Simple Home Finances

According to Wikipedia John Q. Public is a generic name in the United States to denote a hypothetical member of society deemed a “common man”. He is presumed to represent the randomly selected “man on the street.” For history buffs the term “John Q. Public” was the name of a character created by Vaughn Shoemaker, an editorial cartoonist for the Chicago Daily News, in 1922, later Jim Lange an editorial cartoonist for the Oklahoman was closely identified with a version of the John Q. Public character, whom he sometimes called “Mr. Voter”.

Today, though,  it seems that John Q. Public is dead and “the man on the street” is no longer a “common man”. The United States of America, though,  is still a “melting pot” taking us from many countries and languages into one country and one language as it says on our currency “E Pluribus Unum” which is accurately translated “Out of many, one“. It would seem we all should recognize we share common values and hopes.

What has happened to John Q. Public? Sometimes it’s funny how things work, because our politicians have taken the single common man we know as John Q. Public and made him into many! While our country effectively takes many and makes them one our politicians immediately take that one and make us into many but how? Well we all know the phrase “United we Stand, Divided we Fall” and when two or more politicians are vying for a majority of votes they find a way to divide us. So now old John Q. Public is divided by race, by creed, by gender, by age, by economic status and sexual orientation just to name but a few. So we have the Female Jane Q and the male John Q, the blue collar John Q and white collar John Q, the gray haired John Q and the youthful John Q, the liberal John Q and the conservative John Q and it goes on and on. So is there really a common man in the United States anymore? What do you think? We have all bought what the politicians have been selling us; none of us wants to believe we are common we all want to believe we are special. So the politicians make us into special interest groups and they pit one group against the other if you are blue collar then you’re different from the white collar, if you are old you different from the young and if your liberal you’re are different from the conservative! But lets get something very clear here we all are unique and in that regard we all are special but when you go to vote your vote is common, we each have one vote and our votes are all counted equally. This is where John Q Public stands out the most. We must recognize that we all are part of a larger community and as citizens we are all equal under the law. While our politicians these days largely act as if they are above the law they in fact are not. We would serve our country and ourselves better if we started focusing on our common values and hopes rather than are differences. In the end of the day we get what we vote for and if we vote for what is good for all we will get a government that is good for all.

John F. Kennedy was the 35^th president of the United Sates and in his inaugural address he made this now famous statement “And so, my fellow Americans: ask not what your country can do for you – ask what you can do for your country”. This is what we need to hear today our government is by and for the people! We must stop looking for handouts from our government and start doing what we can to make our country better right where we live! There is no better place to demonstrate this than in how we cast our votes!

What will we read in the papers and hear on news the day after the November 2 elections? That is anybodies guess at this point. But those who are newly elected to serve have a difficult task ahead of them. So what should we say to those who find themselves thrust into the spot light and the machine called the United States Federal Government? Well we can learn from the past, Abraham Lincoln said these word; “The difference between histories boldest accomplishments and its most staggering failures, is often simply the diligent will to persevere.” It would serve these new congressman well to understand that it will take a long time to turn things around, we are at the beginning of a long road back to the future and perseverance is required. Two key ingredients are necessary, first be Bold, Johann Wofgang von Goethe spoke these now famous words about Boldness; “Whatever you do, or dream you can, begin it. Boldness has genius and power and magic in it.” People want new idea’s, people want our leaders to be Bold there  is power and genius in it. We want Bold leadership! The second key ingredient is to be Unafraid, Franklin Delano Roosevelt once said these famous words during America’s darkest hour; “We have nothing to Fear but Fear itself”. There is much to fear, the media will doggedly pursue you and oppose your bold idea’s but pay no attention to them. The political party you are associated with will want you to rubber stamp their old idea’s but, you are there to bring change not to be part of the good ole boy network.

We are headed into uncharted territory; We are at War and will continue be so. We cannot spend more money so we must cut the costs of government. We need to get the economy moving and help small businesses which will require targeted tax cuts and deregulation. We need to restore confidence in our government and our economy so the health care bill needs to be repealed and a new health care bill needs to be put in place that actually reduces the costs of health care and increases access to health care without requiring States and Individuals to carry the cost burden. Social Security and Medicare need to be reformed or replaced and funded. We need to bring money and businesses back into our country so tax policy needs to change, we need to go to a flat income tax or a national consumption (sales) tax system. Either one will help the economy and bring money and business back.

Our situation looks almost impossible but Bold, fearless leadership can change what looks hopeless into something that looks hopeful. Bold leadership can get our citizens excited about our future again!

What is a Budget really? Isn’t it just a sheet with my expenses on it?  First, let’s make clear what a Budget IS and what it is NOT! A Budget IS a PLAN for how you want to spend and save the money you have.  A budget is NOT  simply a list of your expenses and a budget is NOT an accounting system that simply tells you where you spent your money and how much have left! Most importantly a budget is NOT a PAIN IN THE NECK!

Think of a Budget like you would think about your elementary gym teacher. Let’s say your gym teacher wants you to climb the rope and touch the ceiling and you can’t do it. Is it the gym teachers fault you can’t do it? Of course not and in a similar way all a budget is doing is showing you whether you  can afford to live the way you want to or not, it gives you a glimpse of your financial reality.

The most important thing budgeting does is allow you to count the cost to see if you have enough money to make it through the month. It is a bit like putting on reading glasses for the first time you finally can see what you could not see before. The PAIN IN THE NECK part comes in when you realize you will have to change your ways to balance your finances.

Few of us start out in life living on a budget. It is something we learn to do out of need. So what is so difficult about managing money? Well there is a long list of reasons why budgeting can be challenging. First, life is unpredictable and you never know when it will throw an unexpected expense at you, for example, a sudden car repair or a trip to the Vet or Doctor. There is an almost infinite number of expenses you can encounter in life that you never see coming at you. One of these can come along and blow your entire monthly Budget causing you to rearrange your plans. I remember being on a long family camping vacation, back when the highways were mostly 2 lane roads. My Dad would carefully pass one car or truck after another until one of the kids needed to go the bathroom then he would pull of the road and watch all the cars and trucks go past him. When my Dad got back on the road he began to pass those cars and trucks again. When life throws an unforeseen expense at you it likely will make you feel the same way my Dad did, but keep plugging ahead because financial freedom only comes through consistently managing and saving money. All of us encounter unexpected expenses and the better we are at handling and planning for those the more money we can save. Second, life is full of choices and we need to carefully evaluate how we spend the money we have. When it comes to managing money, patience and discipline are required. Third, we focus more on things we want now and less on things we will need in the future, such as,  money to cover college costs for our kids or to pay for retirement. It is important to maintain a balanced plan for funding both your current wants and needs  and your future financial needs.

So what is the point of living on a Budget? It puts you in control of how your money is spent. In truth once you use a budget and start to get control of your money you will likely worry less about money and start to save to reach your  financial goals. There is one more important observation I want to share with you, the financial systems in this country are inconsistent and unbalanced, yet banks, mortgage companies and financial advisers expect you to be consistent and balanced in how you handle your money. So your goal should be to “Become Financially Balanced in an Unbalanced World!”, the key to doing that is to live on a budget.

As a child I remember hearing the story about George Washington chopping down the Cherry Tree and telling the truth about it. Why do I remember that story? Why do you? It is really quite simple, honesty and integrity are things that matter to all of us. But, what we see  from leaders in all walks of life today is that the end  justifies the means. If someone has to lie or cheat to reach a goal it is justified.  How can all of us believe in honesty and integrity yet live as if it doesn’t matter? Well I don’t think we have enough space here to answer that question but can  we draw this conclusion ’somehow irregardless of what is actually happening in our lives we still believe in honesty and integrity’? I believe we can and that is a big reason why people are fed up with our government leaders. While we may not always be honest we do have our limits and I believe collectively our nation has reached one of those limits. Why now? We expect our leaders to generally work for the benefit of  all or our citizens. We expect our leaders to care about our country and its future. If along the way our leaders did some dirty deals, we may have  held our noses, but in general we believed our leaders were working for the good of our country. What we have today though are leaders who care only about the power they wield, leaders who are completely unaware of what the average American family is enduring, leaders who are working toward their own agenda and who have forgotten our history and what our nation was founded to be.

So why am I writing this on this website? What does this have to do with home finances? Everything, if you are like me you may be struggling to pay your bills and you work hard to meet your obligations. You and your family may  have made some hard financial trade offs and pulled in your purse strings. You probably know a number of people who are not working and want to work.  Meanwhile what is our government doing? What tough financial trade offs are they making? None, they are working hard to determine how they can extract more money from us.  Have they pulled in our collective, after all they are spending our money, purse strings? No. What have they done to create real private sector jobs? Nothing. What have then done to make our country safer? Nothing, our borders are not yet secure.

The thing about politicians is they make a lot of campaign promises. It used to be that politicians had to make good on most of those promises to get re-elected but, today most politicians offer nothing but empty promises they never intend to keep. It seems there is a general lack of integrity among our elected leaders. Come election time will this lack of Integrity matter to you? I certainly hope so, for your sake and for the sake of our country.

We all hope to retire one day but, if you are like me it seems as the years pass my retirement date keeps getting pushed to a later and later date. So what can we do about it? In 2001 many peoples 401k looked more like  a 201k, then in 2003 the market came roaring back, then in 2008 those 401k’s started looking like 101k’s as the market went into a free fall, there was talk of the next Great Depression. Now our economy is anemic and our politicians are clueless what to do. I don’t think I can wait for our leaders to figure out what to do, how about you?  I believe I need to come up with my own Retirement Plan. It isn’t as simple as saving more money anymore, first money is pretty tight these days, second where can I invest in a way to ensure a gain? Sorry there are no guarantees anymore. I need a real plan, one that includes retiring a year or more later, one that includes working part time in the early years of retirement, one that includes downsizing my home and my life when I am an Empty Nester, not waiting until I retire to do it. If I can piece together my retirement plan this way I may be able to find a way to retire. Then when I do retire I can downsize my home and life again but this time in the location I plan to retire.

I can invest some of my money for a higher return during my retirement years or maybe I can save some of my income during retirement and later in retirement I can get a reverse mortgage which will give me a monthly income from the equity in my house. Finally and most importantly I will need to live on much less income in retirement than I lived on during my working years, this is the key to reaching retirement, I must have no mortgage and my living costs must be greatly reduced.

Today is a new day for retirement planning, more and more pensions are frozen or under funded and Social Security, at this early date, cannot support the current Social Security beneficiary’s without borrowing money to do so.  It is not just a matter of saving more money, either, it takes much more effort to come up with a retirement plan that actually lets you retire.  So how can we do this? There are many variables involved but some retirement planning systems actually give you variables, like those mentioned above, to use to develop your retirement plan.  simplehomefinances.com retirement planning system is a system that lets you plan with these type of variables. Lets not forget the most important steps in securing a retirement though, first and foremost, live with in your means today and that requires living on a budget, second eliminate your debt to free up money to save for retirement and finally develop a retirement plan that fits your goals.  If there is one thing we all must do it is to be flexible and adaptable because Life will continue to provide challenges all through the retirement years.

simplehomefinances.com Master Money toolkit was built with the intent of helping people to live on a budget, pay down their debt and come up with a retirement plan that actually let’s them retire one day.

If there is one thing that has impacted everyone it is the endless drop in home values. I want to know when my home price will stabilize and begin to increase, I am sure you do too! The answer rests in our economy’s ability  to retain and add jobs. We heard about the risky lending that went on, we watched people on TV make large profits by simply upgrading a house over a short period of time and then selling it, we started to believe that real estate prices would continue to rise at double digit rates even as the economy could not muster  more than 3% growth. What happened? There was no real pent up demand driving the prices up, it was driven up by speculation on everyone’s part. We all came to expect to see our home prices increase nicely every year without doing anything to improve the value of our homes! The media points to the bad lending practices and real estate speculators but the truth is we all bought into it.

So what is happening now? Why do prices keep dropping? Now we are dealing with a lack of demand for homes and an increase in the supply of homes, real economic issues. When your neighbor loses their job and their house is foreclosed on or they have to  sell their home at a steep discount it impacts the value of your home! The more people in your neighborhood who lose or sell homes, due to a job loss, the greater the downward pressure on your home value. More than anything else our home prices now are being driven by the ability of our economy to retain jobs (keep people employed) and add jobs (create brand new jobs). None of this is in our control! If you add a bathroom, redo your kitchen, etc., in this market, it likely will have little impact on the value of your home today!

So what should we do? Well you should keep close track of the market value of your home, if you were expecting to tap that money to pay college expenses or some other expense you may need to find that money somewhere else. Be aware of the foreclosures in your neighborhood but don’t do anything rash. It is one thing to have a loss on paper meaning you owe or paid more than your home is worth but it is much worse if you sell that home and turn that paper loss into a real loss. Eventually home prices will stabilize and begin to increase again, if you like where you live then stay put enjoy living there and wait for the market to come back.

The other thing that will drive home prices down is the median family income. If the median income drops then eventually it will impact home prices. Most of what is happening now is the median price of a home needs to line up with median income of a family. Home prices need to be in a range that allows the median family income to afford to buy a home based on meeting new lending standards which, when compare to just a few years ago, require more money up front and require the monthly payment to be a smaller percent of monthly income. In the long run this is good for our economy. Getting back to these type of lending standards will stabilize home prices and tend to reduce foreclosures over time. But the economy still needs to keep and increase the jobs available.

General observations say that home prices are likely to drop as much as 10% more before they stabilize. Try to think long term, if you like where you live and can afford it the best thing to do is stay in your home and enjoy it!

If you are reading this then you were not born yesterday! The old saying that two things in life are guaranteed Death and Taxes is going to come to haunt us all soon! Why? The Bush Tax cuts, if we are honest, were very balanced Tax cuts  from the lowest incomes to the highest incomes, but those Tax Cuts are going to silently disappear if Congress does not take action to keep them or some of them in place.

What does this really mean to You? Well sadly it means the economy will take a very large hit. Economic Growth may all but stop and you will have much less money to cover you expenses each month. Now if this does not bother you then please stop reading now and thanks for visiting this site and blog.

For those of you still here letting these tax cuts expire is a threat to our jobs, our economy but more importantly our country. Our political leaders have rung up such a large debt that they feel they must take more from us to pay for it, how does that make you feel? If you are like me I want them to stop spending and start listening to the people! But I am convinced our politicians have all but stopped listening to the citizens of this country.

So what can you do? Well you could go to work for the Federal government which provides better pay and benefits than the private sector these days and there are government jobs  available. After all since the Federal government no longer works for the peope, why don’t we all work for the Federal government? Yeah and who then pays for the government? Who then invests in our economy? That is at the heart of this issue, do we work for the government or do they work for us? According to the constitution the government is for and of the people….in other words the buck stops with the us, the people, we exert our will by how we vote.

So how did our country get where we are then? A country divided cannot stand and we are by many measures a country divided. We are divided by race, religion, economic status, where we live….well by an almost unlimited number of things. All a politician has to do is use these natural divisions against us. So how do we overcome this? We decide as citizens to Unite behind common causes and we collectively vote accordingly. It seems simple but politicians are well versed in how to keep us divided.

So back to those expiring Tax Cuts how do or will they divide us? The Rich verse the Poor, of course, we hear it all the time lets tax the rich. The problem with that is it makes financial success more difficult for those who aspire to advance their standing in life. It seems so easy to make someone else pay especially when we are not the one paying! But I believe most citizens would be for a Flat Tax which is fair to everyone and does not punish success. Which gets me to the real point, the corruption of our government began with and will end with the Tax Code. We should argue for the Tax Cuts to be kept but, we should vote for a Flat Tax or a Fair Tax both of which would help our economy grow, bring money and business back to our shores and simplify the Tax Code with the goal of minimize if not eliminating corruption.

So are New Taxes Coming Your Way? The short answer is yes, the long answer is be prepared to vote for changes to the tax code that make those taxes fair to all.

I don’t know about you but I for one am tired of hearing higher taxes are the only answer to reducing the federal deficit, the elephant in the room is the size and cost of the federal government itself! There are three things that can work together to resolve our financial crisis; 1) Start shrinking the size and cost of the federal government and make it a continuous process. 2) Provide incentives to small business in America through deregulation and strategic tax cuts. 3) Move the country to a true flat tax policy or a national sales tax policy either would be better than what we have today.

This seems just like commons sense, the jobs engine in this country is small business but the small business owners are the very people who are being taxed more. More regulation means a higher cost of doing business and the more a government inserts itself in the free market process the more difficult it is for small business to succeed.

What we want is a sound dollar and what we need for a sound dollar is more capital. Moving to a flat tax will cause money to move into our economy. Moving to national sales tax could cause many trillions of dollars to be put to work in our economy again. Tax policy is the most powerful motivator when it comes to attracting investments. Today American businesses are among the most highly taxed in the world, is it any wonder more and more of these businesses move out of this country? Better Tax policies can bring much of that back and put people here back to work!

Even with a lower tax rate, tax revenues will grow right along with the economy as new jobs are created. True sustained economic growth will increase the amount of money available for Social Security and Medicare and can buy the time needed to reform those entitlement programs!

Remember, each government job added puts a higher amount of  expense on the people and requires more tax revenue to pay for it. These jobs only guarantee an increased cost of government, the exact opposite of what our country needs today!

In case you did not hear the government (or our non representative representatives) are looking at adding a Value Added Tax on top of our Income Taxes! A VAT is a tax that is hidden and it adds tax at each stage  of production which adds value! This type of tax will be the greatest private job killer this country has ever seen! Please tell your senator or congressman to vote NO on VAT taxes!!

“Keeping Financially Balanced in an Unbalanced World”

A Federal Deficit means there is no revenue to cover the expense.

Imagine if you managed your finances the same way what would that mean to you?

Well your Credit Score would go down quickly.
Your loans would generally be at a much higher interest rate.
Your mortgage lender may be foreclosing on your house.
You might even have to declare bankruptcy.

So what do huge deficits mean to the Federal Government?

Well their lenders may very well stop lending to them (Think China),
absent large lenders they would have to print more money. If they print more money the value of the dollar will continue to fall. If the value of  the dollar continues to fall then inflation and possibly hyper inflation will begin to occur. The end result of this is the middle class in the USA will begin to disappear unable to survive quickly rising costs on every day items, those who have excess money may use inflation to make them wealthier, but the middle class will largely join the lower class as their purchasing power drops.

But the Federal government has one thing standing in their way…That is you and I, we can and must stand up and use our vote and our voice to pull them back from the brink of spending our country into bankruptcy. They should be:

“Keeping (our country) Financially Balanced in an Unbalanced World”