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Archive for January, 2010

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Why handouts aren’t good in the long run…

Friday, January 29th, 2010

A new blog post by one of my favorite Authors/entrepreneurs, Dan Miller, caught my eye, and I thought it would be worth sharing.  The post, titled, When Helping Hurts focuses on some recent developments regarding our national unemployment program.

The government is looking into extending benefits in the unemployment program for the 5th (that’s right, I said 5th) time since the recession started, just a couple of years ago!  Normally, the benefits are doled out to the unemployed over 26 weeks (aka 6 months), with the option to get a 13 week extension.  Basically, this means that you can draw unemployment for 9 months before you have to go back to work, and a lot of people do just that!  They collect full benefits before even really trying to get a job!  Why, you ask?  Well, I assume for some it’s because they think it’s “free money”, but, as we all know, that’s never the case for anything.  Somebody always pays, be it the company, the taxpayers, the government (which takes its money from the taxpayers) or the consumer (who is almost always ALSO a taxpayer).  Under the new proposed benefits, the pay outs can run as long as 99 weeks…almost 2 YEARS!

The funny thing is that some studies sited in the post indicate that people are most likely to find a job when the unemployment runs out, no matter if that length of time is 2, 26 or 99 weeks.    People seem to think that because they are drawing unemployment, they economy must really be in the toilet for everyone, and so they don’t try.  However, when there is no more unemployment, they “magically” find work.  Amazing!

There are many examples of these programs being run the wrong way and abused by some of the participants.  I’m not going to get into that, because I have a feeling many of you wouldn’t want to read a post that long.  If I’m wrong, say so in the comment section, and I’d be happy to oblige!

Dan Miller draws an interesting observation, drawing a parallel between the way bears hunt and the way we as humans acquire a job.  Bears hunt more efficiently when they aren’t given food from humans…you know, when they have to hunt.  We are the same way with money and jobs.  When there isn’t somebody giving them to us, we get creative and figure out a way to do it.  Be that start our own company, go to work for someone else or sell some stuff, we will make it work.  Can’t find work in your area?  Perhaps you should move.  Think outside the box people!

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What would you do for a Klondike Bar??

Wednesday, January 27th, 2010

What is your ultimate goal?  Your “Klondike Bar”, so to speak.  What would you do to accomplish that goal? 

No matter what your ultimate goal is, more than likely you need to plan for it!  Are you planning for this goal that you want to achieve?  Are you working toward it as I’m typing this?  If not, then how do you ever expect to achieve it? 

Planning out your life usually gets you just as excited as doing your taxes, but is just as necessary (don’t want the government coming after you, do you?) because it not only maps out what you need to do, but gives you a sense of purpose to work toward for your future.  Basically, you can’t reach your destination if you don’t have a map to go by.  So, what are some ways to plan for the future?

First, you need to brainstorm.  What is your goal?  What credentials or money do you need to achieve your goal (college, or capital to get started?)?  Is the place you live in a good place to work toward that goal, or is there another place better suited to the goal (i.e., marine biologists shouldn’t live in the desert).  What type of friend and family network do you need to make this goal a reality?  If your goal is for a certain career, are you sure that the career is suited to your personality (i.e. if you don’t like paying attention to details, accounting is probably not a good career path for you).  If your goal is to retire wealthy, have you written out a budget and figured out what percentage of your income you need to save in order to do so (the money isn’t just going to appear, and social security, if it’s still around, definitely won’t let you live “comfortably”). 

Once you have brainstormed and figured out all the things necessary to achieve the goal, then you put them in chronological order or order of necessity, whichever seems to make more sense for your particular needs.  Now, you have a map.  Start at the top of the list and work at it, one item at a time.  For example, if the first thing you need is an education, then that is where you start.  Use the same process of identifying how to achieve each item on your list, as you did to make the list, and you not only have a plan/map to achieve your ultimate goal, but it should be easier to achieve it, because you aren’t scrambling to figure things out on the fly.

Don’t know what you want to do, or what your ultimate goal is in your life?  That’s ok.  Take time to figure it out.  If you bounce around for a few years longer than your friends, it’s OK.  It doesn’t make you inferior, it just means that your interests are too varied to settle on one thing at that point in your life.  However, once you do figure out your passion, take these steps to get a plan in action!

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No tip today…

Monday, January 25th, 2010

We have had a death in the family, and will not be posting a tip today.  Please check back Wednesday for a new post!  Thank you for reading!

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Oh, the insanity!

Friday, January 22nd, 2010

Just when you think you’ve seen all the silly things you can on the Internet, you run across something that makes you CRACK UP LAUGHING!  Such it today’s article, 9 reasons to love credit cards, by Liz  Pulliam Weston.  As the title might indicate to you, our readers, I’m not a fan…and that’s putting it lightly! 

The article is a little lengthy, but it’s worth the read, if only so you can laugh at it as you read.  Here are some highlights:

  • Arbitration – The author says that credit card arbitration is a fabulous feature.  Well, when I used credit cards, I never had to use this feature, even when I had problems with stores.  Also, opinions are split as to whether arbitration is good or bad.  This article says the consumer doesn’t usually come out on the winning end. 
  • Automatic bill payment – Obviously, you can set up your bills to be paid from your account.  So?  You can do that with a debit card as well, which comes from YOUR money, not borrowed money. 
  • Bulwark against identity theft – The author points out that credit card companies have laws in place to make sure they don’t charge you for fraudulent charges, after a $50 fee, within 60 days.  This is true.  However, debit cards have systems in place as well.  Within 2 days, it’s a $50 fee and a $500 fee up to 60 days.  Most banks voluntarily choose to extend the $50 fee to 60 days, and not charge $500.  So again, it’s a wash.
  • Credit Improvement – I wish people would quit focusing on “improving your credit score through credit cards!  Having cash to pay for things makes credit cards pointless, doesn’t it?  Which makes your credit score less important.  Yes, you might need it to buy a house, but if you put at least 10% to 20% down when you buy the house, and have a good income, I doubt they will pay close attention to your credit score.
  • Extended Warranties – These things are a waste of money most of the time anyway, so tauting them as an advantage doesn’t really make sense.  Period.
  • Interest Free Loans – Well, interest free loans don’t matter if you pay for what you want with cash!  If you don’t have the money for it, don’t buy it.  Want money for “emergencies”??  That’s why you have an emergency fund!
  • Purchase Protection - Some cards pay to fix or replace items broken that you paid for with a credit card.  They don’t do it out of the kindness of their hearts.  You, and others, are probably paying for it, you just might not know you are.
  • Rental Car Coverage – Your auto insurance covers this.  So, why do you need more?  A silly advantage, considering auto insurance is mandatory, and credit cards are not!
  • Rewards, Rewards, Rewards- Yes, some cards offer rewards, but that only encourages you to use them more!  Also, unless you stay in hotels a lot, fly a lot or whatever else they offer “points” for, the points are not useful.  Other rewards are usually not worth it, or are something that you could have bought outright, and saved on interest if you carried a balance.  I do know 1 person who got use out of their points, but it was her business credit card.  In general, not worth it!

My favorite quote from the article:  “I get all these goodies largely because so many other folks play the credit card game so badly.  The profits they generate for the credit card issuers essentially pay for my freebies.”  So, she plays the “game” well, and you pay for her rewards and benefits.  Why not just get out of the game?  Use debit cards or cash.  You’ll save more money in the long run!

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Why men should (but don’t) ask for directions…

Wednesday, January 20th, 2010

Jerrill had a very interesting point this week, and we wanted to share it with our readers.  It’s not that people don’t know this, at least at some level, it’s just that we either forget it, or don’t want to swallow our pride and undertake it…the “it”, is asking for directions.

There are very few people out there who can make intuitive leaps of greater understanding out of scarce information.   You know, the people who excel in an area in spite of all surroundings and obstacles.  These are the “genius janitors” out there, solving quantum physics equations on their lunch breaks.   They are the jungle explorers who can successfully navigate to the other side, safe from animals and disease. These are the people that make/invent the things that push civilization forward.  People like Leonardo da Vinci and Nicola Tesla.  For the rest of us mere mortals, gleaning a deep understanding of something takes work and time.   Time we don’t generally have.  Another problem?  Many of us have too much pride to ask those individuals that already have the knowledge we need to share it with us.   It’s hard for us to make progress as individuals, much less move forward and take a bunch of people with us. You know who you are!   You are the man that refuses to ask for directions and gets lost, because navigating from point A to point B seemed like such an easy task at the beginning of the road trip (Thank goodness for GPS!).  You are the person out there quietly struggling to pay the bills and building up a savings account because you were never taught how in school and never sought out the advice of someone who has it all figured out.   You know how your favorite southern couple feels about that!  Swallow that pride!  Find somebody who is “smarter” than you and ask them to share their knowledge.   Odds are, they will happily do so, and you won’t have to reinvent the wheel.   Find someone who is already doing what you want to do yourself, be it find that boutique or thrift store across town, balance that budget, or solve that physics equation! 

You don’t have to go through life without help.  Nobody does.  There are scads of things out there to help you along, some are free and some aren’t, but they are all there for you.  But you have to take the first step.  You have to ask for help, before it is given to you!

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Other places to shop…

Monday, January 18th, 2010

You know, it always amazes me how many people shop “in a box”, and won’t step out of it for anything.  There are, much to the surprise or dismay of some, lots of places to shop other than the mall, outlet malls, strip malls and “boutiques”.    Consignment stores and the retail stores of charitable organizations like the Salvation Army and the Goodwill are great places to find a deal.

Consignment stores are retail locations where people take their gently used clothing and accessories are sell them at a fraction of what they paid.  The consignment store then turns around and sells the items at a discount.  This means a great savings on things for you.  A small disclosure…you DO have to scour the racks for the gems, and you DO have to scour the items for defects and you should ALWAYS wash the item before using/wearing it.  Also, I personally wouldn’t buy undergarments, swimsuits or shoes secondhand, unless your options are completely limited.  The discounts at some consignment stores can be up to 75% off the retail price, and there are consignment stores that are targeted to a specific audience, such as young teen/college age and professional women and maternity.  Check your local community for the options available to you.

As far as charitable retail sites like Goodwill and the Salvation Army, the same rules apply.  You have to look through things carefully before choosing to buy from them, and some things might “need a little work” before they can be useful to you, but these are not bad places to find a deal.  Not everything there is “crap”.  A lot of the time, things are merely discarded items that people no longer want…that doesn’t mean they aren’t worth anything.  As a matter of fact, Goodwill has an auction website, similar to Ebay, called shopgoodwill.com.  You can find antiques, collectibles and luxury goods that have been donated to Goodwill to bid on at this site! 

No matter what your thoughts on these places are, you shouldn’t judge them unless you’ve been there at least once.  If, after going to a consignment store, you don’t like what you see, simply don’t go back.  If however, you find it a worthwhile place to shop, then you are likely to save quite a bit of money over the years!

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They want to tax your junk food.

Friday, January 15th, 2010

A new article from WalletPop.com is discussing the good and bad things that could come from a tax on soda/junk food.  The article, titled Should we tax junk food to control obesity?, caught my attention right away. 

Now, one might think that this is a good plan, since the article sights some very compelling statistics, including the following:

  • 58 million people are overweight, 40 million are obese, and 3 million are morbidly obese
  • Eight out of 10 are over 25 lbs. overweight
  • 78% of Americans are not meeting basic activity level recommendations
  • 25% are completely sedentary
  • 76% increase in Type II diabetes in adults 30-40 years old since 1990

What does this mean to us?  It means that, yes, we are getting fatter.  A lot fatter.  We are coming up with new products like body shapers to hide our fat rolls, and some sort of tape to make our arms look thinner!  Don’t believe me?  Check this out!  And I don’t think anybody remembers the word “muffin top” ever being used until we started wearing pants that sat low enough on our hips to “show off” our fat rolls.  By the way, if you have a muffin top, by a bigger size and a belt! 

So we’re getting fatter!  I hate it!  I love to exercise, and I try to watch what I eat…but I’m not a health nut.  I have junk food on occasion!  I am not model thin, and don’t expect that I ever will be, since my goal is strength and not a 22 inch waistline.  However, I keep my weight within a normal weight range and an average Body Fat Percentage.  I worry about the people I see and know that don’t get any exercise, and don’t watch what they eat at all.  I worry for their lives!  I don’t, however, think that taxing the people to the poor house is the way to go about fixing it!  We’re nuts if we think these people don’t know that this food/soda is bad for them.  They know it!  Punishing them (i.e. taxing them) for their “bad behaviour” is not a RIGHT that I want to give our government, thank you very much.  The next thing you know, the government will be punishing us for all of our bad behaviours, like watching too much TV, not flossing and not recycling ALL of our trash!  It’s not up to them to legislate our behaviour. 

The article takes a much more positive approach to this tax then I would.  Yes, it breaks my heart to see children and teenagers that are not active at all.  12 year old girls that have to shop in the “women’s plus” size section at a store because the cool, stylish clothes for their age don’t fit them.  I want these people to get healthy as much as the next person, but it has to start at home.  They have to decide for themselves that they are dissatisfied with how they look and how they feel.  And then, they have to be mad enough at themselves to do something about it! 

The article says that the taxes raised could be used for education and health programs.  Yeah, it could, but it won’t be.  Have we all forgotten the promise of lottery money being used for education (read this)?  Think about it rationally, without emotion…you know as well as I do that they won’t use the money for what they say they will, or if they do, it will be like 1% of the revenue.   Taxing these people won’t fix the problem, and I don’t want the government legislating what I do or don’t eat.

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Why the mall contradicts the experts…

Wednesday, January 13th, 2010

I drive by our local mall often, and for the past several months, I’ve been watching it for signs of the recession, unemployment, and how bad the economy is suffering.  Now, as much as I believe that there are places all throughout the country that are truly suffering, with debt, falling home prices and unemployment, I have to say, it’s not happening with the same fury everywhere, the way the media would have you think.

I hate to see people suffer, and those people that have lost their jobs are in my prayers.  However, the falling home prices are only an immediate concern if you are trying to sell your house and/or have lost your job.  If you have a stable income and are contented in your home, staying there for a few years (decade, maybe?) isn’t a big deal, so neither is the drop in value.  Debt, is, as always, a major concern for us.  If you are employed, you should be making a budget, sticking to it, funding your emergency fund and getting out of debt.  If you are unemployed, then you are in an income crisis, and that should be your main concern…along with food, shelter (that doesn’t mean a “McMansion”) and basic utilities (i.e. lights, water and heat).  You can’t focus on paying people back what you owe until you get stability back in your life, so put them on hold, even if it takes a few months. 

I would like to make a point for our readers though: with roughly 10% unemployment, that means that 10 people out of 100 are out of work, which is the same as saying 90 people of 100 are employed…it’s terrible for those 10 people, but overall, it’s not a catastrophe.  And those 90 out of 100?  They are shopping!  Maybe less often than before, and they might be spending less than before, but they are shopping…at least, that’s the way it looks EVERY time I drive past/go to the mall.  The place is packed!  As usual, I can’t find parking there, and the Christmas season was just as bad as usual.  Now, like I said, I know this isn’t the case everywhere, but the media’s version that everyone everywhere is suffering terribly, in houses they can’t afford, without jobs and piling up debt.  This isn’t true either.  The truth, as usual, is probably somewhere in the middle.  Some are suffering, some aren’t.  If you are suffering, I wish you luck and speed in your job searches and in getting out of debt, and if your job and home life are stable and “secure”, work hard to keep it that way, and help those who need it, either with prayer, food donations or job contacts (etc.).

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Don’t be afraid to say NO!!

Monday, January 11th, 2010

This Mucho Moolah Money tip is probably more for our younger readers, but hopefully all of the readers will find some value in it!  I wanted to talk about saying no, canceling services and returning items.  I don’t know why, but for some reason, we have a negative stigma in this country about it!  This is completely ridiculous!

When we buy something or request a service, it is perfectly within our right to return it or cancel it, for whatever reason we deem worthy, with the exception of damage that we caused.  Why then, do some people fear returning things or canceling services?  My guess would be that it has to do with the marketing of retail companies, the “strength” of the sales people, and the idea that people (friends, family, the cashier) will think poorly of us for returning it. 

Well, as far as the retail companies go, they spend millions (maybe even billions) on marketing every year, so why wouldn’t they be able to give us the idea that we shouldn’t cancel their service, or return their product.  You have to stay strong and recognize this tactic for what it is…marketing, period. 

As for the sales people?  It’s their job to be pushy, get you to buy something, and, if you come back to return the product or cancel the service, convince you that you shouldn’t.  They aren’t looking out for your needs (in general…there are exceptions, but very few) and they don’t really want to be your friend…they just want their boss to see that they are doing their jobs, and that is it.  So what do you do/say when you want to return something or cancel a service and the sales team won’t “let” you?  Before you go back to the store in question, decide on what you’re going to say.  Let’s say that you are going to say “the device doesn’t work as promised, and I’d like a refund…here is my receipt.”.  Now, if/when they try to talk you out of it, you simply, but firmly repeat your first statement.  Repeat it again, and again, if you have to.  If you still haven’t made them listen, ask for a manager, and state the same sentence for them.  Eventually, they will decide you aren’t worth their time, and will do as you ask. 

When it comes to our friends and family, we all want them to think we are financially stable and secure.  When we return an item or cancel a service, some of us fear that our friends will think we don’t have the money to pay for it, and we feel embarrassed.  Whether or not this is true, it doesn’t matter.  Your business is your business, and keeping your budget balanced is more important than what someone thinks of you and how much money you have.  Don’t worry about what they think.  It’s NONE of THEIR business!

No matter what you’re trying to return or cancel, never forget that it’s your money in question.  You paid for the item or service, because at the time, it was worth more than the money in your hand, but when you decide it is no longer worth that money, don’t feel that you don’t have the right to get it back (or stop paying for the service)!

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Married Couples pay more under new health bill!

Friday, January 8th, 2010

Today’s article, from the Wall Street Journal, titled Married Couples Pay More Than Unmarried Under Health Bill, is obviously about the new health care bill.  Apparently, under the new bill, if a married couple doesn’t receive insurance from their employer, and instead chooses the public option, they will be out a lot more money than their unmarried (couples who live together and share bills but aren’t married) counterparts. 

The article looks at an unmarried couple who make a combined income of $50,000, and a married couple who make a combined income of $50,000.  The unmarried couple will pay only (yeah, only…ha ha) $3,076 a year under the House bill and $3,450 under the Senate bill.  If that couple decides to get married, they would have to pay $5,160 under the House bill and $5,100 under the Senate bill.  That’s a difference of between $2,084 and $1,650 respectively!  Just for deciding to get married.  The individuals that helped write the bill (democratic staff) acknowledged the existence of the penalty, but said that it couldn’t be fixed without creating other inequities.  To me, this seems like a pretty big penalty to be left in place, for fear that you would upset another group, or be unfair to others.  I mean, married couples are a pretty big group to upset!

The article has this quote from a Democratic Senate Finance Committee aide  - “The Finance Committee, along with other committees in the Senate, took pains to craft the most equitable overall structure possible, and that’s what we have here,”.  The MOST EQUITABLE bill.  So, they know it’s not fair for everyone, and one group that will pay will be married people!  This gives people an incentive to stay single.  Great!  Just what we need in this country!  A financial incentive to lose the institution of marriage.  As a country, we’re already doing things that would have been morally wrong just 20 years ago.  Gone on 2 dates with someone?  Ehh, that’s long enough to sleep together.  And we wonder why children in the 6th grade are experimenting with sex…could it be their role models?

I know that legal “mumbo jumbo” is the last thing any of us want to read or look into, but I think it’s important that we know what is and isn’t being approved with the new health care bill, especially since our politicians have a habit of sneaking in extra things when they pass a bill/law.  Be aware of your government!  Watch what they’re doing.  If you don’t, then when things don’t go your way, you have NO RIGHT to complain!

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