Sushi Money

It’s time to move on.  Along with the economic uncertainties we’re facing, many people are questioning the degree to which government is stepping into our public and private lives these days.  Instead of seeking to restore order and growth in free market structures, it appears we are at a cross-roads of ideological change where some are seizing the opportunity to reshape the economic landscape.   Perhaps its an argument we have waited too long to have.  Maybe there is little choice given the circumstances and we will come out stronger in the end.  Maybe it’s going to get worse before it gets better. 

For many of us, the debate centers upon questions involving how much, and in what way, we should allow government to dictate or influence our future economic viability- and sovereignty- moving forward.  In any event, I’ve enjoyed posting a few thoughts these past two years, and it’s time for Sushi Money to close shop.  I may begin again under a different site name and theme at some point, but now will simply watch from the sidelines for a while and focus on personal goals.  Thanks for visiting and best regards in the future.  We do live in interesting times.

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Disheartening.  Among other things.  It seems that the government intends to punish those who would work hard to build and achieve in life while rewarding those who do not.  It seems we are intent on rewarding failure, or the status quo, and punishing success.

It is shocking to consider that the new administration has proposed more spending in the past six weeks, than all other U.S. government spending from the founding of the country to January of this year.  Some of this spending may indeed do great things.  Yet most of this spending is money that we and our children’s children will long carry the burden for.   We call it spending, but it’s really borrowing.

Is all of this spending and new legislation really designed to fix the economy over the short term?  Or is it something more, something greater- a design or framework of spending established to foster a new political structure for the future?    It doesn’t seem that the stock market has any degree of confidence over the direction of government policies and support for free enterprise.  The past couple of months have seen nothing but great uncertainty and fear. 

The stock market has lost 25% since the beginning of the year… 3,000 points since the November ‘08 elections!  And the President is running out of people to blame.

“What is new is the unveiling of Mr. Obama’s agenda and his approach to governance. Every new President has a finite stock of capital — financial and political — to deploy, and amid recession Mr. Obama has more than most. But one negative revelation has been the way he has chosen to spend his scarce resources on income transfers rather than growth promotion. Most of his “stimulus” spending was devoted to social programs, rather than public works, and nearly all of the tax cuts were devoted to income maintenance rather than to improving incentives to work or invest.”

Incentives to work or invest… that, coupled with hard-working people, is what has made America great, through a framework of capitalism under the umbrella of freedom and liberty to pursue one’s dreams.  That is why people have always seen America as the Land of Opportunity.  How do we foster business growth and entreprenuership, hence jobs, profit and spending, when we become the Land of Income Transfer and Social Programs?   Ultimately we would become a wasteland of mediocrity.  

Would you buy a home or even want to live somewhere that didn’t have the structural vibrancy of free enterprise to support the citizen’s needs?  Where business failed and crime became rampant?  Where people were leaving in droves because there was no reason to stay? Look around… there’s a city or two across the nation well on their way to that eventuality.   What does that say about the path for our nation?

In very specific language for example, the pending legislation on the budget reduces taxable deductions for charity and mortgages for those making $200,000 (individual) or $250,000 (family)  per year.  To be perfectly candid, I do not make that much money each year.  But I know many people who do… and they are not rich. 

Certainly they live more comfortably than someone making $35,000 per year, especially with a family.   But most of these are people who have also worked incredibly hard in life becoming educated, growing a business, or taking risks in order to provide a home for their family and often a business in a small community.  And we are increasing taxes in key areas that may dissuade these people from giving to charity or deducting interest expenses on their home mortgage.  Those extra tax dollars they pay will need to come from somewhere- for a business, maybe one less employee.

Will this legislation help charities?  Will it help support home sales across the nation?   Maybe you believe the taxes are too low to really matter, and these folks can afford it.  Well they probably can afford it, but it doesn’t change the fact that they will be paying more money to the government who in turn will be redistributing it to people, or institutions, who can’t.  Some folks think that’s a good thing, and it’s only for a short while. Let’s hope so, because it cannot last.   

It’s not just those making a lot of money who will pay of course.  We will all pay. More importantly, who will finance this tidal wave of income transfer and spending?  We, the people, will.  Those who work the hardest to grow and achieve things in life.  Taking things away from achievers and giving it to those who are not is simply unsustainable.

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So the market has dropped about 50% from its 2007 highs, and nearly 25% across the board from the November 2008 elections.  We’re in a heck of a recession and everyone’s throwing in the towel.  Seriously, people are running for the hills, buying gold and stuffing the mattress with the rest of their money.  

Have you been along for the downward ride the whole time?  Most folks with mutual funds and employer retirement funds have.  Buy and hold was the mantra that worked for many years… but it didn’t help over the past six months at all.  Diversification is the other mantra we hear about.  That didn’t help much at all in late 2008, but diversification has helped people this year, somewhat.  And yet on days like today, February 23rd, when the market sells off 250 points on the Dow, it’s just a mess across the board.

Is it time to bail out, give up and save what cash you have left?  If you’ve ridden the market down this far, I think the answer is no… it’s not the time to sell.  Why?  Because you’ll probably be selling close to the bottom somewhere.

Oh, that doesn’t matter to you anymore?  Well then fine, go ahead and sell.  Especially if you need the money. But if you’re redeeming that 401(k) or IRA to get to the cash, don’t forget about possible penalties and taxes you may have to pay.   Seriously- think hard about your employment status and if you can afford to keep the money there.  

Nobody knows when the market will stabilize or better yet when it may begin to recover.  But it will- eventually.  The problem is folks are downright scared by this recession.   I’ll admit straight up I’m worried too- but more about the direction of the nation itself.  I know the current administration and Congress are doing what they think is necessary to get us back on track, but it doesn’t inspire a lot of confidence.

The stimulus package doesn’t do a heck of a lot towards short-term immediate help.  What they tried to build into it was some help, and even more about a strong wind of political spending for years to come.   People are wondering what is going to help change the short term- what’s going to get us back on track?  Some folks think we’re moving fast toward socialism… I don’t know about that, but it bothers me to see so much government involvement in the free market.

“When the government has its dirty little fingers on vital elements of our economy, it has its hands around the throat of capitalism itself, and it’s squeezing hard…”   Glenn Beck

Personally I think the market panic has more to due with consumer confidence and faith in our financial system than any other thing.  Without it, we have no legs to stand upon and people are scared to death about how to plan for the future.  How can anyone invest confidently if they think the market is full of crooks and that the government is going to continue taking over institutions?

Honestly, with the President and Speaker of the House running around preaching crisis and disaster the past two months, is that really helping Americans look towards a positive future for the nation?  No.  It’s time for leadership and standing tall, regardless of the institutions or business sectors that you like or don’t like.  We can’t be pulling the rug out from under business and at the same time hope that they will prosper, hence that the market and employment will grow. 

One of the provisions of the stimulus bill helps the unemployed get an extension on COBRA coverage.  If someone has been laid off as far back as September ‘08 for example, it looks like they can get an extension for another year.  COBRA health coverage is very expensive, and the stimulus now requires employers to pay for 65% of that COBRA coverage- for all the employees laid off who choose it.  That may be doable for larger corporations, but it’s a heck of cost for a small company.  Will the government pay them back for providing those funds for former employees?  Probably, a little at a time over the next few years in the form of tax credits.  It’s great that those unemployed can get the help, but it seems a little heavy handed in terms of government mandates.

But the business cycle will return eventually.  People will save money and begin to spend again at some point.  Employment numbers will pick up and profits will begin to grow again.   It may not be for another year or more, but it’ll come.  And when that happens I’m going to be invested and ready to go. 

Some people believe this is the buying opportunity of a lifetime.  A lot of us thought that was true a thousand points ago on the Dow.   They may be right… if I had some extra cash to invest there’s some great companies out there right now.   Smart people with smart money are picking and choosing the best of them.

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Update 2-27-09:   The National Surface Transportation Infrastructure Financing Commission is recommending that the U.S. government taxes drivers by the mile!  This commission was created by Congress to explore options to raise money, and says the current 18.4 cents a gallon gas tax and 24.4 cents a gallon diesel tax are not raising enough money to keep pace with transportation costs…

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I didn’t think it would come to this, but a ground-swell of opposition is mounting for huge government programs and regulations.  If you’ve ever wondered what it would be like to have government looking over your shoulder at every turn- the next few years may show us what that could be like- literally.

How about a device in your car that monitors every mile you drive- anywhere- and taxes you on the amount of miles you drive every month?  Or in a year?  Is that incredible?   The new U.S. Transportation Secretary wants to tax you on the miles you drive in your car.  It won’t matter if you drive a high-mileage Honda, a big ‘ole cement truck or a motorcycle… you’ll still pay taxes on the miles you drive.   For someone who lives near their job, or in a metropolitan area that might not be a bad idea.  But what about millions across the nation who commute to work? Or millions more who live in rural America?  And what if your job depends upon driving many miles? 

Can you imagine anything that would provide more disincentives for economic growth and consumer spending across America?  They think people are not spending money now, if I knew I would be taxed at every turn for driving my car why would I drive to the small town down the road for ice cream?  What would happen to travel and tourism?   Too many negatives associated with that… and I have to wonder who in their right mind thinks of these things.   Personally it’s just not the American way.

I’d love to know what the U.S. Commerce Secretary thinks of this idea.   Travel and transportation serves as the basis for trillions worth of commerce in the United States…

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Okay, time’s up.  Raise your hand if you’re a supporter of the bailout, or the stimulus… at least to the degree that it once was?  The hands are becoming fewer as the bailout and stimulus have currently been shaped.  In fact, it’s hard to decide what to really support with the current stimulus debate, other than a strong desire to see our elected leaders get their act together and stop preaching catastrophic disaster every other day.   How about a little leadership?  Working with each other quietly and confidently, reminding the nation of our strengths and showing how we can overcome these challenges in a strong, united fashion?  Alas, that’s not what we’re seeing.

I mean really… does it inspire anyone to see the President and other folks pushing their version of the stimulus package so ardently that they believe resorting to scare tactics is in the best interest of the nation?  Taking the scare parade on a national circuit? Yes, they must really believe what they say.  Which is even scarier.   We are all concerned, and we all feel for those most affected by the economic crisis.  But town hall meetings across the nation to drum up support for the stimulus?  A lost decade? 

“The plan is not perfect. No plan is. I can’t tell you for sure that everything in this plan will work exactly as we hope, but I can tell you with complete confidence that a failure to act will only deepen this crisis as well as the pain felt by millions of Americans,” he [President Obama] said.

All I want to know is why the President and the Democrats think, with complete confidence mind you, that their plan is the best plan?  Don’t get me wrong- I like the fact that our government is working hard to do something, but what that something is has people staying up at night.

It’s enough to make you think that the “do nothing” side of the debate has merit, as in “First do no harm…”   But the harm has already been done by action or inaction, depending upon your viewpoint.   We don’t need more potential harm.

In my view, a super giant political spending bill code named a “stimulus plan” isn’t something that seems appropriate for the crisis at hand.  How President Obama can defend Senator Pelosi’s grand ambitions is beyond me.   We’ve been there before, and instant replay isn’t going to make it better.  And the Honorable Ms. Pelosi’s party has been in power since the 2006 elections after all.

“In the afterglow of President Obama’s inauguration, it’s easy to forget that Mrs. Pelosi’s similarly historic elevation to the speaker’s chair just two years ago had its own elements of a coronation — and its own claims of change we were to believe in.”

“The way Mrs. Pelosi handled Iraq has some interesting parallels to the way she is now handling the stimulus. In the early months of her speakership, the Democratic Congress faced its first test on Iraq in the form of a war funding bill. Mrs. Pelosi’s response? To lard it up with billions in unrelated domestic spending — including a now infamous provision that would have spent $74 million for peanut storage.”

Honestly I think there are some positive, constructive things we can do- and that both political parties should have a stake in crafting this enormous legislation.  But adding billions of tax-payer dollars for “do-good” initiatives and “nice-to-have” goals is not something that’s going to make a difference in the immediate future.  Why not focus on the crucial and necessary things… and then examine and revise as you go along?  Why spend decades of our children’s futures all at once?  Why risk making things worse? 

 ”If you find yourself in a hole… the first thing to do is stop digging.“   Texas Bix Bender

That’s my greatest concern… we’re going to exacerbate the problems and prolong the recession… or worse, foster an economic climate that leads to the Big D.   None other than Jim Rogers sees precisely that, and believes our leaders will indeed make things worse.

Rogers said Geithner, who was president of the New York Federal Reserve Bank, “has been dead wrong about everything for 15 years in a row,” and so was President Barack Obama’s economic advisor Lawrence Summers, who acted as Treasury Secretary at the turn of the century.

“It is mind-boggling to me, if I were on your show 15 weeks in a row and was wrong, you’d probably never invite me back. These guys have been wrong year after year after year consistently and here they are making the same mistakes again. This is not going to solve the problem, it’s going to make it worse.”

He said he was not contemplating investing into financials, as bankruptcies were still possible, and banks were still trying to find out how affected they were by the crisis.

“What’s happening is they’ve all panicked, cutting back everything, trying to see what they’ve got,” Rogers said.   “Everybody is frozen, trying to figure out ok, what are we worth, what do we do?”

In addition, the recent shifts towards protectionism are harmful, Rogers warned.   “This is very dangerous, that’s what caused the great depression in the 1930s. If it happens again, then you’d better sell all the stocks, you’d better sell a lot of everything and bunker down,” he said.

“We already have a lot of social unrest developing. If protectionism comes back, you’d better be really, really careful.”

Oh boy… with opposing views like that it’s hard to swallow the President’s “complete confidence” statement.   And although the Fed Chairman is pledging transparency (it’s about time…), many believe that won’t make any difference. 

And even Treasury Secretary Geithner’s plan… whatever it really is, hasn’t been very well received.

“Investors greeted Mr. Geithner’s speech with dismay and the Dow Jones Industrial Average shed 300 points. Lawmakers Monday night, on being briefed by Treasury officials, were also irked by the lack of details, according to people present.”

“The absence of detail speaks to the thorny issues that lie at the heart of the financial crisis: how to value the toxic assets causing banks to report losses and how to shuffle aid to homeowners and stem the rise of foreclosures. Many of the potential solutions come with a host of fresh problems, which Obama officials have grappled with much as their predecessors did.”

But there are some potential winners and losers in the stimulus plan, and money is sure to go to a lot of places we don’t really understand.  Whether those places really do anything to help us climb out of this economic pit is the real question.  I’m not holding my breath.

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With tax season here, many of us are pulling out the shoeboxes full of receipts and sorting through 1099’s this month. I don’t usually have all the necessary forms until mid-February or beyond, but getting a start now makes things a lot easier.

Once again it’s time for TurboTax… software I’ve been using for over 20 years. I almost dropped the program this year and switched to H&R Tax Cut when Intuit jacked up charges for extra returns and printing functions. Fortunately a loud outcry by TurboTax users convinced Intuit to reverse plans for increasing fees. 

Overall it’s decent software, and makes filing your taxes much easier.  I’m glad that I can import last year’s tax file to save a lot of typing, but filling out tax forms is never simple in itself- even with software.  It’s a tedious annual ritual that most of us faithfully perform.  Of course it would be nice to have a few of the perks of our vaunted leaders in Congress.

For example, a GOP Congressman from Texas has intoduced a bill that would eliminate IRS late fees. What a grand idea- it’s called the “Rangel Rule” after House Ways and Means Committee Chairman Charlie Rangel, D-N.Y:

Rangel, who writes the country’s tax policies, acknowledged last fall that he failed to pay thousands in real estate taxes for rental income he earned from a property in the Dominican Republic.

As of September 2008 the Harlem Democrat reportedly paid back more than $10,000 in taxes but that did not include any IRS penalties.

“Your citizens back home should have the same rights and benefits that come to you as a member of congress. You shouldn’t be treated any differently under the law than your citizens back home,” Congressman John Carter, R-Texas, said.

He added that citizens should receive the “same courtesy” that the IRS is allegedly granting Rangel and Treasury Secretary Tim Geithner, who also recently acknowledged a failure to pay taxes.

Will the bill pass? Probably not, but maybe it will bring a little attention to issues like this. Carter, a former judge, said he is trying to focus in a what he believes is a double standard and add some levity to the debate.

“I am raising this issue not so much to just push the issue but to open the discussion. I don’t think it’s wrong for us to start having a free discussion in congress and with a certain amount of humor in it about how should people be treated in congress,” he said.

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Sounds like a good idea. I think when folks get into Congress they forget what it’s like for the average American.  And the average American has become quite upset at the recent nomination of high-profile people who haven’t figured out how to pay their taxes properly. 

“An overwhelming number of Americans are outraged by tax cheats, according to an Internal Revenue Service poll released after two top US administration nominees withdrew over tax scandals.”

“The 89 percent of Americans who find it “not at all acceptable” to cheat the agency was the highest recorded since the survey of taxpayer attitudes began in 2002, the IRS said.”

“The poll was released after President Barack Obama’s candidate to become Health Secretary, Tom Daschle, abruptly withdrew Tuesday after it was revealed he had paid more than 120,000 dollars in back taxes.” 

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Whatever your situation, the most important thing about tax season is to file your taxes! Everyone has fears about tax season, most of which are unfounded. But putting off filing taxes, or not responding to IRS notices just makes things worse. Here’s a quick look at 7 Tax Terrors and what you can do to overcome them, and TaxHelpOnline has a more thorough look at helping solve and figure out tax problems. The first line is a good one:

“General Accounting Office studies have shown that IRS correction notices are wrong half the time. The common correction notices include claims that made an error in your return, that you failed to file a return or underreported the income in your return. If you get a correct notice from the IRS that you do not understand, there is a good chance it was issued in error.”

You never know- but one thing is for sure: Avoiding responding to the IRS will not help you resolve the problem. I’m not using a CPA at present, but you can be sure that if my taxes become too complicated or I’m concerned about doing them correctly, that I’ll find one pretty quickly.

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Taxes aren’t the only issue where most Americans face challenges that our leaders in Congress don’t understand. Take the global warming debate for example- President Obama and his party want to pass a host of climate legislation that is quite a mess based on divergent geographic needs and interests. This could not only affect real jobs and manufacturing, but also impact the average American’s energy bills each month, and overall U.S. economic growth. Over time we may have to pay a lot higher prices for our energy needs in winter, especially for folks living in the midwest.

“By coincidence or design, most of the policy makers on Capitol Hill and in the administration charged with shaping legislation to address global warming come from California or the East Coast, regions that lead the country in environmental regulation and the push for renewable energy sources.”

“That is a problem, says a group of Democratic lawmakers from the Midwest and Plains States, which are heavily dependent on coal and manufacturing. The lawmakers have banded together to fight legislation they think might further damage their economies.”

I’m one of those midwesterners who depends upon a diverse mix of resources to supply our energy needs- and I can assure you our monthly bills are high enough. Personally we already do everything we can at present to lessen our use of energy in winter at home. There’s only so much more you can do- and at some point we’re just going to pay higher taxes and fees because someone has a grand plan to “lessen our dependence” on the need for certain resources.  That debate is just getting started…

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Catching up the past few weeks on some much needed organization, and a little more focus on priorities at home.   Most of those priorities involve looking very hard at our financial picture.   Congress is doing the same thing, but I’m not sure their priorities are all financial.  It’s politics after all, and the stimulus plan has now become a political spending platform.  Lately it seems that Congress wants to spend billions on a host of programs that may or may not help over the short-term, or that we may not see for decades.   Economists know that Components of the Stimulus will Vary in Speed and Efficiency.

“Devising any economic stimulus plan is tricky: initiatives that can be carried out relatively fast, like tax cuts, tend to provide less bang for the buck in terms of generating jobs and economic growth, while initiatives likely to spur more robust activity, like public works projects, can take so long to get under way that they arrive too late.”

But the country is trying to claw it’s way out of this recession, and today’s news reflects the magnitude of the challenge with the largest drop in GDP since 1982.   Now the debate is whether we’ve seen the worst, or that this drop in GDP is just a preview of worse economic conditions to come.  Consumers have really tightened their belts:

“Hit by tight credit and soaring job losses, Americans slammed the brakes on spending in the quarter.”

“Consumer spending fell at a 3.5% annual rate, which was the seventh biggest drop on record. Spending on big-ticket durable goods plunged at a 22% pace, the largest decline since 1987. Consumer spending accounts for more than two-thirds of overall economic activity.”

“But it wasn’t just consumers pulling back. Fixed investment in equipment and software, taken as an indication of business spending, plunged at an annual 28% rate. That’s the biggest drop in 50 years.”

So this certainly gives momentum to the stimulus package.   Honestly, most Americans just want the government to do whatever is necessary to get our economic engine restarted.  Exactly how you define the “whatever” is the problem.  Increase spending?  Cut taxes?  It’s the age old debate, and even Rush Limbaugh opines in the Wall Street Journal that there could be compromise… we could do a little of both.  

“There’s a serious debate in this country as to how best to end the recession. The average recession will last five to 11 months; the average recovery will last six years. Recessions will end on their own if they’re left alone. What can make the recession worse is the wrong kind of government intervention.”

“Keynesian economists believe government spending on “shovel-ready” infrastructure projects — schools, roads, bridges — is the best way to stimulate our staggering economy. Supply-side economists make an equally persuasive case that tax cuts are the surest and quickest way to create permanent jobs and cause an economy to rebound. That happened under JFK, Ronald Reagan and George W. Bush. We know that when tax rates are cut in a recession, it brings an economy back.”

“Recent polling indicates that the American people are in favor of both approaches.”

“Notwithstanding the media blitz in support of the Obama stimulus plan, most Americans, according to a new Rasmussen poll, are skeptical. Rasmussen finds that 59% fear that Congress and the president will increase government spending too much. Only 17% worry they will cut taxes too much. Since the American people are not certain that the Obama stimulus plan is the way to go, it seems to me there’s an opportunity for genuine compromise. At the same time, we can garner evidence on how to deal with future recessions, so every occurrence will no longer become a matter of partisan debate.”

I believe we need to do whatever fosters business and job growth- expanding economic activity- and both spending and tax cuts can achieve those goals if used effectively.  What effectively means is the real question.  Between job insecurity and the challenges of winter, energy costs and taxes- consumers have got enough to deal with over the next few months.  Let’s hope our elected leaders get it mostly right.

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It’s a new day, a hopeful day, a day of change- and America moves forward again.  Regardless of anyone’s political views, it is heartwarming to see democracy in action in our free Republic, and to see the spirit and pride of millions of Americans on this day that President Obama takes office.

The older I am the more I appreciate the timelessness of all that I’ve been privileged to witness in my life, and that we see in America.  And I am proud that through all the challenge and chaos of our lives, we can find strength in the values upon which our nation was founded, and for which we stand together today.

So many people have bearish and near-catastrophic views of the nation and the economy that you would think the world was ending.  It very well may be, but not anytime soon.   The economy and recession in the late 70’s and early 80’s was far worse, and people didn’t seem to be as negative about it then.    The pendulum will swing, times will change- slowly- almost without recognition and we will come out of this just as we have before.  That’s my view, and it may be early, but if there’s one thing that life and the market teaches you, it’s patience. 

If you’re facing challenge and hardship, I wish you strength and opportunity- it will come, hang in there, and don’t give up.  And if you’re enjoying success and security from years of hard work, I wish for you peace and a chance to help others where you can.  

Where we are as a nation may seem a reflection of the immediate external economic realities we face each day.  But the nation is stronger and bigger than what we see each day.  We will move on, we will grow stronger, we will prosper and we will restore opportunity within America in the months and years ahead.  

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“Out with the old, in with the new” as the saying goes.  Timely words for welcoming a new year that will hopefully be a far cry from last year, at least financially speaking.    For many of us the new year also means a new commitment to getting rid of debt and increasing savings.  In short, through circumstance or necessity, many of our priorities have changed.  

Jim Citrin looks at Getting Back to Basics in 2009, describing how changing priorities have affected business perspectives:

“The era of unchecked consumerism and financial excess had the insidious effect of devaluing everything. Why save money when you could borrow to get whatever you wanted? Why hang on to clothes and appliances when you could just go to the store and buy new ones? Why make structural improvements to your business operations or deepen customer relationships when you could push more stuff to get the growth that Wall Street demanded?”

“In one fell swoop, these attitudes have ground to a halt. They’ve been replaced by millions of healthier conversations in conference rooms and around kitchen tables about how to save, conserve, and prioritize.”

The article looks for a silver lining, examining how we can reconnect and make the best of the difficult times we live in.  I appreciate his views because it makes the simple point that we have a choice with how to respond to the current economic environment.  Sit around and wring our hands?  No. We need to get up and do something about our situation, and work to improve our lives and fortunes.

Admittedly the really tough part of the economic challenge we face is how far it has reached into people’s lives.  Between housing, the stock market and the credit crunch, the financial challenges have touched every level of the socio-economic spectrum.   For those who have lived too long on debt and excessive borrowing, the money faucet has been turned off.  Now they’re struggling to save, get by and get rid of that debt.  Others are struggling with layoffs and trying to find a job.  And even for those who saved and invested diligently through the years, the stock market’s downward spiral has demoralized investors into wondering why they ever invested in the first place.

A lot of frugal and industrious folks today are wondering if they should have just spent more of their money when they had it, instead of scrimping and saving through the years only to watch it disappear in a few months.

Most of all it’s just hard to feel confident about our choices right now.  And we’re shocked when reading about financial scandals and corruption.  It’s no surprise that many people have moved their assets to cash in CDs and savings accounts, deciding that something is better than nothing.   Nothing wrong with that, especially if you need the money in 3-5 years, or you are already retired and may need that money for healthcare or living expenses.   But the rate of return on those accounts is really low, and most planners will still target a growth or dividend component in the overall allocation mix if possible. 

Dividends are also king right now for investors, and there’s nothing like getting paid to hold a good company in stock.  Fixed income investments also may offer some of the best opportunities in the next few years.  Cash-wise I’m at least putting some money into a good quality high-yield savings account such as with ING, and money market accounts such as Vanguard Prime.  If you want treasuries (who doesn’t!?), Vanguard also has several treasury mutual funds.

And I’m certainly still investing in mutual funds and selective stocks, taking advantage of low prices and increasing savings and investments where I can afford it.  Is that a gamble?  Not for me, since I don’t plan to need the money for 10+ years.  If you feel like it’s gambling, then that should tell you something about your risk tolerance, and you should look for a more conservative asset mix. 

But if you’ve got decades until retirement, there’s no better time than right now to accumulate investment shares.  As long as your financial life is in order of course.  I call it my Big Three, and they remain the central focus of our financial lives:  Cut Spending, Pay down Debt, and Increase Savings.  After the first two are under control, then I think about investing.

If you’re feeling bad about your mutual fund losses, most of us can be glad we didn’t join the Dubious 60% Club, and that’s not 60% up…  Bill Miller was a high-flyer for about 15 years as a leading mutual fund manager, but for the past few years- well mostly last year- he has crashed and burned.   It just goes to show that anyone can make poor choices and lose money in the market.  Does that mean he’s sulking in some corner office, licking his wounds?  Absolutely not.  He’s still in their fighting and even managed to beat the S&P 500 for December 2008.   

As we ring in the new year, there’s a host of excellent pracitical advice out there.  Here’s a rundown on some of my favorites:

• The Wall Street Journal offers an eclectic mix of insight for How to Fix Your Life in 2009.  “Exuberance and excess have made way for prudence and pragmatism. Frugality is, once again, a virtue. To help you settle into this strange new world, our reporters have dug deep into their beats…”

• SmartMoney.com shows us 7 Ways to Save in 2009.   “Reducing monthly expenses and saving more money is the must-make resolution for 2009.”

• Kiplinger.com offers a classic article from a few years go reviewing 8 Keys to Financial Security. “Pay yourself first. Protect your loved ones. Borrow sparingly. And don’t go for the home run…”  What a great, timeless article.

• Laura Rowley takes an heady look at the psychology of Understanding Money Behavior in a Financial Crisis.  “One of the keys to surviving the economic crisis, at least from a psychological perspective, is recognizing what you can and can’t control. And not doing destructive things while you’re powerless.”

I wish you a healthy and prosperous new year for 2009.  Sushi Money is two years old this month, and it’s been a grand experiment in the personal finance blogging world.  I don’t how long I’ll continue to write here, and I may look for a different financial niche.  But its been a lot of fun.  One of my goals includes are greater focus on philanthropy.  I’m in little position personally to make significant philantrophic gifts, but I am very thankful for the time and resources I do have available. Maybe there’s some kind of venture in the making.  

In times like these it’s important not to forget those who are struggling.  The economy will gain traction slowly, but there will be many who are left behind.  As we strengthen our own financial lives, it seems a good time to try and help a few others along the way.

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It’s been a busy month with the holidays, and equally busy keeping up with the economic news, most of which isn’t very good.  But at the pump we’re all smiles these days with gas prices hitting five year lows.  Believe it or not I saw gas selling for $1.29 yesterday.  That is amazing, and to think of how much money Americans have wasted over the past couple of years in terms of fuel is even more amazing. 

Maybe wasted is a poor choice of words, but at least we’re not giving billions to third-world crazies anymore while the global recession has reduced demand (and speculation) incredibly.  The good news is how much we’re now saving here at home, and ”Tom Kloza of the Oil Price Information Service says Americans are paying about a billion dollars per day less than in July.”

At least that’s money people can use for other needs during one of the greatest recessions in decades.  But oil prices won’t stay this low forever, and some analysts see prices recovering later in 2009 or 2010 based on greatly reduced oil refinining capacity.  I hope that’s not the case- seems to me we got into the mess partly due to the fact that we didn’t have enough refineries or production capacity.  The big oil companies have little incentive at this point to expand their capacity however, so eventually demand and speculation will increase again.

Maybe we’ll be helped by better mileage cars and alternative energy?  Maybe.  I wouldn’t count on it, but every little bit helps.  That’s especially true in today’s economy, where many people are finding it difficult to juggle income against debt.  I hope you’re doing well at the end of such a tumultuous year, and that 2009 will be a whole lot better for all of us.

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