College graduates continue to show that, despite having diplomas hot off the presses and their futures before them, they are returning home for a period of time in record numbers, according to MonsterTrak's 2007 survey of college students and recent graduates.
Nearly half of the respondents indicated that they would be living with mom and dad for an indefinite period. These numbers reflect several things that are slowing them down in their pursuits of independence.
Many of them have too much debt to make it on their own. High dependence on credit cards and student loans during school have left many new graduates with obligations that are strangling their budgets.
Another issue for them is the high cost of housing and the associated expenses of fleeing the nest. There is rent, utilities, car loans, insurance, gasoline, wardrobe for new jobs, and money typically spent in higher amounts during younger years - movies, dating, traveling, cd's, cellphones, computers, cable tv.
Kids who once thought that they would be free of mom's and dad's roof once they got out of school are re-thinking their view of what it is to be in their early 20's. Our parent's generation was eager to make it on their own and sought fame and fortune during an easier time financially.
The global economy's strains are finding their way to Elm Street in ways not previously considered. With the crunch of smaller budgets, fewer better paying jobs, and bigger installment payment committments, it's no wonder that kids are returning to the same bedroom that they left four years before.
Although young people in other countries have been staying at home longer than is common to US kids, this is something new for many here in the States. It will take some time and patience to get used to. Fortunately, time and patience are free. These two will fit anyone's budget.
Tuesday, April 29, 2008
Sunday, April 27, 2008
Double-Cycle Credit Card Billing Robs Your Wallet
Suppose that you receive a bill from your card issuer this month for charges that you made last month for a refrigerator - let's say $1200. You send a check as payment for $600, half of the charges. In the next month, when the bill comes for $600, how much will your finance charges be based on? Only the $600 that you owe?
The previous $1200 plus the $600 remaining.
How can banks get away with this? Congress tells them that they can. (Congress oversees banking issues.) There are no laws against it. You can be charged interest twice on the same dollar. Nice business practices the banks have. Would you like to charge your customers one and a half times for the work that you do just once?
Before applying for any credit card, ask the card issuer whether they have double-cycle or dual-cycle billing. The largest companies do. Look for one that does not. You will save yourself a pile of money in the end if you are not in the habit of paying off your balances every month during your grace period.
You have almost unlimited opportunities to say "yes" to bad ideas. Don't make this one of them by taking a credit card from a cardsharp.
The previous $1200 plus the $600 remaining.
How can banks get away with this? Congress tells them that they can. (Congress oversees banking issues.) There are no laws against it. You can be charged interest twice on the same dollar. Nice business practices the banks have. Would you like to charge your customers one and a half times for the work that you do just once?
Before applying for any credit card, ask the card issuer whether they have double-cycle or dual-cycle billing. The largest companies do. Look for one that does not. You will save yourself a pile of money in the end if you are not in the habit of paying off your balances every month during your grace period.
You have almost unlimited opportunities to say "yes" to bad ideas. Don't make this one of them by taking a credit card from a cardsharp.
Saturday, April 26, 2008
What Do I Do with My Economic Stimulus Check?
In May, the government is going to be sending you a check, as part of its $165 billion Economic Stimulus Package, to jumpstart a sagging economy. The hope is that you will cash your check and go right to the store to buy a television set, a cell phone, some gasoline, jellybeans or a mailbox. Anything as long as you spend the money quickly.
On the IRS' website you will find a schedule of how much money you will receive based on your family size and income. Most couples with one child will get $1500. People who earned above the income limits will receive less, while others who paid no taxes at all will still get a check anyway. (I don't understand this, but this is the plan.)
The question is "what do I do with this money?" The smarter answer is clear: Pay down existing debt. ($1500 credit card balance at 18% with monthly payment of $100 takes 18 months to pay off. Save yourself $300 in interest.) If you have no debt, invest it in your retirement savings program. ($1500 at 8% for 25 years will be $11,010.) Do not buy anything with it.
Think for a moment, what bill do you have that you could put this toward? A credit card? Student loan? Your car? Home equity line of credit? House note? Any balance that you have that has interest attached to it?
You know your own finances. Put YOUR own money where it will do you the most good.
If you decide what to do with the money before it arrives, you won't have the pressure of making a choice later on. One less thing to do.
On the IRS' website you will find a schedule of how much money you will receive based on your family size and income. Most couples with one child will get $1500. People who earned above the income limits will receive less, while others who paid no taxes at all will still get a check anyway. (I don't understand this, but this is the plan.)
The question is "what do I do with this money?" The smarter answer is clear: Pay down existing debt. ($1500 credit card balance at 18% with monthly payment of $100 takes 18 months to pay off. Save yourself $300 in interest.) If you have no debt, invest it in your retirement savings program. ($1500 at 8% for 25 years will be $11,010.) Do not buy anything with it.
Think for a moment, what bill do you have that you could put this toward? A credit card? Student loan? Your car? Home equity line of credit? House note? Any balance that you have that has interest attached to it?
You know your own finances. Put YOUR own money where it will do you the most good.
If you decide what to do with the money before it arrives, you won't have the pressure of making a choice later on. One less thing to do.
Thursday, April 24, 2008
The Real Cost of Credit Card Debt
I was astounded not long ago when I discovered how much a $5000 credit card balance actually costs the cardholder over time. (I like doing this weird kind of calculation stuff.) Follow this math down the rabbit hole.
If you have a card with a $5000 balance at 18% and make $100 payments each month, what do you think is the final tally to retire your balance and how long will it take to pay off?
Assuming you make no other charges after you begin to whittle away at the debt, it will take you 93 months, almost 8 years, for a grand total of $9300 paid out. That's an unbelievable $4300 in interest.
Now, if you were to invest $100 each month instead, in a mutual fund that grows at a modest 8% annually, in the same approximately 8 years, you would have $13,400.
To finance $5000, it will cost you $8,400.
Where did I get the $8,400? That is $4300 in interest that goes to the credit issuer plus $4,100 that your $100 monthly investment could have earned, if you had put your money in a mutual fund instead of sending it to the credit card company.
This is a cost of debt that your card companies won't share with you. They don't have to. It's not in their best interest to tell you that they are taking your retirement savings from you slowly and steadily every month.
Get out your latest credit card statement. See how much you paid in finance charges over the last month. If you have multiple cards, this could be scary.
This is money that you are not saving in an IRA, spending on groceries, buying shoes for your kids, giving to your favorite charity, or taking your family out for a movie on a Friday night.
You are your own best advocate. The tools of your defense? A pencil, a piece of paper, and a calculator.
If you have a card with a $5000 balance at 18% and make $100 payments each month, what do you think is the final tally to retire your balance and how long will it take to pay off?
Assuming you make no other charges after you begin to whittle away at the debt, it will take you 93 months, almost 8 years, for a grand total of $9300 paid out. That's an unbelievable $4300 in interest.
Now, if you were to invest $100 each month instead, in a mutual fund that grows at a modest 8% annually, in the same approximately 8 years, you would have $13,400.
To finance $5000, it will cost you $8,400.
Where did I get the $8,400? That is $4300 in interest that goes to the credit issuer plus $4,100 that your $100 monthly investment could have earned, if you had put your money in a mutual fund instead of sending it to the credit card company.
This is a cost of debt that your card companies won't share with you. They don't have to. It's not in their best interest to tell you that they are taking your retirement savings from you slowly and steadily every month.
Get out your latest credit card statement. See how much you paid in finance charges over the last month. If you have multiple cards, this could be scary.
This is money that you are not saving in an IRA, spending on groceries, buying shoes for your kids, giving to your favorite charity, or taking your family out for a movie on a Friday night.
You are your own best advocate. The tools of your defense? A pencil, a piece of paper, and a calculator.
Wednesday, April 23, 2008
Universal Default Provisions Raise Your Credit Card Interest
Have you ever heard of "universal default" and its effect on your credit cards' interest rates? It is a term whose meaning you need to understand if you use your plastic from time to time. You could be wearing a target on your wallet and never have any idea.
The particulars of universal default allow your credit card issuer to raise your annual interest rate, although you were never late on any payments on that particular card. This is a reprehensible practice, but one that is growing in implementation every day.
From time to time, your credit card company will check your payment history with your other account holders to see how diligent you are about meeting your obligations. If you have been late on your car, for example, the interest rate on your Visa might jump up to 29%. The credit issuers figure that if you are late with your other payments that you will eventually be in trouble with them too.
Funny how those guys work. When I was in school, if I made an F on a math test, I was not rewarded with an F on an English test too - on an English test that I had not even taken, no less.
One strike and your out. You don't even have to be up at bat.
My recommendation: always be on time, utilize online banking to handle your personal finances, and challenge everything on your card statements that you don't feel is fair. You would be surprised how much you can get done just by making a little noise.
The particulars of universal default allow your credit card issuer to raise your annual interest rate, although you were never late on any payments on that particular card. This is a reprehensible practice, but one that is growing in implementation every day.
From time to time, your credit card company will check your payment history with your other account holders to see how diligent you are about meeting your obligations. If you have been late on your car, for example, the interest rate on your Visa might jump up to 29%. The credit issuers figure that if you are late with your other payments that you will eventually be in trouble with them too.
Funny how those guys work. When I was in school, if I made an F on a math test, I was not rewarded with an F on an English test too - on an English test that I had not even taken, no less.
One strike and your out. You don't even have to be up at bat.
My recommendation: always be on time, utilize online banking to handle your personal finances, and challenge everything on your card statements that you don't feel is fair. You would be surprised how much you can get done just by making a little noise.
Monday, April 21, 2008
Banking On Online Banking
If you are one of the holdouts who prefers to send your bill payments by mail rather than doing it through online banking, then this article is for you. It's time to take advantage of yesterday's opportunities.
The ability to handle all of your personal financial needs online at your bank began back in the 1990's. It hardly seems like it's been that long ago. Technology is handling effortlessly, or nearly effortlessly, the mundane tasks that used to tie you up and prevent you from really being productive.
You can benefit from the advantages of automating your finances right away. After creating an account through your bank or credit union, you are able to generate one-time or recurring debits from your checking or savings account to handle the nuisance stuff that bogs you down during the week.
For example, you can put your mortgage payment, car payment, student loan payment, utilities, cell phone, life, health, and auto insurance on "set it and forget it" mode. You'll need to specify a frequency that you would like the debits to be made. Voila! You are done. No muss, no fuss. It's all taken care of.
Here's another good thing too... You will never have to worry about being hit with a late payment fee either. Your financial institution will begin the payment process early enough to make sure that your funds are sent where they are supposed to go in plenty of time.
Okay, so your creditor doesn't accept online transfers? No problem. Your bank will create a check and send it to them the old fashioned way - through the mail. This is what you would have done. Why stress over who puts the check in the envelope as long as it's done?
Costs for the service are nominal and often free from one institution to another. You need to do this online banking thing. You will thank yourself when you start realizing that you now have some free time that you did not before because you were writing checks, buying and licking stamps, and going to the post office at 5:30 am on your way to work.
Besides, in your kids' eyes, you'll look like a rocket scientist for organizing your finances this way. Who are you to tell them any different?
online banking
The ability to handle all of your personal financial needs online at your bank began back in the 1990's. It hardly seems like it's been that long ago. Technology is handling effortlessly, or nearly effortlessly, the mundane tasks that used to tie you up and prevent you from really being productive.
You can benefit from the advantages of automating your finances right away. After creating an account through your bank or credit union, you are able to generate one-time or recurring debits from your checking or savings account to handle the nuisance stuff that bogs you down during the week.
For example, you can put your mortgage payment, car payment, student loan payment, utilities, cell phone, life, health, and auto insurance on "set it and forget it" mode. You'll need to specify a frequency that you would like the debits to be made. Voila! You are done. No muss, no fuss. It's all taken care of.
Here's another good thing too... You will never have to worry about being hit with a late payment fee either. Your financial institution will begin the payment process early enough to make sure that your funds are sent where they are supposed to go in plenty of time.
Okay, so your creditor doesn't accept online transfers? No problem. Your bank will create a check and send it to them the old fashioned way - through the mail. This is what you would have done. Why stress over who puts the check in the envelope as long as it's done?
Costs for the service are nominal and often free from one institution to another. You need to do this online banking thing. You will thank yourself when you start realizing that you now have some free time that you did not before because you were writing checks, buying and licking stamps, and going to the post office at 5:30 am on your way to work.
Besides, in your kids' eyes, you'll look like a rocket scientist for organizing your finances this way. Who are you to tell them any different?
online banking
Sunday, April 20, 2008
Personal Finance and Your Car's Oil Changes: Something to Consider
We agree that regular service and maintenance on your auto is necessary, right? You have to do it or you'll be sitting on the side of the road.
Let's talk about synthetic oils versus regular petroleum based oils as your choice for your car in a way that you may not have considered.
Regular oil changes are about $25-$30 per average car, depending on where you go. These need to be done in the range of 3000-5000 miles. The nature of driving that you do, age of your car, etc., will be a great determiner of your advised maintenance schedule.
Have you considered switching to a synthetic oil? I am not a car person in any way. There will be no discussion here of viscosity, chamber pressure, or detergent oils compared to non-detergent oils. I am not going there. I am looking at this question from the perspective of my use of time, money, our world's environmental climate, and dependence on foreign petroleum.
A typical oil change takes about an hour and costs $30, as I said. You get this maintenance done on your days off work, because your favorite shop is not open on Saturdays. I don't want to spend my time away from my job waiting for car repairs to be completed.
I switched to synthetic oils years ago for several reasons. I can go 7,000 miles between changes and spend less time in waiting rooms on days when I want to be with my kids. Also, even though a synthetic costs more, about 50% more, each visit to visit the mechanic costs less than it did before because I'm going half as often.
Look at the math: In a year of 15,000 miles, that's roughly four oil changes at $30 and four hours wait time. With synthetics, that's roughly two oil changes at $45 and two hours wait time. Benefits of cost and time earned right away.
Last issue, the environment and dependence on foreign petroleum. Synthetics are not petroleum based, so they do not have the same polluting manufacture or disposal concerns. Since they are not regular oils, we can make them here in the US. No need to look anywhere else. We are self-sufficient in this regard.
Less time in the shop, less cost overall, an environmental plus, and our self-sufficiency. This is a no-brainer switch for your personal finances and your car.
Let's talk about synthetic oils versus regular petroleum based oils as your choice for your car in a way that you may not have considered.
Regular oil changes are about $25-$30 per average car, depending on where you go. These need to be done in the range of 3000-5000 miles. The nature of driving that you do, age of your car, etc., will be a great determiner of your advised maintenance schedule.
Have you considered switching to a synthetic oil? I am not a car person in any way. There will be no discussion here of viscosity, chamber pressure, or detergent oils compared to non-detergent oils. I am not going there. I am looking at this question from the perspective of my use of time, money, our world's environmental climate, and dependence on foreign petroleum.
A typical oil change takes about an hour and costs $30, as I said. You get this maintenance done on your days off work, because your favorite shop is not open on Saturdays. I don't want to spend my time away from my job waiting for car repairs to be completed.
I switched to synthetic oils years ago for several reasons. I can go 7,000 miles between changes and spend less time in waiting rooms on days when I want to be with my kids. Also, even though a synthetic costs more, about 50% more, each visit to visit the mechanic costs less than it did before because I'm going half as often.
Look at the math: In a year of 15,000 miles, that's roughly four oil changes at $30 and four hours wait time. With synthetics, that's roughly two oil changes at $45 and two hours wait time. Benefits of cost and time earned right away.
Last issue, the environment and dependence on foreign petroleum. Synthetics are not petroleum based, so they do not have the same polluting manufacture or disposal concerns. Since they are not regular oils, we can make them here in the US. No need to look anywhere else. We are self-sufficient in this regard.
Less time in the shop, less cost overall, an environmental plus, and our self-sufficiency. This is a no-brainer switch for your personal finances and your car.
Thursday, April 17, 2008
Consumer Privacy Rights and Your Peanut Butter
Do you use loyalty cards at the grocery store or the drug store? Those are the cards that you swipe at the checkout to get an extra 35 cents off your peanut butter.
As well as giving you a reduced cost on the shelf price for your goods, they are used by the grocer to keep track of your purchases to get a profile of your habits. The stores can then use your profile to offer you coupons for the categories of the items that you buy most often. This is called "customer specific marketing."
Also, they can share your information with other companies, even the FBI. If you use those type cards, you might find that you are suddenly getting coupons in the mail for items that you have just begun buying.
The cards are used to monitor how often you come into the store. A friend of mine, not long ago, received poor customer service at a grocer's that requires loyalty cards be used to get lowered prices on featured items. After a 90 day hiatus from the chain, he received a coupon for $5 off his next purchase of any groceries on his next trip to shop.
It is obvious that the store had kept up with his frequency of shopping, realized that he had not been in recently, and sent him an incentive to return. He was suddenly introduced to Big Brother in the potato chip aisle.
My advice, if you have to get a loyalty card to get a discount on your purchases, do not use your real name when you sign up for the card. Stores in my area think that I am Jack Frost, Dylan Pumpkinhead, and Miles O'Miles-Ahead.
Only my son rides in my shopping cart, not Big Brother.
As well as giving you a reduced cost on the shelf price for your goods, they are used by the grocer to keep track of your purchases to get a profile of your habits. The stores can then use your profile to offer you coupons for the categories of the items that you buy most often. This is called "customer specific marketing."
Also, they can share your information with other companies, even the FBI. If you use those type cards, you might find that you are suddenly getting coupons in the mail for items that you have just begun buying.
The cards are used to monitor how often you come into the store. A friend of mine, not long ago, received poor customer service at a grocer's that requires loyalty cards be used to get lowered prices on featured items. After a 90 day hiatus from the chain, he received a coupon for $5 off his next purchase of any groceries on his next trip to shop.
It is obvious that the store had kept up with his frequency of shopping, realized that he had not been in recently, and sent him an incentive to return. He was suddenly introduced to Big Brother in the potato chip aisle.
My advice, if you have to get a loyalty card to get a discount on your purchases, do not use your real name when you sign up for the card. Stores in my area think that I am Jack Frost, Dylan Pumpkinhead, and Miles O'Miles-Ahead.
Only my son rides in my shopping cart, not Big Brother.
Wednesday, April 16, 2008
How Can I Raise My Credit Score?
Credit scoring is a funny thing, although your score may be nothing to laugh at. The models that are used to determine credit worthiness don't always seem to make sense.
For example, if you close numerous credit accounts almost simultaneously, that will adversely affect your score.
If you open numerous credit accounts almost simultaneously, that will adversely affect your score.
Here's a strategy: pay your balances down quickly, close your accounts slowly, making sure that you leave open the oldest account. Part of your scoring is determined by the longevity of the accounts that you hold.
Also, make sure that you keep your monthly balances to no more than 20%-25% of the total amount of borrowing limits that you have available. Those seem to be the magic numbers. If you have $10,000 in limits, do not exceed $2,000-$2,500 in debts.
One last thing, build a balanced credit profile. You want to include a mortgage, an installment debt (a car or student loan), and a revolving debt (credit card or store card) for greatest stability. Stability means responsibility, which means higher scores.
In the end, the point of all this is unnecessary. You want to be debt free. Buy what you can pay for right away. All else, pay for quickly. I would rather be debt free than have an 850 score based on how I handle my affairs.
Freedom is the goal, not how you manage bondage.
For example, if you close numerous credit accounts almost simultaneously, that will adversely affect your score.
If you open numerous credit accounts almost simultaneously, that will adversely affect your score.
Here's a strategy: pay your balances down quickly, close your accounts slowly, making sure that you leave open the oldest account. Part of your scoring is determined by the longevity of the accounts that you hold.
Also, make sure that you keep your monthly balances to no more than 20%-25% of the total amount of borrowing limits that you have available. Those seem to be the magic numbers. If you have $10,000 in limits, do not exceed $2,000-$2,500 in debts.
One last thing, build a balanced credit profile. You want to include a mortgage, an installment debt (a car or student loan), and a revolving debt (credit card or store card) for greatest stability. Stability means responsibility, which means higher scores.
In the end, the point of all this is unnecessary. You want to be debt free. Buy what you can pay for right away. All else, pay for quickly. I would rather be debt free than have an 850 score based on how I handle my affairs.
Freedom is the goal, not how you manage bondage.
Tuesday, April 15, 2008
Can You Afford To Go College? You Can't Afford Not To Go
A recent study published by the Commerce Department's Census Bureau found that over an adult's working life, high school graduates can expect to earn $1.2 million. Those with a bachelor's degree do twice as well at $2.1 million. Those who stick out the classroom just one more time and earn a Master's earn about $2.5 million.
Wow.
How many times have you heard a co-worker say that he couldn't go to school because he needed to work to make his truck or motorcycle payment? That scenario is out of kilter for more than a few reasons. But, the biggest thing is this: The co-worker is sacrificing his education, his future earning potential tomorrow, to be able to continue making payments today to retire a loan that he has on a depreciating asset.
Earning a college degree is not for everyone. All do not have the ability, the temperament, or have the need in their current occupation for an advanced degree. If you can truly fit it into your schedule and lifestyle, why not double your lifetime income? In a few years, you will thank yourself. Your family might too.
Wow.
How many times have you heard a co-worker say that he couldn't go to school because he needed to work to make his truck or motorcycle payment? That scenario is out of kilter for more than a few reasons. But, the biggest thing is this: The co-worker is sacrificing his education, his future earning potential tomorrow, to be able to continue making payments today to retire a loan that he has on a depreciating asset.
Earning a college degree is not for everyone. All do not have the ability, the temperament, or have the need in their current occupation for an advanced degree. If you can truly fit it into your schedule and lifestyle, why not double your lifetime income? In a few years, you will thank yourself. Your family might too.
Monday, April 14, 2008
Can Compounding Interest Turn $35 into $523,738 at Retirement?
The short answer is that it can be done. Now, how do you do it? Time, patience, and discipline. Not what you were looking for, I'm sure.
I heard on the radio not long ago that only one third of working Americans have any type of retirement program in place outside Social Security. These savings plans included in the study were regular savings accounts at banks or credit unions, mutual funds linked to an IRA, participation in a 401(k) program at work, pension plans, and a Mason jar buried in the back yard. Okay, so maybe not the Mason jar, but the study included many popular options.
Given that Social Security is fast becoming a fairy tale, why aren't more people putting something away for their golden years? You can come up with your own reasons, but one glaring one is that they don't understand the power of compounding interest.
That is how you can turn $35 into $523,738.
If you invest $35 each week, or $150 per month, for 40 years at a modest 8% interest, you will have half a million dollars waiting for you at the end of your working years. That is not a bad exchange.
Think about it... What do you spend $35 on each week without thinking about it? There's a fast food lunch three days out of five, a $4 cup of coffee and a $3 muffin on the way to work, lottery tickets, cigarettes, name brands instead of store brands at the grocery store, failing to combine trips in the car to save gas, cable tv with 500 useless channels, cell phones with 23rd century features that you don't ever use, late fees on video rentals, ATM fees, overdraft/NSF fees, expensive designer clothes, drycleaning, for the ladies - just one more pair of shoes, for the men - one more must-have tool for the toolbox.
Your list of possibles can be a mile long. Take a moment to think about it. Then, think about what you could do with $523,783. If you spend the $35 weekly, in 40 years you will have spent $72,800.
Which would you rather have - $72,800 with nothing to show for it or $523,783 with a world of possibilities at your fingertips? You decide.
I heard on the radio not long ago that only one third of working Americans have any type of retirement program in place outside Social Security. These savings plans included in the study were regular savings accounts at banks or credit unions, mutual funds linked to an IRA, participation in a 401(k) program at work, pension plans, and a Mason jar buried in the back yard. Okay, so maybe not the Mason jar, but the study included many popular options.
Given that Social Security is fast becoming a fairy tale, why aren't more people putting something away for their golden years? You can come up with your own reasons, but one glaring one is that they don't understand the power of compounding interest.
That is how you can turn $35 into $523,738.
If you invest $35 each week, or $150 per month, for 40 years at a modest 8% interest, you will have half a million dollars waiting for you at the end of your working years. That is not a bad exchange.
Think about it... What do you spend $35 on each week without thinking about it? There's a fast food lunch three days out of five, a $4 cup of coffee and a $3 muffin on the way to work, lottery tickets, cigarettes, name brands instead of store brands at the grocery store, failing to combine trips in the car to save gas, cable tv with 500 useless channels, cell phones with 23rd century features that you don't ever use, late fees on video rentals, ATM fees, overdraft/NSF fees, expensive designer clothes, drycleaning, for the ladies - just one more pair of shoes, for the men - one more must-have tool for the toolbox.
Your list of possibles can be a mile long. Take a moment to think about it. Then, think about what you could do with $523,783. If you spend the $35 weekly, in 40 years you will have spent $72,800.
Which would you rather have - $72,800 with nothing to show for it or $523,783 with a world of possibilities at your fingertips? You decide.
Sunday, April 13, 2008
Farm Subsidies and Junk Food: An Unintended Correlation
Much is heard in the news about farm subsidies, but just what are they? The subsidies are monies paid to farmers by the government with no expectation that anything will be exchanged for the subsidy. Essentially, it is like a trip to the grocery store during which you put money on the counter, but take no food home with you when you leave. You are just helping to keep the store in business.
The payments of these subsidies do a couple of things: they ensure that farmers will have a steady income throughout the year and that the consumer's costs for certain foods will remain as low as possible. Overall, they keep the agricultural industries in business and running as cheaply as they do. However, health researchers say subsidies for soybean and corn farmers worsen the nation's obesity problem, particularly in low income areas.
Government financial support moves farmers to grow specific crops, which as an unintended side effect create a cheap supply of unhealthy soybean oil and high fructose corn syrup. These elements for burgers, chips, and soft drinks are the mortar that holds the building blocks together for what the medical experts say is an extremely unhealthy diet.
Again, as a consumer if you disagree with an established policy, you have the choice to buy what you want, when you want it, if you can afford it. That doesn't mean that there should only be good choices available to you. You make your own decisions about what to buy and when.
If you want processed, wheat-based morning pastries made with high fructose corn syrup as an ingredient, then you should have the chance to do that. If you don't want that, buy some imported fruit, get a $4 cup of coffee at a chain bean-a-torium, chew a stick of gum, or go hungry till noon.
Henry David Thoreau wrote his essay "Civil Disobedience" after spending a short time in jail for not paying his poll taxes as his protest to the US-Mexican war, a war that he saw as unjust. If, as your act of civil disobedience, you choose to buy only organic foods and drink water, which are not subsidized by the way, then go right ahead.
Focusing on the evils of the system that perpetuates what some see as a problem is not a productive use of time. Vote with your wallet daily and in the polling booth when you have a chance. When consumer preferences and voter desires change, the government will change also.
"The government made me buy the donut. It's cheap and I'm poor." This is reasoning that doesn't cut it for me.
For more details, click here.
The payments of these subsidies do a couple of things: they ensure that farmers will have a steady income throughout the year and that the consumer's costs for certain foods will remain as low as possible. Overall, they keep the agricultural industries in business and running as cheaply as they do. However, health researchers say subsidies for soybean and corn farmers worsen the nation's obesity problem, particularly in low income areas.
Government financial support moves farmers to grow specific crops, which as an unintended side effect create a cheap supply of unhealthy soybean oil and high fructose corn syrup. These elements for burgers, chips, and soft drinks are the mortar that holds the building blocks together for what the medical experts say is an extremely unhealthy diet.
Again, as a consumer if you disagree with an established policy, you have the choice to buy what you want, when you want it, if you can afford it. That doesn't mean that there should only be good choices available to you. You make your own decisions about what to buy and when.
If you want processed, wheat-based morning pastries made with high fructose corn syrup as an ingredient, then you should have the chance to do that. If you don't want that, buy some imported fruit, get a $4 cup of coffee at a chain bean-a-torium, chew a stick of gum, or go hungry till noon.
Henry David Thoreau wrote his essay "Civil Disobedience" after spending a short time in jail for not paying his poll taxes as his protest to the US-Mexican war, a war that he saw as unjust. If, as your act of civil disobedience, you choose to buy only organic foods and drink water, which are not subsidized by the way, then go right ahead.
Focusing on the evils of the system that perpetuates what some see as a problem is not a productive use of time. Vote with your wallet daily and in the polling booth when you have a chance. When consumer preferences and voter desires change, the government will change also.
"The government made me buy the donut. It's cheap and I'm poor." This is reasoning that doesn't cut it for me.
For more details, click here.
High School Students Need More Interest in Personal Finance
Teenagers apparently know very little about their personal finances, according to the 2008 Jump$tart Coalition for Personal Financial Literacy survey. The survey was presented to the kids in the form of a 31 question quiz, with the average score for Minnesota teens being a 48%. Over the last ten years, this is a drop of about ten percent for similar material evaluated. If this is indicative of nationwide results, the kids are behind the eight-ball before they even begin their adult lives.
Our children are not ready to enter their working years if they are not fiscally savvy handlers of the money that they earn. Behind every corner, they will find opportunities to fritter away their sweat on any number of shiny objects. They must learn now what to do with their money or someone else will help themselves to their pocketbooks.
Parents have the responsibility of doing alot for their children - teaching them how to tie their shoes, wait patiently in line, and that it is not good to throw rocks at your friends. How to handle your finances is on par with any of these since they are all life-long skills needed for success. You don't wear dress shoes with velcro closures to work, cut in line at the water cooler or throw rocks at HR because they don't get your exemptions right, do you?
Teaching kids about money is essential. My advice is to start early and review often. Growing up is one big class. The test comes at adulthood with usually no review beforehand. "Tuition" for mistakes can be expensive.
For the full story on the quiz results and more advice, click here.
For the quiz itself, click here.
Our children are not ready to enter their working years if they are not fiscally savvy handlers of the money that they earn. Behind every corner, they will find opportunities to fritter away their sweat on any number of shiny objects. They must learn now what to do with their money or someone else will help themselves to their pocketbooks.
Parents have the responsibility of doing alot for their children - teaching them how to tie their shoes, wait patiently in line, and that it is not good to throw rocks at your friends. How to handle your finances is on par with any of these since they are all life-long skills needed for success. You don't wear dress shoes with velcro closures to work, cut in line at the water cooler or throw rocks at HR because they don't get your exemptions right, do you?
Teaching kids about money is essential. My advice is to start early and review often. Growing up is one big class. The test comes at adulthood with usually no review beforehand. "Tuition" for mistakes can be expensive.
For the full story on the quiz results and more advice, click here.
For the quiz itself, click here.
Saturday, April 12, 2008
You and Your 401k Withdrawal - Be Careful
Pension plans are out and 401(k) plans are in. They are offered by employers as a retirement program for workers and first appeared in the early 1980's. These plans are a much better option all the way around to pensions. They are cheaper for the employers and give the workers many more options for investing their money.
From time to time, savers may be tempted to access their funds when they see a need. Generally, their money is tapped for unforeseen expenses such as during hardships to cover costs of living in health emergencies or unplanned job loss.
Hardship withdrawals come with specific rules for distribution. The IRS has its own policies that it follows. Your individual plan may have strict requirements to meet the definition of "hardship" too. Meeting both specifics is sometimes a challenge.
Before taking any action toward a hardship withdrawal, it is a good idea to check the possible outcomes from all angles with a tax professional since there is a 10% tax penalty on the money that you withdraw and the money is counted as income. Weigh your options.
Others may choose to withdraw their money for additional reasons, such as rolling the funds into an IRA. If this is the intention, the transaction must be completed within 60 days or a 10% penalty will result on the withdrawn funds and the money will be counted as income.
For those who need their money for situations that are not defined as a hardship or when the purpose of the money is that it is not to be rolled into an IRA, a 401(k)loan, or lump sum distribution, is your option. The loan must be paid back, typically within a few years. However, if you leave a company with a loan balance, generally you are required to pay the money back in a short amount of time, say one to two months.
All plans are different, each with their own rules. You have to make sure that you know your plan's limitations. Otherwise, the withdrawal process could be very unpleasant.
Click here for the full story.
From time to time, savers may be tempted to access their funds when they see a need. Generally, their money is tapped for unforeseen expenses such as during hardships to cover costs of living in health emergencies or unplanned job loss.
Hardship withdrawals come with specific rules for distribution. The IRS has its own policies that it follows. Your individual plan may have strict requirements to meet the definition of "hardship" too. Meeting both specifics is sometimes a challenge.
Before taking any action toward a hardship withdrawal, it is a good idea to check the possible outcomes from all angles with a tax professional since there is a 10% tax penalty on the money that you withdraw and the money is counted as income. Weigh your options.
Others may choose to withdraw their money for additional reasons, such as rolling the funds into an IRA. If this is the intention, the transaction must be completed within 60 days or a 10% penalty will result on the withdrawn funds and the money will be counted as income.
For those who need their money for situations that are not defined as a hardship or when the purpose of the money is that it is not to be rolled into an IRA, a 401(k)loan, or lump sum distribution, is your option. The loan must be paid back, typically within a few years. However, if you leave a company with a loan balance, generally you are required to pay the money back in a short amount of time, say one to two months.
All plans are different, each with their own rules. You have to make sure that you know your plan's limitations. Otherwise, the withdrawal process could be very unpleasant.
Click here for the full story.
Friday, April 11, 2008
The Value of International Mutual Funds
International mutual funds are an essential part of your investment portfolio. If you are limiting yourself to domestic funds, you are missing out on a huge opportunity for your dollar's growth.
Looking to foreign companies for investment opportunities is a wise move. They are not subjected to the same taxes placed on US companies nor are they required to follow the same environmental or other guidelines that hamstring profitability.
Additionally, with the decline of the US dollar, I am uneasy about putting my money in an economy whose currency is likely to be worth less tomorrow than it is today. The rising annual debt, the increasing trade deficit, and the rising fuel costs push me to look outside the US for my investment targets.
Going with international funds also allows me to get a small slice of a global pie. The world's economy is much larger than the US'. This allows me greater avenues to offset loss on the same global scale. National economies have their ebb and flow just as individual stocks do. Some days, one country is up and the next it is down a bit. It will all balance, but overall, the world's economic picture has a much better outlook than viewing one country's alone.
Click here to find out more about how international investing is not at all as complicated or scary as you might think. It just makes sense.
Looking to foreign companies for investment opportunities is a wise move. They are not subjected to the same taxes placed on US companies nor are they required to follow the same environmental or other guidelines that hamstring profitability.
Additionally, with the decline of the US dollar, I am uneasy about putting my money in an economy whose currency is likely to be worth less tomorrow than it is today. The rising annual debt, the increasing trade deficit, and the rising fuel costs push me to look outside the US for my investment targets.
Going with international funds also allows me to get a small slice of a global pie. The world's economy is much larger than the US'. This allows me greater avenues to offset loss on the same global scale. National economies have their ebb and flow just as individual stocks do. Some days, one country is up and the next it is down a bit. It will all balance, but overall, the world's economic picture has a much better outlook than viewing one country's alone.
Click here to find out more about how international investing is not at all as complicated or scary as you might think. It just makes sense.
Thursday, April 10, 2008
Term Life Insurance: A Better Way to Go for Most
Term life insurance is the original form of life insurance and is considered to be pure insurance protection.
It builds no cash value, as compared to permanent life insurance. Examples of this permanent life insurance are whole life, universal life, and variable universal life.
Term life insurance provides coverage for a limited period of time, often 10-30 years, and is generally the most inexpensive way to receive substantial coverage. If the insured person dies during the term, the face value of the policy will be paid to the beneficiary. If he doesn't die, he gets to keep making the payments. (I prefer option two: continue making the payments.)
Term insurance works in a manner similar to most other types of insurance in that it pays claims if the premiums are up to date and the contract has not expired. If you do your part, the insurance company will do its part.
Click here for the full story.
It builds no cash value, as compared to permanent life insurance. Examples of this permanent life insurance are whole life, universal life, and variable universal life.
Term life insurance provides coverage for a limited period of time, often 10-30 years, and is generally the most inexpensive way to receive substantial coverage. If the insured person dies during the term, the face value of the policy will be paid to the beneficiary. If he doesn't die, he gets to keep making the payments. (I prefer option two: continue making the payments.)
Term insurance works in a manner similar to most other types of insurance in that it pays claims if the premiums are up to date and the contract has not expired. If you do your part, the insurance company will do its part.
Click here for the full story.
How Do I Sell My House When Houses Aren't Selling?
President Gerald Ford is credited with saying that "things are more like they are now than they've ever been." This is certainly true with real estate today.
Home values are dropping. Requirements for mortgage financing are stricter for buyers. Fewer are buying a home because they are afraid that they can't sell the one that they have. So how do I sell my home then?
First, don't panic. You have somewhere to live. It's important to remember that every market is different. In some, houses sit for over a year without a bite. In others, houses are gone in a week.
Second, get your home inspected and spruce it up before you begin showing it. Inspections will reveal problems that you can take care of before they are deal breakers. A little paint will do wonders to make your home memorable when it shows.
Third, create a marketing plan and interview real estate agents, if you plan to use one. A lonely sign in the yard won't help you. A good agent will offer creative strategies to get you the offer that you want.
Fourth, price your home to sell, not to dicker. This is not a time to ask for the moon. Be in line with your local market. You want a million dollars for your $100k home, but this kind of optimism will price yourself right out of any competition.
Fifth, it's okay to be your own advocate. Really. Tell people that you are selling your house. It's okay to put up your own flyers at the grocery store.
Click here for the full story.
Home values are dropping. Requirements for mortgage financing are stricter for buyers. Fewer are buying a home because they are afraid that they can't sell the one that they have. So how do I sell my home then?
First, don't panic. You have somewhere to live. It's important to remember that every market is different. In some, houses sit for over a year without a bite. In others, houses are gone in a week.
Second, get your home inspected and spruce it up before you begin showing it. Inspections will reveal problems that you can take care of before they are deal breakers. A little paint will do wonders to make your home memorable when it shows.
Third, create a marketing plan and interview real estate agents, if you plan to use one. A lonely sign in the yard won't help you. A good agent will offer creative strategies to get you the offer that you want.
Fourth, price your home to sell, not to dicker. This is not a time to ask for the moon. Be in line with your local market. You want a million dollars for your $100k home, but this kind of optimism will price yourself right out of any competition.
Fifth, it's okay to be your own advocate. Really. Tell people that you are selling your house. It's okay to put up your own flyers at the grocery store.
Click here for the full story.
Wednesday, April 9, 2008
Why Are Gas Prices So High?
This post is more difficult to digest than my other ones and will require some homework on your part.
Here it goes:
The falling dollar, brought about by a slowing economy fed by the mortgage industry implosion, is causing bigger investors to put their money in commodities rather than the US markets. Stocks are more volatile and react quickly to changes in the national economies. Commodities are seen as hedges to inflation.
What this means is that commodities, oil for example, are great places to put your money during economic uncertainty because oil will always be needed to drive the world's production of goods and services.
A weakening dollar requires that more dollars be spent to buy the same amount of oil that it used to buy. Basically, a five cent hamburger now costs $2.99 because you are buying the same burger with money that is not worth as much as it used to be.
Our anemic currency, coupled with wages that are not keeping pace with inflation, leaves you gasping for air when you write your rent check, light bill check, natural gas check, and now too, your check at the grocery store.
When the economy stabilizes, the mortgage market gets back on its feet, you begin getting raises, and price fluctuations become less frequent, gas prices will level off and begin to fall.
Until then, hold on to your hat. It will be quite a ride...on a bicycle.
Click here for the full story.
Here it goes:
The falling dollar, brought about by a slowing economy fed by the mortgage industry implosion, is causing bigger investors to put their money in commodities rather than the US markets. Stocks are more volatile and react quickly to changes in the national economies. Commodities are seen as hedges to inflation.
What this means is that commodities, oil for example, are great places to put your money during economic uncertainty because oil will always be needed to drive the world's production of goods and services.
A weakening dollar requires that more dollars be spent to buy the same amount of oil that it used to buy. Basically, a five cent hamburger now costs $2.99 because you are buying the same burger with money that is not worth as much as it used to be.
Our anemic currency, coupled with wages that are not keeping pace with inflation, leaves you gasping for air when you write your rent check, light bill check, natural gas check, and now too, your check at the grocery store.
When the economy stabilizes, the mortgage market gets back on its feet, you begin getting raises, and price fluctuations become less frequent, gas prices will level off and begin to fall.
Until then, hold on to your hat. It will be quite a ride...on a bicycle.
Click here for the full story.
Never Too Early to Save for Retirement
If you are alive, you are planning for retirement. You are either planning by taking active steps to secure a strong future or you are planning by counting on tomorrow to take care of itself. Hoping that the four winds will blow money in your open front door is not the way to go.
Here are some general guidelines to follow from professionals in the retirement planning field:
1. Make a plan today based on priorities that make good financial sense.
2. Eliminate your debts quickly. Also, do not borrow to pay for things that depreciate or have no real monetary value, e.g., a car, a television set, or, worse yet, a vacation.
3. Have the discipline to invest your savings while you are still working.
4. Live a lifestyle that fits your income. If a trip by car to see the in-laws is what you can afford in cash, don't visit them two states away via London on a 14-day excursion "paid for" by Mr. Visa/MasterCard.
Click here for the full story.
Here are some general guidelines to follow from professionals in the retirement planning field:
1. Make a plan today based on priorities that make good financial sense.
2. Eliminate your debts quickly. Also, do not borrow to pay for things that depreciate or have no real monetary value, e.g., a car, a television set, or, worse yet, a vacation.
3. Have the discipline to invest your savings while you are still working.
4. Live a lifestyle that fits your income. If a trip by car to see the in-laws is what you can afford in cash, don't visit them two states away via London on a 14-day excursion "paid for" by Mr. Visa/MasterCard.
Click here for the full story.
How Not to Get Ripped Off When Buying a Car
If you have a car, you have probably paid too much for it or have gotten bad advice in its financing. You can avoid this nerve-racking, pocket-lightening ordeal by doing one of two things - do not buy a car at all or buy one wisely. Choosing not to have wheels may work for you in New York City, but, in the suburbs, it just won't do. The other option is to buy wisely.
Okay, now how do you buy one wisely? Basically, it goes like this. Get your financing in order, decide what you want to buy, go look for it, make a deal, and don't waver on your pre-search price decisions.
Sounds easy enough, but there are other considerations. For example, how do you know that the car that you are buying is a good one? Where do you get the best financing? How do you know that you are getting the best price on your new or used cream puff? How do you make a deal without compromising your position as the master of all you survey?
Headscratchers all, but there is help available.
Click here for the full story.
Okay, now how do you buy one wisely? Basically, it goes like this. Get your financing in order, decide what you want to buy, go look for it, make a deal, and don't waver on your pre-search price decisions.
Sounds easy enough, but there are other considerations. For example, how do you know that the car that you are buying is a good one? Where do you get the best financing? How do you know that you are getting the best price on your new or used cream puff? How do you make a deal without compromising your position as the master of all you survey?
Headscratchers all, but there is help available.
Click here for the full story.
I'm in college, Mom. Can I have $56,000, please?
While costs continue to rise, a many colleges have eliminated student loans from their financial aid offerings and are opting to offer grants instead. Others are waiving tuition for low-income families altogether.
Although free money is helpful, many students will still need to borrow from a the student-lending market that has seen two big changes in the past year. First, funding for many types of loans has ceased. And second, the College Cost Reduction and Access Act of 2007 cut government subsidies to issuers of federal student loans.
So how do you fund college for your little scholar if you need a student loan? Start with federal programs. With smaller fees, lower interest rates, and better terms than private student loans, federal loans are still the best option for most borrowers.
Click here for the full story.
Although free money is helpful, many students will still need to borrow from a the student-lending market that has seen two big changes in the past year. First, funding for many types of loans has ceased. And second, the College Cost Reduction and Access Act of 2007 cut government subsidies to issuers of federal student loans.
So how do you fund college for your little scholar if you need a student loan? Start with federal programs. With smaller fees, lower interest rates, and better terms than private student loans, federal loans are still the best option for most borrowers.
Click here for the full story.
Tuesday, April 8, 2008
Government Tries to Help Those in Foreclosure - But How?
If lawmakers are going to provide a lifepreserver in the mortgage crisis, homeowners could be waiting a while. Even if the proposals now being discussed pass in both houses, the bills' differences are great enough that bringing them together into one plan could take weeks.
Even with a single document agreed to by both houses and parties, there's no guarantee that President Bush would sign off on it.
If there is a veto in the works, that means it's back to the drawing board for everyone. This week, they're burning the midnight oil to create legislation that the President might be able to sign.
People are looking to Washington for answers in time to save their homes. Legislators have to realize that a solution must be created. Without one, it could be a long election season for some.
For the full story click here.
Even with a single document agreed to by both houses and parties, there's no guarantee that President Bush would sign off on it.
If there is a veto in the works, that means it's back to the drawing board for everyone. This week, they're burning the midnight oil to create legislation that the President might be able to sign.
People are looking to Washington for answers in time to save their homes. Legislators have to realize that a solution must be created. Without one, it could be a long election season for some.
For the full story click here.
Can you make the grade with your credit score?
If you request your credit score, rather than receiving a number between 300 and 850 as you have in the past, you may now get something very different.
TransUnion will give you a score from 501 to 990 and gave you a letter grade on a scale ranging from A to F. This updated reporting model is called a VantageScore, a score developed by the three credit bureaus: TransUnion, Experian and Equifax.
This variation of the existing evaluation method of your creditworthiness will compete with the FICO score that you are more familiar with.
This new grading will create some confusion if you don't understand it.
Click here to get the full story.
TransUnion will give you a score from 501 to 990 and gave you a letter grade on a scale ranging from A to F. This updated reporting model is called a VantageScore, a score developed by the three credit bureaus: TransUnion, Experian and Equifax.
This variation of the existing evaluation method of your creditworthiness will compete with the FICO score that you are more familiar with.
This new grading will create some confusion if you don't understand it.
Click here to get the full story.
Subscribe to:
Posts (Atom)
