Tuesday, June 30, 2020
Monday, June 29, 2020
The Budget Surplus Amendment (Amended....Again)
The national debt clock has plagued our country for years. It's been a ticking time bomb that only half of those in government want to address. Which half depends on which one is in power. If the Democrats are in charge, then the Republicans go on about fiscal responsibility and the need to deal with the issue. When they take charge, however, they're the ones who decide to start "making it rain" and it's the Democrats who, all of a sudden, care about burdening future generations. It's vexing to say the least.
Every so often, you'll hear about a balanced budget amendment, but at this point, I honestly don't think that goes far enough. We need a budget surplus amendment.
I propose that, for the next 40 years, the government's expenditures have to remain less than their revenues. It's a long time, sure, but this didn't happen over the course of one or two years; it makes sense that it would take a while to undo the damage.
So where would the surplus money go? I'm glad you asked because I've got a rough, but still pretty good, idea of how the capital should be allocated.
25% is to go towards debt repayment. This is a logical choice, as the debt itself is what brought this into being. In addition, bringing the debt balance down will reduce the amount of interest we pay over time. That means more capital. Besides, just think of how cool it would be to see that number moving down instead of rocketing upward as it has been for so long.
*Amended* 15% is to go towards unfunded liabilities. This is another figure that some bring up when it comes to the government's dismal fiscal situation. This isn't debt in a traditional sense, but it is money that the government is going to have to pay eventually, even though they don't have it. While this number isn't likely to ever "go away", getting it under control would still be to our collective benefit.
Every so often, you'll hear about a balanced budget amendment, but at this point, I honestly don't think that goes far enough. We need a budget surplus amendment.
I propose that, for the next 40 years, the government's expenditures have to remain less than their revenues. It's a long time, sure, but this didn't happen over the course of one or two years; it makes sense that it would take a while to undo the damage.
So where would the surplus money go? I'm glad you asked because I've got a rough, but still pretty good, idea of how the capital should be allocated.
25% is to go towards debt repayment. This is a logical choice, as the debt itself is what brought this into being. In addition, bringing the debt balance down will reduce the amount of interest we pay over time. That means more capital. Besides, just think of how cool it would be to see that number moving down instead of rocketing upward as it has been for so long.
*Amended* 15% is to go towards unfunded liabilities. This is another figure that some bring up when it comes to the government's dismal fiscal situation. This isn't debt in a traditional sense, but it is money that the government is going to have to pay eventually, even though they don't have it. While this number isn't likely to ever "go away", getting it under control would still be to our collective benefit.
10% is to go towards a national endowment. It turns out that I'm not the first person to see the appeal of a budget surplus. Amusingly, this was apparently put together back when the debt was at $15 trillion, ah the good old days. Not going to lie, I like mine better, but they did have a neat concept in the national endowment. Basically, the idea is that the government sits on the money and uses the interest generated to fund things. Whether it would ever be enough to erase the need for income tax, I don't know, but it is a cool idea regardless. As such, I'm incorporating it into my own iteration of the idea. It takes the pressure off the taxpayers. it can help fund government endeavors and it even gives the government a bit more leeway in terms of the frivolous stuff. If they want to fund a hamster fight club, they can use endowment dollars and people would be more likely to shrug and say, "whatever". This was originally set to go towards unfunded liabilities, but I had to pull from something. Besides, endowment income can help cover those costs, so it does help address it albeit in a different fashion. I would suggest that only a portion of the interest get spent, that way the government can utilize compound interest to raise even more funds down the line.
*Amended* 15% is to go towards universal income. It might not be the "basic" income number that has been making the rounds, but it is at least a start. Seeing as this was our money, it makes sense that we should get a portion of it back. From an economic standpoint, this has the same effect as a tax cut, only this can't push us back into deficit territory and it would work on a much wider scale.
*Amended* 15% is to go towards universal income. It might not be the "basic" income number that has been making the rounds, but it is at least a start. Seeing as this was our money, it makes sense that we should get a portion of it back. From an economic standpoint, this has the same effect as a tax cut, only this can't push us back into deficit territory and it would work on a much wider scale.
10% is to go towards universal investing. Originally, I had this set up so that another 25% would go towards universal income. However, I recently came across a suggestion for a really cool idea to get everybody into the stock market. This would go towards giving everybody an S&P 500-centric portfolio. Admittedly, they can't touch it for 15 years, but the payoff is worth it and in the meantime, people would see growing dividend income.
15% would go towards universal HSA's (health savings accounts). Even before the pandemic, healthcare was a major issue. Some want more privatization, while others want to move to a single payer. This splits the difference and gives people a means of covering healthcare costs without any need for bureaucratic oversight, as each person would decide how to put their equal cut to use. You could use it to cover smaller, day to day medical costs, or allow it to accumulate and act as a medical emergency fund. It would do what people think single payer would do, only better. It's easier on the budget and, rather than take a bulldozer to the system, we apply spackle and fill in the cracks. Insurance plans, regular HSA's, and government plans would still be up and running; this would just operate along side it.
The last 10% would go towards an emergency/reserve/savings fund. It's abundantly clear that emergency funds are a good thing. This is true for individuals, for businesses, and for government. Imagine having money tucked away so that when something big did come up, we as a country would be ready for it and wouldn't have to scramble to get some plan together. Rather than constantly being on our back foot and frantically trying to figure out how things are going to get done, we'd have funds set aside to help carry us through. This may seem similar to the endowment, but they are two separate funds with two separate purposes. The endowment is there to generate income, where this is designed to be a pool to pull from when things turn South.
Now, this is all well and good, but how do we get there? The deficit is huge, so it will be no small feat inverting the curve. From a basic math standpoint, the logical answer would be to increase revenue and cut spending. The problem is that even when revenue was going up, spending never went down. Worse, most of the government's expenses are locked in. There aren't many places where they can cut. Even then, any suggestion is met with outrage from some group who advocates for it.
While I'm not averse to seeing the FICA taxed income limit increased (though I think that should be coupled with removing income restrictions on IRA's) or seeing the gas tax increased by one-tenth of a percent (I hate that fraction!) I think the best approach would be to do an end-run around the government. Politicians clearly have no interest in doing anything, so we should do it ourselves. A while back, I laid out some tools at our disposal that would strengthen social safety nets and shift the burden off the government (facilitating the much needed cuts) whilst simultaneously pumping more money into their coffers.
In addition, I think that the layout here motivates cuts. Why bother with bloated pork and wasteful spending when you can streamline and get much better results with surplus dollars?
Just think of how much stronger we'd be by the end of it. Individuals would have a much firmer foundation and the government would have hundreds of billions that was previously going towards interest to invest. It satisfies the conservative desire for fiscal responsibility while also achieving progressive goals. Who knows, while it might not be necessary after 40 years, the country could decide to keep it intact just because it works so well.
Will it happen? Probably not, but it's still a fun hypothetical.
15% would go towards universal HSA's (health savings accounts). Even before the pandemic, healthcare was a major issue. Some want more privatization, while others want to move to a single payer. This splits the difference and gives people a means of covering healthcare costs without any need for bureaucratic oversight, as each person would decide how to put their equal cut to use. You could use it to cover smaller, day to day medical costs, or allow it to accumulate and act as a medical emergency fund. It would do what people think single payer would do, only better. It's easier on the budget and, rather than take a bulldozer to the system, we apply spackle and fill in the cracks. Insurance plans, regular HSA's, and government plans would still be up and running; this would just operate along side it.
The last 10% would go towards an emergency/reserve/savings fund. It's abundantly clear that emergency funds are a good thing. This is true for individuals, for businesses, and for government. Imagine having money tucked away so that when something big did come up, we as a country would be ready for it and wouldn't have to scramble to get some plan together. Rather than constantly being on our back foot and frantically trying to figure out how things are going to get done, we'd have funds set aside to help carry us through. This may seem similar to the endowment, but they are two separate funds with two separate purposes. The endowment is there to generate income, where this is designed to be a pool to pull from when things turn South.
Now, this is all well and good, but how do we get there? The deficit is huge, so it will be no small feat inverting the curve. From a basic math standpoint, the logical answer would be to increase revenue and cut spending. The problem is that even when revenue was going up, spending never went down. Worse, most of the government's expenses are locked in. There aren't many places where they can cut. Even then, any suggestion is met with outrage from some group who advocates for it.
While I'm not averse to seeing the FICA taxed income limit increased (though I think that should be coupled with removing income restrictions on IRA's) or seeing the gas tax increased by one-tenth of a percent (I hate that fraction!) I think the best approach would be to do an end-run around the government. Politicians clearly have no interest in doing anything, so we should do it ourselves. A while back, I laid out some tools at our disposal that would strengthen social safety nets and shift the burden off the government (facilitating the much needed cuts) whilst simultaneously pumping more money into their coffers.
In addition, I think that the layout here motivates cuts. Why bother with bloated pork and wasteful spending when you can streamline and get much better results with surplus dollars?
Just think of how much stronger we'd be by the end of it. Individuals would have a much firmer foundation and the government would have hundreds of billions that was previously going towards interest to invest. It satisfies the conservative desire for fiscal responsibility while also achieving progressive goals. Who knows, while it might not be necessary after 40 years, the country could decide to keep it intact just because it works so well.
Will it happen? Probably not, but it's still a fun hypothetical.
Thursday, June 25, 2020
Sunday, June 21, 2020
Thursday, June 18, 2020
Cash is Ki
The road to wealth and/or financial independence is a long one. As such, it's important to stay motivated and focused. After all, it's quite easy to fall off track and hinder your own progress.
The Dave Ramsey fandom, for example, is fond of visual aids. They frequently use illustrated thermometers or game boards and color in portions to indicate their progress towards a savings goal or towards paying down a debt (even something as lofty as the mortgage on their house.)
The Dividend Diplomats came up with a game a while back where you calculate both your annual and hourly cost of living and use that to find out how much time your stock purchase paid for. These numbers can also be used to figure out how close you are to FI(RE).
Being a fan of DragonBall, it was only a matter of time before my brain provided another viewpoint by which to provide financial motivation. Said viewpoint was to compare it to something that the fans of the anime are all too familiar with, power levels.
In a way, that's what your net worth is, isn't it? It's your ability to face the various financial challenges that life provides. The more fiscal strength you have, the more you'll be able to pursue hobbies, support businesses, generate tax revenue, or give to charities. You could even view deploying capital in these fashions as very much akin to one of the franchise's many iconic beam attacks. First, you charge up your monetary energy via saving, than fire it at your target..
Now, one could use the comparison in a negative light and point to the gap between the 1% and the 99% being similar to Goku's and Vegeta's vast eclipsing of the rest of the cast. There is a difference, however. The two lead Saiyans do have the strictest training regiments of the cast, but one of the reasons they have skyrocketed the way they did was because of something called Zenkai, this is an innate biological ability where Saiyans get a power boost after recovering from injuries. Considering how many fights the pair get into over the course of the story, record growth is to be expected. They also benefit from the exponential growth that comes from the various transformations being power multipliers.
When it comes to finances, we have our own variations of these. There is compound interest/the dividend snowball where you start to make steadily increasing amounts of money off of your saved/invested money and a snowball effect starts to take place. I've seen some criticize this phenomenon, but that has always baffled me, as this is what you want to happen. It turns the process into a downhill battle, providing more motivation for you to get over the bumpy parts to the smoother waters ahead. Further more, everybody (yes, even you) can use it. It's math. Even if you are in a lower income bracket, you can still reap the benefits if you're committed and stick to a plan.
Our fiscal Zenkai would be acquired through investing in the market itself. Said market goes up and down depending on a myriad of factors. Sometimes (like now, for example) those swings can be large. If you keep a cool head and keep investing during the dips, you'll see your net worth increase much faster when the prices inevitably start to go back up, as you'll have acquired more shares when they were at a lower price.
Going back to the progress meters noted above, you could even use the "power levels" to indicate certain milestones. Mark a certain net worth as having hit "super saiyan" (maybe $100,000 as that first milestone is often cited as the hardest?) and go from there. You could always use something more official, but those later numbers are probably not too realistic. On the plus side, it does give you more milestones in the early portions, so it isn't without its upsides.
So, what do you think? Would this mindset result in more people going even further beyond and breaking their limits, or is it nerdy and eye-roll worthy?
The Dave Ramsey fandom, for example, is fond of visual aids. They frequently use illustrated thermometers or game boards and color in portions to indicate their progress towards a savings goal or towards paying down a debt (even something as lofty as the mortgage on their house.)
The Dividend Diplomats came up with a game a while back where you calculate both your annual and hourly cost of living and use that to find out how much time your stock purchase paid for. These numbers can also be used to figure out how close you are to FI(RE).
Being a fan of DragonBall, it was only a matter of time before my brain provided another viewpoint by which to provide financial motivation. Said viewpoint was to compare it to something that the fans of the anime are all too familiar with, power levels.
In a way, that's what your net worth is, isn't it? It's your ability to face the various financial challenges that life provides. The more fiscal strength you have, the more you'll be able to pursue hobbies, support businesses, generate tax revenue, or give to charities. You could even view deploying capital in these fashions as very much akin to one of the franchise's many iconic beam attacks. First, you charge up your monetary energy via saving, than fire it at your target..
Now, one could use the comparison in a negative light and point to the gap between the 1% and the 99% being similar to Goku's and Vegeta's vast eclipsing of the rest of the cast. There is a difference, however. The two lead Saiyans do have the strictest training regiments of the cast, but one of the reasons they have skyrocketed the way they did was because of something called Zenkai, this is an innate biological ability where Saiyans get a power boost after recovering from injuries. Considering how many fights the pair get into over the course of the story, record growth is to be expected. They also benefit from the exponential growth that comes from the various transformations being power multipliers.
When it comes to finances, we have our own variations of these. There is compound interest/the dividend snowball where you start to make steadily increasing amounts of money off of your saved/invested money and a snowball effect starts to take place. I've seen some criticize this phenomenon, but that has always baffled me, as this is what you want to happen. It turns the process into a downhill battle, providing more motivation for you to get over the bumpy parts to the smoother waters ahead. Further more, everybody (yes, even you) can use it. It's math. Even if you are in a lower income bracket, you can still reap the benefits if you're committed and stick to a plan.
Our fiscal Zenkai would be acquired through investing in the market itself. Said market goes up and down depending on a myriad of factors. Sometimes (like now, for example) those swings can be large. If you keep a cool head and keep investing during the dips, you'll see your net worth increase much faster when the prices inevitably start to go back up, as you'll have acquired more shares when they were at a lower price.
Going back to the progress meters noted above, you could even use the "power levels" to indicate certain milestones. Mark a certain net worth as having hit "super saiyan" (maybe $100,000 as that first milestone is often cited as the hardest?) and go from there. You could always use something more official, but those later numbers are probably not too realistic. On the plus side, it does give you more milestones in the early portions, so it isn't without its upsides.
So, what do you think? Would this mindset result in more people going even further beyond and breaking their limits, or is it nerdy and eye-roll worthy?
Tuesday, June 16, 2020
'10 Cloverfield Lane' Movie Review
You can read my review of the film here.
*At one point, I reference Annie Wilkes, but for some reason, the K got lost in the shuffle making it "Annie Wiles". Alas, there's nothing I can do about it now.
Pros
- The cast all do a fantastic job.
- Plot takes all sorts of twists and turns that keep the viewer engaged throughout
- Michelle proves herself to be resourceful and clever, even giving MacGuyver a run for his money at some points.
- Great character dynamics
Cons
- Bad lighting undercuts the awe and spectacle of the big reveal
- Doesn't tie back into "Cloverfield" in any capacity
Overall
This was a very enjoyable movie. It's tightly written, well acted, and it keeps the tension up in a variety of different ways. I highly recommend it.
*At one point, I reference Annie Wilkes, but for some reason, the K got lost in the shuffle making it "Annie Wiles". Alas, there's nothing I can do about it now.
Pros
- The cast all do a fantastic job.
- Plot takes all sorts of twists and turns that keep the viewer engaged throughout
- Michelle proves herself to be resourceful and clever, even giving MacGuyver a run for his money at some points.
- Great character dynamics
Cons
- Bad lighting undercuts the awe and spectacle of the big reveal
- Doesn't tie back into "Cloverfield" in any capacity
Overall
This was a very enjoyable movie. It's tightly written, well acted, and it keeps the tension up in a variety of different ways. I highly recommend it.
Saturday, June 6, 2020
Wednesday, June 3, 2020
Monday, June 1, 2020
May 2020 Dividend Income: My IRA is Maximum
You can ride to 'em, bounce to 'em, and freak to 'em. That's right, it's time for the dividends. Let's get it on.
AT&T (T): $1.64 Up $0.55 from last quarter due to DRIP and a purchase. YoY is up $0.60
AGNC: $0.13 Down $0.04 from last quarter and $0.05 from last year due to a dividend cut. With the pandemic, these are becoming far too common. Thankfully, this is a small position, so the damage isn't too great.
Sprague Resources (SRLP): $8.51 Up $0.46 from last quarter due to DRIP and up $4.93 from last year. I am legitimately shocked that this dividend has held up the way that it has. Fingers crossed, it can keep things copasetic.
Hormel (HRL): $0.71 Same as last quarter and up $0.29 from last year due to DRIP and a purchase
Kinder Morgan (KMI): $1.09 Up $0.07 from last quater due to DRIP and a dividend increase.
Omega Healthcare Investors (OHI): $2.23 Up $0.04 from last quarter due to DRIP and $0.18 from last year
Realty Income (O): $0.97 Same as last month and up $0.24 from last quarter due to a purchase. YoY is up $0.28
Tanger Factory Outlet Centers (SKT): $1.53 Up $0.05 from last quarter due to DRIP and a dividend increase.
Diversified Healthcare Trust (DHC): $0.01 Ow. That's down $0.15 from last quarter. Another tiny position, but percentage wise, that one was still pretty brutal.
Paychex (PAYX): $1.30 Up a penny from last quarter and up $0.04 from last year.
Westrock (WRK): $0.82 Down $0.62 from last quarter due to a dividend cut. This one surprised me, to be honest. A lot of the stuff that gets shipped to our store comes in Westrock boxes, so I figured that they were chugging along fine, even amid all the COVID chaos. Maybe it's a precautionary measure for possible rocky times ahead? I don't know.
Publix threw in a whopping $9.18 outside the 401K. That's a huge spike due to an employee perk and a dividend increase.
That brings the non 401K dividend total to $28.12, up $5.53 from last quarter.
Speaking of the 401K, Publix threw in another $2.19 in there as well, up $0.72 from last quarter. Another fund threw in $0.82, giving us a total of $3.01 for the retirement account.
The grand total comes to $31.13, new record and a milestone. Noice.
Interest clocked in at $3.26 Up $0.09 from last month.
I did make some small additions to the portfolio. I added another share of Tanger (SKT) the day before they announced that they were suspending their dividend. It's not surprising considering that everything is closed, but it's still vexing. I suppose I put too much stock (heh) in their status as an aristocrat. Then again, as we saw, they did increase their dividend this year. If they reinstate it before year's end does the streak keep going or does the suspension break it either way? I have no clue.
The second purchase was a share of Proctor and Gamble (PG). The portfolio has been updated accordingly.
The real move this month was maxing out my IRA contribution....for 2019. Harder than it sounds, and both the employment impact payment and the extended tax deadline proved incredibly useful, but I got it done. I haven't even started on 2020 yet. I like the idea of going into 2021 without having to make catch up contributions, but I don't know how realistic a goal that is. We'll see how things play out, though.
All in all, this was a solid month. The forward income did take some whacks, and there will be more to come, I'm sure, but things are chugging along quite nicely so far. Whether the second half of 2020 starts to simmer down or whether the madness continues remains to be seen. It should be interesting, though, to say the least.
"stock dividend" by CreditDebitPro is licensed under CC BY 2.0
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AT&T (T): $1.64 Up $0.55 from last quarter due to DRIP and a purchase. YoY is up $0.60
AGNC: $0.13 Down $0.04 from last quarter and $0.05 from last year due to a dividend cut. With the pandemic, these are becoming far too common. Thankfully, this is a small position, so the damage isn't too great.
Sprague Resources (SRLP): $8.51 Up $0.46 from last quarter due to DRIP and up $4.93 from last year. I am legitimately shocked that this dividend has held up the way that it has. Fingers crossed, it can keep things copasetic.
Hormel (HRL): $0.71 Same as last quarter and up $0.29 from last year due to DRIP and a purchase
Kinder Morgan (KMI): $1.09 Up $0.07 from last quater due to DRIP and a dividend increase.
Omega Healthcare Investors (OHI): $2.23 Up $0.04 from last quarter due to DRIP and $0.18 from last year
Realty Income (O): $0.97 Same as last month and up $0.24 from last quarter due to a purchase. YoY is up $0.28
Tanger Factory Outlet Centers (SKT): $1.53 Up $0.05 from last quarter due to DRIP and a dividend increase.
Diversified Healthcare Trust (DHC): $0.01 Ow. That's down $0.15 from last quarter. Another tiny position, but percentage wise, that one was still pretty brutal.
Paychex (PAYX): $1.30 Up a penny from last quarter and up $0.04 from last year.
Westrock (WRK): $0.82 Down $0.62 from last quarter due to a dividend cut. This one surprised me, to be honest. A lot of the stuff that gets shipped to our store comes in Westrock boxes, so I figured that they were chugging along fine, even amid all the COVID chaos. Maybe it's a precautionary measure for possible rocky times ahead? I don't know.
Publix threw in a whopping $9.18 outside the 401K. That's a huge spike due to an employee perk and a dividend increase.
That brings the non 401K dividend total to $28.12, up $5.53 from last quarter.
Speaking of the 401K, Publix threw in another $2.19 in there as well, up $0.72 from last quarter. Another fund threw in $0.82, giving us a total of $3.01 for the retirement account.
The grand total comes to $31.13, new record and a milestone. Noice.
Interest clocked in at $3.26 Up $0.09 from last month.
I did make some small additions to the portfolio. I added another share of Tanger (SKT) the day before they announced that they were suspending their dividend. It's not surprising considering that everything is closed, but it's still vexing. I suppose I put too much stock (heh) in their status as an aristocrat. Then again, as we saw, they did increase their dividend this year. If they reinstate it before year's end does the streak keep going or does the suspension break it either way? I have no clue.
The second purchase was a share of Proctor and Gamble (PG). The portfolio has been updated accordingly.
The real move this month was maxing out my IRA contribution....for 2019. Harder than it sounds, and both the employment impact payment and the extended tax deadline proved incredibly useful, but I got it done. I haven't even started on 2020 yet. I like the idea of going into 2021 without having to make catch up contributions, but I don't know how realistic a goal that is. We'll see how things play out, though.
All in all, this was a solid month. The forward income did take some whacks, and there will be more to come, I'm sure, but things are chugging along quite nicely so far. Whether the second half of 2020 starts to simmer down or whether the madness continues remains to be seen. It should be interesting, though, to say the least.
"stock dividend" by CreditDebitPro is licensed under CC BY 2.0
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