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Investment Analysis Clubs / Macro Economic Trends and Risks


Subject:  Re: Proposal to end public pensions Date:  7/11/2013  5:45 PM
Author:  rharmelink Number:  428528 of 539147

As for you, where would your above average returns be if there had been no bailout and a 90% drop in the indices? Where would a person following your exact path be if he were 10 years younger when the crash hit? What about all the people who did everything you did but simply had crappy employers, crappy plans, and no opportunity to earn bonuses?

Chance favors the prepared mind. (...but is no guarantee...)

Circumstances can defeat the best of us. I had nearly $200K of medical expenses in my 6-month gap between Cobra and Medicare, when my kidneys failed.

But someone consistently living beyond their means is a major accident waiting to happen. A virtual time bomb.

I missed the tech decline because I chose to pay off my mortgage early, when everyone else was telling me I should have been taking out a second mortgage ... "What you earn in the market will more than pay the interest on the mortgage!".

That's also why people overextended themselves in housing and bought more than they needed, or borrowed against it with second mortgages ... "Property prices ALWAYS go up! You can't lose!".

As for 10 years younger, how about 30? Several years ago, my 22-year-old nephew took out a 15-year contract for deed on my condo. I had lived in it for 20 years. He saw how I lived below my means, and knew how cheaply he could live there while starting out. First thing he did was go out and buy some big bags of beans and rice, which he supplements with meat and fresh vegetables and fruits that go on sale. He loves going to the Farmer's Market (a weekly event near my condo) and is one of the best cooks I know. He's worked a few temp jobs, but now after several steady jobs, 4 years into the contract for deed, he's toying with paying it off early. He's into computers, just as I was.

Living below your means gives one much more adaptability to problems that can come up.

Other than the money to pay for those medical bills, I've not needed to tap into my IRA's (ex-401K) for any expenses since I stopped working 7 years ago. Although I do have a small RMD each year from a beneficiary IRA from when my dad died a few years ago.

But I am definitely an extreme case -- my income has been sufficient for me and the things I like to do, but so low that the sum total of owed state and federal incomes taxes over the 7 years since I quit working in 2006 is under $2000. So I'm currently living on the dole -- the "icing on the cake" I mentioned.
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