Category Archives: Uncategorized

Why Does an Election Boost the Stock Market?

I woke up at my usual time today and forced myself to get out of bed even though I haven’t been feeling the best lately. Why? Because then I warmed up my car (we got frost this morning), drove to my polling place, and performed my civil duty of voting. I’m definitely not going to tell you who I voted for, because I will likely make someone angry, but I am going to tell you that this election is important for a lot of reasons. Obviously things like women’s rights, same-sex relationship rights, and other things are coming up all over the place, but the primary topic on a lot of people’s minds is the economy.

I was poking around this morning and reading some articles about the economy and the election. As it always does, the stock market is rising on election day and makes things look like they’re going to get better. Seems weird, doesn’t it? It’s not like a decision has been made first thing in the morning! Now, I have read a couple of articles that say that Wall Street is set for another 4 years with President Obama; incumbents are often reelected for a second term, even if the economy is poor. Something really messed up has to happen in order for an incumbent to have an upset.

So, if that’s the case, why is the stock market up? Aren’t people saying that it’s too close to call? Why would this impact the stock market today? I think there are a couple of reasons.

- The perception of a better future. No matter what way you voted, you still think that there’s a better future ahead. Because a lot of the stock market is based on psychology, the perception of a bright future pushes people to take more risks in the stock market. Those risks make prices go up, and prices going up means that the market looks like it’s bouncing back. Does that mean that it’s going to stay up? Maybe, depending on who actually wins, but we’ll see.

People are more active in general on election day. If you vote on election day, you’re also likely to do other things, like watch the stock market and other news stories. If you’re watching all of the positive things happening (or negative things), you’re more likely to jump on the bandwagon and make more of them occur. This goes hand in hand with the last one, merely because it’s a domino effect. A good domino effect, at least for a few days, can help the economy a bit.

Do you think the election results will affect the economy? Do you think four more years will end up being a disaster? Or will it be better than Romney winning? If you haven’t done it yet, go vote! Your vote counts, even if you don’t feel like it does. This year especially. So, now that I’m off my soapbox, have a great week, and we’ll see you next week!

Struggling World Economies

You see it everywhere. Unemployment is up, more and more people are applying for different forms of assistance (health care, food stamps). We see more homeless people in our cities and more jobless people on the lists at temp agencies. The United States is in a rut that we can’t see the other side of quite yet. Someday, hopefully, but we aren’t exactly there.

The US isn’t the only economy that’s struggling though. There are countries around the world that are struggling, just like we are, and possibly worse. Let’s look at a few of them today.

Greece, Spain, and the European Union. There have been several countries within the EU that have been on their last legs. The Euro continues to tank a bit, and several countries within the EU have considering bailing out. Greece is the big news maker in the midst of it all; its economy all but collapsed earlier this year. Spain is in an economic state of emergency; the Euro continues to spiral down, down, down and the Spanish economy looks to be falling into a depression. Check out this article on The Telegraph to see what’s been happening today.

Congo. Obviously, many African countries are considered “third world” or, the more politically correct term, developing countries. Congo is one of two countries that I’ll discuss today. The Congo has dealt with a myriad of internal struggle, which has far outweighed any of the rich resources the country exports. The per capita GDP here is $231.51, which is far behind any other country in the world.

Sudan. On the flip side of things, Sudan is also greatly suffering. They’ve dealt with civil war for generations upon generations. They have the worst overall economic growth, with a decline of over 7% in 2012 thus far. The biggest reason? South Sudan breaking off from the Northern part, and South Sudan has most of the natural resources.

Japan. This one shocked me, to be honest. I assumed, like a goof, that because Japan is at the top of education and they’re all about electronics. Then, I discovered how much debt the country is in. We think the United States’ national debt is bad? I have no idea who “owns” Japan, but their debt is through the roof. It’s almost 2 and a half times greater than their GDP. I can’t even fathom having that much national debt. Anyhow, add in the fact that marriage is down and the older adult population is up? And you’ve got the recipe for some rough riding in Japan.

What other global economies have you heard about? Of course, the economy as a whole is struggling, but have you heard anything about the economies of other countries? What is it going to take in order to get the world back on track? Share some thoughts in the comments, have a great week, and we’ll see you back here next week.

Millennials Helping Our Economy?

I’m 27 years old. I was born in 1985, and I am part of this generation called the millenials. Millennials are known for being technology-savvy, relational and above all, striving to be different than the generations before them, particularly their parents. I’ll admit, I’m part of that generation and I definitely have all of those traits.

One of the ways that the millennials differ from the previous generation is that we are more willing to take some financial risks that our parents won’t take, especially in the economy that we’re struggling through right now. We are more willing to buy a more expensive hybrid car because we believe that things are going to get better. Optimism runs high, and risks become more frequent the more optimistic we are.

This behavior may be a little scary, especially for people who are waiting for the economy to down-spiral and crash entirely. People are waiting for another Great Depression to occur, and have called the economic climate we’re in right now the “Great Regression.” But… is it all bad? Is it necessarily a bad thing to have millennials taking risks and buying big ticket items?

Not necessarily. Millennials are fairly smart with their money, and if they aren’t in a position where they can take a risk without totally falling flat, then they don’t take a risk. The ones that do are actually helping the economy, as long as unforeseen circumstances don’t knock them and their payments off track.

I have a friend like this. He makes a ton of money being a graphic designer for a company. I’ve never even gotten close to making as much money as he does, and the risks he takes shows it. He upgrades his computer almost every 9-12 months (he built it, so he gets more RAM and other stuff). He has a really nice car. He pays a lot on his student loans with the intention of buying a home within the next 2 years.

Why does this happen? Partially, because of plastic. I’m on the older end of the millennial generation, so I’m still accustomed to carrying cash. But some of the younger millennials use plastic and carry absolutely no cash on them. I couldn’t even imagine doing that; I was always taught to have cash “in case of an emergency.” But, if you don’t have the physical dollars, you’re less likely to think about how much you’re spending. It doesn’t make you as nervous.

All of these factors play into the fact that Millennials are helping the economy in some way, shape, or form. They’re putting money in that hadn’t been there before. And this, in some way, helps the economy, either for the short or the long term.

What do you think? Will the Millennials help the economy, or will their reckless spending result in the same situation we’re in now in the future? Will they increase debt and hurt the economy more in the long run? Share some thoughts in the comments, have a great week, and we’ll see you here next week!

Shopping for Health Care

It’s getting ever closer to that time that every American needs to have health insurance. Guess what? I’m one of those Americans that is still sitting around and wondering where mine’s going to come from. I am in the process of getting it, but I have a preexisting condition that will make it a lot more difficult for me than it is for other people. Some people have insurance with their job, but what about the self-employed or the part time workers? Yeah, this is going to be a chore.

Here are some tips on how to shop for health care.

Research state policies. Different states have different laws as to whether or not someone can be accepted or denied for health insurance. Different health conditions (including kidney stones in California… odd)  can prevent you from getting cheap insurance. Children cannot be denied for these reasons, but adults still can.

Check out specifics. A plan may have a low premium, but does it do what you may need it to? Some plans only provide the minimum. Here are some specifics.

-          Deductable: This is the amount of money that you pay before the insurance begins to kick in. If you’re paying $50 a month, but your deductable is  $10,000, is that really worth the low cost?

-          Co-payments: How much are these? If you have to go to the doctor regularly and your co-pay is $20, it’s totally worth it, but if it’s $75, is it?

-          Annual out-of-pocket cost: Some insurances keep track of how much you spend, including prescriptions and co-pays. They start to cover everything that is covered by the plan, no co-pays, after this point. How high or low is this?

-          What does it cover? Does it cover any doctor you’d have to go to? Emergencies? Dental? How’s the prescription plan? What about surgery? Cancer? All of these are important to check out.

-          Preexisting conditions: Health care laws prevent insurances from denying you for these, but they haven’t stopped companies from charging people a heck of a lot more because of them.

-          Annual Benefits: Some companies cap your benefits at a certain amount a year.

-          Is it short term or long term? Some insurances only last a year or so, whereas others have you renew annually.

Is public health care an option? There are several programs, including COBRA, which you may be eligible for depending on your financial status, your family size, and other criteria depending on the state that you live in. Also, all children under the age of 18 are required to be covered by insurance, so if it’s causing your family a burden to pay for all of your insurances, check your state’s programs out.

Don’t be afraid to ask questions. Be specific in what you need, what you have, and what you want. Sadly, a lot of insurance companies are just out to make a dollar, and if you don’t pry, you may not get the information that you want or need to have until it’s too late.

How’s that health insurance search going for you? Hopefully better than it is for me! Have a great week and we’ll see you here next week!

End-of-Life Financial Preparedness

will and testamentWe don’t like to think about what will happen when we’re gone. But, we need to think about it so that our family members aren’t burdened after our passing. Today, we’re going to look at some of the things you should consider in end-of-life preparedness.

What should be in my will?

-          Your executor. This is the person that you choose to take care of what happens in the will. usually a spouse or other family member. In some cases, it may be a close friend, especially if you are estranged from your family, are unmarried, or have no immediate family still living.

-          The rights your executor has. Now, to some people this seems obvious. But you must give specific rights to your executor to manage your property and to pay off your debts, or they will have to deal with the court system in order to do so.

-          The distribution of your property and finances. Now, this is difficult for some people.

-          Where your children and pets are to go. This may seem silly, but it has caused a lot of issues in the past. What if there is a divorce situation, and there’s a stepparent? They won’t necessarily be the person who gets custody of the child. Pets are also another important thing to put in your will, for similar reasons. Yes, I know it’s ridiculous, but some people are crazy when it comes to animals. I have friends, a married couple, who now own the dog that belonged to the husband’s brother, after the dog jumping between people because his will said nothing about the dog.

Another thing that people frequently overlook is retirement funds. If you have a 401k or other retirement fund, you should make sure that you have it indicated in the paperwork where those funds are to go upon your passing.

Life insurance is vital, and you need to have things straight with it.  Too many people take out too little insurance, leaving your family with extra expenses that they may not be able to afford. The average cost of a funeral and burial ranges anywhere from $5,000 to over $10,000, depending on factors like:

- The funeral home
- Technicalities of the service, including who conducts your service and what type of service it is.
- cremation or burial

On another note, unrelated to finances. Make sure that your wishes for these events are clearly stated in your will as well, instead of your loved ones playing a guessing game when you pass.

One of the biggest tips I have to give you about preparing for tragedy is to keep all of your financial paperwork in order.  Let people know your accounts, keep them organized in a file cabinet or something similar. It will make things a lot easier for your grieving family members if they know where your information is.

Death is not comfortable to talk about, but its important to look ahead and think about if you want to make sure your family isn’t struggling more during their time of grief.

Tips for Throwing a Frugal and Fun Halloween Bash

Whether it’s because your little guys talked you into it, your teenagers need something to do to stay out of trouble, or your friends nominated you as a host, you’re stuck with it, a Halloween party. If you love the holiday or hate it, you’re about to be celebrating it and you don’t want to dump your life’s savings into it. Okay, maybe that’s exaggerating a bit, but here are some tips to help you keep the costs down for some Halloween fun!

For kids:

-        Free ice cream! Well, not free for you, but if you’re looking for party favors, go to your local Wendy’s or McDonald’s and get a few books of their special Halloween coupons. Everyone can get a free Frosty or ice cream cone. These work really well as a part of bags to hand out to trick-or-treaters too.

-        Make your own and take them home party favors. Party favors and an activity wrapped into one? What a novel idea! There are tons of ideas online for inexpensive crafts that you can do with the little guys, and they get to take them home too! For a fun Halloween twist, have it be something that they can throw some candy into as well.

For teenagers:

-        Ghost Tours. Are a couple of your teens’ friends coming over? If your area has a historical flair like mine does, many of the small towns offer inexpensive ghost tours for individuals and/or groups. I’ve never been on one, but I’ve had friends who had and they say they’re a lot of fun.

-        Scary movie night. RedBox and Netflix make a movie night cheap and fun! Get some popcorn (the kernels are a lot cheaper than microwave popcorn, if you have the means to pop it) and soda, curl up on the couch and scream. A lot. You may want to get the other members of your household earplugs for this one.

For adults:

-        Have everyone chip in a bit. Yeah, sometimes it’s awkward to ask for people to bring stuff when you’re hosting a party, but they are invading your house. Okay, maybe you don’t see it that way, because they are your friends. Let me reassure you, if you’re hosting something and say “bring something,” people really won’t mind. They’ll probably be grateful that it’s not their house that’s a mess in the end.

-        Frugal costume party extravaganza! One of the best ideas I’ve ever heard for a fun, cheap party is a costume party where your costume has a price limit. How creative can your friends get with only $10? Most costumes you buy from the store are usually twice that, so it forces your friends to use their imaginations and their creativity in order to make the best costumes. For even more fun, have a contest with prizes that are just as creative and under the same types of restrictions as the costumes!

So, maybe it won’t be so bad, and your bank account won’t suffer from this holiday that is meant to be fun! Have fun planning your fun and frugal Halloween event, and until Thursday, have a great week!

4 Quick Steps to Starting a Budget

Do you have a budget? Did you know that most people don’t have a budget, and even those who do don’t stick to it? Budgeting is incredibly important to you and your family’s financial stability. It helps you to spend wisely, live frugally, and be less stressed out in the long run. Today, we’re going to look at 4 quick steps to starting a budget.

  1. Figure out what you make per month. First and foremost, you can’t work backwards. You need to have at least an estimate of what you make per month after taxes. Yes, I know you make $12 an hour on your contract, but you know as well as I do that you don’t bring that home. Look at your past paystubs and round down to the nearest dollar to see what you’re bringing in and to make up for those months you may make less due to holidays and/or sick days.
  2.  Split your spending into categories. Sit down and figure out what you spend money on. Some examples could be: bills (which I would separate by the bill, especially because some of them don’t change), groceries, credit card/loan/mortgage payments, savings, giving, child care, whatever you spend money on, put it here. This also includes recreational activities – too many people don’t budget for fun and end up spending way more than they intend to!
  3. Prioritize and analyze your spending. Prioritize it. What must get paid every month? Is there a way to reduce my spending? Can you drive less, change your insurance plan, use less electricity, become a couponing guru, and/or be more aware of discounts? Then do it! And stick to it; don’t get lazy and just start buying things because you want them. Take time, analyze how much you’re spending on what, and try to fix it if at all possible. Yes, that may seem like a pain, but in the long run, it’ll help you stick with your budget.
  4. Make sure to save, too! Please do not make the mistake that many people (including myself) have done. Make sure a portion of your income is going directly into savings.

 

To help with this, some people ascribe to what’s called the 80-10-10 plan. 80 percent for living expenses, 10 percent for saving, 10 percent for whatever else. Some people use it for giving to charity or for church, others save it toward a house, vehicle or other large purchase. This helps accumulate money that is specifically for that purpose, without saying “we’ll save for it someday.” Save for it now if you can.

Budgeting isn’t as big of a bear as it seems. Sure, it’s a little more than what I have here, but these steps are a fine start to the beginning of a beautiful relationship with your income and your future. Have a great weekend!

7 Ways to Get Funding for an Education

Getting a decent education is not cheap. Some of the country’s best colleges can leave you with hundreds of thousands of dollars in tuition bills. Ouch! Now, don’t get scared off. Your child’s education doesn’t have to put you in the poorhouse. Today we’re going to look at 7 ways that you can get funding for an education for you or your child.

Many of these require you to fill out a FAFSA (Free Application for Federal Student Aid). You can fill this out as soon as the taxes from the previous year are complete. Find out more information on this at http://www.fafsa.ed.gov/.

Loans:

1.      Stafford Loans. These are probably the most common form of funding. The government offers these low interest loans to most students who have any sort of need. There are two different types of these: subsidized and unsubsidized, and which you get is based on your need. Subsidized loans do not begin to accrue interest until you are done with your degree, whereas unsubsidized loans begin to accrue interest immediately.
2.      Perkins Loans. These loans are even lower-interest than Stafford Loans. Usually provided by your state or your college, these are reserved for those who have the most financial need.
3.      Private Loans. These are granted through your bank or other financial institution, and are usually at the same rate as other loans. I suggest not using them unless you have exhausted all other forms of funding

Free Money:

4.      Grants.  When you fill out the FAFSA, you’re automatically considered for dozens of grants. But don’t just stop there, many organizations also offer grants. Involved in extracurricular activities? There’s probably a grant for it.
5.      Scholarships. These aren’t usually considered when you fill out a FAFSA, unless you’re planning to go to a small college that automatically throws you in the mix for scholarships when they receive your Financial Aid information. Talk to your student’s guidance counselor, your college’s financial aid office, and use websites like FastWeb to see what scholarships you can apply for. Like grants, if you do anything, there’s probably a scholarship for it.

Work-Related Funding

6.      Work Study. These programs are for undergraduates that want to make a little extra cash. A few schools also give a bit of funding toward tuition, but most don’t. This is more to find an on-campus job.
7.      Assistantships and fellowships. These, on the other hand, are for those seeking post-bachelor education. Many grad schools offer these work and research based types of assistance, often with a half or full tuition waiver and a paycheck. Pretty good deal if you ask me.

Don’t let education put you in the poorhouse. Do some research and get the most funding that you can before you go forward in your educational adventure. Have a great weekend!

Cracking Crude Oil Prices

If you drive a car, there’s no hiding the fact that gas prices are absolutely horrible right now. A gallon of gas in my area costs $3.22. The average price in the United States is about $3.19 per gallon. My Sonata took over 50 dollars to fill on Tuesday. Americans are griping about prices, but do we really understand what all goes into our crude oil prices?

Most of the world’s crude oil comes from the Middle East, and if you’ve been watching the news, there’s quite a bit of political unrest there. Egypt had a whole bunch of riots and political demonstrations until their president stepped down. Libya is currently adding to the mess that is over there, on the brink of civil war and adding to political unrest. This political unrest causes oil prices to increase.

Why does the political atmosphere of a country affect oil prices? Because if a country is having political unrest, the access to that country becomes more restricted, and importing and exporting from that country can become more difficult. This leads in a perception of a decrease in supply, which according to the economic principle of supply and demand, will cause the price of oil per barrel to rise. Notice, there may not be an actual decrease in supply, but the perception is enough to cause prices to fluctuate.

One of the biggest reasons that Libya is really affecting oil prices is because of the presence of British Petroleum (BP). In 2007, BP signed a contract with Libya topping about $900 million to explore and drill over about 21,000 square miles. BP is one of the largest oil producers, and even though the amount of oil they export isn’t as much as oil giants Saudi Arabia and Russia (approximately 85% of the almost 2 million barrels they produce is exported a day), they still play a significant role in the crude oil economy. Because of political unrest, the employees of BP who were working on exploring and drilling had to be evacuated, and their very expensive drilling project is now at a standstill.

Thankfully, oil prices in the United States went from over $100 a barrel to about $97 a barrel yesterday, helping ease the potential tension of the political events in Libya. It’s said that Libya is the 18th highest producer of crude oil in the world, so if they stop exporting, this could affect the economy and also the value of the American dollar.

The American dollar, because it is the currency most often used when talking about the crude oil industry, is devalued as crude oil prices go up. A dollar buys less oil, therefore causing inflation in countries that drill and export oil but don’t use the dollar as their primary form of currency. As inflation rises, it affects non-dollar economies negatively. Because global economies are very interlinked, these economies then affect others, causing the global economy as a whole to struggle.

Crude oil prices are a great example on how global our economy has become. Even though we have different political and economic systems worldwide, the web we’ve created of importing and exporting miscellaneous goods ends up being both good and bad. Political unrest, market crashes, or supply and demand issues in one country can affect the whole world, and crude oil exemplifies that perfectly, especially with what’s going on today.

Eating out is for broke people

I have a horrible habit. I like to eat out. A lot. There are a couple reasons for it, really.

  1. I think that food is a great thing to hang out over. You can get wonderful, meaningful, and deep conversations over wings and pizza or ribs or hoagies (if you don’t know what a hoagie is, go to Subway. That’s a hoagie).
  2. I live alone. In living alone, I have a really hard time justifying the cooking of a large meal just for me. It’s not that I don’t like to cook! It’s that I don’t like to waste food. So, for me to eat out is for me to get a larger meal than I’m used to.
  3. I like to get out of the house once in awhile. I stay at home a lot, especially because I work at home, so it’s a good excuse to get away.

So, this year, I made a resolution. I decided that I would only allow myself to eat out three times a month. By the way, I messed that up already and it’s only mid-January. I’ve eaten out 4 times. I realized this yesterday when I was sitting at lunch eating a nice big burger with fries. I looked at my friend and said “You know, I already broke my New Year’s Resolution.” He laughed at me, but explained that he totally understood and that the next time we hang out we should just eat at my house. I agreed, especially because I know for a fact that for me to make us a decent meal would cost as much or less than what one of us paid for our burger and fries.

Did you know that about 37% of an American’s food budget is for eating out? That doesn’t sound like a lot, but consider that a middle-class family’s food budget usually runs about $7,000, that’s almost $2,600 a year on eating out. That’s a lot of cheeseburgers, fries, shakes, and whatever else people eat when they go out.

Why is it so hard to just stay at home and make soup or spaghetti? Is there something about going out that helps create some “atmosphere?” You’d think it would be more comfortable to sit in my cozy apartment and eat the same food (or in some cases, it really is better if you make it yourself). And, more private, for those deep, philosophical conversations that many people engage in at public eateries.

So, I’m going to try again. February is another month (and I can stop going out this month). Think about how much you spend on going out every… month? Week? I know some people who eat out every single day. Not only is that not healthy for your body, it’s not healthy for your wallet either. I calculated that not eating out would save me several hundred dollars a year. I could get a few more grocery trips out of that!