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debt in America


Look before you leap!  This has always been a favorite saying of mine because some of our politicians often open their mouths and spew forth great ideas as they embrace noble causes.  Health care is one of these noble causes.  However, no one bothers to define the main issue,  define the costs involved or where to find the money to fund these great experiments. 

There are volumes of data available regarding universal health care but let’s use one example already mentioned in one of Richard’s earlier postings and that is the situation at Walter Reed Army Hospital.  My friends tell me that most VA hospitals are neat, clean and run on time.  The one drawback so I am told is the fact they are run like assembly lines.  This makes sense to me because of the volume of patients they see each day.  Often I wish my private physician would run more like a factory but frankly I have no major problems with the way my personal health care is handled. 

The quote by Ronald Bailey in a previous post in this Blog says it all regarding government run hospitals. “no real accountability from the people who run the joint.”

This statement speaks volumes of what citizens of the United States can expect if Hillary or those like her get their wish for Universal Health Care.  Look at the budget that is being sought by the VA to run their health care unit.  For fiscal 2008 they are seeking $36.6 Billion U.S. This information is readily available at http://www.va.gov/budgetYou might ask how many patients will be treated using this $36.6 billion.  By the way, I am all in favor of spending whatever is necessary to treat the troops who keep me safe on my own soil.  The point of this is to say the government is overwhelmed by 5.8 million patients who happen to be veterans.  That’s correct … the $36.6 billion will treat and take care of 5.8 million deserving veterans.  Do the math and you will see we are spending only $6200 per individual patient treated by the VA.  Statistics show we have around 47 million uninsured individuals in the U.S. Using simple math we can multiple the total of $36.6 billion by 8.3 (we arrive at 8.3 by dividing 47 million by 5.8 million) to arrive at a figure necessary for the government to supply universal health care to everyone without insurance.  The figure looks like this 8.3 X $36.6 billion = $307,178,571,428.57 or $307 Billion.

Where in the world do you think the additional Billions of dollars will be generated?  One guess boys and girls.  BY YOU AND ME.  In addition we will have the potential for the same disaster that has occurred at Walter Reed.  No accountability and a lot of passing the buck.  Do you want to see your loved ones be denied service for what we now consider routine health care?  Look at your local hospitals and tell me that individuals are being turned away if they have no insurance.  The answer is “no.”  Our local hospital subsidizes those who cannot pay using the insurance payments from those who can.  You may be told this is not lawful and does not happen but think about it.  Do hospitals write off bills of indigent patients or those who have problems paying?  NO!!  They may try to collect and in some cases they are somewhat successful in collecting a portion of the amount due.  Take a close look at your next hospital bill if you have to use a public hospital.  One reason we have $100 aspirins is to pay for those who cannot pay.  We already have universal health care and believe me bringing all citizens to the lowest level of care will not increase the care for those without insurance.

Have a grat day!

Terry

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The Dragon in Wolf Clothing

Her Highness, Senator Clinton, began shedding her centrist ways at the recent Democratic Winter Meetings.  In example, her comment regarding the profits made by Exxon last quarter “I want to take those profits and put them into an alternative energy fund that will begin to fund alternative smart energy alternatives that will actually begin to move us toward the direction of independence.”

First, whoever is responsible for writing this comment for her should find a substitute for the word alternative!  More importantly, every person who thinks they understand the profit motive and the word socialism needs to rethink the definitions in “Hillaryspeak.”  Like it or not the profits made by Exxon are due to the American public and their non quenchable thirst for gasoline and petroleum products.  Who bought the products that allow Exxon to be so profitable?  A better question may be do we really care if they are profitable as long as the flow of gasoline continues?  I think the latter comment may be closer to the truth.  Senator Clinton is utilizing the age old practice of Demagoguery to increase her polling numbers and possibly because she feels the hot breath of Obama breathing on her neck.  She will have to unleash her true persona if she is to beat back the onslaught of “Mr. Clean”.  Pardon my paraphrase of Senator Biden’s verbal misdemeanor.

So now we have the wolf’s clothing being removed to make room for the fire breathing dragon lady known as Senator Clinton.  I cannot wait to see what outlandish comments she may let escape her oral cavity during the next few months.  I suspect the true socialist’s agenda may raise its ugly little head regarding not only the stealing of private enterprise funds (Exxon) but also the heavy yoke of additional taxes required to fund the plethora of social programs desired by the Democratic Party.  Does socialized medicine come to mind?  It should because the likes of Senator Clinton, Senator Kennedy and the current most powerful woman in America, Nancy Pelosi, would all like to force so-called medical care for everyone down our throats. 

Look at the current budget approved by the Bush administration!  2.9 Trillion dollars for a budget with which to run our country.  Our friends in Congress do not believe this is enough and would like to increase the budget to accommodate additional social programs (vote buying).  So now we know that with a population of 300,000,000 (not including illegal aliens) and a budget of 3 Trillion every man woman and child in the United States owes $10,000 apiece in order to fund the budget.  For argument sake let us say that there are only 200 million working people in our country paying taxes.  The bill now becomes $15,000 per working person.  How much tax did you pay last year?  More importantly, how much tax will you pay next year and in the future?  How in the name of common sense will our children and grandchildren live in such a suppressed society?  Regardless of your political, religious or societal affiliations you have to ask yourself the questions above and then put the pressure on our elected royalty in this country to actually do something. 

I suspect a lot of working individuals believe that the rich are not paying enough and that the good old boys currently in charge in Congress will see to it that this changes.  Poppycock! Do the research and you will see that roughly 5% of the American public pays 57% of the taxes in this country.  All we need is to tax those making more and the free enterprise system will fall about like a house of cards.  Where is the incentive to work and make more when the dragon lady is planning on appropriating any excess profits for redistribution to her favorite governmental charity?  I certainly cannot speak for anyone but myself but I would never want to see any branch of government be able to “steal” profits for redistributions from private enterprise.

My firm belief remains constant that Barack Obama and Hillary will eventually become running mates.  Our electorate is uninformed regarding factual information surrounding candidates and so brainwashed into the celebrity mentality that Obama is almost guaranteed a position should the Democrats win in 2008.  Barack Hussein Obama is indeed quick on his feet and gives a great impression during a grin and grab session.  His charisma and charm have generation X and Y all but swooning like giddy schoolgirls, but it remains to be seen if Gen X and Y will get out and vote.  Meanwhile the Republican Party remains on course to run another aging European American male.  The number of individuals remaining in America who will vote for the traditional candidate is shrinking every month and heaven knows who will be less polarizing to the Republican faithful. 

The countdown has begun and we only have 11 months until the first Presidential caucus.  How much money and how much ink are wasted determining the next candidate remains to be seen but I personally cannot wait to witness the verbal assault from Hillary once she receives the oral colonoscopy from the media.  Then we will see the wolf shed her fur and assume the true persona of a fire breathing scale covered dragon lady.

Remember picking a Presidential candidate is not brain surgery.

Terry


Debt.

It is so simple, I really don’t know why we even need to talk about it, but we do.  Here’s a “LABS” moment (LABS is short for Life Ain’t Brain Surgery):

YOU WILL GO INTO DEBT IF YOU SPEND MORE THAN YOU BRING IN!

Sorry folks … but I have to say it: Life Ain’t Brain Surgery.

Look … I did it. Terry did it. We all have spent more than we took in. And we knew we were going in debt. That didn’t make it right then, and it doesn’t make it right now. Don’t spend more than you make. Pay as you go. Good advice.

Sure, the house is different. Although, some folks will advocate that even going in debt for a home is a bad decision. Another argument for another day.

Why do so many Americans go so in debt? For what? STUFF! Just stuff. Shopping appears to me to be a pasttime, not a necessity. Quit buying stuff. Most folks don’t need it. Buy what you need. If you can’t afford it, don’t buy it. It ain’t brain surgery.

I think that this buying binge is contagious. Look at our congressional folks. They spend money like there is no tomorrow. I guess it is easy when it isn’t your money. But they need to stop spending money they don’t have, too. It is  insane to me.

Why the hell is the richest country on the earth in debt up to its eyeballs? Just doesn’t make sense to me. And why are so many young Americans in debt? Maybe they see the American government in debt and think it is OK. If the government set a better example, maybe Americans would follow suit. Makes sense to me.

Start teaching some financial responsibilities in grade school if need be. But let’s start teaching our children to stay out of debt. Debt is only good for the lenders – not the ones borrowing the money. Eliminate the need. It ain’t brain surgery.

Richard


Financial Education or The Lack thereof in The United States

A former client of mine loved the expression “You cannot cure stupid.”  This was not meant necessarily as a demeaning comment, the context in which it was used was to define mistakes made by individuals in his employ.  For example, stupid decisions were usually made by individuals who lacked the intellectual capacity to make an intelligent decision.   Ignorant decisions were usually made by those lacking information or lacking all of the facts.  In other words some individuals do not have the mental acuity to make good decisions while others make uninformed decisions. My client believed management should be able to know the difference in employees and use them according to their ability.  Not a bad philosophy in my opinion.

Now, what does any of this have to do with finance and education?  I believe the current financial crisis in our country is due in part to the same two terms, stupid or ignorant.  According to Forbes Magazine, consumer debt is currently at a seasonally adjusted rate of slightly over 2 Trillion. Yes, that is a T for Trillion, so you can add 12 zeros to the end of the two.  I have been told it would take around 30 years to count to one trillion.  I have no intention of finding out.  Revolving credit card debt averages slightly over $9,000 per household in the United States.  Fortunately my wife and I do not carry any credit card debt so we skew the average slightly.  Is all of this debt due to stupidity or to ignorance or a combination of both?

Having reached the age of maturity and growing weary of hauling laptop computers through airports, I took up instructing at a local 4 year institution a few years ago.  My classes are primarily freshman and sophomores and one of our projects involves determining payments and amortization schedules.  The project is straightforward and includes calculating payments for one used and one new vehicle at different interest rates and time periods.  We also include taking the difference in the two payments and investing in a savings account paying a fixed rate for five years.  The purpose of this exercise is to help students understand the power of interest over time and dollar amounts and to show how investing on a regular basis can increase ones wealth at a surprising rate.  The sad part of this exercise includes comments from students such as: What do you mean by taking the difference in two payments? What is a payment? Do I add the down payment into the amount financed” Why do I care about interest if I can afford the payment?  The list goes on.  Naturally, not all students have such a lack of knowledge regarding money and interest but the vast majority has no idea how the real world operates.  I might add that over 90% of my students own at least one credit card and over 60% are not employed while in school.  Let me see; credit cards, no income, college student, entertainment, clothes, food and all the other necessities of a normal young adult.  Where does the money come from and when if ever will it be repaid?

Although we cannot assign blame to any one person, issue or circumstance we can do something to help the next generation of adults before they become victims of consumerism.  As adults we owe it to ourselves to help cure this problem.  Who will be burdened with this debt in the future?  All of us because those who default or simply cannot pay will force the debt to be written off or declare bankruptcy.  The young people of today will be responsible for paying the social security of those currently in their 40’s and 50’s and they need to be gainfully employed without the specter of overwhelming debt.

What can we do in addition to wringing our hands and singing the blues?  Demand of your legislators that basic finance be taught no later than the 10th grade in high school.  Demand of your legislators to stop the ease with which credit cards are issued by financial institutions and so called credit card repairers!  More importantly we all owe it to ourselves and to the younger generation to learn the pain associated with the yoke of heavy debt.  Credit cards can be very useful tools for traveling, avoiding carrying large amounts of cash and for identification but they are not and should not be meant to satisfy our need for immediate gratification.  Basic understanding of personal finances should not be brain surgery.

Terry