poverty

Here's What You Can (And Can't) Buy With SNAP

Carrie Kirby — Tue, 03 Apr 2018 08:30:13 +0000

The Supplemental Nutrition Assistance Program (SNAP), formerly known as food stamps, has always been controversial. It's meant to help ensure that everyone gets enough to eat, and the program assures applicants that they have the right to be treated with "dignity, consideration, and respect." Yet, the program also imposes lots of complicated rules on users, and many people have shared opinions about whether users are making "acceptable" choices with their SNAP dollars.

Recently, SNAP has been in the news — and in the middle of countless social media debates — because of three developments.

First, Amazon opened its first automated grocery store, Amazon Go, where you can simply enter the store on the app, take the items you need, and leave without checking out as part of their Just Walk Out shopping experience. However, it doesn't accept SNAP.

Second, a petition has been circulating advocating that SNAP benefits should cover food for pets as well as human household members.

And third, the Trump administration Office of Management and budget director, Mick Mulvaney, proposed replacing food aid to low-income families with a "Blue Apron-style" box of canned goods and other non-perishables.

Which made us wonder what you can currently buy with SNAP, and what you can't.

What you can buy with SNAP

SNAP and its beneficiaries have plenty of critics, often people who feel that low-income individuals should be limited in what they are allowed to purchase with public funds. Critics of those critics would say that prescribing their shopping lists is intrusive. Generally, the rules limit SNAP purchases to food products, with some limitations and exceptions.

Energy drinks

Energy drinks such as Red Bull have been available for purchase with food stamps since 2013, when companies making them began changing their labels to list "nutrition facts" instead of "supplement facts." Critics have tried to have them removed from eligibility, but as long as they are classified as a food item, they are likely to stay.

Luxury items

Since they are clearly food items, you can, in theory, buy steak, lobster, shrimp, or any other high-end food with food stamps. Legislators have proposed removing such items from the program, but in reality there is no need: Data from the Bureau of Labor Statistics shows that people in the income group low enough to qualify for SNAP hardly buy any beef or seafood (only about 10 percent of the average monthly grocery bill), because it's too expensive.

Junk food

There is some truth to the impression that a lot of SNAP recipients buy junk food. A 2011 USDA analysis found that 23 cents of every SNAP dollar goes to sweetened beverages, desserts, salty snacks, candy, and sugar. (The other 77 cents goes toward meal ingredients, such as milk, bread, meat, cereal, and vegetables.) However, non-SNAP households spent 20 cents of every dollar on those same sweet treats. So shopping habits were similar, regardless of payment method.

Nutritionists have expressed concern about the amount of junk food purchases funded by SNAP, which is meant to improve health, not to contribute to health problems such as obesity. But attempts to cut junk food from SNAP run into problems both with complexity and with the discomfort of making the government the judge of which foods are worthy and which aren't.

Birthday cake

While you can't buy hot prepared food items, you can buy baked goods. Muffins, cakes, and cookies purchased at grocery stores and some bakeries are fair game.

Holiday items

Since they are technically edible, you can buy your Halloween pumpkins with SNAP — but not decorative gourds. Gift baskets, prefilled stockings or prefilled Easter baskets can be purchased as well, but only if at least 50 percent of the contents are edible items and the basket contains no prohibited items. For example, you could buy a holiday stocking with a few small toys and a lot of candy, but not a large stuffed bear holding a small box of chocolate.

K-Cups

You can purchase coffee to make at home, in any form, with your SNAP card. This includes single-use pods such as K-Cups, instant coffee, cappuccino mix, whole bean, or fresh ground coffee.

Taco Bell (sometimes)

The vast majority of SNAP recipients are limited to buying groceries with SNAP. But in some states, elderly, disabled, and homeless SNAP recipients can participate in the Restaurant Meals Program. In Arizona, participating restaurants include Taco Bell, Denny's, Subway, and others.

Seeds

In 2014, SNAP began allowing participants to purchase seeds and plants that produce food, and launched a site to encourage gardening.

Produce at the farmers market

You can legally buy fresh fruits and veggies, as well as homemade jams and honey, at farmers markets. The only catch is that most stands only accept cash, while SNAP functions as a debit card. The government is working with local markets to change that, including publishing a directory of farmers markets that accept SNAP and setting up incentive programs such as bonuses for SNAP users.

Food from online grocers

The USDA is operating a pilot program allowing SNAP users to order groceries online. This could be a boon to people living in food deserts and homebound elderly and disabled people, not to mention parents of small children and those who work long hours and can't get to the store. (See also: 6 Ways Having Your Groceries Delivered Can Save You Money)

Cocktail mixers

While you cannot use SNAP for alcohol, you can buy mocktails, bloody mary mix, tonic water, or margarita mix.

Things you can't buy with SNAP

Despite the fact that we just listed a wide range of items that you can buy, there are actually plenty of things you are not allowed to purchase with SNAP benefits. Some make perfect sense; there's no way taxpayers are going to fund cigarette or alcohol purchases. But there are valid arguments that some of the following items should be covered.

Rotisserie chicken

Those hot roasted chickens in the deli are sometimes cheaper, pound for pound, than raw chicken. And for people who don't have access to a kitchen, they could be included in many healthy meals such as chicken tacos or chicken salad. However, most SNAP recipients can't purchase any hot prepared foods, including these.

Toiletries

Since they are not food, you can't use SNAP to buy household items such as soap, laundry detergent, diapers, sanitary napkins, or toilet paper. Since these items are essential, this restriction can be a hardship for SNAP recipients.

Pet food

As mentioned above, a petition asking the federal government to include pet food in the SNAP program recently received more than 230,000 signatures. While there's a valid argument to be made that pet ownership is a luxury that the American taxpayer shouldn't have to support, the counterargument is that pet owners that fall into poverty are more likely to give up or abandon pets if they can't feed them — and housing these pets in shelters or euthanizing them costs the public money.

Grocery bag fees

More and more local governments are discouraging waste by requiring stores to charge for grocery bags. SNAP cannot be used to pay those fees, and the local law may not exempt SNAP users. So SNAP users should either bring their own bags or be prepared to pay for disposable bags with cash.

Food shipping charges

SNAP users participating in the trial of online grocery ordering must pay any delivery or convenience fees in cash.

Live animals

While you could buy live crabs to cook at home, you can't use your SNAP card to buy a piglet to raise or a cow to milk — even if it would save you money and provide more nutritious food in the long run. Livestock just isn't part of the program.

Alcohol and cigarettes

Alcohol and cigarettes aren't food, they're not nutritious, and the public doesn't want to pay for them.

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This article is from Carrie Kirby of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread:

7 Roadblocks to Retirement (And How to Clear Them)

Paul Michael — Wed, 29 Nov 2017 10:00:06 +0000

How often do you dream about retirement? It's nice to think about the day when you can stop answering to a boss, and instead spend your time relaxing, traveling, and enjoying life to the fullest. Well, if you want that dream to become a reality, you may need to make some significant life changes now. If you're guilty of the following things, you could end up working well past your planned retirement age. (See also: How Much Should You Have Saved for Retirement by 30? 40? 50?)

1. You simply aren't putting enough money away

Most people vastly underestimate the amount they need to stash away for their golden years. The problem comes from the fact that many financial planners will tell you to put between 10 and 15 percent of your income toward retirement. However, that assumes you started saving in your 20s.

If you are now 40, and only started putting money away 10 years ago, you need a higher savings rate in order to make up for those missing years. In fact, you would have to put around 25 percent of your salary away each month and work until you're 70 in order to make up for the shortfall. And as always, compound interest is the real key to saving. By missing out on those years in your 20s, you will have significantly impacted your future nest egg. (See also: How to Start Saving for Retirement at 40+)

2. You aren't taking advantage of your employer's 401(k) match

Simply put, any kind of match that your employer gives you is free money, and it would be silly not to take advantage of every cent. The average match out there is 3 percent of your pay, although companies can vary greatly on what they offer. This means that if you only put in 2 percent of your salary, you are leaving 0.7 percent of your income on the table. It may not seem like a lot, but that can really add up over time.

If your company offers you 50 percent on the dollar for up to 6 percent of your pay, you should be putting 6 percent away. If it's a dollar amount match, say $2,500 per year, make sure you put in at least that amount. (See also: 5 Dumb 401(k) Mistakes Smart People Make)

3. Your plan is not aggressive enough

Most 401(k) plans have something called a "target date" that is used to figure out what your retirement portfolio will look like. If you have 30 years to go until retirement, you will almost certainly want at least a moderately aggressive portfolio. This will be comprised primarily of stocks, which offer higher gains, but are more volatile and can lose their value quickly. However, the stock market will always recover over time, and if you have that time to spare, this is the plan you should use.

If you have less time to go until retirement, your portfolio will have way less stocks in it, opting instead for a larger percentage of bonds. These are much safer, but they don't have the ability to make as much money as stocks. If you came into the retirement savings habit late, you should talk to a professional about how to organize your portfolio. You simply may not have enough time to make money with a conservative plan, but could also risk losing money with a more aggressive one. (See also: Start Planning Now for When Your Target-Date Fund Ends)

4. You're spending too much of your disposable income

A coffee here. A magazine there. Eating out every week. These small expenditures really add up, and instead of saving the money you'll need to survive after you stop working, these frivolous buys are burning holes in your pocket.

Yes, life's little luxuries are important for your morale and self-esteem from time to time, but get a handle on those expenses and budget accordingly. You may find that you're spending $40 a month just on coffee. That's $480 a year. Let's say you plan on retiring in 30 years, and you stop getting that morning coffee for one year. A good rate of return on retirement investments is about 8 percent. Thirty years down the road, that $480 will become almost $5,000. If you cut your daily coffee out entirely, it will add over $63,500 to your retirement fund in a 30 year period. Now think about it: Is that "luxury" really worth it? (See also: 7 Effortless Ways to Prevent Budget-Busting Impulse Buys)

5. Social Security benefits alone will not be enough

It seems unfair that we pay into the system all our working lives, and when it comes time to retire, we get very little back. But, that is simply the result of a population that is living longer, yet retiring at the same age of 65. There just isn't enough money in Social Security to totally support you unless you have almost everything completely bought and paid for by the time you retire, and even then, it will be tough going.

Right now, benefits for retired workers average around $1,374 per month, or just over $16,400 annually. When you consider that the federal poverty line is currently $12,060 for a one-person household, that's a little too close for comfort.

While it's possible to survive on that, barely, you have to ask yourself: Do you really want to spend the last 20+ years of your life scraping to make ends meet? (See also: 6 Smart Ways to Boost Your Social Security Payout Before Retirement)

6. You're using your home like a cash machine

It's so tempting to dig into the equity in our homes, especially when the housing market is strong and interest rates are so low. But, every time you refinance your home to take out money, and start another 30-year mortgage, you are seriously impacting the quality of your retirement.

Ideally, by the time you retire, you'll want that home to be paid for; no mortgage left, only taxes and maintenance. But if you are 40 years old and just did a 30-year refinance to take out some cash, you've ensured you'll be paying that mortgage until you hit 70. Not only that, but every time you do a cash-out refi, you're spending money on fees.

If you must refinance, consider doing a 10 or 15-year fixed rate term instead. Get that mortgage paid off quickly. You'll also pay thousands less in interest over the life of the loan. (See also: 3 Times a Refinance Is the Wrong Move)

7. You're not aiming to become a millionaire

When people start tucking away money for retirement, they don't really consider the lump sum they are going to need when they eventually stop working. And ask any average Joe if they will be a millionaire one day, and they will laugh at you and say something like, "Yeah, right!"

But, everyone should be doing what they can to become a millionaire in retirement. While it may not be possible to hit that figure exactly, you should still aim as high as you can.

It's commonly advised that by the time you hit retirement age, you should have at least 10 times your current salary in your retirement account. With the current median income hovering around the $60K mark, that means that you should have just over half a million dollars in your fund if you retire this year. If you're a higher earner, let's say you earn $120K a year, that figure should be over a million. (See also: Here's How Far $1 Million Will Actually Go in Retirement)

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This article is from Paul Michael of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread:

6 Ways to Feel Better About Your Financial Situation

Mikey Rox — Tue, 03 Oct 2017 09:00:05 +0000

When your bank account balance is looking dismal and you're digging through your pockets hoping for some forgotten cash, it's reasonable to be pessimistic about your financial situation. Don't despair. Instead, let's look at the piggy bank half-full, because there are plenty of positives in your financial situation that might be hard to see.

1. Count your blessings

While you may be on a tighter budget from time to time, you're not broke — not as long as you have clothes on your back, a roof over your head, and food in your belly, anyway. And if you still have a job? That's a blessing you can count each time a paycheck arrives.

It's not ideal to have no savings, nor an emergency fund, nor a well stocked retirement account. But when you take a step back, you might see that your situation is manageable, and changeable. Start with a tally of what you have in terms of time, money, skills, and social connections. (See also: How to Escape the Paycheck-to-Paycheck Cycle)

2. Come up with a plan

Not having enough money isn't fun, but if you let that problem fester for too long, it will wear you down. Your confidence and motivation will suffer as a result, and you run the significant risk of relegating yourself to being someone who's always struggling financially.

Focus on small ways you can change your financial situation immediately, such as selling stuff you no longer need, or looking for a side gig to bring in extra income. You don't even need a "second job" these days to bring in extra cash. You can pet sit in your neighborhood, rent out space in your home, drive for a ride-sharing service, plus dozens more moneymaking opportunities. I take on several of these tasks regularly, in addition to my job as a full-time journalist, because I like to have "enough" for the things I want. I live by the financial motto, 'If I'm not making money, I'm spending it' – which is why I have to spend more time doing the former than the latter to get ahead in life. (See also: 9 Ways to Earn Extra Cash When Money Is Tight)

3. Find a support group

Financial conversations can be extremely awkward, but it's important to seek out sources of support from people who understand what you're going through, and can provide advice. There's nothing wrong with setting boundaries when friends ask you to do something you can't afford. Politely say no and then lean on your supportive network. (See also: 15 Ways to Stay on Budget — Even With Your Spendy Friends)

4. Never feel guilty about saving money

Sometimes committing to living within your means, saving for an emergency fund, and reaching for financial independence means saying no to certain purchases and activities. It could mean letting your friends and family know that you won't be buying holiday gifts this year. Achieving your financial goals might require sacrifices here or there, but will be worth it when your purchases no longer come with a cost of credit card interest or future security.

5. Demolish that negative mindset

You know how when people start telling lies, they sometimes convince themselves that the lie they told is true? That's what happens when you're constantly saying you're broke. Eventually you'll begin to believe that, and being "broke" will become a way of life. Head that self-fulfilling prophecy off at the pass by removing that word from your lexicon altogether.

Change your narrative about your situation. Believe that you have the ability to rise above — and tell yourself so.

6. Look ahead, not behind

If you're in your current financial situation due to bad money decisions in the past (been there, done that), it's no use to beat yourself up about it. Recognize what you've done, decide that you're going to learn from it, and then move forward. Make each day another opportunity to improve and make better decisions. (See also: 20 Money Mistakes Everyone Makes But No One Talks About)

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This article is from Mikey Rox of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread:

How to Think Like a Billionaire When You’re Broke

Paul Michael — Wed, 24 May 2017 08:00:08 +0000

It’s not easy being broke. As of 2014, there were almost 47 million Americans living below the poverty line. That’s roughly 15 percent of the population.

To simply tell these people to "start thinking like a billionaire" may seem tone deaf, or even cruel. But it actually is great advice. Millionaires and billionaires, especially those who are self-made, tend to think in a completely different way. It all comes down to a different view of the world. And it’s time to embrace that mindset.

Don't think about the money you don’t have

To illustrate this point, consider the test Dr. Tina Seelig gave her Stanford University students. She challenged them to make as much money as possible in two hours using only $5 of "seed funding" tucked in an envelope. Working in teams, they could spend as many hours as they wanted planning, but once they tore open the envelope, the clock started ticking. The most successful results came from the teams that realized a very important part of the test — namely, that the $5 was a red herring.

Concentrating on the small sum of money put them in a box, so they ignored it, and instead looked at ways to make money from scratch. Some of the ideas were incredible. One team made $650 by selling their time; they sold their three-minute presentation slot to a firm looking to recruit students in the class. Brilliant. Now that’s how a billionaire thinks — looking at the opportunity, not the handicap.

The lesson here is that the money you do not have right now should not, in any way, hold you back. If you don’t have funds, find a way to use what you do have to make money. What can you sell? Is it your time? Is it knowledge? Is it a service? The lack of money in your account should not place a limit on your ideas.

Never say "I can’t afford it." Instead ask "How can I afford it?"

You may have heard it often growing up. "Dad, can I get a new bike?" "No, we can’t afford it." That’s how poor and middle class people often think. They look at their current financial situation, and make a quick calculation. But that’s the wrong approach.

If you need something, or your kid wants something that isn’t just a frivolous whim, don’t automatically say, "No, we can’t afford it." Instead, counter with a question. Namely, "OK … how can we afford that?"

Maybe it’s a new stove, or replacing the old, worn-out car. If you immediately shut down the possibility, you’ll never get it. A billionaire doesn’t place these limits on ideas or dreams. They look into funding sources, ways to create capital, and many other money-generating avenues. And we’re not talking about pulling out your credit card for something you can’t afford and don’t need.

For necessities — or important dreams — it doesn’t matter if the object in question costs $100 or $100,000,000. The process is still the same. How can you afford that? What can you do to make it happen? Start thinking. (See also: How to Come Up With $1,000 in the Next 30 Days)

See change as opportunity

Most of us are afraid of a major life change, be it a job loss, financial obligation, or a move to another state. These are stressful and difficult situations. But a billionaire sees any kind of change, even those most of us would consider negative, as an opportunity.

If it’s a job loss, it has created a glut of free time to use for a new venture. What can you do with that time that could create money in new and exciting ways? Think back to those college students with the $5 challenge. Some of them decided to make money waiting in line for people. They were making $20 a shot. Considering the minimum wage is currently $7.25, that’s almost three times the amount for literally doing nothing.

Fear of change is natural. But fear is a negative response to any situation, and in the long run, it will cripple your thinking and your ability to bounce back. Whatever the situation, take control and think positively. How can you turn it to your advantage? What do you have now that you did not have before this major event happened? Then, run with it.

Every penny saved is a penny earned

Billionaires do not blow money. People have this idea, which comes from a select few who hog the limelight, that the superrich are super wasteful. But they did not become rich by throwing money away.

There is a now infamous anecdote about a billionaire who went into a New York bank asking for a $5,000 loan, and put his Bentley up as collateral. It was approved, and the bank employee parked the car in their underground garage. Two weeks later, the man returned from vacation, and paid back the $5,000, plus the $15.41 it accrued in interest. When asked why he, a rich man, would require such a small loan, he replied "Where else could I have parked my car in New York City for two weeks, for only $15?!"

The story isn't real, but the strategy definitely is. This is how a billionaire would actually think about such a situation. Sure, they can afford the finest parking in the city, but why pay through the nose for it when they can get it for almost nothing?

You can think the same way. What are you paying for, right now, that could be reduced in cost? What ways are there to save money on everyday purchases? From extreme couponing, to haggling and bartering, you have many options available to you.

Time really is money

Donald Trump once stated that he never wastes time. Even when he’s on the golf course, he’s doing business. He sleeps as little as possible, because every moment he’s awake is an opportunity to make money or create something.

Look at the ways you spend your time, and see how it can be maximized to work for you. If you’re on the bus going to work, are you staring out of the window, or reading a book that could teach you a new skill? Do you have hobbies that are productive?

Even playing video games can make you a small fortune, if you record yourself playing and post the videos to YouTube and Twitch. Indeed, the average "pro-streamer" makes between $3,000–$5,000 per month from 40 hours per week of game time. Think about that. They are literally being paid a living wage to play video games. Something that many people believe to be a waste of time has been turned into an income stream.

Consider every detail

It’s been said that billionaires look at the bigger picture. It's often called "the 30,000 foot view," which basically means seeing the layout, but not the houses, driveways, and storefronts. This is, in fact, the complete opposite of how a successful business operator thinks. Yes, the big picture is important at the get-go. But the details are what drives the success or failure of a venture. Often, it’s a small detail that was overlooked that causes something to fail.

Look at your own budget, and lifestyle, with that same eye for details. Are you paying $1 too much for something, especially a monthly bill? Did you examine the contract for your lease? Is there something in it that gives you a chance to save money? Did you get every deal you were supposed to get at the grocery store? Check the receipt.

Back in 2005, a software company hid a $1,000 prize in the terms and conditions of its user agreement. It took five months, and over 3,000 sales, before someone actually read the agreement and claimed the money. Details count. Pay attention to them, and you could see incremental changes that really start to add up.

Remember, billionaires and millionaires may live extravagant lives, but don't let that stop you from thinking the same way they do. It will make you wealthier in the process.

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This article is from Paul Michael of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread:

How Every Woman Can Take Control of Her Finances

Carrie Kirby — Tue, 09 Aug 2016 10:30:17 +0000

It may seem patronizing or silly to offer specific retirement planning advice for women. After all, money is money, and compound interest works the same way whether the name on the account is John or Joan. And it's not as if we are living in an era where most women stay home instead of earning an income; today women make up nearly half of the workforce.

But even if I feel like my husband's equal in earning power and investing know-how, the fact is that I am more likely than he is to be among the ranks of the elderly poor. In fact, a recent analysis by the National Institute on Retirement Security found that women are 80% more likely to be in poverty at age 65, and the disparities just get larger as women get older.

There are many reasons why we women may not do as well as men in retirement preparation.

"Women statistically make less than men, so they have a smaller base to work with. And women tend to want to take care of others before themselves," said Sally Brandon, vice president of client services at investment adviser Rebalance IRA.

Then there is the fact that more women take long breaks from full time work to care for children, and are more likely to work part time -— conditions that diminish our likelihood of socking away retirement funds.

So what should women do to avoid having to subsist on Friskies in our latter years? Keep these things in mind.

Find an Adviser Who Listens to You

In my household, I handle our taxes and other finances. It's just not my husband's forte. So imagine my chagrin when I decided to hire an accountant, and he switched my husband's name to "taxpayer" and mine to "spouse" on our IRS forms. He said he did it because the IRS likes consistency — nevermind that we had consistently filed the other way for 15 years at that point!

Other couples I know have met with financial planners who address all their questions to the husband only. That's why it's important to interview a potential adviser before committing. If you visit with your spouse, make sure the adviser addresses both of your concerns. Pay attention to how women working in the adviser's office are treated. And of course, if it makes you feel more comfortable, you can always hire a female adviser or one who specializes in helping women.

Just as important as selecting an adviser you're comfortable with, Brandon says, is signaling to that adviser that "you're a part of that process as much as the person next to you" with your active participation. For instance, Brandon and her husband recently met with an estate planner together.

"I started asking a lot of questions, and by the end, everything was being addressed to both us, and not to just him," she says.

Make Your Retirement a Priority

A survey by financial services organization TIAA-CREF revealed that nearly half of women say they can't afford financial advice, and one in three say they don't have time to seek it. That's another example of women putting the needs of others before their own.

"You get pulled and tugged in so many directions," said Brandon, herself the mom of three.

Because starting early is key to amassing adequate retirement savings, it's important for everyone, including busy mothers, to take the time as soon as possible to set up a retirement savings plan and check up on it regularly.

Save Even If You're Not Working Full-Time

Women are twice as likely to work part time as men, and we are also more likely to take extended breaks from the workplace and have nonlinear career trajectories. If your career has taken this kind of path, it should be incorporated into your planning. Better yet — and I get that this can be tough — evaluate the effect that such a break or shift would have on your retirement before you decide to do it.

One way to keep saving during a break, Brandon suggests, is by contributing to a spousal IRA, which is simply a regular IRA that a nonworking spouse can contribute to in order to keep retirement savings going even during a career break.

Don't Let Divorce Derail Your Future

No one plans for their marriage to end in divorce. Yet, after seeing too many friends and relatives have their finances shredded by divorce, I've come to the conclusion that all married people should be prepared to weather a divorce if necessary.

Statistically, women are more likely to be financially hurt by divorce. We're more likely to have custody of the kids, and many single mothers receive no child support. Anecdotally, I know women who had no credit in their own names until they got divorced and found themselves applying for a credit card with no credit history, or even worse, a credit history that was shredded by the ex's actions.

The first thing women can do to prepare for divorce is the same thing she can do to prepare for successful retirement if she stays married: Understand the family finances. Pay attention and ask questions. Don't leave it all to your spouse.

The next part happens during the divorce: Fight for what you deserve. Divorce attorneys report seeing many women settle too soon in divorces and accept too small a share of the couple's net worth, just to get it over with. Some men bully and harass their wives into giving in, and even use the children against them.

In divorce, as in marriage, remember that as important as the pressing issues of today may seem — the kids' needs, the stress — retirement can last a long time, and it will seem even longer if you have to spend it eating cat food.

What are you doing to take control of your finances?

This article is from Carrie Kirby of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread:

9 Ways Money Does Buy Happiness

Tim Lemke — Fri, 18 Dec 2015 10:00:08 +0000

Whenever someone tells me that money can't buy happiness, I am often tempted to insist they give me all of their money as a way to test this theory. (See also: 6 Ways Money Really Can Buy Happiness)

Research abounds on the "Can money buy happiness?" question, and there is evidence on both sides. It seems that true happiness can come from deep personal connections and life experiences rather than material goods. But there's also information showing that people on the lowest end of the income scale are vulnerable to depression and other mental health problems.

Here's a look at some of the research indicating that money does indeed play a role in making people happier.

1. You're Less Likely to Suffer From Depression

A 2012 report from Gallup revealed that people in poverty are more likely to suffer from health problems, with depression being the most common. About 30.9% of poor people said they have been diagnosed with depression at some point, compared to about 15.8% (half as many!) for those not in poverty.

2. Your Kids Brains Will Develop Better

PBS reported in June on the growing body of evidence supporting the idea that growing up in poverty can have a long-term impact on children's cognitive development. In the most extreme cases, children endure "toxic stress" that is shown to actually chemically alter their brains.

3. You Can Afford an Education

A 2012 study by Pew and the University of Virginia found a connection between happiness and obtaining a college degree. A broad education, researchers concluded, can lead to a richer and more fulfilling life, as well as greater earning opportunities.

4. You'll Avoid Student Loans

There's been a lot written about the impact of student loans on young people, and there's evidence that the crushing debt can actually be detrimental to happiness. An article published in the journal Social Science and Medicine concluded that student loan debt was related to "poorer psychological functioning" among young adults.

5. You Can Mentally Savor Life

When you have money, you don't need to focus as much attention on acquiring it in order to meet your basic needs. This frees up your mind to actually savor the experiences of life, according to a 2010 article in Scientific American. The article concluded that "...a person's ability to savor experiences predicts their degree of happiness."

6. You're "Buffered" From Sadness

A recent paper in the journal Social Psychological and Personality Science concluded that there may not be a direct connection between money and happiness, per se. But, the authors said there was strong evidence that money prevented sadness. The study concluded that people with money can more easily "buffer" themselves against stressful events.

7. You'll Be Free to Spend Money on Others

When you barely have enough to support yourself, you're likely not thinking about giving back to others. But being generous with your money is a path to happiness, according to a Harvard study titled "Using Money to Benefit Others Pays Off." In the study, researchers gave money to students to spend on either themselves or others by the end of the day. "People who had been assigned to spend the money on someone else reported feeling [a] happier mood over the course of the day than those assigned to spend the money on themselves," the authors wrote.

8. You Can Spend Money on Experiences

There's considerable evidence that buying "stuff" doesn't make anyone any happier. But paying for experiences offers a good bang for your buck when it comes to happiness, according to the book Stumbling on Happiness. Whether it's swimming with sharks off the coast of South Africa or hang gliding over a volcano in Hawaii, experiences do cost money.

9. You're Less Likely to Be Lonely

A 2011 study in the Journal of Consumer Psychology concluded that people with meaningful social connections are generally happiest. And there is other evidence showing that people with less money are more likely to be lonely. The Guardian reported in 2014 that "Poor social networks should be included as a contributor to and signal of poverty."

Does money make you happier?

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This article is from Tim Lemke of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread:

12 Surprising Things Women Should Know About Retirement Planning

Max Wong — Mon, 30 Mar 2015 11:00:08 +0000

One of my longstanding fears is that my retirement will see me living on the street, homeless and destitute. As it turns out, my fear is far from unique. In fact, it even has a name: Bag Lady Syndrome. According to a poll by Allianz Life Insurance, 49% of American women fear ending up a bag lady, even those who make six figure salaries. In fact, according to a recent survey of workers by the Transamerica Center for Retirement Studies, only 14% of women are very confident in their ability to retire comfortably.

Yes. I have heard the news: Women continue to make huge strides in school and in the workplace. But I also know the reality. Women are at a much greater risk of financial insecurity in later life than men for a number of reasons.

1. Longevity Does Not Work in Women's Favor

The women in my family generally live to be close to 100. While most people are impressed by my genetics, I find longevity to be an expensive double-edged sword. How am I going to pay for a 30-year retirement? The average American woman lives six years longer than the average man, which is why 70% of Social Security beneficiaries over age 85 are women. There are 50% more elderly women living in poverty than men.

2. 54% of Women Don't Plan to Retire, Ever

Like Mrs. Hughes on Downton Abbey, over half of all American women plan on working until they drop dead.

3. Almost Half of All Women Plan to Work Through Retirement

Shuffleboard and sensible shoes are not everyone's dream retirement. Roughly 49% of women plan on continuing to work during retirement. While work is pleasurable for many women, and delaying retirement is a great way to shore up savings, the job market for 70- year-olds isn't great. Planning to simply not retire is not a viable retirement strategy.

4. Baby Boomers Are Still Living the Dream

Like every other gen X-er on the planet, I figured out in college that I would spend my life paying for someone else's social security, since it's a benefit that I doubt I will ever enjoy. However, this bitter worldview is generational. To wit: 26% of baby boomers (born 1946-1964) don't have a backup plan if they are forced into retirement sooner than expected due to health problems or job loss.

5. Time Off for Caregiving Negatively Impacts Retirement

Millennials, get ready to be poor when you are old. Even if your baby boomer parents put away enough money for retirement, you might still have to supplement their care. A recently published study by the Employment Benefit Research Institute calculates that female baby boomers on the verge of retirement have a savings shortfall of nearly $63,000, while male boomers have a deficit of $34,000.

What's worse, 58% of women don't plan to take time out of the workforce to act as a caregiver for a child or an aging parent, which is odd considering that 80% of American women give birth at some point during their child bearing years. In fact, the average woman spends 17 years raising children and 18 years caring for aging relatives (including her spouse).

Of the 22% of the female population who aren't living in denial of the time suck that is parenting or childcare, 67% believe that taking time off work to care for children or aging parents will hurt their ability to save for retirement. (See also: 9 People in Your Life Who Are Keeping You Poor)

While women who take off time to be caregivers lose out on matching funds and cannot contribute to a 401(k), a survey by the asset management firm BlackRock shows that women can close the savings gap when they return to the workforce. However, they miss out on the magic that is compound interest during years spent being caretakers.

6. The Majority of Women Expect to Self-Fund Retirement

Only 5% of women expect a company-funded pension to be the primary source of retirement, because less than a third of women will receive any kind of pension at all. Roughly 27% expect to rely on social security, while 59% of women expect to self-fund their retirement through a 401(k) or other savings and investments.

7. Part-Time Work Is Women's Work

Due to childcare responsibilities, women are much more likely than men to work part-time. Not only does this translate into a much smaller paycheck, most part-time jobs do not include benefits such as health care.

8. Women Are Less Likely to Be Offered a Retirement Plan

Also, because part-time workers of either gender are less likely to be included in 401(k)-style retirement plans through work, fewer women are offered retirement benefits.

This is compounded by the fact that women who take time out from their careers to raise children or care for aging relatives are not eligible for retirement plans and miss out on matching contributions.

9. Women's Annual Contributions to 401(k)-Style Plans Lag Behind Men

This falls into the "No Duh" category of financial factoids. Women's annual contributions to retirement plans lag behind men's because women make less money on average, and have to take off more time for childcare.

10. Fewer Women Take Advantage of Retirement Plans Than Men

What is preposterous, however, is that even when women are offered retirement plans, only 77% participate, compared to 82% of men!

11. Women Think They Will Only Need $800,000 to Retire Comfortably

Statistically, women live longer than men, and therefore have a longer retirement. This should correspond with higher estimates for retirement savings needs. However, it does not. The median estimated retirement savings need for women is $800,000, compared to the $1,000,000 median men need to feel financially secure in retirement. Why is there this discrepancy?

12. Women Are Guessing Their Retirement Savings Needs

Alas, the main reason that women are low-balling their savings is because 57% are just guessing their retirement needs. Only 8% of women in the Transamerica Study used a calculator to run numbers.

While this is depressing news, women of every age can take steps to improve their retirement readiness.

Develop a Retirement Strategy and Put It on Paper

Use a retirement calculator to figure out how much you will need to save each year — including both employer-sponsored plans and outside savings.

Plan Your Parenthood

Can you actually afford to have children? If you already have children, carefully consider any and all options to help mitigate the impact on your long-term financial security. Can you move in with family to help save on childcare costs?

Seek Retirement Benefits

If you employer doesn't offer you a retirement plan, it doesn't hurt to ask for one or seek out an employer who does.

Participate in Company Plans

Regardless of how little money is left over from each paycheck, workers with 401(k) plans should try to maximize the amount of money they put away, especially if the employer matches funds. Women (and men) who don't participate in matching 401(k) plans are literally refusing free money.

Educate Yourself About Retirement Investing

If you can, seek professional guidance. Learn about ways to stretch savings, including when to withdraw money from retirement accounts with minimal penalties.

Have a Backup Plan

Do you have disability insurance or life insurance? Identify possible cost-cutting or money-making lifestyle changes such as moving into a smaller home or living with roommates.

Actually Do the Math

Use a retirement calculator to estimate your retirement savings needs and do everything in your power to achieve that goal.

Share Your Knowledge and Plans

Talk to your family and close friends about your retirement plans. Managing financial and time expectations should be part of everyone's retirement strategy.

Are you afraid of becoming a bag lady? What is your strategy to keep this paranoid fantasy from becoming a reality?

This article is from Max Wong of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread:

The 5 Charitable Donations That Do the Most Good

Brittany Lyte — Mon, 23 Mar 2015 09:00:05 +0000

You don’t have to be as wealthy as Bill Gates to do good with your money. If fact, you can make quite a big splash in this world even if you can only afford to give a relatively small sum. The key is finding charity organizations that are using your money to the maximum effect. But with more than one million nonprofits registered in the U.S., it can be difficult to determine which ones will use your donation in a way that’s most impactful. Lucky for you, we’ve done the homework — read on for our roundup of the charities that will give you the biggest bang for your buck.

1. Compassion International

In an in-depth analysis by Charity Navigator, this Christian child advocacy ministry earned the most consecutive four-star ratings, demonstrating fiscal excellence over time. That means the Colorado-based youth services charity is well-positioned to pursue and achieve long-term change; every dollar donated to Compassion International is well spent.

Founded in 1952, Compassion launched with a mission to provide Korean War orphans with food, shelter, education, and health care, as well as Christian training. Today, the organization aids more than 1.5 million children in 26 countries. You can donate in many ways, including via a $38 a month child sponsorship that provides health care, hygiene training, supplementary food, personal attention, guidance, and an opportunity to learn about Jesus. Compassion even organizes visitation trips for donors who want to see first-hand how their money is saving a life.

2. Carnegie Institution for Science

Ranking second in Charity Navigator’s four-star rating is Carnegie Institution for Science, which funds research in the earth, space, and life sciences. Headquartered in the nation’s capital, the 110-year-old nonprofit is dedicated to scientific discovery. Some of its greatest accomplishments include providing support to Edwin Hubble, who revolutionized astronomy with his discovery that the universe is expanding and that there are galaxies other than our own Milky Way, and the work of Andrew Fire, who won the Nobel Prize in 2006 for his and his colleagues’ discoveries related to gene silencing. Through Carnegie Science’s research support program, donors can choose to fund specific research projects, which helps make the giving process all that more personal.

3. Development Media International

Of the six million children under the age of five who die each year, two out of three could have remained healthy if their families made use of simple, inexpensive, or free interventions like hand-washing and anti-malaria bed nets. Development Media International is trying to fix this by using television and radio campaigns to spread these public service messages. So far it’s working — DMI’s media campaigns are actively reducing the global child mortality rate. In fact, the charity has the potential to prevent nearly 23% of all future child deaths, according to some forecast models, which has helped earn DMI a spot at the top of The Life You Can Save’s recommended charity list. Previous successful public service campaigns launched by DMI include those targeting leprosy, HIV/AIDS, reproductive health, and tuberculosis abroad.

4. Brother’s Brother Foundation

Since 1958, Brother’s Brother has delivered food, medicine, and educational supplies to people impacted by disease, poverty, and natural disasters — all from its humble headquarters in a run-down neighborhood in Pittsburgh. This family-run foundation is at the forefront of Forbes’ all-star list of the most committed, financially efficient charities in America. Over 99% of all donations to Brother’s Brother go to those in need, making this charity a great place to donate your hard-earned money. With just 16 full-time employees and $245M in annual donations, Brother’s Brother last year shipped 4,821,381 pounds of goods to 60 countries, including people affected by the Ebola outbreak in West Africa.

5. PetSmart Charities

When it comes to animal welfare charities, PetSmart is ranked highest by the three major charity watchdogs: the BBB Wise Giving Alliance, Charity Navigator, and CharityWatch. That’s because the Phoenix-based charity has excellent ratings when it comes to financial efficiency, accountability, and transparency — the most important indicators of whether you should donate to a particular charity. In 2013, PetSmart used 90 cents of every dollar received to help save 400,000 animals by moving them out of shelters and into loving homes. PetSmart also spays and neuters about 285,000 animals annually, and funnels millions of dollars to animal welfare groups across the nation. As a donor, you can give money, or instead adopt a pet, thereby helping PetSmart achieve its goal of giving every animal a loving home.

What’s your favorite charity — and why?

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This article is from Brittany Lyte of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread:

Poverty Makes You Stupid

Lars Peterson — Mon, 23 Sep 2013 22:46:14 +0000

Why is it so difficult for the poor to break the cycle of poverty? Why is it so hard for the busy to stop procrastinating and for the lonely to find companionship? Behavioral economists Sendhil Mullainathan and Eldar Shafir argue in their just published book, Scarcity: Why Having Too Little Means So Much, that the problem with poverty (and poor time management and loneliness) is… the effect of scarcity on cognitive ability. Poverty makes us dumb.

Behavioral economics is the study of the social and psychological factors behind economic decisions. Economic decisions are often decisions about managing scarce or limited resources, such as time or money. Mullainathan and Shafir analyzed past research on hunger and conducted new experiments aimed at measuring the effects of scarcity on IQ.

The past research was a study for American war planners who wanted to know how best to feed the millions of hungry refugees in post-WWII Europe. A little at a time? A lot all at once? A group of volunteers were put on a severely restricted diet and monitored. The starving volunteers soon began to obsess over food. Some talked about favorite dishes and recipes. Others spent hours comparing food prices in newspaper grocery advertisements. The volunteers' scarcity — their lack of food — had pushed all other considerations aside. Much of their thinking "bandwidth" was consumed by thoughts of food. One explained afterward that the psychological effects of hunger were worse than the physical effects: "because it made food the most important thing in one's life…food became the one central and only thing really in one's life."

In one of their own experiments, Mullainathan and Shafir presented a group of people with a dilemma: spend $300 to repair a car now, or wait a little while and hope it keeps going? Would it be an easy decision to make? They next gave the group a series of tests to measure IQ. The poor members of the group and the well-off members showed no significant difference in intelligence.

A second experiment asked the same question, but the cost of the repair was $3000. Again participants were given IQ tests afterward. This time the well-off performed as before. But the poor did much worse — as much as 10-12 IQ points worse. How much is that? It's about the difference between you in the morning after a good, restful night's sleep and you in the morning after pulling an all-nighter. Mullainathan and Shafir argue that this drain on IQ is a result of loss of mental bandwidth as the poor struggled to meet the challenge of a $3000 car repair bill. Where would the money come from? What combination of borrowing, sacrifice, and effort would they need to get it?

For the wealthy those questions never arose because for them, the answer is easy (pay for it out of savings or put it on the credit card). They had plenty of bandwidth left over for the follow up IQ test. Life is easier when you're rich. You can afford to solve your problems.

Making Life Easier for Those Caught Short

Scarcity does more than make life difficult for the poor by offering them plenty of challenges. Scarcity saps them of the tools they need to get ahead. You can't swim far if you're always treading water. You can't budget for savings or make a plan to acquire marketable skills, or build your credit if you're always thinking up ways to pay for the latest crisis. But it gets worse. Other studies have shown that reduced bandwidth (or "decision fatigue") results in loss of self-control (this is true for rich and poor alike). Many of the characteristics we ascribe to the poor — poor impulse control, lack of motivation — as explanations for their poverty may actually be the result of lack of mental bandwidth caused by poverty.

In reviews of their work and in interviews, Mullainathan and Shafir suggest a couple of policy and lifestyle changes that "break into the tunnel," so that diminished economic reasoning doesn't trap the poor in the cycle. They suggest bill pay reminders, automatic paycheck deposit into savings (by default), simplified credit terms, protected savings similar to 401(k) accounts that can be borrowed from, at high interest. (Instead of borrowing from a payday lender, one would borrow from one's own savings — and repay with interest.) The goal of the book, and of these suggestions, is to find new incentives that work within the confined mental context poverty exacts while also freeing up bandwidth to think and plan ahead for other goals.

How to Thrive Amid Your Own Scarcity

Much of the discussion around Mullainathan and Shafir's work is focused on economic scarcity — poverty — but the researchers point out that their ideas apply wherever resources are scarce. Those of us with a lot to do and a short time to do it suffer from tunnel vision and lack of planning ability, too. The emails keep piling up and the deadlines keep slipping. What can we borrow from this look at scarcity to help us get caught up?

Get Inside the Tunnel

Understand that while you're burdened by your scarcity of time you won't be able to think as clearly or plan ahead very well. You're gonna be here awhile. Don't let it frustrate you. (See also: 20 Free Ways to Relieve Stress)

Automate

If the rich can count on their money to buy them out of jams, busy people can rely on their productivity tools to buy them more time. Create email filters. Build file organization systems. Use checklists. Set up reminders for far off deadlines. (See also: The Power of Lists)

Make More Room in Your Head

All those to-dos you are trying to track and remember? Write them down. Someplace you'll remember to look for them. It might be a simple moleskin notebook. It might a complicated Getting Things Done app hosted in the cloud. Wherever you put it, just get that stuff out of your head so you have more room to think. (See also: Personal Productivity Rules)

How do you deal with scarcity?

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This article is from Lars Peterson of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread:

Avoiding the Poverty Tax

Philip Brewer — Fri, 07 Oct 2011 10:24:24 +0000

There's a lot of money in poverty. Not for the poor folks, of course. (See also: Too Broke to be Frugal)

The money in poverty is for the rich folks who sell things to the poor. You'd think that that there'd be more money in selling to the wealthy, but the wealthy tend to be difficult customers. The poor, on the other hand, are sharply constrained in ways that make them a very profitable market segment.

Rich folks — even middle-class folks — get a whole bunch of stuff for free, starting with free checking. They also get stuff cheap — in particular, they get low rates when they borrow. Most important, they can take advantage of deals that are unavailable to poor folks. (For example, they can get huge tax-free investment returns by stocking up and they can afford to drop collision coverage on their car insurance.)

Poor folks end up dealing with check-cashing stores, payday lenders, rent-to-own stores, pawn shops, and all the other businesses that cater to poor customers — and end up paying a lot more.

You'd think that the shops that cater to rich folks would charge more, but that's often not true. The stores that charge the most are the small shops in poor neighborhoods with a captive market of people whose work schedules and transportation options make it impossible for them to shop elsewhere.

Gary Rivlin, in a new book on the topic called Broke, USA, suggests that poverty ends up adding something like 10% to the cost of living for a poor person — it's like an extra 10% tax just for being poor.

But (and this is the whole reason it's worth writing a post about) it's only like a tax. It's more accurate to analyze it as a fee — a fee charged, not on poverty itself, but on people who lack a set of skills related to running their household economy.

Most of us here at Wise Bread have these skills. We learned them from our parents, from our parents' friends, from our peers, from books, from websites like Wise Bread, and maybe even in school. We know how to balance a check register, which means we don't pay overdraft fees and we don't end up bouncing so many checks that banks won't take our business. We know how to create a budget, so deciding to go into debt is a decision, rather than something that just happens while you're not looking. We know how to read the literature the bank sends with the rules for the various kinds of accounts.

The fundamental skill for avoiding the poverty tax is the ability to calculate the all-in cost of a particular set of choices.

For example, we can take the bank's list of account types and figure out which kind of account will give us the services we need for the lowest cost.

Avoiding the poverty tax is simply a matter of applying that skill to the larger questions of your household economy.

When your grocery budget is tiny, it's tough to stock up on stuff that's on sale — but it's not impossible. Start with one can of tomato paste on sale. The following week you can use that one, freeing up enough cash to buy two of something else that's on sale.

Long before your emergency fund grows to the recommended six months' spending, it's large enough to save you a fortune in late fees and finance charges. (And once it's a little bigger than that, it can provide the security you need to save even more money with higher insurance deductibles.)

The trade-offs involved in deciding to buy a car are hugely complex — balancing all the costs (financing, registration, insurance, maintenance, fuel, parking) against the savings and income made possible by the increased mobility. But identifying the key variables and their approximate magnitudes is enough to make useful comparisons. You can, for example, figure out that you come out ahead by living within walking distance of work, even if your rent is much higher.

Of course, just having the skill is not enough. You also have to use those insights to guide your actions. This is also made tougher by poverty. If your finances are already in desperate straits, it's easy to imagine that any particular error or indulgence won't make any difference.

That's just another example of how the poverty tax ends up hitting poor folks while the wealthy don't even notice. But really, avoiding the poverty tax isn't a matter of wealth. It's a matter of skill.

This article is from Philip Brewer of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread:

Bohemians Then and Now

Philip Brewer — Fri, 11 Feb 2011 14:00:10 +0000

The bohemian lifestyle keeps being reinvented. Whenever people try to make a go of supporting themselves through their creative endeavors, it appears naturally out of the confluence of poverty and the freedom to ignore social conventions that comes of not having a boss. (See also: 6 Reasons to Become Self-Employed)

Making a living as an artist (including not just visual artists but also writers, musicians, dancers, actors, etc.) is fundamental to bohemianism. Richard Florida, author of The Rise of the Creative Class, created a "bohemian index" based on what fraction of the population in an area is earning a living through creative pursuits.

For most artists, most of the time, supporting yourself through your art means poverty. There are occasional "golden ages" of one thing or another during which it's possible for large numbers of artists to make a middle-class living with their art, but they're rare.

Right now we're living in something of, let's call it a "silver age." Largely because of the internet, there are a lot of ways to make a little money from art, writing, music, etc. (especially if by "etc." you include things like web design). Whereas the original bohemians pretty much had to live in a densely populated urban center, because it was only there that an unknown artist had any hope of earning a living, now artists can be location independent.

Still, bohemianism and urbanism are pretty tightly bound. Richard Florida's bohemian index shows that the most bohemian locations are large urban centers (although many large urban areas are not particularly bohemian).

For many people, though, it's the unorthodox lifestyle — the living arrangements, the political and social views — that they think of when they think of bohemians. It's the freedom that appeals.

Of course, the freedom has a broader appeal if it can be achieved without the poverty, and in today's permissive society, it often can be. Often enough, in fact, for New York Times columnist David Brooks to have managed to get a whole book — Bobos in Paradise — out of the phenomenon he called "bourgeois bohemians." The people Brooks is talking about don't live in poverty — in fact, they're quite affluent — but their lifestyle looks somewhat bohemian because they eschew conspicuous consumption. But they actually spend a lot of money. It's voluntary, but it's neither simplicity nor frugality.

As far as I know, no one has a index for what fraction of the population is practicing voluntary simplicity.

What's interesting to me about modern bohemianism is that the directionality can flow in the opposite direction: If you choose to live frugally, you gain much of the freedom that made the original bohemians so distinctive. (Of course, even if the standard of living in each case is about the same, poverty and voluntary simplicity are very different things.)

Instead of a commitment to one's art forcing one into poverty, the voluntary acceptance of a frugal lifestyle enables one to commit to one's art. And, if you have a little capital, the lifestyle choices don't need to seem much like poverty at all.

It's a modern bohemianism.

Disclosure: This post contains affiliate links, and I will earn a commission for any purchase made through these links.

This article is from Philip Brewer of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread:

Health Care Reform: Good for People Like Me

Philip Brewer — Fri, 02 Apr 2010 13:00:02 +0000

A long time ago, I had an idea. I was working a regular job, but I realized that what I wanted to do was be a writer. I figured that I could make some money writing, but not necessarily enough to support myself. So, I came up with a naive plan. It started with living more frugally.

I did all the ordinary frugal stuff. I ate out less. I bought fewer gadgets. I moved into a cheap apartment. I drove less.

Living more frugally did two things. First, it narrowed the gap between what I figured I could earn as a writer and what I was spending. Second, it freed up cash for saving and investing — and investing let me fill the gap from the other side, augmenting my potential writing income with interest and dividends.

You'll have already seen why I call it a naive plan. When I first started, I figured all I had to do was build my investments to the point where my investment income filled the gap between my writing income and my spending. But in the United States, that didn't work — because of health insurance.

Now, I was prepared to include the cost of health insurance in my plan, just like I was willing to include rent, groceries, and my internet connection. But there's no way to budget for the cost of health insurance: it's cheap enough if you're healthy, but spikes up toward infinity if you get sick. Worse, there's every reason to worry that getting sick will prompt your insurance company to go over your medical history with a fine-tooth comb, and then use any omission or error in your insurance application as an excuse to rescind your policy.

The upshot, as I wrote a while back in an article called Not Free to Be Poor, was that health insurance in the U.S. wasn't really insurance at all. That is, it didn't protect your finances from the huge contingent expenses that would hit if you got sick.

Health care reform is fixing that. The first big change is that in just six months, insurance companies can no longer rescind policies just because you made some mistake on your application.

To people like me, that's a really important part. Right now (for the next six months) my whole financial future is riding on a bet: I'm betting that I'll only get seriously ill or badly injured one time in my whole life. Since I'm healthy, I've been able to get a good health insurance policy. And, since I'm healthy, and could get a good policy from a different insurance company, I'm in a position to shop around for a better rate. But getting sick would mean losing the bet. I wouldn't be able to get a new policy, so I'd be stuck with the old policy — which would immediately start getting more expensive, a process that would accelerate as healthy people shopped around and found cheaper policies to switch to, leaving only sick people behind, paying ever higher premiums.

There'll be future good things, too. In four years insurance companies won't be able to deny coverage just because you're sick. The health insurance exchanges will make it a lot easier to shop around for a policy. People who are really poor (earning less than 133% of the poverty level) will get free insurance through Medicaid, and people who are a bit less poor (up to 400% of the poverty level) will get a subsidy for the cost of their insurance.

So, health care reform is good for people like me. And there are a lot of us:

How many potential entrepreneurs would be willing to take the risk of starting a small business, but not the risk of going without insurance?
How many workers at big companies would be happier at a small company, but have a sick spouse or sick child and need the big company's insurance plan?
How many creative types (writers, artists, musicians, actors, dancers, filmmakers) would be willing to eke out a meager existence on what they can earn from their art, but aren't willing to bet their entire financial future that they won't get sick?
How many people just want to try something different, but have been sticking to their old job because it's got good insurance?

I look forward to the unleashing of all that talent and energy, once all the people like me are able to do what they're called to do, without worrying that one serious illness would bankrupt them. I think there's a lot of us.

I think we'll do great things.

This article is from Philip Brewer of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread:

USDA Data Visualization Tool

Philip Brewer — Mon, 22 Feb 2010 14:00:05 +0000

The USDA has just released a cool new data visualization tool called Your Food Environment Atlas. If you're interested in poverty, food security, or the related public policy issues, there's a bunch of stuff here that's worth taking a look at.

The tool gives you county-level maps on topics like:

How many low-income households have no grocery store within 1 mile?
Is whole grain much more expensive than refined grain?
How many farmers markets are there?
What's the poverty rate?
Which counties are losing population?
What percentage of adults are obese?

The idea is that you can cross-reference and compare metrics on health and well-being with community characteristics and food choices. You can also get all the data for a particular county.

I assume the tool is primarily aimed at people who have a public policy interest in one of these areas, but it should also be of interest to others. For example, people who are thinking about moving might be very interested in looking at maps of various statistics before pulling up the complete statistics for any counties that look interesting.

Check it out: Your Food Environment Atlas.

This article is from Philip Brewer of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread:

Book review: Wabi Sabi Simple

Philip Brewer — Tue, 24 Feb 2009 19:16:44 +0000

Wabi Sabi Simple: Create beauty. Value imperfection. Live deeply. By Richard R. Powell.

Is there an intersection between living large and simple living? I think so. To me, living large is not about having more stuff or more expensive stuff, it's about living my life exactly as I choose, without being constrained by what my boss wants me to do, what the neighbors think, or what my creditors will allow. It's about the breadth and width of my life, not about how high I can pile up stuff. If that is how you want to live large, you'll find a lot of inspiration in Richard R. Powell's book Wabi Sabi Simple.

Wabi Sabi is a Japanese term for a concept that is fundamentally Japanese, but that will also resonate with people from any culture. The term, Powell explains, comes from two Japanese words:

wabi means poverty--but poverty of the genteel sort where you have everything you need, even if you don't have everything you want.
sabi is a technical literary term used to describe a certain kind of melancholy feel such as evoked by images of nature, rural scenes, and autumn.

Together, though, they describe a certain kind of simplicity:

It is about respectful conversation, harmonious and peaceful dwellings, and modest behavior. It is ordered but not orderly, planned but not scheduled, simple but not simple-minded, and deliberate without being rigid.

This is a book that speaks to me. It finds words to describe many of the pieces that go together to make a life that is filled with both ease and meaning:

Filling life with wabi sabi might be as simple as emptying it of clutter. Wabi sabi cannot be contained in anything square, boxy, or bright, nor can it ever be modular. Quality control kills it, and uniformity negates it. It has to be authentic, genuine, and natural. It perishes under refinement, and sameness wilts it.... Having lots of wabi sabi is a contradiction.

And they are beautiful words:

A friend and I kayaked on a July evening across Northumberland Channel to De Courcy Island just before sunset. The warm golden glow of the sun, low near the horizon, cast elongated shadows along the curving surfaces of the island's weathered sandstone cliffs. A bald eagle soared along the fir- and arbutus- covered ridge at the top of the bluff. We paddled slowly around each bend of the island's varied coastline and craned our necks to look up at the sculpted cookie dough shapes. When we pulled the craft in close, mottled rock, twisted trees, and barnacle-covered stones radiated the day's heat toward us, mirroring the warmth we felt at being there.

The book is not a how-to manual. It is an explanation of what wabi sabi is (and what it is not) with some illustrations of how simplicity enriches your life--at home, with your friends, at work. Implicit in the book is the notion that, if you understand simplicity, you don't need someone to tell you how to achieve it or how to apply its lessons to your life. Once you understand you won't need instruction or exhortation--you'll just see that simple living is better. This makes it an easy book to read. The author isn't trying to convince you of anything or talk you into anything. He's just showing you some things that he has found to be true and meaningful.

I'm all about simple living. To me, frugal living is a means to an end; when I have to choose between frugality and simplicity, I'll go with simplicity if I can possibly afford it. (Fortunately, simplicity often leads to reasonably frugal choices even when it doesn't lead to the most frugal choices.) If you have any interest in simplicity as a lifestyle choice--whether you're already living simply or not--you'll find much to enjoy and much to think about in Richard R. Powell's Wabi Sabi Simple.

This article is from Philip Brewer of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread:

37 Ways You’d be Better Off as a Bum

Paul Michael — Fri, 30 Jan 2009 04:48:38 +0000

First, apologies for the blatantly provocative title (although I do make good on it). But did you know that some people prefer to be homeless? I know, sounds crazy right? But I was watching a news story recently about the growing homeless population in Britain, and the US, and it seems some homeless people stay in their situations on purpose.

Now, one thing was made quite clear; no-one chooses to be become homeless. It is definitely a situation that is thrust upon people by circumstance. Over 95% hate the life they live and want out. But after a few years, a small percentage become used to the lifestyle, in the same way that some inmates become “institutionalized” in prison.

As it turns out, some of the pressures of living a homeless life are comparable to the pressures many of us face living our typical “American Dream” lifestyles. When I say typical, I mean the average family that has credit card debt, struggles to pay bills and wonders how they’ll ever be able to afford to put their kids through college and, one day, retire on a livable wage.

And homeless people can make a pretty good living collecting change. In one article that I found from Associated Content. Deanna Anderson describes in detail how her father-in-law chose to stay homeless, despite the offer of some help. He did stay during the Christmas break, however, and Deanna recounts this tale:

While he was staying with us he asked for some cardboard. Thinking he wanted to do something for the kids (he loved to draw) I gave him some. I cringed with shame when he wrote "Homeless, please help" on the cardboard. He asked for a ride to Wal-Mart and stood outside all day (about 5-6 hours) collecting change. This was his job every day excpet Christmas Day. On a bad day he came home with $20.00 and on a good day he'd come home with $70.00 (what I make in a day filing, typing, and dealing with people in an 8-hour shift). He came home with an entire foot-long sandwich that someone gave him and a warm fuzzy blanket because "no one should be cold during the holidays."

There are also stories of some panhandlers earning $800 a day:

Anecdotal accounts suggest a few panhandlers do quite well. For instance, a recent news story tells of Jason Pancoast and Elizabeth Johnson, self-described "affluent beggars" from Ashland, Oregon. The couple estimates they can make $30-40,000 per year from panhandling. They boast earnings as high as $300 per day, and assert they once made $800 in one day. Similarly, a former Denver City Council president claimed to know panhandlers who made hundreds of dollars per week, or even per day. City Councilwoman Elbra Wedgeworth said, "I know some people are making $150 to $300 or $400 a day. There are some people who are in desperate situations but many who are panhandling for a living." One hesitates to generalize from such stories, though.

And this, from my home town of Denver:

According to a recent survey conducted by the Downtown Denver Partnership, 42% of the population has given money to panhandlers in the past year and the average person there gives $1.84 each time he or she is approached by a panhandler, for a total of about $25 a year. This adds up to an awful lot of money - a total of over $4.6 million, divided among about a thousand panhandlers. That's an average of about $50,000 per active panhandler per year, with confidential interviews with panhandlers indicating that they make between $35,000 and $100,000 tax free per year and view panhandling as the equivalent of a job or a profession. Some even have homes and support families on their panhandling income.

Fox affiliate KMSB-TV reported that panhandlers in the area are making $40 per hour! That’s over 5 times more than minimum wage, and remember, this is tax-free. Outrageous. A former boss once told me that there was a beggar in London who camped outside of a very grand restaurant called The Ivy and committed Grievous Bodily Harm to keep another beggar off his spot; it was THAT lucrative. And I recently saw a photo of a beggar advertising his PayPal account. Wait, what?! (Looks like someone's having fun with Photoshop).

Now, those seem to be examples of extreme cases. I suspect much of this is speculation and exaggeration. And clearly, some of these people aren’t really homeless, they’re more like con-artists. Most of the time, when I see a beggar, they really do look very down on their luck and desperate for a meal and a warm bed. Sometimes, I’ve offered a homeless person food and have been turned down; what they want is money for alcohol or drugs, and many people say “who can blame them?” On other occasions, I’ve given beggars the leftovers from my restaurant meal, or offered to buy them a sandwich or burger, and they were smiling from ear to ear.

And let’s not forget that there are homeless families out there too. As a father of two, I can’t imagine what kind of pressure that it. But getting back to the title of the story, over my few days of looking into this story, I’ve heard and read many accounts of how beggars and “bums” have less to worry about than us regular civilians; some even say they have it easy. Some of these came directly from the mouths of people begging on the streets, I kid you not. I’ll be praying that I never get the chance to find out, but here’s the list. Take it all with an enormous grain of salt.

37 ways you’d be better off as a bum.

You don’t pay taxes on any money you collect
You don’t have a mortgage
You don’t have a boss
You can never get fired
You have zero debt
You can pick up and move anytime you want
You don’t have a car payment
You don’t get stuck in traffic jams
You’ll never break down on the motorway
You don’t have to pay bills
Or remember to pay bills
You don’t care about your credit report
You don’t get harassing calls from collection agencies
You don’t get calls…period
You don’t have to deal with junk mail
You don’t have to wake up to an annoying alarm
You don’t have to do laundry
You don’t get criticized for bad fashion choices
You don’t have email to check (Well, apart from PayPal dude)
You don’t have to wait three hours in security at the airport
You don’t have to attend parties with people you hate
You don’t have to fix yet another paper jam
You never have to sit through an ad featuring Billy Mays
You don’t have to vacuum
Or spring clean
Or scrub the toilet
You don’t get bothered by cell-phone salesmen in malls
You don’t care about identity theft
You don't give a crap about reality shows (you're living one every day)
Going to jail for the night means a warm bed and a meal
You've (probably) never heard of Paris Hilton or Kim Kardashian
Newspapers are actually handy; and you can read them too
You don't care if gas hits $4 a gallon
Sell-by dates are your friend
Every cent is valuable to you; spare change is an oxymoron
Hair salons are a joke
You can say you're free...and mean it

I know, for every one reason listed there are five that would prove how bad it is to be homeless. But that doesn't stop some people from choosing to stay on the streets; and some con artists making a very good living on the back of your sympathy and good will. Personally, I much prefer donating to homeless charities and shelters than to give it to someone on a street corner or at the traffic lights. I know my money is definitely going to help someone who needs it.

Further reading:

http://www.pubmedcentral.nih.gov/articlerender.fcgi?artid=121964

http://en.wikipedia.org/wiki/Beggar

http://blogcritics.org/archives/2005/08/24/020301.php

This article is from Paul Michael of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread: