Europe’s Financial Crisis Leads to Suicide Surge
The harsh spending cuts introduced by European governments to tackle their crippling debt problems have not only pitched the region into recession — they are also being partly blamed for outbreaks of diseases not normally seen in Europe and a spike in suicides according to the AP.
The report goes on to say that the “worsening health was driven not just by unemployment, but by the lack of a social welfare system to fall back on. People need to have hope that the government will help them through this difficult time”.
I think that it is “nice” to have public assistance programs available for the truly needy. There is however something inherently wrong with these social programs. I believe these programs promote government dependency.
A growing dependency of government is what got us into so many of our problems, and what is our own government doing? They are promoting that very dependency. Instead of raising people up, we are keeping them down. We are creating a generational dependency on social programs.
According to the 2012 Index of Dependence on Government more people than ever before—67.3 million Americans, from college students to retirees to welfare beneficiaries—depend on the federal government for housing, food, income, student aid, or other assistance.
Once considered to be the responsibility of individuals, families, neighborhoods, churches, and other civil society institutions, Americans are looking to the government to take care of them.
The ethic of self-reliance joined with a promise to the brotherly care of those in need appears threatened, well nearly absent in today’s society. There was a time, before all of the social programs, when people took care of each other. If you were having trouble the first thing you did was —anything you could — to get back on your feet.
There was no sitting around waiting for the government to come to the rescue. Your church, or family or friends helped out, and you helped others when they were in need. We took care of ourselves without a dependency on the government.
Our social programs including Social Security, Medicare and Medicaid are unsustainable in their current form.
Over the next 25 years, more than 77 million baby boomers will begin collecting Social Security checks, drawing Medicare benefits, and relying on long-term care under Medicaid. There will be no event so financially challenging to these programs over the next two decades than this shift of boomers into retirement.
More than 70% of Federal spending goes to dependency programs.
With so many Americans on or soon to be on the government dole and nearly half of all Americans not paying income taxes, there is no way we can pay for all of this and our spending will spiral out of control (it’s almost there now). With an increase in recipients and a decrease in the number of workers left paying for these programs, we will soon reach our fiscal tipping point much as other countries have already, and this will put us in a certain domestic debt crisis of our own.
In doing research for this article I have found no evidence that Americans are suffering a rise in medical ailments and suicides. But we have not quite reached the same crippling financial problems as our friends across the pond.
…but trust me when I tell you, it’s coming.
Attention Car Owners – Do You Need a Reality Check?
This is a guest post from Joe Plemon from Plemon Financial Coaching who authors the blog Personal Finance by the Book.
“Geraldine”, a sassy lady portrayed by the late Flip Wilson, answered her husband thusly when he demanded an explanation for yet another new dress: “The Devil made me do it! I was walking down the street minding my own business when he snuck up behind me and pushed me into that dress store. He MADE me try on! Then he pulled a gun on me and forced me to buy it and sign your name to a check.”
Geraldine’s humor is timeless because so many of us can relate to it. For example, have you ever bought a new car and then wondered what possessed you to do it? I doubt if it was the devil, but the devil’s first cousin, car fever, will have the same results.
Do you currently own a car you wish you had never bought? Are you asking yourself if you should try to sell it or just live with it? This post is designed to help you think through this dilemma.
Start by asking yourself these questions:
How much do I owe on it?
If you paid cash, then you are probably not facing a financial crisis necessitating the sale of the car. If you simply don’t like the car, then take your time, sell it and pay cash for another one. If you are in debt, move on to question two.
How big a burden is this car on my budget?
If one hiccup in your life will cause you to start missing payments, then you need to amputate this car before that hiccup occurs. Even if you are easily making your payments, you still might be deceived into thinking all is well. Long term debt on a depreciating asset such as a car is a formula for staying perpetually in car debt. To break that cycle, you need to get the car paid off in 24 months or less and then keep driving it while you save cash for your next car. If you are on track to do so, then keep the car and enjoy it. If not, you should seriously consider getting rid of it.
If I am seriously considering selling, how do I go about it?
Knowledge is power. First, you need to learn if you are upside down (owe more than the car is worth). Check http://www.kbb.com/ to learn the private party value* of your car. If this value is less than what you owe, you are upside down. *(Use private party value because you are money ahead selling the car yourself).
But how does this work? Here is an example: You owe $22,000 on your “Geraldine” car and you could sell it for $18,000 (private party sale on http://www.kbb.com), thus putting you $4,000 upside down. If you decided to buy a $3,000 car (we will call the “beater”), your new debt would be $3,000 plus $4,000 = $7,000. You are still upside down, but you have eliminated $15,000 of debt.
How do I go about selling a car I am upside down on?
Unless you have an extra $4,000 available, you will need to borrow it in order to get the title released. So where do you borrow the money from?
Start by checking with the title holder. You have done your homework, so explain your rationale. In effect, you are asking for an unsecured loan on your upside down amount. Most lenders are not thrilled by this, but explain that this same amount of the current loan is already unsecured and you are simply asking that they move this amount from a more expensive car to a less expensive car.
If the title holder balks, don’t give up. Try your credit union or your home town bank, explaining that you will be moving your business to them. If you simply can’t find financing, consider other options such as selling stuff (Craigs List or Ebay or yard sales) or temporarily working a part time job.
REALITY CHECK: Are you ready to get your Geraldine car out of your life? Good! Doing so will not only be a huge relief, but will teach you to never again succumb to car fever. Still, you need to go into this decision with both eyes open, so the following pros and cons will help you preview the reality of your decision:
The Good
◦LESS DEBT. You have just reduced your total debt by $15,000!
◦OUT OF DEBT QUICKER: From our example, with an 8% loan and monthly payments of $400, your Geraldine car will be paid for in 5 years and 9 months. Your “beater”, on the other hand, will be paid off in only 19 months.
◦STAY OUT OF DEBT: Once the beater is paid off, you could save $4,800 toward another car by making payments to yourself for one year. Assuming your beater would bring $2,000, you could upgrade to a $6,800 paid for car. Had you stuck with your Geraldine car, it would have depreciated to about $12,000 by now and you would still owe $13,300 on it.
◦PEACE: You will know that you have taken the steps to undo that Geraldine decision. This is a great feeling.
The Reality Check
◦INCONVENIENCE: Selling your car and buying another is a hassle.
◦A DOWNGRADED DRIVE: Face it: your Geraldine car is nicer than a beater will be. Be prepared for it.
◦LESS DEPENDABILITY: No doubt your beater will have some issues. You need to be realistic in assuming that it will not be as dependable as a newer car.
◦MORE MAINTENANCE: With less dependability comes more maintenance.
◦FRIENDS WON’T UNDERSTAND: Reality? Yes. Negative? Not really. Just be prepared for it.
One Final Reality Check
You may not be able to arrange the necessary financing. Why? Either your credit score is not adequate or you are too far upside down. Should this be your scenario, you will need to strategically pay down all other debt in order to free up enough cash flow to make huge car payments. Keep the car until it is paid off or you will be swimming in car debt for years to come.
A Few Things I do to Organize my Finances
This is a guest post by Mr Credit Card from Ask Mr. Credit Card. Today, Mr Credit Card is going to write about ways to keep your finances organized. If you are looking for a credit card, then be sure to check out his best credit cards list section.
Telling folks to be organized in their finances is easy to say, much harder to do. I’m going to share some ideas that I myself have implemented and hope you find them helpful for yourselves and your situation.
Set Monthly Bills on Autopay – I find it such a hassle to constantly go through my utility bills, cell phone bills, internet connection bills, credit card bills, mortgage etc. For me, I find that putting all my bills on automatic bill pay works for me. There are a couple of ways to do it. You can set it up from your online bank account, or with the entity which you are paying the bill. What I also do is to put some of my utility bill on my credit card to earn extra reward points!
Some folks prefer to manually check the bills and write the checks themselves. For me, I find that this will not work because I just cannot be bothered with things like that. I also do check my bills even though they are on autopay to make sure there are no errors. The only thing you have to be aware of is to have enough cushion in your checking account. You do not want to be short of money and go into overdraft!
Have a separate box for warranties – Ever bought a new blender and forgetting where you put the warranty after you send them in (normally within 30 days though most folks actually forget about it!)? I used to lose warranties and instruction manuals because I had no set place to put them. Well, I now put all product instruction manuals and warranties in one place (more like a big box). That way, even though I am unlikely to ever need to refer to it, I always know where it is.
Have a separate file or box for your insurance policies and wills – We all buy insurance policies and once the payment starts, we forget why we buy them! Some folks don’t even remember buying them! I find that it is a good practice to keep these documents in a separate area. I frequently forget about the nitty gritty details of my health insurance and when I want to check them, I know where to get the documents.
Have lots of files – I file all my statements in bright colored files that I get from statements. For me, I refuse to receive “email or online statements” from my credit cards or utilities. I receive my statements in the mail and file them promptly.
Use Quicken – I use Quicken to track my accounts (both personal and business). My CPA told me to set up my business accounts in Quicken so that she has less work to do come tax time (and would presumably charge me less!). Since I moved over to Quicken, I found life so much easier. I could track my expenses and see patterns in my spending (obviously, you could use use services like mint.com. But for me Quicken does the job.
One trick that I’ve been taught was to set up my expense categories in my business accounts according to the expenses listed under the Schedule C (Form 1040 – where you file your business P&L). This makes it easy for your CPA if you just give him or her your Quicken file.
Use Separate Business Credit Card for your business – I used to use one personal credit card just for my business expense. But I found that I occasionally used it for personal use as well (most of the time by accident! or to make use of reward points!). But it gets messy because it gets in the way of keeping your business and personal finance separate. I finally bit the bullet and got myself a small business credit card. The card I got was the American Express Plum Card, which earns me cash back if I pay in full within a 10 day cycle. I also get no preset spending limits, which allows me to charge a higher than normal expense if the need arises.
Keep track of all your autopay accounts you charge to your credit card – Once I got my new business credit card, I had to call the vendors (or change them online) to change my credit card account. My web host for example has my old credit card information. Google has my old credit card information. My Verizon FIOS had my old credit card number. I had to either call them to tell them to charge to my new credit card or do it online.
Track your portfolio performance – Whether you have a single or multiple accounts with various online brokers, you should always consolidate your accounts into a platform for performance tracking. Quicken for example, does a good job of that. If you only use one brokerage firm, then the task is relatively more simple as most will have some form of annual performance tracking tool. But part of keeping your finances organized is to be able to say precisely what was your return last year net of fees.
Get a safe – I would recommend getting a safe to keep important documents like birth certificates, marriage certificates, your college degree. You could obviously keep your jewelery in it as well.
Have a list of important phone numbers – Make a list of your banks’ numbers, your brokerage number, your attorney’s number, your health insurance agents number, your doctor’s number. You never know when an emergency might come up and you want to have those numbers on hand.
I’ll stop here – These are some of the things that I have done to try to keep my finances organized. I hope you will find some of these tips helpful. The one thing that I have not really figured out is how to organize my pile of receipts! I hate filing them and I am very tempted to get something like Neat Receipts where I can just scan in my receipts and it can be transferred to my Quicken account and the images can be used for IRS audits. But I’m not sure if scanning receipts is an improvement at all. If anyone has any ideas for these, I’m all ears.
21 Ways to Reduce Your Spending Without Making Your Life Miserable
Jennifer writes in:
You often talk about how spending less doesn’t have to make your life miserable. Yet, most of the ideas you give seem miserable to me! What ideas do you have that won’t make my life boring?
Given that everyone’s life is different, it’s hard to point to a list of things that’s guaranteed to not be boring for everyone. For example, I find things like making a batch of laundry detergent to be fun because I can get the kids involved with it, but I recognize that others might not enjoy such things.
So, I made a list of twenty one spending reducing suggestions that I felt either didn’t have any impact at all on quality of life (things you can do once and benefit from for a while) or, if they’re repeatable, are inherently fun.
1. Get rid of stuff you don’t use.
Take a trip through your home and look around for things that you simply don’t use – and do something about it. Collect together things you rarely use and will probably never use again. Sell them off, give them away – just get rid of the clutter.
Why do this? For one, it makes your home less cluttered and more enjoyable. The result of this is that it’s more enjoyable to spend time at home – and to invite people over (see point #6). For another, you can take any money made on the items you’ve sold and apply them to your debts. This reduces your monthly debt payments and helps you get rid of entire debts more quickly.
Both of those come in exchange for just getting rid of stuff you don’t use. Sounds like a good deal to me!
2. Do some basic energy efficiency around your living quarters.
Replace your light bulbs with CFLs and LEDs – each bulb replaced adds up to at least $15-20 in energy savings over the lifetime of the bulb. Install a programmable thermostat to replace your current one, then program it to have the heating and cooling shut off when you’re not at home, saving you the cost of running it. Spend a couple of days air sealing your home, using this really handy guide from the Department of Energy, which can reduce your energy bill by about 20% every month with no additional upkeep work at all (it’s a great weekend project). Turn the temperature on your water heater down to 120 degrees F (or about 50 C).
Each of these tactics are things you can do once and result in a drastically lower energy bill every month thereafter without changing the quality of your life one iota. After all, a 40% lower energy bill each month means a wad of cash you can put towards other goals, like paying down your debts.
3. Unless you’re a heavy cell phone user, switch to a pay-as-you-go phone.
I use Skype for the vast majority of my phone calls (even when I’m out and about). Thus, I use my cell phone less and less, and given that I’m under contract, I’ve made the decision to drop it and go to a pay-as-you-go plan for the few minutes a month I use it.
If you use your cell phone less than a couple hours a month and send and receive infrequent text messages, a pay-as-you-go cell phone can be substantially cheaper than a cell phone plan. Look into some pay-as-you-go plans and see if any fit your usage needs and add up to significant savings over what you already use – in my case, pretty much all of them do, so I’m comparing reviews to see which one offers the best bang (reliability) for the buck.
4. Buy in bulk the staples you use all the time.
Quite often, people march through the store, buying things without careful consideration. They’ll either buy everything at the size that’s the cheapest per unit – even if they rarely use it and much of the item will go to waste – or they just grab the most reasonable size of each item.
The best approach is somewhere in the middle: get the best deal you can without wasting stuff. The best way to do that is to buy items in bulk if you’re sure you’re going to use all of it in reasonable time or before it becomes unusable. Think household supplies – toilet paper, dishwashing detergent, laundry soap, and so on. Everything else, don’t buy it in bulk unless you find yourself buying a smaller (less expensive) version of the item quite often.
Does this mean you should get a membership at a warehouse club? It depends entirely on how much you buy in bulk. It might be worthwhile, though, to share a membership with your best friend (many memberships issue two cards), halving the costs.
Don’t change what you buy. Just do it a little smarter, and you’ll save money without changing your day-to-day life one iota.
5. Get some exercise.
Exercise? How does that save money?
For starters, most exercise is free or at least very inexpensive. Long walks around the neighborhood are free. Jogging is free. Squats are free. Jumping jacks are free. Situps and pushups are free. Even simple weight exercises are really inexpensive – buy some hand weights and that’s all you need. Many simple sports have minimal equipment and have all you need in your neighborhood – soccer just requires a ball, basketball requires just a ball and a hoop (available in many neighborhoods), and parkour requires nothing at all.
Thus, if nothing else, exercise is a way to spend time without cost.
But there’s another benefit. Regular exercise reduces your weight, often not directly, but by raising your metabolism. For most Americans, this is a great thing – it improves your long-term health (reducing your medical costs) and improves your day-to-day energy level. It can also help improve the state of ongoing conditions like diabetes.
Overall, it sounds like a great way to regularly spend an hour, regardless of the financial benefits.
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