Economic Immunity

With all of the panic driven market changes of late and the government takeover of much of the financial sector many people are worrying about their financial futures. Analysts are having to change their predictions about the future of the economy on an almost daily basis and usually not in a positive way. There are two ways for certain to come away from this economic meltdown unscathed. There are plenty of other possibilities as well but these two are certain. One is that you could be the CEO of one of these corporations that you ran into the ground and made off with millions from. In that case you are probably in pretty good shape yet. The other certain way to ride out the economic storm unscathed is to be self-sufficient

My regular readers have seen me write about self-sufficiency in the past and it dawned on me the other day that if someone was self-sufficient then all of this stuff that is going on would barely even register in their lives. Take for example the Amish, they are certainly not 100% self-sufficient but they are probably about as close as anyone in America. You know, except for some crazy cults living in the mountains somewhere I suppose. I searched the internet for articles discussing the economic downturn and it's affect on Amish communities. You know what I couldn't find a single article. The reason that they are unaffected is because they don't have mortgages, they don't have money in the stock market, and they don't have much use for oil. They grow their own food and make their own clothes. So there are lessons we can learn from the Amish.

As I've discussed in the past, I am very inconsistent in my approach to self-sufficiency. The other day I had to come to terms with the reality that my house is not located somewhere where micro-hydroelectric was an option. Wind probably wouldn't be very effective for me. And a solar system is well outside of my price range. But I also realized that I spend much more on food in a year than I do on electricity, we won't even discuss how much I spend on heating oil in a year. Though we do grow a very small percentage of our food, if we were to increase that amount a good deal then we would gain a certain level of immunity to world economic issues.

Food prices skyrocketing? Not a problem. Another tainted vegetable scare? That's okay. Can't afford the gas to drive to the grocery store? Hey no big deal, there's food right outside the door. I have no delusions of ever being 100% self-sufficient but I can build myself a layer of protection from the world's economic woes by taking steps in that direction. And you can too, maybe you don't have the room to grow much food (although converting your yard into a garden would be a much better use of space) but perhaps you could generate your own electricity and know that even if you lose your job in all this mess, at least the lights will stay on.

Sound Investments

A lot of people have been losing great sums of money on the stock market lately and I don't think that things will stabilize for quite some time yet. Me personally, I have nothing invested in the stock market and I'm quite glad of that at the moment. That being said, I am not offering financial advice on investments to anyone reading this but I will say what I would invest in were it me. Right now I wouldn't put anything into the stock market, not until things settle down a little bit. But if I was intent on investing something into the market there are some areas I would look at.

First I would stay far away from any corporations that derive most of their income from hardgoods and/or services. When things get really bad in the economy people are going to spend less money on gadgets and material things and will be less apt to pay someone for technical or financial services.

What I would look at are corporations that deal largely with consumables. People don't need a new computer but they do need to eat. Food manufacturers, grocery chains, and pet store chains are what I would look at. I'm not saying I expect these corporations to show big gains but I expect them to be more stable than much of the rest of the market.

Energy is another area to look at. A barrel of oil is way down in price and could continue to drop. Nothing has really changed in the stability of the energy market though which means we could be just one natural disaster, one crazy dictator, or one terrorist attack away from higher oil prices again. It's a bleak way to look at things but for the long term I believe energy is still a decent place to invest.

Again, these are just my thoughts on where I might put my money if I was so inclined. Right now though I'm not investing in anything. Things need to stabilize a bit first for me.

The Death of Capitalism

During these past couple of weeks we've seen the United States government pouring countless billions of dollars into failing corporations in order to keep them alive, and all of that money is coming out of the taxpayers' pockets. And thanks to the government printing billions in extra money, what little money individuals have left is now going to be worth less than it was before all of this began. No one in Washington can truly claim innocence in this. The Democrats have received hundreds of thousands of dollars from these companies that are filled with fraud. The Republicans are going right along with all of this, including the President who at this point appears to have no fight left in him after 8 years of democrat and media attacks. He has endorsed this broad move toward socialism just like everyone else.

Imagine for a minute that the federal government is a farmer. And this farmer has a bunch of pigs. Now a few of these pigs are extremely old, flabby and pretty much immobile and have nothing useful to still contribute to the farm. But the farmer has been friends with these old pigs for quite sometime and so when they start dieing of natural causes the farmer starts taking food away from the young healthy pigs in order to keep the dieing ones alive. And pretty soon all that the farmer has left is old fat useless pigs that aren't good for anything but he's got no money and no room left for any new pigs to be born. The rest of the people in the town are angry and hungry and poor now because the farmer raised the prices on everything to support his friends the pigs. Stupid farmer.

This is where we find ourselves in America. Capitalism used to be about succeeding and failing on your own merit. Companies would fall apart and die and a new more nimble start up company would take their place. They might do things the exact same way but because they don't have decades of corporate bureaucracy and corruption built up inside the walls they are able to function more efficiently. Now the government isn't letting any of the old pigs die, no matter how corrupt and poorly run they are.

I am tired of having politicians tell me that it will hurt the economy too much if these companies fail. How is spending billions in taxpayer money helping the economy? If they really cared about helping the economy there are simple solutions. All those mortgages held by Fanny Mae and Freddie Mac? They should have just canceled them all. What would have happened if all those homeowners suddenly just owned their house without a mortgage? How would millions of people having $500-1000 a month of extra cash have been bad for the economy? Fanny Mae and Freddy Mac were corrupt corporate giants that deserved to die. Ask any of those homeowners if they feel the economy is better now that the government is holding the money that backs their mortgage.

If the other financial institutions that have been in trouble this past week had been allowed to die after running their natural course a new company would have taken their place. One that would likely be able to do the same job with much lower costs and therefore show higher profits which would have resulted in more tax income not tax money being spent to keep them going.

As someone who does not have tens of the thousands of dollars of debt (in spite of making a lot less money than many who do have that kind of debt), and as someone who did not buy a house I couldn't afford, and as someone who is not running a corrupt corporation, I fail to see how all of this government spending, inflation, and rise of socialism is good for the economy in any stretch of the imagination. Will someone in Washington please start to take Ron Paul seriously? He seems to be the only one who has any concept of how the economy works.

How Will You Be Paying for That?

There I was in the express checkout at Wal-Mart. 10 Items or Less. In front of me in line was a middle-aged woman who waited until all her items were scanned and then pulled out her checkbook. Meticulously wrote the information down in the check register and then began filling out the check. Meanwhile the line in the express checkout was growing and tempers were rising. I'm sure this has happened to all of us. Grocery stores should not allow checks in the express checkout lanes if they should be allowed at all.

I've been wanting to write this article for awhile and finally fit it into the schedule. I wanted to create an article examining the three main forms of payment accepted at retailers and discuss the benefits and drawbacks of each because it seems that many Americans are ignorant of what the differences between checks, cash, and credit/debit mean to them.

Credit/Debit Cards - Over the last couple years Visa has run a number of commercials that portray using cash as much slower than using credit and the undertone of the commercials is that the person using cash is somehow not cool and dumber than everyone using credit. So let's dive into this a little bit. With credit cards you are spending money that you don't have and if you don't pay it off on time you will be paying terrible interest rates and the things you purchased will cost you more than the price you originally paid. Using debit cards means you are spending directly from your bank account and in some sense that is better than going into debt with a credit card. Thinking about security concerns though if your credit card gets stolen you are often not liable for fraudulent charges depending on your credit card company but with a debit card a person can pull your money from your bank account. That's a bit more serious. As for Visa's ads about credit cards being so much faster than cash. As someone who works in retail I can tell you that an overwhelming majority of the time credit/debit takes longer than cash. Additionally the recent advent of touchpay systems further strips away security features on credit cards because the cards themselves emit a radio frequency that can be captured by someone holding a device near your purse or wallet.

Checks - Other than for paying bills, most of which can be paid online, checks are an outdated method of payment that should be done away with in my opinion. No form of payment in stores takes longer to complete. With so much concern about identity theft it amazes me that people still write checks so much and women are the ones who still use checks at retail, almost universally. Think about the information on your check: Your bank account, bank routing number, name, address, and in some cases your phone number. Some people are even brainless enough to include their driver's license number on there as well. Every time you write a check at a store you are placing an awful lot of trust in that cashier that is only making minimum wage.

Cash - Cash is the oldest, usually the fastest and still the most secure form of payment. There are exceptions to it being the fastest of course. I remember another time I was in an express checkout lane at Wal-Mart and the cashier was an elderly lady in her seventies at least and the customer at the checkout was a lady about the same age. The customer paid for the entire purchase with loose change. Between the two of them it took about ten attempts to count it all out accurately. These situations are rare however. The only real drawback of cash is it can't be used to pay for things online, that is until our computers start coming with cash slots built into them like vending machines.

The thing that I really love about cash though is the security of it. You can spend it wherever you like and none of it is personally identifiable to you. I've heard people say that they don't like carrying cash in case they get robbed. Really? I would much rather lose $100 in cash than lose a debit card that is linked to however much is in my bank account. Even if I manage to cancel the card before any damage is done, the theoretical mugger still has my full name and that is something he wouldn't get from cash.

So there you have it. Quit using checks and don't buy into the lie that credit is better than cash.

The 10 Or Less Commute

For the past five years I've worked more than 20 miles from where I live. During that time the cost of gas has gone up about 400% but surprisingly enough my income has not gone up 400% during that same time period. So it continually costs me more money to get to work but I'm not getting paid anymore to keep pace with runaway gas prices.

Politicians have become very fond of saying that something needs done about the gas prices and then blaming the oil companies for the problem. Ultimately nothing changes because it is the politicians who are keeping gas prices high. They will pretend to care and throw blame at the oil companies but the reason for high gas prices is because they are the ones that won't allow any new drilling for oil. We have more than enough oil underneath American soil to support ourselves but the politicians won't let us get at it. Call your congressman and ask them why.

I don't hold much hope that anything positive will happen with gas prices any time in the near future but I think there is something that we can do to help ourselves. That is to stop commuting so far to work. Not only do long commutes take time away from your home life but they also kill you financially. I'm proposing to start a campaign called "10 Or Less." The premise of it is to try and commit to a ten mile or less commute from your home to where you work.

Much of working class America already falls into this category already but there are far too many of us who don't. Changing your commute time has some very big implications for your life. If you are currently on a long commute then one of the following situations would have to happen for you to change this: 1. A new job - sometimes this can be hard depending on your career and geographic location. 2. A new home closer to job opportunities - also life altering and a bit drastic. 3. Getting your boss to let you work from home – great if you can pull it off.

Consider for a moment some of the potential side effects of a short commute. Less money wasted on gas, less time away from your family, less wear and tear on your car. Once you are working closer to home other transportation options open up to you. Like public transportation or a scooter. Scooters get up to 90 MPG and only cost about $1000 brand new!

I am trying my best to accomplish the 10 Or Less commitment in my own life and maybe it's something that could work for you as well. I'm not fond of telling people how to live their lives but I am very fond of people who make smart decisions to better their lives.