Table of Contents Praise Title Page Copyright Page Introduction CHAPTER - The First Rule of Finance Killing Themselves for the Joneses First Save, Then Buy CHAPTER - Credit, Cars, and Castles Credit Cards Cars Castles CHAPTER - Toxic FSP in the Alphabet of Idiocy What Went Wrong Financial Memory Lane Stop Getting Tricked A Pathetic Picture Banksters in Action CHAPTER - The Society You’re Up Against Keeping You in Debt Solving Runaway Debt by Borrowing You Spend, They Profit The Federal Reserve, AKA The Department of Inflation CHAPTER - Government of the Corporations, by the Corporations, for the Corporations Government and Banks in Bed Elected Officials Aren’t the Real Leaders The Antilobbyist President Grows the Lobbying Corps Every President Is an Oil Man Every President Is a Banker Summer of the Lobbyist They Own Everything CHAPTER - How Money Is Power Health Care Prices Oil Dependency Military Spending What They Have in Common Think Like a Corporation Stop Trusting and Start Going It Alone CHAPTER - Financial Freedom Your Low-Battery Birth Rich Gone Wrong What You Do with Your Money CHAPTER - Guarantee Your Own Well-Being Investing Can Wait Focus on Your Finances CHAPTER - On the Front Lines of Freedom Bankers’ Rules Free Families Dream Daughter A Warmly Lit House Avoid the Door of Despondency CONCLUSION APPENDIX A - Smart Scenarios APPENDIX B - Getting Out of Debt APPENDIX C - Keep Current Notes Acknowledgements About the Author Index Additional Praise for Financially Stupid People are Everywhere “In his plain speaking, no-nonsense style, Jason Kelly calls our national economic debacle as he sees it—no one is spared scrutiny By giving us simple financial rules to live by, Kelly’s message is clear: Financial swindlers are out there—always have been and always will be—but, they cannot succeed without financially stupid people (i.e., those who cannot “say no” to crippling debt) So, no finger-pointing, folks; just look at the “Man in the Mirror,” follow these rules, and make that change to financial freedom!” —Diane E Davies, Attorney and Professional Fiduciary “Jason Kelly brings light to many issues at grasp with Americans today, along with many solutions Maybe someday America will wake up and smell the coffee.” —Frank Mancini, CEO Bellabacci Inc “As a professional money manager I strongly believe being financially smart is better than being financially stupid Hence, reading Financially Stupid People are Everywhere is a must Most importantly, Jason Kelly once again hammers home the secret rule on how to get rich: spend less than you earn Also, be sure to NOT pay for this book with a credit card—use cash or a debit card.” —Charles F Michaels, President, Sierra Global Management, LLC “If the Tea Party Movement gets a hold of Jason Kelly’s new book, look out Washington come November!” —Peter Lawrence Alexander, The Business Parables (2010) “On the surface Financially Stupid People are Everywhere is a practical book with effective, clearly explained advices on how to keep control over your finances and stay out of the debt-trap But a more accurate reading reveals a deeper concept that could really improve your life: reducing voluptuous expenses is a prerequisite for achieving financial freedom, which in turn leads to stresslessjobs, better work-life balance and—ultimately—a more meaningful and genuine way of living.” —Dario Di Bella, Executive, Financial Services, Accenture “I couldn’t stop reading It was infectious! Insulting, yet instructive Hold on So you’re saying we should take responsibility for our decisions? People seeking new ways to go into debt to live a fiction is at the root of most financial crises This book provides a nice kick in the pants to wake up and live responsibly I don’t agree with your characterization of the banks or the politics, but the personal lessons are useful.” —Brian Jacobsen, Ph.D., J.D., CFA, CFP(r) Associate Professor Economics, Wisconsin Lutheran College “Jason Kelly’s no-nonsense assessment of the global financial crisis shows that it wasn’t just financially stupid people working on Wall Street who caused the financial crisis, but also ones living on Main Street Daring to take the ‘other side of the trade’ and examine this aspect of the crisis during a period of increasing populism, Jason Kelly offers a Main Street explanation of the crisis along with easy, common-sense solutions that empower individuals to avoid becoming part of the next financial disaster.” —Richard Forno, Chairman, SNS Advisory Board Strategic Advisor to technology startups “Personal responsibility is the willingness to accept the consequences of one’s behavior without blame or excuse This quality is the bedrock of emotional stability and the lack of it is the financial cancer that almost destroyed the world financial markets in the first part of the twenty-first century Mr Kelly’s book is a mirror for seeing what financial irresponsibility looks like Whoever reads this book will see themselves as part of the problem instead of blaming everyone else Like a happy movie ending, this book carefully explains what the average citizen can to become financially responsible, worry free, and liberated from the bonds of the rich and powerful If every American would read this book and follow its advice, America could be solvent and its citizens would have financial peace of mind Get it now!” —Terry Sandbek, Ph.D., Psychologist; Author, The Worry Free Life “This book should be required reading in every high school economics class! Especially valuable is its clear explanation of how credit card debt works as compound interest in reverse How lucky a young person would be to realize this before they fall into the bankster traps.” —Ralph Allswede, Retired President, Precision Prototype & Mfg, Inc., and Consultant “This is a most insightful and easy-to-read synopsis of the causes of our economic problems in the United States! The discussions about solutions are thought provoking The writer has an easy to understand style thatjust keeps you reading till the pages run out!” —C Patrick Lauder, M.D., Mammoth Hospital, California “One of my favorite books has been Piero Ferrucci’s ‘What We May Be,’ a gem of transformational insight On getting into Jason Kelly’s abrasive depiction of financial incompetence, I was hardly thinking ‘transformation.’ Shocked resistance was the first reaction to his scolding against stupidity, claiming that America’s most toxic asset is its financially stupid people ‘OMG, has the meticulously disciplined Jason of the ‘Neatest Little Guide’ series on investing, lost it, this time gambling that his rant against stupidity won’t result in his readers thinking him a misanthrope?’ Shock yielded to ‘Aha’ on feeling the hand of one who has made it, helping his readers along his well trodden path to economic character and a moral course to the good life Kelly offers a rare and coherent fix on the interplay between societal economic chaos and the dysfunction of its individual members The enemy is us, and the cure requires a resurgence of interest in individual character ” —George Collins, Philosophy Professor, Attorney Estate Planner “With disarming common sense, Kelly makes the case that personal financial freedom requires very little math skill It depends mostly on our courage to question the social conventions built into modern consumption societies, and our resolve to change our lifestyles accordingly.” —Alan Furth, Economist; International Entrepreneur; Blogger at AlanFurth com “In his latest book, Jason Kelly has given us a crash course in history and a review of the current state of our society and economy He has shined a spotlight on the rampant lack of accountability that exists today and provided evidence that the cards are stacked against us It’s not all negative though, the book also provides a clear set of rules and tips for how to protect your wallet and get ahead With real life examples of people from all walks of life, Jason illustrates that financial freedom is attainable for all of us.” —Jacob Glenn, Director Financial Services, Rosetta “A must-read if the truth and reality of your financial future is important.” —Roger de Bock, Consultant, Western Financial Planning CareerBuilder.com Carlin, George Carlson, Stuart Car(s) cheat sheet depreciation financing insurance as liability maintenance purchasing registration safety used Cash flow extra Cassidy John CAUCA (Californians Against Utility Company Abuse) CDOs (collateralized debt obligations) CDSs (credit default swaps) Center for Responsive Politics CFTC (Commodity Futures Trading Commission) Cheney Dick Chevron Chism, Jack Cigna Citigroup Clemente, Frank Clinton, President Bill Colbert, Stephen The Colbert Report Cold War Collateralized debt obligations (CDOs) Collins, Richard A Commodity Futures Modernization Act Commodity Futures Trading Commission (CFTC) The Commonwealth Fund Congress Congressional Budget Office Congressional Oversight Panel for the Troubled Asset Relief Program Congress of California Seniors Conspicuous consumption Consumer(s): average culture Corporations: chief executive officers corporate vs citizen interests socialism and CPP (Capital Purchase Program) Crawford, Andrew Credit card(s) as backup in emergencies balances cheat sheet vs debit card effect on finance history improper use incentive programs knee-jerk defenses minimum payments no-fee paying off balances philosophy— point systems ratings Credit default swaps (CDSs) Credit rating Culture, debt-based D Daily Mail The Daily Show Debit card vs credit card De Borchgrave, Arnaud Debt acceptance as control culture and cycle getting out of household management minimum monthly payment reduction runaway U.S Department of Homeland Security Department of Veteran’s Affairs Depreciation, of cars Doherty, Harry Dorgan, Byron Dot-com bubble Dow Jones Industrial Average Dudley William E Earning(s): cheat sheet vs spending Easton, Michelle Eisenhower, President Dwight Electric vehicles (EVs) Eli Lilly Emanuel, Rahm Emerson, Ralph Waldo End the Fed (Paul) Enron EPA ErkenBrack, Steve EVs (electric vehicles) ExxonMobil F FactCheck.org FBI Federal Reserve blame and lowering interest rates Federal Reserve Act of 1913 Federal Reserve Archival System for Economic Research (FRASER) Finance(s): cheat sheet effect of credit cards focus freedom guarantees history living within means management rules Financial crisis: of 2007 origins Financial Services Modernization Act Forbes Ford, Henry Foreclosures Foreign Service Fortune Fortune 500 Fowler, Liz Frank, Barney FRASER (Federal Reserve Archival System for Economic Research) The Fred Thompson Show FreedomWorks Friedman, George Friedman, Stephen Frontline G Gale, William G Garofalo, Bud Gates, Robert Gazprom Geithner, Timothy General Motors (GM) Gerard, Jack Gilleran, James Glass-Steagall Act Glenn, John Glover, Stephen GM (General Motors) Goble, Robert Golden Rule Health Goldman Sachs Government: banks and connections to bank fraud and financial systems and income and spending stimulus Government Accountability Office Gramm, Phil Grant, Darin Great Depression of the 1930s Greenberger, Michael Gregg, Judd GSAMP (Goldman Sachs Alternative Mortgage Products) Trust 2006-S3 Guenther, Ken H Hawking, Stephen Health insurance costs naming national health insurance plan preexisting condition(s) private reform prognosis trends Wall Street and HealthSouth Hedge fund(s) Heinze, Augustus Heinze, Otto Herbert, Bob Hicks, Bill The Hill Hogan, Bill Hoh, Matthew Hohmeier, Tom Home equity line of credit Home ownership down payment vs renting House bill H.R 3962 I IBD IBM Income: disposable extra government and lifetime living within means middle-class from real estate transactions reduction of expenses Independent Community Bankers of America Inflation Insurance: car health private mortgage insurance Interest rate(s): adjustable incentives lowering variable Investment(s) Investor’s Business Daily Iraq war J JPMorgan Chase Japan, lifestyle JasonKelly.com Jekyll Island Club Joint Standoff Weapon Justice Department K Kashkari, Neel Kilgore, Lee Kirk, Charles The Kirk Report Krause, Audrie Krauthammer, Charles Kucinich, Dennis L Larry King Live Larson, Doug Leadership Legislation: American Recovery and Reinvestment Act of 2009 Commodity Futures Modernization Act Federal Reserve Act of 1913 Financial Services Modernization Act Glass-Steagall Act Tillman Act “Liar’s loan,” Life Is Worth Losing Lifestyle conspicuous consumption in Japan money and Lindbergh, Charles Loan(s): equity and quality runaway debt and subprime Lobbyist(s) Long-Term Capital Management (LTCM) Lonky, Neal Los Angeles Times LTCM (Long-Term Capital Management) Lynn, William M Mad magazine Mandelson, Lord Marathon Oil MBSs (mortgage-backed securities) McCain, John McCaughey, Elizabeth McChrystal, General Stanley McLaughlin, James Medicare Mercantile National Bank Meriwether, John Merrill Lynch Merton, Robert Microsoft Middle-class Military spending Milken, Michael Mobil Oil Co Modisette, David Money cheat sheet lifestyle and management as power Money Trust Investigation Moore, Michael Morgan, J P Morgenson, Gretchen Mortgage-backed securities (MBSs) Mortgage (s) : in 2006 cheat sheet payment plans quality second Moyers, Bill N The Nation National Economic Council National Health Service (NHS) National Institute for Automotive Service Excellence National Institute for Emergency Vehicle Safety National Institute for Health and Clinical Excellence (NICE) National Monetary Commission The New Republic Newsweek The New Yorker New York Stock Exchange New York Times NHS (National Health Service) NICE (National Institute for Health and Clinical Excellence) 9/11 Nixon, President Richard Nobel Peace Prize “No Exit” (McCaughey) Novak, Viveca O Obama, President Barack vs President Bush The Observer OECD (Organization for Economic Cooperation and Development) Office of Thrift Supervision Oil dependence O’Neill, Paul Organization for Economic Cooperation and Development (OECD) Orszag, Peter Owens, Howard P Panic of 1907 Patterson, Mark Paul, Ron Paulson, Henry Petrobras Pfizer, Inc Phelps, Michael Philip Morris Phillips Petroleum Piper, H PITI (principal, interest, property taxes, insurance) PMI (private mortgage insurance) Podesta, Heather Podesta, John Podesta, Tony Politicians banks and Ponzi scheme Potter, Wendell Presidential Medal of Freedom Private mortgage insurance (PMI) Prudential Public Citizen’s Congress Watch “Putting It Simply,” R Rasmussen Reports Raytheon Real estate market: in 2006 down payment equity foreclosures income from transactions surplus of inventory Recession(s) Reich, John Remote Area Medical Renting, vs home ownership Resolution Trust Corporation Reynold, Laura Ring of Fire Radio Rockefeller, John D Rockefeller, John D., Jr Rolling Stone Royal Dutch Shell Rubin, Robert S Salomon Brothers Sanders, Bernie San Luis Obispo Tribune Saving(s) before buying cheat sheet Savings and loan institutions (S&Ls) Scheer, Robert Scholes, Myron SEC (Securities and Exchange Commission) Securities and Exchange Commission (SEC) Securitization Senate Budget Committee The Seniors Coalition Shell Oil Co SIVs (structured investment vehicles) 60 Plus Association Sloan, Allan S&Ls (savings and loan institutions) Socialism, corporations and Social Security Société Générale Spending: cheat sheet vs earning unnecessary Stanford Magazine State Savings Bank of Butte, Montana Status symbol(s) Stewart, Jon Stimulus Stock(s) Stratfor Structured investment vehicles (SIVs) Summers, Lawrence Surowiecki, James Sweyne, Aaron Swiss Reinsurance T Taibbi, Matt Take-home pay Taking Our Government Back (Obama) TARP (Troubled Asset Relief Program) Tax(es): cuts deductions Technology Texaco New Yorker Tillman Act Time magazine Toward Utility Rate Normalization (TURN) “Toxic assets ,” Toyota Motor Tranche(s) Troubled Asset Relief Program (TARP) Truman, President TURN (Toward Utility Rate Normalization) U Union of Concerned Scientists United Copper Company United Seniors Association U.S Senate Committee on Commerce, Science, and Transportation U.S Treasury bonds USA Today Utility Consumer’s Action Network V Veterans Health Administration (VHA) VHA (Veterans Health Administration) W Wall Street health insurance and Wall Street Journal Wal-Mart Walton, Sam Warren, Elizabeth Washington, President George The Washington Post Washington Times Wasserstein Perella & Co Wealth conspicuous consumption The Weekly Standard Weil, Dr Andrew WellPoint West, Mae Western States Petroleum Association (WSPA) Weyrich, David Whitehouse, Sheldon Why Our Health Matters: A Vision of Medicine That Can Transform our Future (Weil) Wilson, Pete Woods, Tiger Woodward & McDowell World Bank Wright, Jim WSPA (Western States Petroleum Association) Y Yeletaysi, Sarp Yellen, Janet Yelton, Jack Z Zero Emission Vehicle (ZEV) Mandate ZEV (Zero Emission Vehicle Mandate) a Article by Matt Taibbi from Rolling Stone, July 9-23, 2009 © Rolling Stone LLC 2009 ... Mancini, CEO Bellabacci Inc “As a professional money manager I strongly believe being financially smart is better than being financially stupid Hence, reading Financially Stupid People are Everywhere. .. which, of course, he was These people don’t own anything Every one of them was proud of what they’d financed They seem to have bought it for the purpose of being proud, of showing off, of keeping... issuing one of her many credit cards and still pays on them today even though they’ve long since gone out of style What did she do? Replaced them with new ones, of course—before she’d ever paid off