Beating Broke

Personal Finance from the Broke Perspective

Do Politics Have Any Place in Personal Finances?

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First, this is a personal finance blog.  As such, I try very hard to not comment too much on politics and keep them out of my articles.  But, should I?  Do politics have a place in personal finance?  Do our financial beliefs have any bearing on who and how we vote?  Should they?

I think the short answer is yes.

Whether we like it or not, politics and politicians play a significant part in how our finances play out.  The laws and regulations that they enact have the ability to cause widespread change in how we earn, spend, and save money.  Some examples:

Hoovervilles: 1932 Do-Nothing EconomicsPolitics Changes How We Earn

Recent legislation has raised the minimum wage so that many of the workers who were making minimum wage are now earning more per hour than they were before.  The legislation, in effect, gave many of those workers a pretty big raise.  Of course, the opposite can be true where many companies, feeling the pinch of having to pay that much more per hour, were forced to reduce hours or the number of workers causing some to make less than before. Temporary reductions in payroll taxes have added dollars to our paychecks.  Proposed changes to Social Security could change that again, and could change the way retirees earn their SS funds back.

Politics Changes How We Spend

The most obvious example of how politics can change how we spend money is taxes.  The tax rates that we pay, both federally and locally, can cause us to spend less on some items.  They can also cause us to spend a bit more when we receive a refund each year.  Another good example is the recent legislation that changed the way interchange fees work and caused many banks to raise fees to compensate.  Instead of compensating, many of us moved our accounts to Credit Unions that weren’t charging the new fees.  State sales taxes can drive sales across borders, especially when a bordering state has no sales tax.  Tax credits and deductions have caused millions to be spent on home improvements, energy efficient appliances, electric and hybrid cars, and even the birth of children.

Politics Changes How We Save

Regulations and laws determine the methods of investment for most every investment vehicle publicly available today.  With each new legislative session, new regulations and laws are passed that affect how investments and savings vehicles are able to operate and function.  Any new scandal, like the recent Madoff Ponzi scandal, or the less recent Enron failing, causes a flurry of new regulations and laws that are meant to prevent similar situations from happening, but also result in increased administrative costs that get passed down to the investor.  Tax incentives for certain retirement savings accounts cause added funds to be added to retirement accounts as a tax shelter.

I don’t think that there’s any doubt that politics and the politicians that play them play a huge part in our personal finances.  The laws and regulations that they enact each session make changes to the entire financial field.  Especially in the last few election cycles, there’s been a lot of focus put on the economy as a whole, and how the recent slump has been caused by this politician, or that politician.  There’s lots of blame going around, but in the end, I think it took a concerted effort by a bunch of folks.

As this election cycle heats up with local primary elections this spring and the presidential elections in November, I urge you to take a good look at who your choices are, and inform yourself on their stances on ALL the important areas of your life.  Too often, we look at a politician and judge them based on just one of their platform stances.  “That one is Pro-Choice! I can’t vote for him”.  I think that’s a mistake.  You’re unlikely to find any politician that agrees 100% with all of your views.  Find one that agrees with the most of your viewpoints, and vote for that one.  If you don’t know where they stand, find their campaign website and find out.  Contact them if you have to.  But, educate yourself before you blindly go into the voting booth.  The worst thing you can do is vote based on a gut feeling, or vote blindly without knowing who you are voting for.  Your finances may depend on it!

photo credit: Tony the Misfit

The Millionaire Fastlane

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The Millionaire Fastlane

By: MJ Demarco

If there was ever a case for a little less “hype-y” title for a book, this is it.  I’m not sure what else I would have named it, but the title just seems like a whole bunch of get-rich-quick hype, and it kept me from reading the book sooner than I did.  Which turned out to be a bit of a downer, since it’s really a good book.  Demarco spends about half of the book describing his ideas on the different types of life travelers.  There’s the “sidewalkers”, the “slowlaners”, and then, the “fastlaners”.  Each describes a way of thinking about how we travel through our life, financially.

The “sidewalkers” are the people who subscribe to a 9-5 work life and save as much as they can in hopes that they can one day retire on a decent budget.  The “slowlaners” are those that have started to break away from the 9-5 lifestyle and have some side income coming in, but they just don’t (or won’t) make the jump and get into the fast lane.  The “fastlaners” are those who have made the jump to business ownership, entrepreneurship, and are making their money on their own terms.

The second half of the book is dedicated to the “fastlaners”.  Demarco talks about the dynamics of earning money and how the way you make and spend your money is so important to becoming a “fastlaner”.

As someone who regularly writes about frugality, saving, and making the most of what money you do make, I have to admit that I was a bit off-put by the first half of the book.  There is a large contingent of the world that will work most of their lives, save for retirement, and then enjoy the rewards of having done so.  His arguement, of course, is that we shouldn’t have to work our lives away until we’re 60+ years old only to have our body break down on us and not be able to enjoy our hard-earned money in retirement.  Instead, he talks about becoming a “fastlaner”, and creating your own wealth so that you have control over your life and your income.

On the flip side, as someone who recently quit my job, and am trying to make a go of it as an entrepreneur, I really felt that I connected with many of the “fastlaner” ideas.  Going to college, getting a job, and working until you’ve got enough to retire on does seem like a long, fruitless pursuit.  Going solo and building something worth a great deal of money that enables you to retire early and live life the way you want to sounds a lot less long and more fruitful.  I think he makes a great point that many won’t be willing to make that jump and will, instead, settle for the “slowlane” lifestyle.

If you’ve ever given though to starting your own business, or are just unhappy with your job, I think this is an excellent book to read.  It’s inspirational in that it really gives a good idea of what is really possible.  Demarco comes across as someone who really is trying to help people out of the “slowlane” and into a “fastlane” mindset.  I think some will struggle with the concept, and surely, with the ingrained mindset that we’ve all been taught growing up, but seeing that, and beginning to break away from it are excellent steps.  Steps that will be helped by reading this book.

 

3 Big Steps to Fight Off Rising Produce Costs this Summer

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My family has been increasingly consuming organic produce because we are trying to eliminate all food additives, preservatives and pesticides from our diet.  If you are trying to feed your family the recommended five servings of fruit and vegetables a day, you may be spending more than you would like on produce, regardless if you buy organic or not.  Just for my family of 5, meeting the USDA dietary recommendations means feeding us 25 servings of fruits and vegetables a day, or 175 servings a week!  Here are steps you can take now to save money this summer on fresh produce:

Grow a garden.  If you have the space, consider growing your own garden.  You will have an abundance of fresh, organic produce growing in your back yard, and food doesn’t get any fresher than that.  Eliminate the chemicals and the long transportation time that your produce often endures to get to the grocery store shelves.

VegetablesIf you live in the city or don’t have room to grow a garden, consider getting a plot at a community garden.  Community gardens are designated locations that usually have 15 to 40 plots available for members of the community to garden.  You use a plot and plant what you would like.  You just have to agree to maintain your plot and water it at least once a week.  There is often a small fee.  The community garden I plan to use this summer charges $20, but that money is refunded at the end of the season if you have tended your garden throughout the season.

Subscribe to a CSA.  CSA stands for Community Supported Agriculture.  Many CSAs offer organic produce and deliver it to a location near you every week.  Programs often let you choose between a 1/2 bushel and a bushel of produce weekly or every other week and typically run for 18 to 22 weeks.

In return, you must pay for your share upfront, usually before May.  In larger cities CSAs fill up quickly, so you may want to begin looking for a CSA in your area this month or next month.  You also usually are not given much say in the produce you receive, so being open to trying new vegetables is necessary.

Freeze Your Excess.  If you have grown your own garden or have a share of a CSA, you may find yourself with an abundance of fresh produce during the summer months.  Rather than letting it go to waste, consider preserving some of it.  True, you could can some of it, but I have done that before, and it was a miserable time.  (This is just my experience; you may enjoy canning.)  Instead, take advantage of your freezer.  Shred the excess zucchini and put it in the freezer in small bags.  Puree excess squash to sneak into baked goods during the winter.  Make Jamie Oliver’s pasta sauce and freeze it for future spaghetti or pasta meals.

With careful planning during the rest of the winter months, you will be able to not only enjoy fresh produce during the summer and slash your grocery bill, but you will be able to save some of that produce for the fall and winter months, effectively lowering your grocery bill for produce all year long.

photo credit: Martin Cathrae