Greetings from the Rocking Chair – October 2008

Retirees and the financial crisis

September 29, 2008 will go down in the history books as the first time the Dow Jones Industrial average dropped 777 points in one day. While not the highest daily percentage drop (that occurred on Black Monday, October 19, 1087 when the Dow fell 23%) it was certainly significant in light of the financial turmoil the United States and the world in general is experiencing.

I suppose numerologists could have a great time with this as triple 7’s are usually represented as lucky number especially in simplified slot machines in gambling establishments. From what I have read, holding 3 sevens in a game of Black Jack almost ensures a win since they add up to 21. The number 7 in scripture is often referred to God’s perfect number, the number of completion. I would also suspect that most of us would conclude there is no numerical significance to the events of that day.

Rocking Chair Wisdom doesn’t begin to represent itself as knowledgeable in the area of economics to easily understand everything that is happening in the financial arena, let alone to try to explain it to someone else. Like many other Americans, and from what we’ve read many economists, RCW doesn’t know the real answer.

For most of us in the “retired” community, we are just as concerned as those in the “non-retired” community about trying to maintain our current standard of living. Many retirees have taken jobs to supplement their retirement income and others have started their own businesses.

With credit markets becoming tighter, it may be more difficult for retirees to secure loans to grow their business or obtain favorable financing when purchasing vehicles or other durable goods.

As values in retirement funds decrease, at least short term, the ability to withdraw the necessary funds to satisfy your retirement dreams may be compromised.

Watching the news reports on American television could give one a false sense of the severity of the current financial problem. However, this crisis reaches beyond our shores and becomes a global problem. Financial institutions in other parts of the world are failing or are being propped up, bailed out, or rescued by their governments as well.

Dave Ramsey is a nationally syndicated talk show host, and many thousands of people have followed his advice and followed a path to recovery from debt. Now he has provided some advice for our nation’s leaders to consider in Three Steps to Change Our Nation’s Future and in The Common Sense Fix. In addition, you can read up on some of the debate going on related to the mark to market rule that is getting quite a bit of press here at Zacks Investment Research. If you don’t understand this accounting rule, CNNMoney.com has an interesting article.

$700 Billion has been the most quoted figure for the cost of the bail-out which is now being called a rescue. However, some have used figures up to $1.5 Trillion dollars. A lot of us have a difficult time conceptualizing those dollars when we may be trying to stretch our fixed income retirement and social security checks. To give you some perspective as to how much this affects the individual resident of the United States let’s assume the cost is $1 Trillion. With a US population of approximately 305 million people, this amounts to an approximate cost of $3,300 per person including men, women, and children, whether they pay taxes or not.

Once we get a handle on the bleeding and the pain associated with this disease, we need to identify and eradicate the root of the disease. There will be many committee hearings, task forces, and investigations all pointing to a “cause”. However, Rocking Chair Wisdom believes that when you strip everything away you will find the root of the problem is “Greed”. Money in and of itself is not evil. It is the “Love of Money” that is root of evil and results in the problems of today.

To say we are in troubling times as a nation would be a gross understatement. It is at this time that we are reminded of 2 Chronicles 7:14. When we go to the polls this November, let’s do so as an informed electorate seeking to adhere to the admonishment of 2 Chronicles 7:14 by humbling ourselves and turning from our wicked ways. If you are interested, here is a link to the Presidential Prayer Team web site as well as their Pray the Vote web site.

If you wish to do some reading about the candidates, take a look through the Rocking Chair Wisdom Store. Check out the Kindle wireless reading device category for some suggestions for wireless reading.

Remember, stresses and friction will help us become stronger, just as a plant becomes stronger by pushing through the dirt and by being buffeted by the wind, we will emerge stronger as individuals and as a nation.

 From Rocking Chair Wisdom

ENJOY your Life After Retirement

Greetings from the Rocking Chair – August 2008

Have you ever been called a deadbeat? What image first comes to mind when you hear that word? Is it a picture of someone running away from his or responsibilities? Even though this probably isn’t you, did you know that you may be called a deadbeat and not even know it?

A Deadbeat in the credit card industry is a card holder that pays their bill on time and never carrys a balance to the next billing cycle. Even though you are using your credit cards for how they were designed and exercising discipline in managing your finances, credit card companies are not making much, if any, money from your activities and you are then classified as a deadbeat. I have read of cases where not only did the credit card company not make any money from these so called “deadbeats, but they actually paid them to use their cards through cash back incentives.

Credit card companies may actually make money off these deadbeat card holders, but it won’t be through interest they pay. It will be through various banking relationships and merchant fees charged to the merchants that accept the cards.

Credit cards, when used with care and discipline, can be a great asset affording some protection on purchases that paying in cash or by debit may not afford. In tight financial times it can be tempting to pull out the credit card, but unless you are disciplined enough to pay it in full at the end of the month, it can be a costly adventure. Enjoy being a deadbeat for once.

In the July 22, 2008 edition of the New York Times, OP-ED columnist David Brooks writes an opinion entitled The Culture of Debt . In this article he points out the debate between those who say the predatory lenders are at fault for the debt crisis and those who believe the borrowers are at fault. While there are very valid arguments for both sides, is it possible that there may even be a third position to be considered?

According to Brooks, “America once had a culture of thrift. But over over the past decades, that unspoken code has been silently eroded.” As such, what has happened to our financial system is part of a larger social story. Rising home prices presented temptations for people to take on more risk. With an over abundance of easy credit, Americans were able to acquire designer goods. Or how about buying something on credit now with no money down and no payments for 4 years? Make Sense?

Are we like the proverbial frog, that when placed in a pot of cold water won’t notice that the heat is being turned up until it’s too late? It would seem that we absorb the patterns and the norms of those around us. So instead of recognizing the pattern of over indulgence, we start making excuses or jokes about it, which seems to make it a bit more palatable. As Brooks says, “We mimic the behaviour around us. Only at the end is there self-consious oversight.”

What happened after the Depression? A general attitude of frugal living and saving set in. When the dot com bubble burst, we saw a sobering of investments in technology endeavors. With our earlier oil crisis Americans changed their driving and purchasing habits and moved into more efficient vehicles. But once the crisis ended and incomes rose, people began to think the crisis is over and this country began moving in large SUV’s. Sociology must be a fascinating study.

Rocking Chair Wisdom believes it is time for our public institutions, including our places of worship, to begin teaching and speaking about the values our country was founded on. While this would be a worthwhile step, we need to return to teaching these values in our homes. There is nothing wrong with having nice things and even luxurious things. But deep down we need to get back to the basics of where our joy comes from. We are a free people, but seems that in many ways we are trying very hard to lead an “imprisoned” life.

Before we leave you this month, please note that we have added a new category on the right called Inspiration. It is here that Rocking Chair Wisdom will periodically publish articles we find to be uplifting. We encourage you to take a look. Our first article is entitled “Daddy’s Empty Chair”

Until next time, keep on Enjoying Life After Retirement.

Don’t forget your KINDLE

.