Archive for April, 2020

As I wrote in an earlier post, the FDIC is worried about people pulling money out of bank because they seem to have the need to remind us how safe our money is with banks. The key problem with the FDIC’s message is that they seem to forget or willfully ignore the effect of inflation on the currency and subsequent “value” of coverage. To that end, I have created the table below to show the FDIC how they need to adjust their coverage for inflation since no one there seems to do anything unless a crisis pops up.

I assume a 3% rate of inflation and use 10 year cadence adjustment. The column on the rate is the actual calculation and the column on the left is a suggested rounded number. Keep in mind that as of the date on this post the coverage is $250,000 and it may stay there without people prodding their representatives and government officials to raise this amount.

YearFDIC Insurance CoverageActual TVM (3% inflation rate)
1933$2,500
1934$5,000
1950$10,000
1966$15,000
1969$20,000
1974$40,000
1980$100,000
2008$250,000
2020$350,000$335,979.09
2030$475,000$470,370.73
2040$650,000$638,360.28
2050$875,000$873,545.65
2060$1,200,000$1,175,926.83

Now that I have put my financial survival plans in place for 2020 and beyond, I figured I’d share some of my strategies. A large portion of this post is simply a repeat from the 2007 crisis with some added changes.

  1. Keep your payroll check in MULTIPLE bank accounts
  2. Keep some amount of emergency funds (cash) in your home somewhere safe and sound, don’t assume ATM machines will have cash.
  3. Keep your savings in a SEPARATE account.
  4. Keep well under the 250k limit of FDIC and don’t assume FDIC will bail you out; you’ll learn why later
  5. Forget about money market funds
  6. You should already have a large cash position if investing in the market, if not you’re going to have to ride it out – it took 10 years to recover from 2007 crash.
  7. Keep plenty of food available in your home
  8. Keep you gas tank full at all times when possible
  9. Be vigilant at all times; worry about burglary, robbery and assault at any time from now on until this crisis is over
  10. Have a worst case scenario plan for yourself and your family
  11. If you have large amounts of money buy US Treasuries.
  12. Worry about the “safety” of your safe deposit boxes at the bank and rethink if that’s the best place for your property.
  13. Immediately start thinking about how you can earn some extra cash.
  14. Don’t plan on anyone else saving you. You are on your own.

If you are old enough you might remember the crash of 2001, 2008, and 2020. Keep this in mind when planning your retirement and emergency fund needs.

Did you know there was 4 trillion dollars of money made available to banks as part of the “relief” package? Did you know interest rates for banks are at 0% right now? So if banks have trillions and the federal reserve loan rate is zero percent why the frog are banks still charging 20% to 30% on credit cards?

Worse than that is why are people not DEMANDING from their congressional representative that they put some stipulations in to help provide interest rate relief on credit cards and other high interest loans?

I believe student loans had a three month forbearance and some credit cards may get a forbearance but what is really needed is interest rate relief.

It’s a sad state of affairs when I have to be mad about this for you. I pay off my credit cards each month and rarely pay interest so it doesn’t impact me much but you should be mad and sad.

I received a photo from a long line of cars at a bank ATM from someone today and it got me thinking. Why are people rushing to the bank to get cash?

Is it because 10 million people have filed for unemployment the past two weeks? Is it because those 10 million people won’t be making any more bank deposits? Is it because those 10 million people likely will have their credit card lines cut for non payment soon and they need to stock up on cash?

I wonder what happens when 10 million, 12 million, 15 million and on and on stop making bank deposits and stop making payments on loans, credit cards, mortgages, etc.

Hmm…I wonder what will happen………