It Pays to Stay in School

January 27, 2012 – 5:46 pm by hh

Photo: scui3asteveo

US Magazine reports that Bruce Jenner and Kris Kardashian don’t mind if their two young daughters Kendall and Kylie Jenner skip college, given the success of the girls’ modeling careers and teen fashion lines.

High-visibility careers like modeling might be attractive in the present, but fame can be a fickle thing. Hitting the books is a long-run investment that’s been proven to pay off: Studies show college graduates make far more than those who only hold high school degrees.

In fact, the older Kardashian girls might have avoided several embarrassing financial flubs had they taken a few more finance courses:

  • In 2008, the older Kardashian sisters were sued for charging more than $120,000 in unauthorized purchases on an American Express card that was owned by R&B singer Brandy’s mother.
  • In a 2009 episode of Keeping Up With the Kardashians an intervention was staged by the family to address Kim’s shopping addiction.
  • In 2010, rumors that Kourtney might file for bankruptcy due to spending millions on clothes, cars, and luxury apartments made the news
  • The short lived Kardashian Kard, a prepaid debit Mastercard marketed at teens, marked another financial blunder. The card was pulled after parents argued the $99.95 annual fee and access to plastic would lead to irresponsible financial decisions.

 

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Famous Financial Flubs: Lindsay Lohan

January 17, 2012 – 4:01 pm by How-To Hannah

Image: TaxBrackets.org

Lindsay Lohan might have received an “A” for behavior on her recent progress report, but she gets an “F” in financial literacy. The former child-star owes nearly $94,000 in back taxes from 2009. MSNBC reported that on Jan. 5 the Internal Revenue Service filed a notice of a Federal Tax Lien against Lohan.

The lien is against Lohan’s Encino home for a whopping $93,701.57, and this isn’t the first time the 25-year-old has made a major financial flub. Previously it was reported that Lindsay racked up $600,000 in credit card debt. Another report claimed she was nearly evicted from her apartment for falling behind on her rent.

If you can’t pay the bill, don’t make the purchase.

Comeback role as Elizabeth Taylor on Lifetime aside, it’s time for Lohan to read up and improve her financial literacy. We’ll help her out:

  • Always pay your taxes. And pay them on time!
  • Have someone check your return to make sure you’ve paid the proper amount.
  • Have a liquid emergency fund (not to be used for shopping sprees or late night partying).
  • If you want to live like an A-lister, it helps to be an A-lister. Stop trying to keep up with the Joneses.

Check out why so many celebrities make financial flubs here.

 

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5 Fiscally Responsible New Year’s Resolutions

December 30, 2011 – 11:07 am by How-To Hannah

 

1. Create a new budget. A new year calls for a new budget. Rolling over an existing budget might be easy, but making changes now is easier than dealing with debt in the future. Have you moved, switched insurance, or added a new family member (child or pet) in the last year? Take into account what changed in 2011 and what you’d like to change in 2012. A pay increase or bonus might leave you feeling carefree, but using that as an excuse to splurge can quickly destroy your old budget. Update your budget (or if you don’t have one, start one) with help from these top five budget sites.

2. Ditch credit card dependency. If you’ve already got your budget under control, then putting the credit cards away shouldn’t be too hard. We don’t usually budget cash for impulse buys, so without cash in hand we often turn to the credit card quick fix for items we want but don’t need or can’t currently afford. The easiest way to eliminate this debt inviting thinking is by leaving your credit card at home. Removing the temptation is one way to break free from credit card dependency.

3. Improve your credit score. Don’t let your credit score surprise you. A bad score can keep you from getting the best interest rates, force you to pay deposits for utilities, or even cost you a job. Check your score, and if it’s below 750 make a commitment to improve your score in the New Year. Check out these tips for how to beef up your credit score.

4. Cut spending on [insert budget category here]. This year make a vow to lower your grocery bill, entertainment bill, or clothing bill. Using coupons (not just cutting them out) and comparison shopping can save a lot more money than you’d think. Search a number of different websites or newspapers for the best deals available instead of buying something the first time you see it. Pricegrabber.com even does the comparison shopping for you. Even small changes like attending the cheaper daytime matinee instead of the pricey Friday night movie can add up to big savings.

5. Grow your savings. Cutting spending is a good goal, but a better goal is to grow the money you’ve saved. For example, that $3.50 you saved saying no to the office Starbucks run once a week is good start, but why not take that $3.50 and turn it into nearly $1,000 after just five years. By investing those saved costs in a savings account you can actually profit from your good behavior. Check out how to build long term wealth with more easy tips.

 

 

Posted in Budgeting, Econ4U, Personal Finance, Saving Money, Students | Tagged , , , , , , | Comments (0)

Flash Sales: A Fast Track to Debt?

December 21, 2011 – 4:08 pm by How-To Hannah

With only a few days left until Christmas, retailers are rolling out deep discounts to attract last-minute shoppers ready to click “BUY.”

The so-called “flash sale” discount sites are particularly enticing. A designer bag or new tech tablet is offered in limited quantities, and a timer runs nearby telling you how much time is left. Thinking to yourself, “I’ll never get a better deal,” you quickly make the purchase.

Sounds great, right? Not so fast: Spending more than you normally would, or spending on an item you don’t need (even if it’s on sale) is NOT saving—it’s overspending.

Here are a few tips about how to avoid the temptation to spend on the latest, greatest “flash” sale:

1. How Good is That Deal?

With a limited number of items and a limited time to buy, retailers are capitalizing on our impulse to buy now rather than later. But the deal you’re getting might not even be that great. As the New York Times reports, don’t be surprised if you find those same “exclusive” items on a different site, for less money and without the pressure.

2. Money For Nothing…

In an age of credit card information that’s automatically on file and “one-click” online purchases, sometimes it seems like you aren’t even spending real money. Reality check! The credit card bill is going to come every month, and it’s up to you to keep track of each purchase so you don’t blow your budget. Un-checking that “save my information” box at your favorite online retailer might be just the thing you need for a more frugal New Year.

3. Keeping up with the Joneses

Retailers on these “exclusive” discount sites have taken “Keeping up with the Joneses” to another level—not only can you purchase the new bag that your favorite celebrity is sporting, but you can also use social media to let your friends know about it. The best way to avoid going into debt is to stop keeping up with the Joneses – especially considering that the rich and famous don’t have much of financial track record to speak of.

 

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Shop Responsibly this Holiday Season – Avoid Debt

December 5, 2011 – 11:30 am by How-To Hannah

Though the United States government hasn’t been fiscally responsible this year, at least the American people have: For the 9th consecutive quarter, delinquency rates fell for consumer credit cards.

It’s exciting news, but it remains to be seen if consumers kept up these good habits on Black Friday. US retail sales hit $11.4 billion to kick off the holiday shopping season, which is exciting for retailers—but not exciting if it means people are spending beyond their means.

A recent study by the Western Union Co. shows the number one consumer worry this holiday season is overspending. To prevent holiday-induced debt, create a budget before you hit the mall (or click your mouse) and stick to it. Going cold turkey on using credit cards for the holiday season is another smart move to avoid debt.

Can’t break the credit card habit? Counting on only making the minimum payment each month on a holiday credit card bill? Think again. Only paying the minimum will cost you more in the long run. For instance, if you rack up a $3,000 shopping bill on a credit card with an 18 percent interest rate, it will take 10 years to pay it off if you’re just making the minimum payment. That includes $1,700 in extra interest payments!

Instead of racking up debt this holiday season make a list- check it twice, budget wisely, and when you find that perfect present for Mom or Uncle Mike, be nice to your budget and resist the urge to splurge on “just one more” for yourself. Check out this BetterBudgeting.com article for 63 great gift ideas under $10!

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Thrifty Tips: Thanksgiving Edition

November 23, 2011 – 9:17 am by How-To Hannah

This year, the American Farm Bureau Federation is reporting an increase in the cost of a traditional Thanksgiving meal.

The retail cost of menu items for a classic Thanksgiving dinner including turkey, stuffing, cranberries, pumpkin pie and all the basic trimmings increased about 13 percent this year…the average cost of this year’s feast for 10 is $49.20.

Don’t fret too much: While the price for Thanksgiving may have gone up this year, it is still a bargain at only $5.00 per person. Additionally, you can follow the tips below to avoid breaking the bank on this year’s turkey feast:

Beware the “Organic” Label

If you plan to buy organic this Thanksgiving, it is going to cost you dearly. We found a prepared dinner at Whole Foods with an organic turkey for $189.99—nearly 4x the non-organic price! If you want to eat local on top of that, it’s going to cost you even more. A 16lb local organic turkey from localharvest.org will run you around $180 for just the bird!

Take a Pass on Your Favorite Brand

Those name brands we all know and love can cost more than you would think at the checkout line. Save money by opting for the store brand version which typically costs 30 percent less. Turkey is turkey, after all. Your taste buds won’t know the difference, but your wallet will!

Stick With Tradition

Steer clear of less traditional options like a boneless rib roast or a pork roast. They might be tempting, but these options are usually much more expensive than a classic turkey.

No matter what you plan to do this Thanksgiving, remember to stick to your pre-planned budget. Those discounted items can be tempting, but consider if the item is something you actually need or just another impulse buy only to be remembered after it expires.

 

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Econ4U Salutes the Girl Scouts

November 16, 2011 – 10:40 am by How-To Hannah

We already knew that Girl Scouts had good business sense – who hasn’t been sold a box of their tasty cookies at a high school or grocery store parking lot? But it turns out the girls take their economics seriously. Daily Finance has the details:

A new curriculum of merit badges proposes to teach the GSA’s more than 3 million members everything from good credit to budgeting to the ins and outs of savings and investing. In all, there are 13 Girl Scout badges and awards related to financial literacy.

This is exciting news, since this isn’t necessarily knowledge they’re picking up in school: only 7 states require high school students to take personal finance classes as a requirement for graduation.

Providing lessons in economic literacy to learners of all ages creates better informed employees, voters, and peer educators. With the Girl Scouts offering different badges for each age group, members will stay ahead of the curve with multiple chances to gain financial knowledge.

It sure seems like the Girl Scouts of America are following their motto, “be prepared,” so do as the Girl Scouts do and take one of our quizzes to test your economic literacy. Better yet, you could try your hand at running your own business.

 

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Promoting Economic Literacy in New York City

November 4, 2011 – 3:33 pm by Market Mike

Econ4U painted a giant wall scape in New York City to promote its economic literacy website, Econ4U.org. This time lapse video shows how the wall was painted over a five day period.

In those five days, consumers racked up $360 million in credit card debt. But the U.S. government spent its way to $17 billion in additional federal debt.

 

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Tuesday Top 5: Protecting Yourself During Troubling Times

October 25, 2011 – 3:43 pm by How-To Hannah

Welcome to this week’s edition of our Tuesday Top 5, Econ4U’s weekly tips post to help you manage your money in five easy steps.

FirstJobs.org

If you’ve read a newspaper in the past 3 years, you may have been alarmed at reports of a volatile stock market, high unemployment, and retirement plans in jeopardy. Ever wonder if there’s anything you can do to protect yourself during troubling financial times? There is. And the more you can do to protect yourself from the economic factors outside your control, the better off you’ll be — not only now, but also when the Great Recession is officially behind us.

  1. Finish your college degree. What do most people who have survived the recession financially intact have in common? A college degree. According to the Bureau of Labor Statistics, the unemployment rate for people without them (10.7%) is more than double that for those with a bachelor’s or better (4.4%). If you haven’t completed your undergraduate coursework, get it finished now to improve your employment prospects.
  2. Cut your living expenses. The more you can do to reduce your monthly living expenses, the better. That might mean carpooling to save on commuter costs, trading in your vehicle for an older model to cut down on your car payments, or even moving to a cheaper apartment. Sounds painful, but once you make a few cuts on your monthly expenditures, the savings add up fast. Just be sure to put it into an emergency fund in an interest-bearing account.
  3. Stay employed while job hunting. This one isn’t entirely under your control, but if you’ve contemplated quitting your job — don’t. More hiring managers are enacting “unemployed need not apply” policies. It’s not illegal, even if it doesn’t seem fair. Bottom line: Having a job while job hunting makes you seem more desirable in a competitive applicant pool, so don’t give up on yours, even if you can’t wait to leave.
  4. Pay off debt ASAP. If you have any debt with unfixed interest rates — like student loans, credit cards, or a mortgage — refinance to secure the best terms you can. Then pay that debt down as quickly as you can. If interest rates rise, you’ll save a bundle in the long term and you’ll feel the freedom of being debt free.
  5. Network when times are good. Having a group of people concerned about your wellbeing means you’ve got a list of people to call if you’re ever out of a job. To take one personal example: A friend of mine was laid off at the beginning of this year. She got home that night and starting calling people she knew in her industry — and one of those calls quickly led to a job offer. You never know until you ask.

The news can seem bleak, but the economy has weathered worse dips before. At the end of the day, economic indicators simply reveal trends by individual consumers. Make the right choices to protect yourself and your family and sooner or later, the economy will recover. It always has.

Posted in Budgeting, Credit, Economy, Education, Personal Finance, Tuesday Top 5 | Comments (0)

Why Do Famous Folks Make So Many Financial Flubs?

September 28, 2011 – 5:40 pm by Audrey

TheBigLead.com

Broke professional sports stars are nothing new, but ever wonder why athletes — with their outsize salaries — seem so much more prone to bankruptcy than Average Joes?

The New York Times took a shot at answering that question in a recent “Your Money” column by interviewing Hall of Fame quarterback Steve Young:

Steve Young has done pretty well for himself. He laid the groundwork for fiscal sanity by majoring in finance at Brigham Young University, won the most valuable player award after leading the San Francisco 49ers to victory in Super Bowl XXIX and is now a managing director at Huntsman Gay Global Capital, a private equity firm.

So how well did he do with his money when he started his professional career? “I wasn’t ready to deal with it,” he said. “Just take the driving analogy. Very few people would be able to handle going zero to 100. Good luck. It’s a lot, and it’s very fast.”

His advice for rookies is to deliberately slow down, way down, something echoed by the National Football League’s Players Association, their union. “ ‘Give yourself a time out’ is what I tell them,” said Dana Hammonds, the director of player services and development for the association. “Focus on football, and after you go through the season, you’ll have time to figure it all out. There is absolutely no need to get involved in any kind of investments. The only thing they need to do is figure out cash flow in their first couple of years.”

While few of us will ever earn the kind of money that a rising sports star can expect right out of the gate, that same advice holds true for anyone who receives an unexpected windfall, whether it’s a sweet raise or an inheritance. If there’s one lesson that Econ4U tries to pound home, it’s not what you make, but what you keep that matters most.

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