Live Frugally or Die Broke

The Credit Hangover

A great role model of mine once said, “Credit is like alcohol and no one wants a hangover.” The government especially wants to keep the populace drunk, in order to maintain political positions. We need a hangover right now in this country and we are being prevented from having one. Never before have we had debt to income ratios so high. America needs to ween itself off it’s current system of credit. I’ve never heard a single politician ever advocate frugality and I don’t expect it to happen in my lifetime.

What We Need To Succeed

This country needs to lead by example. Metaphorically speaking the band aid needs to be ripped off. We need our government to slash spending and cut taxes, eliminate unneeded programs, and find free market solutions. Government sector jobs need to systematically destroy themselves. A drastic change in our civil services programs needs to be implemented. Public sector unions need to be broken up and more realistic retirement plans should be sought. There is no reason that a public school teacher should receive $1 million in a pension, when they pay in $70,000 in funding. These people need to get IRAs and 401k plans like the majority of the private sector.

What I Would Do

We desperately need to bring back volunteering. What happened to neighborhood watch programs, volunteer firefighters, and old fashioned barn raising projects? Local governments are unnecessarily burdening their citizens with property and sales taxes. They are paying obscene amounts of money, to positions that are unnecessary or unwarranted.

I would enact a mandatory 2 year civil service draft, for individuals over and under 40 years of age. You would have the option of serving in the military, health care field, forestry service, law enforcement, border patrol, etc. You would be paid a fair wage and would receive training in the particular field you choose. This kills two birds with one stone. In the event of a national emergency, the entire country has already been trained in specialized fields. You would eliminate the tight grips of unions and “big wigs” who work the same job year over year collecting hefty raises.

The Dangers of The Public Sector

The public sector has a choke hold on the nation and we are being suffocated. Every year they take over more and more of the private sector. Eventually we will watch the free market system, established by our founders, become extinct. The amount of control the government would have, if we continue down this path, will make our future very dim. Public sector unions are even more dangerous, with their unbelievable demands of higher wages and luxurious retirement packages. We currently have more and more unemployed Americans lining up at jobs like McDonalds and Walmart. There is a serious disconnect here and it needs to be addressed.

What Happened To Banking?

So I was flipping through a document I got from Wells Fargo this week. It appears that starting July 1, 2010 they will be introducing some new banking fees. This of course will be waived if you have more than $1000 parked in your account. That by the way would be one of the dumbest financial moves out there, considering it would yield about .0001% in interest. You might also have automatic transfers set up, in which case they will also waive the fee, however again you are getting about .003% in interest. The last item that will nullify the charge is if you are lucky enough to have direct deposit, which I don’t.

For everyone else, it will cost $10 per month minimum to have the privilege of banking with Wells Fargo. Where is Suze Orman now, toting her message of, “Keep your money in the bank” in those goofy FDIC commercials? The truth is there will be a massive shake out coming. Big banks are going to have to downsize and go back to the “classic” style of banking. You know, when they used to borrow money and loan it out (amazing concept huh?). What ever happened to those days?

Quoting Wells Fargo

Effective with your July 1, 2010, or later statement, the monthly service fee for your Custom Management Checking account will be $10 per month. You may continue to waive the monthly service fee if your package is complete and has one of the following:

A $1,000 minimum daily balance;

A qualifying Direct Deposit of $100 or more;

A recurring monthly automatic transfer of $25 or more per transfer from this account to your Wells Fargo savings account.

Closing Your Account

There is no talking your way out of this one kids. When those fees hit, it will be game over. You heard it here first. Run while you still can because with these new laws, banks are going to make their pillaging of your funds much more transparent. Their looting through overdraft fees and ATM charges are distant and painful memories. The easy money was made and the economic realities of today have finally caught up with them. In the coming fee hikes, you will see individuals go with smaller, more sane, financial institutions like credit unions and community banks.

When you close your account, you will undoubtedly be asked why. Feel free to let loose your frustration and tell them you are going with the small guys. You will be given a voucher for the remaining cash in your account. You can bring this to a teller window and turn it into currency. Do not call or email the bank to close your account. This will unleash a nightmare of miss communication and could lead to even more fees.

Clean Up Your Mess

I know that closing an account can be a nightmare. You are going to have to make sure that your bill payments aren’t drawn from your closed accounts. Don’t forget your E-Bay and Amazon accounts and switch them over to your new bank account/credit card. It wouldn’t hurt to inform the local IRS to have your property tax refunds rerouted to you, in form of a check, instead of a deposit to an account you no longer have.