Beating Broke

Personal Finance from the Broke Perspective

Back to a Cash Economy?

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With the recent increase in new fees at banks, and the backlash it has caused, people are starting to determine what the alternatives are.  At the moment, there are still banks and credit unions that are maintaining their current fee structure without adding anything new.  Many of those are also maintaining their “free” accounts.  But, if the Durbin Amendment remains, it may be only a matter of time before they buckle under the costs and start removing “free” accounts and adding fees.

What then?  It that happens, we might see a financial world where all debit cards have a monthly fee.  We might see more annual fees on credit cards, and higher interest on credit cards.  We might see more and more checking and savings accounts having a minimum deposit amount and/or a monthly fee.

Use Cash OnlyAs a card-carrying member of the NGPAF (Not Gonna Pay Any Fees) club, that might just make me decide that I don’t want to use any of their services anymore.  My depository institution might just have to become the coffee can in my backyard.  Seriously, though.  If all of those services become services with fees, we might see a pretty drastic increase in the usage of cash again.  Many of us don’t use cash all that much.  I know I don’t.

And what happens if we return to a cash economy?  The banks get even less transaction fees.  Their income drops because of it.  And we all see what happens when their bottom line is threatened.  More fees.  It could send the banking industry into a never ending spiral of more and more fees until the only people who still use banks are the ones who don’t feel comfortable keeping thousands of dollars in a coffee can in the backyard.

Luckily for me, I belong to a credit union that isn’t likely to add any additional fees anytime soon.  What about you?  Do you belong to a Credit Union or Bank that hasn’t added fees recently?  What if they did?  How long do you think it will be before we have to choose to either pay fees or carry cash?

photo credit: flattop341

Sell! Sell! Sell!

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Goodness!  Did you see what the markets did yesterday?  Down almost 400 points!  If you haven’t already, you had better join the rest of the world in getting out while you still can.  The era of easy gains in the stock market and guaranteed returns has officially ended, and it isn’t pretty.  It’s time to let go of the bull market ideals.  Do you know what happens to a bull in a room full of bears?  Here.  Let me show you.

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Seriously. Those bears are going to eat you alive! Sell everything you got now. Take it out in gold, and head for the hills. Don’t forget the canned supplies and vegetable seeds for after the apocalypse that will follow!  Quit your job, pack your family up, and head for North Dakota.  We’ve got plenty of oil field jobs available. (see: Bakken formation) And with a bunch of liquid black gold running over your fingers, you won’t need to worry about the crashing stock market anyways!

Ok, obviously, this whole post is a little bit tongue-in-cheek, with the exception of the North Dakota part.  We really do have plenty of oil field jobs available.  Best economy in the U.S.A., in fact.   And, even if the post weren’t tongue-in-cheek, and you took it seriously, you really, really, should talk to a financial professional before making any thing resembling a sell everything move.  The whole post was all for the enjoyment of myself, MoneyMamba, and others who felt that there would be a whole plethora of posts by our colleagues touting the benefits of dollar cost averaging and long term views on the stock market.  They may be right, but sometimes you just have to poke a little fun. 😉

Despite my best efforts, I don’t know everything about finances, stock markets in particular, so please don’t construe this as advice.  It isn’t.

photo credit: VirtualErn

Debt Ceiling Crisis?

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If you’re even slightly interested in the US economy, and, let’s face it, most of the world is, then you’ve likely been at least marginally following the last few weeks worth of debt ceiling news.  The quick and dirty of it is that the US government has a debt ceiling that puts a cap on how much debt the US federal government can carry.  If they reach that cap, they can no longer issue treasury bonds and the like to raise money to pay for things.  Based on what I’ve read, everyone would like us to believe that it’s a major crisis, and the world will end if we don’t raise that debt ceiling and allow for more debt.  But, is it really a crisis?

Let’s think about this just a little bit.  Replace “U.S. Government” with John Doe in everything I’ve just said, and all the news you’ve read.  If we were talking about an individual, we wouldn’t be talking about how the world would end if they weren’t allowed to accumulate more debt.  We’d be talking about how they need to radically cut costs, increase income, pay off debt until they can get their finances in order.  Would  it be called a crisis?  Maybe on a personal level, John Doe would believe it was a crisis.  But, it certainly wouldn’t be world ending.

Bus1I’ll admit that it is a bit different when it’s a government entity that we’re talking about.  If the US government goes bankrupt, there will be some pretty serious problems with the economy for a while.  Which brings up another issue altogether.  The US economy needs some diversification of it’s revenue streams.  Way too much of the economy balances on how much money the US government sinks into it each month.

It’s time we start asking the same questions of the US government that we would be asking of John Doe.  Do you really need that expenditure?  That service?  All three cars?  The McMansion?  Unfortunately, those that are in charge in Washington are playing political ball instead of really trying to solve the problem.  They think way to hard about what programs they can cut that won’t lose them votes in the next cycle, or how much they can raise taxes without losing votes, when, instead, they should be looking to make the US government financially solvent and stabilizing it’s fiscal situation.  You or I would start with a balanced budget, I don’t see any reason why the government shouldn’t do the same.

What do you think?  I don’t think I’m being to idealistic in asking that they carry a balanced budget each year.  Or that they cut costs until they can do that.  Yes, they’ll likely have to raise taxes some to pay off what they’ve got for debt, but if it doesn’t come with some pretty significant cost cutting, they’ll all be looking for new jobs in 2012 anyways.

photo credit: Public Notice Media