Posted on 11/20/2012 10:24:01 AM PST by 4everontheRight
I heard recently that a lot of "wealthy" Americans are selling off their wealth. I am not by any means "wealthy" but really, what does that mean? Government wealthy? Own my own home wealthy? Just wondered what FReepers are doing? Selling? Buying?
You don’t pay tax on a 401k, in fact you get to deduct 401k contributions from your taxable income.
Going Galt. Family stopped exchanging Xmas gifts years ago (we play games and build up a “pot”...winnings go to a selected conservative charity).
Sold home months ago to move to Detroit for job (had to...didn’t want to...hate it here)...enjoying renting actually. But keeping family cottage for retreat and stocking it well. Making plans with family in case of several scenarios. Just finishing paying daughter’s college education so neither of us has debt from that :)
Trying to enjoy the little things and learning all about prepping....didn’t start in new company’s 401k...am paying off remainder of debt first..want to be able to move on moment’s notice.
I am not an economist. Any here? I’m trying to figure some of this out.
The federal government receives money from taxes. They do sell a few things, but not much. So, they borrow money to make up the difference between what they take in for taxes and what they pay out. How do they borrow this money? I have some vague idea of how all this works, but I would like to be sure, and I’m no expert.
If you are close to retirement, you may want to consider an annuity fund. If you have a few years left - say 10 or more years before retirement, you may want to consider purchasing the least expensive house you can find in a good area. Then use some of the funds to clean up / repair and update the house. From there you can find a rental agency to rent the house for you.
Those that take that path, expect a 1% return on their money each month. So if you assume 120,000 is spent on the house, you should expect to see a rent somewhere around $1,200 per month. Check with your local rental management companies first to see if your area is able to support that level of payment.
Monthly funds should first be used to pay off high interest debt. After that is paid off, save up the monthly payments to eventually purchase a second house. Rinse, Repeat
This slow but sure plan will often result in a housing portfolio worth 400k to 500k in 20 years with no debt. Further, you will have about 4,000 per month of income to retire on with no debt.
A little surprise for the black-helicopter boys.
I’ve been working very hard to scrape together about $20 for seeds this spring. That’s the extend of my spending money.
Well - my plan after the election was to go galt. Had a very interesting life changing event crop up, and decided to come off the Galt. Time will tell if that was the right decision.
What money?
I agree with you. I have money invested through NY Life. It’s just sitting. I own my home, drive a 12 year old truck, pay all bills on time in full every time. Fortunately I don’t need to dip into savings now so I’m content to sit out the situation.
I swept about another 25% of my chips off the table. I’m waiting out the storm with about 50% of my assets in high and dry cash and cash-like equivalents.
Stocks have and will continue to tank. Interest rates will skyrocket in a few minutes someday, killing long bonds. There is no safe harbor.
There is no wealth creation, anywhere in the world.
This is just plain ugly.
How do you escape a World Wide Wealth and Productivity Collapse?
Been thinking about one of those too and using it as a vacation property when no one is there.
I didn’t have any money befor the election and I don’t have any now, so, I’m doing the same thing - nuttin. lol
What made you want to step back into the dragon’s mouth? (If I may be so bold as to ask?)
Making a strategic withdral from IRA to get almost debt free, and facilitate selling our house to downsize both from a size and cash flow perspective.
Spending time learning more in the way of prepping and SHTF survival information. Working on modifications and additions to our RV equipment that make our rig have bug-out capability.
Basically, I am moving to a lightweight Galt-ette and Prepper-ette existence with the option to ramp up more in response to events. I am exposed for a sudden collapse but believe if it does happen, it would probably be a slow burn more than a flash.
” I have 401ks”
For now.
OBAMA BEGINS PUSH TO CONFISCATE IRA’S & 401K’S
http://www.silverdoctors.com/obama-begins-push-to-confiscate-iras-401ks/
With luck Pelosi and Obama won't decide that since you are content to just sit on your savings, you don't need them nearly as much as, say, a Yemeni peasant does...
With luck Pelosi and Obama won't decide that since you are content to just sit on your savings, you don't need them nearly as much as, say, a Yemeni peasant does...
A woman, and that’s all I’ll say. :)
Like I said, I don’t know how it’s all going to work out, but for now I’m off the Galt. If it doesn’t work out, I’ll be back on. If it does, then I’ll have plenty of other responsibilities. :)
No, but I did stay at a Holiday Inn Express last night.
So, they borrow money to make up the difference between what they take in for taxes and what they pay out. How do they borrow this money?
Normally, they borrow money by selling treasury bonds. However, the interest offered on these bonds is subject to the law of supply and demand, meaning that in order for anyone to attract $1.5 trillion of investment in T-bills on the world market in a single year, one would have to set interest rates accordingly. So one would be looking at interest rates of around 20% in order to raise that much capital. Repeating that scenario four years in a row makes it even worse.
Yet what we see are interest rates below 3% for those same notes, which means that the government is not actually borrowing this money. Instead, they are simply printing it. That's what 'quantitative easing' is all about. The Fed expands the money supply for the sole purpose of financing government deficits so that interest rates can remain low. The problem now is that interest rates are below the rate of inflation which makes these bonds a very poor investment. So the government prints even more money because no one is purchasing treasury bonds.
Meanwhile, the government gets the tax increase it always wanted without having to change tax rates. Let's say the government increases the money supply by 25%. This results in a 20% devaluation of the currency. So your net worth decreases by 20% while the government gains access to some 'free' money.
Here's a couple of videos that will make it easier to understand:
http://www.youtube.com/watch?v=PTUY16CkS-k
http://www.youtube.com/watch?v=oGIvw7T0GPI
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