Thursday, September 25, 2008
7 better uses for $700 billion
If the bailout sounds like a lot of money, that's because it is. What else could it buy? How about health insurance for everyone, or fixing all the roads and bridges?
Wall Street's crisis is about to become Main Street's crisis, as bank credit freezes and loans dry up. The government's fix: $700 billion to buy up the bad loans choking the system.
It's a monster plan, but there's little choice, according White House and Federal Reserve officials. Though much of the money may return to the nation's coffers over time as the Treasury sells off the mortgage-backed assets it will purchase, the bailout will severely limit what the government can afford to spend on health care, energy, infrastructure and education in the years ahead.
New bridges and guilt-free electricity
Let's start with the nation's infrastructure. The American Society of Civil Engineers estimates our nation's bridges need $180 billion in repairs, with our rail infrastructure in need of $185 billion in maintenance. California wants to spend $40 billion for the nation's first high-speed rail network to connect Southern and Northern California.
Saskia Sassen, a professor on Columbia University's Committee on Global Thought, points out that infrastructure investments would feed directly into gross domestic product, based on job and enterprise growth. And we certainly have the builders to do it. Unemployment in construction is 40% higher than in manufacturing.
Arizona Public Service, an electric utility, is building the nation's largest solar power array in the desert near Gila Bend, Ariz. It will be able to power 70,000 homes using only the sun's rays -- and will create thousands of high-tech green energy jobs. Construction costs will be about $1 billion, but the utility says the 3-square-mile project will pay for itself in about seven years. With $699 billion left over, you could put even more of the Southwest's desert to work in creating clean energy.
Peace of mind for the environment and our bodies
Health care and climate change are other major concerns. Kenneth Thorpe, a professor of health policy at Emory University, points out that for $150 billion you could provide every American with private health insurance and create a universal automated health-information system.
When you consider that the National Cancer Institute receives $5 billion a year in funding, you could multiply its budget by 10 and provide private health care to every American.
McKinsey, a consulting firm, estimates it will cost the U.S. economy $150 billion a year to stabilize greenhouse gases by 2030. For three years, $700 billion could pay for the cost of both health care plans (in case one doesn't work) and cover the cost to reduce carbon emissions.
Defend the borders, the economy and our academic edge
Since global trade isn't going away anytime soon and America's ports are getting increasingly crowded, using the money for port expansion might be a smart idea. According to the American Association of Port Authorities, container volumes at U.S. ports have increased by 7% a year over the past 20 years, far outpacing capacity growth.
National security is also a concern. After five years in Iraq, most estimates for the war's cost tally into the $500 billion range. Unlike investments in distressed assets, paying for the Iraq war won't produce a return, but $700 billion would stem the government's future debt obligations to its creditors.
Then there's education. The U.S. currently spends about $500 billion annually on public education, yet still finds itself slipping behind many other industrialized nations when it comes to giving the next generation the skills it needs to compete globally.
The difference, of course, is that government spending for any of this would require a massive tax increase, with no chance of getting any of the money back. The upside: At least it would be a sure bet.
This article was reported and written by Matt Woolsey for Forbes.com.
I'm not really sure where this story begins other than at the beginning. Jim and I were married and became joint partners in a lot of his pre-marriage debt and a little of mine. At the beginning of our marriage, we kept our separate checking accounts and divided up the bills. This time was not one of any strife in our marriage; we each paid what we were supposed to and did whatever with the leftover money we wanted. And nothing was ever said about it. If I had $100 to spend as I wanted and I wanted to spend it at Macy's, I did. Marriage did not change my spending habits one bit. And I was ok with that.
Then July hit (I hate the month of July!) and Jim found himself unemployed. All the bills suddenly were dumped onto my happy little checking account (I emphasize the word little). Realizing my income did not match my outgo, I picked up another job at the hospital and started utilizing our credit cards for all purchases that I could, as it took every dollar I made to just pay our bills.
During this time in our marriage, I felt suffocated by the stress of handling our finances by myself and grew to resent Jim, both for "doing this to me" and for his spending habits, which ironically are not much different than mine. Our marriage did not have any peace during this time, and if I could have pulled it off, I would put on my cutest pair of red shoes and tapped them three times.
After seven months of unemployment, with a marriage that was surprisingly still salvageable, Jim was called to the ministry. I gladly relinquished all my financial responsibilities back to him. Unfortunately, once the credit card statements started to roll in from the time of unemployment, we both realized something would have to change in the way we managed our money.
Jim suggested we merge our checking accounts and took my credit cards away. At the time of the suggestion, I agreed with this wholeheartedly, but the first time I got a little itch to buy a new purse or new shirt, I resented this plan. Jim saw for the first time in our marriage how I spent money and did not like it. Every thing I spent, from frivolous purchases to groceries, was scrutinized by Jim. Any discussion we had about money ended with Jim becoming frustrated and me dissolving into sobbing hysterics. Needless to say, this did not bring us any peace in our marriage either!
So that brings us to a few months ago, when Jim brought home the materials for our Financial Peace University class and insisted I start to preview them. I refused to watch the tapes for a few weeks as every time I passed by them, Dave Ramsey's smiling face scared me. I told Jim he was crazy if he thought Dave Ramsey would help us. "He's just going to tell me I can't spend money ever again!" I would cry to Jim. But as the start date for our class neared, I finally buckled down and watched one.
Now Financial Peace University is made up of 13 one- to two-hour tapes, and I think I managed to watch the first ten tapes in a week. And I enjoyed it. Dave's plan for financial freedom and peace seemed so logical and so doable that I actually begin to look forward to the class.
Three weeks before the class was to begin, Jim suggested that we begin to implement Dave's plan into our lives. So thus began our love-relationship with the budget and the envelope system. We agreed on set amounts to spend each week on groceries, gas, and a "blow" account for any extra purchases, such as going to the movies or getting a haircut. We also began to set aside a little money each week for car repairs, Christmas, and an upcoming vacation. We made an envelope for each category and Jim withdrew cash to fill the envelopes with.
The envelope system was a huge learning experience for me. Jim actually had to take me to the gas station one evening and teach me how to pay with cash at the pump. I have never paid cash at the pump before! Another learning experience for me was realizing that if I bought more expensive beauty produces, I would have less money to spend on food. Our bathroom is slowly becoming an advertisement for Suave products!
We've been on the envelope system now for a month and I would never go back. It fills me with such a sense of security to know that each week I have this much for groceries, every week. I love watching our "saving" envelopes grow larger and larger each week, knowing that this year at Christmas, I won't have to wonder how I will pay for gifts.
Beyond that, Jim and I have found financial peace in our marriage. Thanks to Dave, we've learned how to communicate with each other about money and how to agree on our spending, saving, and giving. Most importantly, we've learned how to dream together. We've set financial goals and are working together to achieve them.
Dave Ramsey has become a hero in our house. Jim and I are always throwing around "Dave says..." terms around when we are discussing just about anything. In fact, I used "Dave says..." to get my husband to clean out his closet! Just as Jim and I never want to go back to our lives before God entered them, we never want to go back to life before Dave. Yay for Dave Ramsey!
Monday, September 15, 2008
June included my 22nd birthday and our first Vacation Bible School experience at Quinault. Fruit tart from Desserts by Kelly and having fun with the kids in our church - what could be better?
Mrs. Orr with the Megan, Suzie, and Katie Gelston... How precious!