Sunday, August 28, 2011

Dear Washington

Dear Washington

By Keith Bunn Jr.
August 28, 2011

This is a letter I should, and would, send to our government if I thought it would make a difference…

Dear Mr. President, members of Congress, and the House of Representatives,

As I’m sure you are all aware by now, the American people are not very happy with you all. You have squandered our money in ways most of us have disapproved of for a very long time. It wasn’t until we lost our “AAA” debt rating, that you may have finally opened your eyes about what you have done.
It has gotten to a point where you think you need to start making cuts to what you referee to as “entitlements”. I agree with you on that point as long as you are not talking about Social Security. Even though Social Security was never designed to be this way, it has been the soul income for a lot of people for a long time. But if you are truly bent on making cuts in that area, I have a few suggestions for you…

  • All those who are receiving social security now, whether its for their retirement, disability, or death benefits, will continue to receive those benefits, without losing a single penny, until their death, are no longer disabled, or are no longer eligible to receive death benefits or a combination there of.
  • If you are 45 years old or older, they will also get full social security benefits just for the simple fact they have paid into it most of their adult lives and they are entitled to it.
  • If you are 21 to 44 years old, they will have the option to opt out of receiving social security benefits. If they choose to opt out, they will no longer have to pay into the social security system, nor be eligible to receive social security for their retirement, disability, or death benefits according to present day guide lines. However, if they choose to stay in, they will continue to pay into the system and be eligible to receive full social security benefits also according to present day guide lines. I think the majority of this age group will not opt out just because I don’t think they know what I know.
·    If you are under 18 to 20 years old, they will no longer be paying into the social security system and will not be eligible to receive social security for their retirement, disability, or death benefits according to present day guide lines. They will be fending for themselves until their deaths. Unfortunately, I think the majority of this age group will not be please with this because this age bracket believes they are entitled to things whether they have paid into it or not. Also, they don’t know what I know.

Even though everyone wouldn’t be happy with this plan, I think the majority would and it would give the system time enough to purge itself and make people more dependant on themselves instead of the government. That’s what you wanted when you said cut backs on entitlements, right? The only side effect would be is that you would be losing revenue. Oh well, you can have your cake and eat it to.  
As for the 18 to 44 year olds that don’t know what I know, I’m going to teach them! Because if they knew that if they took just what they pay into social security each week and invested that, they would receive way more in that investment than they would ever get from having social security benefits.


Keith Bunn Jr.

Now, do I think Washington would ever do anything like this? Absolutely NOT. Do I really think this would work?  Absolutely!  Let me explain.
Our senior citizens get an average of $1094. a month in social security benefits. If they started collecting it at the age of 65 and lived until they were 95, 30 years, they would have received only $32,820. Not very good for a 47 year investment.   
  Now if I were 18 years old and paid $122. a month, every month in a 10% rate of return, decent growth stock mutual fund for 47 years (18 to 65), I would get $1,576,976. Now you tell me which dollar amount you would like to have at retirement. I thought so.
And here’s the kicker, your social security benefits don’t get passed on to your heirs. When you die, your benefits stop. If you do it the way I explained above, your heirs inherit a million bucks. How cool is that?

“A good man leaves an inheritance for his children's children.” - Proverbs 13:22 –

Checkout my website, Facebook, & Twitter pages as well.

Sunday, August 21, 2011

Then and Now

Then and Now

By Keith Bunn Jr.
August 21, 2011


We’ve all heard about the roaring 20’s and how for that decade, our country was at its peak in prosperity. It was at the end of World War I, the U.S.’s Gross Domestic Product (GDP) had doubled, and consumer spending had shot up buying cars, washers, and refrigerators. Radios then, were the equivalent of today’s TV and people were buying them up too. Jazz and dancing grew in popularity and it seemed that people couldn’t get enough of it. The movie industry blossomed and going to the movies for entertainment grew as well. It was a period of social, artistic, and cultural dynamism. So I was wondering, what happened back then that hasn’t happened since?
Well, believe it or not, it started with the government under the administration of President Warren Harding. President Harding took office in 1921. At that time, inflation was running rampant and unemployment was at 20%. In an attempt to make things right, Harding proposed to reduce the national debt, reduce taxes, protect farming interests, and cut back on immigration. Unfortunately, the president never saw any of those proposals pass Congress due to a fatal heart attack in 1923. It was those policies however, that led to what was known as the "Coolidge prosperity,".
  In President Calvin Coolidge’s inaugural address, he stated that the country had achieved “a state of contentment seldom before seen,” and swore to himself that he would maintain the status quo. In both Harding and the Coolidge administrations, the heavy taxes that were imposed on the wealthy (from 7% to 77%) to help fund WW I, were lifted. President Coolidge believed that that tax burden would slow down the economy and reduce tax revenues. He also prevented the government from interfering in private business. The management style of both Harding and Coolidge, caused an environment that would sustain economic growth throughout most of the 1920’s. But, as we all know, the prosperity that most of the country enjoyed, came to a screeching halt when the stock market crashed in 1929 at the beginning of the Great Depression.
Herbert Hoover became president at the beginning of the depression and announced to the country that he would keep the Federal budget balanced, cut taxes, and expand public works spending. He also stated that while the people should not suffer from being hungry or cold, the responsibilities for caring for those in need should fall onto the local and voluntary help. He also proposed to Congress a program that would Reconstruct Finance Corporation to help businesses, additional aid to farmers who were looking at foreclosures, reform banking, and loan money to the states to help feed the unemployed. Unfortunately, Congress considered him to be callous and a cruel president and he became the scapegoat for the depression and in 1932, Franklin D. Roosevelt defeated Hoover in a landslide victory.
By March 1933, there were 13,000,000 people unemployed in the U.S. and just about every bank was closed. It was around this time that a growing popular, 50 year old, British economist by the name of John Marynard Keynes, contacted FDR, first by letter and then later in a face to face meeting in Washington.
Without going into tons of economic details, Keynes’ theory (what is now known today as Keynesian Economics) was that full employment can be maintained only by government spending. The government must invest in public works, must hire the unemployed, and the government has to run up deficit spending during a slowing economy. Now I’m not trying to degrade or belittle anyone’s intelligence, but for those of you who don’t know what ‘deficit spending’ is, it means that the government is spending more than it brings in and is running up debt.
For 4 years, FDR didn’t buy into Keynes’ theory, but with very little recovery of the U.S.’s economy, FDR bought into Keynes’ theory in 1938 and FDR’s New Deal  program was born. In this program, the U.S. was taken off the gold standard, a huge work relief program was made for the unemployed, new controls over the banks and utilities were made, Social Security was formed, and the wealthy were loaded down with heavier taxes again.
By 1944, the Great Depression was starting to end, unemployment went from 25% to 1%, plus the U.S.’s GDP went from very bad to almost triple. So as history wrote this, FDR’s New Deal  and Keynesian Economics brought the U.S. out of the Great Depression. Unfortunately, that is not true.
Now before I go on, I want you to carefully look at the dates I told you, especially the last one, 1944. Years prior to 1944, the U.S. struggled to stay out of the conflict that was taking place in Europe. Sure, we were helping our allies with supplies and such, but that was about it. But as we all know on December 7, 1941, the Japanese boomed Pearl Harbor and the U.S. was thrust into a war with Japan and then later with Germany and it’s allies. So from 1938 to the end of 1941 (3 years), there was no where near enough time to see the outcome of any new national program. Plus, all our men either volunteered or were drafted to serve in the military and every able-bodied woman left here in the U.S. replaced the men in the work place, building, selling, whatever was needed to support the war or anything else that was needed for that matter. So it was World War II that ended the Great Depression and not the New Deal or Keynesian Economics.


Fast forwarding 63 years. In December 2007, we entered another recession that has been so bad, many economist and other world governments have compared it to the Great Depression. Affects of this recession included, a devaluing dollar, sub-prime mortgage crisis, rising oil prices, and a housing market correction.
In February 2008, a 5 year record of 63,000 jobs was lost. Now at the beginning of his second term in office, President George W. Bush, tried to fix the situation by signing a $170 billion stimulus package which he hoped would improve the economy by giving tax breaks to struggling business, and sending out tax rebate checks to many Americans.
In September 2008, the recession became much more serious when the government took over Fannie Mae and Freddie Mac, followed by the Lehman Brothers bank filing bankruptcy, and then a federal bailout of American International Group of $85 billion. By October 2008, because of increasing foreign and domestic spending, our national debt rose to $5.6 trillion. Most of that debt was from the ‘Bush tax cuts’ and an increase in national security spending. When Bush’s presidency was over, unemployment was at 7.2%.
In February 2009, newly elected, President Barack Obama, signed the American Recovery and Reinvestment Act of 2009. This $787 billion stimulus package would increase federal spending on infrastructure, various tax breaks and incentives, education, health care, and direct assistance to individuals. Later, the White House intervened with the hurting Detroit auto makers, healthcare reform, etc… I’m not going to get into too much detail with fairly current events.
The point of this blog is not to place blame or to point fingers at any one administration. It is to show what one wrong decision, repeated over a long period of time, can do to devastate your family, community, state, and country. What do you think would of happened if FDR waited just 3 more years. I know that sounds like a long time, but it is my opinion that our country wouldn’t have over $14 trillion of debt that we do today. As I said earlier, Keynesian Economics is still being taught today in college and it is the way a lot of economists think. The old economic way of thinking, the way it was in the 20’s, still works and that is proven by the way today’s Texas Governor, Rick Perry, is governing. His leadership style is similar to Harding and Coolidge’s style of not interfering with businesses, and keeping taxes low across the board. By doing so, he has created an environment where that state’s economy is thriving in one of the biggest recessions this country has seen in a long time.

“Those who cannot remember the past are condemned to repeat it.” – George Santayana –

Checkout my website, Facebook, & Twitter pages as well.

Sunday, August 14, 2011

Can you be a student without a loan?

Can you be a student without a loan?

By Keith Bunn Jr.
August 14, 2011

When did it happen? Can someone please tell me? When did it become normal that if you wanted to go to college, the only way you could go was by getting student loans to pay for it? When did that happen?

Way back in the day, if you wanted to go to college and your mom and dad couldn’t afford to pay for it, you were expected to work to earn the money to pay for it. But not today, today students’ sign up for student loans, with no money to their name, thinking that after college they will get great jobs and make lots of money to pay them off. The truth is, it just doesn’t work that way. According to The Wall Street Journal, student loan debt has now surpassed credit card debt by over $3 billion. Life doesn’t always pan out the way we plan and we don’t get a high paying job to pay for those loans. On top of that, students that graduate college not only have tens of thousands of dollars in student loan debt, but they have thousands of dollars in credit card debt also. It can be very overwhelming and stressful to the young adult who is now being harassed by collectors wanting the money for the loans and credit cards and they don’t know how to handle money. Based on the documentary Maxed Out , the stress was so great for two students, that they took their own lives.

Let’s face it, going to college for most of the kids today is really the first time they have been on their own and it’s sad to say that most kids today have no idea what the adult world is really like. Most of them are accustom to the lifestyle they grew up with, while having no clue as to how much it costs to maintain that level of lifestyle. Some are unwilling to down grade their lifestyle, so they use their student loans on everything else but for their education. Sallie Mae reported, that 92% of undergraduates charged books, supplies or other direct education expenses on credit cards and 1/3 of the students put their tuition on credit cards. And they don’t mind doing that because the average teen today thinks they will be making $145,000. per year after graduation based on other studies.

The truth of the matter is this; life doesn’t always go according to plan. I have heard too many times where someone has a bunch of student loan debt and didn’t pass their bar exam to become a lawyer, didn’t pass the exams to become a doctor, has a medical condition now or has been in some sort of accident and they can’t work in their educated field anymore, or now has children and wants to be a stay at home mom. On top of that, student loans are not bankrupt able, and just like the IRS, they don’t have to sue you to garnish your wages or put liens on your property.

Student loans are not only dumb but are unnecessary. According to Zac Bissonnete’s book, Debt-Free U: How I Paid for an Outstanding College Education Without Loans, Scholarships, or Mooching off My Parents, if a student works just 20 hours a week while going to college, they can make enough money to pay for in state college. Also, the same study showed that those students that worked to pay for college instead of just getting a bunch of loans, got higher GPA because they were either working or studying and didn’t have time for partying.
You can also get grants and scholarships. Those are a little more time consuming to get and you may get a lot of rejections, but in the end they are well worth it. In fact, there are millions of dollars in scholarships every year that don’t get used because no one tries to get them.
And finally, choose a college you can afford. There is absolutely nothing wrong with community colleges. I know some of you out there have your eye on a specific college for whatever reason, but consider this; a friend of mine went to college after high school. He started at a community college, and then bounced around from school to school, all the while transferring his credits as he went, till finally, he ended up and graduated from University of Michigan. Now he only has one diploma. It doesn’t list all the schools he went to, it says that he graduated from U of M. It may have been a pain to do all that transferring, but in the end, he saved a lot of money. And let me ask you this, when was the last time you went to see a doctor, a lawyer, an accountant, or any other profession that has to have some sort of degree and asked them where they went to college? You haven’t! Degrees don’t have any value. The knowledge you get while getting that degree does.


“It doesn't matter where you've been, it only matters where you are going.” - Brian Tracy –



Checkout my website, Facebook, & Twitter pages as well.

Sunday, August 7, 2011

Difficult Days Ahead

Difficult Days Ahead

By Keith Bunn Jr.
Originally Posted: August 7, 2011
Re-Posted: October 8, 2013

My friends, we have some difficult days ahead. Our political leaders can’t seem to pull their heads out of their politics to do what is best for the country. They think more about their political careers then making the obvious, and hard decisions of not over spending and thinking about not raising the countries ‘Debt Ceiling’, to put this country back on track.

But let’s say they did make that decision, what kind of economic pain would we be looking at? Unfortunately, a lot! As we stand now, the federal government will be taking in $2.17 trillion this year, but will also be spending $3.82 trillion during this same year, which is one of the reasons why we now have a debt of $14.2 trillion. Now these are some huge numbers. For some of us, a little too big to wrap our minds around, so instead of using the government, let’s use a factious household. So if someone’s family was doing what the government is doing it would be like their household income would be $55,000 per year but spending $96,500 a year, all the while having credit card debt of $366,000. If you knew someone who was doing that, you’d call them STUPID! And you would be right!

Now here is something I want you to think about. Think of several things that the federal government funds, it doesn't matter whether it is small or big. Can you see those organizations, research, etc… in your mind? Now imagine that they’re not there anymore. How mad would people get? I mean, people have gotten so use to certain things being there because the federal government funded them every year that if they were all taken away, people would think their lives were coming to an end. It would be like you taking your teenager’s cell phone, iPod, computer, and video games away all at once. They would be throwing a hissy fit!  You don’t believe me? Remember what was going on in Wisconsin, when some of the residents there were going to be losing some of their benefits because the state didn't have the money to fund them? And even here in Michigan, it wasn't too long ago, on Facebook, there were some teachers complaining about possibly losing some of their benefits. People are going to get mad. There is no way around it.
Make no mistake. If the government cut all spending except for the military, medicaid/medicare, and social security, the budget still wouldn't be balanced. As of right now, just to balance the federal budget, they would have to cut their spending by 27%. Just to balance it. More cuts would have to be made to start reducing our debt.

Now there is a way to reduce the pain on your end of this mess and this is what I told those teachers on Facebook, and I got some-what ridiculed for it, and that is you need to be in the best financial shape you can possibly be in. If you are not debt free, you need to be. Then, you need to start building wealth. If you are debt free, but don’t have a lot in savings, you need to start saving to increase you wealth. Because the larger your net worth is, the bigger your cushion will be when the pain starts to roll down hill. You need to make sure you have a good retirement plan going outside of your 401Ks or 403Bs. You need to make sure you have a good life insurance plan outside of your company’s plan. You need to make sure you can cover all these things for you and your family, including a good health insurance plan just in case your company will no longer supply those things as a benefit because of cost, and then you’re left out in the cold with no way of getting them because of your finances.

Things are changing every year. You’re seeing and hearing about it all the time in the news. Our political leaders don’t have the capability to fix our lives. WE DO! So lets do what we have to do to protect our way of living and running our families’ lives. When the pain comes, we’ll still have an ‘ouchie’ moment and we can still get mad, but it will by no means be as painful as for those who are not prepared.

The reason I do this, is to give people hope and to try to inspire others. To make people think about their finances, whether they are young or old, so they can win financially.
If you have any questions for me about my posts or if you need help learning how to live on less than you make and creating a budget, you can call me at (616) 454-2046 or e-mail me at I’d be happy to help!
You can also find more money news, facts and ideas, on my Facebook and/or Twitter pages. I'd be grateful if you followed me. Thank you!