This past week I had a chance to visit with some neighbors. We have known these folks (not the neighbor with the backhoe I have written about before) since we moved to Walker full time through the fire department. They had a financial worry that turns out is not a problem. In assessing that it was not a problem I was able to get a sense of their financial picture and came away quite impressed not with what they have accumulated but what they have not accumulated which is debt.
If your only fixed expenses every month are utilities, food, insurances, gas for the car and taxes (more like quarterly and semi-annually) then how much money do you need to have? Not how much do you want to have, how much do you need to have?
Add to that the willingness to work. He works maybe a week or two a month some in his construction trade and doing some wildland fire work (there are all sorts of jobs on big fires that do not involve scratching out a fire line for 12 hours a day) in the summer.
It doesn't take much to pull in an extra $1000-$1500 on top of social security if someone is resourceful and willing to work. That may not sound like a lot of money but if there is no mortgage, no car payments and no other debt to service then it is a very useful amount of money. BTW I have no idea what my neighbor makes doing the sidework mentioned.
Obviously not everyone is healthy enough to do physical work into their 60s and beyond and I certainly hope to have a pile of money saved in case either one of us needs a six-figure, life-saving toe procedure (trying to keep it light) that health insurance won't cover.
We can control our indebtedness, live below our means and I will say take the time figure out some sort of work to do even with physical limitations. This is not to say people should never do anything fun, or that they should sleep in sleeping bags and sit on lawn furniture in their homes but if the monthly nut can be whittled down to just the things mentioned above without a $2500 mortgage, $900 in car payments and credit cards it makes financial success much easier to attain.
The focus of personal finance is almost exclusively on how to make your nest egg bigger. A decade like this one is a reminder that not everyone can grow their nest eggs to the sky. If you are flat for the decade (before new savings) then you are miles ahead of the market which is great but you are still flat for a big chunk of your investing lifetime. You can work hard at investing and might have some combination of luck and skill but it makes a lot of sense to also devote time and energy to the things that you will have a much better chance of controlling.
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34 comments:
Yes it is easier to control your spending than to control the markets, but if you ever figure out how to control the markets will you let us know?
Roger,
putting away for a rainy day is allways a useful tool. I have lived in both sides of the atlantic and socialiced medicine to me makes very much sense and making the general pop. pay through a national sales tax. Roger, read your statement, "putting away for a medical life emergency", well paying taxes for social medicine is the same. Either you save or the goverment saves for you to get that service. I feel that it is better to let the goverment do it.
Roger on another note market. By doing my numbers - the market is giving me that it will get higher. I figured poss.1166 on the S&P. However, as for stock trans. It gave me olny a few buys, so we are reaching the top but not there yet.
Can yuo give us as to what your toughts are where we stand on the market and if we are going to make a new march/09 low possible new year. -- Thanks Roger
Jeff from milan, Italy
Jeff,
I do not know what software you are using, but I probably would not trust it for picking an ultimate top (or bottom).
We are short term overbought which is why your software is not showing a lot of buys, but that does not mean we do not grind higher after a pull back. This is standard for a bull market.
It is hard to say to much about software I have not seen, but does it really out perform owning qqqq since march? Personally I am happy with just getting the trend correct.
Couple things:
Jeff's shilling for socialized medicine in just about every post is becoming tiresome. I can also provide you stories of people dying while waiting for a procedure in countries with government meddled medicine...a procedure that is readily available in the US (yes, for a price).
Second, the living below ones means is a great thing when you pile a bunch of extra $$ into your mortgage and pay it off early. The pundits can say all they want about it being better to invest than pay it down heavily but not owing anyone anything is a WONDERFUL feeling.
DE
A very good Sunday post!
Living without intrusive debt is a wonderful thing.
Recently, we relocated near Southport, NC. overlooking water in an area that used to be a hunting preserve. We moved from a high tax (compared to NC) no growth State to one with more promise. Our home was built by excellent craftsman at a 50% discount from prices I gathered in 2007. We used reasonably priced energy efficient devices to save over 35% of our energy costs, not counting the savings of living in a more seasonally temperate climate. I was going to build it for cash, but a 30 year 4.64% mortgage convinced me otherwise. We paid for the mortage by selling our home to well-qualified buyers using us as the bank (I have done this several times, successfully). Their monthly payments cover almost our entire mortgage and taxes. The mortgage money on our home was immediately put to use through income-producing securities.
We have no other debts and plenty of diverse assets (stocks, bonds, rental real estate and mortgage notes). Our LLCs are excellent asset protection and tax efficient vehicles. We receive a hefty amount of income over our living expenses and anticipated emergency situations before our retirement "jobs" income. We are still saving and investing.
Importantly, we always lived well within our means. After other careers, we are working and volunteering in areas of expertise and enjoying every minute (I'm off to the beach for some reading -and then to a Tiki bar for fb after this comment).
Regarding the governemnt "saving" for me and providing for my life's expectations and needs? No, thanks.
T
"I can also provide you stories of people dying while waiting for a procedure ..."
Then do so and quit bothering people with factless facts: Let's hear the stories, with a verifiable link of course.
T,
as far as the G saving for us, the $16k I put into social security would be very nice to have in my own IRA that is for sure, of course that type of thinking by 40 somethings would be ruinous for people who only have the social security check.
I wish I knew how to reconcile the dilemma.
There is no one best way for medical care. If there was, everyone would be doing it, right?
So you have to look at the problem from a different perspective; which way is best for most people?
If everyone had free at the point of sale medical care, funded by taxes, wouldn't this be the best way for most people? How can an illness make you bankrupt when care is free? Yes, you can say that privately-funded care is better - for those who are fortunate enough to pay for it.
They were likely born into a society which rewards hard work and talent with money, and has the available resources and laws to give lots of money to the better individuals.
If you're not talented, or unable to work hard, or born in a poor country then sorry buddy, you're on your own. If you get sick then you might as well just find someplace quiet to go and die. We as a society are not going to help you. Bad luck.
I know which kind of society I would rather live in.
If you're not talented, or unable to work hard, or born in a poor country then sorry buddy, you're on your own. If you get sick then you might as well just find someplace quiet to go and die. We as a society are not going to help you. Bad luck.
Wow, I'm sorry, but that's a huge load of crap. If you're disabled, we take care of those people. If you're not disabled then you are able to work hard. You may choose not to but that shouldn't be at the burden of someone else who is working hard (note: I'm at work on a Sunday, not watching football, what are you doing?). Please spare me the "luck" and "less fortunate" metaphors. Life is not luck, life is what you make of it. Sorry I couldn't argue this more tactfully.
I know for a fact that I'd rather live in the society that rewards hard work and taking calculated risks.
Here are some links:
Injured Man Dies In Japan After Rejection By 14 Hospitals
http://www.huffingtonpost.com/2009/02/04/injured-man-dies-in-japan_n_163851.html
Man dies during 34-hour wait in emergency room at Canadian hospital:
http://blogs.usatoday.com/ondeadline/2008/09/man-spends-34-h.html
Man refused liver transplant dies
http://news.bbc.co.uk/2/hi/uk_news/england/london/8159813.stm
Girl starved to death after op (after refused re-entrance to hospital)
http://news.bbc.co.uk/2/hi/uk_news/england/cornwall/7879301.stm
NHS's refusal to fund cancer treatment costs mother £21,000
http://www.telegraph.co.uk/health/2910780/NHSs-refusal-to-fund-cancer-treatment-costs-mother-21000.html
Drugs denied to sick - against the rules of new NHS watchdog
http://www.telegraph.co.uk/news/uknews/1437855/Drugs-denied-to-sick---against-the-rules-of-new-NHS-watchdog.html
If some sort of goverment managed health care is allegedly not in our society's best interest and a moral obligation, why are we the only first world country with out such. Are all the other developed countries out of their minds? Also I suggest you go to Canada etc. and ask the average Joe if he would like to give up his universal health care with all its problems.
Its easy for them who have it to say they made it by their own hard work but that is a myth. You got it because of this country's frees educational system and its infrastructure and legal system as well. And if you want to keep this country a place where others can make it, one cannot adopt a we verses them mantality. Our eventually we all will not have any thing. Take at the look at what has happened to the size of our middle class. No one in this country made his or her wealth by themselves. Thank your teachers and the social class you were born into. See if it would be the same if you were born into a signal household in an inner city in america. Grow up and give others the same chances you had.
anon 1:21 you do a good job articulating an emotional aspect of this.
however there a plenty of people born into wealth who go on to be derelicts. Additionally there are plenty of people who succeed/thrive coming from less than idea circumstances.
My parents had some bit of wealth at one point which was gone in my early years of not earlier. my parents split when I was 14 and there were many times in highschool that I had to lend my mother money, I worked through most of highschool, and she always paid me back.
I went to a college that cost $300 per semester and I had the time of my life and am living in an 1100 square foot cabin that I love which was purchased for $87,000 and has been paid off for a little over five years now.
Anyone can go to a cheap school and figure a way to make $20,000 per year and live like they make $10,000.
I believe my little anecdote addresses most of the stereotypes you bring up. I strongly disagree with your thesis.
Regarding health and pention should be garantee by goverment. Why. Anything can happen to you. Bill B. I disagree with you that a person cannot have bad luck. He can. And in a society run by special groups and racist one's hole can get deeper, and deeper. I had IRA, Keo and making 200k a year in the 80's. When I came to Italy, I had zero keo, zero IRA and no job and perhaps my life would have come to an end. I was like you Bill B. I was a hard core republican and looking foward my million mark. Stan Getz the famaous jazz player experienced himself that he could not get away from that blood sucker until death. I did not want to wait death and chose different. I started from zero than starting from death with no keo, no IRA in a different country. From the US experience I have two things, my pension that the goverment garantees and when you see a bad person hide or run away at first sign. So again the liberal courts did not garantee the keo and Ira. The ex-wife today has the house, her KEO, her IRa and all other assett I left behind. From that experience and the years I have been here in Italy - now I believe that especially in the USA anything can happen to a person. It is random. The goverment should garantee a minimal pension and minimal health care. In Italy I can see a doctor every day and sit in his office for free, until things are resolved and my kids get a pediatrician and medicine for free. If I do not care for one doctor I can go to emergency and demand for care. Then there are sensational news stories, for either side. But I know that If I need a health procedure and am waiting for it if things deteriate than I can go to the hospital in an emergency.
I am not a violant person, however I will protest against the injust people get especially men when get divorce. I will speak out against death row. I will speak out that a socialised health care as a minimal service like a pention plan for rich and poor. Those are my rights - to protest peacfully and spek-out.
Bill B. I do not think to give up 10% in a federal sales tax is so much. When I go and buy a pound of meat and now I have to pay 10% more I can buy 3/4 of a pund and eat a little less and consume a little less. The problem with a national health care is that doctors, insurance and HMO will be making less money and so there are lots of lobby and special interest groups that brain-wash the people of USA. Just like there was a massive campain in the 80's for death penalty. I pay 20% in sales tax and 170% in gas tax and have not gone poor. Actually Italy has been a great place to live, providing great health care and a fun place to live without having to worry about a bad-luck put-to-death type of incident, while accumulating good returns on my investment. I am on the way to my million, but on the way to the billion I will put some lobby first to the less fortunate the ones on death row than to the rest.
A GOOD LAW ABIDING WORKING CITIZEN SHOULD BE GARANTEED A PENTION AND A GOOD MINIMAL HEALTH CARE. HE SHOULD BE GARANTEED EQUALITY FOR ALL MEN AND WOMEN. A MEN SOULD BE ABLE TO HAVE THE SAME RIGHTS TO RAISE HIS KIDS LIKE A WAMAN HAS THAT RIGHT. :::::
Jeff from Milan, Italy
P.S. Roger, I like to appoligize for taking your space to air something that I strongly believe.
Cheap schools are not cheap they are subsidized by the state or federal government. if you are saying your wealth and position were self made you are forgetting who subsidized your education and the institutions which enabled your success
i believe the income tax i payed on my paycheck contributed to my own subsidy.
Sure as you long you have health insurance that it simple to be "rich" in America.
Unfortunatly millions cannot aford health insurance and then a simple health issues and your in debt to your eyeballs.
Single Payer or Public Option National Health Insurance would be the greatest economic boom this country has seen in a century.
I don't mean debt driven, sell of the farm, make financial advisor rich type of boom...I mean an economic boom where people product things.
How many people do you know have a job simply because of health care? Millions and Millions.
If you have health care through a government job, military, ect. then you are already "wealthier" then much of the country.
If you do not have health care then you are in a week to week risk situation where you could be in a third world tent living and broke for the rest of you life situation.
this is something I don't know much about. when I left my last corporate job. I shopped for health insurance online and found humana for something near $200 per month and that covers both of us. now it is $250 per month for both of us as an HSA with a $5000 deductible but it pays for basic checkups.
can someone educate me on why it is so difficult to afford insurance?
Yes it amazing how health insurance companies in the USA have pulled the "free-market" "capitalist" wool over the eyes of so many Americans.
They would rather see thier neighbors die then given up thier Republican party ID card.
Health Care in Amercia today is about as COMMUNIST a system as you could have. Put on your thinking caps people!
It is disgusting and goes against every ounce of blood that the founding fathers gave to create this FREE country.
Health Insurance in America can go 1 of 2 ways.
1) Free-market health care. That is I can start my own hosipital and hang my own sign as a "Doctor" with NO American Medical Association Approval, give out whatever drugs I want with NO FDA approval and COMPETE IN A FREE MARKET with the current FASCIST health care system.
I have start a Preventive Care hospital and I be entreprenurial and change the way health care in America works without getting sued and thrown in a COMMUNIST AMERICAN PRISION.
2) We can move to Single Payer or Public Health Care into a more socialist system as a HUGE IMPROVEOMENT over the COMMUNIST system we have today as a REALISTIC choise as option 1 seems impossible give the health insurance and legal industry cartels that control it and D.C.
can someone educate me on why it is so difficult to afford insurance?
As soon as you get any type of chronic condition - at leat 50% of people world-wide eventually do at some point in thier live as you age - and need care - then go back and try and get health insurance.
and I'm talking about 5 pack a day, 6 pack a day, McDonalds type - most people will get some chronic condition at some point and then in America you are toast.
Bill B, thanks for your reasoned response - honestly.
You come across as an Alpha Male; working hard, achieving, responsible, self-motivated, building a concrete foundation for your family.
And I respect you for that. Without your type of people, man would still be stuck in the dark ages.
Humanity needs people who want to take risks, and it also needs people to do the day-to-day sort of things that keep our world ticking over.
Without either party we're missing important factors in innovation and progress. Leaving one part to the vagueness of luck where health is concerned doesn't help anyone.
www.ehealthinsurance.com/
Rodger, it you are truely paying only $250 a month for you and your with for health insurance then you got the deal of a century or have yet to be sick or have kids, ect..
Go to run some heatlh insurance quotes and pretend that you were born with a minor heart condition (as millions of people do).
I guess you could argue that we as a society should let these "unproductive" people die off, although I don't think the founding fathers would argue with.
"Humanity needs people who want to take risks"
I'd like to live in a "free market" "capitalist" society where I could challange an established health care system because I think I could train Doctors, Nurses and build hospitals to deliver better and cheaper care then currently in communist / fascist / whatever your term America.
Free market capitalist heatlh care was killed by the HEALTH INSURNACE companies a long time ago.
If I can get socialist health care then that is a HUGE step in the correct direction, this a point American are missing.
They think our current health care system is free-market yet it is WORSE then socialism, so public health care would actuall be MORE COMPETITIVE than what we have now.
Sure elect Ron Paul so we can once again have a FREE market, but I'm a realist so will take public health care first to break up the cartel.
Roger's post was certainly uncontroversial but it looks like the health (and now the education) financing system have popped up again. Makes some sense I suppose: How well you do going forward depended to a significant degree on what your subsidizer/parents could afford before (including where they lived) and what you can afford after (and how good your luck is).
That is, unless everyone started working and paying taxes before they were born in the case of health care and by the time they started elementary school in the case of education it's probably fair to say that someone else subsidized their health care and education for awhile: Until at least 17-18 in most cases, probably longer these days.
Somebody paid those costs, mostly it wasn't the recipient of the benefit who did so, and since those costs have been increasing at a much faster rate than wages for the past few decades it's probably also fair to say that the beneficiary is probably not going to catch up any time soon (unless they're a fat cat willing to donate a wad to alma mater).
So the beneficiary passes it forward via some enduring institutional intermediary: For most that's taxes to county (for education) or state (for health) government but the federal government is kicking back more to states these days and other paths such as charities exist as always. Some think that's perfectly fine, some resent the hell out of it and some don't care much one way or the other as long they can maintain the crib, set aside some goodies and go fishing.
I seem to bounce around between those groups but when it comes to financing health care I've pretty much made up my mind that the US system of rationing care based upon ability to pay is not only riddled with perverse incentives and uncontrollable cost inflation it is ineluctably discriminatory. We can do better and ought to but I'm inclined to doubt the current plan circulating DC is the right approach.
The heat from the health reform debate is masking what I regard as an increasingly troubling 'partnership' between the "too-big-to-fail" financial institutions and federal government. Henry Kaufman makes some comments on that subject near the end of an interesting interview at e.g., http://tinyurl.com/oq9rfz
Adding major insurance companies to the list of partners brings me scant comfort.
Same with the legal industry as an example. Try to start your own bar association to COMPETE in a FREE-MARKET against the American Bar Association by providing better and cheaper legal services. Start a new law school and try to make tuition free. Ha ha ha ha ha...
Trying hanging a FREE MARKET HOSPITAL sign outside your door and bring in Indian Doctors to the USA to perform surguries for 1/100th of the price. ha ha ha ha..
Americans that think they live in a FREE MARKET are FOOLS. It is just different levels of socialism, communism, fascism, and stupidism, ...
Anytime someone like Obama comes along to try and help America those in power screen SOCIALISM and the FOOLS FALL IN LINE. LOL.
No problemo bring in millions of poor Mexicans to pick fruit, the Republican (and many Dems) look the other way.
Trying bring in illegal Mexican Lawyers and Doctors and see what happens in out CAPITALIST SOCIETY.
Once a FOOL always a FOOL.
Founding Father got up out of thier graves and left a long time ago.
Ask any Russian immigrant the grew up in the U.S.S.R about how similar how the U.S.S.A is going.
Yes Singapore has the lowest per capita health care costs in the modern world and blows America out of the water in terms of quality of care.
Singapore has a public option (Obama's plan) that COMPETES with private plans. Much more FREE MARKET then American health care and stats prove it.
This is exactly why American health insurance companies spend hundreds of millions to KILL the public options - because it would mean competition - but of course they SCREAMED SOCIALISM AND THE FOOLS FELL IN LINE.
As if the health insurance companies are going to drop $100 million on political bribes for the good of capitalism and free markets. LOL.
I go to grill up some chicken and a town hall breaks out, nice!
we pay $249.82. neither of us had issues with the underwriting process.
anon 6:11 says As soon as you get any type of chronic condition - at leat 50% of people world-wide eventually do at some point in thier live as you age - and need care - then go back and try and get health insurance.
if someone needed to get insurance at that point then yes I could see where that is a problem (not weighing in on the morality of that for now) but how many people start to look for insurance after they find out about a problem?
is this a common thing? Not being a wise guy but it would appear we have insurance with Humana for as long as they remain in business (provided we pay the premium).
Are that many people really being straight up canceled out of the blue as implied by Obama?
You'd have to define "that many" but probably not. However, as in any political discussion, the outliers make great talking points.
To be honest, I would guess that the whole healthcare debate doesn't directly affect anyone reading this blog. We are most likely all professionals who already have health insurance (and would therefore keep it) and in tax brackets that won't go up, at least in any of the plans put forth so far.
If you think your income tax on your pay check while you were going to school payed for the real cost of your education and every other benefit you got by living in america you are hiding your head in the ground. Sure its relatively easy to get insurance when you are young and healthy but lets see what happens when
that is not the case. For a smart guy, I think you have put blinders on , wake up and smell the coffee.
How easily professed literate individuals with a compelling interest on the subject of investing go politically off the left branch of the River Bizarro when it comes to supporting a government that is intent upon playing Robin Hood to uneducated illegals and other societal trash, creating an ill-educated monolithic mob of mush-brained morons who will vote only for the party that promises more transfers of wealth at the ultimate expense of initiative, skills and "can-do" spirit of the rest of us.
I think the best way to make additional money(if you have time to spare)is to do some data entry or conduct online surveys. All you need is a computer and a phone line, and the compensation is pretty good.
Anon 9.25,
can do what, brain wash, steal, put to death. Give people a decent education, health care, job, and equality for the betterment of oneself and like anon 5.57 we will have an econamic boom.
Perhaps you are a physician making one million dollars a year. I am sure you are. There is need for you to make a million a year. You can use sound investing along your profession and can make even more. However more people get health services and better treatment. Yes in Italy I can go see my doctor every day. I have gotten more checkup in Italy than anytime in my life. When my son could not bread at night and was diagnosed adenoids we talk to many pediatricians for free most sayed operations, a few gave us some insights that worked wonders. We used injects salty solutions to clean the nose, every 3 months a homepath solution and Streptococcus salivarius subsp. thermophilus (ST) and Lactobacillus delbrueckii colturs. Well we have avoided the operation and my son is healthy. So I can understand that you as a surgen will not able to make as much money. There is no need to insult common people. If I disagree with you should not get insultive. You see there is such a word "humanly" meaning kinder to your fellow next to you even though he is less fortunate, less capable ad less skilled. Did anyone teach you civil respect and duties. I was born unimpared thank GOD, or thank nature, thank ..., so why not be kinder, to the one who did not have such attributes at birth. Ask a moron how much he is willing to pay in taxes to be normal. How much volanteering he is willing to give if someone makes him whole. When I had both parents dye at a young age from cancer I wanted to be a physician to help people not to make lots. I do not think tat anyone wants to be a nothing-doer. But if you demeen someone brainwash that person that he is a nothing doer than you know what happens. Give people jobs self esteem. You know something at one point everyone of us will be dead, what remains is not the money the wealth but the people talking about how much good or bad one has done in his life. I rather be on the side of doing some good even in a small way to our brother. Anon 9.25, just remeber, THINK, THINK, THINK, do not start being selfish hatefull person.
Jeff from Milan, Italy
Hello and thanks for the post. I agree with you that people should think more about their personal finance. The fact is that many people simply overestimate their abilities to pay the loans they take and then they get into debt.
Take care,
Jay
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