Do you know about - Living Without Reserves
World Finance Corporation! Again, for I know. Ready to share new things that are useful. You and your friends.The residents at my condominium voted last night, as they do every year, not to put money aside for the big-ticket repairs and renovations we will someday have to undertake.
What I said. It is not outcome that the actual about World Finance Corporation. You check out this article for information on an individual need to know is World Finance Corporation.How is Living Without Reserves
I am all the time part of the minority that thinks we should put money into withhold funds, even though it would raise our monthly condo fees - which are not cheap to begin with - by 5 to 10 percent. But every year, the Board of Directors recommends foregoing the reserves, and every year, my neighbors outvote me by a lopsided margin.
Our building is a sparkling 31-story tower that was completed in 2004, just as the South Florida condo craze was hitting its stride. Ours was the first of more than a half-dozen high-rises to open in a three-year duration in uptown Fort Lauderdale.
I love the building and I like my cordial neighbors. They range from 20-something professionals and athletes to relatively young retirees. Collectively, we enjoy the Miami-standard pool, gym, club rooms and 24-hour door attendants, plus perks like a concierge and parking valets. Did I mention that our condo fees are not cheap?
I don't mind. The building is well-tended, fully occupied, and - unlike so many other recent projects in the region - not burdened by many foreclosures and defaults. It helps a lot that our building was first on the market, before the boom hit its peak.
A 31-story tower has a lot of expensive infrastructure. Elevators, roofs and air conditioning systems are big-ticket items that wear out, especially in the Florida heat. We get more than five feet of rain annually, which takes a toll on the building's exterior. So does the soot from the diesel engines of the ships on the New River and colse to Port Everglades.
The infrastructure was brand new for the first generation of buyers at our building. Over time, it will wear out. Every time I ride the elevators or turn down the climatic characteristic in my apartment, I use up a microscopic bit of that machinery's assistance life. So it makes sense that my neighbors and I should pay for what we use by setting aside a withhold for eventual replacements and repairs. Florida recognizes this by requiring condo associations to obtain reserves unless a majority of owners votes to do without.
By not funding reserves, we are sticking future owners with a large bill for the tool and amenities we enjoyed. Those future owners might face a special evaluation that could run into thousands, or tens of thousands, of dollars per apartment. Or our decision could force the condominium association to borrow money to make repairs, which will force future owners to repay the loans straight through their monthly assessments.
Does the situation sound familiar?
As I pondered this topic, I realized that my condo's decision not to fund reserves reflects an attitude that has become ingrained in America, and in some other countries. We take anyone we can. We think of costs as being the cash that leaves our pockets every month, and our goal is to minimize that monthly cash cost. We ignore the long-term consequences of our choices.
Rather than save to buy a car, we borrow - or we lease the car, never owning anything, just paying a minimum estimate every month.
Rather than put money aside in individual accounts to fund our own retirement, we organize an construe exchange scheme. Our collective security is based on the assumption that our kids and grandkids will pay for the benefits we promised ourselves.
Rather than tax everyone except the truly poor to finance government services, we tell the majority of Americans that their struggles are so burdensome, their needs so great, that they should view government as a net source of benefits, to be funded by man else, known variously as "corporations," "the rich" and whoever it is that lends money to Uncle Sam.
We scorn corporate managers for finding no supplementary than next quarter, or next year, or to anyone criteria their deferred-comp plan requires them to meet. We claim those managers should maximize value for the long term. But what is the long term for a corporation that can, legally, survive anyone who is alive today? Should managers try to maximize value five years from now? Ten years? Fifty? Who decides?
Though I disagree with my neighbors about funding reserves, I do not assume they are being stupid, or short-sighted, or greedy, or irrational. There are some good arguments in their favor.
For one thing, if we boost our monthly payments, our building will have to put that cash in a bank that pays virtually no interest these days. My neighbors and I could have used that cash to pay down our own higher-interest debts, fluctuating from mortgage balances to reputation cards.
Having a big pool of cash held by the building association creates the occasion for mismanagement, or worse. What if some future treasurer invests the money unwisely? The fear of the next Bernie Madoff is irrational and exaggerated, but that does not mean citizen don't have such fears. And it isn't just a Bernie Madoff one must worry about, in a post-Lehman, post-Aig world where politicians pledge no more "bailouts" of financial institutions and their creditors.
Then there is the easy fact that citizen move, citizen die, and many - probably most - of the citizen who bought apartments in my building in 2004 and 2005 just won't be there when the elevators need to be replaced. Quite a few are already gone. When Linda and I bought our apartment in 2005, we became its third owners, just 18 months after the building opened.
Can we expect citizen to tax themselves for the benefit of a future generation of strangers who will live in our building? Can we expect future prospective buyers to study the building's financial statements so closely that they understand they should reduce their offering price to account for the lack of reserves? It would be nice to think buyers will be so careful, and it is the kind of thing an economics professor might teach enterprise students to expect, but it would not be realistic.
The reality is that unless the law undoubtedly demands that we fund our reserves, we aren't going to do it. Today's generation of owners will not look out for the next, and cannot be unbelievable to. Not when we, as a society, don't look out for the financial interests of our own children and grandchildren.
I didn't set out to make an consulation for a balanced allocation amendment to the Constitution (an idea I oppose, incidentally), or to convert collective security to a secretly funded savings scheme. I just wanted to tell you about my condo. It's funny where these trains of opinion can take us.
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