OT - Gas to hit 4.00

Kimball Larsen kimball at kimballlarsen.com
Wed Jun 11 11:42:12 MDT 2008


On Jun 11, 2008, at 10:41 AM, Grant Robinson wrote:

>
> On Jun 10, 2008, at 6:53 PM, Derek Davis wrote:
>
>> On Tue, Jun 10, 2008 at 4:50 PM, Matthew Frederico <mfrederico at gmail.com 
>> > wrote:
>>> You are so awesome.  I wish I could be like you.
>>
>> Assuming you were being serious, I agree. I think Dave is  
>> definitely a
>> guy worth emulating based on my interactions with him.
>>
>> If that was sarcastic, it was also rude, immature, and uncalled for.
>>
>> I'm hoping for serious.
>
> Having met both Dave and Matthew, I believe both of them to be good  
> people of character.  I re-read Dave's message.  I didn't take  
> offense, because I know Dave, but it could be taken as a bit  
> insensitive.  People have and are losing their homes, and you can't  
> make a blanket statement that it is totally the persons fault in  
> every situation.  People lose their jobs, get in accidents or have  
> serious health problems their insurance can't or won't cover.  I  
> know of someone who got in a car accident, and was swamped with tens  
> of thousands of dollars of medical bills that he couldn't pay.  He  
> eventually had to declare bankruptcy and is still dealing with the  
> consequences five years later. Ask yourself this question:
>
> Even with a modest home and mortgage, how long could I go without  
> working before I would be in deep financial trouble?
>
> The "average" person would probably not be able to go very long.   
> Those of us who are in salary positions with companies that offer  
> things like short and long-term disability, if we couldn't work,  
> those benefits would kick in.  That makes us pretty fortunate.  If  
> you don't have those types of benefits at your work, you are a just  
> a bad car accident away from financial ruin.  So, while I agree that  
> there are definitely people in our country who are not "acting their  
> wage", until we have walked in the shoes of the "average American",  
> we should probably refrain from passing (or appearing to pass)  
> judgement on their choices and circumstances.
>
> Grant
>


WARNING:  Conservative political ranting to follow.  Read at your own  
risk.

I was raised with a very strong work ethic and emphasis on self  
reliance - in short, if I want something, I have to make it happen.   
Period.  This includes insulating myself from potential effects of not  
being able to work for an extended period of time, prices going up on  
items around me, living well within my means, etc.  I feel pretty  
strongly that this is the right way to live your life - develop your  
talents/skills/aptitudes to the point you can rely upon yourself to  
handle any situation.  I have done relatively well in this regard, and  
am definitely not one of the "typical" americans referred to by Dave.

However, I totally agree with Grant here - there are some  
circumstances completely out of your control that can take away what  
insulation you may have built up, and make it very difficult or  
impossible to recover to a totally self-sufficient state.

I'll give you one example:  My brother was driving home from costco  
with his family in their big full size van several months ago.  As he  
approached a 4 way intersection (one with stop signs on the other  
road, not the one he was traveling on) a motorist waiting at the  
junction (he had stopped) decided it would be the right time to pull  
out.  My brother stomped on the brakes but still T-Boned the guy's  
car.  Fortunately, nobody was seriously injured in the accident, but  
it was a severe enough accident that it completely demolished the  
other guys car, and totaled my brothers new van.  Now, here's the rub:  
The guy driving that car was an illegal alien with no identification,  
no drivers license, and no registration on the car.

The police at the scene said this happens frequently, and it was  
unlikely anything would happen to the guy (no jail time, no  
deportation, no fine, etc).

(for more gory details than I'm sure anyone cares to know:  http://www.kimballlarsen.com/bloggity_blog_blog/illegal_immigration_rant.html)

Had an "average" american (instead of my brother) been driving the  
van, such an incident could have been completely ruinous, and  
completely out of their control.

Now, I told you all of that, so I could tell you this:  Given the  
current political scene, I have become increasingly aware of the  
various parties vying for attention as they make somewhat sweeping  
statements about how they are going to change America for the better.   
I find the mentality of some political statements truly frightening:   
"What happens if you lose your job?  What happens if you can't afford  
xyz?  What happens if [insert negative thing that could potentially  
occur here] - Don't be afraid of any of these things - your government  
will be there to take care of you."  This sort of statement gives me  
the heebie jeebies - usually because the sorts of items they propose  
are exactly the sorts of things I have always been taught and felt  
strongly are the individual's responsibility, not the gub'ment.

Getting back to what Grant mentioned, I run into a moral dilemma - and  
it's one that has only recently surfaced for me:  Where do we draw the  
line?  At what point *should* the government step in and assist people  
in distress?  It seems that Democrats tend to be in the "anytime you  
get a boo-boo, the government will come kiss it better for you" camp,  
while today's republicans seem to be ... uhm.... I'm not sure  
anymore.  Hmm.

So, turning from what everybody else thinks/says, here are examples of  
boo-boos that could occur and how I feel they should be handled.

Tornado comes and rearranges my whole city:  Lets get some government  
help rebuilding (perhaps in the form of cash to purchase building  
materials, in the form of national guard troops to provide labor for  
the building, etc) - but let's expect the citizens of the area to be  
right there working hard to restore things too.

I lose my job:  That's too bad.  Brush up my resume, do some  
networking, and get another one post-haste.  Even if I have to flip  
hamburgers.

I get in a car accident and can't work for 6 months:  Reduce  
expenditures to bare minimum.  Use my food storage (I do have nearly a  
year's worth of good food stored, in addition to a large, producing  
garden in my back yard), explore every avenue that may exist to earn  
an income of some sort first.  If/when that fails, turn next to other  
family members (siblings, parents, etc) for *temporary* support.  If  
that does not work, find a way to swap roles with my wife until I'm  
back on my feet - she is every bit as competent to earn a paycheck as  
I am.

Finally, to respond to Matt's discussion:

   - Does the "Average American" REALLY own a big house and a big car?
	No, but most *want* to, and most have tried to purchase more than  
they can really afford.  I feel pretty strongly that the current  
mortgage crisis was caused in large measure by people purchasing way  
more home than they could afford because the ARM they were sold by  
their mortgage company meant they *could* afford it for a few years  
until the rates went up.  Didn't matter to the buyer - they had what  
they wanted now, and would worry about later later.

   - Last I checked the average income was ~ $48k / year ..
	I thought it was lower than that.  Hmm.

      - Frankly, I don't know many people in that cash bracket who  
drive big
      cars and were still able to qualify for a mortgage on a "big  
house"
	During the ARM heyday of 3-5 years ago, many people on that sort of  
income could get loans on larger properties and more expensive cars  
than their income would really support.

   - Is David actually doing anything to help people or make a  
difference?
	This is irrelevant.  The real question is does David actually do what  
he recommends?  Does he have adequate savings?  Is he self-reliant?

      - I mean, is he moonlighting as a financial counselor helping  
educate
      people on how to resolve debt?
	He shouldn't have to.  He should keep his own house in order, and not  
have to worry about everybody else.

      - Here's the hypocracy: Both David and myself are spouting words  
of
      utter uselessness unless we actually act.
	I agree.  However, I believe that the acting should be restricted to  
dealing with your own circumstances and situation.  You should not  
have to fix everybody else's problems.  Just deal with your own.

      - Are you really "ok" if gas goes up to $8.00 per gallon?
	I would be as well.  I purposely bought a smaller house than I could  
afford (Oh, Mr. Larsen - your FICO scores are 820.  You can afford a  
half million dollar loan! - I got one less than half that), and  
purposely found said house about 1 mile from my office, so I can walk,  
ride my bike, skate, etc to work if necessary.  I realize there will  
be other economic impacts of fuel prices going that high (if you  
bought it, it was once on a truck), but I have structured my finances  
such that I can absorb those costs as well, if necessary.

   - I found that statement quite ludicrous - It's simply going to  
raise the
      cost of my bus fare and my trax fare.
	Which, if you are out of debt and self reliant, is not all that much  
of an issue.  If you are in debt to your eyeballs and depend on the  
government or other social programs for all your support, then yes,  
you are in a heap of trouble.


- Kimball
http://www.kimballlarsen.com




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