The American Financial Diet

Well, there you have it. We were on the American financial diet for last 5 months and now we are spending again. It's like the Atkins, Zone or Somers diets where we deprive ourselves of that which makes us happy and then we go full boat the other way. So the economy is starting it's slow and treacherous turn around. It's like the Titanic that continues to move at a slow pace because of the weight of the boat. Our economy is turning at a slow pace because of the weight of our unemployment. But turning it is, we sacrificed for five or six months and that is all we can stand. Tax refunds are coming in and we are spending them. All that we put off purchasing for ourselves, we are now spending to get what we want.

I wonder, do we have the sustenance to get back on the savings diet? Do we have the courage to turn this vessel with wise purchases and not get ourselves back into the same credit mess? Do we have the ability to purchase American products so we can keep Americans employed?

Only time will tell. I pray we have the ability to be thoughtful purchasers, good stewards of the money given to us and givers of hope. Let's get on the financial diet together again and beef up the savings for a rainy day.

Bailout Idea

Every where one turns these days there is yet another story on the bail out plan. Another $819 billion has been approved by the House and is going to the Senate floor. This got me to thinking, $819 plus $734 (previous bill) is $1.553 trillion. I can't even fathom the amount of zeros on that number. Then I read that we will need billions more for a full recovery. My mind started thinking, how can this money come directly to the American people. How many American people are there? I googled it, $384,505,000 people in the United States. Could we give the money directly to the American people?

So now here's where it gets tricky because I'm not really great at math and this is a lot of zeros to play around. If everyone in the United States got a check for $100,000 that would be $3 Trillion. So that would be more than we have allotted already. What if it was $50,000? That should be $1.5 Trillion so less that we already have allotted. If we give the money to the people, they could spend it, save it, invest it or pay off debt with it. All of these options will help to stimulate the economy while creating a "feel good" atmosphere.

1) If every single American spent the money our economy would spike and therefore the world economy would spike. If during this spike, companies continued to get lean we would emerge a world leader with lean companies who had money in the bank from the spike in sales.

2) If every single person saved the money, this would be quite an influx of money to our banking system which should open up their ability to lend again. Credit scores would rise because borrowers have the ability to pay back debt, banks would have excess cash reserves to borrow and the American population would feel like they have a safety net to catch them if this happens again.

3) Could you even imagine Wall Street if everyone invested these dollars? They would be going crazy trying to buy all these under valued $10 stocks before their prices rose. The market would rise again as everyone determined their buying strategies. People would be in control of how the money is spent. I wouldn't be investing in Citibank because I don't believe in how they have handled the money thus far however I would invest in Ford because they have a great management team that prepared the organization for a day such as today. I would invest heavily in American stocks because I believe in putting our money back into the society in which we reside. Yet I would still invest some in foreign stocks because in the end we are all connected in one big life circle.

4) I have a lot of debt. There is less than I had before however it is still there. To get an influx of $50,000 would pay off all my credit card debt and my small mortgage. Right now I can only dream of what this would feel like. The freedom to do what I want because my debt load is relieved. I continue to pray for this day and in this blogs fantasy world I can almost taste the victory that would be. For the economy, even if everyone paid off their debt, the disposable income this would provide families would be enough to spark the economy again.

This is all a dream but could you even imagine what our country could do if this amount of money was actually given to the general population instead of business as usual up in Washington. It will be interesting to watch our new President and how he handles this money. The first test will be if there are stringent checks and balances on the spending of our next bailout plan.

God Bless.

Election Day

The election day is here. Our new president will have his hands full with this crazy economy and whether to raise taxes or not. My take on this is that no matter who gets elected, taxes will be raised. That stimulus payment back in the Spring has to get paid for in some way. This new $700 billion bailout plan must be paid for by someone. As the old adage goes, money doesn't just grow on trees. So what to do. Some analysts say increase 401K payments, some analysts say start a 529 college fund, some analysts say insurance funds...what if you are quietly living, making a decent income but really don't have the funds to put someplace. Well I like the story of the tortoise and the hare, slow and steady wins the race. So here's my plan, add a savings account in a small denomination $50/paycheck that will be used to pay any additional taxes this next year. If it is easily accessible in a regular 3% savings account, then if it is needed in an emergency prior to tax time, we can get at it. Hopefully this won't change our plan too much and we will be able to adjust our spending levels by this much. If by May this is going strong, my intention is to add this %age to my 401K deductions to gain the tax benefits of less income. My philosophy is to firs test to adjust the spending then make the permanent change. Just remember going directly into the 401K means you can't get at that money without penalty until you are 59 1/2 years old...so make certain before making the adjustment.

Happy Savings on this election Tuesday.

God Bless.

Spending Monday

So, I'm writing about financial and debt management and you may wonder why in the world is this titles Spending Monday? Well, even as you go through your financial budgeting process and your debt management cycles, one must always have a spending account. My fiance and I are working through this process. We are living off one salary and trying to make ends meet, pay off the last of our debt, save for retirement and still have fun...oh yeah, also plan a wedding. So today I'm going to tell you about our spending plan. So I get paid bi weekly and that paycheck must last us through two weekends. What usually happens is the first weekend we have fun, and the second weekend, we hang at home. It seems to be a vicious cycle in that by payday, we are ready to get out because we have been shored up at home for a long seven days. This week we started a process where I got paid on Friday and we each got $100 to spend however we want with the balance at the end of the week going into a "fun" pot for vacations and future long term purchases. It was pretty amazing that since we had the money in our pockets we didn't spend it. Something had to be truly justified for us to purchase it because once that money is gone, we can't replenish it. So even through our savings and budgeting, we are still spending however we are spending much more wisely these days. I wonder if God is thinking we got a little greedy here on earth and now we need to show Him that we are truly good stewards of the money He has given us.

Well, happy spending on this glorious Monday. May your days be filled with health, wealth and laughter!

God Bless,
K.