Encouraging saving is good, but is a MyRA the answer?

Posted By on February 2, 2014

Most people dislike partisans who are only be looking for ammunition to attack the other side … and I do find myself slanting from that perspective too. So while President Obama delivered his “Blah, blah, blah …” SOTU speech last week, I had to work hard not to approach every word and idea with skepticism, even though Obama has a solid track record of misleading and “fibbing(I’m trying to be polite). 

Anyway, when I heard about the MyRA Retirement Savings Account idea in order to encourage Americans to save for retirement, I figured let’s give our president the benefit of the doubt … thinking that saving money is better than encouraging more debt. Unfortunately the devil is in the details as outlined by Chuck Jaffe a columnist for MarketWatch (see the highlighted 4 points below the break).

chuckjaffeThe basic details released to this point make it clear that myRAs will be backed by a security that looks and feels like a savings bond, backed by the government and with the same variable-interest-rate return offered by the G Fund, the Government Securities Investment Fund in the federal employees’ Thrift Savings Plan. (It’s similar to another idea the Treasury has been working on for at least four years now: the R-bond, a retirement product that would let employees direct part of their paycheck toward an investment.)

Savers would be guaranteed that the value of their account would never go down; they would pay no fees on the accounts.

Savers can open the accounts for as little as $25 and can make additional contributions in amounts as small as $5. In this regard, it’s like savings bonds in their prime, from the 1940s through the 1980s, when savers regularly set aside small dollar amounts through payroll plans. The result of all of those small bond purchases was a lot of “shoebox millionaires,” folks who had boxes and boxes of savings bonds stuck in an attic, representing riches amassed by years of small, government-protected savings.

The myRA will use after-tax dollars, like a Roth IRA (meaning withdrawals under most circumstances will not be taxed). And while it is funded by paycheck deductions, savers will be able to keep their accounts when they change jobs. Employers aren’t required to take part in myRA. Obama can start his program without legislative approval, but a proposal forcing employers who have no retirement plans to participate would require a vote from Congress.

All of that sounds pretty good. Here come the “buts”:

1. The G Fund in 2012 — the latest year for which numbers are available — returned 1.47%, and has an annualized average return from 2003 to 2012 of 3.6%. The problem is that inflation in 2012, as measured by the Consumer Price Index, was 2.08%, which means that in real-return terms, G Fund savers lost ground. The value of their account was up, but their purchasing power was diminished.

Obama is introducing his program just as interest rates appear to be coming off the bottom, and at a point where many observers expect an increase in inflation going forward. If the myRA can’t generate more in returns than inflation, even if it succeeds in getting people to save, they won’t be saving well.

2. The myRA program has a $15,000 limit — after amassing that much, savers will have to move their dollars to a Roth IRA — which isn’t exactly allowing anyone to become a modern-day shoebox millionaire through a lifetime of savings. That limit curtails some effectiveness: Reach the $15,000 limit and you must transfer the funds, so your government guarantee of a protected investment is gone. That’s a flaw if the idea is to help people develop protected lifetime savings.

3. The structure encourages savers to use the myRA for their immediate investment benefit rather than for their long-term savings.

The G-Fund payout of 1.47% in 2012 is a far sight better than most savers could have gotten from a bank account at that time. Let’s assume that trend continues; with the myRA having no penalties for withdrawal, it can be used as a better alternative to a savings account for people trying to keep an emergency fund in an account that is government-insured against loss.

That’s not the intention of the program, but Americans have shown a knack for taking advantage of programs for personal benefits, and not necessarily as the framers of those programs intended.

4. You can lead a horse to water, but you can’t make it drink.

We’d all like to believe that if you make retirement-savings plans available, people who have never had access before will sign up and get involved. Ask small entrepreneurs who have established plans, however, and they will tell you that most of their workers didn’t much care.

My sister Carole, for example, established a 401(k) for employees at her small business in New Jersey, and despite matching funds and other efforts to encourage good long-term habits, a majority of employees had personal reasons — from simply living paycheck to paycheck to perhaps feeling like they won’t be on the job long enough to amass a nest egg and more — to ignore the plan.

In short, you can build it, and they will look at it, but there’s no guarantee they will play ball.

“The litany of retirement-savings options already out there are plentiful,” Lance Roberts, chief executive at STA Wealth Management in Houston, said on my radio show this week. “What is not plentiful is the money to put into them. People don’t have money to save. If they had money to save, they would be — and they are — taking advantage of the options that exist. … What people are lacking is the money to save.

“You have roughly 80% of America that is living paycheck to paycheck for the most part. There’s not a lot of savings there.”

Tackle that problem and more people will save. Until those economic issues are resolved, it will take something more attractive than the myRA to get more low- to middle-income Americans to use a retirement plan.

Time Warner Cable: long term mistakes for short term gains

Posted By on February 1, 2014

The Wall Street Journal reported that customers are fleeing Time Warner Cable to the tune of 825,000 twc140131TV users in 2013. There is an increase in competition and a change in viewing habits as younger subscribers cut the cord choosing to watch over the air digital (free) TV or just Internet TV on-demand. What’s TWC’s answer? Increase the prices on existing customers.

Competition in the cable market is suppose to be good for the consumer … right? t seems TWC is going in a different direction. In fact, my combined cable, Internet and VOIP phone bill has increased even as competition is inching into our market (nothing comparable at my house just yet). Here’s hoping for “choice” or convincing my wife we need to cut the cord next year.

According to Bloomberg, the “average monthly bill climbed 2.2 percent to $106.03 last quarter.” Your reward for your continued loyalty to TWC? A bigger bill.

LINK

Tired of playing games with media subscriptions services

Posted By on January 31, 2014

It’s depressing to be back from a few days of sun (and rain), after a long drive from Florida yesterday, but also good to be home. solarpanelencore140127It has been a morning clearing a few bills and accumulated mail off my desk and a light work day before Superbowl XLVIII weekend. One piece of mail, a letter from the Wall Street Journal informed me that my subscription to the Wall Street Journal will be expiring and automatically they will bill my credit card at the new price … of course an increase. This is par for the course for most subscription based services, but pretty frustrating when the jump is large. SirusXM has previously been the most offensive in jumping their rates once “the deal” rate is over, but almost all magazines and newspapers seem to play the same game. Companies know they can gain subscribers with low intro rates for new customers and make it up with big jumps on existing customers unless they call to complain … or leave and then re-subscribe (something they don’t seem to discourage).

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  • WSJ – I’m currently paying $213.72/yr, the increase letter takes that to $455+tax/yr BUT after my phone to cancel the rep offered me her lowest rate of $312+year. Still too high as the current intro rate is $12 for 12 weeks.

I just hate playing the game … it sure would be nice to have them appreciate long term existing customers.

So “once again,” as a long, long time subscriber, I canceled my subscription, listened to the “please continue” offer (still higher then I was paying) and will revisit once they want me back again.

Enjoyed working on the boat and time with Mark and Dar

Posted By on January 30, 2014

20140130-114314.jpg

So much for my Postie WordPress plugin … “no postie” would be more appropriate. Anyway just wanted to include a photo of my liveaboard boating friends Mark and Dar in front of their sailboat Zola. The news is that after Dar’s surgery and stroke that left her vision impaired, they will have to put their Hunter 37 on the market. Very sad.

Blah, blah, blah. President Obama and the SOTU 2014

Posted By on January 29, 2014

President Obama addressed the nation with his State of the Union rhetoric on Tuesday night and his blabbering leaves many of us wondering if he really knows how to rejuvenate the economy? Focus, Mr. Obama, focus. I have my doubts he even cares, sotu2014let alone understands how jobs are created. Once again an Obama speech sounds more like an “elect me” campaign stump speech rather than someone who is functioning as the President of the United States. I rarely agree with most Democrats, but West Virginia’s Senator Joe Manchin suggested we need a president for “all the people” rather than just his liberal segment. If different points of view are going to accomplish anything, the president needs to bring them together rather than accentuate their differences. It is one thing to be a congressman representing a district and holding to a point of view, but President Obama needs to “rise above” the partisanship and the one to bring these two (or three or four) sides together.

If we’re going to succeed, we need to grow the economy in order to create and improve jobs for all citizens. It’s the only way to move our nation to move forward. Just creating class warfare and taxing the job creators, corporations and spending more foolishly is not going to help our country. Jobs and a real growth economy needs to come first … expanding government and adding more social programs is a battle to fight later.

How I watched the SOTU below …

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On a side note, I used the Sprint LTE Freedompop hotspot and my iPad to watch the SOTU on the boat whiles streaming the feed live from my Slingbox at home. Got to love technology … when it works!

President Obama vowed Tuesday to use the power of the pen to chip away at his agenda in 2014, making clear he’ll sidestep Congress through executive actions while also lowering his sights for what is achievable at this stage in his presidency.

In his State of the Union address, Obama stopped short of proposing any sweeping new initiatives. He renewed his call for Congress to approve an immigration overhaul “this year,” but for the most part narrowed his focus to smaller-ticket items he’s vowing to do on his own.

LINK

Freedompop, a Skype connection and new boat batteries

Posted By on January 28, 2014

While using my Freedompop hotspot on the boat on Monday night for a Skype video call with my son on his XBox, I wondered just how much data I was burning through. I wasn’t too worried since I’ve been paying $3.99/month to accumulate some data, I still I knew video would chew through data pretty quick. The Sprint LTE connection (Freedompop uses Sprint) was great and clocking 22.49Mbps down and 5Mbps up … and hour later and I only used 523 MB for the hour long Skype call — great quality too, credit the XBox Connect.

anhouronskype140127

My quick trip down to Encore is strictly a “work on the boat” trip. I rented an economical car and should be able to offset the rental cost with gasoline saving compared to my Honda Pilot. It will be interesting to see if the five door Ford Focus can do a little bit better heading home than the 34.6 mpg driving down. I think it could have been a little better, but I was loaded down pretty heavy with 4 deep cycle batteries, some tools and a bunch of gear. The weather was great on Monday so I accomplished getting the old batteries out of the bilge and the new ones way down in there … and yes I have a sore back!

diehardsincockpit diehardsinboat140127

The final days of the ferry Ostend Spirit (MS Pride of Calais)

Posted By on January 26, 2014

What do you do with a ship when it is time to retire it? Cut it into piece so it can be salvaged for scrap … or sink it as an artificial reef. In the case of this 27,000 gross ton ferry, they’re going to beach it first, so you better get out of the way!

The M/F Ostend Spirit (once the MS Pride of Calais) was own by a shipping company that declared bankruptcy and was sold for scrap and scheduled for disassembly by crews in Turkey. It looks a little crazy to me, but I suppose “beaching it” is probably the easiest way to get workers and equipment aboard?

Name:
1987-1999: Pride of Calais
1999-2002: P&OSL Calais
2002-2003: PO Calais
2003-2012: Pride of Calais
2012-present: Ostend Spirit

Owner:
1987: Stanhope Steamship Co Ltd (Townsend Thoresen)[1]
1987-2006: P&O European Ferries (Dover) Ltd
2006-present: P&O Ferries Ltd

Launched:
11 April 1987

Completed:
27 November 1987

Maiden voyage:
4 December 1987

Tonnage:
26,433 GT

Length:
169.6 m (556.4 ft)

Beam:
28.27 m (92.7 ft)

Draught:
6.12 m (20.1 ft)

Depth:
13.80 m (45.3 ft)

Installed power:
3 x Sulzer ZA40S Diesels

Propulsion:
Triple controllable pitch propellers

Speed:
22 knots (41 km/h; 25 mph)

Capacity:
2,290 passengers
650 vehicles (1,500 lanemetres)

Prepping for an Electromagnetic Pulse — EMP strike

Posted By on January 25, 2014

disastersprepper

No not what you think. I have not gone down the Doomsday rabbit hole … just yet, but for years I’ve been interesting in self-sufficient living and do my share of reading. I enjoy reading both fictional thrillers about EMPs (ie. One Second After) and books oriented towards self-sufficiency. tinfoilhateyesI’ve spent a few hours watching videos too, hasn’t everybody?

For me, I enjoy simplicity and easy to understand mechanical gadgets (sailing, no electronics diesel cars, biodiesel, firearms, amateur radio, etc) and have a personal reputation to uphold as the EMP prepper of my family. Brenda has nicknamed my old Mercedes Benz 300D theEMP car” and even one of my sons’ friends jokingly asked (I think "jokingly"???) if we had our bug out evacuation route mapped out to the boat (in order to avoid cities and highways).  Now if you’re chuckling, the concern isn’t all that loopy since the EMP Commission has produced a pretty detailed report and threat assessment that should concern more that just the tinfoil hat crowd.

"An electromagnetic pulse attack could involve just two nuclear bombs launched from vessels 100 miles from the United States coast and exploding 120 miles above Indianapolis and Denver, respectively. This event would have the immediate effect of damaging or destroying the entire electrical grid and a large majority of computer chips across the contiguous 48 states. This would mean a massive electrical shutdown, affecting water systems, transportation, electronic medical devices, communications, sewage systems, and security systems.

Do you think an electromagnetic pulse attack in the United States is likely to occur?"

RESULTS of the survey

Even the 6PM “real news” is at least talking about the threat once in a while:

  Special Report – Bret Baier and Doug McKelway on EMPs (mp3) | 1/21/2014

What actions should you take following an EMP strike?

100806.EMP.map

So what actions should you take immediately following an EMP strike?  Remember that time will be critical, the first few hours (days at most) will enable you to get a jump on everyone else and set the stage for your success.  You will immediately know that an EMP, be it from a nuclear weapon or massive solar flare, will have struck your area.  Your car will no longer work, your cell phone won’t work, the power will be out everywhere, planes will have fallen from the sky.  You will know it was an EMP but the vast majority of the public will not, they will be quite literally sitting around waiting for someone to tell them what to do.  You won’t know how large the scope of the strike is but you will have to assume the worst, which would be a nationwide outage.

First things first, if you are at work, get home.  Your boss no longer has authority over you, your co-workers no longer are a priority.  They will be trying to restart a computer that will never again work, trying to restart their smartphone, sitting in the break room trying to call 911 and saying things like: “This is ridiculous, I’m going to miss my 3pm sales call!”  You on the other hand will go to you car and change into the extra set of clothes and shoes you keep in the trunk.  You will don your “get home bag” and start walking, hopefully your walk will not take more than a day.

Once home it is time to start implementing your plan.  Remember time is absolutely critical and you only have a small window of it in order to set yourself up for success.  During these initial hours and days people will still have faith that some sort of government agency will come in to make everything better.  They will expect to see the power come back on any minute becausesomeone will surely do something.  They will tell each other to sit tight, just hold on for a day or so because eventually the HMMWV’s will roll in loaded with supplies and some military officer or government official will explain that this is merely a temporary problem, nothing to worry about, sorry for the inconvenience.  You know better because you realize just how devastating an EMP strike is and the reality is that it could be months before systems start to come back online.  It will only take a week or two (at most) before things start getting really ugly because people start going hungry.  With all of that that in mind you take these 7 actions because you were prepared for this to happen.

1- Use your cash.  In the first few days after an EMP strike cash will still have value.  Take all of your cash and that radio flyer wagon your kids have and walk down to the corner store.  Avoid the big retail stores, I suggest finding the corner gas station or local drug store.  The owner of the store will no doubt be there, concerned that the items in the store are unprotected during a power outage.  Explain to the owner that you are in need of some supplies, can pay cash and do not require change.  Tell him/her that you will give them an extra $100 to allow you to “shop” for a few minutes.  Load up your wagon with anything you can find to include medication, candy bars, water bottles, pop tarts, lighters, hand sanitizer etc etc.  Of course you should be well stocked at home but you might as well get rid of your worthless paper money in exchange for any amount of extra supplies you can get your hands on.  In a week (maybe less) most stores will be completely looted so you need to take advantage of this moment.

2- Fill up the tub(s) with water.  Hopefully you have a water bob for each bath tub in your home in addition to several other water storage devices and water purification/filtration devices.  Remember a down grid means that fresh water will stop flowing to your home very quickly.  Fill up your tub as soon as you can, that extra hundred or so gallons could prove invaluable.  If you are concerned about the quality of the water remember you can add 8 drops of regular Clorox bleach per gallon to help purify what you have in the tub.

3- Talk to your neighbors.  This step is absolutely critical, you have to get out and talk to your close neighbors and explain to them what is going on.  They will be in denial for the most part, hopefully you have copies of the EMP report printed off which you can distribute as you go door to door.  Explain to them what is going on and that time is critical, let them know a worst case scenario means that there will be no help coming for quite a long time.  Additionally mention the following to them.

a. Discuss a neighborhood watch.  Tell them that in a few days or weeks things will get dangerous with hungry people roaming the streets.  It is essential that you define your neighborhood’s boundaries and set up a neighborhood watch of sorts, assigning people to different shifts.

b. Offer to hold a meeting.  Set a time that you will have a meeting at your home, say every day after sunrise in your garage.  Tell them they are invited and that every day you will be there passing out information.  At first you might not have anyone attend these meetings, in a few days there will be a handful and in a week you might have 50 or more hungry, scared, tired people demanding answers.  If you are going to assume the role of a leader, be prepared to do just that.

c. Tell them to use their cash.  Much like you should have already done, tell them that their cash will soon be worthless and that they need to get down to the market to spend it.  Most people have no cash on hand, so this probably won’t be a real issue.

d. Tell them to inventory their supplies.  Most people have 3 to 5 days food on hand in their home.  You should mention that they need to start rationing what they have, and taking inventory of everything else.

e. Start identifying those with skills.  I wrote about how to organize a survival community as well as what skills will be valuable after T-SHTF in a few recent articles  While making the rounds in your neighborhood you should start identifying who has special skills and make note of it.  Cops or military personnel could help with security, Doctors have obvious value, and so on and so forth.

4- Start rationing food.  Hopefully you have at least a 1 year supply of food for your family, if not more.  Start rationing immediately because more than likely you will have to share some of your food with your neighbors.  It will be unavoidable, you will need their help to survive as a community and there is absolutely no way that they will starve while watching you and your family live high on the hog.  This doesn’t mean that you cannot oversee how some rations are distributed, or seek out other sources of food, but just remember nobody gets through SHTF alone.

5- Hygiene preparations.  Consider where you are going to dispose of your human waste, it might be a good time to start digging that pit.  Also consider where you will dispose of your trash and if you will bury it or burn it.  Remember the trash man won’t be around next Sunday and your toilets will stop flushing very quickly.

6- Listen to your weather radio.  Prior to the EMP strike you had a small solar/hand crank weather radio secured in an old microwave in the basement, it still works.  You should monitor NOAA Weather Radio frequencies throughout the day in case there is information being published which you can use to stay informed.  Maybe the strike only covered 500 square miles and help will be on the way in a week, or maybe there is nothing but static…not a good sign.

7- Consider your own security plan.  Despite all of the actions you are taking, trying to help those within your community by reaching out to organize them, realize that not everything goes to plan.  There could be dissenters within your neighborhood or those outside of your community who might choose to take advantage of the situation.  Looting will become prevalent very quickly and no neighborhood will be immune.  Consider your security plan, this is no time to rely on the charity and goodness of mankind.  Remain suspicious of all activity and never walk around unarmed.  Never allow your family members to venture out alone and remember to stay in after dark.  All of that said I would caution against using deadly force unless absolutely necessary.  Protect yourself and your family but remember that there will come a time when the power does come back on and people will be held accountable for their actions.

An EMP strike on our nation will be an absolutely catastrophic event and while I’m sure all of us hope that something like this never happens, hope is never a course of action.   Despite our best efforts to prepare for such an event there is a good chance that many will not survive.  Some have predicted that within a year of a strike, 9 out of 10 Americans would be dead.  In sports success or failure on the field of play is determined months before the actual game by how much dedication the athletes displayed during practice.  In much the same way success or failure following an EMP strike will have been determined by how seriously we took our prep strategy in the months or years prior, as well as actions which we take immediately after.  Life isn’t fair, plan accordingly.

LINK

Wall Street traders and investors are deciding it is time to sell

Posted By on January 24, 2014

Investors and Wall Street traders are growing nervous that 2013 gains were too much, too fast as selling dominated the last two trading days. The Dow Jones Industrial Average is having its worst day since April 15th of last year and looks like it will close at the low of the day. (DJIA at 15,935 down 260 points  at 3:30PM)

djia140124

Amidst the encouraging news that the economy is improving, most recognize that our house of cards is pretty fragile and built on the Fed flooding our economy with money and low interest rates. We really live in two different worlds: 1) Credit worthy borrowers using cheap money to invest in real estate and equities and 2) the rest of America trying to hang onto their jobs, pay off debt and living with stagnate or declining paychecks. If we are really in a recovery, where are the jobs?

Tech Friday: Optical Character recognition improvements

Posted By on January 24, 2014

IMG_1615It has been a few year since I’ve needed to scan a pile of papers and convert them to text, but a project crossed my desk this week which had me firing up and updating my free copy of ABBYY Finereader (it came with my scanner). The last real project was when I was still working out of my office in Cuyahoga Falls (a few photos) and was assisting the legal department at one of the rubber companies digitize some of their documents. Ugh what a nightmare job!

After a quick reinstall on my old Gateway notebook, I tested the OCR ability on a “doctor” article I wanted to share with my MD daughter and son-in-law (image right and PDF below). It did a great job on the single page scan … not sure how well it is going to do on a pile of pages?

Desultory - des-uhl-tawr-ee, -tohr-ee

  1. lacking in consistency, constancy, or visible order, disconnected; fitful: desultory conversation.
  2. digressing from or unconnected with the main subject; random: a desultory remark.
My Desultory Blog