Archive for the ‘Credit & Spending’ Category:

Should student loans be forgiven?

Written on October 19th, 2015 by Jamesno shouts

I’ll let you make your own judgement after reading this article.   I’m not trying to be cold but after reading my thought was “why can’t the kids help Dad pay back the loans, it was for their education?”.  Anyway, this is a good example of why you should think twice about amassing those big student loans (or taking them out for your kids):

http://www.bloomberg.com/news/articles/2015-10-14/obama-administration-hits-back-at-student-debtors-seeking-relief

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Really great way to spend 30 minutes

Written on August 14th, 2015 by Jamesno shouts

This short 30 minute video should be mandatory for everyone to watch, whether a student, worker or retiree.  Ray Dalio has simplified Economics into an animated presentation that will help everyone understand how the real economy works and what caused the 08 meltdown.  Really good stuff, in fact I am going to make my kids watch it.

http://www.economicprinciples.org/

 

an article fit for a miser

Written on December 4th, 2013 by Jamesno shouts

While I love this time of year, my wallet screams out in pain.  I am naturally a self-proclaimed miser when it comes to spending money.  Just this week I spent 30 minutes on the phone with AT&T telling them to cancel my home phone service since it is a waste spending money for something we don’t use.  They convinced my to stay by lowering my combined phone/internet/cell bill by $65/month so I was happy.

But back to the holiday topic, my wife loves to decorate for Christmas.  Each day this week I have come home to notice more decorative items around the house.  My first thought is “that looks nice”, my second is “did she just buy that today?”, the third thought is “don’t we have an old one of those in a box in the garage?  did we really need a new one?”.

My wife and kids think I am a scrooge, but it comes with the occupation I guess.  Anyway this article popped up this morning on Marketwatch and thought that all of you misers would get a kick out of it:  http://www.marketwatch.com/story/10-retail-tricks-that-make-you-spend-more-2013-12-04?dist=beforebell

I’ll definitely be emailing it to my wife……..

negative interest rates?

Written on November 26th, 2013 by Jamesno shouts

Maybe just coincidence, but I have seen several articles out that are discussing extreme measures to stimulate growth both in the US and Europe.  The issue is that despite the Fed’s QE program of injecting $85 billion / month into the economy and keeping the benchmark rate very low, that growth and job creation are not responding as fast as they would like.  This same problem is occurring on the other side of the Atlantic as well.  So what do you do when unprecedented stimulus measure don’t work?  You pull out the nuclear option and crush savers by making them pay for the right to keep their cash at banks!  And what do you do if that doesn’t work?  You devalue the currency so much that even if they stuff it under their mattress it will lose value (purchasing power).

So why would Central Banks consider this?  To them savers are not helping grow the economy.  They want you to spend and invest that money instead of saving it.  The concept borders on insanity to this financial planner, and I would not even bring it up if it weren’t for several articles I have recently seen on financial news websites and a recent speech by Larry Summers delivered to the IMF (discussed in this week’s Bloomberg BusinessWeek Magazine).  I hope that this is just crazy economists coming up with theoretical ideas that will never materialize, but this topic should be one to watch.  Remember that Larry Summers was one step away from being nominated to the most powerful financial position in the world, the US Federal Reserve Chief.

Marketwatch article: http://blogs.marketwatch.com/thetell/2013/11/25/bank-look-to-charge-customers-to-hold-their-money-if-fed-says-stop-being-lazy/

Marketwatch article: http://www.marketwatch.com/story/draghi-talk-of-negative-deposit-rate-not-new-2013-11-21

BusinessWeek article with Larry Summers: http://www.businessweek.com/articles/2013-11-18/larry-summers-has-a-wintry-outlook-on-the-economy

IRS changes rule for Flex Spending Accounts

Written on November 6th, 2013 by Jamesno shouts

Many employers offer Flex Spending Accounts (FSA’s) that allow employees to contribute up to $2500 per year pre-tax and use the money toward healthcare costs (co-pays, pharmacy, etc).  Up to this point the issue was that each year the money was on a use it or lose it basis, so employees were left scrambling at year end to figure out ways to spend down their account.  Now the IRS is relaxing the rule and employers can now allow participants to “carry over” up to $500 in the account to the next year.  The only caveat is that the employer has the decision on whether to allow this or not.  Don’t assume so unless your employer has stated that is the case.

Read more:  http://www.financial-planning.com/news/treasury-relaxes-use-or-lose-rule-for-flexible-spending-accounts-2687132-1.html

1973 vs. 2013

Written on October 7th, 2013 by Jamesno shouts

A recent Powershares Investment Workshop got me thinking about inflation.  Often times we hear about the massive increase in prices of items and on the surface it sounds like a huge return, until we factor in that most other items have risen at the same rate or more.  Case in point is when you hear that your grandparents purchased a home in the 40′s or 50′s for what seems like a modest  amount of money (for a home) and then sold it for $300k.  So let’s do the math:  $40,000 home in 1950 sold for $300,000 in 2013.  That seems like a huge return on the surface, but over a 63 year time period the increase is simply keeping up with inflation, a return of 3.25% annually!  But more than the return is the concept that everything increases with inflation: the cost of food, a postage stamp, a can of soda and your income!  If your salary is keeping up with inflation then your percentage of income to buy that $40k home back in 1950 is equivalent to your percentage of income to buy the more expensive ($300k) home in 2013.  Make sense?

To grasp this let’s take a look at two graphics from the American Enterprise Institute that detail the amount earned by a college student over his/her summer break and what they spend that money on.  One is from 1973 and the other is 2013:

 

 

What you notice is that while things get more expensive, in a perfect world your income would rise to compensate for it.  Inflation is another way of saying the purchasing power of the dollar diminishes over time, so to keep the same lifestyle (as things get more expensive) then your income must rise as well.  It’s when those “things” continue to get more expensive and your income stays stagnant that we encounter purchasing power erosion and really feel the effect of inflation, but that is for another blog.

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30 minutes to save $70

Written on August 12th, 2013 by Jamesno shouts

It really works.  Spending 30 minutes with the Sunday paper coupons and grocery sales circular resulted in the wife saving $70 on a recent trip to Kroger.  That took a $170 shopping trip down to $99.  Now if I can just convince her that this doesn’t equal a new pair of shoes…

coupon savings

saving $70 on a $170 shopping trip

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New lending rules could dampen the realestate market

Written on August 5th, 2013 by Jamesno shouts

Came across this article regarding the Consumer Financial Protection Bureau’s new rules on mortgage lending and wanted to share.  Will it impact the real estate market?  That’s anyone’s guess but when you restrict lending you automatically have a smaller pool of buyers.  Maybe for the best, but somehow I get an uneasy feeling anytime I see a government agency trying to “protect” us from ourselves….  http://www.northfulton.com/Articles-BUSINESS-c-2013-07-29-199972.114126-sub24322.114126-Will-qualified-mortgage-rule-slow-housing-market-next-year.html

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Does College Pay Off?

Written on July 30th, 2013 by Jamesno shouts

That was the title of an interesting article in this month’s Money magazine.  The writer interviews the president of Arizona State University and asks some very good questions about the cost vs. benefit of higher education today.  The debate rages on as we constantly hear about the “student loan bubble” and all of the college grads that get out of school with loads of debt and can’t find a job to pay for it.  At the same time we hear from State labor officials that there is a shortage of skilled trades:  Pipefitters, welders, electricians, etc.  Are we so focused on a traditional 4 year college degree that we are overlooking some very well paying jobs produced by technical colleges?  Is the prestige of a 4 year degree worth more than a $75,000 per year job in a skilled trade that is in such demand that states are competing with each other to bring in those workers?

It seems more students need to be shown the options and then make their decisions based on real metrics…..

Maybe for traditional college bound students we should begin to evaluate colleges and majors based on ROI.  Treat it like an investment and look at what kind of return you get (salary/job) vs. the cost of the education.  One such website does just that, payscale.com has compiled a ranking of schools based on ROI:  http://www.payscale.com/college-education-value-2013

Technology is always disruptive and eventually colleges will adapt to society needs or be forced out with new internet learning options.  The easy money from student loans that have enabled universities to get big, bloated and expensive will eventually end and the student loan bubble will burst…..it is just a matter of time.

 

a spouses definition of “savings”

Written on October 19th, 2012 by Jamesno shouts

The wife and I attended a “marriage workshop” at a local church last night.  It was a good event and even after 19 years of marriage it helps to get a refresher on how to keep it going for another 19.  The highlight of the night was when the speaker was discussing how spouses view (or define) things differently. I thought his definition of “savings” for he and his wife was the funniest thing I heard:

From the male perspective: Savings is what you put away for a rainy day or accumulate for retirement.

From the female perpective:  Savings is the difference between regular price and sale price!

Now before I get nasty comments, the roles could of course be reversed.  I work with plenty of clients where the wife is the more frugal one, but this particular statement resonated with me so I had to throw it out there!

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