Frugal Holiday Celebrations

It’s that time of year again, when the political ads cease and attention is now to get you to purchase and spend for the holidays. The height of consumer spending frenzies is commonly referred to as “Black Friday,” which this year took on Thanksgiving Thursday. I don’t want to bash the consumerism of the holidays, but want to provide you with a few frugal fun ideas to increase your holiday cheer without breaking the bank. Who knows, you just might start some new favorite holiday traditions.

Go Caroling
Bundle up and grab some hot chocolate with your friend and go door-to-door singing favorite holiday tunes. Have a pot-luck dinner or snack before or after the caroling.

Give the Gift of Time
Life is busy and it may seem as if you don’t have any time to give. It may seem easier to just buy presents, gift cards or give. Think about giving your time to a friend or family member. You can help them around the house, with special projects or just an evening of turning off the television and playing cards or board games and enjoying each other’s company and conversation. Your time is very precious and giving of it may be the most expensive gift you give.

Casserole Exchange
The holidays are busy and you may not have time to cook and enjoy a nice meal. Invite friends and family to participate in a casserole exchange. Make four of your favorite casseroles and invite everyone over for an exchange party. You will give away three of your favorite casseroles while having one in your refrigerator or freezer. The new casseroles that you exchanged for can provide some variety to your holiday meals.

Ornament Exchange and Decorating Party
Some of you may take great pride in decorating for the holidays and want total control, while others may dread putting out the decorations. If you are of the latter persuasion, or think more people always are more fun, you could have a decorating party where everyone brings an ornament or decoration. Get out the eggnog, crank out the holiday tunes and have fun.

Other Ideas:
• Drive around and look at holiday lights and displays
• Cookie exchange parties
• Take time to watch your favorite holiday movie or show
• Make your own holiday cards, wrapping paper, gifts

• Secret Santa with a low dollar limit

Travel
Now this might break the bank but our family has the tradition of only buying stocking stuffers and traveling as a family over the holidays. By allocating your gift giving budget to travel, you can do a lot of things and go lots of places. It is our gift to give and receive and focuses us on our values of family time. We all get away for a week or a weekend and spend quality time with each other. It is always fun to explore a different area and it doesn’t have to be far from home.

We wish you the best, to you and yours during this holiday season.

Bob and Kristy

Are You Prepared?

As hurricane Sandy hit the East Coast, with the flooding this past weekend on the West Coast and listening to the struggles of those affected by the disasters, I am wondering how prepared I am for a disaster. Living in the Midwest, I have to worry about tornados, floods, droughts, ice, snow storms, and straight line winds. Granted, we are not talking hurricanes, earthquakes, active volcanoes, forest fires, or tsunamis, but I still wonder if I am prepared to go a week or even a month without electricity or disrupted transportation.

FEMA has at http://www.ready.gov resources and information to help you ‘Ready. Plan. Stay Safe’. It includes what to do before, during and after an emergency, how to prepare plan and stay informed for emergencies, how to build a kit for disasters to be prepared, ways to be involved, information for businesses and fun and games for kids.

What would it take for you to be prepared for a disaster? We are not talking “Doomsday Preppers” mentality, but are you ready for a week without power? How much cash would you need if you could not access your ATM or credit cards? How empty is the gas tank on your car? These are just a few questions that we are considering as a family.

Hopefully we will never have to put our plan into action, but ….just in case.

Above Average in Student Loan Debt?

The numbers are out for the class of 2011 and two-thirds of the graduating class graduated in debt. If you are an average borrower, you owe $26,600, exceeding the class of 2010 by 5%, Was it worth it? In 2011, the unemployment for college graduates was 8.8% while unemployment of high school graduates was at 19.1% so the employment number would say yes.

So you decide to go to college. How do you reduce the amount of money you will borrow, have a good time, and graduate? Here are a few ideas.

1. Graduate on time or early. An extra year of college can cost you can $50,000 or more. To calculate the cost of that extra year, add your tuition, fees and books to your potential starting salary. Say that your tuition, book, and fees are $20,000 and your starting salary is $30,000; that extra year cost you $50,000. This number could be higher or lower depending on where you attend college and your career. Just for fun, calculate your own cost of an extra year of college. If you were to graduate in 3 years, you just saved $50,000!

2. Go to a college you like with a major you like. Transferring from one school to another can cost you an extra semester or year, depending upon what credits transfer and how credits are applied. If you do transfer, check with your advisor or Registrar’s office to make sure that all credits transferred and were applied correctly.

3. Do your homework when picking a college to find out what the average student loan debt is for that institution. Some colleges work very hard to offer students work-study money and enabling students to graduate either debt free or with small student loan amounts. College of the Ozarks, Knoxville College, and Berea College are strongly committed to students graduating debt free.

4. Apply for scholarships and grants. Grants and scholarships do not have to be repaid. Great places to check are fastweb.com as well as with local organizations or employers who might grant scholarships. If you were to calculate the time you invest in researching opportunities and the funds you receive, you will be surprised at your hourly wage.

5. Take 15-18 credits per semester. To be classified as a full-time student, you must be enrolled in 12 credit-hours per semester. However at many colleges, you can take 15 or 18 credit at the same cost of taking 12 credits. That is like getting two classes a semester for FREE! You will have to work harder and you don’t want your GPA to slip, but consider maximizing your schedule so you can graduate early or take extra classes for a second major.

6. Take college level classes while in high school. In many high schools, student can have dual enrollment in both their high school and in a college. Many of these partnerships are with local community colleges. The high school pays for the class and the student can graduate with college classes. Who knows, you might be able to graduate high school as a college sophomore, completing enough college classes while in high school.

7. Talk to your admissions counselor and financial aid representative. These two contacts can be worth their weight in gold in looking for strategies for reducing college debt and increasing scholarships and grant awards. They know the inside and are usually more than willing to help you put together a plan to pay for college.

8. Take classes at your local community college. Most institutions will transfer in 62-64 credit hours if transferring from a community college; some institutions will take more. Work with the institution that you want to transfer to when you register for your community college courses. This will ensure that the courses you take at the community college will apply directly for your degree completion at the 4-year institution. I would encourage you to save the e-mail or have it in writing on what courses will transfer. Not every advisor is up to speed on transfer courses.

9. Create and live by a budget. College can be very expensive with a lot of extra-curricular activities. College should be fun, but some of that fun can be expensive. Know the opportunity cost of your fun and look for inexpensive alternatives. With your budget, you may not need all the money from your awards letter. It is okay not to borrow all the money you can while in college.

10. Start a 529 College Savings Plan. The earlier you start savings, the more time the money has to grow. Saving for College.com has details on every state’s 529 plan and college savings plan. Do your research and start saving early. An old saying states that “The best time to plant an oak tree was 20 years ago. The next best time to plant an oak tree is today.” Get started today saving for college.

There are many different routes to your college education and they don’t all have to be expensive. Take time to choose the right one for you.

What other strategies do you have for lowering your student loan debt? Leave us a comment and share your idea.

One Key Thing

Last Friday, I had the opportunity to go to Hawkeye Community College in Waterloo, Iowa and speak in Mark Ryan’s Personal Finance Class. This was the first class that I visited that is using our Personal Finance book. It was really fun and exciting to be at a different college and in a different classroom and answer the student’s questions. The one question that I thought was most interesting was “What is the one key thing, or most important part of your book?”

After a little time, I answered that Chapter 1, ‘Values, Vision, Mission and You’, was the most important part of the book. If you know your values and have a vision for your future, financial decisions become easier. Whenever you make a financial decision, ask yourself if this decision or purchase is a reflection of your values. Is this really how you want to use your resource of money? Framing your decisions around your values allows you to achieve your goals and work towards your vision.

Knowing your personal mission helps you define your passions and what you do best. If you can turn your passions into profits, you never have to work another day in your life. Knowing you passions and strengths helps you find careers where you can excel.

I also shared with them that I thought our Personal Finance book was really about helping you increase your happiness. Money decisions are stressful and knowing your values, and setting your budget based on your values will reduce your stress and increase your happiness.

We hope that this blog and our Personal Finance book increases your happiness, helps you discover your vision, values and mission, and be in control of your finances. Thanks again to Mark Ryan, Hawkeye Community College, McGraw-Hill, and most importantly, the students in the class for hosting me for the hour. It was an honor to spend time with you.

All our best, Bob and Kristy

Living off the Grid

It has been six weeks since we sold our house and moved into our motor coach. If you read our previous blog "Homeless" you know it was quite a shock moving from 3,000 to 300 square feet. The idea of living in our motor coach for 6 to 9 months while we build our next home was a great plan as we sat around the dining room table of our old house. The good news is that it gets better.

To bring you up to speed, we now have electricity as of two weeks ago but still do not have running water. When we were showering in the motor home, our 85 gallon water holding tank would last us about one week. Tuesday was our day to take the motor home out to empty our tanks and fill up with fresh water.

We changed our ways two weeks ago. We now get up at 5:00 am to head out to the Campus Wellness and Recreation Center (CRWC) for a work out and morning shower. We can now stretch our 85 gallons out for one month.

Lessons learned over the past 6 weeks:

1. Running water and electricity are great luxuries. There is nothing like a long hot shower.

2. We have a new appreciation for space. Bob misses his home office and fast Internet. Kristy misses her closet and room to get ready in the morning.

3. Living in a small space makes every other house seem enormous. We spent time at Kristy's parents’ house and our kids’ house and they both seem gigantic! Such a luxury to spread out and have separate rooms.

4. Public libraries are great places. Without a home office, Bob has been spending time working at the Coralville Public Library and he appreciates free Wi-Fi.

5. Laundromats have free Wi-Fi and you can do a week of laundry in less than two hours. They also have cable television and we can watch channels that we don't have.

6. Why did we pay so much for cable? We are using the antenna on the motor home and the reception is great. We get 27 channels from our pasture.

7. Living off the grid is frugal but the 'fun' varies.

8. Life is good. It's not the space you have but the people in your life that makes life good. When we are with family or friends, the space never feels small. For all our family and friends, we are very thankful.

Homeless?

This week we closed on the sale of what had been our home for 19 years. Going through a packing frenzy of moving life-long belongings and wanting to pass on a sparkling, clean adobe; the moment caught me completely off-guard. I am not an emotional person, but upon the final signature at the closing, I burst into tears and hugged the new owners of our home where we had raised our family. I was passing a part of us on to these newly-met out-of-towners.

Over the course of the day, I went from exhaustion, -to tears, -to exhilaration. For the first time in three decades, we were mortgage-free. It felt gypsy-like. Think of how close the moment of being totally debt free. This summer, we purchased five acres out in the country, have our orchard started, a vegetable garden in, 41 grape vines underway and four hens laying eggs – but no house. Not wanting to risk two mortgages, we made the decision that we would sell our current home before building our next home. And in the interim? We would make due with our motorhome.

Still waiting for electricity and water, living in a motorhome parked in a cow pasture feels a little too off-the-grid for me. Yes, we are saving lots of money and are appreciative for the next space already. We are open to the 6-9 month adventure of what I consider an ultimate frugal life-style. But there are two sides to this coin and we are finding ‘homeless’ comes with both its hardships and its blessings. Hopefully, the blessings will continue to outpace the hardships.  

What extremes have you taken on, in either risk-aversion or in goal-savings? I want to hear from someone more nuts than us. :)

Frugal Fun Night?

As classes have started and I’m back to teaching personal finance, I have a challenge for all the students taking this class and using “Personal Finance; Building Your Future” by Walker & Walker. I want to know who can come up with the best frugal fun night. Add your suggestions and ideas by adding it as a comment to this blog. Keep it clean (PG rating), include an estimated cost and how this Frugal Fun Night reflects your values – the values that you worked on in Chapter 1. Remember, being frugal is not being cheap, but it is the wise spending of money in accordance with your values.

I look forward to reading your responses and getting ideas of how I can spend a Frugal Fun Night!

Should You "Bank" on Your Home?

We are just about to close on the selling of our home of 19 years and I was wondering what the appreciation was over the past two decades. This was inspired because my realtor keeps reminding me of how much I paid compared to our selling price. The actual cost can get really complicated (considering home improvements, tax benefits, repairs and maintenance, etc.) but I wanted to keep it simple.

I took our purchase price as the present value and our selling price minus realtor fees and updates to the house for selling as our future value. The 19 years of compounding yields a whopping 2.2% return on our house. I know all of you finance people want to look at my investment (down payment) and calculate the return based on that, with tax advantage on interest, also calculating in home repairs and maintenance, but that gets complicated really fast, and I don't have all of those records (shame on me). But this shows that our house appreciated an average of 2.2% over 19 years or about the average inflation over that period.

My grandfather always told me "you buy a house to live in and not as an investment." The house has served us well as a happy home to raise our three children; But as an investment? -Not so much. We are glad that we sold our house. We hope that the buyers enjoy the house as much as we did and they make it into their happy home (but not bank on it as their happy investment ever-after).  

Paying for College – Your Award Letter

Sallie Mae just released a study conducted by Ipsos Public Affairs titled “How America Pays for College 2012”. The burden is shifting to the student, up from 25% in 2009 to now 34% in 2012.  As a student, after you complete the free application for Federal Student Aid (FAFSA) form and send it to your school, the school will send you an award letter, stating scholarships, grantos, work study, and amount available through federal subsidized and unsubsidized student loans. As you start the fall semester, it is a good time to start paying on your student loans. How are you going to pay?

If you borrow money for college, you should take advantage of subsidized federal student loans before unsubsidized federal and tap private student loans as a last resort. The difference between these options is that the interest of a subsidized student loan does not accumulate until you are done with school while the interest in an unsubsidized student loan starts to accumulate while you are still in college. Private student loans have the highest interest rate; the interest and payments start immediately. But, should you borrow all you can while in college?

To me, the answer is ‘No’ to borrowing. Take full advantage of grants and scholarships – you don’t have to pay those back, but be careful of how much you borrow. Loans have to be repaid. If you don’t need it, don’t borrow it. This will require you to create and stick to a year-long budget. Once you create a budget, you can determine how much you will need to borrow for college. You can also work on campus through work-study programs which will help reduce the amount you need to borrow.

With total student loan borrowing exceeding total credit card borrowing in the United States, as a student, you will want to take a hard look at how much you should borrow for your education. Student loan money is not free money and the less you borrow, the less you will have to pay back. Complete a budget for college and seriously consider how much you need tn borrow when you get your awards letter from your school. I challenge you not to take your full award if you have to borrow on subsidized, unsubsidized or private student loan. However, if you need the money to stay in college, borrow the minimum amount so you can graduate on time.

Who Do You Trust?

Peregrine Financial Group and a missing $200 million? Cedar Falls, Iowa, the Heartland, where corn is tall and people are honest. It's of small towns where people leave their keys in their cars and they don't lock their front doors. Embezzlement of this nature happens in New York, Greece, but not in Iowa.

Peregrine Financial Group was an Iowa-based brokerage firm and the CEO allegedly used $200 million of his clients’ money to keep the business going. He attempted suicide and confessed to embezzling in his suicide note.

If this can happen in Iowa, it can happen in your neighborhood and with you investment counselor. I do not want to imply that all financial advisors are dishonest, but the few bad ones remind us to keep on our toes. A few basic points to keep in mind as you talk to your financial professional:

1. No one is going to be or should be more concerned about your financial wellbeing than you. It is your money and your future. You need to take responsibility for your financial future. This may require you to increase your financial literacy by talking a personal finance class, researching the investment on your own, and being aware of market trends. Don't bury your head in the sand when it comes to financial knowledge - you can learn it, you can do it.

2. If it sounds too good to be true, it probably is. How often have you heard that? If you are making money on your investment and everyone else is losing, it may be time to question your investment broker.

3. Ask questions. If you don't understand an investment or investment strategy, question it. This is a great way to increase your knowledge.

4. Use your BS detector. If an investment doesn't feel right, smell right, and you have an uneasy feeling about it, it may not be the right investment for you.

5. Be aware of the con-artist. The "con" in con-artist stands for confidence. The goal of the con-artist is to get you to trust him or her so he or she can rip you off. Be aware of these phrases: "this is standard language and you don't need to read every detail," "trust me, everyone is doing this." I have a special deal for you that not everyone can have."

Again, it is your money and being knowledgeable about the investment options helps you make wiser investment decisions.

4th of July Financial Freedom

Today is the 4th of July and time that we celebrate our freedom as Americans and those who have given so much to keep us free. Thank you to all who have served.

The celebration gives us pause to consider our financial freedom. What is your definition of financial freedom? One definition of financial freedom (financial independence) is when your passive income exceeds your expenses. You no longer have to work another day in your life for money as all of your financial needs are met from the income of your investments.

For many of us, we work the greater share of our life to save for retirement – hopefully the point of our financial freedom. Our retirement savings, along with social security hopefully provides enough income that we don’t need to supplement our income with another job.

When you think about retirement and financial freedom, how much money do you need to live the life you want? Are there avenues to reach your financial freedom sooner? Increase your level of investment? Do you have options to reduce spending? (i.e., reduce living expenses and improve your overall health by eating fresh produce from a home garden, using public transportation or riding your bike to work or school). Maybe your financial 4th is sooner than you think. How much do you really need to be happy?

Financial freedom and independence can be reached sooner by saving more, spending less or a combination of two. Can you reduce your spending and increase your savings to reach your financial 4th of July sooner?

Let us know your secrets to reaching financial freedom and happy 4th of July.

Happiness in Punta Gorda (PG), Belize

I just returned from Punta Gorda, Belize where I met with business owners in preparation for bringing MBA students for a week in January. I didn't know what to expect, for this was my first trip to Central America. We are organizing this trip through ProWorld Belize and the Toledo Association of Businesses in PG. Many thanks for their hospitality, openness, and warm reception.

A little geography lesson; Belize is south of Cancun, Mexico and just above Guatemala. I had to find it on the map before I left. Punta Gorda is on the southern coast of Belize with a view of Guatemala across the bay. It takes 1 hour be prop-plane or 5 hours by bus from Belize City. My experience with Belize is the 3 full days I spent in Punta Gorda, Barranco, looking out the window as we drove and the interactions I had with the people I met.

PG doesn't have the white sand beaches and the towns are not featured in travel magazines. PG is very rich in Garifuna, East Indian, Creole, Mopan, Q'eqchi, and Mestizo culture. The business owners I met are very entrepreneurial and scrappy, making do with what they have and creative in overcoming things they don't have. I was impressed with how sharp and perceptive they are at understanding customer needs and wants. Of note, they are some of the most genuine and sincere individuals I have met.

Driving through the bush and into the villages, I met subsistence farmers, living in thatched roof houses and huts. It reminded me of how little we need to be happy. It also made me question if all development and advancement is good. You buy a car and now you have to make money for gas, insurance, and (if you borrowed the money) to repay your loan. For this, it keeps us in the "Rat Race", always chasing the dollar to pay for goods we don't need. It made me question what we really need and what I want out of life.

Now don't get me wrong, I really enjoy the comforts and conveniences I have. But I also realize that these things don't make me happy. To me, happiness is good conversation and being around the people I love. Happiness happens when I share a meal, engage in meaningful work, and give back to my community; however you define your community.

The conversations I had in Belize were very rich with thoughtful people. Sitting in 90+ degree heat with humidity and sweating like there was no tomorrow but having rich meaningful conversation was very rewarding. Learning about Belize, PG, and the different cultures was enlightening. Meeting with and thinking of how we can help the entrepreneurs of PG was both exhausting and invigorating.

I look forward to spending 6 days with a group of Mount Mercy University MBA students in PG and sharing in their experiences. I feel we can do good for the PG community and businesses. I know our students will come back changed, richer, and with a new perspective on life.

So what does this have to do with a personal finance blog? Nothing and everything. It is always good to get out of your comfort zone and question what is truly important and what makes you happy. I hope all of you have that opportunity.

To learn more about life in Punta Gorda, Belize, check out Sarah's Blog: http://belizeyoume.wordpress.com/

Ready for Retirement?

Not ready for retirement yet? You see your net worth decreasing? You are not alone. In fact, retirement may be a dirty word in your household as you wonder how long you are going to have to keep working.

In a new survey released by TD Ameritrade Holding Corporation, one out of every two Americans surveyed were not looking forward to retirement. The Federal Reserve Board’s Survey of Consumer Finances reported Monday that the average American family saw their net worth decrease 39% from 2007-2010. Other statistics show that 69% of the respondents have no specific savings goal. Those that did respond had an average retirement savings goal of $750,000. Only 54% were confident that they would reach their retirement savings goal. What is one to do?

Hopefully, the housing and stock market will bounce back and increase net worth, but that can’t be counted on. One way to increase your net worth so to prepare for retirement is to maximize your 401k plan at work. Make sure you are depositing enough to take advantage of any offered employer match. Try to save at least 10% of your income for retirement in a 401k or an IRA. Take advantage of a Roth IRA and Roth 401k if you think taxes will increase. The Roth allows you to save for retirement on after-tax dollars, but the growth and withdrawals will not be taxed.

Start saving for retirement early in your life. The best time to plant an oak tree was 20 years ago. The next best time to plan an oak tree is today. The same is true with retirement savings. Compounding can make a world of difference in your retirement. If a 16-year-old contributes to a Roth IRA on an annual bases until age 66, he or she would have more than twice the money saved than if waited until age 26 to begin savings. Making annual contributions of $2000 with an 8% return over 50 years would grow to $1,147,540, while the same contributions over 40 years would only grow to $518,113. The extra $20,000 invested in the first 10 years grows to an additional $629,428.

Not ready for retirement yet? You see your net worth decreasing? You are not alone.  In fact, retirement may be a dirty word in your household as you wonder how long you are going to have to keep working.

In a new survey released by TD Ameritrade Holding Corporation, one out of every two Americans surveyed were not looking forward to retirement. The Federal Reserve Board’s Survey of Consumer Finances reported Monday that the average American family saw their net worth decrease 39% from 2007-2010.  Other statistics show that 69% of the respondents have no specific savings goal. Those that did respond had an average retirement savings goal of $750,000. Only 54% were confident that they would reach their retirement savings goal.  What is one to do?

Hopefully, the housing and stock market will bounce back and increase net worth, but that can’t be counted on.  One way to increase your net worth so to prepare for retirement is to maximize your 401k plan at work.  Make sure you are depositing enough to take advantage of any offered employer match. Try to save at least 10% of your income for retirement in a 401k or an IRA.  Take advantage of a Roth IRA and Roth 401k if you think taxes will increase.  The Roth allows you to save for retirement on after-tax dollars, but the growth and withdrawals will not be taxed.

Start saving for retirement early in your life.  The best time to plant an oak tree was 20 years ago.  The next best time to plan an oak tree is today.  The same is true with retirement savings.  Compounding can make a world of difference in your retirement.  If a 16-year-old contributes to a Roth IRA on an annual bases until age 66, he or she would have more than twice the money saved than if waited until age 26 to begin savings. Making annual contributions of $2000 with an 8% return over 50 years would grow to $1,147,540, while the same contributions over 40 years would only grow to $518,113.  The extra $20,000 invested in the first 10 years grows to an additional $629,428.

Increasing your net worth and being prepared for retirement takes discipline and sacrifice.  Having the long-term vision of the future growth and your financial well-being helps to ease the pain of the sacrifice and can help increase your strength to save.

Community Supported Agriculture (CSA) Basics

Question: What enables you to both eat healthy and be a good steward of your community? 

Answer: Buy a share membership to your local Community Supported Agriculture (CSA). Through a CSA membership, you are buying seasonal food directly from a local farmer. In a CSA, the farmer offers a set number of "shares" to the public. A share consists of a box of farm produce. You purchase a share up front at the beginning of the year and in return, you receive a box of seasonal produce each week throughout the season. Information about CSAs and how to find one in your community can be found at http://www.localharvest.org/

Advantages for the Farmer

• Market your produce prior to the growing season
• Receive payment early in the season, which provides cash flow
• Connect with those who will be consuming your produce

Advantages for You

• Fresh food, packed with flavor and vitamins as they will be consumed or frozen very soon after they are harvested
• Exposure to new fruits and vegetables and new ways to prepare them keeps you from getting bored with eating healthy options
• Good for the environment as you have a lower carbon footprint when there is a shorter distance from field to table

Consideration

• CSA will not meet 100% of your fruit and vegetable needs. For example, depending on the CSA, they may focus only on vegetables. You probably will find that you need to supplement your CSA share
• Eating seasonally is an adjustment. If you are not accustomed to eating seasonally, it may take you some time to transition from eating whatever is at the grocery store to a focus as to what is in season from the current week’s CSA box.  Many CSAs provide a list of what produce to expect and when
• Quantity varies. Farmers try to provide a variety of items in a reasonable quantity on a weekly basis. An important question to ask before you sign up with your local CSA is how much produce to expect to be delivered weekly as well as the expected variances throughout the full season
• Policies vary. For example, learn what arrangements can be made if you are out of town for a week; What does it mean for you if there is a bunker crop or low productions due to influences from Mother Nature

All in all, buying a share in a CSA provides you a way to invest both in your local community and in your own health, as well as it helps keep your environment healthy. Bon Appetite!

Skirts to Shirts

Gaining weight?

No fun.

Not fitting into your clothes?

No fun.

Buying new clothes for a temporary larger size?

No fun.

Remaking old skinny-butt skirts into funky fun tops for the afternoon graduation parties?

So fugal. So fun!



Student Loan Bill

Congress is getting the idea....maybe.  The Wall Street Journal’s article “Trying to Shed Student Debt” inspired this blog.  The article states that Senator Dick Durban is proposing a bill that would allow forgiveness of "private" student loans in bankruptcy so that private lenders will become more cautious about making student loans. Federal student loans would not be forgiven.

I have two problems with this legislation: 1) it is an uneven playing field. Why should private lenders have different standards than government lenders? 2: this is treating the symptoms, not the cause. The causes, as I see them, are many and complicated but the top three are the high cost of education, lack of financial literacy, and lack of personal responsibility.

1. The high cost of education. Reduced government support and increased college cost, along with a recession has left college more expensive and students with less in savings. We also need to ask if a college education is a benefit only to the student or to society as well.  If we determine that society benefits from a well-educated workforce and community, then we, as part of this community, need to make a commitment of help keep the cost of higher education affordable to everyone. This means increasing government financial support to education.

2. Financial literacy or lack thereof.  We need a financially literate society, where individuals know how to make wise financial decisions.  This starts with parents teaching and involving their children in decisions about money.  We all need to be reminded that money is it a limited resource with opportunity cost, that you have to make tough choices about needs and wants, and that every investment has risks and rewards.  A college education is an investment with risk and rewards, and the calculated pay-back, return on investment (ROI), should be considered when choosing a major and/or career.  Will my ROI be greater if I attend a two-year technical or community college, attend a private college or university, or attend a public college or university?  One has to be realistic about future income potential when taking out student loans.  Even with the best major and the best education, no job or future income is guaranteed.  You have to work hard to get the job, salary, and career that you want.

3. Personal responsibility.  If you borrow money, you need to be responsible and pay back your loan.  This needs to be communicated to students at the time they take out a loan.  Just like the CARD act, where your credit card statement tells you how long it will take to pay off your credit card, students need to be aware of their future payments, the time it will take to repay the loan, and the total cost of interest on the student loan.  When they sign their student loan documentation, they are signing away part of their future income for a minimum of 10 years!  They need to be fully aware of the cost of repayment, and the opportunity cost for the next 10 years of repayments; the opportunity of buying a house, car, or going on vacation.

As I stated in the beginning, there are a lot of causes to high student loan debt and hopefully these three ideas can be implemented to treat the cause, not the symptoms.  If you like this idea and want to work for solutions to the problem, not reacting to the symptoms, please forward it on to your congressional representative and/or the White House. The e-mail for the House of Representative can be found at http://www.house.gov/representatives/ , your Senator’s at http://www.senate.gov/general/contact_information/senators_cfm.cfm 

or contact the White House at http://www.whitehouse.gov/contact/submit-questions-and-comments.

High Cost of STD (STudent Debt)

Can you believe that both agree!?! Yes, it might be really cold and someplace is freezing over, but President Barack Obama and Mitt Romney both agree that student loan interest rates should not be increased.  This would keep current interest rates at 3.4%, not raising them to 6.8% on July 1^st.   By not increasing the rate on student loan interest rates, the government is stating that it will “cost” $5.9 billion.

Woo, wait just a minute-- did anyone question that figure?  Being an old banker, we tried to have a 3%-4% spread on money; the cost of deposits verses the cost of loans to make money.  The government can borrow money (cost of deposits) at almost zero percent, yet they are charging 3.4%.  Even the ten-year treasury is at 2%. Not a bad positive spread.  I also just financed a new car for 60 months at 1.9% at my local credit union.  Why is the government charging so much on student loan interest and want to raise it even higher?

I know, the “cost” of $5.9 billion is really forgone profit if rates were higher. Yes, I am very bias towards higher education and feel that this is the way we can recover from our recession and the only way to continue to be a leader in the world.  China, India and other countries are catching up or have caught up in technology and education.  We need an educated nation to survive and thrive in the future.

According to the Federal Reserve Bank in New York, it estimates that about 15 percent of Americans (not students) have outstanding student loan debt totaling $870 billion.  Other estimate student loan amounts as high as $1 trillion ($1,000,000,000,000.00) Yes that is a lot of zeros!  This amount exceeds the total borrowed on credit cards and auto loans according to the New York Times. Two thirds of the student loan debt is held by people under 30. The average 2011 graduated walked across the stage with over $25,500 in student loan debt.  Is this our next housing bubble that will put us in another recession?

How do student loans affect students?  Living back with parents, not buying houses, cars, delaying marriage, and the list goes on.  If we truly believe that education is an investment and benefits society as a whole, as well as the individual, we need to keep it affordable and attainable. Here is a short, fun little video about the effects of STDs (STudent loan Debts)  Enjoy the video; don't play the lottery.

IRS Blues

Yes, we had two extra days this year before your tax bill was due. Even with two extra days, it is still painful. Make sure it is postmarked by April 17 at midnight. Need a playlist to help numb off the sting? If you are working late on your taxes, here is some music to keep you motivated:

-Taxman by the Beatles
-Money by Pink Floyd
-It’s Money that I Love by Randy Newman
-Take the Money and Run by the Steve Miller Band
-Tax Free by Jimi Hendrix
-Who Will Buy My Memories by Willie Nelson
-Taxman, Mr. Thief by Cheap Trick
-I Want to be a Billionaire by the cast of Glee
-Mo Money Mo Problems by the Notorious B.i.G. ft. Mase & Puff Daddy
-Sweetest Girl by Wycliff Jean
-If I had a Million Dollars by Bear Naked Ladies
-Take this Job and Shove It by David Allen Coe

Filing Bankruptcy While Averaging $115,881 per Month?

Yes, this is what Warren Sapp, former NFL player and Dancing with the Stars contestant did on March 30, 2012.  Mr. Sapp filed for Chapter 7 in South Florida stating that he owes more than $6.7 million to creditors and back-child support and alimony.  His reported assets are $6.45 million.  What does this mean and how did it happen?

It happens because Mr. Sapp was spending more than he could afford, even more than his income of $115,000 a month.  Bankruptcy happened because of poor financial decisions, poor financial planning and thinking of the short-term, immediate gratification--not the long-term gain.  It happened because he was living life beyond his means.

Chapter 7 bankruptcy is also known as “straight” bankruptcy or liquidation and allows an individual to keep certain exempt property.    Assets are sold by a bankruptcy trustee to repay creditors and many unsecured debts are discharged.  Florida does not allow the bankruptcy courts to sell your home because the equity is protected by the Florida Constitution.  Florida also exempts IRS approved retirement and pension funds and personal property valued at $1,000 or less.  Chapter 7 bankruptcy also allows you to reaffirm your secured debt so you can keep your car, furniture or house by renegotiating with your lender.

For Mr. Sapp, he has 240 pairs of Nike Jordan shoes worth $6,500, a watch worth $2,250 and a lion skin rug worth $1,200 that will likely be liquidated by the bankruptcy courts.  However, his Super Bowl ring and 1991 national championship ring will not be auctioned off because he lost them.

Lessons Learned:

Ø  One can always spend more than he or she makes.
Ø  You need to have a budget and keep a spending limit to what you can afford.
Ø  When is enough ‘enough’? Really…how many Jordan athletic shoes do you need?
Ø  Review your values and make sure you are using money as a resource to reflect your values.
Ø  Live below your means; always pay yourself first and save at least 10% of your income.

If you want a pair of Nike Jordan shoes, contact the South Florida bankruptcy court!

Budgeting Household Chores

Spring is here in two hours. Spring cleaning officially starts in two hours. Do you share a household with others? Do those of the household not share an equal level of desire to maintain an orderly and clean environment?

Whether a husband and wife or roommates, sharing this responsibility can be a challenging task. How do you peaceful resolve the differences? One option: the envelope. How much would it cost to have a cleaning service come in weekly and keep the home in a 'guest-ready' state?

Each of you contribute proportionally to the envelope. Each of you record your contribution to the clean environment for the past week. If the effort has been equally shared then divide the contents of envelope equally back to all of you. Somewhat lopsided? You get that percentage of the envelope that equates to your percentage of exerted work. No one worked at it - you have the budget collected to hire out.

Either way, the "envelope" method helps for everyone to feel fair about how much effort they contribute and the household stays orderly. Budgeting the work and budgeting the pay helps everyone feel compensated for extra effort and the house stays organized. Try this one at home and let us know how it plays out. 

15% for All

We filed our taxes this week. The picture on the wall of our tax preparer’s office included the quote: “When the first 1% income tax rate was being debated in 1913, a U.S. Senator opposed to it stated, "If they get away with 1% today, some day it may be raised to as high as 5%!" How lovely would it be today to be capped at 5%? We would even be excited to cap at a certain ex-governor’s 15% if fairly distributed to all tax payers, whether their earnings were by way of nursing a patient bedside or from long-term capital gains.

We know that paying taxes is our legal obligation. And we believe it is a social responsibility to pay taxes to support the common good – our roads, street lights, schools, libraries, fire fighters, and so on. But it is a bit painful to see all in one lump sum the amount of our ‘giving’ to the government for the past year.

In the words of Scottish whisky distiller Lord Thomas R. Dewar (1864–1930) “The only thing that hurts more than paying an income tax is not having to pay an income tax.” Even though the unemployment rate is moving in the right direction, there are still too many unemployed and underemployed and we know we should be grateful that we have income for which to tax. But darn, how fun would it be if the tax rate would be capped at 15% for all?

Underground Economies

On a recent trip to visit our son in the Army stationed in Italy, I started to think about the "underground economy," Greece and their debt problems, and taxes. As we were purchasing items, most if not all places prefers cash (Euros) then take a credit card. Some places even charged you 10% more if you used your credit card. Now I'm sure some of this is to offset the credit card fee but I wonder how many sales do not get reported for tax purposes.

Greece is, in part, in trouble because of an underground economy that deals in cash and where income is not reported to the government. As they implement their austerity measures and cutbacks, have they increased their tax collections and increased reported income? Would they need to cut back as much if everyone, and I mean everyone, reported their income? This may be against their culture and custom, but the Greek government needs every Euro it can get to provide services and pay down its debt.

The same is true in the United States, we all need to pay our taxes so the government can pay for services we use every day. We may think that we "won" by not reporting all of our income, or by claiming more in deductions then we actually earned, but when you do that, we as a country lose. We lose support of our streets, our education system, our libraries, and our national defense.

As April 17th approaches (tax day) lets not lose as a country. Take every legal tax deduction you can, but be honest and report all of your income and don't exaggerate your deductions. It takes us all to do our fair share to keep this country great.

Brown Bag Valentine

It is Valentine’s frugal fun time. In keeping healthy hearts, label one of these healthy snack items and sneak it into your sweetheart’s lunch box. The following are a few sweet (as in thoughtful) sample valentines lunch box label treats for you to consider:

1. Apple: “You are the apple of my eye”
2. Cheese Slices: “Our love is so cheesy!”
3. Cupcake: “You are my little cupcake”
4. Cherries: “I cherish the memories”
5. Almonds: “I am nuts about you”
6. Pepper Packets: “You spice up my life”
7. Turkey Roll Up: “Don’t’ be a turkey, go out with me”
8. Ham Roll Up: “I am a real ham when it comes to dating you”
9. Peanut Butter and Jelly: “We go together like peanut butter and jelly”
10. Sushi: “You are the wasabi of my sushi”
11. Lettuce Salad: “Lettuce enjoy our time together”
12. Relish Salad: “I relish our time together”
13. Tickets to Lunch: “Let’s ketchup”
14. Jar of Mustard: “I mustard enough courage to ask you out”
15. Olives: “Olive you”
16. Pickle: “If I am ever in a pickle, I want it to be with you”
17. Bouquet of 14 Carrot Sticks: “14-carrots for you”
18. Corn Chowder: “It may be corny, but I love you”
19. Tabasco Sauce: “You warm my up with your spice.”
20. Ice Cream Sandwich: “Ice cream with delight when I think of you”
21. Miniature Box of Lucky Charms: “You are my lucky charm”
22. Miniature Box of Corn Flakes: “Just like corn flakes, you are great!
23. Miniature Box of Raison Bran: “You are my Raison Bran, you keep me regular”
24. Jimmie Bean Sausage Muffin: “You are my Jimmie Bean Sausage Muffin, a little ray of sunshine”
25. Mentos and Diet Coke: “Our love is like Mentos and Diet Coke”
26. Maple Syrop: “ I’m stuck on you like syrup”
27. Grilled Cheese and Tomato Soup: “We go together like grilled cheese and tomato soup”
28. Pears: “We make the perfect pear”
29. Sweet Potato: “ You are like a sweet potato and I want to butter you up”
30. Plums: “Plum love into you”



Time to Sell or Buy a House?

Spring is the time for love, the groundhog to see or not see his shadow and time to buy or sell a house. This year we are selling our house. We want to move to the country and have chickens, a goat, maybe a llama, fruit trees, and a big garden. As empty nesters, we don’t need to be close to the schools, and our current home is in the perfect neighborhood to raise a family.

As this is my first time selling a home, I am learning a lot about trying to maximize your selling potential. Here are a few lessons learned:

It takes time, energy and effort to get a house ready to show. We have spent the last few weeks cleaning, repairing, editing, and donating things we no longer need. Good Will and Habitat Restore are great places to take your good-slightly used items that you no longer need. To clean, organize and minimize can be revitalizing.

Make repairs when things break. We had to replace two bedroom doors. It wasn’t a big deal to replace them. To think, we lived with our “slighted bruised” doors for years! Though not that noticeable, we should have taken care of it at the time of injury. Keeping everything in good repair will encourage everyone in the house to maintain that level of polish and care.

If you don’t use it in a year, donate it. After living in one location for the past 18 years, we have many things we rarely use. When I first moved to Iowa, I moved once a year for three years. If I didn’t use it in that year, I donated it. I was able to pack light and did not have a lot of things cluttering my life. It feels really good to get to be purged of all clutter.

Take the time to clean daily – really clean. It is nice to be living in a house that is ready to show perspective buyers at any time. We are making a conscience effort to make sure we never leave a room messy. We are doing what we were taught as little kids – put your toys away after you play with them. The little things make such a big difference.

We might have listed our house at the right time. Interest rates are low and the economy seems to be tracking optimistically, at least in our community. So far we have had three showings in the first four days. We will keep you posted on ups and downs of selling a home. And if you are interested in buying our house….you know what to do! (contact us).