Advice from across the pond

A budget alternative

Daniel Hannan on Neil Cavuto

Daniel Hannan on Glenn Beck

Message from across the pond resonates here

He might want to revise and extend his remarks

Dave Ramsey rant on Washington, D.C., and AIG

Listen to Dave Ramsey here talk about the problems in Washington, D.C., and AIG. He also proposes term limits to reduce the influence of lobbyists. He also argues the people who "run" this country (our elected officials in D.C.), should know what is going on (as with the AIG bonuses).

10 Myths about credit scores, but ...

A former FICO exec shares 10 myths about credit card scores. It's interesting that in order to have a good score, you have to have debt. Closing credit card accounts will not help you score.

Dave Ramsey repeatedly says he will not worship at the altar of FICO and calls the credit score an "I love debt" score.

Below is a question posed to Ramsey by a caller (or you can listen to Dave's response here):

Question: Caleb has had credit problems in the past, but has tried to clean them up. He wants to buy a house and wonders how he can improve his credit score.

Dave Ramsey's advice: Pull a copy of your credit score and make sure you have no outstanding bad debt or unpaid debt. The second thing that could cause your score to be bad is past debts that have been paid but are still on there. Remember, you don't have to have a credit score to get a house. You have to have cleaned up your bad debts, but if you find a mortgage company that does manual underwriting and can verify that you've paid your bills on time, then you qualify for a premium mortgage. You don't want to spend your life building your FICO score, because it's just an "I love debt" score.

You can also listen to Dave go off about credit scores here.

Another thing to keep in mind, as pointed out on the video, is that your credit score is used for other things (some employers check it, landlords will and some insurance companies offer better rates to those with good credit scores).

Pennywise, dollar foolish

Trust me, we don't make this stuff up. This great and wonderful Oz, I mean, stimulus plan will provide a short-term boost, but have negative effects in the long run. This is not me, but Dr. Douglas Elmendorf, director of the non-partisan Congressional Budget Office. This is what he says, in part, in his blog:

We estimate that the legislation will raise gross domestic product (GDP) and increase employment in the short run—by adding to aggregate demand and boosting the utilization of labor and capital. In contrast, we expect that the legislation will reduce output slightly in the long run because the resulting increase in government debt will tend to “crowd out” private investment and thereby reduce the stock of productive private capital. That crowding-out effect will be diminished to the extent that some of the funding in the legislation will go for activities that could add to the nation’s long-term output.

At the risk of repeatedly sounding redundant and saying the same thing over and over, again and again, time after time, Congress has risked our future for a short-term gain.

Is this want one of our founding fathers called pennywise and dollar foolish? Let's borrow our way to prosperity. Oh, that's right, that won't work.

Our wonderful, loving and benevolent government is going to "crowd out" private investment, thereby reducing our freedoms and liberty.

We need an infusion of Ronaldus Magnus about now.

So simple, yet so true

Here is a funny skit from Saturday Night Live that Dave Ramsey pointed out: Don't buy stuff you cannot afford.

I have not always made the best financial decisions, but I have been getting better with the help of Dave Ramsey's Financial Peace University classes. If only our politicians would get it into their heads about not buying stuff unless you can afford it.

Enjoy.

A little plastic surgery

My wife and I are working toward eliminating debt and have started operating on a cash basis. Here is video from Dave Ramsey talking about how credit cards have not propelled us toward wealth and how some families have chosen to get rid of those credit cards, aka plastic surgery.

What'd he say?

The "debt hawk" weighs in

Ohio Senator George Voinovich, a Republican, had this to say about President Barack H. Obama's proposed budget:

“President Obama has delivered a budget outline that attempts to fool the American people with smoke and mirrors. He unrealistically promises everything to everyone and masks the sacrifices Americans will be forced to make if it passes. To act like it is some sort great accomplishment to reduce the deficit in four years to a level that is still higher than every deficit from the end of World War II up until Barack Obama’s inauguration is absurd. And, the $533 billion figure he touts for Fiscal Year 2013 ignores the continued borrowing from Social Security and other trust funds to the tune of roughly $200 billion a year. It doubles the debt in five years and triples the debt in 10 years, continuing huge deficits beyond this administration. Failing to tackle entitlement and tax reform and relying simply on an obvious phase-out of the astronomical spending in his stimulus bill, a reduction of troops in Iraq and Afghanistan and revenue from an irresponsible cap-and-trade program is a womb-to-tomb tax increase for every child born in this country.

“And, where are the $2 trillion in cuts and terminations we were promised? Although they are absent, he does promise to make middle class tax relief permanent while spending at least $634 billion on establishing a path to universal health care, but he does not know how he will fully pay for it.

“President Obama’s budget includes a cap-and-trade auction program to generate revenue for his botched spending priorities and permanent tax cuts. This is simply a veiled consumer tax increase the likes of which have already received a devastating critique from the EPA, EIA and many well respected economists. The impacts of this program will be disproportionately felt by states like Ohio who depend on coal for much of their energy needs. The president’s plan maximizes the economic pain of emissions reductions by requiring energy producers and users meet their compliance needs at auctions designed to maximize the costs that will ultimately be passed on in the form of higher gasoline, power and heating bills – stressing families and killing jobs. And, because energy costs are a form of regressive tax, the program will hurt our most vulnerable citizens at a time they can’t take any more pain. Indeed, the budget assumes this new tax will generate $645 billion over an eight year period – something businesses, workers and families cannot afford in this time of economic crisis.

“While I believe we have a responsibility to reduce emissions, we should not do so in a manner that further erodes our economic stability and our energy and national security interests. Last year, I worked very hard to kill a similar proposal when it came to the Senate floor. I will do so again unless significant revisions to this proposal are made.”

With talk like this, it will be sad to see him retire from the U.S. Senate, as he plans to do after this term. Republican Rob Portman and Democrats Lee Fisher (Ohio's lieutenant governor) and Jennifer Brunner (Ohio's secretary of state) have announced their intentions to run for the seat.

You better go in debt -- or else!

Listening to President Barack Obama's address before a joint session of Congress Tuesday conjured up thoughts of a tag line from a rent-to-own company: "Because we all deserve nice stuff."

Those companies are willing to let those who cannot afford "nice" stuff pay an arm-and-a-leg for the privilege of renting that stuff with the hopes of one day owning that stuff. So, instead of saving your money for 13 weeks to buy something, take possession of it now and pay for it 26 weeks.

I had hoped to hear a good, clear message from President Obama. Instead, what I heard was a conflicting speech.

Obama said if we do not take care of the "credit crisis" and restart lending, then the recovery would be choked off before it begins. He added that the flow of credit was the lifeblood of the economy. Without lending, people cannot afford to buy homes or cars.

His solution is to create a lending fund for new autos, college educations and small businesses.

Think about what he said: This country does not thrive or revive unless you and I go in debt.

Listen to this from Proverbs 22:7: The rich rule over the poor, and the borrower is servant to the lender (NIV).

According to Obama, this economy in the land of the free does not move without debt, yet at the same time, we are not truly free as long as we are in debt.

I am sorry, didn't we get into this mess because of borrowing? Are we now supposed to get out of this mess by borrowing?

What is the definition of insanity? Isn't it doing the same thing over and over and expecting a different result?

When Obama talked about the new lending fund, he received a standing ovation. With leaders like this who are willing to trade long-term financial peace for some short-term relief, we are never going to get out of this mess.

Obama promised change, and now he is delivering.

p.s. I did not hear all of his speech, but I did appreciate the fact that the President said he is going to cut some federal programs.

So, how much is $800 billion

Check this out from the American Issues Project.

Bailout Prize Patrol spoof

Bailout Prize Patrol
Taxpayers Clearing House Prize Patrol delivers large checks to Citibank and Amtrak, gets them signed by Sen. Snow, Sen. Schumer, confronts Tim Geithner with wads of cash and delivers invoices to taxpayers. (From Right.org).

Thanks to Ian F. for pointing out the video.

Where is the wisdom in debt?

The $787 billion stimulus package approved by the U.S. House (with no Republicans voting for it and seven Democrats joining them in a show of bipartisanship) will likely cost American taxpayers more than $1 trillion when interest is factored into it, Rep. John Boehner said. He also said it will add about $10,000 in debt to the average family and it was "generational" theft.

How can debt be a good thing for us? Debt is what got us into this mess. What nearly brought down the financial markets? Wasn't it subprime loans people couldn't pay back? Wasn't it getting into debt when they couldn't afford it?

How should we approach debt? Look at how it is talked about in the book of Proverbs 6:1-5 (NLT):

1) My child, if you have put up security for a friend’s debt or agreed to guarantee the debt of a stranger — 2) if you have trapped yourself by your agreement and are caught by what you said — 3) follow my advice and save yourself, for you have placed yourself at your friend’s mercy. Now swallow your pride; go and beg to have your name erased. 4) Don’t put it off; do it now! Don’t rest until you do. 5) Save yourself like a gazelle escaping from a hunter, like a bird fleeing from a net.

The Bible warns against signing your name for the debt of a friend. If we do, we are told to flee from it and get out of it ... fast -- like a gazelle running away from a cheetah.

While our nation's leaders do not care if we are consumed by debt, my advice to you is do what you can to get out of debt and don't add any more new debt.

Brother, can you spare a dime?

Consider this:

A friend of yours gets paid and blows his paycheck. So, he asks his family for some money, and they reluctantly agree. Because he spends more than he earns, the family never sees their money again.

Well, your friend is still wasting his money and has nothing to show for it. So, now he looks to borrow from his friends. Despite their apprehension, they cough up some money for him. As is his nature, he blows the money and continues to live beyond his means.

For some unknown reason, a credit card company decides to take a risk on your friend and sends him a pre-approved credit card. He runs it up and gets behind on his payments. Another credit card company gives him a line of credit, and he maxes it out and defaults on his payments.

Now, let me ask you this: Is it in the best interest of your friend to get another credit card? borrow more money? take out a loan? Will going further into debt help out his situation?

If it is not in his best interest, then why is it in our country's best interest to go into debt by another $800 billion?