New Link - Try it out!

Here's a link to a handy wage calculator, and you can use it for US currency or UK. On the left side you can click on whether you want to enter an hourly wage to base your calculations on or calculate your take home pay based on an annual salary. Enter your filing status and deductions and you can quickly see a good estimate of what taxes you will have withheld and what your daily, weekly, monthly take home will be. I have added this link to the "favorite links" at the bottom of the blog so you can come back and use it any time. Let me know if you have other links we might all find useful.

http://us.thesalarycalculator.co.uk/hourly.php

Why are gas prices so high?

Well, once again, the same tired e-mail is circulating telling us how we can supposedly force the gas stations to lower their prices at the pump. Ridiculous!!! Think about it. why would gas prices be any different than any other commodity? If there is plenty of...milk, and you don't like the price at store A, you drive to store B, check the price and, if it is lower, you buy your milk there. Now, if enough people discover that store B can save them money on milk, store A might possibly be forced to either lower their price on milk to compete, or settle for selling less milk, right? Simple theory. Fundamental example of a free market economy. Now, it is unlikely that one person switching stores would have any impact at all, but this person tells all his or her friends where to buy cheap milk, and together, they all spread the word, so that soon, store B is having trouble keeping up with the demand. To slow the demand, and perhaps to take advantage of the increased flow of customers, store B raises their price on milk. Meanwhile, store A realizes that they have lost business, and to some extent, they lower their milk price. Now both stores are selling some milk, and customers are happy. That is what happens when there is plentiful supply and sufficient demand. But let's look for just a minute at the gas situation. We have, on a global scale, finally crossed the line between a supply driven gas price to a demand driven price structure. Why? That's very simple. We now have more demand than supply. With China soon moving from a few million vehicles to hundreds of millions, that demand is not likely to drop, is it? Here is a whole new demand source for a constantly dwindling supply of fossil fuel, and the supply that remains is increasingly more difficult, and expensive, to get to. So, boycott whatever company you want to for however long you like, the supply won't grow a bit, and the demand will still have grown tremendously. You may SHIFT the demand from one company to another, but you won't shrink that demand. So it is well past time to quit sending this silly e-mail around the world, and focus instead on how to shift a significant part of the demand to some other fuel source, like hydrogen, solar power, etc. We have now produced something over a trillion barrels of oil so far, and some "experts" believe that there is still about 2 trillion more barrels in the earth...somewhere. Much of it might be under very deep water, and we're exploiting that already. Much of it is in oil shale, and technology is making that more practical to get too. But if you believe anything about the oil crisis, believe this. IT WILL NOT BE ENOUGH.

Now, that is just my opinion, based on all that I've read on the subject, and on what I recall of a very well researched lecture I saw on TV several months ago in the wee hours. I'd be happy to hear your opinion, or to try to field your questions. I'm no expert, so your input can only help.

Not in a recession yet, but this may be worse than you think

Interesting information. At present, with the decline in housing values at around 8.4% nationally, 13.5% of homeowners now owe more than their homes are worth. But this is happening with only with an 8.4% fall in the housing market. What happens with a 15% or 30% fall? Goldman-Sachs, now praised for avoiding the pitfalls of sub-prime lending, projects that this won't bottom out until we reach 15% or even 30%. First American Finance (NYSE:FAF) calculated the effect on homeowners if housing prices started falling, using data from December 2006 (and they certainly have started falling, haven't they?) Brace yourself! These numbers can be shocking. Already at 8.4%, what would happen if the prices drop to 15%? At that po8int about 21% of homeowners would be "upside down" in their mortgages. And to satisfy those who believe it could continue to a 30% decline in home prices - that would leave 39% of homeowners owing more than their homes are worth. Now, you may think that this will not affect you because you have built a lot of equity in your home. Or perhaps your mortgage is paid off. Good for you! Maybe you don't have a Adjustable Rate Mortgage. Good for you again!! But, you will still be hit with the effects of this crunch in one way or another. You see, what frankly scares a lot of lenders at this point is that it might become more attractive, and even financially less damaging, for some of these folks caught up in the squeeze to simply walk away from their mortgages. When and if this happens is large numbers, credit of any kind for anyone will become far more difficult to obtain, and prices of everything could go thru the roof. In addition, the impact on your home value, when so many homes are being seized in foreclosures, may shock you and alter your own financial planning significantly. It has already become far less attractive for many people to own a home. In fact, the new reality maybe that home ownership is not going to be the American dream that it once was. So watch the news, keep your powder dry, and stay flexible. None of us will escape the effects of this trend, recession or not. That's my opinion. What's yours?

Recession - Will it affect you?

Many of the folks I know and work with seem to be totally unconcerned about all the recession talk. It is not the most frequent topic of conversation. In fact, many are not even all that sure what a recession really is. Wikipedia provides this information: In macroeconomics, a recession is a decline in any country's gross domestic product (GDP), or negative real economic growth, for two or more successive quarters of a year. However, in the United States the official designation of recessions is done by the business-cycle dating committee of the National Bureau of Economic Research (Feldstein, 2007). That Bureau defines a recession more ambiguously as "a significant decline in economic activity spread across the economy, lasting more than a few months."

Like the law of gravity though, you do not need to understand it to be affected by it. The fact is, if we do indeed continue toward a recession, it will affect everyone in our society in some way, though some far more than others. The phenomenon that interests me most though is the way that the media frenzy over certain things seems to push us in the direction of our fears. The mere mention of recession seems to create in us a tendency to take steps that will make a true recession even more likely, like some self-fulfilling prophecy. Many other factors are at play here, of course, but our own fears must certainly take a significant chunk of the blame for the general direction of the economy. It is not at all unusual for the herd to head in some general direction based on some murmurings and grumblings, without any clear vision of just where they are going...or why. (I also happen to believe that the tendency of the workforce to demand more pay and benefits for less and less production pushes us further from stability and closer to recession, but let's save that for another day)

To reduce or minimize the effect that any cycle of the economy might have on you, it would be wise to avoid the herd altogether. The herd of baby boomers have some things in common that are not at all to our advantage. For example, the herd has not planned well for retirement. The herd does not have the reputation for saving. The herd has not typically learned to deny themselves any instant gratification that the media pushes at them. No, as a group, we have not invested in 401K plans or Keoghs or IRA's to the extent we probably should have. We indulged ourselves with bigger and better and newer and more conspicuous "stuff", instead of fixing up what we have or making do with what we have and realizing that we don't necessarily NEED all the things we WANT. As a result, as a herd, baby boomers might be hit pretty hard by a recession, right at a time when they are least prepared to handle it. What about you? Do you have access to liquid assets to cover 3 to 6 months of basic living expenses? Have you made most of your major purchases with cash rather than plastic? Have you learned to identify what you need, and resist at least some of your wants? Are you impressed by all the "bling", or do you still have an appreciation for the simple but elegant things that are designed to serve us well and last a long time?

My wife and I were talking this morning about a new phone being advertised that has a GPS feature. We agreed that it was a really neat idea and that we would like to have one. Then we both quickly realized that the cell phone with a camera in it also seemed like such an important thing to have, that when our phones were due to upgrade, we both got camera phones. The camera feature seemed like such a great idea, but we both quickly found that the novelty didn't last and we rarely have had any reason to use it. To me, that was just one recent example of how the media helped us to waste money on something we at first knew nothing about. Constant advertising helped to create in us a want for this new technology, and then in time we allowed the constant bombardment to change that want into a need. The passage of time, and very little time at that, turned that into "I have no idea why I thought I needed this thing." And it is not just cellphones, it's everything new that is flying at us from every direction.

Will the recession, if there is one, affect you? You bet it will. but how much it will affect you has a lot to do with how you are living your life from day to day. There is a certain protection in simplicity.

The "Silver Tsunami"?

The following article is featured on EzineArticles.com
http://EzineArticles.com/?id=854024

The leading edge of what the US government has referred to as the Silver Tsunami will begin to be eligible for retirement beginning next January. Baby boomers are beginning to reach retirement age and nearly 80 million people retiring over the next 20 years will totally wreck our economy. OR NOT! You see, the generation right before ours was sold on the idea of working to 62 or 65 and then retiring and living a life of leisure. The baby boomer generation is not necessarily buying into that scenario en masse. In fact, a significant percentage of baby boomers have no plans to retire any time soon. Many will work long beyond the age of 65, either full time or part time. More and more US employers are beginning to realize that they will need these folks to keep working beyond the traditional retirement age because there are not enough Gen X'rs to fill all those jobs. And Generation...Y, for lack of a better identifier, those in the generation right behind X, are a much smaller group as well. Right after the baby boom years there was a sort of "baby bust" when far fewer babies were born. So as that group matures, there will be considerable holes in the work force. Perhaps the tension between baby boomers and younger workers won't amount to much after all. Neither group set up the situation that we are all facing, when a very small number of people is expected to support a very large crowd of retirees. It now looks like at least some of the problem will be relieved by boomers working and contributing for several years beyond "normal retirement", and therefore not claiming Social Security benefits for a number of additional years.

Some few companies are already taking advantage of changes in the law that allow them to accomodate older workers taking retirement in phases, or steps. First a reduction in the number of hours per day or days per week they are working, while still retaining full benefits, will keep a lot of seniors employed and happy, and not burdening the system. Some will continue to work because they simply wouldn't know what to do with themselves otherwise. Some will continue to work because they cannot see any other way to continue to take care of their basic needs. Some will change jobs and schedules to try something new, or something they have long been interested in. These variations are not being factored into all the gloom and doom headlines concerning Social Security and baby boomers, so perhaps the problem will not be quite as overwhelming as we are being led to believe. In any case, any baby boomer who has been paying attention and who has had any choice in the matter, is not counting on Social Security as their sole means of support in retirement. Others really have little choice.
Next week this blog will have a poll concerning such matters, and we hope you will participate. For now, please leave your comments below. What plans, if any, do you have for retirement?

Set Them Free

Baby boomers are not all in this condition, but a surprising number are financially strapped and ill-prepared for retirement. Many failed to plan very far ahead, while others just never expected to face some of the financial stresses they now must deal with. And of course, many have always placed an inordinate faith in Social Security to provide their retirement funding. Well, we should by now all realize that in the United States at least, social security is not all that secure. There is a large, and growing, imbalance between the number of people still working and contributing to the system, and the number of people being supported by the system. As for personal finances, one of the common threads that seems to weave its way thru many conversations among baby boomers is just how much money they have spent, and for many, are still spending, helping to support their grown children who should by now be supporting themselves. I'm not talking about the situation that arises in a family that requires the stop-gap sort of support that we should all be willing to give where possible. What I'm talking about is the ongoing, week after week, month after month, year after year drain on your finances trying to get a child to finally "get their act together." Well, at some point you must realize and accept that you may not really be helping them at all. More likely, you are enabling them to continue to be less-than-responsible for themselves. And if you are caught up in this dilemma, you are certainly not helping your own chances of supporting yourself to a reasonable extent in your post-retirement years. To some extent, you may be preparing yourself to be more dependent upon some social services, and there simply are no guarantees that those services will have the funds to provide even your basic needs. So, perhaps you need to close your child's bottomless bank account with you. Set them free to learn to fly on their own. And certainly tell them why. At what age should they be flying on their own? That's something only you (and they) could possibly decide.

Are we keeping up?

Does it really matter whether your income puts you in the top brackets? Not really. The great equalizer is time. Some folks whose income never amounted to a lot have accomplished some wonderful things by using it wisely. Still, it can be helpful to know how we stack up, so here are some statistics for you. 2004 is the most recent available.

FINANCIAL SNAPSHOT: AGES 50-59
Median household income $60,586
Median net worth $182,300
Percent with home equity 80.70%
Percent with credit card debt 50.30%
Median amount owed on cards $2,700
Percent with traditional pensions 38.10%
Percent with minor children 40.30%
Source: Federal Reserve Survey of Consumer Finances, 2004