The Savings-Rate Myth (Bogus assumptions based on a bogus government statistic)

NRO Financial ^ | Dec 23, 2004 | John E. Tamny

[conservative physics]

well it's a horror to the government who would like to TAX your savings :)

I have gone from nearly nothing to a multimillionaire in the last 12 years and haven't really paid all that much in Federal taxes during that time. This is because I made all my money in real estate and put every spare dime into purchasing additional properties. Even when I sell a property I just roll the profits into the next one, avoiding taxation... I can also use the equity that I've built up as collateral to purchase additional units negating the need to sell to get needed cash.

During all these years I've rarely had much more than it would take to pay my property taxes in the bank at any one time... so by the way the government figures it, I have saved little to nothing in the past 12 years!

[x5452]

Interestingly do you consider your car to be savings?

[x5452]

Is that a bad thing? Should not the governments numbers be conservative in this case? Creative accounting for 'savings' and 'assets' in the late 90s sort of blew up in everyone's faces.

[bpjam]

And the one huge, monsterous, gigantic, overwhelming important word these government eggheads left out: Primary Residence!!!! Hello, most homeowners in the country have seen a dramatic increase in the value of their home. That is SAVINGS if you don't sell it.

[Toddsterpatriot]

Liberalizing the definition of savings is a stupid idea that will drive the country further into debt.

How is counting 401k and IRA contributions "liberalizing" the definition of savings? If capital gains taxes are subtracted from savings how is adding the capital gain "liberalizing" the definition of savings?

It's bad enough that idiots like yourself call your car savings without convincing everyone to do so.

No one called a car savings. It's idiots like you who claimed a car isn't an asset.

[Auntie Dem]

One thing this article missed was how most of the LSM lament how our savings pale when compared to other countries. They neglect to mention the "savers" in those other countries mostly don't own their own homes, and have ZERO equity therefrom.

Maybe they have $100,000 in the bank drawing a whopping 2% interest, but compare that with the $200,000 equity I have in my house, which will be $250,000 next year, then $300,000 and so on. That's how I'm funding my retirement. (And I pay ZERO taxes on that appreciation and equity)

[x5452]

For purposes of applying for a loan it is useful to call a car an asset. For purposes of planning one's retirement it should not even be pondered. Quit falsifying my point.

Further IRA and 401k contributions can go up or down. It is foolish to count them as savings because they are not 'money in the bank'. The day before Enron revealed its behavior all it's employees were certain they had great 'savings' for retirement. That saving the next day was worthless. Promoting that rationale and basing government policy on volatile 'savings' is stupid.

[sitetest]

Dear x5452,

I missed the post where someone called his car "savings."

Could you point it out?

Thanks,


sitetest

[1rudeboy]

Could you please direct me to where Toddsterpatriot called a car "savings?" Thanks in advance.

[Paradox]

I hate to be a fence sitter, but I believe both of the analyses are pertinent. One provides some perspective to the other.

Now both y'all calm down and be nice :)

[conservative physics]

A car is a depreciating asset... and although VERY necessary is one of the worst investments a person can make... BUT it does have a set value at any one point in time and assuming you owe less than it's worth, it is an asset you could sell to come up with needed cash, but I wouldn't consider it a form of savings since in almost all cases it's a loosing investment.

[Toddsterpatriot]

For purposes of applying for a loan it is useful to call a car an asset. For purposes of planning one's retirement it should not even be pondered.

Who pondered that?

Quit falsifying my point.

You had a point?

Further IRA and 401k contributions can go up or down. It is foolish to count them as savings because they are not 'money in the bank'.

Some 401k money is in money market accounts. Can we count that as money in the bank?

[x5452]

http://www.freerepublic.com/focus/f-news/1568643/posts?q=1&&page=151#188

[x5452]

I do not find it to be pertinent, 1 it would require invasive legislation, 2 it would tell a room full of legislators with no required accounting experience that all contributions are 'savings'. Considering the way they treat Social Security 'savings' I think that'd be quite dangerous.

[Toddsterpatriot]

Thanks for a link to where I called a car an asset. Would you like some links where you said a car was not an asset?

[1rudeboy]

Your link points to the following:

"That's right. Cars are never assets. Only rental property."

So let me be the first to ask, what's your major malfunction?

[x5452]

So you'd agree that when planning on's financial future that regarding the car as more or less a wash financially is better than carefully calculating it's apparent value?

Personally I think it's distracting to the point to get into assets with as little and declining value.

Depending on one's home, and the finances involved I'd say the same can apply to a live-in home, although there is certainly more ability to examine that balance sheet to see if it's a positive or negative.

That is my objection to counting these sorts of assets as 'savings'.

[x5452]

Don't clip his post. He tried to infer that all cars could latter be sold for 50 million dollars.

[1rudeboy]

Can you give me a summary of this whole car as savings thing? Is this one of those "doom and gloomer arguing with a notion that exists only in his imagination" occasions?

[1rudeboy]

Don't clip your argument, silly. Where, when, and how did T argue that a car is "savings?"