Posted: December 27th, 2009 | Author: Kimberly McCaffery | Filed under: Money | 1 Comment »
Americans are saving more and consuming less. The Washington Post reports The savings rate in October reached 4.4 percent, up from 0.8 percent in April 2008. Since 1959, the personal savings rate has hovered around 7 or 8 percent, reaching its zenith in May of 1975 when we hit 14. 6 percent.
So the good news is, personal savings is increasing in spite of record low interest rates. The bad news is, personal debt has gone up precipitously making the recent bump in savings less meaningful. It’s not enough to save, we also have to decrease debt.
My personal goal for 2010 is to start paying down my mortgage debt, and saving 10 percent of my income. Anyone out there have a personal savings goal for 2010 they would like to share?
Posted: July 15th, 2009 | Author: Kimberly McCaffery | Filed under: Money | Tags: Goldman Sachs, greed, stimulus money | No Comments »
On a crowded number 4 train last night, I was smushed up next to two future masters of the universe. They were discussing the article by Matt Taibbi on how Goldman Sachs has engineered every major market manipulation since the Great Depression (that article inspired my Independence Day post). The conversation went something like this:
Friend of Goldman employee (hereafter referred to as FOG): “Did you see that story in Rolling Stone about Goldman?”
Clueless employee of Goldman (whom I shall call COG): “Yeah that was just a bunch of bullshit rambling. I read it and was just like, whatever man, you didn’t prove anything.”
FOG: Did you see, Goldman responded?
COG: Yeah, that was amazing part because they never respond to the media. They train us not to talk to journalists. You know, the press is evil.
blah blah blah… They go on to talk about how journalists make everything up and don’t understand how finance works and they talk about how Goldman gave back the stimulus money because they never really needed it. Then COG reasons:
COG: Look, they have make money, it’s their job. And it’s not like one guy gets it all. It’s distributed over all the shareholders, so it’s fair. If there is a way for them to make money, they have to do it. They have to make as much money as they can, that’s the whole point.
I wish I’d had John Stewart with me, so that he could give them his WTF look, and say something about how making as much money as you possibly can dragged the whole world into financial ruin. Or maybe he’d say something clever about COG’s notion that the “whole point” is to take make money. Is that the point? I thought the point of banks, brokerage houses, investment firms, and other institutions that manage the flow of money, was to manage that money, not to take it. I thought they were part of system that kept businesses healthy and people employed. And I foolishly imagined that the people in charge of this flowing money, took that responsibility seriously. But now they are starting to look like greedy Augustus Gloop, guzzling the chocolate river in Willy Wonka’s factory.
Goldman, Citibank, AIG, the whole lot of ‘em remind me of a deadbeat relative with a gambling addiction. He comes around asking you for a “loan,” and gives you a sob story about how he’s on the brink of utter collapse, so you hand him $20 (sucker). When he hits the jackpot with your money, he keeps the prize for himself, and only hands back your twenty when you threaten to sue. Sound familiar? (Hint stimulus money returned, Goldman earmarking huge bonuses after posting the highest profit in its 140 year history.)
So all of this makes me think of my grandmother. When I was a kid, she would go on about how she didn’t trust banks. She would lecture me about how the stock market was a hustle, and the only thing worth investing in is real estate because it’s “real.” I always thought this was depression-era paranoia. I thought things were different and the people in charged fixed it so the depression wouldn’t happen again. I figured grandma wasn’t keeping up with the times. But now I see how naive I was, and her financial advice is starting to look solid.
So I’m ditching the 401K, and putting the money into my house (I’ll pay down the mortgage and fix the place up). Even though its value has declined slightly, the house itself still exists (unlike Bear Sterns or Lehman Brothers). And I enjoy its benefits every day (I get to live in it!). Grandma was right. I’m going to try to put my money where I can see it.
Trust FOG and COG with my hard-earned twenties…I think not.
Posted: July 10th, 2009 | Author: Joelle Hann | Filed under: Frugal Resources, Money | Tags: Abacus Portfolios, Abacus Wealth Partners, archetypes, Brent Kessel, financial analyst, financial planner, frugal money, frugality, It's Not About the Money, yoga, Yoga Journal, Yoga Journal Conference New York | 1 Comment »
Brent Kessel
I thought it would be appropriate for a site dedicated to frugal living to hear a few words from someone who spends his days and nights advising people on their money–and helping them to use it better.
Financial planner Brent Kessel is the C.E.O. of Abacus Portfolios and President and co-founder of Abacus Wealth Partners. I met him at the Yoga Journal conference in New York in May, where he was presenting at the 2-day “business of yoga” workshop.
Kessel, a long-time yoga practitioner, has been able to combine his wealth of financial experience (pun intended) with the mental discipline and spiritual insight of his yoga practice to come up with some pretty fascinating theories on our relationships to money. And, some helpful techniques for taming the financial beasts within.
In his talk–and in his book It’s Not About the Money: A Financial Game Plan for Staying Safe, Sane, and Calm in Any Economy
–he outlined 8 major money archetypes as he sees them: the Guardian (worry/prudence), the Saver (hoarding/abundance), the Innocent (avoidance/hope), the Pleasure Seeker (hedonism/enjoyment), the Caregiver (enabling/empathy), the Idealist (distrust/vision), the Star (pretentiousness/leadership), and the Empire Builder (greed/innovation).
I was so fascinated that I took another workshop with him a few weeks after the conference. I found out (no surprise for a Frugaltopian) that I’m a Guardian and a Saver—also, to my surprise, an Idealist and a Pleasure Seeker.
Brent was gracious enough to agree to an interview with Frugaltopia. So, I’m happy to pass some of the super interesting insights outlined in his book “It’s Not About the Money” (Buy it! You won’t be sorry!) on to you, dear readers.
Interview with Brent Kessel
Frugaltopia: Do many people avoid looking frankly at their financial situation? If yes, do you know why?
Brent Kessel: Almost everybody avoids looking at some part of their situation. I call it their Money Mask. This is the part of us that hopes the world will see us a bit differently than we know ourselves to be. Most want to appear to have more income and assets than they do, primarily because in our culture, that’s synonymous with approval, success, praise. They are like a drug fix that allows us to avoid emptiness, restlessness, or sadness. However, because they’re ego-driven, they’re completely impermanent. So the only lasting solution becomes an addiction to more and more.
Frugaltopia: How did you come up with the idea of the 8 archetypes that best describe most people’s money issues?
Brent Kessel: Mostly just by observing the patterns that people get stuck in year after year, even if they sell a business or get a big inheritance. And these patterns are almost entirely based on past conditioning. It seemed an easy way to give us a common language for identifying our weaknesses and strengths, and to cultivate more balance.
Frugaltopia: Is there one archetype that seems to do better financially than others? Why is that, in your opinion?
Brent Kessel: It really depends how you define better. If it’s defined as increasing your net worth or financial security, it’s likely the Saver, or sometimes the Guardian. If it’s defined as voluntary simplicity, it’s probably the Idealist. If it’s using money to ease the most suffering in the world, then it’s the Caretaker.
Frugaltopia: Frugaltopians–the 4 of us who run Frugaltopia–are most likely Savers or Guardians, according to your system. (I’m both!) Are there any downfalls to being frugal?
Brent Kessel: The biggest downfall is when we believe that we can obtain ultimate security from our frugality or savings. They are impermanent too. It’s imperative that we stay in touch with our mortality, with the preciousness of life and how quickly security can vanish. This elicits compassion, which is the best antidote to the extreme Guardian (who’s overly anxious about money and safety) and to the Saver (who never gives money away for fear that they might need it one day.)
Frugaltopia: If there’s one piece of financial advice you could give to everyone, no matter what their archetype, what would it be?
Brent Kessel: Look beneath the surface. Your financial life is not dictated by interest rates, investment returns, or budgets. 99% of it is dictated by the unconscious beliefs you have about money. Use my book, or the Cure for Money Madness to uncover the parts you’re not yet aware of.
Thank you, Brent! Learn more about Brent and his work at his web site www.brentkessel.com.
Posted: July 4th, 2009 | Author: Kimberly McCaffery | Filed under: Money, Philosophy | Tags: banks, economic independence, economic tyranny, July 4th, recession | No Comments »
Aidan's Independence Day Decorations
What does the recession (ephemistically referred to as “the current financial crisis”) have to do with Independence Day? First read this:
The Great American Bubble Machine then come back here so we can discuss.
As Matt Taibbi’s article points out, the problems in our banking system aren’t anything new. In fact, the system has been corrupt since…the beginning. Andrew Jackson said this about it: “If the people only understood the rank injustice of our Money and Banking system, there would be a revolution before morning.”
Now consider the origins of our July 4th holiday. One of the biggest problems the colonists had with the King was that he taxed them excessively and didn’t give them any say in how that tax money was spent. In 1773 they dressed up in disguises and dumped over-taxed imported goods (tea) into Boston harbor. That touched off the Revolutionary War which ended in the birth of our nation. Of course, the war was about more than just money, but my point is that Boston Tea Party was to the Revolutionary War what Rosa Parks was to the Civil Rights movement. Someone finally did what everyone else had been afraid to do, and that ignited the courage and resolve of the less bold.
So this 4th of July I’m looking for, hoping for, a hero who confronts the economic tyranny we are under. But I don’t see any heros on the horizon. The new government hasn’t done anything to hold banks accountable for their monumental swindle mistake. The previous administration did even less. Maybe we need a grass roots movement? But short of pulling our money out of the banks and stuffing it in our mattresses, what can we do? I’ve been writing this blog thinking that the little things would be enough. That if we could learn to consume less, then our greed would atrophy and our culture would shift its focus. But when I think about the enormity of the problem and the powerlessness of “ordinary people” like me, I get overwhelmed and discouraged.
The Declaration of Independence
I know this sounds boring and kind of depressing, but that’s what I’m thinking about on this July 4th – economic freedom – how do we get it? I’ll take heart by reminding myself that against the odds the founders of our country declared their independence from tyranny, won that independence, and started a new kind of nation.
We need a new declaration of economic independence. Anyone have ideas?
Posted: June 25th, 2009 | Author: guest | Filed under: Home, Money, Philosophy | Tags: freecycle, frugal living, frugal tips, recycle | No Comments »
By Carolyn Lengel
I grew up frugal—or, as friends put it, “cheap”; my family had the whole reduce-reuse-recycle thing down, or at least the reduce and reuse part (municipal recycling didn’t exist yet where I lived). We grew vegetables, drew on the backs of papers my dad brought home from work, and wore sweaters indoors all winter. And we kept things, even if we didn’t need them anymore, because they were “perfectly good.”
I’m glad for some of the things my parents kept and handed down to my family, like wooden trucks and kid-sized rocking chairs—but these days I’m amazed at how suddenly all the perfectly good things can stop being useful and start being clutter. The lavender and hot-pink bicycle with training wheels was great when my daughter was four, but she’ll never ride it again. The local consignment shop where I used to unload baby items lost its lease years ago. There’s the dump, of course, but how could I stand to throw out all these perfectly good things?
So how to connect my unwanted but still eminently usable stuff with people who would snap it up? I signed up for Freecycle. Local online groups exist all over the country for the sole purpose of connecting one person’s trash with another person who sees it as treasure. Once you join your local Freecycling group, it’s a simple matter to post messages (“Offer: little girl’s bicycle”) and tell respondents where to pick items up. The recipient gets something for nothing; I get rid of things without having to throw them away. And even more satisfying than the extra space in my basement is knowing that somebody else’s little girl is learning to ride that perfectly good bike.
Freecyclers join to get free stuff, too, and sometimes I’m surprised by what’s on offer—just this week, in addition to the ubiquitous baby clothes and (surprisingly) televisions, I saw a pasta machine, a sailboat motor, and a 50-year-old metronome kit still in its unopened box. I try to resist; after all, I’m in it for the joy of unburdening. But every now and then I’ll see an item that makes my frugal heart skip a beat. Tomato seedlings! Extra paint! All the zucchini you can pick! And hey, couldn’t I find some use for that bag of switchplates? After all, they’re still perfectly good.
Posted: May 26th, 2009 | Author: Leora Schachter | Filed under: Money | Tags: ATM, banks, easy ways to save money, environment, frugal tips, money saving ideas, money saving tip, saving money tips, savings, tips on how to save money, tips on saving money, tips to save money, ways to save money | 1 Comment »
Money may not grow on trees, but does come on the roll.
Growing up, I thought banks were meant to hold onto the checks that you received from your aunts and grandmothers on your birthday. As I got a little older, I started to understand that the banks used your money to make loans to other people. And to thank you for using your money, they paid you a little bit each month – something called interest, currently ranging from .25 to 1.5%. (Back in the day, it was more like 2 to 4%, but since the banks made loans to people that could never pay them back, we’re getting less and less.)
The whole point was that the nice people at the bank were there to help you save money. I think that’s why ATM fees infuriate me. And what really gets my blood boiling are the “double” withdrawal fees – not only does the stranger bank (the one who is not your own) charge you a fee to take money out of their ATM, but then you get charged by your own bank too! It means that if you want to take out $100, you’ll end up spending between $2 and $4 per withdrawal. In other words, you’re paying 2 to 4% of your own money TO USE YOUR OWN MONEY! And if you’re keeping track of the math, that’s a whole lot more than the little interest they’re paying you to hold onto your money. Read the rest of this entry »
