Archive for April 2011

Net Worth

Net Worth

Do you agree with the artist? Who really has spare money? The above image describes an all too familiar situation. According to the St. Louis Fed the personal savings rate has recently come back above 5%, up from around 2% prior to the recession. While some people are able to effectively manage their debts, I believe it is too socially acceptable to abuse credit.

When walking through the streets of downtown Portland, I sometimes give money out when asked, but usually I try to avoid it. I avoid it not because I don’t have compassion for the poor but that I feel giving out money is only a short term fix.

When waiting at my bus stop, the same woman comes by everyday asking people for money. I saw her elsewhere once downtown, walking and talking on a cell phone. I don’t know if it was her cell phone or not but it made me think.

I feel strange when I am at an intersection and I see a person with a sign asking for help. It would be dangerous to stop my vehicle to give them some money, but I think it’s their intent to get money from people who end up stopped right next to them. When I see a sign that mentions being a veteran my heart aches that much more.

This topic is hard for some to talk about. I grew up in an area with less visible signs of poverty so maybe I am more impacted by people I see on the street asking for help. What are your thoughts?

Feels good to do the right thing.

Living in an apartment complex, I get other people’s mail all the time. Typically from the outside of the envelopes I can tell if it is a credit card application, appeal for a donation, or junk mail. I receive this type of mail weekly for the previous two to three people who lived in my unit before me. (This still is hard to believe considering the post office once stopped delivering my mail until I submitted this card with my name, yet they still send me other people’s mail – very strange). I had never opened another person’s mail until yesterday; I usually put it into the outgoing mail box or in the case of junk mail, I recycle it.

Yesterday I was performing some car spring cleaning. When going through the center console I found something peculiar. It was a Christmas card that I had intended to put back in the mail. I then remembered the origin of this envelope. This was the first letter that had an actual return address on it. It was addressed to Person X from Persons X (X signifying the same last name). So instead of simply throwing it away or putting it back into the outgoing mail, I decided in December I was going to send it back with a note, telling the senders (seemingly Person X’s family), that I had been living in the apartment unit since July, and Person X had moved out. I placed the letter in my console for safe keeping and it stayed there until yesterday.

Impulsively, I decided to open the letter to see if it was even worth my time and energy to send it back. Low and behold, I open the letter and find a heartwarming Christmas card. Persons X had not heard from Person X in a long time and wished to see her again. I was taken aback for a second feeling pretty concerned for Person X. Was she in some sort of trouble? I hope that her family had heard from her since December 24th (the date the letter was post marked).

There was also $50 cash inside the card. Not for a second did I think about keeping the money. While the 50 bucks had been hidden in my car for 4 months, the money was never mine. Seeing the money motivated me to take action. I wrote out a letter explaining what I had initially intended, that Person X had moved, and I never knew her. I expressed my hope that they had heard from her, put their card with the money inside into my envelope and sent in back. See: http://goo.gl/cSAZB for better ways to send money through the mail.

New Ways to Save

The past few years have seen a significant boom is consumer savings opportunities. The most well-known, of course, are companies like Groupon and LivingSocial. More recently, Yelp initiated their effort for group buying and Google rumored a new service called Google Offers. These types of services are likely to flourish during the twenty-teens.

GroupOn is a service that has a deal of the day, per geographic region, which allows you to buy goods and services usually at more than 50% discount. There are a few restrictions but most people rave about it. Personally, I still have not adjusted to the idea of paying for a coupon. One downside of the service is that you have to opt-out of getting daily emails. I am a person who prefers to click my bookmark and see what the deal is – only when I feel like buying. There is nothing that annoys me more than receiving a daily bacon email (bacon emails are one step above spam because you know the service but still don’t want them in your inbox every single day!!!). LivingSocial is a similar service that offers even steeper discounts when people who you refer to the deal also purchase it. Yelp has joined the daily deal market and keep your eye out for Google offers.

With the boom in mobile computing technology, there are numerous opportunities to hunt for deals using services such as Foursquare, Facebook places, Gowalla, and Scvngr.

Location based social media is the next huge wave is consumer computing and Foursquare is leading the charge. Foursquare is a service that allows users to check-in to locations using their smartphones such as iPhone, Android, and Blackberry. The service has exploded in popularity and has over 7 million users. Not only can you check-in with friends and review stats on their website, local companies offer specials that are only visible to customers who use Foursquare. Just last week, I checked into a bar and saw that upon check-in, I could claim a free slider. Starbucks is also big supporter of Foursquare. At numerous Starbucks across the country, the Mayor (the person who has checked in the most time in the previous sixty days – maximum of one check-in per day is recorded) is able to claim a free cup of coffee every day! Facebook places, Gowalla and Scvngr came after foursquare and offer similar services.

Let’s say you are ready to get rid of you old phone and upgrade to one of the fancy smart phones so you can use Foursquare. You could trade in your phone old phone on Gazelle.com. This is a service that gives you cash for your gadgets.

If you have not already, you should try these great opportunities. I have reviewed some traditional websites and some location based services. If you want to know more, please feel free to contact me: josh@financialbeginnings.org.

If you build it…will they come?

This is a question we all ask when planning educational events. Though its common knowledge there is a huge need for financial education usually the people who need the information are not going to seek it out. One of the struggles many of our partners who serve adults face is getting people to attend their events. Financial Beginnings is fortunate we don’t need to recruit our audience because our classes are in the in schools or community groups where are audience is already gathered. They are stuck hearing form us if they want to or not.

Last week was Money Smart Week in Oregon. Financial Beginnings and Operation HOPE decided that we wanted to expend our efforts beyond our youth in school programs during Money Smart Week. I have always wanted to have an open forum for adults to be able to ask their questions regarding personal finance. With laws and industry norms changing so frequently in addition to money always being viewed as a taboo subject I thought people have a forum to where they can ask questions would be wonderful. Money Smart Week gave me the push I needed to finally organize one of these forums and we named it Unraveling the Mysteries of Your Money. You’d be surprised how long it took us to come up with the name.

At Portland State University we brought together experts within the financial industry including; Jim Hunt from OnPoint Community Credit Union, Michael Parker from the Oregon College Saving Plan, Nelson Rutherford from Alten, Sakai & Co, and Diane Childs and Fernando Velez from the Oregon Division of Finance and Corporate Securities. The moderator of the panel was Brent Hunsberger, It’s Only Money columnist for the Oregonian Newspaper. Brent’s diverse knowledge in personal finance combined with his reputation in the community really helped to bring exposure and credibility to this event. You would think that with this great group this would have been the hard part of my task, but this was easy.

The hard part was the promotion and getting people to come to the event. I hear it time and time again from event organizers that it is so hard to get people to come. Having the event be free may even make it more difficult in some respects because of the perceived value. If people pay for attendance to an event they may tie a higher value to it and may be more likely to attend.

As of the three days before the event we had less than 10 people registered to attend. My anxiety level was high and I was so worried I was going to waste the panel’s time because nobody would show up. So we marketed it hard. All of the panel members helped to promote the event. Brent wrote about it in the paper and Nick Allard from KGW brought us on the bricks to promote it. We ramped up our social media and contacted all of the business professors at Portland State.

The registrations started flooding in, we maxed out the registration. We even added more seats because our experience has shown that usually only 2/3 of those that register end up attending free events. Our predictions were correct and we ended up with about 2/3 of those who registered attending.

I was so pleasantly surprised by the diversity of the crowd and their eagerness to hear from the panel. We had several planned questions in case the audience did not have questions right away, but Brent was only able to get one of the planned questions out and the audience took over from there. I saw several individuals in the crowd filling out multiple pages of notes. When time ran out several audience members flocked the panel for additional questions. It was like they were rock stars.

Aspects I see attributing to the success of the event:
• Having Brent Hunsberger of the Oregonian as the moderator added a lot of credibility to the event and his writing about it gave the event more exposure.
• Holding the event at Portland State University also added credibility to the and highlighted the educational component of the event.
• The panel was made up of high level and respected individuals.
• The varied marketing proved to be successful based on a pole of those attending reporting how they heard about the event.

We will definitely hold the event again next year during Money Smart Week. We have created a great foundation for the event and will be able to build upon this more next year.

Panel

SURPRISE! You owe on your taxes

Turns out my poor tax planning hurt me more than I had expected.  On Friday we went to pick up our returns in the best of moods because we assumed we would be getting a couple of thousand returned to us.  We were already starting to plan the vacation we would take with the money we got back.  Well….turns out we owe a couple of thousand.  Both of us were dumbfounded when the tax preparer told us.

How could this be?

  • Getting married hurt us- In 2009 I was able to file head of household and deduct more.
  • Not owning a home- In 2010 we rented our home so we did not have home mortgage interest that we could deduct which both of us had in previous years.
  • 401k rollover- I rolled over a 401k from a previous job into my Roth IRA.  It was only about $6000, but that’s $6000 that I now needed to pay taxes on.
  • Charitable contributions- We did a poor job keeping track of our charitable contributions.  We both volunteer a lot outside of our nonprofit jobs and we could have deducted mileage and other expenses that we incur when volunteering.  We also donated several loads of items to Goodwill, but never collected the receipts.  You’d be surprised by how much you can deduct when you itemize these donations.
  • Rental expenses- Though we do a good job of keeping track of the direct costs we put into repairs on the homes we rent out, we did not track the mileage for driving to and from the homes and smaller costs like paint brushes or cleaning supplies.

Though I know we were new clients and we came to the firm towards the end of the season I also felt that our return was rushed.  If it had been brought to our attention that we were going to owe we could have worked to gather more of the documentations some of the charitable contributions or rental expenses.  Also, we hosted an exchange student and were surprised when I asked what our deduction for that was and she said nothing.  I came home and researched it and found that in there in fact was a deduction of at least $50 a month we could have taken.

So do I gather more information and pay them to restate it?

Tax Preparation Part I

Last Friday I had my annual tax preparation appointment which meant we had to have all of our tax information gathered before the 2pm Friday appointment.  I have never had such a hard time gathering my taxes before!

I imagine that based on my work in the financial education sector you would expect me to be fully prepared for my taxes.  You might even think I’d do my own.  Well, this year that was far from the truth.  I stopped doing my own taxes several years ago when I decided the hours I spent and the unease of knowing if I was actually doing them correctly was not worth it and sought out a tax professional.  I did what most of us do, asked around and got a referral.  I blindly took the referral and brought him all of my financial information.  I didn’t interview him or even question if he was right for me because I really didn’t know how to figure that out.

I wasn’t highly impressed by my CPA’s abilities since there were a couple of occasions where he made mistakes on my rental homes, but he always fixed the mistakes and it never financial affected me so I kept using him.  I used him until the year of my divorce.  You know how you get the packet from you tax preparer for you to fill out before they complete you taxes?  Well, due to the stress of going through a divorce I decided for the first time in my life to file for an extension.  A few months later when things calmed down I finally got around to opening the tax packet only to find a very sad letter informing me that my CPA had passed away.  Boy did I feel stupid for not opening the packet sooner.  I continued to use someone else at the firm until this year after I got remarried.

My husband utilized a firm down in California to do his taxes and I didn’t really have a connection or was really impressed by the firm doing my taxes so we decided to find a new CPA.  Once again we asked around for a referral and took the recommendation of our financial advisor.  And once again I had no idea what to ask or what would indicate if this person was right for us.  I just handed over the financials, expect that I’ll get my returns and bill in a couple of weeks and then do the same thing again year after year.

It wasn’t until yesterday when I was talking with a supporter of Financial Beginnings, Nelson Rutherford from Alten, Sakai & Co, that I realized I really have been going about this all wrong. He is joining us as our tax and financial planning expert at our panel discussion, Unraveling the Mysteries of Your Money, this week and we were discussing some talking points.  He told me how so many consumers wait until the last minute, throw everything together and take it to any CPA that will take them, but they forget one key aspect.  PLANNING!

Now I did not admit to Nelson that I was one of those people and quite honestly always have been.  You might be wondering why I didn’t go to Nelson since I know him and think highly enough to consider him an “expert” for my panel.  I felt like it was mixing business and personal too much.  Though I don’t imagine him seeing my nonprofit salary would scare him away from continuing to be a donor.  I did however refer my grandmother to Nelson.  She too had gone to the same tax preparer for 30 years and every year complained how she made mistakes, but never did anything about it until the tax preparer retired this year.

So I’m taking a new approach for the future!  I’m going to try out this whole planning thing that Nelson was talking about.  More to come on how I’ll go about it.

Classroom Experience – Part 4

My third experience with the middle school class was by far the hardest. The class had become very comfortable with me and as such it was very difficult for me to keep them quiet. Suffice it to say, it was not the most fun for me constantly trying to keep their attention. When I left I was unsure if the students had learned anything that day.

In the classes I taught since then I have not had such a hard time. I have been glad to have students that are well behaved and attentive. I have found that the enthusiasm of the class definitely varies by time of day. I can say the same thing in one class and get blank stares as I do in another and get tons of responses. The more I teach, the better each class has become. I have perfected not only my jokes but also by activities, questions, and visual aids. Each time I look forward to trying something new. (Quick note: if you are ever teaching multiple classes and you have jokes, the students talk to each other so it’s smart to have plenty of material).

Sometimes my ideas work well, other times they don’t. An example of something that did not work is when I tried to illustrate to a middle school class the importance of diversifying their investments. Since there math skills were not at the level I thought they would be, the game crashed and burned. I had to spend the whole time explaining how to do the math. It was not good. Since then, I have learned to have a contingency. If something is not working, I simply move on to something I know works well.

Of the limited hours I have spent teaching; it has mostly been middle and elementary school students. I look forward to teaching high school, because I am most enthusiastic about the higher level concepts I learned in economics classes throughout college. I was first turned onto economics in high school and I know the students have the capacity to understand the material. Find out next week what I love most about economics.