Disbelief But Enlightenment is Happening – Slowly

Hello everyone! My last post on this blog was a year ago. I just had to walk away for awhile because of all the stupid things I saw being done in the name of “economic management”.

I kept thinking that surely there must be some sense to what is being done and that a great economic grand-plan would somehow be revealed to us all. That has not happened and after a year of research I realise I never want to see a grand plan, ever. If I do then we are all doomed to a meagre existence with our future planned for us by those in power.

Both left and right of politics want control. They believe it is easier to government if we all sign up for their grand plans and do as we are told.

My disbelief is still there, but I have found some enlightenment in my reading and my research.Solar Power Generated so far

I now find it essential to try to put together a philosophy by which I can guide my decisions. This philosophy has and is developing and evolving as I gain enlightenment. I continue my research into, “why are we always in these financial crises?”, and, “what can we do to protect ourselves?”. Even more relevant is, how do we do this in retirement?

As long as we don’t end up with a world government with a totalitarian bent, and our private property confiscated, we can expect to keep some of our earnings and grow our retirement nest egg. With this assumption, I can continue to read, research and write what I find that might be useful to retirees to protect that nest egg.

In a world where consensus rules, as in the climate change non-debate (it has been settled Smile or so I am told) so too we are bombarded with the need to have a financial planner take care of our retirement nest egg. Heaven forbid that you say you can take care of it yourself. The consensus is you can’t, and therefore, the government (in Australia) forces you to pay 9% of your wages or salary into a retirement fund for others to manage for you.

The government thinks you cannot be trusted with this money so forbid you to use it for up to 40 years, if you are just starting your working life.

Yet they do allow the fund managers to dip into it every quarter to pay themselves and have a great time gaming the stock market with a “balanced portfolio” where 70% or more of your retirement nest egg can be “invested” in the stock market.

The carrot for you is that there is some tax relief on the money you compulsorily submit into your retirement account. This they believe gives them the right to pass laws, which forbid you using your retirement money before you retire.

The disbelief is that we let our government do this to us.

The enlightenment is more to do with how we got here and why we allow our governments to micro manage our lives and our money. It’s less about fighting the system and more about going with the flow and realising the government is collectively stupid. We may be able to work around them to some degree or get out of their way, or even make sure we are on the same side if it is to our benefit.

What is important is to realise that governments do things for political reasons or outcomes. Your economic well-being is a very poor second. Understanding this point helps us evaluate “government-speak” and hopefully can put us on the right side of the political objective, so we can capitalize on it or minimise or avoid its impact.

An enlightenment is that the private citizen is paying all the retirement benefits of many public servants and being forced to save for their own retirement too. No government guaranteed indexed pension for them at 75% of their last salary as is the case with many public servant.

Another enlightenment is the government (of either persuasion) aims to get as many people on the public purse as possible and those that will not come on board will be forced to save for their own retirement. Governments do this through selected welfare programs which both expand the public service and extend welfare dependency.

Voters are what matter because politicians want power above all else.

In times of crisis is when governments can do most damage. Employment growth in the Federal public service has been very high during this financial crisis. When private businesses have been down-sizing, the government has been up sizing. “Never let a good crisis go to waste”, was heard more than once, in the last two years.

What I want to do in the next series of blog posts is talk about what I discovered over the last year and how this information might help us avoid losing our nest eggs before or during retirement. We may even be able to capitalise on some things governments do.

Being aware of how the economy works and how governments manipulate things for their political ends can offer opportunity, or danger if you are not quick on your feet.

You are probably wondering what that image is at the top right hand side of the post? It is a snapshot of the energy generated from the 5kW solar system installed on my roof last June.

This is an example of what I am talking about. The Federal Government and the State Governments both offered generous incentives to householders to install solar systems. They offered:

  • REC (Renewable Energy Certificate) valued at $30-40 each for a solar installation – I got over $8,000 credited to me.
  • They also offered up to $10,000 interest free loan for 4 years to help pay for it.
  • They will pay me 60 cents per kW for 7 years from January 2009. The tariff the charge me for electricity I use is only 20 cents per kW.
  • You could install up to a 10kW system on your roof.
  • The expected pay-back period is 4.5 years.

Here is a case of making sure you are on the right side of a government program. So far I have “sold” 5,377kWh to the electricity supplier at 60 cents per kW. They have paid me $3226.26 for that electricity. My electricity bills used to be between $600-$1000 a quarter.

Right now my electricity account is in credit in excess of $1,000. And I have taken steps to significantly reduce my electricity usage by being a bit smarter too.

This year Sydney has had more cloudy days than I can remember Sad smile so this may be a poor result. But unless climate change gives us permanent clouds in usually sunny Sydney I expect to have this thing paid off with the solar credits I am getting in under 5 years.

Both the Federal Government and the State Government have stopped this scheme dead. As people caught on they realised it was going to cost them a lot of money.

Now it may be that the governments will find some way to spoil my day. But in the meantime I am enjoying considerably lower electricity bills.

Some people may say I am taking advantage of other people who did not install a solar system or could not afford to. Many people in that position either pay no tax or get payments from my taxes. So with respect, I have no qualms about reducing my carbon footprint this way.

I tried to convince many of my friends of the benefit of the scheme but only one took it up, and then almost missed out.

Most thought there was some “catch” to it so they did not bother to investigate it. Also there was some work to do to qualify for the scheme, which again might have proven too hard for some.

You’ve got to learn how to read the government’s mind and act accordingly in your own self-interest.

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