Radio host Dave Ramsey, who has been mentioned on this blog at least once before, appeared this week on CBS's "The Early Show" to talk about President Obama's jobs plan (incorrectly referred to in this interview as "The American Jobs Act", though that title has now been taken by a quite different bill*). The video, helpfully enough, appears here:
You can also access the same video at CBS News's webpage here.
Mr. Ramsey, while not saying anything disparaging about President Obama, gives what can only be described as a backhanded compliment by saying "I think the President's a great orator." I translate that, basically, to "he talks a good game," and I would say he definitely does that. But Mr. Ramsey, in a very unsurprising turn (for those who know him), doesn't really care for the jobs plan itself.
Some of my favorite quotes from Mr. Ramsey:
"I resist the tax code telling me how to behave."
"A $4000 tax credit is not gonna cause me to hire people that I gotta pay for the next five or ten years."
"Government's role is...to push the taxes back from the edges...so that, as the owner of the business, I have more money; then I can hire people."
As usual, I think Dave Ramsey is spot on. Watch the video and see what you think.
* It should be obvious even to the occasional reader of this blog which of the "American Jobs Acts" I prefer.
Do people still line up at the post office on the deadline day for mailing taxes? I've e-filed for over ten years now, so that seems so foreign to me.
But for those looking forward to spending their evening that way, or for those who just dealt with taxes this weekend, or for pretty much anyone else, I present these fun facts about taxes:
The power of Congress to collect income taxes was granted by the 16th Amendment, which reads:
The Congress shall have power to lay and collect taxes on incomes, from whatever source derived, without apportionment among the several States, and without regard to any census or enumeration.
The Internal Revenue Service actually predates the 16th Amendment by 50 years; per its website, it was created when an income tax was enacted in 1862 to pay for the Civil War, though it was later repealed after the war had ended. Once the 16th Amendment had been ratified, per the IRS, "Congress levied a 1 percent tax on net personal incomes above $3,000 with a 6 percent surtax on incomes of more than $500,000". For those keeping score at home, Wikipedia's IRS entry* states that, adjusted for inflation, $3,000 would be worth about $65,000. So, then, to pay for the federal government under those standards today would require a 1 percent tax on income over $65,000, and a 6 percent surtax on incomes over about $10,833,333. (I think I could live with such a tax table.)
E-filing, per Wikipedia*, came into being around 1995.
Sixteen years later, "only 30 percent of tax forms are now sent by mail", according to The Coloradan.
The filing deadline was delayed until April 18 this year because of the celebration of Emancipation Day* in Washington, D.C. This holiday became official in Washington in 2005 and is celebrated on April 16, unless, of course, it falls on a weekend, in which case an alternate day off from work must be provided. (Meanwhile, I'm finally past the midpoint of my New-Years-to-Memorial-Day period of no holidays whatsoever. Such is the life of the small-business employee.) And, since the day selected for observance this year was April 15, no one was available to process tax returns, and so the deadline was moved to April 18.
The Tax Foundation celebrates Tax Freedom Day each year. That is the day when the average American will have made enough money to cover all federal/state/whatever taxes for the year. This year, Tax Freedom Day was April 12.
However, if the total cost of covering our budget deficit is factored into the equation, Tax Freedom Day would not be until May 23.
The average tax refund this year is $2,895. This means a lot of people have way too much money withheld from their paychecks. People who do that are giving the federal government a free loan for many months. My general rule is to work through the allowance worksheet on your W-4 form and add at least one to get the total number of allowances to claim. Of course, that takes into account my deductions; your mileage may vary.
45% of all American households will have no tax liability this year. None.
The article which provided the previous fun fact has the absolutely-not-meant-to-be-inflammatory-no-really headline "Super rich see federal taxes drop dramatically". I'm sure that has nothing to do with President Obama's renewed cry to raise taxes on "the rich".
The U.S. corporate income tax rate is 35%, making it one of the highest rates in the world. It's no wonder that some companies, through totally legitimate means, use off-shore subsidiaries and other methods to lower their tax rates. This, of course, leads some to protest in the streets, when a better way to change things would be to lower corporate income taxes, so that doing business in the United States wouldn't be so costly. And what conservative mind had that thought? Why, none other than President Obama's Treasury Secretary, Tim Geithner.
And since we're talking about people up in arms regarding supposed unfairness in income taxes paid, I'll just point out that, per the Wall Street Journal, the top 1% of wage-earners in the U.S. paid 38% of all federal income taxes in 2008 (the last year for which data is available). And to those who think we can solve our debt crisis by taxing the rich, as apparently the president thinks is a winning answer, the Journal also points out the following:
If you took all[emphasis mine] the income of people over $200,000, it would yield about $1.89 trillion, enough revenue to cover the 2012 bill for Medicare, Medicaid and Social Security—but not the same bill in 2016, as the costs of those entitlements are expected to grow rapidly. The rich, in short, aren't nearly rich enough to finance Mr. Obama's entitlement state ambitions—even before his health-care plan kicks in.
Just a few thoughts to tide you over as you sit hunched over your keyboard, hoping that Turbotax will give you the correct answer.
Oh, and are you running late this year? If you qualify for FreeFile (adjusted gross income of $58,000 or less), you can still e-file Form 4868 for an extension at the IRS's website. Of course, if you owe tax, it's still due now, or you can always pay whatever penalty the IRS sees fit to assess.
*Information obtained from Wikipedia is, as always, not guaranteed to be accurate. It is entirely possible on any given day, for example to find the entry for Atlantic Records replaced with a fairly rude statement.
Funny, I thought by now everyone understood what the Tea Party stood for, and what policies it supports. But recent events have convinced me that this is not the case.
I cross-post many of my articles at the Austin Post (such as this one, which I totally expect to be rated about (-3) within 24 hours of its approval...this is Austin, after all), and that site has featured, in the last couple of months, multiple articles about the Tea Party. But as I have not written for the site lately, I thought it might be good to have an article at the Austin Post about the Tea Party by someone who actually knows what he is talking about.
For example, a recent article on the Post's site made the following assertion in its very first paragraph:
The NAACP made a good stab at defining the values of the Tea Party by calling them racists. It’s a simplistic judgment but fair, considering that the Tea Party’s main activities are 1.) opposing every issue supported by a black president, and 2.) hating immigrants of color.
Do you see the logical fallacies at work here?
Let's start with point 1. "I oppose President Obama's policy stances, ergo, I am a racist." No, I'm sorry, it doesn't work that way. (But then, we've heard this argument since before the presidential election. Somebody ought to write about that particular issue. Oh, wait: someone did.) Yes, I definitely oppose President Obama's policies; they represent an unprecedented-in-peacetime grab of power by the federal government. But that certainly does not mean I am racist, or that I would not support any black president. (I hear some people are trying to convince Herman Cain to run in 2012; having heard him talk about policy before, I could get behind his ideas.) I would have been just as opposed to these policies if they had been implemented by Hillary Clinton, for example. (But that would have made me a misogynist, wouldn't it, though of course all the people who so virulently hate Sarah Palin are never called that, except by conservatives, who of course have no standing to speak on anything.)
No, these policies include a quadrupling of our budget deficit (with similar deficit numbers over the next ten years) via countless stimulus packages that do not appear to have stemmed the tide of unemployment. Remember when the unemployment wouldn't go above 8% if the first stimulus package were passed? Neither do I. But with unemployment firmly entrenched above 9%, our government continues to spend as if there is no tomorrow. Since the federal government apparently hasn't the will to cut any government spending (except, of course, for defense), the only other way, in the minds of many, to raise federal revenue is to raise taxes. A lot. More on that momentarily.
The policies I oppose also include a healthcare plan that tells my employer exactly what has to be included in our health insurance plan, regardless of whether we want all of it or not. It keeps people who have been using health savings accounts for years from using them for certain items. It also does a bunch of other things that burden individuals and employers, including small employers in many cases; see here for more information.
Our president's policies also include, though it hasn't been passed yet, a cap-and-trade (referred to by many, including me, as "cap-and-tax") plan that would drive utility rates up quite a bit. Don't believe me? Maybe this will convince you:
And since we're talking about costs to the consumer, let's add taxes into this discussion. Now, we could debate the Laffer curve all day and try to determine where the midpoint is for balancing tax rates and revenue growth, but the fact is that the 2001 and 2003 tax cuts (referred to by most as the "Bush tax cuts") spurred growth and job creation in what was becoming a economic slowdown. Let's see...we're in something a little greater than just a "slowdown" now; what do you think allowing these tax cuts to expire (in effect, raising taxes) will have on job creation? Hmmm...
(Yes, there's still time for Congress to attend to the issue of whether they want to raise everyone's taxes...a few people have spoken about where we currently stand, including one Sarah Palin.)
Oh, and before you get the impression that I'm just a selfish so-and-so who doesn't want to help anyone, let me say two things: 1) I worked, and continue to work, very hard to get myself out of the debt I've run up, following (for the most part) the fairly simple ideas put forth by Dave Ramsey; and 2) I've addressed in a previous post (which did not appear on the Austin Post) what I believe my responsibilities as a Christian are to others.
Then there's the incredible government intrusion into the car industry under the guise of "saving" GM and Chrysler. Word to the wise: they weren't too big to fail. If it had come to it, parts, or all, of the companies would have been sold to more profitable automakers, many of whom probably could have done a better job of running them.
And, of course, there is the federal government's stubborn refusal to do one job specifically given it in the Constitution: to protect our borders. Per Article IV, Section 4:
The United States shall guarantee to every State in this Union a Republican Form of Government, and shall protect each of them against Invasion; and on Application of the Legislature, or of the Executive (when the Legislature cannot be convened) against domestic Violence.
But instead of protecting our borders against illegal immigration, the federal government has sued a state that tried to solve their own problem.
And this brings us to the other main assertion made about the Tea Party: that we "hat[e] immigrants of color". Personally, I don't hate anyone, and I don't think anyone has a problem with immigration--as long as it is legal. The author of this Austin Post piece, in saying that the Tea Party hates immigrants in toto, has made us into a bunch of white supremacists. Far from it. But there is a proper way to enter this country, just as there is a proper way to follow every law in this country. How would the author of these defamatory accusations like it if I and, say, 12 million of my best friends all decided not to pay our taxes for, oh, ten years or so, and then we all held rallies to demand that our tax liability be totally forgiven? No? Then why should others be allowed to break existing laws with impunity?
And since the person in question also wondered why "the Tea Party can’t formulate a convincing argument why immigration is harmful" (I will assume he meant to say illegal immigration), I'll answer. First of all, I'll refer this person to the article I wrote three months ago in which I pointed out the following:
Phoenix is the "number two kidnapping capital of the world" (Mexico City is #1).
Suspected human traffickers shot a deputy in Arizona. Just the shooting is bad enough, but human trafficking is reprehensible.
What wasn't in that article was that I know someone whose family was affected by a kidnapping relating to a Mexican cartel. Thankfully, the kidnappers in that case were totally inept, and so the person affected is fine now, albeit a bit shaken up, I would imagine.
I'm not gonna say any of the stuff that has been said for years such as "they're taking our jobs!!!!11!" because I'm all for people working. But there is a correct way to do it.
In closing, I welcome discussion about these topics. To borrow a phrase from the person who wrote the previous Austin Post article, get to know some tea partiers; they're great folks.
Or keep calling us names. But just realize that it says a whole lot more about you than it does about us.
It certainly seems, at times, as if there are a lot of people who have a desperate need to show that Sarah Palin is wrong about something, regardless of whether she is actually wrong about whatever topic these people choose to mention, or not.
Today's case in point is PolitiFact, which, generally, appears to be fair in its analyses, at least as far as I have seen in the past. What they were thinking when they classified a recent statement by Governor Palin as "pants on fire" (that means they're calling it a lie, for those of you who never had a childhood), I don't know. That statement appears during her appearance on Fox News Sunday four days ago:
To those wondering: yes, this is the "cojones" interview. It is also the interview in which Governor Palin addressed the image presented of her by a lot of media outlets, and the unfavorability that she has among many:
As for the unfavorable, you know, I don't blame people for not really knowing what it is, in some instances -- what I stand for or what my record is because if I believed everything that I read or heard in the media, I wouldn't like me either.
But let's get back to the statement that she made while discussing the impending expiration of the 2001/2003 Bush tax cuts on January 1, 2011. The statement that raised PolitiFact's dander was the following:
But Democrats are poised now to cause this largest tax increase in U.S. history. It's a tax increase of $3.8 trillion over the next 10 years, and it will have an effect on every single American who pays an income tax.
I won't devote a lot of space to PolitiFact's argument; you can see it for yourself here and make the call. But I will call attention to the following statement:
So Palin is confusing the issue here by using numbers that assume all the tax cuts are going away. That is not the Democratic plan nor is it President Obama's plan.
Well, that sounds better, doesn't it? So what's the problem? Sarah Palin explains exactly what the problem is in her response to the PolitiFact post:
Plan? What plan? There is no plan. All we have is smoke and mirrors based on an old Obama campaign pledge that if elected, he would exempt families making less than $250,000 a year from “any form of tax increases.” But this pledge was already watered before he was even elected. First vice-presidential candidate Joe Biden lowered it to $150,000. Then campaign surrogate Gov. Bill Richardson lowered it even further to $120,000.
A few months after the inauguration, even that last promise disappeared in a puff of smoke. When asked to reaffirm the White House’s commitment to the campaign promise of no tax increases for families earning less than $250,000, Obama’s spin doctor David Axelrod declared the President had “no interest in drawing lines in the sand.”
The truth is that as of today, Democrats haven’t taken any action to extend any part of the 2001 and 2003 tax cuts for any income group – and in this case doing nothing equals hitting American taxpayers with a massive $3.8 trillion tax increase.
What we do know for certain is that the White House is more than willing to raise taxes on families with incomes of less than $250,000. Democrat Senator Max Baucus admitted as much during the debate about Obamacare when he stated that “One other point that I think it’s very important to make is that it is true that in certain cases, the taxes will go up for some Americans who might be making less than $200,000.”
Who's right? At this point, until something hits the House floor addressing the tax cuts, Governor Palin is. But she leaves the door open for further discussion:
[...] it would be helpful if the White House and the Democratic Congressional leadership finally mustered the courage to table their plans to let the 2001 and 2003 tax cuts expire. Mr. President, publish your proposals, and we’ll duke it out. You can argue in favor of a multi-trillion dollar tax hike in an age of economic uncertainty and mass unemployment, and we’ll argue for fiscal sanity combined with serious spending cuts. I for one look forward to such a debate.
Somehow I doubt such a debate will take place, given the seeming inclination of so many, including people at PolitiFact, to try to spread misinformation. In the meantime, however, you could see all of Sarah Palin's response to PolitiFact here.
I have a post coming soon about Christian responsibilities to help the poor. But something that really irks me is the fact that a lot of people with their hand out do not need the help.
Given my job, I see every day the moochers among us.
Many get their housing cheap or free. Regular checks from the federal government. Checks from the state and local agencies. Utility assistance. Cheap or free healthcare. So on and on.
Yet many drink beer all day, cigarette butts in the yard, cars newer than mine, big screen tvs, 2-7 cell phones in the household, cable, and so forth.
And when I come walking up, they want to know where their check is.
Of course, of course we have a responsibility to help those who really need it. But the people described in the comment above need to start by taking a page out of Dave Ramsey's book.*
The IRS, which of course knows what is best for you, has a perfect solution to the mountain of debt currently facing the federal government: why, raise everyone's withholding rates, of course! You can verify this for yourselves, thanks to the IRS's knack for creating publications about every known tax topic up to and including something called the "Capital Construction Fund for Commercial Fishermen" (Publication 595...who knew?). The withholding information may be found in the IRS's website as well: here for 2009, here for 2010.
I checked, thanks to the fact that I had to run my own payroll in the absence of literally everyone else in the office this week, and sure enough, my federal withholding has gone up $8 per paycheck.
But Snowed, that's chump change! Yes and no...for those of us who subscribe to Dave Ramsey's pretty darn good idea of earmarking where every single dollar you bring in is going, losing those eight dollars means having to retool the budget. In my case, that most likely means eight dollars less per check will be going to retire my own mountain of debt. (I, at least, know enough when in a hole to stop digging.)
So, Snowed, are my taxes going up? President Obama promised they wouldn't! As much fun as it may be to blame President Obama for everything, no, your taxes are not going up, to the best of my knowledge. The amount of withholding has changed, but I don't believe that the tax tables themselves have changed. What this means, basically, is that you are now either going to have a smaller tax payment in April 2011, or you will get a somewhat larger refund (assuming everything else stays the same as in 2009). The way I view this is that it means I am loaning a little more of my money to the federal government, interest-free, for a year. That's not cool.
So what should I do? You don't necessarily have to do anything. You could always file a new Form W-4 and change your withholding, perhaps to claim an additional allowance. (Aside: why do the IRS worksheets always tell me to claim about three less allowances than I ought?) What I, and others, recommend is that you set your own withholding up so that you either get a very, very small refund or owe a somewhat small amount. (The IRS charges penalties if you owe too much at the end of the year, so be careful there.)
As with all financial matters, it's always good to consult with your own accountant or financial planner. (Note: the author's father is one of those financial planners, so if you're looking for one...) Just don't be surprised when you get that first paycheck of the year and see that it's a little bit smaller.
If you don't know Alfonzo Rachel, you should. Who knew that someone could display so much charisma while articulating a decidedly conservative viewpoint while standing in front of a bare wall in his basement? (Mark Sanford, among others, could learn from him.)
Anyway, Zo is now at PJTV, where he has a much better backdrop than he did previously. His most recent video is now available here, and I'd advise everyone to check it out. (I'd embed it, but the YouTube version suffers from a fatal audio glitch.)
In this video, Zo takes on the liberals who need to "get out of the way" and let situations resolve themselves. One could argue whether some situations cannot resolve themselves, but do you really think throwing $4,000,000,000,000 a year around and doubling the national debt in ten years is going to help in the long run? (But Snowed, W did that too. Yeah, and that was misguided at best and irresponsible at worst. The Republicans forgot how to be conservative, and it bit them in 2006 and 2008.)
Zo also takes on those who would crucify Sarah Palin for Bristol Palin's having become a single mother. As he basically states, just because people don't follow certain advice (such as, for example, abstinence) doesn't invalidate that advice. He goes on to explain why some people hate Sarah Palin, most likely stepping on a few toes in doing so. Good.
Oh, just watch it. If YouTube ever fixes their version, I'll update and embed it.
Bank of America, in its typical manner of biting the hands that feed it, has decided to tick off the Snowed family once again. Because we have made the choice not to use their card (or any other credit card) but to work as hard as possible to pay it off, and because we had an interest rate less than 10%, B of A has told us that our rate will jump to almost double what it was.
It apparently is not just us; B of A is apparently (per severalsources) raising rates for about four million customers. Mind you, these are customers who have not defaulted or missed any payments. (No, those people get their mistakes paid for by the rest of us.)
So, what is one to do when one still is paying a balance and is about to get hit with an outrageous interest rate increase? First of all, don't use the card! Cut it up. Second, call B of A and decline the changes to the card's terms of service. You will still be able to pay off the card under the old terms (including your old rate) as long as: 1) you never use the card again (which is why you should cut it up!); and 2) you continue to make at least the minimum monthly payment (and hopefully you are paying a lot more every month).
I got the impression when I called to decline the change in terms that many people were doing so; the representative on the phone did not even try to talk me out of it, but simply made the change and closed the account. If that many people are dumping B of A's cards, that can't be great for B of A's bottom line. Way to treat your faithful customers there.
"Americans didn't vote for a rush to failure," huh? And yet, that's pretty much what we've gotten so far, isn't it? Yeah, credit's dried up (no big loss there), my grandkids will be paying this debt off, unemployment's skyrocketing, the Dow's in the toilet, but HEY! LOOK OVER THERE! IT'S RUSH LIMBAUGH!!!!!1!!one!!
Dave Ramsey, now part of Good Morning America's "dream team" of financial pundits, opined this morning about the Obama administration's budget plans. In what shouldn't be a surprise to those who know of Dave Ramsey, he didn't much care for it.
Just in case you're one of the five people in the US who hasn't seen it (three of them are the rest of the Snowed family), here's Rick Santelli's original rant:
Many people are ticked off. People are organizing "Tea Parties" all over the country. Now there's a website recommending a mortgage strike in April.
I would like to see this movement gain traction. I would like to see it make a difference. But, I'm worried that the general response of the MSM and the Democrats who gave us this junk will be a collective “oh, how cute!” with a knowing smile as we all get right back to our jobs to pay for the grasshoppers’ bailouts. And I don't think too many people are going to skip a mortgage payment in this economy. I'm not going to either...I'm still trying to get my debt paid off.
I think the most we can hope for is that some people will come to the conclusion that it is not in anyone's best interest to sit around and wait for the government to pander to them. Alfonzo Rachel, as usual, is right on target with that point (and many others) in the following.
Watch the whole thing and consider what is the best course.
As expected, the $825,000,000,000 (give or take) American Recovery and Reinvestment Act of 2009 (H.R. 1) passed the House today. Now, anyone who knows me knows that I think very little of this bill. And why is that?
Well, for starters...
$1 billion for Amtrak
$50 million for the National Endowment for the Arts
$400 million for global warming research (no word on whether any of this will be directed to finding out why it snows every time Al Gore shows up to talk about climate change)
$2.4 billion for carbon-capture demonstration projects
$150 million for the Smithsonian Institution
$6 billion for mass transit
That's all well and good, but how about...
$81 billion for Medicaid
$83 billion for Earned Income Credit payments
$66 billion for education (My guess: none of it will be spent to determine the efficacy of incredibly large federal block payments into state education programs. Actual truth: this money is prohibited from being used for vouchers.)
Are these new, incredibly large, payouts justified in any meaningful way?
Oh, and finally...
$30 billion for road/highway projects
$40 billion for other infrastructure projects
$20 billion for business tax cuts
And those three items are arguably the only payouts that will lead to any meaningful job creation. The rest seems like Democrats rewarding their donors to me.
Rather unexpectedly (at least to me), every Republican voted against this thing, including Michael McCaul and Lamar Smith (for people in my local area). Lloyd Doggett ignored my call pleading with him to vote against, unfortunately (but as I figured he would). Full rollcall vote is here.
My take on this bill: a disaster. I (like most of us, I would think) would like to see the economy improve, but I cannot believe that this bill will do it. I do, however, think that the Democrats will use this bill to take credit for the natural cycles that will turn this economy back into an upswing.
Good Morning America featured Dave Ramsey this morning talking about getting out of debt. The video is currently featuring on the GMA home page. Go check it out.
Update 2/26/09: For more Dave Ramsey on GMA, look here.
As I continue to catch up on all the stuff I haven't been posting recently (darn that day job), I have some happy news...I've joined the No Credit Needed Network, a site where people can post their progress at either saving money or eliminating debt. Being myself basically in Dave Ramsey's Baby Step Two, I get to track my debt payoff. You can see it in the pie chart at right (presently 60.94% paid off).
Better still, head over to NCN and check it out for yourself. Go subscribe to the NCN blog. Start your own chart and get yourself out of debt, or save up for retirement (really, do you think Social Security will still be around? I don't.).
For me, the biggest upside at this point is that I am not nearly as concerned about the current recession as a lot of people. My budget is in balance, I'm still getting debt paid off, and that particular stress is gone from the Snowed family's marriage.
As 2008 draws to a close, I have started to think about what I would like to get for people for Christmas. (Actually, Mrs. Snowed does most of this, which is a good thing, seeing as I'm only just starting to think about it.)
This year, I want to give the following:
For the Austin American-Statesman (heretofore known on this blog as the "unwanted daily"): relevance
For the Austin Chronicle (heretofore known on this blog as the "worthless weekly"): objectivity (perhaps you can also share it with a few other organizations)
For Barack Obama: best wishes and a hope that he will govern from the center, and a promise from me not to contract Obama Derangement Syndrome
For Bush Derangement Syndrome/Palin Derangement Syndrome sufferers: a life! (That especially means you, Andrew Sullivan. No, I'm not giving you a link.)
For Capital Metro: some knowledge regarding just how far south Austin really extends
For the Dallas Cowboys: a playoff win already! I'll take one in early 2009. I'd prefer four.
For KVUE: an end to those annoying "we've won the Edward R. Murrow award for overall excellence x years in a row" spots, which always make me laugh when they air right after some technical (or other) difficulty (and it happens way too often)
For KXAN/LIN TV: lousy ratings (Granted, NBC's helping to grant this one for me.)
For MSNBC, particularly Keith Olbermann and Chris "Snugglebuggle Kissyface" Matthews: Valium
For Sarah Palin: better handlers, better interviews, and a Reagan-like rebound paralleling his rise from the 1976 ashes
For the staffers who slammed Sarah Palin: obscurity
For Time Warner Cable: a little respect for your customers, maybe?
For the United Auto Workers: an immediate and permanent end to the Jobs Bank, some severely restructured contracts, and a dose of humility
Unfortunately, I cannot personally deliver on most of my list this year, so I hope that this will prove an adequate gift for now.
ABC's Good Morning America has made a point in recent weeks of emphasizing just how bad things are financially. Whether or not you agree with that point, following some of the advice they give is not only unhelpful but potentially quite harmful. For example, consider comments made this morning by financial contributor Mellody Hobson in a segment called, somewhat inauspiciously, "Borrowing 101". Now, some of the worst ideas somehow didn't make it into the article, but you can always watch the video, which is also available on the GMA site.
Now, with a title like that, they weren't exactly singing my tune anyway, but things went from bad to worse when Ms. Hobson said that people having difficulty getting an auto loan should consider a lease. Sure, that's a great idea if you want to spend even more money for the car, and don't forget you either lose the car after three years or have a balloon payment. Hey, how about driving the old car a few more years!
But Snowed, I get 4 miles per gallon, and gas is expensive!
Okay, and how much extra will you be spending if you add a big new car payment, even with the lower fill-up costs?
Here's another phenomenally bad idea (as a "worst resort", according to Ms. Hobson): ask a friend to cosign a loan for you! That's a great idea if you want to lose a friend, but not a smart idea otherwise.
And this idea, in the same vein, did make it to the article:
It may sound crazy, but now may be good time to entertain a loan from friends or family. That's an option you should leave on the table. If you do that, it's extraordinarily important to document it, because that protects both parties and helps preserve the relationship in the event of a problem.
Yes, Ms. Hobson said this should only be done "in a pinch", but even with everything documented, you have the loan hanging over your head. It will change your family dynamic, and not in a good way.
(By the way, the segment just before on the same show was entitled "How to Keep Your Money Safe". Here's my advice: don't watch "Good Morning America".)
EDIT: That didn't take long...they changed the title to "Panicking? See How to Protect Your Money". Well, for starters, stop borrowing it from other people!
Sure, Dave Ramsey has been seen in places from CBS News to Oprah, and he certainly doesn't need the scant attention he'll get from my site, but everyone, particularly those interested in a quaint, forgotten concept called fiscal responsibility, needs to check out Bethany's profile of him.
Sure, it's not the usual Vent one would see over there, but this definitely has a more practical application, as most people I know (myself included, as I am a somewhat successful graduate of Dave Ramsey's Financial Peace University) do better when they remember to live within their means. Too bad the federal government hasn't figured out how to do that...
