Taxes- How Does the Government Spend Money?

The money Americans pay in taxes goes towards important factors, such as education, military funding and medicare. Most of the money actually goes towards social security as well as National Defense. This chart shows how the Government spends:

There is always a sketchy outlook towards the government because no one knows if this is where our money is actually going. Not everything is included in this chart because state taxes cover things such as medicaid and educational funds.

Savings and Debt

The article in the NY Times didn't shock me at all. It's a known fact that the average American family is in serious debt. The reasons aren't just finance charges and interest rates, its the carelessness of Americans. Families don't save anymore, they usually spend money they don't have on elaborate items, such as an $800 television set. Debt is becoming a lot more common than saving in this nation. This chart shows the declining saving rate from 1985- 2005.

In the United States saving money has become a hassle because there are so many bills to pay, on top of the necessities to live a healthy and normal life. Debt seems to be inevitable.

Critique of GDP Podcast

I reviewed Ronald and Richards GDP Podcast.
The podcast itself was very interesting. There was music in the background, pictures of the both of them and they talked as if it wasn't a Public Service Announcement. Everything was clear and the pictures had some relevance to the facts but there were hardly any facts.
Despite the obvious that it was a short recording, they only covered what GDP was and nothing more.
Needless to say, I learned nothing from the podcast. Sorry. =[

U.S Trade Defecit: Getting Better

According to an article in the NY Times, the United States economy is expanding due to the high rate of exports. The United States may be a rich country but we are known for our imports. Everything in the America is "Made in China" or in any other country that exports. If the United States continues to export then we wouldn't be in a trade defecit.
A trade defecit is when a countries imports from a foreign country are worth more than their exports towards other countries.
The United States is doing a great job of selling cars and fast food overseas.
Americans are making "Made in the U.S" goods more valueable in foreign countries and making products a lot more competetive. This is making the American dollar weaker by producing an intense amount of goods and sending them to other countries for where the money isn't worth as much but the product is valued more.

Taxes- How Does the Government Get Money?

The average American worker pays about 1/4 of their income to taxes. Some people pay taxes that others don't based on annual income amongst other factors. Medicare, social security and sales tax are some of the common taxes all Americans pay. Federal, state, and local taxes are paid based on how much the government needs.

Federal Tax:
Income tax- collected from rent, salaries, wages, and interest on bank accounts

Estate tax- collected from the deceased estate

Excise tax- taxes paid for alcohol, gas and tobacco

Payroll tax- only collected from salaries and wages

Gift tax- collected during the property of property


State Tax:
Inhereitance tax- collected from a person after they have inhereted from the deceased

Estate tax- collected from the deceased estate

Excise tax- taxes paid for alcohol, gas and tobacco


City/Local Tax:
Property tax- collected from financial assets including stocks, houses and cars

Excise tax- taxes paid for alcohol, gas and tobacco


THATS ALL FOLKS...

Student Loans- Beware

Student loans can be the worst things to experience but for most students seeking a higher education it is inevitable. Financial aid isn't helpful when most of it is in loans. The culinary students probably didn't get that great of a deal because od need base priority. To even get a full scholarship a students has to be on welfare and with a 99.99% average in high school. Other than that loans are the road to a bright future. Interest rates and fees are the things that make a loan a lethal decision. When a graduate is using their degree to find an entry level position and moving out on their own, $705 a month towards the Sallie Mae fund is going to put them into financial ruin.
I was given $1500 in a Stafford Loan and I have to pay $4000 towards tuition. I was going to take the $4000 out as a loan but my mom is taking it out of her 401K. So the only thing I have to pay is $1500 with a 6.8% interest rate.

Critique of Federal Reserve Podcast

I reviewed Alex & Benny's podcast. The podcast was simple, clean cut and the basic facts about the Federal Reserve were stated. Some of the information was complicated to hear because the voices seemed muffled out and groggy. I really didn't learn anything new considering I researched the same information but if I didn't know anything about the Fed I would have learned from the podcast. There were a lot of relateable pictures and they were consistent throughout the presentation. Overall I say they put a lot of effort into the Federal Reserve podcast and it was well executed.

Compound Interest and the Rule of 72

Compound interest is the interest earned on an initial (principal) deposit in an account or hedge fund. If a bank's interest rate was 20% then a person could make 20% of their first deposit and then the next year 20% from the initial deposit + the first 20% earned.
An example would be: I put 500 smackaroos in an account. After one year I have 100 dollars on top of that. I am then left with 600 dollars in the bank. The next year I would have earned 120 leaving me with $720.00.

The Rule of 72 is an equation created by Albert Einstein to determine how long it would take an initial investment to double. By dividing an interest rate by 72, you will determine how long it will take for your initial deposit to double.
If I put 600 in the bank with a 5% interest rate, with the equation (72/5), it will take me 14.4 years for it to double to 1200 dollars.

Insider Trading Scandal

The most recent scandal on Wall Street was uncovered and has been the largest scandal since the 1980's. Insider's at Morgan Stanley and Co. and UBS Securities LLC leaked valuable information to attorney's Randi and Christopher Collata. 13 people were charged with securities fraud including employees of Wall Street Banks. Mitchel Guttenberg, an executive director in the Stock Research department of UBS, tipped individuals with information on upgrades and downgrades in the stock market that was not released publicly. The scandal was very discreet; tips were given on diposable cell phones and with secret coding. The illegal insider information was traded between many people including the employees of Bear Sterns and was linked into over 15 million dollars.
Although what they did was wrong, it was smart. The tips they got was not friendly business advice. Guttenberg helped these people gain millions of dollars by telling them when to invest, how much to, and when to pull out. The stock market can help gain or lot or can make investors lose a lot so them knowing exact information helped these people gain more money than any other investor.
But if it were me, I would have stopped after the first million, covered my tracks and run to the Bahamas.

Opportunity Costs

In economic terms, opportunity cost is the decision to produce or consume a product. There is a gain in both and a negative if you go with one or the other.
An example of opportunity cost in every day life is if I decided to get a part time job instead of focusing 100% on school. If I get the job I can save money for college but it oculd distract me from school and cause my grades to drop. If I stay commited to school and nothing else, I'll have the grades but not the money for me to go to college.
Everyday life is an opportunity cost.

Economic Systems

A traditional economy whose decisions are based on religion, habits and customs.
A centrally planned (command) economy is inspired by the Soviet Union and is organized and controlled by central administration.
A market economy is a free market with voluntary exchange; capitalistic economy, no central control.
A mixed economy allows private and public enterprises to operate at the same time.

Stock Market Game- Initial Investment Strategy

Stocks can usually make or break someone's initial investment. I plan on investing in one major company that stays static. Then I think the way I would make profit is to take a risk in smaller companies and buy 100 - 200 shares of each. I'm not too nervous about losing the money because it is a learning experience. The smaller shares in my opinion will make most of my profit and even if the stock goes down, I still have the major company to keep my profit at a decent balance.

Test

Test