The Tax-Free Savings Account (TFSA) has an annual maximum of $6,000 in 2019, and a lifetime maximum of as high as $63,500 depending on the year you were born. How to max out your TFSA every year The Tax-Free Savings Account is the most powerful investment tool available to Canadians. In fact, if you utilize [...]
The post 8 Strategies to Max Out Your TFSA Every Year appeared first on Money After Graduation.
As we head into the Federal election, the parties are campaigning for your vote. A popular issue is always how much money they’ll put into your pocket. Government grants, benefits, tax credits, reduced taxes, job creation, subsidies, and more directly impact how much money you have. Here’s how the party platforms compare when it comes [...]
The post How the New Democratic Party of Canada Campaign Promises will affect your finances appeared first on Money After Graduation.
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Sometimes we get dealt a bad hand and end up with a bad credit rating. Or maybe we’re trying to build up our credit rating for the first time.
Either way, we can find ourselves in a trap.
Credit card issuers want good credit scores in order to approve us for a new credit card. But we need a credit card to improve our credit.
I’ve got good news.
You have options. And these aren’t scammy deals that will take advantage of you. Even with bad credit, it’s still possible to get a credit card and rebuild your credit.
If you have a decent credit history but can’t quite get the premium credit cards yet, start with a rewards card for folks with average credit.
Compared to the premium rewards cards, these cards offer fewer rewards at higher APRs. You’ll want to get in the habit of paying off your cards every month. So the APR shouldn’t matter.
So the only real difference between these cards and premium cards is that the rewards aren’t quite as good.
But it’s still something. And these cards help you build up your credit. You’ll build credit while earning some rewards along the way. That’s a great deal.
If you have a high enough credit score to get one of these cards, start here.
Let’s say something happened and you now have bad credit. Every time you apply for a new credit card, you get denied.
Now what?
Even with bad credit, you still have options.
I recommend considering one of the secured credit cards. These cards are still credit cards so you will build up a credit history with them. If you always pay on time (which you should be doing), you’ll slowly improve your credit score and unlock better credit cards.
The difference if that you have to put a deposit down when you open the card. Depending on your credit score, the deposit usually ranges from $50 to $200. The bank holds onto this deposit and will keep it if you skip too many payments.
The deposit allows the bank to offer credit cards to a larger range of folks than a standard credit card.
Yes, it is inconvenient to save up enough for the deposit but it’s a better option than not having a credit card at all. Credit cards are the easiest ways to build your credit score which will get you better credit cards, more credit, and better interest rates on mortgages and loans. It’s definitely worth the effort.
I was a student when I got my first credit card.
A bunch of bills hit me all at once, including some hefty maintenance on my pickup that I hadn’t planned for. I went from having a couple of hundred dollars in my checking account to being about $500 short of what I needed to pay all my bills.
So I went around town and applied for a credit card at every bank. They all turned me down.
Then I went to the credit union on campus that offered student credit cards. Their approvals department initially denied my application until the banker advocated for me. He got me approved at half their usual credit line for students.
After paying my bills with that credit card, I paid the card off on time and started building my credit score. A decade later, I have good enough credit to get just about any credit card I want.
When you’re a student, many banks will turn you away outright. That’s what happened to me. Going to a bank and choosing a student card can get you out of this trap. Student credit cards are designed for folks without any credit history and low to no income. As long as you’re a student, the requirements get much more flexible.
That’s how I got started.
Once you have your first card, pay if off every month to build your credit. Then in a few years, apply for a card for average credit scores to get your first rewards card. The point is not to be picky as a student, get any card that doesn’t have annual fees and use it to build your credit. Worry about the rewards and perks once you’ve built up your credit a bit.
What’s the best way to right the best card for building your credit rating? Follow these steps.
Lots of the premium credit cards have annual fees. They give rewards and perks which easily exceed the value of the fee.
But when you’re building credit, you’re not going to get the best rewards or perks. Your primary goal is to build up your credit rating so you can get access to the better credit cards later. Fees are only going to slow you down at this stage.
When I was building my credit up, I avoided fees entirely. That kept more money in my pocket and kept things really simple until I had a good enough credit score to get the premium credit cards. I recommend you do the same.
We’ve included reviews of some cards that have annual fees. Sometimes they offer rewards and it’s worth it. In other cases, they might be the last option available. Avoid fees if you can. And if you can’t, switch to a no-annual fee card as soon as you can once you’ve built up your credit score.
As a student, you’re stuck in a catch-22.
You need a credit score in order to get a credit card. But you need a credit card in order to build a credit history and get a credit card. Breaking this cycle can get tricky.
These days, there are great credit card options for students that help kick-start everything.
Most of them don’t have annual fees, some have a few rewards and parks, and they’re specifically designed for students so you’re odds of being approved are much higher.
If you’re a student, get a student credit card. That will put you on the path to building credit and you’ll be able to get a much better card later assuming you always pay your monthly bill on time.
Maybe you’re building from scratch. Maybe, you’ve hit a rough patch. Whatever it is, we’ve all gone through tough times.
If you know that your credit score isn’t great or you’re building your credit from scratch for the first time, get a card for bad credit.
Why start at the bottom?
Every time you apply for a card, your credit score will take a hit.
It’s true, part of your score is dependent on how many credit requests that you’ve had recently. If you apply to a bunch of cards all at once, your score will go down a bit.
I personally hate this. Right when you really need a credit card, the process of applying for credit cards makes your credit worse.
The credit score hits are minor but they do add up.
When we’re going through a rough patch, a single card can mean the difference between paying our bills or not. I’ve been there, my first card got me through a cash crunch.
The last thing we want to do when we’re in this situation is try to apply to cards out of our reach, ding our credit score, and make it even harder for ourselves to get one credit card.
I recommend getting a credit card that you’re confident that you’ll be approved for. That way, you’ll have some breathing room to make your bills and you can start building your credit. Even if you get declined on the rest of your credit card applications, you’ll have one card to work with.
Unless you’re positive that you have at least average credit, start with the cards for lower credit scores.
And I’d absolutely go straight to these cards if I’ve recently been declined 1-2 times already and really needed a credit card. As long as you get a card without an annual fee, there’s no downside to keeping a credit card open. It actually helps your credit score a bit by increasing your total available credit limit.
Once you have one credit card that you’ve been using awhile and have built up your credit, try applying for one of the credit cards for folks with average credit. These aren’t the premium cards but you will get started with some rewards.
As a general rule, consider applying for one of these cards once you’re credit score is 600 or above. There’s no guarantee you’ll be approved but this is the range where it becomes a possibility. And the odds are in your favor once you get close to a credit score of 700 and above. Remember to only apply once in case your score isn’t high enough. If you’re declined, continue building your credit for another year or two and try again.
I’d avoid multiple cards at this tier so only apply for one at a time. There’s no reason to have more than one. Later on, you can consider having multiple premium cards to maximize rewards and perks. But at this stage, you want one decent card that will give you some rewards while you keep building credit. Continue to avoid fees and keep things really simple at this stage.
Here are our reviews on all the best credit cards for building credit:
The Capital One Platinum card offers a no-frills basic credit card. There’s no rewards, no annual fee, and no foreign transaction fees. It’s a basic credit card without any fees dragging you down.
For building credit, it’s a fantastic option. Especially without annual or foreign transaction fees. When a card doesn’t have rewards, it’s really important to avoid fees since every dollar comes straight out of your pocket.
Yes, there aren’t any rewards but it’s a real bonafide credit card without any downsides.
Even better, you’ll get a higher credit line after making your first 5 month payments on time. Usually, you have to call credit card companies and ask them to increase your credit and justify it with a higher income. Having a built-in credit increase will help you increase your credit score even faster.
When I was starting out, I would have been thrilled to get this card.
If you can get this card, get it.
The rewards are as good as they get outside of the top tier cards that require great credit scores.
You’ll get 1.5% cash back on every purchase. For context, the best cash back cards give 2%. So this card is close to the top.
There aren’t any bonus or rotating categories to worry about either. You’ll get a straight 1.5% cash back on every purchase. I love simple cash back cards like this because I don’t have to manage anything. I spend, I get cash back rewards, that’s it.
Your credit limit will also go up after you make your first 5 month payments on time. Part of your credit score is determined by your “credit utilization” which is a fancy way of saying what percentage of your total credit limit you use at any given moment. The lower the percentage, the better. So having a high total credit limit means you’ll use a small percentage and improve your credit score faster.
It does have a $39 annual fee. As long as you spend $2600 on your card each year, you’ll come out ahead and earn more in rewards than you spend on the annual fee. That comes to about $220/month in credit card spending.
One other perk: Capital One has an upgraded version of this card called the Capital One Quicksilver. It’s the same card without an annual fee and has a lower APR. The catch is that you’ll need a higher credit rating in order to get it. Once you’ve used the QuickSilverOne for awhile and built up your credit score, you should have an easier time upgrading to the better version since the card is at the same bank you already have a history with. Once your credit is high enough, this simple upgrade will give you one of the best cash back cards out there.
Business credit ratings work a bit differently than personal credit ratings. Each rating agency uses their own method, businesses have their own credit ratings, and your personal credit rating can be used as a substitute for your businesses’ credit rating.
Even if you have a great credit rating personally, you might have to start from scratch with your business. And a poor personal credit rating can negatively impact the rating of your business.
If you find yourself needing to improve the credit rating of your business, try to get the Capital One Spark Classic.
It’s a simple and solid rewards card for businesses with average credit ratings.
You’ll earn a straight 1% cash back on every purchase. Yes, other cash back cards have higher percentages but you’ll have a much easier time getting approved for this card. No hoops to jump through either. No rotating or bonus rewards categories to remember.
There isn’t an annual fee to worry about and no foreign transaction fees.
It’s a super simple card with a decent cash back amount for businesses that need to build their credit some more before going after the premium cards.
The Capital One Secured Mastercard is my favorite secured card.
This is still a credit card so it has the same impact on building your credit rating as any normal credit card.
The difference is that you’ll put down a deposit of $49-200. The deposit stays with the bank and can be taken if you go delinquent. As long as you stay on top of your credit card payments, you’ll get the deposit back if you ever close the account.
Credit lines start at $200 and go up after your first 5 monthly payments that are made on time. If you need more credit each month, you can pay some of it off with an extra payment so you can keep using your card.
And there’s no annual fee or foreign transactions fees.
There’s no gotchas or tricks. You put a deposit down, you get a credit card, then you start rebuilding your credit. Nice and simple.
If you’re rebuilding your credit and don’t have access to other cards, I highly recommend this one. It’s a fantastic card to start with.
To get rewards with a secured card, get the Discover it Secured. Rewards are really rare with secured cards.
You’ll get 2% cash back at gas stations and restaurants up to $1000 in purchases each quarter. You’ll also get 1% cash back on all other purchases.
Those are decent rewards on their own and they’re fantastic for a secured card.
Since it’s a secured card, you’ll need to put down a deposit of at least $200. A $200 deposit gets you a $200 credit line and a $500 deposit gets you a $500 credit line.
Once you’ve used the card responsibility over a long period, you’ll get the option to convert the card into a non-secured card. These reviews happen automatically every month starting at 8 months after getting the card.
There’s no annual fee either.
And all the cash back that you earn the first year will be matched by Discover. So the cash back for your first year is doubled. It’s a nice bonus.
Like all Discover cards, it has the downside of not being accepted everywhere. If it’s your primary card, make sure you have another card with you even if it’s a debit card. It will be turned away by businesses on a regular basis.
The Indigo Mastercard is a normal credit card and there’s no deposit required like the secured credit cards.
If you have poor credit, it can be risky to keep applying to different credit cards, hoping one of them approves you. Every application dings your credit rating a bit. That’s the last thing anyone wants when their score is already low.
The Indigo Mastercard does a quick, 60 second pre-qualification for you that doesn’t impact your credit score. This is super helpful when you’re trying to rebuild your credit. You’ll find out if you can get access to this credit card without having to risk lowering your credit score.
This “pre-qualification” isn’t a guarantee though, it’s an initial prediction on whether you’ll be approved. You’ll only get the real answer once you officially apply and they do a real credit check.
Watch out for the variable annual fee. Depending on your credit score, you’ll get an annual fee between $0 and $99. Since this card doesn’t have any rewards, that annual fee comes straight out of your pocket and there’s no way to earn it back.
You’ll find out what the annual fee is when you complete their pre-qualification process.
If you get an annual fee, you’ll be better off going with a secured card which allows you to get your deposit back. You only have to pay the deposit on a secured card once. With the Indigo Mastercard, you’ll have to pay the annual fee every year.
But if a secured card isn’t an option for you and this is the only credit card that will approve you, it is an option. And paying it off consistently will allow you to build credit. Sooner or later, you’ll be able to switch to a better card. Just keep in mind that you’ll eat the annual fees along the way.
Also watch out for the 1% foreign transaction fee. That will add up while traveling.
Not many cards offer cash back rewards card to folks with lower credit scores. Credit One Bank Platinum Visa does.
You’ll get 1% cash back on these categories:
That’s pretty amazing.
But be careful with this card. There is a catch.
There’s a variable annual fee of $0 to $99 depending on your credit rating. Normally, this would be fine with a rewards card. But the cash back on this card only applies to gas, groceries, mobile phone, internet, cable, and satellite TV. If you get stuck with the $99 annual fee, you’ll need to spend $9,900 every year on these categories. That’s a lot for gas, groceries, and a few monthly bills.
If you don’t spend enough to earn the cash back to cover the annual fee, you’ll be paying for the privilege to use this card. When you’re building credit, every dollar counts and I’d consider other cards before going this route.
Hopefully, you’ll get an $0 annual fee on this card and it won’t be an issue.
One other perk: Credit One Bank regularly evaluates your account in order to give you a credit line increase as soon as you’re ready. This makes it a lot easier to increase your total credit limit, lower your credit utilization, and increase your credit rating faster.
Lastly, you can pick the due date for your card. This is super helpful when balancing bills. I recommend picking a day right after your second paycheck of the month (assuming you get paid twice per month). Your first paycheck will go to rent while your second paycheck can cover your monthly credit card bill.
The Discover it Cash Back is the best of the “rotating cash back cards.” These cards cycle through different purchase categories each quarter. During that quarter, the purchase category earns 5% cash back. One quarter will be gas stations, another will be Amazon.com, etc.
A 5% cash back is super high when the standard is usually 1-2%. In exchange for the higher reward percentage, you’ll have to remember the difference promotional categories as they change. For myself, I avoid these types of cards. It’s just too much hassle to manage for me. But if you want to maximize your rewards, this is the way to do it.
You will also earn 1% cash back on all other purchases which is decent for a student card.
I’m not the biggest fan of first-year promos. They come and go quickly, I don’t like choosing cards based on them. But this card does have a promotion that’s worth mentioning. For the first year, Discover will match the total cash back that you’ve earned with no limit. That’s pretty cool. Again, don’t choose this card just for the first year promotion but it is a nice perk.
The card also has a good grade award. You’ll get $20 in statement credit each year your GPA is 3.0 or higher for up to 5 years. I would have gladly used that money to buy myself an extra burrito and some beer when I was in college.
You won’t have an annual fee with this card.
There aren’t fees for missing your first payment and the APR won’t change for late payments either. But if you’re taking advantage of these perks, you need to work on better credit card habits. Credit cards really slow down your ability to build wealth and a better credit rating if you don’t pay them off every month. So I wouldn’t consider these to be perks.
Remember that this is a Discover card so businesses will refuse to accept it somewhat regularly. Make sure you have another credit or debit card on you just in case.
If you want to avoid rotating cash back categories and still get some bonus cash back, this is a great option.
You’ll earn 2% cash back at gas stations and restaurants on up to $1,000 in combined purchases each quarter. If you max this out by spending $4000 on these categories per year, you’ll get $80 cash back.
When I was in college, restaurants and gas were definitely some of my biggest spending categories. This card would have been a great fit for me.
Like some of the other Discover Student cards, it does have a great first-year promotion. Discover will match all the cash back that you earn in the first year, that doubles your cash back rewards for one year. That’s a great perk. Just remember, promotions come and go quickly so don’t sign up for this card just for the promotion.
You’ll also get a statement credit of $20 ear year your GPA is 3.0 or higher. This lasts for up to 5 years after you get the card. That’s another $100 of potential rewards.
There’s no annual fee to worry about.
While you won’t get a late fee for your first late payment and the APR won’t increase from late payments, I strongly encourage you not to take advantage of these perks. Paying late is a horrible habit to get into and you’ll lose a tremendous amount of money to interest charges if you carry a balance. Your credit score will also get trashed from late payments, making car loans and mortgages much more difficult later on. It’s better to skip credit cards entirely and just use a debit card if you carry a balance or pay your credit cards late.
There is one major downside to this card: it’s a Discover. On a regular basis, businesses won’t accept the card. Make sure to have another Visa or Mastercard on hand even if it’s just a debit card.
If I could go back and choose a card when I started college, I would pick this card. It’s simple, has a solid cash back rate, and no fees to worry about.
It’s everything you could want from your first rewards card.
You’ll earn 1% cash back on every purchase. That gets bumped to 1.25% when you pay on time. You should be taking advantage of this bonus every single month, get in the habit of always paying off your credit card on time. It’s the only way to get any value from your rewards. Otherwise the interest charges will devour any cash back that you earn.
No annual fees to worry about. And no foreign transaction fees either. You can spend without having to worry about either.
It also has the option to pick your monthly payment date, this is helpful when you want to align your credit card payment with when you get paid.
And once you make your first 5 payments on time, you’ll automatically get a higher credit line. This helps you build your credit score faster which comes in handy when you apply for a car loan or a mortgage down the line.
I highly recommend this card for students, get it if you can.
When you sign up for the Deserve Edu MasterCard, you’ll get one year of Amazon Prime for Students for free (a $59 value). To be honest, this perk isn’t that amazing. It’s a nice little bonus but don’t pick the card for this perk alone. One year goes by pretty fast.
It’s still a great card though.
Getting a 1% cash back on all purchases as a student is an amazing deal.
The real benefits from this card come from what’s NOT required:
And no annual or foreign transaction fees either.
For students that need to get their first card and need some flexibility on the application, this card is a fantastic option.
Advertiser Disclosure: I Will Teach You To Be Rich has partnered with CardRatings for our coverage of credit card products. I Will Teach You To Be Rich and CardRatings may receive a commission from card issuers.
The best credit cards for building credit in 2019 is a post from: I Will Teach You To Be Rich.
I’ll never forget the moment I got the text message from my wife: “Do you want to adopt two girls?”
I was at work. We'd been exploring adoption for the previous year but had hit some roadblocks. Adoption wasn’t really on my radar anymore, and we had never discussed adopting more than one child.
And if I’m being honest? Girls weren’t really on my radar either. We have two biological sons, and I thought one more boy would be nice. Adopting two girls wasn’t part of the plan.
But my response? “Sure.”
At that moment, regardless of my preconceived thoughts and dreams, I knew I was supposed to say yes. I felt it inside of me. I'm glad I did.
Our adoption story is unique. All adoption stories are unique. No adoption is normal.
As I mentioned, we have two biological boys. They're pretty cool — most of the time. At the start of our adoption journey, they were ages five and two. The girls were ages eight and five.
We live in Ohio. The girls were from Florida. The eldest was born in Thailand (where their biological mom used to live) and the youngest was born in Florida, where their dad resided.
Their family suffered a couple of major health tragedies so that their parents were no longer able to care for them. They feared the girls would be taken away and put in the foster care system — possibly separated. As much as they didn’t want to lose them, they wanted to find a good family that would adopt them both so they could stay together.
I have so much respect for their parents and what they did for their girls, knowing it was probably the hardest decision they ever had to make. It turned out to be a smart decision. Both parents have now passed away.
Anyhow, the girls had come to visit cousins in Ohio for the summer. My wife, who is a teacher, heard about the girls' story through a colleague. It was then that she sent me the text message.
Because we didn't adopt through an agency or through overseas, our adoption costs paled in comparison to what many families pay. (This is another way in which our story is unique.) >We had costs associated with our home study as well as going through an adoption attorney in Florida.
What's a “home study”? Great question! A home study is one of the most important parts of the adoption process. They're required for almost every adoption.
A home study is just what it sounds like: a study of your life to assess if your family will provide a stable environment for adopted children. Home studies vary depending on the agency involved. Our home study included a criminal background check, interviews, references, training classes, a look at our finances, and a home inspection.
Shortly after gaining legal custody of the girls, we moved to a bigger house. We needed more room for our large family. For our home study, we had to update some of our house to meet safety standards. This included tasks like updating electrical outlets, installing new carbon monoxide detectors, and posting emergency contact info.
The average cost to use an adoption agency is $43,000. (Some agencies charge a sliding scale based on income.) An independent adoption through an adoption attorney can save families a few thousand dollars.
As you might expect, the cost of adoption can vary based on the child's home country. Adopting from China costs an average of $36,000. Adopting from South Korea costs an average of $48,000. It all depends on airfare, how much time you spend in the country, and the fees the country charges for adoption.
Some of these costs can be defrayed by government tax credits, but it's still a lot of money.
I wish the cost of adoption wasn’t such a roadblock or deterrent for adopting children, but often that’s the case. I've heard some crazy stories. We were fortunate to receive help from many people, which helped defray our adoption costs.
In the United States, about 428,000 children per year are placed into foster care. About 135,000 children per year are adopted.
Caring for a child is expensive, even if you're frugal. Because we already had two children, we understood that the real cost of adoption would come after the girls became part of our family. This wasn't simply a matter of adding two more mouths to feed, two more children to clothe.
When you go from two to four kids, you don't just double costs. For us, it was way more than that.
It started with our cars. We couldn’t fit our newly-expanded family into our vehicles anymore! We had to purchase a minivan.
Plus, we'd already planned a huge family vacation with extended family for that summer. After just two weeks in our home, the girls joined us for that trip. The rented house at the beach had space, but we hadn't considered the hotels to and from our destination. Most hotels aren't set up for a family of six.
In fact, few things in this world are set up for a family of six!
That was just the beginning. Our family finances grew in many areas, including:
The increased costs that came from adoption weren't just financial. All four of our kids needed individual attention. Each had very different physical, emotional, and educational needs. It was a lot to learn on the fly.
And our oldest son, who had been first in the birth order, now found himself third. That was a tough transition.
When I was younger, my dad took me on a camping trip. He and I visited several pro baseball ballparks. We also spent a day at Hershey Park in Hershey, Pennsylvania, where we toured the chocolate factory and rode roller coasters.
I didn’t realize it at the time, but that trip had a profound effect on me. It helped shape the way I view life and my role in the world. Now that I'm a father myself, I want to provide my wife and children with unique experiences that might help shape the way they view life and their roles in this world.
While this is a great goal, adding two more kids to our family makes the task much harder. As our family dynamic changed, so did our spending habits. Everything financial became tougher.
Until this point, I'd only given token attention to considerations like retirement, 401(k) accounts, college funds, and investing for the future. We weren’t broke and we weren’t living paycheck to paycheck. But we weren't really prepared for the future either.
As I began to take a more active role in our family’s financial future, my passion for learning kicked in. I read books and blogs, listened to podcasts, and managed our money more closely. I was constantly looking for ways to save, cut expenses, and get rid of debt.
I still wanted to find ways to provide great experiences for my family, though, and that led me to discover the world of credit card rewards. I was able to earn enough points and miles for a nearly-free week-long trip to Universal Studios in Florida!
After a while, I realized that cutting expenses can save you money, but that only takes you so far. If you want to save more money, you need to earn more money.
I’ve always had an entrepreneurial spirit. I’ve wanted to start my own side business for as long as I can remember. Because I love speaking, I thought I could do that as a second career. I took an online course on how to start a speaking business and was super psyched to get started. The problem is that I have a full-time day job and most speaking gigs conflict with that. I wasn’t ready to make that sacrifice. There had to be another way.
I’ve had a passion for writing since I was a kid. Because I was learning so much about personal finance and budget travel, I decided that maybe I could write about that in my spare time. With four kids, spare time is a precious commodity! But I managed to steal a few minutes here and there. That’s when Family Money Adventure was born.
Great! I had my own website…but I wasn’t making any money. A side gig isn't very good if it doesn't give you extra income, right?
I was already a fan of Holly and Greg Johnson at Club Thrifty. When Holly launched her course on earning money through freelance writing, I thought this could be my way to create some extra income for my family.
I signed up immediately and got to work. I continued to write for Family Money Adventure, secured some guest posts (including this one!), and took some low-paying gigs to build a portfolio. From there, I’ve been able to slowly build my writing business, develop steady recurring writing gigs, and land higher paying writing jobs.
Note: Holly was a regular staff writer here at Get Rich Slowly for several yeas. In fact, she has 77 GRS articles to her credit, making her one of the site's all-time top contributors.
Today, I still work full-time but I’m building my side business. I wake early to write before my workday begins, and I often stay up late to finish assignments. I’m still able to spend quality time with my wife and kids. I even coach my son’s basketball team!
Yes, expanding our family meant making sacrifices. But I’m happy to make these sacrifices if it means moving toward a more secure future. I want my wife and kids — all four of them — to know that they can find success in whatever they're passionate about if they put in the work. For me, it’s worth the late nights and sacrifice.
I didn’t know it at the time, but adopting two daughters was a catalyst that would start a new adventure. Without them, I don’t think I'd have felt the urgency to make financial changes. I was too complacent. I never would have learned to save. We never would have become more intentional with our finances. I never would have pursued writing — for Family Money Adventure or for freelance clients.
More importantly, if we hadn't adopted our two girls, we would have missed out on meeting two of the most special people on the planet. Our family wouldn’t have been complete.
The post How adopting two girls changed my money mindset appeared first on Get Rich Slowly.
As we head into the Federal election, the parties are campaigning for your vote. A popular issue is always how much money they’ll put into your pocket. Government grants, benefits, tax credits, reduced taxes, job creation, subsidies, and more directly impact how much money you have. Here’s how the party platforms compare when it comes [...]
The post How the Liberal Party of Canada Campaign Promises will affect your finances appeared first on Money After Graduation.
As we head into the Federal election, the parties are campaigning for your vote. A popular issue is always how much money they’ll put into your pocket. Government grants, benefits, tax credits, reduced taxes, job creation, subsidies, and more can keep dollars in your wallet. Here’s how the party platforms compare when it comes to [...]
The post How the Conservative Party of Canada Campaign Promises Will Impact Your Finances appeared first on Money After Graduation.
When I discuss American spending habits, I try to cite specific numbers. Sometimes people write to ask where I get my info. Simple. Whenever I cite figures about American earning, saving, and spending, I get them from the U.S. government. In particular, I use the Consumer Expenditure Survey (or CEX) from the U.S. Bureau of Labor Statistics.
Here's how the BLS website describes the Consumer Expenditure Survey:
The Consumer Expenditure Survey program consists of two surveys, the Quarterly Interview Survey and the Diary Survey, that provide information on the buying habits of American consumers, including data on their expenditures, income, and consumer unit (families and single consumers) characteristics. The survey data are collected for the Bureau of Labor Statistics by the U.S. Census Bureau. The CEX is important because it is the only Federal survey to provide information on the complete range of consumers' expenditures and incomes, as well as the characteristics of those consumers.
The Consumer Expenditure Survey is the only reliable source I've found about actual spending habits. Most similar projects have much smaller sample sizes and/or provide theoretical numbers. The CEX is a great way to develop a descriptive budget (one that deals with real behavior) instead of a prescriptive budget (one that pushes an agenda).
Naturally, the CEX has its drawbacks. As always, averages (and medians) only provide a limited view of a dataset. Plus, what might be true for an entire population (a country, in this case), probably isn't true for a small subsection (your state or city, for instance). Still, for looking at the Big Picture, nothing I've found beats the Consumer Expenditure Survey.
Because I'm a money nerd, I get very excited when the new Consumer Expenditure Survey numbers are released each year. And guess what! The 2018 data was released two weeks ago. I spent some time yesterday sitting in the hot tub and geeking out over U.S. spending stats on my iPad. Then I updated my personal CEX spreadsheet. (What? You don't have one of your own?)
Let's take a closer look at the Consumer Expenditure Survey — and what we can learn from it.
If you visit the BLS Consumer Expenditure Survey page, you'll likely be overwhelmed by the amount of information available. When I first found the site, I had to sort through the various reports until I found the one most useful for my work: the “age of reference person” table, which splits spending info based on the age of the person surveyed. (This is the base report I use when I collect stats.)
I also like the “Library” section at the Consumer Expenditure Survey website. It contains decades-worth of research papers and reports related to personal spending. Some of my favorites include:
To a money nerd like me, this stuff is golden!
Like most federal government agencies, the BLS has an excellent website. For starters, you can access all past CEX data on one of two pages: tables from 1984 to 2011 (plus 1961 and 1973), tables from 2012 to 2018.
Turns out the government performed this survey once during the early 1960s, once during the early 1970s, then made it an annual thing starting in 1984. That means there are now nearly fifty years of stats for money geeks to sort through. (Plus, the site provides access to a “forgotten” expenditure survey from the early 1940s!)
I've created the following table, which points to individual reports for each year. Yes, this is mainly for my own personal nerdery, but I hope that at least a few of you money bosses will enjoy it also.
|
|
|||||||||
|---|---|---|---|---|---|---|---|---|---|
| 1941 | 1961 | 1973 | 1984 | 1985 | 1986 | 1987 | 1988 | 1989 | 1990 |
| 1991 | 1992 | 1993 | 1994 | 1995 | 1996 | 1997 | 1998 | 1999 | 2000 |
| 2001 | 2002 | 2003 | 2004 | 2005 | 2006 | 2007 | 2008 | 2009 | 2010 |
| 2011 | 2012 | 2013 | 2014 | 2015 | 2016 | 2017 | 2018 | 2019 | 2020 |
If you'd prefer, you can make your way to the Get Rich Slowly file vault. I've created a directory that contains a PDF summary for every year of the Consumer Expenditure Survey. In the future, I'll add various other CEX-related downloadables here.
A few years ago, I went through past editions of the Consumer Expenditure Survey to grab data for a spreadsheet that tracks how American spending has evolved over time. Naturally, I just updated it for this year.
Rather than bury myself (and you) in a flood of information, I decided to look at roughly ten-year intervals. I figure by skipping a decade we get a more meaningful look at shifting habits. That means I used expenditure tables from 1961, 1973, 1988, 1998, 2008, and 2018 — the most recent year for which data is available. For fun, I also included data from the “forgotten” 1941 survey (which is much less comprehensive than later reports).
When I get time this winter, I'm going to update the spreadsheet to contain data for every year of the CEX.
Note: For our purposes, I cut a lot of cruft when transferring these numbers to spreadsheet format. These are complex statistical reports, and they're filled with numbers we don't care about (do we need to know the standard deviation for everything?) and jargon that just confuses, such as “consumer unit” (which we'll call “household”) and “reference person” (which we'll call “head of household”).
Here's a complete glossary of CEX terminology. Also, I'm not going to break down every little subcategory. The “Food at home” subcategory has 25 sub-sub-categories beneath it, including “bakery products”, “fish and seafood”, and “processed fruits”. I'm just going to stick to the primary categories and subcategories.
The following tables provide a run-down of the data I collected. After I show you the numbers, I'll discuss a few things that stood out to me about how American spending has changed with time.
Tables 2 and 3: Attributes of the average American household
Note that estimated market value of home is inflation-adjusted
Table 4: Income, taxes, and spending (actual)
Table 5: Income, taxes, and spending (inflation-adjusted)
Table 6: Spending by category (actual)
Table 7: Spending by category (inflation-adjusted)
Take some time to browse this info. Let it soak in. Look for patterns. Look for changes. What surprises you about how Americans spend their money? Where do we spend less than you thought we would? Where do we spend more?
Before I point out some of the things I find interesting, you should know a couple of things:
With those notes out of the way, let's dive into the numbers! Let's look at how Americans spend their money — both now and in the past.
A note on inflation: Using 2018 as a base, I calculated a cost-of-living adjustment for each year in order to factor out inflation. (I used the U.S. government CPI inflation calculator to get these numbers.) Looking at Table 1, you can see that prices in 1988 were roughly 48% of what they were in 2018. After computing this number, I converted it to a multiplier to get inflation-adjusted expenses. If 1988 prices were 48% of 2018 prices, that means we have to multiply numbers from the former by 2.08 to get equivalents for today.
We could spend hours sifting through this information to find patterns and trends. Instead, let's just hit the highlights.
First up, note how the size of the average household has dropped from 3.2 people in 1961 to 2.5 people in 2018. Almost the entirety of that drop comes from the fact that we're having fewer children. In 1961, the average household contained 1.2 children; today it contains 0.6 children.
Meanwhile, automobile ownership has boomed. Since 1973, we've gone from owning 1.3 cars per household to owning 1.9, an increase of 46% during the past 45 years. Other notable demographic changes:
Moving on to Tables 4 and 5 (Income, taxes, and spending), you can see that even when adjusting for inflation, household income doubled between 1941 and 1973. In the past 45 years, household income has only increased another 24%. It's fun to speculate about causal relationships for these numbers. I suspect that household income skyrocketed after World War II due to women entering the workforce. (But admit I could be wrong.)
As much as income has increased, spending has grown more quickly. In 1973, Americans spent 85.0% of their after-tax income. In 2018, they spent 91.1% of their after-tax income. (Admittedly, spending as a percentage of income seems to bounce around.)
To make it easier to visualize some of these changes, I created another table to calculate some important ratios and percentages.
In 1941, the average American family spent 31% of its budget on food. In 2018, the average family spent 12.9% of its budget on food. That's a huge decline! From 1973 to 2018, restaurant spending (food away from home) increased 48% while spending on food at home declined 36%. Overall, food spending declined 30% in in the past 45 years.
For me, it's more interesting to compare numbers today with numbers thirty years ago. (Thus the 30-year change column in the spreadsheet.)
I'm surprised that when you adjust for inflation, a lot of American spending has stayed relatively flat — or even dropped. We're spending about as much of our income on housing today as we did thirty years ago. There's a clear downward trend on our transportation expenses. Our food spending remains flat — even restaurant spending! We spend much less on clothing and (unfortunately) reading. (Although that reading number is probably down because we do most of our reading online.)
Meanwhile, health insurance costs are out of control. Between 1973 and 1988, the average American family decreased its spending on health insurance by 9.3%. But in the past thirty years, rates have shot up 245%. That is insane. No other spending category comes even remotely close. And it's why I make an exception to my no politics policy to advocate for scrapping our U.S. healthcare system. Any other option would be better and cheaper than what we have right now.
Looking at these tables, what numbers stand out to you? How does your spending compare to the average American family? What worries you about your spending — and the spending of the country as a whole? (And are there other similar surveys and reports I should take into account when writing about consumer spending?)
The post How Americans spend money: A look at the latest Consumer Expenditure Survey appeared first on Get Rich Slowly.
Hello, friends! I have four money articles in progress, plus I'm editing several guest posts for future publication. But today I want to give a brief update on my mental health. My depression and anxiety have been tough this year but it feels like I've turned a corner, and I want to share what's helped.
Each week when I go to therapy, I complete a survey regarding my recent mood and attitude. It's about what you'd expect. There's a list of maybe a dozen statements, and for each I fill in a bubble indicating how strongly I agree (or disagree) based on my experience during the previous seven days.
From memory, sample statements include:
At my first therapy session in April, my score on this assessment was awful. I felt anxious all of the time. I was having trouble with increased heart rates. (Thanks, Apple Watch, for constantly flagging that.) And by far my biggest problem was getting done everything I wanted to get done. I wasn't doing anything. I was too deep in my anxiety and depression.
Last week, I visited my therapist for the first time in a month. As always, I completed the mental health inventory before our appointment started.
“Whoa!” my counselor said when she saw the results. She pulled up my past scores on her computer. “This is the best you've been since we started working together. You marked that everything's fine except for your ability to get work done. That's great. What happened?”
“What happened is that I got out of my routine,” I said. “I've been on vacation. Plus, I've been doing a lot of the things you and I have talked about. They've helped. Right now, the reason I can't get done everything I want to do has nothing to do with depression and anxiety. It's just that I have so much on my plate that I can't figure out how to prioritize it!”
During our time together, my therapist and I have explored a variety of steps I can take to improve my mental health. When I actually implement these things, life is great. (I have a tendency to talk about making changes without actually doing so. This was especially true early on.)
Here are three changes that have helped me cope with my depression and anxiety.
When Kim and I lived in a condo in the city, I got plenty of social interaction on a daily basis. Now we live in a house in the country. Unless I make an effort to reach out, I can go a week without having a meaningful conversation with anyone but Kim.
Plus, I lost touch with many of my old friends when Kim and I embarked on our fifteen-month RV trip around the U.S. When I returned home, I didn't resume the relationships (and my friends didn't either).
Some people have social interaction built into their lives. They're surrounded by co-workers on weekdays. They attend church on Sunday. They take their kids to school events and/or participate in community organizations. I don't do any of this.
For many years, I had a built-in social group because I took Crossfit classes. I got to interact with my fitness friends several days each week. But I haven't attended classes in a long, long time, so that network has vanished too.
This summer, I've deliberately taken steps to reconnect with old friends. I invite them to join me at Portland Timbers games. I have lunch or dinner with them. We walk dogs together. Although I haven't joined any community groups, Kim and I are both looking to do so.
There's still more work to be done here, but I feel as if I'm moving in the right direction. It feels good to reconnect with people.
Speaking of exercise, this is another area where I've let things slide.
I used to be fat. I ate poorly and I didn't exercise, so naturally I gained weight and then maintained it. My poor choices were reflected in my (lack of) physical fitness.
In 2010, I resolved to change. I reduced my calorie intake and made better food choices. More importantly, I started cycling and discovered Crossfit. Within two years, I was the fittest I'd ever been in my life. I was lean. I was strong. It felt amazing.
No joke: Being fit and knowing that you're fit is one of the best things you can do to boost your confidence and to fight depression. I'd always heard that. For a few years, I lived it.
I maintained my fitness until 2015. When Kim and I left for our RV trip, however, my health began to erode. At first, she and I made time to exercise but gradually our motivation vanished. At the same time, we were eating more unhealthy food (we wanted to try the regional cuisine!) and drinking more alcohol (we wanted to try the regional wine and beer!). We packed on the pounds.
Since returning to Portland in 2016, I've made intermittent attempts to exercise and eat right but nothing has stuck. “I had to buy fat clothes for our trip,” I told my therapist before we left for Italy in August. You can bet she had a chat with me about (a) my word choice and (b) my inability to follow through with fitness.
Now, I have a plan. My crazy summer schedule becomes less crazy on October 15th. After that, I have no travel planned. I will sign up for Orange Theory classes and attend them early every morning. (I have to exercise first thing or it won't get done.)
In the meantime, I've already begun reducing my calorie intake and making healthier choices. My goal is to lose weight this winter instead of gain it.
Perhaps the biggest change I can make to improve my mental health is this: lowering my expectations for myself. I am a perfectionist. But perfectionism leads to both procrastination and disappointment.
“J.D., why are you forcing yourself to publish so much when you know that doing so is stressful?” my therapist asked in June. “This is an expectation you've placed on yourself. Nobody else has done this to you. You are making yourself unhappy.”
Good point. And, you know what? This was one of the primary reasons I sold Get Rich Slowly back in 2009. Ten years ago, I was deeply unhappy because of the publication schedule I had imposed upon myself.
So, Tom and I have been s-l-o-w-l-y transitioning to a different model here at the website.
But it's not just here at the blog that I have to fight my high expectations. It's everywhere in my life: my relationships, my health, my home — even my expectations of what I do in my spare time.
Yesterday, I was talking with my former Crossfit coach about returning to the gym. “J.D.,” he said, “I know you. And if I could offer one piece of advice, it'd be this: Set your bar for success very low. If you go in and expect to be where you were six years ago, you're going to give up. For now, you should count it a success if you simply show up.”
“Showing up” seems like a low bar indeed, but my coach is right. If my expectations are too high, there's no doubt that I'll fall short. And when I do, I'll be discouraged. It'll stop me from starting! So, my first fitness goal will simply be: get to the gym each day.
It's going to take some time for me to shed all of my expectations. (And, truthfully, I'm not sure discarding all expectations is even desirable.) But that's why I'm working with a therapist.
Here's an example of my expectations in action. Although I've agreed with my counselor that I should not adhere to a publication schedule at GRS, I begin to get antsy as days pass and I don't have something new ready for readers.
In fact, this very article is a result of that. For the past seven days, I've been working almost non-stop even though there's nothing new to show for it. It's been a week since I published my last piece and it's stressing me out.
When I sat down with my coffee this morning, I started writing a journal entry about how this expectation was making me unhappy. That journal entry turned into this article. I still have work to do on this haha!
The funny thing about therapy (to me) is that my counselor's advice is stuff I already know. I have a psychology degree, after all, and at one time I intended to become a therapist myself. The things she says and does are all very familiar to me. (She's always telling me not to worry about things I cannot control, which is hilarious because that's what I'm always telling you folks.)
But there's a difference between knowing and doing. You can have all of the book knowledge in the world, but if you don't put that knowledge into practice, what's the point? My counselor's job is to move me from words to action.
Honestly, I feel great right now. This is how I used to feel most of the time — and how I want to feel in the future. I'm enjoying life and getting shit done. The darkness is currently at bay. All I see is light.
Yes, I feel overwhelmed by how much work I have to get done — next Thursday, I leave for another 20 days on the road! — but instead of shirking the work, I'm doing it. And the workload isn't due to negligence on my part. It's just a perfect storm of deadlines and travel.
But in the back of my mind, I'm worried about what might happen this coming spring. The past few springs have been miserable for me. I'm dreading a return to the days of lying in bed, the lack of desire to talk to anyone about anything. I don't like myself when I spend all day in my underwear playing videogames. Yuck.
I'm making the right moves now, though. I'm being proactive. I'm being a grasshopper, not an ant. While everything seems rosy and bright, I'm working to lay a foundation for future success, working to create systems that will help me maintain a positive direction even when the depression and anxiety come creeping back next year.
Fingers crossed that all of the preparation pays off!
The post How I’m fighting chronic depression and anxiety appeared first on Get Rich Slowly.
Advertiser Disclosure: I Will Teach You To Be Rich has partnered with CardRatings for our coverage of credit card products. I Will Teach You To Be Rich and CardRatings may receive a commission from card issuers.
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Foreign transaction fees silently kill your credit card rewards.
Depending on the card, foreign transaction fees add a 1-3% fee on top of every foreign transaction.
For me, international trips can be one of the biggest expenses that I have all year. Flights, hotels, tours, restaurants, it adds up.
Adding a 3% fee on top of all that gets hefty.
Let’s say you spend $10,000 on an international trip and every dollar gets hit with a nasty 3% transaction fee. You’ll end up paying an extra $300 just for using that card. That’s a lot of money! And for what? The convenience of using a credit card? No thank you, that’s a terrible deal.
Even as you rack up points, perks, and cash back, you could negate all of those rewards by using the wrong card during one international trip.
Here’s the worst part.
Foreign transaction fees can ding you even if you never leave the country.
These fees trigger any time there’s a transaction through a foreign bank. So when you purchase something online that happens to be located internationally or uses an international bank, the fees can still trigger.
I can’t stand hidden fees like this.
Since I love to travel internationally, I have a mandate of only using credit cards without any foreign transaction fees. Even the one debit card I carry for emergencies doesn’t have them.
That way I never have to think about it.
Some types of cards are more prone to having foreign transaction fees than others:
Regardless, I always double check every card that I’m considering.
If you never travel internationally, you can get away with choosing a card that has foreign transaction fees. Just be aware that you can still get hit with them occasionally.
I have a deep guide on how to pick the right card in our best credit cards post. It walks you through everything you need to pick the right card from scratch.
As a quick summary:
Go through the same process when looking for a no foreign transaction fee card. The only difference is that you’ll only consider cards without these fees as you go through the process.
Depending on the type of card that you want, your selection process will be a bit different.
Most travel rewards cards won’t have foreign transaction fees. Folks with travel cards tend to…well… travel so it’s a common perk to have no foreigh transaction fees. Once you’ve picked the card you want, check their fees to be safe but you shouldn’t have any issues getting the card you want. The point is you don’t have to worry about foreign transaction fees until the end. Focus on finding the right card, then double check that there aren’t any fees.
Business cards are even easier. Almost all of them don’t have foreign transaction fees. So pick the best card, double check just to be safe, and you’ll be all set.
Cash back cards are almost the exact opposite. Most cash back cards have foreign transaction fees. It’s the most common downside of having a cash back card. Instead of picking the ideal cash back card and hoping it doesn’t have foreign transaction fees, it’s usually best to work in reverse. Start with the few cash back cards without fees and then pick the one that’s the best fit from that pool. Unfortunately, you’ll have much fewer options with cash back cards since it’s not a common perk.
I personally restrict myself to cards that have no foreign transaction fees. So this is the exact process that I use when looking for a new card..
Or you could go straight to our favorite no foreign transaction fee cards.
What if you want to jump straight to the best cards with no foreign transaction fees? Which should you choose?
We’ve combed through all the cards to find our top three favorites, one for each of the main card types: travel rewards, business, and cash back.
I love love love the Chase Sapphire Preferred card.
It’s probably the most popular card on the market right now and has been for a long time.
It earns 2X points per dollar on travel and dining at restaurants.
For me, those tend to be my biggest spending categories. Earning double points on them gets me a ton of points over the year.
Does it have the best rewards or perks? Not quite. Other cards do earn more points or have more perks.
But it’s an incredible deal at a very reasonable annual fee of $95. The value that you get from this annual fee is unbeatable. That’s why it’s so popular.
The Chase Ultimate Rewards points are solid too, it’s one of the best points networks out there. You’ll be able to transfer your points at 1:1 to plenty of airline and hotel partners, giving you tons of flexibility on finding great redemptions.
For your first rewards card, I strongly recommend getting the Chase Sapphire Preferred.
It was my first rewards card and I racked up a ton of points with it that I used for many international trips.
And of course, you get all this with no foreign transaction fees. I used mine worldwide and never had a single issue.
*Terms apply – Learn more about this card.
I love the Ink Business Preferred card for businesses, it’s a point-earning machine.
You’ll earn 3X points across these categories:
There is a cap of $150,000 for these bonus points. So once you’ve earned 3X points on $150,000 worth of spending, you’ll start earning 1 point per dollar after that. You also earn 1 point per dollar on all spending that doesn’t fall into the categories above.
If you max out the point bonus, you’ll earn 450,000 points per year.
I particularly love using this for online ad budgets. It’s easy to spend thousands, even tens of thousands of dollars every month on adds. When done correctly, that spending goes directly to growth for your business. Now add an incredible point bonus on top of it. That’s amazing.
If you average $12,500 across any of these spending categories or are even in the ballpark, get this card. You’ll rack up almost half a million points per year.
This is how business owners generate millions of points for first-class flights and nights at the best luxury hotels without having to pay for any of it. Other than a few minor fees, you’ll easily have enough points to travel in top-tier luxury for free.
These are also Chase Ultimate Points. You’ll have tons of flexibility in how you redeem your points for great airline tickets and hotel stays.
It does have an annual fee of $95 which is super low considering how many points you can earn with it.
Employee cards are also free, making it even easier for you to earn points off their purchases.
And of course, there’s no foreign transaction fees so you can use it worldwide. If you do any business internationally, get this card to avoid any foreign transaction fees. An extra 1-3% charge for businesses can add up to serious amounts of money.
*Terms apply – Learn more about this card.
Hands down, the Capital One Quicksilver Cash Rewards card is the best cash back card without foreign transaction fees.
Be aware that there are two versions of this card:
They’re almost identical.
They both get you 1.5% cash back on every purchase. You won’t have to worry about rotating categories, cash back limits or anything else. Simply spend money and get a flat 1.5% cash back.
Of course, neither of them have foreign transaction fees.
Now let’s get into the differences.
The QuicksilverOne Cash Rewards will accept folks with average credit but does come with an annual fee of $39. That’s a really low annual fee. As long as you spend $2,600 per year, you’ll come out ahead with your cash back rewards.
The APR is also higher but I never worry about that. And neither should you. You want to get in the habit of paying off your cards in full every month.
And it doesn’t have a signup bonus. I don’t worry about that either. Signup bonuses come and go quickly. In the long-run, they have very little impact on your total rewards.
This is a fantastic option if you’re building credit in order to get access to the better cards.
*Terms apply – Learn more about this card.
The Quicksilver Cash Rewards is only available if you have an excellent credit score. In exchange for having great credit, there won’t be an annual fee.
The APR is also lower and there’s a signup bonus. Again, neither of these should matter much.
Regardless of which one you get, I love the simplicity of these cards.
1.5% cash back without foreign transaction or annual fees. That’s an amazing deal.
No annual fee, no worrying about getting hit with a foreign transaction fee, no points to manage. Use the card anywhere and everywhere without ever having to think about it.
Are there cash back cards with better returns? Yes. You can find cards with higher cash back rewards. But they have foreign transaction fees and possibly annual fees too. That really dings the rewards that you get to keep.
This is the only cash back card I’d ever consider getting since I refuse to have any card with foreign transaction fees. I highly recommend it.
*Terms apply – Learn more about this card.
Advertiser Disclosure: I Will Teach You To Be Rich has partnered with CardRatings for our coverage of credit card products. I Will Teach You To Be Rich and CardRatings may receive a commission from card issuers.
The best no foreign transaction fee credit cards of 2019 is a post from: I Will Teach You To Be Rich.
LIRA stands for Locked-In Retirement Account and is an account you open to transfer an employer pension to after you leave a job. LIRAs are becoming increasingly popular as people tend to job hop more than ever. Gone are the days when you worked for one company for your entire life and collected your pension [...]
The post What is a LIRA (Locked-In Retirement Account)? appeared first on Money After Graduation.
Earlier this week at The Washington Post, Helaine Olen wrote that the world of personal finance needs more politics.
Olen specifically calls out FinCon, the financial media conference I attended last week. I love FinCon. She doesn't. She's disappointed that so many members of our community emphasize personal action and responsibility instead of directing our efforts toward changing the systemic and societal issues that make it difficult for some people to succeed.
She writes:
Spending a few days at FinCon 2019 shows the limits of the nonpolitical approach to improving your financial life…Over and over again, the systemic problems facing Americans are simply accepted as a given and unfixable, and tossed back onto the individual for him or her to solve.
Rarely mentioned are the political system’s many contributions to common economic troubles.
Olen is concerned that there are larger societal and systemic issues that hold some people back and prevent them from achieving financial success. I agree.
I disagree, however, that FinCon is the place to address these issues. And I disagree that we, the financial media, should turn our attention from the personal to the political. In fact, I find the notion absurd.
Personal finance is personal. It's right there in the description.
I don't know how many times Olen has attended FinCon. I've attended every year so far (and have already registered for next year's tenth installment). From my experience, she's wrong that attendees accept systemic problems as “given and unfixable”. We don't.
This year, I had a memorable conversation about privilege with Julien from rich & REGULAR. I spoke with several people in the FIRE community about how we can make the principles of financial independence more accessible to everyone, especially those with lower incomes. (We talk about this all of the time. So much, in fact, that I'm tired of the topic.) In past years, I've had extensive conversations about the challenges women face in mastering their money.
Here's another example: In 2015, the Debt Free Guys attended their first FinCon. Kim and I (and several others) enjoyed hanging out with John and David at the hotel bar. They confided that they were afraid about coming out to their readers. “Do it,” our small group told them. They did. Four years later, they're killing it, and LGBT financial blogs now have a powerful impact.
Financial bloggers talk about systemic and societal issues often. But we talk about these things amongst ourselves, one on one or in small groups, not in hundred-person breakout sessions or, worse, as a 2500-person body in the Hilton grand ballroom.
Why not? Because these conversations are nuanced. They're sensitive. Nobody agrees on any of this stuff. Even two people who have very similar political viewpoints will disagree on solutions. (Case in point: The current Democratic debates.) Imagine what it'd be like trying to do this with hundreds of people from across the political spectrum. Tackling subjects like the “student loan crisis” is best done in small groups, not as a FinCon collective.
FinCon founder Philip Taylor says that past sessions at the event have explored Universal Basic Income, women and money, minorities and money, and more.
This year, there were sixteen attendee-organized sessions with political themes, including an “equity and justice” meetup. Plus, the National Endowment for Financial Education sponsored a community service project.
FinCon in not a political event and never has been. Too, nothing about personal finance is inherently political. Sure, some folks put a political spin on the material they present, but that's an individual choice. And the political spin Dave Ramsey employs is different than, say, the spin Helaine Olen would use.
That's the biggest reason I'm glad FinCon doesn't include politically-charged topics in its official schedule: We are a diverse group with diverse beliefs. Olen writes as if there are universally agreed-upon solutions to the systemic and societal barriers confronting Americans. There aren't.
It's this lack of agreement that causes so much friction in our current national discourse. What does she think would be accomplished by holding these sorts of political discussions at FinCon?
In Olen's article about FinCon, she argues that personal finance has failed. She believes the solution is to move from the personal to the political:
We are facing staggering levels of income and wealth inequality, while facing staggering costs for housing, health care, education and so on. If better personal finance could fix this one by one for more than 300 million Americans, we would know by now.
Here's the thing, though. We do know by now that better personal finance can and does fix things one by one for Americans. I'm not sure why Olen believes that it can't.
I've been writing about money for more than thirteen years now, and I've had hundreds (thousands?) of readers contact me to tell me how they've turned their lives around after deciding to take charge of their finances.
No, GRS readers do these things themselves.
Each year, I meet one-on-one with dozens of folks from the GRS community. Without fail, these people are taking action to master their money — and their lives. They're not waiting for somebody else to solve their problems. They're seeking solutions themselves. And while not every reader finds success, most do.
I believe strongly that the focus of my work is (and should remain) personal, not political. I don't believe turning my attention to systemic and societal problems would solve anything for anyone. But by helping individual readers find ways to improve their lives, I can help many people.
If I were to write an article bemoaning the state of student loan debt in the United States, it wouldn't solve anything. I'd just be adding to the noise. If we at FinCon were to hold a panel discussion on student loan debt, we wouldn't solve anything. We'd just be adding to the noise. Frankly, it worries me that Olen believes we should be adding to the noise instead of offering readers tools and solutions that they can apply to their individual circumstances.
It's not my job to change the system. It's my job to give readers the tools they need to thrive within the world we've created. If Olen wants to fight the system instead of teaching readers to better their lives, that's fine. She can do that. I genuinely wish her well. But I'm not sure why she thinks it's necessary for everyone else to have the same goals that she does.
Here's the thing, though. As the 1960s feminist movement made clear, the personal is political. That is, how we live our lives should be consistent with our political (and spiritual) beliefs. Even though I don't discuss politics overtly here at Get Rich Slowly, I hope that my choices and actions for the site subtly reflect what I believe, in a way that leads by example rather than shouts from the rooftops. I hope that I'm “walking the walk”, not just “talking the talk”. That's my goal, anyhow.
Here's an analogy borrowed from my buddy Jim Wang.
A doctor's job is to maintain (and restore) the health of her patients. It is not a doctor's job to battle insurance companies or the pharmaceutical industry. She may have concerns about these aspects of the medical-industrial complex, and she may have a deep desire to see things change, but changing the system isn't why she spent 15+ years in higher education. She did that so she can improve the lives of individual patients.
Likewise, my job is to improve the financial lives of individual readers. It is not my job to solve the student loan crisis, to fight high taxes, or to rail against our modern corpocracy. I may occasionally bitch and moan about how shitty our healthcare system is, and I may secretly wish our corporcracy would die a fiery death, but I generally try to steer clear of politics because my job is to help you build wealth. Period. The end.
Another problem that Olen doesn't mention is that there's no unanimous agreement over how to address the problems with our socioeconomic system. There's not even agreement that the things she views as problems are problems. (Conversely, I'm sure other folks would consider some things pressing issues that she'd dismiss as unimportant.)
Olen complains, for instance, that Americans face “staggering” costs for housing, health care, and education. But she doesn't acknowledge that there's no consensus on how to address these problems.
My conservative readers would suggest one possible course of action. My liberal readers would argue in favor of another. People like me who are generally centrist would prefer a third alternative. Which way is right? How can we possibly know? How would arguing about this at Get Rich Slowly (or any other money blog) possibly improve society?
It wouldn't and it won't.
But Get Rich Slowly can make the world a better place by showing people how to pay off debt, start saving, and achieve financial freedom despite the societal and systemic structures that surround us. I can make things better by helping people become more resourceful, helping them develop the skills they need to build wealth. And then these people can teach others.
Over the years, I've received many messages from readers thanking me for keeping politics off this site. While I'm a human being and have my own opinions and beliefs, I do my best to keep the blog itself as neutral as possible. All readers are welcome: gay, straight, black, white, religious, atheist, libertarian, socialist, whatever. I don't care.
This seems like a good time for a Taylor Swift GIF to express my stance:
Because GRS is a safe space, we're able to have civil conversations about topics — taxes, divorce, Taylor Swift — that would provoke heated nonsensical debate on other sites. (Earlier today, I was reading an article about taxes from my local city's newspaper. The comments were ridiculous. Like five-year-olds with larger vocabularies and less civility.)
Besides, the GRS readership isn't exclusively USian. We have many Canadian readers among us. (And my business partner is Canadian.) Lots of people in the U.K. read this site. I've had beer with readers in Turkey, Hungary, Ecuador, Germany, Switzerland, and France. (Well, in France we drank wine and in Switzerland we drank whisky. You get the idea.) If I were to shift my focus to politics, what good would that be for these folks?
About three years ago, Brad Barrett and Jonathan Mendonsa launched the Choose FI podcast. These two men have polar opposite political perspectives. But because they keep the politics out of their show and out of their friendship, they've achieved huge success. They're focused on helping people, not on changing the system.
On the final morning of FinCon this year, I met Joshua Sheats for breakfast. Sheats is the whipsmart host of the Radical Personal Finance podcast. His mind works at a million miles per minute, and our conversations always make me think. Whenever we meet, I take notes. Even at breakfast.
Joshua and I share drastically different political and religious views. Yet every year at FinCon, we break bread together. We engage in a deep, respectful discussion about the world we live in. It's one of my favorite parts of the conference.
We're only able to do this, though, because we're meeting each other as two individuals. While we disagree on certain fundamental issues, we share a passion for helping others get better with money, and we both believe strongly that ultimately it's up to each individual to improve her own life.
“Are you and Kim married now?” Joshua asked this year, pointing to the ring on my finger.
“No,” I said. “But we're committed to each other.”
“How does that work from a practical financial perspective?” he asked. “My world view is based on the Bible. I understand how Biblical marriage works. I don't understand how a secular partnership like yours would work.” I explained how we manage our shared lives.
Joshua wasn't challenging me. I didn't feel threatened. We weren't shouting at each other. We hold radically different viewpoints, but were able to engage in a civil discussion because we entered the conversation as two individuals with mutual respect.
In Olen's world — in a world where FinCon and money blogs focus more on political issues — this kind of thing would be less likely to occur. Instead of engaging as complex indviduals, attendees would engage as adherents of one or another political movement. When this happens, people stop thinking of others as real human beings. We end up with the sort of political discourse that is already destroying our society. It's as if Olen wants Finconners to give up their mutual admiration and respect in order to become a mirror of existing American culture. That seems insane to me.
We at FinCon come from myriad different backgrounds. The conference is racially diverse. It seems fairly gender balanced. (I don't have precise stats.) There's a large contingent of Christian bloggers. There are many atheists. There are Republicans. There are Democrats. In a way, it's almost as if the conference itself is a microcosm of American society…but without the bickering. It's wonderful.
I don't think FinCon could be this tiny five-day utopia if politics were a prominent part of the discussion. If politics were a central focus, we'd risk shattering this fragile, precious thing, this sublime soup of mutual love and respect.
“I'm taking my son to the Museum of the Bible this morning,” Joshua said as we finished our breakfast on Sunday. “Do you want to join us?”
“I can't,” I said. “I have another meeting.”
But I was deeply grateful that Joshua would ask me to accompany him, especially since he knows my political and religious beliefs. He wasn't trying to proselytize. He was simply trying to engage and share. I'm honored he would want me to be with him.
These sorts of interactions are only possible, though, because FinCon doesn't do politics. The moment that politics become a primary focus, I believe much of the FinCon magic will disappear.
Ultimately, what bugs me most about Olen's argument is this: By trying to convince readers that societal and systemic issues are too large and too powerful, she strips individuals of agency. She denies them the ability and power to change their own lives. She encourages a passive, reactive mindset instead of an active, proactive point of view.
This seems like a miserable worldview. It robs people of dignity and hope. It's a tacit argument that “you can't control your life; your life is controlled by larger forces”. I don't believe that. I don't want others to believe that.
The fundamental premise of this site is: Regardless the hand you've been dealt, it's up to you to take action to improve your life. You can't wait for somebody else to make things better for you.
![[Circle of Concern vs. Circle of Control]](https://farm6.staticflickr.com/5784/23783342876_61fe34d89c_z.jpg "This graphic by James Clear shows the Mr. Money Mustache version of Stephen Covey's circles. Confused? I don't blame you!")
At the same time, I agree with Olen. There are problems with our current socio-economic system. And while we may not agree how to remedy these problems, talking about them is important.
But I don't think FinCon is an appropriate venue. Nor is Get Rich Slowly.
I love the idea of a new event dedicated to this discussion, a conference where financial journalists discuss systemic issues and politics and how they relate to personal finance. If this were deliberately inclusive, intentionally designed to include all points of view and to foster respectful discussion, I think it could be awesome. I'd attend.
But it seems misguided to come to an existing event that works, one that's valuable precisely because people can escape politics for a few days, and then complain that it ought to be more political.
Why politicize the non-political?
Whoa! While researching for this article, I found a short 2006 piece I published about the politics of personal finance. In it, I wrote: “Personal finance is non-political. It helps everyone when another person avoids debt, learns to save, and becomes financially independent.” I'm pleased to see my position has remained consistent all of these years!
The post Does the world of personal finance need more politics? appeared first on Get Rich Slowly.
