Category Archives: Kids and Money

An Easy Way to Make College Affordable

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Paying for college is a concern of many parents, and well it should be.  College debt is a concern of many graduates, and well it should be.  An issue is that the children of parents who decide to do something about paying for college by saving up money and doing without some things so that they will have at least some of the money needed for room and tuition end up with about the same amount of debt as those whose parents save nothing.  This is because colleges just raise the tuition for those children whose parents have saved.  OK, they actually reduce the tuition for those whose parents have not saved, but it is really the same thing.  Go into college with $50,000 in a college savings account and the college will figure that you can pay $50,000 more than someone without a savings account.
Now if the child with the $50,000 account came from parents who made $250,000 per year while the child without anything came from a family making $30,000 per year, the difference in tuition is understandable.  But often both families may make $80,000 per year.  One family just choose to maybe drive older cars or vacation locally so that they could put a few thousand dollars away each year into an Educational IRA, while the other family was trading in cars every few years and vacationing at Club Med, living for today and figuring that they would worry about college later.

              

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The issue with this system is that it encourages exactly the kind of behavior you don’t want.  It encourages spending and penalizes savings.  This means that more people show up at the financial aid office with no savings.  People are not foolish — they will find ways to go to college for less or for free if they can.  Why save up if there is no advantage?  As a result, not only do only children from poor backgrounds show up with nothing to contribute.  Many children of middle-class families who could have paid a significant portion of their own tuition and room-and-board show up as well without any savings.

Because colleges need to provide a lot of grants (as does the Federal Government) to prevent their colleges from being full of only the children of the wealthy who can float the tuition with their yearly income, they raise the base tuition so that those who can pay, pay more.  This provides more money for grants and scholarships, so long as people don’t decide it isn’t worth the cost and as long as all colleges do the same thing.  Because the cost is higher, however, it means fewer people are able to pay full tuition from income, which means more student debt and less people saving up since when the amount they can saved is dwarfed by the cost, they figure, “Why bother?”

So what is the easy solution to fix his issue?  Simple – stop using college savings when determining eligibility for tuition reductions and other grants.  Instead, base tuition rates purely on income.  Children who come from families with little income would still find a lower tuition bill that they can afford, but those from a family with a higher income will need to put away more money, use more of that income to cover tuition, and/or take out student loans.  Because tuition would be lower for everyone (since the colleges would be giving out less tuition aid because more people would be paying most or all of their bill), the cost would actually be lower for everyone.

Several colleges could also band together and establish a birth-to-college saving plan where parents could contribute an amount each year based on their income as their children grow with the guarantee that tuition and a certain portion of room-and-board would be covered for any of the colleges in the network.  This would eliminate the uncertainty we currently see when it comes to college tuition and also means that everyone will be paying what they can.  Parents whose children decide not to attend college could have their money returned with a reasonable interest rate applied.

So what do you think?  Would it work?  Do you have a better idea?  Let’s hear it!

Follow me on Twitter to get news about new articles and find out what I’m investing in. @SmallIvy_SI

Disclaimer: This blog is not meant to give financial planning or tax advice.  It gives general information on investment strategy, picking stocks, and generally managing money to build wealth. It is not a solicitation to buy or sell stocks or any security. Financial planning advice should be sought from a certified financial planner, which the author is not. Tax advice should be sought from a CPA.  All investments involve risk and the reader as urged to consider risks carefully and seek the advice of experts if needed before investing.

How Every 16 Year-Old with a Job Can Retire a Millionaire

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I’ve been encouraging a couple of twins who I’ve known since they were five to start an IRA since they are now 17 and working a job at a grocery store.  An IRA, or individual retirement account, is a little gift from the government that allows individuals to save money either tax-deferred or tax-free.  They come in two flavors: Traditional and Roth.    A traditional IRA is tax-deferred, meaning you pay no taxes on the money you invest or any of the money you make in the account until you withdraw it at retirement age.  With a Roth IRA, you pay taxes on the money you invest, but then pay no taxes on the money you withdraw or the interest it earns.

So how would these little wonders turn a 16 year-old into a millionaire at retirement?  Well, if one of the twins were to open an IRA and put $4,000 in it, and then invest entirely in a diversified stock mutual fund like the Vanguard Total Stock Market Fund, it would double in value about every six years. Because it would double eight times between the time they were 16 and 65, every dollar they put into it would be worth $256 when they reached 65.  This means that $4,000 would be worth about  $1 M at retirement age, even if he invested nothing else after putting the original $4,000 away.

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If he invested in a traditional IRA, he would also save on the taxes on the year he put the money into the IRA.  If he were in the 10% tax bracket, he would get to keep $400 more of his money right now, so it is like he gets extra money for making the investment.  Went he withdrew the money from the IRA at age 65, however, he would be taxed on the money he was withdrawing.  If he were in the 25% tax bracket during retirement, this would mean that he would actually only get $750,000 after taxes.

If he invested in a Roth IRA, he would not get a tax break now, so he would pay $400 more in taxes now.  But when he withdrew money at age 65, he would get to keep all of the money he earned, tax-free.  This means he would get to keep the whole $1 M.  The only catch is that he would need to find the extra $400 to invest.  (In fact, if he invested that extra $400 he got to keep from taxes when he invested in the traditional IRA, putting in $4,400 instead of $4,000, he would end up with the same amount of money after taxes as he would have had with a Roth IRA if his tax rate at retirement were the same as it was when he was working.)

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For the twins, I’m advising they go to Charles Schwab since they offer an IRA account with a $1 minimum investment.  This means they could put whatever they can this year, even if it is only $100, an then add to it as they can.  If they could get used to putting in $20 per paycheck, that would get them to a little over $1,000 per year.  They could also go to Vanguard, but they require a $1,000 minimum to start.  Both are great companies with a wide selection of funds to choose from for investments.

Filling out the paperwork and opening the account only takes 15 minutes or so online.  Because they are minors, the twins would need to have a parent be a custodian on the account until they turn 18.  After opening the account, they would just need to send in a check or send money from a bank account electronically, then choose investments.  At Schwab, I would start with the Schwab Total Stock Market Index Fund (SWTSX).  At Vanguard, I would buy the Vanguard Total Stock Market Index Fund if I had the minimum $3000 to invest, otherwise I would choose the 2065 Target Date Retirement Fund which only has a $1000 minimum.

 

So what else do you need to know about IRAs?  Well, there are some important rules:

  1.  You must have earned income equal to or exceeding the money you put into the IRA during the year you put the money in.  This means you need to make at least $4,000 from a job or from running a business in 2018 if you want to put $4,000 in an IRA this year.
  2. Right now you can put in up to $5,500 per year.  If you were to put $5,500 away each year between age 16 and age 35, you would be absolutely set for retirement, no matter what else you did financially.  (Lone exception, you must not touch the money in the IRA and it must stay invested in a diversified stock portfolio your whole working life.
  3. If you take the money out early (before retirement age), you’ll pay a penalty plus you’ll need to pay taxes on the money.  (Actually, there are a couple of exceptions with the Roth IRA, but why would you want to raid your retirement funds? Just stay invested.)
  4. With a traditional IRA, you’ll be forced to start taking the money out when you’re about 70 1/2 years old, so you may need to pay some hefty taxes then, especially if you invested a lot more than the original $4,000 and have several million dollars in the account.  With a Roth IRA, there is no need requirement to take the money out ever, so you could let it grow for another 30 years and leave it all to your heirs, if you wished.

Have a burning investing question you’d like answered?  Please send to vtsioriginal@yahoo.com or leave in a comment.

Follow on Twitter to get news about new articles.  @SmallIvy_SI

Disclaimer: This blog is not meant to give financial planning or tax advice.  It gives general information on investment strategy, picking stocks, and generally managing money to build wealth. It is not a solicitation to buy or sell stocks or any security. Financial planning advice should be sought from a certified financial planner, which the author is not. Tax advice should be sought from a CPA.  All investments involve risk and the reader as urged to consider risks carefully and seek the advice of experts if needed before investing.

Would you Rather Have a Million Dollars, or a New Car Every Three Years?

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Would you drive a used car until you were 55 if someone would pay you a million dollars to do so?  Understand this doesn’t mean driving a junker – just driving a four-year-old car until it was eight years old and then trading for another four-year-old car.  If you would take this deal – and I think that most people would – why would you go on buying new cars anyway?

The fact is, if you can save up and buy used cars for cash every four years, rather than taking on a new payment schedule and dropping deeper underwater with each new car loan, you can invest the savings and have over $1 million by the time you are 55 just from the savings on the car loans.  Even more insane, that $1 million will turn into $2 million by the time you are 62, $4 million by the time you are 69, and a cool $8 million by the time you are 76 (which will probably be the new retirement age, given current life expectancies).

How could this be so?  Two reasons: depreciation and interest.

Basically, any car will drop in value by 50% in four years.  This means that a new car which cost $30,000 will be worth about $15,000 in four years.  This means that the car will lose an average of $3750 per year during each of the first four years.  This, by the way, is if you sell it to another individual.  If you trade it in, you’ll be lucky if the dealer will give you $10,000 (because he wants to make a profit from the sale of your used car to someone else).

 

              

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The same depreciation rate is true when you buy a used car – it will still lose about 50% of its value over four years –  but because the price of the car is less, the depreciation loss per year will be less.  Let’s say you pick up that car someone else bought new for $30,000 after four years when it was worth $15,000.  Even if it drops in value to $7500 over the next four years, you’ll still only be losing $1,875 per year.  This means that you will save $1,875 per year, which you can invest.

The second reason that what seems like a small amount of savings can turn into a large amount of money in 35 years is compound interest.  Specifically, while you are paying interest when buying a car on payments, you are being paid interest when you are able to save money that would have been going to a car payment and invest.  If you were going to be paying 8% interest on a car loan, but instead pay cash for the car and invest the rest, you will be getting an effective interest rate of 20% on your money, assuming a 12% return on stocks.  This means that instead of working extra hours to pay the interest on your car loan, you will be making money for simply letting others use your money to build their businesses.

So before you fall into the trap of endless car payments, think about what that car payment is really costing you – millions of dollars over your lifetime.  Is that new car smell and 32,000-mile warranty really worth that?

Your investing questions are wanted.  Please send to vtsioriginal@yahoo.com or leave in a comment.

Follow me on Twitter to get news about new articles and find out what I’m investing in. @SmallIvy_SI

Disclaimer: This blog is not meant to give financial planning or tax advice.  It gives general information on investment strategy, picking stocks, and generally managing money to build wealth. It is not a solicitation to buy or sell stocks or any security. Financial planning advice should be sought from a certified financial planner, which the author is not. Tax advice should be sought from a CPA.  All investments involve risk and the reader as urged to consider risks carefully and seek the advice of experts if needed before investing.

Is It Possible to Save for College?

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About 16 years ago I sat down and predicted the growth of my son’s college savings account.  I was planning to put away $2,000 each year into an Educational Savings Account (ESA).  Using an investment calculator, and using an estimate of a 12% return (about the average return for the stock markets), I predicted I’d have about $140,000 by the time my son was ready to go to college.  With in-state tuition at about $12,000 per year, plus money for food and housing, I was figuring a cost of about $30,000 per year, so the ESA would at least get him through undergraduate school.  He could then do research/teaching/etc. to help fund grad school if he went, and hopefully get out debt-free or fairly close.  That was the plan.

              

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Unfortunately, then came the 2001-2003 stock market, where returns were low or negative.  Things finally picked up after the 2003 tax cuts (yes, tax cuts do spur the economy, despite what some Liberal pundits will tell you), but then stocks fell during the 2008 housing market crash.  Since that point things grew at a modest pace, until Trump was elected, from which point on things have been on fire.  Despite the fairly good markets from 2009 – 2016, and the great market over the last 10 months, my annualized rate-of-return has been around 3.5% instead of 12%.

So, sitting here with about two years until the first tuition bills come in, my son’s account has a little over $52,000 in it today, instead of the $108,000 I predicted.  This is enough to pay for about two years’-worth of college expenses, but not four.  Alternatively, it is enough to pay for tuition, but not for room-and-board.  This has left me with a big dilemma:

How should I invest for the next couple of years, if at all?

With less than two years remaining, if I really need the money in two years, I should really put it all into bank CDs.  I cannot predict what the markets will do over such a short period of time, and they have about a 1/3 chance of being lower in two years than they are today,  There is a small chance, maybe one in ten, that they will be 25% lower or more, meaning I may only have around $39,000.  Then again, if we do see some great returns over the next couple of years, for example if Trump is able to pass big tax cuts and spur the economy, I could get 20% returns and have almost $75,000 when the first tuition bill arrives.  Note that my original predictions assumed I stayed fully invested in stocks the whole time, which was probably a bad assumption due to the risk of doing so during the last couple of years.

Another question this raises, however, is

Is it possible for a middle-class family to really save up and pay for college?

Granted, perhaps we should have been putting $4,000 or $5,000 away each year, with $2,000 in an ESA and then the rest in taxable accounts or a 529 plan after we maxed out the ESA.   But I don’t see how most families who don’t make $150,000 per year could afford that.  I mean, we have been very disciplined compared to many people our age.  Despite having an income far less than $150,000 per year, we paid off our home about six or seven years ago, leaving a lot of free cash flow available that many families who keep a constant mortgage don’t have.  Frankly, I don’t know how families who keep a mortgage are able to pay for the things they buy.  (Maybe they don’t, since the median amount of debt families who have a credit card balance is $17,000, according to Nerdwallet.)  Paying for everything and not using credit, including the things that come up like medical bills and auto repairs, I’m really glad we don’t have that $1,000 or $1500 mortgage payment each month.

I do think that many families should be able to get their children through college debt-free or close to it, but saving up everything ahead of time may not be possible.  Once our son gets into college, we could direct some of our regular income towards his room-and-board.  He is also likely to get scholarships that will cover most or all of his tuition.  If he also gets a part-time job and makes $500 per month, that would cover about half of his room and board.  Still, it does make you wonder why college prices are so high that many people need to get loans to get through.

Luckily in our case (and good planning and hard work create luck), we have some resources beyond the ESA to help pay for college.  Because of this, I will probably keep the ESA fully invested in stocks, hoping that we’ll see a couple of good years to boost the account balance.  If we see a drop in the next couple of years, we can cover costs with other funds for the first year or two while we wait for the ESA to recover a bit.  Really we don’t need to assume we’ll need to tap the account right away.

So what do you think?  Is it possible for families making $80,000 per year to save up for college?  Are tuition costs worth the value of the product they provide?  Is it worth it to run up loans to pay for college?

Follow me on Twitter to get news about new articles and find out what I’m investing in. @SmallIvy_SI

Disclaimer: This blog is not meant to give financial planning or tax advice.  It gives general information on investment strategy, picking stocks, and generally managing money to build wealth. It is not a solicitation to buy or sell stocks or any security. Financial planning advice should be sought from a certified financial planner, which the author is not. Tax advice should be sought from a CPA.  All investments involve risk and the reader as urged to consider risks carefully and seek the advice of experts if needed before investing.

Starting a Teenager’s IRA

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My son has started to earn a bit of money through odd jobs, and I’ve convinced him that it would be a smart thing to start an IRA account rather than just blow all of his money on cars and stuff.  The reason is the effect of compounding.  Basically, for every six years that you have to invest in a wide basket of growth stocks (such as in a diversified mutual fund), you double your money.  This means that you’ll make twice as much starting at 16 than you will at 22.  How significant is this?  Well, a 16-year old who starts and IRA and puts in $2,000, then never touches it, will have about  $1.2 M at age 70.  To get the same result, he would need to put in $4,000 at age 22, $8,000 at age 28, and $16,000 at age  34.

In order to put money into an IRA, you need to have earned income, meaning money that was earned through a job or through starting a business, rather than money that is given to you or money that you earn through investing.  All of the money needs to be earned in the year it is put into the IRA, although you actually have until April 15th of the following year to send in the money.  So if you earned $2,000 in 2017, you could start an IRA with $2,000 and send in the money until April 15th of 2018.


One issue with a child starting an IRA is that many places have minimum amounts to start the account and minimum amounts that can be invested in a fund.  Many of these fund companies require minimum investments of $3,000 or more, which can be difficult for a minor to earn, let alone part with at the end of the year.  I found that he could start one with Vanguard with a $1,000 minimum investment, and that he would have two funds to choose from.  These would be the Vanguard Star fund and the Vanguard Target Date Retirement funds.

An issue he is having, however, is that even earning $1,000 will be difficult.  You see, his summer break is only 2 months long because we have a “modified year-round” schedule where   they only get two months off in the summer, then they get a two-week fall and spring break.  Add a family vacation and maybe a camp in there, plus he starts with the marching band a couple of weeks before school starts, and he doesn’t have very long to work a job.  He could work during the school year, but he has quite a bit of homework each night, so his grades would probably suffer.

Luckily, my son is something of an entrepreneur.  Seeing a need for regular chips and other good-tasting snacks due to the restrictions placed on the school lunch program by Michelle Obama’s initiatives, my son started a covert chip business where he sells chips to his classmates (and sometimes a teacher) between classes.  He claims that there is nothing in the school rules against selling snacks out of his jacket, and we’ve checked as well.  He has even started using an ice pack to keep chocolate bars from melting so he has added Hershey bars to the product mix.  (He says that girls almost exclusively buy the chocolate, where guys tend to buy chips.)  He is learning about running a business since he needs to keep a careful inventory of his expenses and sales so that he can file taxes and start an IRA.

Unfortunately, with his business he was only able to earn about $300 last year and is unsure if he’ll be able to continue this year or not.  I checked to see if there was a way he could start an IRA with less money.  I found that he could actually start a custodial IRA with as little as $100 at Schwab.  We will probably open his account this week with the $300 he has earned so far and then add to it as the year progresses.  I’ll provide reports later on what we invest in and on how his IRA is doing in future posts.  Stay tuned!

Anyone out there start a custodial IRA?  What has been your experience?

Have a burning investing question you’d like answered?  Please send to vtsioriginal@yahoo.com or leave in a comment.

Follow on Twitter to get news about new articles.  @SmallIvy_SI

Disclaimer: This blog is not meant to give financial planning or tax advice.  It gives general information on investment strategy, picking stocks, and generally managing money to build wealth. It is not a solicitation to buy or sell stocks or any security. Financial planning advice should be sought from a certified financial planner, which the author is not. Tax advice should be sought from a CPA.  All investments involve risk and the reader as urged to consider risks carefully and seek the advice of experts if needed before investing.

Empty Nest Insurance- Start Your Kids with a Nest Egg

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Today the news is full of stories of children returning home to stay after college.  The recession has certainly made it difficult for some to find jobs.  In some cases parents may also be making their homes a little too comfortable. With few rules, no expenses and no responsibility, who wouldn’t want to stay?

By starting children out early learning about saving and investing, and by giving them a little nest egg with which to start, you can dramatically reduce the chances that they will be knocking on your door, duffel bag in hand after college.

Starting an investment fund can be very quick and easy.  It simply takes a couple thousand dollars and some mutual funds.  If you start a fund about the time they are born, and add to it as they get those checks from relatives early on, and then match their contributions once they start to earn their own money, you can build up a substantial fund by the time they leave the house.  This is money they can then use when they have the unexpected expenses that always occur instead of running up credit card debt.
              

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The first step is to find a fund family with a low enough minimum.  I personally like Vanguard because their funds have very low expenses and the minimums for many of them are only a couple of thousand dollars.

You are looking for a fund that invests in a large number of stocks over a broad range of the market.  Good choices would be a largecap fund such as an S&P500 fund or a midcap or smallcap fund.  Selecting specific sector funds or ETFs is probably not a good idea since you want something you can hold for years rather than needing to move in and out of it, incurring capital gains taxes.


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Once you have selected a fund, simply create a custodial account in the child’s name and send in a check.  (Warning:  When your kids go to college, the college may see the custodial account and expect it to be used for tuition before they’ll kick in financial aid.  If you’re worried about this, keep the money in your name and then gift it to your child over a period of a year or two, staying below the gift tax exemption, when they are near graduation.)  As time passes, add extra money to the fund.  You should avoid the temptation to make many if any changes – you want to minimize expenses and taxes.  Just let it grow with the economy.  If you need to do something, wait for dips and buy more shares.

Once the fund has grown large enough, you should consider selling part and using the proceeds to buy another fund in a different sector of the market.  For example, if you’ve amassed $15,000 in a largecap fund, you may want to sell half and buy a smallcap fund.  This diversification will reduce the risk of losses and smooth out the fluctuations that occur.  In general, different sectors of the market do well at different times.


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Note that capital gains and dividends will be tax-free below a threshold amount, but be sure to check with your accountant on what those minimums are in any given year.  They are generally less for investment income than earned income.  You may also need to file tax returns in some years if the income is large enough even when they haven’t made enough to pay taxes.  Payment of quarterly estimates may also be required.  Minimization of trading, and thereby the realization of gains, will delay the time at which you will need to start preparing tax returns for their accounts.

Once the child reaches 18, the money will be theirs (you have no say over this).  You therefore should have been teaching them all along that the money is there to help them in emergencies, such as when the car breaks down, and not just for day-to-day expenses.  You should also be teaching them to leave the principle alone and just spend the interest/dividends.  In that way, even though they may waste some, hopefully there will be enough remaining when they are older and wiser to help secure their financial security.

By giving your children a nest egg with which to start their lives, you can help keep them out of debt, help them have a down payment for a house when they are ready, and be able to stay out on their own between jobs and other issues. You will also give them an extra source of income that they can use throughout their lives.

 

Follow me on Twitter to get news about new articles and find out what I’m investing in.  @SmallIvy_SI

Disclaimer: This blog is not meant to give financial planning or tax advice.  It gives general information on investment strategy, picking stocks, and generally managing money to build wealth. It is not a solicitation to buy or sell stocks or any security. Financial planning advice should be sought from a certified financial planner, which the author is not. Tax advice should be sought from a CPA.  All investments involve risk and the reader as urged to consider risks carefully and seek the advice of experts if needed before investing.

Teaching Children How to Be Wealthy

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We learn most of our financial knowledge from our parents and usually have similar spending habits.  Unfortunately, money and sex are both subjects that are rarely talked about between generations, resulting in young adults with a poor understanding of both.  By teaching children where money comes from and how to manage it, you can set them on the path to a life of security instead of a life of worry.  Here are important points to cover.
1.  Money can be saved, invested, spent, and given. 
When one receives money, it can be saved, invested, spent, or given.  Saving provides immediate security.  Investing provides multiplication of wealth and future security.  Spending provides current enjoyment and the zest of life.  Giving allows us to grow and become better people.  Children should be taught that an appropriate level of each activity should be part of one’s financial life.
2.  Money is earned by providing something of value to others.
In our Capitalist society, one earns money by providing something of value to others.  Something of value is something that meets their needs.  This can mean operating a business that provides something needed, or working as an employee and providing something your company needs to them in exchange for a salary.  It can even mean digging something up out of the ground that is needed, or refining something into something more valuable.  The more valuable the thing provided, i.e. the greater the need fulfilled, the more money can be earned.  As an employee, the more value you bring to the company, the greater your salary can be.

      
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3.  Wealth and financial security is created by building pipelines.
People who spend all of their wages may seem to be doing well, but they are taking a great risk that something will happen to their ability to produce their wages and end up in financial ruin.  Also, except for the few souls who pass away suddenly, they will eventually not be able to earn their wages due to sickness or there will come a time where they do not want to work anymore.  Financial security is earned by using some of our wages and our energy to create pipelines – investments that provide income to us.  By buying shares of a mutual fund, buying a rental property, writing a book or a song, or building a business we create the ability to generate income without working.  This will both supplement our current income (allowing us to spend and give more) and allow us to replace our income when needed or desired.  Individuals who become wealthy are those who delay the acquisition of things and/or work additional hours while able in order to build their pipelines.

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4.   When we pay interest, we pay for everything twice (or more).
One will never become wealthy while paying 20% credit card interest.  Even keeping a perpetual house payment by constantly withdrawing equity for home improvements and other spending will have a huge impact on future wealth.  Likewise, if one keeps a car payment throughout one’s life, one will forego over a million dollars in wealth at retirement.   If we save up cash and buy things, we will pay substantially less than if we buy things on credit.  This in turn will leave more money for saving and investing.  Loans should be taken out very rarely, and then the debt should be paid off as quickly as possible.

     
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 5.  An emergency fund turns an emergency into an inconvenience and provides more options.
Most people are able to pay their monthly bills, but then sudden emergencies cause them to take on debt.  Eventually, they will have all of their income (or more) consumed before the month starts, making it impossible to save or invest.  By keeping 3-6 months’ worth of expenses in a savings account, the sudden car repair or minor medical issue can be resolved via a check instead of a loan.  Likewise, the loss of a job becomes an issue to work through rather than a crisis.
6.  Save up for big things you will need to buy or replace monthly.
Most individuals will need to take out a loan to replace a car, an air conditioner, or a roof.  Many put vacations on their credit cards and then pay for them over then next several years.  If you regularly save for the big expenses, you will have the money available when the come times.  Not only will this result in savings on interest (which will give you more money to save for future purchases). It will allow you to negotiate for better prices.  Everyone likes cash-up-front, and may people will give you a discount if you can pay in full.
Teach your children about how to handle money, and you will greatly reduce the stress in their lives.

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Disclaimer: This blog is not meant to give financial planning or tax advice.  It gives general information on investment strategy, picking stocks, and generally managing money to build wealth. It is not a solicitation to buy or sell stocks or any security. Financial planning advice should be sought from a certified financial planner, which the author is not. Tax advice should be sought from a CPA.  All investments involve risk and the reader as urged to consider risks carefully and seek the advice of experts if needed before investing.

A Response to the Me-ternity Leave Columnist

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Are They Growing Up While You're on Your Phone?In her article in the New York Post,  “I Want to Have All of the Perks of Maternity Leave – Without Having Any Kids,”  Meghann Foye talks about how she felt it was unfair that new mothers get paid time off for maternity leave, while she and others who chose not to have children didn’t get the same.  She proposes that women (and maybe men) should get some time off for reflection that she calls “me-ternity leave.”

Now I feel the eye roles from millions of parents out there and yes, she does appear to be that clueless.  While she seems to think that new mothers are home, sipping coffee in light-bathed sunrooms while reading the paper (having slept in until late morning) while their newborn child sleeps peacefully in a room down the hall, only waking periodically to coo and do cute baby things, mothers and dads can both attest that the weeks and months after having a new child are anything but peaceful.  Getting sleep 2-3 hours at a time, trying to cram food down during the brief moments you have, and always walking around with a little bit of spit-up on you shoulder (because it happens so often you no longer bother to change or even wipe it off) is not conducive to deep self-reflection.

And that’s where Ms. Foye really misses the whole point, probably precisely because she has not had kids herself.  In fact, she has it exactly backwards.  Once you have children, you go from worrying about yourself and yourself being the focus of your attention to the children being your focus.  You start to watch kid shows, read kid books, wake up at kid hours, (once they get old enough) go to kid movies, and take vacations where you look for kid activities.  I barely noticed the playgrounds at parks before I had kids but they became the focus of my life for many years.  Maternity (and paternity) leave isn’t about taking time away from work to focus on yourself and look at the direction of your life.  It is to figure out how you will need to change your routines now that you have someone in your life that will take your constant attention.

I remember just looking at other people in restaurants, just sitting there waiting, and thinking how wonderful it would be to just sit.  Looking back, I wish we had eaten out less and maybe just done take-out when we didn’t feel like cooking because going to restaurants was usually a terrible experience between fighting the children to stay in their seats and the inevitable rush to the parking lot with a screaming child just as the food arrives.  Actually, we used to fight over who got to cook most nights since it was a break from constantly addressing our childrens’ needs.

I remember thinking as I rocked my son late at night how after he had grown and was out of the house, I could start to do things again.  But then I realized that by the time that happened, I would not be wanting to do the same things.  I wasn’t gong to go to the dance clubs when I was fifty.  I wasn’t going to go play spend the weekend mountain biking with friends.  That part of my life had ended and a new part had begun.

I started to realize some other things about work as well.  I’m guessing (perhaps incorrectly) that Ms. Foye looks down her nose at women who stay home to raise the children.  I’m just guessing this given what she thinks maternity leave is like.  Really, raising children (for those who have the capability to do so) is one of the most important jobs there is.  We seem to lose sight of the fact that we go out and work to bring home money for our families.  It is like we have all decided that the people who leave the cave and hunt have the important role, such that everyone wants to go out and hunt.  But we forget that the whole reason we’re hunting is to take care of the children back at the cave.

Now I’m not saying that the mother needs to always be the one to stay home.  Really the decision is a combination of who has the better paying job and who has the capabilities to  do a good job raising the children because that is the more important and difficult job that many people are not suited to do.  In a year, few people will remember anything someone does at the office.  Certainly in twenty years almost everything will be forgotten and the presentations that were made will have been deleted.  But the children will continue to make an impact on the world, good or bad, and a big part of that impact is due to the work of the person who raised them.  We’re already seeing the impact on the world of children who were raised by no one.

Being the primary parent is also far harder than many jobs.  Now I’m not talking about people who stay home, but let the TV raise the children while they go on about their lives.  I’m talking about parents who spend the day taking care of the children, dressing them, teaching them, finding activities for them to do that expand their experience, correct them when they act inappropriately and encourage them when they do well.  It takes enormous patience, enormous energy, and enormous sacrifice to be a truly great parent.  There is nothing “me” about being a great parent – it takes giving totally of yourself.

But when you truly do, you start to realize how incredibly unimportant all of those other things that once filled your world really are.

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Disclaimer: This blog is not meant to give financial planning or tax advice. It gives general information on investment strategy, picking stocks, and generally managing money to build wealth. It is not a solicitation to buy or sell stocks or any security. Financial planning advice should be sought from a certified financial planner, which the author is not. Tax advice should be sought from a CPA. All investments involve risk and the reader as urged to consider risks carefully and seek the advice of experts if needed before investing.

What do you think?  Please leave a comment?

Contact me at vtsioriginal@yahoo.com

Follow on Twitter to get news about new articles. @SmallIvy_SI

Disclaimer: This blog is not meant to give financial planning or tax advice. It gives general information on investment strategy, picking stocks, and generally managing money to build wealth. It is not a solicitation to buy or sell stocks or any security. Financial planning advice should be sought from a certified financial planner, which the author is not. Tax advice should be sought from a CPA. All investments involve risk and the reader as urged to consider risks carefully and seek the advice of experts if needed before investing.

A Plan to Stop Bullying in Schools

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Are They Growing Up While You're on Your Phone?

In Bullying has a New Face, I discussed the issue of bullying and how, particularly in this digital age when bullies can come right into your children’s rooms, it has become even more serious.  While physical bullying is bad enough, psychological bullying can lead to suicides or mass shootings like Columbine.  Girls will even encourage other girls to commit suicide and laugh when they do.

But how can this be stopped?  The trouble is that a lot of this bullying comes in the form of spreading false rumors in person and by social media.  How do you stop children from spreading these rumors, particularly when their parents don’t care and it comes from a large group?  In a case with an actually suicide or many months of taunting you might be able to sue the parents for slander or liable if you save the texts (and some parents really should to create some fear in parents of bullies), but for many cases it would be difficult to get a court to take the matter seriously.

A clue to a solution lies in looking at the mechanics of verbal bullying.  It usually starts with some mean girls or boys who feel somehow inferior.  They feel they need to insult others to make themselves look better to impress a group.  There will always probably be people like this.  These kids create a culture where they are “cool” because they are the ones spreading the rumors and teasing the others.  There are a few kids that the other just find to be naturally cool, but many in this clique get there by joining together to pick on other kids.  They come up with absurd ideas of what makes you cool.  (Note, if you feel that buying designer labels and new cars is needed to make you feel cool, you are still being influenced by this culture.)

There are a few children who are the main targets of the bullying.  This is usually because they are perceived as different somehow or because they have a strong reaction.  Most of the children outside of the main clique of students is bullied somehow, but a few get most of the attention.  Note that schools aid in causing the bullying by having popularity competitions like prom queens and letting groups like cheer leading be dominated by girls in the cliques.

Now there is a very important effect that allows the bullies to have power.  When one child is being picked on by the mean girls and boys, many of the others will stop associating with the targets of the abuse.  They do this to be thought of as “cool” by the bullies and also to avoid being the target of the bullying themselves.  Girls will ostracize the girls being harassed so that they will not be harassed themselves, which is particularly sad since the girls being abused the most then have no one to support them.  Changing this behavior is the key to stopping the bullying.

If you think of the movie, A Bugs Life, you saw the ants being dominated by the grasshoppers.  While the ants outnumbered the grasshoppers in numbers and could easily have torn the grasshoppers to shreds if they attacked altogether (which is what real ants do), the ones in this story cowered in fear and let the grasshoppers hurt their kin because they didn’t want to be victims of the abuse as well.  This is exactly what happens with bullying where most people stand by or shun the victim (or even join in the harassment) to avoid being targets themselves.

To stop the bullying, we need to teach children to immediately join together against bullies when they appear.  Girls and boys should make an agreement to not tolerate any abuse of members of the group and say something immediately if it occurs.  If a girl makes a mean comment against another or starts a rumor,  we need ten or twenty girls to immediately rebuke her and ostracize her until she stops the abusive behavior.  If a boy taunts another, we need five other boys to stand up and tell the bully that his actions are unacceptable. This could be supported by the teachers, parents, and school administrators who would also make it clear to the bully that the behavior was unacceptable.  In this scenario, the bullies would be stopped immediately and quickly learn to change their behavior or be ostracized from the group.

Of course one would need to be careful to prevent the past victims from becoming the bullies.  Once a child has stopped the abusive behavior, forgiveness and acceptance should be given.  Disagreements or debating should also not be seen as bullying – only personal insults and the spreading of rumors.

So how to start?  Parents can ask girls to talk to their friends and make agreements to support each other should bullying start.  School officials could call school assemblies where the victims of bullying tell their stories and the students could be asked to pledge to stand with their classmates whenever bullying starts and tell teachers and school staff immediately.  This could be reinforced in classes where students could be asked to renew their pledge and to discuss any examples of bullying that had been seen during the week.  School officials should be particularly watchful at school events, lunch, and recess since this is often where abuse occurs.

We can stop bullying.  We just need to get kids to act together to stop it the minute it starts.  Bullies give themselves power and can only grow more powerful if others stand by and don’t help.  Let’s stop bullying in schools today.

Got and investing question? Please send it to vtsioriginal@yahoo.com or leave in a comment.

Follow on Twitter to get news about new articles. @SmallIvy_SI

Disclaimer: This blog is not meant to give financial planning or tax advice. It gives general information on investment strategy, picking stocks, and generally managing money to build wealth. It is not a solicitation to buy or sell stocks or any security. Financial planning advice should be sought from a certified financial planner, which the author is not. Tax advice should be sought from a CPA. All investments involve risk and the reader as urged to consider risks carefully and seek the advice of experts if needed before investing.

What do you think?  Please leave a comment?

Contact me at vtsioriginal@yahoo.com

Follow on Twitter to get news about new articles. @SmallIvy_SI

Disclaimer: This blog is not meant to give financial planning or tax advice. It gives general information on investment strategy, picking stocks, and generally managing money to build wealth. It is not a solicitation to buy or sell stocks or any security. Financial planning advice should be sought from a certified financial planner, which the author is not. Tax advice should be sought from a CPA. All investments involve risk and the reader as urged to consider risks carefully and seek the advice of experts if needed before investing.

Bullying has a New Face, But Schools Still Stand By

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Are They Growing Up While You're on Your Phone?

Today’s post will be very different from other posts on this blog because I’m in a very different mood.  We are losing our neighbors because they’re moving out-of-state to escape the situation in our small town that nearly took their daughter’s life.  They have been great neighbors, always friendly and nice.  They have been a great asset to our community, helping out at the school and other places around town.

Our town has two six grade schools, two middle schools, and one high school.  Our neighbors moved next door from another state when their daughter and our son were in third grade at one of the elementary schools.  They both transitioned to the nearby middle school in sixth grade.  I was surprised to hear, however, that our neighbor’s daughter, Vicky, had changed to the other middle school, far across town (you would drive by the one she was attending and then drive another ten minutes to get to the other one).  Apparently Vicky had been the target of bullying by girls in her school and it had gotten so bad that her parents decided she needed to change schools.

Vicky’s parents had tried to remedy the situation.  They had gone to the school and gotten no support.  They even drove to the homes of each of the girls who were bullying Vicky and talked to them, but they didn’t believe there was any issue and would do nothing.

Things were all right at the new school, but then when Vicky went to high school she ended up with the same girls since both of the middle school funnel into the same high school, where the bullying started up again.  A few weeks ago, Vicky attempted suicide.  Luckily she was stopped.  After a couple of weeks in the hospital and a few weeks out-of-state at her grandparent’s home, she is recovering, but the mental scars left will be with her forever.  Her parents feel she cannot be left alone since she is still not entirely out of danger.

The bullies at the school didn’t feel any remorse for their actions.  They continue to taunt her parents when they pick up and drop off their other child with smiles and waves.  They started a rumor that the Vickie was pregnant and that was why she had disappeared.  They then spread a rumor that friends of the victim were actually the ones doing the bullying.  Vicky’s parents have taken her off social media and given her a new phone number because otherwise the girls at the school would continue to torment her until she did kill herself.

The amazing thing is the lack of action by the school.  If I child were bringing a knife to school and threatening another child, the child with the knife would be expelled.  Have a group of girls telling another girl that she should just kill herself and tormenting her until she takes her own life, however, and the school will do nothing.

Bullying comes in two forms.  The first is the stereotypical physical bullying where the bully pushes you down or steals your lunch money.  The second type is more sinister and comes in the form of spreading rumors and putting people down because of the way they dress, activities they take part in, or how they look.  Note that both kinds of bullying generally have a feeling of inadequacy by the bully at their root.  The physical bully is often beat at home and may not be wealthy or the best student.  The second kind of bullying is normally done by people who are wealthy and popular, yet still have some sort of defect where they don’t really like themselves and feel they need to belittle other to elevate themselves and hold onto popularity.  Social status comes by stepping on others.

For too long society has put up with bullies in schools.  How is it acceptable that parents are forced to send their children to a school where they may be physically assaulted or even killed?  Why must parents send their children to a place where they undergo daily torment that comes in the form of snide comments and gossip in the halls that bleeds onto their phones that can drive wonderful young women to commit suicide?

I’m asking that every person who reads this story does something.  If you’re a parent, talk to your children about bullying and the consequences. Bring up children who will stand up for those who are being harassed and bring attention of the matter to school officials and parents.  I’m asking school officials to take these matters seriously and deal with children who are bullying each other seriously.  I’m asking parents and members of the community to go to school boards and demand a no bullying policy with severe punishments (taking away a child’s phone while at school would be a great first step).  I’m asking parents whose children are the target of bullying to take the other parents to court for damages with lawsuits for slander or assault.

This isn’t just “kids being kids.”  This is a serious issue that has left mental scars on many people.  It is time for the bullying to stop.

Got and investing question? Please send it to vtsioriginal@yahoo.com or leave in a comment.

Follow on Twitter to get news about new articles. @SmallIvy_SI

Disclaimer: This blog is not meant to give financial planning or tax advice. It gives general information on investment strategy, picking stocks, and generally managing money to build wealth. It is not a solicitation to buy or sell stocks or any security. Financial planning advice should be sought from a certified financial planner, which the author is not. Tax advice should be sought from a CPA. All investments involve risk and the reader as urged to consider risks carefully and seek the advice of experts if needed before investing.

What do you think?  Please leave a comment?

Contact me at vtsioriginal@yahoo.com

Follow on Twitter to get news about new articles. @SmallIvy_SI

Disclaimer: This blog is not meant to give financial planning or tax advice. It gives general information on investment strategy, picking stocks, and generally managing money to build wealth. It is not a solicitation to buy or sell stocks or any security. Financial planning advice should be sought from a certified financial planner, which the author is not. Tax advice should be sought from a CPA. All investments involve risk and the reader as urged to consider risks carefully and seek the advice of experts if needed before investing.