Category: Economy

Credit cards, they are a polarizing thing.  Some will tell you never to obtain one, others will declare you need one, or you won’t be able to rent a car/house/apartment, buy a house or car, or what if some emergency comes up.  I will examine both ways in this blog. 

Personally I have 3 credit cards.  I use all 3 for different things, one is all my auto-payment bills (utilities, internet) one for work expenses (reimbursement), and another for literally emergency/pleasure use (think going out etc.)  I track all purchases when statements come in monthly.  I receive a paper bill each month… never auto pay with a credit card.  I do not open or use a card simply for earning “points” or “miles” as I think and believe both are a scam.  I cash in my “earnings” each year and do something with them, usually buying items off Amazon as that tends to be the best use.  I tried to use it for airfare, and quickly found out the price of a ticket in points was unreal compared to just booking as usual.  With my method I am able to track my expenses by category and find out exactly where I spend too much, and adjust as necessary.  I always pay the bill in full, and have never paid a fee or interest.  Don’t feel good for me as the credit card company still makes money off me, as the swipe and usage fees charged to the merchant on each swipe are not avoidable. 

I bought my house in large part due to my 820 credit score and got a lower interest rate to boot.  I was also able to lease a brand new Toyota Tacoma after my old vehicle finally kicked out again due to said credit score.  (I have since paid it in full, and owe nothing on it.)

This isn’t to say you should go get a credit card, many get by without, quite a few by choice, and you can still buy houses/cars and rent houses/cars without a credit card.  It’s just a longer, tougher, nerve wracking process.  The point of this blog isn’t to whack anyone without a card, it’s a choice, I live my way, you are free to live yours.

Now for the folks who need/needed or understand Dave Ramsey’s advice. 

Some do not need a credit card, nor should they own one.  Credit cards create a false euphoria when used, you simply swipe it, and are worry and carefree until the bill is due.  Even then they offer a convenient “minimum payment option” of a nominal amount say $40.  In addition each time you log into the website to view/pay bill you get a prompt saying sign up for paperless billing, quite literally every time, there is no way to opt out.  Mess up and click on the link, well good luck getting taken off paperless billing.  They bill it as a “green initiative….you are doing right by the environment.”  Give me a break; a paper statement of roughly 3 pages, and a mailed envelope?  That isn’t causing the ice caps to melt Al Gore.  These are corporations and while they make money each time you swipe the plastic they make even more when you opt out of a monthly paper statement.  But wait there is more…

You forgot to pay the bill this month…. just by a day darn it!  Well, you get hit with a late fee, your interest rate goes from probably 17% or so to about 38% which, oh by the way, they can do since that is the agreement you agreed to when you applied.  Of course, you didn’t read the fine print, you needed the card to earn miles or points.  Oh, they also report that missed payment to the 3 credit bureaus, watch what happens to the interest rate on your other cards, suddenly that 17% turns into about 30%  But that’s ok, you only missed one payment and you will make it up next month.

It not just fees and extra interest, it’s your entire buying pattern that changes.  Suddenly you find yourself going down each aisle at the grocery store, you only went there for 8 things, but your basket turned into a cart full, which turned a $25 total into about $175.  But you had to get 3 more bags of chips because they are on sale, and you earned “points.”  Ditto for those spices in the spice aisle that will migrate to the back of the pantry, but hey you earned a few points, and they were on sale… the cool red tag said so.  Now you are swiping so freely you lose track and forget how much you spent… hello, surprise bill.  You make the minimum payment but keep spending, you do so because, well you always get a bonus in December, so you will pay it off then.  You don’t get the bonus, or even if you do the interest compounds daily, and is on your bill monthly.  All of a sudden that 1-3% cash back doesn’t look so great on 19% interest charges now does it?

The last and most worrisome is deferred interest charges.  And yours truly almost got caught in this.  I had just bought a house, and my down payment took every dollar that was not in my retirement account.  I know cry me a river!  At my house I had no washer, dryer or fridge.  The dishwasher was quite literally on its last leg, and the oven/stove and microwave had been through a lot.  In fairness the family I bought it from had moved out 3 years prior and let their grandson live there rent free.  Everything else was fine, but I needed appliances, using my parent’s wasn’t going to cut it.  Enter Pacific Sales, conveniently located inside the local Best Buy.  They had a big sale going as it was a three day weekend, and to be fair I shopped around and for all seven appliances I needed it was the best deal by far.  The total came to about $3,500 I reckon, then after the installation and “other” parts required for said appliances we were at about $4,000.  Obviously I didn’t have the kind of coin, and right on cue they had a financing offer.  No interest for 1 year!  Just get the store branded credit card.  Even better I was told 3 months of no payments applies as well…. how great 1 year and 3 months of zero interest!  There’s a catch, I will get to it later.  2 months later, the tires needed to be replaced on my Explorer, about $1,100 worth.  Of course, they have you by the proverbial balls, since they can pull the “your car isn’t road worthy so we cannot let it leave card.”  Again, they pulled a great offer, 1 year no interest, and $200 off.  I didn’t want to do it, but hey… why not right? If you are keeping score at home, I now have 2 store cards, and about $4,800 in monies owed.  I was making minimum payments on the balances each month, $100 on the appliances, $50 in the tires… because…. Well, time value of money, right?  I was going to pay them off later, but had other things to worry about. 

Well at the bottom corner of the statement, there is/was a box, it stated deferred interest.  This box was the way the store makes money.  You see the store likely is losing on the deal offered up front, but they stand to gain a large amount from these deferred charges.  Luckily for me, in both cases I caught this before it became a problem at all.  To give you an idea, had I been a month late on the tires, the interest would have been $350, on top of the $900 I would have paid.  Had I had just paid in full that day, $1,100 would have been the damage, instead I would have paid about $1,250.  The appliances would have been far worse, deferred interest would have been about $1,500.  Again, look at the deal upfront, and the deal had I not paid in full in the “promo-time.”

Don’t believe me?  Check out these quotes from the earnings reports of Macy’s and Nordstrom

Macy’s executives disclosed on Tuesday that rising delinquencies cut credit card revenues to $120 million in the second quarter, down $84 million from the previous quarter. While Nordstrom’s credit card revenues rose 10% in the first half of this year, company executives said Tuesday that delinquencies are now above pre-pandemic levels and could “result in higher credit losses in the second half and into 2024.”

US department stores see higher credit delinquencies amid strained spending

Credit cards are big $$$ for these corporations, and a large part of the earnings numbers.  Keep in mind interest earned is basically “free money” to these groups.  They only have to mail out a statement each month.

The last item I wish to address is when you pay with plastic it truly is “buy now, pay later.”  Items purchased may or may not show up on the next bill.  Take this for example, I paid for a tank of gas Tuesday this week, in the amount of $80, I used my trusted cash back card.  Well, my statement closed Monday night, so the gas I bought will not be on Septembers bill, it will be on Octobers.  Let’s just say in September I owe my house insurance, in addition to my other utility/recurring expenses, well my October bill will be higher thea I likely budgeted.  This is another trick the credit card companies do not want you to know.

In closing I do not hate credit card companies, nor do I completely agree with Dave Ramsey that you should not have one.  I will agree with him on the fact it creates bad buying habits, and unsafe financial practices. 

Use my example, if you are not careful, those appliances, or tires quickly become very expensive.  Dave doesn’t need me shilling for him, he offers and does good things, especially for folks who find themselves not realizing the pitfalls of “2% cash back.”  If you don’t carry a card… more power to you. I don’t judge, if you messed up previously… I don’t care, just don’t do it again.

As far as renting a car goes, yes, if you have no credit card it may be tougher, may even need to check a couple of companies to rent you one, but you will find one.  As for buying a house/car, sure there will be more hoops to jump through and you may need to shop around for a bank who will “manually underwrite you” but if you qualify for the loan, you get it.  Federal law. 

Johnnie Does

PS check out the value of those “points” thepointsguy.com I think is a good site, it will show you the best/worst uses for them, and you can see firsthand how some banks…cough…Citi… cough, devalue points if you use them certain ways.

You may be confused by the title of this blog, and you should be.  William pointed out in his most recent writing that most in CA love big government; specifically, being told what to do by government.  However, what if they knew the government was guaranteeing loans to business owners who are already successful?

Enter the City of Elk Grove.  The City Fathers have decided to pick losers and winners in the local economy using your tax dollars for the wager. The remainder of this blog documents this very socialist behavior in our once very Republican community.

Old Town Elk Grove’s future barbecue restaurant and bar took a large step closer to its completion thanks to the Elk Grove City Council’s recent approval of a $500,000 loan deal.

LowBrau’s Slow and Low Smokehouse, a project of restauranteur Michael Hargis’ Slow and Low, LLC, is currently slated to open at 9700 Railroad St. in the next one and a half to two months, Hargis told the Citizen on June 29.He also owns Sacramento dining establishments such a Beast + Bounty, a Michelin-rated restaurant; and the LowBrau Bierhall.

During their June 28 regular meeting, the Elk Grove City Council unanimously approved an agreement for that loan, which is a commitment from River City Bank to Slow and Low, LLC to fund the costs of final tenant improvements, opening and initial operations of the new restaurant and bar.  The vote was unanimous.

Because the loan was contingent upon a third party agreeing to provide a repayment guarantee as security, if Slow and Low, LLC defaults on its loan, the business’s owner, Michael Hargis, asked the city if it would serve as that third party.

Yes, folks, a Michelin Star restaurant is a big deal. Think Gordon Ramsey or Wolfgang Puck… It is one of those places where frog legs cost $125 a plate, and you get 1 leg …I though frogs had 2 legs, but I digress.  Low Brau I have been to before, it’s a German sausage/food themed place where you guessed it, the beer flows freely.  It is a cool place; I do not have a gripe with either restaurant.  Where I have a gripe is why are we, the taxpayers, guaranteeing a loan to a guy who runs not 1 but 2 very successful places to eat?  Can’t someone else lend him the cash?  Specifically, the Small Business Administration (SBA) or Chamber of Commerce or maybe a bank?  I thought when you wanted a business loan that you had to have a business plan, profit/loss projections, costs, and a plan to pay it back?  Maybe times have changed?

Slow and Low, LLC is responsible for the loan that must be paid in full within five years.

As a guarantee that the bank would be reimbursed if the business defaulted on its agreement to pay off the loan, the city has pledged a collateral cash deposit in funds that were already deposited by the city at that bank.

Another element of this contract includes the use of a security agreement, in which the city will place a lien on the business’s restaurant equipment, if the loan is not paid in full prior to the deadline to do so.

In a worse-case scenario, a defaulted loan would result in the city losing some or all of its pledged deposit with River City Bank.

However, the city’s potential loss of $500,000 would be less impactful, considering that the restaurant equipment and Hargis’ 7001 Garden Highway, Sacramento property is relatively equal in value, noted Darrell Doan, the city’s economic development director.

“We have that first deed of trust in Mr. Hargis’ personal property (on the Garden Highway), and we also have the lien on the restaurant equipment (for the Railroad Street restaurant project),” he said. “We could foreclose both of those interests – in theory take title to his personal property, take title to the restaurant equipment.”

Although Doan mentioned that he does not foresee the worse-case scenario occurring, he presented that possibility for the purpose of providing full disclosure.

Doan noted that if Hargis is able to pay off the loan, the city will “experience no loss.”

“During that time, (those funds) would have earned the same interest on that deposit as we would have had we not created this security arrangement,” he said.

This Doan fella seems like a real piece of work, but his actions are on point for a government official.  Let me make a bet with taxpayer money and if it goes wrong, we will seize the man’s house and the equipment in the bar.  If it goes well, I can parade around calling myself an economic growth genius and apply for a job in a bigger City.  It’s literally heads I win, tails you lose.

Just to make things clear here, I do not know this Hargis guy who owns the restaurants, nor do I know his finances, or business acumen.  But I will make an assumption, he is quite good at his craft, a Michelin Star is not given out like candy on Halloween, they are quite rare.  Keeping it is even harder.  I have never had a bad meal at Low Brau. 

But why is he privatizing the profit, while socializing the loss?

Opinion of blogger:

This deal reeks.  Sorry I’ll say it.  The idea that the City will have a lien on his house tells me he may be mortgaged to the hilt.  His agreement should be between the bank, the landlord of the building he will occupy, and himself.  Why is the City involved at all?  This smells like Darrell Doan wanted to see a BBQ joint in Elk Grove and talked this guy into starting one and guaranteed his loan. In addition, I think the bank didn’t like his business plan or profit/loss estimates moving forward so they balked at the loan. 

Also pay attention to this statement:

Hargis, who has already spent about $750,000 on this restaurant and bar project, told the Citizen that he feels confident that his barbecue business will open on Railroad Street and the loan will be paid in full.

Why is the tenant making all the improvements to the building?  Typically, the landlord does this in exchange for higher rent/increases in rent annually.  I have not seen many of these arrangements lately.  It gives me pause.  Especially since the Dust Bowl Brewery that went in directly next to this proposed site made a lot of improvements, then ripped them out and put other ones in.  (Note, the buildings are old brick train station type buildings that got a ton of updating). 

Continuing my concerns, the location is in Old Town. It’s far away from the city center and is not easy to get to.  Think of one lane in each direction street, stop lights/neighborhood homes/very scarce parking.  Simply put, not many work in the area, and most who live there work far away so locals likely will not be partaking.  The BBQ business is also very fickle, either folks like it or not, and usually the owner finds out his BBQ is not as great as he thinks it is.  I watched as “The Rib Shack” near my office bit the dust in a bout a year’s time.  The location is also very set back from the road, and visibility will be little as it will be behind the Dust Bowl Brewery and a couple of housing units being built.  I would be remiss not to add that the neighborhood directly to the east of this is known for its meth heads and crack cocaine deals.  Just ask a local, one told me any Amazon package left on the porch longer than about 30 minutes is stolen.

In closing I will say this is the new America.  It used to be you took a chance, and if you hit it, you could hit it big, or even hit it to where you made a good living working in your own business.  Now the profit is enjoyed by the owner, and the loss is shared by the citizens.  It is sad, but it’s what it has come to.  Frankly you would be foolish not to get into it if you can.  This town is playing with house money quite literally as we built a casino.  One has to wonder if it will decide to have a BBQ joint inside or nearby their casino?  The plans are to build a hotel and amphitheater.  Most in central or west Elk Grove likely have never heard of Old Town Elk Grove or really care.  Quite frankly, if you live in either area its likely quicker and easier to go downtown than to travel to East Elk Grove and deal with the aforementioned parking and logistics issues getting to the area.

We are spending 1.25 million on something that is so far from a sure thing the owner (of 2 restaurants) has to personally put up his house and kitchen equipment as collateral?  Huh?  Also, the kitchen equipment, may seem like it’s worth a lot, no one buys that stuff second hand.  It’s likely useless, and only has scrap value.  Also, they say this guy’s house is worth 500k?  How can that be possible?  They claim he lives on Garden highway, for those of you not familiar Garden Highway (essentially the levee road in most of Sacramento County) which means he has a view/close proximity to water, so his home value is bunk.  My small 1700 square foot house in aforementioned East Elk Grove in a tract home neighborhood is worth north of $650k according to Zillow.  A lot is not adding up here.  I think he does not own his house free and clear; he likely has a large note payable on it via a bank, backed by the house as collateral.  No bank is letting the City of Elk Grove foreclose on it if they are owed money.

Again, folks here we are privatizing the profit, socializing the loss.

The Chief

It sounds great, doesn’t it?  Owning a rental?  Someone else pays your mortgage each month, you get the leftover cash.  It’s cash flow baby, how can you go wrong?  You get income each month, and if they do not pay you tack on a late fee.  They still don’t pay?  Evict their butt!  Raise the rent yearly and voila, you can buy another, and another and another.  WRONG!

Let me give you a real-world story. First, a friend of mine rented out his townhouse to a couple college kids.  He had since bought a newer, bigger house.  It worked fine for a couple years, then when move out time was happening (tenants graduating college) they proceeded to have a massive party, trashing the place to the tune of 40,000 dollars.  Yes, 40k.  Let’s just say that was equal to the amount of rent paid over the two years they rented from him but it likely was not.  I helped with repairs, but they thew a kegger, had a bunch of folks over, and flooring had to be replaced, the bathtub/shower insert was broken, the toilet bowl was missing a chunk out of it.  Yikes.  All this for a little income?  My friend sold the place at a loss, this was circa the housing bust.

If that doesn’t scare you, or you are very naïve now read, on for my personal reasons not to own one (again in CA specifically).

Rent Control Laws: They will keep getting more not less favorable to the tenet.  Try making money/keeping up with inflation and property tax hikes when you have strict limits on how much you can raise rent annually.

Property Taxes: Prop 13 is/has been under siege for the longest time, eventually prop 13 property tax protections will go away for commercial buildings, this likely will include rentals someday.  Prop 13 for those of you not familiar, limits property tax hikes to a set percentage a year, 2% I reckon.  Without prop 13, Katie bar the door.

Tenant Has all the Rights: In CA Landlord = Bad, Tenant = Good.  The laws are all on their side.  All the time.  Stove goes out?  They can withhold the rent.  AC/Heat goes out? If not fixed quickly…ditto.  And withhold means straight up not paying for the month by the way.  Trust me, I know this, as my office partner owns a rental, if it wasn’t paid for he would sell.

Eviction is HARD:  Again, like the above, the laws are all on the tenant side.  First, months upon months of payments must be missed.  Then you must file with the court, then have the Sheriff serve the tenant in person, not via email, or snail mail.  Then you will need a good lawyer, not a cheap one, because again if the “I”s are not dotted and “t”s not crossed then the process starts over.  With your tenant living for free.

“Plandemics”:  Yup, it was planned not a pandemic.  Fauci came in and made the rules, governors enacted them.  We shut down, but worse, you could not evict anyone for non-payment or any reason.  Check out that sentence again.  So, folks quit paying their rent, actually you would have been stupid to keep paying it.  Now good luck collecting that bank rent. Oh by the way, I think CA just finally allowed evictions to start to proceed, literally a year plus after the plandemic was declared over.

Utilities: See above, but the tenant likely wasn’t paying those either, but since it’s your house and you the landlord are the owner…you owe them now or face a shut off.  Again, as landlord good luck getting the state to forgive those.

Upkeep:  It’s not the tenant’s house so don’t expect much from them.  Major wet/dry rot, dead trees, water leaks, uncared for appliances will be the norm.  Don’t expect them to make you aware of the cosmetic damage either.  A client of mine had a rental with 25k of dry rot on the entire side of his rental.  The sprinkler was hitting the side of the house for probably 2 years straight causing major damage.  (Also not covered by insurance btw).

Mortgage: Whether the tenant pays rent or not, your mortgage is still due.  Just remember that.  Just like the property tax, insurance and utilities that are your responsibility.  Those entities do not give a rip that your tenant ain’t paying you.

If these have not convinced you to not buy a rental in CA, then by all means go for it.  I am sure a lot of you have wonderful stories of great tenants/experiences etc. so the obvious disclaimer, your experience may vary.  I just do not see the upside in CA or any blue state for owning a rental property.  For me there is too much risk involved.  I see way too many negatives, and I do not wish to not sleep at night due to stress or whatnot.

The Chief

I guess it’s natural that once you get to the top of the heap that you lose your edge. Amazon has really lost their edge in the last year or so. They have more warehouses in more locations but their service is becoming subpar. Often utilizing their competitors, I can match or beat their price, and sometimes their deliver schedule.

Even when they have a good price on something, their delivery is terrible or nonexistent. Here’s some recent examples.

I don’t appreciate buying a $700 lens for my camera and having it sent to me in a plastic bag. Yeah, no packing material or box, just a plastic bag with a note printed on it that they are saving the environment. Sorry guys, first, I don’t give a crap about the environment and second, if I spend that kind of money, I think I deserve the respect of having something I worked hard to purchase packaged well enough to have a reasonable expectation to arrive safely.

I bought an electric razor on Amazon on February 20^th. It scanned out of a warehouse in Maryland and then disappeared. OK, first why does it ship from Maryland? Does nobody this side of the Rockies shave? Second, how did they lose it? Third, where’s my refund? My wife is not a fan of facial hair and Amazon is causing me disruptions in my marital bliss with there incompetence.

Some prices of stuff that I buy regularly for my family have literally doubled in the last six months. Sometimes its cheaper in the grocery store than on Amazon but some things that we purchase aren’t carried by the local grocery stores any more. Covid wiped a lot of items from grocery store shelves that we may never see again. Thus, we are often forced to buy grocery items online.

Amazon’s delivery is also taking much longer that it used to. Many types of items that used to be next day are taking up to two weeks between ordering and delivery and as mentioned earlier, they are selling at much higher prices.

The bottom line is that Amazon is forcing me to shop elsewhere to get the price and service that they used to offer. I have a much longer mental list of things I won’t ever buy from them anymore. Amazon is moving to become my last resort to buy something instead of my “go to” retailer.

However, I have found at least one exception to the above complaints and that is a shop vac that I recently bought at Lowe’s. The shop vac needs vacuum bags when fine dust such as that from drywall is cleaned. The manufacturer has a “marketplace” on Amazon and their Amazon prices are less than buying the exact same item on the manufacturer website. I think thy would rather let Amazon take care of all the paperwork than having their own list of customers. My recollection is that the shipping was significantly less from Amazon for the same item.

In conclusion, a decline in Amazon’s service is an opportunity for other enterprising folks to exploit. I’m just surprised that Amazon is making it easy to let others be competitive.

A friend of mine does very well for herself, she makes $125k a year.  Keep in mind that is double the MEDIAN US income per person.  So, she makes more than double the average worker.  She informed me Sunday that her spending on her credit card is unsustainable.  One would think this is a good thing, a wake-up call of sorts.  Negative ghost rider.

Her biggest issue is she tries way too hard to fit in, for someone in their mid-20s to mid-30s this is understandable.  You are likely in an apartment, a small one and hanging out with colleagues after work, and the like.  You may also be going on dates/parties etc.  However, this behavior needs to be grown out of, it’s a sign of a maturity process.  It hasn’t stopped in fact it got worse.

I do not care what part of the country you live in, a 6-figure income should be more than enough to sustain the life of a couple/family, let alone a single person.  This is where budgeting, and expense management comes into play.  In addition, knowing needs vs wants as well.  This person has shown repeatedly they are not capable of doing this.

Interest rate on car loan?  Yeah, it’s over 30%, that’s not a good rate, that’s a good loan shark rate.  The credit card rate is likely about the same mind you.  You wreck your credit in this country you will pay at every turn.

Student loan debt?  Sure, just make a minimum payment like your other loans.  This person is checking all the boxes.

Her biggest problem?  It’s not her debts believe it or not, it’s her lifestyle.  She refuses to be an adult, instead opting to a college fueled party life.  For someone closer to 40 than 37 mind you.

As hard as this may be to fathom, it is not hard to correct this, but it’s not a diet she needs, it’s a lifestyle change.

First?  Knock off the happy hour and late-night partying.  You are an adult not a college kid anymore.  Happy hour is famous for the “I’ll have a couple drinks, well better get an app, well another drink please….aw shucks I better order food…. maybe dessert too?”  Next thing you know that cheap mixed drink turned into a bill of around $100.  Instead of this being a one-time thing, you have made it into a daily thing with your friends.

Second?  Learn to cook at home, you have cable shows, YouTube, and cookbooks.  Cooking at home costs a fraction of going out.  You can even grab a bottle of booze/liquor/wine for a fraction of going out.  Don’t believe me, look it up for yourself.

Third?  Pay your bills first.  Every paycheck.  After paying rent, pay your bills.  Your credit score will thank you later.  Do not save money, extinguish all debt as humanly possible.

Til next time

Johnny Does

Folks/sheep you may be hearing the word transitory in regard to inflation, the White House started it, the media ran with it.  No one questions it because “hell far covid done did this.”  But they are ignoring the problem…. this inflation was not caused by one person or party, and contrary to the Fox News thumpers, the GOP has no answer.  This inflation was caused by about 16 years of economic and monetary policy failures.  From W. Bush to Obama, to Trump and now president Depends, we have had a 0-rate economic policy at the Fed.  This means banks could borrow the money for essentially no cost and could artificially keep borrowing costs low.  Meaning your credit card, mortgage and car loans were essentially free, speaking in terms of what rates used to look like.  To give you an idea, in 1986 my parents bought their first house, the interest rate was 9.5% and that was viewed as a screaming deal back then.

But now things are only temporary, just trust the media.

The reality is the zero-rate environment caused massive “Ponzi-like scheme” in many areas of our economy.  What happened is the Fed Reserve gave folks no reason to save or “have cash on your balance sheet.”  This went for both people and corporations.  Corporations borrowed money to buy competitors, buy back stock, or buy startups.  They also took on debt for reasons so they will not be viewed as an acquisition target.  CEOs did this because, well we need the stock price to go up, and everyone is doing it. 

For people, a low-rate environment caused a “keeping up with the Jones’” mentality on steroids.  You could no longer earn any return on savings so “liquidate it and toss it in the market!”  The sheep followed, because their friends were making a killing.  The market kept going up….so why the heck not?    Your 5K in the bank was earning $.03 a month in interest.  You didn’t need a new car…your spouse didn’t either, but very low financing!  You didn’t need that house, but again the payment works.  So now you have 2 car payments, and 2 mortgages on that house, because…. well, we needed a pool, hello!  To go with rising food, and gas prices.  Wages are only up for the people at the lowest rungs (minimum wage) and folks at the top, most of the middle has gotten little to nothing in the form of an increase in the last 3 years.  So, you are getting squeezed, credit card debt is piling on.  You would have ditched eating out, but you can’t cook.  As you have noticed, the food is no longer cheap, a burger (2 patties) x2 and a small fry at Five Guys set my office partner back almost 20 bucks.  By the way, no cheese or bacon, the toppings are unlimited and free.  Also, no soda.  $20.  At a place you drop the peanuts on the floor mind you.

Now the stock market is beginning to crater?  You don’t say?  Tesla, and other stocks selling for a million times their earnings.  No way? 

Sure, I have lost money in the stock market…I am no Warren Buffett.  I own zero crypto as that is a major Ponzi scheme…. think about it.  Bitcoin and the like are based on high inflation, debt, and stock markets tanking.  Why is bitcoin at a low as well?  Of course, you cannot answer, but buy more, you’ll retire at 40.

Yes, we are experiencing a massive correction.  It is long overdue.  We have been in a very long bull market for about a decade.  Stocks are at never-before-seen levels.  Rather than investing in companies who make money, we invest in crazy start-ups with virtually zero earnings to speak of.  We have credit card balances at record highs.  Your mortgage?  Well, you now need to re-finance at a higher rate.  You now realize you do not need the pool, yet you have 20 years on that second mortgage.  You hate your cars, but prices are at an all-time high, rates are also not zero.  Your fence fell over, and you have no savings because you put it all in the stock market.  There is no baby formula, and your wife isn’t working because you guys popped out another kid. 

The above example is not as extreme as you think.  A survey by CNBC showed nearly 2/3 people live paycheck to paycheck.  Most bought more home than they needed and overreached on their cars.  Their credit is shot, and now the bank won’t be taking a minimum payment.  You need liquidity, and the market is falling, so you sell at a loss.  It’s going to get ugly folks and quickly.

The good news is for people like me and others, we get to pick the best choice cuts as the US gets butchered.  I have no car note and might be in the market for a Camaro or Corvette here soon.  I don’t need a bigger house, but since mine is about half paid for, I may look out of state (following a very smart person I know AKA Blog Father).  As far as stocks, I buy in each month, and have a mad money account for which to buy companies on sale (separate from my IRA btw). The companies I own make things, and make money, not a wild bet on a gas free future like Tesla.  I’ll be acquiring things while you hold a fire sale.  I love it.

I am most definitely not perfect, however the government dubbed me as essential, and I’m going to take advantage.  Hurry trade in that Toyota Camry for a Nissan Altima, 8-year car loan at 12% interest is a smooth move.

Chief