Friday, August 21, 2009

Banks are changing, but are we?

The new credit card laws are going into effect today. They have been long needed. But, have we learned anything or would we just run out and do it all again given the opportunity?

It's hard to change our basic nature and habits. I probably should not admit it but we are still paying on a truck that has not run for three years. It started with an argument of whether to pass on the deal and wait to save the money and ended up being a credit card purchase because the price was low. That got wrapped into a balance transfer, that got wrapped into a home equity, that got wrapped into a 30 year fixed. All with the lure of lower rates.

Yes, it sounds crazy because it is. I dare say I'm by far not alone and would bet there are some cappacinnos out there that are now on a 30 year payment plan.The banks will continue to take advantage of us as long as we allow it.

Something to think about everytime we pull out the credit card or don't pay our balance off in full at the end of the month.

Sunday, August 2, 2009

I'm just not good at handling money!

Warning. This entry is not for everybody. Just those who have either said this or thought it, or more obviously have been told it by somebody else.

Are you over 18? Then you can't use that excuse. Sorry, it's just part of being an adult. If you don't know or are not good at managing money, it's time to learn. It's strange that there is more instruction on how to drive a car than there is on how to handle finances. And, not only does that lack of knowledge affect the individual but it also affects their spouses, children, and our social structure through the welfare rolls, bankruptcy courts, and credit card defaults.Sure it maybe does sound harsh and maybe we should just ignore it. But, the first step to any change is to acknowledge the truth.

What are some of the signs you are not good at handling money?
1. No savings account.
2. Credit cards that are not paid off at the end of the month.
3. Out of money before the next paydate.
4. Having to borrow from family, friends, or businesses just to pay non emergency expenses.
5. Even when you have a job you still can't pay for your basic living expenses such as food, shelter, and clothing.
6. You are over 18, living with your parents, and are not paying for any expenses and still don't have a savings account full of money.
7. You are living with another adult and they are paying the bulk of the living expenses. Marriage can be a great place to hide financial incompetency but even that will not go on forever and is one of the leading causes of divorce.

Of course there are exceptions for the sick and disabled, students, or the temporary inability to do these things due to life changes (Temporary is the key word here).

It's true, our education is sadly negligent on the basics. How to handle money, how to raise children, how to take care of the things we use, and lately how to cook and do laundry. We are expected at age 18 to know all these things but we may never have been taught. I know that I sure have made a lot of mistakes in the last year and have found many weak spots in my own thinking and doing.

The good news is: wherever we are at right now we can learn more! And, we all can learn together! It's time to grow up, take responsibility, and improve the economic health of our nation one adult at a time.


As just a starting place for beginners at financial management.

1. Expect to work for any money you have and need.

2. Live within your means.

3. Save 10% of your income. No matter how tight money is today it could be tighter tomorrow.

4. Give generously to those in need. This can be your church, disaster victims, or orphans. A tithe of 10% is the most commonly accepted principle.

5. Invest some of your earnings. This is above your savings for it is the specific intent to have a higher return than the amount you put in.

6. Stay out of debt. That means friends, family, charge cards, or banks. If you are already in debt pay it off as quickly as possible. Debt is the negative result of not doing #2.

We may not be able to accomplish these things all the time or in every situation but they establish the direction we are going.

Simple yes. Easy no. Possible definitely.

Saturday, August 1, 2009

Keep the best. Sell the rest.

Learned this saying from a lifetime farmer and wish I would have learned it earlier. I used to raise poultry. I had up to 30 peacocks and ornamental pheasants, but, our mainstay was ducks and chickens. At one point I had about 50 chickens so I placed an ad in the paper to sell them for $8 each. A man came and I told him he could take his pick. He wanted to buy about 30. He chased and caught, chased and caught, and when he left gave me a check.

I surveyed what was left and what did I find? He had picked through and taken all the best of the birds and I was left with the too small, too old, too young birds. My prime laying stock was all gone. Of course it was! He was not stupid, I was!

Everytime I reflect on this situation I want to hit myself in the head. I had set myself up so splendidly. But, most interestingly is that we all do this to ourselves when we walk into or get put into a lower income situation and do not have a plan. We can end up loosing our best house, or best car, or best anything because we have not structured ourselves to prevent it. We either try to pay everthing and end up late on it all or we pay nothing and end up late on it all.

Doing an inventory is the first step when confronted with a downturn. Realize that everything is at risk and make some decisions up front on how you will handle it. If you need help read books, go to consumer credit counciling, talk to people over 70 who went through the biggest depression and get their advice. Their experience is priceless.

Then, keep the best and sell the rest.