The Money for Life Blog

This post is longer than normal. It deals with an issue that does not lend itself to easy explanation. Lost opportunity cost deserves closer scrutiny than most because it is fundamental to understanding, building and maintaining a successful personal economy. In addition, since it’s difficult to address the topic piecemeal, it demands a single post rather than a series of shorter entries.

Dr Agon Fly

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Part I - The Myth vs. The Reality of Lost Opportunity Cost

There are hundreds of money myths that make bad decisions feel good. Most are propagated by popular pundits on TV and radio whose main credential is that they are smooth talkers or enthusiastic preachers of their unique money gospel.

One of the most deceptive and destructive of these money myths is that ‘paying with cash’ is always better than any other alternative. This erroneous belief ignores a basic economic principle: lost opportunity cost.

According to the Merriam-Webster Dictionary, Lost opportunity cost is the value of what is lost when you choose between mutually exclusive alternatives. This value can be estimated before the fact and determined more accurately after.

A simple explanation of lost opportunity cost, and a statement of the benefit that you gain from understanding lost opportunity cost comes from R. Nelson Nash, author of Becoming Your Own Banker.

“Any time that you can cut out the payment of interest to others and direct that same market rate of interest to an entity that you own and contol…you have improved your situation.” Third edition, p40

Another way of saying the same thing comes from an experienced advisor who says; ”You always finance what you buy.”

• If you borrow the money to buy something, you repay principal and pay interest to another.
• If you pay cash to buy something, you give up both the principal and the earnings it would have brought you.
• The only way to win is to borrow from yourself so you recover the money you borrowed - your capital - and the interest too.

Part II - Money is Capital Too!

Understanding the fact that money is ‘capital’ is key to understanding lost opportunity cost. For example, it’s easy to see that a person who owns a 160 acre parcel of arable land, holds that land as capital. The owner might consider these optional uses of that capital; plant one or more cash crops each year, convert the parcel to a tree farm, subdivide the land and sell off the lots, or sell the parcel outright. Each choice would produce different results both in terms of money and time.

Cash crops promise an uncertain but probable income each year and preserve the basic value of the capital asset.

A tree farm might produce a greater income at a much later date and, perhaps, enhance the value of the capital.

Subdividing the land and selling off the lots would eventually reduce the value of the asset to zero while proportionately increasing the owner’s cash capital account.

Selling the parcel outright transfers the asset to a new owner and produces immediate cash.

Money in the form of cash is capital too, however. In banking, cash contributes to the tier one capital that determines the stability rating a bank receives from regulators. Corporate balance sheets include cash holdings among their capital assets. Your personal economy runs almost exclusively on its capital holding of cash.

Why, therefore, is there the modern day myth that paying cash for everything is always the best choice? Why the insistence that you deplete your most valuable asset on a regular basis, which, coincidentally, increases the cash account of the entity that receives your money? Is it, perhaps the very fact that it’s a myth  that serves the interests of those who propagate the myth rather than your interests?

What do you lose when you pay cash? 

Should you consider just the cash in your decision?

Is there a benefit you might receive from using your cash differently?

Where is the cash coming from?

Is what you give up when you use cash worth more than what you gain by doing so?

Are there alternatives to cash that you should consider?

Part III - The Role of Debt-to-Others vs. Debt-to-Self

The always-pay-cash mantra is usually chanted with an ‘all debt is bad debt’ chorus. The purveyors of this myth seldom, if ever, consider a third, fourth or other alternatives. I’m not suggesting that debt is good. It’s easy to justify paying cash in lieu of putting your purchases on a credit card that you may take years to repay. It may make sense for some to pay off a mortgage early to save thousands in interest.

But debt may also give you leverage in certain situations. More importantly, if you have studied the Money for Life Model that lets YouBeTheBank, you realize that debt to yourself can create wealth more readily than other more risky systems and paradigms.

Consider these common strategies used in the retail business. Here are three ways to use cash to pay for a $24,000.00 car.

1. Cash, which you take from a $24,000.00 savings instrument. You also earn a $2,000.00 discount off the purchase price. This leaves you with $2,000.00 to put into a CD at 4.15% that yields $2,450.90 during the 60 month finance period. (If you were to leave the money in a five year CD paying 4.75% it would mature to a value of $27,745.52.)
2. Borrow $22,000.00 from your credit union at 6.5% (you still get the dealer discount for cash) and withdraw the $430.46 per month payment for 60 months from your $24,000.00 savings instrument. You end up repaying $25,827.37 including interest and have just over $2,400 left in savings.
3. 60 months of interest free payments of $400.00 per month to the dealters finance arm taken from your savings plan would reduce the $24,000.00 to about $2,000.00.

Does it surprise you that leaving your CD intact, borrowing from the credit union or taking the zero interest option all produce about the same result? It shouldn’t. In each of these cases, you effectively pay cash. When it’s all over you have depleted you savings, have very little money and a five year old car that is worth virtually nothing.

Imagine instead that you had borrowed the money from your own “bank” and repaid yourself? At the end of the 60 month payoff period you’d have both the principal and interest returned to your account…and you’d still own the five year old car.

Part IV - The Fallacies

Here’s the fallacy in the myth. The myth assumes that the payments you don’t make on the auto are going to be used to either increase savings or to pay off other debt. In this example (using numbers from BankRate.com and in order to be honest and fair in our presentation) we took the cost of the purchase from the same source in each case and did not replenish the savings.

If we factor in a monthly payment of $430.46 being made to replenish the savings plan - or in the case of the credit union loan, leaving the money in the savings vehicle and making the loan payments to the credit union - and calculate the results for each approach, the results in each case are, again, similar. You would replace the money you spent on the car plus a little interest. The auto dealer is still the one that made a profit from the transaction while you lost the earning power of your money for a net two and one half years.

This uncovers the second fallacy in the always-pay-cash myth. The myth assumes that there is only one instance of the transaction type that is discussed or illustrated; one car, one refrigerator, one vacation, one of anything. The reality is that you will have to buy many cars, refrigerators and vacations. The always-pay-cash myth doesn’t address this issue. It relies, like most other shallow financial paradigms, on a snapshot in time that captures a scene that ceases to exist the instant it is taken, and is immediately at odds with your current reality.

This leads us to the third and most compelling failure of the always-pay-cash myth. Since the myth relies on creating support for its proposition, it consistently represents unrealistic results for both its positive effects and the negative results of not following its rigid mandates. It compares apples and elephants as if they were of the same species. It discounts any alternative that does not support its position - or improve the ratings of the pompous pundit that promotes it on radio or TV.

When investments are recommended - and they usually are - an unrealistic rate of return is illustrated. While the “market” has delivered a hypothetical 12% year on year return, investors have averaged only 2.9% gross and less than 1% adjusted for inflation and taxes.

If a savings plan is suggested, little or no consideration is given to the surprisingly unsurprising surprises that life delivers on a daily basis and that create the great sucking sound that decimates your reserves.

One Final Thought and a Conclusion…

What’s a person to do?

First, recognize that the concept of lost opportunity cost is, at best, misunderstood by the celebrities and pundits who promote their personal form of mucked up economics on radio and TV shows. (I am uncertain how I would fare if ever I had my own radio or TV show. I’d hope to emulate Ben Stein, who is fearlessly well informed and honest.) 

Second, recognize that the vehicles you choose to consider when making a lost opportunity cost decision will determine the validity and outcome of your decision. If you rely on hyped up hypotheticals with 6% or higher assumptions, your choices will eventually destroy your financial foundation and your house will fall. If, on the other hand, you choose a more conservative and realistic approach that is based on guarantees and high probability returns, your financial foundation will rest on rock solid ground and your framework will strengthen.

Recall the thought early in this discussion that you can estimate lost opportunity cost  before the facts are in and determine the actual results later.

·     Like the country-western song says, “You gotta know when to hold ‘em, know when to fold ‘em, know when to walk away, know when to run.”

·     And don’t forget what Will Rogers cautioned; “I’m more concerned about the return of my money than I am about the return on my money.”

Lost opportunity cost  is one of the most powerful tools you have to evaluate financial opportunities. The Money for Life Model incorporates this tool into every aspect of its approach to helping you build a successful personal economy that lasts ‘in good times and bad.’

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www.YouBeTheBank.com

By Benjamin Franklin and Dr Agon Fly

Father Abraham’s recounting of the advice delivered by Poor Richard’s Almanac during its twenty five years of publication continues with some admonitions about chasing a life of leisure. These observations may be even more appropriate today than they were 250 years ago, when they were written.

“Methinks I hear some of you say, `Must a man afford himself no leisure?’ I will tell thee, my friend, what Poor Richard says, Employ thy time well, if thou meanest to gain leisure; and, since thou art not sure of a minute, throw not away an hour.

Right off the bat Father Abraham chastises the questioners. Leisure is the result of work but not its aim. If you want to have leisure time, beware wasting time at work because the hour spent on the internet, or reading the paper, or discussing last night’s game will lengthen your day at work and reduce your time of true relaxation with family and friends.

Self employed folks recognize this relationship more readily perhaps than those employed by others. It’s easy to measure the value of time wasted when it translates directly into lost opportunity, lost sales or extended hours completing a critical project for a revenue producing client.

It’s easy to measure the lost leisure time when the ‘leisure’ time spent at work keeps you from a golf date with friends, your child’s sports event or musical recital; when the long awaited anniversary dinner has to be postponed at the last minute; when the weekend barbecue goes on without the host, who had to go into the office.

There’s more from Father Abraham…

“Leisure is time for doing something useful;

Now there’s a mind bender for the modern American. Who thinks of leisure being ‘useful?’

As a starting point, let’s define ‘work’. The Merriam-Webster dictionary defines it this way; ‘activity in which one exerts strength or faculties to do or perform something.’ Hmmm. According to that definition, everything is work. Playing tennis, watching TV, reading, wrestling with the kids, laying in the hammock taking a nap all require you to ‘exert,’ to ‘do.’

Father Abraham got it right again. All of those activities are useful all by themselves and all of them are work. Their leisure value comes from your intention and attitude, not from the activity itself. Their ‘useful’ aspect derives from the benefit you derive from the activity – the work – and perhaps from the control you exercise over the choice of activity.

There’s more…

“this leisure the diligent man will obtain, but the lazy man never; for A life of leisure and a life of laziness are two things.

The option of having a choice about how to spend your time and energy results from being diligent. You’ve seen it a hundred times; the slacker remains a slacker all his or her life; the hard worker grows in stature at work and in the community. The slacker ends up with few choices and the diligent person with many.

Leisure is the reward of work and laziness is trying to gain the reward without doing the work, which – by way of observation – is just as much work as that done by the diligent person.

There’s more from Father Abraham on this topic…

“Many, without labor, would live by their wits only, but they break for want of stock; whereas industry gives comfort, and plenty, and respect.

Following Father Abraham’s thoughts from the last entry, it only makes sense that those who ‘live by their wits only’ and avoid labor eventually come to a bad end. Consider where the petty thieves, drug dealers, con artists, even organized crime bosses end up. ‘They break for want of stock.’ There’s nothing of value in their choices or their ‘work.’

Those who work diligently, on the other hand, and take control of their money, their time and their lives arrive at a different place.

Sometimes my workload writing, helping clients and mentoring other advisors is so heavy that I have to hire out some chores around the house. My favorite chore to hire out is mowing the lawn and trimming around the sidewalks, trees, planters and bushes.

The 72 year old man that does this work for me is a fine example of a person who has diligently made his way through life for the past four decades on his own terms. He is respected and admired by everyone who employs him, works only when he chooses based on his age and energy level, but lacks for neither money nor leisure.

Father Abraham makes one more point…

“Fly pleasures, and they will follow you. The diligent spinner has a large shift; and now I have a sheep and a cow, everybody bids me good morrow.”

I recently attended the 50^th reunion of my high school graduating class. I was amazed and surprised that so many of my classmates remembered me for who and what I was 50 years ago. Some of those memories were accurate and others were not. The party girls from ’58 were still seen as party girls. The jocks were still the jocks. The elite still elite.

If you start out as a pleasure seeker you may never recover to be anything better in the eyes of the world. The ‘diligent spinner’ started, I’m thinking, with just one sheep. He worked hard, made wool enough to also buy a cow and now ‘everybody bids [him] good morrow.’

www.YouBeTheBank.com

By Benjamin Franklin and Dr Agon Fly

Having laid the groundwork for continuing his verbal treatise, Father Abraham translates the premises he’s postulated into a series of calls to action.

“Let us, then, up and be doing, and doing to the purpose;

These simplest of words carry profound meaning when it comes to you building your wealth. During the last thirty-five years Americans have lost track of the basic truth that working hard and following conventional wisdom – doing what everyone else does with their money just because that’s the way everyone else is doing – just isn’t enough. You need to invest your activity and decisions with meaning. You need to be ‘doing to the purpose.’

What purpose? Every successful personal economy has four essential goals: to be debt free, to develop an income stream that requires neither work nor active management, to have plenty of cash at hand when confronting life’s surprisingly unsurprising surprises, and, perhaps most importantly, to pay forward a legacy of both money and the secret wisdom about the way to wealth so future generations aren’t burdened with property they don’t own and investments they don’t control.

Father Abraham has other admonitions about how to travel the way to wealth.

“so by diligence shall we do more with less perplexity.

Diligence on the way to wealth means persevering with attention and care at building your personal economy. Diligence makes life simpler and less perplexing. That lets you get more done in less time and with less stress. Life is only a struggle for those who struggle with living.

Dr Benjamin Franklin’s Father Abraham has more insights…

 “Sloth makes all things difficult, but industry all easy;

Motivational speakers, authors and coaches get paid millions of dollars every year to tell you the simple compelling truths that Americans have embraced for over 250 years and that Dr Benjamin Franklin’s Father Abraham popularized in the final installment of Poor Richard’s Almanac in 1758.

It’s no surprise that Dr Benjamin Franklin has become such an iconic person in history and folklore. He practiced what Father Abraham preached. He worked diligently at a wide range of tasks and became one of the wisest, most accomplished and most beloved men in history because of it…and he made it look easy.

Let’s consider a few more of Father Abraham’s ideas.

“and He that riseth late must trot all day, and shall scarce overtake his business at night; while Laziness travels so slowly, that Poverty soon overtakes him. Drive thy business, let not that drive thee;

I know a man that claims to be a ‘night person.’ He stays up late, sleeps late, gets to the office late, then works late. His family suffers, his health suffers, his business suffers, he complains about being overwhelmed on a regular basis. This man reads motivational books, attends seminars, studies Dr Benjamin Franklin’s works, yet he refuses to consider the possibility that his sleeping and work habits have anything to do with his everyday challenges.

Is this laziness? I don’t judge it, but Father Abraham implies as much and predicts the natural consequence – poverty. In America we may measure such a man as a success. He has a nice home in a nice neighborhood, drives a nice car and so on.

The hidden reality, however, is that he could be a better parent, a better spouse, a better provider, and of greater service to his clients. His income, his charitable giving, his health, life and peace of mind could all improve if he would put his business in perspective and give up the failed idea that he is a ‘night person.’

Father Abraham ends this discussion of “Do or do not…there is no try” with perhaps the most commonly quoted aphorism from Poor Richard’s Almanac;

“and Early to bed, and early to rise, makes a man healthy, wealthy, and wise, as Poor Richard says.

Bill Newman was one of the founders of the human potential movement and one of my mentors. He taught me by example that this approach to time and life management worked well.

I had hired Bill to conduct his PACE seminar for a group of my employees. I invited him to stay with my family for the two nights he would be in town. When he retired the first evening it was quite early and I asked him when he’d like me to awaken him. He said he would awaken at 5:30 and I need not worry. He did. He did so without the aid of an alarm. Bill had become so accustomed to rising early that doing so was automatic for him. I’m betting the same was true for Dr Benjamin Franklin and for thousands of other successful people for centuries and millennia.

www.YouBeTheBank.com

August 21st, 2008

By Benjamin Franklin and Dr Agon Fly

Father Abraham continues: “If time be of all things the most precious, wasting time must be, as Poor Richard says, the greatest prodigality;

Like most seekers in their thirties, I devoured books, articles and training programs that could help me grow and prosper. In 1975 – or thereabouts – I discovered a timeless treasure in Alan Lakein’s book ‘How to Get Control of Your Time and Your Life.’  I adopted the principles and practices the book advised, and adapted them to my life and lifestyle. I created a training program for my employees and clients based on the ideas in the book. I was convinced that Alan Lakein had discovered eternal truths.

A few years later I discovered ‘The Way to Wealth.’ Surprise: 225 years earlier Dr Benjamin Franklin had not only known of these ideas but had also written about them. When Father Abraham begins the discussion of time management it is with the premise that the ineffective use of time is a failing so great that it is the greatest failing a person can allow themselves.

As he continues his dissertation, the first principle Father Abraham lays out is

“since, as he elsewhere tells us, Lost time is never found again;

Lost money can be regained. Lost opportunity can be regained. Lost sales become lessons learned and future sales. Lost time – be it seconds, minutes, hours, days or longer – is gone forever. Every culture, every age and every spiritual tradition recognizes the value of time. Living in the present moment isn’t a Buddhist idea or a Christian mystical teaching or the wisdom of the ancient Greeks, Hindus or Jews. It is the common sense that Father Abraham captured in a few short words: “Lost time is never found again.”

Father Abraham continues again with sage words that anyone who ever tried to complete a complex project on schedule can relate to:

“and what we call time enough, always proves little enough.

My working career started in 1965 as a computer programmer for a large corporation. My first assignment was to learn a ‘symbolic language’ that would let me talk to an IBM 1460 computer. I went to a computer language school for a week and returned confident that I could handle any programming challenge that was thrown at me.

As soon as I returned to my desk at work the boss handed me a small payroll reporting program that one of the HR folks wanted. My boss reassured me that “It should only take you a few hours to code it.  You can get it compiled into a language that the computer can understand overnight and have it running tomorrow.”

That was Monday morning. Fast forward to Thursday morning and the distinct possibility that I would be summarily dismissed for gross incompetence. The ‘few hours’ turned into about 40 and the program simply defied every attempt at being ‘compiled.’ I was downhearted, thought myself a complete failure and was ready to take my lumps.

I and my boss were, however, in for a surprise. One of the more senior programmers offered to look over my code and help me get it right. After a few minutes the senior programmer burst out laughing. I was certain he was about to ridicule me out of existence but instead he gave me hug. “Jeff’s logic is impeccable” he told us, “and his code is elegant.” We were puzzled. What’s wrong, then, we wondered. “The only problem is” he continued laughing so hard he had tears in his eyes, “you sent Jeff to the wrong language school.”

www.YouBeTheBank.com

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It is rare for me to quote someone else’s blog in full detail. However, Greg Moore is helping many Americans escape from the Debt Paradigm and his emails are always worth reading. I hope this one inspires…

Dr Agon Fly - www.YouBetheBank.com

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Getting Into the 0% Interest Loan Game…

The U.S. Government is getting into the 0% Interest Loan Game. Actually, if you consider income tax refunds are really 0% loans taxpayers make to the government, the government is already in the 0% game.

Only this time, instead of you receiving 0% on money you lend to the government, the government will lend you money at 0%.

I’m referring to the new Housing and Economic Recovery Act of 2008, specifically, the “First-Time Home Buyer Tax Credit” portion of this bill.

You can read the “current” details of this provision here:

http://www.federalhousingtaxcredit.com/

I say, “current,” because, as you’ll read, some  details are still being worked out.

In a nutshell, the FTHBTC provides a “refundable” tax credit up to $7,500 for first-time home buyers on homes purchased between April 9, 2008 and July 1, 2009.

Tax credits reduce your tax liability dollar for dollar, so, for example, if you have a $10,000 tax liability and you were eligible for — and took — all $7,500 of this credit, you would only owe $2,500.  The “refundable”

part means you will receive this credit even if you have no tax liability. If you owe nothing, you will receive a check up to $7,500. If you expect a refund, your refund check will be increased by the amount of the credit.

Now, before you begin scheming on all of the ways you can put this credit to work in your debt-elimination, wealth-building, or flat screen TV plans… wait!

The amount of your credit must be PAID BACK over a period of 15 years. “Tax-credit” in this case means you have an IRS loan at 0% for 15 years.

This is just a wee bit different than a traditional tax-credit…

Michelle Singletary, personal finance columnist for the Washington Post had a few questions for an IRS spokesperson…

Michelle: Since this is a loan from the IRS, will the IRS be sending an annual loan statement to taxpayers?

IRS: The details of how the IRS will collect this money or inform people have not been worked out. A line would probably be added to the standard 1040 tax form to indicate that the credit should be paid as part of your tax liability.

Michelle: Can I pay off the loan early?

IRS: The IRS hasn’t yet come up with a system to accommodate an early payoff.

Michelle: What happens if someone does not pay back the debt on time or at all?

IRS: The unpaid loan will be treated like any delinquent tax obligation, meaning standard IRS interest and penalties apply.

Yep. Just like any 0% loan you default on, the 0% rate disappears, which places it in the same category as 0% credit cards, with one exception…

Do you really want to have the IRS as a creditor?

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Greg Moore is the Architect of the Debt Freedom System, ‘DebtIntoWealth — Lessons from My Journey to Debt Freedom.”

http://www.debtintowealth.com/debttrap.html

DEBTINTOWEALTH.COM

By Benjamin Franklin and Dr Agon Fly

I. Industriousness

It would be thought a hard government that should tax its people one-tenth part of their time, to be employed in its service;

Benjamin Franklin and the other Founding Fathers didn’t have to deal with the IRS, state, county, township, city and district income taxes, taxes on gas, electricity, telephone service, internet access, cable and satellite service, water, sewer, gasoline, heating fuel, beer, wine, whiskey, tobacco, and sales tax on almost everything else thrown in just for good measure. Add to that the taxes on corporations, which are rolled into the price of their goods. Those taxes then get taxed again when you buy those goods.

Today’s governments in America take a lot more than ten percent of your time. They don’t require actual time. They take so much of the typical American’s work product – money for short – in the form of taxes that you really work for the government up to 50% of the time.

It can get even worse when you add in estate and inheritance taxes and probate fees and costs if you are financially successful and don’t have well informed and qualified advisors.

but idleness taxes many of us much more; sloth, by bringing on diseases, absolutely shortens life. Sloth, like rust, consumes faster than labor wears; while the used key is always bright, as Poor Richard says.

One thing hasn’t changed. No matter how much of your money the government takes, you are still responsible for your health and your own financial success or failure. That means you have to rely on your own work to produce enough income to care for yourself and your family if you have one.

Benjamin Franklin obviously refers to manual labor when he talks about ‘sloth brining on disease’, rust consuming faster than wear and tear, and saying the ‘used key is always bright.’ Many Americans don’t do manual labor. Finding a way to keep your key always bright is intrinsically your job, too.

A corollary to what Father Abraham teaches is that relying on government for health care or financial support is not a good idea. The more a government gives you personally the more it can take away.

Here’s a story that should make you madder than h… and wake you up to the reality that is the credit card business.

A businessperson applied for and received an Advanta credit card with a low permanent rate of 7.99% - not an introductory rate, a low permanent rate.

• The card was used to pay all of the businesses expenses and was paid in full periodically as cash flow allowed; ususally each month or so.
• All payments were made on time and the credit limit was never exceeded.
• There were no cash advances taken and the “courtesy checks” that came with almost every bill, and which carry usurious rates, were summarily shredded as they were received.
• The businesspersons’s credit score was in the high 700’s and the business itself had never had any kind of negative report from any credit reporting agency or vendor.

So, what did Advanta do? They raised the rate to over 20% with a two week notice and with no justification other than “We adjust rates based on a variety of factors.”

Here’s the reality.

• You have NO CONTROL of the money that is tied up by credit card companies or of the rates they can charge you for the use of that money.
• Credit card issuers can raise your rate for NO REASON AT ALL and with minimal notice.
• Unlike the fixed or variable rate mortgage on your home, the terms of the mortgage on your paycheck that credit card companies hold can be changed by them without cause or limit - that’s right, they can charge you 100% if they wish.

Credit is a trap. You cannot win the credit game and you cannot escape unless you learn to be your own credit grantor; to be your own bank. It’s not as hard as it sounds or appears. You have to change your mind about money and adopt The Money for Life Plan thatl lets You Be The Bank. I know this is a commercial of sorts, but I also know that those who follow this approach are rocking comfortably on the front porch while others are sneaking out the back door to avoid the bill collectors.

By the way, the businessperson cancelled the credit card, paid off the balance and now relies entirely on her own bank.

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www.YouBeTheBank.com

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The Money for Life Plan

America is addicted to investments they can’t control and debt they may never repay.

As you will see shortly, T. Boone Pickens has committed $58,000,000.00 to promote a plan to wean America from foreign oil in ten years.

The Money for Life Plan weans individual Americans from the Debt Paradigm almost immediately. [It's not as expensive.]

In both cases the process begins when a person - or in the case of the Pickens’ Plan - when a country changes its mind.

The Money for Life Plan lets YouBeTheBank and gain control of the money that flows through your life. It relies on the individual family re-thinking what works and what doesn’t regardless of the “conventional wisdom” that the Behemoths - large government, unions and business - want you to believe.

The Pickens Plan flies in the face of the “conventional wisdom” of Washington DC. The Pickens Plan aims to keep American money in America by converting electric power generation from natural gas to power generated by wind and solar, then converting petroleum driven vehicles to natural gas.

Both plans rely on the same principle.

The Pickens Plan believes that it’s essential for our nation to regain control of its energy and stop sending  $700,000,000,000.00 of our wealth oversees every year.

The Money for Life Plan believes that it’s essential for individual American families to stop putting their money into investments they don’t control and debt they may never repay.

Below is a detailed description of the Pickens Plan. I encourage you to read it, recognize the wisdom it contains, and sign on to support it. It is worth your time and attention.

I also encourage you to visit www.YouBeTheBank.com and learn about The Money for Life Model. I don’t have $58,000,000.00 to promote this idea and the book that describes it Money Now, Money Later, Money for Life! How to thrive in good times and bad so I’m hoping you’ll discover some value there and tell a friend.

The Pickens Plan

America is addicted to foreign oil.

It’s an addiction that threatens our economy, our environment and our national security. It touches every part of our daily lives and ties our hands as a nation and a people.

The addiction has worsened for decades and now it’s reached a point of crisis.

In 1970, we imported 24% of our oil.
Today it’s nearly 70% and growing.

As imports grow and world prices rise, the amount of money we send to foreign nations every year is soaring. At current oil prices, we will send $700 billion dollars out of the country this year alone — that’s four times the annual cost of the Iraq war.

Projected over the next 10 years the cost will be $10 trillion — it will be the greatest transfer of wealth in the history of mankind.

America uses a lot of oil. Every day 85 million barrels of oil are produced around the world. And 21 million of those are used here in the United States.

That’s 25% of the world’s oil demand. Used by just 4% of the world’s population.

Can’t we just produce more oil?

World oil production peaked in 2005. Despite growing demand and an unprecedented increase in prices, oil production has fallen over the last three years. Oil is getting more expensive to produce, harder to find and there just isn’t enough of it to keep up with demand.

The simple truth is that cheap and easy oil is gone.

What’s the good news?

The United States is the Saudi Arabia of wind power.

Studies from around the world show that the Great Plains States are home to the greatest wind energy potential in the world — by far.

The Department of Energy reports that 20% of America’s electricity can come from wind. North Dakota alone has the potential to provide power for more than a quarter of the country.

Today’s wind turbines stand up to 410 feet tall, with blades that stretch 148 feet in length. The blades collect the wind’s kinetic energy. In one year, a 3-megawatt wind turbine produces as much energy as 12,000 barrels of imported oil.

Wind power currently accounts for 48 billion kWh of electricity a year in the United States — enough to serve more than 4.5 million households. That is still only about 1% of current demand, but the potential of wind is much greater.

A 2005 Stanford University study found that there is enough wind power worldwide to satisfy global demand 7 times over — even if only 20% of wind power could be captured.

Building wind facilities in the corridor that stretches from the Texas panhandle to North Dakota could produce 20% of the electricity for the United States at a cost of $1 trillion. It would take another $200 billion to build the capacity to transmit that energy to cities and towns.

That’s a lot of money, but it’s a one-time cost. And compared to the $700 billion we spend on foreign oil every year, it’s a bargain.

An economic revival for rural America.

Developing wind power is an investment in rural America.

To witness the economic promise of wind energy, look no further than Sweetwater, Texas.

Sweetwater was typical of many small towns in middle-America. With a shortage of good jobs, the youth of Sweetwater were leaving in search of greater opportunities. And the town’s population dropped from 12,000 to under 10,000.

When a large wind power facility was built outside of town, Sweetwater experienced a revival. New economic opportunity brought the town back to life and the population has grown back up to 12,000.

In the Texas panhandle, just north of Sweetwater, is the town of Pampa, where T. Boone Pickens’ Mesa Power is currently building the largest wind farm in the world.

In addition to creating new construction and maintenance jobs, thousands of Americans will be employed to manufacture the turbines and blades. These are high skill jobs that pay on a scale comparable to aerospace jobs.

Plus, wind turbines don’t interfere with farming and grazing, so they don’t threaten food production or existing local economies.

A cheap new replacement for foreign oil.

The Honda Civic GX Natural Gas Vehicle is the cleanest internal-combustion vehicle in the world according to the EPA.

Natural gas and bio-fuels are the only domestic energy sources used for transportation.

Cleaner

Natural gas is the cleanest transportation fuel available today.

According to the California Energy Commission, critical greenhouse gas emissions from natural gas are 23% lower than diesel and 30% lower than gasoline.

Natural gas vehicles (NGV) are already available and combine top performance with low emissions. The natural gas Honda Civic GX is rated as the cleanest production vehicle in the world.

According to NGVAmerica, there are more than 7 million NGVs in use worldwide, but only 150,000 of those are in the United States.

The EPA estimates that vehicles on the road account for 60% of carbon monoxide pollution and around one-third of hydrocarbon and nitrogen oxide emissions in the United States. As federal and state emissions laws become more stringent, many requirements will be unattainable with conventionally fueled vehicles.

Since natural gas is significantly cleaner than petroleum, NGVs are increasing in popularity. The Ports of Los Angeles and Long Beach recently announced that 16,800 old diesel trucks will be replaced, and half of the new vehicles will run on alternatives such as natural gas.

Cheaper

Natural gas is significantly less expensive than gasoline or diesel. In places like Utah and Oklahoma, prices are less than $1 a gallon. To see fueling stations and costs in your area, check out cngprices.com.

Domestic

Natural gas is our country’s second largest energy resource and a vital component of our energy supply. 98% of the natural gas used in the United States is from North America. But 70% of our oil is purchased from foreign nations.

Natural gas is one of the cleanest, safest and most useful forms of energy — residentially, commercially and industrially. The natural gas industry has existed in the United States for over 100 years and continues to grow.

Domestic natural gas reserves are twice that of petroleum. And new discoveries of natural gas and ongoing development of renewable biogas are continually adding to existing reserves.

While it is a cheap, effective and versatile fuel, less than 1% of natural gas is currently used for transportation.

The Mechanics

We currently use natural gas to produce 22% of our electricity. Harnessing the power of wind to generate electricity will give us the flexibility to shift natural gas away from electricity generation and put it to use as a transportation fuel — reducing our dependence on foreign oil by more than one-third.

How do we get it done?

The Pickens Plan is a bridge to the future — a blueprint to reduce foreign oil dependence by harnessing domestic energy alternatives, and buy us time to develop even greater new technologies.

Building new wind generation facilities and better utilizing our natural gas resources can replace more than one-third of our foreign oil imports in 10 years. But it will take leadership.

On January 20th, 2009, a new President will take office.

We’re organizing behind the Pickens Plan now to ensure our voices will be heard by the next administration.

Together we can raise a call for change and set a new course for America’s energy future in the first hundred days of the new presidency — breaking the hammerlock of foreign oil and building a new domestic energy future for America with a focus on sustainability.

You can start changing America’s future today by supporting the Pickens Plan. Join now.

By Ben Franklin and Dr Agon Fly

COURTEOUS Reader,

I have heard that nothing gives an author so great pleasure as to find his works respectfully quoted by others.

          Dr Agon Fly agrees.

Judge, then, how much I must have been gratified by an incident I am going to relate to you. I stopped my horse lately, where a great number of people were collected at an auction of merchants’ goods.

Today we park our cars in multilevel parking facilities at multilevel malls where a great number of people are collected for “sales.”

The hour of the sale not being come, they were conversing on the badness of the times;

Just like last week, of month or year, times and topics remain consistent. Some see the world as full of shadows and others see it as full of light. Those who live on the dark side tend to engage in negative talk and behavior while those on the side of light focus on more positive thoughts and activities – as you will discover was the case in 1758 as it is today. Read on.

and one of the company called to a plain, clean old man, with white locks,

          A picture of wisdom.

“Pray, Father Abraham, what think you of the times? Will not these heavy taxes quite ruin the country? How shall we ever be able to pay them? What would you advise us to do?”

Today, as in 1758, people look to those with experience and the wisdom of years for advice and counsel. The difference between 1758 and 2008 is that current America has mistakenly clothed government – including its most incompetent branch; the Congress – corporations, unions and bureaucracies with the mantel of both knowledge and wisdom.

Father Abraham stood, up and replied, “If you would have my advice, I will give it you in short; for ‘A word to the wise is enough,’ as Poor Richard says…”

Ah! The first words of Poor Richard and how profound. There’s much more to come. Read on.

By Dr Benjamin Franklin and Dr Agon Fly

In 1758 Benjamin Franklin published the final annual installment of Poor Richard’s Almanac. As a preface to this final edition he wrote The Way to Wealth and introduced Father Abraham as the main character in the tale.

Father Abraham embodied the financial wisdom that “Poor” Richard Saunders – Ben Franklin in disguise – incorporated in the 25 years during which the almanac was a staple on the bookshelves and kitchen tables of colonial America.

In 2008, on the sesquicentennial of that event, Dr Agon Fly is bringing this classic book about money back to life. The money wisdom that Dr. Benjamin Franklin captured in The Way to Wealth is timeless; however, the vernacular of 1758 sometimes obscures the meaning for today’s economy and for the   personal economies of 21^st Century Americans.

Dr Agon Fly offers clarification and corrects archaic words and spellings to help the reader move easily through the story and capture the essence of the messages about money, saving, investing, debt, taxes and a variety of other financial fundamentals.

In addition, Dr Agon Fly provides commentary on Father Abraham’s insights in 21^st Century English and invested with the knowledge of financial products and services that were not available to Americans in 1758.

Dr Agon Fly’s comments are indented and italicized to set them apart from the main text.

Read on…

Introduction by Benjamin Franklin – Commentary by Dr Agon Fly

In 1732 I first published my Almanac under the name of Richard Saunders; it was continued by me about twenty-five years, and commonly called Poor Richard’s Almanac. I endeavored[i] to make it both entertaining and useful, and it accordingly came to be in such demand, that I reaped considerable profit from it, vending annually near ten thousand.

Think about that! That’s about ½ of 1% of the total population as subscribers and about 2% of the total population based on family size. In today’s terms, that would be over 6 million subscribers. Any publisher or writer – even J. K. Rowling – would be pleased with that. Imagine the influence this simple publication had on the thinking and behavior of early America

And observing that it was generally read, (scarce any neighborhood[ii] in the province being without it,) I considered it as a proper vehicle for conveying instruction among the common people, who bought scarcely any other books.

In today’s world of mass communication – TV, cell phones that are more powerful than the computers of just ten years ago, print on demand publishing and – more than anything else – the internet, is it any wonder that Americans are going in dozens of different financial directions.

 I therefore filled all the little spaces, that occurred between the remarkable days in the Calendar, with proverbial sentences, chiefly such as inculcated industry and frugality, as the means of procuring wealth, and thereby securing virtue; it being more difficult for a man in want to act always honestly, as (to use here one of those proverbs) “It is hard for an empty sack to stand upright.”

Ben Franklin wrote pithy sayings and motivated early Americans to work hard and save money so they could amass wealth and secure “virtue.” The amazing part of this is that it worked for the founding fathers and for many generations after them. It’s hard to be virtuous – have peace of mind and the freedom to serve our family, church, and country.