Good evening all!
If you did not read yesterday's article, this post will not make sense to you. So, please read yesterday's entry before reading this article (here is the link: http://eaynuf.blogspot.com/p/solution-to-young-americans-current-and.html).
As promised, I will provide a brief outline of my plan to fund the GRP accounts program. Before I can start, let us look at how much I believe it will cost to start our GRP accounts and the federal government's 2011-2012 budget.
According to my estimate (it is a crude estimation, but I believe 10-15% of our total outstanding debt of $930 trillion will be sufficient to get our program off and running. I came up with this solution basically by taking the total amount of debt students will pay back and dividing that value by the standard number of years it will take to make those payments). So, let's just say we need about $120 billion (about 15% of outstanding debt) to get this retirement account program started.
Let us turn our attention now to the federal budget. The most instructive explanation of our government's budget can be found here: http://www.usgovernmentspending.com/budget_pie_gs.php.
As we can see at the aforementioned link, the US government's deficit will be well over $1 trillion dollars this fiscal year. The largest expenditures as depicted in the pie chart are defense, healthcare (Medicare and Medicaid payments), pensions (Social Security and government worker pensions), and welfare. These four slices of the budget pie comprise about 79% of the government budget.
(Side note: the alert reader will notice that the pie chart on the website I linked to above seems to be flawed. Specifically, the summation of the percentages of the pie chart only equal 88%. I believe the missing 12% accounts for the funding of government agencies like the FBI, CIA, Department of Justice, etc).
So, let's look at the defense budget first. The defense department's total budget in 2011-2012 will be $925.2 billion. (Interestingly, that amount is very close to the total outstanding student loan debt number I stated yesterday). Anyway, I believe we can cut some significant spending from the defense budget (and actually turn some of it into public profits).
While this may not be popular, I believe we should rent out our overseas bases (currently there are 662, not even including Afghanistan's 411 bases). Operating those bases costs us $42 billion or so annually (http://www.fpif.org/articles/bring_war_dollars_home_by_closing_down_bases?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+FPIF+%28Foreign+Policy+In+Focus+%28All+News%29%29). We can save that amount every year by completely shutting down those bases (sorry South Korea and other allies, but you guys are big boys now and can handle your own crap).
But, if we keep those bases open and rent them to the host country, we can make a profit. If we rent those bases out for a total of $10-20 billion (plus the cost of operating the bases), the government will essentially make and save $50-60 billion annually that can be put towards our GRP accounts.
In addition to this, I believe we can cut more from defense spending. Just cancel the whole war in Iraq thing. It costs us around $5 billion per month ($60 billion per year) and it does not seem to be helping us in any area (giving Middle Easterners freedom, gaining access to oil, increasing goodwill in the region and combating terror).
Another option we can do is a combination of small (but meaningful) cuts in pensions and health care spending. For instance, a total 2% cut from both of those slices of the budget pie will amount in about $30 billion in spending freedom. (I know trying this may be a political death wish, but it really is in the government's interest to get the GRP started as soon as possible, as I pointed out in yesterday's post).
We can also look at cutting funding for welfare programs. A modest 2.5% reduction in welfare spending will free up $10 billion.
Other ideas include 1% taxes on Pigovian goods like cigarettes and soda. Or, we can partially roll back the Bush tax cuts. Those cuts might have cost the federal government $300 billion annually (http://www.csmonitor.com/USA/Politics/2010/1206/What-will-deal-on-Bush-tax-cuts-mean-for-the-federal-deficit). If we partially roll those tax breaks back (say only allow $150 billion in Bush tax cuts) we can totally pay for this program in full (and really rich people will still get pretty nice tax breaks).
In sum, I have provided several different avenues for the Feds to fund this program. It is now up to everyone to pressure our officials and make the GRP a reality.
Saturday, April 23, 2011
Friday, April 22, 2011
A Solution to Young Americans' Current and Future Financial Problems
Okay, my fellow Americans. I was doing some thinking about my post from yesterday, and I really do not want the USA to become divided like I think it will (in terms of today's youths exacting revenge on tomorrow's retirees). So, I decided to stop whining and start thinking of solutions.
I think I have come up with a plan to pay off our student loan debts, save our retirements, and (mostly) preserve our government's obligations to our seniors. This idea is a student loan quasi-forgiveness plan that no one has thought of yet: I call it the "graduate retirement program" (GRP).
Before I explain how the GRP should work, let me quickly review the facts. Today's college graduate will leave school with over $24,000 in student loan debt; the total outstanding student loan debt today is over $900 billion (see: http://www.nytimes.com/2011/04/12/education/12college.html?_r=3&hp).
Compounding graduates' student loan troubles is their inability to find work (as noted here: http://eaynuf.blogspot.com/2011/04/brief-look-at-our-countrys-political.html).
Furthermore, we young Americans have the prospects of funding 76 million Baby Boomers through retirement, paying off the nation's $15 trillion debt, dealing with rising healthcare costs, raising families in a comparatively expensive world, and funding our own retirements (this all is discussed here: http://eaynuf.blogspot.com/p/young-and-screwed-americas-youths.html). That is a ton of responsibility.
The GRP will serve the purposes of getting money back into the economy, paying off our student loans, and starting our retirement programs early so we can take advantage of the miracle that is compounding interest.
Essentially, the GRP will work like this: for every $1 college graduates with student loan debt deposit in a GRP retirement account, the government will pay $1 towards the graduates' student loan monthly payments. For example, if someone has a $300 monthly payment for 10 years, the government will pay $300 every month for 10 years to the student loan company if (and only if) the student pays an equal amount of $300 into his or her GRP account. If that same student only deposits $200 into his GRP account, the government will only pay $200 to the student loan lender; the student will have to cover the remaining $100 on his monthly student loan payment. (Obviously, this policy gives graduates strong incentives to make the full monthly payment into their retirement accounts).
This plan has several upsides. First, it helps to reduce graduate anxiety over their loan debt. Second, it allows graduates to use their money to start saving for their retirements early (which allows them to take advantage of compounding interest); this is crucial because today's young people (as I have documented here: http://eaynuf.blogspot.com/p/young-and-screwed-americas-youths.html) will not have Social Security to rely upon during retirement. Third, the potential future political problems that we will face in terms of workers versus retirees will be mitigated: essentially, today's graduates will not have as much of a reason to be pissed off in the future because they will have their own retirement accounts, their student loan debt burdens will be alleviated, and they will have more secure futures.
Notice that all three parties (graduates, governments, and loan lenders) benefit here. Graduates benefit in two ways. First, their student loans are being paid down. Second, the money that would have gone to student loan repayments is going to retirement accounts (which they were going to need anyways). Under this plan, graduates just get to start their retirement accounts sooner, which is much, much better.
The student loan companies benefit because their receipts will become more certain. Basically, because graduates are greatly and directly benefiting (in terms of starting necessary retirement accounts) from this program, they are more likely to participate fully in it; full participation in this program is strongly in their self-interest, after all. That means, for the student loan companies, that they will be more likely to get their payments on time and in full (since the government will be paying on behalf of the graduates who have made their full monthly payments into their respective GRP accounts).
Finally, the government wins in a couple ways. Officials will not have to deal with as many tough questions in terms of Social Security, student loan, and Medicare reforms. Additionally, the government will gain financially in the long run because young people were allowed to start retirement accounts early (which means these accounts will grow fantastically due to compounding interest); this substantial increase in the size of young people's retirement accounts means that the government will have less need to worry about Social Security in the future (they will still need to reform it, but the changes should be far less brutal). Lastly, the government will gain by having a more-educated workforce (which usually translates in to economic growth); because there will be a great opportunity for people to get a good deal for college in terms of repayment programs, they are more likely to go to college and finish their degrees.
I know of a couple problems people will raise with this program. For example, students who get full rides (and therefore don't have student loans to pay back) will be pissed. However, to combat this argument, students with full-rides will get the same amount from the government that the average (mathematically) graduate from the same year will be expected to pay into his or her GRP account; this government payment will have to be deposited into the full-ride student's GRP. For instance, let's say the average graduate in 2012 will have to pay $350 a month for 10 years in student loan payments; that means the full-ride student who also graduates in 2012 will receive $350 a month for 10 years directly deposited into his GRP account. A similar treatment will be applied to students who graduate with no debt (because they worked through college or parents helped them pay for school).
As for students who leave school before graduating, they will not be eligible for this program. However, to help them out, student loan reforms will need to be made in terms of bankruptcy protections (for both federal and private loans).
In terms of graduates of technical schools, they will be eligible if they took out student loans. And, they will be eligible for the full-ride treatment I explained above (in terms of receiving payments in their GRP accounts for the same length and amount that the "average" technical school graduate will pay into his or her GRP account).
Graduates of graduate and professional programs will only be eligible for this program up to 50% of their loans.
The other crucial issue is funding this program. I should have more on this issue tomorrow.
Obviously, this program is not perfect (as I explained above). But, this program will work wonders for many of today's and tomorrow's graduates struggling with student loan debt. It will help alleviate many financial and socio-political problems this country will face.
Of course, instead of doing this program, the government could just greatly subsidize higher-education (like many Westernized countries do) so their students do not graduate with so much debt. But, that would be too socialist. (Never mind the fact that governments already subsidize education up to and including the 12th grade. I really do not see what is so special about those grades; I mean, exactly why the government has singled out kindergarten through 12th grade for funding is beyond me. Higher-education is where most Americans do most of their learning, so, higher-ed should be funded the best).
At the end of the day, something needs to be done, and I think this plan is a pretty good start. If you like this idea, or believe it needs some work, please feel free to comment and tell your friends about it. Or, you can just respond with your own completely new ideas. Just, please, spread the word about this issue.
BB
Thursday, April 21, 2011
Generational Pillaging and Warfare
Good evening folks!
Yesterday, I was reading the comments section of a Yahoo! article when I stumbled across a bitter argument going on between two readers. One reader, who seemed to be close to retiring (so I am guessing he is a Baby Boomer), was ranting about people calling for Social Security reform. His position was, essentially, that he worked his whole life and deserved every penny of every check Social Security was going to send to him. According to him, it was not his fault government officials spent Social Security's surpluses; he should not have to sacrifice some of his Social Security benefits to fix the government's mistakes.
His opponent, a younger fellow, did not take too kindly to the first person's comments. He believed that the Baby Boomers created a lot of the country's messes (such as the Iraq War, Social Security's problems, the mortgage crisis, and the inflating student loan bubble) and they should have to pay up. (I sided with this gentleman, but I do understand where the older man was coming from).
Anyway, the really interesting part of this argument came when the younger man argued that most of the USA's current troubles can be blamed on the Baby Boomers because the Baby Boomers have more seats in both houses than all other generations combined. After doing my own research, I found the younger man was right.
I found that 58 Senators (58% of the Senate) and 254 Representatives (58% of the House) are Boomers. Our President is a Boomer. So was the previous one. Clinton, too? Yep.
All this scares me. Why? Because the Boomers are, quite possibly, the most selfish generation in America's history. Don't believe me? Read what one prominent journalist (Robert Samuelson) has to say about his fellow Boomers: http://www.washingtonpost.com/wp-dyn/content/article/2007/01/09/AR2007010901334.html.
For more information, feel free to read this article on Boomer selfishness and failures by the WSJ: http://online.wsj.com/article/SB124458192890699487.html.
Given that there are 76 million or so Boomers getting ready to retire and the fact that our legislative and executive offices are controlled by the most selfish Americans ever, there is little hope that meaningful changes will be made any time soon. We young people will probably be stuck in a a truly crappy economic, political, and fiscal situation for decades because, as Mr. Samuelson pointed out in the aforementioned article, Boomers failed to make small (but important) changes to SS, Medicare, and education reform when they had the chance.
We young people, though, may be catching on to this sad fact (it's about time). And the results (at least according to this article: http://money.usnews.com/money/blogs/the-best-life/2011/04/18/how-the-budget-deficit-could-lead-to-generational-warfare) could very well be a brutal battle that tears the country apart.
The USA will be locked in a huge generational struggle. The young will be fighting against the old, and the old will probably lose. (The reason the elderly will lose, I fear, is because when my generation is old enough to take over the country, they will exact revenge on the remaining Boomers).
It's just a shame that we came to this point. America will be torn apart by internal strife caused by decades of poor fiscal management and bad public choices. These were issues that could have been solved by some modest compromises in the past. Instead of grasping those opportunities and making the best of them, the Boomers (and other previous generations) let those chances slip through their fingers. And they don't seem to care.
Yesterday, I was reading the comments section of a Yahoo! article when I stumbled across a bitter argument going on between two readers. One reader, who seemed to be close to retiring (so I am guessing he is a Baby Boomer), was ranting about people calling for Social Security reform. His position was, essentially, that he worked his whole life and deserved every penny of every check Social Security was going to send to him. According to him, it was not his fault government officials spent Social Security's surpluses; he should not have to sacrifice some of his Social Security benefits to fix the government's mistakes.
His opponent, a younger fellow, did not take too kindly to the first person's comments. He believed that the Baby Boomers created a lot of the country's messes (such as the Iraq War, Social Security's problems, the mortgage crisis, and the inflating student loan bubble) and they should have to pay up. (I sided with this gentleman, but I do understand where the older man was coming from).
Anyway, the really interesting part of this argument came when the younger man argued that most of the USA's current troubles can be blamed on the Baby Boomers because the Baby Boomers have more seats in both houses than all other generations combined. After doing my own research, I found the younger man was right.
I found that 58 Senators (58% of the Senate) and 254 Representatives (58% of the House) are Boomers. Our President is a Boomer. So was the previous one. Clinton, too? Yep.
All this scares me. Why? Because the Boomers are, quite possibly, the most selfish generation in America's history. Don't believe me? Read what one prominent journalist (Robert Samuelson) has to say about his fellow Boomers: http://www.washingtonpost.com/wp-dyn/content/article/2007/01/09/AR2007010901334.html.
For more information, feel free to read this article on Boomer selfishness and failures by the WSJ: http://online.wsj.com/article/SB124458192890699487.html.
Given that there are 76 million or so Boomers getting ready to retire and the fact that our legislative and executive offices are controlled by the most selfish Americans ever, there is little hope that meaningful changes will be made any time soon. We young people will probably be stuck in a a truly crappy economic, political, and fiscal situation for decades because, as Mr. Samuelson pointed out in the aforementioned article, Boomers failed to make small (but important) changes to SS, Medicare, and education reform when they had the chance.
We young people, though, may be catching on to this sad fact (it's about time). And the results (at least according to this article: http://money.usnews.com/money/blogs/the-best-life/2011/04/18/how-the-budget-deficit-could-lead-to-generational-warfare) could very well be a brutal battle that tears the country apart.
The USA will be locked in a huge generational struggle. The young will be fighting against the old, and the old will probably lose. (The reason the elderly will lose, I fear, is because when my generation is old enough to take over the country, they will exact revenge on the remaining Boomers).
It's just a shame that we came to this point. America will be torn apart by internal strife caused by decades of poor fiscal management and bad public choices. These were issues that could have been solved by some modest compromises in the past. Instead of grasping those opportunities and making the best of them, the Boomers (and other previous generations) let those chances slip through their fingers. And they don't seem to care.
Wednesday, April 20, 2011
Mary J. Day
Okay, readers.
Today is 4/20, and, as many of you know, it is the day when potheads around the country toke it up in public protests. The end goal is to get pot legalized in the USA.
I have never touched weed. Sure, everybody and their mother was toking up in my high school's bathrooms, but I never got involved with the stuff. It just seemed stupid to me.
Just because I never saw the need to get high does not mean I think other people should not be able to enjoy cannabis. As far as I know, cannabis has anti-inflammatory and anti-Alzheimer's properties. Additionally, pot is known to reduce stress and relieve pain.
On the other hand, there could be bad news for pot-smokers. According to some researchers, smoking pot hurts an individual's short-term memory. Furthermore, regular consumption of pot may cause some cancers.
The important thing to note is that the science on pot is not quite settled. What we do know, however, is that weed does not automatically turn people into mindless zombies or vicious criminals.
Although we may never know all the pros and cons of cannabis, that does not mean we should keep it illegal.
In reality, we Americans have much bigger problems to deal with than some stupid debate over a quasi-benign drug; unfortunately, some of the money our government uses to fund the War on Drugs undoubtedly goes to the prevention of pot production.
That is stupid. In any introductory economics course, students learn the basic principles of supply and demand. Essentially, if people demand a good, someone will supply it.
It would be nice if our leaders understood this principle and applied it to their decision-making in terms of the War on Drugs. There is a huge demand for pot (a similar argument can be made for all drugs), and, despite our government's best efforts, pot will always find its way to its demanders. Our government's War on Drugs is only wasting our money, driving up the prices of the drugs, and costing the government in lost tax revenue.
If our officials would stop wasting tax dollars on this silly prohibition effort, the government would have more money to put towards fixing America's education system, cutting down the public debt, and fixing America's infrastructure. These are worthwhile investments. Trying to enforce anti-pot laws is not.
So, US government, please just legalize pot already so we can all move on with our lives. Thanks.
Today is 4/20, and, as many of you know, it is the day when potheads around the country toke it up in public protests. The end goal is to get pot legalized in the USA.
I have never touched weed. Sure, everybody and their mother was toking up in my high school's bathrooms, but I never got involved with the stuff. It just seemed stupid to me.
Just because I never saw the need to get high does not mean I think other people should not be able to enjoy cannabis. As far as I know, cannabis has anti-inflammatory and anti-Alzheimer's properties. Additionally, pot is known to reduce stress and relieve pain.
On the other hand, there could be bad news for pot-smokers. According to some researchers, smoking pot hurts an individual's short-term memory. Furthermore, regular consumption of pot may cause some cancers.
The important thing to note is that the science on pot is not quite settled. What we do know, however, is that weed does not automatically turn people into mindless zombies or vicious criminals.
Although we may never know all the pros and cons of cannabis, that does not mean we should keep it illegal.
In reality, we Americans have much bigger problems to deal with than some stupid debate over a quasi-benign drug; unfortunately, some of the money our government uses to fund the War on Drugs undoubtedly goes to the prevention of pot production.
That is stupid. In any introductory economics course, students learn the basic principles of supply and demand. Essentially, if people demand a good, someone will supply it.
It would be nice if our leaders understood this principle and applied it to their decision-making in terms of the War on Drugs. There is a huge demand for pot (a similar argument can be made for all drugs), and, despite our government's best efforts, pot will always find its way to its demanders. Our government's War on Drugs is only wasting our money, driving up the prices of the drugs, and costing the government in lost tax revenue.
If our officials would stop wasting tax dollars on this silly prohibition effort, the government would have more money to put towards fixing America's education system, cutting down the public debt, and fixing America's infrastructure. These are worthwhile investments. Trying to enforce anti-pot laws is not.
So, US government, please just legalize pot already so we can all move on with our lives. Thanks.
Tuesday, April 19, 2011
Thoughts On the Mainstream Media
Good afternoon everyone!
This post is going to be a rant against the mainstream media. I am not going to criticize writers for political viewpoints (differing opinions make life interesting). But, I will criticize them for their shameless promotion of sensational news stories as being essential and informative when they certainly are neither.
For instance, I was just on Yahoo!'s home page, innocently trying to locate the news when I was bombarded with the tremendous beard of Brian Wilson (he is a pitcher for the San Francisco Giants). Why was he front-page news? Did he start a charity or cure cancer? Nope. He designed a new pitch.
What the hell? Brian Wilson's new pitch is not worthy of being on the front page. It has not revolutionized the way we live (like the coming advent of nuclear fusion will, for example). It is not a life-saving gift to mankind like the polio vaccine was. It has not fixed the deadly catastrophes in the Ivory Coast, Libya and Syria. It has not helped the people in Japan. It has not solved our public debt problems.
Wilson's pitch, has made a dull game slightly more interesting. Big deal.
I have no problem with sports coverage; I am a huge soccer, tennis, basketball and football fan. However, what I have a problem with is the fact that sports (and other less-important things, such as pseudo-scientific studies on how to achieve relationship bliss) are being pushed on us by news agencies as being crucial to our lives. I fail to see how Brian Wilson's pitch has a place on Yahoo!'s home page while the crisis in the Ivory Coast does not. Maybe one of my readers can explain this to me.
Over the years, I have noticed that many stories our news institutions report on are not necessary. (When I say "necessary" I am essentially referring to things that have a profound impact on our lives and humanity in general). Here is one such crappy story: a couple weeks back on Yahoo!'s front page, the reporters were making a big deal about the anguish of a celebrity whose dog recently died. That's certainly sad for the celeb, but does it matter to you? It shouldn't because that celeb probably doesn't give two craps about you. Additionally, you should not care because you never met the dog, and because that dog's death has virtually no impact on your life or on mankind (that may be harsh, but it is true).
The war in Iraq, however, was not anywhere to be found on Yahoo!'s front page, though. In fact, many times, I have a hard time finding it anywhere. This story SHOULD matter to you and it SHOULD be everywhere: your tax dollars are paying for it and your leaders are sending your countrymen over to Iraq and Afghanistan to die for oil (or freedom or whatever other crazy excuse our leaders can come up with).
It seems to me that the mainstream media has been side-tracked by ratings. While I understand that news agencies need to make money somehow (sports and sensational stories help this) I do believe they have gone overboard with these promotions. Again, I want to reiterate that I do not have a problem with the reporting of sensational stories: the problem is that they are marketed to us as being crucial.
I should acknowledge that part of this problem falls on us readers as well. After all, if we did not have such a high demand for non-essential information, news agencies would not really benefit by publishing them.
What I am saying is that we Americans (readers and reporters alike) need to get our priorities straight. It is a sad commentary to me that we care more about a baseball pitcher's slider than what is going on in Iraq and Afghanistan, our own government's inner-workings, and other economic and social issues that are sending our country down the toilet.
Wake up, people. There are bigger things going on than Brian Wilson's "revolutionary" pitch.
This post is going to be a rant against the mainstream media. I am not going to criticize writers for political viewpoints (differing opinions make life interesting). But, I will criticize them for their shameless promotion of sensational news stories as being essential and informative when they certainly are neither.
For instance, I was just on Yahoo!'s home page, innocently trying to locate the news when I was bombarded with the tremendous beard of Brian Wilson (he is a pitcher for the San Francisco Giants). Why was he front-page news? Did he start a charity or cure cancer? Nope. He designed a new pitch.
What the hell? Brian Wilson's new pitch is not worthy of being on the front page. It has not revolutionized the way we live (like the coming advent of nuclear fusion will, for example). It is not a life-saving gift to mankind like the polio vaccine was. It has not fixed the deadly catastrophes in the Ivory Coast, Libya and Syria. It has not helped the people in Japan. It has not solved our public debt problems.
Wilson's pitch, has made a dull game slightly more interesting. Big deal.
I have no problem with sports coverage; I am a huge soccer, tennis, basketball and football fan. However, what I have a problem with is the fact that sports (and other less-important things, such as pseudo-scientific studies on how to achieve relationship bliss) are being pushed on us by news agencies as being crucial to our lives. I fail to see how Brian Wilson's pitch has a place on Yahoo!'s home page while the crisis in the Ivory Coast does not. Maybe one of my readers can explain this to me.
Over the years, I have noticed that many stories our news institutions report on are not necessary. (When I say "necessary" I am essentially referring to things that have a profound impact on our lives and humanity in general). Here is one such crappy story: a couple weeks back on Yahoo!'s front page, the reporters were making a big deal about the anguish of a celebrity whose dog recently died. That's certainly sad for the celeb, but does it matter to you? It shouldn't because that celeb probably doesn't give two craps about you. Additionally, you should not care because you never met the dog, and because that dog's death has virtually no impact on your life or on mankind (that may be harsh, but it is true).
The war in Iraq, however, was not anywhere to be found on Yahoo!'s front page, though. In fact, many times, I have a hard time finding it anywhere. This story SHOULD matter to you and it SHOULD be everywhere: your tax dollars are paying for it and your leaders are sending your countrymen over to Iraq and Afghanistan to die for oil (or freedom or whatever other crazy excuse our leaders can come up with).
It seems to me that the mainstream media has been side-tracked by ratings. While I understand that news agencies need to make money somehow (sports and sensational stories help this) I do believe they have gone overboard with these promotions. Again, I want to reiterate that I do not have a problem with the reporting of sensational stories: the problem is that they are marketed to us as being crucial.
I should acknowledge that part of this problem falls on us readers as well. After all, if we did not have such a high demand for non-essential information, news agencies would not really benefit by publishing them.
What I am saying is that we Americans (readers and reporters alike) need to get our priorities straight. It is a sad commentary to me that we care more about a baseball pitcher's slider than what is going on in Iraq and Afghanistan, our own government's inner-workings, and other economic and social issues that are sending our country down the toilet.
Monday, April 18, 2011
How to Save Cash
Ok, fellow young people, it's time to talk about something we need to start doing ASAP: saving our money for rainy days and retirement.
Some of you are probably wondering exactly why I think I'm qualified to talk on this subject. Here is my answer: I lived in Irvine, Orange County, California (easily one of the priciest places in the USA) for about 4 months saving over $600 every month while earning about $1,900 per month (after taxes). (That means I was averaging less than $24,000 per year -saving $7,200 of that- and still living a nice life).
Here are my recommendations for saving money:
1. Carpooling. Do not be ashamed of doing this. Gas is $4 per gallon (higher out west), and you cannot afford to NOT be doing this. For example, I organized bi-weekly grocery shopping trips with friends and my roommate. It's easy, and it saves a bundle on gas.
2. Cheap (but healthy food). Yes, this stuff does exist: canned beans, eggs, frozen veggies, bananas, celery, peanut butter, and apples. Canned beans, eggs, and peanut butter are some of the most protein-packed foods out there (in fact, eggs actually have the purest and most-beneficial protein on the planet. They're cheap, but don't eat more than 2-3 egg yolks per day). Frozen veggies (contrary to conventional wisdom) have just as much nutritional value as fresh veggies, and they're a fraction of the cost. Bananas and apples are good for you, cheap, and they keep forever in the fridge.
3. Cut out ingestible crap. Soda is a big no-no for me and for you. That stuff adds calories, has no nutritional value, and is more expensive than the best beverage on the planet for you: water. A similar analysis can be applied to most juices. Just drink milk, water, and homemade coffee (coffee has antioxidants and appetite-suppressing qualities).
4. No more gym memberships. Seriously. You can buy some kettlebells on eBay (for about the same price as regular weights) and get high-quality cardio and strength-training workouts in your home. Most people don't know how beneficial ballistics exercises with kettlebells are for your muscles, bones, and heart. For more, read this: http://www.livestrong.com/ballistic-training/.
5. Save on utilities. Unplug electric devices when you are not using them. Do not leave lights on when you are not in the room. Get more efficient light-bulbs. Wear heavier clothes indoors instead of turning up the heat. Stuff like that.
6. TV, land-line phones, and internet service. If you have a cell, I do not believe you need a land-line; get rid of it. As for TV, if you can handle it, cut it out entirely or find a different company (or smaller television package). Or, you can start watching TV shows online. Many TV networks broadcast their shows online a few days after they air, so you can catch them there. In terms of the Internet, it may be possible for you to share Internet access wirelessly. Specifically, ask your neighbors who have WiFi if you can pay them a percentage every month to access their wireless network. Everybody wins with that kind of arrangement.
If you start using my ideas, you can save tons every month. Now, with your extra savings, what should you do? That's easy. Start a retirement account.
Vanguard has a nice, cheap retirement account option. You can start a Roth IRA with them and invest your money monthly (see: https://personal.vanguard.com/us/home?fromPage=portal). Make sure you pump as much money as you can every month into your retirement account; it will be huge over time. As you will find out, compounding interest rates are your friend.
I cannot stress this enough: the earlier you start your retirement account, the better your results will be because of compounding interest rates (see: http://personalfinance.byu.edu/?q=node/440).
Get to it, people. You're going to need all the money you can save in order to have a comfortable retirement because we cannot depend on Social Security and Medicare (as I have mentioned numerous times).
Some of you are probably wondering exactly why I think I'm qualified to talk on this subject. Here is my answer: I lived in Irvine, Orange County, California (easily one of the priciest places in the USA) for about 4 months saving over $600 every month while earning about $1,900 per month (after taxes). (That means I was averaging less than $24,000 per year -saving $7,200 of that- and still living a nice life).
Here are my recommendations for saving money:
1. Carpooling. Do not be ashamed of doing this. Gas is $4 per gallon (higher out west), and you cannot afford to NOT be doing this. For example, I organized bi-weekly grocery shopping trips with friends and my roommate. It's easy, and it saves a bundle on gas.
2. Cheap (but healthy food). Yes, this stuff does exist: canned beans, eggs, frozen veggies, bananas, celery, peanut butter, and apples. Canned beans, eggs, and peanut butter are some of the most protein-packed foods out there (in fact, eggs actually have the purest and most-beneficial protein on the planet. They're cheap, but don't eat more than 2-3 egg yolks per day). Frozen veggies (contrary to conventional wisdom) have just as much nutritional value as fresh veggies, and they're a fraction of the cost. Bananas and apples are good for you, cheap, and they keep forever in the fridge.
3. Cut out ingestible crap. Soda is a big no-no for me and for you. That stuff adds calories, has no nutritional value, and is more expensive than the best beverage on the planet for you: water. A similar analysis can be applied to most juices. Just drink milk, water, and homemade coffee (coffee has antioxidants and appetite-suppressing qualities).
4. No more gym memberships. Seriously. You can buy some kettlebells on eBay (for about the same price as regular weights) and get high-quality cardio and strength-training workouts in your home. Most people don't know how beneficial ballistics exercises with kettlebells are for your muscles, bones, and heart. For more, read this: http://www.livestrong.com/ballistic-training/.
5. Save on utilities. Unplug electric devices when you are not using them. Do not leave lights on when you are not in the room. Get more efficient light-bulbs. Wear heavier clothes indoors instead of turning up the heat. Stuff like that.
6. TV, land-line phones, and internet service. If you have a cell, I do not believe you need a land-line; get rid of it. As for TV, if you can handle it, cut it out entirely or find a different company (or smaller television package). Or, you can start watching TV shows online. Many TV networks broadcast their shows online a few days after they air, so you can catch them there. In terms of the Internet, it may be possible for you to share Internet access wirelessly. Specifically, ask your neighbors who have WiFi if you can pay them a percentage every month to access their wireless network. Everybody wins with that kind of arrangement.
If you start using my ideas, you can save tons every month. Now, with your extra savings, what should you do? That's easy. Start a retirement account.
Vanguard has a nice, cheap retirement account option. You can start a Roth IRA with them and invest your money monthly (see: https://personal.vanguard.com/us/home?fromPage=portal). Make sure you pump as much money as you can every month into your retirement account; it will be huge over time. As you will find out, compounding interest rates are your friend.
I cannot stress this enough: the earlier you start your retirement account, the better your results will be because of compounding interest rates (see: http://personalfinance.byu.edu/?q=node/440).
Get to it, people. You're going to need all the money you can save in order to have a comfortable retirement because we cannot depend on Social Security and Medicare (as I have mentioned numerous times).
Sunday, April 17, 2011
"While They're Stuck On Stupid In DC, Your Generation Is..."
It is not all bad news over on ThinkProgress, however (read my previous post so you understand what I am referring to).
Earlier this weekend, environmental activist Van Jones addressed 10,000 young activists in Washington, DC. While the purpose of his speech was to motivate his audience into leading the "clean power revolution", he also advocated a different kind of "power revolution". Mr. Jones, it seems, has similar goals to EAYNUF: he wants us youths to "shift the power" from the current political establishment to ourselves.
Mr. Jones acknowledged that our leaders in Washington are failing us (that is nice to hear, but it is also pretty much the understatement of the century).
Additionally, Mr. Jones seems to have comparatively high opinions of us, as evidenced with these enterprising remarks: "While they're stuck on stupid in DC, your generation is rising". (I would prefer if he said that my "generation is sinking due to the weight of student loan debt, massive unfunded federal programs, a recessionary economy, bank bailouts, multiple wars, and poor national leadership", but I suppose a little positivity is not a bad thing every now and then).
The most important and inspiring quote from Mr. Jones, however, was this tidbit of sage advice: "You have to be wise enough to hold both parties to high standards". This quote is really what I want to briefly discuss.
For as long as I can remember (which is about 23 years), this country has been at the mercy of Washington's partisan politics. Our leaders in Washington attack each other with vicious verbal barbs that do nothing besides bring colleagues and constituents to anger and disgust. Instead of trying to meet in the middle on issues like responsible adults, both parties turn to petty and petulant bickering that is not even acceptable in high school debate clubs.
It really is no wonder much of the world sees the USA as a joke. The power-brokers in DC continually act like jackasses, and average citizens keep re-electing them. Pretty stupid, right?
At the end of the day, though, Mr. Jones seemed to be imploring us youths to get away from that partisan divisiveness we see in DC now and work together towards a more just and free country.
"Shift the power!" Mr. Jones said as he ended his speech to standing ovations and cheers.
This power shift cannot come soon enough, and, we are going to be the ones to initiate it. Let's just hope we heed Mr. Jones's advice and avoid the crippling errors his generation has made.
Earlier this weekend, environmental activist Van Jones addressed 10,000 young activists in Washington, DC. While the purpose of his speech was to motivate his audience into leading the "clean power revolution", he also advocated a different kind of "power revolution". Mr. Jones, it seems, has similar goals to EAYNUF: he wants us youths to "shift the power" from the current political establishment to ourselves.
Mr. Jones acknowledged that our leaders in Washington are failing us (that is nice to hear, but it is also pretty much the understatement of the century).
Additionally, Mr. Jones seems to have comparatively high opinions of us, as evidenced with these enterprising remarks: "While they're stuck on stupid in DC, your generation is rising". (I would prefer if he said that my "generation is sinking due to the weight of student loan debt, massive unfunded federal programs, a recessionary economy, bank bailouts, multiple wars, and poor national leadership", but I suppose a little positivity is not a bad thing every now and then).
The most important and inspiring quote from Mr. Jones, however, was this tidbit of sage advice: "You have to be wise enough to hold both parties to high standards". This quote is really what I want to briefly discuss.
For as long as I can remember (which is about 23 years), this country has been at the mercy of Washington's partisan politics. Our leaders in Washington attack each other with vicious verbal barbs that do nothing besides bring colleagues and constituents to anger and disgust. Instead of trying to meet in the middle on issues like responsible adults, both parties turn to petty and petulant bickering that is not even acceptable in high school debate clubs.
It really is no wonder much of the world sees the USA as a joke. The power-brokers in DC continually act like jackasses, and average citizens keep re-electing them. Pretty stupid, right?
At the end of the day, though, Mr. Jones seemed to be imploring us youths to get away from that partisan divisiveness we see in DC now and work together towards a more just and free country.
"Shift the power!" Mr. Jones said as he ended his speech to standing ovations and cheers.
This power shift cannot come soon enough, and, we are going to be the ones to initiate it. Let's just hope we heed Mr. Jones's advice and avoid the crippling errors his generation has made.
The Largest Ponzi Scheme Ever (No, I Am Not Talking About Bernie Madoff's Scam) Part II
Evening, loyal readers!
I would like to put out a follow-up post to yesterday's article on Social Security. A guest blogger over at ThinkProgress.org recently published an article discussing the merits of Social Security (you can access the article here: http://thinkprogress.org/2011/04/16/jeb-hensarling-ponzi-scheme/). In his analysis, Kevin Donovan asserted that Social Security is not a Ponzi scheme because "no one is being mislead" and it is "not automatically doomed to fail".
I have a few issues with his analysis. Before we get to those, let's remind ourselves of the SEC's definition of a Ponzi scheme:
A Ponzi scheme is an investment fraud that involves the payment of purported returns to existing investors from funds contributed by new investors. http://www.sec.gov/answers/ponzi.htm
The first problem I have with the Mr. Donovan's analysis is his belief that the persons who run Social Security (our government officials) are not misleading anyone. The Social Security Administration was initially created to take in payroll taxes, save them in accounts where they would grow and gain interest, and pay the principal and earnings back to the individual. In other words, when someone paid into the system, he or she will get paid back (and then some) when he or she retires. However, as I have shown previously (see: http://eaynuf.blogspot.com/2011/04/young-and-screwed-americas-youths.html), Social Security will collapse by 2039. That means, unlike before, many persons currently paying into the system (as it is now constructed) will NOT get paid back. There is a large discrepancy between what is currently happening with retirees and what will happen when today's young people try to retire: in essence, today's youths won't get paid while current retirees will get full benefits. These results are unequal for different generations of people (despite both generations having the same legal right to these funds), and, that is fraudulent and unjust.
And, to make this worse, the Social Security Administration is not exactly open about how badly this program is screwing youths. That to me smells a little bit like deception and fraud (after all, you cannot blatantly tell youths that they're screwed: they will freak out, rebel, and ruin everybody else's fun).
The second issue I have with the author's article is his implicit assertion that Ponzi schemes are doomed to fail while the SS is not. He's right about the first part: normal Ponzi schemes are doomed to fail because the schemer will eventually run out of new funds to pay earlier investors. However, that argument can also be used to describe SS's issues today. The SSA is currently running out of workers (new investors) to pay into the system in order to fund older people's (earlier investors') retirements. Eventually, the SSA will be bankrupt because of this problem, just like any normal Ponzi scheme.
Finally, the biggest problem I have with Mr. Donovan's article is that he ignores one problem (besides size) that makes SS worse than any other Ponzi scheme: choice. In normal (private) Ponzi schemes, investors have the options of refusing to join the scheme, and, pulling their money out at will if they decided to make an investment. (Importantly, this principle applies to late investors: the late investor, if he or she wanted to, could pull his or her money out of the Ponzi scheme before earlier investors did).
There are no such options with SS. Our contributions are taken without any say in the matter. And, we later contributors have virtually no chance of pulling our money out before older people do (unless we get seriously injured or something to that effect).
I believe Mr. Donovan and I can agree, however, that the way the SSA is being run right now is a huge travesty. The SSA's money was supposed to be used to help people in need and fund retirements. Unfortunately, past surpluses have been frittered away by careless politicians on unknown (but probably senseless) projects and expenses.
And, for the record, I do not have a problem with the SSA existing; it has a legitimate purpose. I do have a problem with how it is currently run, and I hope Americans everywhere do, too.
I would like to put out a follow-up post to yesterday's article on Social Security. A guest blogger over at ThinkProgress.org recently published an article discussing the merits of Social Security (you can access the article here: http://thinkprogress.org/2011/04/16/jeb-hensarling-ponzi-scheme/). In his analysis, Kevin Donovan asserted that Social Security is not a Ponzi scheme because "no one is being mislead" and it is "not automatically doomed to fail".
I have a few issues with his analysis. Before we get to those, let's remind ourselves of the SEC's definition of a Ponzi scheme:
A Ponzi scheme is an investment fraud that involves the payment of purported returns to existing investors from funds contributed by new investors. http://www.sec.gov/answers/ponzi.htm
The first problem I have with the Mr. Donovan's analysis is his belief that the persons who run Social Security (our government officials) are not misleading anyone. The Social Security Administration was initially created to take in payroll taxes, save them in accounts where they would grow and gain interest, and pay the principal and earnings back to the individual. In other words, when someone paid into the system, he or she will get paid back (and then some) when he or she retires. However, as I have shown previously (see: http://eaynuf.blogspot.com/2011/04/young-and-screwed-americas-youths.html), Social Security will collapse by 2039. That means, unlike before, many persons currently paying into the system (as it is now constructed) will NOT get paid back. There is a large discrepancy between what is currently happening with retirees and what will happen when today's young people try to retire: in essence, today's youths won't get paid while current retirees will get full benefits. These results are unequal for different generations of people (despite both generations having the same legal right to these funds), and, that is fraudulent and unjust.
And, to make this worse, the Social Security Administration is not exactly open about how badly this program is screwing youths. That to me smells a little bit like deception and fraud (after all, you cannot blatantly tell youths that they're screwed: they will freak out, rebel, and ruin everybody else's fun).
The second issue I have with the author's article is his implicit assertion that Ponzi schemes are doomed to fail while the SS is not. He's right about the first part: normal Ponzi schemes are doomed to fail because the schemer will eventually run out of new funds to pay earlier investors. However, that argument can also be used to describe SS's issues today. The SSA is currently running out of workers (new investors) to pay into the system in order to fund older people's (earlier investors') retirements. Eventually, the SSA will be bankrupt because of this problem, just like any normal Ponzi scheme.
Finally, the biggest problem I have with Mr. Donovan's article is that he ignores one problem (besides size) that makes SS worse than any other Ponzi scheme: choice. In normal (private) Ponzi schemes, investors have the options of refusing to join the scheme, and, pulling their money out at will if they decided to make an investment. (Importantly, this principle applies to late investors: the late investor, if he or she wanted to, could pull his or her money out of the Ponzi scheme before earlier investors did).
There are no such options with SS. Our contributions are taken without any say in the matter. And, we later contributors have virtually no chance of pulling our money out before older people do (unless we get seriously injured or something to that effect).
I believe Mr. Donovan and I can agree, however, that the way the SSA is being run right now is a huge travesty. The SSA's money was supposed to be used to help people in need and fund retirements. Unfortunately, past surpluses have been frittered away by careless politicians on unknown (but probably senseless) projects and expenses.
And, for the record, I do not have a problem with the SSA existing; it has a legitimate purpose. I do have a problem with how it is currently run, and I hope Americans everywhere do, too.
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