How To Make $50,000 A Year For Free From The Government

Someone once said “there’s no such thing as a free lunch”.  They lied.  With $50,000 a year, you can buy yourself 5,000 free lunches thanks to the generosity of the government!  What are you talking about, I can hear you thinking.  It’s pretty simple really.  In addition to giving struggling homeowners a free $50,000 over a course of 5 years, and 99 weeks of unemployment benefits (which we might as well extend to 5 years in my Shock & Awe Yeah! program), the Obama administration has now announced they will require mortgage companies that collect loans backed by the Federal Housing Administration to offer 12 months of forbearance for qualified unemployed owners!  In other words, if you qualify, you don’t have to pay your mortgage for a whole year!  Is that not sweet sugar or what?!

Think about this scenario.  You unfortunately lose your job in 2010 due to a cut in your entire department.  You own a home but don’t have much savings to hold you over even though you should have been saving and investing for the past 20 years.  The 10% you put down for your home basically wiped out your cash reservers, but you didn’t care because your three kids and spouse deserve the best.

You can literally get 99 weeks of unemployment benefits, a free $50,000 from the government, $3,000 a year in child tax credit and not have to pay your mortgage for a whole year if you qualify!  The maximum unemployment benefit is around $1,400/month.  Let’s say your mortgage is around $1,800 a month.  That’s $38,400 in income you get to receive from the government a year.  Add on the $10,000 a year free gift from the government for 5 years, plus the $3,000 a year child tax credit, and that’s equivalent to earning a fantastic $50,000+ a year!

I don’t know about you, but I sure as heck wouldn’t mind receiving $50,000 a year in free assistance from the government.  With the median US household income of roughly $50,000 a year, the temptation would be incredible not to work and just spend time traveling or hanging out with family. In essence, “making the most of unemployment” might have some different meanings for different people!

To put $50,000 further into context, you can basically change the figure to equal whatever you are making since $50,000 equals the median US household income.  Hence, if you live in Manhattan or San Francisco, where incomes frequently breach $200,000 a year, can you imagine getting a free $200,000+ from the government?  Oh man, no wonder why despite all the doom and gloom from the media about unemployment, the malls and restaurants are packed, traffic is horrendous, and real inflation is much higher than expected due to so much demand and spending!

WHEN WILL THE GOOD TIMES END?

We all know that 2012 is a key election year, and the most important thing a politician wants is to get re-elected and maintain power.  Therefore, it is perfectly rational that the Obama administration is trying to buy votes with your taxpayer’s money.  Remember, as Milton Friedman said, it’s easiest and most fun to spend other people’s money on yourself!  I can understand this, and so does everyone else.  The question is, when will the madness really end?  When will we start helping the unemployed find jobs, instead of just giving them money?

The solution is compelling small businesses, which account for 70%+ of new and existing jobs to start hiring again.  If you are a small business, you are currently shell-shocked by all the new taxes being imposed by the state and federal government.  Not only that, you’d rather make due with what you have and work a little hard because you fully expect taxes to go up in 2012 once Obama gets re-elected.  Let’s lower taxes for new businesses instead.  The SF city government did a smart thing by freezing the 1.5% payroll tax of total employee compensation for companies with over $250,000/year in payroll because if they didn’t, Twitter and its entire staff would simply move.  Taxes are suffocating because States have mismanaged their budgets!

The REALLY good times will end when Obama gets re-elected in 2012.  Thanks to the eradication of Osama Bin Laden and all the bailouts that will be offered up to election night, another 4 years is almost a certainty.  Once elected, there will likely be more programs and taxation aimed at redistributing wealth.  We need to embrace this fact that our fiscal responsibility and hard work will be siphoned away to those who have been more reckless or simply unlucky.  It’s just the way it is.  We should help our brothers and sisters out.

Moral hazard is here to stay so long as we keep offering people incentives to take asymmetric risks.  Hopefully many of us can take advantage of the government’s generosity with other people’s money.  At the same time, it behooves you to try and pay as little taxes as possible because you know the government is fiscally irresponsible.  If the government was a normal citizen, they’d be thrown in jail long ago because they stolen from Paul to pay Peter for way too long.  Stealing is wrong, at least according to the Bible, Tanakh, Koran, the Dhamapada and thr Hat In The Cat.

In the mean time, let’s safeguard our finances and keep chanting, “USA! USA! USA!!”

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Regards,

Sam

Sam started Financial Samurai in 2009 during the depths of the financial crisis as a way to make sense of chaos. After 13 years working on Wall Street, Sam decided to retire in 2012 to utilize everything he learned in business school to focus on online entrepreneurship.

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Comments

  1. Traineeinvestor says

    It is not free money and it is not from the government.

    It is paid for by current and future taxpayers (or bond holders who get repaid in depreciated dollars) – ask the people paying the cost if it is “free”.

    If history is any guide, the era of endless entitlement will only end with a substantial economic and social dislocation. Just hoping that “this time it’s different”.

    • says

      There’s a difference between free to the individual receiving benefits (true in this case) and free or without cost to society (definitely not the case). As an individual who pays no taxes, but receives unemployment that money is effectively free since we’re paying for it and they aren’t.

  2. says

    I wonder though, will Obama stop offering bailout after bailout if he is reelected in 2012 and doesn’t have to worry about reelection again? Or, will he push a socialist agenda even more for the very same reason?

    I can’t speak for the rest of the country, but even the Detroit area is rebounding a little. Isn’t it time to start focusing a little bit on growth instead of handouts?

    People have had financial struggles since the beginning of time, regardless of the economy. Why doesn’t the government spend more money on educating people and forcing personal finance to be taught in schools as opposed to just throwing money into a bottomless pit constantly??

  3. says

    I definitely agree Everyday Tips, but here is something to consider, Obama is a pretty moderate Democrat. Imagine some of the other options out there? I really wonder where these debt negotiation talks will go. The 4 Trillion over 10 years in debt reductions sounds like a good move, and I think it would go a long way to restoring confidence in the American economy and USD. I hate the partisan politics that are going on right now. I’m not in favour of the US having to put up with the crazy income tax levels that we do in Canada, but allowing the Bush Tax Cuts to expire wouldn’t do too much to hurt small businesses from my point of view.

    • Everyday Tips says

      I think our problems are also at a very fundamental level. So many people don’t pay taxes period. If we went with a flat tax and made everyone pay what they should, then we would increase revenue a heck of a lot. That is just one example of how we have made things so complicated that I don’t even know how things can be improved without just wiping the slate clean and starting over. (Good luck with that.)

      In reference to Sam’s post, I am just so frustrated with the money being thrown at people to ‘fix’ the economy, and to me, it is like putting your thumb over a huge water leak. I would rather see investment be made in long term solutions rather than putting bandaids on things all over the place. I know so many people that will just keep spending regardless of their financial situation. I also know people that have purposely just decided to keep taking unemployment benefits because they like having the summer off instead of looking for a job. I really believe people think that whatever the circumstance, someone will be there to just pick them back up with a new program.

      I am properly oversensitive about all the programs because of my upbringing. I grew up in a blue collar neighborhood with a horrible school system. If I was able to put myself through college and find a way to make money, then many of these other people should be able to also. Sure, I got some scholarship and grant money, but other than that, it was all up to me. Colleges didn’t come to our school, nobody encouraged HS grads to go to college, it was the rare student that went on to a 4 year school and get a degree. However, I barely knew anyone in our neighborhood that was on public assistance or getting free lunches. Now, it seems like so many people are looking for ways to get something from the governement, and there are opportunities at every turn. Can’t say I totally blame Obama or any politician for that. It seems there has also been a shift in the American mindset that it is ok to get handouts and pride seems to have taken a back seat for many.

      I better stop now or this comment will end up longer than the original post! :)

    • says

      Once you try and start a small business and see all the hoops and hurdles one must climb through to survive, you’ll realize how suffocating it is and wonder why you are even trying. Takes 3 months to get incorporated in California bc of all the red tape and inefficiency.

      We need to broaden the tax base of contributors so everyone has skin in the game. I
      Once you have skin in the game, you will do everything possible to make the country as healthy as possible.

      • says

        Agreed. We started an LLC and it’s been a nightmare to get all the paperwork done. I’d even consider myself pretty good at paper pushing but small business stuff is a nightmare to DIY and incredibly poorly documented to boot.

        • says

          I feel ya. And you know why… the government wants their fingers in everything and to take our money. Those who vote for ever bigger government need to try and start a business one day.

        • says

          There must be some balance between using tax money to actually fund real social programs that will make a difference, as well as aggressively paying down debt, and simply enlarging government randomly. Constant negative financial incentives like the 99 weeks that Sam talks about, or giving 50K to over-extended mortgage owners, along with crazy regulation is killing both Canada and the USA. My friend had the same over-regulated experience when trying to get a construction company off of the ground.

  4. says

    I’m with Trainee Investor on this one, but I think he/she fails to see the sarcasm in your post (at least I think its sarcastic). After all, you do have an MBA and I’m pretty sure you understand that the money is definately not free to the American Tax payer!

    • says

      If I’m one of the 47% of Americans who pay no Federal Income Tax (awesome) and I get all these benefits if something happens (thankful), am I paying for any of it? Or, is it free? Like your website’s name, “trees full of money” baby! Time to shake others for their money to feed us!

  5. says

    Yes I agree wait till Obama gets re-elected , I am sure some tough decisions will be taken. It will be good for the economy and who knows will shape the future of the country in a better way and than doling out bailouts. On a personal level I feel Obama is doing the right thing making sure that people do get some help from the government even though it is taxpayers money.

  6. JT says

    I thought you were nuts when you said that the child tax credit is free money. I didn’t think that would be refundable…Google proved me wrong.

    Sam, you might enjoy a recent article in BusinessWeek about Turkey. It’s a long read, but worth the time: http://www.businessweek.com/magazine/content/11_26/b4234066536311.htm

    Thanks to careful reform, they’ve become the new emerging market. Supply-side economics has proven successful in lowering prices and inflation while increasing output. If nothing else, take a look at this image from the article: http://www.businessweek.com/magazine/content/11_26/b4234000671028.htm

    Cost and procedures to start a business were halved. The number of days it takes dropped from 38 to 6. Supply-side wins again.

    Giving people free money doesn’t do anything, and anyone who says that regulations and legal hoops don’t get in the way of business hasn’t ever started one. The last thing you want to put in front of an entrepreneur is paperwork–paperwork is probably the reason they ditched their last job to start a new business.

    • No Debt MBA says

      Refundable tax credits astounded me when I first discovered them. I only wish I could qualify for some. However, there’s no way I’m going to have kids to do so, though the gov’t is incentivising it.

  7. Untemplater says

    I don’t think there will be any radical changes until a republican takes his seat. There will always be programs to help people out but republicans will just make them harder to get and offer them for shorter durations.

  8. says

    I’m Canadian, so I’m obviously all for social programs and helping the down and out and all that, but this is going WAY too far, in my opinion. And not only that, but like, going about it the wrong way. I don’t see how handouts is going to help anybody. If anything, they’ll be in a worse spot once the recession is over. If you’re going to spend money, make sure it’s going to actually benefit the nation. Like, why not create new jobs instead of increasing unemployment? Why not implement a free or low-cost childcare plan so there’s no financial incentive for young moms to stay home, instead of going to work? Why not go after the credit card companies to lower interest rates? Etc. etc. I absolutely agree that it’s the country’s job to take care of its own in times of crisis, and I’m more than happy for my tax dollars to go to that, but this is going about it all the wrong way.

    • says

      I know plenty of (ok only a few) Canadians that are against the social programs currently being shoved down the throats of Americans.

      I am confused with your questions:
      Like, why not create new jobs instead of increasing unemployment? ‘
      - People have differing opinions on how that is done

      Why not implement a free or low-cost childcare plan so there’s no financial incentive for young moms to stay home, instead of going to work?
      - Who is going to pay for it?! More money out of my pocket…Sweet

      Why not go after the credit card companies to lower interest rates?
      - So we should attack free market companies?

  9. says

    This is insane – and completely doomed to failure like all the other government interventions in the real estate market. I see this as just another campaign to buy votes as the presidential election campaign gets underway.

  10. Norman says

    While we’re at it, lets stop all free money for farm subsidies, defense contractors, public schools, IRS, regulatory bodies, Congressional perks, earmarks, unemployment benefits, charitable deductions, mortgage interest deduction, welfare of all types, financial aid for students, and dozens of tax credits for everything from child care to solar panels, and raise the capital gains rate to the same as the highest rate paid by a wage earner. That doesn’t quite cover it, but it would come close to getting our money back from those awful people struggling to make their mortgage payments.

  11. says

    There is just a small problem, I don’t qualify and that is okay! I am glad I don’t qualify! Should the government have a program like this. No! I think the banks, mortgage companies and Wall Street should bail out the homeowners in some fashion.

  12. Geek says

    Ugh. This makes me so unhappy, and now reminds me of the Sword of Truth series. The author is obviously a capitalist as the protagonist strongly believes no one has a right to any of your life (or hard earned cash).
    I’m torn between “people shouldn’t starve so I can have another Xbox” and “not my problem” a lot of the time, but this is pretty offensive.

    As a high earning renter, I’m upset. :(

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