The above video clip from last month shows the president hasn’t progressed from the magical thinking of financial reality he first practiced with Michelle. In August, 2011, Fellowship of the Minds published this “Magic Beans” financial strategy practiced by the newlywed Obamas.
Would you believe the “smartest man in the room” and his lovely and talented helpmeet, Michelle, have a poor track record in budgeting family finances? Their behavior as the “First Couple” confirms these people are clueless on the value of money and where it comes from. Indeed, Michelle referred to the first substantial income they had as a couple as “magic beans”, (the royalties from “Dreams of My Father”). Prior to that, it sounds like they would have qualified for a Dr. Phil-style intervention for profligate spending.
President Obama’s troubling mantra: In debt, we trust
Friday, May 1st 2009, 4:36 PM
It is no surprise that President Obama supports unprecedented spending and borrowing in the federal budget since he has never suffered any consequences from the excessive spending and borrowing in his private life.
And I’m not just talking about the First Lady’s $540 sneakers.
A close examination of their finances shows that the Obamas were living off lines of credit along with other income for several years until 2005, when Obama’s book royalties came through and Michelle received her 260% pay raise at the University of Chicago. This was also the year Obama started serving in the U.S. Senate.
During the presidential primary campaign, Michelle Obama complained how tough it was to make ends meet. During a stop in Ohio, she said, “I know we’re spending – I added it up for the first time – we spend between the two kids, on extracurriculars outside the classroom, we’re spending about $10,000 a year on piano and dance and sports supplements and so on and so forth.”
Let’s examine how tough things were for this couple using various public records.
In April 1999, they purchased a Chicago condo and obtained a mortgage for $159,250. In May 1999, they took out a line of credit for $20,750. Then, in 2002, they refinanced the condo with a $210,000 mortgage, which means they took out about $50,000 in equity. Finally, in 2004, they took out another line of credit for $100,000 on top of the mortgage.
Tax returns for 2004 reveal $14,395 in mortgage deductions. If we assume an effective interest rate of 6%, then they owed about $240,000 on a home they purchased for about $159,250.
This means they spent perhaps $80,000 beyond their income from 1999 to 2004.