Generation Y Not: Day 3

Continued from December 14 and 17 post on why Generation Y isn't as bad as society claims.

We spent our lives being told we can do anything, so why not let us prove it?

I grew up in an era in which all people, no matter what their abilities may be, were celebrated. “Everyone is a winner” is what I hear most people refer to it as, usually while scoffing. The reality is that people don’t like their feelings hurt; people want and value constructive criticism. We want to get better at how we live and work, which is why we need the feedback that so many employers roll their eyes at. We want to live out our dreams but we often need guidance in how to get there. We aren’t asking for a pat on the back for going to the bathroom or for getting to work on time. We are asking for a chance to shine, and when we do, to notice it. Generation Y has a reputation for needing approval, and I can’t understand how that is a bad thing. When we get approval, we know we have done something right, and don’t you as employers want us to do what is right? If we fail, so what? We learned something. Life is about lessons. Just let us do our thing, and if we can’t do it, replace us with someone who can.

Generation Y Not: Day 2

Continued from December 14 post on why Generation Y isn't as bad as society claims.

We embrace change.

I’ve heard and read complaints about millennials who thrive on an ever-changing atmosphere complete with multiple job changes, spouse changes, changes in tradition, culture, and communication. We graduate college and we want to revolutionize, which often ends up changing the structure that an organization has worked hard to create. We change jobs to gain experience and eventually move up while Generation X retires from the same job after thirty years. We get married and we get divorced because we are more unsure and afraid than ever before. We are going to take longer to get where Generation X was at our age because we are different. We have more choices. We have a different life. Opportunity has conditioned us to see the ability to change and make a difference and to be challenged in to being better people. We are more willing to take chances because we are more willing to learn from our mistakes. Generation X wants things done the same way every time, because that is the “right” way; Generation Y shows the world that tasks can be done faster and that everyone brings a unique perspective. In an effort to not get too political, I will highlight some of the issues that have been brought to the surface since, lets say, 2000, and have opened millennial advocate’s eyes for change: marriage equality, healthcare, abortion rights, and clean energy. That is not to say that all millennials support these issues, but millennials are more likely than older generations to support them because we embrace change. The world is different than it was a year ago, a decade ago, a century ago, and it will continue to change as we move right along with it.

Generation Y Not: Different, Not Wrong

As a member of Generation Y, or the generation commonly referred to as “millennials,” I am fascinated by the facts, statistics, and general descriptions that surface about our “type.” Known for being the “Entitled Generation,” individuals born after 1980 and currently entering the workforce have developed a reputation for overspending, irresponsibility, and lack of work ethic. Just type “millennials” into Google and you’ll find links like “tips for managing millennials,” “millennial generation could kill the NFL” and articles by people like me who seek to defend Generation Y’s intentions and stand up to the stereotypes. The truth is that we are just trying to make it in this world and just because we work differently doesn’t mean any other generation does it better. Here is one of five analyses that prove it:

We live at home.

I am a recent college graduate with thousands of dollars in student loans and I live at home with my parents. I know I am not the only one my age that lives off of a small income and I make my monthly loan payment work. I live off of a tight budget that still allows me to save each month for a house because I don’t want to ever rent. I am able to do this because of my parents who are so willing to do whatever they can to help me, which I understand isn’t the case for everyone. I don’t want to live above my means and I won’t. Do I want to own a house like the generations before me did at my age? Of course. But I won’t have my house foreclose on to fit in with their expectations, nor will I put a big job with lots of money before experience at this point in my life.

Stay tuned for reason #2 why millennials really aren't so bad.

Money Saving Tips for People With a Low Income

If you are like me, it can be difficult to manage a budget when you have student loans and other financial obligations to worry about. A part of my experience as a Volunteer In Service to America is  to live in poverty, according to the region I am serving, for a year. Our goal as asset builders is to fight poverty by helping people become financially literate and save money to create a better life for themselves and their families, such as the current and future homeowners of the New Century IDA program. I am fortunate enough to live at home with my parents so I don’t have to worry about rent for now, but many VISTAs choose to relocate, meaning they have to learn to live on a very tight budget while simultaneously paying rent and any other monthly bills. For many of us, this is a small price to pay for the opportunity to serve our country and to fight poverty. We become advocates for budgeting and saving, and in turn, we become financially literate ourselves (or, that is the hope).

For those of you who live on a low income (considered to be below $20,000 a year for a family of four), check out these suggestions I came across (and many I have incorporated into my life) on how to live on a small budget:

• Have an emergency fund and three months worth of income in a savings account just in case.
• Avoid scams that rip off the poor: used car leasing, rent-to-own, banks, payday lenders, and buy here, pay here car lots.
• Save save save! Save as much as you can, whenever you can. Shop on clearance, don’t impulse buy, and create a budget. Shop at the Goodwill or the thrift store instead of paying full price for clothing. Use coupons and if you go out to eat, choose the special instead of ordering off the menu. Know what your money is going to each month!
• If you don’t need it, don’t buy it.
• When you start to think that this person or that person has it all when they are young, stop and ask yourself: Would I be willing to live like no one else now so I can live like no one else later? The money you are saving will help you live a better life in the long run.
• One of the biggest things you can do is to automatically deposit money into your savings every time you get paid. If you aren’t able to set that up through your bank, check out your accounts online and move money over to your savings on the day you know you are getting paid.
• Try not to eat out. Although shopping at the grocery store seems like it costs more initially, it is much cheaper than eating out. You are paying about $3.00 or less per meal eating at home compared to $5-10 eating out.
• Don’t live above your means. This is really easy to do in today’s world. While friends are buying new cars, eating out for every meal, and spending lots of money on rent and clothes, it can be hard not to fall into the same trap. Everyone has a different budget and just because someone else buys it, doesn’t mean you should.

There are tons of other budgeting and saving tips out there, but these suggestions should give you an idea of some of the ways you can be financially literate on a tight budget. Feel free to comment with any other money saving tips that have worked for you!

Holiday Shopping 2012 Predictions

 Interested in knowing what is in store for the 2012 holiday shopping season? Check out these interesting predictions to plan your shopping.

1. Overall Holiday sales will rise modestly – Holiday sales will rise from 3.5% to 4% this season, with total sales rising from $920 billion to $925 billion.
2. “Non-store” sales will rise – Non-store sales, which consists of catalogs, tv, and online shopping, will rise 15%-17% this season.
3. Luxury spending will soar – 53% of consumers plan on purchasing 1 luxury item this year
4. Interest in electronics and Black Friday will fade – Many consumers are already equipped with the lastest electronic, and are able to find deals before and after Black Friday.
5. Amazon – Amazon announced its Black Friday sales 24 hours in advance last year, and engaged in showrooming which allows people to browse items in a physical store before buying them on Amazon. This is expected to happen again this year.
6. Retailers will fight showrooming – Retailers will try to convince showrooming shoppers to make on-the-spot purchases. Retailers that welcome smartphone shoppers will increase sales.
7. Gift cards, Apparel Sales, and Regifting – Sales in gift cards will rise 4% this year, with increases in clothing sales as well. Downloadable gifts such as movies and itunes will promote no-wrapping. Regifting will happen more this year, with 32% of people saying it is okay compared to last year’s 25%.

Fore more information on What’s in Store for Holiday Shopping 2012? visit Brad Tuttle’s article from TIME’s Moneyand.

What to buy in October

 With all the hustle and bustle right between back-to-school shopping, Halloween, Thanksgiving, and Christmas, it is difficult to know if consumers are getting the best bang for their buck. Check out this list by Mark Di Vincenzo from TIME’s Moneyland before you make a purchase this October:

1. Shop Online – The weekend before Halloween has the best deals on clothes and electronics, with savings up to 30% off.
2. Buy a 2012 car – September and October have the best selection of 2012 cars at a deal because car lots are trying to make room for 2013 cars. Wait until November/December and risk fewer options.
3. Buy jeans – Back-to-school jeans that haven’t sold by October are discounted as much as 40%.
4. Buy camping gear – Camping gear that didn’t sell during the peak camping season will be on sale in October. Look for sales on tents, sleeping bags, lanterns, and hiking gear.
5. Beware of diamonds – October offers the best selection of diamonds but with the highest prices.
6. Produce – Produce is offered at a great price if it is in season. The abundance of fruit and vegetables will be put on sale so it won’t rot. Here are the fruits and veggies that are in season this month: apples, cranberries, honeydew melons, oranges, peaches, Bartlett pears, broccoli, brussel sprouts, cauliflower, and spinach.
7. Travel Deals – Airfare and hotels are cheaper for more diverse locations because summer is over. The different weather also means fewer tourists.
8. Health – Get your flu shot in October and it should protect you through much of the flu season. The shot is $30 and insurance typically pays for flu shots. Clinics could give it for free.

For more information, see Moneyland’s article What to Buy in October.

No Funds From Students, No Funds From State

The reduction in state funding for education has caused economic turmoil for many students who depend on fixed tuition and enough money from loans and grants to provide adequate resources to pay for school, according to Lisa O’Donnell’s article in the Winston-Salem Journal titled N.C. colleges see jump in cancellations. The reduced state funding allowed universities to increase their tuition and many students are having a hard time making up for the loss in funds.

High tuition and changes in financial aid are causing a jump in registration cancellations. In fact, UNCG recently cancelled classes for 1300 students for unpaid bills. NC A&T cancelled classes for 541 students, and Winston-Salem State University saw an increase in cancellations this year.

According to financial aid experts at these local universities, students are not applying for financial aid on time, if at all, or their financial aid had not yet been packaged at the time of cancellation.

With schools such as ASU and UNC School of the Arts cancelling fewer registrations than previous years, it is evident that not all schools are suffering from the rise in tuition and lack of financial aid. However, it is difficult to ignore schools such as NC A&T in which 80% of the students qualify for need-based aid while the necessary funds becomes less available. So what will students do to remedy the lack of money for education?

As someone who didn’t have thousands of dollars set aside for school when it came time to go to college, I understand what it is like to need money from outside sources in order to fulfill the dream of a college education. I’ve had my fair share of waiting in the financial aid office or on the phone, just to be told more disappointing news of lack of funds or increased expenses.

I saw the affects of the lack of state funding for education firsthand last year. Friends who had previously gotten their education paid for with money to spare were now having to take out loans. They no longer qualified for grants because of the lowered maximum income level. Fortunately, they were able to get these loans to make up for the lack of money, but what about those who aren’t able to or don’t know how to go about it? Or what about those who don’t think the loan is worth it?

Not only has tuition increased since I first began college in 2008, but with the lack of funds comes a lack of classes available. It was difficult to find the necessary classes needed to complete my degree during my senior year. I knew I would be student teaching during the spring semester which meant no other classes for the rest of the year. However, I needed 19 hours for the fall semester and it felt like my school didn’t want me to graduate. That year, they decided to cap the maximum credit hours at 17. What about all those people that were in my same boat that needed that extra class? Plus, with a maximum amount of hours and limited classes, that meant that it would be virtually impossible for incoming freshman or even sophomores to graduate within the standard four year time period without going to summer school (if classes were available even then). After much protest, they changed their mind back to the normal 19 hours and all was well. But this is just one of the many examples that come from lack of money for education. It trickles down, causing us to spend more time getting our degree, which causes us to spend more money that we don’t really have, putting us in more debt in the end. What I want to know is if we do our part by getting in our financial aid packages on time, what will the state and the universities do for us? Will we continue to suffer with a lack of classes? Will capped credit hours per semester become a reality for universities across the nation?

Unfortunately, I don’t have the answers to these questions. I do, however, have some advice for those who are suffering from lack of financial aid:

1. Contact the financial aid office at your school! No matter how long you have to wait in line or how long you have to stay on hold, it is worth every second! There are options available to you!
2. Don’t be afraid to take out a loan. You may be eligible for a subsidized loan which won’t develop any interest until it is time for you to start paying on it. Debt for education is not bad debt like it would be if it was credit card debt. Having loans also helps you establish your credit if you pay your bills on time. This, in turn, will make it easier to purchase a home in the future. Your financial aid office will have the necessary info to make this happen.
3. Apply for scholarships. Departments have scholarships available as well. Apply for all of them!
4. Apply for FASFA as soon as possible. Each school has a different deadline, but the sooner you get it in, the better it will be. Check your financial aid status frequently on your school website.

For more information on financial aid, visit www.fasfa.ed.gov and www.cfnc.org.

For more information on the Lisa O’Donnell’s original article, visit www.journalnow.com, search N.C. colleges see jump in cancellations.

Experience is the Key to Job Opportunity

With all the school and certification required to practice law, law school students as well as the general public would think passing the bar exam would be the only barrier standing between an indebted law student and a successful life in the law firm defending their clients. According to Catherine Carlock’s article found in the Winston-Salem Journal on job status for law graduates, the American Bar Association released employment data on recent law school graduates in North Carolina and across the country that suggests that only 55% of 2011 law school graduates were employed with full-time positions that required a juris doctor degree nine months after graduation. For the first time, individual law schools are asked to report their data, and the findings are not in these graduate’s favor. Local universities such as Wake Forest and Elon do not have much better job turnout rate. Law school graduates are having to reevaluate their desire for full time employment and consider part time positions instead.

With the economy in its current state, grads are facing a tough job market. This becomes increasingly difficult with the average law school student having $100,000 worth of student loans upon graduation. These grads rely on their prospective income to justify not only their law degree, but also to decide if law school really is a good investment. Chris Smith, assistant dean for career services at Elon University School of Law, gives sound advice on the subject: do not dismiss jobs in which your law degree is not required. With the mean salary for law degree graduates having fallen 16% since 2009, and the law profession continuing to shed 5-10,000 jobs per month, law school grads cannot afford to be picky. But is the degree worth the cost?

Having no personal experience in the field of law school, I cannot offer any specific advice for these fellow graduates. I can, however, offer my own experience as I take plunge into figuring out life after college with student loans to consider. My first suggestion would be to take any job that will increase your skills and make you more marketable for the job that you want. Experience might be what separates you from another applicant. Whether or not the job is full time or in your specific area of interest does not matter as much. Holding out for the ideal job will not maximize your time to gain experience in order to be the best employee and person you can be. I am currently uncertain about what I want to do as far as a career for the future. Although going back go school to get my master’s is a viable option at this point, I am afraid to pile on more debt without being sure what I want to do. My goal is to find a career path through experience.

I have a friend who graduated from UNC-Chapel Hill this past May. With a degree in Statistics from a prestigious university, everyone was sure he would be secure for a job upon graduation. He searched for actuary jobs at insurance companies but even with his degree and certification, he had no luck. He is now working part-time at a law firm. Is it his dream job? No, but he is willing to do what it takes to get there, even if that means taking more time to figure things out and gain experience along the way.

Just like people have internships in their area of interest to gain more understanding of their field, time must be spent wisely to gain more knowledge.

Law students may have a difficult time finding employment these days but just like the economy, the housing and stock market, job opportunity will rise and fall. Recent graduates of all trades will be prepared with their degree in the mean time, and be more experienced than they would otherwise.

For more information on Catherine Carlock’s article Only half of recent law graduates are practicing their craft, visit www.winstonsalemjournal.com.

Saving for College vs. Saving for Retirement

Let’s hear from the experts:

The stress of paying for college has parents questioning which is more important: saving for retirement or paying for their child’s education. Although both are important investments for the future, ING Retirement Coach Jacob Gold suggests that dipping into retirement funds is not a financially healthy way to go in order to pay for college.

College is becoming increasingly more expensive. In fact, the average tuition at private colleges has tripled in the last 30 years. And private schools, which are generally more expensive that in-state schools, aren’t the only schools that are increasing tuition. State school prices are rising as well. With the average starting salary for college grads being $27,000, parents worry about their children’s financial future.

Gold assures parents that saving for college is important, but he tries to steer parents away from using their retirement to pay for their education. In fact, he says, for every dollar put in retirement, parents should only put 10 cents towards college. There aren’t any loans for retirement, but there are various other methods such as loans and grants that will help pay for college.

Gold offers the following tips for balancing saving money for college with saving for retirement:

1. Parents should start investing money in a college fund when their child is young. Look into a 529 college savings plan which offers, for qualified education expenses, tax-deferred earnings and income-tax-free withdrawals.
2. Get the extended family involved in saving. A video game or a toy will be forgotten easily but a financial gift will add up to an important financial investment when it comes time to start college.
3. Grants, scholarships, financial aid, and loans can help make up the difference for college. Many colleges also offer room-and-board discounts for students who work on campus.

Although saving for college and retirement can be difficult to simultaneously, Gold encourages families to have “a disciplined and balanced strategy and plan for both goals.”

For more detailed information on Gold’s financial advice on saving for college and retirement, visit the original article at http://www.huffingtonpost.com/jacob-gold/college-savings_b_1738577.html.

And now from a recent college grad:

Just a few months ago, I graduated from college. Four years of late nights, exams, endless reading material and raised tuition rates had landed me a bachelor’s degree in English Education. When I got that sheet of paper in the mail in June that confirmed I had done the necessary requirements, I held in my hand what was supposed to be my passport to job opportunity. With that sheet of paper, I could go anywhere, be anything. But it isn’t that easy, and sometimes I feel like all I have to show for those four years of hard work is a sheet of paper with my name on it and $28,000 of debt.

I am someone who would take experience any day, even if it meant not having as much money, and I have found that state of mind definitely has its advantages. However, experience unfortunately has its downfalls as well. I wanted to live on campus to have the “real” college experience, and although doing so taught me a lot about myself and about life, I am paying for that now, literally and figuratively. I was so focused on being out on my own that I didn’t stop to consider other alternatives that would save me money in the future. What I didn’t realize then is that it is possible to have a great college experience without all the debt to go along with it. In three months, the grace period on my loans will be over and the monthly bill will start coming in. As I think about that and look back on my own college experience, I wonder what would happen if I would have done some things differently. This is what I’ve learned along the way:

1. If your current living situation with family is good, consider living at home and going to a technical college for two years. Save money in getting your associate’s degree. If you do well, that degree will transfer practically anywhere. You will save money in all kinds of ways.
2. If you don’t want to go the technical route, still consider living at home during your college experience.
3. If you aren’t interested in living at home, consider being a Resident Advisor on campus. Many colleges offer the position as early as one semester into your freshman year. Many schools offer either free room and board or a discount on housing with this position. This is a great way to save money, have the experience of living on campus, and get a great leadership opportunity that looks great on any resume.
4.  If you decide to commute or live on campus, get involved on campus. Take advantage of all of the resources the college or university has to offer. Getting involved as a commuter will help you feel more apart of the campus life and will help you to meet friends on campus. Getting involved as a resident on campus can help you to network which may lead to scholarship and job opportunities, making any sort of debt accumulation seem not as bad in the long run. Make it worth it.
5. Start looking for scholarship opportunities your junior year of high school. Scholarships are out there and thousands of dollars of scholarship money goes unclaimed every year because people don’t apply.
6. Consider programs such as the AmeriCorps or the Peace corps. These programs offer an education award upon completion of the program and can open up tons of job opportunities.
7. Look for programs like the Education IDA. This program can help you to become financially literate as you save money for college. Upon completion of the program, they will match what you have saved. All of that money can go towards your college education!

Although it is often difficult to figure out where money is going to come from when it comes to paying for college, being ready for retirement, or any other financial issue that may come along, there are ways to find it. Don’t stress over paying for college; there are tons of ways to pay for a great education and college experience without dipping into retirement or breaking the bank.

Don't Pay For Cut Produce - Cut Cost Instead

20 helpful tips to save money at the grocery store courtesy of the Huffington Post

Interested in learning ways to cut costs at the grocery store? The Huffington Post offers these 20 helpful tips to prevent overspending and still get the foods you need:

    1.   Grocery stores put essentials such as milk and other dairy products at the opposite ends of the

          store. Try to avoid the middle aisles and only purchase what is necessary.

    2.   Toiletries are typically cheaper at pharmacies rather than grocery stores.

3. Buying generics instead of name brand items can save you a lot of moneyThe product is usually the same, only with a different name. Check ingredients to be sure.
4. Buying foods that are pre-made from the deli may be convenient, but buying the ingredients and making the product yourself can save you money while also providing you with fresher food.
5. Grocery stores will often put the most expensive items at eye level. Be sure to scan the aisle up and down before making a selection.
6. Although it can be difficult to avoid, shopping with children can cost you more money. Children can often persuade you to buy unnecessary and expensive junk food.
7. Shredded cheese is more expensive because it is already grated. Investing in a grater and buying block cheese instead will save you extra money.
8. Don’t shop on an empty stomach. Eating beforehand can help you buy only what is necessary.
9. Products that go on sale may run out before you get a chance to buy them. Ask if the store offers rain checks for the item.
10. Make a list of what you need at the grocery store and stick to it.
11. Look at the units and see which brand offers the best deal for your money. Avoid products that over package.
12. Stay away from lettuce that is packaged in a plastic container. The fancier the packaging, the more money you are spending.
13. Buy dried beans instead of canned beans. Don’t pay extra for convenience.
14. Don’t pay more for food that is already cut up. If it is cut, that is a service you are paying extra for.
15. Eat what is in season. If the food is out of season, you are paying more for it.
16. Use tap water instead of buying bottled water.
17. Make your own spices instead of paying for them.
18. Avoid buying individual bags of popcorn. Making your own popcorn is cheaper and fresher.
19. Start an herb garden. The price of one plant is equal to the price of less that a few sprigs of herbs in the store.
20. Buy exotic spices in an international market instead of at the grocery store where they are more expensive.

The "Money Talk"

If you have a child getting ready to head off to college, there may be a talk you still need to have… the “money talk.” Financial planning is probably not the first thing on a college freshman’s mind, but that doesn’t lessen its importance. It is essential that incoming college freshman understand money management, credit, and budgets because financial mistakes made during college can take years to overcome.

Research shows that students that complete financial education courses in high school are more likely to save, less likely to max our their credit cards, and less likely to be a compulsive buyer. Unfortunately, only 14 states require a high school course in personal finance. This means that having conversations about money with your children at home are even more important.

Understanding how to budget is one of the most important lessons a person can learn before entering college. Susan Beacham, the CEO of Money Savvy Generation says that, “Kids leave home thinking they can live at college as they did at home, and that’s not possible, is it? The standard of living they had at home will be different from the one they have at college.”

College freshman must adapt to a different standard of living, and the first step is to create a monthly budget. To make it easier to stick to the budget, put the budget on paper or a computer spreadsheet and specify times that the family can review the budget together. Beacham also warns that credit cards are very tempting for college students, so it is important for parents to establish what the card should and shouldn’t be used for.

If you have a child heading off to college this fall, don’t miss the opportunity to have the “money talk.” Susan Beacham says, “Financial planning is a huge life lesson that needs to be worked on to ease your child’s transition to having an independent financial life.”

Consumer Financial Protection Bureau to Supervise Credit Bureaus

The Consumer Financial Protection Bureau recently adopted a rule to begin supervising larger consumer reporting agencies, which include what are commonly known as credit bureaus and credit reporting companies. The rule will become effective September 30, 2012.

CFPB Director Richard Cordray said: 

     “Credit Reporting is at the heart of our lending systems and enables many of us to get credit, 

      afford a home, or get an education. Supervising this market will help ensure that it works 

      properly for consumers, lenders, and the wider economy. There is much at stake in making 

      sure it is both fair and effective.”

According to a press release by CFPB, "credit reporting agencies are private businesses that track a consumer's credit history and other consumer transactions." These companies play a major in the consumer financial services marketplace and in the lives of consumers. Consumer reports are used for many things such as determining eligibility for credit and the interest rates that consumers pay for credit.

The Dodd- Frank Wall Street Reform and Consumer Protection Act gives the CFPB authority to supervise nonbanks in the specific markets of residential mortgage, payday, and private education lending. Previously, consumer reporting at the federal level was only subject to law enforcement authority. No single federal government agency could see the whole picture and adequately monitor what was happening with consumer reporting agencies. This new rules allows the CFPB to supervise the larger consumer reporting agencies as well as write rules and enforce the law as needed.

To supervise credit reporting, the CFPB will use the same approach it uses in supervising banks. The  credit bureaus will be subject to review of compliance systems and procedures, on-site examinations, and discussions with relevant personnel.

To view the full rule, click here.

How Different Classes Spend Their Money

The following is a very interesting graphic shared by NPR Planet Money. It illustrates how Americans spend their money and how budgets change across the income spectrum. The graph shows average household spending patterns in three income brackets- just below the poverty line, at the middle of the income distribution, and one at the top of income distribution. 

There are some similarities. For example, each income bracket spends a similar portion of their budgets on clothing and shoes and food outside the home. But poor families are forced to spend a larger portion of their budget on basic necessities like utilities and health care. 

What jumps out at you when you look at this illustration? Does anything surprise you?

To read the full article from NPR, click here.

Living on the Edge

Check out this staggering statistic: Nearly two-fifths of American households are living paycheck to paycheck.

A recent report conducted by the Consumer Federation of America and the Consumer Planner Board of Standards, Inc. found that 38% of households live paycheck to paycheck, up from 31% in 1997. The report also found that almost half of American households are behind on retirement savings.

Similarly, a recent Bankrate.com survey found that the financial security of Americans is deteriorating, and almost 40% of Americans feel less at ease about their savings than they did a year ago.

Living paycheck to paycheck is extremely risky. Any kind of financial blow, such as illness or job loss, would be devastating. About 46 million Americans are already living below the poverty line. But about 127.5 million people do not have enough money saved to weather a financial emergency and are just one mishap away from living in poverty as well.

However, it is important to note that financial planning is often the difference in whether or not a household will face financial distress. In the CFA/ CFP Board Survey, more than twice the percentage of respondents who identified themselves as planners, in comparison to those who did not have a financial plan, said they are living comfortably. This gap between planners and non- planners held true across income brackets.

This is why programs such as New Century IDA are so important. New Century IDA helps its clients transition from a pattern of consumption to one of savings. This is a behavior change that lasts a lifetime and helps people become more financially secure.

For more information read, “Living Paycheck to Paycheck is Reality for Two in Five Households: Report” by Khadeeja Safdar.

What is the Middle Class?

Do you consider yourself part of the “middle class?” Many Americans do.  With the political season heating up, the term “middle class” is being used more and more frequently. President Obama referred to the “middle class” 14 times in a recent speech!

Economic data suggests the middle class is actually shrinking. The White House chief economist Alan Krueger said in January that the middle class fell from 50% of households in January to 42% in 2010. More families are moving to the extreme ends of income distribution. But what does this mean? What is the middle class?

The Census Bureau divides household income in groups of 20%. Some economists define the middle class as those in the middle 20% of the distribution, which would be earning $38,000 to $61,000. Other economists say it includes the middle 60%, which would be earning between $20,000 and $100,000.

Another way to gauge class is by income tax bracket. The middle class is typically seen as falling in the 15% and 25% brackets, which would be families whose taxable income is between $17,400 and $142, 700.

Dennis Gilbert, a sociology professor at Hamilton College, says, “Politicians love to use the term, because it’s vague and connotes an image of regular American people.” As the election draws nearer, we will only hear this term more.

Here are a few varying interpretations of the current middle class:

• President Obama: families making less than $250,000.

• Mitt Romney: families making less than $200,000 (includes families who fall below the poverty line).

• Council of Economic Advisors: people earning between $25,000 and $75,000.

• Economists: people making between $20,000 and $100,000.

• Americans in an ABC News poll: middle class means owning a home, being able to save for the future, and affording things like vacation travel, the occasional new car, and other luxuries.

For more information, read this article from the Winston-Salem Journal: "'Middle Class' Becomes an Indistinct Label in Politics."

How do you define the middle class? Do any of these definitions line up with your own interpretation? Let us know!

Healthy Homes: Drinking Water

This is the final post in our series on Healthy Homes.

Did you know that Americans drink more than a billion glasses of water a day?! We also  use water for many other daily tasks, like cleaning, cooking, and bathing.  That’s why it is so important to have clean water.

There are several things that could be in your water that would make it unsafe. They include bacteria and viruses, nitrate, lead and copper, and other chemicals such as pesticides.

It is important to know where your water comes from, so you know what action steps you should take to keep it healthy. If your water comes from a public water supply, it is tested for over 80 different chemicals before it reaches your home. The test results are available in the local newspaper, or you can contact your water utility for more information. However, the water can become unsafe before it gets to your home if it travels through lead or copper pipes.

Here are some tips on how to make sure your water is clean when it reaches your home.

• Clear your pipes. If you haven’t used your water in a while, let cold water run for 2 or 3 minutes until you feel the temperature change. This will flush out water that has sat in the pipes and collected lead or copper.
• Do not use hot water from the tap for cooking or drinking. The heat dissolves minerals faster.

If you have a private water supply, like a well, it is your responsibility to make sure your water is clean and safe.  You should test your water tested regularly. Here are some tips on how to protect a private water supply:

• Make sure your well is uphill from  animal pens, manure, dumps, and places where chemicals are stored.
• If your well is older than 20 years, the water may need to be tested more often.
• Keep your well in good shape. Make sure the casing sticks up above the ground. There should be no gaps or spaces between the well casing and the soil around it.
• Be sure there is not a low area near the well where rainwater can collect.
• Don’t keep gas, oil, weed killer, or other chemicals in your well house.

 If you have any questions, you should contact your local water company, your local Cooperative Extension Office, or EPA’s Safe Drinking Water Hotline at (800) 426-4791 or www.epa.gov/safewater.

Thanks to the United States Department of Agriculture and the Healthy Homes Initiative for providing these tips.

Healthy Homes: Lead Paint

This is the 4th post in our series on Healthy Homes.

Lead poisoning is a serious health threat, especially for children, so it is important to know if your home has lead paint in or around it. If there is lead paint in your home, children can be poisoned easily. Bits of paint too small to see can chip off windows, doors, and walls, creating dust.

Even though laws have been passed to ban lead paint in household paint, many older homes still have lead in them.

Fortunately, there are ways to protect yourself and your children from lead poisoning. If your home was built before 1978, you should have it tested. The local or state health department can tell you how to do this.

If you discover there is lead in your home, don’t try to remove it on your own. Contact your local or state health department to find a certified lead paint removal company.

Here are some other tips for protecting your children from lead:

• Wash your children’s hands and faces often, and especially before they eat.
• Don’t let children chew on windowsills. Keep cribs away from windowsills and walls.
• When you haven’t used water for a few hours or overnight, let the cold water run for a few minutes before using it again. This clears out any water that may have collected lead while sitting in the pipes.
• Have soil tested for lead.
• If someone in your home works with lead, make sure they shower and change clothes and shoes before coming inside. Wash those clothes by themselves. They can bring the lead home in their clothes.

Have you ever tested your home for lead? Let us know if you have found lead in your home and what steps you take to keep your family healthy!

Thanks to the United States Department of Agriculture and the Healthy Homes Initiative for providing these tips. Check back tomorrow for more tips on healthy homes!

Healthy Homes: Carbon Monoxide

This is the third post in our series on Healthy Homes.

The scary thing about carbon monoxide is that you can not see, taste, feel, or smell it. However, it is dangerous and can be deadly. But there are steps you can take to prevent carbon monoxide poisoning!

First, it is important to know the signs of carbon monoxide poisoning. Symptoms include headache, nausea, dizziness, sleepiness, and trouble breathing.

Second, it is important to know what you can do to prevent carbon monoxide from building up in your home.  Some tips are listed below.

• Never use charcoal grills or run engines inside your home.
• Never warm up a vehicle inside the garage.
• Have a heating contractor check your furnace and chimneys every fall.
• Make sure your chimney is in good shape, clean, and working properly. Burning wood produces carbon monoxide, so it is important to make sure all of the smoke goes out the chimney.
• Never use the kitchen stove or oven to heat your home.
• Turn on the kitchen exhaust fan when using a nonelectric oven or stove.

Finally, the most important tip: Install carbon monoxide alarms near each sleeping area and on each floor of your home. A carbon monoxide alarm will sound when carbon monoxide levels become too high. If the alarm goes off, get outside immediately and call your local emergency number.

Thanks to the United States Department of Agriculture and the Healthy Homes Initiative for providing these tips. Check back tomorrow for more tips on healthy homes!

Healthy Homes: Mold and Moisture

This is the second post in our series on Healthy Homes.

At some point, you have probably seen mold or moisture somewhere around your home. But did you know that it is alive?! It grows on wet or damp surfaces, so if you live in a damp climate you probably have to work even harder to prevent mold from growing in your home. It’s important to fix moisture problems to prevent mold from growing because mold can cause health problems, such as watery eyes, sneezing, trouble breathing, and headaches.

Some common areas that have mold are bathrooms, wet or damp basements, leaky sinks, on wet clothes that are not dried quickly, and in your air conditioner.

Here are some steps you can take to prevent mold from growing in your home:

• Use downspouts to direct rainwater away from your house.
• Repair leaking roofs, walls, doors, or windows.
• Store clothes and towels clean and dry.
• Run a fan while bathing or showering.
• Run a fan vent to the outside when cooking.
• Use a dehumidifier to dry out damp areas.
• Throw away wet carpeting, insulating, and other things that are very wet for more than two days.

If you already have mold in your home, here are some steps you can take to clean up the mold.

• Scrub hard surfaces with a mix of laundry detergent or dish soap and water.
• Rinse the area with clean water and dry quickly.

You may be wondering what mold looks like. Here is an example of mold growing on  bathroom ceiling.

If you have more than 15 square feet of mold, it’s best to hire a professional to remove it. If you have further questions about mold, you can contact the Cooperative Extension Service or your local health department. The Forsyth County Department of Public Health can be reached at 703-3100.

Thanks to the United States Department of Agriculture and the Healthy Homes Initiative for providing these tips. Check back tomorrow for more tips on healthy homes!

Healthy Homes: Air Quality

This is Part 1 of our blog series on Healthy Homes.

Did you know that people spend over 90% of their time indoors? That is why it is so important to have healthy air in your home. It is not always easy to tell if your home has healthy air, but here are a few steps you can take to cut down on pollution in your home.

• Test for radon. You can buy low- cost radon test kits at hardware or home supply stores. You can also call the local or state health department for more information. The number for the Forsyth County Department of Health is 336-703-3100.

• Do not smoke in your home.

• Open windows or use fans to let in fresh air when you use chemicals in your home.

• If you get new carpet, ask the salesperson to unroll the carpet and let it air for one day before bringing it into your home. Install new carpet during a season when you can open the windows for several days afterward.

• Let new furniture and building materials air out for a few days before bringing them inside.

• Look into using products that are made with nontoxic chemicals and materials.

Thanks to the United States Department of Agriculture and the Healthy Homes Initiative for providing these tips. Check back tomorrow for more tips on healthy homes!

Asset and Opportunity Profile

The City of Winston-Salem is fortunate to have been selected as one of three cities in North Carolina to participate in the Corporation for Enterprise Development's Municipal Economic Opportunity Project (MEOP).

Participating in MEOP gave Winston-Salem and Forsyth County an opportunity to study asset poverty. Asset poverty is a measure that establishes a minimum threshold of wealth needed for household security. A household is considered asset poor if it does not have sufficient assets to support itself at the federal poverty level for at least three months in the absence of income. 

The findings may surprise you. The study found that 39% of households in Winston-Salem/ Forsyth County live in asset poverty. This is concerning because these families are a job loss or illness from falling below the poverty line.

For the full report visit: http://www.newcenturyida.org/documents/WS_MEOP_Report.pdf.

Is this surprising information to you? What do you think we should do to reduce the number of households living in asset poverty and help families become more financially stable?

The Credit Divide

There is an emerging theme of the economic recovery in the United States: Americans are divided not by income or wealth but by their access to credit. Many people have been left with damaged credit as a result of plunging home prices, lost jobs, overspending, or bad luck. In the article “Fed Wrestles With How Best To Bridge U.S. Credit Divide,” The Wall Street Journal reported on the credit divide that is hobbling economic recovery.

In theory, the low interest rates we currently have should encourage household spending, business investment, and hiring, while reducing the burden of past debts. However, there is still a gap in who has access to credit. Banks remain reluctant to extend credit to households with any hint of financial problems. Many with lower incomes or blemished credit histories are finding it difficult and costly, and sometimes impossible, to refinance their mortgages or get new loans.

In addition, interest rates have fallen more for people with good credit than for people with bad credit. Interest rates on a 30 year mortgage for households with a credit score of 750 or higher are 3.53%, but for households with credit scores around 650 the interest rate is 4.04%.

Many people with good credit are taking advantage of this cheap money. But those who can afford to borrow money are not spending the money- they are investing it. Financially secure households can already consume as much as they want, so they are more likely to save or invest the money they borrow. As a result,  the low interest rates have not triggered broad waves of spending, refinancing, and new borrowing.

The following graphics come from the Wall Street Journal and illustrate the credit divide.

To read the full article, click here.

Let us know what you think about the credit divide. Have you struggled to borrow money because of it? What do you think will be the long term effects of the credit divide?

Marketing and Outreach Coordinator

New Century IDA is seeking a Marketing and Outreach Coordinator- AmeriCorps VISTA. Please see the job description below and share with anyone that may be interested! 

New Century Individual Development Accounts (IDA) is an asset building program that empowers low- to moderate- income working families to become first time home owners through financial literacy and matched savings.

The Marketing and Outreach Coordinator will manage social media channels for New Century IDA, recruit guest speakers for IDA classes, participate in New Century IDA Working Group meetings, conduct outreach to recruit new participants to the IDA program, and plan events.

The ideal candidate will be organized, have excellent interpersonal skills, and be comfortable working in a team environment.

This position is a great opportunity for someone interested in starting a career in the housing or asset building field. The AmeriCorps VISTA will gain a year of valuable job experience and while working with an excellent team of government and nonprofit  leaders dedicated to asset building in Forsyth County.

The New Century IDA AmeriCorps VISTA will be part of a larger “Community Based Asset Building” Project sponsored by the North Carolina IDA Collaborative. For more information on the project click here:

https://my.americorps.gov/mp/listing/viewListing.do?fromSearch=true&id=36103

To learn more about New Century IDA, visit www.newcenturyida.org.

For more information on the New Century IDA Marketing and Outreach Coordinator position, contact the Forsyth County Department of Housing at 336-703-2677 or 336-703-2681.

Anticipated start date is August 6^th, 2012.

To apply, send resume and cover letter to batesrk@forysth.cc.

Setting the Record Straight: Part 5

This is the last blog in our 5 part blog series, in which we set the record straight on affordable housing.

Theory 5: Homeownership should be restricted to those who can put 20 percent down.

Even though studies have shown that, on the average, owning a home is less expensive than renting, it is difficult for the working poor to accumulate enough money for a dow payment. Michael Sherraden writes that, “One of the constraints on homeownership as a wealth building vehicle for low- to moderate- income households is institutional barriers to credit… Liquidity constraints, stemming from the uncertainty of lenders, prevent the extension of credit even when the working poor might be a good risk.”

Since the mortgage lending crisis began in 2007, down payment requirements have come under scrutiny. In May of 2011, the FDIC and Federal Reserve even proposed a 20% down payment requirement. While this remains unsettled, down payment requirements have remained part of the debate over mortgage finance. Within this debate is the belief that all of the down payment money must come from the borrower himself.

However, loans in the Community Advantage Portfolio do not fit into this new prototype. “A down payment of 1 to 3% of the home price is not uncommon, nor is a minimum borrower contribution of $500.”  Furthermore, a substantial amount of CAP’s borrowers had help meeting their down payment requirements and closing costs.

Using data from 2003 to 2011, Allison Freeman and Janneke Ratcliffe found that “having received assistance toward one’s down payment and closing costs has no significant effect whatsoever on CAP homeowners’ mortgage performance.”

For a closer look at the study, click here.

In conclusion, this five part blog series has used information from the UNC Center for Community Capital to refute claims about homeownership for lower- income families. These findings are particularly interesting because they have held true through recent market turmoil. Michael Sherraden argues that, “Homeownership is an important component of a long- term asset building strategy: the accumulation of small amounts of savings in an IDA can be put toward a home, which in turn can allow owners to send children to college, start small businesses, or pass along wealth to the next generation.”

New Century IDA is proud to be a part of the asset uilding movement by helping low- to moderate- income working families in Forsyth County become first time homeowners!

This home was purchased by a New Century IDA graduate in 2009.

Setting the Record Straight: Part 4

This is the fourth blog in a series in which we refute common misconceptions about homeownership.


There has been a long- standing debate over whether it  makes more sense for lower- income people to rent rather than own, and this has gained even more traction since the housing crisis began in 2007. Some argue that renting is less expensive than owning, but this had not been analyzed for lower- income households.

Sarah Riley and Hong Yu Ru studied data from participants in the Community Advantage Program from 2003 to 2010 to put this theory to the test. They calculated costs of both owners and renters. For owners, the included mortgage payments (including property taxes and insurance), the opportunity cost of holding equity in the house, mortgage closing costs and origination fees, homeowners association fees, maintenance expenditures, annual depreciation, the observed net property appreciation, and the tax benefit received each year.

The results may surprise you. The study found that the median owners’ user cost was $36,000 from 2003 to 2010. The median cumulative equivalent cost for renters was $41,000. Riley and Ru found that “the initial period of house price appreciation was sufficient to offset the subsequent higher owners’ user costs as a whole.” They estimated that it was necessary for the house price to appreciate about 2% annually to ensure that owning was not more costly than renting for this time period.

It is important to remember that CAP borrowers all received fixed rate, fixed payment, and competitively priced mortgages. Another factor is the cost of renting, which has been increasing in recent years. As the cost of renting continues to rise, Riley and Ru suspect that “homeownership may actually be gaining relative financial advantage over renting.”

For more information, check out Riley and Ru's study, "The User Cost of Low- Income Homeownership: 2003- 2010."

Setting the Record Straight: Part 3

This is the third blog in a series in which we refute common misconceptions about homeownership.


Theory 3: Lower- income homeowners erode their equity gains through excessive borrowing.

Another criticism of homeownership as an investment is that lower income homeowners might diminish their wealth gains through excessive borrowing. For low- and moderate- income households to recognize the benefit of accruing equity, they must not borrow that money back for other uses. Allison Freeman and Janneke Ratcliffe from UNC’s Center for Community Capital used data from the Community Advantage Program (CAP) to determine whether or not low- and moderate- income homeowners increase their levels of borrowing because of the accumulation of home equity.

Freeman and Desmarais found that home equity of more than $150,000 corresponds to an average increase of $1,000 in credit card debt. However, “the accumulation of equity over time shows a smaller relationship to the accumulation of credit card debt.” Notable borrowing against the home occurred only when equity levels exceeded $100,00 and never reached a scale that would decimate equity based wealth.

The study concluded that while there appears to be some association between the accumulation of large amounts of equity (more than $150,000) and increased debt, “there is no evidence that debt accumulation by CAP homeowners offsets the wealth- building effect of home equity.”

For more information on this study, click here.

Setting the Record Straight: Part 2

This is the second blog in a series in which we refute common misconceptions about homeownership.


Theory 2: Homeownership crowds out other investments, while renting allows households to diversify their investments.

There is speculation that homeownership leaves some households with under-diversified and, therefore, riskier portfolios. If this is true, it would be particularly concerning for lower- income households who invest a greater portion of their net worth in housing.

Allison Freeman and Janneke Ratcliffe from UNC’s Center for Community Capital put this theory to the test. They used data from homeowners that participated in the Community Advantage Program (CAP) to determine whether or not they restricted their investments in other financial instruments as a result of having their investment concentrated in their home.

They found that when renters were given the same equity amounts as a matched set of homeowners in 2008, the simulated effect on their investment portfolios was a shift of less than one cent. They found no evidence that investments or savings suffer from having funds tied up in homeownership. Freeman and Ratcliffe concluded that affordable homeownership, “serves as an effective means for promoting stable wealth- building for low to moderate income households through the forced- savings mechanism of equity accumulation.”

For more information on this study from the UNC Center for Community Capital, click here.

This home was purchased by a New Century IDA graduate in 2007.

Setting the Record Straight: Part 1

This is the first blog in a series in which we refute common misconceptions about homeownership.

Theory 1: Homeownership is not a reliable wealth building strategy for lower- income families.

There has been debate about the wealth- building effects homeownership offers lower- income people. However, data from the Community Advantage Program shows that “when low- and moderate- income families purchase homes they can afford with mortgages that are sustainable, wealth happens.”

This is supported by the Community Action Program’s (CAP) rates of equity appreciation relative to other investments in which low- to moderate- income families could have put their down payment funds. Home equity gains are a primary factor of wealth building and give home owners an advantage over renters. As the foreclosure crisis was beginning to unfold from 2005 through 2010, homeowners saw an average gain in net worth of more than $11,000, while the matched sample of renters only gained an average of $742. It is also interesting to note that non- housing wealth grew faster for owners than for renters over this period, and there was no significant increase in liabilities for owners compared to renters.

It is also important to state that homeownership doesn’t just generate wealth, but it can also act as a buffer against losing wealth in tough economic times. Measuring from 2005 to 2010, home owners were able to retain greater net worth through the financial crisis.

CAP also found that homeownership has a significant beneficial effect on financial satisfaction and overall stress. The statistics show that homeownership truly is an effective means of long- term wealth building for working families, even in times of economic upheaval.

For more statistics from the UNC Center for Community Capital, click here.

Setting The Record Straight on Affordable Housing

Since Michael Sherraden’s groundbreaking book Assets and the Poor: A New American Welfare Policy, discussion around welfare policy has shifted from income and consumption to the promotion of savings and wealth generation. Sherraden advanced the use of individual development accounts (IDAs) and argued that IDAs should enable homeownership as a path towards economic mobility.

In the paper “Setting the Record Straight on Affordable Homeownership,” Allison Freeman and Janneke Ratcliffe argue that affordable, sustainable homeownership is one of the best ways to help lower income households build long- term wealth. A home has the added benefit of being a consumption good. Freeman and Ratcliffe say, “Essentially a home provides its owner with a place to live while simultaneously forcing the owner to save, and hopefully build wealth, through principal reduction and equity accumulation.”

However, the recent foreclosure crisis has caused some to question if homeownership had been pushed too far and made available to too many families. While proponents of homeownership acknowledge that it is not appropriate for everyone, it has been a successful route to economic security for working families who are asset poor.

The University of North Carolina’s Center for Community Capital conducted a study in which they tracked borrowers who participated in the Community Advantage Program (CAP), which includes a portfolio of over 46,000 home- purchase mortgages made to lower- income households. Using data from this study, Freeman and Ratcliffe refute five theories that have arisen since the foreclosure crisis.

The theories are:

1. Homeownership is not a reliable wealth building strategy for lower- income families
2. Homeownership crowds out other investments for lower- income borrowers.
3. Lower- income borrowers erode their equity through excessive borrowing.
4. Renting is a more affordable option for lower- income individuals.
5. Homeownership should be restricted to those who can afford a 20% down payment.

Next week, we will run a blog series in which each day of the week we share information to refute each of these theories. Be sure to check back each day to learn more about how homeownership helps low- income families achieve economic stability and why New Century IDA is so passionate about helping low- to moderate- income families become homeowners!