Bible Money Matters

Happy 4th Of July!

Peter — Sat, 04 Jul 2009 12:28:15 +0000

Happy 4th of July everyone! I hope you have a happy and safe holiday. God bless America!

The 4th Of July Story

During the American Revolution, the legal separation of the American colonies from Great Britain occurred on July 2, 1776, when the Second Continental Congress voted to approve a resolution of independence that had been proposed in June by Richard Henry Lee of Virginia. After voting for independence, Congress turned its attention to the Declaration of Independence, a statement explaining this decision, which had been prepared by a Committee of Five, with Thomas Jefferson as its principal author. Congress debated and revised the Declaration, finally approving it on July 4. A day earlier, John Adams had written to his wife Abigail:

“The second day of July, 1776, will be the most memorable epoch in the history of America. I am apt to believe that it will be celebrated by succeeding generations as the great anniversary festival. It ought to be commemorated as the day of deliverance, by solemn acts of devotion to God Almighty. It ought to be solemnized with pomp and parade, with shows, games, sports, guns, bells, bonfires, and illuminations, from one end of this continent to the other, from this time forward forever more.”

Adams’ prediction was off by two days. From the outset, Americans celebrated independence on July 4, the date shown on the much-publicized Declaration of Independence, rather than on July 2, the date the resolution of independence was approved in a closed session of Congress.

One of the most enduring myths about Independence Day is that Congress signed the Declaration of Independence on July 4, 1776. The myth had become so firmly established that, decades after the event and nearing the end of their lives, even the elderly Thomas Jefferson and John Adams had come to believe that they and the other delegates had signed the Declaration on the fourth. Most delegates actually signed the Declaration on August 2, 1776. In a remarkable series of coincidences, both John Adams and Thomas Jefferson, two founding fathers of the United States and the only two men who signed the Declaration of Independence to become president, died on the same day: July 4, 1826, which was the United States’ 50th anniversary.

Happy 4th Of July!

Net Worth: How Should It Be Defined?

Guest Poster — Fri, 03 Jul 2009 13:39:00 +0000

Craig is a Christian missionary, writer, and speaker. Ten years of ministry experience has provided valuable insight for helping Christians deal with their personal finances from a Biblical perspective. His blog www.moneyhelpforchristians.com provides daily personal finance advice from a Christian perspective. You can subscribe by RSS feed here.

It’s a term we have heard of often – net worth. The calculation is relatively simple - add up what you own and subtract what you owe. Voila! You have your net worth. If that calculation seems complicated, most basic budgeting programs show your net worth every time you open your budgeting software.

The goal of many individuals is to increase their net worth over a lifetime. There is, however, a common misunderstanding regarding net worth. Many think net worth is visible to the neighbor.

Here is our misinformed formula:

The bigger the house + the newer the cars + the larger the salary = a larger net worth.

Instead the following is typically more accurate:

The bigger the house + the newer the cars + the larger the salary = a greater burden of debt.

Here is the actual formula for increasing your net worth:

Salary - Expenses (bills, shopping, insurance, payments …) = $1 < (a dollar or more)

In other words net worth is built only by having something left over at the end of every month.

One cannot increase their net worth by:

Earning more money
Buying another vacation home
Purchasing a shiny new vehicle

Net worth is increased by doing one thing – living on less than you make. If you are not saving anything today, you are not increasing your net worth.

But, even this is only a small, small part of what it means to build your net worth. Look at the term more closely.

net = sum, complete, total, entire

worth = value, importance, significance, merit, meaning.

Net worth could be said in the following ways: the sum of your value, your entire significance, your complete meaning. We fool ourselves if we think our worth, net worth, can be calculated with a pen, paper, or calculator. We prepare ourselves for a lifetime of disappointment if we think our worth is determined by what we own. Our worth is found in our relationship to Jesus Christ.

Our most significant assets are husbands, wives, children, church, and friends. Our most important investments are those with eternal implications. Our gains truly increase only when we give.

“What good is it for a man to gain the whole world, yet forfeit his soul?” (Mark 8:36, NIV)

Your worth can never be calculated by a number on a bank statement. Your value can never be attained by adding some numbers. Your significance is not found in what you have, but to whom you belong.

So get out there and build your net worth. But, be sure you define net worth by something broader than money.

Net Worth: How Should It Be Defined?

Making Home Affordable Refinance Program Eases Eligibility To Allow For Higher Maximum Loan-To-Value Ratio

Peter — Thu, 02 Jul 2009 14:16:47 +0000

For a while now we’ve been talking about the Obama administration’s Making Homes Affordable Refinance and Loan Modification program. We looked at who was eligible for the program, and what you needed to do in order to push through your own refinance or loan modification. According to the administration the plan was going to be able to help anywhere from 7 to 9 million people to get into a more affordable loan, all while not increasing costs through added PMI or other costs.

The reality of what has happened so far is much different. According to the Treasury Department earlier this week, so far only 20,000 loans have been refinanced. That’s a far cry from the millions of supposedly eligible homeowners who were forecast to be able to refinance. So what’s holding things up?

Problems With The Program: Why Haven’t More People Refinanced

There are quite a few reasons that people speculate the program hasn’t been more successful that it could have been.

With mortgage rates in the low 6’s in recent years, for many people refinancing to the mid 5’s just doesn’t seem worth it after paying for points and high closing costs many banks are offering.
According to many sources, including commenters on this blog, the program has been slow to ramp up. Borrowers have complained that banks are not approving their applications. People at the banks often don’t seem to have any idea what the program entails. Homeowners are getting the run around, and are being given refinance offers that aren’t really much of a deal.
Many homeowners have seen dramatic drops in their home’s value in recent months/years, which means they don’t have the required 105% LTV ratio needed to benefit from the refinance program. (This week’s changes to the program should help address this).

Changes To The Program: 125% LTV Loans Now Available

The Obama administration eased eligibility rules on July 1st for the Home Affordable Refinance Program, lifting the maximum loan-to-value ratio to 125 percent from 105 percent. So that means the eligibility requirements for the program are now as follows:

Loans originated on or before January 1, 2009.
Your loan is is owned/backed by Fannie Mae or Freddie Mac.
You are current on your mortgage payments, no 30 day deliquencies in the past 12 months.
You have income to support the new mortgage payments.
Your first mortgage will not exceed 125% of the current market value of the property.

The new requirement of no more than a 125% mortgage to home market value ratio should allow quite a few more people the chance to apply for a refinance under the HARP program.

If your loan is owned by Freddie Mac and you are refinancing through your current servicer, the expanded LTV ratios are available now. If you are refinancing through another Freddie Mac lender, the expanded ratios will become available October 1st.

If your loan is owned by Fannie Mae you must use your current loan servicer to refinance your mortgage, but you must wait until September 1, 2009 before you can take advantage of the expanded LTV program (You must wait if your LTV is more than 105%).

A Step In The Right Direction?

Administration officials are confident that the new program requirements should help a lot of people, and the changes are crucial in helping continue the recovery.

Treasury Secretary Timothy F. Geithner said the move was “a crucial step in our broader efforts to get America’s housing market and economy on the path to recovery.”

I’m not as confident as they are that this will really help to improve things (given the program’s track record so far), but I really hope that they’re right.

Want to find out more details about the program? Check out the government’s website at http://www.makinghomeaffordable.gov/, and read our articles that we’ve previously written on the topic:

Do you think that the expanded loan to value ratio will allow more homeowners to take advantage of the Home Affordable Refinance Program (Will it help you?)? Will problems with the program being implemented by banks continue to plague HARP? What’s your take on the program? We’re interested on hearing your personal experience!

Making Home Affordable Refinance Program Eases Eligibility To Allow For Higher Maximum Loan-To-Value Ratio

10 Tips To Help Sell Your Home Fast In A Down Market

Peter — Wed, 01 Jul 2009 14:53:54 +0000

A couple of years ago we were in the middle of selling our house right at top of the real estate bubble. Homes were routinely going for asking price, and some houses were even getting multiple offers above asking price. At the time the thinking was that the market would continue going up, and it was better to buy now than in a couple of years when prices had skyrocketed. Looking back, that thinking seems a bit foolish now, but at the time it seemed reasonable. We ended up selling our townhouse for the asking price, and we made a nice profit. The problem is, we also ended up buying a house for more than it was worth. Hindsight is 20/20, right?

Now that the market has been dropping for a while things are extremely tough for homesellers. Because of the rash of low or no down payment mortgages that happened a few years ago, a lot of homeowners are finding themselves underwater in their mortgages, they owe more than the house is now worth.

The real estate Web site Zillow.com reported that 21.8% of all U.S. homes, representing more than 20 million residences, were in a “negative equity” or “underwater” position after prices dropped more than 14% nationally in the year ended March 31.

With so many homeowners being underwater, a huge number of them are just deciding to walk away from their homes, and the mortgages. The result? A ton of foreclosures. According to Lawrence Yun, chief economist with the National Association of Realtors, there were 2 million properties in foreclosure in 2008. That number could climb to almost 2.5 million this year. With such a huge number of foreclosure properties available, and due to the tough economic times, getting your house to sell is harder than ever. Here are a few tips to help you sell a bit faster.

Tips To Sell Your Home In A Down Market

To make sure your home sells in a down market, there are a few things that you can do.

You have to be willing to price it right: If you’re going to sell your home in a down market, you may have to be willing to make some concessions on price. In many areas foreclosures have depressed the prices quite a bit. While you may not be able to cut your price to the level of some of those bank owned homes, you can still do your research as to what comparable homes are selling for, and undercut their prices. You may not get as much action as the foreclosures, but you will at least get more action than other sellers who aren’t as flexible on price. Try not to get emotionally stuck on a certain price.
Make sure the home has curb appeal: Even if you can’t compete on price with foreclosures, you can do your best to make sure that the your house at least looks better on the outside than the foreclosure down the block. Get the home power washed, paint the trim and the doors, put on new exterior lights and/or knockers, and give your plants some sprucing up. All the hard work should pay off by at least getting that buyer through the door. (When we sold, this was key for us because there were similar units at the same or lower price. Our unit was just in better shape, had been repainted, etc.)
Clear the home of clutter: When you’re living in the home, it may be ok to have stacks of papers on the coffee table, and tons of personal photos on the walls. But when you’re selling a home you want the potential buyers to picture themselves living in the house. Remove personal photos from the walls, and replace them with neutral framed art. Take everything off the countertops in the kitchen to make it seem like there is more counter space. Remove any unnecessary furniture and put it into storage. If you can remove clothing from the closets and put it into storage to make the closets feel bigger. Reduce all the extra clutter throughout the house to make it feel bigger, more spacious and buyer friendly!
Fix big problems: If your house has a big problem that will turn a lot of buyers off, fix it! Shag carpeting in the living room? Consider changing it out with fresh new carpeting. Non-working water softener? Pay to have it fixed, or get a new one. ( We actually did this). Big hole in the wall? Get some drywall and patch it up. Ugly peeling linoleum in the kitchen? Put in new flooring. Anything that can cause instant dislike for your house should be fixed, as long as it isn’t too expensive.
Fix smaller problem areas around the house: Go throughout the house and take notes of all the small things that need fixing that may be a turnoff to a potential buyer. Take the time to go around and fix those things one by one. If you noticed them, the buyer will too! When we sold our house we ended up repainting some trim on the outside of the house, repainting several rooms that had scratches and marks on the wall, and removed some rubber marks on the kitchen linoleum. It only took us one or two days of hard work, but in the end the house looked much better, and was more inviting to a buyer.
Consider staging the house: When we sold we actually staged the house to make the rooms feel more spacious, give it a less cluttered look and a make people feel more at home. In the living room we removed several larger pieces of furniture, and replaced them with smaller more luxurious pieces from our parent’s houses - in a different layout. We took our personal photos down and put up framed art pieces. We removed all the magnets and photos from the fridge, and put up nice valances on the windows. Watch a lot of HGTV and try to emulate what the experts do to stage a house!
Offer bonuses to agents or buyers: consider offering a bonus to the first agent to bring in a full price offer, or offer to pay closing costs for a buyer (this might be especially attractive for first time buyers). I’ve even heard of buyers offering to pay a years worth of homeowner’s association fees. Be creative.
Use the power of the web and your personal networks to market your house: Don’t rely on the listing that your agent has put online to sell your house. Use other online venues to help sell your house. Put an ad on craigslist, use sites like zillow.com or trulia.com, get your own url with the house’s address (4000wooodland.com), promote the house through social media like facebook and twitter, and send out a copy of your listing to people on your email list. Sometimes word of mouth is one of the best ways to market a house.
Get a good agent to help you sell: Get a good agent to help sell your house, not a friend of a friend - or your aunt Agnes who just got her real estate license. Your house is one of your biggest assets, and this is no time to do someone else a favor. Call a local real estate office and ask for their top salesperson. Interview a few agents and ask them to tell you what their marketing plan is for your home. Use someone who understands the power of the internet, the importance of good wide angle interior photos, and an overall marketing strategy for your house.
When the house is showing, keep the house clean and don’t be there!: When you are having an open house, or the house is having a showing, make sure that you aren’t there. There’s nothing more annoying than having the home’s owners in a house when you’re trying to look at it. Also, make sure to keep the house spic and span to make sure that it shows well. Finally consider baking cookies before a showing, or lighting one of those cinnamon roll candles. It will give the house a pleasant aroma, and people will feel at home.

Selling your house in a down market isn’t an easy task, but you can still do some hard work along the way and make your chances that much better. In the end your house will show better, and you’ll be able to sell your house that much quicker.

Do you have your own tips for things that can make a home sell faster? Were there things that you did when selling your house that made it more attractive to buyers? Let us know about it in the comments!

10 Tips To Help Sell Your Home Fast In A Down Market

Going Back In Time: This Month Last Year on Bible Money Matters

Peter — Tue, 30 Jun 2009 15:17:44 +0000

I‘ve been blogging for well over a year now, and in that time I’ve built up a considerable archive of articles. In fact, I’ve now published over 660 articles on this site. We’ve come a long way in the past year, going from a small blog that no one was reading, to the point where we now enjoy tens of thousands of readers every month. I feel truly blessed to have been able to make a small contribution to the blogosphere, and I thank you all for sticking with us.

Today I thought we could take a look at some of our best articles from 1 year go in June 2008. (hat tip to Simple Dollar for this idea)

One Year Ago On Bible Money Matters (June 2008)

Financial Peace University Week By Week: It was just over a year ago that we started taking Dave Ramsey’s Financial Peace University. We were greatly impacted by the class, and you can read about our experience starting here.
Save Like You’re Paying Off A High Interest Debt: This post uses an illustration from the Back To The Future movies, how could you not like it?
Saving Money At The Movies This Summer: Finding things to do during the summer and staying within a budget can be tough. This post looked at ways you can be entertained at the movies without spending a ton of money.
Sad News - Passing Of A Loving Grandmother: My grandmother passed away a year ago this month. We all miss her greatly, but we’re rejoicing that she’s now in heaven!
Food Is A Big Expense. 20 Ways To Save On Food: One of our biggest expenditures in our budget is our food budget. Here are some ways we’ve found to cut down on how much we’re spending.
7 Questions That Can Change Your Life: I’m not sure that these questions changed my life, but looking back it’s amazing to see how far we’ve come from my answers then. 1 year ago this month I was getting my first adsense check from this blog (adsense has increased substantially since then), and we were still in the midst of taking Dave Ramsey’s Financial Peace University course (since then we’ve taught the class). Other areas discussed I’ve still got a lot of work to do.
Lies And Money: What Are You Keeping From Your Spouse?: This article talks about how important communication in marriage is, and how lies about money (or other things) can harm a marriage.
Automated Tithing: A New Way To Give: This guest post talked about a new trend in churches, tithing via an automated tithing machine (ATM). Personally I still prefer the discipline (and worship) of actually writing a check every week.

So those are a few of my better posts from last year at this time. I think a lot of the posts are quite good, and it’s challenging me when I read them to make sure I continue writing things up to those standards. Find other articles from the past year and a half in our Archive, or read some of my favorites on our Best Of Page. Some of the older posts don’t have many comments, so chime in with your thoughts now!

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Going Back In Time: This Month Last Year on Bible Money Matters

Spending Less Than You Earn. Sound Advice At Any Income

Peter — Mon, 29 Jun 2009 14:35:44 +0000

The past week was a sad one as we saw the passing of several well known celebrities. The week started off with the passing of affable Johnny Carson sidekick and veteran of two wars, Ed McMahon. He was always able to light up the stage with his easy going demeanor, and he seemed to be a genuinely nice guy. The week went on and we also saw the deaths of Farrah Fawcett and Michael Jackson. Farrah and Michael both died too young, with Farrah passing after a hard battle with cancer, and Michael passing after having a heart attack (source unknown?). How many of us have memories of Michael Jackson’s music from our younger years?

Two of these celebrities have something in common, more than just their celebrity status. Both Michael Jackson and Ed McMahon had been in financial trouble within the past few years. Seems they both had problems understanding one key financial concept that remains constant whether you’re making $20,000 a year or 20 million. If you want to succeed, you can’t spend more than you make.

Ed McMahon And Foreclosure

Ed McMahon has been in show business for decades. We all remember him from the Tonight Show with Johnny Carson, Star Search and all of those Publisher’s Clearing House ads. Over the years Ed McMahon had earned a fortune through his various endeavors. By all accounts his financial situation should have been quite secure. The problem was, Ed wasn’t the greatest with the finances. One rep described his money problems:

His rep, Howard Bragman, further felt McMahon’s money mess was a result of a confluence of “bad health, bad economy, bad housing market.”

When you look a bit deeper, however, you’ll see that McMahon wasn’t very disciplined in his spending. According to a variety of sources he was generous to a fault, always being overly generous to everyone around him. One friend who helped write two books with McMahon said,

“Being Ed McMahon was an expensive proposition,” he said. A lot of cash “went to tips,” noted Fisher, who recalled walking through hotel lobbies with McMahon as he would hand out money to anyone who helped him.

He also lost a large amount of money helping his 3rd wife to launch a failed clothing line. Add to that several expensive failed marriages, and within the past year Ed McMahon found himself in over 1.5 million dollars worth of debt. What did he owe on?

He owed approximately $644,000 in payments on a nearly $5 million mortgage loan. He also owed American Express almost $750,000 in unpaid bills, along with having an outstanding loan of $135,000 to yet a 3rd company.

Ed McMahon had been facing foreclosure on his home within the past year and had been scrambling to scrape up the money to cover his expenses, even doing a commercial along with MC Hammer for a company called “Cash4Gold” in his last year.

If only Ed had learned earlier the importance of having a solid financial plan, and of spending less than you earn, he might have left a larger financial legacy.

Michael Jackson And His Millions In Debt

Michael Jackson is an even more severe case of someone who didn’t live out the concept of living within a budget. Despite the fact that he had made hundreds of millions of dollars over his career, Michael died with a mountain of debt, by some estimates at the time of his death he was in debt by over 400 million dollars. Before he died he was planning on coming out of retirement in the coming months to help pay for some of those debts, and to struggle to get his life back on track.

During his career Michael sold over 61 million albums, owned rights to the Beatles catalog, and even had a popular ride at Disney World. He had made hundreds of millions of dollars, and because of it he was able to live a lavish lifestyle. Even so, he lived a bit too lavishly. During one of his very public trials, the details of Michael’s finances came out in the public eye.

One forensic accountant testified that the singer had an “ongoing cash crisis” and was spending $20 million to $30 million more per year than he earned.

Jackson was known to go on lavish shopping sprees, spending millions of dollars on antiques, toys and other things. There are stories of him flipping through high end catalogs and ordering every item on every page. Or other stories of him spending $150,000 in a few minutes at London’s Harrods store, or $250,000 on antiques in Beverly Hills. And of course there was the millions he spent on plastic surgery.

At some point Michael took out a 200 million dollar loan against this Beatles catalog rights, in order to continue to finance his lifestyle.

What legacy does he leave for his 3 children? A mountain of debt, and the possible hopes of being able to dig out of the debt in order to have something left over?

What Do Their Stories Tell Us

What can we learn from Ed McMahon and Michael Jackson’s stories of financial woe? What could they have done differently?

Personally I think their stories point out how even the most basic of personal finance advice can be excellent advice - at any income. The advice? Make sure to spend less than you earn, and save and invest the rest.

Make sure that you have a solid financial plan, and at the very least that you have someone around you helping you to make good decisions about your money. It sounds to me as if neither of these men had anyone there to help keep them accountable, and that they both just enjoyed spending money on the things they wanted, or the people that surrounded them. In the end even though their incomes were as large as some small countries, they spent more than they had made. It lead them to financial ruin.

The last point that this illustrates to me is the futility of trying to spend your way to happiness. Money has never yet made someone happy. Sure, it can buy you momentary fun, and fleeting happiness, but in the end you can only find true happiness and inner peace through a relationship with Jesus Christ.

Jesus said again, “I tell you the truth, I am the gate for the sheep. All who ever came before me were thieves and robbers, but the sheep did not listen to them. I am the gate; whoever enters through me will be saved.He will come in and go out, and find pasture. The thief comes only to steal and kill and destroy; I have come that they may have life, and have it to the full. John 10:7-10

Spending Less Than You Earn. Sound Advice At Any Income

Personal Finance Bible Verse Of The Day: God Loves A Cheerful Giver

Peter — Fri, 26 Jun 2009 14:38:07 +0000

Let each one do just as he has resolved in his heart, not grudgingly or under compulsion, for God loves a cheerful giver. 2 Corinthians 9:7

This verse in 2 Corinthians tells us that God loves a cheerful giver. God wants us to give to our church, and to others freely so that we might experience the true joy of giving, and sharing with those around us.

I truly believe that not only does God love a cheerful giver, but that the act of giving will also make you more cheerful! When you give you experience the true joy of knowing you’ve made a positive impact on someone’s life, and you acknowledge that there is something more important out there than money or material things. Hording everything you earn won’t make you happy. True happiness comes through knowing Jesus Christ, and through living more like him - in an unselfish, caring and loving manner.

So next time you’re thinking about whether or not you should give, remember. Giving makes you happier, and makes you a more un-selfish and caring person. Food for thought.

Personal Finance Bible Verse Of The Day: God Loves A Cheerful Giver

Should There Be Mandatory Personal Finance Classes In High Schools?

Peter — Thu, 25 Jun 2009 17:16:02 +0000

photo credit: DownTown Pictures

Basic Personal Finance Know How Is Lacking

In the time I’ve been writing this blog I’ve come to realize something through the comments on the posts, the questions I receive via email and the searches that people use to reach this blog. A lot of people just don’t have a basic understanding of personal finance. They don’t know how to setup a budget, they don’t understand the benefits of investing and saving, and they think that debt is a normal way of life that everyone just has to live with.

Part of the reason that I write this blog is because I feel like I have some good things to say, and that I can help people to gain a better understanding of their money and how to manage it. But I can’t help everyone (I wish I could)!

After reading some posts on other blogs, I began to wonder if it might be a good idea to start teaching our kids the fundamentals of personal finance at an early age, before they have a chance to completely get themselves in debt, and create a situation that they’ll regret.

Should we be teaching personal finance in the high schools, or even earlier?

Stats Show That Education Is Needed

The stats showing just how bad most people need a financial education are pretty staggering:

The average college student is now more than $20,000 in debt at graduation. (source)
Total consumer debt in the United States stands at nearly $2.6 trillion dollars. That works out to be nearly $8,500 in debt for every man, woman and child that lives here in the US. (source)
Nearly one in every 35 households in the United States filed for bankruptcy in 2007. (source) Could it be even more now that times are tougher?
Roughly 2.0 to 2.5 million Americans seek the help of a credit counselor each year, mostly to avoid bankruptcy. (source)
As of April of 2009 consumer revolving credit, mostly credit card debt, stands at $931.0 billion. (source)
Students are much more likely to pay off their balances, however, they tend to pay late and exceed their credit limits more frequently than other groups and therefore incur more fees than other groups. (source)

Americans are in debt, and for many of them it leads to bankruptcy and financial ruin. I think it’s pretty obvious that a good majority of Americans need some sort of financial education. But what type, and where should they receive it?

Should The Schools Teach Personal Finance, Or Should It Only Be Taught At Home?

Like a lot of subjects, ideally personal finance should be taught by parents to their children from an early age. Flexo from Consumerism Commentary posted a comment about this, stating that the schools are already chocked full of classes, and this one isn’t one that should be taught in schools, but at home:

If students aren’t getting the money management education they need, don’t blame the schools, blame the parents. These skills could be easily taught in the home by parents with even the most basic knowledge.

In some homes that is probably happening, but looking at the statistics we see that this probably isn’t the case in most homes. In fact, most parents probably could use some education on the basics themselves. I think we need to consider something else. So what is the alternative?

Many people are suggesting that we should start teaching a course on the basics of personal finance in either the junior highs or high schools. The course could be either an elective or required (hopefully required), and would cover a variety of personal finance topics designed to give the students a good solid foundation and understanding of how finances work once they leave high school. Another user crystalized my thoughts on this:

It is the responsibility of schools to prepare students for the real world. Every level of education is preparation for the next step and high school leads to the real world. It does not necessarily need to replace any core academic classes. It would be in addition to those classes. Students are allowed many electives and the benefit of understanding finances can help them with a strong start in their future. Imagine if students left high school with a strong grasp on interest rates, investments, assets, liabilities, student loans, credit cards, taxes, etc. They would not only improve their own economic strength, but in turn would improve the US economy by being investors.

What Subjects Should Be Covered?

I think the subject of what topics should be included in this personal finance curriculum could be up for debate, but here are my vote for things that should be covered.

How to do a budget
How to balance a checkbook
How to save and invest, and the power of compounding returns
Credit Cards and Debt
Loans, Mortgages and Real Estate
Insurance

These are just a few ideas of topics to get started, and I’m sure there are more that could be included. What are some things that you think should be covered?

Would It Make A Difference?

Personally I think getting something like this implemented in the schools could have a huge impact on people’s lives, helping them to understand that their financial actions do have consequences. I know if I had been through something like this I could have avoided making some of the mistakes that I made as a student and young adult.

Would we be able to get something like this passed and implemented in the schools? I’m not sure that we could - it just makes too much sense for the folks in Washington. Better to keep people uniformed and dependent on the government? (That’s about as political as I’ll get on this blog)

What are you thoughts on teaching a course on personal fianance in the schools? Would it help? Could we truly make a difference by educating people to make good financial choices? Or do people just not care to know about these topics? Tell us your thoughts in the comments!

UPDATE: I’ve been told that Oklahoma already DOES have a required personal finance curriculum. Check it out here. Who’s next?
UPDATE 2: I’ve been told now that Texas already does this as well! Read about it here. See, I had a good idea!

Should There Be Mandatory Personal Finance Classes In High Schools?

Cash For Clunkers Rebate Program Might Save You Money On Your Next New Car Purchase. But Is It A Good Idea?

Peter — Wed, 24 Jun 2009 15:08:20 +0000

Rebates, Tax Credits And Stimulating The Economy

The Obama administration has been giving us all sorts of stimulus packages this year that aim to stimulate spending in troubled sectors of our economy, and jumpstart consumer spending. First we had the tax incentives for new car purchases, and then the $8000 tax credit for first time homebuyers. Then we heard rumblings about the $8000 tax credit being expanded to $15,000 (which hasn’t happened yet).

Now the government is about to pass another measure that once again aims to help the struggling auto industry, and at the same time get some less efficient cars off of the road. The program is being called “Cash For Clunkers“, or ” Car Allowance Rebate System/CARS“. The program will cost about $4 billion, and the money is currently proposed to come from Energy Department funding included in the already enacted $787 billion economic stimulus package. The bill is now simply awaiting the president’s signature to be enacted.

Cash For Clunkers - Car Allowance Rebate System/CARS And How It Works

The aim of the program is to get older less fuel efficient vehicles off of the road. You trade in your old car or truck for a voucher towards the purchase (or lease) of a new vehicle that gets better mileage. The better the mileage of the new car, the more money you’ll get towards the purchase of a new vehicle.

You get either a $3,500 or a $4,500 voucher, depending upon the increase in mileage per gallon in old car to new car. To find out the MPG of your old car vs. a new car, check out this website.
The minimum combined fuel economy of a new car purchased under the program must be at least 22 mpg.
Small trucks and SUVs have to get at least 18 mpg.
Large trucks have to get 15 mpg.
The old cars will be salvaged once they’re turned in.

Here’s a graphic showing the increase in mileage you would need to attain in order to qualify for either the $3500 voucher, or the $4500 voucher. The amounts vary depending upon the vehicle type.

So what cars are qualified to be turned in for the program?

Must be in drivable condition. (That means you can’t tow in that truck on blocks sitting in your front yard)
Have been continuously insured to the same owner for at least one year immediately prior to trade-in. (That means you can’t just go out and buy a cheapo old truck to trade in)
Manufactured in model year 1984 or later, so 25 year old or newer cars.
Have a combined fuel economy of 18 mpg or less. Get anything more than that, and you’re out of luck!

How Do I Participate In the Program?

To participate in the program you just have to buy a new car from a participating new car dealership. The incentive amount that you qualify for will be applied to the new vehicle’s purchase price. You won’t receive an actual check or voucher. The program will run from July 1, 2009 to November 1, 2009.

In order to participate in the program car dealers will have to register with the National Highway Traffic Safety Administration (NHTSA), and it may take a few weeks for a list of participating dealers to be put together, so be patient! The government will be putting out a new website to give details about the program, and which dealers are qualified to give you the rebate.

When Does It Start?

The program is slated to take effect as of July 1, 2009, however, it still needs to be signed into law by President Obama. When it finally is signed into law the NHTSA will need to work out details of the program and set up a procedure for dealerships to get registered with the program. When all is said and done it may be a few weeks or more before buyers will be able to participate.

My Thoughts On The Program

To be honest I can’t see how this program will be very effective at any of it’s aims. I really don’t think there are that many old cars with bad gas mileage on the road anymore. According to one analysis by Arlington, Va.-based investment bank FBR Capital Markets, the parameters of the “Cash for Clunkers” bill are narrow, and the bill limits eligibility to fewer than 5 percent of U.S. vehicles. The participation rate in the program is probably going to be much lower than that. Even for those 5% of the cars that are still on the road, a good number of them may still be worth more than the voucher would pay for them. So what’s the point in getting the voucher? On top of that for many people just keeping their old clunkers makes more financial sense because it means they won’t have payment on a new car, even if they are paying slightly more for gas.

With unemployment hovering around double digits, most people just can’t afford to be buying new cars right now. (In fact, many people are now saying that most of the “clunkers” that are still on the road, are actually owned by people in lower income brackets, and they really can’t afford a new car anyway)

I’d much rather see the money spent on this program be used for things like paying down the national debt. What do you think of the program? Do you think it will be effective in it’s aims of taking less efficient cars off of the road? Will it give a boost to new car sales? Is the program set to be a failure right out of the gate?

Cash For Clunkers Rebate Program Might Save You Money On Your Next New Car Purchase. But Is It A Good Idea?

Ways To Watch TV Without Paying An Arm And A Leg For Cable Or Satellite

Peter — Tue, 23 Jun 2009 15:57:33 +0000

Television Can Be Expensive (It Doesn’t Have To Be)

One way that my wife and I have saved money over the years is that while most of our friends have cable or satellite TV, we’ve never paid subscription costs to receive TV programming. That means that we are saving ourselves a good chunk of money every year. If you’re in debt, you probably shouldn’t be paying for TV either!

Rates for cable in our area range anywhere from around $12/month for the basic package with only local channels to well over $100/month for upgraded offerings with premium channels and shows. We probably would have ended up going for a middle of the road package, somewhere between $50-60/month. How much have we saved every year by not paying subscription costs for our TV entertainment? Probably between $600-720! That’s a lot of money! The good news is, TV doesn’t have to be that expensive!

While we haven’t paid for cable TV, we haven’t exactly been deprived, or had to watch only the shows offered by the over the air networks. There are tons of free video options out there! In fact, we actually still watch a lot of the same shows that our friends do. How do we do it you ask? Through a combination of free over-the-air digital TV, free online video services (the legal kind), a video streaming software, and a Xbox 360.

Our Low Cost Home TV Setup

Here’s how we watch TV at our house. Keep in mind that this package isn’t free, but it is lower in cost than the above mentioned $720/year package. Things we needed:

TV: A TV to watch your shows on! - Cost: Free (you probably already have one)
Playon Software: This software that can be found at http://www.themediamall.com/playon and allows you to stream online video from popular services like Hulu.com, straight to your TV through a networked media device (see below). - Cost: One time fee of $39.99 (there is a 14 day free trial)
Networked Media Device - Like Our Xbox 360 (list of Playon supported DLNA-compliant networked media devices): You can get a brand new Xbox 360 for around $200 nowadays, sometimes cheaper if you buy used or refurbished. Tons of other networked media devices are compatible as well including Playstation 3 and HP Mediasmart TVs. Soon it should work on the Nintendo Wii as well. Check the link above to see if your device is supported. - Cost: Free-$200 (depends on if you have one of these already)
Video Streaming Services: There are tons of online video streaming services like Hulu.com, Netflix, CBS.com, Youtube, Comedy Central, HGTV, and ESPN that support the Playon software! The software also now supports plugins, so additional channels are appearing all the time including the Food Network, NBA/NFL content, and others! - Cost: Free

In our case, we already had everything at our house, except for the Playon software. So for this setup we paid $29.99 (the software has gone up in price since then, but goes on sale occasionally.), plus the $8.99/month for the basic Netflix streaming package. That’s $138 for the first year, and $108 for every year after. That is a lot cheaper than if we were paying for cable! (It would be free if we dropped netflix.)

UPDATE: From now until June 31st at midnight, the Playon software is on sale for 1/2 off! Just enter coupon code PLAYON1999 and you’ll get $20 off the price of $39.99!

So here’s how the above cited items are setup at our house in order to stream video from the web, to our TV

The Playon software is installed on our home computer connected to the network.
Once installed Playon has a media server running in the background that pulls in RSS feeds from major video content providers, which allows the PC to pull in the video streams in the same way that a web browser does.
Video is sent over our home network, and played full screen through the Xbox 360 on our 37″ LCD. Much better than trying to watch shows on our tiny 19″ computer monitor!

Here’s an explanation of how Playon works from the software’s website:

MediaMall’s PlayOn software is a UPnP digital media server and browser that pulls RSS feeds from content providers, and presents them to DLNA-compliant networked media devices. In plain English, this means you can use your game console or networked television to access content from providers like YouTube, Netflix and Hulu. The PC software pulls in the media streams, in the same way as your web browser, and then sends them directly over your home network to your device, even converting their formats on the fly to make sure the devices can play them. Simple as that.

MyLifeROI.com talks about how he setup the same Playon to Xbox 360 streaming at his house.

Watch Free Over-The-Air HDTV

The setup I talked about above is only one way to get free or low cost TV content. Another way we get free content at home is through the free over-the-air HDTV channels that are now available to everyone who has a HDTV tuner and an antenna. If you have a TV with a built in digital tuner and a simple antenna, you should be able to just turn your TV on, and get all the network TV stations in their full HD glory! Check for your local digital stations here.

If you have a regular TV, you’ll need to buy a digital converter box to continue watching TV by this summer anyway, and once you get one, you will then get tons of crystal clear TV stations for free! When we started watching Digital TV we instantly gained about 5-10 TV stations because some channels have the main channel, and then sub channels as well.

Honestly we could probably survive on our over the air channels alone, although my wife likes to have our cable TV fix every once in a while - which is why we have Playon.

Watch Free TV Online

In addition to the options above, you can also watch TV for free through a variety of websites online. While it isn’t as fun to watch the shows on a small computer monitor, it is still a good option I think. Many of these online options may be available for streaming through the Playon software in the future as well.

Hulu.com: probably the best one out there in my opinion, already works through Playon, but you can watch it on your computer as well if you’d like.
Fancast.com: Similar to Hulu, not quite as good, but still has tons of great content.
TV Network Websites: ABC, NBC, CBS all have good full episode streaming options available.
Joost.com: Full episodes from a wide variety of shows.
Tioti.com: Tape It Off The Internet is a social media site for TV shows - allowing you to view episode information, and then see where you can find the show online.
Veoh.com: Tons of content, including TV shows!
TidalTV.com: Tons of TV content, not my favorite site or layout, but it works.
FreeTVOnline.com: Haven’t used this site much, but was recommended to me.
Sidereel.com: I’m new to this one, but it looks to have lots of good free TV options.
AOL Video: Both short and long video clips and full shows.

There are a ton of other free video sites out there, this list only lists some of the ones I found to be the best. Have some free online video options that you use? Let us know about them in the comments and maybe I’ll add them to the list.

Rent Movies And TV Shows - And Use The Library

Another low cost option to get your TV and movie fix is to either rent your TV shows and movies, or to get them from your local library. My favorite options are:

Redbox: Redbox allows you to rent a new release movie for $1 a night, which is an extremely low cost movie rental option. Search for coupon codes online for free redbox rentals, and it can be even cheaper!
Netflix.com: Slightly more, but the added convenience of keeping the movies and TV shows as long as you want, and being able to stream a selection of movies and TV shows over the computer, or networked media device. $8.99 for the basic package, or try a netflix free trial.
Your Local Library: Your local library will most likely have a decent selection of DVD movies that you can check out for a week or more. My local library tends to be a bit picked over, but if you get on a waiting list you can usually find movies or TV shows you’d enjoy watching.
Borrow From Friends: Borrow movies and TV shows from friends and family. They already own a ton of DVDs, they may as well get some use out of them!

Conclusion

A lot of people pay a lot of money in order to be able to watch the TV shows that they want, when they want. In the process they end up spending upwards of $500-1000 a year, mostly for programming that they don’t watch. If they would just look a little deeper they might find that there are a lot of free or low cost options out there, and they can get a lot of the same TV shows, movies and other video content for free.

My suggestion? Read this article, do some research, and find your own low cost option for watching the TV shows that you love. If you put a few of these tips above into practice, you can save thousands of dollars, just like we have.

Do you have other suggestions for low cost or free options for watching TV? What setup do you have at your house, or do you still pay for cable or satellite TV? Are there shows that you think you can’t get by using these free video options? Tell us your thoughts in the comments!

Ways To Watch TV Without Paying An Arm And A Leg For Cable Or Satellite