DST, in my opinion, is one of the most disruptive things I deal with in life. It does not save energy, in my house anyway. It makes putting my kids to bed a nightmare. It is physically a drain and I don't feel it's healthy for anyone. If you are against DST, please contact your congressmen (and women) and let them know. If enough people speak up they will listen, in theory. It certainly can't hurt--contact your senators and representatives and tell them you want DST gone!
@Guest: Thank you for this informative addition! You are right, and it does certainly bear repeating that leverage can carry some big risk, and the bank calling in a loan is one of those real (albeit remote) risks.
@jtimberman: Sure, you could play the what if game, but you could also take it to extremes. Not to say you did, but more to make a point: "What if I go outside and get hit by a bus? Oops - better not go outside today". It also goes both ways. "What if I don't go outside, and I miss meeting the love of my life today", or "don't buy a winning lottery ticket?"
The matter of risk is all in degrees. For some, borrowing money to fulfill a lifelong dream of owning a business is worth the risk involved. For others, the thrill of borrowing money to invest is exciting, even if it's only $5,000 or $10,000. For these people, the risks are of less consequence than in your picture. It all lies in the eye of the beholder, and is different for everybody.
If you personally don't want the risk, then great. You know yourself well enough to invest in vehicles that yield lower average but safer overall returns. I have known many people who have successfully "gotten rich slowly" with such prowess. But don't press your judgement on others who may not feel that various standard "investment" risk is already too much.
@Linsey: You make a good point about the perceived investment loss of $25,000 being potentially negligible if you consider the cost to rent. However if you also calculate the property tax, repairs, household improvements, and utilities paid in addition to the $25,000 - and it wasn't an expensive city to rent in - then the loss gets bigger.
@Andrea: There are no absolutes in life. Amen, sister!
Things we are working on to save money but also help the environment. I want to be a good steward!
1. Switch all light bulbs to CFL's.
2. Reuse paper/plastic bags and get cloth bags for all shopping.
3. Turn off lights when we are not in the room.
4. Continue to use cloth diapers.
5. Hang my laundry to dry when possible.
6. Limit trips into town to 1-2 times a week for errands, groceries, etc.
7. No more chemical cleaners in my house! All eco-friendly!
8. All bills and charity gifts are given online to eliminate extra use of paper, envelopes, stamps, etc.
9. We already reuse all plastic zip-block bags. Look into buying small reusable containers instead.
My wife and I have used the Keep The Change program since its inception...and we LOVE it!! There are NO fees for the automatic transfer that B of A does from Checking -> Savings with this program. Last year, we saved over $650 using this program (we average about $40-$60 per month). Our 100% match for the first 3 months when we got it was over $125!! As you can tell, we use our debit card A LOT!! I think this was a REALLY good idea from B of A. Use the program correctly, and you can save HUNDREDS of dollars EVERY year without even doing anything (although we do "dip" into the savings every now and then when we need to)!!
We have other accounts from other banks that we use quite often, but we use these accounts for the "everyday" things we buy when we use our debit card most often.
It's really not a bad program if you use it correctly. Now if they could offer higher savings rates...they would have a hard-to-beat combination...
I wish this article offered more ideas. My wife and I are struggling with her going back to work. We are a family of 5 and have two children that would need some sort of daycare while she works. We have one 3 year old and we are seeing care would run $500 - $700 a month for her to be in full-time. Our son is 10 and would require a few hours of care after school as it is against the law for him to be home alone.
My wife does not have any special training that would allow her to make good money. She would make between $8 and $10 an hour.
Here is our struggle we figure she would bring in roughly $500 to $800 a month to the household. She has a home based business that is bringing in on average $500 a month. One says well heck there is no problem here. The problem is she has 2-3 low paying months that throw things off. Her pay is never consistant on a given day of the month.
I stuggle with the idea that someone else would raise our children for her to bring in what she is already bringing in.
On the flip side, what if you borrow money and invest it in a great stock, make a pile of cash, pay back the loan, and retire rich? There are no absolutes in life.
This is a well-written article.. thanks for explaining some areas where it would possibly be worth it to borrow. I would like to point out that your friend (with the divorce) may not be as bad off as it sounds, though. If $25,000 seems like a loss, remember that she did enjoy use of that home for 2 years minimum. That's at least what it costs to rent a home for the same period of time. So while it is a bummer that she lost the home and some cash, she did enjoy use of that home. We do it all the time when we "throw away" money on rent. Just a thought.
Investing borrowed money is RISKY. There's already enough risk in various types of "investments" that I don't want to introduce the additional risk of borrowed money.
Play the what if game, and you'll see what I'm talking about.
What if you borrow to invest in a single stock, or several single stocks? Day traders do this and lose their shirt all the time.
What if you borrow to invest in real estate, "flipping" houses? People doing this are losing money hand over fist, and this is a big contributor of the subprime meltdown this year.
What if you borrow for your business, to purchase new equipment, or even worse, new product, and you find demand for your services or products has dwindled or disappeared?
Sorry, but borrowing money to invest is just plain stupid. The kind of idea propagated by this particular blog post is teeming with "get rich quick" mentality, and borrowing money to invest is a microwave strategy to making money.
It might be worth mentioning that much of the cause of the great depression was that people had invested in the stock market using leverage (at the time there was no cap on how much you could do this with, there is now). When the market crashed the banks got nervous and called in the balance of a lot of their outstanding loans -- people had to give just about everything to the banks to pay them off or go into bankruptcy, small businesses collapsed and the worst economic period in US history began. Banks still have the ability to "call in a loan" for whatever reason on most loans. I don't think they would do it on the same large scale again -- but always remember when borrowing money that you affordable monthly payment could turn into a life shattering lump sum if the bank calls it in.
For scenario #2, college students typically have a number of financial aid options, including loans, and a long lifetime in which to repay said loans--whereas parents of college students are generally nearing retirement.
I would advise using the "college savings" towards mom's medical expenses and having the kids pursue financial aid. If the family finances are really shaken up by mom's situation, any reasonable college or university's financial aid officers would probably be sympathetic and secure some need-based financial aid money (grants, scholarships) for the children.
If the parents take on debt they're unable to repay, the children will likely be responsible for it in the end, anyway--and at terms far less favorable than those attached to student loans.
I use cloth napkins instead of paper. They look nice, feel great and are recyclable. I bought a whole bunch of pretty green and white ones at the local discount store, and even take them to work for an elegant touch.
That was a really cool article, Philip. I'm still struggling to get my mind wrapped around these concepts, but I'm glad you illustrated why things are calculated the way they are.
Damn, though. There goes one more favorite conspiracy theory.
I learned of long-term care insurance after my father (young father) fell ill and it cost our family a fortune (and a bankruptcy) to care for him. My mom ended up becoming an LTC insurance agent to try to help other families. So, I know all the horror stories of people who didn't have it when they needed it. And with all insurance, once you need it, it's too late to get it if you haven't already.
Shawn: with more and more young people getting sick, you can bet a huge number will need long-term care before retirement. I was deemed permanently disabled at 25 years old after getting bit by a tick and getting Lyme Disease. I have a host of friends with MS, one with ALS and hear story after story of young people who can't work or take care of themselves. Health insurance doesn't pay. "Emergency funds" won't do it to fill this kind of need. It can easily cost $50k+ a year for care in the U.S.
Sam: As for your comment, "When it get to that point, I'll either go to Panama where you can hire 24 hour nursing for less than 40 a day and if I cannot afford that, I'll just shoot myself." I can't tell you how many times I've heard this one and I can assure you that if you were actually in the position of being sick, you'd most likely do neither. If you were ill enough to need long-term care, you'd probably have to talk someone into getting you a gun. My feeling is that's a decent fantasy but not real realistic. A lot of people receiving long-term care insurance are collecting because of dimentia or other related diseases; they don't have the capacity to carry out the suicide plan they theorized when they were thinking clearly. I've been suffering for years and struggling to pay for care but killing myself just isn't one of the options. And, although I could get cheaper medical care in Panama too, when you are in the position, moving your life isn't as easy as it sounds when you are healthy and just thinking about it. Also, nothing against Panama, but have you been there? It's most likely far from everything and everyone you know. Nice to vacation but maybe not to live....sick and alone.
A huge percentage of wealthy people have LTC insurance. It's all part of protecting their assets. Even those who have plenty of money to pay for care if they should need it, still choose to purchase insurance. If you have plenty of money, is that really what you want to spend it on? For a fraction of the cost, you can pay the insurance premium and keep all your hard-earned cash. Plus, it unburdens your kids from ever having to worry about either changing your diapers someday or paying for someone else to do it. Now, that's reason enough for me.
Insurance is all about risk management. If you want to chance it, that is your right.
Did you know that most of the store-brand formulas are made right here in the US of A? You can't say the same for the brand name formulas...they outsource to other countries - including CHINA.
I have started to become more vocal with my green-ness and thankfully people are beginning to take notice. We have started a "green campaign" at my church. Even though we are starting small, for example printing on both sides of a page and recycling, I have high hopes for the future.
Personally, I am going to become more diligent about my actions. I am pretty good about bringing my own canvas bags when I go grocery shopping, but I am going to start taking them when I go to other stores as well.
My boyfriend and I have also stopped buying coffee and we now make it at home. We also carry around our reusable thermoses just in case.
James Howard Kunstler has called the coming times "The Long Emergency" and it's the title of his most recent book. I read the book a few years ago around the same time as I read Paul Robert's book "The End of Oil" and blogged about it.
The poster above who says "you might understand why NOT developing alternatives to petroleum-based energy is simply not an option" is engaging in a peculiar kind of wishful thinking. Kunstler calls it the "Jiminy Cricket Syndrome" -- when people insist that if they wish hard enough new technology will somehow allow us to maintain our current lifestyle after peak oil. As the poster admits, our whole infrastructure is based on oil. Current Ethanol production uses so many petroleum inputs (in fertilizer, farming, transport, and processing) that its completely unsustainable without fossil fuels. Even coal and nuclear energy are actually run by having oil-fired equipment to dig, transport, and process the raw materials. As oil gets more expensive, all of these things will become harder to do. In fact, our whole landscape of suburbs and big-box stores that are predicated upon cheap energy will become increasingly unlivable as the cost of energy increases.
It's been interesting to me that our political system (and the oil companies) have been clearly aware of the coming emergency for 30 years -- it is, after all, the same emergency that Jimmy Carter warned us about. The complete disinterest the current administration has shown for actually trying to govern the country, and their rapacious efforts to leverage money out of the system make me believe that they understand largely what's going to happen and are simply trying to cash out. They want to ride the country down into the ground and end up with as much capital as they can squeeze out, since having a bunch of money will probably make the coming Long Emergency much less unpleasant -- at least for a while.
40% of claimants may be between 18-64. What percentage are between 18-50? What percentage are between 60-64? What percentage of the general populace between 18-60 needs LTC? I'd guess it's a miniscule percentage.
I was unaware that interest on a general loan was tax deductible. Can you point to some information explaining this?
DST, in my opinion, is one of the most disruptive things I deal with in life. It does not save energy, in my house anyway. It makes putting my kids to bed a nightmare. It is physically a drain and I don't feel it's healthy for anyone. If you are against DST, please contact your congressmen (and women) and let them know. If enough people speak up they will listen, in theory. It certainly can't hurt--contact your senators and representatives and tell them you want DST gone!
So are you for or against DST?
@Guest: Thank you for this informative addition! You are right, and it does certainly bear repeating that leverage can carry some big risk, and the bank calling in a loan is one of those real (albeit remote) risks.
@jtimberman: Sure, you could play the what if game, but you could also take it to extremes. Not to say you did, but more to make a point: "What if I go outside and get hit by a bus? Oops - better not go outside today". It also goes both ways. "What if I don't go outside, and I miss meeting the love of my life today", or "don't buy a winning lottery ticket?"
The matter of risk is all in degrees. For some, borrowing money to fulfill a lifelong dream of owning a business is worth the risk involved. For others, the thrill of borrowing money to invest is exciting, even if it's only $5,000 or $10,000. For these people, the risks are of less consequence than in your picture. It all lies in the eye of the beholder, and is different for everybody.
If you personally don't want the risk, then great. You know yourself well enough to invest in vehicles that yield lower average but safer overall returns. I have known many people who have successfully "gotten rich slowly" with such prowess. But don't press your judgement on others who may not feel that various standard "investment" risk is already too much.
@Linsey: You make a good point about the perceived investment loss of $25,000 being potentially negligible if you consider the cost to rent. However if you also calculate the property tax, repairs, household improvements, and utilities paid in addition to the $25,000 - and it wasn't an expensive city to rent in - then the loss gets bigger.
@Andrea: There are no absolutes in life. Amen, sister!
Awesome response, Amy - thanks! You add to the whole picture a very personal element, and a compelling one at that.
Thank You!
Things we are working on to save money but also help the environment. I want to be a good steward!
1. Switch all light bulbs to CFL's.
2. Reuse paper/plastic bags and get cloth bags for all shopping.
3. Turn off lights when we are not in the room.
4. Continue to use cloth diapers.
5. Hang my laundry to dry when possible.
6. Limit trips into town to 1-2 times a week for errands, groceries, etc.
7. No more chemical cleaners in my house! All eco-friendly!
8. All bills and charity gifts are given online to eliminate extra use of paper, envelopes, stamps, etc.
9. We already reuse all plastic zip-block bags. Look into buying small reusable containers instead.
I think this is absolutely disgusting and, sadly, sounds very much like my city. *Sigh.*
My wife and I have used the Keep The Change program since its inception...and we LOVE it!! There are NO fees for the automatic transfer that B of A does from Checking -> Savings with this program. Last year, we saved over $650 using this program (we average about $40-$60 per month). Our 100% match for the first 3 months when we got it was over $125!! As you can tell, we use our debit card A LOT!! I think this was a REALLY good idea from B of A. Use the program correctly, and you can save HUNDREDS of dollars EVERY year without even doing anything (although we do "dip" into the savings every now and then when we need to)!!
We have other accounts from other banks that we use quite often, but we use these accounts for the "everyday" things we buy when we use our debit card most often.
It's really not a bad program if you use it correctly. Now if they could offer higher savings rates...they would have a hard-to-beat combination...
I wish this article offered more ideas. My wife and I are struggling with her going back to work. We are a family of 5 and have two children that would need some sort of daycare while she works. We have one 3 year old and we are seeing care would run $500 - $700 a month for her to be in full-time. Our son is 10 and would require a few hours of care after school as it is against the law for him to be home alone.
My wife does not have any special training that would allow her to make good money. She would make between $8 and $10 an hour.
Here is our struggle we figure she would bring in roughly $500 to $800 a month to the household. She has a home based business that is bringing in on average $500 a month. One says well heck there is no problem here. The problem is she has 2-3 low paying months that throw things off. Her pay is never consistant on a given day of the month.
I stuggle with the idea that someone else would raise our children for her to bring in what she is already bringing in.
I look foward to hearing what others have to say.
Jeff B
California
On the flip side, what if you borrow money and invest it in a great stock, make a pile of cash, pay back the loan, and retire rich? There are no absolutes in life.
This is a well-written article.. thanks for explaining some areas where it would possibly be worth it to borrow. I would like to point out that your friend (with the divorce) may not be as bad off as it sounds, though. If $25,000 seems like a loss, remember that she did enjoy use of that home for 2 years minimum. That's at least what it costs to rent a home for the same period of time. So while it is a bummer that she lost the home and some cash, she did enjoy use of that home. We do it all the time when we "throw away" money on rent. Just a thought.
Borrowing money to invest is stupid, period.
Investing borrowed money is RISKY. There's already enough risk in various types of "investments" that I don't want to introduce the additional risk of borrowed money.
Play the what if game, and you'll see what I'm talking about.
What if you borrow to invest in a single stock, or several single stocks? Day traders do this and lose their shirt all the time.
What if you borrow to invest in real estate, "flipping" houses? People doing this are losing money hand over fist, and this is a big contributor of the subprime meltdown this year.
What if you borrow for your business, to purchase new equipment, or even worse, new product, and you find demand for your services or products has dwindled or disappeared?
Sorry, but borrowing money to invest is just plain stupid. The kind of idea propagated by this particular blog post is teeming with "get rich quick" mentality, and borrowing money to invest is a microwave strategy to making money.
It might be worth mentioning that much of the cause of the great depression was that people had invested in the stock market using leverage (at the time there was no cap on how much you could do this with, there is now). When the market crashed the banks got nervous and called in the balance of a lot of their outstanding loans -- people had to give just about everything to the banks to pay them off or go into bankruptcy, small businesses collapsed and the worst economic period in US history began. Banks still have the ability to "call in a loan" for whatever reason on most loans. I don't think they would do it on the same large scale again -- but always remember when borrowing money that you affordable monthly payment could turn into a life shattering lump sum if the bank calls it in.
For scenario #2, college students typically have a number of financial aid options, including loans, and a long lifetime in which to repay said loans--whereas parents of college students are generally nearing retirement.
I would advise using the "college savings" towards mom's medical expenses and having the kids pursue financial aid. If the family finances are really shaken up by mom's situation, any reasonable college or university's financial aid officers would probably be sympathetic and secure some need-based financial aid money (grants, scholarships) for the children.
If the parents take on debt they're unable to repay, the children will likely be responsible for it in the end, anyway--and at terms far less favorable than those attached to student loans.
I use cloth napkins instead of paper. They look nice, feel great and are recyclable. I bought a whole bunch of pretty green and white ones at the local discount store, and even take them to work for an elegant touch.
That was a really cool article, Philip. I'm still struggling to get my mind wrapped around these concepts, but I'm glad you illustrated why things are calculated the way they are.
Damn, though. There goes one more favorite conspiracy theory.
Wow, Nora, thanks. I'm kind of embarrassed to admit this, but I actually didn't know that that is what "leverage" meant. I love these primer-articles.
I learned of long-term care insurance after my father (young father) fell ill and it cost our family a fortune (and a bankruptcy) to care for him. My mom ended up becoming an LTC insurance agent to try to help other families. So, I know all the horror stories of people who didn't have it when they needed it. And with all insurance, once you need it, it's too late to get it if you haven't already.
Shawn: with more and more young people getting sick, you can bet a huge number will need long-term care before retirement. I was deemed permanently disabled at 25 years old after getting bit by a tick and getting Lyme Disease. I have a host of friends with MS, one with ALS and hear story after story of young people who can't work or take care of themselves. Health insurance doesn't pay. "Emergency funds" won't do it to fill this kind of need. It can easily cost $50k+ a year for care in the U.S.
Sam: As for your comment, "When it get to that point, I'll either go to Panama where you can hire 24 hour nursing for less than 40 a day and if I cannot afford that, I'll just shoot myself." I can't tell you how many times I've heard this one and I can assure you that if you were actually in the position of being sick, you'd most likely do neither. If you were ill enough to need long-term care, you'd probably have to talk someone into getting you a gun. My feeling is that's a decent fantasy but not real realistic. A lot of people receiving long-term care insurance are collecting because of dimentia or other related diseases; they don't have the capacity to carry out the suicide plan they theorized when they were thinking clearly. I've been suffering for years and struggling to pay for care but killing myself just isn't one of the options. And, although I could get cheaper medical care in Panama too, when you are in the position, moving your life isn't as easy as it sounds when you are healthy and just thinking about it. Also, nothing against Panama, but have you been there? It's most likely far from everything and everyone you know. Nice to vacation but maybe not to live....sick and alone.
A huge percentage of wealthy people have LTC insurance. It's all part of protecting their assets. Even those who have plenty of money to pay for care if they should need it, still choose to purchase insurance. If you have plenty of money, is that really what you want to spend it on? For a fraction of the cost, you can pay the insurance premium and keep all your hard-earned cash. Plus, it unburdens your kids from ever having to worry about either changing your diapers someday or paying for someone else to do it. Now, that's reason enough for me.
Insurance is all about risk management. If you want to chance it, that is your right.
Well done article!
you can choose to let them do it, or have someone in your state do it. Shop around.
Did you know that most of the store-brand formulas are made right here in the US of A? You can't say the same for the brand name formulas...they outsource to other countries - including CHINA.
I have started to become more vocal with my green-ness and thankfully people are beginning to take notice. We have started a "green campaign" at my church. Even though we are starting small, for example printing on both sides of a page and recycling, I have high hopes for the future.
Personally, I am going to become more diligent about my actions. I am pretty good about bringing my own canvas bags when I go grocery shopping, but I am going to start taking them when I go to other stores as well.
My boyfriend and I have also stopped buying coffee and we now make it at home. We also carry around our reusable thermoses just in case.
James Howard Kunstler has called the coming times "The Long Emergency" and it's the title of his most recent book. I read the book a few years ago around the same time as I read Paul Robert's book "The End of Oil" and blogged about it.
The poster above who says "you might understand why NOT developing alternatives to petroleum-based energy is simply not an option" is engaging in a peculiar kind of wishful thinking. Kunstler calls it the "Jiminy Cricket Syndrome" -- when people insist that if they wish hard enough new technology will somehow allow us to maintain our current lifestyle after peak oil. As the poster admits, our whole infrastructure is based on oil. Current Ethanol production uses so many petroleum inputs (in fertilizer, farming, transport, and processing) that its completely unsustainable without fossil fuels. Even coal and nuclear energy are actually run by having oil-fired equipment to dig, transport, and process the raw materials. As oil gets more expensive, all of these things will become harder to do. In fact, our whole landscape of suburbs and big-box stores that are predicated upon cheap energy will become increasingly unlivable as the cost of energy increases.
It's been interesting to me that our political system (and the oil companies) have been clearly aware of the coming emergency for 30 years -- it is, after all, the same emergency that Jimmy Carter warned us about. The complete disinterest the current administration has shown for actually trying to govern the country, and their rapacious efforts to leverage money out of the system make me believe that they understand largely what's going to happen and are simply trying to cash out. They want to ride the country down into the ground and end up with as much capital as they can squeeze out, since having a bunch of money will probably make the coming Long Emergency much less unpleasant -- at least for a while.
Do I have to pay extra for holes?
Amazon Deals at Brand Name Coupons
Personally i find the layout the easiest way to search Amazon for deals.
John
40% of claimants may be between 18-64. What percentage are between 18-50? What percentage are between 60-64? What percentage of the general populace between 18-60 needs LTC? I'd guess it's a miniscule percentage.