In a correct-thinking United States Government, the new stimulus package would look more like this:
1. Create new banks; let bad banks fold. Make bankers and lenders hold on to their own loans so they are responsible for the outcome.
2. Offer refinancing to a large majority of those in need and encourage refinancing in general by forcing the mortgage rates at the new banks and lenders to 4.0 or 3.5.
3. Offer a “no tax” window on savings accounts, money market and other savings vehicles starting in July 2009 for a period of no less than 12 – 15 years. Notice how this is focused on saving vehicles – not pure stock trading.
4. Step up laws on fraud and make the “guidelines” tougher on high interest loans. Make certain that the profits from the higher interest credit cards are more highly taxed.
5. Focus stimulus spending on roads and bridges, technology for alternative energy and the attraction of manufacturing facility and jobs inside the United States.
6. Fix the corrupt medical infastructure in the United States and make those sections of industry restrain their control of pricing and limited competitive environment and the health care system.
While congress will never do these things, you should focus on your own stimulus package focused on savings. Here is how to turn the above 6 things into 6 personal financial vehicles to get your family “ahead of the curve.”
1. Don’t reward the sour big banks. They may be FDIC insured, but they are bad. Stop doing almost all business with “street banks.” Use on-line banks that will offer you better savings interest with money market so your money works for you. While it is okay to keep a checking account with your local bank – focus on removing savings (as much as possible and in the most automatic ways you can) to these on-line FDIC insured banks that will make your money work for you.
2. If you have a mortgage, watch for the rates to come down. They almost certainly will. Then, lock in the lowest rate possible for the long-haul. If it drops a point and you plan to stay in your home, refinance. Just make sure it is a fixed mortgage. We are heading into a period of time where you want your risks to be as low as possible.
3. Max out your 401k if you can. If you can do more, look into a Roth IRA or Traditional IRA and max that out if you can. With everything balance is rewarded – so, make sure you have a good emergency savings fund (15 – 18 months of expenses; if you don’t have this, start working on it. It will build faster than you think over time).
4. Do your research any time you have to borrow money. DON’T chase your credit rating. Remember: Cash is KING. See the above mention of the proper Emergency Savings Fund.
5. Stay as liquid as you can right now and wait for things to return to a more “normal state.” There has been significant stress on the U.S. financial system. This is not likely to turn around quickly and more job losses are likely on the way. The more savings you have – the better off you will be.
6. The drug companies are mostly profit focused bad guys. Always compare where you get your drugs. Consider extending the time period of each issue of a drug. In other words, have them filled for three months instead of 30 days. This will curb your cost. Double check every cost and compare. You’ll be glad you did.
We are in an environment where most Americans do not recognize how serious the future consequences can be for the movement from a savings society to a society that is based in credit. Credit is not a way to build wealth.
Help yourself by making your move to find ways to save for your future. This is more than saving for retirement.