Personal Finance For the N64 Generation
The ratings agency Standard & Poor’s recently downgraded the state of New Jersey once again. This downgrade is far more perilous to the municipal bond market than average investors realize. As a former municipal bond trader myself, here’s my take on what the downgrade of New Jersey means for investors and residents of the state. Continue reading “Why the Latest S&P Downgrade of New Jersey is a Big Deal”
The Windy City of Chicago has the worst funded pension system in the United States. A combination of corruption, skipping required pension payments, generous benefits, and ridiculous investment assumptions have put the financial future of the nation’s third largest city in jeopardy. Because of this pension problem, Chicago just raised property taxes by 72% over the next few years. Sadly, it will not be enough to avert disaster. Continue reading “The Worst Funded Pensions in America are in Chicago”
Imagine you are a police officer in New Jersey. You put your life on the line to keep the citizens of the state safe. When you are not risking bodily injury, you have to deal with all kinds of unpleasant situations like evictions, traffic stops, or looking for suspects with outstanding warrants for their arrest. All you want is a secure pension when you retire. How would you feel if you discovered that New Jersey stole from the police pension to shore up the failing teachers’ pension? Continue reading “New Jersey Stole From the Police Pension and Gave It to Teachers”
Looking at the latest New Jersey pension performance report made me realize how doomed pensions are for average people in America. If you work in the public sector, you need to be using a 403b and IRA to shelter as much as you can for your golden years. I seriously doubt all but the strongest funds will be able to pay their obligations in 30 years when many Millennial Moola readers will retire. This is mostly due to impossible public pension investment assumptions, and I have the numbers to prove it. Continue reading “Most Public Pension Investment Assumptions Are Impossible”
Fake. Duplicitous. Phony. Surreal appearance underlying the dark truth of the willingness to take advantage of anyone in its way. I could be talking about Chris Christie’s support of Donald Trump. Unfortunately, I’m not. If you take a look at trading levels, there are a lot of individual investors out there that could lose their shirt when New Jersey bonds default. I’ve written two pieces on the coming disaster of New Jersey’s finances, here and here. Sometime in the next 10 years, the state will have no money to pay its bills. The scary part is, the bond market is completely ignoring it. There are people today paying premium dollars for bonds that could be close to worthless in 10 years. The rating agencies and other institutional investors are wrong because there has never been a looming financial crisis quite like this before. Here’s the evidence. Continue reading “New Jersey Bonds Are Like Chris Christie at a Trump Rally”
My goal here at Millennial Moola is to bring readers financial articles they won’t get anywhere else. While this site’s target audience is millennials, I’ll write about anything if I deem it relevant to the financial health of Americans in general. It’s for that reason I want this week to be focused on the failing financial health of the state of New Jersey. While New Jersey is the worst actor, there will be smaller crises like this one all over the nation over the coming years because of the failure of politicians to make the payments for the benefits they’ve promised to public employees. I estimate that New Jersey will have a $10 Billion hole in its budget by 2026, with no way to pay it besides drastically increases taxes, cutting public retiree benefits, or defaulting on its billions of dollars in municipal debt. Continue reading “New Jersey Will Have a $10 Billion Hole In Its Budget In 10 Years”
Before I started this website, I worked in the municipal bond business. Everyone in that world knows New Jersey’s finances are a basket case. However, no one is talking about right now is how badly the the latest stock market crash has affected the New Jersey Teachers’ Pension Fund. It speeds up the timeline for Armageddon in New Jersey by years. People are lazy. They look at the latest published reports for their information. However, by simply extrapolating their cash burn rate it is clear that the New Jersey Teachers’ Pension Fund will run out of money. The fund will be totally gone within 10 years. New Jersey will owe billions in payments to retired teachers that it doesn’t have. At that point, I conservatively estimate that New Jersey slashes teacher pensions by 50% and New Jersey raises taxes by about 30%. Continue reading “New Jersey Teachers’ Pension Fund Has Eight Years to Live”
A pension crisis of epic proportions is unfolding in New Jersey right now, but if all you listened to was the presidential campaign trail you’d assume it’s the best managed state in the nation. In fact, New Jersey is a financial disaster. I’m a firm believer that you can’t just worry about your own financial situation as a millennial. You have to look around you and see what’s going on because if you don’t you could wake up one day and wonder how your taxes got to be sky high, or your city services aren’t being delivered, or how people aren’t getting their pensions. It is with this thought in mind that I want to tell you that New Jersey’s pension funds are projected to be totally broke by 2027. By my own calculation, I find the pensions will be empty by 2025. While this problem has been building over the past decade, Christie and his administration have misrepresented the fact that they’ve placed the state on the path to financial ruin by making one of the lowest pension contributions in the country. Now, Jersey’s pensions are about 50% funded using their own ridiculously high expectations for investment returns on their pension fund and the payments the state needs to make to catch up are not being made, so the funding ratio is going to continue to plummet. Let’s find out how this is happening and what you can do to protect yourself if you or anyone you know happens to live in New Jersey. Continue reading “New Jersey is a Financial Disaster About to Explode”
