US Election: GO VOTE!

[scanner313]

Debt, by itself, is not a bad thing if you have something that you are leveraging it against. For example, I'd rather pay 5% interest on my house debt instead of paying off my house early if I can make 10% by investing that extra amount each month to annuities.

I have to ask this and I'm not trying to make you look bad, but...

If you had the means to pay off your house and redirect the monthly payments into an interest accruing annuity, why would you ever chose to not do this and continue to PAY interest on the mortgage debt? I mean, this one has me absolutely dumbfounded?

Secondly, what "leverage" does the US have against it's debt? Our country is OWNED by everyone who has lent us money. That debt isn't just some number floating in space. That's money that OUR government has spent without the ability to pay it back. And cutting taxes to stimulate the economy while tacking hundreds of billions of dollars onto the debt each year is not the answer. Yes, we need a strong economy, but at some point in the not too distant future, our government will have 1 option to save this country. And that option will be to cut every single tax funded program we Americans take for granted. This is something the Republicans claim to be about, but they have never once reduced government spending to a point below the incoming taxes. The only surplus we've ever had in recent history was under Clinton, a Democrat. But instead of allowing Clinton to take that money and start paying down our debt the American people all screamed and yelled about how they "want OUR money back". "It's OUR money, not the governments!". Blah, blah, blah. We'll I've got some news for all those braindead idiots who were screaming about that...

The national debt is YOUR debt! Or had you forgotten that when the government spends money it's OUR money they are spending? And when they run a deficit and borrow money to cover their expenses it is money they are borrowing against US.

People need to wake up and realize that disregarding the national debt is going to kill this country.

Here's a simple analogy for anyone who still doesn't understand what's going on:

Your salary is $25,000 a year. You get a credit card with an unlimited balance. You start buying everything your heart desires but that you can't pay for right now, but you can afford the monthly minimums so you're ok. Every year, you continue to charge all of the stuff you want, far beyond your yearly income. Your minimum payments get bigger and bigger and bigger until you can't afford to make them anymore, and you realize that almost your entire minimum payment is going to just cover the interest. You begin defaulting on your payments. So what happens now? The credit card company says "Hey, that's it. We're not lending you any more money until you pay off your debt". Your answer? "But I can't, because I don't even have enough to cover the interest each month, so how can I ever pay it down?" CC Co.: "That's not our problem. You owe us this money, so find a way to pay or we're taking back all the stuff you bought with OUR money." So you'll look to other sources for a loan, and they all reject you. What do you do?

Now, using that same scenario, pretend that YOU are the US government. Your salary is what they collect in taxes each year. Your credit card balance is the national debt. The credit card company is Japan, and every other country who buys up US bonds and other securities that the US government issues to borrow money. See the problem?

So what options do you have? #1 - Get a second job and make more money (raise taxes). #2 - Reduce your living expenses by cancelling your gym membership, cancelling your phone and cable, etc. (cut federal programs). #3 - Continue as you've been doing and wait for the credit card company to come and seize your assets. And you won't be able to stop them because you can't afford a lawyer, so they'll just come and take what they want while you sit there helplessly watching (Draw in your own picture here).

So for anyone who is bitching about the fact that their taxes are going to go up, too bad. And if you truly wanted someone in charge where your taxes could stay the same and the debt could be reduced, you should have voted Libertarian. And you should learn about them and support them in all upcoming election because they are the only hope for the long term survival of this country. Because I can promise you that neither the Repubs nor the Dems will be doing anything to reduce government spending enough to take care of both.

(Sorry this was so long)

 

[J-Dubya 777]

J,

It's a mistake. Unless you own 250 acres of developed, commercial land there is no way in hell that your taxes are going to be $25,000 when you're home value is only $83,000.

I lived on Long Island in NY for a long time, and they have some of the highest property taxes in the country, and even a $150,000 home has an average tax of only about $10,000.

Worst case you have to get a reassement because someone screwed up. It's a pain but not the end of the world. Most likely this entire thing was caused by someone's typo.

It's FMV, fair market value. Talked to our "mayor" yesterday, and because we haven't been re-assessed since 1995, there is a huge jump in FMV. WHat concerned me was a jump in FMV = a jump in my prop. taxes. The calculation they use to determine the actual tax amount is much lower this year, and will balance out most of the increase. Time will tell, I should have my tax bill in Dec. What does surprise me, is that when I had my home appraised for a re-fi, I was told mid 140's to low 150's. The people who will be killed by this will be the people in the 400K houses on large lots who have been paying at the 1995 rate for the last 10 years. All is well, I'm calling off the dogs until December....

J-Dubya

 

[ABQShredHead]

If you had the means to pay off your house and redirect the monthly payments into an interest accruing annuity, why would you ever chose to not do this and continue to PAY interest on the mortgage debt? I mean, this one has me absolutely dumbfounded?

Pay interest on the mortgage to get the tax relief. Mortgage interest is tax deductible. If you have the money on hand, invest it into something that will return a high yield rather than dumping that money in your house. Sure, you accrue value in your home as prices rise, but the money invested will return greater value and liquidity than tying up that money in your house. Use your real estate as a tax shelter and invest your money to improve your returns.

 

[Beelzebub]

Excellent post, scanner. You verbalized my thoughts quite eloquently, I have to say. I remember when the billboard in Times Square showing the amount of the national debt was turned off because we had a surplus. Sure, taxing and spending is bad, but not taxing and spending is even worse.

 

[Anonymous]

Aside from the current situation, my contempt for the republican party stems from their strong ties to the religious right. I really don't care about a politician's personal beliefs, but when it affects the laws they are passing or want to pass, it crosses the line for me. You will not get me to vote for someone who wants to close down abortion clinics, ban gay marriage, stop stem cell research, and try make teaching that joke that is "intelligent design" manditory in public schools. Not happening.

 

[Kenneth R.]

Hooray for the outcome.

Reasons, so that it does not appear that I am yet another party-bandwagon fool-

1. Having the Executive and Legislative branches in opposition provides (theoretically) a more balanced government. However,
2. I don't really think either party is any better than the other- they both suck balls. Can we elect real people for once? The entire party thing is pretty pathetic in my opinion, in that it generates these attitudes such as several have already discussed - people do it just to do it, like a club. And the competition is more "we aren't as bad as the other guy", which to me says "we both suck, so vote against the one who sucks more". The polarity of the political system lends itself to this kind of petty squabling and backtracking.

Ultimately however, we cannot blame the government for sucking (even though it does) because it is we, the people, who put them there. A lot of people who whine about the government forget that a majority of voters are responsible for the idiocy. As the saying goes- who is the greater fool? the fool or the fool who follows him?

I'm just glad Rumsfeld is gone. That guy was a creep on so many levels. Maybe now this senseless war can be conducted and concluded in a proper and intelligent fashion.

 

[Fossil Records]

I have to ask this and I'm not trying to make you look bad, but...

If you had the means to pay off your house and redirect the monthly payments into an interest accruing annuity, why would you ever chose to not do this and continue to PAY interest on the mortgage debt? I mean, this one has me absolutely dumbfounded?

Multiple reasons:

1) Would you rather pay off 5% every year for half the number of years or MAKE 5-10% every year for the full duration of the mortgage? Let's say I have a $200,000 mortgage. I pay $1000 a month and have $200 left over every month to invest in either my mortgage (5% interest) or an annuity (12% interest).

If I apply it to my mortgage, I can pay it off 12 years early and save about $90,000 in interest (though I've still got to pay $100,000 in interest). So, in 18 years, I've paid $300,000 for my house and have no profit (other than what I can write off in taxes, which is now proportionally $90k less). So I'm -$300,000 total. Okay, but we paid off 12 years early so let's invest the whole $1200 per month during that duration into an annuity (12 years at 12%): $389,219.17. Not bad, we've profitted $89,000 over 30 years.

If I apply it to my annuities which have consistently returned over 12% (I average between 15 and 16%), then I'm paying the full interest for my house in 30 years to the tune of $390,000. But my annuities have made me $648,702.26 (30 years at 12% with $200 per month). So I've actually profitted from NOT paying off my mortgage in 30 years ($649,000 - $390,000 = +$259,000).

Which would you rather have? $89,000 after 30 years (but you paid off your mortgage early) or $259,000 after 30 years (but maintained your debt during those 30 years)? Me? I'd rather have the $259k.

2) I get to write off mortgage interest in taxes so that 5% interest really becomes less of an impact on my "bottom line." In the first example, over
the lifetime of the mortgage (18 years), I get to write off an average of $5,555 per year. In the second example (30 years), I get to write off $6,333 per year. Again, which would you rather write off? Me? I'd rather have the $6,333. So it is as though I'm being reimbursed either $28,000 ($5,555 per year for 18 years at .28 tax) or $53,000 ($6,333 per year for 30 years at .28 tax).

3) Money that I pay off my house with can't be pulled out in an emergency without taking out another mortgage which may or may not be tax deductible and at a much higher interest rate. Not a good plan to hedge bets on an emergency.

Total score after 30 years? $117,000 profit by paying off your mortgage early or $312,000 profit by letting it ride. Don't think you made me "look bad" at all.

Secondly, what "leverage" does the US have against it's debt? Our country is OWNED by everyone who has lent us money.

Um... no, it's not. Any more than your house is OWNED by the bank. Next time your roof leaks, call the bank and tell them to come out and fix it 'cause they OWN your house. They own an INTEREST in your house as collatoral for the money you have borrowed. Having worked for a bank in the past, I know first-hand that banks do NOT want your house. The only thing the bank wants is for you to pay your bills. The LAST thing they want is to get stuck with a house from a foreclosure.

The national debt is YOUR debt! Or had you forgotten that when the government spends money it's OUR money they are spending? And when they run a deficit and borrow money to cover their expenses it is money they are borrowing against US.

People need to wake up and realize that disregarding the national debt is going to kill this country.

Let's calm down a little. I don't think anyone is under the presumption that the point that our national debt is at is a petty amount. It HAS gotten out of hand and needs to be remedied - you got any solutions? If so, run for office. My point was that having debt isn't AUTOMATICALLY bad - you can leverage debt (and should). And with respect to the Iraq war, the total cost is far less than our national debt and politicians (whom I've already said by allusion don't work) attempt to use engagements like this as leverage (with regard only to the financial cost).

Unfortunately, everyone (even Libertarians) spout about how the system's broken yet don't have a viable solution. And until there's a revolution, Dems and Repubs are the only parties that will ever be in power - they've written the rules that way.

 

[scanner313]

Pay interest on the mortgage to get the tax relief. Mortgage interest is tax deductible. If you have the money on hand, invest it into something that will return a high yield rather than dumping that money in your house. Sure, you accrue value in your home as prices rise, but the money invested will return greater value and liquidity than tying up that money in your house. Use your real estate as a tax shelter and invest your money to improve your returns.

What "tax relief"? You're only getting a 30% (if you're lucky) write-off on the interest. So no matter how you look at it you have to give $1 to some bank in order to get $.30 back from the government.

I don't have the numbers in front of me to prove it, but unless you have a guaranteed, high yield investment to put your free cash into, it's almost never a good idea to carry a mortgage. The 70% loss on the interest has to be offset by the appreciation of your house (which has been about 5% annually over the last 7 years, and significantly higher during the last 3 or 4) plus the yield on your investment. So, even with the 5% conservative estimate, with even a 6% mortgage rate (not too absurd these days) you'd need to be making at least 9% in return on your money in order to break even. And that would have to be guaranteed. There aren't many investment options out there that promise rates around 9% with minimal risk.

Regardless, paying interest on any loan is throwing away money. If you have the cash to buy something outright, it's always the better option unless you can offset your differential by gaining value on that money somewhere else. But for the most part, you won't be ganining enough to make it worthwhile.

 

[scanner313]

As the saying goes- who is the greater fool? the fool or the fool who follows him?

Obi-Wan Kenobi said that.

 

[scanner313]

If I apply it to my annuities which have consistently returned over 12% (I average between 15 and 16%),

I don't disagree with you. If you can get these kind of returns guaranteed then it absolutely makes sense to use your free cash here instead of paying down your mortgage. My contention is that you won't get many options for returns like these without significant risk.

2) I get to write off mortgage interest in taxes so that 5% interest really becomes less of an impact on my "bottom line." In the first example, over
the lifetime of the mortgage (18 years), I get to write off an average of $5,555 per year. In the second example (30 years), I get to write off $6,333 per year. Again, which would you rather write off? Me? I'd rather have the $6,333. So it is as though I'm being reimbursed either $28,000 ($5,555 per year for 18 years at .28 tax) or $53,000 ($6,333 per year for 30 years at .28 tax).

In absolute terms this makes no sense. To say you're being reimbursed more by haolding your mortgage is a fallacy. You're still PAYING a significant amount more in interest to save a little more on the back end. Without the offset from other investments this is not beneficial in and of itself.

Having worked for a bank in the past, I know first-hand that banks do NOT want your house. The only thing the bank wants is for you to pay your bills.

Of course they don't want your house. But the fact of the matter is that they have absolute rights to whatever the collateral is for the loan you have with them. In this case it just so happens to be a house. And so they absolutely OWN your house up to the value you still owe them on the loan. You know exactly what I mean when I say OWN in this situation, and if you don't believe that the lenders to the US government don't own it, you're dead wrong.

I don't think anyone is under the presumption that the point that our national debt is at is a petty amount. It HAS gotten out of hand and needs to be remedied - you got any solutions? Unfortunately, everyone (even Libertarians) spout about how the system's broken yet don't have a viable solution. And until there's a revolution, Dems and Repubs are the only parties that will ever be in power - they've written the rules that way.

The simple solution is to immediately cut all federally funded programs that are unnecessary, unfair, and unsuccessful (there are thousands to choose from), stop incarcerating victimless criminals, etc. There are endless sources of wasted money that the Democrats are always blamed for. But the Republicans are just as guilty. Cut this waste and you'll have a surplus to actually pay down the debt. It's that simple. The major parties could do this if they tried, but they just don't care.

And it's only us, the American people, who are responsible for the fact that the Dems and Repubs will be the onyl 2 in power. If people would wake up and look at the bigger picture they might realize that their stupid petty bullshit desires aren't right for everyone else. And they'll actually vote for a party that could benefit the entire country instead of just the liberals, or the conservatives. It won't happen any time soon, I'm not kidding myself about that. But hopefully in my lifetime I'll see the American people wise up and take back what is theirs. If we wait until our government collapses into financial ruin, it won't matter much then, will it?

 

[ABQShredHead]

I think Fossil pretty much owned this argument.

 

[Matt]

Obi-Wan Kenobi said that.

Obi-Wan FTW.

 

[Matt]

Aside from the current situation, my contempt for the republican party stems from their strong ties to the religious right. I really don't care about a politician's personal beliefs, but when it affects the laws they are passing or want to pass, it crosses the line for me. You will not get me to vote for someone who wants to close down abortion clinics, ban gay marriage, stop stem cell research, and try make teaching that joke that is "intelligent design" manditory in public schools. Not happening.

That is my opinion pretty much, aside from the damn Iraq war, and the "war on terrorism".

 

[Fossil Records]

In absolute terms this makes no sense. To say you're being reimbursed more by haolding your mortgage is a fallacy. You're still PAYING a significant amount more in interest to save a little more on the back end. Without the offset from other investments this is not beneficial in and of itself.

"in and of itself" you're correct. It only pays if you combine all of the options. And, as I've shown, it pays well.

And, of course, there are ways to violate all that I explained. If you can pay for your house right out of your pocket, then everything I said may be null and void (I haven't crunched those numbers). What if you have an extra $2000 per month (haven't crunched those either)? But for the numbers that are more typical (and affect me directly), it works out to be beneficial. Everyone should do their own numbers and determine which is the best payoff for them. And it only works if you actually put that $200 in the annuity and not towards that new guitar (guilty).

Of course they don't want your house. But the fact of the matter is that they have absolute rights to whatever the collateral is for the loan you have with them. In this case it just so happens to be a house. And so they absolutely OWN your house up to the value you still owe them on the loan. You know exactly what I mean when I say OWN in this situation, and if you don't believe that the lenders to the US government don't own it, you're dead wrong.

So Japan is going to annex Pennsylvania? No, they have the options on the interest bearing bonds. They can exercise the bonds and we'd have to figure out a way to pay for them. THAT is why the huge debt we have is a problem. And, not to poke a hornets nest, but keep in mind that Congress has debt limits that they keep exceeding. In a very generic way, the government is supposed to "dissolve" if they exceed these debt limits - but Congress keeps raising the limits. Wish you and I could do that with credit cards... "Ya know, that $25,000 limit isn't gonna cut it Visa - I'm gonna raise it to $35,000. 'Kay?"

The simple solution is to immediately cut all federally funded programs that are unnecessary, unfair, and unsuccessful (there are thousands to choose from), stop incarcerating victimless criminals, etc. There are endless sources of wasted money that the Democrats are always blamed for. But the Republicans are just as guilty. Cut this waste and you'll have a surplus to actually pay down the debt. It's that simple. The major parties could do this if they tried, but they just don't care.

What you and I think are "unnecessary, unfair, and unsuccessful" programs aren't what Tom, Dick, and Harry think are "unnecessary, unfair, and unsuccessful." The problem with a Democracy is that you have to try and please everyone all of the time and succeed in pleasing none of the people most of the time.

Just to put the debt into perspective, we're to the point now where we can't really pay down the debt. Our current interest payment is $282 billion. Last year we pulled in $2.1 trillion. That make more than 10% of our nation's income as interest. With the DoD, DHHS, SSA, and DVA requiring $2 trillion on their own, not quite sure where that extra money's going to come from. To break that down, the DoD requires over $650B in order to operate (that's regardless of whether we're in combat or not) and the military is already accused of not being at a state of readiness, $580B goes to the DHHS and you might be able to trim off a little here and there, but not enough to make a difference, SSA requires $570B and unless you want to piss off every person getting close to retirement there's no way you can get rid of SSA, and finally, the DVA requires $270B. Unless you're an advocate of dropping services for veterans (people who were underpaid and underfunded while they served us), you can't really cut any of this. The services you and I might want to cut are $20M here and there and won't affect the bottom line (unfortunately).

And it's only us, the American people, who are responsible for the fact that the Dems and Repubs will be the onyl 2 in power. If people would wake up and look at the bigger picture they might realize that their stupid petty bullshit desires aren't right for everyone else. And they'll actually vote for a party that could benefit the entire country instead of just the liberals, or the conservatives. It won't happen any time soon, I'm not kidding myself about that. But hopefully in my lifetime I'll see the American people wise up and take back what is theirs. If we wait until our government collapses into financial ruin, it won't matter much then, will it?

Well, sort of. You're assuming that ALL Americans dislike the Dems and Repubs. Unfortunately, many Americans are diehard Dems or Repubs. Still others dislike both but realize that they're the only game in town and feel that they're votes are "wasted" by voting for independents. The rest of us vote for independents (if they are on the ballot - unfortunately there was only one on our ballot) and get lost in the noise.

It's frustrating - I hear you. I agree. Unfortunately, even the one independent I voted for didn't have any answers and was merely the least of three evils.

 

[Rose Immortal]

Aside from the current situation, my contempt for the republican party stems from their strong ties to the religious right. I really don't care about a politician's personal beliefs, but when it affects the laws they are passing or want to pass, it crosses the line for me. You will not get me to vote for someone who wants to close down abortion clinics, ban gay marriage, stop stem cell research, and try make teaching that joke that is "intelligent design" manditory in public schools. Not happening.

Not everybody in the Republican party is a hard-liner in that way...so now you all get treated to some specific reasons why I wish there was a third party for moderates. Now, "moderate" for me doesn't mean being quiet and unobtrusive...it basically means I'm guaranteed to piss off both the left and the right at the same time. So...in here I guarantee everyone who reads this will walk away pissed off, probably many of you for opposite reasons from each other!

--Abortion clinics: Definitely would not want them closed down as I don't like the alternative, and there are those rare cases when it's needed to save a life and in that case, while I believe I would give my life to allow my child to live (including at the moment of childbirth), I think that's up to the individual. However, I'd like to see MUCH more effort in things like promoting the use of contraceptives and perhaps most importantly to me, promoting adoption as a better alternative. There are so many people out there who can't have their own children who in my opinion should be encouraged to adopt before doing something potentially wasteful as can happen with in vitro fertilization.

--Gay marriage: While I admit I'm on the fence here, I see more pros than cons. The value of monogamy has really been trampled on these days, and I think that whether you call it gay marriage or civil union, some sort of recognition of homosexual domestic partnerships will go a long way towards reinforcing the value of having only one lifelong partner. On the other hand, I don't care for other states trying to force other states to recognize gay marriages from out of state. Either the federal government needs to step in or each state needs to legalize it on their own. The one argument I've seen against gay marriage that I really have to think about is that other things like polygamy might then be made legal, or the consent age might be lower, but I'm not yet conviced that must automatically follow from legalizing gay marriage.

--Stem cell research: The thing that gets me here is that there are still alternate techniques being researched that may render the destruction of embryos unnecessary. This includes using adult or umbilical stem cells, as well as lab techniques that may be able to force adult cells to revert back to an embryonic (or very close) state. It bothers me that people try to frame this question as one where those who oppose the current methods are somehow against all research that could find a cure for somebody. This is one of those cases where I think taking the shortest route is not the most ethical--but I DO think there need to be concentrated efforts so that the alternate techniques become usable faster.

--Intelligent design: In public schools, science should stay in the science room. However, I think it would be wise of public schools to, in social studies, history, comparative religions, or some other similar course, to discuss what different religions believe about creation in a way that is respectful and not derogatory towards people's beliefs. This would provide a balanced approach that would leave the real decisions in the hands of children and their families. Do remember, though--when you talk about the beliefs of the religious, not all Christians (guessing that's your example) believe in the "creation science" that requires denying scientific fact. Others such as myself believe that God created the world through the processes science documents and agrees on; there's no need, therefore, to change any of what's in the science books under this view because the Bible is seen in this view as not a perfectly literal account but an explanation of the "who" and "why," so to speak, rather than the "what" and "how."

 

[MasqueReaper]

Look, one way or the other, the nation has spoken...finally

 

[Rose Immortal]

Look, one way or the other, the nation has spoken...finally

I guess I can at least hope that by being forced to be in the same room with each other, so to speak, that people can figure out how to put the hostility towards each other aside for the time being.

 

[MasqueReaper]

Bush will finally have to admit when he is wrong, and he will HAVE to work with the Democrats. He has left them in the cold for so long, and now that his Iraq war has become so unpopular, he and the GOP will have to burden the responsibility. I hope the dems take the high road (unlike the GOP over the last 6 years) and include everyone in the decision-making process.

 

[NegativeVolume]

It's fun to watch political debates via message board. I'm curious to see how a Republican Prez and a Democrat Congress handle their business in these next two years. Go team.

 

[turke]

"You can't fight city hall." "Death and taxes." "Don't talk about politics or religion." This is all the equivalent of enemy propaganda, rolling across the picket line. "Lay down, GI! Lay down, GI!". We saw it all through the 20th Century. And now on the 21st Century, it's time to stand up and realize, that we should NOT allow ourselves to be crammed into this rat maze. We should not SUBMIT to dehumanization. I don't know about you, but I'm concerned with what's happening in this world. I'm concerned with the structure. I'm concerned with the systems of control. Those that control my life, and those that seek to control it EVEN MORE! I want FREEDOM! That's what I want, and that's what YOU should want! It's up to each and every one of us to turn loose of just some of the greed, the hatred, the envy, and yes, the insecurities, because that is the central mode of control, make us feel pathetic, small, so we'll willingly give up our sovereignty, our liberty, our destiny. We have GOT to realize we're being conditioned on a mass scale. Start challenging this corporate slave state! The 21st Century's gonna be a new century! Not the century of slavery, not the century of lies and issues of no significance, of classism and statism, and all the rest of the modes of control... it's gonna be the age of humankind, standing up for something PURE and something RIGHT! What a bunch of garbage, liberal, Democratic, conservative, Republican, it's all there to control you, two sides of the same coin! Two management teams, bidding for control of the CEO job of Slavery Incorporated! The TRUTH is out there in front of you, but they lay out this buffet of LIES! I'm SICK of it, and I'M NOT GONNA TAKE A BITE OUT OF IT! DO YA GOT ME? Resistance is NOT futile, we're gonna win this thing, humankind is too good, WE'RE NOT A BUNCH OF UNDERACHIEVERS, WE'RE GONNA STAND UP, AND WE'RE GONNA BE HUMAN BEINGS! WE'RE GONNA GET FIRED UP ABOUT THE REAL THINGS, THE THINGS THAT MATTER - CREATIVITY, AND THE *DYNAMIC* *HUMAN* *SPIRIT* THAT REFUSES TO *SUBMIT*! WELL THAT'S IT, that's all I've got to say. It's in your court now.

This is a quote from the movie "Waking Life" from Richard Linklater. Watch the movie if you can find it, it is a great movie.