It’s time to sit back, relax and enjoy a little joe…
Welcome to another rousing edition of Black Coffee, your off-beat weekly round-up of what’s been going on in the world of money and personal finance. Here’s what caught my attention over the past week…
I hope everybody had a great Thanksgiving. I know I did!
With that said, let’s get right to it this week.
Blogs I’ve Been Following This Week
The Frugal Toad – 10 Frugal Ways to Save on Food. I’m always looking for new ways to cut back on my grocery bill. Here’s a bonus tip that didn’t make the list: eat less.
Yes, I Am Cheap – I’m Anti-Black Friday This Year. Says Sandy: “I had the pleasure of walking through Walmart the other day.” You know, I don’t think I’ve ever used the words “pleasure” and “Walmart” in the same sentence. Well, until just now.
Budgets Are Sexy – The “Sticky Note” Method of Budgeting. Uh huh. Just when you thought there was nothing else that could possibly be done with Post-It notes — there’s this. Very clever!
Don’t Quit Your Day Job – The Moral Case Against Price Controls. I stated in last week’s Credits and Debits several reasons why price controls are bad for society. This week, Paul gave an excellent example that proves my point.
Financial Uproar – Can You Please Stop Buying Drinks for Girls? In this very amusing piece, guest author Martin explains why buying drinks for girls is a losing proposition for single guys. (Psst. Martin. It’s usually a losing proposition for married guys too.)
The Way-Back Machine: Past Posts Of Mine You May Have Missed
From November 2009:
Flexible Spending Accounts Provide Free Money. Why Pass Them Up? – With healthcare costs rising faster than ever before, you need every advantage you can get. Maybe you should consider a Flexible Spending Account.
Credits and Debits
Credit: Although Thanksgiving has been celebrated in the United States since the founding of the Republic, it didn’t become an official holiday until Abraham Lincoln’s presidential proclamation in 1863.
Debit: Lincoln set Thanksgiving as the last Thursday in November. However, in 1941 with prodding from Franklin Roosevelt, Congress tossed almost 100 years of tradition out the window and set Thanksgiving as the fourth Thursday of the month.
Debit: For some odd reason, FDR naively assumed the date-change would somehow boost a stagnant US economy that was still suffering after eight years of his failed big-government New Deal policies. It didn’t.
Debit: Speaking of languishing economies, more Americans used food stamps this year to buy their Thanksgiving dinners than ever before. Over the past five years, the number of people on food stamps has increased 70%.
Debit: Meanwhile charities are seeing increased requests for help. One particular food pantry in Boston has seen requests for free Thanksgiving turkeys and other holiday food assistance increase 400% over the previous year.
Credit: In other news, mortgage rates have once again hit an all-time low. You can thank the Fed, which has been suppressing rates to help the government afford the trillion-dollar deficits it’s been racking up over the past four years. At least temporarily.
Debit: The continued economic uncertainty generated by that debt has resulted in plunging corporate investment plans for next year. That’s not a good sign for those looking for robust economic growth or higher stock market returns in 2013.
Debit: Ranchers and farmers are gloomy too. Many fear they’ll be unable to pass their ranches on to their heirs after the so-called “death tax” increases from 35% to 55% on January 1. The exemption is being reduced too; from $5 million to $1 million.
Debit: It gets worse: If all the federal tax cuts expire as scheduled at the end of this year — the so-called fiscal cliff — then the median four-person household earning $74,563 will see its taxes rise 4.32% next year. That’s $3,222 less in your wallet next year.
Debit: Then again, liberal economist Paul Krugman is intimating that what we really need is a return to the 91% marginal tax rate on “the rich” that was in effect during the booming 1950s. I know.
Credit: Of course, the biggest trouble with Mr. Krugman’s assertion is that, today, anybody making over $250,000 is considered “rich” for tax purposes. In 1955, the 91% rate was only triggered after one earned the inflation-adjusted equivalent of $27 million.
Credit: In fact, back in 1955, one had to earn about $1.35 million in 2012 dollars to reach the 38% tax bracket. In 2013, the new 39.6% top tax bracket will officially kick in at just $388,350. Despite this, Krugman suggests taxes aren’t high enough today. Unbelievable.
Debit: Last week, Timothy Geithner doubled down on the fiscal insanity with a “brilliant” idea of his own: completely eliminate the debt ceiling. Remember, this is coming from our US Treasury Secretary. We’re truly on a downward spiral.
Credit: There are others who believe racking up debt to pay for massive entitlements and programs we can’t afford has no consequences. But it’s pure folly to believe the dollar will remain the world’s reserve currency if the US continues to spend with impunity.
Debit: So, what, you say? Keep in mind that when the government’s reckless spending policies finally cause the US dollar to lose reserve currency status, all but the wealthiest Americans’ standard of living will drop precipitously.
Debit: Loss of reserve currency status will mean prices for almost everything in the US could double. Then, if the “fit really hit the shan,” prices could eventually double again — and then double yet again. How would that affect your grocery bill?
Debit: If most Americans realized this, it wouldn’t be long before we returned to the days when the federal government was much smaller. Unfortunately, they don’t. And so, sadly, we’ll continue the charade until the economy finally collapses. We’re almost there. Get ready.
Debit: Finally… A nine-year-old Ukrainian boy is in deep borscht after he discovered his parents’ life savings of $3900 hidden under the sofa and spent it all on candy. That’s a lot of money in a country where the gross per capita income is just $3120 annually.
Credit: Obviously, that story gives new meaning to the term “eating your parents out of house and home.”
By the Numbers
Here are a few facts on the so-called “fiscal cliff,” a woefully misguided — not to mention futile — effort to head off the eventual collapse of the US dollar:
$14,000 According to one estimate, the amount the top 20 percent of all wage earners would pay, on average, in annual taxes. (Scary, if true.)
$412 Amount the lowest 20 percent of all earners would pay on average in additional taxes.
30 Millions of taxpayers who will be hit by the alternative minimum tax. (That’s up from 4 million.)
$16,291,454,232,729 The current National Debt.
$1,420,000,000,000 The budget deficit in 2012.
0 Number of budgets the US Senate has passed since 2009.
$110,000,000,000 Amount of mandatory spending reductions in 2013.
$500,000,000,000 Amount of additional revenue that will be raised from the new taxes that will be implemented.
0 Common sense of any politician who believes raising taxes is part of a “balanced approach.” (They’re the same ones who can’t see that the government has a spending problem, not a revenue problem.)
$901,000,000,000 The projected 2013 budget deficit — even after going over the fiscal cliff.
Contributing Source: The Boston Globe
The Question of the Week
Last Week’s Contest Winner
Congratulations to Sarah, who won a $20 Starbucks gift card! She was one of only three people who correctly guessed that the only Top 10 movie of 1982 that I haven’t seen (and never will) is The Best Little Whorehouse in Texas. Her name was pulled in a random draw among all the correct guessers.
Thanks to everyone who participated. I’ll have another contest next month.
Other Useless News
Here are the top 5 articles viewed by my 3336 RSS feed and weekly email subscribers over the past 30 days (excluding Black Coffee posts):
- The 7 Most Popular Ways to Commit Financial Suicide
- 100 Words On: Why Most Early Risers Wake Up Smiling
- The Unexpected Bill That Added $2406.88 to My Vacation
- The Emperor Has No Clothes: Why In-N-Out Burger Is Overrated
- 6 Basic Steps to Help You Achieve Financial Freedom
Each month I post some of the more curious search terms visitors entered into Google’s search engine (according to Google Analytics) that led them, somehow, some way, to Len Penzo dot Com:
- can i run over a nail to take advantage of a tire warranty?
- what does 13-5 a key mean cocaine? [sic]
- can i use a whirlpool tub to take a shower?
- len penzo throwing up on bus
- how do I get a family member to pay me back now that shes [sic] living the high life on money I loaned her?
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Letters, I Get Letters
Every week I feature the most interesting question or comment — assuming I get one, that is. And folks who are lucky enough to have the only question in the mailbag get their letter highlighted here whether it’s interesting or not!
Jen took a moment to pass along Thanksgiving greetings to me and my family. She also tossed in this age old question:
I have to ask. Do you prefer white meat or dark?
I prefer dark meat, Jen. I’ve always been a leg and thigh man. (Yes, I realize a lot of guys say the exact same thing over at Match.com.)
I’m Len Penzo and I approved this message.