Here are interesting posts and news this week from the MoneyBlogNetwork and beyond: AllFinancialMatters thinks we may be saving more than we think. MightyBargainHunter got a great deal at a yard sale. Five Cent Nickel tells us that Honda is

JT also makes the point that the cost of debt is less than the cost of capital. For someone, or some entity, with good credit and thus good interest rates on debt, it is much more profitable to borrow and invest. This won’t continue forever. According to the efficient market theory, they should even out over time. The 0% credit card trick is already starting to move away as they are begining to charge an interest rate on balance transfers but not purchases.

The federal government demonstrably uses outdated methods to calculate economic measures.

That said, the capital gains exclusion makes sense to me for the reason others have pointed out – the wealthy are the overwhelming beneficiaries of capital gains. Excluding capital gains from the calculation omits those ‘outliers.’

Finally, I think it’s important to point out that debt in America today largely isn’t being used for investment, but for CONSUMPTION. It doesn’t matter how cheap borrowing is if you’re essentially destroying the money.

Many people aren’t using mortgages to directly fund investment, but many do carry mortgages while they invest, or carry student loans while they fund 401Ks. From an economic and accounting point of view, this is identical to funding their 401K or investment with debt against the house, even if it isn’t intended this way.

And there _are_ many people who use RE to directly fund investments, especially in other real-estate or to launch small businesses. This is especially true for little businesses, which are often bought or started with SBA loans that are collateralized with real-estate.

My point with that question was that although that strategy can be done, I doubt the vast majority of people actually do it. Some of them do, but I’m betting that a lot of people are borrowing against their house to buy cars or other things like that. That’s just my guess.

I put over 17k a year into my 401k (including catch up contributions), but the gov’t would say that I am saving very little because the amount going into my savings account at the credit union is relatively small.

As for the statement “if American households are so rich, why are they borrowing so much?”, a previous commenter has it exactly right. JLP, you and others here have spent much time arguing against paying down your mortgage, but rather using the money to invest. That is in effect borrowing money to invest, and increasing your debt load. If you can do that successfully, and you have argued that you can, then why not borrow? You would have to be a chump to do otherwise?

Looking at my extended family and friends, I am fairly well convinced that the vast majority of Americans are not taking any near the appropriate steps to secure their financial futures.

Even my accountant brother-in-law, who makes around $100K does not contribute the max to his 401K or save any amount outside his 401K. He is pretty much banking on inheritance for retirement – and that is a pretty questionable strategy – not so much a strategy as cop-out. But, he’s convinced that to provide the white picket fence, two-car suburban lifestyle for his SAHM & kids, that he has to spend today rather than prepare for tomorrow. And he’s a fairly conservative, financially literate member of the top half of the income spectrum.

Most of our friends and family are simply ignoring the whole idea of retirement savings. It’s as I’ve been saying – most people knowingly or not are making the cost of the later part of their lives, a burden of their children. And if not their children, then the govt. It definately seems to be the norm rather than the exception.