Entries from September 2008 ↓

Today I read an excellent article called The Key to Wedded Bliss? Money Matters.  The author pointed out several things married couples could do to improve their relationships with themselves and their money.  I should summarize them here with my personal experience.

Talk and share goals – The hubby and I are pretty different in terms of our money management, but I think I am converting him into a saver.  We have talked quite a bit about retirement and having kids, and we generally agree with each other about what we want in the future.  Communication is definitely important in a marriage.

Run a home like a business -  I keep a running spreadsheet of our incomes and expenses for each month and give the hubby a report at the end of every month just to let him know how we are doing.  This has worked fairly well for the past year.

Be supportive of careers – We are very supportive of each other’s careers right now.  We both have pretty good jobs as engineers.  If either of us had a great job opportunity elsewhere I think we would both be okay with a move. 

Enjoy, but within reason - We spend our fun money mostly on food and vacations.  The hubby also loves games and gadgets.  As I wrote over a year ago, we started a budget where 2% of our income goes to entertainment.  That has worked out quite well and we still have a surplus in the entertainment fund.  As I wrote in my Wise Bread article from yesterday, there needs to be a balance between pleasure spending and saving, and I think we are doing fairly well. 

Use a mediator – Fortunately, the hubby and I haven’t really had fights about money, but we’d probably use our parents as mediators if we did have some unlikely scuffle.

Maintain some independence -  Both the hubby and I have credit cards, bank accounts, and investment accounts under our own names.  We also have a joint checking and investment account.  This is important because I think we should maintain our own credit histories. Also, we can’t have joint retirement accounts anyway.   So even though we are married I think we are both pretty financially independent.

Invest in your marriage - The hubby and I spend A LOT of time together when we are not working.  Sometimes it feels like too much, but that may change when we have kids.  We are definitely not workaholics and we like playing games and watching TV together quite a bit. 

Since many couples split up because of financial issues,  I feel that money management is an extremely important part of a healthy marriage. However, love and respect needs to come first before a couple can compromise on their money.  For example, I know that the hubby made a lot of concessions on the things he wanted to buy in the past year because he loves me and respects my saving ways. He also started to use coupons, FatWallet and subscribed to SlickDeals on his own (I am really proud of him).   On the other hand, I have also made compromises with the hubby and enjoyed spending more money and time with him.   He acknowledged that I am not as cheap as before.   Marriage is about becoming one single unit, and our attitudes toward money simply manifested how we balance each other.   I am having more fun with the hubby and  he’s glad that I am dealing  with the finances he  dislikes so it is a win-win situation.  So finally, I’d like to say that money management skills are able to be acquired, and if a couple really wants to fix their finances together then they can definitely do it, but if a couple do not care for each other enough to manage their money in a positive way together, then that may not be so easy to fix.  So my conclusion is that money management is much much easier than marriage management, and there is no reason not to tackle it first.

Share This

As a tax paying permanent resident of the United States with no right to vote, I am watching this election with a lot of disgust and a little bit of amusement. I think this election is really turning into a giant soap opera and I’m not sure how it will turn out, but the prevailing themes have been racism, sexism, and elitism. These are my opinions on what I have seen so far. Feel free to stop reading if you are not interested in my political commentary.

Now on the issue of racism, I’m pretty sick of hearing the rhetoric that if you don’t like Obama you are a racist. I was also pretty sickened by the fact that Obama and the democrats attempted to draw parallels between Obama and Martin Luther King Jr. and the Civil Rights Movement. Historically, the Democratic party was the party of the slave owners and the Republican party was formed in opposition to the Kansas-Nebraska Act which would have expanded slavery into Kansas and expanded the power of the slave owners. Eventually, Abraham Lincoln became the first Republican president and the slaves were freed. During the Civil Rights Movement, the democrats were mostly against the desegregation and civil rights laws. It was Republicans who pushed through the The Civil Rights Act of 1964, a key piece of legislation that outlawed segregation and also created equal employment opportunities for women. One of the Democrats who voted against the Act is Senator Robert Byrd of West Virgina and he is still in office at the age of 91. He is a former member of the Ku Klux Klan and said the following in a letter, “I shall never fight in the armed forces with a Negro by my side… Rather I should die a thousand times, and see Old Glory trampled in the dirt never to rise again, than to see this beloved land of ours become degraded by race mongrels, a throwback to the blackest specimen from the wilds.” He now says that he made a mistake by joining the Ku Klux Klan and endorses Barack Obama. He may be reformed, but it doesn’t change the fact that he supported racism for decades and the democrats have pursued racist agendas for hundreds of years. In a way, I feel that the Democrats are simply using Obama as a tool in the current moment. They are attempting to shed their racist past by using Obama as a symbol of change and I think it definitely worked. Apparently many people now believe that Republicans are the intolerant and racist party because they do not say nice things about Obama. I think that is pretty hypocritical because I am sure many of those old Democrats have nothing nice to say about Obama in their private letters.

The next big theme of this election is sexism. The hatred poured out against Hillary Clinton has pretty much divided the Democrats. There are allegations of caucus fraud by the Obama campaign and one female Clinton-supporting statistician has compiled a 98 page book about what happened during the caucuses. There are a lot of stories of fraud and intimidation conducted by the Obama campaign. The most serious and comical group that sprang out of the Hillary bashing by the Democrats is P.U.M.A, which stands for Party Unity My Ass. They are really serious about supporting Hillary, and there are hundreds of groups of these democrats who believe that the proverbial “old boys club” have shunned their candidate Hillary. Now McCain has picked Sarah Palin in response to the treatment Hillary received. I think it was a brilliant move even though Sarah Palin is the polar opposite of Hillary Clinton on pretty much every issue. Is Palin being used as a gimmick? I believe so, but the response of the Republican party towards Sarah Palin has been extremely enthusiastic, and in a way they are using the sexism of the Democrats against them. So far, the more liberal media has bashed Palin for having kids and having a high powered career at the same time. And just today I read a ridiculous comment by South Carolina Democratic chairwoman Carol Fowler that said Palin’s “primary qualification seems to be that she hasn’t had an abortion.” The funny thing about all of this is that the more they trash Sarah Palin, the more backlash they will receive. There are so many women in America that juggle being a mom and having a career, and I think when the media and rabid Democrats make comments that insinuate Palin isn’t qualified to do her job because she is a mom of five, they are inherently insulting many working woman across the nation.

The final -ism of the election is elitism. In the last election the Republicans painted John Kerry as an elitist that lived in a giant mansion with his ketchup heiress wife, and Kerry lost. This time, it is McCain who has the heiress wife and 8 or 10 homes, but somehow Obama is still more elitist. From where I am standing, both McCain and Obama are pretty far removed from the average American. However, Obama seems more elitist because he is a well spoken and well educated black man and Rev. Jesse Jackson actually said that Obama “talks down to black people” and that he wanted to “cut his nuts off”. Obama did make a lot of critical comments about the African American community including “I don’t know who taught them that reading and writing and conjugating your verbs was acting white, we’ve got to get over that mentality.” With these comments, it’s understandable that some people feel that Obama is elitist, but I think Obama is just being himself and being honest. Technically, you want to have the more educated and wise people in public office, but being humble and likable is also very important because the common man and woman do the voting. So in a way it makes sense that elitism is an undesirable trait, but I don’t think Obama or McCain should act dumb or poor just to be more likable. They are who they are, and there is nothing wrong with being well educated and wealthy as long as they govern with integrity and wisdom.

In the 16 years I have lived in America, it seems that Americans rarely vote on the important issues such as the economy and healthcare. Most of the time we have a personality contest filled with personal attacks. This election is definitely the most heated and divisive election I have seen thus far. It is also by far the most entertaining. I think whatever happens, this election will start a grand social experiment. We will either have the first African American president or the first female Vice President. As demonstrated by this election, racism and sexism are still alive and well in America and if either Palin or Obama fails miserably in their administration they could set back the group they represent. No matter what happens, I just hope things do not get worse than they already are. As the Chinese proverb says, “It’s better to be a dog in a peaceful time than be a human in a chaotic world”.

Share This

The latest news is that Henry Paulson is “readying his bazooka” to let the government take over Fannie Mae and Freddie Mac completely since the dastardly housing bailout bill passed in July gave him the power.  This is actually very scary news for many reasons.  Here are some of my thoughts.

First of all,  no one knows what the exact damage would be yet since the housing meltdown is not over.  Fannie and Freddie hold over $5 trillion dollars in mortgage loans, and own about 44% of all the foreclosed homes as of August 2008.  Since foreclosure numbers are still stacking up the amount of losses Fannie and Freddie will sustain is still going up.  Once the government officially takes over these enterprises taxpayers would be paying for all the loan guarantees and costs to dispose of these foreclosed properties.  Even if the housing market does not worsen, I think it is safe to say that the Treasury will stand to lose billions if they take over Fannie and Freddie

The situation right now is that if the government does not take over Fannie and Freddie then they may not stay open for very long since investors have lost quite a bit of confidence in the mortgaged backed securities spewed by these companies.  The stock prices of these companies have plunged and they’re drowning in billions of losses.  Without Fannie and Freddie’s guarantees on loans, it would be harder for everyone to get loans and home sales will be even slower and that will simply bring about more losses amongst the financial industry.  It is almost like  the government almost has no choice but to step in and stabilize the mortgage and credit market.

Interestingly enough, both McCain and Obama agree that Fannie and Freddie should not be bailed out since they are supposedly private entities,  but these two government sponsored enterprises have so much influence  and so many loans now that just letting them fail could have a huge impact on the real estate market.    I think it is really bizarre that these two companies were allowed to operate in such a way that they are government sponsored, and yet not carefully regulated to take on sensible risks.  Where was the line drawn?  Now that the crap has hit the fan, taxpayers have to pick up the pieces?

So on one hand, I agree wholeheartedly that Fannie and Freddie need to be restructured by the government for the good of the economy, but will they do it correctly this time?  If the current lending and fraud prevention practices continue, Fannie and Freddie will be nothing but endless money pits where taxpayer money bleeds into oblivion.  If management becomes good and these enterprises become profitable again, where will the money go?  Will taxpayers see any return on the good fortunes of these companies as their former shareholders once did?  Right now, there are so many questions and so little answers, and the big unknown future of Fannie and Freddie is rather frightening.

Share This

Well, I will be on vacation from October 30th to November 14th in China so I probably will not be blogging during those weeks.  So for the first time ever, The Baglady will be accepting guest posts about personal finance, careers, or womanhood.  You can submit an article you have already written or a brand new article.  I don’t mind if you republish it on your blog.  Please contact me if you would like to participate!

Share This

Last week I read an article on CNN titled “Why you can’t teach money”.  In this article, law professor Lauren Willis argues that financial education is a waste of time and money.  Here are my thoughts on this matter.

Her first argument that financial education doesn’t work because financial product companies “spend billions drowning out well-meaning messages to consumers from nonprofits or government agencies.”  This is certainly true. I am sure people are more likely to know lines from the  MasterCard “Priceless” commercials rather than their own credit card interest rate.  Also, she says that financial products change all the time so it is hard for educators to teach a subject that is constantly in flux.  That is also true, but some basics stay the same.

Next she argues that teaching the basics of finance is a waste of money because sending people to class gives them the illusion that they are educated in the ways of finances and they  don’t change their financial behavior.  I’m not sure if I agree with this because just listening to the basics of budgeting and getting out of debt can be really helpful.  It may be that people who are forced to take classes in personal finance do not change their behavior, but people who want to learn and change can certainly benefit.

Finally, she believes that the government should spend more money on regulating the financial industry rather than trying to educate consumers about the dangers of certain financial products.  I agree that there needs to be regulation on deceptive business practices, but an informed consumer is more able to use the wide variety of financial products to his or her advantage. People do not need to have the knowledge of a professional financial planner to understand some arithmetic  and figure out what is best for them.  Indeed, some financial companies make the math more complicated than it really is, but I think  the basics of budgeting and interest rates be understood by any  human being with average intelligence.

To close the interview the professor stated that parents should continue to teach their children about money and finances because families can educate their children better than the government could.  That may be true, but if the parents have no financial knowledge, then it would be the blind leading the blind.   Financial education has to start somewhere, and blankly stating that it is a waste of time and money does not help the fact that many people are clueless about how to manage their money.  I know a lot of people want to learn how to manage their money better, and those who seek the education voluntarily are more likely to benefit from it.

Share This