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I'm positive the folks in the "frugal living" section would all shake their heads, so I was curious what the general economic folks think. Let's keep the politics out of this and only focus on the financial decisions. I should also note that these are personal finance issues and that Rubio hasn't done anything illegal nor took a bailout.
I can understand his mortgage payment trouble on a non-primary residence, especially purchased during the housing bubble. I can also understand the desire to buy a speed boat after getting a book advance, but I can't quite figure out why he would liquidate a $68K retirement account. Has anyone else been in a similar situation where you paid penalties and liquidated a tax-deferred account while you had plenty of income and assets? What do you think?
Can you provide any links for context? I work in a field tangential to the financial industry, but I'm not great with my personal finances. But from the bits you've provided, I'm thinking the dude's not as bright as everyone seems to think - that's without context however.
Can you provide any links for context? I work in a field tangential to the financial industry, but I'm not great with my personal finances. But from the bits you've provided, I'm thinking the dude's not as bright as everyone seems to think - that's without context however.
From my own experience, field of study and profession doesn't always translate to prudence. My older brother has a degree in finance and found himself with $20K of revolving credit card debt that he was rolling from one balance transfer offer to the other. My mom bailed him out, but he got a good yelling at from my mom and me. He took the bait of the offer and didn't read the fine print regarding fees and FIFO balance (he was paying hundreds of dollars in fees each month). A friend of my wife's is a bankruptcy attorney who is on the brink of her own bankruptcy. She makes around $120K-$140K, but has $380K of student loan debt and $60K of consumer debt. I convinced her to refinance her auto loan from 10% to a longer term 2.49% and use that monthly savings to pay down her highest interest rate debt first. My brother learned a lot after college, got his MBA, and now has a positive net worth around $400K, but he got off to a really bad start.
As for Rubio, I know he's not alone but I still cannot understand why he liquidated a retirement account.
If you can't run your own life well, how can you be expected to run others well?
This is also my thought. I will say most politicians are lawyers. Lawyers have a reputation of being bad with money. It's no wonder our government has so much debt with so many lawyers in charge.
If we want to set our nation's financial ship in the right direction, we need more engineers to run for office and we need to vote for them. But engineers aren't usually interested in running for office and people don't usually vote for them because they're not into flashy BS and flattery.
LOL! The nation carries debt not because of lawyers, but because it is the only rational thing to do. Virtually every other national economy with a heartbeat carries debt as well. None of us intends ever to pay back this debt. We'll service the debt of course, making all scheduled payments of principal and interest, but we will not seek to reduce outstanding balances to zero, or most often, at all. US debt was last paid off in 1836, and people had a hard time figuring out why we did it. Debt was last paid down at all between 1998 and 2001 when the Clinton budget surpluses enabled Treasury to buy back $363 billion worth of debt held by the public, first at its own discretion, and later via reverse auctions. The circumstances that permitted such restraints on debt were blown to pieces by the economic debacle if the Bush-43 administration. It will be decades before we are able to consider the option of buying down debt again.
In the US meanwhile, Congress (when not paralyzed by the usual political monkey-wrenchers) provides an annual appropriation for the payment of interest on the public debt. It makes no such provision for repayment of principal. It is understood that Treasury will simply issue new debt in order to raise the funds needed to pay off maturing debt. In the real world, national govenrments are very different animals from ordinary households, and they operate under rather different sets of rules.
Politics aside, I think Rubio is bad with money. It seems he only sees the benefits of the purchase.
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