Could Asset Seizure Occur in the US?

Greece is running out of money and nearing default on its debt.  The debt crisis in Greece has been going on now for so long that they are having a tough time getting another bail-out.  They owe roughly the equivalent of 350 billion dollars.  The worst case scenario is a Greece default on that debt.  Financial institutions all over the world would feel that default.   

So, what is the solution for Greece?  The prime minister of Greece announced that they would be seizing all cash from local governments.  That would be like the United States government ordering each state to send in their available cash.  

Greece don’t have enough money to pay for salaries, pensions, and their bond payments.  Thus, they are now desperate enough to seize assets that belong to local government.  This situation in Europe is starting to take a turn for the worst.  The worst of it is that this seizure of cash only puts a small band-aid on a big wound.  This seizure of assets would amount to the equivalent of roughly 2 billion dollars.  

So what could be the result of these drastic measures? 

(1)     Civil War – You just can’t seize assets from other local governments and expect no one to react.  It wouldn’t surprise me if we see the country revolt against the government and a major civil war start.  After all, if things are going to get dire, what do the people of Greece have to lose?

(2)     Greece imploding from within – Taking local government cash would only push local governments into trouble. Now they would be the ones not able to make important payments.  This could cause Greece to implode from within. 

(3)     Greece defaulting on their debt, leaving the European Central Union and dropping the Euro –  This would be the nuclear option that as I said earlier would be felt in financial markets all over the world.  It would be unprecedented waters with unpredictable consequences.  

(4)     Dangerous Precedent for the rest of the world – Could there come a day when you see this happen in the US?  All it takes are two different elements to play out. First, other countries smaller than the US practicing assets seizure.  This would make it a more commonplace situation to occur.  Second, all it takes are things to get desperate enough.  Governments do desperate things in order to keep Government going. Politicians are always first in line to get paid and taken care of.  This of course is often at the expense of its’ people.  

You can’t fix a system that is broken.  Greece is a broken system. Since 2012, they have been continually bailed out and once again find themselves on the brink.  This is a Greek drama with a tragic ending on its’ way. 

What Your Kids Think About the Family Finances

How do you think your kids feel about your family’s finances?  Well. T. Rowe Price did an survey that had some interesting results.   Here were the results:

82% of parents said they think they are setting a good financial example for their children. But only 46% of kids say their parents are doing extremely or very well at teaching them about money and finances. Further, 72% of parents say they are at least somewhat reluctant to talk to their kids about financial matters.  They are concerned that their kids will worry.  Yet, 61% of the children surveyed, who were ages 8 to 14, said their parents worry about money. 

Just remember one thing – What we don’t teach our kids about money, the world will do it for us. 

For some great tips on money talk with your kids, check out this article in this month’s Kiplinger Magazine.

What Will You Do With Your Tax Refund?

It is April 15th and some will receive a much anticipated tax refund.  The average refund is $3,500.  What should you do with it?  Some use this as a savings strategy knowing that money will come in handy about this time of the year.  Thus, they know it is coming and it is already spent.  

My advice to you would be simply to do away with the tax refund once and for all.  Take this last tax refund and spend it however you see fit.  Then adjust your holdings so this never happens again.  Why would you want to give the IRS a tax free gift? 

Instead enjoy the benefit of increasing your after tax MONTHLY cash flow.  It is much better to receive that money throughout the year in the form of cash flow versus a one-time lump sum.  If you still want to save that money, you can still put that additional money into a savings plan each month.

At least afford yourself the flexibility to use that additional monthly income and put it to good use.  If you needed it during the year, wouldn’t you want access to it? Plus, most people tend to not spend lump sums effectively.  They know that they need to pay down debt.  However, they see a vacation in their instead.  It is the emotional pull of the lump sum of cash.

The bottom line is to use your cash flow wisely versus allowing the IRS to benefit from your cash flow.

Good Example of Identity Theft Phishing Scam

I received this the other day.  You can notice how fake the Chase logo looks.  There are several variations of this email going around.

Dear User,

It is strongly recommended that you update your account. There are series of issues about misuse and theft of account informations. We have update our security server for the year 2015 to enhance your online banking security and protect our customers from online fraud.

Click Here, to update your account.

We Are Here For You.

© 2015 JPMorgan Chase & Co.

There are two rules of thumb when it comes to protecting yourself from identity theft.

First, if someone in any capacity (in person, phone call, email, etc.) approaches you requesting you to give or update information, don’t do it.  Always verify before giving out personal information. 

Second, if you have the choice between a credit card and a debit card, use the credit card and cut up the debit card.  When it comes to having your personal information compromised, the question is not about if it will happen.  It is highly likely that it will happen to everyone at some point.  If your personal information was stolen, would you rather a thief have access to a line of credit on a credit card or direct access to your bank account?  If the debit card is your only option, just remember to always be watching your bank account.  

There is one other take away. Debit cards are dangerous. 

I would make one suggestion to the thieves trying to steal information.  IF you are going to go through all of this trouble, use proper grammar and make sure you spellcheck.   

Saving Won’t Get You to Your Retirement Goals

TIAA-CREFF just released a survey on retirement saving.  This survey and how it is presented is illustrative of the problem with the financial services industry.  The compartmentalize retirement planning by leading the reader to believe if you just save enough you will retire well.

Let me explain – This article starts off by giving an example of an individual who was saving for retirement.  The article shows that by saving a certain amount he would have over $700,000 for retirement.  Then they add this:

“That’s a tidy sum to be sure. But look how much more he could have with a more diligent savings effort. By stashing away just two additional percentage points of pay each year—12% vs. 10%—his nest egg at retirement would total just under $890,000. That’s an extra $150,000. And if he can pushes himself to save 15%—the target recommended by many pros—he would be sitting on a nest egg of roughly $1.1 million, fully $360,000 more than its value with a 10% savings rate.”

Is the formula that easy?  Just save money for retirement and you reach your goals?  Of course not – however, that is how all of these articles are written.  The concern is that the average reader walks away with a savings only mentality and that in itself has a low probability of getting you to your dream retirement.

Saving alone will not get you to retirement. Successfully reaching your retirement goals requires a 4 step process.

1)   Saving – obviously you have to commit to saving money.  There is no question.  That is the fuel that makes the engine go.

2)   Invest – More importantly, you have to appropriately invest that money in order for it to grow. 

3)   Manage – Unfortunately, we don’t have the luxury (as the financial services industry would have you believe) to just save money and make sure it is invested.  You have to manage those investments for growth AND risk.  Being a long-term investor (another popular myth told by the financial services industry) is not a strategy that protects you from risk.

4)   Plan – You can save, invest, and manage and still not know whether or not you are on track.  Do you want to know what separates out those who are successful and those are not?  It is this one step.  Doing steps 1 through 3 and leaving out 4 is much like deciding to travel to another city and state, jumping in the car, and just start driving.  You have no idea if you are on track or traveling in the right direction.  What’s worse, you have no idea when you will reach your destination.

To be successful, you have to employ all 4 to insure a successful retirement.  If you want more information on how to make all 4 work let’s have a conversation –

Security Changes to Credit Cards – It is About Time!

Visa and Mastercard are requiring major retailers and banks to have implemented the security chip into their credit card program by October 2015. This chip can be found on the front of the credit card.

Credit Card Website, just recently released its 2015 EMV Migration Report – which analyzes the smart-chip credit card plans and progress of the country’s 10 largest credit card issuers as well as 55 major retailers.

Here are some findings of the study.

”   All 10 of the largest credit card issuers are in the process of issuing chip-based credit and debit cards and expect the majority of their portfolios to be updated by the end of 2015.

”   All chip-based cards issued by major banks will continue to have magnetic stripes – enhancing usability while also mitigating certain fraud protection benefits.

”   All of the major retailers that responded to our survey are on track to meet the October 2015 EMV transition deadlines set by VISA and MasterCard.

”   This one is the most disturbing finding. Retailer transparency regarding the security chip program is surprisingly low given the level of consumer concern about data breaches and financial security. Only 17 of the 55 retailers we contacted provided information about their policies – including just 25% of those that have been victims of breaches. It makes you wonder if retailers are just giving up and not even trying to fight a situation that they think they can’t win.

”   In the event a chip card is not automatically re-issued, consumers can call and request one from customer service.

To check out the full report, please visit:

I asked spokesperson Jill Gonzalez what was so special about this new chip.

Instead of magnetic strips, EMV cards use microprocessor chips, which are almost impossible to duplicate. The cards are tapped or waved about an inch in front of updated terminals — the exact method will vary from retailer to retailer. Each transaction made using an EMV card is approved using a unique authentication code that can only be used once. So, if a retailer falls victim to a payment information breach, that information cannot be used to make additional purchases or create fraudulent accounts – Jill Gonzales

Bottom line – don’t wait around for your bank or retailer to send you a new card. Be proactive, call them, and request that they send the new card to you.

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