July 15, 2011 – 9:15 am by Paparazzi Paige
StarPulse.com
R. Kelly is in trouble again, although at least this time it’s not a big-time felony mess.
The Associated Press reports that he hasn’t made a mortgage payment on his Chicago mansion since June 2010, leading JP Morgan Chase to initiate foreclosure proceedings against the R&B singer:
Crain’s reports the Olympia Field home’s appraised value fell 26 percent in a year, to $3.8 million in 2010. The original 1999 loan was for $3.5 million.
The principal due is more than $2.9 million.
The R&B singer’s spokesman, Allan Mayer, declined to comment about the foreclosure. But he tells The Associated Press that Kelly isn’t in financial trouble.
If his spokesman is right and R. Kelly is not in dire financial straits, that makes this foreclosure all the more disappointing.
The home’s appraised value is higher than the balance on his loan, which puts him in a better position than the millions of Americans who are underwater on their mortgages. But based on this information, it just seems like R. Kelly got tired of paying what he owed on a property that is declining in value, and that makes it an ethics issue for him to walk away.
However, he may get what’s coming to him: Illinois is a recourse state, meaning the lender can come after him to pay for the balance of what he owes. I hope he’s saving the profits from his ongoing “Love Letter” tour, because he’s going to need them.
July 14, 2011 – 2:52 pm by Market Mike
How much money do you save?
Maybe you’re someone that dutifully sets aside money from each paycheck. Conversely, maybe you’re someone who has never met a dollar they didn’t want to spend right away. Perhaps you’re somewhere in between these two extremes.
If you’re not saving at all, it’s time to start. If you are saving, you need to make sure your savings are being put to their best use.
Did you know that banks will pay you for the privilege of holding on to your money? It’s true—banks offer savings accounts that pay you a percentage of the money you put in. That payment is called interest. The bank will also pay you interest on the money it has already paid you. That payment is called compound interest, and it can help your savings grow larger than you may have thought possible.
Econ4U has a new, user-friendly calculator to show savers and non-savers alike the benefits of regularly socking aside money in an interest-bearing account. Check it out here.
July 12, 2011 – 1:14 pm by Shopaholic Suzi
In the first survey of its kind, the Pew Internet Project found that 35 percent of all American adults own a smartphone. (As Mashable.com points out, that means more people have smartphones than college degrees in the United States.)
The study found that 59 percent of people in financially well-off households (defined as income above $75,000) are smartphone users, which was expectedly high. But more surprisingly, 39 percent of people ages 18 to 29 with household incomes below $30,000 also own smartphones. And survey respondents were far more likely to describe their devices as “necessary” than as “expensive.”
We hope that all smartphone users are judiciously budgeting for data plans, which can add $30 or more per month to their bills (and that’s beyond the cost of the phone and a voice plan). But it seems to us that there’s a confusion of “wants” and “needs” going on here for many people — a problem that all too often leads to a lifestyle that goes beyond a household’s means.
Smartphones are understandably fun and convenient, but by and large they are not a necessity. If you are considering buying one, consider not just the cost of the device but also how much you will pay to operate it over its lifetime. While $30 per month for a data plan may not sound like much, that’s $720 over the course of two years. Is being able to Facebook on the fly worth that much to you?
July 8, 2011 – 2:04 pm by How-To Hannah
CriticalMass.com
Despite the encouraging news that women in their 20s have more than made up the salary gap — with recent census data indicating that single, childless women outearn their male peers by 8 percent — women as a group are light years behind men in retirement savings.
Why is that?
For starters, as this Fidelity article points out, women live longer than men and are more likely to live alone as they age. But the bigger issue is that women in general tend to both save less and invest more conservatively compared to men, cumulating in a smaller nest egg that needs to sustain them for a longer period of time.
If you’re a woman who’s concerned about her future, here are some basic steps you can take to make sure you won’t have to eat cat food in retirement.
- Make long-term saving a priority, even if you’re out of the workforce. If you take time off to be a stay-at-home mom, make sure your significant other is funding a retirement account in your name in exchange for all that free child care you’re providing. Prioritizing his retirement savings at the expense of your own is one of the main reasons women are so much worse off financially after divorce or an untimely death.
- Start early and choose age-appropriate investment. When you have decades left before retirement, there’s no reason to stick to cash and bonds, which may not even keep pace with inflation. If you’re risk-averse, talking to a financial advisor can help you choose the right mix of investments that will give you a great long-term return with minimal sweating.
- Take an active role in the family finances. Stay on top of bank-account balances, quarterly investment performance reports, annual Social Security statements, pension protocol, and any other financial paperwork that details what income you are entitled to in retirement. Cultivating that knowledge will help you avoid unhappy surprises in your sunset years.
July 6, 2011 – 4:21 pm by Market Mike
Welcome to the third installment of our new series! We’ve rounded up experts in the fields of economics and personal finance to answer common questions young people have about their money. For this column, we’ve asked an expert on the budget for his insight on the country’s $14 trillion national debt. Got a question you’d like to see addressed in this space? Shoot us an email at info@econ4u.org.
Today’s expert is Antony Davies, a professor at Duquesne University and a Mercatus-affiliated Senior Scholar at George Mason University. At Econ4U, we talk a lot about managing your own money—but what about the federal government’s money management skills? We asked Davies for three things you should know about the national debt.
1. The debt is yours. It is tempting to think of the government’s debt as the government’s problem. But remember that every dollar the government receives comes from taxpayers or is borrowed and must be paid back by taxpayers. That means that children today will be paying for today’s debt in the form of future higher tax rates. It’s the same as if your parents took out a credit card in your name and went on a spending spree. It doesn’t matter that your parents are doing the buying — you’re the one on the hook for the bill.
2. Don’t expect the rich to pay the debt. Even if the government taxed earnings over $250,000 at one-hundred percent, it wouldn’t raise enough money to fund its operations — let alone pay down the debt. The debt is so large that the only way to pay it down without cutting spending is to raise taxes at all income levels.
3. It isn’t going to get better. Even if the government pursued the politically unpopular course of raising taxes on the middle class, it wouldn’t raise enough money to pay down the debt and continue operating at its current level. If the government were a household earning $50,000 a year, it would be spending $85,000 a year and (so far) have racked up $320,000 on its credit card. The only way the government can hope to tackle its debt is to dramatically reduce spending –by dramatic, I mean cuts close to one-trillion dollars per year.
Note to Readers: Curious about just how big a trillion is? Click here to find out more.
July 5, 2011 – 1:23 pm by Audrey
EveryJoe.com
In May, we brought you some of the lessons that having a summer job teaches teens who are working for the first time in their careers.
Now that summer is in full swing, the Christian Science Monitor has some more valuable takeaways from that first job:
- Getting to know tax forms and direct deposit. Having a paycheck will be most young adults’ first introduction to Uncle Sam. The Monitor encourages parents to help kids set up bank accounts if they don’t have them already, and teach them the value of living within their means. To this, we’d add our own article, “Pay Checks: Who Is FICA and Why Is He Getting All My Money?”
- Learning about plastic. Remember when swiping that first credit card with your name on it was a thrill? Rein in that youthful exuberance for spending by explaining the difference between debit and credit, and the importance of having enough cash to pay for your purchases — either now or at the end of the month.
- Making that first budget. Having a budget is not just for people with big household bills to manage every month. Teach teens to play around with budgeting software like Mint.com. With dozens of money-minded apps for tablets, smartphones, and other handheld devices, it can even be fun for young adults to learn about money management.
June 28, 2011 – 2:01 pm by How-To Hannah
RuggedElegantLiving.com
Welcome to this week’s edition of our Tuesday Top 5, Econ4U’s weekly tips post to help you manage your money in five easy steps.
You probably already know that buying a new car is a fast way to burn through your savings. But if you’re nervous about getting stung on a used car, fear not. Here are a few handy ways not to be taken for a ride on previously owned wheels.
- Know what the car you want is worth before you shop. Use Kelley Blue Book’s free online database for an estimate of what the car is worth, based on model year, condition, and options. Note that the price for a car in a private-party sale should be lower than the same car sold from a dealership (see below).
- Browse private-party sales on Craigslist and other local websites for good deals. Dealers mark up the value of used cars so they can earn a profit by selling it. Private owners have no similar incentive, and can tell you more details about the car’s history and why he or she is selling it. If it seems like a good reason, that’s easier to trust than a used car salesman’s spiel.
- Demand service records to show that the car has been well-maintained. Complete records will contain not just oil changes but mileage-based service, invoices on brake jobs/wheel alignments, body work, and so forth. Be suspicious of an older car (say, more than 5 years) that appears to have never had any work beyond oil changes done.
- Make friends with a good mechanic. Take it to a mechanic you can trust if a potential purchase hasn’t been serviced recently (within the past month or two). Or ask him if he knows anyone selling a car you may be interested in. And be sure to check Carfax.com to find out if your desired vehicle has ever been involved in or damaged in an accident.
- Trust your gut. Never be afraid to walk away if anything seems fishy.
June 24, 2011 – 2:09 pm by Paparazzi Paige
Life.com
Actress and dancer Debbie Reynolds, who’s perhaps best known for starring in Singin’ in the Rain, spent much of her career collecting an estimated 3,500 costumes and thousands more props to create a museum of Hollywood memorabilia. Unfortunately, sinking so much money into her hobby landed her in more than $4 million worth of debt, and a California bankruptcy judge ordered her last fall to auction off items from the collection to pay back her creditors.
Luckily for Reynolds, the court-ordered compromise worked better than anyone could have predicted.
Beverly Hills-based Profiles in History held an auction for select items in the collection last weekend and the proceeds far exceeded projections. The peak of the evening was the bidding war over the iconic white “subway grate” dress that Marilyn Monroe wore in the poster for The Seven Year Itch. That dress netted $4.6 million after commission — more than enough to settle Reynolds’ debts with that one sale alone.
Also among the notable bids were Dorothy’s ruby slippers and blue cotton dress from The Wizard of Oz, which sold together for $1.75 million, and one of Charlie Chaplin’s signature bowler hats, which went for $135,300.
Other auctions were initially planned but the success of this event may be enough to rescue Reynolds from financial ruin. And it provides a good lesson: When you feel completely broke, check your attic or basement for anything you can sell to scratch up enough cash to cover your bills as a short-term solution.
June 22, 2011 – 10:30 am by Market Mike
Welcome to the second installment of our new series! We’ve rounded up experts in the fields of economics and personal finance to answer common questions young people have about their money. For our second column, we’ve asked an economics expert for his insight on the high prices we’re paying at the gas pump. Got a question you’d like to see addressed in this space? Shoot us an email at info@econ4u.org.
Today’s expert is Mark C. Schug, a professor emeritus at the University of Wisconsin-Milwaukee and a national consultant on economic and financial education. The high price of a gas is a common complaint, but who’s responsible for those prices? And is that gas station boycott you heard about in a forwarded email really going to help matters?
- Your local gas station isn’t responsible for rising gas prices. Most economists agree that gas prices are set by the laws of demand and supply. Local gas stations are “price takers” and not ”price makers”—which means they’re paying the same high price you are. In fact, most retailers are only earning 1 to 3 cents in profit for each gallon sold.
- High gas prices are painful for your wallet, but they do serve an important purpose. High gas prices are signals to oil producers that demand exceeds supply—which means they need to find more oil and come up new technologies. Some oil companies are using new technologies in the old oil fields of the Texas Permian Basin; North Dakotans are aggressively developing oil deposits in the Bakken formation. Such new oil supplies may eventually bring oil prices back down.
- Boycotting gas stations will not reduce the price of gas. Local gas stations are merely reflecting changes in the market—they have no more say over the price of gas that your local grocer or family doctor. What will reduce the price of gas is an increase in supply, which is why some elected representatives have discussed expanding supply by obtaining oil off the coast of Alaska, California, and Florida.
June 21, 2011 – 1:03 pm by How-To Hannah
Lowes.com
Welcome to this week’s edition of our Tuesday Top 5, Econ4U’s weekly tips post to help you manage your money in five easy steps.
Maybe you’ve just graduated and need to find a new place to live, or perhaps it’s time to say adios to your roommates and get a place of your own. Moving can be one of the most stressful experiences in life, but if you follow our advice, you can minimize the financial drama and be kicking back in your new living room in no time.
- Get your credit in tip-top shape. Many landlords use your credit score to assess your trustworthiness as a renter. Pull your credit report — you can do this three times a year for free from AnnualCreditReport.com — to make sure it’s an accurate representation of your financial history, and give yourself some time to clear up any cases of mistaken identity or erroneous information.
- Save up for a security deposit. Depending on your city, you’ll probably need to come up with a deposit worth at least two months’ rent before you take possession of an apartment. Start saving early so you’re not crunched for cash right around the time you’re itching to buy furniture for your new home.
- Be aware of moving scams. WalletPop.com has a good article on identifying the most common scams perpetuated by moving companies. If a mover gives you references, check up on them before you give them access to all your worldly possessions.
- Review your lease carefully. Never sign anything you haven’t read in full. If you don’t understand the terms of your lease, ask for clarification rather than assuming it’s boilerplate. Trust your gut if something seems fishy, even if it means walking away from the “perfect” place. You don’t want to get stuck with major bills and heartache if something goes wrong.
- Protect yourself by inspecting the apartment. Take a video camera through your new pad before you’ve moved in your furniture so you have a record of its condition. Take written notes of chips in the paint, a rotted window sill, and any appliances that don’t look factory-fresh, and give a copy to your landlord. It will come in handy when you move out and want to get your deposit back.
