My great-grandmother Emma kept a $20 bill, neatly folded in thirds, pinned to her girdle. Grandmother Millicent steamed the stamps off envelopes for reuse. Mom gave me $500 to open a Roth IRA after college graduation, and still extols the virtues of doggy bags at restaurants.These matriarchs have shaped my attitudes towards personal finance to this day. My thriftiness borders on eccentricity: I've squirreled away rainy-day money deep in a drawer, and I've cut open bottles to get that last dollop of hand lotion.
Research shows that what our parents teach us about money lays an important foundation for our future financial fitness. Some experts suggest that the lessons start even before we can speak: When babies accompany mom or dad to the market, they take in early impressions about commerce. And while there is no specific research that examines a mother's influence on financial literacy, conventional wisdom is that her advice goes a long way. According to my unscientific Facebook poll, the most commonly cited lesson from mom is: Money doesn't grow on trees.
Teach Your Children Well
"My mom taught me that money doesn't just appear in my account," says Alice Louise Kassens, an associate professor of economics at Roanoke College in Salem, Va. "She told me I have to earn it, and should never rely on someone else for it." Alice adds that her mother also taught her the value of investing early in her life to get the maximum benefits of compound interest.
Jennifer Peng, a schoolteacher in Brooklyn, N.Y., echoes that lesson. "My mother taught me the lesson: Less out than what comes in and you're good to go," says Jennifer. "Also, without a Roth IRA and 401(k), I might as well not be her progeny."
While anecdotal evidence indicates that savings and investing behaviors are often influenced by mom, empirical data shows that other areas of our personal finance profiles are shaped by our parents with meaningful results, too. A recent set of studies by Michal Grinstein-Weiss, an associate professor at the University of North Carolina School of Social Work and a faculty fellow at the Center for Community Capital, showed that what parents teach their children about money early in their lives will affect their credit scores and loan delinquency rates as adults.
Grinstein-Weiss and her co-authors asked 2,398 adults in low- and moderate-income households to rate how well their parents taught them about money management growing up using a three-point scale (low, medium, high). Their findings demonstrated that adults who reported having the most parental teaching had lower credit scores than those who had little or no teaching and less credit card debt. In a similar study, the group also had lower risk of delinquency and foreclosure compared to those reporting lower levels of parental financial teaching.
"This is an important set of outcomes," says Grinstein-Weiss. "These studies suggest that prenatal teaching early in life can help lay the foundation for better financial outcomes as an adult. Loan performance is very important in keeping a home later in life. Experiencing delinquency and foreclosure has both negative consequences and imposes lasting constraints on future financial health. Similarly, credit scores are a gatekeeper on the road towards building wealth, and impact many things, including housing and employment."
But some of the kitchen-table wisdom passed down from mother to child may have less to do with making money, and more to do with making a life.
"My mom stressed and demonstrated the difference between being rich, or having a lot of money, and being wealthy, like having nice things and having what you need and being happy about it," says Jimmi Hagan, a computer programmer who lives in Sonoma, Calif. "She taught me the importance of enjoying life. We never had much money, but we had horses."
Catherine New is a reporter with Huffington Post Media Group for DailyFinance.com.
Source: http://www.dailyfinance.com/2011/05/07/financial-lessons-from-mom-mothers-day/
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It's amazing what some people will do just to reduce what they pay to Uncle Sam. That includes blindly investing money to save on taxes.
Yes, there are investments such as the traditional IRA (pre-tax savings) as well as the Roth IRA and Roth 401(k), which both grow tax free. They are great for growing your money in mutual funds, and they should be used.
Our point is that you should not invest just for the tax savings. If you chase investments solely for the purpose of not having to pay Washington, you'll put money into something that doesn't maximize the potential to grow your money.
For example, let's say you buy a local municipal bond. The interest generated by it is tax-free. If you've already maxed out your tax-free Roth IRA and want to keep stocking money away safe from taxes, you might think a municipal bond is a good place to invest further. But that's not the case.
Since the 1920s, municipal bonds have generated average annual returns of around 4%. A regular mutual fund, which you would pay taxes on, averages about 9% after taxes. Over time, that difference is huge.
Putting $2,000 a year ($166 a month) into a 4% investment will turn it into $196,000 after 40 years. Putting that money into a 9% investment (again, that's your after-tax number) will grow it to $777,000! There's no comparison once you run the numbers.
On top of that, there are some investments that border on being (or actually are) scams. They will heavily promote tax savings to distract you from how bad the investment actually is. If someone pitches a complicated investment that promises big tax savings and big returns, then back away and stay away.
The whole point is to remember to be smart with your money when you are trying to grow it. If you get a tax break along the way, that's great. But don't let the break be the basis for where your investment money goes.
For the best investing advice, you need to work with a professional with the heart of a teacher. Dave's investing Endorsed Local Providers (ELPs) are experienced pros who will give you the same advice Dave would. Get in touch with your ELP today!
Source: http://www.daveramsey.com/article/dont-invest-for-a-tax-shelter/lifeandmoney_investing
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Source: http://www.legaldebthelponline.com/2011/05/07/credit-card-debt-2/
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Via Bespoke. If you look at the six earnings quarters you’ll start to see the stair step decline down, which can’t be good for the markets.
More than 1,800 companies have already reported their quarterly numbers this season, and with so few companies left to report, it’s going to be hard to bring the overall “beat rate” … [visit site to read more]
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Credit card debt does not discriminate and no one is completely immune from drowning in credit card debt. It would just take one individual to become unemployed for 30 days to become deep in credit card debt, and even the so called, "fiscally responsible" consumer can fall victim to credit card debt.Source: http://ezinearticles.com/6239067
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Are you confident that you'll get an income tax refund in this year? Till date, it is reported that the IRS has issued around $45 million tax refunds to the consumers.Source: http://ezinearticles.com/6244169
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In the megatrends post this past week I mentioned that:
A third of Netflix' new subscribers are opting for the streaming only plan
We've been Netflix customers for a long time and we currently have the "4 DVDs at a time Unlimited" plan. But when I went to look at our Netflix account this morning, I saw that we've only ordered one DVD in all of 2011 and we have streamed eleven movies in the past seven days. We are not ready to go to streaming only because the Netflix streaming library isn't complete enough and there are times when we really want to see a film and we order it on DVD. That's happened once so far this year so we probably should cut back our account to 1 DVD at a time.
Last night the Gotham Gal and I decided to make dinner at home and watch a movie. We made that decision around 6pm. There are no video rental stores anymore west of seventh avenue between 14th and Houston that I know of. So it was a pretty easy call. We went with Netflix Watch Instantly. We found a good film we hadn't seen (City Island) and enjoyed it. We could have watched the movie on any one of four devices we have connected our our family room display (boxee box, xbox 360, sony blue ray player, and mac mini via the browser). We went with Boxee for obvious reasons.
In addition to Netflix, there are a few other streaming services for movies worth mentioning. Amazon Instant Video is a great service. They have over 5,000 movies and TV shows available for streaming. And if you are an Amazon Prime member (we are), you get Amazon Instant Video for free. Amazon needs to follow Netflix' lead and get Amazon Instant Video on as many devices as possible. It is not yet on the Boxee Box, for example. And I'm not sure how many blue ray players and game consoles it is on either. But I believe Amazon will be a strong player in this category.
And Vudu is another service to check out. Vudu is now owned by Wal-Mart so it certainly has the resources and distribution potential to compete in this market. I think Vudu has the best library of movies and certainly the largest library of HD content. Vudu is currently a pay per view model and I prefer an subscription model. I hope they move to subscription soon. Vudu is available in HD on the Boxee Box and we use it a lot in our home, particularly for movies that are not available yet on Netflix.
I've written a lot about the end of "file based music" and I believe we are moving rapidly now to that end game. Likewise, I think we will see the end of "file based video" in the not too distant future. One third of new Netflix subscribers are already there. I bet that number of 50% by year end.
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