Category Archives: Home and Family

10/22/11

5 Ideas for Kids to Learn about Money

5 Ideas to Help your Kids Learn about Money

 

1.  Play Games: Monopoly is a classic board game for a reason.  Lessons in real estate, opportunity costs, and cash management transfer well to real world economics.  For young family members, consider Monopoly Junior.

 

2.  Take Field Trips:  Allow your child to accompany you to the bank.  Instead of going through the drive through, go inside and let your child help you fill out the deposit slip.  Explain the basics behind a checking account, credit and debit cards, and mortgages and loans.

 

3:  Talk the Talk:  Many parents think it’s taboo to discuss finances in front of their kids.  On the contrary, an open discussion about family finances allows your child an opportunity to learn important financial topics from the best teachers available—mom and dad.

 

4:  Save Up:  As a family, save lose change and dollar bills toward an agreed upon family goal—such as a trip to the circus, vacation, or even a pizza party.  Let your kids be part of the end reward to feel the satisfaction of accumulating funds for a goal.

 

5:  Start a Business:  Lemonade stands, bake sales, babysitting or lawn care…find your child’s talents and encourage them to start a mini-business.

10/20/11

New Stimulus Idea: Forgive Student Loan Debt? No Way!

 

 

 

 

 

 

 

 

 

 

 

 

So, this has been floating around facebook, and I finally feel like interjecting.

 

There is a petition circulating from SignOn.org, to encourage lawmakers to forgive student loan debt as part of a new economic stimulus plan.

 

I have to say (though I’m sure I’m in the minority) that this is an awful idea.

 

In full disclosure, I will admit that I personally have no student loans (thanks to generous and hard-working parents, a reasonable in-state college, and KEES scholarship money.)   

 

However, David and I are now sitting on ginormous student loans thanks to his attendance at the University of Louisville Medical School.  Just like we do with all of our finances, David and I consider this debt to be a burden we both share.  Although only his name is on the loans, it is a part of our entire family’s financial plan, and we are both taking responsibilities to tackle the payments.

 

Therefore, you’d be hard press to find another family that could benefit more than we could from a loan forgiveness stimulus package.  And yet, I still think it’s an awful idea.

 

Why?

 

First and foremost, I think there is a lesson in responsibility that would be lost should the government honestly consider eliminating student loan debt.  A loan is an I.O.U.  Not an I.O.U (but let’s forget about the “O” part.) 

 

Those of us with student loans have a legal (and ethical) responsibility to make good on the promise we made when we borrowed the funds.  What kind of society are we living in when a student can borrow $100,000 for a private education, never pay a dime of principal or interest, and expect the debt to be magically wiped away with a magical congressional wand?

 

A post-high school education in this country is a luxury, not a necessity.  It is a choice, and it is a privilege.  It is a blessing in our country that any one who really wants to receive a college education (or post-graduate education for that matter) has the opportunity and resources available to do that.   That doesn’t mean one will receive their education for free, be able to attend any college one desires, or graduate without any ill financial consequences or debt.  It just means the opportunity is there, although some will inevitably have to sacrifice for it more than others.

 

By taking out student loans, you are investing in your future, believing that the education you receive will provide you with enough income to later in life make good on your loans.  That’s how loans work.  Someone lends you money today, in exchange for the return of the money (and interest) at a later date.  Loans are contracts.  Loans are promises to pay.  Loans shouldn’t be forgivable.

 

Secondly, as a taxpayer, I have a problem with the forgiveness of student loans, justified only by the fact that they are “student loans.”  Most students that borrow for college are not just borrowing money for tuition, books, and fees.  Justifiablly so, these students are borrowing money for living expenses, food, shelter, entertainment, computers, clothes, beer, concert tickets, etc… etc….

 

We live in a college town, and I see this every day.  These kids support our town through their plentiful (and sometimes frivolous) spending patterns.  David will be the first to admit that it was his borrowed money that paid for everything during medical school—beers while watching the game with the guys,  our dates, and even a trip or two now and then.  Please tell me why a taxpayer (or anyone other than David or myself for that matter) should be responsible for paying for those types of expenses?

 

And lastly, beyond the ethical dilemma I think this would cause, is an economically more important point in that I think the idea would fail as a means of a stimulus plan.  We’d be “bailing out” those with student loan debt—college graduates, lawyers, doctors–the ones in our country who need to be “bailed out” the least.  

 

I understand some college graduates are having trouble finding a job in this economy and are having difficulty making student loan payments.  I do think there could be adjustments to the system, though I won’t go into that in this post (for example, our loans are at an interest rate of 6.75%–well above the rate we pay for our mortgage or car loan).  But completely forgiving debt would not hold the millions of students responsible for a promise they made.  Nor do I think it would encourage job growth, as there would be even less of an incentive for people to find employment. 

 

If you are a graduate having trouble with your loans, consider Federal programs that qualify you for a portion (or complete) student loan forgiveness through public service.  You can find out more about these opportunities by visiting http://www.finaid.org/loans/publicservice.phtml

 

 

10/18/11

Online Budgeting Tools

Here are some great online budgeting tools to help you get started on budgeting:

 

Microsoft Office offers custom budget templates: http://office.microsoft.com/en-us/templates

 

A great budgeting tool I use and love is Mint.  It sends alerts based on personal information and settings.  Great Mobile App as well:

www.mint.com

 

For a small business, I highly recommend the use of QuickBooks.  This is what I use for my small business to keep track and send out invoices.

 

http://quickbooks.intuit.com/

 

You might also find that a simple Excel spreadsheet, Word document, or old fashion pen and paper works for you.  Whatever format you choose is less important than making sure you consistently update, review, and follow your family or business budget.

 

 

10/18/11

How to Budget

 A lot of people ask me how they can get started reaching their financial goals. And my answer always starts with the “B” word:  Budget.

Having a budget means you understand where your money is coming from and where your money is going. And once you understand where it’s going, you then have a basis for future financial decisions. In this sense, a budget is the foundation to any financial plan.

 

Do the Math:

Start by listing the basic bills you pay each month such as rent/mortgage, utilities, car, student loan and credit card payments, gasoline, insurance, cable, phone and Internet.  Don’t forget to include money donated to charity, food, clothing, savings, travel expenses, entertainment and miscellaneous expenses.

A great budgeting tool to use is your on line bank or credit card statements. Often these will offer an itemized list of your monthly expenses.

 

I have a budget… Now What?

Making a budget is easy. The hard part is implementing action steps in result of your budget.  If you’re not willing to execute needed changes in result of preparing a budget, then it’s not worth any more than the paper you printed it on.

Subtract your monthly income by your monthly expenses to see what is left over.  This “leftover” money can serve as a piggy bank for your dreams.

Dedicate your piggy bank money to your goals, whatever they might be: paying down debt, saving for retirement, buying a home or vacation home, or taking a family trip. Continue to find ways to make your budget work for you…not the other way around.

Through budgeting, you may discover that you need to increase income–not just decrease expenses.  Consider a part-time job, over time work, or refinancing your house.  Do not consider borrowing from your 401(k), taking on additional debt, or ignoring your cash flow issue.

As with anything in life, perfecting your budget will take practice.  But there is no better starting point to financial success than a sound and basic budget. 

Check out these online budgeting tools to help you get started.
 

 

10/18/11

Teaching Kids about Money

Most parents think the “birds and the bees” talk will be the hardest conversations with their children. But equally as difficult as well as complex is the discussion about the value of money.

 

According to Certified Financial Planner Tracy Redmon of Ameriprise Financial, it’s never too early to start “incorporating your values about money” to your children.

 

“The first best place to learn about money is at home,” says Redmon. “Involve your children early…it will help them for the rest of their lives.”

 

How do you get them involved? Here is what you should be discussing with your kids at different stages in their life:

 

Age 5-8: Even at age five you can begin to explain the concept of money.  Once children can count, it becomes easy to relate that skill to money management.  When out shopping, let your child count the money and hand it to the cashier.  Ask your child questions at the grocery such as, “Which one of these is cheaper? What can we buy with $5?”  Encourage them to start saving coins in a piggy bank and to count their savings. 

 

Ages 9-13: Now it’s time to help them understand where money comes from.  Explain how you make money and what you do with the money you make.  Let them go through the process—at the bank, let them deposit a check or let them help pay the water and electricity bills online.  Explain how it’s important to share money with those less fortunate and include them in this process. It’s also a great time to have your child start his or her own savings account. Most banks and credit unions offer this with no fees and no minimum deposit.

 

Ages 14-18: It’s now time they work for it.  They understand Mom and Dad work for money, but do they understand how hard it is?  Help them find a part-time job doing something they enjoy.  Instead of giving them an allowance, tie the allowance to the completion of certain jobs around the house.  Give bonuses for good grades or good behavior.  Offer to match their savings (the idea is to provide an incentive just as an employer might do in the future). Use real money, even if it’s a small amount, and teach them how to invest it and the power of compound interest.

 

18 and Beyond: Although they are no longer children, they still look to you as a role model, especially in money matters, says Suze Orman, financial expert and author of The Road to Wealth. “Parents, I know you want the best for your children,” she says. “So you should realize how much that means making sure you’ve got your own financial act together. Children who watch parents do stuff like ring up huge credit card bills buying goodies and vacations they can’t afford tend to dig the same financial holes themselves as adults.”

 

How do you teach your kids about money?  Share with us under Comments…

10/17/11

Save Money at the Doctor: Questions to Ask

Part of saving money on healthcare is having a clear understanding of your health care options.  The best way to do this is to utilize the time available with your doctor. 

According to Dr. Terrie Wurzbacher, author of Your Doctor Said What? Exposing the Communication Gap there are three main questions seniors should always ask of their health care provider.  In addition, be prepared for your appointment by preparing a list of questions ahead of time.

 

1. Always ask if any medication your doctor prescribes will interact/interfere with any that you are taking.

“It’s vital that you always tell the medical staff everything you’re taking – no matter where you got it,” Terrie explains. “Many people think that if they obtained something over the counter or at a health foods store that it’s neither a drug nor potentially dangerous. This is simply not true.”
 

 

2. Always ask what the side effects are of a medication being prescribed.

”You want to know what to expect from something you’re putting in your body,” Terrie says.  If you don’t know what to expect, it is less likely you will notice a negative reaction.

 

3. Always ask when you should expect a positive response and what you should do if that doesn’t occur.

“No matter whether it’s medication, physical therapy, or advice to just rest, you want to know at what point you should start feeling better even if you’re not completely cured.”

Seniors are saving money on health care by getting innovative and creative with their options.  One couple I spoke with said they save on health care by asking for prescription samples. Another suggested the local University’s Medical School, which offers services at a discount performed by residents or students.

Other ideas include preventive treatment and regular check ups, using doctor visits instead of emergency room visits, and negotiating with your health care providers and insurance companies.

 

10/17/11

Finding a Mortgage Lender

So you have fallen in love with a house. You’re now serious about buying the home or refinancing, and you need a good mortgage lender on your side.  Where do you go?

 

The first step is to ask friends, relatives, and trusted colleagues for referrals. Ask these people what they liked (or didn’t like) about their lender. Make sure to ask a diverse group of people for referrals to get an idea of similar experiences.  For example, if you ask a wealthy client who has lots of rental property and has built a strong business relationship with their lender, it is likely that lender offers them the best possible rate and services the client exceptionally well.  If this is not your case, take that into consideration.

 

Referrals are a great place to start because most of the time past clients have no monetary incentive to give a good referral.  They do it because they honestly liked their lender, and felt they did a good job for them.  Likewise, you can also ask your Realtor or appraiser for referrals. It is likely they work closely with one or two lenders they trust.

 

With the Internet and other technological advances these days, we are often inundated with information overload.  Type in “find a good mortgage lender” in an internet search engine, and thousands of mortgage lender’s numbers will come up.  While the internet can be a good tool for researching rates and fees, I would not suggest using it to find a lender.

 

The lender you use should be local to your area.   Meaning, you should be able to physically meet him or her in their office at an accredited lending facility.  A local will have more expertise in your market, and will offer greater accessibility.

 

Most importantly however, the lender you chose should compliment your buying experience, and make you feel as informed and comfortable as possible.  There are lots of lenders out there, so you can afford to be picky.

 

If you don’t like his or her attitude, rates, fees, office, or hair-do for that matter, go find a lender that you do like.  Shop around until you find one that offers you everything you are looking for both emotionally and financially.  You will need to provide the lender with sensitive personal information including your income, assets, and liabilities. Thus, they must posses a high level of competence and professionalism.

10/17/11

Is my Money Safe?

Until recently, most people felt somewhat confident in our financial services industry. But with the disappointing news of insurance companies going bad, banks failing and getting bailed out, and the stock market on a roller coaster ride, the public now wants to know, “So how safe is my money?”

Money at the bank:


“It’s more important than ever that customers understand the risk associated with where they place their funds,” says Ashley Roberts, private banking officer with Republic Bank in Kentucky. The best way to be certain about your funds is “with the backing of the United States government in the form of FDIC insurance,” Roberts explains. Though most are familiar with FDIC, coverage can be somewhat confusing depending on how your bank accounts are titled. Currently, the basic coverage limits are $250,000 per owner, per participating bank. To see if your accounts are fully covered, go online to www.fdic.gov and use EDIE, an online coverage estimator. You can also call toll-free (877) ASK-FDIC.

 

Money under the mattress:

Under the mattress, in the cookie jar, buried outside, or in the freezer might feel like a comfortable place to keep your money, but there are too many “what could go wrong” variables, making this the least safe option of all. For one, the money you keep at your home is not insured. It could also be lost, stolen, or easily accessible for spending. While it’s appropriate to keep some cash on hand, large sums of money are most suitable in a bank environment with tight security and monitoring.

 

Money in investment accounts:
While there is nothing equivalent to FDIC insurance for investment accounts, many brokerage firms are members of SIPC, or the Securities Investor Protection Corporation, www.sipc.org. “SIPC does not cover individuals who are sold worthless stocks and other securities. SIPC helps individuals whose money, stocks, and other securities are stolen by a broker or put at risk when a brokerage firm fails for other reasons.” In other words, it does not guarantee your account won’t lose value, but rather that it will step in should your broker or brokerage firm fail.

 

10/17/11

Keeping Costs Low in your New Home

Moving in to your first home is exciting.  The hidden costs associated with the move –not so exciting.  From moving, to decorating, to maintaining your style, here are my tips for keeping costs as low as possible:

 

Say “No” to the Hired Help:

 

Sigh. I know, moving day is tough. But doing it yourself can save hundreds of dollars in expenses. Professional movers love to take advantage of lazy or busy people. They will charge you for labor, a moving van, gas, boxes, tape, bubble wrap, and anything else they can get away with charging you for.

 

Instead, borrow trucks and vans, or rent a U-Haul for the day (this is still cheaper than hiring movers). Call in those favors and ask friends and family to help load and unload boxes into the house. Buy them lunch and drinks and be sure to return the favor when they are in need.

 

Also, save any receipts associated with your move in day. If a company is not paying you to relocate, and if you are moving more than 100 miles away, you may be able to deduct moving expenses from your taxes at the end of the year.

 

Paint:

 

One of the least expensive ways to make a big change to the interior of your home is to paint. You can easily change the entire look of a room with just a few gallons of your favorite color.

 

Again, try doing this on your own.  Unless you have cathedral ceilings that require professional painters, this is one of the easiest projects to conquer by yourself.

 

When buying paint, take advantage of buying in bulk. It is much cheaper to buy a gallon of one color than many small quartz of various shades.

 

If you fall in love with a pricier, designer shade of paint (as I did with Ralph Lauren’s selections) consider taking those color swatches and having them made with a less expensive paint, such as Bear. You can get the exact color and quality you want, without paying the designer price tag.

 

Reuse, Redo, Reward:

 

For furniture, go to yard sales, consignment shops, shop Craigslist or freecyle.org. Freecycle is an on line community which people give and receive items for free. Things are not always in perfect condition, but they can be, with a little TLC.

 

You can do the same thing for the outside of your home.  Instead of hiring someone to do the landscaping, try doing it yourself. Often you can use what the previous owner left, but rearranged it to fit your style. It is actually very easy to transplant small bushes and shrubs from one area to another.

 

Buy Quality:

If you’ve never bought a home before, there are lots of first time expenses involved. These big ticket items might include a lawn mower, weed eater, refrigerator, and some tools. Here, the trick is to spend a little more money for quality items that will last for years. It may seem expensive in the beginning, but it will pay off in the long run.