“Save up, pay cash for your toys - Daily Oklahoman” plus 1 more |
| Save up, pay cash for your toys - Daily Oklahoman Posted: 05 Sep 2010 09:57 PM PDT Copyright ©2010. The Associated Press. Produced by NewsOK.com All rights reserved. This material may not be published, broadcast, rewritten, or redistributed. 
DEAR DAVE: When is it OK to buy toys for the lake — like boats and personal watercraft — when one is following your plan? Anonymous DEAR ANONYMOUS: I'm a lake guy, too. So, you've hit a soft spot with me on this question. Still, you have to be an adult about these things, and here are a few rules. First, you should be completely debt-free except for your house. Second, you need to have your fully funded emergency fund — that's three to six months of living expenses — in place. In other words, I want you to have completed the first three Baby Steps. And remember, no matter how shiny and cool it may look, buying a Sea-Doo is not an emergency! Save up and pay cash for your toys. Remember this rule of thumb when it comes to toys. With the rare exception of collectibles, anything with an engine goes down in value. You should never have more than half of your annual income tied up in the total of all your vehicles. It would be pretty stupid to make $60,000 a year and have $40,000 tied up in cars, boats and other toys. That's way too much money tied up in things that go down in value. Always make sure your family is well taken care of before you go out buying toys! DEAR DAVE: My wife and I are active-duty Marines. She's planning to get out in a few months, but I'm staying in for the long haul. You recommend saving 15 percent for retirement, but how does that apply in my case when I'll be getting a good pension after 20 years? James DEAR JAMES: I'd like to see you do both. Just imagine the money you two would have for retirement with your military pension and a big pile of cash from having saved 15 percent of your income over the years! Having options is a great thing. Think about all the things you could do down the road if you save for retirement and have your pension in place. You could pay cash for a home or even open a business when you retire from the military. And these are things you probably wouldn't be able to do working with just your service pension. You've got a great future if you'll just keep plugging along and saving, James. Let the military do its thing, and you two keep pumping 15 percent of your income into Roth IRAs and pretax retirement plans. It's going to be pretty cool! E-mail questions for Dave Ramsey to davesays@daveramsey.com. For more financial advice, go online to www.daveramsey.com or call (888) 227-3223. Life Photo Galleriesview allThis entry passed through the Full-Text RSS service — if this is your content and you're reading it on someone else's site, please read our FAQ page at fivefilters.org/content-only/faq.php |
| Personal Finance: Woes of 1914 ring a bell - Sacramento Bee Posted: 05 Sep 2010 12:00 AM PDT This Labor Day, it's hard to find many reasons to celebrate the working life. If you're unemployed, jobs are unbearably scarce. And if you've got one, chances are your pay increases are stalled, your 401(k) is capped and your retirement seems far, far away. "The economy is stuck: It isn't getting worse, but it also isn't getting much better," said Alissa Anderson, deputy director of the California Budget Project, in releasing a report this week that notes that Californians hit hardest by the lagging recovery are 16- to 24-year-olds and the long-term unemployed. "Economists have been telling us the recession is over," Anderson said, but the past year has been "a recovery in name only." But we're not here to spread more bleak news. Recently, we ran across some bits of local history that help cast perspective on this relentless, seemingly endless recession we've been enduring. For nearly 50 years, James C. Powell was a local manager for the Crane Co., a Chicago-based manufacturer of valves, fittings and plumbing supplies that maintained a Sacramento branch starting in 1910. His daughter, lifelong Sacramentan Betty Jane Powell, 89, has kept many remembrances of her dad's working life: The gold cufflinks shaped like water valves, the commemorative medallions, his office spittoon. And a stash of holiday cards mailed to Crane Co. employees each year. Some of those nearly 100-year-old messages are uncannily reminiscent of 2010. In 1914, the Crane Co. was helping drive the country's push into the modern age. Its shiny white porcelain sinks and bathroom fixtures were bringing indoor plumbing to homes, schools, offices and prisons. Its valves, fittings and steel pipe were appearing in everything from Chicago skyscrapers to industrial heating plants to gold-dredging equipment. For years, its building on Front Street in downtown Sacramento was a beehive of activity. But in December 1914, the good times were on hold. A stubborn recession had been dragging on for nearly two years. Business activity nationally was down 25.9 percent. As the company wrote to employees on its Christmas card: "During the past year, business has been very much depressed all over the country and we have experienced great difficulty in keeping (our) plants running. (As) men laid off would undoubtedly have trouble finding employment, it has been our aim to keep the full force going, but it was necessary to shorten hours. … It is hardly necessary to say that the company does not make much money when shops are partially shut down." Sound familiar? Ailing economy, shortened hours, laid-off employees. Fast-forward to December 1931. In its annual report to stockholders, the company was again taking note of a depressed economy. For the first time since its founding in 1865, the company reported an operating loss, of $7.9 million. "The year 1931 was unsatisfactory in nearly all industries … and our business was no exception," the company wrote in its cream-colored annual report. The reasons: a falloff in construction and in purchases by railroads, utilities, oil companies and others. To curb its losses, the company slashed overhead and cut salaries, from executive halls to the sales floor. But it was also predicting an end to the misery. "In our opinion, the country has touched the bottom of the depression and we may anticipate in the near future a slow, steady ascent to a sound business level." Again, all too familiar. Much has been written comparing the current recession with the Great Depression of the 1930s. But it's worth reminding ourselves that there've been dozens of recessions, large and small, over the last 220 years of U.S. economic history. In fact, as many as 47 in all, according to some studies. Yes, you can say this recession is different. It depends on what you're measuring. University of California, Davis, economics professor Gregory Clark, who's studied the history of recessions, calls the downturns "a regular part of the economic diet," noting that almost every decade has claimed a recession, going back to the 1830s. But as painful as it may feel, this one isn't as harsh, relatively, as some previously. Viewed from history's sweep, it shows up as "a gentle wobble," said Clark, but its impact has perhaps been felt more keenly. "One of the oddities of this recession is that the shock to output (goods and services) isn't particularly enormous, but there's been a huge psychological shock to the U.S.," he said. That's partly because previous recessions were often sharper but shorter, with wages and prices falling more deeply but regaining momentum more quickly. This one may feel worse, Clark concludes, because we all had built up grander illusions of wealth due to soaring home values and bulging stock portfolios. With so many invested in real estate and stocks, we felt richer than we actually were. Then as now, the economic jolts were met with government reforms intended to contain the damage and prevent its recurrence. Back in 1914, it was the Federal Reserve. In the 1930s, it was Social Security, the FDIC and other New Deal programs. Today, it's federal stimulus spending, new consumer protections and extended stretches of unemployment benefits. You can argue forever whether those measures are the right ones. Ultimately, the cure is jobs, jobs and more jobs. In a survey this week, Chicago-based consulting group Challenger Gray & Christmas Inc. pointed to at least one hopeful sign: Job cuts announced by companies in August fell to their lowest level in a decade. Overall, announced layoffs for January- August this year are down 65 percent from the same period in 2009. "Obviously, for the millions of Americans who are still out of work, the improvements are not coming fast enough," said Challenger Gray CEO John A. Challenger in a statement. "However, it is important to remember that the economy is digging itself out of the deepest hole this generation of workers has ever experienced. The recovery is not going to occur overnight and not without hitting some bumps in the road." And while a plumbing supply company's message to its workers from nearly 100 years ago is hardly a definitive statement, it does remind us that we've survived this before. Happy Labor Day. © Copyright The Sacramento Bee. All rights reserved.  Have a personal finance question? Call The Bee's Claudia Buck at (916) 321-1968. What You Should Know About Comments on Sacbee.com Sacbee.com is happy to provide a forum for reader interaction, discussion, feedback and reaction to our stories. However, we reserve the right to delete inappropriate comments or ban users who can't play nice. 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