Thursday, March 24, 2011

Made my 15th payment to pay down the public debt of the U.S. government

I just made my 15th monthly payment to pay down the public debt of the U.S. government. It wasn't a large payment, just another $25, but it is a matter of principle, albeit mostly symbolic. It may take me another 47 billion years to pay it all down all by myself at this rate (and assuming the deficit went to zero immediately), but, as I said, it is a matter of principle and a sense of personal responsibility. It is our debt, not somebody else's.

According to the U.S. Treasury web site, the total public debt outstanding was $14,233,559,283,692.40, as of March 22, 2011, an increase of about $151 billion over 39 days, about $3.9 billion a day or $1.41 trillion per year (annualized daily deficit.) As bad as that is, it is actually better than 6 of the past 10 months.

We are now only $66.5 billion below the $14.3 trillion statutory debt limit. In short, something dramatic will play out in the coming weeks. At $4 billion a day, nominally the limit would be reached in a little over two weeks.

Here is what I wrote back in January 2010 when I made my first donation/gift/contribution/payment:
Everybody is whining and complaining about the ballooning debt of the U.S. government, but who is actually doing anything about it? Well, for starters, ME! Yes, that's right, I, Jack Krupansky, just did something to reduce the U.S. government debt. Really. No kidding. I actually paid down a small slice of this debt. Granted, it was a rather small slice, but a slice nonetheless. Okay, sure, it was only $20, but the point is that at least I am one of the very few people willing to stand up and DO something about the problem, rather than be one of the whiners and complainers who refuse to acknowledge that it is their debt and their problem, not just the fault of mindless politicians in Washington, D.C. After all, every politician ultimately answers to voters and most of the so-called wasteful spending of the U.S. government is simply politicians responding to the demands of their constituents (voters.) Maybe my one small contribution to paying down the debt won't really make any difference to any of those whiners and complainers, but for me it is a matter of principle. I consciously choose action rather than the inaction and lack of responsibility of the whiners and complainers.
If you have any sense of principle, you too can pay down a slice of the U.S. government debt yourself at You can pay via credit card or debit transfer from a bank account.

So do the right thing and show all those whiners and complainers (including so-called "tax protesters") how mindless and spineless they really are. PAY DOWN THE DEBT! And that has to start at the grass roots with us individuals before politicians will ever pick up the lead.

For the record, the only real way out of the deficit is not to merely cut expenditures or raise taxes or some combination of the two, but through economic growth, which includes a healthy amount of immigration in addition to unemployed workers going back to work and young people entering the work force. Sure, we need to manage the federal budget more carefully as well and make difficult choices about the size of government and tax rates, but the big focus has to be on achieving sustainable economic growth. In truth, nobody, including all of the Nobel laureate economists, knows what that sustainable rate really is or how to get there. We'll stumble our way in that general direction. That's the way we do things in America.

Another note: A significant part of the deficit is businesses writing off losses from the financial crisis and recession as tax deductions. That may continue for awhile longer, but will gradually wind down and tax receipts from businesses will begin to pick up in the coming years.

-- Jack Krupansky

Wednesday, March 02, 2011

Keeping my retirement investments on autopilot

It's that time of year again, time to make my annual contributions to my retirement accounts for the previous tax year (2010.) I always try to max-out my contributions. I made the full $6,000 that I am entitle to make to my ROTH IRA. Those of us over 50 get to contribute an extra $1,000. I also made the maximum contribution to my SEP-IRA retirement account. I gave a tiny amount of thought to the question of how to invest that money, but I quickly decided that my current "auto-pilot" approach was still the best approach for me, at least for now. Rather than trying to time the market or engage in asset allocation, I put all of the new money into the same target-date fund that I have used for the past three years, Fidelity Freedom 2025 Fund (FFTWX). That target date is presuming that I retire at age 70 in 2024. I placed the buy order this morning, so it will execute at the closing price this afternoon.

I did seriously consider switching to a comparable fund at Vanguard that would have lower expenses or a fund at T. Rowe Price that has had better performance, but it just didn't seem worth the hassle since my total retirement assets are still far too modest to be worth the effort compared to spending that same effort seeking additional work income. In a few more years I may have accumulated enough assets for such a difference to matter, but I'm reasonably content with what I have. Actually, if I have a little extra free-time or even down-time later this year I will likely look at maybe opening an account at one or both of those firms.

Overall, I am reasonably satisfied with keeping my retirement investments on autopilot. I didn't sell anything when the market dropped in 2008 and early 2009 and my regular annual contribution in April 2009 caught a big portion of the market bounce after the bottom in March 2009, more than recouping any losses from 2008. Target-date funds are rather bland and boring, but that's okay for me for right now.

I had filed for personal bankruptcy back in 2005, so I really only have five years of contributions in my accounts, plus a small amount in a couple of old IRA accounts from "the old days" when I had depleted all of my assets due to difficulty finding work after the dot-com crash decimated technology spending. I have just over 13 years before my "planned" retirement and I intend to contribute the maximum to my retirement accounts in each of those years. In truth, all of this retirement savings will add up to only a modest increment of additional income over my Security Income (being very conservative in withdrawals), but every dollar of additional income will be greatly appreciated I am sure.

-- Jack Krupansky