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

I understand the point but I think ABC News sends the wrong message with this story.

It is difficult for anyone to venture out and start a business. The SPEC’s have the utmost respect for anyone willing to take this risk. It’s a challenge both physically and mentally, which is especially true for one having a family depending on an income.

In this case, however, the story’s focus is a gentleman whom was making about $750,000 per year and owned a nice & luxurious home. This is where the concern lies.

It does not, ON THE SURFACE anyhow, portray extreme difficult circumstances. The viewing public is to feel sorry for a former millionaire. One problem with this economy is that everyone attempted to live like a millionaire by using credit. NO CASH AVAILABLE.

There is nothing wrong with being a Pizza Delivery driver. NOTHING. People have been doing this job for the past 20 years. This news story gives the impression that delivering pizza is somehow beneath the conscious OF MANKIND. WRONG MESSAGE.

Pizza delivery drivers are no different than any other employee. They may make a bit less in salary, but otherwise, no difference.

The video also comes across as ELITIST. The wife made a comment about going to work at the end of the story. I believe her job was in managing the “snack food” bar at her children’s school. AND!!!, if you need to work, then work.

ABC, if you want to contribute something meaningful and useful to this crisis, be careful not to use broke millionaires as your example!!!

There is plenty of blame to go around. The past six months has provided blame to the Financial Industry. Many U.S. citizens are both upset and concerned that the Fed continues to bail out these firms deemed “too big to fail” while not doing enough for those who have recently become unemployed or currently going through foreclosure.

Reality ”can” justify the bailouts of financial institutions. If the capital markets are in disarray, the ecntire economy would be affected, including those entities not normally associated with the financial industry (Bankruptcy of local governments, layoffs in the educational system, reduction in public services including various insurance programs).

However, remember that WALL STREET is and has always been in business to make money, PERIOD!! They raise money for small and large businesses, local and international governments, and extend lines of credit. I don’t blame the STREET for creating this current meltdown, but give them responsibility for extending the difficulties.

This is how this story begins, WITH YOU & YOUR GREED. The housing meltdown initiated the crisis. People began to default on home loans where such defaults reverberated throughout the entire global financial system.

MAIN STREET (MS) bit off more than it can chew. Many purchased a home because of its size without looking at the costs of maintenance (Excluding a mortgage, there’s insurance, taxes, etc….). But, MS only concern was to get qualified (At any cost) and move in. The SPEC’s will not discuss the cars or other material items MS thought were necessary goods.

To be fair, there were many who persuaded MSto accululate excess. Mortgage Brokers, Real Estate Salesman, the news media, politicians, etc… In order to have any sense of self-worth in the U.S., you 1st need to “Display” yourself. If not then you are not one of the few whom are experiencing the American Dream.

WALL STREET then stepped in. They took your GREED and created tradable investment securities using it & your ignorance. CDO’s (Collaterized Debt Obligations), CLO’s (Collaterized Loan Obligations), CDS’s (Credit Default Swaps) and so forth. These firms got into trouble when the asset creating value in these securities (YOU and your mortgage payments) started to either default on their obligations or became severely delinquent, causing the value of the securities to drop.

Now here we are. Government bailouts will continue. But, the government cannot print money forever nor save everyone. For those who recently joined the ranks of the unemployed, it is time to use an innovative mind and create wealth for you and yours. Remember, the U.S.’s biggest lender, the People’s Republic of China is now doubting our economy & may begin to sell U.S. Treasuries subsequently creating more chaos.

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.