Did you get to catch ABC’s special Unbroke: What You Need To Know About Money? I heard about this via Twitter from MainStreet.com. The special advertised it would talk about what people needed to know about their personal finances and it was interspersed with vignettes describing different aspects of money from the celebrity likes of Samuel L. Jackson, the Jonas Brothers (that got my daughter watching), Oscar the Grouch, and the E-Trade babies.
Hey, how to not be broke? Sounds right up the alley for Free From Broke! I was game.
So with the kids running around and the computer on my lap on the couch I took note of what the show talked about.
Here are the points I picked up from Unbroke-What You Need to Know About Money:
-No driver’s education for your finances: You learn how to drive but school doesn’t teach you anything about credit cards or your finances.
-Credit cards are a primary cause for debt: A big culprit for debt in the country is credit cards.
-Paying cash makes more sense: Cedric the Entertainer tells us that the old school way to pay for something was to use cash. This way there’s no debt and no worries.
-People have lots of credit cards on average: Random people are asked how many credit cards they have and the answers run from about 5-9 cards. You really only need one.
-The average American family has 10k in debt on an average of 5 cards: Wow.
-It takes 58 yrs to pay off 10k if you pay only the minimum.
-19 yrs to pay off a laptop if pay minimum for a college student: If a student starts school and buys a laptop on credit it can take them close to the time they’ll attend their 20 year re-union if they only pay the minimum requirement on their credit debt. The laptop gets REAL expensive!
-Why people bought expensive houses – sub prime mortgages: The thought here is that some money people came up with a foolish way to extend credit to people who couldn’t pay it back.
-Seth Green shows us how to live within our means: Smaller house with a low fixed rate mortgage; own a modest car; keep your small tv; pla board games instead of getting an expensive gaming system; have adequate insurance; save money with energy efficient appliances; and have a rainy day fund. Keep you spending tight!
-Many people are living paycheck to paycheck: You need a safety net; an emergency fund of 3-6 months expenses.
-A system to start building up an emergency fund: Start saving 1 dollar a day for four months. Then up that to 2 dollars a day. Now amp it up to five dollars a day. Before you know it you’ll have $1000 saved.
-Definition of stock: A share of ownership in a company.
-Definition of bonds: A loan to a company for a set period of time with a set return.
-You have to take a long term view when investing: The stock market goes up and down but over the long term the market goes up.
-Stock indexes give a measure of how companies are doing: Dow is the top 30 companies, the S&P 500 is the 500 top companies, and the Nasdaq lists newer tech companies.
-Oscar the Grouch, the reason I watched: You need a retirement account. When stocks go down there’s an opportunity to buy. It’s tough to save for the future (in Oscar’s case a nice dumpster near a garbage dump) without stocks in your portfolio. Individual stocks can fluctuate but overall markets go up. The biggest risk is not taking a risk.
-One term you need to know to retire: 401(k) – Money goes in before taxes so it grows tax free. Even though stocks can fluctuate wildly in the short-term, over the long-term stocks have always gone up. You can invest up to $16,500 a year in a 401(k) plus many companies offer a company match. Variety is crucial in your portfolio so make sure you diversify. A 401(k) is automatic savings since it comes right out of your paycheck. If your company offers a match it’s ridiculous not to meet the match. For example: if company offers a 50 cent match that’s 50% return right off the bat. These days saving for retirement is mandatory.
-Should I invest in a 529 or 401(k)? – Take care of yourself first then help your kids.
-It’s very difficult to blog about a show with your kids awake. It’s a challenge to keep up and type while your 9 year old and 2 year old are jumping around. At one point my son asks me what I’m doing and tries to shut my laptop. That’s what I get for not playing with them on a Friday night.
-Samuel L Jackson gives a great take on the movie Network. He’s a fictional financial guru who tells a TV audience that no one thought they had to follow the basic rules and now they are broke, including himself even though he’s an “expert.” He tells everyone to get up and yell: I’m broke as hell and I’m not gonna take it anymore! You want a monologue delivered? Give it to Samuel L Jackson! He made some good points though. Pick yourself up and tell someone you’re broke and you’re not going to stay that way. Get mad and do something about it.
These aren’t any new personal finance topics, though it’s full of great information. There’s no new “gazelle intensity” or “debt snowball” or “latte factor” introduced in the show. But that’s not what it was trying to do. These are all great basic premises for someone to take care of their finances and hopefully it helps to get a few people to take a look at their financial situations.