Paul E. Zimmerman.com

I Love Satellite Radio

2012-02-27T22:05:00.000-08:00

My satellite radio introduced me to this today:

I love satellite radio. Worth every penny.

Tax Refunds: More Americans Plan to Save Rather Than Spend

2012-02-23T09:41:00.001-08:00

Of those expecting a refund, 44% said they plan to stash some of it in savings, up from 42% last year, according to a survey of more than 8,700 consumers by the National Retail Federation. That marks the highest percentage in the survey's nine-year history.

Generally speaking, I consider that to be good news. The bad news is that the rate of return on plain vanilla savings accounts is negative. If you put your return toward paying off the right kind of debt, however, the return can be quite high.

Dividend Taxes, Collateral Damage

2012-02-22T11:42:00.001-08:00

Great article on WSJ this morning on President Obama's proposal to drive up dividend tax rates:

Obama's Dividend Assault: A plan to triple the tax rate would hurt all shareholders.

Mr. Obama is proposing to raise the dividend tax rate to the higher personal income tax rate of 39.6% that will kick in next year. Add in the planned phase-out of deductions and exemptions, and the rate hits 41%. Then add the 3.8% investment tax surcharge in ObamaCare, and the new dividend tax rate in 2013 would be 44.8%—nearly three times today's 15% rate...

...Who would get hurt? IRS data show that retirees and near-retirees who depend on dividend income would be hit especially hard. Almost three of four dividend payments go to those over the age of 55, and more than half go to those older than 65, according to IRS data.

But all American shareholders would lose. Higher dividend and capital gains taxes make stocks less valuable. A share of stock is worth the discounted present value of the future earnings stream after taxes. Stock prices would fall over time to adjust to the new after-tax rate of return. And if investors become convinced later this year that dividend and capital gains taxes are going way up on January 1, some investors are likely to sell shares ahead of paying these higher rates.

Maybe that will make Buffett happy. Or, watch for Warren to be mysteriously silent on this one.

I don't expect the President's budget proposal to become the budget. Budgets are supposed to originate in the House, so after they are done laughing at his proposal, they'll come up with something else that the Senate won't approve.

I Wish Buffett Would Just Shut Up, Too

2012-02-22T10:17:00.003-08:00

I used to like Warren Buffett. Now I only appreciate his approach to investing (and even that's a stretch since his love of estate taxes help to explain his returns...).

I'm in agreement with Gov. Christie on this one..

To the extent that Buffett's claim about his secretary is even true, it has to do with dividend versus wage income. Most of Buffett's personal income is in the form of dividends, not salary, so he can pay a lower effective rate than his secretary.

Or, put another way (and this is why the rates are such), most of Buffett's income is derived from having capital at risk - he could lose everything - and so the income from it is taxed at a lower rate to encourage going ahead and taking that risk. His secretary's wage income is taxed higher because it's a trade for her time only. She does not have to put up capital to have her income, and thus pays a higher tax on that income, which does not come from having anything at risk.

What it boils down to is that Buffett is a liar. He's got lots of people swooning over his "soak the rich" siren song right now, but in the end, he will still pay a lower tax than most. It might also come to pass that the additional burdens will overwhelm someone's business and force them to sell it. Guess who will be around looking to buy...

Privatizing My Social Security: 2012 - Game On!

2012-02-18T13:09:00.000-08:00

They finally did what was likely to happen all along anyway.
Good news for my plan, which I will now continue for the rest of this year (and if the claims of some pundits and politicians are correct, then maybe permanently).

There is an added twist to this though, something that has been the case since the December battle over continuing the Social Security tax holiday. Carrying out a personal privatization of that train wreck of a program only makes sense if you don't get a Fannie/Freddie backed mortgage for the next decade or so. What's that about? Apparently Congress and the President slipped in a hidden fee elsewhere to pay the difference (so much for Social Security being "insurance" that is only funded by "premiums"; now the lie is exposed, that it's really just another welfare scheme).

The quick version: the average payroll tax holiday savings is reported to be about $40 per month, and maybe it will last another year (so on average people will have about $1,000 total not taken from their pay from the start of 2011 to the end of 2012, if it ends then), but the cost of this new fee on mortgages and refinancings adds $15 per month in additional cost for every $200k borrowed, or $5400 total on a loan of that size over 30 years. So, if your new mortgage is around or less than $36,933 (good luck with that), you might break even. Bad deal. The smart play is to stash your SS tax holiday funds and also completely avoid Fannie/Freddie.

Tonight's Viewing: The Devil's Double

2012-02-12T12:27:00.000-08:00

The Learned Sergeant inspired me to toss $1.63 into a Redbox kiosk to get this on blu-ray for the evening:

It's waiting for me at a kiosk that's about mile from my place. The weather is nice today, so I think I'll walk there to get it. That'll be a part of an effort I'm undertaking to reestablish some old habits.

Ultimate Tazer Ball

2012-02-10T13:36:00.000-08:00

Whatever sport you like, it sucks.

From Canada's National Post:

A Toronto team is ushering in the world’s newest ultimate sports league, but don’t expect to see a home game anytime soon: One of the pieces of equipment used, a 300,000 volt electroshock gun, is considered a weapon in Canada.

“It’s not technically a police grade Taser,” said Eric Prum, 25, one of the founders of Ultimate Tazer Ball. “That being said, the first thing the [players] will tell you is that they hate getting tased. Those things really do hurt.”

The Toronto Terror is one of four teams in the newly minted Ultimate Tazer Ball league. The game puts two teams of four players on a field about the size of a hockey rink. Players have to get a large ball into a net while avoiding their opponents, all of whom are armed with the device.

EUR/USD

2012-02-10T11:35:00.001-08:00

Time to short the Euro again?

The Golf War

2012-02-06T21:40:00.000-08:00

Bill Flax: Was Jesus A Socialist, Capitalist, Or Something Else?

2012-02-05T10:22:00.000-08:00

Spotted this excellent Forbes.com article this morning: Was Jesus A Socialist, Capitalist, Or Something Else? It's packed with gems; the two that are my favorites are quoted below.

I'm not posting this to express any endorsement or rejection of any particular theological point-of-view, which is really the point of the article. When you hear people of either left or right political persuasions leaning on scripture to make their case, it's very likely that they have no clue what it is that they cite as support and they sound silly. To wit:

"Although capitalism appears compatible with Christ’s teachings the Bible never specifically endorses free enterprise. Neither are markets anywhere condemned, only the sinful actions of those abusing others. Markets offer freedom, which amplifies character. Without room for good or ill, morality is irrelevant."

One of the secular gems, and a very clear, concise explanation of why individualism is good and why collectivism is bad, without needing any sort of false "biblical" justification (the author's apparent bias in that regard is demonstrated here, though not in a way that detracts from the main point):

"Capitalism forces the greedy to produce thereby growing the overall pie. To gain they must provide what others willingly purchase. It’s ironic that while those relentlessly pursuing materialism search for contentment in error, the rest richly benefit by the impoverishing lifestyles they pursue.

Those most responsible for increasing wealth accumulate more, they should, but in so doing lift their community’s living standards. Even America’s poor live well by any material measure.

In socialism, greed shifts from productivity into consumption. Without property rights or opportunities for profit, men quickly descend into mutually destructive envy. Our base instincts betray us. Output plummets. When we see someone slacking and still taking – we produce less. When we see others hoarding – we snatch more too.

If nothing can be acquired, advantage is only feasible by consuming beyond one’s share of public goods. As Adam Smith said of slavery, “A person who can acquire no property can have no other interest but to eat as much and to labour as little as possible.”

One criticism of the article I have (though maybe I'm operating from a false premise here, not sure) is that on page three, Mr. Flax writes, "capitalism is the best platform man has yet devised." To my mind, capitalism isn't a system, it is just what is: in the absence of any sort of institutionalized market, people trade, always with the aim of making an exchange in which each party considers themselves to have gained. A system of rules and procedures is not a prerequisite to this, quite the opposite. What was devised? Nothing, that's just how things are.

Speaking of Stuff Excluded from the Dow 30

2012-02-04T13:27:00.000-08:00

It seems I have caught a flu bug. I have no chicken soup handy, so I will attempt to combat the virus by blogging (why not?).

I saw this Motley Fool article through the pathogen-induced fog I'm living in at the moment: The Dow Should Never Have Booted These Stocks.

I said, "take that, flu virus! I blogged about this yesterday! Hah!"

It just so happens, too, that this article mentions a company I will be adding to my Social Security tax holiday Roth IRA on Tuesday (when Sharebuilder does its deep discount purchases): Altria.

As the article states, it was in 2008 that Altria was booted from the Dow following the spin-off of its international operations, which began trading independently as Philip Morris International (PM). Mistake? Probably. Altria has appreciated in value significantly since then, paying out a generous, rising dividend the whole way. Index investors got... smoked.

I take issue with the author's description of Altria following the PM spin-off as being "a shell of its former self." From their Yahoo Finance profile:

"Altria Group, Inc., through its subsidiaries, engages in the manufacture and sale of cigarettes, smokeless products, and wine in the United States and internationally. It offers cigarettes under the Marlboro, Virginia Slims, Parliament, Benson & Hedges, Basic, and L&M brands; smokeless tobacco products under the Copenhagen, Skoal, Red Seal, Husky brands, and Marlboro snus brands; and machine-made large cigars and pipe tobacco. The company also produces and sells blended table wines under the Chateau Ste. Michelle and Columbia Crest names; and distributes Antinori and Villa Maria Estate wines and Champagne Nicolas Feuillatte in the United States. In addition, it maintains a portfolio of leveraged and direct finance leases in rail and surface transport, aircraft, electric power, real estate, and manufacturing."

That's a shell of a company?

Like I said in yesterday's post, I'm going to kind of use a Dogs of the Dow strategy for this little retirement account going forward, but not dogmatically (pun intended) as it would cause me to miss some great opportunities out there.

[Several thousand flu viruses died during the creation of this post. Good riddance.]

My Roth IRA is Going to The Dogs

2012-02-03T11:18:00.000-08:00

At this point I do not know for how much longer we working folks of the U.S. will enjoy the Social Security payroll tax holiday. It could terminate at the end of this month (when it's currently set to expire), or we'll have a 2.0 version of the Congressional battle we witnessed back in December and eventually see it extended through all of 2012. My guess is that the latter will occur; neither side of the aisle will want to be marked with a tax hike ahead of November. (After November, they'll probably bank on having at least two years for you to forget, and they'll likely let the rate rise again.)

For at least a few more weeks then I will continue to put the difference between the current 4.2% employee share of the Social Security payroll tax taken from my pay and the typical 6.2% rate into the Roth IRA I set up for this purpose. Given the possibility that this source of funds will come to an end, and due to a few other recent economic developments, I'm changing up how I'm keeping the account invested.

What I was doing before relied on purchasing fixed income closed end funds at a discount that pay a relatively high, monthly dividend. I had them set to reinvest dividends with the aim of letting compounding work its magic.

What changed? Basically, I became concerned that the eventual fate of most (if not all) of these types of instruments is a decreasing dividend. The Fed aiming to keep rates low for years to come is where my concern comes from: many of these closed end funds use leverage to produce higher yields (low Fed rates would help this), but if their inventories of bonds and equivalents can only be replaced with lower yielding ones as the inventory matures (low Fed rates could cause this), then it seems very likely the yield of these funds can only go down. A rally has occurred in many closed end funds and similar instruments in the days following the Fed's announcement, which I believe to be a short term yield chasing event that was sparked by the promise of cheap leverage. I think this rally will stall; many will miss the rally and buy the top, and then they will be burned as share prices begin falling again, especially if dividends among these types of funds do get cut. When that happens, the truly ugly selling begins and loses will become severe and permanent. That is why I took advantage of the rally by selling and locking in my gains.

The Dogs of the Dow is probably not a new name or concept to many who are experienced investors, so I won't describe it again here. I have decided though that I will use it as a sort of short list for picking positions to take inside of my Roth, now that I've jettisoned my closed end fund positions. I don't plan to use it in keeping with the Dogs method, however. I just look to it as a handy, sortable list of companies that will likely give me what the closed end funds may not be able to: growing dividends. I also do not plan to stick to this list exclusively as its source index, the Dow 30, necessarily excludes some things that are great equity investments.

This will basically be a buy-and-hold strategy, with some exceptions. All positions in the portfolio will not automatically reinvest dividends. Instead, periodically (once per quarter, let's say) I will examine the current relative yields offered by the existing positions in the portfolio and potential investments on my short list. The equity offering the best yield at that time gets the available cash. Additionally, if any existing position has appreciated in value such that its yield relative to its current market value is 25-50% lower than the position's yield on cost, I will lock in the gain on that position, move those funds to a higher yielding alternative, and send the liquidated company back to the short list for later consideration. Finally, any company that cuts its dividend gets booted immediately.

Though this may sound like a lot, in practice it should result in very few transactions per year. The goal here is to take advantage of growing dividend income, but to also "leverage" a higher amount of cash flow in the portfolio by channeling capital gains into better yields. The funds for this project are limited, and since it is my intention to keep it "pure" (I do not intend to fund this account with anything but funds from the SSI tax holiday), it likely will be necessary to make the moves I have described here if this account is ever to become anything noteworthy. Fortunately, I have a few decades to work on it.

A Tragic Thing of Beauty

2012-01-25T22:02:00.000-08:00

Zero Percent Withdrawal Retirement Plan

2012-01-25T13:40:00.000-08:00

Saw this at Seeking Alpha today: Zero Percent Withdrawal Retirement Plan

I like this article. This is what I'm planning to do with my retirement accounts, and I've often wondered why I don't see more people reporting that they pursue the same method. It seems like a no brainer to me: do not spend your principal, which can produce income, because you may find that you have more years of life than you do dollars of principal.

I also prefer this approach because it requires that one roll with the punches, so to speak, rather than trying to force an unlikely/impossible result from a retirement account. What I mean is that unlike a defined benefit model (an arrangement in which your distribution is X amount and the account manager attempts to sustain that payout through market swings in either direction), a dividend/interest-only distribution strategy can see the distribution fluctuate up and down, but do so with a greater chance of living to fight another day since it is not principal that is being drawn from during market downturns.

This approach also provides a benefit that cashing out a percentage of principal does not: while market fluctuations are common, dividend cuts are less so. Instead, it is dividend increases that are relatively more common.

It still requires that one spend below their means to make it work (like everyone should anyway). If one's investments are spread out enough such that no one of them constitutes a major percentage of the total income of the portfolio, any dividend or interest rate cuts should be easily weathered and later adjusted for (and if you reinvest any unspent money periodically, a dividend cut may only mean a slight reduction in the margin between your portfolio's total income and the last dollar of your budget - discipline pays).

When You Light A Fire Under Someone, They Move

2012-01-25T10:46:00.000-08:00

Following on the heels of President Obama's State of the Union address last night, I spotted this Barron's article this morning:

Barrons: Millionaires Won't Sit Still for Higher Taxes

This dovetails with the article I posted last night about U.S. citizens becoming former U.S. citizens to avoid taxes, though the methods described in the Barron's article are far less drastic. Bottom line: the minority of people being targeted here are a moving target (and they can afford to be very mobile). Unless they think the purpose of an individual human life is to support the whims of government (doubt that), then move they shall: leave New York for Florida, buy municipal bonds, offshore; the list goes on.

I also saw this U.S. News and World Report article: 3 Myths About Mitt Romney and the Rich

This one fits the theme I have going here this morning, too. This is all old hat stuff to people who are familiar with the topic, and it probably won't change the minds of the envy class about anything (it's nearly impossible to convince someone of the falsehood of their religion). The article does contain at least one gem that, old or new to you, is worth repeating again and again: wealth is not a zero sum game. Again: WEALTH IS NOT A ZERO SUM GAME.

Finally, on the SOTU address, read through this article at Zero Hedge: President Obama's State of the Union: Ten Skirted Issues

Good read, but I hope that Prins is wrong about her conclusion.

1,024 Became Former U.S. Citizens In First Half Of 2011 Over Taxation

2012-01-24T23:30:00.000-08:00

"Rather than deal with the complexities of U.S. tax law, Americans living overseas are increasingly renouncing their citizenship in order to avoid paying their income taxes.

According to National Taxpayer Advocate Nina E. Olson, approximately 4,000 people gave up their citizenship from fiscal year 2005 to FY 2010. Renunciations increased sharply within the past three years, from 146 in FY 2008 to 1,534 in FY 2010. And during the first two quarters of FY 2011 alone, 1,024 Americans ditched their citizenship."

Read more: Tax Evaders Renounce U.S. Citizenship

That headline, it's wrong. Tax evasion is not paying a tax that you are legally required to pay. Tax avoidance is doing something that legally exempts you from taxation of some sort. Renouncing your U.S. citizenship and being in the country for less than the maximum allowable time legally exempts you from a requirement to pay U.S. income taxes.

More Bacon News: Price Of Bacon Up 22% Under Obama

2012-01-24T10:58:00.000-08:00

As a follow up to yesterday's Smithsonian bacon post, I had to put this one out there:

Under Obama, Price of Gas Has Jumped 83 Percent, Ground Beef 24 Percent, Bacon 22 Percent

I think they could have shortened it to "Under Obama, Price of Gas Has Jumped 83 Percent; All Else Follows."

It is funny that they mentioned bacon specifically though. Bacon: it has powers!

Smithsonian.com: Why Are We So Crazy For Bacon?

2012-01-23T09:03:00.000-08:00

Does the question really have to be asked?

Read: http://blogs.smithsonianmag.com/food/2012/01/why-are-we-so-crazy-for-bacon/

Check Disk... Check Disk... 1... 2... 3...

2012-01-10T10:45:00.000-08:00

My new computer rule of thumb: buy new. Ugh.

I recently purchased a used computer to replace my ancient silicon Frankenstein, only to see the replacement go down just two months later. I'm now on my brand new machine (3.1ghz quad core; not the most powerful out there, I know, but plenty for me and hopefully for a long time) and mostly back to normal. I'm missing just one chunk of data right now that I really need to get back: my most recent Quicken data file.

I'm a Carbonite subscriber and have been for a few years and through a few crashes. The last couple of times around Carbonite saved my bacon. This time around, not so much. The fault was not with Carbonite entirely; the data I so desperately need is being held hostage on my old hard drive by a bad cluster, an error on the disk that prevents it from being accessed. If I can't reach it, neither can Carbonite, and thus it is not a part of my backed up files.

As I type, check disk is chugging along on my old hard drive attempting to salvage what it can. Hopefully this will be resolved soon so I can get on with other things. The worst case scenario here isn't too terrible: I have Quicken data up to November 17th. It would be somewhat of a pain to go through my online records and rebuild everything since then, but it's better than nothing.

Debt Limit - A Guide To American Federal Debt Made Easy

2012-01-06T07:47:00.000-08:00

This is pretty funny. The video, that is. The subject matter... not so much. Our nation's finances are out of control, people refuse to understand that their entitlement programs must come to an end, and there seems to be a complete lack of will to truly deal with it that all you can do is laugh. Or, as Cappy likes to say, you can enjoy the decline.

Video HT: Travis Ulrich

Minimum Wage Up In Washington State Again

2012-01-04T05:24:00.000-08:00

As of January 1st, the minimum wage in Washington state increased to $9.04 per hour. This no doubt has lots of fans, but it's nothing to cheer about. That .37 cent per hour increase? It's already being matched by price increases for goods and services. Last time I checked, treading water doesn't actually get one anywhere.

Worse than that though is the effect on future employment. Proponents of minimum wage laws always like to cite data showing no decrease in jobs. No decrease in jobs does not mean no increase in unemployment, however. As young people grow up and begin attempting to enter the workforce, lacking experience and skills, they are confronted by a market in which the government has mandated that their labor be too expensive. They are simply not hired (That which is seen, and that which is not seen...).

All of that and more is in this article, which inspired this post: As Wages Rise, Tough Choices - Forbes.com.

There's even a quote from the owner of a restaurant I've eaten at before in Port Orchard, Washington (I used to live there).

I think my favorite example of what minimum wage laws ultimately do though is the restaurant owner in Florida who is experimenting with computerized ordering directly from the tables in his restaurant (even if rising minimum wages were not an issue, I'd love to have restaurants around that feature this). Past a certain point, a waiter or waitress just isn't worth paying, and another kid never gets that first summer job (at $9.04 per hour, 100% of zero is still zero). Meanwhile, you don't have to pay machines.

Penny Power 2011: How My Change Jar Stacked Up and Where It's Going

2012-01-03T11:26:00.000-08:00

While the New Year's Day tradition of many is to nurse their raging hangovers, my ritual is a bit more tame and a lot less painful. I get up on NYD, make some coffee, turn on my satellite radio, then I dump out my loose change jar and count what's in it.

This jar contains the spare change I come by via whatever means (odd tip money, coins I find in the laundry, on the ground, etc.; the exception is quarters, which go back into the laundry...). I say, "do not pass up free money," which is what finding coins here and there represents. By themselves they're not much, not even added together, which is why I find a productive use for them all once per year: these tiny bits of lost and found capital get invested somehow. In 2011, the change jar ended up with $11.44 in it.

I've taken to plotting my financial moves in terms of whatever will result in the greatest increase in cash flow. I don't pay much attention to my net worth, nor will my future investing be for capital gains. The thinking behind this I'll have to save for a future post, but the basics of it is that I want to widen the spread between what is coming in versus what is going out month-to-month.

Right now I have various debts, one of which is a credit card that is currently at 0%. At first glance it would seem the choice of what to do with 2011's coin collection would be to invest in something paying any amount greater than zero. That would be to ignore the nature of a credit card balance payment, however, which is a percentage of the existing balance, calculated monthly. In this particular case, the percentage used is 1.5%. Thus, any amounts applied to the balance have the effect of reducing the monthly minimum by 1.5% per month going forward, which increases future free cash flow by an equal amount. In terms of cash flow, any alternative must pay at this rate at the least, but preferably more, to be the better alternative. Since most investment returns are expressed annually, the alternative must do better than this:

$11.44*.015 = $0.1716 monthly minimum payment reduction; $0.1716*12(months) = $2.0592 annual free cash flow increase; $2.0592/$11.44 = 18%.

Any alternative has to do at least 18% or better. There's only one dividend paying stock I'm paying attention to these days that can do that, American Capital Agency Corp (AGNC), which at the moment sports a dividend yield that clocks in at 19.9%.

It would seem I should go for some AGNC. I will not do this, however. AGNC's dividend could change. It may go higher, but because that company's returns depend on the Federal Reserve keeping interest rates very low, there's a good chance that their dividend will go down. There's also a very good chance that any cut in their dividend would take the relative yield well below 18%.

Applying these coins to my card balance, however, guarantees an 18% boost to my free cash flow in perpetuity, because once that balance is gone, it's gone forever (changes to other inputs and outputs notwithstanding, of course; I'm focusing on this event in and of itself here).

Had this particular card used the common monthly minimum divisor, 1%, the situation might have been different (the implied yield from applying these funds to such a card would have been 12%, a rate which can be easily and reliably beaten by alternatives). Being what it is though, it is the winner of my 2011 loose change collection.

The 2012 collection is already started, with the first few found coins clinking against the bottom of the jar. Keep your eyes peeled, there's free capital out there on the ground. Don't ignore it, it does add up. Find it, get it, and put it to work for you.

Adgitize Shutting Down

2012-01-02T08:38:00.000-08:00

This morning I saw that my Adgitize boxes were displaying a message rather than ads: "Adgitize is closing."

I clicked through to see what was up. It's about what one could expect, the costs of the business are exceeding revenues, so they're done. In the blog post they put up explaining everything, there was this little parting gift at least:

"All publishers with monies owed them who have given us a valid payment method will be paid from $0.01 USD and up."

That's nice of them. Their normal threshold for a payout for the method I was using (PayPal) is $10. They could have taken my remaining earnings and run, but I'll receive what I'm owed.

It's too bad that they're done. I like their style of advertising, which requires impressions only, with click through activity as a bonus for calculating earnings. Project Wonderful, my favorite ad revenue program, works in the same way: I get paid for hosting the ads in the first place, but if you decide to click on one, so much the better. I much prefer that over systems that require clicks, because often people just do not click. Under that model, crap advertising rides for free and is thus never weeded out. It's a backwards approach to an advertising market.

Oh well. That space on my blog will now be free for something else, or perhaps this will just be an opportunity to reduce clutter here a bit more.

Santa's Gonna Light You Up

2011-12-24T07:11:00.000-08:00

Santa has upgraded his kit. Coal? That's out. From now on, you had better start behaving.

Merry Christmas!

What Not To Do With Your Payroll Tax Cut

2011-12-22T13:47:00.000-08:00

It's still anyone's guess as to the fate of the payroll tax cut. Will my personal privatization of Social Security continue into 2012, or will the funding of that little retirement account end (at least with these particular funds)?

For others, it seems the question is about other stuff:

'Waa, No Pizza Night': Sad Stories Roll In at Request of Obama White House

(CNSNews.com) - The White House says it's been flooded with responses to the question it posed Wednesday: "What does $40 mean to you?"

One day after the White House asked "working" people to "tell us what your family will give up if your (payroll) taxes increase," the stories are rolling in, including one from a person who worried about not having enough to pay the cable bill -- or continue family pizza nights.

The list goes on: might have to cancel internet service, no lunch for two kids for a month, no more money for insulin or water, no way to see the doctor, no gas, no groceries, etc. You can read the full article here.

There's certainly some harrowing things on that list, but, uhhh.... Folks, one question: this payroll tax holiday is only one year old; what were you doing before it went into effect last year?

I highly doubt that most people were starving, freezing, dying of thirst, dropping dead on the front step of the doctor's office, etc. before they started getting, on average, $40 more per paycheck back in January.

What's more likely to be the case is that when many did begin receiving those additional funds in their net pay, they added it to their discretionary spending and began buying toys. They became accustomed to having that money available to buy pizza, faster internet, satellite television, whatever. Probably very few disciplined themselves and left those additional funds out of their budget so as not to end up relying on them.

So now the party may be coming to an end. Instead of cutting back on the toys, however, now they come out of the woodwork crying about having to give up necessities. This is just like jackass state and local politicians who threaten to cut police and fire services every time you start to feel like your property tax is too high: "If you don't keep letting us buy toys, we'll keep the toys and stop spending on things that are really needed!"

I'd like to see the tax holiday extended. I hate Social Security, I want to see it fail, and I am enjoying every penny of those funds ending up in an account that I own rather than disappearing down some transfer payment black hole. I do not agree with this two month band aid crap, however, so I am fine with not continuing to enjoy this little break if the politician types continue to fail to deliver something better. I also absolutely despise this tactic that the Obama administration is using to try and push this garbage legislation through. Most of all though, to the extent that these tweets and emails Obama is waving around are even real, I am disappointed to hear that, once again, a lot of people out there cannot get their priorities straight.

If we do get to continue enjoying this partial and temporary liberation from the failure that is Social Security, don't squander the opportunity. Put that money aside and grow it. If you think having to give up pizza night sucks now, just imagine yourself several decades from now when Social Security isn't paying you squat (if it even still exists) and you don't have your own savings built up.

***
Breaking: It's a bit past 2pm Pacific time here. I've just now heard on my satellite radio that House GOP members are yielding on their refusal to pass the two month extension. I haven't cross referenced this just yet to see if it's true or not, but I would not be the least bit surprised if this is in fact an accurate report that I've just heard. Congratulations, folks, you can have Domino's for two more months, then we can have this fight again. Or maybe this time around, you all can pull your heads out for a change and wean yourselves off of this unreliable source of cash. You've got two months.