Buy Now, Pay Later.

I have always found it amazing that we are a nation that loves the idea of purchasing what we want and not what we need. I was reminded of this when I saw a Saturday Night Live sketch called, "Don’t Buy Things You Cannot Afford" with Steve Martin, Amy Poehler, and Chris Parnell. The premise behind the sketch is that Chris Parnell is marketing one of those "Get Out of Debt Quick" solutions which are incredibly popular today. What makes the whole sketch so funny is that Steve Martin and Amy Poehler are confused by the plan that Parnell is marketing which advises people, "don’t buy things if you don’t have the money".
But the sketch, although intended for humor, had some points I feel people either ignore or disregard when they are making purchasing decisions or calculating their finances.
To start, if you don’t have money, don’t buy things. This statement is fairly straight-forward and easy to understand, however, I can’t help but think about the people that make little to no money or receive state assistance and purchase non-necessity goods, often neglecting to purchase necessity goods for themselves or their families. Do you really need that pair of Nike sneakers or that brand new cell phone when Junior needs baby formula?
Another point that was discussed in the sketch was buying expensive things with saved money. I understand there are some things that just cannot be paid for with saved money (especially when the need for them is immediate and cannot be postponed). However, for that flat-screen television you’ve always wanted or the new Mac Book that’s on sale this week, one should postpone those purchases unless the money can come from saved money.
On the same note, I have noticed that people will often make investment decisions that don’t make sense to me. I have noticed there are a lot of houses in Middlesboro that look run down but the owners have other luxuries; above ground pools, basketball courts, brand new cars in the driveway, trampoline, a visible flat screen television, etc., etc. These luxuries are often nicer than the homes the owners live in. We all know at least a few houses like this. To me, I can’t imagine spending money on a nice car and a nice pool when I could use that money to instead have a nice house. Personally, I drive an older car so that I have more money available for the finer things in life. I will literally drive the wheels off of my car before I get a new one. Why stretch myself further just so I can have a luxury vehicle?
Isn’t the purpose of a car to help us commute and travel to places? Do we really have to have a luxury vehicle or even a new car every few years? I knew a family like this once; they replaced a car almost on a 3 year schedule. Why not just keep the car and pay it off rather than continue to make car payments for new cars? To avoid paying for repairs as necessary? If a car requires repairs, on the whole it costs less than making a cay payment every month.
Forgoing those luxuries now will free up more funding today to help purchase nicer things later. But we are a buy now, pay later society. Our purchases of the past are coming back to haunt us today because the bill came in the mail and the payment is due (with interest). And we wonder why there’s a credit crunch; we can’t make our minimum payments anymore! We have consistently asked for what we want now rather than wait until we can afford it. This only helps to explain why we have a national deficit that is greater than a trillion dollars.
I’m not saying that people shouldn’t spend money. That’s not the case at all. In my column about stimulating the economy, I argued that people should be spending money today to capitalize on the buyer’s market (and lower prices) only if you have the money. The federal government wants to stimulate the economy, but we shouldn’t adopt their practices; deficit spending. In times of financial crisis, it’s only best to cut back a little to ensure you make it through the storm. Essentially, the solution is to buy now, pay now.

My First Case of Writer’s Block

Writing opinion columns is not normally hard for me. It’s easy to have an opinion when you’re very opinionated (obviously). However, one of the hardest things to do is to pick a topic to write in depth about (intelligently).
Sure there are things that I have strong opinions about, but today I just seem hard pressed to write about them. It can sometimes be difficult to come up with enough information and premises to support an opinion.
So in the interests of being unable to formulate a single topic to write about in this column, I thought it might be appropriate to piecemeal a few opinions.
Honestly, who steals pure-bred dogs? I want to offer my sympathy for the victims of these crimes, but nothing says "senseless" quite like stealing someone’s pet. I mean seriously, aren’t there more lucrative strategies to get rich quick? Why not just try to take candy from a baby? I think the two crimes are comparable in terms of "classiness".
Billy Mays will sell you OxiClean, Mighty Mend It, Kaboom, OrangeGlow, MightyPuty, Gophers, Hercules Hooks, and now to add to his resume, he will sell you health benefits. That’s right folks, health benefits. The iCan Benefit Group, LLC (No kidding, that’s actually the name of the company. Please note it’s resemblance to the iPod) has officially contracted the "television salesman of the year" to help them sell health insurance. The insurance allegedly costs the insured a fraction of what private insurance costs today (but then again you get what you pay for). I wonder if Mays is seeking advice from Richard Scrushy, the founder of Health South? This may be the first product that Mays endorses that does not come with a 100% satisfaction guarantee. I bet Mays would sell you his beard if he could, or perhaps even his own Grandmother. Buyer beware on this one.
Grave robbers strike again in Middlesboro. This is truly shameful and distasteful. Karma being what it is, retribution is on it’s way.
President Obama’s inauguration was neither "green" or fiscally responsible. During a time of economic recession and high unemployment, I can completely see his logic in throwing a grand gala and a lavish parade for his coronation (pun intended). Why not, right? It’s not like he’s paying for it with all of his contributions from Hollywood and Oprah. I love that my taxes went to his celebration and not to the creation of jobs, or for that matter, anything to help weather the current economic storm. Let’s not even mention what he’s doing with the stimulus. On top of that, his inauguration totaled 100 tons of garbage. By comparison, New York City on New Year’s Eve only had 40 tons. That’s not even ironic given Obama’s campaign platform, that’s just downright hypocrisy.
There is a coalition forming that would like to restore voting rights to felons in Kentucky. They argue that felons who have paid their debt to society should have this right restored. In my opinion, if you can’t do the time, don’t do the crime. I don’t care if they ever have their vote restored again. Before you know it, groups like this will also try to restore former felon’s rights to own and possess firearms. Steps in the right direction, I assure you.
Current Illinois Governor Blagojevich informed the media recently that he thought about giving Oprah the Senate seat for Illinois. Well, at least that would put her show on hold for a while (which would be fantastic). However, do we really want to give more power and influence to this woman? I would suspect, if selected for the seat, she would vote however President Obama told her. Does it upset anyone else that Oprah (who already has a substantial influence on the public) has a strong friendship with the President, or is that just me? I can personally see Oprah lobbying the public for anything and everything that President Obama wants in order to sway public opinion to his benefit.
Some opinions are meant to be funny, others satirical but sincere. Please read with caution.

The Economic Forecast calls for Gale Force Winds

As we draw closer to the inauguration of President-Elect Barack Obama, many Americans are looking for the change that is needed today. Not necessarily a policy change, or even a change in regime, but a change in the economic outlook. Things look abysmal. The national unemployment rate is expected to increase from the current 6-7% to approximately 12-13%. Today’s economic situation has been compared to the Great Depression. For all of us, we all need to hope that President-Elect Obama can deliver on his promise of change and take action to fix the economy.
However, it seems that people believe that Obama can just wave a magic wand a make things better as soon as he enters office on Tuesday. The "recession" is just not that simple to fix. President Bush has taken the right steps to put things in motion to correct themselves. He and Ben Bernake have used policy and interest rates to provide all the right incentives to stimulate the economy. So why hasn’t the economy been stimulated?
Well half the problem in my opinion is the media. There are constant reports of job loss, low consumer confidence, stock losses, and banks requiring bailouts that are negatively impacting consumer confidence. We all know that things are bad, but the more the media reports how bad things really are, the less likely consumers are to make any type of financial decision that may help to stimulate the economy. Who even knows what may happen with the tax return checks we will see this year! Some may hide the money under the mattress for the ensuing economic catastrophe. At least we haven’t experienced any bank runs yet.
The reports on the state of the economy are so alarmingly bad that otherwise"smart financial decisions" have been delayed or disbanded altogether. Interest rates are at an all-time low, the price of goods has declined sharply (most notably gasoline), and the housing market is a prime buyers market for once. My wife and I have been searching for homes and have found remarkable deals in the process. Yet people refuse to spend money, invest money, buy homes, or proceed with normal financial matters partially out of fear the media has instilled in us about the pending economic doom.
Honestly, the media just needs to stop reporting exactly how bad it is or at least not in such negative detail. This alone will help to increase consumer confidence and may result in the thawing of our pocketbooks. Note: I’m not saying spend money like you’ve won the lottery, but if you’ve got it, now is the time to use it to take advantage of some great deals.
Now for those of us who are worried about some of President-Elect Obama’s policies about raising taxes on the rich and the state of our welfare nation, take solace in this; there is no way President-Elect Obama can raise taxes now on anyone. As I have told others, if he were to raise taxes in his first year in office during this recession, it would spell the certain end of his presidency by 2012. With unemployment as high as it is, where does Obama plan on collecting these taxes from? There are fewer people working to pay taxes let alone pay higher ones. If he tries to increase the taxes on businesses it will almost certainly result in the loss of more American jobs and even less taxes to be collected.
I predict that President-Elect Obama will have no other option but to cut the federal budget, sit on his spending plan, and try to weather this economic crisis. Given the historic election, and the historic crisis this nation is facing, President Elect Obama may end up being either a historic American figure or a historic idiot by stubbornly pursuing the financial plan he discussed during the election. That’s the key difference between ideal and reality; Obama’s plan was rooted in a static, ideal environment where everyone benefitted and outside factors played no role. These same ideas, when met with reality, have no chance of success.
So to those of us who are currently hiding in the basement during hurricane "Main St. To Wall St.", it’s safe to come out. Things are bad, but it’s not the end. The four horsemen are not in sight. If we are to weather this financial crisis, consumer confidence has to start increasing. Spending more will increase sales and the need to bring back those jobs that were lost. Don’t go out and deficit spend, but as I said before; if you’ve got it, now is the time to use it. That’s the main way to weather this storm without anyone having to call FEMA.

The Economics of Smoking

Smoking has long been a concern of mine. For me and for others smoking has more drawbacks than benefits. To start off, I am not advocated a total smoking ban. We have rights to make certain decisions regarding our bodies, no matter how self-destructive they may be. This is why we have the right to live our life as we choose, provided that we only impact ourselves and not others. This is the essence behind out laws; they are not designed to impede the freedoms and liberties of the people, but to protect the freedom and liberties of those who are affected by the decisions of others.

Think about drinking and then operating a motor vehicle. This is illegal because you place the lives of others at risk by doing so. The same holds true for smoking. Smoking presents what is called a negative externality in that your actions can negatively impact others (unintentionally). By smoking in confined places, you are impacting the living condition of others and impacting their decision on whether or not they would like to smoke. True, they have the ability to leave the area in which you are smoking, but non-smokers have as much right to be there as a smoker.
The only difference between a non-smoker’s right and a smoker’s right is that a smoker’s decision to smoke not only affects the smoker, but all others around. Restaurants previously either banned smoking in their facilities altogether or had designated smoking areas. Cities today are banning smoking in public places for the same reason. A person’s right to breathe fresh air is impeded upon by a smoker’s right to smoke. Smokers can choose either to smoke or not to smoke at no harm to themselves, however a non-smoker, when around other smokers, is at the mercy of the smoker’s decision. Since a majority of Americans do not smoke, it further only makes sense to rule in favor of the majority.

Smoking bans do not impede on the rights of smokers. These bans make smoking allowable in certain places much like other currently existing laws. For instance, alcohol cannot be consumed in public except during certain exceptions (like a tailgate party). Try drinking a cold-one in public and you might end up with a public intoxication charge. Smoking is moving towards the same standard; get caught smoking in public where it’s banned and receive a citation.
Now onto the economic side. Why do people choose to smoke and continue to do so? Because quitting for most is an impossible feat. So they continue to pay to feed their addiction, not only to purchase their smokes but for any ensuing medical costs from smoking-related illnesses. Calculating the costs of smoking should not only be contained to the cost of a pack of cigarettes, but should also include (1) the costs of any additional health care and (2) any loss of productivity an individual may experience from smoking related diseases. I would also like to note the costs associated with the loss of life but this cost is both difficult and too subjective to determine.
Smokers with low income who suffer from smoking related diseases are more likely to have the costs of their medical expenditures paid by Medicaid, a program financed by tax-payer dollars. Essentially, those individuals who smoke and have low income are affecting the pocketbook of both smoking and non-smoking Americans alike. Smokers who have private insurance will also have higher medical costs which translate into higher insurance premium costs across the board for smokers and non-smokers alike. Smoking not only affects the health of non-smokers through second-hand smoke, but also results in less disposable income for all.

Now what about any benefits? Smokers obviously experience some benefits from smoking or else they would never start. The benefits they experience would be difficult to assess against any negatives a non-smoker may experience from second-hand smoke. So we’ll leave it at that it is noted nonetheless. Smoking generates a source of revenue for states from an established per unit tax rate. This revenue normally goes towards public programs that the state government has dedicated the tax revenue for (ironically, some states utilize these tax funds for smoking cessation programs). Sometimes the funds are used to help defray the costs of medical expenses related to smoking. This way at least those who are smoking are paying for some of their medical treatment. Additionally, any tax burden imposed by states is going to raise the price of a pack of cigarettes and make it increasingly less affordable for people to smoke. Higher prices for cigarettes will at least provide incentive for people to stop smoking in order to save money.
So given the inherent costs and benefits of smoking, in my purely economic opinion, smoking should be banned as a cost saving measure, for smokers and non-smoker alike. However, my legal opinion of the issue varies to the extent that smokers have a right to smoke, but this right should not infringe on those of non-smokers. Given both the legal and economic reasons presented here, I hope that this article garnishes a good discussion about the fate of a statewide smoking ban, or even a national smoking ban.