Advanced Consumer Economics - Part II

Beloved, welcome to another advanced session of personal financial debauchery, inspired by the gentle soul at greybeard university. When last we met, I was preaching mightily about the avarice and vice of personal debt, and especially credit card debt.

To review, debt is bad. Liquid assets, good. Credit cards with mandatory arbitration, "universal default", and 30% APR, bad. Cash, your own cash, not owed to anyone, good. I passed high school physics for reasons other than my respect for the scientific prowess and appreciation of such dark arts. I made it through my high school math classes by cheating, but even I can tell you, investing at 8% return, and servicing debt at 30%, is a no-win situation. Investing Inertia is a physically impossible until you have politely, but firmly, instructed MBNA, Household Finance, and the rest to to kiss your fat Irish ass.

However, that was Class I, and now that we have all accelerated our debt repayment (God Bless you John Cummuta), chopped up all but one emergency credit card, re-roofed your house with the credit card applications, paid both mortgages (3Q 2005, Americans drew $60 BILLION equity out of their homes in home equity or re-fi... don't make me stop this car!), and made the final payment on the car note (at 17.99%) it is time to move on to a higher plane of living. Before blithely stepping into the bold new world of investment, let's take just a second to see what kind of shape the finances are in now.

Think just a moment. If you get debt free, and learn to live debt free (easier than you might think), that means there is going to be a pile of money that you gotta stick somewhere.

Hmmm... more than half of all marriages end in divorce, more than 75% of second marriages also end in divorce. Across the country, states have "lawsuit reformed" legions of lawyers into other exploits, and searching more a new source of deep pockets. The passing of the Greatest Generation might not result, after all, in the largest transfer of wealth in the history of, overweight, moneyed, bald Americans everywhere. Part of the perfect storm of bankruptcy reform was the palliative relaxation of consumer protection from debt collectors. I continue to be amazed by the number of people unaware that aggressive litigants can freeze bank accounts without notice. In many states, it is possible for a creditor to freeze bank accounts WITHOUT having a judgment! Those cute little children that want to grow up and be doctors and lawyers... you better turn them into profit centers now! Take care of yourself? Workout do you? Great, you may outlive me, and even my third grade math tells me that Social Security will be no more than an historical anomaly at retirement age. Oh, yeah, and don't forget about the Chinese...

In short, there is a daily domestic insurgency targeted at relieving you of your ducats. As we learned last time, the secret is not what you earn but what you keep. If you build a pile, only so that some one else (be they ex-wife, lawyer, doctor or other scavenger) you still lose cause you didn't keep it.

Here then, is the nutshell survival guide for having your pile and keeping it to:

1) Emergency liquid reserves - Open a savings account. Forget that crap about 6 months worth of salary in savings, none of us mere mortals will ever do it, and sitting on that much cash is the same thing as painting a big red target on the aforementioned fat, Irish ass. Keep enough cash for a few months mortgage, baby food, diapers, whatever... For purposes of rule #1, assume that unmarked black helicopters exist.

2) Emergency hard assets - Gold can be purchased for cash. Gold can be sold for cash. Gold can be kept in a safe deposit box, a shoe box, or, yes, buried in a Mason jar in the back yard. Gold coins do not have serial numbers, deeds, RFID chips, blogs, girlfriends, allegiances or biases. Gold, just like your gun, should be kept close at hand at all time.

3) Let your wife be one of your bosses - With the rise of the Internet, there is officially no reason not to have your own incorporated business. Mileage, home office, utilities, health insurance expense, losses, carrybacks, uppers, downers, straights, MILFS... sorry, got carried away there. It ain't a tax gimmick, but it sure doesn't hurt.

4) Don't be cheap - Find a good probate/estate lawyer, and live with the idea that your CPA is your best friend. I have had the good fortune of working for hundreds of self-reliant entrepreneurs over a few short years. I like them because they try to do it themselves, and they screw it up really bad. Almost universally, it will cost you more for me to fix your screw up after the fact, then it will for you to educate me about your business and build in firewalls upfront. If you ignore Rule 4, forget about trying Rule 3. You will only hurt yourself and further disappoint your family and friends. Each year, the government creates a new bushel basket full of gifts for the peasants, but don't tell the peasants. Think of your lawyer and CPA as little Christmas elves to Uncle Sam's Bad Santa.

5) Financial planners are modern day feudalists - Financial planners are the used car salesmen of the financial world. A good CPA knows everything financial planner does, and more.

6) Exemption is not an excuse to get out of jury duty - Each state has a secretary of state. Most secretaries of state have web sites. Most of those web sites have a link to the statutory law of your state. Most statutory collections have some form of Property Code. Most Property Codes have some form of list of property that is considered exempt from all but ex-wives, IRS, student loans, and Vegan invaders. Learn those exemptions, memorize them, tattoo them on your girl friend's ass and your wife's forehead. Then pay your lawyer for an hour of his time to explain the exemptions to you, and how to use them.

7) Lawyers and CPA's are corrupt, incompetent liars - Managing your finances, particularly your retirement, is a part time job, but one that requires perfect attendance. You paid damn good money for the advice of your lawyer and your CPA, but don't blindly accept what they tell you. Make them copy sections of the statutory code or the tax code they are relying on. Make them explain everything, twice. Slip a little tongue to the librarian in the Personal Finances section, so that she gives you first dibs at new books and CD's. Read at least one of them a month. Don't know where to begin...? Refer a new client a month to your professionals, buy them a Pinch of scotch for Christmas, and they will put up with your crap.

If all this is overwhelming, well... tough, get over it. Hurricane Retirement/Insolvency/Divorce/Lawsuit is blowing in from the Gulf. You have been warned, and a mandatory evacuation order has been issued, requiring you to vacate your current state of ass-clownery. That cruise ship anchored off the coast? That ain't your temporary residence after the storm blows in, that is me, lounging in a stately seaborne penthouse, smoking a Cuban handrolled and engaging in other activities involving the thighs of virgins... sailing into the sunset on the HMS Formerly Living.