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Saturday, December 29, 2012

The Fiscal Cliff Is Not The Problem, The Debt Tsunami Is.

      We made it past the Mayan Crisis, which turned out to be more of a Y2K event than the end of the world.  The next Crisis is the Fiscal Cliff which is looking more and more like a reality.  Actually the thing to watch is the Coming Financial Tsunami.  Certain idiots are saying, it will not be that bad but they are not looking at all the facts. History is full of facts that say they are wrong.  One sign is what the richest people in the world are doing to prepare for it.  They certainly are not waiting till the last minute. You might check this link.   It makes clear that those who understand finances sense an upcoming economic problem.  Warren Buffet, John Paulson and George Soros have been dumping stocks that are dependent on consumer spending.  Why would they do that unless they sensed something interrupting the cash flow in the economy.

     The current situation with the Fiscal Cliff says the taxes are going up on some people regardless of what the Congress does or does not do.  Well in 1936, almost seven years into the Great Depression, the Roosevelt administration seeing a slight recovery tried to raise taxes to reduce government debt.  They had to reverse themselves quickly as the economy slid back to its historic lows and stayed there till the start of World War II. That is proof that raising taxes brings things to a halt.  Big business and the rich immediately tighten their belts if they sense a problem.  The sad part, and something not realized by most economic analysts is that most downturns start from the bottom up.  It is sort of like the warning sign before the Tsunami.  The water suddenly rushes out and people see easy pickings of the fish on the beach, but those who understand as the poor do, know something worse is coming.

      America's debt problem is going to sweep over the top of the Fiscal Cliff and suck out any hope of recovery in the economy.  The poor are already tightening their belts.  That can be proven from the holiday sales records.  Spending was way slower than projected.  If the Congress does not act and over 2 million people lose their unemployment income the housing market will shortly start another downhill slide. Even if only half of those people own homes the lost income will put many over the edge.  Congress and the Obama administration are not doing what needs to be done to save the economy.  They need to create jobs.  Even if they are only temporary infrastructure repair jobs.  They are jobs.  The national infrastructure may be one way to help solve the problem.

     The President and Congress say they know there is a spending problem yet they just approved a pay raise for themselves.  Based on what I have seen, it should be a pay cut for their incompetence.  The media recently showed how and why we have such a big problem in America.  In Florida they are building a center to honor the Space Shuttle program.  It is only going to cost $100,000,000 dollars.  Yes that is right one hundred million dollars to make a garage to house the Atlantis Space Shuttle.  Yes it was a great program, but it is not a wise investment to spend that much money on a museum.  That does not include the money they spent moving the other shuttles to the Smithsonian, New York and California.  Even if those other three are included in the cost it is simply to much money.

    Over the last week the Congressional indecision has caused the stock market to slide and loose 2 per cent of it's value.  How down will it go if we go off the cliff.  Those who say it does not matter are totally ignorant of the cost involved in a real crash.  The people who wrote the book referenced in the link I gave earlier, estimate the stock market could loose 90 per cent of it's value.  That would only put it in line with the Great Depression.   In the Great Depression the market lost 89 per cent of it's value.  So their statements are not unreasonable.  You ask why should anybody listen to them.  Well they were about the only ones to predict the housing bubble busting and the market collapse.  That tends to show they have some credibility in what they say.

     The Fiscal Cliff is only a minor problem.  When we get to the bottom of the cliff the incoming Tsunami of debt will totally wipe out the system as we know it.  To balance the debt and bring things back into line economically we need to cut about 6.5 Trillion dollars from the debt.  That number is staggering when you consider the entire national debt at the start of the Great Depression was less than 4 Billion dollars total.  We should have a clue that we have a problem when the debt is at levels that can not even be entered on the average calculator.  I have a 12 digit calculator and it only gets me to 999 billion.  I would need a calculator that does 14 or 15 digits to actually calculate the numbers our national debt is at.  It is easy to see that these numbers are not sustainable.  Putting America's Financial House in order will be a very painful process and there is no way around it.  It will have to happen sooner or later.   The longer it is put off the more intense the pain is going to be.  The sad part is that it is is going to hurt people all over the world.  Especially ones who believed in the Great America Dream.  America's biggest financial houses raped the world markets.  They  sold over valued housing portfolios based on the worlds faith in American Honesty.  Then they wanted bailed out of the crisis they created.

      Well the sad part of the tale is that when we hit the bottom of the cliff and the whole economy collapses, there will no one to bail out anybody else.  It will make the Great Depression look like a cake walk. It will be every man for himself.  When the Market collapsed back in the twenties the government was solvent and it could bail the system out.  The sad part is this time it will be the government itself that is going under.  If you would like to know what the Great Depression really looked like you might read.pages 211 to 256 of the book The Sweep of American History, Volume 2, by Robert Jones, and Gustav Seligmann. It is available through Amazon and it is in the Google Book Library.  I have done a lot of reading on the Great Depression and it is one of the better reads. The chapters on the Great Depression give lots of things one can see happening in this day and time.  It deals mostly with the facts.  Or if you would like some really interesting reading purchase access to Time Magazines archives.  Time was founded in the early twenties an you can actually read in every issue back to their founding,  Articles from the time of the collapse as it actually happened.  It is a great resource for historical information.  If you do not want to buy it yourself many universities and libraries have access to Time's Archives.

      Only time will tell where things are going.  I personally feel President Obama should have done what he said and left after the first term.  It would have left him a better place in history than where it will probably be four years from now.  His trickle down job program is not going to keep the system going for another four years. Being a history buff, history says we are overdue for a major setback and adjustment.  I would love to be wrong, but history repeats itself and it says I will be right.  Time will tell.

Wednesday, December 26, 2012

Simple Shelves and Recycled Storage Units How-to

                        Solving Storage Problems 

     Solutions to your storage problems do not have to cost a fortune. Taking the time to make units just for your pole barn situation can be done, both cheaply and effectively. These pictures and details are from my own personal unit. I ran out of wall on my desk unit and solved the problem by simply putting a support under one shelf. You just have to be creative.

    Lots of people have storage problems like myself.  It is easy to spend a ton of money on building and buying storage units this is an ultra cheap way to do it.  It also recycles stuff and keeps it out of the land fills.  You can easily see I am in need of an additional unit myself and as soon as I finish moving out of my old building I will get right on it.

The picture on the right is of my new unit so you can see what it looks like without the bottles..  I rip a single sheet into 5 pieces 9 and 1/2 inches wide and 8 feet long. That gives me two sides and six shelves. Your needs may allow you to make more or less shelves.  The reason I did mine this way is that it can be cut from one sheet of plywood.  My bottom shelf is so high so I can set my five gallon buckets under it.  You will have to figure what works for you.. The reason for my size is that four cuts equal a half inch at 1/8  inch each.

     As you can see my unit consists mostly of old detergent bottles and even some kitty litter bottles.  When you start planning your unit you need to measure your bottles you will be using first. Some of the larger jugs are a very tight fit on my shelves.  What I really like about it is that there are enough colors out there that you can color code things.  Something I have just started doing myself.  You can do it in a way where you dedicate each color to a special item.  Say orange for nails, red for screws, white for fasteners and hardware,  blue for nuts and bolts.  The nice thing about them is that you can write on them with a magic marker and know what you have in each one at a glance.  Cutting them to your needs is the trick.  I like to save the kitty litter ones for nails and stuff I take to job sites.  Some brands of bottles have big holes that I can stick my big fat fist in and pick out what I need.  I leave the top intact on these bottles.   That is another reason I need another shelf  unit as I made the shelve spaces to small for these bottles.  At the end I will post a diagram of how you can cut all the shelf unit pieces from one piece of plywood or OSB.   I prefer to use 5/8  or thicker as some of the bottles will have some weight in them.  You tend to get less sag that way.  One piece of 2 X 4 about 8 foot long and cut in half makes the mounting brackets and shelf supports.   How you build it will depend on the type of wall you are hanging it on.  This unit is hanging in a pole barn structure.
    How you cut the bottle is determined by what you are wanting to put in it.  I do a lot of crafts and some bottles I put lots of little pieces in.  On those bottles I cut low like I did the front of the bottle on the left.  Other bottles I cut the sides higher, like the back of the bottle on the left, if I need more storage.  How you do it is all up to you.

     My preferred way to make the units is with 8 inch sides.  I figure my shelf spacing and then I use a router to cut a 1/4 inch deep groove just big enough to fit the shelf end into. (Remember this when cutting your shelve supports.  There will only be 47 1/2 inches between your sides.) I then screw thru the sides and into the ends of the shelves which helps pull it all together.  Then I mount 1/2 of the 2 X 4 on each side and screw it to the sides.  Finally I screw thru the 2 X 4's into the perlins or the studs.  Depending on the kind of wall you are working with. Depending on the height of the ceiling you can move the unit up from the floor and make extra storage for five gallon buckets or whatever else you might need to store beneath the shelf unit.

       This is not the best drawing, but hopefully it will give enough info to help anyone who wants to make a unit.  If you make the shelves 9 1/2 inches wide and cut all the full length cuts first it will work out so the shelves are all the same size.  You will make 4 cuts which take 1/8 inch of board or 1/2 inch total for all 4 cuts. Then you can cut the 3 boards which are 9 1/2 inches wide into four foot lengths.  You can cut wider shelves that will stick out a couple inches farther than the sides but it does not hurt anything unless your a neat freak.  Something I have never been accused of.  Rip the 2 X 4 in half and you have your mounting brackets.  The spacing of the shelves is up to the builder.  Note in the pictures the piece of 2 X 4 on each side vertically or horizontally under each shelf which helps give the shelves extra strength. IF you want support under all six shelves you will need a 12 foot 2 X 4 instead of an 8 foot if mounting to a stud wall. Figure 5 shows a top view of how it would be mounted to pole barn studs.  Figure's 3 and 6 show how it would be mounted to a standard stud wall.  Hope this helps some one create some  cheap storage.

Tuesday, December 18, 2012

2012, What The Mayans Missed

       Well here we are with three days to live and the world is still turning.  My personal feeling is that the Mayan Calendar prediction will turn out to be about like the Y2K predictions.  It is either lot of hot air about nothing, or we are toast. However in the course of my reading up on the issue I have come to the conclusion the Mayans may have been on to something, but they missed a few points.  The fact that they no longer exist says a lot for that point of view.

      The Mayans predicted that their Gods would return from the heavens and deliver them from this world.  That sounds a little like the Biblical account of what will happen in the end time.  The Bible. however, goes into a little more detail and Jesus gave us some guidelines and things to look for.  In both the Book of Matthew and the Book of Luke, Jesus made it clear that in the end of times it would be as it was in the days of Noah.  Well Noah was one of the few saved at the time of the flood and the end of the world as it was in his days.  In Matthew 24:32.  Here is what Jesus said on the matter.

       32 Now learn a parable of the fig tree; When his branch is yet tender, and puts forth leaves, ye know that summer is nigh: 33 So likewise ye, when ye shall see all these things, know that it is near, even at the doors.  34 Verily I say unto you, This generation shall not pass, till all these things be fulfilled. 35 Heaven and earth shall pass away, but my words shall not pass away. 36 But of that day and hour knows no man, no, not the angels of heaven, but my Father only. 37 But as the days of Noe were, so shall also the coming of the Son of man be. 38 For as in the days that were before the flood they were eating and drinking, marrying and giving in marriage, until the day that Noe entered into the ark, 39 And knew not until the flood came, and took them all away; so shall also the coming of the Son of man be. 40 Then shall two be in the field; the one shall be taken, and the other left. 41 Two women shall be grinding at the mill; the one shall be taken, and the other left. 42 Watch therefore: for ye know not what hour your Lord doth come. 43 But know this, that if the good man of the house had known in what watch the thief would come, he would have watched, and would not have suffered his house to be broken up. 44 Therefore be ye also ready: for in such an hour as ye think not the Son of man comes.

       Maybe what Jesus did not say is more important than what he did say.  Jesus was noted for speaking in parables. He also made his point several times by what he did not say. When dealing with the issue of a woman caught in sin, he said," Let you who is without sin cast the first stone." he did not have to list their sins for them.  They knew what they had done.  He told stories that the ones who believed in him would understand.  To those who did not believe in him it was just a bunch of rambling.  One key to Jesus's talking was that he expected you to know what the Word of God, The Bible, said.  Most of the Jews he spoke to did know the Bible.  The first thing he said for them to understand was the cycle of nature.  He made clear that when you see nature unfolding you know what is going to happen, because nature is consistent.  Just as the Word of God is to those who believe it.

      He made it clear when you saw these things happening that the end was near.  Which is the same thing the Mayans were saying.  He also made it clear he came to save those who believed in him.  He did not come to save those who were of the world and who did not believe in him.  Verse 35 gives the big clue. "My Words shall not pass away."  His Word is still with us.  Jesus spoke of people eating and drinking, marrying and giving in marriage."  Which happened right up till the time Noah went into the Ark.  What Jesus did not say was what his Word, The Bible, says.  The verses I have attached give a little clearer view of what Jesus was speaking of, especially if you read the highlighted verses.  Just look at all the violence in the world today. One clue that he did give which is not mentioned in Genesis is pretty clear if you look at the world today.  He said they would be giving in marriage.  Marriage was one of the first institutions created by God.   Today marriage has or is becoming and abomination in this day and age.  It is being twisted against all that the Word of God commanded.  Note that in the Genesis account, His Word mentions the taking of wives, but it is not a normal relationship.

1 And it came to pass, when men began to multiply on the face of the earth, and daughters were born unto them, 2 That the sons of God saw the daughters of men that they were fair; and they took them wives of all which they chose.
3 And the LORD said, My spirit shall not always strive with man, for that he also is flesh: yet his days shall be an hundred and twenty years.
4 There were giants in the earth in those days; and also after that, when the sons of God came in unto the daughters of men, and they bare children to them, the same became mighty men which were of old, men of renown. (Could this be the source of the advanced knowledge of ancient civilizations.) 5 And GOD saw that the wickedness of man was great in the earth, and that every imagination of the thoughts of his heart was only evil continually.
6 And it repented the LORD that he had made man on the earth, and it grieved him at his heart. 7 And the LORD said, I will destroy man whom I have created from the face of the earth; both man, and beast, and the creeping thing, and the fowls of the air; for it repenteth me that I have made them.  
8 But Noah found grace in the eyes of the LORD. 9 These are the generations of Noah: Noah was a just man and perfect in his generations, and Noah walked with God.  10 And Noah begat three sons, Shem, Ham, and Japheth.
11 The earth also was corrupt before God, and the earth was filled with violence. 12 And God looked upon the earth, and, behold, it was corrupt; for all flesh had corrupted his way upon the earth. 
13 And God said unto Noah, The end of all flesh is come before me; for the earth is filled with violence through them; and, behold, I will destroy them with the earth

     So let me conclude as to why the Mayans may have been right.  It has nothing to do with their calendar.  It has to do with their lifestyle.  They believed in human sacrifice and were an exceptionally violent group of people.  Genesis said what happens to that type of people.  God has no use for them and will destroy them.  They no longer exist as a people.  Yes there are living descendants of them, but as a people they no longer exist.  So God is consistent with dealing with violent people.  That may be the biggest warning we can take away from what is known and what is said.

     I could go into a long Biblical dialogue about how and why it is the end time.  That is not the point.  We all need to live like today is our last day and treat our fellow man with respect.  We need to turn our hearts and lives back towards God.  If we are living the life he commanded us it will not matter what happens.  If we are right with God, we will be delivered.  We have his Word on it.  Dying is not the measure of a man.  All men will and must die.  It is how we live our lives that matters.  The rain(death) falls on the just and the unjust.  All will die at some point.  Whether it is individually or collectively at some point we will all die. The Bible says so.  It also says all shall be raised up at some point.  Some to glory, and some to judgement.  Which is your destination?  Only God knows the answer to that question.

Monday, December 17, 2012

Solving the Gun/Shooting Problem in America

      Mention guns and you are going to get either of two replies.  The answer will be determined by the person's personal point of view.   The fact that gun ownership is protected under the Constitution might actually help solve the problem.  Answering a few questions first might help solve the dilemma.  First is why should people have guns?  Second is should there be controls on the right to have certain types of guns?  Third how should gun related crimes be punished?  Finally how do we educate people to be more aware of gun ownership, possession, and use in public.  Answering the questions might provide the solutions to America's problem.  Hopefully I answer those questions, but maybe not in the order presented.

      First America needs to get over its love affair with the gun.  It is simply a tool that used properly can protect our rights as citizens.  Used improperly it becomes a threat to society.  The first thing America needs is an understanding that there is a clear and well defined cost for the misuse or abuse of the privilege of having a gun.  In my opinion there should be a price for using a gun in the commission of a crime.  Even if it is never fired.  Using a gun in the commission of a crime should carry at least a five year minimum sentence.  Just the threat of taking or endangering others lives should require such punishment.  There should be no plea bargains and no deals.  You did it, you pay the price.  The only exception is if you can prove you were using the gun to save your life, or the life of another.  Defending your family,home, property and life should be clearly defined as acceptable uses of force.  Threatening a persons life should be treated accordingly.  If a person actually shoots or wounds someone in the commission of a crime the absolute minimum sentence should be ten years.  There should be no appeals, no time off for good behavior or plea bargains.  If you actually kill a person you should technically be dead yourself.  You should get life in prison with no parole, no time off for good behavior or any other reason. A special prison should be created just for killers. It could be called the box.  You are put in a box, till you come out in a box. You take a life, you give up the rest of yours as simple as that.  The person you killed does not get a second chance, why should you.  The lack of clear and well defined laws is one of the problems with America today.  Here are some examples of the problems in America. Your illegal, but you have rights.  You smoke pot, but it is okay in your state for whatever reason.  Drinking and driving is wrong, but you will probably never go to jail unless you kill someone, or can't afford and attorney.

     Some states are moving toward legalizing pot.  I agree and feel it should really be all drugs.  Not because I want to use drugs.  I am tired of paying for not only catching the drug users, but incarcerating them and treating them when they overdue it.  Legalize it and tax the heck out of it.  Let them pay for their own treatment and pay their own way.  The price would go down so they would not have to rip us law abiding citizens off to get money for their habits. The war on drugs and alcohol (remember prohibition) have proved only one thing.  You can not legislate morality, but you can tax it.  Many people who approve of guns would go along with this. Yet when I say let the gun owners pay the tab for fixing the mess they have made of society with their guns they will scream like stuck pigs.  If a nation of alcoholics(based on the number of TV commercials for alcohol) can approve prohibition. Surely a nation that claims to be Christian should be able to overcome the gun lobbies.  Real Christians would pass legislation to protect society from the crazies.

     The above may sound harsh, but I formed my opinions over 65+ years of life.  I have personally seen young people imprisoned at fourteen for murder and then paroled or let out at 21 because the law said that was the maximum sentence they could get.  Then upon release from prison they managed to kill more innocent people or injure a person in such a manner that the person suffers for the rest of their life from the injuries received.  When I mentioned ten years above for shooting someone.  That should be the absolute minimum.sentence.  If they put a person in a wheelchair for life, a longer sentence is justified.  People who take lives either have no respect for life, or they consider other lives worth less than theirs.  Society should consider every life of value, from conception to the grave.  After all it is the Constitution that says we have  a right to "life", liberty and the pursuit of happiness. Failure to respect other people's lives should carry a very harsh yet clear cost to the person who does so.  Removing the plea bargaining and making clear the cost of ones actions is the best method of providing and orderly society.  The refusal to accept responsibility is half the problem in America today.  A couple people take an immoral romp in the hay. Then when the consequences of their actions start to manifest themselves they believe society should take care of the problem they created.  Don't get me wrong. I love children, but people who have them need to do take care of them.  It should not be a responsibility or burden on society.

     The second thing that should happen is that America should have a mandatory education system on the rights and costs of gun ownership.  Children should be educated on the Constitution and it's importance to the society we live in.  Children should also be taught at a young age the ethics and value of all life.  The lives of others as well as their own.  Children should be taught in school how to handle weapons and how to shoot them.  Yes this would cost a lot of money to do, but I have an answer and a way to pay for it. Finishing the classes will determine if a person has a "right" to own a gun later in their life.  People who are in America visiting or are illegally here should have no rights to have, own, or possess a gun for any reason.

    This final item will create a lot of argument, but I have paved the way to where I am going.  We are not taking away the right to own guns.  We are interested in making sure those who have guns understand the responsibility that comes with that ownership.  In my opinion, I spent thirteen years in the Army so I know what guns can do and are capable of doing.  Again as I said, "This is my opinion."  The only guns Americans should be entitled to have, are single action weapons.  Weapons you must physically cock or load each time you shoot it.  That would include some pistols, bolt action rifles and a muzzle loaders.  Any weapon that you can simply keep pulling the trigger till it is empty is in a different category.  The only ones who should be allowed to possess or carry semi-automatic or automatic weapons are law enforcement.  Anyone else who wants a semi-automatic or automatic weapon should be required to have a permit, which should be renewable annually for a fee.  Just like the license plate on your car. In fact I personally would require each weapon to have a title and require it to be transferred every time a gun is sold.  Each weapon should be taxed annually also.  To get a permit to own an automatic weapon should require both and a mental and a background check.  If a weapon is used in a crime the licensed owner should be accountable.  It would not have to be an outrageous fee.  Ten dollars per weapon would be adequate.  Some will say, "but I have a hundred guns."  That is fine, just have as many as you can afford. The fees from this program would be used to pay for the gun education programs and registration programs.  Single action weapons would be exempt from registration and license fees.  Only those who want "special privileges" would pay for the programs. Legislators looking for a source of revenue, here is a potentially big one.

      The two largest mass murders in America did not even involve handguns.  Oklahoma City and 9/11 happened without a shot being fired.  All over the Middle East people die everyday and a shot is not fired.  Crazies will kill people if they are so inclined whether they have guns or not.  Educating society about how to get along would do far more than any gun laws ever will.

      I can hear the outcry but think about this.  This nation was made independent with single shot weapons. It was preserved as a nation with single shot weapons.  A single shot weapon well aimed is far more dangerous than a random spray of bullets.  Several of our own Presidents have paid the ultimate price to learn that. If you become President, believe it or not,  based on history you have a one in ten chance you will die in office.  Murder is nothing new, it is the escalation of frequency.  That and the lack of reason is what is making us more aware of the problem. The education and training of the citizens is in the interest of preserving our nation.  No one needs a rapid firing weapon for killing Bambi or taking out a rabbit or a squirrel.  Weapons that do more than that are for warfare and killing people, not animals.  There is no intention of taking away guns, but on educating the citizenship on their rights.  There is no intention to limit the number of guns you can have.  The intention is provide a system that makes it harder for the crazies to get the guns.  If you want the freedom to own the weapons, the tax is simply the price you pay for that right.  Much like property taxes, and license plates are the price one pays for ownership of those items.  Insurance companies might look into ensuring gun owners as a new source of revenue, instead of charging me deductibles so I will not use the insurance I have already paid them for.

     The final point I would make is that if you own a gun you are responsible for securing it.  If it happens to be used in the commission of a crime, you should be held to account as to why you were not in control of  the weapon you owned.  Failure to maintain  your control should be grounds for forfeiting your rights. The privilege of ownership comes with the duty and responsibility of safely securing your weapons.

Monday, December 10, 2012

MONEY...Real Estate..Rentals versus Storage

       If investing is about getting the absolute best return on your investment, "Getting the maximum return for the minimum expenditure," is one key to investing.  Making secure investments that do not disappear with the fluctuations in the market is another. Finally maintaining personal control so you can take advantage of opportunities as they present themselves is very important.

       As the year comes to a close it is a good time to lay out a plan for the coming year.  Sometime back, February 15, 2012 to be exact I wrote a piece entitled "From Trash to Treasures"  It told how I managed to turn getting rid of my trash from an expenditure to a profit.  My goal in this article is to share how to carry that a step farther and apply it to investments. Please bear with me as I give examples to show what I am talking about.  Over the time I have been writing I have stressed trying to be self-employed and managing your own budget.  Well this article will tackle a new way of looking at that.  I have always urged real estate as a way to invest and grow your money so you have control of it.  With real estate you have a physical asset you can see and hold.  It does not disappear with the fluctuations of the stock market or interest rates.  It may go down in value occasionally, but in the end, with sound management you still have the piece of property.  There are at least twelve articles on my blog about the how-to's of dealing in real estate.  Just type "tax sales" in the search bar and it will give you a list of articles that might be helpful.

     Simply applying the same rules I used in changing my trash from an expenditure to a source of income is one of the keys.  Most of us are not rich enough that we do not need to manage our resources wisely.  The people I gear my writing towards are those who do not have a lot of experience.  These are people who make bad decisions due to a lack of knowledge not because they are intentionally wasteful.  Here is a perfect example.  Recently I refinanced my house and in the process reduced the payment from $600 a month down to about $300.  Yes it stretched the term back out to fifteen years instead of the eight years or so that we had left.  At 66+ years my living another eight  years is iffy, especially as I have already been dead technically once already.  My spouse and I can use the extra income, "now" that our actions produced.  The main reason for doing it though was that we wanted/needed a new roof on our home.  We managed to borrow the money for that project as part of the loan.  Which was better than spending our savings or taking a second mortgage and creating a new or extra bill.  So why do I share this story, because of another story that did not turn out so good.

      I have/had a second hand business and just sold the building as part of our downsizing.  The nice thing about investing in real estate is that at some point you can turn it into cash as you need the income from it.  The trick is having enough to last you till you are gone. Still have forty five days to get out.  Anyhow the lady next door to my shop moved out and I did not realize she was gone till I was in the process of selling my building.  The young lady had a house she had paid on for over ten years and had a similar problem.  She needed a new roof but could not afford to do it.  Because of her lack of understanding she walked away from the home and moved out.  She had a ton of equity which she could have used to get a new roof and probably have cut her payment in half by simply refinancing the house.  She did not know she could do that.  Unfortunately for her we did not have this conversation till after the bad decisions were made and could not be reversed.  If you are young or even older and do not have much experience it would benefit you to seek out an older and more mature person who has been down the road and especially one you see as successful.  Often the solutions are right in front of us and within our means and we are just not looking at things from the proper perspective.

      Getting back on track with my opening statement,  "Getting the maximum return for the minimum expenditure," is key to any sound business or financial investment.   I know people who have ruined their credit trying to dabble in the real estate markets.  They used their good credit to by properties and then rented them while trying to make a normal mortgage payment.  There was not enough meat left on the bone for them to earn a profit.  When things started going wrong, as they often do, they were suddenly in over their head and in risk of not only loosing their "investment properties" but their personal properties which they had taken the equity out of in an effort to "get ahead."

      If you are going to get into the rental business the best way is to buy properties through "tax sales,"  Yes it may require some work, and some time if done right.  It will make it much easier to get by once the money starts coming in.  Mainly because you are not strapped with a mortgage payment.  Read my articles to see how this works.  My knowledge came over many years of my life.  From helping my Dad fix up properties when I was a kid still living at home.  From having made some bad financial and business decisions myself.  Also my civilian truck driving career started out working for a moving company.  If you have seen the TV series "Storage Wars," it is real and really happens all over the country all the time.  Over the years I saw it in action.  People lose their homes and put their "stuff" (read my article on "Stuffitis") in storage.  A few months later when the unemployment runs out and they can no longer make the payment on the storage unit they loose that stuff too.   Rental storage units have the "right" after ninety days to sell the contents of units that the rent is in arrears on.  It is a sad situation, but it is a fact of life.

      Sometimes people put stuff in storage and then die.  If no one in the family, or if there is no family, the rent does not get paid and the stuff goes up for sale.  From my experience people do not make the big money you see them making on the TV shows, but it does happen occasionally.  Most of the time half the stuff is nothing more than trash that should have be thrown away to start with.

     The final way I learned that storage units can be a sound investment is looking at banks and delivering goods to many of the building materials chains.  While trucking I delivered custom made kitchen cabinets to the companies that purchased them.  Say you go to Home Depot, or Lowe's and you buy all the materials to build a house.  You order the kitchen cabinets, appliances and many other items that are just for your home. The store orders the materials when you make the purchase.  You may not need it for ninety days or so.  The custom items may be delivered in about thirty days or so.  Well the stores do not have the space to hold all the orders they have coming in.  Their solution is to rent a storage unit and put the stuff in till it is time for it to be delivered.  Hopefully you can see that there is a huge demand out there for storage units.  Little businesses do the same thing to store stuff for seasonal sales.  That is why you are seeing an explosion of storage units across the country.  Starting your own small business, well here is the solution to one of your logistical problems.

      Around where I live the average unit runs about fifty cents per square foot per month.  A ten foot by ten foot unit would be about fifty dollars a month.  How does that compare to renting a house.  Well where I live rentals run on average from $450 a month to $600 a month.  They average from 1500 to 1800 square feet of space.  That means a rental house would make between twenty five cents per square foot and forty cents per square foot.   The upside of the rental storage unit is not that it pays more.  The real upside is that there are no utilities to keep up, (i.e. Furnace, water heater, air conditioner)  No tenants calling in the middle of the night, no holes in the walls and  no carpets to replace because of pets or kids destroying them.  Nobody moving out in the middle of the month or night and leaving  you hanging for the rent.  No fighting the courts to get out a deadbeat tenant.  If you put in place a good security system and control your units there is a lot of upside to storage unit versus a house rental.

      Also banks understand the concept as they are masters at it. The branch bank I deal with has safety deposit boxes.  Mine runs about $35 a year.  The little vault they have them in is about 6 foot wide and 6 foot tall.  It is about 16 inches deep.  Based on what I can see and what I pay that unit makes at least $3780 dollars per year.  That is a pretty good return on about ten square feet of floor space.  I figure that one little box pays most of  their utility bills.  Now that is maximizing your income.  So if you prepare your pitch well and you are even half ways decent at carpentry work you could get into the storage unit business very reasonably.  The variable is how tough the building codes and rules are where you live.  You could easily put 150 rental units on one acre of land.  If they were all full for a year the potential rent is around $90,000 a year.  It is something you can start small at and work your way up.  A twenty by twenty four foot garage could be converted to four units at roughly 10 foot X 12 foot  or a monthly rent of about $240.  Three garages would be a little less than 1500 square feet and the rent would be roughly $720 a month.  You can easily see it pays more than a house would return.  With a lot less risk.  Also if  a deadbeat does not pay his rent and you sell his stuff after 90 days you at least should get your rental money back, if not a lot more.  I would like to issue a warning here about using existing structures.  You need to know what  you are getting into.  I recently had a deal go south, mainly because I backed out of it.  I had misgivings about it and prayed about it.  While I may have lost a friend at least I can live with my conscience that I did not rip the person off.  After finding what he wanted to use the building for I am more convinced I made the right decision.  He may not see it that way.  Sometimes deals are not about money, if your conscience bothers you pray on the matter.  Even if you lose money and are at peace with yourself and God, that is all that matters.  If we had done the deal and he found out the building would not have worked out the friendship would have probably have suffered anyhow.  It was/is a 112 year building that has probably outlived its usefulness.  It will take more to fix the building up than it would cost to build new one. It is part of why I am writing this article to advise other people so they do not get into the same situation.

     One acre could handle six to eight houses depending on local zoning laws.  Even if you go with eight houses and rent at $600 the best you could do with houses is a gross of about $57,600.  So making the property into rental units has the potential to make $32,400 more on your investment.  The question is are you in it for the money or the return.  I can not tell you what the depreciation or appreciation would be on  the storage units verses the houses.  I know the rent will probably follow the market as will rental income from houses.  My goal is not to advise anyone to make a decision to pursue either house or storage rentals.  My goal was to show those who do not understand the market the potential that is out there and why rentals might be a good way to go.

     American's are not going to get over their bad case of Stuff-itis any time soon.  Americans hoard stuff because getting "STUFF" is what Americans do best.  However if we go over the "Fiscal Cliff"  personally I would lean toward storage units over houses.  It is estimated three to four million people will lose their jobs.  One of the government cutbacks is to do away with unemployment extensions.  It will not take long for the housing market to fall off another cliff.  Housing will drag us even farther down into a financial abyss.  The incompetent Congress has no clue how to end the slide.  A better way to say it is they know we need jobs, but they are taking no actions to create them. As more and more people lose any source of income the Great Depression will look like a cake walk. I would venture a market collapse and a bottom of 1600 to 2400, but I don't know anything,  I just study the Great Depression and realize we have not learned a thing.  At least back then the government was solvent, which is not the case in this day and age.


Tuesday, December 4, 2012

2012 Economic Collapse?


      The above picture is funny till you consider the matter.  It is the perfect picture of the American government.  It can not get any traction or get anything done because the government is to big.  It is a situation that is not getting any better and stands to get a lot worse.  The media and politicians keep counting down till January 1st, but that is a big mistake.  The other day I was looking at my calendar and I realized that the 21st of December is not only the end of the world according to the Mayans.  It is the last effective working day of the year.  Christmas is on Tuesday and nothing will get done on Monday as it is Christmas Eve.  Then New Years day falls on the following Tuesday.  So there is a period of about 11 days that nothing meaningful will get done.  Congress goes on Christmas break and they will not want to work, not that they ever do anything even when they are in session.

     The credit rating agencies have warned if the United States fails to do something they will lower our credit rating.  It looks like that is what is going to happen.  The market can not get traction.  It seems stuck at the 13,000 mark.  The question is will the market end up back where it was when Obama took office.  For those who do not remember the market was at 7,949 on January 20th 2009 and by March it had dropped to a low of 6,469 points.  That was just from a minor shake up in the markets. The market had fallen to 45% of its all time high.  The all time high was 14,164 which it reached in October 2007.  That was in spite of the almost $4.00 a gallon price that gas hit earlier in the year.  I remember this only because it was at a period when I had no options about driving.  My mother was in the hospital with a terminal illness.  The point of all the above is what happens if the economy really goes bad.  Many compared it to the Great Depression.  In reality it did not even come close.

    The truth is that during the Great Depression the market lost 89% of its value.  To be equal in amount of loss the market would have to get down to about 1566 points.  What many do not realize is that there was a thirty month period between the market's high point and it's low point at the start of the Great Depression.  It was also still going on when World War II came along and rescued the economy.  Another thing that might show why this collapse could be worse is that the total national debt at the time of the collapse only equaled 38% of the GDP at the time.  At the end of World War II the government's total debt equaled 128% of the national GDP.  So all the forecasters that are harping on the GDP as an indicator are missing the boat.  The real problem was that the poor people could no longer survive in the economic environment of the time.  They quit buying and investing and started focusing on surviving.  The statistics for the recent Black Friday event might be an indicator of what is to come.  The size of the crowds were up compared to past Black Friday events.  The total sales however were down considerably.  That clearly says people are not buying and not spending their money.

      What the government does about the Fiscal Cliff will have serious consequences.  Either way the government has to cut spending.  Which in other words means cut jobs and add more people to the unemployment rolls.  That means the amount of revenue the Federal Government takes in will drop.  The government lost over 50% of it's income during the Great Depression.  With America's present debt load it does not take a rocket scientist to see that this could be a problem today.  If Congress fails to act and lets the mandatory tax increases and budget cuts go into effect the outcome will be much the same.  It will trigger a period of belt tightening by the lower income earners, which means reduced sales and a slowing economy.
The only thing that can fix the problem is the creation of jobs.  That is one problem the present administration can not seem to get it's hands around.  They give lip service to the issue, but no real solutions are forth coming.

     Then there is the problem of the Republi-can'ts.  They can not raise taxes even to pay for the two wars they voted for, but forgot to allocate funds for.  They were suppose to magically pay for themselves I guess.  At the same time they started the wars they gave one of the largest tax cuts in American history to the wealthy by reducing the Capital Gains Tax.  Restoring the Bush tax cuts till they have paid back the money the wealthy took away from government is a logical way to start paying down the debt that the Republi-can'ts created by their poor management.

      The one real possible solution is for the Congress to take a look at the Constitution and what it says their duties are.  Then they need to do them.  They are suppose to manage the money, the military and the welfare of the country.  They have failed on all three counts.  They have allowed the country to get sucked into wars and actions that America had no business getting involved in.  Partly because when they had the authority during the first Gulf War they failed to follow up and get rid of Saddam.  Later they manufactured a reason to finish the job they should have finished at the time of the first Gulf War.  The problem is across the board Congressional incompetence.  Their vision is totally focused on the next election, not the countries problems.

     Congress has failed totally to provide for the welfare of the country.  Had they created programs and allocated funds to maintain the infrastructure of the country it would not be falling apart.  They needed (or need) to create a program to maintain and develop the nations infrastructure, which is a duty clearly lined out for them to do in the Constitution.

      Based on what I am seeing the Fiscal Cliff may be a lot closer than many believe.  The end of the world that the Mayans spoke of may or may not happen.  It may turn out to be about as dangerous as Y2K did.  The Fiscal Cliff, however, is a real and present danger.  The cliff is not really the problem either.  The problem is how far down is the bottom of the abyss it is going to plunge the nation into.