Don’t Buy Stuff You Cannot Afford

For some reason, some continue to not pay off their credit card bills every month.  Can you believe this nonsense? Who willingly buys something they cannot afford, and then pays massive interest on something for months, if not years?  That’s just silly.  Let’s get that 30 pound dumbbell and drop it on your toes.  After your metatarsals are broken, get a really long needle and start ramming them into your eyeballs.  Maybe after a while, you’ll realize how stupid it is to live beyond your means.

We have proposed creating government restrictions on what you can and cannot buy, and how much credit you can get based on your high school and college transcripts.  If you’re stubborn enough not to see the value of doing well in school, then you are likely stubborn enough to buy things you can’t afford.  The government can be a helpful big brother to save consumers from over-consumption.  Listen here, this is only one solution to help protect people from themselves.  You are welcome to offer up another novel solution too.

Why Did Oil Collapse And How Low Will Gas Prices Go?

Finally, oil has gotten crushed in 2015! We haven’t seen this large of a decline in oil in years as momentum speculators rushed out like someone discovering their date looks nothing like their picture. Nobody would have guessed oil prices would have declined by 50% over the past 10 months.

Oil Price Collapse In 2014 And 2015

Let’s try and understand WHY oil prices collapsed so much when global economies are largely recovering.


What The Tax Cut Extension Means To You

Hip hop hooray! With House Democrats agreeing to not hold the middle class hostage anymore, the tax bill passed 277-148!  It was a landslide victory, but still it’s interesting to see that there were 148 dissenters.  What’s more amazing is that Democrats weren’t able to lower the estate tax exemption amount of $5 million per individual, and raise the estate tax level of 35%.  Talk about bad negotiating!

The real fun now begins where we all do rough pro forma calculations of how much more disposable income we’ll have in 2011 and potentially 2012!  First off, I’m glad to see that everybody will pay 2% less on the first $106,800 they earn thanks to a cut in payroll taxes (Social Security and Medicare) from 6.2% to 4.2%.

From $100,000 to $172,000 (28% Federal marginal tax bracket for singles), you really aren’t going to see much of a change in that money earned after, because the government wasn’t going after you guys. But, for all you lucky ducks who make $172,000-$380,000 (33% Federal marginal tax bracket for singles), and $380,000+ (35% Federal marginal tax bracket for singles), you’re in for a big treat!


The Clubber’s Guide To Saving Money And Having A Good Time

at-the-clubIn my younger days I used to go out clubbing with friends and regularly drop $100 to $200 a night.  New York City was crazy expensive and we often got bottle service to ensure that we could get into the hottest clubs in the first place.  Each guy almost always had to be paired up with one girl, otherwise you had as good a chance as Obama does of raising taxes in a soft economy than getting in!  Bouncers made it a priority to ensure the inside wasn’t a sausage fest.

Spending a couple hundred on a Friday night isn’t frugal.  However, this wasn’t a point in my life where saving a fortune was a top priority.  Instead, experiencing Manhattan, having fun with friends, and meeting new people were.  A dollar spent while young is more enjoyable than when old since you aren’t making much in the first place.  It’s inefficient to save money when you’re making less money ironically.

As an old man now, who is certainly not in touch with the latest trends in music and fashion, I realize my younger self could have probably saved several thousand bucks going out a year if I wasn’t so carefree.  I worked hard and I felt I deserved to party hard.  The phrase, “one life to live” seemed to pop up a lot!  But, a $300 bottle of Moet that costs $50 bucks at Costco might be a little too much!


The Four Different Ways To Spend Money By Milton Friedman

The reason why Warren Buffet is so great is because he’s able to distill the most complicated financial topics into very simple terms.  Lucky for us, there is someone like Warren in the economics world.  Regular reader, Investor Junkie who disagrees with the government’s unemployment insurance extension, but agrees with the cessation of rising taxes, highlights a fantastic video by the great economist Milton Friedman about four different ways of spending money.

Professor Friedman’s examples are simple and perfectly to the point.  In an environment where we are spending other people’s money on someone else (deciding how other people’s tax dollars are spent), we don’t maximize the value of the dollar because we simply don’t have much at stake.

Professor Friedman highlights that people spending someone else’s money on others is a “distributor of welfare funds.”  Strong words with a certain amount of truth wouldn’t you agree?  In “The Ultimate Solution To A Fair Tax Policy In America”, I discuss the concept of limiting the voting ability of the 47% of non tax paying Americans on raising taxes for the other 53%.   Don’t worry, voting rights for everything else is status quo.  The reason why I suggest this rational solution is because it makes sure the country isn’t overrun by those who have their cake (don’t pay taxes) and get to eat it too (enjoy the benefits).

One can easily see an America where 90%+ of citizens don’t pay taxes and stick it to the 10% rich because it’s rational to look out for your own interests.  It’s up to balanced people who believe in equity to continue fighting for those who perpetually get unfairly blamed for our economy’s problems.  It really is ironic, because if everybody studied hard in school, volunteered their time to help others, and were self-sufficient (doesn’t have to be wealthy), America wouldn’t have nearly the amount of problems we have now!

The 4 Ways Of Spending

1) Spend your own money on yourself.

2) Spend your own money on somebody else.

3) Spend somebody else’s money on yourself.

4) Spend somebody else’s money on somebody else.

Readers, do you agree or disagree with Professor Friedman’s thesis that the 4th way of spending is the worst way of spending?  If you do agree, why do you think people feel it’s OK to spend other people’s money as they wish?


Sam @ Financial Samurai – “Slicing Through Money’s Mysteries”

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“Capitalism: A Love Story” DVD Review & Giveaway

Michael Moore thinks he is pointing out injustices through his latest documentary, “Capitalism: A Love Story“.  Instead, Michael simply reminds us that life isn’t fair in a free market economy where those who work hard sometimes get the short end of the stick through no fault of their own.

I find it ironic that one of the wealthiest documentary filmmakers is bashing Capitalism.  Despite highlighting that 33% of “young Americans” now believe in Socialism (37% for Capitalism, 30% undecided), it’s hard to argue for a better system.  It’ll be interesting to see if these young Americans still believe in Socialism by the time they reach their thirties and make some money.  Socialism just creates a new set of problems for society.  Is it really that bad buying a foreclosed property from someone who can’t pay their debt on time?  Property vultures are necessary to provide a floor in many devastated markets or else things go to zero and more people suffer.

There is a sense of self-righteousness when Michael tells the viewer that he can’t fight the system alone and encourages all to rise up.  Michael you aren’t alone.  Thousands upon thousands of us fight for what we believe in every single day.  I wish Michael would put his money where his mouth is and donate all his proceeds to helping victims he continues to highlight.