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PodCast: Money Pirates


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Transcript of audio:

Today on WealthArtisan.com: Money Pirates and the grief that we bring.

But first, some current events.

The London Rioters, the UN has made their stance on spankings well-known, but I bet they wish some of these rioters had a few more spankings in their past.

Speaking of Spankings: how’s your 401K feeling? We’ve seen about a 1,000 point drop over the last few days, and not much good news to soften it.

But don’t sell! Stick it out, especially if you have a long investment horizon. Only experts and dummies pick tops and bottoms, and most people lose a lot of money doing it!

Instead, use this opportunity to buy excellent, quality stock that has great fundamentals. The great thing about irrational down swings like this is that even amazing companies get punished.

The people I really feel bad for are the cash savers, and anyone who is stuck in fixed income now.

The Federal Reserve

The federal reserve had some interesting things to say on Tuesday. Most notably, from the deck of the Queen Anne’s Revenge, they announced that all savers will continue to walk the plank, OK, maybe I’ve embellished a bit for the show’s them, but This is what they actually said:

To promote the ongoing economic recovery and to help ensure that inflation, over time, is at levels consistent with its mandate, the Committee decided today to keep the target range for the federal funds rate at 0 to 1/4 percent. The Committee currently anticipates that economic conditions–including low rates of resource utilization and a subdued outlook for inflation over the medium run–are likely to warrant exceptionally low levels for the federal funds rate at least through mid-2013. The Committee also will maintain its existing policy of reinvesting principal payments from its securities holdings. The Committee will regularly review the size and composition of its securities holdings and is prepared to adjust those holdings as appropriate. (Federal Reserve Statement 2011)

Maybe I’m being unfair to the Federal reserve, I know they’re trying to get the economy back up and running, but they’re trying their hardest to stoke inflation, and get consumers spending again. If you ask me, it sounds like they want to continue the ridiculous, symbiotic economy that we’ve been in which is to give money to consumers, and have the consumers run out and spend it.

During deflation, Cash is King, and Bernanke has already stated that he’ll drop money from helicopters before he allows us to go into deflation. You might as well tell savers that they are the enemy, because with these philosophies, they are. It’s kind of like stealing another doctor’s medicine for your patient. You’re trying to help someone, but at the same time, you are certainly hurting someone else.

The problem is, we’re courting the wrong kind of customers. Our government, on a daily basis, is telling us a very interesting message: They don’t want us to be savers and investors, they want us to be spenders and consumers. That might fix the economy in the short-term, but it’ll be very interesting to see what the future holds.

Coming Up

What role does finance play in your marriage? It sounds like a strange question, but it’s perfectly legitimate
considering money is a primary cause of divorce in this country. Does money have you working together, or does it have your ships dualing? Join us for a Wealthy Family Minute coming up after this.

Main Feature: Money Pirates

Over the last week, we’ve been discussing a lot of the extreme hidden expenses that can really wreck a person financially. We’ve referred to these as “Money Pirates.” It’s not the most practical term, but it’s made the subject more fun. We’ve talked about Job Losses, Home losses, medical emergencies, mechanical failures, debt coming due, natural disasters,

and unexpected children. Any of these events can dramatically change the way your whole life is laid out. With the exception of the last one, unexpected children, these can generally be categorized as the worst moments in a person’s life. With so many terrible pirates waiting for you, what are you to do? Do you turn your ship around and head back to port? You could, but giving up on life isn’t my style.

Do you take them head-on with what you’ve got and hope for the best? You could, but why leave your financial ship to chance? You could outfit your financial ship with the sweetest most up-to-date weaponry, and have an action plan. Now, that is an awesome idea! We’ve covered a few action plans that you could use, but the big, daddy cannon that you need to outfit your ship with is an emergency savings.

One well-placed shot from the emergency savings cannon would have Barbosa, and Davey Jones running for the nearest lifeboat holding hands. The next big gun is adequate insurance for your situation. If you are a high risk person, then you need a low deductible (within reason). But don’t just buy insurance for everything, only get the vital insurance you need.

The last defense is common sense. Many things are preventable, but hindsight is 20/20. You need to pay attention, look ahead, and figure out what might happen. What do I mean? Your car will eventually break down, you will eventually get sick, you are getting older, your kids will hurt themselves, the air conditioner will break down, statistically speaking you’ll probably be unemployed at some point or looking for a new job, you’ll need to pay back your student loans, and something else bad will probably happen.

I’m not pessimistic, it’s just life. None of the above things have to be a surprise, but they tend to be. The majority of people look at their spouse in shock when the air conditioner doesn’t turn on, it’s just how we are. Be different, plan, be proactive, and have your money pirates walk the plank the next time they rear their ugly faces.

Wealthy Family Minute

Today on Wealthy Family Minute: Finances in Marriage. Do you wish your spouse would stay out of the finances? Do you wish your spouse were more active in the finances? Today, we’ll read a section from Proverbs 31 that describes a woman’s role in the finances and it’s a big one!

Proverbs 31: 16-17:
She evaluates a field and buys it, she plants a vineyard with her earnings.
She draws on her strength and reveals that her arms are strong.

Proverbs 31: 24-25:
She makes and sells linen garments, she delivers belts to the merchants.
Strength and honor are her clothing, and she can laugh at the time to come.

That sounds like an awfully involved life! Like most things in life God never intended us to take on the burdens of finance alone. You’ve got a great partner with tons of potential, isn’t it time you ask them for help? For more on this subject, I invite you to visit us at http://WealthArtisan.com.

Farewell

Well, it’s been fun and silly, but this is my port or call. I hope you’ve enjoyed our Money Pirates series, and hope to have you back soon for more great information on WealthArtisan.com.

’tis been a wealth artisan production. fer more, visit us at wealthartisan.com, Arrr.

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