To the Mattresses

9 Apr

This is basically a re-post of something I wrote a few months ago about savings and banks and sending your children to college but since then it appears that our federal government is up to their old shenanigans again and soon there might be no safe place for your money to reside except…you guessed it… So let’s review:

First of all a word to parents: Parents, I highly recommend college for your children. A college education is a great way to boost your child’s future earning potential but, how can we parents possibly save for it and then pay for it without saddling ourselves and our children with more and more debt?

Well, a few years ago I would have said, buy United States Savings Bonds! Money that I put into U.S. Bonds when my children were little doubled and even tripled by the time they reached college age. But in 2006 Congress voted to reduce the interest rate on bonds from 6 percent annually to .04 percent. That is unbelievably a 93 percent reduction in interest on U.S. Savings bonds and 93 percent is like…well…everything! So thanks U.S. government and forget bonds.

I’d say put your money in a savings account but remember that for every 10 thousand dollars you save this year, next year you’ll have 10 thousand dollars and about… 3 gallons of gas, because unless you haven’t been paying attention banks no longer give interest to you even as a thank you not to mention fair payment for using your money to make money for themselves… So, forget savings accounts.

How about a nice mutual fund or stock portfolio? Well, mutual fund agents used to guarantee 8 to 12 percent average interest over the life of your fund but of course that was a “market based” guarantee which was not actually a guarantee of any kind as they’d always remind you when you were signing up for the fund. And when they say no guaranteed interest boy they sure don’t kid around! No guarantee. No interest, period. The stock market (just like you suspected) really is for people with 14 billion dollars, who really don’t need all that money and who really do have 100 years to not care whether it’s here today, gone tomorrow and back again. So forget the stock market. It’s become tantamount to gambling so you think you will make lots of easy money there but just like at the casino, you won’t make any money there at all.

What about 401ks? Stock Market again! See above. Plus you get a 10 percent penalty and taxed another 20 percent if you use it before you are 59 and ½. Hopefully your kids are gone by then because you’re going to need that money. Trust me! (And what’s the ½ for? Just to screw with us?)

And now the following bill is being proposed in Congress and recent reports say that it has a 79% chance of passing. It’s called H.R. 992: Swaps Regulatory Improvement Act and as you probably can guess it will not be an improvement of any kind to anything. What it will do as I understand it, is weaken the already weak Dodd-Frank Act that is supposed to protect us from another big bank money grab and public bailout like the one we had in 2008.

Instead this amendment to Dodd-Frank will make it easier for banks to speculate with depositors money again and allow for a future where the FDIC will no longer need to guarantee depositor funds; it can just confiscate them  to recapitalize the banks should they go south once again. This would mean that your money in your bank could be used to bailout your bank’s theft of your money. So the bank of the not too distant future, for all intents and purposes can rob you!…legally!

So, how do we save for college and our children’s future or save for anything if this is what we have to look forward to? The mattress! Yep, you heard me! Every dollar in gets you 1 dollar out plus when you consider adding all of the spare change that falls out of your pocket and lands under the bed your mattress has a higher average annual yield then most government securities! So parents of America, To the Mattresses I say! To the Mattresses!

10 Responses to “To the Mattresses”

  1. RAB April 9, 2013 at 1:36 am #

    Depressing but very true, very sensible. What a world we live in.

  2. mvschulze April 9, 2013 at 2:55 am #

    Just throwing this out for clearification: I believe a US series EE bond still will double in 20 years; that is a 20 yr bond can be cashed in for 2 times purchase price in 20 years. The treasury makes up the difference if interest doesn’t meet the obligation.

    • gpicone April 9, 2013 at 3:18 am #

      Yes, once upon a time but If you buy a series EE bond today your interest rate is 0.20% through April 30, 2013 (fixed rate)

  3. simplysamiam April 9, 2013 at 5:47 am #

    But how will the FASFA take into account all that mattress money;)

  4. Missriete April 9, 2013 at 10:20 am #

    Same here in the Netherlands of course so … on my way to buy a spare mattress (all that money makes for huge lumps and an uncomfortable lie down, lol)

  5. onnovocks April 9, 2013 at 11:42 am #

    It may be time to look at Bitcoins, but like anything else, there are no guarantees. The mattress, seems to be the only refuge.

  6. Gwen April 9, 2013 at 3:10 pm #

    We’ve started 529 accounts for our two kids. 529’s are tax-free, higher-education investment accounts.

  7. Jae April 9, 2013 at 6:18 pm #

    Did you hear about what happened in Cyprus with them just taking (no bills, no discussion in the government, just straight up theft) 6-9.9% of people’s savings accounts—not just the rich, everyone? I certainly wouldn’t put it past our government in the near future. And apparently they’ve (in Cyprus) already thrown out taking 20% more from people’s savings accounts, and maybe 80% in the future? Seriously?!? I’d say buy gold, but our own government confiscated people’s gold back in the ’30s or ’40s and never paid them back for it… Dangerous times we’re living in…

  8. avwalters April 9, 2013 at 8:24 pm #

    Yeah, think Cyprus. The good news? This economy has relieved so many of us of this worry, because we no longer have savings.

  9. Maurice A. Barry April 18, 2013 at 9:33 pm #

    In Canada we have a financial product known as an RESP (registered educational savings plan). These are registered and safe investments. While the contributions are NOT tax exempt the plan can GROW tax free so, in the end, it’s a secure and sound way to put money away for post-secondary education. The Fed also allows for matching funds. I am surprised that an advanced economy such as the US does not have an equivalent.

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