The New York Times has an article about a trend that’s been gaining some attention lately: people are cutting back on spending and downsizing their possessions in drastic ways.
Moving to smaller houses. Going without a TV. Trading cars in for bikes. Not having a couch or a “full” set of dishes and kitchen supplies. These are just some of the different approaches people are taking to reduce their spending and streamline their lifestyles. And to be honest, some of the changes that people are making seem a bit extreme (no couches!?!).
But there are some broad themes at play here: Is more always better? Is bigger always better? Why do we consume the way we do? How much does someone really need to be happy?
Our goal here at 4tNox is to equip our community with a toolkit to manage your finances and assets over the course of your entire life. At some point, if we’ve been successful, you’ll have more assets than you know what to do with! You’ll really have to sit down and think “what do I want to DO with all this wealth and success that I’ve built up?”
In some sense, these people are asking themselves that same question. They’re identifying the most important things in their lives and becoming as efficient as possible in focusing on those key priorities while cutting out other distractions.
Now, we’re definitely not saying run out and sell your car or couch. But are there any possessions or activities you think you might cut out of your life if you were making big changes? What are some things you think you could get rid of? Are there any of your possessions that you feel chained to, that make you feel like they own you? (It only takes a few months of expensive car maintenance and insurance to make us feel like that sometimes.)
NYT - But Will It Make You Happy?
Lifehacker - Rethinking the Things You Can Live Without
Wired has a more humorous take on the new ways that credit card companies are using to extract more revenues from their customers.
It could always be worse!
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• Account balances will be rounded up to the nearest $100, “just to keep things tidy.” Consumers who refuse this service will be charged $10 per month per significant digit. • Paper bills will come with a surcharge for paper, ink and postage. E-bills will include a surcharge for electrons, photons and magnetic particles. • Late fees will be replaced with “on time, but cutting it way too close” fees |
The Wall Street Journal ran an article on some of the new tactics that credit card companies are using to offset the effects of recent credit card reform. “The New Credit-Card Tricks (subscription required)
When passed in spring of 2009, the Credit Card Accountability Responsibility and Disclosure Act of 2009 introduced a range of new protection for credit-card users. Among those protections were reforms in interest rate increases, changes in how creditors record payment dates, restrictions on what fees card companies can charge, and requiring that customer statements show a repayment timeline assuming minimum payments. (See the Act entry at Wikipedia for additional provisions.)
The Journal reports that some companies are making end runs around these rules in pursuit of new fee revenues. These include increases in the annual fees charged on some cards, continuing to charge inappropriate late fees, and charging inactivity fees (annual fees assessed when a customer has not incurred a sufficient amount of charges in a given year).
No one has any illusions about credit card companies being in the business of extending credit to consumers for fun. They’re entitled to any additional revenues they can legally get their hands on. But for you, as a user or potential user of credit cards, the take-away is “read the fine print.”
Know what fees your credit card bank will charge and do your best to avoid triggering any unnecessary penalties. Make your payments on time and, if possible, schedule or mail your payments well in advance of the actual due date.
Yahoo Finance has an article up reporting that many lower income Americans will be unable to meet basic expenses during retirement. They point to 401(k) retirement savings accounts as a huge factor in whether or not you will have enough assets to meet your retirement needs.
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“”How long you’ve been in a 401(k) plan is the number one thing showing if you’ll have enough retirement income,” Jack VanDerhei, EBRI’s research director, told Reuters.” |
What’s the take-away? Start saving AS EARLY AS POSSIBLE. Put together a basic plan to save and invest for your retirement and stick to it.
According to creditreport.com, the average FICO credit score in the U.S. is 680. For a scale that ranges from 300 to 850, a score of 680 isn’t all that bad. But what if you really want to boost your credit score to 800, or even higher? Think that might help with your next car loan or mortgage application?
Yahoo Finance posts some tips on how to raise your credit score. Their biggest tips (and our favorites):
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“Your Payment History: Having a long history of making payments on time on all types of credit accounts is one of the most important items lenders consider before approving you for a loan.” |
and
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“Owed versus Available Credit: This compares the amount you owe versus the total amount of credit available. Your credit score can be lower when you use more than 50 percent of your available credit for each account. That’s because when you are close to maxing out on all of your credit limits lenders see you as a higher risk and more likely to make late payments in the near future.” |
Pay on time and keep your balances lower than 50% of your available credit. Sounds like a good plan to us. Be sure to check out the rest of the article for more great tips.
What Folks With Great Credit Scores Do Right via Yahoo
Finance
The double-edged sword of debt is striking again, and its blade is very long and sharp. Being able to print currency to fund debt obligations is a tool that can be used by profligate public servants. Individuals can’t get away with it. Corporations cannot get away with it. And governments that do not have the legal framework to fire up the printing presses must either default or crawl to those who directly or indirectly (IMF) do. Enter Thespis.
Sovereignty just doesn’t mean what it once did - and the Greek people are finding out dependence may not be such a panacea after all.
http://finance.yahoo.com/news/Pressure-grows-on-Germany-to-rb-433834137.html?x=0&sec=topStories&pos=main&asset=&ccode=
The first installment of their new personal finance column. This is a very good source for future reference.
http://knowledge.wharton.upenn.edu/article.cfm?articleid=2461
Though this article was pre- the Sunday vote, it gave a good description of how the Student Loan legislation was proceeding. Agree or not, students now tap the US Treasury directly for student loans. College funding is hard to divine from the US Constitution and the Treasury’s role in coining money, but that is a moot point today. Students will have more funds available due to this legislation (grants and loans in aggregate).
Student Loan legislation and Health Reform legislation tied together in a Budget bill? Interesting way to go about making law (a little different than what I remember from old Saturday morning educational cartoons - “How a bill becomes a law”). Pondering…..how many earmarks for pork projects in special districts were attached to this “budget” bill?
Love it or hate it, the process is pretty extraordinary!
http://www.nytimes.com/2010/03/12/us/politics/12loans.html
New credit card rules kick in today. While we have never had a problem with our credit card companies and had no need to worry about reform, evidently there were some items in fine print which could be deleterious for many credit card users. Unfortunately, it is probably likely that, for those of us who were satisfied, our costs will go up to cover these new regulations. For some reason I don’t think the lenders will eat the costs and rather will pass those along to the masses. I am thinking this will probably be one of those ideas we can chalk up to unintended consequences (higher costs for people who were satisfied with their previous relationship) by well-meaning legislators. But, until these costs get passed through, let’s keep some optimism. (Maybe the banks will surprise us!)
http://finance.yahoo.com/tech-ticker/banks-already-looking-for-ways-to-skirt-new-credit-card-rules-427064.html?tickers=^gspc,^dji,axp,v,mc,ma,dfs
Simplicity for the Secretary
While some (possibly tax accountants) may see flat taxers as flat earthers, all one has to do is read this elementary article and the simplicity of a flat tax jumps out. As you compile all of your 1099s, K-1s, receipts, spread sheets, etc. it might not hurt to schedule a day in April (after the 15th) to research the strengths / weaknesses of the flat tax argument. It may or may not have merit, but this time of year has a lot of people yearning for a simpler process (and maybe one the bureaucrats can understand - probably would have helped the sitting Treasury Secretary, the leader of the Department that takes US citizens to task for tax filing mistakes).
http://money.cnn.com/2010/02/16/pf/taxes/IRS_tax_audits/index.htm?section=money_pf&utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+rss%2Fmoney_pf+%28Personal+Finance%29
Easy money causes booms which eventually bust. Propping up preferred assets can only help for a time. Once the supports are removed, the over-leveraged system will again be under pressure. By not removing the supports, the market is unable to determine the real health of the underlying system. Sometimes consequences are painful and are required before the healing process can commence. If the real inventory in housing was on the market, participants would get a clearer picture of the problem and be able to make decisions accordingly. By shrouding the scale of the problem, even with good intentions, it makes it hard for capital to act. This is one reason for the housing number gyrations. The market can be very punishing, but at least it gets it over with fairly quickly. Intervention is probably helpful in personal addiction; in market-based economics, it paralyzes more so than clears the system.
The following is a quick blurb about home sales. Housing is still a mess in the aggregate. Economic growth will help alleviate some of the stress on the system, but it will be a long slog coming back.
http://online.wsj.com/article/SB10001424052748703808904575024974181771514.html?mod=WSJ_hpp_LEFTWhatsNewsCollection
Credit Card Rules
http://finance.yahoo.com/news/Fed-adopts-new-rules-to-apf-117125065.html?x=0&sec=topStories&pos=4&asset=&ccode=
When asset prices go up, those with high levels of debt generate high returns on equity. However, when asset prices fall, those returns can be sliced to nothing. Worse yet, with high debt levels, not only can you lose all of your equity, but you can owe much more than the asset is worth. Leverage is a very serious double-edged sword. Wielding it can be self-destructive.
What a great time of year to resolve to make some positive changes (New Year’s Resolutions): More Equity less Debt; More Investment less Consumption.
Here is to a more pleasant and prudent 2010!
(A quick excerpt from the article found at the link below):
“There’s a close relationship between high levels of household debt,
including mortgage debt, and bankruptcy filings,” said Samuel J.
Gerdano, executive director of the American Bankruptcy Institute, a
research organization made up of attorneys, accountants and other
bankruptcy professionals. “That…has been exacerbated by the bursting
of the housing bubble.”
http://online.wsj.com/article/SB126282003786518681.html
“Orbital” education is here and thriving (and will as long as it doesn’t become the commuter’s jet pack :) and continues to develop into the PC).
Human ingenuity is amazing, as well as human skepticism. The article will give an inventive type encouragement.
Hopefully you’ve had a wonderful Christmas season. Have a safe and happy New Year! Many Blessings as you plan for a prosperous 2010.
http://online.wsj.com/article/SB10001424052748704039704574616401913653862.html
This doesn’t have a lot to do with online personal finance education, but this is a potentially important story for the average investor. No Commissions, lowest expenses, a big player in the industry…..it doesn’t hurt to take a look, yet these ETFs are new and still have to be proven. Put Schwab ETFs on your radar.
http://www.kiplinger.com//columns/fundwatch/archive/schwab-launches-commissionfree-etfs.html
After a lot of traveling and a great holiday, we are finally back in the saddle. We went to a couple of conferences in November, one being the iNACOL national conference in Austin, TX. It was interesting to see all of the motion in online education. While state budgets ergo education budgets have been hurt and aren’t getting any better soon, activity was still very brisk in the online space. Stepping back and contemplating all of the buzz from an objective viewpoint, one would be forced to recognize the future of education via technology is very bright.
Now, Terry Moe from Stanford gave everyone a reality check when he recalled a meeting he had recently at the Hoover Institute. He told the attendees at his Hoover presentation that technology is going to change education dramatically and went on to list how he thought so. The room embraced his assessment but then asked how long before potential meets reality - “30 years” he said. The group was aghast. They asked, “If technologies to improve the educational process are available now, why would it take such a long time to implement?” Without rehashing his keynote address, his answer to them and the iNACOL attendees was simply, “entrenched interests.”
Let’s hope that Terry Moe is right about educational transformation in our 21st Century Information Age, but let’s also hope he is off on his timing a bit, at least by half.
Here is a link to interesting research on using social networking in education. The idea is easy enough to put forth, but the execution is a much larger bear to handle. http://www.edweb.net/fimages/op/K12Survey.pdf
(excerpt from the Oct. 22, 2009 article - Online Education’s Great Unknowns)
Bourne said that despite the reservations of some faculty members (most
of whom, he suggested, have little experience with online teaching or
learning), the question of whether online teaching produces similar
learning outcomes to traditional methods has been settled by 15 years’
worth of research saying it does. He said he was heartened to learn
that according to Green’s findings, most campuses do not appear to be
studying whether or not this is true anymore. “They’re unlikely to find
out anything different than what’s been found out already,” Bourne said. (John Bourne, Executive Director of the Sloan Online Learning Commission)
http://www.sloan-c.org/news/index_view
Grade inflation isn’t the only inflation at American universities!
http://money.cnn.com/2009/10/19/pf/college_costs/index.htm?postversion=2009102013
A small but interesting insight into how a piece of Washington works. (Make sure and try the full screen view of the two letters; pretty cool and easier to read).
http://www.huffingtonpost.com/2009/10/21/fed-chair-balks-at-speed_n_328949.html
Neither the first,
http://www.usatoday.com/money/economy/housing/2008-06-19-mortgage-fraud-arrests_N.htm
nor the last —
http://www.usatoday.com/money/economy/housing/2009-10-15-mortgage-fraud_N.htm