- RT @ScottATaylor: Get a Daily Summary of Your Friends’ Twitter Activity [FREE INVITES] http://bit.ly/4v9o7b #
- Woo! Class is over and the girls are making me cookies. Life is good. #
- RT @susantiner: RT @LenPenzo Tip of the Day: Never, under any circumstances, take a sleeping pill and a laxative on the same night. #
- RT @ScottATaylor: Some of the United States’ most surprising statistics http://ff.im/-cPzMD #
- RT @glassyeyes: 39DollarGlasses extends/EXPANDS disc. to $20/pair for the REST OF THE YEAR! http://is.gd/5lvmLThis is big news! Please RT! #
- @LenPenzo @SusanTiner I couldn’t help it. That kicked over the giggle box. in reply to LenPenzo #
- RT @copyblogger: You’ll never get there, because “there” keeps moving. Appreciate where you’re at, right now. #
- Why am I expected to answer the phone, strictly because it’s ringing? #
- RT: @WellHeeledBlog: Carnival of Personal Finance #235: Cinderella Edition http://bit.ly/7p4GNe #
- 10 Things to do on a Cheap Vacation. https://liverealnow.net/aOEW #
- RT this for chance to win $250 @WiseBread http://bit.ly/4t0sDu #
- [Read more…] about Twitter Weekly Updates for 2009-12-19
Twitter Weekly Updates for 2010-03-13
- Getting ready to go build a rain gauge at home depot with the kids. #
- RT @hughdeburgh: "Having children makes you no more a parent than having a piano makes you a pianist." ~ Michael Levine #
- RT @wisebread: Wow! Major food recall that touches so many pantry items. Check your cupboards NOW! http://bit.ly/c5wJh6 #
- Baby just said "coffin" for the first time. #feelingaddams #
- @TheLeanTimes I have an awesome recipe for pizza dough…at home. We make it once per week. I'll share later. in reply to TheLeanTimes #
- RT @bargainr: 9 minute, well-reasoned video on why we should repeal marijuana prohibition by Judge Jim Gray http://bit.ly/cKNYkQ plz watch #
- RT @jdroth: Brilliant post from Trent at The Simple Dollar: http://bit.ly/c6BWMs — All about dreams and why we don't pursue them. #
- Pizza dough: add garlic powder and Ital. Seasoning http://tweetphoto.com/13861829 #
- @TheLeanTimes: Pizza dough: add lots of garlic powder and Ital. Seasoning to this: http://tweetphoto.com/13861829 #
- RT @flexo: "Genesis. Exorcist. Leviathan. Deu… The Right Thing…" #
- @TheLeanTimes Once, for at least 3 hours. Knead it hard and use more garlic powder tha you think you need. 🙂 in reply to TheLeanTimes #
- Google is now hosting Popular Science archives. http://su.pr/1bMs77 #
- RT @wisebread 6 Slick Tools to Save Money on Car Repairs http://bit.ly/cUbjZG #
- @BudgetsAreSexy I filed federal last week, haven't bothered filing state, yet. Guess which one is paying me and which one wants more money. in reply to BudgetsAreSexy #
- RT @ChristianPF is giving away a Lifetime Membership to Dave Ramsey’s Financial Peace University! RT to enter to win… http://su.pr/2lEXIT #
- RT @MoneyCrashers: 4 Reasons To Choose Community College Out Of High School. http://ow.ly/16MoNX #
- RT @hughdeburgh:"When it comes to a happy marriage,sex is cornerstone content.Its what separates spouses from friends." SimpleMarriage.net #
- RT @tferriss: So true. "Nearly all men can stand adversity, but if you want to test a man's character, give him power." – Abraham Lincoln #
- RT @hughdeburgh: "The most important thing that parents can teach their children is how to get along without them." ~ Frank A. Clark #
Living in Debt: How I Sacrificed My Future
For those of you who haven’t been following along, I’m in debt. Starting 13 years ago, when I was 19, I managed to bury myself in debt, until I decided I’d had enough of that…almost 2 years ago.
Why?
It wasn’t because of college expenses, though they contributed to my debt level. I was in debt before I went to college. Heck, I was a daddy before I went to college.
It wasn’t because of major medical procedures. The only major medical procedures we’ve ever had were the births of our children, and we had two of them well after we built our shackles.
It wasn’t because we bought more house than we could afford. We own a modest house that we bought before the bubble started.
Then what was it? Why did we do the things we did that have financially crippled us for so long?
It was a combination of things, crowned by a glorious lack of financial sophistication. As I wrote in No Brakes, neither of us had the early training to really understand our financial decisions. We knew bills need to be paid, but what was the difference if the money came from a credit card versus our checking account? Why did it matter if we carried a balance on the cards, as long as we could make the payments? What’s wrong with just making the minimum payment?
Naïve. Unsophisticated.
That day-to-day lack of sophistication was only part of the problem, and it wasn’t the biggest part. We made a lot mistakes, but they were all small. Before 2001, I think our total was about $5000. Too much, but not painful.
Between the fall of 2001 and the winter of 2002, we took our naïve decision-making process and ran with it. It was a full-scale mistake marathon.
That year, we built an addition on our house, because a full dining room and a bigger kitchen would make our house so much more livable and it was cheaper than buying a home, new. Oh, and since the difference between the mandatory crawlspace and a full basement room was just a few rows of concrete blocks, let’s expand it. Wait, don’t bedrooms require walls, sheetrock, windows, closets, paint, furniture, and electricity?
That was also the year that the car companies all jumped on the 0% loan fad. In case you don’t remember, that was the program that meant you could get a 0% loan on a new car if you picked up a 3 year term on your loan. At 22, making maybe $45,000 combined, we decided that buying a $35,000 truck was a good idea. To save money. Rationalization is wonderful. Or at least, effective.
That summer, we got married. We did a phenomenal job getting married on the cheap. We had about 100 guests, a park to get married in, flowers, food, and a hall to eat and dance in, for about $3000. The problem was, we didn’t have $3000. We didn’t have the $1500 + activities for our 10 day honeymoon on a Caribbean cruise, either, though I still plan on returning to St. Thomas.
None of those individual payments were terrible. The biggest problem was that we piled them all so close together that we never had time to absorb their impact before taking on the next obligation. When we did realize how much we had to pay, we made up for it by only buying big things that came with a “0% for a year” deal, like our living room set, our carpet, and our dining room table.
Then, when we finally did pay something off, or came into more money, we’d immediately expand our lifestyle to fill the void. The month we paid off our truck, I got a significant raise. Did we use it to pay off some other debt? Of course not, we bought a new car on a six year term.
We had so many opportunities to make bad decisions with our money, and I think we took them all and have suffered for it, since.
If you’re in debt, what made you decide to get that way?
The Evils of a Reverse Mortgage
Picture it: Sicily, 1922.
Sorry, wrong channel. Let’s try again.
Picture it: 20, 30, 50 years from now. You’re old. The money you’ve been failing to save so you could stock up on Fritos and obsolete video game consoles(to survive the zombie apocalypse in style) would come in handy about now, since the end of the world never happened. Note to self: Never trust an ancient Mayan.
You’re 70, with no savings and no income aside from the Social Security check that hasn’t been adjusted for inflation since the Palin(Bristol) administration.
But you own your house and that nice young man down at Yersk Rude Bank recommended a reverse mortgage. That could give you all of the money you need to live a comfortable retirement and pay for a bit of a funeral.
Right?
Nazzofast.
Of all of the possible social security strategies, this is one of the worst.
What is a reverse mortgage?
In a traditional mortgage, you’re given a chunk of money guaranteed by your home. You have to pay that money back over time, or you’ll lose your house. In a reverse mortgage, you’re still converting your home’s equity into cash, but you don’t have to pay it back until you die or move, including moving into a nursing home. You are effectively abandoning future-house in exchange for now-money.
Who qualifies for a reverse mortgage?
If you are 62 or older, and live in a home you own, you qualify. Credit and income are not considered.
Why would you want a reverse mortgage?
If money is tight and you have no prospects, a reverse mortgage may be a valid consideration. A better consideration would be to take out a traditional loan and make monthly payments out of that lump sum, or sell your house outright and move someplace more affordable.
What are the downsides of a reverse mortgage?
You lose your house. Technically, your heirs lose your house. A reverse mortgage becomes due when you die. If your heirs can’t cover the loan, the house will be foreclosed. Also, this is a loan. It accumulates interest, even if you aren’t paying it back. If you borrow $200,000 and die in 10 years, your estate may owe $400,000 on the reverse mortgage. If this is a treasured family home, losing it could come as a shocking blow at a time when your family would already be reeling from the loss of, well, you.
What if you really don’t like your heirs?
I’d still recommend getting a traditional mortgage. You can throw a killer party and then, you’ll rebuild equity over time. That way, if you live longer than you expect, you can refinance and throw another killer party. If you go this route, don’t invite the kids, but be sure to hire a videographer so they can see how you’re spending their inheritance.
I’m not a banker or a financial advisor, but I’d recommend against a reverse mortgage in almost all circumstances.
How about you? Would you get one, or recommend one? What’s your preferred method to hurt your ungrateful heirs?
Corporate Bankruptcy Hurts Employee’s Most
This is a guest post from Hunter Montgomery. He writes for Financially Consumed on every-day personal finance issues. He is married to a Navy meteorologist, proud father of 3, a mad cyclist, and recently graduated with a Master’s degree in Family Financial Planning. Read his blog at financiallyconsumed.com.
Bankruptcy has evolved from something that people and businesses were deeply ashamed of a few decades ago, to a seemingly acceptable path to restructuring; towards a more sustainable future. Bankruptcy is so common in corporate America that it is referred to by some as an acceptable and necessary business tool.
This bothers me on a number of levels, but mainly because corporate bankruptcies hurt the humble employee the most. The laws are supposedly designed to help the company stay in business, and continue to provide jobs. But at what cost to those employees?
When a company declares bankruptcy, they are essentially admitting to the world that they failed to compete. Their business model was flawed, they were poorly managed, and they simply did not organize their resources appropriately to meet their consumer needs.
Given this failure, it shocks me, that bankruptcy laws are designed to allow management to get together with their bankers. They essentially protect each other. Management is obsessed with holding on to power. The bankers are obsessed with avoiding a loss.
The bankruptcy produces a document called first-day-orders. This is a blueprint for guiding the organization towards future prosperity. But this is essentially drafted by the existing company management, and their bankers. Do you see any conflict of interest emerging here?
Bankers are given super-priority claims to the money they have loaned the company. Even before employee pension fund obligations. This is absurd. Surely if they loaned money to an enterprise that failed, they deserve to lose their money.
Management generally rewards itself with large bonuses, after declaring failure, paying off their bankers, shafting the employees, and finally re-emerging with a vastly smaller company. This is ridiculous.
The humble employee pays the highest price. Assuming there is even a job to return to after restructuring they have likely given up pay, working conditions, healthcare benefits, and pension benefits.
This is exactly what happened at United Airlines in 2002 after they filed for chapter 11 bankruptcy protections. The CEO received bonuses, and was entitled to the full retirement package. The banker’s enjoyed super-priority claims over company assets to cover their loans. Meanwhile, the employees lost wages, working conditions, healthcare benefits, and a 30% reduction in pension benefits.
An adjustment like this would force a serious re-evaluation of retirement plans. For most people, it would require additional years in the workforce before retirement could even be considered a real possibility.
Employees of General Motors, which recently went through bankruptcy proceedings, also had to give up significant healthcare benefits, and life insurance benefits. Entering bankruptcy, it was the objective to reduce retiree obligations by two-thirds. That’s a massive cut.
The warning to all of us here is that we must do everything possible not to fall victim to corporate restructuring. Save all you can, outside of your expected pension plan, because you never know when poor management, or a terrible economy, will force your employer to file bankruptcy. Always plan for the worst possible outcome.
It’s a competitive world and it’s quite possible that the traditional American system of benefits is uncompetitive, and unsustainable in the global market place. The tragedy of adjusting to a more sustainable system is that the employee suffers the most.
Pros and Cons of Cashback Credit Cards
The news that the Bank of America is introducing a cashback credit card is of little surprise. The credit card industry is competitive and customers enjoy the thought of earning while they are spending!
There are both pros and cons of cashback credit cards however and they are not suitable for every circumstance. So, before committing to a card, consider the advantages and disadvantages.
Firstly, cashback cards can be financially profitable but this depends on whether you have the funds to make the repayments. If you are having difficulties with debt, these cards are probably not the most suitable.
The strategies for maximizing your benefits from cashback credit cards depend on making repayment deadlines. Prioritize cards that have a 0% APR introductory rate.
If you can make your repayments within this 0% interest rate, or on time each month, you will not incur any interest charges. It is important to be organized so that you always meet repayment dates.
Once the 0% APR has finished, cashback credit cards will often then revert to a high APR. If you cannot pay all your debt, these charges will mount up quickly.
If this is likely to happen to you, consider looking at alternative cards with a low but constant APR, so that you do not encounter such high charges while repaying your debt.
Cashback cards are not always the smartest move financially when it comes to outstanding debt. Although they may offer a 0% balance transfer, this is not always as simple as it sounds.
If you transfer an outstanding balance to a new card, even with a 0% APR introductory period, any repayments made will be charged against your newest purchases.
This means that it is more difficult to pay off the original balance transfer if you are also using the card to purchase new items and of course, it is very tempting to do so as you have the 0% APR available.
Be aware that if you do not pay the balance transfer amount by the end of the 0% period, you will then have to pay a much higher rate on this amount.
So you either need to be sure that you can pay off the balance transfer in full in addition to new purchases or consider using a separate card just for a balance transfer.
Although this may seem more work, it can potentially save you a great deal of money in interest charges. Remember any credit card is only worthwhile if it helps you manage your money.
Some cashback cards also have a minimum spend requirement and often this is paired with a specific time frame. Read all the criteria about the card before committing to it.
Otherwise, you could be charged for not reaching the minimum spend limit or not doing so within the required time frame. Consider these issues when choosing a card.
Cashback cards can be very useful and allow you to earn money while you are spending, but they need to be used with wisdom. Research your options to ensure you select the right card for you.
Post by MoneySupermarket.
