What Are Your Kids Gift Expectations?

The boys were a little puzzled about what to do on their last duck hunt

I hear some people complain that they have to buy expensive things for their kids because it’s what they expect.  Some don’t know what they are going to do this holiday season as times are getting tight.  How are we going to get little Johnny the latest (insert expensive popular toy here)?!?

Here’s what I say – Don’t!!

Where do your kids get their expectations from?  Do they get them from friends?  From television?  Those are influences but not the real source.  Children get their expectations from their parents!!

If you make it a habit to buy your kids expensive gifts for every occasion then you are setting yourself up for financial trouble!  The younger you start the worse it will be.  If you are already buying expensive items when the child is a toddler what are you going to do when they get older?  How about when they are in their teens?

It’s tough to tell kids they won’t be getting all the goodies they are used to. But if your spending is putting you in debt or you don’t have an adequate amount for savings and retirement then you better re-think your holiday spending plans!  Make your kids understand that they won’t be getting as much this year.

But all their friends are getting it!! Hmm.  Are their friends paying your bills?  Are they putting money away for retirement.  Are they making sure the mortgage is on time?  I didn’t think so.  Teach your child to take pride in who they are not what they have.  This lesson will be valuable for their entire life!

And you better practice what you preach!! Your child’s expectations come from watching you as well.  Don’t think you’re getting that new flat-screen TV or expensive cell phone while they don’t get the goods.  Parents must set the example for their kids.  We are not our stuff!!

Say that to yourself – We are not our stuff! It’s important.  Get this into your mind set and teach it to your children, not just by explaining but by setting the example.

I’m not saying don’t buy any gifts. But watch what you buy for your kids.  Yes, they love getting stuff.  I know I did as a kid.  But what is the child really getting out of it?  Are they using and loving the gift?  Not just for a day but for months, maybe years?  Or did they say it was their favorite for a few days then it joined all their other stuff in the corner?  Do your kids really appreciate the gift?  If your always buying them expensive stuff then your kids will start to see you a the person who will get them stuff.  Not for the person you are!  Think about that.

Stop the cycle of consumerism that hurts us in the end. You don’t have to buy your kids everything they want.  Let them love you as the great parent you are rather than the person who gets them stuff.  They won’t hate you if you don’t get them all the hottest toys.  If they say they do then think about the values you are teaching them.  We all want to make our kids happy but we need them to grow up responsible too.

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What Is The Dow?

What Is The Dow Jones Industrial Average?

The New York Stock Exchange

We’ve hear a lot about the Dow in the news. It goes up and folks are happy.  It goes down and folks panic.  But what is this mystical Dow that everyone is talking about?

The Dow actually stand for Dow Jones Industrial Average.  It’s made up of the 30 largest and most widely held public companies.  The average is a scaled average which is price weighted to account for stock splits.  Although it only accounts for 30 companies, the Dow has historically been in line with the larger US market.  For this reason it tends to be the most common indicator of the market in general.

The Dow was first published in 1896 and consisted of 12 companies:

  • American Cotton Oil Company
  • American Sugar Company
  • American Tobacco Company
  • Chicago Gas Company
  • Distilling and Cattle Feeding Company
  • General Electric
  • Laclede Gas Light Company
  • National Lead Company
  • North American Company
  • Tennessee Coal, Iron, and Rail company
  • US Leather Company
  • Unites States Rubber Company

Today’s Dow looks very different:

3M
Alcoa
American Express
AT&T
Bank of America
Boeing
Caterpillar
Chevron Corporation
Citigroup
Coca-Cola
DuPont
ExxonMobil
General Electric
General Motors
Hewlett-Packard
Home Depot
Intel
IBM
Johnson & Johnson
JPMorgan Chase
Kraft Foods
McDonald’s
Merck
Microsoft
Pfizer
Procter & Gamble
United Technologies Corporation
Verizon Communications
Walmart
Walt Disney

Update – On June 8, 2009 GM and Citigroup were replaced by The Travelers Companies and Cisco Systems.

When it started the Dow averaged 40.94.  It’s recent high was 14,164.53 on October 9, 2007.

Why is it so important?

Since the Dow represents 30 of the largest US companies, changes in the stock prices of the Dow can be seen to represent the general health of US companies.  Higher averages mean growth and profits while lower averages represent contraction and losses.

Do you follow Dow prices?  Do you think it’s an accurate economic indicator?


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Causes Of Poverty – Blog Action Day 2008

Homeless in Sugamo 2

To paraphrase Wikipedia, poverty is the deprivation of common necessities which determine the quality of life.  In our age of Nintendo Wii’s, online banking, flat-screen TV’s, and more, poverty is still a huge problem in our world.  Poverty affects about half of the world’s population.

Here are some of the main causes of poverty:

  • Demographic and social factors: Overpopulation; crime; cultural causes; war; discrimination.

About half of the world population suffers from poverty!

What can we do?

Kiva.org is an organization that provides micro-lending to the working poor.  In impoverished nations it’s very difficult to get loans.  Kiva helps by giving small loans so people can improve their livelihoods.

End Poverty 2015 Millennium Campaign – In 2000 189 world leaders made a promise to meet the eight-point development goals to help end poverty by 2015.  Check out the goals and what you can do to help achieve them.

This post is part of Blog Action Day 2008.  Blogs from all walks of life are getting together to discuss poverty and what can be done to end it.  Go check out the Blog Action Day site and the participating sites.

Poverty can be wiped out if we want it to.  It’s up to us to push that goal!

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I’m Saving By Bringing Lunch To Work

the finished product

So as you know, we’re living off of one income now as my wife took off from her education job to stay home to raise the kids.  We’ve been looking for all sorts of ways to cut expenses to make my salary stretch a little farther.

One thing I’ve started to do is bring lunch to work a few days a week.

I work in NYC.  I don’t tend to go too crazy on lunches in general.  I tend to stay away from the expensive restaurants.  This was a habit before we were on one income.  But the costs of eating in Manhattan do add up anyway.  A sandwich is easily $5 at least if I go to a small deli.  More if I go to a bigger establishment.  Salads cost at least $7.  One thing to note is that I don’t eat at fast food places such as McDonald’s, Subway, or Wendy’s.  I could get cheaper lunched there but I gave up that food long ago.  I try to keep my eating healthy.  It could cost more at times but I think the payoff to my health is much greater in the long run!

So now my wife has been making lunch for me around three times a week. If I would have spent $5 on lunch then that saves me $15/week.  That’s around $60/month or $720/year!  And that’s if I only spent $5.  I’m saving more if my lunches were more expensive on those days.

I also don’t buy any beverages for lunch.  We have a coffee machine and water cooler at work which I use instead.  This also goes back to eating healthy since I wouldn’t buy soda or sugar drinks anyway.

So there’s one way we’re making our money stretch.  I’ll be telling you about others ways in future articles.

How do you stretch your money?

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Best Financial Advice You’ve Received

Father and son surf lesson in Morro Bay, CA 12 of 12

There’s a meme going around that I saw at The Digerati Life who got it from Sound Money Matters.  It’s basically asking everyone to answer:

What’s the best financial advice you ever received?

Probably one of the best pieces of advice I received was from my dad.  When I go my forst credit card he told me to be careful and not go into debt with the cards.  “Pay off your balances every month,” he said.  Unfortunately I was young and headstrong and had to learn mistakes the hard way.  I’d go onto opening numerous credit cards – Macy’s, Bloomindale’s, two CitiBank cards, and others.

At first I was real good with my cards and paid them off.  But as I got older with more responsibilities the balances started to grow (that and I couldn’t keep my hands off buying “stuff”).  In the end I had debt in the thousands.  I was able to slowly pay everything off with a little help from my family as I moved back in with them for a while.

I was foolish for not taking my dad’s advice to heart.  I’m sure many people out there have a similar story.  They know what the right thing to do is but somehow their credit card debt got out of hand anyway.

If you’re one of these people – You can get out of debt! It may take a while but small steps will lead to big changes over time in paying back your cards.  Start now!

If you’re not in credit card debt then make sure you stay that way!  Be responsible with your charges and make sure you can pay back everything once the bill arrives.

I’m not one of those who thinks that credit cards are evil. The mistakes I’ve made with them I take full responsibility for.  They can be very useful in fact.  But you have to be responsible with them.

I’m tagging the other members of the Money Life Network to answer the question: What is the best financial advice you ever received?  (MiB Smarter Money, Bible Money Matters, Sense To Save, Remodeling This Life, Prime Time Money, and Milk Your Money).

If you’re reading this then consider yourself tagged too!  Write about it or drop a comment here.

What’s the best financial advice you ever received?

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We Got Our Insurance Deductible Back

Happy!

Some years ago we got into a car accident.

Fortunately I called the police and had the officer file a car accident report.  As a result, a full report of the accident was on file for my insurance company to use in their case against the person who hit us.  If we didn’t have a report on what caused the accident, the other driver, then we would have been responsible for the deductible.

Not calling the police would have cost us $1000!

How is that possible?  The other driver rear ended us putting the fault of the accident on him.  Without that police report stating what happened, and that the other driver got a summons for driving too close, then we would have shared the blame in the accident.  That would have meant we’d have to pay our $1,000 deductible.

A little while after we repaired the car from the accident we got a check in the mail from the car insurance company for $1,000.

Whew!  Everything worked as it was supposed to and we got our insurance deductible back.

Our insurance company paid for all of the repairs but we had to pay $1,000 of the repairs out of pocket.  I was afraid everything would drag out and it would take even longer to get the deductible back.  Or even worse, something would happen and we wouldn’t get it back.  In fact the collision company that fixed our car stressed that we should firmly follow up with our insurance since some companies keep the deductible.  You always hear about some paperwork SNAFU that causes you to not get your insurance money.  Thankfully our insurance was great and they paid us back without any problems.

So you understand, our insurance takes all of the information about the accident and basically sues the other driver’s insurance company for the damages.  The success of the case determined whether we got our deductible back.  If our insurance couldn’t win it back then we wouldn’t get it back either.  Fortunately that wasn’t the case.  A big part of that was having a police report saying the other driver rear-ended us.

Some of you might wonder why our deductible was so high?

I set it up that way with my insurance so I would have lower payments.  Since we had the $1,000 socked away we could afford to have a high deductible.  A higher insurance deductible is a great way to save on your car insurance.

This is a great example of why it’s important to have adequate savings! If I couldn’t back up the deductible I’d be paying higher insurance OR I might have to find the money somewhere else such as a credit card.  That would not have been good.

If you are going the higher deductible route to save on your car insurance make sure you have that deductible handy in savings.

So to recap: Make sure you have the police at a car accident.  And raise your car insurance deductible as much as you can afford in order to get lower car insurance payments.  Also have enough savings to cover your deductible should you ever need to pay it.

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The American Dream Is An Illusion

part of our living room

What is the American Dream to you?

I used to think of it as owning a home, having a good job, and raising a family.  I don’t think I’m far off by thinking that’s what many of us think it is.  Perhaps the conventional thought is the house has a white picket fence with a 2-car garage as well?

But is that what we are actually aiming at these days?

My big issue here is owning a home.  We’re all hearing about financial institutions doing bad because of mortgages.  So what is happening to the people who buy homes?  Foreclosures!

Why foreclosures?  Could be that people bought too much house than they could afford with too little down?

The way I see it, when you’re buying a house with say zero down or even 5% down when will you actually own your home?  This has become a major problem for people.

In my opinion it’s no longer the American dream to own a home.  That’s an illusion.

Today’s American dream is to appear like you own a home.  It’s become more important to look like you have a great big home.  Who really owns these homes?  The banks!

If there’s anything to learn from all of the recent financial bruhaha it’s that most people have to re-think what owning a home really means!

  • An interest only loan or an adjustable APR will not help you own a home.  You’ll get to move into one but you won’t own it.
  • A modest home is OK.  You don’t need a McMansion!
  • Put down as much as you can when you buy a home (remember when you really needed 20%, aim for that).  This way you start off owning a good piece of it.
  • Homes are to live in!  Perhaps flipping a house is profitable for some.  But for most people a home should be where you live not where you speculate.
  • Just because you make enough to cover the cost of the mortgage it doesn’t mean you can actually afford the home!  So many other things have to be considered from taxes to losing a job to how much savings you have to home repairs, and so much more.

I’m ranting a bit so I apologize.

It just seems that there’s so much talk about how banks and such are so greedy that we might be forgetting that it’s people who are living in these homes.  They had a bit to do with all of this as well.  Some people probably got genuinely swindled and some came on hard times.  I understand this.  But many people were just greedy and wanted as big a home as they could get without considering if they could afford it.

I’m going to go a bit further.

The American Dream has turned into consuming as much as you can.  At least that’s what corporate America wants.

One of the biggest measures of the economy is GDP, Gross National Product.  This is driven by us buying more stuff.  When we buy less stuff then the economy stagnantes.  But is it really a fair point to judge the economy by how much stuff we buy?  What’s the end goal?

We can only buy so much stuff without going into debt and I dare say we’re in enough debt already.  How much more debt can we handle without bursting?

We need a new measure.  Maybe we need to look at quality of life instead of a dollar figure put on our economy.  Think of it.  How many times can we upgrade our personal technology?  We can only get so many computers and flat-screen TVs.  How quickly can we really upgrade or cell phones?  But when we don’t do these things, even if we’re already saturated, then Chicken Little runs around saying the economy isn’t doing well.

But how happy are we?  What is our life like?  If we have to work 2 jobs or put in overtime in order to afford all this stuff and their upgrades then is that a good life?  Is that a dream to aspire to?

What do you think?  What is the American dream these days?  Is it attainable?  Is the American Dream an illusion?

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