Posted on 09/21/2005 6:35:44 AM PDT by Maria S
Savings in a 401K (which could be bonds, stocks, etc). You give someone money and they give you a reward for using that money. BUT YOU PAY A HEAVY PENALTY FOR ACCESSING THE MONEY BEFORE IT'S 'DUE', AND YOU DAMAGE YOUR RETIREMENT INVESTMENTS BY TAKING MONEY INTENDED FOR LONG TERM INVESTMENT AND USING IT FOR IMMEDIATE NEEDS.
Get the difference? It's not insignificant
So you are saying that someone who puts 2% of his pay in a passbook account at 1.3% interest is a better "saver" than someone who puts 17% of his pay in his 401k (in a mix of stocks and bonds)?
Prices for presold lots in a brand-new exurban subdivision will collapse.
But prices for existing homes in established suburbs and city neighborhoods will probably hold up quite well.
No. I'm saying the prudent person does BOTH. It doesn't have to be just passbook savings. I also use cds, which got about 3% this past year. The DOW has grown 4% this year, so I don't think I've missed out on much. And I put 20% in the 401K. I do both.
Not to quibble, but you CAN borrow against a 401K, under most plans, anyhow.
Of course you have to pay the going interest rate, which as of late has been relatively cheap, around 5-6 percent.
My son borrowed against his 401K recently (around $1,000) when he needed money to move, and he paid it back several months later.
Although I wouldn't advise it for most people, it came in handy for him.
What other items did Brinker say are not included? Here is a link to the BLS website and how the CPI is calculated.
Scroll down to item #7 for a breakdown of what's included. It's pretty thorough. I'm wary, to a certain degree, of government supplied information however, I seriously doubt that Brinker, or your local observations for that matter, know more than the bond market.
that is not a NEW vehicle. I bought a saturn with leather upholster, CD am/fm air power steering and so forth, but not new for 5500.00
You said a basic passenger vehicle. Last I checked, a basic passenger vehicle doesn't have to be new. Paying the additional cost of a new car is elective, not necessary.
I just cannot believe that the homes are going for as much as they are. There are a ton of people investing in Real Estate who know absolutely nothing about it. Carlton Sheets is no help on this one.
A UCLA economist is saying because of this trend, he expects the bubble to burst. For myself, I won't lose, but for many people, It is unfortunate.
Housing is savings if, in fact, the purpose of your savings is to buy a house. Either way, it's an asset.
I'm in the same boat. Bought 98 saturn 5500.00 Sure saves on the insurance and so forth. Raising two kids, can't keep affording that cost like that.
PT cruiser is a cool vehicle I hope you're happy with it.
I was referring to the cost of a new car in my statement too.
I love the cruiser. it was an ordeal finding something; i just had back surgery last spring, and i needed a certain kind of ride and seat to be comfortable. it's really worked out and i can't believe how much i like it. they are very affordable too. like your screen name, btw. so true.
Or the new tax law (passed in '97?) allowing for large tax free earnings on home equity. I have to think that had a big impact on money flowing into real estate rather than traditional savings. It would be pretty difficult - and take a long time - for my wife and I to earn $500,000 tax free in the equities market or in traditional savings.
You are partly correct. The National Association of Realtors has reported that 36 percent of homes sold in 2004 were second homes. Of those, 64 percent were for investment purposes."
Ok, now let's look at the facts from that report:
36% of homes sold were for second homes. This means that 64% were NOT second homes but single home purchases. Then it says that of the 36% that are second home purchases, 64% of those are for investment purposes. How is this bad? 64% of the 36% of second home purchases means just 23% of all homes purchased were for investment. So, 77% of all homes purchased are made by people to live in. How this is construed to mean there is a bubble - when looking at the big picture - is dumb founding. What this means is that American's have a lot of wealth and are using it to purchase second homes for rental income, retirement, vacations and yes, speculation.
You may find this scary but it's nothing more than a result of the incredible wealth generated by our economy.
70% of Americans live paycheck to paycheck.- Scary
Wherever did you get this number? You do scare easily, don't you?
http://www.mdmproofing.com/iym/brokethink.shtml
http://www.metlife.com/Applications/Corporate/WPS/CDA/PageGenerator/0,1674,P250%257ES649,00.html
http://www.inspiredfinancialconsulting.com/default.html
http://www.financialfreedomcoaching.net/snapshot.htm
"Did you bother to read this crap carefully?"
Nope! I posted it just to annoy the crap out of those so much smarter than I. That's why I try to remember to always say "just my opinion; means nothing to anyone else".
Thanks for your insightful input.
Your simply wrong about that. The surplus took into account FICA tax surplus from Social Security. It was an accounting gimmick pure and simple! Here is the surplus lie in a better perspective
When will a politician in Washington have the honesty to admit that we do NOT have a REAL budget surplus? We only have the appearance of a budget surplus because of bookkeeping sleight-of-hand.
Many years ago, a decision was made to include the Social Security Trust Fund transactions within the Federal Budget. Since much more FICA tax is collected than is paid out in benefits, the positive net inflow into the Trust Fund helped offset the huge deficit in all other "accounts" in the Federal budget. This bookkeeping dishonestly helped hide the true growth of our huge national debt. It is, in fact, an "off-the-books" borrowing from the Social Security Trust Fund.
There is no REAL budget surplus until all the other (non-Trust Fund) accounts no longer run a deficit. It is time to separate the Social Security Trust Fund transactions from the Federal budget and reveal the actual deficit in the Federal budget. Then we would see the REAL federal budget surplus or deficit.
It is wonderful that the current budget is finally showing an "apparent" surplus. But lets not lie to ourselves. It is not a REAL surplus. The politicians should not buy votes by offering a tax reduction that will drastically increase the REAL deficit and the REAL debt that we pass on to our grandchildren. Neither should the politicians squander the apparent surplus on "pork barrel spending" with the same result.
Even if there were a REAL surplus, it should be used to repay the "off-the-books" borrowing before we allow politicians to use it to buy votes. When we finally repay all that "off-the-books" borrowing, we have to get to work on our National Debt. Do we really want to pass this huge burden on to our grandchildren?
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Prof. James T. LaTourrette
2 Candlewood Ct.
Huntington, NY 11743-1827
516-271-6763latour@rama.poly.edu
http://rama.poly.edu/~latour
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Professor LaTourrette is Professor Emeritus in the Department of Computer and Information Science at Polytechnic University. He retired in 1993 after a long career in industry and academia. (The views expressed are his own. The affiliation is mentioned only for identification purposes.)
It is wonderful that the current budget is finally showing an "apparent" surplus
Using the same accounting as today, there was a surplus. Today, it's far worse.
That was my point. You have these idiots buying rental properties not knowing if they can even cover the carrying costs or are going into the red as soon as a small increase in taxes or insurance costs happen. Forget about deabeat tenants.
Some fools think judges just throw people out immediately. Evicting someone takes months and usually with no payment of back rent.
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