What Every Kid Can Learn From a Piggy Bank

May 22nd, 2012

Many parents aren’t sure where to begin when it comes to teaching their children about the basics of money management. I’m happy to say the old fashioned way may be the best: the Piggy Bank. Piggy Banks have a long and rich history helping people learn to save money.

The Piggy Bank gets its start not from some clever inventor or banker but rather a misstep of language. In Old English the word for orange clay was pygg. People would use this type of clay to make dishes and jars and they would put their coins in them. Around the 18th Century the word pygg began to sound like the word for the animal “pig.”  So some clever craftsman shaped a pygg jar to look just like a real pig. This is how the Piggy Bank is thought to have been ‘born.’

When you give your child a Piggy Bank you are telling them they’re now old enough to begin saving their own money. The Piggy Bank can be the tool which starts the conversation about the importance of savings and why we set money aside for our future goals and emergencies. The Piggy Bank will serve as a great teaching tool for your child because they’ll see the money accumulate. I also recommend that you open a savings account at your local bank or credit union as well. Most offer free accounts for children.

Once the Piggy Bank begins to fill up, or whenever they receive birthday or gift money, you should take them down to the branch and make a deposit. When the statement comes in each month, show them how their money has grown. This becomes another opportunity to discuss the importance of saving and financial goal setting.

As you can see, getting your child a Piggy Bank can really help you teach some valuable lessons in money management to your child. It’s a simple way to start, but starting is what’s important.

Below is a list of several companies that make educational piggy bank products, but check with your local bank or credit union to see if they give away free ones when you open an account. You can also go to the local craft store for a less expensive option that your child can decorate themselves, which may get them more excited about the whole idea.

Moonjar ($25.00). This durable tin moneybox is a timeless gift that will inspire and teach children to save, spend and share wisely for a lifetime.

Money Savvy Pig ($16.99). This clear plastic pig is available in several colors and has four compartments: save, spend, donate and invest.

Prosperity4Kids ($24.95). This handmade ceramic Money Mama piggy bank is designed to give children a fun, hands-on way to practice abundant money management.

Financial Forgiveness: Letting Go of Your Emotional Debt Too

May 8th, 2012

“A mistake made with good in your heart is still a mistake, but it is one for which you must forgive yourself.” (Linda Sue Park author of When My Name Was Keoko)

We are experiencing an interesting time in our financial history. There are still elevated levels of unemployment and under employment, as well as sizable outstanding consumer debt, and some of the highest mortgage delinquency rates since the Great Depression. Many individuals have had to consider extreme measures including not repaying their bills and leaving their homes.

Though fiscally understandable because of the substantial reduction in their income, these decisions do tend to take a toll on one’s emotional and spiritual being. We all understand that mortgages, loans and credit card agreements are more than just contractual obligations; they are moral and ethical ones as well. Therefore, when we are unable to repay those obligations we know we have broken an accord. We have made a mistake.

The financial aspects of these mistakes can be dealt with. The options include filing for bankruptcy protection, letting our homes go via short sale or foreclosure and entering into settlement agreements with our creditors. However, how do we go about dealing with the emotional and spiritual aftermath?

We must be able to forgive ourselves for the financial mistakes that we have made. We must come to a place were we accept that whatever financial missteps we may have taken are in the past. No matter what your intention was, the outcome has been determined. You can learn from your experience, you can grow from it; you can most certainly try not to repeat it. However, you must eventually forgive yourself and move forward.

Courts and creditors can grant you forgiveness from your financial obligations. Only you can grant yourself financial forgiveness. Are you ready?

Making Change: Financial Education Starts at Home

March 30th, 2012

April is National Financial Literacy Month. For more than 10 years now, organizations such as the Institute for Financial Literacy and others have celebrated April as a time to promote the importance of financial literacy education and teach Americans how to become better managers of their money.  

This year, one of the topics that is gaining attention is teaching financial literacy in our schools. Many are advocating that states should make a class in personal finance a High School graduation requirement, and in fact several states have actually done so. However, for our children to truly achieve an acceptable level of financial literacy, they have to learn about money from their parents. That means financial literacy education has to start at home.

It’s unrealistic to expect K-12 teachers to take on financial literacy education when they’re already working to raise the standardized test scores of their students in core subjects. Math, English and science take precedence. When financial education is added on as a stand-alone additional requirement, it just becomes another burden for teachers.

So what can parents do? Plenty! Teaching financial literacy education doesn’t take an advance degree in economics, only a commitment to share important information and life lessons with your child. The first thing you need to know: children begin to understand the concepts of money as young as five so you can begin the conversations when they start going to school.

Next, no money topic should be off limit. Ever time you spend, earn, save or share is an opportunity to teach your child. Don’t be afraid to talk about money (just like you shouldn’t be afraid to talk about other topics, but that’s for another blogger!) When you buy food, explain what you’re doing and the decisions you’re making. Why did you buy this box of cereal and not that box? Why did you buy the more expensive loaf of bread but the less expensive cut of meat?

When it comes time for your family to pay the bills, let your child sit with you and explain the process. This is always hard the first time around, but it is very educational for the child to understand the financial cycle: Mom and Dad have jobs; they earn money; they use that money to pay rent, insurance, utilities, etc. It’s okay for them to know what you earn because they’ll also see what you spend to care for them. Allow them to ask questions. Don’t get frustrated or defensive. This is a chance for them to see how things connect and learn how to manage money. You might even find you start changing some of your spending habits once “the committee” is looking over your shoulder come bill paying time.

By letting your child see how you manage your money, pay the bills and save for your future, you’re giving your child the best financial education possible. Show them a good example and let them learn it first hand. The gift of financial education is a gift your child will use all their life. That is the gift that keeps on giving, and it needs to start at home.

‘Twas the Night Before Christmas…When Elder Protective Services Called

December 15th, 2011

Senior Financial Safety Class

I believe one of the worst phone calls a family member can receive is one from a state agency informing them that they are investigating another family member for elder abuse of a loved one. In 1999, I received such a call. The State of New York was concerned about the welfare of my grandmother and they called to let me know that they had opened an investigation into my uncle who lived near her. They also asked if I could step in and begin to assist her with her affairs.   

The emotions I felt in that moment ranged from shock to fear to anger. What was happening to my grandmother? She was always so fiercely independent. She traveled the world and belonged to every social club in her community. She was healthy and of sound mind when I saw her last. What had gone wrong? Why would my uncle want to harm her?

I called my father to inform him of the news and we decided that because I was both an attorney and I lived closer that I would go to New York. By the time I arrived the State had already conducted a surprise visit and found my once vibrant grandmother confined to one room, being feed less that 800 calories a day, with her phone being intentionally left off the hook. She was dying a slow death, a prisoner in her own home.

Through the months that followed, it was discovered that my uncle had improperly used a power of attorney my grandmother had granted to enrich himself and his family for nearly $75,000. It was also discovered that once she passed away he would have inherited half of a trust that neither my father nor I knew about. If not for that phone call from the State of New York I am afraid to think what would have happened to my grandmother. Ultimately, my father and I became my grandmother’s guardians. We recovered some of the money and moved her nearer to us where she lived happily until her passing in 2008. 

Sadly, for many seniors they do not get the happy ending my grandmother received. In research just published by Center for Gerontology at Virginia Tech, there were 1,128 news articles nationally dealing with elder abuse from November 2010 through January 2011. Of these cases, 31 percent dealt with financial abuse, and most disturbing is that of these cases, 45 percent were either committed by a family member, friend or neighbor.

To help combat this problem and honor my grandmother’s memory, I wrote the Senior Financial Safety education program. Senior Financial Safety focuses on the unique money management needs of older Americans and is currently being taught in more than 40 states. It covers important topics such as fraud prevention, money management, post-retirement planning, maximizing government benefits and senior care.

We’re seeing great results with this program but want to reach even more seniors before it’s too late!

At the Institute for Financial Literacy (www.FinancialLit.org), of which, I am the Founder and Executive Director, we believe the best protection seniors have is quality financial education and guidance. As a nonprofit 501(c)(3) tax exempt organization, the Institute is committed to helping seniors navigate these troubling economic times by offering effective financial literacy programs and services. Our staff of certified professional educators and counselors has successfully enabled thousands of seniors from coast to coast to better manage their money and protect themselves.

This year, the Institute has designated the Senior Financial Safety program for our annual fundraising appeal. Our goal with this campaign is to raise $55,000 to provide free financial education classes to more than 5,500 additional individuals at senior centers, churches and retirement communities in all 50 states. This is an ambitious goal but one we are confident we can achieve with your timely financial support. Together we can ensure that our seniors receive the proper education and support they deserve.

In these difficult economic times, I ask that you give generously to a national campaign that is providing education, guidance and hope to a vulnerable senior population.

For more information about our campaign or to make a secure donation online, please visit www.MyIFL.org.

I thank you very much for taking the time to consider my request and trust you will join me in supporting this worthwhile cause.

Santa Claus Can Help With Money Problems

December 6th, 2011

Saint Nicholas is the patron saint who is commonly considered to be the original Santa Claus. He was born during the third century in the village of Patara, which at the time was Greece. Now it is located on the southern coast of modern day Lycia, Turkey.  

Nicholas came from wealthy parents who raised him as a Christian at time when many were still practicing other faiths. His parents died while he was still young but Nicholas would go on to use his inheritance for good. There are many stories of how he helped out those in need. One of the more well-known stories tells how he secretly helped a nobleman who was in debt and about to sacrifice his three daughters to a life of disgrace. One night, Nicholas secretly threw three purses of gold through the nobleman’s window for their dowries and therefore allowed the girls to marry honorably.

It is said that Nicholas used his whole inheritance to assist the needy, sick and suffering. He would later go on to become a Bishop in the Catholic Church. Bishop Nicholas became known throughout the land for his generosity to those in need and for his love for children. And thus his connection to Santa Claus was born.

Nicholas has since become the patron saint of money and debt problems. His Feast Day is celebrated on December 6th each year and prayers to him have been said to assist those who are in need of financial assistance.

During these difficult economic times, many families are struggling with bills and not enough money coming into their household. They are looking toward Christmas and worried about providing a nice holiday for their children.

I found the following prayer to Saint Nicholas, whether for today on his Feast Day or any day, and hope that it brings needed comfort and assistant to those who find themselves struggling this holiday season.

Recite the prayer to ask for Saint Nicholas’ assistance with your money problems. Repeat this daily until he has sent you a solution (remember the solution can take many forms, e.g., a better paying job, a settlement of debt, etc.).

“O glorious Saint Nicholas, the noble preacher of Christ, thou art a great and fervid helper of those in difficulties, of those who are on land, and of those who are at sea, all-compassionate, a precious intercessor for those who are far off and those who are near. Wherefore, in our gathering we shout to thee to intercede with the Lord, that we be delivered from every tribulation. Amen”

Happy Holidays and God Bless!

The Old get Richer and the Young get Poorer?

November 10th, 2011

The 2010 census data has revealed that U.S. households headed by a person age 65 or older have a net worth almost 50 times greater than a household headed by someone under the age of 35. What does this mean in real numbers? The typical young American family has a net worth of about $3,600 while their grandparents are worth around $170,500. This disparity has doubled in the past five years.

What is the cause for such a striking difference? Well, for the most part grandma has paid off her mortgage, saved for her retirement and probably inherited a small nest egg some years ago from her own parents. How about little Johnny and his bride? Well, today theirs is a different story.

The nice house they bought five years ago is probably worth less than what they paid for it. Also, let’s not forget about their respective student loan debt which they are both still paying. When you throw in auto loans and credit card debt, it all adds up (and subtracts from their net worth.) As for savings, what little has been added to 401(k) plans hasn’t grown much and these young people are less likely to inherit from their aging parents. So now you can see why they are only worth $3,600.

Currently, over a third of all younger American households now have a net worth of zero or less. This number has nearly doubled in 25 years. However, only about 8 percent of older American households have no net worth and this percentage has remained constant during this same 25 year period.

This will be the first generation that truly will not be better off than their parents. It can no longer be denied when we are seeing the accelerated pace of the widening of the wealth gap between the generations. One of the most basic tenets of the American Dream, the idea that each generation does better than the one before, appears to be dying.

It would seem as though the solution to this problem will require a complete economic reset including local job creation, lower cost education, affordable housing and retirement security. These are all things that sound very good when spoken on the campaign trail, at policy forums and written about in white papers but are difficult to implement. I don’t envy those who must work to bring about actual consensus and workable solutions to these problems.

Until then, I suspect this gap will continue to widen.

ID Theft: Deter, Detect, Defend!

October 14th, 2011

Almost 30,000 Americans who filed for bankruptcy in 2010 did so because they were victims of identity theft. Identity theft happens when someone else uses your information, such as your name, Social Security number, credit cards or medical insurance without your permission for the purpose to commit fraud or other crimes.

The Federal Trade Commission (FTC) reported that at least nine million Americans are victims of identity theft each year. Once criminals steal your information they can do anything from rent an apartment, open credit cards, set up utility accounts or seek medical treatment all in your name. You may only learn about the resulting “debts” when you start getting calls from bill collectors. So what can you do to protect yourself?

The FTC has created a program called “Deter, Detect and Defend.”

Deter

An ounce of prevention is worth a pound of cure. Here are a few suggestions to help minimize your risk of becoming a victim. 

  • Don’t carry your Social Security card in your wallet or write your Social Security number on a check.
  • Always shred any document with your name, credit or medical information on it, including checks and bank statements, expired credit cards and credit offers you get in the mail.
  • Be on guard when using the Internet; use strong passwords and secure your computer.
  • Protect your purse and wallet at all times.
  • Keep your personal information in a secure place at home, especially if you have roommates, employ outside help or are having work done in your house.

Detect

The best way to detect identity theft is to monitor your accounts and bank statements each month and check your credit report annually.

 What are other signs of identity theft? 

  • Accounts you didn’t open and charges on your accounts that you can’t explain.
  • Fraudulent or inaccurate information on your credit reports, including accounts and personal information, like your Social Security number, address(es), name or initials and employers.
  • Failing to receive bills or other mail. Follow up with creditors if your bills don’t arrive on time. A missing bill could mean an identity thief has taken over your account and changed your billing address to cover his tracks.
  • Receiving credit cards that you didn’t apply for.
  • Being denied credit, or being offered less favorable credit terms, like a high interest rate, for no apparent reason.
  • Getting calls or letters from debt collectors or businesses about merchandise or services you didn’t buy.

Defend

If you do find you are a victim of identity theft, take the following four steps as soon as possible and keep a record with the details of your conversations and copies of all correspondence.

1. Contact one of the three credit reporting bureaus and ask them to place a fraud alert on your credit report. They will contact the other two bureaus for you. They will also send you a copy of your report to review.

2. Contact the Fraud Department for each creditor and close the accounts that you know, or believe, have been tampered with or opened fraudulently. Follow up with them in writing with documents supporting your claim of ID theft.

3. File a complaint with the Federal Trade Commission by calling 1-877-ID-THEFT (438-4338).

4. File a report with your local police or the police in the community where the identity theft took place. If the police are reluctant to take your report, ask to file a “Miscellaneous Incident” report or try another jurisdiction, like your state police.

Being educated is probably the best weapon you will have to prevent identity theft. Knowing how information is stolen and what you can do to protect yourself will help you respond quickly if you ever discover a problem. So remember, Deter, Detect and Defend. If you would like to learn more, I would encourage you to visit the FTC website on ID theft at www.ftc.gov.

How “Kids Eat Free” Can Teach Them To Save

October 11th, 2011

As a mother of three children, I will be honest and admit that there have been times when coming home after a long day at the office the prospect of cooking has been less than thrilling. On more than one occasion when I have asked my husband for input, his response has been, “Let’s go out.”

Eating out for a family of five can be a real budget buster if you are not careful. So starting when the kids were young, I discovered the power of “Kids Eat Free.” Many restaurants will designate one night a week when children of a certain age eat from the children’s menu at little or no charge. This typically will save you $5 to $6 per child and if mom and dad order the nightly special, you can very often keep the bill in the reasonable range.

FrugalLiving.TV has compiled a comprehensive list of national restaurant chains that offer kids eat free specials. Before you go, however, you may want to check with your local chain restaurant to confirm the details of their offer.

One thing that I noticed early on was that many of the restaurants that offered kids eat free nights, did not include the beverage. So, what I began to do with my children was offer them the option of putting money in their piggy banks if they had water instead of soda, juice, etc. I would pay them fifty cents each time we went to dinner and they ordered water. This was a win-win because the drinks usually cost a dollar or more, are full of sugar and the kids began to learn about incentive earning.

My three children really took to this. They knew they could get milk and juice at home, so having water at the restaurants didn’t seem like such a big deal. To make it easier my husband and I also began drinking water and saving the cost of drinks on our meals as well. When we would get home the quarters were dutifully paid and deposited into their piggy banks.

My children are all passed the age of “Kids Eat Free,” but they still carry the early lessons taught. They still ask for the fifty cents if they order water (and I happily pay!), they all have some form of a job (babysitting, cat sitting, etc.) and they all are good savers.

So, the next time you are too tired to cook and decide to take the family out to eat, not only can you save money but it can become the building block for teaching the kids about earning and saving. Bon Appétit! 

5 Tips for Managing Your Student Loan Debt

September 25th, 2011

The pressures of dealing with student loan debt can make you feel like Sisyphus rolling a boulder up a hill. Just when you feel you have a handle on the situation, the boulder comes rolling right back down at you!

If student loan debt is weighing you down, here are five tips to help you transform your financial rock into a manageable pebble.

Loan Forgiveness: There are programs available that will forgive all or some of your federal student loans if you work for certain employers, such as the government or for nonprofits. The Public Service Loan Forgiveness is one such program and forgives any student debt remaining after 10 years for people in government, nonprofit and other public service jobs. There are also federal loan forgiveness programs available for teachers, nurses and those who work in the AmeriCorps and PeaceCorps programs.

Repayment Plans: Six months after you leave school your federal loans will come due. When this happens, your loan payments will automatically be based on a standard 10-year repayment plan. If the standard payment isn’t your best option, you can change your repayment period. Doing this will extend the time it takes to repay the loan and increase your overall cost but it will lower your monthly payments. One option now available is the Income-Based Repayment program. It will cap your monthly payments at a reasonable percentage of your income each year, and forgive any debt remaining after 25 years of payments. Forgiveness may be available after just 10 years of payments for borrowers in the public and nonprofit sectors as mentioned above.

Loan Consolidation: A consolidation loan will combine multiple loans into one loan with a fixed rate and single payment. One option is to consolidate your federal student loans through the Direct Loan program. There are pros and cons to consider before you consolidate your loans, however, so be sure to do some research first. For your private consolidation loans, shop carefully. Look for a low fixed rate and avoid consolidating your federal student loans with a private lender.

Deferments: If you are having trouble making your student loan payments, there are options available to you. For example, if the cause of your financial difficulties is due to unemployment, health problems, or other unexpected financial hardships you can apply for a deferment to temporarily postpone your federal loan payments.

Deferments allow you to postpone paying back your loans in certain circumstances. There are different types of deferments, including for unemployment and military service. Deferments will stop the interest from accruing for subsidized loans during deferment periods. Interest will continue to accrue on unsubsidized loans, but some lenders will postpone charging interest and add it all to the loan principal after the deferment period is over.

Forbearances: Forbearance is different from deferment. Forbearance allows you to temporarily postpone repayment or may allow for the acceptance of smaller payments for a period of time. Unlike deferments, forbearances may be granted even if you are already in default. During forbearance interest continues to accrue while the loan payments are postponed, so your balance will grow.

Don’t despair. Students loans would have been a challenge for even the Greek gods, but knowing your options can make all the difference.

Graduating with cap, gown, degree and debt

September 14th, 2011

Recently, it was reported that the number of borrowers who have defaulted on their student loans has risen sharply. This is probably due to the lack of available jobs. The unemployment rate for 20 to 24 year-olds is currently at 14.8 percent.

The typical college graduate leaves campus with not just a cap, gown and degree. Today, students are graduating with large financial obligations. The average student loan debt in 2011 is approaching $23,000.

So many of these borrowers may be tempted to think about running to the bankruptcy court to find relief. Unfortunately, they will most likely find the doors shut and locked tight.

Student loans are almost impossible to discharge in a bankruptcy.  The only exception is due to “undue hardship.” Don’t get too excited though as there are very few instances when you can meet this test.

So how does it actually work? Well, once you file for bankruptcy you must prove to a judge that if you have to repay your student loans it “will impose an undue hardship on you and your dependents.”

The judge then applies a test to evaluate your hardship. A common test used is called the Brunner test. It requires evidence that:

1) The debtor cannot maintain, based on current income and expenses, a “minimal” standard of living for the debtor and the debtor’s dependents if forced to repay the student loans;

2) Additional circumstances exist indicating that one’s state of affairs is likely to persist for a significant portion of the repayment period of the student loans; and

3) The debtor has made good faith efforts to repay the loans. (Brunner v. New York State Higher Educ. Servs. Corp., 831 F. 2d 395 (2d Cir. 1987).

Not all judges use this test but it will give you a good idea of how it works. 

As you can see, this is a hard test to pass. Generally speaking, if you are suffering from a life debilitating disease, or become severely handicapped and no longer can work to support your family, you may meet this test.

If you prove undue hardship to the judge they have the ability to forgive the debt and discharge it, if not you will need to repay it.

Before you file for bankruptcy, I would strongly recommend that you speak with an attorney and preferably someone who has done a hardship discharge before. Filing for bankruptcy is a serious financial decision and all other options should be explored first.