I’ve been doing a lot of thinking about rights and privileges.  Needs and wants.  Obligations and choices.  And I’m hoping every parent will actively assume the responsibility of making sure their children understand and respect the differences. 

What I’ve been thinking is that we adults might be able to explain the differences to our children by drawing some parallels for them.  Parallels that encourage a thrifty, frugal, value-minded approach to growing up.  Parallels that connect them in a healthy way to the mentality of the post-Depression generation of some of our parents rather than the access (and excess) to everything of those of us who are from the Baby Boomer generation.  

I’m not indicting my generation.  I’m just indicating that we Baby Boomers support a positive and responsible financial direction and mindset for the generation we produced.   

Our modern day recession had all the sights and sounds of a depression; we just didn’t call it that.  As a result, I think it’s our obligation as parents to remind our children that nothing is promised, that life and security can be fragile and that stated bluntly – in business, you’re only worth what you are and produce today. 

It may be a sobering thought to them but I think all children should be taught from a very early age to understand that what they want is far less than what they need.  Teach them the mindset:  it’s your money so take it personally.   It will help them make better money choices.

I hope and believe that we Boomers have produced a generation that has the entrepreneurial spirit, independence and motivation of their grand and great-grandparents rather than a generation that will just work for somebody to sign their paycheck. 

Every time I read a post from my Thin Pink Line colleague Lindsey Pollack on Generation Y career and workplace issues – I celebrate.  She confirms my hope:  young adults are building successful careers.  She’s addressing my concern:  teaching/advising organizations on how to maximize the potential of the new workforce.   

Here’s to your health and wealth.

TAGS: Money needs versus money wants

Every time I watch the Olympics, I find it thrilling. Certainly the mastery of the sports awes me ─ the athletes make it look easy but we know it’s not. The desire to be champions is at the core of their success but desire is merely a dream without discipline.

You can’t teach someone the desire to be a champion – and clearly we can’t all be Olympic champions but we can be the best we can be at whatever it is we do. And, we can teach our kids to do the same. If you are a parent trying to raise kids with a strong work ethic, here are some ideas to consider:

• Limit TV ─ “what”, “when” and “where”. I think some TV, even on weeknights after homework was finished is fine but consider this: The Nielsen Company show kids aged 2-5 now spend more than 32 hours a week on average in front of a TV screen. The older segment of that group (ages 6-11) spend a little less time, about 28 hours per week watching TV, due in part that they are more likely to be attending school for longer hours.

Watch it with them and discuss what you saw.

Think carefully before letting your kids have TVs in their rooms, if they do, you lose control of the “what” and the “when”.

• Keep the computer in public space. Computers should be used in a part of the home where your kid may have to IM “pos” (parent over shoulder) at any time.

• Let them know you are interested. Keep up with your kids’ teachers and assignments. I’m a big believer in the role of parent as homework “coach”, not doing the assignment but making the time to check that it’s been done as well as to serve as a resource as needed.

• Be clear about your expectations. They don’t have to get all A’s but they should work to the best of their ability.

TAGS: LinkedIn, work ethic. raising children

When it comes to money and remarriage, stepfamilies need to find sensitive solutions to avoid stepping on anybody’s financial toes.   

Money has always been a potential source of conflict in marriage and is the number one reason for divorce.  So how do couples divvy up the income and cover the costs when two families with children are combined?  Who gets how much and when?  Who says when too much is being spent on one child and not the other?  You’ll need to mind over this potentially destructive money matter. 

Here are some suggestions on how to make sense out of stretching limited dollars and keep you and your spouse in a better money frame of mind: 

• Set up and focus on the present family budget.
• Be sure both of you are involved in decisions about how family funds are spent.
• Remind one another not to fall victim to buying your children’s affection because you feel guilty about having divorced their other parent.
• Figure out ways of saying “I love you” to your children that are more meaningful than by giving gifts.
• Look for low-cost adventures and events instead of trying find extra money necessary for more traditional activities. 

Some second marriage couples with children choose to set up a “three-pot money system”:  yours, mine, and ours.  

Under this plan, you and your spouse pool resources in one bank account that will pay for joint present family expenses.  Then each of you takes out an agreed-upon amount for discretionary spending.  Since the extras each of you buy for your own children will come from your own individual money pot, guilt spending is easier limited and money needed for your present family remains intact. 

Here’s to your health and wealth.

TAGS: 3-pot money system, second marriages with children, Stepfamilies

Don’t forget to give yourself a gift this holiday season.  Give yourself the gift of being a life long learner when it comes to money.  Promise to make just one new money-information-gathering move a week – starting now. 

Read the first paragraph of every story on the front page of the Wall Street Journal.  Subscribe to Kiplinger’s Personal Finance magazine to be sure you get ongoing, incremental and interesting money news in an easy and informative way.  Take a glimpse at online calculators such as Bankrate.com’s to input your personal money numbers to get projections and information you need.

These are doable goals.  Most of what you need to successfully determine what you’re going to do with your money starts with getting yourself in the right frame of mind for the task.

My gift to you this holiday season is the concept of “mind over money matters” – the process of identifying what you want and why, when you want it, and what it takes to achieve it.  I’ve written about this before.  It was my Thanksgiving wish for each of you.  But let me say it again.  These disciplines work in good times and in bad.    

• Before you decide what to do with your money, first know how you feel about your money.  
• Everyone – from cradle to grave – can benefit from ongoing, continuing education regarding basic money knowledge and responsibilities.
• “Mind over money matters” begins as early as the age of 3 by teaching children the difference between wants and needs – a money lesson that many adults never learned and as a consequence have made ongoing, poor money choices and suffered the consequences. 

Spread your new found wealth of knowledge – up and down the generations of your family.  Inspire the sense of accomplishment that comes when one saves money.  Instill the goal of self-reliance which is the gift each person can give him or herself through money management.

Here’s to your health and wealth.  New Year 2010.

TAGS: importance of life long learning about money, Self reliance through money management

If you want to get your child a gift that keeps on giving – consider a Roth IRA.

Funding a Roth Individual Retirement Account for your child or grandchild’s future is a gift that will literally and figuratively be appreciated in the years to come. 

I know.  I have kids.  Your son or daughter might want something digital or shiny for his or her next gift.  But if you get them into the right frame of mind with a little explanation, he or she might actually prefer some financial security and learn an early lesson about the importance of mind – over money matters. 

You plant the seed (by funding your child’s Roth IRA), and then see how it (and your child’s money intelligence) grows: 

Say you open a Roth IRA for a 15-year old and fund it with $1000. If the money in that account grows at an annual percentage rate of 8%, which is a conservative rate, that $1000 investment will become about $47,000 in 50 years.  

The seed grows.

 If you added another $1000 to that Roth IRA over the next four years, it would make your total contribution $5000.  By the time that child turns 65 years old, their Roth IRA account will be worth more than $250,000 – without adding another dime beyond the $5000 you contributed. 

Your child’s money intelligence grows.  It sees value in and the power of long-term compounding.  This is a measureable and heartfelt return on your investment.

It’s never too soon for children to get/be taught a tiny but firm financial grip!  How you think about money usually rules what/how you do with your money for life.  Change/re-calculate your relationship with money.    Give yourself the gift of growing your best asset:  your mind.  You’ll be amazed at the amount of random and intuitive money knowledge you already have! 

Gift yourself a kinder and gentler financial frame of mind for the New Year: Mind over money matters.  Because mind over money – matters.  Think it.  Teach it.  Preach it.  Show it.  Grow it.  Share it.  Declare it.  Use it.  Protect it.  

Here’s to your health and wealth.

TAGS: Roth IRA, Roth IRAs for children

That’s me!

I was born on December 25 (the year is not relevant!) at 10:30 PM so my mother called me, ‘Carol”.  She has a wonderful sense of humor.  Perhaps because I am a Christmas Carol, I particularly love Christmas. Clearly, not all Thin Pink Line Readers celebrate this particular holiday but I’m sure everyone has a special holiday they do celebrate.

Here’s what I love about my favorite holiday:

• Buying gifts
  As much as I obsess about what to buy, and complain about the crowds in the stores (although this year, I’m not complaining much ─ I’m happy to see people out buying to help the economy) I love the opportunity to please people with a tangible expression of my feeling. Trite but true, the giver often receives more pleasure than the donor.

• Holiday cards
  While one could certainly argue that staying in touch with people only through the rather tenuous exchange of greeting cards isn’t much of a relationship, it still makes me happy to send and receive greeting cards ─ even the ones with the long and often tedious brag letters.

• Getting together with friends and family
  Whether it’s a large party or dinner for just the immediate family, I love the opportunity/obligation to see people. It’s just too easy to let time slip away without making the time to meet face-to-face; holidays force us to get it done.

The most frequently asked question I get when people learn of my special “Christmas Carol” status is, ‘Don’t you lose out?”.   There were years when, as a child, I thought I did because I was never able to have a birthday party on my actual birthday.  Now I’d say that I’m very fortunate ─ mine is the birthday that few forget. I’m amazed that at such a busy time of year some people actually buy a special, “For your Christmas Birthday” card separate card just for me!

Whatever you celebrate,  know that you have my heartfelt best wishes!

TAGS: holidays, LinkedIn

When times are hard, opportunists look for soft landings which is just another way of saying they look for easy targets.  I don’t want you to be one of them.

It’s truly a perfect and decidedly unhealthy storm in our country’s health care arena:  the recession, high unemployment and the prolonged debate among lawmakers regarding health care reform.

The best offense is a good defense.  So always be a doubter when approached (often by fax or email) by someone offering health insurance policies chocked full of benefits at cheap rates.  And please – do not cancel your existing, valid health insurance policy until you absolutely, positively know what the new health insurance policy you’re considering really gives you.

The horror stories are real.  And they’re painful.  Fake policies not worth the paper on which they’re written; deceptive policies that have hidden, expensive costs.  They’re scams – and there are a lot of them out there.

So how do you know the real “health” of a health insurance policy?

• Know who’s for real.  Contact your state’s insurance commissioner to see if the policy you’re considering is with a reputable company.  The company should have a license on file.  Check with the National Association of Insurance Commissioners (http://www.naic.org) to see if any complaints have been filed against the company, the agent or both.
• Don’t be rushed.  Take time to have a good look at the details in the proposed policy.  Fact check promises with what the company has delivered to existing policyholders.  How do you do that?  Ask for references.  Google the agent and company.  It’s amazing the random and often pertinent facts (or at least inquiries) that you can find.
• Demand full disclosure.  It’s never a good idea to do business with a company that won’t provide full contact and location information or only offers an 800 number for phone contact.
• Be wary of “too good to be true” deals.  They usually are – too good - and not true.  Compare the policy you’re considering with comparable policies.  If the price points are dramatically different – there’s a reason – and that usually means a red flag.
• TMI request.  It’s never healthy to give too much (personal) information during a sales presentation.  Your Social Security number, bank accounts, retirement accounts, portfolio details are not required in order for a legitimate insurance agent to give you a policy proposal so don’t be intimidated into doing so.  If pressed, go elsewhere.  There are many good and legitimate agents and companies in the business.
• Too easy to get is too good to trust.  The reality of a pre-existing medical condition is one that’s facing many Americans.  If someone’s offering you a policy regardless a pre-existing condition, which requires no medical examination and is so much easier to get than any other you’ve tried – stop!  If the price offered is too low for the level of benefits promised, it is likely a scam.

Remember that mind over money – matters.  Take a good look at the health of the insurance policy you’re considering.  Make an informed, conscious decision about your medical insurance options before a medical crisis challenges and plays on your emotional state of well being.

Here’s to your health and wealth.

TAGS: health insurance, scams, tips on how to find good policies

From my quiet desert town of Tucson, Arizona – what a storm! 

Earlier this week, a professor of law at the University of Arizona just minutes down the road from me wrote an academic paper about the shame of the upside-down loan circumstances in which many American homeowners are drowning.  Shame on the nation’s banks was his point. 

Professor Brent White says these over-extended homeowners (estimated to be about 15 million Americans) would be better off financially if they walked away from their upside down mortgages.  He says they don’t because their moral compass won’t allow it; that it makes them ashamed to do it. 

Professor White respects that moral value but says many people are ashamed to walk away from their mortgage because they/we live a double standard.  A double standard that expects moral norms for Main Street and accepts market norms for Wall Street.  Banks operate to maximize profits.  Banks think about their interest(s) and look out for themselves.  Banks do this often at Main Street’s expense.  Professor White believes this double standard is what scares American homeowners into meeting to the market norm mentality that puts them in this upside-down home, negative equity situation.

I think he’s got a point.  And to me, the point is:  think about what’s in your best interest. 

Professor White isn’t advocating anyone walk away from their mortgage unless they feel its right for them.  White is saying American homeowners must act on economic self interest and determine what financial decision given their circumstances – is right for them.  And, he concludes, since shame doesn’t work for banks, it shouldn’t work for homeowners who are considering walking away from their homes.

This is a mind over money matters decision.  This is one of those situations where your mind over your money – matters.  If you choose to do this, know that there will be consequences.  Mortgage lenders are outraged and say it’s unethical.  They remind you – correctly – that this decision to walk away from your mortgage will stay on your credit report for 5 to 7 years. 

But advocates of this option say – your credit is already battered, you’ll have to take the steps to rebuild it anyway.  What you pay, the bank will solely benefit because you can’t keep up with the growing debt.  And to get in front of it now – is impossible.  Why throw money at a market mentality that is morally irreverent? 

It’s your money – take it personally.  Everyone’s situation is different.  There are 15 million Americans facing this right now.  It might be ok for you (or any one of them) to walk away from an upside down mortgage if it’s in your (their) best interest. 

Here’s to your health and wealth.

TAGS: default or walk away from homes, Upside down mortgages

Since the U.S. holiday season has begun with Thanksgiving (an old tradition) and Black Friday (a relatively new tradition), it seems timely to consider ways you can manage the season in a way that ensures that you will truly enjoy it, rather than merely enduring it. Recently, the NY Times had an article about how badly some families behave ─ the examples included everything from a complaint that sweet potatoes with marshmallows weren’t on the menu to a woman who found the need to delve deep into her psyche to share her conviction that her family didn’t love her.

Funny, if it’s not your family!

But, sadly, bad behavior isn’t limited to the holiday gathering alone. It can begin with disagreements about who’ll host, who’ll be invited, whether to do a sit-down dinner or a buffet and whether the good china or paper plates are the right table setting. And that is certainly not an exhaustive list!

If you want to enjoy the holidays, you need to have a realistic idea of what is doable given your particular situation. Consider these ideas:

• You can’t make everyone happy and you shouldn’t be disappointed about that.
  Some family members don’t like each other and if that is the case in your family, don’t make the mistake of thinking it’ll be different this year unless you take preemptive action. If you think there is a chance that the “difficult” person will listen, consider having a conversation about the offending behaviors. Try not to review past transgressions, rather, focus on the upcoming opportunities to be more congenial. If the difficult person won’t listen, consider dropping him/her from the guest list.

• Tradition is important until it doesn’t work anymore, then have the courage to start new traditions.
  When my sister first married, she and her husband traveled every year both to her husband’s family and to ours, thousands of miles from where they were living and from each other. They continued the tradition when their first daughter was born and kept it going even after their second child came along. Each year, it became more difficult ─ their visiting time was limited at each family, the children tended to pick up airborne germs in the crowded airplanes and the cost was outrageous. Finally, they decided that it was time to make a change ─ they started alternating so that they visited only one family each year. While they wished they could be in two places each year, the reality was that they weren’t enjoying the holidays much at all doing things the way they had done them before. Their situation was different. We all got over it.

• Plan ahead.
  If you know that your children won’t eat Aunt Sarah’s luscious leg of lamb, ask her ahead of time if you can bring along something for them that they will eat. If you are traveling, pack some games or toys that will keep them busy and happy. If you know they tend to melt down at 8:00 PM, perhaps you can negotiate an earlier start time.

• Appreciate the stresses others may be feeling.
  Most people (even the most difficult of family members) aspire to enjoy the holidays. While it may not seem like it, they probably don’t wake up in the morning, look at themselves in the mirror and say, “I’ll do my best to make someone miserable today, and I’ll give myself extra points it that person is related to me!”. They have their own perspectives and feelings; the more you try to listen to their concerns, the better your chances to reach agreements that work for both of you. That’s a gift that will long outlast the leftovers!

TAGS: bad behavior, Families, holidays, LinkedIn

Thanksgiving has always been my favorite holiday.  I was born Thanksgiving week and as a child relished the fact that there were birthday parties for me – everywhere!  My Dad planted that seed to counteract the sting of my older cousin’s annual taunt:  “Happy birthday, turkey!”  

This Thanksgiving 2009, I’m thankful that we are closer (though still a long way to go) to the end of this brutal recession and that I’ve had the opportunity to provide you some tools/information with which to rebalance your financial lives going forward. 

It has been written: “You can’t change the direction of the wind but you can reset your sails”.  That’s my Thanksgiving wish for each of you.  I think “resetting your sails” speaks to the importance of life long learning when it comes to personal money because with every major life change, we must readjust/reset how we handle and allocate our money resources.  We use money every day but new information about money and how it impacts the lives of every day people isn’t talked about regularly or consistently until there’s a financial crisis.  That’s when the topic gets everyone’s attention. 

I strongly believe in the concept of “mind over money matters” – the process of identifying what you want and why, when you want it, and what it takes to achieve it.  Those disciplines work in good times and in bad.    

There are new tools and rules of engagement regarding re-calculating your relationship with money – the most important of which is:  before you decide what to do with your money, first know how you feel about your money.  For example, if you find a dollar, do you say “what can I do with this dollar?” or “what can this dollar do for me?”  A wealth building mindset will embrace the latter. 

In 2008, everything and everyone changed regarding the modern world and money.  I see that as an opportunity – a new rule of engagement – that says everyone can benefit from ongoing, continuing education regarding basic money knowledge and responsibilities.  “Mind over money – matters” and the concept can be taught as early as the age of 3 by teaching children the difference between wants and needs – a money lesson that many adults never learned and as a consequence have made ongoing, poor money choices and suffered the consequences.  

What we’re going to face economically in the months and years ahead is a social phenomenon of slow job creation as a consequence of the systematic transfer of manufacturing and production abilities abroad.  Those jobs won’t come back overnight and those nations to which we’ve transferred skill and knowledge have now transferred those skills to their respective work forces and will be our competitors as we try to rebuild our manufacturing and production base here at home.  What heretofore were underprivileged countries are now emerging economies. 

This is happening in the midst of a domestic and world economy that has all sorts of electronic components:  social networks, day trading, and investment clubs on line – which further supports and emphasizes the importance of life long learning when it comes to personal money.  Our new, post-recession economy will require everyday people of all ages to be life long learners about money, economics and most importantly – our system of commerce and finance called capitalism.  This recession has proved that the average American is a poor capitalist.  Many don’t know how it works.  Those who do – don’t know how you grow it and make it work for them rather than against them.   

Finding a new relationship with your money has never been easier.  That’s the recession’s silver lining.  While money decisions have always had consequences, this recession got everybody’s attention.  The consequences are now clearer and more important to every member of the family. The new money rules of engagement and responsibility will require families to practice a form of “cooperative economics” since this financial dilemma has caused a boomerang effect of adult children (and often elders who can no longer afford retirement communities) returning home.  This has created a new and challenging financial dynamic for Baby Boomers who were poised for retirement and now can’t because of their own huge losses which are compounded by the money needs of the generation above (aging parents) and the one below (their adult children). 

Those are the reasons why this Thanksgiving 2009, I hope you and your family will embrace a collective mindset:  to make financial decisions based on what you want and why you want it, when you want it and what it takes to achieve it.  That kind of money discipline will work for you in good times and in bad. 

Here’s to your health and wealth.

TAGS: life long learning and money, Money mindset, personal money management, Relationship with money