February 16, 2012
Dear Everyone:
Remember
Savings Bonds?
They started out during World War I as “Liberty
Bonds” to help finance the war effort.
Even before the United States entered World War II, they were
called “war bonds”. Later,
they morphed into “savings bonds”.
The idea was:
You gave some money to the government, in return for which you
received a “bond”, a piece of paper not really worth what it said on the
denomination. Hold onto the
bond, and eventually it would “grow” in worth until it reached, or even
surpassed, the stated value.
If you worked for a large corporation, as I did,
there was pressure to “invest” in Savings Bonds.
It was your “patriotic” duty.
And the company liked to use them as rewards:
“Congratulations!
Great job! Here’s $50
(really only worth $25, but who’s counting?
It’ll be worth $50 someday.)”
There were a wide variety of “reasons” to buy
bonds. Patriotism was one.
The “guaranteed” interest rate was another.
If they became lost, stolen or damaged, you were promised the
value of them. Many
television companies, and their stars, made short videos extolling the
virtues of “buying bonds” (and getting their
tax write-off in the
progress.) If you bought them for
your children, or grandchildren, they made a nifty gift that looked like
it was more than it was.
You hardly needed to do anything; just sign a form
and the money would automatically be held out of your
paycheck.
From time to time, a “bond” would show up in the mail.
Typically, it was worth half what it said.
For example, a $50 bond cost you $25, in small increments taken
out of each paycheck.
When the bond arrived in the mail, it would read
$50, but would really only be worth the $25 that you paid for it.
Hold onto it for a decade or more and it would actually be worth
the $50 that it said, minus the tax you have to pay on the interest.
(Let’s not get into how much is/was lost to inflation over the
years. Looked at the price
of ground beef lately? I
remember when it was $0.19/pound.)
Or you could cash the bond at any time for whatever
the government said it was worth (half the face value, at least) at the
time, minus the tax, of course.
Many, many years ago, I had a file clerk who
apparently owned a large number of bonds (or, at least a number of
large-value bonds.) Whenever
her bills got to be too much to handle, she would simply “cash a bond”
to supplement her income.
Probably one of those children-or-grandchildren gifts.
I worried that she had a false sense of “security” that allowed
her to habitually live above her means.
Sooner or later those bonds were going to run out.
But that was decades ago.
Eventually, the company got out of the “bond
business”, declining to “spend” accounting time on the payroll
deduction. If you still
wanted bonds, you could buy them at just about any bank, just as you
could cash them at any bank.
I saw something on the
Internet recently about
bonds that reminded me that I still have an envelope full of them in a
dresser drawer in the “back bedroom” (also known as the “catchall
room”.) There were a lot of
them.
I “googled” “savings bonds” and found the “Savings
Bond Wizard”, which is basically a
runtime version of
Microsoft Access
designed to add up the current value of each bond.
I remember once at work, I was assigned to download the Wizard
and make it available to any of my coworkers who wanted to take it and
run it on their home computer.
At that time, it took two diskettes.
So I downloaded the Wizard and spent the afternoon
entering Serial Numbers and issue dates.
Turns out I own 116 bonds, each worth “$100” (face value), with
the notable exception of one $50 bond which was a company “gift”.
Some are actually worth more than $100 each, having sat around
gathering interest for over two decades.
Others are worth less, but still more than the $50 I originally
paid for them.
The total:
A little over $11,000.
Not bad.
Not that I’m going to run to the bank with them any
time soon. After all, it
takes time to write your address on the back of each of 116 bonds.
And I’m not exactly hard up for the cash just yet.
Nevertheless, there’s nothing quite like
discovering that you have $11,000 sitting in your sock drawer.
Even accounting for inflation,
that’s a lot of ground beef.
Love, as always,
Pete
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