EU is splintering – The Western fools led by German include Denmark and France, two countries that surrendered to Germany in World War II are demanding that Trump respect their authority. They have none. The USA protected Greenland from Hitler and his Nazi horde. Trump wants to defend it again, this time from Russia and Red China.
My wife is Scandinavian. I’ve heard 3 decades of shit from them about free education, free medical, and free money if you can’t work or are going to school, or basically, if you are alive, you can suck off the system. There are a lot of illegals and goat herders who are getting free money also. Someone is paying for it.
The problem I point out is that their 70% tax rate is paying for this.
The other problem is that almost everyone in her family who got an operation had to either have it redone or had results that would be malpractice were it not socialized medicine.
Not all of her country finishes high school. So much for the education.
Even they don’t believe it is free anymore. Their argument couldn’t hold water as soon as I asked a couple of questions about how the economics work. They can be insufferable so the less we talk, usually the better, for me at least. You can only listen to so much shit before it gets old and it got old for me decades ago.
Now This:
Europe’s free university model is often seen as a triumph of modern society. With no crushing tuition bills, minimal student debt, and a promise of equal access, it sounds ideal. In countries like Germany and France, students pay only a small administrative fee, typically between $200 and $500 a year, compared to the staggering tuition costs in the US or UK. Many also receive financial aid in the form of grants that don’t need to be repaid, or low-interest loans based on need.
But behind the promises of fairness and opportunity lies a system that too often feels rigid, overcrowded, and uninspiring.
For all its accessibility, the reality of navigating these institutions can leave students feeling like just another number in a giant, bureaucratic machine.
When education is available to everyone, universities become packed. Lecture halls overflow, and personal contact with professors becomes rare. In many European countries, it is normal to attend classes with hundreds of other students. There is little space for discussion, feedback, or even questions.
You sit, you take notes, you pass or fail. It feels more like an assembly line than a place for learning. And the numbers explain why. In 2022, the European Union had 18.8 million students, about 7 percent of its total population, enrolled in tertiary education. In the United States, about 19.1 million people were enrolled in college during the 2024–25 academic year. In addition to similar enrollment figures, both the EU and the US have made higher education widely accessible. In the EU, where tuition is often free or heavily subsidized, higher education has been expanded to accommodate the majority. As of 2022, 44 percent of EU citizens aged 25–34 had completed a tertiary degree, compared to 50 percent in the US.
The two systems differ in structure. What sets these systems apart is not the number of students, but how education is delivered. European universities tend to rely on large lectures, rigid course pathways, and limited institutional competition. The result is a model built for efficiency over individualization. US institutions, by contrast, operate in a competitive, decentralized environment with a wider range of academic structures, including smaller colleges and more flexible program design.
When higher education is scaled to serve nearly everyone, as in much of Europe, it risks trading depth for throughput and personalization for administrative convenience. It works, but at the cost of treating education less as a journey and more as a bureaucratic process.
See a couple of posts below to see the Swiss about to cut their own throats with taxes.
The United Kingdom’s suppressive policies have consequences — with some wealthier individuals seeking greener pastures.
On June 24, Forbes reported that the U.K. is facing a massive transfer of wealth out of the country, “the largest single-year exodus of wealth ever recorded.”
Projections indicate 16,500 high-net-worth individuals — those whose “liquid investable wealth [is worth] $1 million or more” — are seeking residency in other countries.
Founder of Apex Capital Partners Nuri Katz helps people like this by offering guidance should they wish to relocate.
Katz stated this shift doesn’t signal that the upper class is fleeing in terror so much as it is making a backup plan that can be used when needed.
In a national referendum set for November, the people of Switzerland will vote on whether the country should impose a 50% inheritance tax on the wealthiest of people — under a regimen so harsh that not even surviving spouses would be spared from the rapacious confiscation. Naturally, this is triggering predictions of a mass-exodus of wealthy people, with opponents pointing to a wave of departures the United Kingdom has witnessed in the wake of its own recent wealth-seizure move.
Under the proposal, a 50% federal tax would apply to inheritances and gifts above 50 million francs — about $63 million. The measure isn’t supported by the legislative Federal Assembly nor the executive Federal Council. However, under Swiss law, public proposals must be put to a nationwide plebiscite if 100,000 supporting signatures are collected. The signature campaign was led by Switzerland’s Young Socialists.
We’ve been robbed. Our tax money has been looted, stolen, and wasted. Beyond the imagination of most Americans.
But not beyond my imagination.
Mohammed Ali once said, “It ain’t bragging if you can back it up.” Well, I can back it up.
I’ve spent the past decade on my TV and radio shows reporting, warning and screaming from the highest mountaintops that…
*Politicians and government employees are robbing and raping taxpayers.
*Politicians and government employees are crooked and corrupt.
*Politicians and government employees live by the credo, “We make $170,000 a year, PLUS all we can steal.”
*Politicians and government employees are lazy and incompetent, don’t know how to do an honest day’s work, and live by stealing from taxpayers.
*There are way too many government employees. We could operate government just fine by firing half of the government employees.
*Politicians and government employees have stolen and looted TRILLIONS of dollars from taxpayers. That’s why people making $170,000 a year are retiring as multi-millionaires. That’s not possible.
After paying taxes, and paying for kids, and college educations, and mortgages, and property taxes, and often alimony too- no one can become a multi-millionaire on $170,000 a year. Something is wrong.
*Politicians and government employees are getting filthy rich by directly stealing taxpayer money…and also by awarding government spending and contracts to their friends and relatives…and by taking kickbacks from whoever is awarded government money…and from taking bribes into offshore bank accounts from our foreign enemies like China, the Mexican Drug Cartels and Iran…and from high-paying no show jobs, stock options and insider trading scoops given to their relatives from big corporations and lobbyists.
President Donald Trump’s new government watchdog agency that’s headed up by Elon Musk, the U.S. Department of Government Efficiency (DOGE), announced it has already reduced federal spending by approximately $1 billion per day.
“DOGE is saving the Federal Government approx. $1 billion/day, mostly from stopping the hiring of people into unnecessary positions, deletion of DEI and stopping improper payments to foreign organizations, all consistent with the President’s Executive Orders. A good start, though this number needs to increase to > $3 billion/day,” the Department said in a social media post Tuesday.
Topline: The Biden-Harris administration is eclipsing the $1 trillion mark in improper payments, a new record for wasted money in a four-year term, according to a recent report from OpenTheBooks.com.
Key facts: Improper payments — money sent by the federal government to the wrong person, for the wrong reason or in the wrong amount — totaled over $800 billion from 2021 to 2023, adjusted for inflation.
That’s $450,000 every minute. In the roughly five seconds it takes to read this very sentence, the government will have wasted $37,500 on mistaken payments.
Medicaid and Medicare accounted for 43% of improper payments last year, but problems were found across the board. Dead people received $295 million, mostly from pension benefits the Office of Personnel Management sent to former federal workers who had passed away. Prisoners were paid $171 million.
The Internal Revenue Service spent $25 billion doling out fraudulent and mistaken tax credits, with some IRS programs reporting mistake rates above 30%.
The issue is not new, but it is getting progressively worse. Barack Obama wasted roughly 4% of his spending on improper payments in his second term. Donald Trump wasted roughly 5%, and Biden is approaching 6%.
Kamala Harris bragged about casting the tie-breaking vote for the bill that allowed the IRS to crack down on service workers tips. Now she's adopting Trump's 'no tax on tips' proposal. Will she admit that her vote was a mistake and the IRA was bad for America? pic.twitter.com/5vjUKan7m6
KJP dodges questions about Kamala stealing Trump’s “No Tax on Tips” idea.
During the question, she nervous laughs, then spews word salad and refuses to admit the obvious, that yes, the Harris campaign stole the idea after Trump proposed it.
This isn’t necessary, at least to do it to us this way.
Illegal immigration is costing taxpayers $151 billion every year — a 30% increase since 2017.
“The Fiscal Burden of Illegal Immigration on United States Taxpayers 2023,” a report by the Federation for American Immigration Reform (FAIR), concludes that taxpayers spend $182 billion annually on illegal immigrants. That number is partially offset by illegal aliens paying $31 billion in taxes. FAIR estimates that tax revenue is collected from 15.5 million illegal aliens — far more than the government’s 11.3 million estimated illegal alien numbers, which are based on population surveys.
The cost to taxpayers supporting 11-15 million people who refused to go through the legal process of crossing the border and applying for a green card that would allow them to work in the U.S. isn’t really the point. It’s the loss of sovereignty. Every other nation on earth is allowed to determine who gets in and who stays out. Why America has to be different in this regard is a mystery.
“As America struggles to meet countless societal needs while facing the realities of our staggering $31 trillion national debt, the costs of providing for millions of people who have no legal right to be in the United States continues to grow at an alarming rate,” FAIR President Dan Stein said in a statement.
Adding $151 billion to a $31 trillion national debt is immaterial. It’s the drain on resources — criminal justice, healthcare, and education — that matters. This is especially true since the costs of illegal immigration varies from state to state.
Anytime a government is giving you free stuff, they took your money and are giving part of it back to you.
For example:
My wife’s relatives in Denmark can’t wait to brag about free education and medical care and how much better it is than the US. They spend a lot of time trying to make their country better by bringing down the US (especially to me), only it’s not.
They always shop here as it is half the price like a lot of the EU.
I casually mention that they pay 70% income taxes and then VAT on that for their medical care. OBTW, you have to wait 6 weeks for a Dr’s appointment there and I had a kid who went to school there.
I got in to the Dr the same day 2 weeks ago.
I had a daughter go to school there.
The education in socialist countries was at least a year behind where she was in the US, so she didn’t have to work that hard. She was taking courses in her sophomore year that she took as a freshman.
Now for the US. Bernie loved to compare the US to Scandinavian systems.
The group of individuals trying to suck free stuff out of the US government are now prisoners of the very same. Working and doing what you want with your own resources is freedom. Very few actually need the handouts, or only need it a little while to get back on their feet.
Our government (the half currently in charge) wants as many people as possible on the dole. They control the people who take their money. How is this not a form of indentured servitude? Money for votes.
The administration before produced the lowest unemployment for all races and genders. That is freedom and that is the American Dream.
Biden isn’t “canceling” student debt. He’s making everyone else pay for it. The National Taxpayers Union Foundation reported:
Public reporting indicates President Biden may soon announce executive action canceling federal student loan debt for a large set of borrowers. Though parameters of the student debt cancellation have yet to be announced, the Biden administration may cancel $10,000 of debt per borrower for borrowers making $125,000 in income per year or less.
Based on projections from the Penn Wharton Budget Model for the total cost of such cancellation, we estimate President Biden’s plan would cost the average taxpayer over $2,000.
The Penn Wharton Budget Model (PWBM) released a policy report on Tuesday that estimated the total cost of $10,000 in debt cancellation for borrowers making less than $125,000 per year would be $329.1 billion over 10 years. There were just under 158 million taxpayers in 2019 according to the IRS, meaning that the average cost of debt cancellation is $2,085.59 per taxpayer.
This is not a perfect proxy for cost, however, given the U.S. tax code is progressive and tax burdens are not evenly distributed across households. Accounting for the share of taxes paid by low- and middle-income households, we estimate that:
The average cost of student debt cancelation per taxpayer making between $1 and $50,000 is $158.27;
The average cost per taxpayer making between $50,000 and $75,000 is $866.87;
The average cost per taxpayer making between $75,000 and $100,000 is $1,477.78;
The average cost per taxpayer making between $100,000 and $200,000 is $3,158.35; and
The average cost per taxpayer making between $200,000 and $500,000 is $9,947.92.
Some may dispute that taxpayers bear the cost of canceling student debt. But the $329 billion cost of student debt cancellation would be $329 billion previously borrowed from the federal government and not returning to the Treasury. Policymakers will need to make up for that gap in the future with government spending cuts, tax increases, more borrowing, or some combination thereof.
Another bad economic decision that hurts Americans, the middle and lower class. It violates the (HA!) campaign promise of no taxes on those who make under $400,000.
The colleges have over $40 billion in endowments. They can pay for it. The universities raised costs when student loans became available. They are culpable for teaching anti-American policies and helping to ruin, not better our youth.
They are just taking our money and giving it to others. They won’t spend 5 billion to close the border fence, but can’t wait to give $100’s of Billions to other countries and not us (to build fences on their borders). In no way are the current leaders thinking of our best interests. They are thinking of their investments (Pelosi anyone?) and getting re-elected on other people’s money.
Do you know that all of the money for foreign aid is wrapped up together? So is we are helping a needy country, it gets bundled together with money going to China, Russian, Iran and other state sponsored terrorists.
It leads to Socialism, which leads to higher taxes. Relatives in the Scandinavian country tell me that they get to pay upwards of 70% taxes. I get the free college and healthcare (it’s not free, they pay taxes), but I also know of the under the table system that goes on to avoid taxes there.
I’ll support the protection of the country and investment into the future, but the just passed Anti-Inflation bill that increases inflation and is a re-badge of the green new deal. It’s just money for politicians to pilfer and waste.
Yes, just like Bush 41, Biden lied. There will be taxes on those who can afford it the least.
History shows the larges tax revenue increases are from tax cuts, not tax increases. Why? because you stimulate the economy and more revenue is generated for everyone, including the government.
It only leads to one thing.
And to bring this to an unhappy ending, this is why history is importat:
And the blame is on you for not being better educated and studying history. We started this country to get away from what the current administration is trying to do.
And I’m tired of the media hiding what happened on January 6th. It’s like hiding Hillary’s emails, or Hunter Biden’s laptop. I ask myself why, but know the answer. Do you ask yourself why and how is what they are doing affecting you?
Studies are coming out that everyone (including DARPA) knew in 2020 that Ivermectin and HCQ worked to stop Covid. The evidence is coming out that everyone including Fauci knew that it started in Wuhan and he helped to fund it through the NIH.
The cover up and forcing (mentally) people to get jabbed cost many their health. Free jabs were never free. I thought it would be interesting to see how much per person the government has jabbed us for to get the jab.
Now, the MSM has made the big switch to the Ukraine to cover this up, but let’s not forget what it cost our health.
Here’s the recent narrative from the SOTU:
From the transcript: “First, stay protected with vaccines and treatments. We know how incredibly effective vaccines are. If you’re vaccinated and boosted, you have the highest degree of protection. … We will never give up on vaccinating more Americans. Now, I know parents with kids under 5 are eager to see a vaccine authorized for their children. … If necessary, we’ll be able to deploy new vaccines within 100 days instead of many more months or years. … And with 75% of adult Americans fully vaccinated and hospitalizations down by 77%, most Americans can remove their masks, return to work, stay in the classroom and move forward safely.”
Actual data contradicts what Biden said. If COVID vaccines were really effective, let alone “incredibly effective,” then how can the nearly 1 million COVID deaths be explained with 75% of adults vaccinated? The U.S. COVID death rate is incredibly high compared to other nations. Biden failed to acknowledge the many hundreds of thousands of Americans who have died or suffered serious illness from the COVID vaccines, not the infection. No one who follows actual medical science and looks at benefits and risks of vaccination would seriously question whether they or their children should get the shot.
The public needs to know about a CDC database that has not received media attention. Here is the story.
The less visible and accessible data are in the CDC Case Surveillance File. Here are the main key data through the first week in February that shed better light on the full and real extent of the pandemic.
Whereas the total deaths being reported in the press has been nearly 950,000, the CSF figure is almost 785,500. How is this explained? One possible explanation is that the CSF data are for accurately diagnosed cases and deaths definitely attributable to COVID. Perhaps the higher figure is linked to deaths with but not from COVID.
Of that total number of deaths, 425,726 happened in hospitals, and 79,988 in ICUs.
CSF indicates a total of 2,087,643 hospitalizations. That means that about 20% of hospitalized patients died.
This is a very high death rate and supports the fear among many people that being admitted into a hospital is a likely to result in death. This high COVID death rate is higher than for most stroke victims in most hospitals, about 15%. This is also the figure for heart attack victims in the best hospitals.
That high level of death suggests hospital protocols are not very effective. But the medical establishment has refused to seriously reexamine how late-state COVID disease is managed. In particular, those who believe in the efficacy of ivermectin and hydroxychloroquine would be in favor of using those generics for hospitalized COVID patients to save lives. And there is solid clinical evidence that both generics have been effective for seriously ill hospitalized COVID patients.
The current case number reported in the press is nearly 80 million, compared to about 61.3 million in the CSF. Why are there nearly 20 million fewer cases in the CSF data? Are the higher numbers for cases and deaths being over-reported and featured in the media in an attempt to maintain public fear so that people are motivated to get the jab? That seems likely.
Also note that the CDC just announced that nearly 150 million Americans whose blood was tested for antibodies against the COVID virus were infected at some point. That huge number means that nearly half the population had obtained natural immunity that many medical research studies have shown more effective, safer and longer lasting than vaccine immunity. Interestingly, that blood testing was done on samples collected by commercial laboratories doing testing for other reasons. That means the privacy of millions of Americans was violated. Individuals would benefit from knowing whether they had achieved natural immunity. That information could have caused them to reject COVID vaccines.
I moved from a Northern Blue State (South Florida) decades ago to raise my kids in what was know as a Bible Belt state. Due to the area nearby (RTP), it attracted many people from the Bluer states. It was also near eastern Portland/San Francisco (Chapel Hill). That is a concentration of people who consider themselves elites, but in reality were just a bunch of Woke/PC/SJW America hating socialists who were against anything morally proper. So in a way they are elitists, but that is not a compliment. They are a group of disagreeable people who live to try and tell everyone else how to live. They are loathed by most of the surrounding area.
It is safe to say that they ruined a perfectly good place to live with their constant whining to try and make it either NYC or California by standards. They were and still are a minority, but have infiltrated the University System (UNC-CH, Duke, NC State, Wake Forest, etc.) and make life miserable in a once very nice place to live.
Therefore, I moved to get back to the South, where people are normal and have beliefs that are not Marxist. I don’t want to say where for fear that the dicks from the blue states will come and ruin that also.
Just like in Florida, they would come there and say how much better it was in NY/NJ/Penn/Mass than where we lived. Go the hell back if it was so good. Don’t come to a good place and ruin it with the policies that you moved away from, starting with more taxes and more Government.
Here is a little Friday humor, inspired by all the recent going’s on in the news about housing prices, immigration, pot, high taxes, overburdensome government regulation and the usual stuff you read about.
1. Your coworker has 8 body piercings and none are visible.
2. You make over $300,000 and still can’t afford a house.
3. You take a bus and are shocked at two people carrying on a conversation in English.
4. Your child’s 3rd-grade teacher has purple hair, a nose ring, and is named Flower.
5. You can’t remember . . . is pot illegal?
6. You’ve been to a baby shower that has two mothers and a sperm donor.
7. You have a very strong opinion about where your coffee beans are grown, and you can taste the difference between Sumatran and Ethiopian.
8. You can’t remember . . . . is pot illegal?
9. A really great parking space can totally move you to tears.
10. Gas costs $1.00 per gallon more than anywhere else in the U.S.
11. Unlike back home, the guy at 8:30 am at Starbucks wearing a baseball cap and sunglasses who looks like George Clooney really IS George Clooney.
12. Your car insurance costs as much as your house payment.
13. You can’t remember . . . .is pot illegal?
14. It’s barely sprinkling rain and there’s a report on every news station: “STORM WATCH.”
15. You pass an elementary school playground and the children are all busy with their cell phones.
16. Or it’s barely sprinkling rain outside, so you leave for work an hour early to avoid all the weather-related accidents.
17. HEY!!!! Is pot illegal????
18. Both you AND your dog have therapists, psychics, personal trainers and cosmetic surgeons.
19 The Terminator was your governor.
20. If you drive illegally, they take your driver’s license. If you’re here illegally, they want to give you one.
Despite his request to pay more taxes and that the rich do not do their fair share, it appears that Mr. Buffet has reduced his tax burden. While you read the story below, consider if there is a double standard.
Warren Buffett is the best of the best at transforming income into wealth. How did he do it? Wise investing, you say. Combine this with his reputation for having enormous integrity and his well publicized frugal lifestyle. When it comes to consumption he seems to possess traditional midwestern values. In spite of his substantial wealth he lives in a relatively modest home and drives American makes of cars. Ah , but there is something else. As I stated in The Millionaire Next Door,
Millionaires know that the more they spend, the more income they must realize. The more they realize, the more they must allocate for income taxes. So . . . adhere to an important rule: To build wealth, minimize your realized (taxable) income and maximize your unrealized income (wealth/capital appreciation without a cash flow).
You may recall from an earlier blog that the typical millionaire next door has a realized income that is equivalent to only 8.2% of his wealth [median]. But Mr. Buffett is much better at miniziming his income as a function of net worth. According to the 2012 Forbes 400 list, Mr. Buffett has a net worth of $46 billion. CNN Money reported that “his taxable income was $39,814,784” in 2010. That is the equivalent of only 0.087% of his net worth! Translated, the typical millionaire next door’s percentage of realized income to his net worth (8.2%) is nearly 95 times higher than Mr. Buffett’s (8.2%/0.087%).
Also consider something else in this equation: income tax as a function of net worth. The typical millionaire next door pays the equivalent of approximately 2% (median) of his net worth in income tax annually. But here again Mr. Buffett is far, far better in minimizing his income tax. According to Reuter’s, “[Warren Buffett] paid only $6.9 million in federal income taxes in 2010.”
In a nominal sense, $6.9 million in income tax might appear to be a significant amount of money. But look at Mr. Buffett’s tax bill as a function of his net worth, that is $6.9 million as a percentage of his $46 billion in wealth. At this rate he is paying the equivalent of only 0.015% of his net worth. Compare this with the 2% paid by the millionaire next door. This rate is more than 133 times greater than Mr. Buffett’s. In fact, if Mr. Buffett was taxed at the same rate (2%) he would owe the Treasury Department $920,000,000 or nearly $1 billion. You might say that it is unAmerican not to pay your fair share. But Mr. Buffett gets special dispensation regarding this topic. Why? He has pledged to leave the vast majority of his estate to noble causes. And according to Forbes, he has already demonstrated considerable generosity. “He gave $1.5 billion to the Gates Foundation in July, bringing his total giving to $17.5 billion. . . in August he pledged $3 billion of stock to his children’s foundations.
Who is more likely to do an efficient job distributing money from your estate, the government or enlightened eleemosynary organizations? You know the answer and apparently so does Mr. Buffett.
Instead of leaving the country in better shape as every generation until now has done, debt is weighing on us like a herd of elephants. The taxpayers, likely the next generation will be taxed ad infinitum.
Once again, the rich like their money. Once again, Socialism doesn’t work because growing an economy is the way out of a deficit rather than taxing your way out. So Hollande’s premise during his campaign, like in the US is a facade.
As Frank Zappa said: Communism doesn’t work because people like to own stuff.
Margaret Thatcher noted that socialism doesn’t work because sooner or later you run out of other people’s money.
France’s Constitutional Council on Saturday rejected a 75 percent upper income tax rate to be introduced in 2013 in a setback to Socialist President Francois Hollande’s push to make the rich contribute more to cutting the public deficit.
The Council ruled that the planned 75 percent tax on annual income above 1 million euros ($1.32 million) – a flagship measure of Hollande’s electioncampaign – was unfair in the way it would be applied to different households.
Prime Minister Jean-Marc Ayrault said the government would redraft the upper tax rate proposal to answer the Council’s concerns and resubmit it in a new budget law, meaning Saturday’s decision could only amount to a temporary political blow.
While the tax plan was largely symbolic and would only have affected a few thousand people, it has infuriated high earners in France, prompting some such as actor Gerard Depardieu to flee abroad. The message it sent also shocked entrepreneurs and foreign investors, who accuse Hollande of being anti-business.
I am not the author, but this is one of the most important financial decisions you’ll make (the other is tithing) The whole article can be found here:
One of my good friends, “Judge Rob,” is a local, elected judge who also owns a small family business. Judge Rob paraphrased Warren Buffett when we were discussing mortgages over a recent breakfast, saying, “If I knew where I was going to live for the next decade or so, I would buy a house with a long-term mortgage.” The idea is that a mortgage is a good hedge against inflation because you pay it off with much cheaper dollars down the road.
Today, many pundits point to low interest rates and encourage people to borrow as much as they can while interest rates are low. While they do have a good point, deciding when to pay off my own mortgage caused a great deal of conflict between the logical and emotional parts of my brain.
In the early days of black-and-white television, much of the programming was old, silent movies. Who can forget the little old widow, confronted by the evil, rich banker, who licked his chops at the opportunity to throw her out as her mortgage payment came due? As the deadline got closer, the piano would bang louder and faster, and somehow Widow Nell would make her payment in the nick of time. Was I programmed by my generation’s version of Sesame Street?
There’s Something to Being “Old School”
I spent a good bit of my breakfast with Judge Rob in “Yes, but!” mode. Here’s why.
When I was contemplating paying off my mortgage, I spoke with a CPA who also happened to be a financial advisor recommended by a good friend. I explained that I was self-employed, so my income fluctuated, and my mortgage was my largest monthly bill. I suggested that there could be some emotional benefit to paying it off. Less stress perhaps?
He insisted that I could invest and out-earn the cost of my first mortgage. He pooh-poohed the idea of paying it off to calm my nerves, and kept repeating that I could easily invest my money and earn more after taxes than the cost of the first mortgage.
When I asked if his mortgage was paid off, he responded with, “Oh, hell yes!” I was flabbergasted. How could he advise me to do one thing when he’d done the exact opposite? He explained that his wife was from Germany – the old school where you pay your bills, don’t borrow money, and stay out of debt.
Then I asked him, “Once you paid off your mortgage, did you sleep better at night?” He pondered a bit and said, “Yeah, I guess I did. I no longer worried about it. No matter how bad things got, we would still have a roof over our heads.”
When I asked Vedran Vuk, our senior research analyst, about when to pay off a first mortgage, he made some excellent points. First, you should no longer view your house as an investment that’s going to rapidly appreciate as it did in the past. A house is a home, and you should look at it that way. Second, right now a mortgage can make sense from an investment perspective. If you can borrow money at 3.5%, invest it, and earn a guaranteed higher return on it, you’ll come out ahead.
The real question becomes: where can you find a guaranteed greater return, even with the low mortgage rates available today? The government is committed to keeping interest rates artificially low for the foreseeable future. Yields on CDs and high-quality bonds are pathetic.
I just checked my brokerage account, and the longest CD they have available is a five-year CD paying 1.15%. A 30-year Treasury bond will pay 2.8%. Neither holds any appeal for me, particularly if I were investing with borrowed money.
If you’ve found an investment that’s a lead-pipe cinch – one that’s absolutely, positively going to pay off – and a low mortgage rate, you may want to roll the dice. However, I want to add one more note of caution.
The upcoming issue of Money Forever‘s premium subscription, which we’re releasing on December 18, takes an in-depth look at reverse mortgages, one of the most controversial ways to help fund your retirement. Our team will explain reverse mortgages in easily understood terms, highlight pitfalls to avoid, and explain how a reverse mortgage is a good way for some (but not all) folks to fund their retirement and maintain their lifestyle.
Before obtaining a reverse mortgage you must go through HUD counseling. While researching our upcoming report, I came across a study of over 20,000 people who had been through HUD counseling between September 2010 and November 2010. A few statistics really jumped off the page!
In 2000, the average age of people receiving reverse mortgages was 73 years old. By November 2010, the average age had dropped to 71.5, and it’s continuing to decline. In other words, retirees are tapping into their home equity at an increasingly younger age, many because they have no other choice.
It was also interesting to learn why these folks wanted a reverse mortgage. In the 70-and-older group, 38% still had mortgage debt. Seventy-one percent owed 25% or more on the current value of their home, and 33% had a mortgage in excess of 50% of the value of their home. Many wanted a reverse mortgage because they could not service their existing debt. A reverse mortgage is based on the net equity in your home. If their homes were paid for, meaning no huge house payment, perhaps they could have put off the reverse mortgage for a few more years. The older the applicant, the higher monthly payment they receive.
I wonder how many of these folks lost money betting on their lead-pipe cinch investment because they had been nudged along by their CPA.
My point is simple. For most baby boomers and retirees, their home is their largest asset. You don’t want to live like the little old widow in a black-and-white film, worrying about getting thrown out of your home, particularly if you’re no longer working.
Nevertheless, if you had a mortgage with a 3.5% interest rate and we were still living in a world where a top-quality bond or CD would pay you 5% or more, it could make sense to take advantage of it. But that’s not the world of today.
Ideally, you would pay off your mortgage and then use the money you’d been setting aside for payments to build a nice portfolio. For many folks, home equity is like a security blanket – and a potential source of income for when they may really need it.
The Judge’s Word Isn’t Always Law
As I left our breakfast meeting, I shared a few parting comments with Judge Rob. The mortgage conundrum has both financial and emotional factors. Paying off your mortgage is a milestone; it really does change your life. I certainly sleep better, and my blood pressure probably dropped ten points. It was the point when my wife and I actually started accumulating true wealth.
“In the north, we are hearing that more and more people are preparing to leave the country,” said Sebastien Huyghe, a conservative UMP lawmaker. “This autumn, a number of people may make their arrangements.
“The 75% tax will not fill the country’s coffers; instead, it sends a strong signal that will both scare away those who have the means to create jobs, and prevent others from coming and investing in France,” he said.
Economists and analysts say the super-tax is more symbolic than effective, saying it would affect only 2,000 to 3,000 French households while adding little to state revenue.
“From a strictly budgetary and economic point of view, the impact will be marginal, but the Socialists expect a political effect, and they are right,” said Thierry Pech, editor-in-chief of Alternative Économiques monthly magazine. “There is a deep resentment (by the public) against the ultra-rich, one that could feed populism.”
Many French say these super-rich must contribute more, and those seeking tax exile betray the very country that gave them the savoir-faire that led to their international success, a sort of French version of the “You didn’t build that” claim that President Obama leveled against successful businesspeople in America.
“Has (Arnault) thought about all the help he has received from French investors and from the French state itself to make it where he is now?” asks French taxpayer Olivier Weber in Paris.
Last year, 16 business tycoons and other holders of French fortunes wrote an open letter in the French weekly magazine Le Nouvel Observateur with the title “Tax us!”, saying that after benefiting from the “French model,” they were willing to pay more in times of crisis. But that was before a super-tax.
Many of them have changed their minds, such as Jean-Paul Agon, the chief executive of L’Oréal, the biggest cosmetics company in the world.
“If there is such a new tax rule, it’s going to be very, very difficult to attract talent to work in France, almost impossible at a certain level,” he told The Financial Times.
Even Stéphane Richard, CEO of telecom company Orange , who is close to the Socialist party, is worried about the “accumulation” of taxes and the impact on the French economy.
“I’m worried that we start by taxing the rich, and that’s it,” he told French daily Le Monde. “It’s one thing to call on economic patriotism, it’s another to organize a looting (of the rich) that will turn on the tax exile machine.”
Some French shrug their shoulders with typical Gallic distaste
“It’s normal to pay your taxes — it’s important — it means you belong to a community,” said Christine Templier, 38.
IS THE USA GOING DOWN THIS PATH?
Share the wealth has been the mantra of the current government. Current policies emulate France, Greece and the PIIGS. Based on our tax system, we certainly seem to be headed in the direction of not having enough taxpayers to pay for the entitlements.
It is said that the 1% need to pay more. In fact, if you confiscated 100% of their wealth, it wouldn’t make a dent in the deficit. It causes division and class warfare. It clearly defies the history of success where “a rising tide raises all boats”.
SO WHAT IS THE ANSWER?
Besides the obvious of spending less, which congress does not have the ability on either side to do, grow the base of taxpayers and more revenue will come in. JFK and Reagan (and other Presidents) proved this so we have history to support this. In fact, the largest year of tax revenue ever by the government was 2007. There are far more complex economic theories, but increase a tax base who are not afraid to spend more, and tax revenue will rise.
CONCLUSION
I don’t think Zuckerberg, Gates and Buffet will leave America if they raise taxes, but many are leaving California (at 2000 per week). If you look at history, we can do more by having an economy that is growing for everyone. By not singling out a specific group, we get the rising tide and an economy shift with more jobs and more tax revenue.
Economist John Williams of Watchdog.com describes why we will suffer from hyperinflation that will begin no later than 2014 and why.
Open ended QE will cause treasury debt which leads to long range insolvancy of the US Government. If they had to report income under GAAP (Generally Accepted Accounting Principles) rules, we are losing $5 trillion annually. Taking 100% of peoples income would still not pay for this debt.
We are broke.
Government has been kicking the bucket down the road and the result will be inflation.
The global loss of confidence in the dollar happened with the raising of the debt ceiling last year.
The Fed’s primary goal is to keep the banking system solvent. They haven’t done anything to stimulate the economy.
3
Delusions of Adequacy 
