A Penny Saved

[Guest guest]

I found this article today.

In my business course, one of the professors had us read one of the Rich Dad/Poor Dad books. Mostly it focussed on what is now called property flipping and using a certain tax code, can never remember it, that allows you to transfer all the proceeds from a property sale to the purchase of a new property without paying any tax on it. I was the only one in the class who saw the flaw with this system. Yes, you could make money doing this. However, it only works so long as there are only a few people doing it and demand remains high. The more people who get into this, the more speculators, the more the property values will over inflate. Eventually it will become unsustainable and crash. Like hot potato, the last person holding the potato loses. This happened with some condos I invested in on the Gulf Coast. Speculators were flipping properties sometimes daily, each time taking a little bit of profit. Some shady characters got involved and I walked. As you might guess, the condo market overheated and crashed. The building I was going to have a condo in was never ever built, several others weren't either because the company went bankrupt. As an aside, the article talks about vice becoming virtue. You see this across the board now. Not only is savings stupid and debt smart, but these days sluts are cool and virgins or other self respecting people, are duds and objects of ridicule. Society is completely upside down.

http://www.washtimes.com/news/2008/oct/12/a-penny-saved/

EDITORIAL: A penny saved ...

Sunday, October 12, 2008

COMMENTARY:

As the financial crisis that apparently started here at home winds its way around the globe, the order of the day for ordinary

taxpayers is hiding in plain sight. Politicians and economists call it fiscal discipline. Our Founding Fathers called it personal responsibilty.

The days of thrift seem long gone, as Americans now seem to prefer debt-financing as a way of life. Credit-card debt has tripled since 1990, with the average American owing approximately $9,000 on their credit cards, according to USA Today and bankrate.com. Since 2000, Americans have saved just 2 percent of their income compared with 8 percent in the 1980s. According to CardWeb.com, approximately 43 percent of American families spend more than they earn each year and personal bankruptcies have doubled in the past decade. Many Americans have over-leveraged their homes to the point of choking on payments and for some, ending in foreclosure.

Who now adheres to lin's dictate that "a penny saved is a penny earned"? The common wisdom - as typified by the 19th-century best-seller penned by Smiles, "Self- Help," - that thrift was a virtue and debt was shameful. This notion is reinforced by biblical passages that champion personal responsibility. For example: "Whoever can be trusted with very little can also be trusted with much, and whoever is dishonest with very little will also be dishonest with much. So, if you have not been trustworthy in handling worldly wealth, who will trust you with true riches? And if you have not been trustworthy with someone else's property, who will give you property of your own?"(Luke 16:10-12)

For centuries, capitalism has been buoyed by a Christian ethic that champions hard work, self-reliance and thrift - values that have been, well, devalued in recent years. In fact, spending beyond one's means and acquiring debt have been encouraged by financial advisers as a savvy means to make more money. In that view, debt can be used to finance investments, which can ultimately lead to more wealth.

How was a vice turned into a virtue - and a virtue turned into a vice?

The ethic of thrift has lost its currency, in part, due to get-rich-quick proprietors, which portray saving money as useless. For example, Kiyosaki, author of sensational best-seller, "Rich Dad, Poor Dad," says that the traditional approach of working and saving leads to stagnation rather than wealth. Prophets of wealth accumulation also say that paying down one's mortgage as quickly as possible is foolish, for a house that is paid off is "dead equity" or "a liability."

Ordinary Americans are reaping the fruits of such advice.

In light of this economic mess, it is worth considering a return to once-cherished monetary values that made the American economy the envy of the world: Work hard, save money and live within one's means. America's way toward economic recovery is a long road. But it does not have to be painstaking as well. New MapQuest Local shows what's happening at your destination. Dining, Movies, Events, News more. Try it out!