Ten Ways You Can Screw Up Your Life

Today we have DOTE's inaugural guest post. Bill Hicks (a pseudonym) of the excellent blog The Downward Spiral gives us some practical advice for living in a rapidly changing world. I hope this will be the first of many guest posts by Bill and others. — Dave

Sometimes it’s tough having your eyes wide open while nearly everybody around you remains fast asleep.  Like the protagonist in the classic H.G. Wells story, “The Country of the Blind,” instead of becoming the king, you find yourself to be a social outcast, especially if you try to tell the truth to those unwilling to hear it.  So you go through every day as if in a trance—while friends, colleagues and perhaps even family members make plans that you know are going to lead them to grief in the long run.  But you remain mum.  After all, however addicted to the truth you might be, you don’t want to become that pariah who claims to see while everyone else is blind.

Despite how few of us recognize that there was a fundamental change back in 2008, and our civilization has now crossed over from the long era of economic growth to one of permanent contraction, this fact has nevertheless turned all of the accepted wisdom of how one should manage one’s personal finances on its head.  Since Internet readers seem to love tidy little lists, I decided to put together one of my own, which I call: Ten Ways You Can Screw Up Your Life.  These are things that people still do every day because they remain firmly rooted in the business as usual mindset.  Sadly, thanks to the relentless propaganda of the mainstream media, most will not recognize the folly of their actions until it is far too late.

So without further ado, here are the ten ways:

1). Take Out a Big Home Mortgage – Several professional colleagues of mine have done this one just within the past year alone.  Most people buying homes today probably think they’re getting a great deal, what with real estate prices still being very much depressed and 30-year fixed rate mortgages going for around 4% interest.  But even with all of that, prices remain WAY TOO HIGH and will no doubt fall much further in the coming years with the next big waves of job losses and government spending cutbacks.    A particular folly is buying a humungous exurban McMansion, with the half-acre yard, granite counter tops, lawyer foyer and three-car garage located 30 miles from your job.  In a few years when gasoline becomes unaffordable for most people, those ugly monstrosities will become virtually worthless, and all of your equity will vanish like a Texas fishing hole in July.

2). Buy a Large SUV, Minivan or Pick Up Truck – Is the current elevated price of gasoline putting a strain on your family budget?  Well, if so then you have no business continuing to buy the kinds of gas-guzzling behemoths the auto industry loves to push on dimwitted customers because they carry the largest profit margin.  Many parents, for example, think they need that huge vehicle with the video entertainment system in the back seat to keep their precious little snowflakes safe and entertained wherever they go.  They don’t stop to think how they are going to be able to afford to pump gas into that monstrosity when one of them loses their job or gas goes to five-dollars a gallon.

3).  Max Out Your 401K Contributions – I sympathize with people on this one.  I really do, for I myself made this stupid mistake for about 15 years, blissfully pouring the maximum amount of money into a paper asset I cannot access until I retire.  Nowadays, I just make the minimum 5% contribution it takes to get the matching payments from my employer.  Even so, I am gambling that the system will hold together for three more years until I can take early retirement and withdraw that large chunk of change—10% IRS early withdrawal penalty be damned.  Always remember that every dollar you deposit into a retirement account that you cannot access for years is at risk of being lost when the financial system does finally acknowledge reality and implodes.  The longer your money has to remain in the account before you can access it, the greater the risk you are taking.

4).  Keep Your Savings in a Big Bank – Okay, so you’ve been listening to commentators who tell you that the safest investment right now, other than precious metals, is cash.  Good on you for at least having the sense to stop playing at the rigged Wall Street casino.  So now what do you do with all that loot?  Well, if you deposit it in a savings account at one of the shaky big banks like Bank of America, Citigroup or Wells Fargo, it could also be very much at risk.  “But what about the FDIC deposit insurance?” I hear you asking.  Well, as I wrote recently on my blog, the Deposit Insurance Fund is currently carrying a positive balance of around a measly $4 billion, even though the total amount of insured deposits at those three banks alone is $1.8 trillion.  If one or all three of those banks fail, it would likely be months at a minimum before you would be able to access any money you had deposited with them, assuming you are EVER reimbursed.

5). Take Out Student Loans – On my blog, I’ve written several posts about Leslie, a 23-year-old woman with a Master’s Degree, a six-figure student loan debt, and no job prospects.  Leslie and her live-in boyfriend survive on his $10-dollar-an-hour retail job and food stamps.  She’s been participating in the Occupy Wall Street protests, but sadly, despite her opposition to America’s imperial wars, she has decided to join the military in order to pay off her debt.  By doing so she has deferred her dreams of getting married, buying a house, starting a family and planning for retirement.  Leslie’s situation is hardly unique, and it should be obvious by now that a college degree, particularly one you have to place yourself deeply in debt to obtain, is no longer a guaranteed ticket to do any of those things.

6).  Count on Your Pension to Be There When You Retire – As I have reported on my blog, the financial condition of the Pension Benefit Guarantee Corporation (PBGC), the little known federal agency that backstops private pension plans should the companies that have them go bankrupt, is even worse than the FDIC.  The PBGC is currently running about $23 billion in the red, and yet the cumulative pension deficit of America’s largest corporations is over half-a-trillion dollars.  Worse yet, it was also reported recently that the federal government pension plan for its own retirees is underfunded by a staggering $5 trillion.  Not to be outdone, the state and local government pension plans around the country are also in a huge collective hole.  Whether you are employed in either the public or private sector, if you are more than a decade from retirement you should assume you’ll likely never see one thin dime of your promised pension.

7).  Count on Receiving Social Security Benefits – Like the FDIC and the PBGC, the Social Security Administration is effectively broke.  The alleged $2.6 trillion social security “trust fund,” supposedly built up from many years of the program running a surplus, is a cruel lie.  The trust fund contains U.S. Treasury securities, which means that any deficit in payroll tax collections has to be made up by selling those securities—directly adding to the already-insane levels of federal deficit spending.  The annual surpluses in the program have already disappeared because a large number of Baby Boomers have joined the rolls in recent years, and that was even before our so-called “leaders” decided to increase the financial strain on the system by lowering payroll taxes from 6.2% to 4.2% this year in a desperate bid to stimulate the economy.

8). Run Up Your Credit Card Bills – this one seems pretty obvious, and if you are reading this essay I gather you are probably the kind of person who is already wary of taking on debt at the usurious rates charged by the credit card companies.  Unfortunately, as working and middle class incomes have stagnated in recent years, many people have turned to the plastic to try and keep up the appearance of prosperity.  These are people who are still employed, but are finding that their incomes are not keeping up with the rapid rise in basic expenses such as food and energy.  Instead of readjusting their lifestyles to reflect reality, they use the cards to keep on buying massive amounts of stuff they don’t need because hey, they “work hard” and they “deserve it.”  It is true that credit card debit is unsecured, but if you were to become unemployed, would you really want a massive debt default on your record to be considered by future potential employers at a time when there is cutthroat competition for even the crappiest jobs?

9).  Listen to a Financial Adviser – My wife’s employer recently had a financial adviser-type come in to the office and speak to the employees about planning their financial futures.  My wife was appalled to hear the man actually repeat the tired old housing bubble-era mantra that people who pay off their mortgages early are foolish because that money would be much better off invested in the stock market.  This is someone who actually gets paid to spew such claptrap.  Ten years ago, most financial advisers would no doubt have been horrified had you told them you were going to invest in precious metals rather than the stocks.  Had you done so, you would have quadrupled your money, whereas the stock market remains mired near the levels it first attained back in 2000. 

10).  Have Children While Being Unaware of What the Future Likely Holds – I am not one of those misanthropes who says that since the world is just now adding its seven billionth human that no one has any business having children.  If you are aware of the issues I’ve written about above, and you are planning to become a parent with your eyes wide open, then that is your choice and I wish you the best of luck.  Most people, however, have no idea what’s coming.  They have no clue that they are bringing their children into a world where not only are they going to be worse off than they themselves were, but they are very likely going to endure much pain and suffering at some point.  This is particularly true because most parents are raising their children to function within an economic growth model that is already dead.  It’s a zombie—the body just doesn’t know enough to stop twitching yet.  Young people who have been raised to expect that they will always possess the latest electronic gadgets, and if they dutifully attend their classes and don’t rock the boat they can go to work in some cubicle and be able to afford all of the same things that their parents had are going to be in for the rudest generational awakening ever seen in human history.

Comments

[NARNfan]

They need to get the cost of college way, way down and the value of it up. It's a criminal scandal that the cost has exceeded government manipulated inflation measures for over thirty years.

[CHilke]

The good news is that apparently more and more people are starting to wake up and smell the coffee: "The Hill Poll: Voters say US is in decline":

"More than two-thirds of voters say the United States is declining, and a clear majority think the next generation will be worse off than this one, according to the results of a new poll commissioned by The Hill."

"A resounding 69 percent of respondents said the country is 'in decline,' the survey found, while 57 percent predict today’s kids won’t live better lives than their parents. Additionally, 83 percent of voters indicated they’re either very or somewhat worried about the future of the nation, with 49 percent saying they’re 'very worried.'"

"The results suggest that Americans don’t view the country’s current economic and political troubles as temporary, but instead see them continuing for many years."

http://thehill.com/polls/189273-the-hill-poll-most-voters-say-the-us-is-in-decline

[Ed]

Now that is some sound advice Mr. Hicks. Barack should put that in leaflet en use some of the B52 bombers to drop those leaflets all over the USA (and the rest of the western world). That would affect the crisis in a more positive way then all the TARP's and what not he and his Chicago boys deluxe have come up with.

Greetings, Ed

One addition if that is "gestatted"

11) Work for a major (stock exchange) company is not a good idea either. Work for family owned businesses or work for your own wallet.

[John D]

Let's see. Social Security- out. Pension- out. 401k- out. What's the 4th choice? Under the mattress, or buy a farm with some chickens and cows?

[Bill Hicks]

@John D - I wish the farm was an option for me, but I was born with the brownest of brown thumbs.

[John Ludi]

Good one as usual, Mr. Hicks.

[Dave Cohen]

I looked at those poll numbers Chilke talked about. Quoting from the results--

"The degree of pessimism, however, varies sharply by race and party affiliation, The Hill Poll found. REPUBLICANS, for instance, HAVE LESS HOPE for the country’s future, with 90 PERCENT saying the United States is declining and 66 percent predicting today’s kids will be worse off than their parents. By contrast, FEWER THAN HALF OF DEMOCRATIC respondents indicated the country is in decline (47 percent) or fear for the next generation’s living standards (45 percent)."

If we had a Republican president, I assume the situation would be reversed. So, it's still hard to say how many people understand America's decline, despite the astonishing rapidity of the change in the last decade, and especially the last 3 years.

Which means, apropos Bill's post, that many, many people are going to be completely UNPREPARED for the coming disaster.

-- Dave

[Mulligan]

Good point Dave, you have to look at exactly what the people think the decline means, and what is causing it, most seem to think that it is just a temporary setback, or perhaps a relativley long one, but they still think that there will be a turnaround to the "good old days" as long as A, B or C is done.

[Brian M]

You know, it's not just that they're unprepared. It's that they are so stuck in the box, so totally brainwashed about the American Way of Life, that they cannot even fathom the possibilities. To the extent that they think the US is really in decline, they think it is simply a political issue, an economic issue, a standard of living issue, an issue defined by whether their kids will be able to consume more and destroy more than their parents did. What these people are unprepared for is reality outside the tiny little box that has been built for them to live in.

They can't understand the problem because it is entirely outside of the plane of their existence. It's like me trying to explain life in another dimension. I have no knowledge or experience set that can possibly frame such an understanding. The best I can do is use my imagination and create fiction. That, folks, is what most of the people are doing most of the time... doing their best to live their fiction. Unfortunately for them, the real world is continually making it harder and harder for that fiction to feel real. Perhaps that's one of the reasons for the extremism and polarity, people are having to fight harder and harder to maintain the fiction.

[Bill Hicks]

@Dave - I totally agree. Sadly, way too many people STILL equate the condition of the country with whether they like the person in the White House. They are no doubt among those who will NEVER wake up before its too late.

[Bill Hicks]

@Brian M - VERY well put.

[Alexander Ač]

Yeah!

Slightly OT, but here is Hans Rosling presentation on population growth:

http://www.youtube.com/watch?v=fTznEIZRkLg&feature=results_main&playnext=1&list=PLF051B235F7FDFB13

Matt Ridley is irrational hyperpessimist compared to (well intentioned) Hans Rosling.

We are totally fucked up.

Alex

[Leon Haller]

This article is ludicrous. Yes, things are bad and getting worse. But some of the problems are eminently correctable -if and only if we had the right type of, yes, CONSERVATIVE political leadership. We are being destroyed in the US due to :

1. Third World immigration 'diversity' (do I have to explain this?)

2. badly behaved domestic diversity

3. Government at all levels spending vastly too much money

4. Too much economy killing government regulation of business

5. the dysgenic trend (US IQ has been falling for a century).

There are other problems, but there are solutions, too. For starters:

Stop immigration. End affirmative action. Hang violent criminals en masse (and make every convict do productive and hard physical labor, like road repair - bring back the chain gang). Legalize the right to carry firearms. End foreign non-security aid. Militarily seal the border with Mexico. Abolish the Fed and return to a 100% gold dollar. Radically privatize and downsize govt at al levels. Radical tax simplification. Radical deregulation of economy. End harassment of energy producers. Restrict job-killing EPA. End animal rights nonsense. Raise age of eligibility for SS and Medicare to 70, in line with longevity increases. Revamp public schooling, to focus relentlessly on the basics - reading and math. Recognize that most people DO NOT BELONG IN COLLEGE. Encourage high school vocational training for the unintelligent (bottom 90%) instead. End welfare for non-disabled. Bring back loud, public support for traditional morality and mentality (whose foundation is criminal punishment).

We need to get seriously rightwing - economically libertarian, socially authoritarian - and fast.

[Mulligan]

Leon Haller, you are a fascist, please F-O-&-D. Everything you believe in will lead to a dead, cratered, and smoking world filled with miserable and possibly violently revolting people.

[raintonite]

Leon Haller obviously considers himself in the 10%. Not for him hanging, the chain gaing, nor dead end jobs, but one who owns and wields the whip hand.

Horrary, we're saved.

PS Do us 90% get to wear medieval sack clothe? Will work houses have cold running water, or is that being too soft on the unworthy?

[Paul]

After the last financial meltdown Germany spawned Hitler. The ingredients are slowly brewing again. We must all stay aware.

[Bill Hicks]

@Paul - You got that right.

[Alexander Ač]

We will get probably "several Hitlers" at one time and only few will recognize them. Only that "this time is different"...

Alex

[D]

It's amazing to see the churn this type of thinking creates. These tenets are correct, but vastly hard to swallow for most people, particularly the part about not procreating. We are headed for a major paradigm shift and that is freaking the living s**t out of most people—the ones clinging so strongly to their outdated belief system that they're clambering for a return to "conservative" leadership or an enlightened "liberal." The sad fact is that either choice is the same. Our "democracy" is now kaput. Every child born in this country today is being born into bondage or at least a legacy of cancer. Humanity has outgrown our host planet's carrying capacity, and America has outgrown its creativity and compassion.

The United States has become a Third World country; we just haven't got the guts to admit it yet. China is the Next Big Thing. America's next logical evolution will be a slide into fascism. Like the wise gentleman named Paul pointed out, the U.S. is about the spawn the next incarnation of the Nazis. We just aren't truthful enough or enlightened enough to admit it yet. We labor under the delusion that just because our nation was once benevolent that we will always be benevolent. Read your history. See what happened to Germany after WWI. A fierce sense of nationalism in the wake of a period of national shame, coupled with a vicious, charismatic leader gave rise to the Nazis. We have all parts of the equation except for the charismatic leader. But we sure do seem to be searching for one, don't we?

Maybe Number 11 in the article should be "Don't Renew Your Passport".

I'd say "God help our nation," but that would only serve to incite our budding fascism even more....

Don't believe these things? You need only wait a few more years.

[Deck Hazen]

The first rule of Peak Oil is "Nobody talks about Peak Oil" the second rule of Peak Oil is "Nobody talks about Peak Oil"

Not if you want to have any friends, or if you'd prefer to have your family think you're still sane.

This sounds like an exaggeration - like paranoia - but lots of people owe me a reply I doubt I'll ever see.

When I initially came to grips with "the terrible trio" (energy, economy, and environment) I felt compelled to warn everyone - to force the issue - to beat down any and all counter arguments one by one.

Bad Idea - people just get mad at you. You want to save them, help them get a little more prepared - but you can't - if you push too hard and they will shut you out - push too soft and your message gets ignored.

My compromise in the end was to draft a list of the videos I found most persuasive - those that make the point without being "in your face" about it. I offered the list to my friends as an off-hand comment like "oh - by the way, I've got this list of videos that I hope you'll look at ... "

To date, no one has come back with questions or comments on it.

I hope that when (if) we make it through all this I'll be able to say "I tried". Anyone got a better way? I'd sure love to hear it.

- Deck

Here's my list:

A Crude Awakening
Arithmetic, Population & Energy (probably have to take this out -- too much math)
Blind Spot
Crash Course
Crude ABC Documentary
Crude Impact
History Channel on Crude (anti-peak - thrown in for balance)
Oil, Smoke and Mirrors
Our Local Future - Climate Change, Peak Oil & The End of Money 2009
Permaculture and Peak Oil - Beyond Sustainability
The Automatic Earth
The End of Suburbia
The Power Of Community (on Cuba)

[Martin Hanson]

Re Deck's comments: An important item missing from Deck's list:

"The Money Masters" - a very detailed look at the gigantic fraud that is banking, and how the bankers have developed their grip on all of us.

Martin Hanson

[Martin Hanson]

I should have added:

"Preparing for a post-peak life" - also available on the web.

[Alexander Ač]

Deck,

there is no solution to help "THE MASS". It is over, sorry.

Alex