Updated: May 3, 2013 12:14PM
The Memorial Day holiday is about remembering those who served -- and serve -- our country. Out of respect for their sacrifices, Memorial Day seems a perfect time to examine our way of life, and to consider some changes that would dignify the duty of those who swear to preserve our American way of life.
Is our country honored this Memorial Day by our use of the material benefits of our free enterprise society? Consider some of the following commonly accepted practices:Re-arranging assets to qualify for Medicaid.
Every week I receive an e-mail asking about the rules for spending down assets or giving them away to family members so a parent can qualify for state-provided (Medicaid) custodial care. With all due respect to the hard-working and underpaid people who work in these nursing homes, a state-funded nursing home is absolutely the last place you'd want your parents to spend their final days. But the real question is whether it is moral -- or a fitting memorial -- to those who served to ask taxpayers to cover the costs of care for the aged while their children spend their parents' money? Is that the sacrifice we want to memorialize?
SOLUTION: Long-term-care insurance. It gives you choice of care, and saves your assets for your children who can enjoy them without guilt.Mortgage fraud.
I have a stack of letters, e-mails and phone messages, typically from older women who are about to lose their family home -- their personal piece of the American dream -- to foreclosure. Many fell victim to ads and calls by mortgage brokers, promising they could refinance their homes at a very low monthly payment. But they weren't sophisticated enough to realize that the monthly payment could -- and would -- adjust upward, perhaps doubling in cost. Did our soldiers die so women like Brenda in Greenwood, Miss., could face being evicted from her home, along with her three small children?
SOLUTION: Find the mortgage brokers who did the original mortgage deals that were subsequently sold, and sold again to investors. Their names are on the original documents. Prosecute them for a refund of all those brokerage fees they collected. Buried in debt.
Somehow our grandparents' generation survived the Great Depression without credit cards. Today Americans carry nearly $1 trillion in credit-card debt -- and about half of those cardholders are making only the minimum monthly payment! That debt load excludes a mountain of mortgage debt. If we're not willing to sacrifice to save for the things we want, do we have the right to ask our sons and daughters to die for the things we want?
SOLUTION: Get a part-time job to earn extra money. Double the minimum monthly payment, and don't charge another penny. Your card balance will be paid off in about three years.Dreaming of retirement.
The disillusionment over the federal government's inability to protect the citizens of New Orleans from Hurricane Katrina will be nothing compared to the shock awaiting baby boomers who expect the government to take care of them in retirement. The promises already enacted for Medicare and Social Security, plus required interest payments on the national debt, will consume 100 percent of tax revenues by 2030.
NO SOLUTION: Higher tax rates on tomorrow's young workers. That would set us up for generational warfare. Those twentysomethings aren't going to let the government confiscate half of their earnings to pay for their parents' retirement.
REAL SOLUTION: Save more, invest wisely. Our American way of life was never based on handouts and dependency -- an approach that was the hallmark of failed socialist economies. Only a hard-working, productive society can afford to take care of its weakest and needy members.
We ask our sons and daughters to fight for our American way of life. But as we honor our military of today, and years past, it is our job to make sure we're living a life that's worth asking them to fight, and die, for. And that's The Savage Truth.
Terry Savage is a registered investment adviser.