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Your Town Owes What?

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Your credit score gives you a pretty good idea about your money habits. Cities and towns get scored by Moody’s, Standard & Poor’s, or Fitch. All three completely missed the real-estate crash. So tell me again, how are we supposed to believe their ratings? The agencies’ lack of credibility makes it even more important that Rhode Islanders, and all Americans, understand their own town’s finances. That’s why a customized map of Rhode Island Pensions–the RIP Map—was in order.

In the Finance section of the profiles of the 39 cities in Rhode Island on the RIP Map, you’ll find a ratio of liabilities calculated by adding debt to pension liabilities and dividing by receipts. The higher the ratio, the less capable a town is of paying its obligations. While the colors on the map reflect the troubling pension situation for the towns of Rhode Island, the (Pension+Debt)/Receipts ratio gives you a broader perspective. For example, you can see that Newport is orange on the map, but so is Scituate. But Newport’s (Pension+Debt)/Receipts ratio is a whopping 324%, while Scituate’s is a still substantial—but not nearly as terrifying—136%. The RIP Map gives you a clear view of how troubled the state’s municipalities really are.

If you live in Rhode Island, take a look at your city/town on the map. If your real estate and/or local taxes are already high and your town is facing a mountain of pension debt, isn’t it time to ask why? One key metric for assessing a town’s deterioration is its population growth over the last 10 years. Fewer people means lower real-estate assessments means higher taxes. It’s a simple business equation.

You can go to the RIP Map and look up your mayor or your town’s equivalent. The contact info is there. Ask them why your town’s finances aren’t what they ought to be. Ask for reasons why. If they don’t know, they should. But since you’re armed with the information on the RIP Map, you can’t simply be pushed off to the side. Intimidation won’t work. It’s time politicians in Rhode Island listen to how bad the numbers really are. And it’s time they do something about it.

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E.J. Smith - Your Survival Guy

Preparing your investments and family for when disaster strikes.
E.J. Smith is the Founder of YourSurvivalGuy.com, Managing Director at Richard C. Young & Co., Ltd., a Managing Editor of Richardcyoung.com, and Editor-in-Chief of Youngresearch.com. E.J. graduated from Babson College in Wellesley, Massachusetts, with a B.S. in finance and investments. In 1995, E.J. began his investment career at Fidelity Investments in Boston before joining Richard C. Young & Co., Ltd. in 1998. E.J. has trained at Sig Sauer Academy in Epping, NH, where he completed course-work in Practical and Defensive Handgun, Conceal Carry Pistol, Shotguns, Precision Scope Rifle and Kidnapping Prevention. E.J. plays a Yamaha Recording Custom drum set with Zilldjian cymbals. His first drum set was a 5-piece Slingerland with Zilldjians. He grew-up worshiping Neil Peart (RIP) of the band Rush, and loves the song Tom Sawyer—the name of his family’s boat, a Grady-White Canyon 306. He grew up in Mattapoisett, MA, an idyllic small town on the water near Cape Cod. He spends time in Newport, RI and Bartlett, NH—both as far away from Wall Street as one could mentally get. The Newport office is on a quiet, tree lined street not far from the harbor and the log cabin in Bartlett, NH, the “Live Free or Die” state, sits on the edge of the White Mountain National Forest. He enjoys spending time in Key West and Paris. Please get in touch with E.J. at ejsmith@youngresearch.com. Sign up here to receive all the best content from Richardcyoung.com each week.