Insurance Advice and Assistance

Are you an investor?

Investors are ambitious and optimistic. Unlike humble savers, they believe that taking a little risk and exerting a minimal effort will dramatically increase their funds. Investing can be very troubling, but it touches fewer core emotions than savings. When ambition is thwarted and optimism is shattered, investors are miserable. However, they do not storm the capital and start a revolution. Investing concerns one-on-one relationships rather than the role of God and society in safeguarding hard-earned money. Whereas savers trust no one individual, optimistic investors trust too many people. When markets collapse, individuals are blamed, not government or the gods.

Ideally, the investor only invests excess savings. In investing, an individual or a group lends their excess savings to other individuals or groups for a fee. The fee is rent, interest, dividends, or capital appreciation. Groups can be corporations, partnerships, trusts, or other legal entities. The investor relies on the investee to pay the fee over time and to repay the investment.

Investing creates a relationship between the investor and the investee. Each has expectations of the other. Emotions are triggered entering the relationship, during the relationship, and leaving the relationship.

Threat to home equity

The biggest threat to home equity is impulse buying and keeping up appearances in a consumer society. Have you taken out a second mortgage even though you consider home equity your retirement nest egg? Many people run up credit card debt and then refinance it at a lower rate with a second mortgage. At some point, though, the nest egg disappears. Impulse buying and keeping up appearances can turn savers into spendthrifts.

Still, there is some justification for using a home as a savings vehicle. We all need to have a residence. The purpose of saving is to create a sense of financial security in our lives. Renters are subject to rent increases and the whims of landlords. A long-term saver able to pay a mortgage and not take out second and third mortgages will not have rent increases. A longterm saver able to pay off the mortgage will dramatically increase the sense of financial security in his life. Investors and speculators will have little interest in this type of security.

Home ownership works best for long-term savers who are not interested in the value of their home, but the security of their lifestyle. They are able to ignore the ups and downs of home prices, interest rates, and the economy, and focus on paying down the mortgage one payment at a time.

Often, true savers double their mortgage payments to eliminate the mortgage at a faster, orderly pace, whereas investors would not dream of using their excess cash to increase a mortgage payment.

Personal Income Taxes

Adoptions: The last adoption of a personal income tax in a state without one was Connecticut early in the 1990s. For the status of proposals for income taxes in states without them see the section on state-local fiscal relations.

Changes: By basing a successful 1993 campaign for governor of New Jersey on a promise to reduce the state income tax by 30% Christie Whitman made cutting income taxes a popular proposal for candidates in the  1994 gubernatorial races. Victories by some of the gubernatorial and legislative candidates using the theme and strong state finances made cutting income taxes popular in 1995, 1996, and to a lesser degree 1997. The interest in income tax cuts has probably about run its course. Polls in New Jersey suggest that Whitman got little credit from New Jersey voters for the 30% cuts. She has promised that her tax cutting priority in the new term will be property tax reductions.