I DON'T THINK WE WILL DEFAULT

Josh Marshall has a post praising Joe Biden on Social Security and the ability of the US government to fund anything. Well, of course, if I was able to print money in my garage I probably wouldn't have much of a problem financing my outrageous spending habits, now would I? The U.S. government's ability to do this on such a massive scale is quite unique in history and surely can't last forever.

Wasn't Marshall worrying last week about foreign central banks dumping the dollar?

TOXIC TANK TOPS

I caught Rock's opening monologue and I'm happy someone had enough guts to paint the pro-war/pro-Bush crowd for the idiots they are -- live on a show broadcast worldwide! Rock:

Just imagine you worked at the GAP. You're $70 trillion behind in your register and then you start a war with Banana Republic because you say they got toxic tank tops over there.

You have the war, people are dying - a thousand GAP employees are dead. That's right - bleeding all over the khakis. You finally take over Banana Republic and you find out they never made tank tops in the first place.

I guess the joke really is on these fools.

THE CONSERVATIVE CASE AGAINST WAL-MART

Is there one? Prof. Bainbridge lists a few counts against the retailer:
1) little impact on employment
2) Wal-Mart has a "downward impact" on core consumer prices
3) data on Wal-Mart's wages are inaccurate or skewed,
4) Wal-Mart drives out smaller businesses and 5) Wal-Mart gets zoning and taxation breaks.

(Also, later in the post he notes that Wal-Mart stores are ugly monstrosities. This is certainly true, but so what?)

I don't really see this as a case against Wal-Mart at all. Part of the problem, however, is created by conservatives and libertarians going around supporting Wal-Mart because the stores create Benefit A, Benefit B, or Benefit C for the community. In response:

1. Why should Wal-Mart increase countrywide employment?
2. What's wrong with falling prices??
3. Why should Wal-Mart pay above median or even average wages?
4. Why should smaller stores stay in business if customers prefer to shop at Wal-Mart instead?
5. Oh my god, someone is paying lower taxes and getting around nasty local government zoning laws! Are local governments really subsidizing Wal-Mart? The reason they give the "breaks" is a direct result of the fiscalization of land use, see my previous post on the subject below.

The greatest "democracy" we have is the economic democracy of the free market, where individual consumers choose where they want to spend their money and therefore influence the structure of production.
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PURGING THE LIBERTARIAN DEVIANTS

I followed a link from Karen De Coster to this amusing post by Tom Palmer. If you can stomach the comments, one finds this:

I presume that Tiny Tim was referring, not to the idea of being patient and undertaking long-temr planning, but rather to the cadre strategy that I discussed with Murray Rothbard many times and that I came to reject as both inappropriate and repulsive. Rothbard frequently quipped that "Fewer but better is better," i.e., that one had constantly to purge out those with deviant thoughts (as defined by MNR) to find the true cadre who could be relied upon to play their role. That is a strategy that may be appropriate to what Lenin accomplished, viz. the seizure of absolute power, but it is not appropriate to what libertarians favor, which is the elimination of absolute power and universal respect for the equal rights of all.

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FAT CELEBRITIES

Christiana points out a TV show I didn't even know existed. While it is sad that consumers eat these shows up, I wonder if there is a positive message here? Celebs aren't perfect? Every celebrity I've met so far has failed to live up to the image portrayed in the media. Even close inspection of a Playmate left much to be desired. Plus, the girl was eating chocolate cake for breakfast. Chocolate cake. That's just disgusting.

The message: beautiful women are intolerable and highly overrated.
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ALMOST FORGOT

A very nice young lady recently treated LJ to dinner at Lilly's in Venice, an inexpensive little French cafe and wine bar on Abbot Kinney. I don't spend much time in Venice, but I did enjoy the garden patio and the fillet mignon. We went through several bottles of wine (there were actually four of us) but I can't really recall the labels now. We also spent the afternoon wandering around The Getty with particular attention paid to the Jacques-Louis David exhibit. His The Death of Marat is probably the most famous piece. The Christ-like imagery helped stir the martyr image of Jean Paul Marat.

Next year the young lady has promised to take me directly to Paris.

Iran have weapons of mass destruction?

BUT, MR. BUSH, doesn't Iran have weapons of mass destruction? Typical Bush idiocy captured in a single paragraph: "This notion that the United States is getting ready to attack Iran is simply ridiculous. Having said that, all options are on the table."

Bombs away.

THE STORM

The storm continues. One of the ladies in my office says to me today: "We are under a tornado watch."

No kidding.

UPDATE: It was mentioned to me that it might be a good time to go surfing (surf is estimated at 7 to 9 ft.). You'd be wrong to think that. You see, we have this huge problem in California called "public ownership" of sewer and drainage systems. Run-off (from any number of sources) feeds directly into the drains and is pumped a short distance off the Coast. Then the water gets contaminated. Then my little brother suffers from a rash after venturing out in the water after a storm.

EMINENT DOMAIN

Timothy Sandefur has an interesting article on emiment domain. Why do cities want so-called big box stores within their jurisdictions? Simple answer: sales tax revenue. In fact, in California at least, local governments thrive off alternative revenue with which to gain control over local discretionary spending (I won't go into all the background on the State of California's property tax laws and the centralization of financing sources here). Putting up big retail commercial outlets and auto malls helps. The local governments basically engage in the "fiscalization of land use," where land-use decisions are made based on channeling growth in the direction of increasing revenues over public service costs. Hence, the preference of commercial development over residential development. Worse still, the local governments have an enormous say in all real estate development projects -- what the developers build, where they build it and how long (literally years) it takes to jump over all the development hurdles (zoning restrictions, fees, public services financing, permits, inspections, etc).

The result is that private property owners don't really get to use their private property. They get to use it for purposes the local government accepts. That's not freedom. Just because the local government isn't taking the bulldozer to your shack (something that can be seen), doesn't mean it isn't limiting your freedoms (unseen choice alternatives).

The opportunity costs of this tyranny are incalculable.
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JEFFREY TUCKER

"In any case, there must be a special place in Hell reserved for those libertarians who, in those days and following 9-11, repudiated their supposed principles, and lent their voices to the cause of despotism. She ought to be doing penance, not smearing and trashing the work of real scholars."

Beautiful.

ASIAN CENTRAL BANKS

Global Austrian Business Cycle Theory: It's not very interesting that South Korean thinks it might start dumping the dollar (diversifying), but it is fun to see how the world banking systems pyramid their currencies on top of the U.S. dollar.

REALITYCHECK.ORG ON SECESSION

A response to liberal calls for secession in the wake of the Bush victory:

Let’s check some facts real quick. Which states were the first to threaten secession? The answer is the New England states. In fact, they did it on three different occasions, once even meeting in convention to vote on the matter. The three events that caused these states to consider secession? 1) When the U.S. Congress was considering allowing Louisiana to enter the union; 2) the War of 1812; 3) and when Congress was considering allowing Texas to enter the union (there’s a pattern here: Yankees don’t like Southerners and don’t want them in the union; unless it is to tax them). Oh, by the way, what did the South say about these threats of secession? At the time of these events, it was generally accepted that the American union was just that, a union of sovereign states, not one monolithic state. In general, the calls for secession were met with understanding, and even acceptance. Thomas Jefferson provides a clear, concise comment concerning the right of secession in the American union:

'If any State in the Union will declare that it prefers separation over Union, I have no hesitation in saying, 'let us separate.'".

All this to simply say that the sudden discovery/new love affair with secession that liberals are spouting is hypocritical. After all, it is mostly liberals that love to declare the South wrong for seceding, how the South was violating the constitution and attempting to overthrow the U.S. government. Let’s get this straight: The South never attempted to overthrow the U.S. government, but was merely getting away from it. In addition, for those that want to write me to say secession over slavery was wrong, the South didn’t secede over slavery, and the reason for secession is immaterial any way. Either the right exists or it doesn’t, and it does exist, no matter what anyone says contrary to the matter. Here’s another quote, this time from James Madison, the 'father of the Constitution,' in Federalist paper No. 45.

'The powers delegated by the proposed Constitution to the federal government are few and defined. Those which are to remain in the State governments are numerous and indefinite. The former will be exercised principally on external objects, as war, peace, negotiation and foreign commerce; with which last the power of taxation will, for the most part, be connected.'

In plain terms, if something isn’t expressly stated in the Constitution as the domain of the federal government, it remains a right of the member states of the union. Secession isn’t mentioned, therefore it is a right held by the member states, not something under the control of the federal government. All rights not mentioned in the Constitution remain a right of the member states of the union, whether they are specifically listed (enumerated) or not. Some say secession is no longer a valid option thanks to the Yankee victory in the War for Southern Independence, that the South losing the war makes secession a moot point. That is about as brilliant an argument as saying because a rapist isn’t caught and prosecuted, the victim was having consensual sex. Might does not make right, even if it gets someone their way. The Constitution is clear on the matter, and the fact government refuses to follow our laws doesn’t mean the laws don’t exist (although I know we all wonder some times).

If only the liberals really did push for secession. Aw. . . . The Socialist Republic of California. I like it.
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ROMANTIC WEEKEND GET-A-WAY

It's a holiday weekend for us and we are supposed to be deep in the heart of Mexico (where Americans fear to tread). Due to circumstances beyond my control (Thanks, Don Juan), we must settle for San Diego.

Banal Banter

This applies to the blogosphere, too. This also explains why certain female acquaintances annoy me so much.

According to a survey of more than 2,000 adults, almost two-thirds of us admit to indulging in shallow chit-chat at the expense of weighty dialogue - even though we secretly long for more meaningful exchanges.
...
We can't exchange thoughts and opinions reflectively when we're in a hurry and so we resort to banal banter,' said Carter, who has published more than 20 books and 100 papers on different aspects of spoken language. 'We have got used to chatter and have stopped making the effort to reach any more significant conversational depth.'

U.S.-TRAINED THIEVES (AKA "SOLDIERS")

Gentlemen's Quarterly, one of three magazines arriving regularly to the Jackass compound, runs an article on the pieces of work the U.S. military sends abroad to spread democracy. It seems that, when they aren't sexually assaulting female soldiers, military guys are trying to enjoy the spoils of war. Quote:

They find another door, and Jamal, Matt, and Moyer work on it. As soon as it opened, it was stale air, like a closet you hadn't been in for a long time. There were two sheets coming down at real weird angles, covering the windows. And it looked like the floor was tiled with metal boxes. There is a total of $200 million in $100 bills in fifty galvanized-steel crates, riveted shut, with blue nylon bands around them. And then it just, one box began to -- we had to know what it was -- one box began to be opened. [This is how Matt says it. You can tell on the Novak tapes when he's getting close to the money -- his vocal cords tighten, he searches for words. The actions become disembodied.The box is opened. Like there is a ghost in the room, a spirit brought to life by the Novak Eight, made up of the shadowy parts of themselves none of them want to own, and this spook does the dirty work.] The top comes off awkwardly, and money spills to the floor in a great avalanche. Jamal can hear his heart beating in his ears.Is surreal the word? Just fantasy, you know what I mean? When the first box was opened I was like, There's no way this shit is real. I think I said, "Holy fuck."

At almost the same time, a vehicle pulls up, and in walks First Sergeant Wilson and, depending on whom you ask, First Sergeant Burns. [While first sergeant is a pretty high rank, it's not higher than lieutenant, which means that Greenley still has de facto responsibility. But Wilson has about twenty years' experience on Greenley, which leads to a bit of confusion about who, exactly, is in charge. Right here, you see the notion of rank and the circumstances at that moment in Baghdad, undoing the normal sense of right and wrong. This is a common occurrence in war. Because what war does is turn what we accept as the unimpeachable rules of morality on their head: We can say that incinerating people is right, that exploding skulls with .50-cals can be an average event after which one eats an MRE and watches Happy Gilmore. And what we use as synthetic filler for that internal, hardwired moral structure is military discipline. It's right because your superior officer tells you it's right. And Matt's crime was rejecting the synthetic filler, choosing himself over the system, being an individual. Saying, if it's okay for you to blow people up, it's okay for me to take a few million bucks that doesn't really belong to anyone. War invites nihilism, after all, and Matt Novak simply opened the door when it came knocking.]

Matt throws a stack of hundreds to First Sergeant Wilson. Say, First Sergeant, aren't you getting ready to retire? Everyone's passing money around the room now. Don't you have kids going to college? Maybe you need this for a new vehicle. Some gets shoved at Greenley. Hey, Lieutenant, this isn't right. You're senior here! They're just testing it out. They don't know themselves if they're serious about it yet.

Foreign Debt Ownership

As a follow-up to the post directly below, I wanted to point out that John Mauldin, in his weekly e-newsletter, remarks:

As a prelude to a paper we are going to examine in detail in the next few weeks, there is reason to believe that long term interest rates might be at least 1% higher and perhaps as much as 2% without foreign buying of US government debt. 10 year treasuries at 6% would mean that 30-year mortgages would be well over 7%. That would create quite a slowdown in housing construction and at least put a lid on the rise in home values, if not reverse the trend. That would certainly slow the economy down.

Debbie Stabenow

Interesting line of questioning on the fact that foreign banks own half of U.S. debt for Greenspan before the Senate Banking Committee. It's good to see Greenspan clarify that foreigners are not dumping dollars, it's just that the value of the dollar is declining relative to the other currencies in their portfolio.

SEN. DEBBIE STABENOW (D-MI):

[...]

Turning to a different subject in terms of our debt, and this actually goes back to my concerns on manufacturing. But it relates indirectly to manufacturing, when we look at our dependency on inflows of foreign capital to finance economic activity. And then I would argue on the other hand our difficulty in enforcing trade agreements against those who own so much of our foreign debt, I think this is going to be making it more and more difficult for us. I would -- I'd welcome your thoughts on that. But when we look at the fact that -- and I have just a small chart, but in the last four years, foreign holdings of U.S. Treasury debt has gone from basically a trillion to $1.85 trillion. And about half of that's owned by China and Japan. And I think people would be shocked to know who else owns our foreign debt as we're talking about financing private accounts through Social Security or other privatization efforts or anything else that we're doing for that matter -- the war, anything else -- that South Korea, Taiwan, Germany, Hong Kong, OPEC, Switzerland; we have a lot of foreign entities that hold our debt, portions of our debt right now.

And I'm wondering at what point, particularly when we're looking at $2 trillion or we're hearing now 20 years down the road, two decades, potentially $5 trillion in new debt added, if in fact privatization in some part goes into effect of Social Security, at what point do you believe that we should be concerned that our foreign financing of our national debt is becoming too great?

MR. GREENSPAN: Well, Senator, we have a difficult problem that people find U.S. Treasury securities the safest in the world. And it's not as though we're forcing them to go buy our securities, nor do I believe we have any legal mechanism to prevent them from buying them in the open market, which is what they do. So I'm not sure how to address this issue because I'm not sure what we can do about it.

The notion, however, that came out, I think, a couple of weeks ago, that there was a significant move towards selling off U.S. dollar instruments by foreign central banks, that actually was not accurate. The extent of holdings remains very heavy for dollars as a share of their aggregate holdings. And part of the decline is -- very small -- is the very fact that if you take a portfolio with dollars and, say, euros, and the dollar's price falls relative to the euro, then the value of euros in dollar equivalents rises and that, therefore, it looks as though the dollar has gone down as a share of total outstanding portfolios, when indeed, it has not. And that's basically what the case is.

But on the broader issue you're raising, I'm not sure how to handle that because I'm not sure what the long-term implications are. You are quite correct at the moment, excluding the debt, U.S. Treasury debt held by the Federal Reserve, half of our debt is owned abroad. And I would assume at some point it has consequences, but I'm not -- I cannot tell you what they are.

SEN. STABENOW: Mr. Chairman, isn't it reasonable to assume, though, that when we add national debt, every time we are adding national debt we are adding opportunity for foreign investors to purchase those bonds? So that one way to stop the foreign holdings increasing would be to stop the national debt from increasing?

MR. GREENSPAN: Well, we almost -- we had -- believed we were going to run the debt down to zero, not that many years ago. That would have solved the problem.

SEN. STABENOW: I remember your being here with us in 2001 when we were talking about the wonderful problem of having too large of a surplus and the question of what we do about that.

I wonder if I might ask one further question? I know my time is up, but just --

SEN. SHELBY: Go ahead.

SEN. STABENOW: Thank you, Mr. Chairman.

One further question. It's similar in terms of what's happening abroad for us.

Would you -- would it be your position that free-floating currency is an essential element of efficient capital markets? And to that end, would you be supportive of mechanisms whose goals are to ensure that nations allow for floating currencies?

MR. GREENSPAN: Well, in general I would say flexibility, which is an extraordinarily valuable asset to the world financial system, is clearly advanced by having essentially a free-floating rate system, which is largely what we have. The difficulty is that numbers of nations find dealing with fluctuating or variable currencies difficult to handle for lots of different reasons, and they choose on their own to lock in against the euro or the dollar or a basket of something and accumulate or decumulate their foreign assets to sustain it. So it's largely actions taken by foreigners, not something which can be mandated by anybody; in other words, I'm not sure the mechanism that, for example, the IMF would be involved in to induce somebody to go from a fixed to a flexible rate -- they could suggest to them that it's in their interest, and indeed we do on numerous occasions, but there's no legal mechanism to create it because they always have the capacity of purchasing or selling dollar, yen, or euro or sterling assets in the marketplace and thereby create a non-floating currency.

SEN. STABENOW: One mechanism -- and I will close, Mr. Chairman. Thank you for your patience. But we do have in the Banking Committee -- I'm sure we will be hearing from Secretary Snow in his yearly report that he's required to give about countries that may be pegging their currency. And certainly many of us on both sides of the aisle have expressed concern particularly about China, and what the impact of pegging their currency has done in terms of the cost of goods and services in our country as well as selling into their country. And so there is a mechanism. If, in fact, the Treasury secretary would just simply certify that it's happening, at least internationally we would have the opportunity to make our case. And I'm hopeful the secretary will do that before the committee later this spring.

ON LOVE

Most of you -- I assume -- have already seen this: "Love is one of the cultivated pleasures of life, like good food and wine. It gives zest to the quotidian routine, adds a healthy glow to the skin, encourages one to dress well, stay in shape and keep intellectually engaged."

On Valentine's Day tomorrow we will exchange cards and flowers or chocolates, and treat love as a pink little Cupid. But we should be careful: Gods are not mocked. Better perhaps to keep one's distance from mighty Eros, as the French so often and so wisely do, than to see one's heart served up on a salver.

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Britney Is Just Upset

because she realizes she married a tatterdemalion.

"Britney should start her own magazine if she'd like to dictate her own coverage."

US Weekly really hit home in their final comment saying, "Coming from a celebrity who sold pictures of both her wedding and her stepdaughter, it's unlikely the issue here is privacy."

...

As to publicity, Mrs. Federline got more out of it than most and considering her career is beginning to wane as she ages into marriage and motherhood, her adoring fans may begin to dwindle in numbers. So she can use all the publicity she can get. After all, when was the last time you looked fondly at a teen idol that wasn't anymore?

TORRENTIAL DOWNPOUR

The rain is pouring down on Southern California right now. Zipping down the publicly owned 405 South from a friend's beach house in Seal Beach early this morning, I hit a huge patch of water, lost control of the vehicle and slid across three lanes. Thank Goodness only a couple other cars were in the vicinity at the time.

CONDO FEVER

"The gold rush mentality has some economists concerned. Some buyers of new condos and houses are behaving like day-traders before the dot-com crash, said John Vogel Jr., a real estate professor at the Tuck School of Business at Dartmouth College:

In some cases, developers are actually creating the frenzy. In central Florida, Transeastern Homes, which builds subdivisions, asks prospective buyers to put down a refundable deposit of $500 to $5,000 to reserve a time slot to buy a house that has yet to be built, sometimes without knowing more than the general location of the subdivision and a price range.

Sounds like a perfectly reasonable investment.

THE PROBLEM WITH VALENTINE'S DAY

Any guy can be romantic one day a year.

I do appreciate Christiana's movie recommendations. An Affair to Remember is a personal favorite. Who doesn't love Nicky Ferrante? As for Eternal Sunshine of the Spotless Mind, I checked that out on the flight to Hawaii last summer between conversations in the back of the plane with my brother and a guy from the Islands, but I've been looking for a reference on the ideas behind the film ever since.

I KNOW THAT MAKES YOU REAL MAD

It was approximately 80 degrees here in Southern California yesterday. Clear blue skies, no smog. Too bad I'm leaving for a few days.

GOLDBERG ON EMPIRICISM

I don't know what point Goldberg is trying to make when he posts an email from a reader on "Empiricism". Historical events are exceptionally unique. They can't be repeated. They can't be generalized into a law of human affairs. In this sense Juan Cole is right: only direct knowledge of the individual stakeholders (their positions on the issue continuum, their salience on the issues and their effective political power) will enable one to speak intelligently on "the situation in Iraq."

From a reader:

J.,

The *essence* of Cole's outburst is that *concepts are useless*. (Tony at "Across the Bay" flails in the general direction of refuting this. He doesn't hit it squarely, although he does illustrate Cole's hypocrisy in trying to have it both ways.)

It is in no way necessary to "live in the Middle East" in order to be able to grasp -- *conceptually* -- the issues that occupy us there, any more than it was necessary to have lived on the moon in order to achieve the first landing on its surface.

In "The Gulag Archipelago", Solzhenitsyn wrote that "To taste the ocean requires only a single drop." He did not explicate it in these terms, but he was referring to the utility of concepts to human affairs. Juan Cole is essentially arguing a radical empiricist angle, the necessary implication of which (in a *consistent* -- not hypocritical -- application) is that transmission of knowledge is impossible because only direct experience with every discrete detail (grains of *sand*, even) can result in knowledge.

Tony glanced off one implication, which goes like this: Why should anyone pay attention to Cole's books? We couldn't learn anything from them, anyway, because they have no standing next to direct experience of what he attempts to impart.

Men pick up injured mountain lion

...get ticketed for marijuana possession.

Three men who thought they rescued an injured bobcat or lynx in the middle of the highway were shocked to learn it was a 65-pound mountain lion.

They were even more shocked when two of them were ticketed for drug possession.

HAPPINESS

I flipped through Richard Layard's book Happiness while at the bookstore. His reason for writing the book is great (at least for the realist Austrians): mainstream economics explains gains in "happiness" by referring to increasing purchashing power, and that just doesn't make sense to Layard. Bingo! Thank you! Serve me up another round, Richard! I love to see people jump ship (even if they don't realize it), or at least test the waters with their toes.

My main reason for even picking up the book was to see how Layard explains the problems of measuring and making interpersonal comparisons of happiness. How does he do it? Cleverly, he avoids the issue by clouding the chapter with many different examples of ways to measure happiness in individuals and aggregates ("countries"). Then he moves right on with the book and that's where the whole thing falls to pieces (at least for me). Surely, if you can't even measure and compare individual happiness, you can't go on to prescribe public policy on the basis of increasing societal happiness.

If you're interested, I suspect you can glean the juicy details of his book from this lecture, upon which the book is based.

WAIT A SECOND

The "terrorists" in Iraq are a huge threat to civilization as we know it (so we must send 18-year olds to fight them there instead of here), yet the best scheme they can hatch is using a G.I. Joe doll as a fake hostage?

Military in classroom

How do they trick the rest of them into signing up though? I actually got into a bit of a "discussion" with my mother (she's a public school babysitter, er, teacher) over allowing the military salesmen in her classroom. She tends to have the "at risk," underachievers in her class and the sell is that the military is "a way out" to a better life that these kids would not otherwise be able to achieve.

It's funny how we send these kids off to be completely unproductive members of society -- in effect, they become parasites -- as a means of giving them a chance. I had an international relations prof in graduate school who used to rip on the military's waste of resources by saying, "Soldiers get paid to die. That's it." Students usually responded negatively to this rhetoric, but he's right . . . except for that fact that there is a huge military class living as dependents on the wealth transfer from the rest of society. The same prof was always a bit distressed that some nations never actually use their cannon fodder. "They just sit around all day doing push-ups and sit-ups," he said.

Evidence modern economics is absurdly wrong. Especially the mathetmatical aspect. People are not profit-maximizers. They waste tons of money each month. Except the guy in the article.

The 33-year-old Topeka, Kansas resident replaced all 52 light bulbs in his house with fluorescents three years ago, in order to cut his monthly electricity bill.

"I even replaced the one in the fridge," he laughs.

His savings, however, are no joke. Rick explains that his $60 investment in energy efficient light bulbs saves him some $20 a month. And he has yet to replace a single bulb.

"The return on that is astronomical. I wish that I could find that in the stock market," Rick states.

Rick, a computer help desk supervisor and part-time financial advisor, learned to live on less than the $49,000 he makes annually after struggling with debt. In late 2001, Rick had a $20,000 car loan and another $8,000 in credit card bills, not to mention $90,000 left on his mortgage.

He's since wiped out his car loan and paid off the balance on his cards, but the plastic is still used for everyday purchases. Rick pays off that bill each month and uses a reward card that offers a 1 percent cash-back award on all purchases and 5 percent on gas and grocery charges.

Rick refinanced his home using a 15-year mortgage, with a 4.875 percent rate, instead of the traditional 30-year. A bi-monthly mortgage would be ideal, but his lender charges a fee for the service.

The $74,000 he has left on his mortgage doesn't bother him as "you have to have a place to live," and the interest is tax-deductible.