Acting Smarter

The year is half over and what a year it has been so far in the world of politics, the economy, the banking system, tax law changes, etc. This year will go down as the one of the most pivotal in our nation's history as we try to address every issue on the democratic platform while in a recession. Praying for our leaders is a good thing to do this year.

It was announced this week that personal income rose in May, the 2nd month in a row, much to the surprise of the people who tend to focus on the negative side of life. The stimulus package spending is flowing money into people's pcokets during April and May. Normally this is viewed as wonderful news and the stock market would rally because consumer spending is about 70% of the economy. People are acting smarter in that the savings rate also increased to a level not seen since 1993. The stock market took a dim view of this smart behavior and went down slightly.

Having people save rather than spend is wonderful news for the long term future of our country. We all need to save for the future for things like retirement, major purchases, college, etc. Our Social Security system is headed for trouble as people live longer and jobs move oversees reducing inflows. People need to have additional savings beside just Social Security for retirement. For example, a recent study forecasted that $450,000 more than Social Security benefits is needed by a retired couple for future medical costs alone.

Cash for Clunkers is great for someone who is wanting a new fuel efficient car. You have heard details about it in the media. If you do not have a qualified clunker and still want a new car here is a gameplan. Some people who have clunkers will not be able to take advantage of the program. They will sell them as part of their normal routine of upgrading vehicles. Buy a $1,000 clunker, title, register and insure it then drive it to the dealer. Sell the extra older car yourself to maximize your return.