Street Speculator

The predictions and calculations have finally been released. The U.S. government today released a report stating that the Social Security Trust fund will be depleted by the year 2037. Subtract 65 from 2037 and you get 1972.

It doesn’t take a math genius to see that those born in the year 1972 and beyond will more than likely have no Social Security benefits to depend on. There has always been random speculation as to when this program would bankrupt itself, but today we finally have a “concrete” date.

This announcement may spark fear in many. However, let this fear drive you and not act as a hindrance.

Now more than ever is the time to get your financial house in order. Put off all of the plans for big-ticket item purchases (Homes, Cars, Vacations, etc…). Also, save and invest like a madman (or woman). You must become frugal as well.

Plan of Action:

1. Get out of Debt (Start with your small balances 1st). Don’t go back in!!

2. Put away at least 15% of your earned income or more if possible.

3. Take as many “legal” deductions as possible (Tax Planning).

4. Ignore April the 15th, you want your immediately & not once a year.

5. Pay off your mortgage. Tax writeoffs for interest paid on DEBT is Dumb Accounting.

The above principles are very basic. More will definitely need to be done. This is just a message to prepare you as to what lies ahead.

SPEC’s

The SPEC’s just reviewed the movie I.O.U.S.A. featuring former Comptroller General of the United States, David Walker.

In a nutshell, Mr Walker outlines the debt levels of the government and how it will continue to grow with the current spending patterns of the federal government. The debt level of the Fed (You and I) is in the trillions, growing daily, where we pay around $500,000,000 daily in interest only.

We will not further analyze the picture, but you definitely need to rent and more importantly analyze this movie.

However, as we move into mid ‘09, we have a plan to get you out of debt, stay out of debt, and rely on Capital Reserves. Disclaimer: All members of StreetSpeculators are following these principles.

2009 SPEC’s Fiscal Plan

1. Pay off credit cards– close the accounts

2. Put into a savings account the $amounts of the previous credit card limits, save, save, save

3. Once you have saved the $amount of your previous credit card limits, continue this saving pattern

4. Mobile and Landline Phone Service (Choose One, cancel the other)

5. Pay off “Non-Returnable” debt (Car Notes, Student Loans)

6. Stock Market Investing (Buy what YOU know), give your money to “NO” Money Managers. (Remember: Bernard Madoff)

7. Do not lease cars. Buy, Pay-off, & Maintain

8. Pay off any debt encumbering your home (Mortgage, Deed of Trust, etc…)

9. Don’t go into debt for TAX Write-Offs (The absolute dumbest piece of financial advice I had ever heard)

10. FIRE YOUR ACCOUNTANT if their goal is for you to get a Tax Refund. You want your money now, not once a year.

11. Make sure everyone in your home is being productive (or Working)

12. Don’t be manipulated into giving money by Religious figures!!

Hope this helps. If you have anything additional to add, please inform us.

SPECS’s

StreetSpeculators.com audience, start with your first ‘09 paycheck and subsequently take $100 out each time you get paid. Set aside this money in a savings account so you can draw interest (IMP: Banks/Credit Unions insure deposits up to $250,000/account).

Another strategy, if manageable is to open 3 separate accounts (For couples). This way you can get protection for each account in the event the bank fails, which we hope will not happen. Ex. Husband opens an account in his name alone, the Wife does the same, then both open a Joint Account. If disciplined enough to implement this strategy, you should have at least a few thousand dollars cash by mid-summer.

DEBTS

Pay off the small account balances 1st. Get them out of the way and then close them. Your goal is to have enough cash in the bank to cover any unexpected emergencies instead of credit. Debt however continues hangs over you and prevents upward mobility and movement financially.

401K

Put the minimum in your employer account this year. Use the previous payroll deduction amounts to fund your “Cash” fund. What we hate about employee retirement accounts are the losses incurred. Some of these fund managers SPECULATE more than we do at this site. Also many companies are reducing their contributions to their employer accounts in order to conserve cash as the credit markets are still not moving.

Last, and we will continue to repeat this, don’t listen to Stock Pickers & Analysts. No one knows who will become a growth company in ‘09. These TV entertainers usually start off the year positive about a certain sector then turn negative before years end. Utilize the Business News Channels (CNBC, Bloomberg, FoxBusiness) only for the “News” element and not for stock picking. Your goal in ‘09 needs to be Cash Preservation.

To the new administration: General Motors (Symbol: GM) needs to re-organize through the bankruptcy process.

The U.S. Senate will vote tomorrow on a “Bailout Package” for the automotive industry. The SPECs do not think a bailout will have any effect on the financial problems associated with car manufacturers. NOTE: Former Senator, now President-Elect Obama just resigned from his Senate senate, removing any potential future blame if the bailout program doesn’t work. SMART MOVE Mr. President…

GM has over $40 billion in debt. They report a DROP in car sales each month. Their labor contracts with the UAW (United Auto Workers) is laughable. It was reported that each union member receives health coverage better than that of the Office of the President. Plus, financing for car purchases and lease transactions have virtually vanished.

No. A bailout without drastic cost-cutting measures agreed upon prior to release of funds would only delay a future calamity. Union members need to elect people whom negotiate on their behalf while having a business sense. No business, No paychecks!!! The GM labor situation was predicted to be the cause of the future downfall of the company 3 to 4 years ago. Now, here we are. The credit crisis has just heightened the labor picture and the financial problems of the auto industry.

If GM and other auto companies fail, fine. The reverberations will be felt immediately, but at least they will have time to constructively change their business model while removing current management and renegotiating labor contracts.
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Tough times call for extreme measures. Today the SPECs bring forward a proposal to those suffering financially during these trying economic times. Remember, we are not salesman so there is no financial interest in providing this information.

This is an attempt to assist you in regaining the financial stature once had but now a thing of the past. It is never too late.

1st, GET RID OF THE FOLLOWING:

CABLE TV– Cable TV does nothing but keep people ignorant and overweight. Its sole purpose is to “entertain” the mind and not educate it. Plus, you would probably save between $30 -$90/month if removed. Take that money and put it where it can at least draw interest. If you happen to own these industry companies, sell them. TOO MUCH DEBT and the U.S. Cable industry as a whole is very capital intensive with virtually no international exposure:  Comcast (Symbol: CMCSA) $32 billion in debt; Time Warner Cable (Symbol: TWX) $16 billion in debt; Verizon (Symbol: VZ) $43 billion in debt.

CELL PHONE SERVICE– Yes. Since the day you 1st purchased this gadget and its underlying service, it has become an addictive device. Most people would not know how to survive without their cell phone. But, we all live near access to some type of communication in the event of an emergency. This will be difficult to most to rid themselves of. If you elect not to take our advice and keep your CELL PHONE, then subsequently get rid of your landline service and use the CELL as the main source of communication. Also, “sell” CELL PHONE service stocks as many of these companies are also loaded WITH DEBT: Deutsche Telekom (Symbol: DT) AKA “T-Mobile”, has $58 billion in debt; AT&T (Symbol: T) has $76 billion in debt (Unbelievable).

There may be other so-called house hold luxuries you know is a monthly financial drain. There are many items you can definitely do without, but the mental facility persuades otherwise. Remember, stick with the fundamentals.

As for the Stock Market investing, get back in after this Friday 10.31.08. That way you will have given the market a chance to ingest the FEDS injecting money into the Insurance industry.

Good Luck and Stay Focused.