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