About 5 years ago I came across and article in the Albuquerque Journal.  A group out of Santa Fe had procured a grant to travel the state and host financial literacy seminars for women the grant targeted women for two reasons: First because the odds are overwhelming that at some point in her life a woman will become the financial head of household and second because women are more responsible with money than men.  Teaching women about financial literacy and how to make sound financial decisions can help keep families out of poverty.  Other organizations like RoomtoRead.org seek to raise the standard of living in communities by targeting young women and providing them with books.  Programs aimed at improving the educational level of young girls are at least as effective as providing contraception in reducing the incidence of unintended pregnancy and early child rearing two correlates of poverty in communities.

I contacted the group from Santa Fe and they agreed to come to Gallup, NM.  I just had to advertise the seminar and find a venue.  The venue part was easy.  Low cost advertising was not.  I tried word of mouth but got few committals for people to attend.  I put up a sign in our local chamber of commerce.  On the day of the event, I approached the head of our hospital and asked permission to send a mass e-mail to hospital staff.

The event was well attended, standing room only.  It is pretty clear to me that people want information about how to manage their money.  Most folks are willing to attend a class, but few are willing to read a book or ten or make learning and living financial literacy a habit. But attending a seminar is a start.

The leaders of that seminar espoused a philosophy that is antithetical to the way that most people, especially women who tend to nurture the people in their lives, think.  What they advised was not to put any money away for your child’s college until all savings and retirement needs are met.  Their rationale was simple, having a comfortable retirement depends on the length of time money is put away for retirement and it is hard to make that amount of money up later in life.  “Your child can always take out loans,” they said.  They also said that a child is likely to be more responsible with the money if they are taking out loans.

During my mother’s talk on financial literacy that I alluded to in an earlier post, she expressed considerable concern that graduating with significant undergraduate debt would stunt the economic prospects for kids.  In this arena, I truly don’t know what to think. My mother and I had a deal.  She took care of undergraduate school and I was responsible for my graduate education.  It makes me quake in my boots to think that the assistance that my mother provided my brother and me may have stunted her retirement prospects, yet I did ask the question in an earlier post if living in a pension-less society will force parents to choose themselves over their children when planning for the future.

Today is May 7th.  Yesterday the DOW lost 998 points in intraday trading. The year is 2010 not 2008.  We are supposed to be experiencing an economic recovery.  We had a net gain of 290,000 jobs in April, beating economists’ forecasts yet the markets are down.  The markets are really like a party.  The folks who arrive early have their choice of the available foods and can eat their fill, the folks who arrive later are left to pick over the remains and the folks who arrive at the end of the party are shut out altogether.  Trouble is that when the food first arrives it seems to be without limit.  No one knows when it will run out but everyone understands that it will run out.  Those who benefited from the unprecedented bull market of the 1990s were in the market in the 1980s, they were early arrivals to the party.  The market activity of the last 24 hours  proves, yet again, that you cannot use the markets to goose retirement savings, so the only asset you have is time: saving early, saving often and prioritizing that saving over everything else.

Please comment.

I was reading 7 Steps to Get Your Finances Back on Track from the April 1st CNN Money.  Digging the article I was just about to Tweet it when I ran across this statement:

Tap the power of a Roth.
What if you’re hard-pressed to come up with the extra cash? Redirect a portion of the money you’re saving for retirement. Put only enough in your 401(k) to get the full company match; put the rest into a short-term bond fund in a Roth IRA. Unlike a 401(k), contributions to a Roth can be tapped without penalty in an emergency because you’ve already paid taxes on that money. But earnings withdrawn from a Roth before age 59½ will typically be taxed and hit with a 10% penalty.

I added the emphasis.  I thought the law was that the account seasoned at least 5 years or age 59 1/2 and earnings could be withdrawn without penalty. I was wrong, but being wrong got me thinking.  What can we do to make sure the financial information we get is correct?  One of the things that I did was go to the IRS website and find the IRA publication number 590.  It has a great flow diagram that I am including here about qualified distributions from a Roth IRA.  Qualified distributions are the distributions that qualify to be withdrawn tax and penalty free.

As I have written in other posts, I am very concerned that the 401K may not be appropriate for all individuals depending on their financial resources and that under certain circumstances it is preferable to maintain present-day liquidity.

Financial writers and bloggers alike are human.  We make mistakes but when I am unsure, I go to the source.  Qualified savings plans were created by the US Government, the IRS site has free, easy-to-understand publications devoted to those savings plans.  The US Treasury has an easy-to-navigate site that explains its bond programs and how to buy them.  Fannie Mae produced a several hundred dollar, several hundred page tome on mortgage backed securities.  I could not understand them so I never invested in them.  The Fannie Mae site, however, emphasized the possibility of investment loss when purchasing mortgage-backed securities.  I thought that was a clue.  For real estate investments I consult real estate investors, not retail agents.

It is always important to have a network of unimpeachable sources that you can go to for reliable financial information.

What sources do you use?  Please comment.

I canceled my iPad.  I have never done that before, but the connectivity problems publicized on the internet made me accept the fact that I should wait.

3 months ago my MacBook failed.  The MacBook was new to the Apple lineup when I bought it.  After 2 weeks of steady use it crashed.  Then it began to crash daily especially when connected to Wi-Fi.  I bought it through MacMall who would not return my calls when I tried to return the device. (Note to self….never buy from MacMall again) Because of the circumstances under which it crashed, Apple wanted the device to take apart.  They replaced my MacBook when the retailer who actually had my money would not even respond to my calls or e-mails.  About a year after I got my new Mac, I heard a high-pitched metallic sound coming from it and I thought, humm hard drive.  I nursed it along for another year when the hard drive failed.  I still remember the panicked call I made to tech support.  The support person, using the tone of a physician conferring a cancer diagnosis, asked me if I had a back up drive.  When I said, “yes” he said “get to work your hard drive is failing”.  The computer never booted again.  Off to the Apple Store for a new hard drive.  When I got my computer back and began transferring data from my back up drive, I realized that a few iTunes purchases had been lost.  I knew exactly which ones they were and Apple replaced them.

I canceled my Direct-TV subscription and bought a mac mini I now stream TV programming to my TV from my computer.  The subscription cost savings will pay for the mac mini in less than a year.  It was when I purchased the mini that I experienced my first ever Wi-Fi connectivity problems.  Both of my lap tops connected to my home network without a problem.  Not the mini.  It would go to sleep and “forget” which network it was connected to;  reconnecting it became a painstaking process consuming 30-60 minutes of my time and I had to do that a lot.  I called our local tech support geek who is a mac user.  He could get my mini to stay connected a few days at a time then, without warning or reason, my mini would “forget” which network it was connected to starting the frustrating reconnect process all over again.  I decided to invest in a Time Capsule (an Airport extreme would have been just fine).  It solved 99% of the problem allowing my mini to cooperate and stream TV programming.  What do I do the 1% of the time when my mini “forgets who and where” it is?  I restart it.

To think that I might have to go through that with my new iPad.  No.  I pre-ordered my iPad with the idea that it would add convenience and pleasure to my life, not frustration.  The “fix” for my mini was $300 dollars.  A price I was willing to pay because I thought that all of my devices would connect more easily to the new system, and I was right. Alas even folks with home networks using Apple hardware are reporting connectivity issues.

The iPad that I ordered was the 32 GB 3G+Wi-Fi model.  The 3G was for traveling only.  My intended primary Internet use was my home network and Wi-Fi hot spots.  I wasn’t interested in a long term commitment to AT&T.  Frankly, given the pricing on the device paying $15 or $30 dollars per month to use the AT$T network because the Wi-Fi is too dodgy makes the iPad untenable.

Apple is a great company and that company has treated this customer well.  I will be watching the chat rooms to see if Apple discovers a fix to the Wi-Fi problem and, when it does, I’ll re order.

Please comment.  Do you have an iPad?

I am tired of the pundits!

I finally pre-ordered my WiFi-3G iPad and I cannot wait to get it. I remember when the iPhone came out, I remember when Apple opened its retail stores. Pundits had lots to say, mostly negative. Apple didn’t need retail stores. Now the retail stores have helped increase Apple’s market share and its market cap. People didn’t want or need the kind of smart phone the iPhone represented now Apple has become the standard. I am always getting e-mails from friends, the tag line, “sent from my iPhone”. Years after the iPhone was first introduced, it still has a wow factor among those of us who don’t yet have one. Maybe the iPad will be a dud, but I don’t think so. About a month ago Amazon started offering its Kindle app as a free download to iPhone users. The iPad will run the iPhone OS, so guess what. Amazon is really saying use our app iPad users and read our books on your new iPad. When I get my iPad, I will download the Kindle app. I have lap tops and by themselves they are pretty light, but I have a lap top case, charger, and other items that increase the weight of the lap top to something not very comfortable or mobile. When do I use my lap top? When I am traveling and want to view a movie, when I am traveling and want to read an e-book, (they are lousy e-book readers by the way) when I am traveling and want to use the word processing function and when I am traveling and want to check my e-mail. The iPad will not be as robust as a lap top, but it will fit the bill for most people. I for one will be happy to leave my 10 pound lap top + entourage behind. Apple has become masterful at defining the user experience and creating irresistible sex-appeal around their products. I believe they have done it with the iPad. I’ll update this post as soon as I have my new iPad.

The iPad comes out this weekend. What do you think? Please comment

It was June 2007.  I returned home to find water running down my driveway and out my front door. In my house I heard the whoosh of water and felt the water soaking in through my shoes.  Four inches of it in my home, every room.  The laundry room was the epicenter.  Dry wall ruined.  A water hose on the washing machine was the culprit.  In a moment, my plans changed. I was supposed to be headed out of town.  Insurance company called, flights cancelled.  I called a friend and we began to bail my home out.

I picked up my floating belongings, ruined books, papers hard drives and computers and realized then that I had way too many personal possessions.  That was a tough realization for me.  I consider myself frugal.  Frugal people don’t buy things they don’t need, right?  Many of the things I found floating round my home were things, books especially, that people had given to me.  My closets were littered with clothes that I hadn’t worn in years, yet had not sorted through to give away.

You don’t appreciate the amount of junk, clutter in your until you have to empty your home in 2 hours,  Once I filled the garage, everything else had to go in the back yard;  a friend of mine came by and told me that my back yard looked like a scene from Sanford and Son.  The lesson from the flood what that my house was filled with junk pain and simple.

I vowed to de-clutter and stay that way.  For a time I did it.  Now I look around and discover un-filed papers, unread books and unviewed DVDs.  For a brief moment I considered buying a cabinet to house them!  But I have come up with a better plan, I think.  In the next 60 days, I am going to host a de-clutter party.  I will cook for friends and in exchange, they can hold my hand while I empty out shelves.  I am declaring a moratorium on buying books for the next 60 days, until I identify the ones I will never read and determine a place (not inside my home) for them.  I am also going to add up the cost of those books and post it around my home as a reminder.  I will make a reading list and read the books I haven’t read posting them on this blog so that you can cheer me on as I check them off.  I will also let you know how the anti clutter party went
complete with pictures.

Let me know your struggles with clutter and what you have done about it.

This book is incredible I was looking for Financial Infidelity, recently featured on CNNMoney, but our independent bookseller didn’t have it. They had Hilary Black’s book instead. Money issues in relationships are difficult and are the number one reason that relationships end, but this book contains essays from several successful female writers on the issue of money. NOT about personal finance, but how money and decisions around money plays out in their most intimate lives. I was frankly surprised at the level of sharing in this book, but there you have it. My partner and I have been together 15 years. We have decided not to talk about money and our finances are, for the most part, separate. That separation prevents numerous arguments, but it doesn’t reduce stress. Just for a sense of perspective for anyone struggling with money either alone or while in a relationship or to know that you are not alone, The Secret Currency of Love is a must read. To find out more and read additional reviews click this link, The Secret Currency of Love: The Unabashed Truth About Women, Money, and Relationships

You can win “Why Smart People Make Dumb Money Mistakes” OR Cash $100
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What is the 80/20 Rule?

More formally the 80/20 rule is also known as the Pareto Principle. To Quote Wikipedia: “The Pareto principle… known as the 80-20 rule, the law of the vital few…Business management thinker Joseph M. Juran suggested the principle and named it after Italian economist Vilfredo Pareto, who observed that 80% of income in Italy went to 20% of the population.”

We hear the 80/20 rule as it is applied to business and sales. Twenty percent of your employees produce 80% of a companies problems, 80% percent of your corporate sales are produced by 20% of your sales force and in network marketing, 80% of your profits may come from 20% of your distributors. We hear of it as it relates to wealth and wealth accumulation: 80% of the money is controlled by 20% of the people.

Joseph Duran was born in 1904 and he credited this principle to an economist who lived in the 1800’s. Is the Pareto Principle an abstract economics principle or is it a model of human behavior?

Going back an estimated 5000 years we see a beautiful example of the 80/20 rule in the Old Testament: Numbers 13 and 14. After an arduous journey through the desert, the Israelites arrived at the borders of the promised-land. Finding it already occupied, Moses sent an exploration party, a representative from each of the 12 tribes of Israel, to explore the land and bring back a report. Ten of the party members brought a negative report: the land flowed with milk and honey but the current occupants were powerful and their cities were large. They recommended retreat. Two brought a positive report and recommended taking possession of the land. Seventeen percent of the exploring party were in agreement with taking the land and 83% were opposed to taking the land. Two disparate courses of action though they were all members of the same exploration party and saw the same things. A curious thing happened, the 80% then went to the whole of the Israelites and caused them to abandon heart and not take the promised land. The Israelites were not able to take the promised land until the 80% and were gone.

There are 5 lessons here that can be applied to business

1) New Ideas will be Opposed: Business innovation and success are governed by vision. Yet in any corporate structure, the 80/20 rule describes human behavior: 80% of people will oppose a new idea concept or vision and 20% will support it.

2) The majority will seek to garner support for their opinion usually among those people who do not have all the facts, in this case the people who did not have direct experience with the promised land, and disrupt positive moves of the corporate body.

3) Facts alone will not persuade. All members of the exploration party went to the promised land. They all received the same facts, yet 10 of them did one thing with the facts they received and 2 did another. What they each did with the facts they received was colored by their vision and purpose.

4) Movement in any business is governed by vision; in order to move in a given direction, a company may have to shed the part of its work force that does not tap into the overall corporate vision. If 20% of the people at any given time catch the vision, the other 80% will find themselves vulnerable. I explore this concept further in my companion article, “Moses, Death and the Entrepreneur’s Journey”

5) Change is inevitable and necessary for growth in any organizational structure. In this story, the Israelites could only possess the land when the 80% who lacked vision had been replaced.

Using this model of human behavior and the lessons it teaches can allow any business owner, whether a free agent or the owner of a traditional business, to focus on the few strategies and the few key individuals that can bring a business success rather than attempt to persuade the majority of the rightness of a course of action.