Debt can destroy any dreams you have of a financially independent future. That is why it is so important to reduce debt and even maintain a relatively high credit score.Debt is and of itself isn’t the entire problem. Excessive debt is a drag on wealth creation, but what debt does to the household budget is even more damaging than the original debt itself.And debt can sneak up on anyone. Student loans, medical bills, job loss or a failed business venture can turn a bad situation into a nightmare even bankruptcy can’t deliver you from.Once calamity strikes it is near impossible to shake the effects in every financial aspect of your life. A medical issue or mounting student loans can lower your FICO score which leads to higher costs in almost every other area of your life. Auto and homeowners insurance rates are higher for those with lower FICO scores. Many landlords refuse to rent to people with a FICO score below a certain level or charge a higher rent.Read More
Healthcare is taking center stage once again as the political arena heats up. This will not be a political treatise. Instead, we will focus on the long-term problems in the U.S. healthcare system and potential solution to be found in the tax code.Medicare for all is something that appeals to me. When the politics are stripped there is a lot to like in the idea of expanding Medicare to everyone. Currently about half the people get some form of Medicare benefit. The old, very young and poor qualify for the Medicare program. Unfortunately, the Medicare system is set up backwards. The people who pay for it are not the people receiving benefits and the people receiving benefits don’t pay for it (with the exception of people age 65 and older).Even the elderly who pay a Medicare premium for some parts of the program are still subsidized by those earning a wage or salary, the very people who don’t qualify for benefits. The inefficiency of the U.S medical system has created the most expensive healthcare system in the world by far with sub-par results. For most illnesses it is better to travel for treatment if you want better odds at living.Read More
Frequently we look for political solutions to income inequality and the wealth gap. While the issues can be improved slightly from political action, there are two additional ways to close the wealth gap and level income.
Politics is the messiest way to fix these problems and history offers ample warning for those who seek answers from this source. One need not look further than Mao’s China or Stalin’s Russia to see how abysmal political leveling can be. North Korea is a modern example of how not to level the playing field.
Let’s turn our attention to the second way income inequality can be reduced. Walter Scheidel in his book The Great Leveler provides what he calls the “Four Horsemen” of leveling: war, revolution, collapse and plague. Historically these four horsemen have been the leading cause of leveling income and wealth.
Once again this is not a comforting thought. You can read Scheidel’s work for an in-depth review of his research. The record is clear, however; it takes great dislocation, pain, suffering and death for income and wealth to level naturally.Read More
It was late May of 2015 when a wayward accountant from the backwoods of Nowhere, Wisconsin traveled to Cascadia. Tucked away in the Washington State foothills stood the Rainbow Lodge where a nondescript gathering of devoted followers of the emerging Mustachian movement were preparing for Camp Mustache II. This was our hero’s destination.
The goal of our accountant was to meet the Great One, Mr. Money Mustache himself, Pete Adeney, and present him with a business offer.
The wayward accountant had a game plan. Since Pete had no idea who this crazy guy was he needed to build rapport before springing his devious plan on the unsuspecting celebrity. He had four days to build this rapport, present his offer and seal the deal. The pressure was on!
Since our hero was already attending the event he figured he could volunteer to give a short tax presentation. And wouldn’t you know it, the Big Guy attended the session and sat right in front of him, no more than five feet away!Read More
When the Western economic world collapsed in 2008 there was only one beacon of light: China.
For decades China has grown at nose-bleed speeds and looked like an unstoppable economic miracle. Now the foundations of that miracle are exposed and the house of cards is in peril. Shadow banks and ghost cities are only the tip of the ice berg.
Speculation over the years of fudged official economic numbers coming out of Beijing is starting to haunt the government there. As 2018 came to a close the government reported the slowest growth in 28 years. This was still a bit north of 6%.
Unfortunately, these slower growth numbers are probably a wildly exaggerated lie. Recently, a former chief economist for the Agricultural Bank of China mentioned a report that two recent studies show China’s economy growing at a mere 1.67% and another showing the economy actually declined.Read More
Blogging is a business. Sometimes it’s hard to believe, but it is true. Along with podcasting, speaking and every other form of training and education, blogging is a business. Sometimes a really big business. And businesses take work to manage and grow.
It is easy to forget that those friendly bloggers you communicate with work some serious hours to bring you information and perhaps a laugh or two. Most people don’t realize bloggers are sweating it out at the keyboard in the wee hours of the morning to get a post out on schedule.
And then there is the invisible work. It seems like blogging is about the cheapest hobby going until you realize that every part of the platform demands a fee and usually loads of time. And that is where this blogger enters.
I originally planned a detailed post of the coming collapse of China when the IRS released another 249 pages of regulations on Section 199A. The ink wasn’t dry before the calls flooded in for a brief post on the IRS release. The good news is we finally have a definition for a trade or business as it applies to 199A. The bad news is those 249 pages contained a lot of material and one simple post wasn’t going to cut it. A series was in process before the next hammer fell.Read More
Retirement, or at least the ability to to live a hedonistic lifestyle, appeals to many people. Age has nothing to do with it. Punching a clock working for the man get old real fast when you don’t have perspective. Until you realize how useless life becomes when you spend each day creating no value and have no real reason to live. Then the job looks more appealing. Or starting a business. In either case you get real interaction with people on a similar mission and it brings the spice back to life. (Redditors, fire up your engines!)
But I contend, as I often have in this blog, that retirement had nothing to do with the FIRE movement. It was never about retirement; that was the dream sold to get victims in the door. FIRE has always been about wealth, about independence and freedom. People never wanted to be retired like and old worn out machine. They wanted meaningful activities. Financial independence allows the freedom to choose and that is what people really wanted all along.Read More
My grandfather always had a saying that has stuck with me: Never take off the pile. Granddad was an old farm boy living the dream in the backwoods of Nowhere, Wisconsin. He lost the farm in the farm crisis of the early 1980s and then rebuilt his fortune doing nothing more than saving a serious portion of all his income. Most money was only deposited in bank accounts. And he still managed to re-grow his liquid net worth well into the seven figures starting over from an old age.
The corpus of your investments, that original seed money, is sacred. If you never touch the sacred you will always be safe! The income stream keeps growing larger with time. Dividends reinvest to earn more dividends. You don’t need a pension when you have one far safer.Read More