Thanks For Nothing Uncle Sam

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Today government debt and social security are the greatest financial challenges facing our country today. Social security is on unstable ground, not being able to sustain itself. The future holds for it reduced distributions and benefits. It's on a collision course to collapse. So many retirees are dependent on it as their only means of support.

To make matters worse for the social security recipient there is no cost of living increase. The government in it's infinite wisdom says inflation is so low that the cost of living increase is not applicable this year. Even though health care, food and gas prices are rising through the roof.

This lack of an increase in social security has caused quite a stir in the senior community. To keep them happy a $250 check has been talked about being sent out to every social security recipient to make up for the lack of increase.

The problem is that this week it was put up for vote and it didn't pass. Sorry Grammy and Grandpa. This must be devastating for these people. They already live day to day with the checks they get now.

The problem with all this is the people have become all to dependent on their government for all their needs. They have trusted the government to take care of them in their old age and it's failed miserably. It's only going to get worse for them as prices get higher. Even Medicare only goes so far and will probably continue to do less as the budget and austerity program begin to happen as the national debt increases.

Europe's austerity programs are just starting and they're not very popular. The United States will be following their lead very soon.

It only makes me wonder when I am living in retirement, what I will be doing. I don't want to be living under the hopeful good intentions of a government led by men who have to do things not for my benefit but to get themselves elected again. We have finally pushed the limits on the nanny-state. Cradle to grave care by the government is a dismal failure. Trusting in a government that can give a retirement check can also be a government that can takes one away from you, too.

The most important lesson learned from all this is that you are responsible for your own welfare. It's your job to take care of you. Only you can take care of yourself, well and fairly. Preparing for your health care and retirement is your job. Remember the old saying, "If you want it done right, you have to do it yourself."

With the new year coming, make a resolution to prepare for your future. Save and invest to take care of yourself before the time arrives. Start that Roth Ira, get that health care arranged. Quit buying everything in site. Invest the money into your future.

Related articles

• "House rejects bill for $250 payment to Social Security recipients" and related posts (personalmoneystore.com)
• Social Security Administration limits retirement do-overs (usatoday.com)
• Senate to vote on bonus Social Security payment (dispatch.com)
• Retirement Benefits: What to Expect in 2011 (money.usnews.com)

7 Youtube Channels That Teach You How To Handle Money.

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In our quest to learn what to do with our money we seek information from friends, family and also professional financial planners. Some of the things we need to know are: Are you saving and investing enough? Do you know how to save and invest? How do we plan for retirement? We need information to make decisions. A lot of us go to the web. We read blogs and information websites. What else can do to get the information needed? A lot of good information is on YouTube. YouTube is great, just sit back, watch and learn. I'm listing a few of my favorites. Check them out.

Kiplinger

Kiplinger on YouTube has hundreds of videos covering a wide variety of subjects. It has something for all ages and  knowledge levels. It's brought to you by the people who publish the Kiplinger Magazine.


Morningstar

Everyone has heard of Morningstar, the people that publish the great information on mutual funds. This page concentrates a lot on investing subjects. There is a good amount of interviews with the industry leaders. You will find the interesting Morningstar lead financial planner Christine Benz. She has a lot of good financial planning information to share.

CBS MoneyWatch

Here you will find good advice concerning Real Estate, Investing, Banking, and Personal Finance. This channel has the backing and resources of CBS News. You will see CBS reporters filling their network stories and web only financial stories.

Sound Investing TV

Sound Investing TV is produced by Paul Merriman founder of Merriman Investing. Paul is dedicated to teaching and giving good information about investing and finance. He is a big advocate of the Lazy Portfolio theory of investing through index funds. You will find Paul's homespun style of teaching very informative. I highly recommend this channel.

The Saving and Investing Channel

This channel is run by Michael Fischer, author of "Saving and Investing". This channel has Michael teaching the concepts his book describes. He covers all subjects from banking, no-loads, shorting and mutual funds. He really covers the entire gamut of investing and financial information. His videos usually run about five minutes and are concise and informative. A good reference source for all you new investors.

Money Talks News

Money Talks News has hundreds of quick 2 minute videos with the most variety of topics of all the channels. From foreclosures to Thanksgiving tips, this channel covers it all. You will be kept busy for hours watching all these videos, but you will definitely learn a lot.

Cambridge Credit

Cambridge Credit Counseling focuses on credit, debt, and saving. They cover other things like banking and budgeting. They try to help people through their offices with debt problems. Their videos teach people to save and budget as a way to get out of debt. They have a very informative channel.

You will find a lot of other videos scattered all over YouTube concerning financial teaching and information. These channels put it all in one place so you don't have to go all over searching for that needed information. So sit back with a nice cup of coffee and enjoy some videos

Related articles

• Why Mutual Funds Are the Best Investment (money.usnews.com)
• Christmas gifts with a financial twist (woodsg.wordpress.com)
• How to talk retirement with your parents (money.cnn.com)
• 7 Ways to Become Your Own Retirement Planner (money.usnews.com)

5 Things That Will Consume Half Your Income In Your Life

In these recessionary times, financial tips are flowing fast and furious about how to save money and stick to a budget. Facing a sea of information many people are asking, “Where do I start?”   For most of us, five areas of spending will consume over 50% of the money we earn during our lifetime, so that’s the best place to begin.  The five areas are:  Home, Car, Kids, Education, and Retirement.  Here’s what you need to know about each:

• Don’t bite off more HOME than you can chew. How much house can you comfortably afford? For most people the answer is a house with a purchase price of no more than 3x their annual household income.  Rationale:  the cost of a home includes much more than the monthly mortgage payment. It’s also property tax, insurance, upkeep, etc.  Typically these costs run 2%-3% of the price of your home each year.  Assuming a 20% down payment, a 30-year fixed rate mortgage, and interests rates in the 4%-5% rate, the 3x your income rule of thumb will translate into total housing costs of roughly 30% of your gross income.

• Don’t let your CAR drive you to the poor house. The same logic applies to your car. Most people can comfortably afford a car that is 1/3rd of their annual income.  If you make $60,000 you can comfortably afford a car that costs $20,000.  If that seems low – now you know why so many Americans are in financial trouble.  They are driving it.  A car has many other costs than simply the monthly payment.  There’s insurance, gas, parking, maintenance, etc.  If you follow this rule of thumb,  your total transportation costs should be 10% or less of your gross income.

• Don’t let your KIDS kick you in the wallet. Kids are expensive.  From a purely clinical standpoint the Dept. of Agriculture estimates it will cost $220,000 to raise a child born in 2008 from diapers to age 18. And that figure is before you add in the cost of college!  Deciding to be a parent is a major financial obligation.  Don’t make it worse by over-indulging your love bundles.

• Don’t forget to ask “How high is too high for higher EDUCATION?” It used to be good debt was defined as mortgage and student loan debt… and bad debt was everything else.  Not any more.  We’ve now learned that too much of a good thing can indeed be bad.  Rough rule of thumb, don’t take on more in total education debt than you think you are going to earn on average annually during your first 10 years after graduating (from college or grad school).  In plain English, if you think you’ll make $50,000 a year, don’t take out more than $50,000 in loans. The logic behind this is that if it takes you more than 10 years of paying 10% of your income a year in student loan repayments, it’s going to be tough to meet your other financial obligations.

• Don’t underestimate the need to feed your RETIREMENT nest egg. How much will you need to retire? A simple rule of thumb is to multiply your current income by 25.  So if you make $50,000 a year and want to maintain that standard of living in retirement, you’ll need a nest egg of at least $1,250,000.  Understanding early on in your working life what “your number” is… will help you see just how important it is to plan for this major savings goal.

Related articles

• How Much Home Can You Afford? (imbrandon.com)
• Out With The Old, In With The New: Clean Up Your Debts (thesimpledollar.com)
• Using Financial Calculators to Help Your Personal Finances (creditloan.com)
• Review: Smart Is the New Rich (thesimpledollar.com)

Detours On the Road To Be Debt Free

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You made the decisions to get organized and knock out that debt. With a budget in one hand and Dave Ramsey's book in the other hand, your being all gazelle intense. But be careful there are going to be some bumps in the road to the debt free life. Here are a few of the bumps you may hit.

Being too ambitious

Once you've decided to attack your debt, it can be tempting to get carried away by your enthusiasm. In all likelihood, it has taken several years to work up any debts you may have so you're not going to clear them overnight.

When you decide to sort out your finances, try to do an honest appraisal of the situation and set yourself realistic targets. If you attempt too much too quickly, you could fail and become disillusioned with the process.

Borrowing to cover debts

You probably already know how effective balance transfer cards can be if you want to repay your credit card debt more quickly and cheaply.

However, balance transfer cards are something of a special case. If you're not savvy, borrowing to repay an existing debt could exacerbate your financial problems.

If you are going to take out another loan to cover a debt, you should make sure you are getting a more competitive rate of interest. Otherwise you're unlikely to make any progress.

Borrowing money to make the minimum repayments on another debt will probably send you further on the downward spiral. If you do reach this point, it could be a sign you need professional help with your debts.

Spreading yourself too thin

Although you might want to pay off all your creditors as soon as you can, this may not be the most effective debt busting technique.

Take a look at all your debts and the interest rates on each. It could be prudent to use a technique known as 'snowballing' in which you focus your efforts on repaying one debt - normally with the most expensive interest. Meanwhile, you continue to make minimum repayments on everything else.

As soon as this is paid off, you could turn your attention to another debt - until they are all cleared.

Over-reliance on family and friends

Taking a loan from your nearest and dearest could be an effective short-term solution if you're experiencing cash flow problems.

However, it could well be a mistake to rely on these kinds of loans to cover regular outgoings and debt repayments.

If your family are always around as a financial safety net, there won't be much of an incentive to stand on your own two feet. Likewise you're probably not doing your children much good if you constantly bail them out of financial jams without talking to them about the cause of their problems.

It's taken you years to get into such deep debt, it will probably take a few more to get you out. Just stay on your budgets, don't make dumb mistakes and you will be debt free soon. Just be patient.

Related articles

• Out With The Old, In With The New: Clean Up Your Debts (thesimpledollar.com)
• Good Debts and Bad Debts:What You Need to Know (debtsettlementevents.wordpress.com)
• The Snowball Method and Balance Transfers (balancetransfercreditcards.org)
• Debt Management Strategies (thinkup.waldenu.edu)

A Get Some Rest: Weekend Roundup

Here's a list of my favorite posts of the week:

Over at DINKS there is a challenge to save. Could You Save $5 Every Day for One Year?

At Bargineering they are talking about taxing online purchases. Your Take: Should Online Purchases Be Taxed?

Get Rich Slowly tells us about The Dangers of Store Credit Cards

Five Cent Nickel says there are Life Lessons From E.T.

Personal Finance By The Book writes about being truthful. Dealing With Poor Performance: Lessons From Simon Cowell and Jesus Christ

Free Money Finance write how frugality is spreading with Americans Trying to Save Money by Cutting Back

The Biz Of Life budget post describes how the US Budget is out of control. What's 16 Feet Tall and 43,000 Pages Long?

Barbara Friedberg Personal Finance write how rich we really are.
ARE YOU WEALTHIER THAN YOU THINK? What do Success and Wealth Mean to You?

Last week was crazy so maybe squeeze in some rest this week. I still have some shopping to do and if you do, why not get it done this weekend. 

Related articles

• The Best of Get Rich Slowly: November 2010 (getrichslowly.org)
• Save Money by Paying Upfront Instead of Over Time [Personal Finance] (lifehacker.com)
• Use the Reverse 4% Rule to Trim Expenses and Bolster Your Retirement Savings [Personal Finance] (lifehacker.com)
• Best of - Personal finance posts (christianpf.com)
• Best Money Tips: Feel Better, Look Younger (wisebread.com)

Ways To Live The Frugal Life

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Is the new frugality a fad or a new way of life for Americans. What is it like to practice frugality? Does it mean sitting in your home wearing tattered clothes and making your own soap? Or is it about having a different view on life and money. Frugality isn't just about pinching pennies. We all know people who can pinch a penny till the the Brylcreem comes out of Lincolns hair. My wife is like that and she's taught it to me. Thank you, Dear. 

1. Frugality means consumers are putting needs above wants, sticking to budgets, deferring purchases and spending less — and they aren't shy about letting others know about it. In fact, those who have embraced the new frugal mindset are proud of their accomplishments, and they should be.

2. People with a frugal mindset view money as a tool, not a status symbol. They don't see money as the end result but rather as a means to help achieve a more balanced, comfortable life. So they tend to transfer their spending from things that are less important, such as brand-name products and luxury items, to things that are more meaningful, such as freedom from debt, a home or an emergency fund.

3. Those who practice frugality more effectively distinguish wants from needs. They don't interpret essential needs — food, water, clothing, shelter and transportation — as their more upscale counterparts — eating out, Perrier, designer clothing, luxury homes and new cars each year. Instead, they look for value when purchasing necessities. They also recognize extras, like cable TV and magazine subscriptions, as desires — not must haves.

4. Frugal people track their bills and manage their cash flow. Disciplined spending and budget tracking are at the core of the frugal mindset. Every dollar and expense is accounted for. Saving before spending is the norm. And credit is a last resort.

People who are frugal focus on their long-term goals instead of short-term indulgences. They rarely spend money on immaterial purchases that give them immediate satisfaction. Instead, they are committed to saving for future financial goals, such as college for their children or retirement.

For consumers who embrace it, frugality has an upside. It's a shift to a new value system and provides relief from the burden of "keeping up with the Joneses." It's even helping to bring some households closer, with more opportunities to spend time together at home playing board games, participating in outdoor activities, preparing meals and watching TV as a family. And here’s one ancillary benefit to this lifestyle: Parents are leading by example, teaching their children how to save and spend more responsibly.

So is the era of conspicuous consumption gone forever? Evidence suggests that, as with the Great Depression, this change in consumer behavior toward frugality will last even after the economy gets back on its feet, largely because consumers have less confidence in the economy and are less willing to run up debt. But only time will tell if the new frugal mindset is permanent. One thing is for certain: Living within our means could be a very good thing.

Related articles

• How to Develop a Frugal Mindset (money.usnews.com)
• How to be Frugal and Have Fun (christianpf.com)
• Forever Frugal? Survey Confirms Persistent Frugality (treehugger.com)
• The Road Not Taken (thesimpledollar.com)