) "gives" you or "allows" you to have. And MasterPo can guarantee it will not be anywhere near what you would have obtained for yourself had you been able to purchase it on your own.

That is not contributing to you freedom or liberty!

Think this over the next time you hear a politician say it's "just" a little tax on this or that.

Little things add up fast. Ask a blizzard.

Tax Deductions of "The Rich" and (In)Famous

One of the many common statements about "the rich" (defined anyway you want) is they get preference in taxation. Specifically, the claim is "the rich" get sooooooo many tax deductions that they end up paying little or no income tax. Far more deductions than a non-rich (defined however you want) has.

Really?

Let's examine that claim from a purely objective view:
- "The rich" can deduct charitable contributions, just like you and me.
- "The rich" can deduct medical expenses, just like you and me.
- "The rich" can deduct mortgage interest, just like you and me.
- "The rich" can deduct capital losses, just like you and me.
- "The rich" can deduct certain work related expenses, just like you and me.
- "The rich" can take the per child tax deduction, just like you and me.
- "The rich" can take their 401k deduction, just like you and me.
- "The rich" can take a deduction for buying Energy Star devices, just like you and me.
- "The rich" can take certain tax credits for events in life such as adopting a child, just like you and me.

This just to name a few of the more common deductions, allowances, and credits that everyone has under the law.

So where is the great tax preference for "the rich"?

I don't see it.

Obviously if you contribute more to charity than someone else you will have a bigger deduction. If you have greater capital losses than someone else you will have a bigger deduction. And if you have adopted a child you will get a tax credit that someone without an adopted child doesn't get.
Big deal! That's the events in each individual persons' life. It doesn't take a rocket scientist to know that your life and my life and the next person's life all are different and as such will have different expenses and events that may (or may not) lead to more/less allowable deductions. That shouldn't be a surprise to anyone. In other words, someone with more deductable activity gets to take more deductions.

So how is that giving preference, much less an unfairness, in taxation to "the rich"?

Work hard, take the same risks, and perhaps you too will have greater tax deductions.

Until then, get over it!

NO!

If the solution to the current economic mess could be summarized in a single word it would have to be No.

That word is probably the #1 un-PC word in the dictionary today.

Can't be said to anyone, not even a child.

If you say it than you are wrong. Everyone is entitled to a Yes answer for anything and everything they want.

But No is going to have to be taken off the bad-word list and made mainstream again. If not as the solution then certainly as part of the solution.

No is going to have to be said to everyone! That includes both "the rich" and "the poor"!, Yes, MasterPo did say to tell the poor No!

When a person making $9/hr at Wendy's goes into a bank to borrow $200,000 for a new house with no money for the down payment and no credit (or poor credit) history they bank will have to tell the person No!

In turn that means several things.

First, the government is going to have to abolish all these programs to help low-income people get mortgages. NEWS FLASH! "Low Income" means you can't afford $200,000!!

Second, the person applying for the mortgage is going to have to accept No as the answer when they are told they don't have the income and/or credit to qualify for a mortgage. The person is going to have accept their own short comings and not accuse the bank of discrimination.

Third, if the person does try to seek legal action lawyers, as much as they want to earn their fees, are going to have to tell the person it's not discrimination to expect a person to have a good credit record and stable income of an amount sufficient to pay back the loan. It is the right of a lender to decided if someone is capable of repaying the loan.

And finally, even if legal action is taken the courts are going to have to uphold the lender's right to decide for themselves who is and is not capable of meeting the standards of being a good risk for a loan. This applies to not only mortgages but any kind of loan too.

This is only one of many many situations where people are going to have to get used to hearing No as an answer. Not for a cruel or callous (or "greed") reasons (in spite of how it will inevitably be portrayed in the news) but because there just isn't enough money left in the world to give everyone everything they want just because they want it!

Your parents told you No.

Now act like an adult.

Stand on your own.

Do what you can do with what you have and strive to have more yourself rather then seek it from others.

To Catch a Falling Knife

MasterPo lost money on Enron.

So did thousands of other investors. And by extension thousands if not millions of other people by way of their mutual funds, 401ks and pensions.

MasterPo didn't bet the farm on Enron but for a time it was the star of the portfolio. You don't sell your stars unless you absolutely must. Right?

Mrs. MasterPo has often asked why MasterPo didn't sell out as the stock dropped.

Part of the reason was so much of MasterPo's Enron holdings were in the Dividend Reinvestment program and as such it isn't so quick and simple to sell as holdings in a brokerage account or mutual fund account.

But another part was simply time.

Enron's fall came very fast! By the time the news came out and the full picture of the company's problems were on the nightly business news it was all but over for Enron. Even if MasterPo's Enron holdings were in a brokerage account, at that time (regrettably) MasterPo simply did not have the access to hour-by-hour financial news. As such it was impossible to see the events unfolding and react quickly enough. Even today watching the minute by minute stock market isn't MasterPo's full-time job. MasterPo has better access to information now but still not immediate feeds. Besides, markets go up and down, company stocks go up and down, all the time.

However, this article isn't about MasterPo crying over a stock loss. Wasn't the first lost and certainly won't be the last.

The point of this article is this:

When end of the party comes it will likely come FAST!

When that end will be? Who knows. Depending on the pundit, commentator, or alleged financial guru that could any time from tomorrow to 5 years out. MasterPo will break one of his own rules and toss a market prediction into the mix as well: 18 months or less. (Footnote: Interestingly however, there are no credible predictions that a massive market drop is never going to come! Just a matter of when in the not-too-distant future.)

Predictions run all over the spectrum from a double-dip recession to 1929 all over again (or worse) to a Road Warrior style collapse of the economy and society (that may be a bit extreme, though not entirely out of the realm of possibility).

MasterPo isn't going to offer advise on how to prepare for the crash, largely due to MasterPo also not being sure what one can really do to prepare for it. At least not at this time.

But MasterPo will advise that when the drop comes it will come immediate, unforeseen on that particular day (though afterwards pundits and wanna-be financial celebs will scramble to take credit for having predicted it), and happen very very fast! There will be no time to prepare when it starts. It will be a come-as-you-are event. Whatever resources you have on that day don't expect to be able to bulk up any more. Maybe you will be able to, but don't count on it because just as you see the worst happening so do all your friends and neighbors.

In truth, the actual events when they happen will probably be a lot more severe that many people think it will be, but not nearly as totally chaotic has many others fear it will be. The extreme ends rarely happen.

The time to prepare is now!

Just what "prepare" means isn't clear.

If anyone has real advise on preparation (not the usual buy gold and guns rhetoric) MasterPo is listening.

To Worry? Or To Plan?

Worry is a natural human emotion. People don't like to feel powerless or helpless. Psychologists tell us that 'worry' is what we do to make us feel like we are doing something when there really isn't anything substantive that we can do.

But so is sticking your proverbial head in the proverbial sand. Human but just as ineffective.

The more people MasterPo speaks to these days about the economy and state of the nation the more is heard this reaction:

"It's very bad, probably will get worse. But there's nothing I can do about it so why worry?"

MasterPo agrees – to an extent.

Worry? No.

But plan, yes!

Besides the obvious of writing to your elected officials and voting in elections, there isn't much one can do on a daily basis about the state of the economy or nation. But if you do believe it's all spiraling down the drain then you can (and indeed should) make plans and implement them.

Save cash.
Perhaps buy gold and silver.
Invest for cash flow instead of growth.
Pay down debt as quickly as you can (you may need the debt service cash later to pay for living expenses).

'Worry' is foolish. But prudent planning is never a waste of time. Yet planning and following a plan is much harder than simply ignoring the situation. And there is always the concern about having spent the time and effort (and perhaps money) planning for something that never happens. It's a risk.
MasterPo has a friend who work in his family pool business. A pool is definitely a luxury item and a discretionary expense. He says sales are pretty good but admits it's probably because people expect to stay home more and not travel or take vacations. But if and when further economic squeeze comes it is discretionary spending that will take the first hit. He should have a plan, a "parachute", for work outside of the family business if/when that economic squeeze comes.

This is an example of planning instead of worrying.
But alas, he doesn't.

As the old saying goes: People don't plan to fail, they just fail to plan.

Invest The Difference?

There is a common theme in personal finance: Instead of buying expensive [whatever], buy the cheaper [whatever] and invest the difference.

MasterPo is all for buying on the bargain and certainly in favor of banking or investing the extra for the future. But there is another factor to be considered: Reality.

It takes a lot of personal discipline to be able to actually save/invest the difference between the expensive thing and the cheaper thing. And to exercise that discipline month after month or even just year after year. The temptation to spend the savings is great. And the reality is that things happen in life that can get you to say you'll spend the savings on something else instead of investing it.

On paper buying on the cheap and investing the difference sounds great. But functionally to implement such a plan over the long haul is a whole other story that usually doesn't turn out to a happy ending.