discussion response

You must reply to at least two colleagues in a manner that extends the discussion. A simple “I agree/disagree” will not be accepted. respond in a manner that further extends the discussion. respond to the posts below,

post 1.

Carpe Diem spending is out of control in this country, in my opinion.  We have continually proven that we will spend beyond our means as long as someone is there to help us do so.

One of the drawbacks of having a banking system as sophisticated as ours is, that it really is too easy to get financing these days.  Almost anyone can qualify for some type of loan, and as long as the bank will accept a higher risk of default for a higher rate of return, they will continue to do so.

Think about it.  The bank makes money on the loan origination and interest payments, and if the borrower doesnt pay it back, they seize whatever collateral held the loan and sell it.  Doesnt seem like a lot of risk being taken by the bank, so why not keep lending to anyone that asks.

I certainly used to do some of these things myself.  Without the dumb luck of a hot housing market, I was looking at a nearly six figure debt while making a whopping $30k a year.  Nobody should have given 20 year old me enough money to buy a house.  What were they thinking?  They were thinking that even if I couldn’t pay them back, they would get at least some of my money and end up owning a house.  Like I said, not a lot of risk for the banks.

I think it should be just a bit harder to get a loan for any kind of larger purchase.  And to file for personal bankruptcy, which many people see as a safety net if they decide to stop paying their debts.

post 2.

Social Security is a tough one for the politicians.  Hard to say you are in favor of changing things around when its quite possible for the people affected are the ones who will vote you out of office next term.

They are at least on the right track with finally raising the full retirement age.  They need to keep this age moving, and faster rather than slower.  The sooner the FRA catches up with current life expectancy predictions, the better chance there is for SS to survive.

The only other real viable alternatives to raising the retirement age would be hitting the wealthy up in one of two ways.

First, SS would have to eliminate the tax limit currently in place at $118.5k and include incomes above that level to be counted towards SS contributions.  Some estimates say this would cover almost 3/4 of the current funding shortage.

The second option to hit the wealthy would be to limit their own benefits after retirement.  Many people with multi-million dollar 401ks and IRAs likely wont miss the $30 thousand or so that they would otherwise get in benefits.  They probably wont starve if they only receive $18k of that.  Right?  Yeah, but its really just another clever way to levy higher taxes on the rich which in my view you can only take so far.

At some point you have to start spending less money, not start taking more.