Category Archives: Think

Do Good in a World Full of Bad News

The news has been dragging me down lately. Nice to see a way to do good through Charity:Water!

Guys, I don’t know about you, but the world has been a rough place for me since January 20th.

Refugees being turned away from our doors. Leaders in the highest ranks firing people for  dissenting opinions. The very real potential of net neutrality being dismantled. The richest of the rich with no qualifications or experience being placed into positions of power that jeopardize the most voiceless of our population: disabled children. The very nature of reality being questioned–not by philosophers, but by our government.

It’s enough to send you into a panic attack.

Despite my attempts to avoid this constant stream of bad news, it keeps on filling my feed. I have to admit, I’ve occasionally engaged with it. Because I have a hard time keeping silent on things that matter so incredibly much.

In a world full of bad news, I feel like we all deserve a little good. I think we all need the opportunity to do a little good so we don’t fall into the dark madness that has been the past few weeks.

A powerful way we can fulfill that need is through our monetary resources. A powerful way we can curb our despair is by recognizing how fortunate we truly are, despite our struggles.

Without further ado, here is the good news.

clean water for uganda

Ladies in Media Charity:Water Drive

I’ve teamed up with several amazing women in the personal finance media space to raise money for communities around the world that don’t have water. Every day, about 1,400 children die from diseases caused by unsafe water and poor sanitation.

As far as public projects go, a surprisingly small amount can change this situation for an entire community. For just $10,000, a community or school can have access to clean water via drilled wells, spring protections and BioSand filters.

Am I asking you to donate $10,000?

Psh. No.

But if you’re looking to do some good in the world, I would ask you to consider donating a much smaller amount that fits into your budget. Because with our powers combined, we can tackle this problem.

There are 13 women participating in this drive, and if each of us have 16 readers who contribute $50 within 60 days, we’ll not only reach our goal–we’ll exceed it.

clean water for india

What happens after we reach our goal?

The operational costs of Charity:Water are fully covered by private donors. That means 100% of the $10,000 raised will go directly to this project.

After we reach our goal, Charity:Water will send us photos and GPS coordinates of the community we helped, which I’ll be sure to include here. (So bookmark this page!)

This won’t help solve the crazy political problems we’re facing right now, but it will help a school or community in desperate need get access to clean water.

If the order is reinstated and we start turning people away again, at least we’ll be able to help those who aren’t as fortunate as we are to live in a community with clean water–the most basic of all basic needs.

clean water for cambodia

Okay, I’m in. Where do I donate?

Thanks, rockstar. People like you restore my faith in humanity.

You can donate here. You can use this same page to track our progress.

Why Online Entrepreneurs Need a Plan B

Um, this was my Plan B. Important food for thought for all online entrepreneurs about the threat of net neutrality.

A couple of years ago, a regional work shortage pulled the rug out from under my hours at my day job. Luckily, I wasn’t a one-trick pony. I had this hobby called blogging that had turned into a side hustle in freelance writing and editing.

That hustle turned into my full-time job when that unexpected shortage happened. I was glad because, as many of us preach, it’s always good to have a plan B.

A lot of online entrepreneurs’ stories are similar. I use the word entrepreneur but really mean to include those who are self-employed (like me) or work remotely thanks the to the internet. We either lost our jobs or started making enough money online that there was no need to continue with old employers.

But do we have a plan B now? I’d argue that many of us do not. This was our plan B, and we’re proud of that. But not too many of us have an exit strategy should the floor fall out from our online journeys.

Net Neutrality and Online Entrepreneurship

Regardless of your politics, the placement of known advocates of the dismantlement of net neutrality into positions of power should be a huge wake up call. We’re in a time of massive transition in this country, and we don’t really know how things are going to turn out.

If net neutrality is dismantled, internet users will essentially have to pay for data like we do on our cell phones. Switching over to “WiFi” won’t save us anymore.

How sure are you that users will dedicate their precious data to browsing your site? Especially if you haven’t paid a premium to have your site load quickly with any given internet service provider?

How sure are you that your clients aren’t in the same boat?

How sure are you that you’ll be able to afford the data you need in order to complete your job–and still make a profit?

Another thing that could happen without net neutrality is that certain sites, likely those of larger corporations who have deeper pockets, will be able to pay service providers so that their sites don’t count towards a user’s monthly data allotment. AT&T already does this with their cell data.

I’m willing to bet there would be mega financial institutions willing to pay for their personal finance content to be sponsored. It would mean I’d have a much harder time attracting visitors to Femme Frugality, even though I’m proud of my content and think it adds a different value than that of those who are in the market solely to profit off of consumers.

Then there’s the manipulation of search engine results by different providers, and the not unrelated fact that net neutrality combats racism, classism and oppression of voices that would otherwise remain unheard.

You might feel confident in  your business model–maybe even confident enough that the loss of net neutrality doesn’t concern you.

But at the end of the day, are you willing to risk it? Are you willing to put all of your eggs in one basket labelled “online income”?

Analog Side Hustles

I’ve decided that 2017 will be the year that I pursue analog side hustles. I’ll be kickin’ it like it’s 1993–no internet allowed. Not for marketing. Not for production. Maybe to look up the occasional phone number and to do research while I still have access to a free web.

Some ideas I’ve come up with:

  • Art. Because it’s important in a time like this. And it’s marketable at the local level.
  • Writing children’s books. Because the husband and I have some pretty splashy ideas and my kids love the feel of paper between their fingers.
  • Maintaining ties at my old day job. I loved my old day job. It doesn’t pay as much as this does, but I still maintain it as a side hustle. I’d open up my availability should the internet become more closed off.
  • Print copywriting. If the overhead for online content becomes too high, I could always look at marketing my skills in print at the local level. I’m thinking for small businesses in particular, but I could look at print magazines, as well.
  • Opening a music studio. Between the husband and I, we could teach all kinds of music instruction.

Hopefully none of this comes to pass. Hopefully I’m wrong and paranoid and our judicial system will keep the other branches of our government in check.

But there is a chance that I’m not. Just like I didn’t anticipate the work shortage a few years ago, there’s no crystal ball that tells us the internet will look the same in the next year, four years or eight years.

I think it’s important that we practice what we preach, and don’t become one-dimensional simply because we’ve found a way to make a living online. We made it work with our initial Plan B’s, but it’s time to draft some new ones.

Getting Finances in Order is Imperative for Women

Why Getting Your Financial House in Order is Even More Important for Women

“Women with money and women in power are two uncomfortable ideas in our society.”
–Candace Bushnell

As a financial planner, I was pretty adamant when I had couples as clients that they both participated in at least the initial kickoff session. After that, if one of the two said that they were fine with not being involved going forward, then that was acceptable to me, although I always gave the non-participating spouse a one-page “to do” list if the participating spouse ever got hit by the beer truck, and got a premature opportunity to find out what was on the other side. (Besides the stories that John Edward used to tell people about their loved ones talking to them through him.)

Maybe it was because I am a male or because there was a selection bias that occurred in the types of couples that I drew as clients, but there were certainly a few instances where the wife was the one who said that her husband made the financial decisions, and she was fine with it.

Note: I’m not including same sex couples in this analysis because if you’re a same sex couple, you both face the same gender-specific issues, whereas an opposite sex couple means that the female has different financial needs than the male.

Horses. Water. No drinking.

It was frustrating to me to see this situation because, like it or not, the women are much more likely to have to deal with and pick up the pieces when the husband passes away. I’ll explain more about this later.

The husband-as-lead scenario didn’t happen terribly often in my practice, maybe 20-25% of the time, but it certainly happened enough that I had a standard response to it.

The statistics about women participating in household financial decisions are mixed. A 2008 Pew Trust survey showed that families believe women make more decisions 43% of the time, whereas they divide decisions equally 31% of the time, and the man makes more 26% of the time.

But, in the same survey, the perceptions about who managed the money in the household differed between men and women. 45% of women said that they managed money in the household and 23% of women said that their spouse managed the money; however, 37% of men said that they managed the money and 30% of men said that their spouse managed the money.

On the flip side, a 2013 Fidelity survey reported that only 24% of women said that they took responsibility for day-to-day financial decisions.

Regardless of whose numbers you believe, there are a significant number of women who are punting the decisions on household finances to their spouses.

I’ll throw one more statistic to show some numerical and financial disparity.

In 2010, the RAND Corporation conducted a study relating the numeracy (math skills) of household members to overall household wealth.

The scores were scaled from 0 (the worst score) to 3 (the best score). When both spouses got a 0 on the test, the average household wealth was $200,000. When both spouses got the highest possible score, the average household wealth was $1,700,000 – 8.5 times higher than the 0/0 pairing.

According to the survey, men were more responsible for the finances than the women, with men in charge 62% of the time.

In cases where there was a 10 year or more age difference where the man was older, and the man was age 70 or older, the man made the decisions 82% of the time. This was the case, even though studies show that cognitive decline can start as early as age 60, and that math is the first skill to go.

What’s even worse, according to the RAND study, is that households where the man scored 0 on the test had him making the financial decisions 50% of the time!

How does this impact family wealth and financial well-being? Let’s look at couples who had one member score 0 and another member score 2. There were less than 20 0/3 couples out of 1,200, so there wasn’t enough data to draw conclusions.

In cases where the 0 scoring spouse led the family finances, the average wealth was $548,500. In the cases where the 2 scoring spouse led the family finances, the average wealth was $684,500, meaning that if the 2 scoring spouse took the reins, the average wealth was $136,000 higher.

More broadly speaking, when the less numerate spouse made decisions, the financial wealth of those couples was 14.7% less than households where the spouses were equally numerate.

But Wait! There’s More!

Adhering to traditionalist values, particularly when the financial decision-maker isn’t the mathlete (that’s a word…trust me!) is really harmful to your long-term nest egg’s health.

However, that’s not the only issue that causes women to come out on the short end of the stick when they don’t take part in the financial decisions.

On Average, Women Earn Less Than Men Over Their Careers

This quotation from Catalyst sums it up:

“No matter what their race/ethnicity, age, occupation, or education, all women are impacted by the gender wage gap.”

The Catalyst study finds that, on average, in 2013, women earned 78% of what men earned in income.

Let’s assume that you have a man and a woman starting out in their careers at age 25. The man earns $100,000, and the woman earns $78,000. Each saves 15% of their income, gets 7% return on their investments, and gets a 3% payraise every year.

How much will each have at the end of the year at age 60?

The man will have $3,154,916.

The woman will have $2,460,834.

Those differences add up over time. It’s a 28.2% difference over 30 years for the man.

Not only is this a problem when a woman is in her working career trying to save up, it’s a problem when she’s retired, too, because…

Women Live Longer Than Men

A woman who is 25 years old today can expect to live about 4.3 years more than a man who is 25 years old today.

So, just from a pure actuarial standpoint, women have a longer retirement to plan for. They can either work longer (which stinks if your husband is already retired) or plan so that they have enough assets to carry on when they, statistically speaking, outlive their spouse.

However, that would only be true if you married someone your age.

The average age difference for a heterosexual couple is 2.3 years, meaning that men are usually 2.3 years older than the women they marry.

So, women should plan on living between 6.5 and 7 years longer than their male spouses.

Most retirement projections from financial planners basically assume a 30 year joint retirement.

That’d be great if the female spouse was about 6.6 years older than her husband, but as we saw above, that rarely happens.

On average, a woman has to make the financial decisions for 6 ½ to 7 years without her spouse, whether she wants to participate or not. Plus, she has to make those decisions when she’s likely cognitively impaired and, therefore, susceptible to making the wrong moves.

Ladies, that’s not a position you want to be in, I can assure you! How many of you have heard the anecdotes of the widow who doesn’t even know how to balance the checkbook?

I’m sure you’re not in that position because you’re Frugal Femmes, but even then, you need to be actively participating in the financial decisions, from budgeting to investing to insurance to estate planning.

Budgeting

I’m not really going to go into the nuts and bolts of budgeting here; you can swing a dead cat at the Internet and find budgeting articles.

However, you do need to make sure that you’re setting aside enough money each month to save for your retirement.

We calculate the number such that the youngest spouse lives to be 100. There is a less than 1% chance that both spouses will be alive at that point, but you do not want to run out of money on your 99th birthday. That’s about the worst possible scenario you could face if you’re alive at that point.

I like the anti-budget. Figure out how much you need to save and then work backwards from there.

Investing

Again, I am not going to tell you what to invest in. In general, invest in low-cost indexed funds for most of your investments. Don’t try to swing for the fences lest you fall prey to the myriad behavioral biases that make the average investor a chump compared to market averages.

The rule of thumb that we use is for asset allocation – 100 – the age of the younger spouse for equities and the rest for fixed income. Easy peasy. Rebalance. Use proper asset allocation. Don’t follow the herd and try to figure out what the market is doing from what Jim Cramer prognosticates.

You do need to know what you’re invested in and why you’re invested in it so that if you have to be the one to start making the investment decisions, you’re fully aware of the game plan so that you can continue to execute it.

Insurance

The reason you buy insurance is to protect yourself against an unexpected event. You do it with your house in the hopes it doesn’t burn down. You do it with your car in the hopes that you’re never in an accident that is your fault. The same holds true for both life and disability insurance.

By the way, repeat after me (loudly, preferably if you’re reading this from a Starbucks):

INSURANCE IS NOT AN INVESTMENT. IT IS INSURANCE!

Yes, there are a few exceptions to this rule, but they are few and far between.

So, in this case, you want insurance in the event that you need to replace your spouse’s income, either from getting hit by the beer truck and finding out what’s on the other side (life insurance) or from getting hit by the beer truck and not being able to go back to work for long periods of time (which happens more often than you’d expect it to).

Estate Planning

This can be a touchy subject, particularly if you have a blended family. Remember, if your spouse passes away, you still have to look out for Number One (the person you see in the mirror).

You want to make sure that you have your documents together and affairs in order, to include not only a will, but other documents like advanced medical directives and do not resuscitate orders (if either of you doesn’t wish to be resuscitated in the event of an unlikely recovery).

It’s painful to go through. You’re forced to face your own and your spouse’s mortality in a way that no other event, aside from the death or disability of someone close to you forces you to do.

But do it anyway. You owe it to yourself and you owe it to your spouse to go through the planning process and make sure that you both understand each other’s wishes.

I’m Convinced! What Do I Do?

This list is not a comprehensive list, but a starting point for discussions with your spouse.

  • Know what the target number is for you to ensure you run out of heartbeats before you run out of money. That’s the amount that your nest egg has to be so that you can continue your desired standard of living in retirement without running out of money. Sure, the ideal is to spend your last cent (minus what you’d like to leave to kids/other benefactors, although I argue you should give that away while you’re alive so that you get to enjoy the act of giving) right as the old ticker gives way, but trying to achieve that, except through the use of low commission annuities, is impractical.
  • Know what you need to save each month/year in order to hit that target number. This is the starting point for your anti-budget. How you spend beyond that is a decision between you and your spouse.
  • Negotiate your salary. Only 16% of women negotiate their salaries, and only 15% believe that they are effective negotiators. What are most pay raises based on? Your current salary. That compounds over time. So, do everything you can to get your baseline as high as possible!
  • At least do a “fly-by” review of the monthly budget. You don’t have to get into the line item details, but you should have a general idea of where the money is going and how it’s being spent just in case you have to pick up the responsibility in the future.
  • Know where the accounts are. All you have to do is maintain a list of accounts by institution so if you need to access that list, it’s readily available.
  • Make sure that you’re both properly insured. Do a review. Find out your numbers of how much insurance you need. Get it. Don’t avoid the situation, put your head in the sand, or think “this could never happen to me.” Invariably, the unexpected happens more often to those who don’t expect the unexpected (though I have NO statistics to back that up!).
  • Update the beneficiaries for your insurance (you should be the first for your spouse’s insurance and vice versa) and the Payable On Death recipient on accounts. This will help you avoid a ton of inconvenience and wait if the worst case scenario hits.
  • Plan what you will do in the event your spouse can no longer manage the money, if you decide to delegate. It’s OK to not be a super active participant in the day-to-day finances (unless you’re the math smart one, in which case, you should manage), but you also need to have a contingency plan for the statistically inevitable.

Personal finance, in general, should not be a lot of work on a month-to-month or even a year-to-year basis. Set a plan and execute it.

Even if you don’t want to be involved in the nuts and bolts, if you’re a woman, you’re, in all probability, going to have to be the one to handle the day-to-day finances at some point. Make sure that you’re prepared for that day so that, if it comes, you know what to do and do not get taken advantage of.

Jason Hull, CFP®, is the CTO of the online, comprehensive financial planning service myFinancialAnswers. He is an Army veteran, earned a BS in Engineering from the United States Military Academy at West Point, and earned a MBA from the University of Virginia’s Darden Graduate School of Business.

This post is a part of Women’s Money Week. If you want to join us, you can do so here. Please tag this post with #WMWeek17 when sharing on social media.

Free Rides Home to Prevent Drunk Driving

Sending this to my friends---free rides to prevent drunk driving!

I had an interesting conversation with my Japanese friend while she was visiting. We were driving through an area laden with bars and night life.  Which can be a fun area if drinking is what you’re there for.

But that wasn’t what we were there for, and it got us talking about drunk driving. I related the lives I’ve known that have been lost to the horrible mistakes of both themselves and others while under the influence and behind the wheel. I lamented the lack of consequences for those who do drink and drive.

She looked shocked. “It is not like that in Japan. If I did that, my father would lose his job.”

Hell, yes, Japan.

Costs of Drunk Driving

Our system is way too lenient. But that doesn’t mean there are no consequences. Here’s some of what you face if you do drive drunk:

  • A night in jail.
  • Bail money.
  • A fine.  And a big one. They get bigger the more offenses you have, but the first one is nothing to laugh at.
  • Possibly extra time in jail. Upwards of six months.
  • A misdemeanor on your record.
  • Might have to attend AA.

Honestly, a DUI with its accompanying consequences would be good news. The fact that the cops caught you means that they got your drunk butt off the street, preventing you from killing someone else.  Or yourself.

Free Rides Home When You’re Drunk

Believe it or not, there are quite a few ways to get a free ride home when you’re drunk–especially on major holidays. Here are some of the best:

Cheap and Frugal Alternatives to Driving Drunk

Maybe you can’t get a free ride home, but you can use one of these options instead. Every single one of them is a heck of a lot cheaper than a DUI:

  • Public Tranport– This one is best if you plan to use it before you leave. On New Year’s and other holidays, cities usually leave their public transport open much later than usual so you won’t have to drive at all.
  • Sober Rides– AAA has created a compilation of programs across the country that offer DD services. They do charge a fee, but most of them not only drive you home, but also send a second driver out to get your car home, too. Check them out here.
  • Tell Siri you’re drunk. She’ll immediately offer to call a cab for you.

Cheaper Than a Funeral

Even if you pay for a super long, super overpriced taxi fare and get your car towed, the costs will still be less than that of the average funeral: $7,000. And that’s if only one person dies at your hands, not including additional damages awarded in the sure-to-happen law suit and the deep, painful remorse you’ll experience for the rest of your life.

It’s okay to have fun–as long as you’re responsible.

I hope everyone has fun tomorrow night–truly!

But I hope even more that you’ll do so responsibly. 2016 has sucked enough.

 

 

 

*This post does contain referral links. While they will provide me with credit, they’re the only way I known to get you a free ride—which is the entire point!*

Stranger in My Native Land: Asian American Money

Today, Revanche of A Gai Shan Life  joins us for our weekly Friday series on women’s money issues in honor of Women’s Money Week, which will take place January 1-7, 2017. Revanche covers the xenophobia and racism she has encountered in her lifetime as it pertains to her finances as an Asian-American woman.

Please use the hashtag #WMWeek17 when sharing this story.

I never would have thought of the ways that prejudice can make Asian-American women feel like strangers in their native country--especially financially.

Stranger in a Strange Land: My Native Country

As a first generation American, I see my home country through different eyes than most. Not because I don’t consider myself American. Of course I am, as much as anyone who isn’t a First Nation native can be – I was born here, a natural citizen.

But I have dark eyes, dark hair, dark skin and no nose bridge to speak of, so the correct answer to “where are you from?” can be Japan, The Philippines, China, Cambodia–anywhere but here. California, or Los Angeles, are unacceptable answers. I can’t be from here. I’m not white.

Why does this matter? In some cases, it makes no difference. What harm do I suffer if the cabbie wonders if I’m from that one country he visited, or the other country whose cuisine he likes?

None.

In most other cases, however, it matters a great deal, indeed.

The Financial Costs of Being a Target

It matters when you’re a target to profit from, based on your race. I saw this play out most immediately with Mom and had to get involved at a very early age. Her accent meant that vendors would dismiss her, disregard their own policies, overcharge, and fail to deliver. She had an accent and that made her stupid and unimportant, they decided.

Angry and frustrated sitting beside her listening in to one such conversation, I got on the phone, all of 9 years old but speaking in English unaccented, demanding that they honor the agreed-upon terms. Magically their inability to do so melted away. From then on, I made the phone calls, whether to renegotiate contracts, dispute billing errors or just to get simple information.

Being an Asian-American Woman in the Workplace

It matters when you hear and understand anti-immigrant rhetoric–when you realize that white or European immigrants are now acceptable, but the people who look like me or my friends are “immigrants taking the good jobs.” No matter that I’ve been a star in the workplace since I was 17; to those people, my race and my skin color define me, not my professionalism, work ethic or performance.

As Taylor pointed out, it’s tough enough to make it in the workplace as a woman with the wage gap. As a woman of color, racial stereotypes further impacts your ability to earn a living. So it matters a great deal when employers and colleagues consider you a “minority quota hire” on sight.

It matters when your first manager has a (well-known, internally) obsession with Asian women so his hires were dismissed as objects of his obsession. Work performance made no difference; they couldn’t earn raises or promotions because they were hired based on their appearance–nothing more–so far as the management was concerned.

A Long Way to Go to Eradicate Racism, Xenophobia and Prejudice

Twenty years later, the racism we face is still astonishing. Not more than a year ago, we were calling a mechanic’s shop regarding services and the shop owner declared he wouldn’t help people with accents. We don’t have accents, but he was suspicious and wanted to be sure, you see, that he wouldn’t have to deal with a lesser form of American. “Those people”, he calls them.

My white friends rallied to the cause, of course, offering to call him with their Canadian, British, Australian, and Scottish accents.

My perceived youth, completely normal for an Asian, still comes up when my performance is evaluated, more than my results. I still have to jump through more hoops than any other manager to ensure that I’m being taken seriously as a professional because my years aren’t worn on my face.

I am always mindful of the active racism that lingers in many fellow citizens when I look out for our money. I always get a second and third quote for services.

I’m not bitter about my particular journey, but I am frustrated that this is all old hat. I’m frustrated that my child will also be held up to a standard that takes into consideration zir racial appearance first, zir skills and results second–or last.

It’s not just Asian Americans

Despite all the barriers I’ve faced, the level of racism that I encounter on a daily basis is mild. Asians are the “model minority” so we don’t come in for the same degree of hate that other non-white minorities experience. We’re dismissed, demeaned, underestimated. But we’re considered harmless in the end. If you’re Hispanic or black, you always have to appear calm and collected, otherwise you’re a harridan or an angry Black woman.

I don’t have to imagine what it’s like to be them, I hear their stories and, to this day, I can only shake my head when people declare that we’re post-racism. The recent election, and the surge in hate for Jews and minorities since, clearly points up the fact that many Americans are in favor of racism.

Racism isn’t limited to the white residents of this country, of course, I’ve witnessed racism between non-white races, towards one another, and that also contributes to the wider harms done to our fellow citizens.

Xenophobia and racism are complex issues in this country and it’s critical to know that they are both present in the structure of this country.

It’s critical to know that people who object to hiring for diversity, stating they shouldn’t have to “lower standards,” are telling us what they believe: only a heterosexual white male can meet standards because that is the standard. Not skills, not experience, but race and sex. Anyone else, therefore, is naturally lowering the standard.

It’s critical to know that minority, women, disabled, LGBTQIA, any otherwise not standard issue white male candidates do indeed have the necessary talents and skills necessary to do the job. It’s our job to remove artificial barriers to finding them when you recruit new hires.

It’s critical to know that we have to actively dismantle our biases that point to hiring the people who look the same or fit the same “culture”, that manages to consistently avoid admitting minorities beyond the token woman, or token Asian, or token Black man, that consistently builds and maintains racist structures in which managers can refer to their colleagues as racial slurs.

These are complex issues. I can hardly do them justice here, but they’re worthwhile to tackle.

This country was built on the bones of Natives, with the blood of immigrants, and we must grow beyond what and where we are.

We have to start somewhere. We can’t avoid it simply because we aren’t able to solve it overnight.

Related Posts Plugin for WordPress, Blogger...