Category Archives: Personal Finance

Obama’s New Stimulus Plan and YOU.

o_stimulusb4a4cf1c-b4ac-4afe-9d99-caa0dea07075Here’s a brief breakdown of how the new stimulus plan could help you!

  • First-time homebuyers who purchase their homes before December 1, 2009 would be eligible for an $8,000 tax credit, and people who buy new cars before the end of the year can write off the sales taxes.
  • College students-or their parents- are eligible for tax credits of up to $2,500 to help pay tuition and related expenses in 2009 and 2010.
  • We can expect to see about $13 extra in our weekly paychecks, starting around June, thanks to the new $400 tax credit to be given through the rest of the year. Couples would get up to $800.
  • Those receiving un-employmet benefits this year wouldn’t pay any federal income taxes on the first $2,400 they receive.
  • For those who have lost their health insurance as a result of losing their job, the government will now pick up up the tab for 65% of the cost of continuing insurance through the COBRA plan for the first nine months while you look for a new job. COBRA is typically very expensive, often over $1,000 per month so this is a huge cost savings for job seekers.
  • Homeowners who add energy-efficient windows, furnaces and air conditioners can get a tax credit to cover 30% of the costs, up to a total of $1,500.

Information from the Associated Press.

Online Stock Tips? Buyer Beware.

There was an article in the Wall Street Journal on February 4, 2009  about new social networking services that allow users to share investing and trading tips. It is a great way for like minded people to build a community and share ideas. In many ways the idea is not new – we have seen chat rooms, message boards, and the like before. However, these sites operate more like Twitter where messages are limited or truncated to a preset number of characters and people only build ‘followings’ only if they have something of value to say. The idea definitely is progressive and timely as many people are seeking ways to build or rebuild wealth in a deepening recession.

But buyer beware! There are a few things to keep in mind or questions you ask yourself before you throw your money into any investment based on the advice of someone – especially someone you don’t know.

No one knows where this market is headed – let alone any individual stock. The current financial crisis is evidence that not even the pros on Wall Street have a handle on the markets. This could be one of the riskiest times to put your money into the unknown.

Speaking of unknowns, who is providing the information on the stock? What is the track record of this individual? I always seek advice from someone who has been successful in whatever subject they are discussing (not just money). So, if the person dishing out the information retired from an investing career, it might be worth considering. Otherwise, be careful.

Be realistic. We have seen with the Maddoff scandal – and countless other examples – that if it seems too good to be true it probably is. Yes, we have heard this before, but the tough economic times are giving life to more scams and con artists than ever before.

Is the timing right for you? Given how hard the markets and our portfolios have been hit, is now the time to put your hard earned money into ’stock tips’?  We all are eager to make up for our losses, but there is (still) no quick fix. Building wealth is a lifetime endeavor. Don’t get yourself into deeper financial straits by trying to make up for the market meltdown. We all are hurting.

Final thought. Personally, I would rather see my financial or investment adviser tracking and researching the markets. I worry that someone who is texting stock tips or using social networking services may not be focused on the right activities. Markets move rapidly. Information changes even faster. I need and want an informed adviser – not a good sales person.

Copyright FELA, Inc. 2009
Ms. Career Girl, a Financial Education & Literacy Advisers company
www.themindsetforwealth.com

Checking in on Your 2009 Goals and $10 a Day

So it’s already February, and I have to ask:  how are those New Years’ Resolutions and 2009 goals going?  Most people fall off the wagon 6 weeks into the New Year.  Don’t let it be you!

 

Most of us (me included) set goals to get financially AND physically fit this year.  It’s not as easy as it seems, is it?!  Well, I’m here to be the annoying person who gives you your February “Reality Check” to help you stay on track. 

 

I was scanning my book shelf the other day to gather ideas for this post and came across Jean Chatzky’s book, “Pay it Down,” which I purchased at the peak of my over-spending days.  The book is based around the idea that you can get out of debt on $10 a day. 

 

I’m a huge believer that debt and overspending can be traced back to psychological factors and/or personal insecurities.  So before we get to the part where we find that $10 per day, I must ask: How did you get into debt in the first place?

 

For many women, the reason is simple: we needed to fill the gap of what we make and what we need to live.  For many others, we had inadequate savings to bail us out of an emergency.  Lastly, many women have a spending problem.  Although society constantly makes jokes out of shopping too much, i.e. the new movie “Confessions of a Shopaholic,” it is a serious problem for many.  Retail Therapy is a topic that deserves its own post, but in the meantime consider if you may be guilty of this “disease.”  Regardless of your reason, identify it so you can stop history from repeating itself in your life!

 

Did you follow my advice and get out ALL of those icky credit card statements at the end of 2008?  What did you see?  If you haven’t done this yet, you need to.  You should know exactly how much debt you have, and how much debt you’d like to end 2009 with.  Yes, a number is required here.  You aren’t allowed to say “I want to have less debt and more savings” because that is not a clear goal that you can work towards. 

 

Back to finding an extra $10 a day.  The obvious answer is to cut lattes and going out to lunch but for many American’s, this isn’t the answer.  We like to get out of the office and we have a Starbucks addiction, fair enough.  $10 a day is about $300 per month.  I took inventory of my own spending habits and wanted to share ways that I found an extra $300 per month to put towards debt or savings:

 

  • Going out.  My biggest spending weakness.  I’m not at ALL saying don’t go out.  Live it up, have fun but just keep an eye on it and maybe limit the # of nights you go to the bars if it’s cutting into your pay check too much.
  • Books.  I can’t stop buying books on amazon.com!  I suppose this is a healthy way to spend money, but I’ll admit sometimes I buy more books before I’ve even started reading books from my last order.  Perhaps I should consider going to the library for FREE…
  • Gym Membership.  Jean Chatzky says that if you use your gym 0-1 times per week, then it may be time to cancel it because you are wasting money.  This is a matter of personal values and choice.  For me, I can’t imagine life without my gym, but if you aren’t using yours consider cutting it.
  • Travel.  Don’t go unless you can pay for your ticket in full.
  • Hair.  Platinum blonde is super expensive.
  • Manicures/Pedicures.  Do you really need them every week?

 

You get my drift.  In order to reach goals, you will need to identify your weaknesses and hang up’s.  I don’t want you to start living like a pauper who wears ugly clothes, has roots and never goes out-gross!  I don’t think that is realistic.  Find out what you value, and maybe have less of it.  If you really can’t part with being blonde, for example, find a way to spend less on being blonde, or better yet find a way to make more money (yes, part time jobs are GREAT!) so that trips to the salon are no longer a burden you need to charge on your credit card.

 

I’d love to hear more of your ideas on how you can save $10 a day (or $300 per month) because I know there must be a thousand ways to do it.  I could use the advice just as much as any other girl could.  Please share your thoughts!

 

Beware of the Newest Credit Card Game

ABC’s Good Morning America aired an interesting segment today about credit card companies that are looking at the places people shop to determine credibility.  So for example, if the credit card company’s data shows that a high percentage of people who shop at XYZ Store don’t pay their bills on time, some companies are using this as a reason to significantly cut customer’s credit limits without warning. 

The subject of the segment was a man named Kevin Johnson, a 29 year old who owns a PR Firm in Atlanta and has stellar credit (a 764 FICO score).  He had been a loyal American Express user when he received a letter saying his credit limit was lowered from $10,800 to $3,800.  Ken says he rarely kept any balances on his credit cards and has always paid on time.

This new twist is called “behavioral analysis” or “behavioral scoring” and it seems quite unfair.  Apparently this is just another way for credit card companies to assess their risk during the recession.  It’s a bit strange to me, especially for those who are trying to save money by shopping at a discount store or for those who have always been loyal paying customers. 

The other weird part of the story is that American Express received more than $3 billion in taxpayer money from the “Troubled Assets Relief Program,” yet they are choosing to cut off great customers like Kevin Johnson.  It is the Kevin Johnsons of the world who are paying the taxes to fund thse bailout programs…

I guess the moral of the story is that in a battle between a single consumer and a huge credit card company, the credit card company is going to win.  During times like these, we as consumers need to remember that we can’t count on using our credit card company’s money to get by.  They have the right to revoke our privileges at any time.

Read the whole story here for more details.

Nicole’s Review of Suze Orman’s “Women and Money”

2418695_3600b4cab5_m

As featured on justthrive.com!

Only Suze Orman could talk about two topics as sensitive as Women and Money so honestly and accurately. In her eighth book, Women and Money, Suze uncovers the mysterious stumbling blocks that so many women face when it comes to their finances, “It doesn’t matter if I am in a room full of business executives or stay-at-home moms, I find the core problem to be universal: When it comes to making decisions with money, you refuse to own your power, to act in your best interest.”

Women are typically the givers of the world: they are always putting others before themselves, nurturing their families, and sacrificing for others. Suze is NOT suggesting women replace “nurturer with narcissist.” She says, “I simply want you to give TO yourself as much as you give OF yourself. By taking care of yourself financially, you will truly be able to take care of those you love.” She asks why women don’t show their money the same attention they show every other relationship in their lives and claims it is because women have a dysfunctional relationship with money.

It is this dysfunctional relationship that has intrigued me personally to start a business to help educate women about their finances. My belief is that it is not intelligence or information that women lack, it is a mental “block” that is holding women back. Suze points out that so many women feel they must be all things to all people, “mother, wife, dutiful daughter, supportive friend, school volunteer, cheerleader at home and at work.” With the demands of life, it’s easy to keep denying the importance of learning new things that may be uncomfortable or hard to face. It is much easier to deny that money exists, say you are just “too busy” or blame others for your financial shortcomings.

My favorite chapter of Women and Money is called “The 8 Qualities of a Wealthy Woman.” I like it because it sheds light on what many women are not doing and clarifies how changing our thoughts and behaviors will improve our relationship with money.

For example, numbers 1 and 2 are harmony and balance. When you are in harmony, what you think, say and do are aligned. How many women do you know who say, “Oh I’m fine!” or “Ok daughter, you can have that new ___” even when they don’t feel that way or can’t afford it. That leads us to quality 3: courage. Courage gives you the ability to make sure your thoughts, feelings, and actions are aligned. So many women fear that if they say no, they may hurt someone else or not be loved as much. Suze points out, “It’s so much easier to hurt yourself than to hurt someone else, isn’t it?” When you think logically about that statement it is so true, yet women do it several times a day.

I believe that courage is important because it allows women to set boundaries with quality number 4: generosity. Women are known for being too generous with their time, support, love and money. Suze points out that the act of generosity must benefit the giver as much as the receiver, or it is not true generosity.

Quality 5 and 6 are happiness and wisdom. Quality 7 is cleanliness, which is really just another word for organization. And lastly, number 8 is beauty, which is a combination of the other 7 qualities.

Notice I haven’t gone into any detail about the technical side of money in my review. Suze Orman and I could sit here all day and tell you about the importance of saving, investing, and organizing your finances but if you don’t have a relationship with money first, you will never stick to making good decisions with your money. Just like losing weight, we have to get to the bottom of what is really causing that “stumbling block” in order to conquer it.

Money and Love

As featured on womenco.com!

For those who follow my writing, you know that I love drawing parallels between things that seem unrelated at first glance. Let’s investigate the ways in which women handle money affects their romantic relationships.

The way women think about money can be very emotional and typically transcends into every aspect of their lives. An underlying theme for many women is dishonesty. Women are often dishonest with themselves about money, saying they don’t need to worry about it or face it. Many women tell themselves “it will work itself out later”, or assume that eventually a guy will take care of it for them.

Women’s relationships with money tend to reflect their relationships with themselves and their romantic partners. We’ve all heard that the #1 cause of divorce in the United States is MONEY. It makes sense. For example, in a time of crisis, some women blame their husbands for not taking better care of things and not planning properly. Managing and planning finances is a lot of pressure for one person! Once something urgent happens, the downward spiral of arguing and personal attacks begins.

What about women who were taught that “money is the root of all evil”?  Last time I checked, if you want to provide opportunities to your family, you need money. If you want to care for your sick relatives, that healthcare costs money. If you want to send your kids to a better school or live in a safer neighborhood, you will need money. There is nothing greedy about wanting to take care of your family. Why are so many women conditioned to think that discussing money is inappropriate?

Are women afraid of being “too powerful?”  If women were brought up to believe in Cinderella stories, and taught that “money is a man’s job” or that “money is evil,” perhaps women are afraid that if they take control of their finances, they will be seen as too greedy or self-centered.

Women love getting others’ approval and making people happy. Are we afraid that if we get smart about money, we won’t be loved as much?

I am here to say that you can have a relationship with money and with your partner at the same time. In fact, psychologists say that “when a woman becomes financially independent, she gains self-assurance and peace of mind, and her relationships become healthier and more mature.” (Stanny, 50). Psychotherapist Annette Lieberman says, “those who take charge of their money develop the same qualities people need to enjoy sex: higher self-esteem, a sense of mastery, confidence and permission to enjoy pleasure.”

If your relationship with money is struggling, and you also hope to improve your love life, I hope you will relinquish the Cinderella myth and get real about your relationship with money. Stop waiting for someone with an extra piece of anatomy to take care of YOUR money and YOUR future. Stop blaming others for your relationship with money and start believing that YOU can do it!

America Needs Financial Education

As you know, I’m very passionate about helping others become financially savvy. I have a strong belief2125697998_b053ac13e1_m1 that having a good relationship with money positively affects every area of a person’s life. I was doing some research last night for a financial education program I’m working on with FELA and found an article that gave some interesting facts worth sharing.

• Fewer than 10 states require a unit of structured personal finance education in public schools.
• High school students who aren’t exposed to financial education by the time they graduate will rarely receive it in college either. http://www.csmonitor.com/2002/0212/p13s01-legn.html
• Many colleges are starting voluntary series of weekend and evening seminars, or “boot camps” but the programs are very rarely required courses.
• According to student loan company Nellie Mae, the lack of financial education carries over into adult hood and leaves one in ten students with more than $7,000 in credit card debt before they graduate college.

 •Many parents choose never to bring up money to their children. Perhaps because they are insecure about it themselves. Therefore many Americans grow up without having established good habits.

• Those who need financial education programs the most, are the least likely to seek them out due to intimidation, or a perception that the programs are too expensive/require too much time. http://www4.gsb.columbia.edu/ideasatwork/feature/34369/Discounting+financial+literacy


In my opinion, our current economic situation begs the question: where were our financial literacy programs when we needed them the most?
I feel that America is paying the price for being greedy, which is only enhanced by the large number of people who are not financially literate.

1365752197_2b5b9e4b92_mI saw the lack of financial education first hand when selling sub-prime mortgages to clients of all socio-economic backgrounds at my first job out of college (more thoughts on this odd adventure here). It was disturbing to me how little my clients knew about a simple mortgage refinance, or that they were being charged interest upon interest daily on their pile of credit card debt.

Oddly enough, my experience would suggest formal education has no relationship to financial literacy, as it was often the clients with several degrees that struggled with their finances the most.

The economy is in shambles. People can no longer afford their homes. Americans are drowning in credit card debt. Most twentysomethings are stuck with heaps of student loans and can barely make ends meet. Many baby boomers just realized they haven’t saved nearly enough for retirement.

 
How could this crisis have been helped by simply integrating financial education into schools, colleges and even businesses from day 1?

Perhaps if American’s had been exposed to personal finance early on, they would’ve considered buying more conservative homes and cars, saving a little more for retirement, or not spending their money aimlessly just to promote the image of having achieved “The American Dream.”

As I always say, we had it coming to us. The economic meltdown is no surprise especially considering most Americans entered adulthood with no preparation or tools of how to combat the inevitable challenges that they would face. I hope that financial education becomes a top priority for America from here on out. At least then we’d have a chance of making the next generation a bit better than ours