Let’s get this link up here, with thanks to Jay Lake:
Don’t Tax the Rich. Tax Inequality Itself.
Because these economists realize how important the middle class is.
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Keeping with the financial theme, it’s now time for a fiscal fable.
Once upon a time, in the early 90s, there were two young teachers in their early 20s. One of them was working a temporary job at Iowa State University. The other was a high school chemistry teacher. Both of these people were poor, but they believed they had to plan for their future. So, they bought a life insurance vehicle, which was supposed to turn into a retirement vehicle after 20 years of investing in it. The poor young teachers felt virtuous indeed, and they paid into the life insurance policy for 20 years.
Over the 20 years, the policy changed hands, and its original intent was eroded by company change. The teachers, no longer young or poor, realized that the policy would not increase in value, the return was poor, and that the policy would eat its own value up as they continued aging. Further, the teachers did not need extra life insurance. They had pretty good insurance at work and had purchased extra to cover their debts in the case of the unfortunate. Also, the kids they had one time thought of having had never materialized, so no one else needed to be covered in case of an emergency.
One of the things the teachers did have, though, was debt. One of the teachers had gone back to school, and while she had borrowed minimally from the government as these things go, the cost of her full time employment had meant a swelling of their consumer debt that they had yet to conquer.
About a month ago, the teachers cashed in their old life insurance policies. Today, the teachers took the majority of that surrender money and paid off their consumer debt. The teachers think they still have enough for their trip to Disney Paris for their honeymoon. They’ll see about that tomorrow.
This teacher is feeling pretty good about that. As you all know, Bryon and I come from poor stock–his family the worthy poor, mine the unworthy poor. There are no rich uncles or aunts in our backgrounds, no chance of any money.
We sort of get to be our own rich relatives here. That’s nice. Thank you, poor, young teachers, for being smart enough to put money away for the future. You could have just spent that $104 a month. We, your future counterparts and your heirs, thank you.
Next up: After the holidays, Bryon and Catherine go to see Catherine’s financial adviser to see what can be done about putting the two old bills we had a month that no longer exist, and maybe a little extra, into Catherine’s retirement fund. Early retirement is closer than I think.
