Damascus Gate

Today my wife and I bought the following property:

892 Maplewood Ave.
Ypsilanti, MI 48108

Here are the specifics of the deal:
Sale Price: 54,000
Down Payment: 15,000
Type of financing: Land Contract
Loan amount: 39,000
Interest Rate: 7.5%
Loan Specifics: 15 year amortization, balloon payment after 3 years (expendable to 5 if necessary)
Monthly Payments: $361.53 Principle and Interest + $280.00 Tax and Insurance

We intend to keep this loan for the shortest amount of time possible, hopefully refinancing through a bank to a 30 year fixed-rate mortgage sometime early next year.

The house is in rentable condition except for needing carpet in one room and a new water line from the street to the house which is currently leaking. I’ll be taking care of these things in the next couple of days. I am hoping to get the house fixed and rented before the end of the month. It’s already being advertised on craigslist for $950/month and we’ve had a good deal of interest.

If anyone was thinking of believing the Israeli government when they talk about wanting to provide a state for the Palestinians, please reconsider.  Every since 1967 the policy has been to move as many settlers into the West Bank as possible.  Since then hundreds of thousands of Israeli have been settled in these lands which were confiscated from Palestinians.  When Israel pulled out of Gaza in 2005 they increased their settlement building in the West Bank.  During the Oslo Peace Accords, Israel was supposed to freeze settlement building, they didn’t.  As freeze in settlement building has been a condition of every single attempt at peace between Israel and the Palestinians and Israel has NEVER stopped.

I write this becuse today Israel announced that it intended to confiscate another 450 acres of Palestinian land for an Israeli settlement.  My question is “When will this end?”  How long will the international community or we as Americans allow Israel to subjugate the Palestinians, take their land, push them into smaller and smaller areas, destroy their homes, and bomb their cities with our weapons?  I have been holding out hope that soon we as Americans would collectively come to our senses and realize what we are support and even encouraging with our billions of dollars a year.  The fact that the situation never seems to improve makes me lose hope.

If anyone still has some degree of faith in the United States banking system, you should consider reconsidering after the various bailout packages of the past several months.  It’s no secret that these bailouts are going to increase the rate of inflation considerable.  In 2007, the inflation rate was 2.85%, in 2008 it was 3.85%.  I can only imagine how high the inflation rate will be in 2009 after trillions of more dollars are printed, given to these very banks, and then put in circulation.  If you are considering lending money to a bank in the form of opening up a money market account, consider the following example:

You open up a money market account with an interest rate of 2%, which is about the going rate these days.  In one year you will have 10,200 dollars.  You might think this is great, you avoided losing the money right?  I mean, I guess it’s better than losing 30% of the value that you might have if you had been in the stock market.

However, after one year, assuming the interest rate will be 4% in 2009 – and it will probably be considerably higher based on the increase between 2007 and 2008 and the fact that there are trillions of more dollars in circulation after the Federal Reserve gets it’s printing presses running full force – your 10,200 dollars will only be worth 9,792 dollars of today’s dollars!  In other words, instead of making 200 dollars, you actually lost 208 dollars when you take inflation into consideration.  Think of what a great deal this is for the banks!  Personally I would gladly pay anyone a 2% interest rate on money they lent to me with an inflation rate of greater than 4%.

In other words, when you lend your money to a bank at 2%, your “loan” to the bank is definitely going to lose value.  Giving your money to a bank to manage is a bad idea, especially considering the rate that the Federal Reserve has been printing money.  If you have no other options, at least buy Treasury Inflation Protected Securities.  These are govenment bonds that pay a rate of return marginally higher than the inflation rate.  Money market accounts do not do this.

As I mentioned before, the government uses the federal tax system to influence our behavior as citizens and residents of the United States.  If you look at any tax break, tax credit, or tax write-off you will see that they are designed to direct you toward a certain type of behavior.  Incidentally, I think this is a major reason why the nationwide sales tax called the Fair Tax will have trouble being passed.  A sales tax would take a lot of the power that the government enjoys out of its hands and there are some very powerful people that want to keep that power.

With the tax system as it is, you may as well use it to your advantage.  Don’t pass up the best deal the government is offering, the Roth IRA.  With a Roth IRA, you invest money after you pay taxes on it (post-tax dollars), but you get to withdraw the money tax free.  It’s a great deal and could save you hundreds of thousands of dollars when you retire.

Another thing about the Roth IRA is that you can invest in anything you want within an IRA account to include CDs, stocks, bonds, mutual funds, and even real-estate.  There is a common misperception that a Roth IRA is a stock account.  This is not true.  If you are only comfortable investing in CDs, you can do that under the umbrella of a Roth IRA and not be taxed on your earnings every time your CD comes due.  Again, it’s a great deal.

One thing to remember, you can’t pull your money out of the Roth IRA until you’re 59 and a half without some penalties.  The Roth IRA certainly is a way that the government encourages people to save and invest.  In the tax system that we’re in, I think it’s imporatnt to take advantage of every break you can get and this certainly is one of the best, if not the best tax break available.

I am going to start a section of this blog dedicated to personal finance which is another hobby of mine.  Part of it will deal with developing passive income, that is, income that doesn’t get reported on a 1040.  The key to passive income is purchasing things that pay you to own them.  One of the great benefits of passive income (besides the fact that it’s passive), is that it is taxed at a lower rate than say, your salary.  Why is that you might ask.  It’s because the US government uses the tax code to encourage certain behaviors from citizens.  For instance, when the government wanted people to own their homes instead of renting, they implemented the mortgage interest tax deduction.

In this case, passive income is usually taxed at lower rates because it generally involves some sort of up-front investment which is something else that the government wants to encourage.  All that said, one of the easiest ways to start recieving passive income is to buy dividend paying stocks.  If you want to stay on the safe side, you can stick with divident paying stocks that are included in the dow jones industrials.  If you’re more of a risk taker, you can check out some of the companies that pay the highest dividends.  The dividends that you recieve from owning these stocks are taxed at 15% which is much lower than what your regular income is taxed at.

Buying dividend paying stocks is a safe (depending on the stocks you buy) way to start earning passive income.

Rod Parsley’s rhetoric about September 11th being a “generational call to arms” is eerily similar to the call to arms which mobilized the First Crusade.  During that crusade, European “noblemen” pillaged, destroyed, conquered, and raped their way from Europe to Jerusalem, all in the name of the Church.  Today the Crusades are seen universally as a very dark point in the history of Christianity and are a serious stumbling block (for good reason) to Muslims accepting Jesus Christ as their savior.  The last thing we need are more wars in the name of Christianity.  Jesus never showed anything buy compassion for those of other faiths and we need to do the same.  If you are a member of Rod Parsley’s Church, I would ask you to prayerfully consider the message you are hearing from him and decide if that message is one that is fully backed by the teachings and actions of Jesus Christ.

Dear members of Cornerstone Church in San Antonio Texas,

I believe that the most important way for us to live as Christians is to follow the example and teachings of Jesus Christ.  The last commandment of Jesus Christ was to go into the world and preach the Gospel.  It was not to make war against those who do not believe.  John Hagee supported the war against Iraq, all of Israel’s wars, and it a major proponent of war against Iran.  As you sit in Church and listen to Pastor Hagee encourage this nations leaders to go to war, can you honestly say that if Jesus were sitting next to you He would be cheering and saying “Amen”?

I believe that Jesus Christ came to earth to die for our sins, He came to be the Messiah.  John Hagee has shifted his focus from following Jesus Christ to supporting the state of Israel as his main priority, even going so far as to claim that Jesus didn’t come to earth to be the Messiah!  Please consider our priorities as Christians, whether it should be to preach the Gospel to non-believers or kill them.  I believe that Jesus taught us to spread the Good News to them and to exemplify our faith in our lives, not to vanquish people who don’t believe.

In the theme of using the quotes of Israeli prime ministers to get some idea of what it’s like for Palestinians living in Israel or the occupied territories, I would like to present a few quotes from Ariel Sharon, the man who George Bush called “a man of peace“.

“I vow that if I was just an Israeli civilian and I met a Palestinian I would burn him and I would make him suffer before killing him.”

“Even today I am willing to volunteer to do the dirty work for Israel, to kill as many Arabs as necessary, to deport them, to expel and burn them, to have everyone hate us, to pull the rug from underneath the feet of the Diaspora Jews, so that they will be forced to run to us crying. Even if it means blowing up one or two synagogues here and there, I don’t care.”

-  Ariel Sharon

If you want to read more quotes by the man of peace, check out this link.  Incidentally, Ariel Sharon didn’t just talk the talk when it came to killing Arabs.  Among other atrocities, he was also responsible for the Sabra and Shatila massacres.

If there was ever any question as to who was the original initiator of violence in the conflice between the Israelis and Palestinians, one need look no further then David Ben Gurion, the first Prime Minister of the state of Israel.  These quotes give a vivid and accurate picture of what happened to the Palestinians in 1948.

“We must expel the Arabs and take their places.”

“We must use terror, assassination, intimidation, land confiscation, and the cutting of all social services to rid the Galilee of its Arab population.”

“If I were an Arab leader, I would never sign an agreement with Israel. It is normal; we have taken their country. It is true God promised it to us, but how could that interest them? Our God is not theirs. There has been Anti – Semitism, the Nazis, Hitler, Auschwitz, but was that their fault ? They see but one thing: we have come and we have stolen their country. Why would they accept that?”

- David Ben Gurion

(Israels first prime minister and namesake of the Tel Aviv airport)

There is a common tactic that Israel uses whereby they consistantly claim to be “responding” to some act of violence that has been perpetrated by the “Palestinian terrorists”.  The November 2008 breaking of the Gaza ceasefire was a classic example where Israel bombed what they claimed were tunnels, thereby breaking the ceasefire.  This tactic has been used time and time again throughout Israel’s history and even before its establishment in 1948.

These quotes by Israels first prime minister compellingly show that Israel was the first agressor.  Acting on decisions made by the Zionist conference in the late 1800’s, Jews started moving to Palestine with the intent of using whatever means possible to include “terrorism”, “assassination”, and “land confiscation” to rid the land of its Arab inhabitants.  Every act of Palestinian violence was a response to this aggression from an external invading force.

Consider this, the PLO was founded in 1964 (16 years after the state of Israel was established), Hamas was founded in 1989 (41 years after Israel’s establishment).  These organizations which are or were considered terrorist organizations were both founded in response to the state sponsored terrorism that Israel’s first prime minister advocated as the state of Israel was born.

Every so often it gets to bugging me that corporations have such sway on our government.  I mean, they are the ones with the money and the power these days.  I called several members of congress the day before the $700 billion TARP bailout to tell them that I was very opposed to the bailout.  In fact, the whole concept sickened me and it still does.  I actually think that most Americans are in fact sickened by the bailout, especially in retrospect when we see where the money has gone and what these banks are doing with their share of our money.

That said, I was encouraged by Ray Anderson, the former CEO of Interfact Inc., a company that makes carpets.  Without going into too much detail, Ray Anderson came to a realization that his company was raping the environment for profit and he became determined to turn it around.  Watch the youtube video for a more detailed explaination.  The point I wanted to make here was that the thing that originally got them thinking about sustainability was that they started getting comments and questions from customers about the company’s environmental policies.  As US citizens, we vote once ever 2 or 4 years for our leaders.  As consumers and investors however, we vote every day by the products that we buy and the companies that we invest in.

The fact remains that companies will only change their behavior when it makes economic sense to do so.  I have written several letters to Caterpillar in protest to them providing Israel with the D9R bulldozer which is a gigantic fully armored bulldozer specifically designed and produced to destroy Palestinian homes.  As a company their obligations are to their stock holders (of which I used to be one), but I also believe they should feel a moral obligation to distance themselved from this despicable Israeli practice of knocking down Palestinian homes.

Caterpillar will not cut these business ties until they reach the point where they lose more money by continuing to sell these D9R bulldozers because of the backlash from the public.  I have “voted” for them to stop selling bulldozers to Israel by selling my caterpillar stock and writing the board of directors a letter.  The good thing is that in this type of voting, your vote will count far more than your vote for president.  It’s a much more effective way to make your voice heard.