Financial Thoughts Before You Pull Any Lever

Guest post by Sharon O’Day, Awakening the Financial Genius in Today’s Woman

Reprinted with permission

lever1Mud-slinging.  Name-calling.  Shades of the truth.

If you listen to political ads, you’ll hear a hundred triggers you could react to as you make a decision about what candidate to vote for.  That holds true for all elections: national, statewide or local … in fact, for anyone who can possibly have an impact on the “playing field” you call your life.

Of course social issues are important.

But if the economic environment makes it difficult to earn, save and create security for yourself and your family, how important is that social issue … relatively speaking?

So, before you pull back the curtain and step up to a voting machine, special stylus or pencil in hand, here are some financial thoughts you might want to consider as you make those oh-so-important choices.

photo from Fotolia.com

photo from Fotolia.com

Other factors, like healthcare, student loans, mortgage rates and others, are very important … but here we look at just the big four:

Jobs

Unemployment figures are bandied about by all candidates.  But do you know what those figures really mean?  Is there any manipulation of the statistics that makes them a false indicator?  (The answer is yes.  Besides, there are enough different statistics out there that they can always find one that works in their favor.)

So what do you hang your hat on?  Listen carefully to what the candidate says she or he is going to do to create an environment where good jobs will be generated.  Are they pro-business or anti-business?  Do they seem to have a believable vision of where they’d like to see the job market go?  Does the position they are seeking have the influence needed to make the promised changes, or is it just pretty-sounding rhetoric?  Check your gut:  do you believe them?

The Economy

Unless you’ve invested years in studying economics to understand how all the pieces work, domestically and internationally, it’s hard to grasp what’s really going on in the economy.  (It’s even hard for economists, because today nothing reacts as it used to.)

But here are two fundamental elements that we can all appreciate.  And if the candidate you’re favoring has been elected to some office before, her or his voting record is a good place to start.

What is the position they hold on the country’s deficit?  (And here all politicians weigh in, whether they are running for the Senate or chief dog catcher.)  If they think it’s okay to grow the deficit more and more, remember that this is the same as allowing the balance on your credit card statement grow larger each month.  As you know, the interest payment due each month grows proportionally.  Someday it will be more than you can pay.  And the balance itself will eventually have to be paid back.  The answer you get from candidates will give you a hint about their long-term view.

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And inflation?  Like the unemployment rate, this too is a manipulated number.  Just imagine, the figure mentioned most often today in the U.S. is what’s called “core inflation,” a figure that doesn’t count the price of food or energy.  How real is that?  How many people do you know who can live long without food?  Or heat in the winter?  And how long could they go without filling their gas tanks?

To put inflation in perspective, it means “how far your money will go when you shop.”  So listen carefully to what a candidate is saying about keeping all costs down as far as possible.  The answer will tell you how much she or he cares about the quality of your day-to-day life.

Taxes

Nobody likes to pay taxes.  Yet everybody likes to benefit from some of the things they make possible, like good roads, good schools, a safety net for those in need, a secure country and so on.  And we know they’re necessary.

But politicians are great at demonizing their opponents, throwing enough mud to make it hard to know what’s what.

Here’s what you can use as a gauge when you’re analyzing a candidate’s posture on taxes in general or on a specific tax:  do you feel that the money collected will be used efficiently if the government provides the good or service?  Or is there someone else who could do the job better?

Forget the rich and the poor for a moment.  Putting yourself in the taxpayer’s shoes, if you were going to pay more because of a particular tax, at the end of the day would you feel good about paying it?  (Because in my books, if you wouldn’t be willing to pay it, you shouldn’t expect someone else to pay it either.)

Where a candidate stands on “who pays what” will tell you what they think the role of taxes is.  And then it’s up to you to see if you agree.

Housing

The American economy grows and contracts based on how housing is doing.  You see, it’s not just building or renovating the houses themselves that matters.  It’s everything that goes inside those houses that helps drive the economy.  Refrigerators, toilets, roofing materials, sod, architects, plumbers, landscapers, realtors, county inspectors …

If anything has taken a direct hit in this economic crisis, it’s been the housing market.  Generations of Americans have counted on the increased equity in their homes to help finance their needs in later years.  And home values had grown along on a pretty steady upward curve.

Whether you’re in a house with an upside-down mortgage (where the balance is greater than the value of your house) … have lost your house … have been able to stay afloat … or don’t even own one, what candidate seems to have a better plan to get our economy back onto sure footing?

Forget fairness for a moment.  Who is offering a plan that will strengthen the general economy so that the demand for houses can grow?  Is that plan affordable?  Or is it so expensive, it’ll put a drag on the economy as it tries to get out of its present doldrums?

To Wrap Up These Financial Thoughts …

I’m not talking about political platforms here.  These questions aren’t about Democrats or Republicans … or anyone in between.  They’re about the numbers.  They’re about what are ultimately your numbers.

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What Do You Do about Online Security Abroad?

Q&A with a Reader

Do you or have you ever used a wireless travel router when conducting online banking or other secure business over the Internet when abroad? What method do you use?

I enjoyed The Adventurer’s Guide To Early Retirement. Thank you for sharing your experiences and encouraging others to follow their dreams. Seeing that I had already taken some of the steps you suggested was reassuring that I am on the right track!

Sincerely,

Kevin

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Hi Kevin,

We use a Netgear extender… but not always. Most of the time while traveling we just jump onto the hotel’s system.

That said we check our accounts daily.

I hope this helps.

Thanks for writing and we are happy you enjoyed our book.

Regards,

Billy

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