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May 2008 - Posts - The Dollar Stretcher
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The Dollar Stretcher blog will explore people and money.

May 2008 - Posts

  • Congress Likes Higher Food Prices

    It's fairly obvious to anyone who's not sleepwalking that higher food and fuel prices are really hurting most Americans. Everyday I get emails from folks who are struggling with these two bills. For many people it's a real serious problem. 

    Maybe I'm just an optimist, but I figured that our elected representatives would recognize the problem and try to do something about it. Boy, was I wrong. Not only did they ignore the food price inflation, but they actually found a way to make it worse! They just don't seem to understand what it's like for you and I to work to support our families. Last week provided an excellent example. On May 14th, the House passed a $307 Billion farm bill.

    Now, I like farmers as much as anyone. In fact, Foremans were Wisconsin dairy farmers. I was raised in the city, but spent lots of time visiting relatives who made their living on small family farms. So I have the utmost respect for someone who plants something and nurtures it as it grows bigger. And, I want to help those people wherever I can. But, this bill doesn't do that. It assumes that you and I are too stupid to go beyond the name 'farm bill'. We must be too dumb to recognize that it's not the small farmer who's being protected. It's the large agri-business corporation and others who have little (or nothing) to do with farming as you and I would think of it.

    First, look at the cutoff. A couple with a yearly income of $1.5 million can receive farm subsidies. Call me Scrooge, but I'd say that families making more than, oh, say $500,000 per year probably doesn't need subsidies paid for by you and I. One group reports that only 8% of the producers will get 78% of the money here

    Still think it could be a good piece of legislation? Take a look at your grocery bill. You'll find that bread, milk and meat have all increased in price. Dramatically. Why? In large part because ethanol is consuming grains that normally would go to feed us. Higher prices indicate that there's more demand for corn than we can produce. Now you might think that Washington would get the idea that their ethanol mandates should be relaxed until the supply of corn can catch up with the demand. Guess again.  So why is the government subsidizing ethanol production?  Seems a little like pouring gas on the fire of higher food prices. 

    Then you have the old Congressional shell game. That's where they include spending that has nothing to do with the main bill. After all, who wants to be against the family farm? So let's throw in some money for horse racing and timber interests. Those dummies back home will never know the difference!

    Rational people might have said that this was a good time to limit a farm bill to helping those family farmers who truly need help. "Farm net income is up 56% in the last 2 years" (source: NY Times)  There's "$40 billion in subsidies to commodity farmers who already enjoy record prices." (source: SF Chronicle) We could have had a farm bill that took care of the small family farm without causing additional grocery inflation. But, that wouldn't have pleased all the special interests.

    Guess I'm just mad. You and I are dealing with higher energy and food prices. Instead of doing something to help, our elected representatives (from both parties) are busy spending our money buying favors for themselves. Adding 'earmarks' to every bill in sight. I really believe that it's time to put Washington on a budget. And, force them to keep it. Whoever said that they should be allowed to 'earmark' anything? I don't recall voting on it. 

    Much of the economic trouble that you and I face today is due to the clowns (and I use the term intentionally) in Washington that we call elected representatives. They set us up for this fall. And, unless a camera is present they really don't seem to care to much about how much it hurts us. After all, things are booming in the beltway. No recession there!

    I was raised to respect the people who led our country. But, it's really hard to respect someone when you know that their back pockets are filled with money that at best was unearned, and, at worst could be called bribe money. Maybe it's time to let them know how little respect they've earned.

    So the next time your elected representative says they're against special interests ask them how they voted on the farm bill. There were 318 yes votes (and only 106 no's) in the House.  The Senate voted 85-15. This isn't a partisan Democrat/Republican issue. This is a question whether we can trust the crazies on the Potomac not to bankrupt both the government and you and I. If they voted 'yes' on this bill, it's probably time to vote 'no' on their re-election this November.

    Keep on Stretching those Dollars!

    Gary 

     

     

     

  • Specator Sports

    Heard an interesting phrase at a conference I was attending. It came from Tom Evans, President and CEO of Bankrate. He said that "money is no longer a spectator sport" and I think that he's right.

    When we bought our first home the choices in mortgages were pretty simple. Unless you were self-employed you took out a 30 year mortgage. There was a little difference in closing costs and points, but nothing too dramatic.

    Credit cards were also pretty simple. You had gas, store and bank cards. But no 'cash back' or points cards. Everyone had the same payment due date. And, interest rates on most cards for most customers were the same.

    Back then you could put your finances on autopilot. Sure you needed to know how much you owed on your credit card. But there weren't too many decisions to make.

    Sure is a different world today. Much, much more complicated. Not only do you need to know how each different credit card is handling your balance, but also how they're handling new purchases. And, your mortgage, well that's another whole topic.

    Tom was right. Money is no longer a spectator sport. Whether you like it or not, you're a part of the game. And, that means reading more and learning more. No doubt, that's a challenge for many people. Fortunately, there are a lot of good resources available to you. We hope that you consider The Dollar Stretcher.com and our newsletters to be one of those good resources.

    Keep on Stretchin' those Dollars!

    Gary                   

  • Gas Crisis???

    Just finished an interesting week. I drove across the state for a conference. The conference was about online financial news. Many of the discussions included comments about how higher gas prices were causing big problems for consumers. (BTW, I agree that higher gas prices are causing problems for consumers. But, as you'll see in a moment, I'm a bit confused as to how consumers are reacting to the problem).

    The first thing I noticed was that people were traveling a little slower on the highway. I couldn't ask them, but I suspect that they were trying to save a little gas. According to http://www.fueleconomy.gov/feg/driveHabits.shtml gas mileage decreases dramatically when you go faster than 60 mph. Until recently here in Florida the interstate moved along at about 80 mph. This trip it seemed to be closer to 75 mph. I usually try to stay with traffic, so I managed to save myself a few dollars this trip.

    But, the signals were mixed. Yesterday was Mother's Day. Mama didn't want to cook and didn't want to eat what I volunteered to cook. She wanted to do takeout from one of those national chain restaurants. At this one, you call ahead and just pull into a special section of the parking lot. A server comes out to your car. They'll go back and forth until your transaction is complete. At 6:15 on Mother's Day you'd assume that they'd be busy. And, they were. What struck me as odd, was that I was the only one who shut off the engine and rolled down the windows. Granted the temperature was in the upper 80's. But, if gas is too expensive, how can I justify sitting in a parking lot for 10 minutes with the engine running? (maybe not everyone is concerned with gas prices)

    Next, I refilled my tank. While I'm pumping gas the fellow on the other side of the island comments "guess it'll be $4 the next time we fill up". I have no way of knowing whether that's true or not. Even the experts at the conference couldn't tell for sure. But, I am convinced that if we want to have low energy prices we'll need to address both the supply and the demand side of the issue. That means taking steps to conserve the energy we have. But, it also means using the resources we have to produce more energy. We may choose to buy an SUV to go to the mall. We can decide not to make our homes more energy efficient. We can vote not to drill for oil or build refineries. We can say no to windmills and nuclear plants near us. We can put all of hopes on tomorrow's technologies being clean and abundant. We have that right. But, let's not kid ourselves into thinking that those decisions don't have costs. They do. 

    Finally, a way that you can reduce your cost of gasoline. Just by buying and using a tire gauge monthly, you'll get about 10% better gas mileage (if you're the typical driver). An investment of less than $5 and ten minutes a month could save you many dollars. Along with driving slower, it's the easiest way to reduce your fuel bill. You'll find more on the subject here.

    Keep on Stretching those dollars!

    Gary 

     

  • Supply and Demand

    Wow! The news is full of stories about rising gas and food prices. For those of us who pay attention to our expenses it's not a big surprise. We've known for awhile that's been happening. In fact, what surprises us (at least me) is that so many people were unaware of what was happening.

    Take gas for instance. World demand is up (primarily due to growth in China and India). Supply is basically unchanged. Economics 101 will tell you that prices will rise. On one hand we can argue about how to increase energy supplies or whether we can conserve enough to offset increased demand by other countries. But, that's not really our mission here.

    What we can do here is provide ideas that you can put to work this week to reduce those gas and grocery bills. So with that in mind I invite you to pour a tall glass of your favorite cool beverage (I favor sweet tea or lemonade), sit back and enjoy this week's issue. I hope that you find it saves you some money!
     

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Gary is a former financial planner and purchasing manager who edits The Dollar Stretcher website <www.stretcher.com> and newsletters. You can follow Gary on Twitter.com/gary_foreman
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