Why punish the rich for good choices?

Minneapolis Star Tribune ^ | 12/3/05 | Gregg J. Cavanagh

[rhema]

After reading the Socialist claptrap "Wondering if tax ride goes too easy on rich" (Nov. 20), I was left wondering if I should cancel my subscription to the Star Tribune. I decided to write a rejoinder instead.

Those in favor of soaking the rich cite "ability to pay" as if it were some immutable characteristic, like race or eye color. After all, if someone was lucky enough to be born with more "ability to pay," why shouldn't he or she share with the rest of us poor schlubs who were born without that attribute?

This attitude is fostered by the media's fixation upon the so-called "idle rich" -- those who acquired their wealth through the fortuity of birth. While I question society's claim on the assets of even those people, I can at least understand a philosophy that favors some redistribution of wealth to ameliorate the effects of truly random events.

But for most wealthy people (a class to which I do not belong), their "ability to pay" is the direct result of choices they made throughout their lives. They invested years in getting an education while others settled for entry-level jobs straight out of high school. They worked nights and weekends while others were enjoying happy hour or spending time on the golf course. They saved their earnings while others were buying new cars or big screen TVs or stereos. They invested their savings in start-up businesses or inventions or property or stocks. They steered clear of the temptations of alcohol, drugs, gambling and crime.

Could someone please articulate for me the moral principle that dictates that persons who study harder, work harder, relax less, save more, spend less and invest more should be compelled by government to give their earnings to persons who do precisely the opposite?

[speekinout]

I've always been a fan of the "sleep well" strategy of money management.
This matters to your wife, and there are financial experts who would approve.

So, logic would say that you sleep well with the decision to pay off the mortgage. Sounds right to me.

[speekinout]

Your situation may well be different than the ones I know about. I'm thinking about a relative who had paid the mortgage down to almost nothing. She had a lot of equity, but almost no cash. The property taxes and insurance were high (more than the mortgage payment, for sure).
You have to pay the taxes and insurance.

My relative lost her job, and had trouble getting another one. She had a lot of equity, but couldn't refinance, and had no funds to pay the taxes or insurance.

Your home is not secure unless you know how you can pay the taxes and insurance. Just paying off the mortgage is not enough.

[mr_hammer]

Like I said, you need at least 6mo worth of cash or some form of it to make it past life's curve balls. An open line of credit can also get you by the rough spots also, so long as you don't abuse it for frivolous purposes.

[speekinout]

I agree about the 6 mos. worth of cash. I'm not so sure about the credit line.
The 6 mos. of cash should cover all expenses. A credit line is a track to disaster. Medical insurance is a better idea than credit.

[SQUID]

That's all I was sayin' Susie. I guess some people here thought that was a bad thing to say.

[SQUID]

I think you need anger management.

[Pukin Dog]

I think you need a class in reading comprehension.

[B4Ranch]

What is obvious to some must be pointed out to others. I'll give her credit for stopping the bad habits.

[B4Ranch]

If you have a 100k cash today and aren't a millionaire in 6 or 7 years kick yourself for not asking successful investors how to do it.

[B4Ranch]

WHO ARE THESE PEOPLE?

Nearly 11 million households are the wealthiest 10% of all U.S. households in net worth with:

Minimum net worth of $750,000
Average net worth of $2.7 million
Average income of $270,000
Earn nearly 40% of the total income of all Americans
Own 65% of the personal assets of all U.S. households


Source: American Affluence Research Center

---

Aggressive investors if they are under 40, that's who. People who think and ask lots of questions before they invest, that's who. Getting 2nd, 3rd and 4th opinions about when to pull out of an investment, then listening to what they are told, that's who.

I have friends who buy stocks during the annual October crash every year and in 3 months make more money than most folks do in a year. Of course they have studied the economic flows of the quarter intensively.

I was taught to: Never be satisfied with a 10 or 15 percent return when there is a 25 or 30 percent one available. Never invest 100% in anything unless you are willing to follow it 24/7. When you start to tire pull out and go to something that doesn't require so much effort.

[Dawsonville_Doc]

If you have a 100k cash today and aren't a millionaire in 6 or 7 years kick yourself for not asking successful investors how to do it.

Alright, give me $100,000. Cash. I'll get back to you in 7 years.

The last $900,000 is the easy part. It's that first $100,000 you so casually refer to that's hard.

[Dan Evans]

Generally, restaurant workers are proud of their food and work hard to make it a pleasant experience (so they can get good tips).

A guy I once worked for was a lousy tipper but he fancied himself as some kind of gourmet. Anyway, every single time we had dinner or lunch with him there was some kind of problem. They got his order wrong or soup was spilled or something worse. I suspect the staff had his picture posted in the kitchen.

[B4Ranch]

You are in your mid 30's, correct? If you don't have 100k by now, slow down your spending by 50% and start living like you mean to attain some assets. Become really aggressive now because you won't want to later on.

When I say "slow down your spending by 50%" I mean move to a much smaller home, one that you will have no problem financing the mortgage, property taxes, maintenance, etc. Buy an older car that has cheaper insurance rates and you can pay cash for. Toss the cell phone if your bill is more $30 a month. Get off the TV cable system. Do you drink beer? Give up drinking and you'd be surprised what that'll do for your wallet in 5 years.

Yeah, live like you are broke, flat a-- broke for 5 years and you'll have your $100k, then 6 or 7 years later you'll be a millionaire. And 5 years later you'll have double that. Then retire and have some fun.