I recently read an interesting article about the racial wealth gap, called “Making it in the US: More Than Just Hard Work” by Pam Fessler.  In the article, the author argues that wealth is passed down through the generations instead of individuals building it.  An example given in the article describes two women who make similar incomes but one is wealthier because her family background. How? Perhaps the woman’s parents were in the position to pay for her college (so she has no college debt) or to help her with a down payment on a home. Maybe she lived in a neighborhood with better schools or she inherited money from her grandmother and invested it.  It seems that the author’s main point is that people do not start out with the same financial resources available to them and where they end up (financially) as adults is both a reflection of their hard work as well as the family background and societal situation they grew up in.

I was moved by this article.  I feel that I have seen similar situations in my own life and at work.  Now that I am working at Financial Beginnings, I think it would have also been interesting if the author had examined the connection between people’s income and the knowledge of how to successfully manage their money.  Perhaps it is not only wealth that passes through the generations but also the knowledge of how to manage it?

A year has passed since I arrived at Financial Beginnings. It does not seem that long ago that I first stepped into my office at the Bank of the West. My time at Financial Beginnings is one that I will always cherish. Working closely with Melody Thompson and David Bell has been one of the best experiences of my life. Their passion for Financial Education is matched by none that I have met.

During my time at Financial Beginnings my main focus was on programs. I brought on over 2000 new students and 20 new schools. Schools I brought on, such as Minter Bridge and Free Orchards, have already begun signing up for 2011-2012 school years. I have to say it feels really good knowing that I made a sustainable impact.

I also helped revise our student materials while serving on the program committee. Working with a small but highly efficient committee allowed me to implement changes within our curriculum. While there are still plenty of improvements to be made, I am delighted to know that some of the ideas I brought will live on in our student text long after I am gone.

While this is my last day with Financial Beginnings, this will not be the last time you hear from me. I plan to stay on as a guest writer. I am off to a Master’s Program in Statistics at UCLA. Without a doubt I will come across interesting topics related to finance and I plan to share them accordingly. Thank you for reading!

Whether it’s a car or computer, each time we make a purchase, there is a risk of product failure. To be a smart consumer, we have to weigh the costs and the benefits of a warranty. We must ask ourselves, what is the worst that can happen? And then contemplate how much loss we are willing to accept. For me, a warranty almost always makes financial sense. I tend to have bad luck with my products – they are simply not built to last.

I have an extended warranty on my PS3, it cost me $80 and nothing has gone wrong. But the two year coverage ends this Monday, so now I can only hope nothing goes wrong. I have a three year warranty on my television (only one year left!), and a five year extended warranty on my car (only two and half left!). My car warranty cost me $2,500 in 2009 but since then, I have saved over $8,000 because of it. My car has been extremely problematic.

Most products come with a limited manufactures warranty, like my cell phone. I had it for five months when it started acting funky, so I took it to the Sprint store and they gave me a new one for free. Credit card companies also offer free warranty extensions on products purchased with the card. Check your card member agreement terms to see if this is available to you.

I read an interesting argument against purchasing extended warranties. The idea is, instead of purchasing the warranty, you take the money you would have spent on the warranty and put it aside in a separate saving’s account. Do this for every product for which you could have bought extended warranty. You have now created a funding source for repairs. Since it is unlikely that all your products will break at the same time, you can withdraw funds as items fail.

This strategy would not have benefited me due to the ridiculous problems my car has had, but for some people, this strategy would work. Everyone has a warranty story, some good, and many bad. What’s your story?

I recently read an article on NPR illuminating a surplus of unused dollar coins in the Federal Reserve that has now topped over a billion dollars. The banks keep returning the coins to the FED because they do not want them! This got me thinking about our fiat currency once again. I love coins because they can stand the test of time – the oldest coins in the world are thousands of years old. I love coins because they have touched so much history, so many places, and so many people. The introduction of dollar coins in America brought these feelings to life for me once again.

When I first saw the Sacagawea gold coins I was really excited, but my excitement quickly faded. Not only was it difficult to use them in vending machines, but I can count the number I have received during my entire life, through day to day transactions, on one hand. Sure, I can go to my bank and exchange a $10 bill for 10 dollar coins, but it nevertheless it remains unlikely that I will ever receive one back when buying goods or services.

I am lucky enough to have traveled to Europe many times in my life. Their one and two Euro coins, or alternatively British one and two pound coins, work well and no one thinks the wiser! Something funny (and a hidden cost) is that people in countries with heavier coins require their pant pockets to be fixed considerably more often than their American counterparts.

What do you think? Is it time to stop printing dollar bills?

Remember my blog a few months ago toting about all of the money I am saving by getting rid of cable and just using Hulu and Netflix? Well it’s a good thing I have created the savings in my budget because I ended up having a huge expense on my TV last week. A couple of weeks ago we heard the dreaded POP while we were watching TV. It was immediately apparent that the picture bulb blew out on the TV.

I purchased this TV in 2006 and was told that the bulbs usually go out about every two years. They encouraged me to purchase the few hundred dollar warranty because I was bound to need to replace a bulb within the three year warranty period. Well either the salesman severally underestimated the average bulb life or I watch less TV than most people. Quite honestly both are plausible reasons.

Josh’s asked his friend who repairs TV if he’d be willing to help. Within five minutes sitting in my inbox was a link to where to purchase the bulb and a copy of the owner’s manual. The bad thing was that the part was almost $200 dollars. Josh said that my husband or he could easily install it, but that since it was so old maybe I should just go buy a new TV. Old? It’s only six years old! I remember a few years ago I gave away a TV that was over 20 years old and still working perfectly fine (well except that it didn’t have a remote). How could I even consider buying a new TV?

The following Sunday when I was sitting down looking at the advertisements in the Sunday Oregonian I understood why Josh suggested I buy a new TV. The TV that I purchased six years ago could be replaced by a newer, thinner, clearer (all together better) model for about a third of the cost that I paid for my current TV. So I was faced with either spending $200 to repair my existing TV or spend about $800 for a totally new one that was way better. Tempting right?

It seems we have become a disposable society. When it almost costs as much to replace an item as it does to repair it then people are not motivated to keep it and repair it and then we are left with disposing of the old item. What a waste.

So I sucked up the $200 cost of the bulb and it took a whopping 5 minutes for my husband to replace it and hopefully I am good for another six years. Do you think it was the right decision?

After college graduation I decided I wanted to apply for a Master’s program in Statistics. I began preparations for this program almost immediately after graduating from Willamette University. My focus in college was economics; as such I was required to take five math classes at Portland Community College and one math class at Portland State University to have all the pre-requisites from the MS Stats program.

One morning in mid-April I received a welcome letter from UCLA. All my hard work paid off and I quickly began to celebrate. As I reviewed the details of the cost, my celebration was halted. I realized it would be twice as expensive to attend graduate school at UCLA since I no longer lived in California.

The next step was figuring out how I could get in state tuition. I filled out my intent to register and claimed I was a California resident for tuition purposes. My logic was, I grew up in California, and while I have been living in Oregon for the past six years, I was in college most of the time, I still paid most of my taxes in California, and my permanent address was in California. The university rejected my claim. This meant an extra $22,000 a year for out of state tuition.

Luckily, with the rejection notice, came another letter that indicated I may be eligible for tuition exemption based on the fact that I attended high school in California for more than three years. This was music to my ears, I hastily sent in all the required paperwork. Last week I received news that I had been approved for instate tuition; this is a glorious victory that is going to save me over $45,000 over the course of the program.

Thank you exemption program ! I still need to come up with the rest of the money, stay tuned to find out how.

A few weeks ago Josh talked about the web and social discounts available and I thought I’d expend on it with my own personal experience. Yesterday I realized that I had six deals that I had purchased through Groupon, Living Social and Travel Zoo that I had not yet used. I was determined to utilize these deals which I had purchased over the last several months.

So yesterday I:
• ordered $40 of personalized stationary which I purchased for $20,
• ordered five bottles of wine which I had purchased a $75 certificate for $25, but I ended up paying an additional $20 because of shipping and the cost of the wine, and
• Went out to a 4 course meal with wine which I had paid $50 for. I left a $20 tip.

I still have yet to use:
• 3 sessions of kickboxing which I purchased for $15,
• 20 fitness sessions at a women’s gym, and
• $60 of ceramic painting which I paid $30 for

There have been numerous other deals which I have purchased over the last several months like lodging, golf, yoga accessories, tea, hot yoga, and the list goes on and on. But now I’m wondering was it worth it? It has been great trying out new businesses and experiences, but am I really getting a good deal? Many times yes, but many times no.

For example with the work out sessions, many times they only give a short period of time to use the sessions. Over Christmas I purchased 20 sessions of Bikram yoga for $25, the only caveat to that was that they had to be used within 60 days which meant that I would have had to go 2-3 times per week. Do you know how hot it is in there? It took me a good week just to get up the nerve to go again so I ended up only going about 4 times. Still, a reasonable deal averaging just over $6 per session, but still I may have stuck with it had I more time to get use to the excruciating experience.

I’ve also been burned by some of the online retailers because of the shipping. I purchased $25 worth of yoga accessories for $12. I figured this was good because I could purchase a new yoga mat which I was in need of. Well, what I did not know was that the shipping was going to be over $10 so I likely ended up paying the same price as I would have if I had just gone to a shop here locally.

The thing that is important to pay attention to with these deals is that we are still spending money out of our budget. Most of the deals I have purchased are extras in my budget. Some do give me good deals on things that I would have purchased anyway like the wine, or golfing. But many just sound fun and like a good deal so I purchase them, like the ceramic painting.

So now the questions is do I purchase the $20 certificate for $10 to Old Navy which is on Groupon today?

Student Loan Consolidation- Dispute Letter

It’s been a long time since I’ve had to write a dispute letter, but I’m quite experienced in it since I worked in collections for several years. I finally had some time today to sit down and sift through the notices I’ve received over the last several months regarding my student loan consolidation. Unfortunately the more I dug into the paperwork the more it scared me how unorganized they were during this whole process. In March they sent me a notice telling me that they were planning to complete the consolidation 09/01/10, but that they sent it in 02/25/11. They didn’t bother to call the previous loan company to get a new payoff amount since I had still been making my regular monthly payments. It’s important that anytime you are doing a consolidation, refinance or any type of loan change that you continue to make your regular monthly payments on time.

I sifted through all of the paperwork and tried to outline as clear as possible my situation of them receiving a refund from my previous service provider, which then caused my principle balance to go down and somehow caused my payment to go up.

Some important things to know about sending dispute letters:
• Always send dispute letters via certified mail and save the delivery receipt,
• Send the notice to multiple departments if you think it will help,
• Send copies of any documents you are referring to,
• Document and cite names and dates of conversation you have had with the company,
• Clearly state the problem and what you want to know or what your suggested resolve is, and
• Be sure to follow up!

I will be sending the disputer letter out today. I’m sending it to the processing center Texas and the Consolidation Department in Kentucky. Cross your fingers on my getting a response.

The following blog is written by a Patrick McCarthy, a high school student who taught the Financial Foundations program to his fellow classmates as part of his senior project.

Looking back on that educational session about investing, I realized I had known practically nothing about money management, financial literacy, and planning for my life. So what did I do? I decided to teach this information which I had known so little about to the other students at my high school.

Through the Bank of America Student Leader Program, I attended a meeting with Meryl Lynch professionals, where my eyes were opened wide by the information, tips, and keys to success I was missing out on. And with all of this daunting information filling my brain, I came upon the thought that if I, an achieving and smart student had no idea about this, then there were probably countless others at my school without any learning in this important area.

So as my senior project, I wanted to teach my fellow senior class about the various aspects of being financially literate. The only challenge being that there were a total of 120 students, which meant teaching five classes a day three days in a row. And to top it off, most volunteer teachers were experts in the field or long time volunteers, and I was just a senior in high school. Nevertheless, I took on this challenge of educating my peers, who would soon themselves be entering the work force and facing their own financial lives.

Eventually, I was finally able to contact the non profits Operation Hope and Financial Beginnings. David Bell, my personal contact, was extremely helpful in getting me information about financial literacy, providing the classroom materials, and much more through the means of advice and excellent support. With this connection, I had a real opportunity to actually accomplish this goal, and was eager to do so.

While I had performed many speeches through class projects, 4-H events, and other venues, this was a totally different experience. After learning about banking, credit, and insurance myself, I wanted to make the largest impact possible on them. Yet I found that trying to drill the information into them was not the way to do so. Since they were all my peers, I found it possible to speak with them, and not lecture them on the importance of financial habits. This prompted numerous questions, discussions, and interest that I could see in their faces.

One particular class stuck out to me in which the teacher and students were intrigued by what I was teaching. When talking about managing money properly, the topic of Mint.com came up, and some of the students who had heard of it were interested in the site. So the teacher of that class simply pulled up his own profile, and we were able to all go through this site that is efficient in assisting one with his or her financial life. Little instances like this happened in almost every class every day, and gave me the knowledge that they found my information both valuable and interesting.

Of the many things I took away from my project and teaching others, a remarkable thing I noticed was how I knew much more about financial literacy itself compared to when I started. I am greatly satisfied knowing my fellow classmates have a grasp on money in life, yet I was surprised in how much I personally obtained just by teaching the material. Now I know more than ever that I too will be prepared for the complex financial world out there.

Anyone who is interested in teaching or even learning more in depth about financial literacy should seriously consider teaching others about it. You can take it from me that the most beneficial learning you will ever experience is learning by teaching, and learning from and about those who you teach.