crisis effects here in washington state

after attending a forum regarding the economic crisis at the university of washington yesterday, a few things were brought up that i found very interesting.

the historians were walking us through what had happened between 1929 and 1930 here, and although the state approved to increase large projects to boost employment, it appeared that the governor tied their hands by not raising taxes. photos were provided of "hoovervilles" shantytowns, while mentioning the current homeless "nickelsvilles" (named to spite mayor nickels). i found this thought provoking as such a reality is hard for me to believe had existed and the photos really kicked the reason "home". they feel that the situation today is not much different than in the past, and i hope that we can make good long-term decisions. we can reduce the effects locally by continuing governmental investment in "human capital", such as education, job retraining, and they argue through further unions and worker mobilization to ensure that policies will be aimed towards the people and not corporations. the way that we emerge out of a recession, or a depression for that matter, is to keep people employed to continue to be able to consume and thus prop our own industries up. not through cutting taxes and canning workers, which seems to be the direction many are pointing.

realistically, after seeing an article in the new york times confirming what the historians were saying by college being more and more expensive, i think it will be hard to balance out the short term solutions (which seem rather tempting to most, such as bailing out the auto industry, etc) with the long term solutions (such as keeping or upping taxation levels to keep retraining or education high, ensuring that after the resolution of the crisis we're to re-emerge well). i wrote a message to governor gregoire this morning to note that we will need to convince the people to keep all the social services that we can alive, at a time that we'll be more than ever tempted to hatchet spending.

any comments are more than welcome to ponder through what should be done.
abraços,

The Most Awesome Thing Ever!!

Ok, so maybe that's a little overboard. But, in the financial world, a Roth IRA is the most awesome thing ever. A Roth IRA is an individual retirement account that you fund with after-tax money. The current amount that you are allowed to fund is $5,000 per year. So what's so great about this thing?? Because Roth IRAs are funded after-tax (you have already paid the taxes on your income), when you take the money out when you retire, the money is taken out is not taxed. Because our government has a progressive tax structure (lower income pays a lower tax rate than higher income which pays a higher tax rate) and we are in our mid-20s, hopefully earning the least amount of money in our career, this becomes a no-brainer. Your current tax rate is somewhere between 15% and 25%, however, when you're older your tax rate could be 38% or higher (depending on who becomes president between now and then). That means the cost to you is 15% now, but could be 38% later. I say pay the taxes now and reap the benefits later.

So why doesn't everybody do this? One is that you have to be under a certain income (I believe it's $100k). Second is that you cannot take the money out until 59 1/2 years old. If you take out the money before then, then you will be major penalties. So, even if you can only put in $200 a month or whatever, set up an account with any brokerage firm (T. Rowe Price, Fidelity, Scottstrade, etc).

Best of luck and keep saving!

B-Squared

Fannie, Freddie and our Bloated Government

The mess that is Fannie and Freddie is extremely confusing and honestly can't be explained in a blog setting. The next time we all meet up I'll explain. I'm sorry but I've tried to write this twice and it is just so complex that I can not write this and have it make any sense.

B-Squared

What does it all mean?

Can I make a humble request to out resident financial expert, b-squared, to explain what is going on with Fannie and Freddie? It's all over the news and seems like sort of a big deal... so the government is taking them over, but what does that mean? For those of us who don't have a mortgage, should we care?

how to afford coffee, wine, and tea...

Just wanted to let everybody know about the best way to earn interest on your savings. If you have a Washington Mutual (www.wamu.com) checking account, you are eligible to receive 3.75% on your money if you open an online savings. The online savings is the exact same as a regular savings in that you use your ATM card just the same to take out money, you can use the teller to deposit money, etc. The interest amount I receive in one month is more than I made in interest for an entire year with a regular savings. If you don't want to deal with WaMu, there are other banks out there with online savings like ING Direct, although the interest rate is not as high as WaMu.

Here's to monetary success!
B-Squared