There usually seems to be a trade-off between time vs. money.  It is probably not a coincidence that people who have a lot of money are short on time and people who have a lot of time don’t have money.  One would think it would be the opposite.  If you have a lot of money, you should have a lot of time on your hands.  But this only happens if you are retired.  If you have a busy job or own your own business, you don’t have much time.  But you can’t quit your job or business or you might not have enough money.

I think it is good to think about the trade-off between time and money.  Of course, everyone’s time is limited, unless technology finds a way to make us immortal.

If you make 100 dollars per hour in your work, it is probably not a good use of your time to clip coupons.  On the other hand, if you make 8 dollars per hour, it probably is a good idea to clip coupons.  There is really almost a sliding scale here.

The more money you make, the more you should make use of the division of labor.  Tiger Woods is better off spending an extra hour with his golf coach each week instead of mowing his lawn.  He can pay someone a trivial amount to mow his lawn (from his perspective), but spending an extra hour with his golf coach could mean the difference of a win or second place finish.  It could potentially mean tens of thousands of dollars.

Even if an extra hour with his golf coach wouldn’t matter, he is still better off relaxing or doing a hobby (hopefully not getting into any more trouble) than mowing his own lawn.

For someone making 8 or 10 dollars an hour, they probably should be mowing their own lawn, unless they have another source of income or if they are using their extra time building skills.

For someone making 50 dollars an hour, it would make sense for them to call a plumber for something that would take a couple of hours to fix.  It might make sense to hire a lawn service.  It may or may not make sense to hire a maid.

Again, the more you make, the more you should make use of the division of labor and delegate other tasks.  You are better off focusing on your own work.  However, if you like mowing your lawn and find it good exercise, then do it.  If you want to change the oil in your car by yourself because you like working on cars, then do it.  If it is more like a hobby to you than a chore, then there is nothing wrong with doing it.  Tiger Woods should mow his own lawn if he feels like it is a good stress reliever.

You should also look at time vs. money when you are spending.  If you are spending 15 dollars for a dinner and that is how much you make in an hour, then ask yourself if the dinner is worth an hour at your job.  It may be.  I think it is even more useful when talking about larger ticket items.

If someone makes $30,000 a year after taxes and is considering buying a car that will cost $30,000, that person should ask himself if a full year at work is worth having that car.  It puts it in a different perspective.  It makes you realize how much your time is worth.  If you can buy a decent car for $10,000 and “save” $20,000, then perhaps with good investing (if you invested the money you would have spent on the more expensive car) you will be able to retire a year or two earlier than if you bought the expensive car.

If you are looking for ways to make more and/ or spend less, I would look at the spending side first.  If you cut your spending by 10 dollars, then you save 10 dollars.  But to save 10 dollars by working more, you might actually have to earn 12 or 13 dollars because of taxes.

The time vs. money decision is a personal decision.  But you should at least do a fair comparison so that you know what you are getting.  Maybe an expensive vacation isn’t a good idea if it is going to cost you a month’s salary.  But then again, maybe it is your dream vacation and a month’s salary is completely worth it to you.  Just make sure you fund that vacation out of savings and not by running up debt, because putting it on your credit card without paying it off right away will mean it will cost you several months worth of salary.

There is a legitimate argument to be made that 401k plans, IRAs, and other retirement plans are not safe.  In saying the word “safe”, I am not talking about the threat of financial institutions going bankrupt or the threat of a stock market collapse, although those may be legitimate threats too.  When I say “safe”, I am talking about safe from government confiscation.

I go back and forth on this issue.  I think the government would love to get its dirty mitts on retirement accounts.  Governments are in “need” of money and it is only going to get worse.  Politicians will do almost anything they can get away with.  While it has been tried in other countries and even been partially successful (from the government point of view), I think it is less likely in the U.S.

In the U.S. there is a lot of wealth being held in retirement accounts such as 401k plans and IRAs.  While this makes it a big target for governments, it also adds a layer of protection.  With tens of millions of Americans in 401k plans, it means that there will be fierce opposition to any government attempt at confiscation.

The only way that the U.S. government will be successful in confiscating retirement funds is by doing it in baby steps.  Isn’t that the way we have turned into a virtual welfare state?  It is the story of putting a frog in boiling water.  If you don’t want the frog to jump out, you have to slowly heat up the water.

There are a number of measures the U.S. government can take to start heating up the water, even if slowly.  These are just a few ideas.  The politicians could raise the minimum age for withdrawal without a penalty.  The politicians could increase the penalty for an early withdrawal.  The politicians could simply increase the income tax rates.  This will mean people paying higher taxes upon withdrawal, except for those in a ROTH IRA or ROTH 401k plan.

Another step the government could take would be to offer “government guaranteed investments”.  After a stock market crash, the politicians could announce a new government fund designed for a safe and secure retirement.  They would “invest” the money in U.S. treasury bonds.  This would allow them to kick the can further down the road in terms of running up spending and debt.  It would be a way to do this without relying on the Fed for massive monetary inflation.

Such a program of offering a government guaranteed investment would probably be voluntary at first.  Again, you don’t want to heat up the water too fast.  After the voluntary program, perhaps the government would start offering tax incentives for people to invest in the government funds.  Again, I have no idea how exactly things could play out, but I am just throwing out some possible ideas.  If you think some politician is going to steal an idea here, don’t worry, because I’m sure the politicians are already thinking about all of this.

The good news is that we have the internet.  When the government tries one of these preliminary steps, there will be people like me talking about them and warning others.  There are hundreds of thousands of libertarians now in existence in America.  Perhaps the number is in the millions.  Most of these people have friends, particularly on Facebook.  It will be hard for the government to get away with a retirement confiscation.

If for some reason the current libertarian swell and the internet are not enough to stop the government, you will at least get plenty of warning signs ahead of time.  The government will not throw the American people into a boiling pot.  It will start slowly.

A couple of weeks ago, I wrote on the topic of interest rates.  I asked if we were seeing the beginning of rising rates.  Interest rates, like the 10-year yield, jumped higher in a short amount of time.  Since then, the rates have retreated slightly, although the 10-year rate remains above 2% as of this writing.

One thing I failed to mention in that post is that we are not likely to see significantly higher interest rates until we see significantly higher price inflation.  In other words, I don’t expect to see the 10-year yield to double or triple until we see much higher consumer price inflation.  We might see the 10-year yield go to 2.5% or even 3%, but I don’t expect it to go to, say, 6%, unless we see substantially higher consumer price index (CPI) numbers.

The reason for this outlook is the Federal Reserve.  If the rates start to creep up more, I would expect the Fed to start buying more government debt, particularly longer-term bonds.  Whether they call it QE3, Operation Twist, or anything else, I would expect the Fed to buy longer-term bonds.  This will put a lid on interest rates.  I would not expect to see a Bernanke Fed sit on its hands and do nothing in the face of rising rates in the current environment.

The one scenario where I see the Fed sitting on its hands is if we see a big spike in consumer prices.  I understand that things like food and gas are already going up at a decent clip.  I understand that the CPI is not the most accurate measure of price inflation and may be swayed to understate the number.  But generally speaking, price inflation is not huge right now.  It is not like the 1970’s yet.

Big price inflation (let’s say 10% or more) is the one thing that could stop the Fed from buying more government debt.  While many libertarians disagree with me on this point, I think the Fed will stop the monetary inflation if the dollar is severely threatened.  It does not make any sense why the Fed and bankers would allow a situation of hyperinflation.  This would destroy the division of labor.  They would be committing financial suicide to go this far.

So the one situation I can see where the Fed would allow rates to rise would be in the face of severe price inflation.  The Fed will probably choose to save the dollar.  At that point, interest rates would go up.  We would see an unwinding of all of the previous malinvestment.  We would see a severe recession or depression.  The federal government would finally be forced to cut back on its massive spending.

In conclusion, we should watch the CPI just as carefully as we watch interest rates.  If the CPI remains around 2 to 3 percent on an annual basis, then the Fed can keep holding rates down.  Once bigger price inflation kicks in, then the Fed will have to make a decision to stop or severely cut back its purchases of government debt.  Then we could see much higher interest rates.

There is a lot of talk on the internet, and even by the Ron Paul campaign, that the media is not reporting what is actually happening in the race for the Republican nomination.  It has been pointed out, even by Ron Paul himself, that many of these primaries are basically just straw polls and that many of the delegates have not even been decided yet in states where voting has already taken place.  This article published a couple of weeks ago is fairly representative of some of the things I have been reading and hearing.

I hate to be the bearer of bad news on this one.  I really don’t want to rain on anyone’s parade.  Please don’t take this as being negative.  Please don’t think that I’m telling you to give up.  Please don’t think I am telling you not to vote or voice your opinion.  But I am going to be a realist here and tell you that the chances of a Ron Paul presidential Republican nomination are extremely slim.

Does anyone really believe that Ron Paul can win this, even if it did go all the way to the convention?  The Ron Paul camp is trying to win this on the technicalities of the Republican Party rules.  If anyone is going to win based on technicalities, it sure isn’t going to be Ron Paul.  If anything, if Ron Paul were actually the front runner, I would be waiting for dirty tricks by the insiders to try to snatch it away.

Even if it did go to convention, I don’t see how Ron Paul could have a majority of the delegates, even after the delegates are no longer “committed”.  If anything, it would be Santorum, Gingrich, and Romney teaming up to make sure that the nomination does not fall into Ron Paul’s hands.

Based on my outlook, I have no reason to be disappointed at this point.  A lot of libertarians thought this was our last chance.  They thought that the whole point of the Ron Paul campaign was to win and that nothing else mattered.  I had no delusions about this.  I knew his chances would still be slim.  I am positive about the whole thing from an education standpoint.  There are hundreds of thousands of new libertarians now because of the Ron Paul campaign.

As far as the Republican race goes, Mitt Romney will be the nominee.  As I write, he is projected to win Wisconsin, Maryland, and Washington DC.  Romney has been the front runner ever since Rick Perry took a nose dive.  Perry was really the only person capable of beating Romney.  But Perry was a horrible debater and had some really bad advice.  Santorum and Gingrich never really had a chance.  Santorum wants to shove his religion down the throats of others.  He would have been destroyed by Obama.  And Gingrich has too much personal baggage, along with an unlikeable personality.

You are going to see more and more politicians line up behind Romney now.  We have seen those great conservatives (that’s sarcasm) like Paul Ryan and Marco Rubio line up behind Romney.  The rest will soon follow, with certain exceptions like Ron Paul.

I think Ron Paul should continue his campaign for educational purposes, assuming he doesn’t run on a third party ticket.  However, I don’t think the Ron Paul campaign or Ron Paul supporters should go around pretending that he can still win the Republican nomination.

There has been a lot of news lately on the lottery.  There was a jackpot worth $640 million, although not really when you take the lump sum and you take away all of the taxes.  There were three tickets that won.  The ticket sales for this one drawing were reportedly near $1.5 billion.

I consider the lottery like a tax on the poor.  Maybe a tax on the lower class is a better description.  Sure, there are middle class people who buy tickets and there are even people with good incomes and high net worths who buy tickets.

There is a difference between poor and lower class.  I have seen a description of class as your outlook for the future or your time preference.  If you have a low time preference and can look far into the future, then you are not lower class, even if you don’t have much money.  People who live for today and who have a high time preference are lower class.  It doesn’t mean you can’t have fun today.  But you do need some planning in life to get out of that lower class mentality.

The lottery is a joke.  For this particular one, the odds of winning were about 1 in 176 million.  I’m not looking down on you if you bought a ticket.  Perhaps you wanted to be part of the mania.  But if you were banking on your retirement plan coming through with 6 winning numbers, then you better have a plan B.

The lottery makes most people poorer.  When I say “most”, I mean probably 99.999% of people who play.  It is like a tax.  The government takes a good cut of the money to pour into the state indoctrination systems, otherwise known as schools.  Governments also use the money for other things like buying votes, paying lobbyists, and making more people dependent on government.

If I am going to give up my money gambling, I would rather send it to a casino which is a legitimate business.  Lotteries are a government monopoly.  And the governments take a much bigger cut than the house in a game of blackjack, or even playing the slots.

I could never figure out why people all of a sudden get so excited when the jackpots grow to huge amounts.  There are some people who drive long distances to other states just to buy lottery tickets for that one drawing.  Some people spend twenty dollars, forty dollars, a hundred dollars, or even more at the chance to win.  Why weren’t these people doing this when the jackpot was smaller.  Is three million dollars or ten million dollars not enough for you?  You get “serious” about it when it gets up into the hundreds of millions?

The ironic thing is that the odds are much better in the other games.  For this last huge jackpot, you have to pick the Mega Ball number exactly.  In other lotteries, you can pick any six numbers in any order.  Your odds are much better, even if still remote.  So again, three million dollars isn’t good enough for you?  You will only make a big effort if the jackpot is in the hundreds of millions?

Of course, we have all heard the stories of lottery winners who go broke.  Worse, they end up ruining their lives or the lives of others with drugs, depression, greed, etc.  These are the lower class people.  They probably make up a majority of the people playing the lottery.  They don’t know how to handle getting this large sum of money all at once.  It is overwhelming to them.  In contrast, there are stories about lottery winners who stay grounded and make good decisions, although there seem to be few of these.

If you took everybody in America and took all of the money and divided it up equally amongst everyone, my bet is that 80% of the people would be back near where they started within five years.  The other 20% were probably headed up or down anyway, regardless of the redistribution.

It is not about the money.  It is about mentality.  Some people can see into the future and plan and others will live for today.

In conclusion, libertarians should not worry about fractional reserve banking.  It will be used by the Federal Reserve to inflate the currency as long as there is a Federal Reserve.  In a free society, fractional reserve banking will not take place anywhere close to the extent that it currently does, if at all.  We already have laws that allow people to use the courts to sue for fraud.  We don’t need any more laws.  Our main goal should be to eliminate the Fed by repealing legal tender laws and to get back to sound money.

2012 is potentially a real opportunity for the Libertarian Party.  Will they repeat the mistake of 2008?  Or will they put up a principled libertarian like some previous nominees.  Harry Browne was the nominee in 1996 and 2000.  Ron Paul was the nominee in 1988.  There have also been other principled nominees.  Let’s hope that if Ron Paul is not on the ballot in November, that there will at least be one pro-liberty candidate on there.

Real estate has been in a major downtrend for the last 5 years.  While all real estate is local, it is safe to say that there was a real estate bubble that burst for the large majority of Americans.  The downtrend may continue for a little while longer, depending on how long it takes for the malinvestment to clear.  Mortgage rates are even harder to predict, as it depends on what happens with interest rates in general, which depends on the Federal Reserve’s monetary policy and the overall state of the economy.

I have read and heard people say that now is a terrible time to invest in real estate.  Perhaps that means that we are beginning to see a bottom.  Perhaps not.  But now is not a terrible time to invest in real estate.  It was a terrible time 5 years ago.  In many places, housing prices are half of what they were back in 2006 or 2007.  With the loose monetary policy by the Fed and the potential for it to continue, it is easy to see a scenario where housing prices go up quite a bit from here, at least in nominal terms.

If you are in the right situation and you live in an area where housing prices are a good deal, I think now is an excellent time to start investing in real estate.  If you have some money in the bank and you plan to stay in your current area, then you may have a great opportunity.

So how do you know if you can get a good deal?  One easy way is to calculate the monthly expenses of a place (including mortgage, taxes, insurance, and potential repairs) and compare that to the potential rent.  If you can have a positive cash flow with the rent, then it is probably a good deal.

You should look for a place in a decent neighborhood.  You should look at 3 bedroom – 2 bathroom houses, and not more.  Condos and townhouses may be ok, but keep in mind that they will not appreciate as much and you will also have to include the association fees as a significant cost.

There are different ways to calculate your potential return on investment (ROI).  Here is how I like to do it.  Forget taking a mortgage (even if you may have to).  Let’s say you can buy a place for $100,000.  Let’s say that the taxes will be $100 per month.  Let’s say there are association fees for $100 per month.  Let’s say you can estimate repairs of $50 per month (just as an average estimate).  Let’s say the insurance will be about $50 per month.  Your total expense are $300 per month.  Let’s say you can rent the place out for $1,000 per month.  This will mean a net of $700 per month.  Again, this is without a mortgage.

In that scenario, you take the $700 and multiply it by 12 months.  You get $8,400 per year.  Take that number and divide it by the purchase price of $100,000.  You get 8.4%.  That is your ROI.  Your $100,000 investment will get you a return of 8.4% if your estimates are correct and you keep it rented.

To me, that seems like a decent return.  When you are considering an investment property, don’t worry too much about appreciation.  That will be icing on the cake.  Just make sure to buy in a decent neighborhood where it is unlikely to lose nominal value over the long run.  Worry the most about your ROI.  If you are taking out a mortgage, you want to have positive cash flow.

Many Americans have been financially devastated from the housing bubble crash.  Many feel defeated.  Now is a great time for investors to take advantage of great deals.  You can be choosy and take your time.  If you see something you like and the numbers look good, you can build real wealth over time.

Most of the Republicans have it wrong on Obamacare.  In fact, they are probably more inconsistent with their proposals than Obama.  Since I am a libertarian, I am obviously in favor of a complete repeal of Obamacare, but I think the Republican plan may be worse.  Since the Supreme Court is hearing arguments about the new health care legislation (also known as Obamacare), I figured now would be a good time to discuss the merits of the Republican “plan”.

First, a few side notes on this whole thing.  On Monday, the court heard arguments about whether they could even hear the case based on some 19th century law that says a tax hike cannot be challenged in court until the tax actually takes effect.  I find this strange because some taxes from the legislation have already taken effect.  The tanning tax (is Obama against white people getting a tan and getting some vitamin D?) has already taken effect.  In addition, you can no longer use money from a health savings account to buy over-the-counter medicine without a prescription.  This is basically a tax hike.

I suppose this whole tax debate is centered around the mandate to buy health insurance.  The tax penalty for not buying insurance has not yet taken effect, but there certainly have been new taxes that have already taken effect from Obamacare.

Next, from a constitutional standpoint, this whole piece of legislation is unconstitutional.  The 10th Amendment clearly says that those powers not delegated by the Consitution are to be left to the states or the people.  Since managing health care is not mentioned in Article I, Section 8, the federal government has no constitutional authority to pass legislation regarding health insurance or health care.  Of course, this would also mean that the federal government should not be doing anything like Medicare, Medicaid, HMOs, and the thousands of other things it does in health care.

The ironic thing is that if there is one thing the federal government does have the power to do based on the Constitution, it is regulating interstate commerce.  That means the federal government could strike down state laws which prohibit people from buying health insurance from another state.  This would actually create more competition and reduce costs.  Therefore, the one constitutional thing that could be done by the federal government is not done and it is one of the few things that would make health care and health insurance cheaper (aside from repealing all of the federal laws).

So why are the Republicans actually worse than Obama and the Democrats on this?  Most Republicans that I listen to say they support certain aspects of Obamacare, but they don’t support the insurance mandate.  Of course, this does not include Ron Paul and a few others.  But most of the Republicans I hear, even the supposedly conservative ones, say they support a law that requires insurance companies to not discriminate based on pre-existing conditions.

This is completely ridiculous.  Not discriminating based on pre-existing conditions defeats the whole point of insurance.  It would no longer be insurance.  If I can just buy insurance after my house burns down or after I get in a car accident, why would I ever get it in the first place?  If the Republicans have their way, people would wait until they get sick before they buy insurance.  That means that the healthy people would be less likely to get insurance and insurance companies would get stuck covering mostly sick people.  This would drive insurance rates sky high.

The ultimate result of the Republican plan would drive health insurance companies out of business or make insurance completely unaffordable.  It would be a sure path to fully nationalized healthcare.  So based on the plan being spouted by many Republicans, we would surely have socialized medicine.

Obamacare, while fascist and a boom to insurance companies, actually makes more sense.  People would be required to buy health insurance or face a penalty (tax).  Therefore, people would not be allowed to just wait until they get sick and then buy health insurance, unless they chose to pay the penalty.  Obamacare is actually less of a disaster than the plan being proposed by many Republicans.

The Republicans are saying that nobody should be forced by the government to buy anything.  I agree.  But most of the people saying this are completely hypocritical.  We are forced to buy nearly 4 trillion dollars worth of things every year by the federal government, along with an almost equal amount by state and local governments.  For every tax that I pay, I am being forced to buy something I don’t want to.  I am being forced to buy wars, food stamps for others, education for other people’s children, etc.  At least with Obamacare I am being forced to buy something that I can actually use for myself and my family.

This is not a defense of Obamacare.  I just wanted to point out the absurdity of the Republican “plan” and the absurdity of the arguments being made by many Republicans.

In conclusion, I hope that Obamacare is repealed.  However, if the Supreme Court strikes down the insurance mandate while leaving the rest of the legislation in place, it could be a total disaster for health care in the future.

There was an article on LewRockwell.com, by Robert Wenzel of the Economic Policy Journal, discussing a gold bar that had been filled with tungsten.  Tungsten can be used to make fraudulent gold bars.  Gold is a very dense metal and tungsten is the only substance that comes close to gold in density.  Since tungsten is much cheaper than gold, a gold bar filled partially with tungsten would be worth a lot less than what is supposedly being sold.

One of the points of this article was to point out the potential fraud in Fort Knox.  Perhaps the U.S. government owns a lot less gold than what is thought.  If this was discovered, it wouldn’t mean all that much to you as an individual.  It would be interesting to know.  It would make people realize that their government is dishonest (as if you need anything else to realize that).  It would mean that the government is a few days closer to bankruptcy than we thought.

As an individual investor, I think it is good to own a small amount of actual gold and silver.  You should not get carried away with buying the actual metal due to the risk of theft or fire or some other accidental loss.  Even keeping it in a bank safe deposit box is not a guarantee.  Even there it could be subject to an accidental loss or a government seizure.  At some point, you should put a little bit of faith in the whole system and buy gold and gold related investments in other forms, even if it is through a warehouse.

But to start out, it is a good idea to own some actual physical gold and silver.  In regards to the referenced article, I would not worry too much about being defrauded.  First, I would stay away from any large quantities of gold (or silver) in one piece.  The largest piece of gold you should buy is one ounce.  The article referenced a 1 kilo bar, which is over 32 troy ounces.  It is much harder to fill a one ounce gold piece with tungsten.

Second, I would stay away from bars.  It is better to stick with common coins such as the American Gold Eagle.  This coin is easily recognized and hard to counterfeit.  The eagle comes in four sizes: one ounce, half ounce, quarter ounce, and one-tenth ounce.

Third and finally, I would buy from a reputable company or dealer, especially if you are unsure.  You can shop around and find the best prices from companies that are established.  You can also try to find a local gold dealer who you trust and who has decent prices.

So remember, stay small and stay in coins.  Then you don’t have to worry about being defrauded.  If there are gold bars in Fort Knox filled with tungsten, then that is someone else’s problem.  The U.S. government is almost insolvent anyway, unless it resorts to mass inflation.