Cheat Sheet Q&A: 


Topic:  Direct to consumer sales (Tesla inspired)


Today’s entry:


Good morning Brian. I have found there are many items that you cannot buy directly from the manufacturer. Things like alcohol and wine. Other things like ham and eggs. The only difference I guess is that you can buy all these things at the grocery store and when they go bad you can return them.


Bottom Line:  A cleverly worded retort to my assertion that Tesla or any manufacture of goods should be able to sell directly to us if they desire to do so.  I’ll respond in two ways.  Literal and from a big picture perspective. 


Speaking literally…  You absolutely can buy alcohol and wine direct from the manufacture.  Ashley and I love going to wineries as we travel and I’ve yet to visit one that didn’t sell directly to customers.  Ditto other forms of alcohol production.  From legal moonshine to craft breweries there are a myriad of manufactures of the alcohol that sell it right on site to customers and sell it online.  At the same time there are some mass production wines and alcohol products that sell only through distribution arrangements with retailers.  Here’s the key…  It’s their choice how they choose to sell and distribute their products. 


Since 1914 via the Federal Trade Commission Act (coinciding with the forced Government breakup of Standard Oil – deemed to be a monopoly), the Federal Government has consistently erred on the side of consumer choice and best pricing available for American consumers.  In the case of this Tesla situation it’s actually an issue at the state level as many states have passed laws and/or regulations banning the sale of automobiles direct to consumers.  In my view it’s indefensible given that any other legal product sold at retail is able to be sold direct to us if the manufacture decides to do so.   That includes that largest company in the world…  Apple.  They sell direct to the consumer and through other distributers and retailers. 


Consumer backlash has already begun and the states that have taken action to block direct to consumer sales of Tesla vehicles will eventually be overturned.  Either through consumer influence or legal challenges...  It’s just a matter of time because it can’t be justified for just one industry. 


Audio Report:




Higher taxes, fewer higher income Americans:


Bottom Line:  Whatever your view is of what the tax rate should for upper income Americans – there is a universal truth.  Everyone has their threshold for taxation before they take action against it. 

For years we’ve seen, first hand in Florida, that as some states and cities have raised taxes, wealthier individuals have relocated to avoid them.  There isn’t any universal rule about what the threshold of taxation is before people targeted by them rebel.  It’s an individual decision.  For a record number of Americans they’ve made their decision. 

2013 marked a year of a record number of Americans renouncing their American citizenship. 

  • 2,999 Americans renounced in 2013

By comparison prior to this Administration a total of 5000 Americans had renounced in the prior ten years altogether. 

In the first quarter of the year we reached yet another record number of Americans renouncing their citizenship.  For the first time more than 1000 Americans left the country for good. 

  • 1001 Americans renounced in the first quarter of 2014

Clearly we’re on yet another record pace this year.  The reason cited by almost all who have renounced…  Yes taxes.  As you’ll recall 2013 marked a year of significant tax increase for upper income earners.  Clearly many of them have had their threshold breached.  With the average top income earner accounting for 35% of all Federal Income taxes paid in 2013, each of these Americans that leave the country actually have the impact of 35 average tax paying Americans.  This is a vicious cycle that doesn’t work just as we’ve seen in many states and cities.  As the wealthier individuals leave tax revenue drops.  As revenue drops debt is accumulated and taxes are raised on those who are left until there isn’t anything left to take (a la Detroit among others).  Wealthy individuals have the flexibility to leave and targeting many for more taxes will only lead to more of them leaving for good.  That’s not good for any of us. 


Audio Report:



You are what you read:


Bottom Line:  Remember the coffee table book about coffee tables (Seinfeld reference for the rest of you)?  This isn’t about coffee tables but you could call it the Success book about Successful people.   It’s a actually a new book called:  “Rich Habits:  The Daily Success Habits of Wealthy Individuals”.  In Essence he found that financially we are what we read.  For example:

Of those who earn $160k or more day: 

  • 11% read primarily for entertainment
  • 85% read empowering and/or career related information

Of those who earn $35k or less:

·        79% read primarily for entertainment

·        15% read empowering and/or career related information

So we really are what we read…


Audio Report:



Latest CBO info shows Social Security catastrophe starting in 2016:


Bottom Line:  We all know that Social Security’s future doesn’t look good as it currently stands.  Most folks know that sometime many years into the future we’ve got an insolvency problem (currently Social Security becomes insolvent in 2033 at current pacing).   What I don’t think many are aware of is that the Social Security crisis is actually set to being in just over two years. 

Social Security has two different payout streams.  The benefits for retirement aged individuals and disability.  The disability portion of Social Security is soon to become insolvent. 

Given the current pacing of disability payouts and revenue generated for disability, the program will reach insolvency by the end of 2016.  By 2017 only 80% of the claims would be able to be paid out without changes.  So in other words, it’s not that we can turn our backs and punt on Social Security until sometime 15-20 years into the future.  Something will have to occur/give in just two years. 


Audio Report:



Have a SunTrust mortgage?  You might be entitled to compensation:


Bottom Line:  SunTrust Bank has agreed to a new Settlement with 49 states and Federal regulators over a number of mortgages originated between January of 2006 and March of 2012.  Nearly $1 billion is being allocated to make good on mortgage practices that weren’t proper.  Floridians are expected to receive about 20% of the total settlement benefit.  So if you had a mortgage originated by SunTrust during that period of time, keep an eye out for communication from the bank or perhaps even the state of Florida.  We still don’t know the breakout in terms of payouts of benefits but it appears as though a combination of cash payouts and/or mortgage modifications or fee free refis may be possible. 


Audio Report: