3 Diamonds and a Dog #7

Jun 22, 2012 by

In each post of the Money Counselor “Diamonds & Dogs” series, I pick three items—could be an article, a website, a video, an image—that in my humble opinion would be especially valuable—the Diamonds—in helping Money Counselor readers make better money choices. And to balance the three Diamonds, I pick just one lame item—the Dog.

3 DiamondsThree Diamonds

  • Psychology and Money – If You Know Something Isn’t Good for You, Why Do You Still Do It?” Enemy of Debt combatant Brad Chaffee dissects some intriguing parallels between his own struggles with dieting and binge eating and others’ struggles with controlling spending.
  • In “The Government Returns to Fiscal Sanity” Bret lets it all hang out and really rung my bell by writing “I would love to see a viable third party break the partisan stalemate and eliminate the duopoly on our political process.” Amen.
  • I think this compelling graphic from Financial Mentor does a great job of illustrating very simply a formula for building wealth. There’s no magic to it! This is worth printing and posting on your fridge.

How To Build Wealth

A Dog

A May 15 New York Times article entitled “Needy States Use Housing Aid Cash to Plug Budgets” reported on the growing diversion of National Mortgage Settlement funds. You may recall that earlier this year 49 state attorneys general and the federal government reached a $25 billion dollar settlement with Ally/GMAC, Bank of America, Citi, JPMorgan Chase, and Wells Fargo. These lenders “routinely signed foreclosure related documents outside the presence of a notary public and without really knowing whether the facts they contained were correct,” an illegal practice, unsurprisingly.

The Settlement Agreement specifies that funds are to be used “for purposes intended to avoid preventable foreclosures, to ameliorate the effects of the foreclosure crisis, to enhance law enforcement efforts to prevent and prosecute financial fraud or unfair and deceptive acts or practices, and to compensate the states for costs resulting from the alleged unlawful conduct of the defendants.” A naive observer like myself might think that the settlement money would go to benefit homeowners. Uh-uh. As the Times reports, “Only 27 states have devoted all their funds from the banks to housing programs, according to a report by Enterprise Community Partners, a national affordable housing group. So far about 15 states have said they will use all or most of the money for other purposes.”

Texas deposited $125 million right into its general fund. In California, Governor Jerry Brown wants to use much of his state’s settlement money to pay the state’s debts. Missouri will use $40 million of mortgage settlement money to lessen education cuts. Arizona wants to devote half of its windfall to prisons. Alabama will spend nearly three-quarters of its $26 million windfall to finance operations in the attorney general’s office and the state’s district attorneys’ offices. (I forecast an uptick in the fancy office furniture biz in Alabama.) And on it goes.

Why is it that politicians who’d rather be drawn and quartered than vote to raise taxes on the mega-wealthy eagerly commandeer and divert money intended for working Americans who lost their homes through an illegal foreclosure?

Nominations Please

Do you have a nomination for a Diamond or Dog? Send it to me please using the Free Advice link at the top of the page. I’ll give you credit if I use it in a “3 Diamonds and a Dog” post.

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