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Where Did We Go Wrong?

Karim Rahemtulla, Options Strategist, The Oxford Club

My article last week touched a nerve. And it should have...

Judging by the responses, something has gone completely wrong with the state of our union... and it's not getting better.

The majority of responses had two common themes. One, healthcare expenses are out of control; and two, household incomes can't keep up with expenses.

Now, you may think that I'm working from a place of ignorance when it comes to these things. Sure, I make a good living and have good healthcare. None of these were by accident, however.

I credit my lot in life to two experiences - a ton of luck and the willingness to adapt to any situation.

The first experience that shaped my life was when my father declared bankruptcy in the mid-'80s. He was a hotelier and bought in the right location... at the wrong time.

He bought a hotel near Disney just before Epcot was built. He had a good run for two years, and then everyone and their brother was killed when Disney began building hotels on their property. Almost overnight, hotel rates plummeted to as low as $20 per night for non-Disney properties.

The run was over.

He suffered greatly after that. He had spent the better part of 40 years working his butt off to save enough for a down payment only to see debt service wipe him out. The lesson I learned - and one I teach my children and anyone else who listens - is that it's not how much you make... it's how much you spend.

The second experience that shaped my life was when he died. He passed away early, at the age of 58, just a few years after losing the hotel. Yet, in that time, he worked hard and bought another business, which he ran with my mom. My brother and I helped when we weren't in school.

When he died suddenly of a heart attack, there was no will or estate plan. Not that it mattered much... There wasn't much left in his estate. My mom was heartbroken, but she still worked every day, running the business. She was always his partner, and she knew how to get the job done. Both my brother and I cut back our school and helped her out until we could sell the business for a modest profit. We looked after her until she passed away this summer.

The lesson I learned was that you need to stick together during good times and bad. And make sure you pick a partner in life who shares your goals and whose goals you share.

The one thing that was paramount to my parents was that their children received the best education they could afford. My dad always said, "You can lose everything in life or 'they' can take everything away from you... except your education."

According to the results of a recent Program for International Student Assessment (PISA), the U.S. barely registers in the top 25 for any education. The PISA is a global exam that measures the performance in math, reading and science of 15-year-olds across 72 countries...

We have the best universities, for sure, but those are increasingly difficult to afford.

When it comes to healthcare costs and low income, I witness the effects every day. Both of my daughters struggle to make ends meet, and I won't do more than the bare minimum to help them financially. They need to understand the struggles of independence.

I wasn't always that way. As parents, we always want to help. But this is a dog-eat-dog world, more so now than ever before. And it was and still is tough to let go and watch them struggle. The only help I provide them now is health insurance until they turn 26. After that, I am as worried as you are about how they will fare with an ever-changing healthcare landscape.

Several years ago, I confronted my Congressman about healthcare at an athletic event. I told him that as a businessman and individual, my biggest variable expense was healthcare costs. It scared me more than any mortgage payment. And today it's higher than my mortgage payment was back then... and it's going even higher.

We need to get our head out of the sand and demand things like tort reform, term limits, lobbyist reforms and an end to pervasive cronyism. Do you really need three MRIs and four opinions just to cover your doctor's butt from a lawsuit? If your answer is "yes" because we "deserve" it, then get ready to pay even more.

We need to invest more in education. Period. It's not immigrants that are taking away jobs; it's a lack of skills and education that is handing over jobs. Wait until artificial intelligence and robotics really kicks in. Our biggest problem won't be low wages... It'll be NO wages.

We are at a defining point in this country...

All your comments suggest that something is awry. But we keep electing the same dolts to office and expecting different results. Or we have become so reliant on entitlements that we are forgetting to teach our kids the meaning of hard work.

It's time to reverse course and use the ballot box to force issues such as improved primary and secondary education and a more rational healthcare system.

A poorly educated, sick country is not the foundation for prosperity.

Good investing,



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