Financial Samurai

Lucky Amanda Clayton, 24, recently won $1 million dollars from the Michigan State lottery. The interesting point about Amanda is that even after winning the lottery, she is still using her “Bridge Card” for food.  The Bridge Card is essentially a $200 a month state funded food program (food stamps) for people who have lost their jobs or fall under a certain income threshold.

When asked by a local reporter why she is still accepting food money from the government, she responded, “I thought that they would cut me off, but since they didn’t, I thought maybe it was OK because I’m not working.”

And when asked by the reporter whether she felt it was morally right to accept food money designated for low income people, she replied, ”I feel that it’s OK because I mean, I have no income and I have bills to pay. I have two houses.”

My initial reaction to the story was that of excitement for Amanda.  She was basically down and out, with no job and just won a million bucks!  Someone had to win the money, so it might as well have been someone most in need, rather than someone who is already rich right?  After all, a couple million people probably spent $2 in after-tax money to buy this particular lottery, thereby already helping fund the state once again!

A MILLION BUCKS IS NOT A MILLION BUCKS Read more…

I want to fix America and make things better for our children.  We cannot fix anything through complaining.  Instead, solutions must be made and implemented.  Of course no solution will be perfect, as there will always be a group of people who feel unduly hurt by new proposals.  That said, during tough times, tough choices must be made!

One of the best ideas proposed to help improve our country’s fiscal health and our personal finances is limiting what consumers can buy based on their high school grades.  Since high school is mandatory, we use high school as a barometer.

Let’s use the car as an example of how we can use grades as a way of controlling consumption to protect our fiscal health.  The car is one of the great personal finance killers of our generation and our attitude towards what our car spending habits needs to change!

The assumptions in this article are namely: 1) Big government is good, otherwise, we would not allow such massive federal government spending and ballooning budget deficit, 2) We are all patriots and want to help America, and 3) Despite allowing big government, we are still a meritocracy.

Please keep an open mind while reading as we look towards controlling our overconsumption habits and healing our nation!

THE “GRADES AND CONSUMPTION PLAN” Read more…

On Wednesday, January 18th large internet companies such as Wikipedia blacked out their sites in protest of the Stop Piracy Act Bill (SOPA).  The nice-sounding bill threatens to destroy creativity and freedom of speech on the Internet by allowing the US Department of Justice and copyright holders authority to attack sites who enable or facilitate copyright infringement.

Imagine Financial Samurai sharing a piece of useful information on how to prevent credit card theft online, and the original creator is from some giant corporation who has a propensity to sue despite linking back and giving credit.  I will probably never bother to share this useful content in fear of having some overly paranoid lawyer sue me for SOPA infringement if this bill passes.  Our society is already litigious enough!

I’m proud of the Internet community for speaking out against SOPA.  The government, despite all its “good intentions” should not be in the business of regulating what we can share and say online.  Sure, there is a limit to what we can and should do, especially if someone is being untruthful, but for the government to get involved with what I can and cannot say on my own site is wrong and I am fiercely against SOPA and more government regulation!

You would think that those who are against big government would also be against big government who discriminates based on income, gender, and sexual preference, but you’d be mistaken.  To many, discrimination is OK, so long as they aren’t being discriminated against.

THE HYPOCRISY OF INCONSISTENCY Read more…

In my fiscally irresponsible state of California, Governor Jerry Brown (D) is proposing raising taxes on people making over $250,000 a year.  According to the SF Chronicle, 65% of those polled believe this is a great idea.  Well No Duh useless poll and uninsightful newspaper.  Most people or households don’t make more than $250,000 a year so of course they’d be for raising taxes on those income earners!

In fact, less than 5% of the population makes more than $250,000 a year, so why don’t 95%+ believe this is a great idea?  The reason is because Jerry Brown has also proposed raising the sales tax by another 0.5%!  Uh oh, suddenly since everybody has to pay for an increased sales tax, not everybody is for it!

Hey, what’s a 10.5% sales tax rate from the 10% now?  At least you have a choice in paying taxes, whereas if you are making above a certain income level, you don’t.  Let’s just raise sales taxes to 20% since rich people have a lot of money and buy way more things they don’t need anyway!

WHY ISN’T THERE PENSION REFORM? Read more…

There’s a tremendous battle in Congress regarding balancing the budget.  The Democrats want to raise taxes and remove deductions for the highest income earners while the Republicans want to just cut spending without raising taxes on the richest Americans.  There has to be a combination of higher taxes and lower spending in order for there to be an agreement, otherwise the US economy will fall back into a recession since nobody will have any confidence to spend.

Given it’s the holiday season, one of the most perplexing issues is why the President and his party wants to remove charitable deductions for those in the highest two income tax brackets: 33% ($212-$380,000) and 35% ($380,000+).  There’s no doubt that the main reason why people give is to help people, however, the elasticity of giving is not vertical mind you.  There will be incremental negative consequences.

It’s estimated that roughly $300 billion of charitable contributions happen each year, with the large majority of donations coming from the wealthiest citizens.  The top 10% of income earners pay 70% of all taxes, despite earning 46% of all income.  The statistics for contributions are roughly the same for charity.

With the enactment of asymmetric policy against high income earners, some have estimated there will be a decline of roughly 2%, or $6 billion in charitable contributions per year.  2% sounds quite conservative, but regardless of the amount, there will be a decline in charity exactly during a time when charities need the money the most!

The poor have already suffered enough, let’s not make them suffer even more.  With the economy growing at an inadequate pace to soak up the ever increasing number of unemployed, we will see an increase in those falling under the poverty line.  More people needing assistance increases the financial burden on the government and a negative cycle ensues.

What the government needs to do is incentivize people to give even more, not less.  Individuals are much more efficient at identifying causes that need the most help, not big organizations.  I urge everyone to write, call, and speak up for the poor by denouncing the removal of charitable deductions for those who donate the most.

We should fight for the less fortunate always, and not just during the holidays.  Give what you can give to what you believe in.  We never know when we’ll need help, so until that day arrives, we fight for them.

Happy Holidays,

Sam

PS: Having issues containing your shopping beast?  I just wrote a new post on Yakezie.com called, “Controlling Spending The Fun And Easy Way“.  Go check it out!

I’m against big government.  Politicians are wasteful with our tax dollars and like to propose empty promises to maintain power. From that ding dong Congressman who sent pictures of himself in his underwear on Twitter, to Elliot Spitzer’s indecencies – when people have too much power, they let us down.  Given this view, I am perplexed why there are those out there who vote for more government!  Do you really want XYZ government agency controlling your every move and stealing from you?

60 Minutes recently did a terrific 15 minute spot about how Congressional lawmakers can freely trade stocks based on non-public information and the very bills they are voting on!  For example, if you are on the Healthcare Committee which is about to pass a law that requires all hospitals to provide the first $5,000 in expenses for free, you can actually short hospital stocks on this information even though nobody has a clue this bill will pass!

TELL ME WHY, WHY, TELL ‘EM THAT IT’S HUMAN NATURE WHY, WHY… Read more…