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Car Buying: Stressful...yet surprisingly rewarding

Are you in the market for buying a vehicle?  I recently found myself in the predicament of having to navigate the often very stressful and intimidating world of car shopping, only to come out on the other side empowered, educated, and confident in my decision.

Tip # 1:  Although it is not always a possibility, try to start looking before you are in desperation mode.  Car buying negotiation and research is best done over time, without the added pressure of necessity or emergency.  I began the car-buying process by asking around for opinions from friends and co-workers.  Everyone has great advice to share from their own car buying experience, and usually want to talk about it because it often becomes a big life event for many people.  

Tip # 2:  Do not feel obligated to purchase a vehicle when shopping around.  Even if a Salesperson has been extremely helpful, do not feel obligated, and especially if they are pressuring you, DO NOT FOLD.  There is power in walking away.  I had never purchased a vehicle before, and wasn’t sure what to expect.  I had visions of Car Salesmen circling me like sharks at the Dealership to get a sale….well it wasn’t quite this way, however, you do get a sense of urgency to “make that sale” and all the tactics are used, whether you realize it or not.  The first tactic I encountered was the Finance Manager assuming that I was purchasing the vehicle that day, after I had met with the Salesperson for all of 15 minutes.  Yes, there are levels of Salespeople, first you deal with the Salesperson, and then you meet the Finance Manager, who is essentially there to close the deal.  I had to be confrontational and say to the Finance Manager, “I’m not planning to buy a car today.  This is a big purchase; I need time to think about it.”  I was then told, “We sell 20-30 vehicles per week…it might not be at the lot when you return, in fact I’ve had cars sold right after someone left the lot.” I was given the gimmick of, “Just take the car home for 24 hours, and see how you like it, that way no one else can buy it…”  This is because the Dealership knows if you go home to think about it and do not have an obligation to come back, chances are you will not return, especially if you research prices and find you can get a better deal elsewhere.  I had to say “No thank you” many more times than I am comfortable with (at least 10 times!) before I finally left the Dealership.  Evidently, the vehicle didn’t sell as soon as I left the lot because I received several phone calls over the next week or so asking when I would be coming in to purchase the vehicle, they couldn’t hold it much longer, etc., until I finally told them that I would not be purchasing the vehicle at all.  At first, I didn’t want to say “no” because I was scared that I was passing up a good deal, but, then I realized that I really didn’t like their sales tactics and I wanted more time to become informed and make the best choice for my needs.  You must lean into these uncomfortable moments and learn from them, because you will be glad that you ultimately made the choice that is best for YOU. 

Tip # 3: Shop around, not only for the right vehicle, but the right financing.   I also approached several banking institutions (Credit Unions mostly) to request information regarding car loans.  You need to know that you have options.  When you begin to discuss financing with the Car Salesman, they will most likely tell you that their interest rates are the lowest (I spoke with three different Dealerships that said this).  Well, I ended up finding an interest rate lower than all the Salesmen I negotiated with, just by doing my own research, and taking my time.  It is in THEIR best interest for you to finance with them…but, you have to realize that you should make decisions based on YOUR best interest, because you will be making the payments.  It is quite possible that you could get the better interest rate through the Salesman, but, by doing your due-diligence, you will be confident that you are getting the better rate in whichever route you choose.

Tip # 4:  Know what your needs are, and know what your personal financial limits and goals are…there may be options that you haven’t considered that may help you achieve your goals while staying within your budget.  Because of my modest income as an AmeriCorps VISTA, I automatically assumed that I would only be able to afford a used vehicle.  After speaking with an Industry Professional, I began to realize that if I buy a used vehicle, that is most likely out of warranty, how will I pay for any unforeseen mechanical problems?  I would inevitably have dip into my Emergency Savings, or worse, put debt onto a credit card.  I slowly began to think about the possibility of a new vehicle, which would still be under warranty.  I began my research online, and you will see that the majority of warranties are 3 years or 36,000 miles for General, as well as 5 years or 60,000 miles for Power Train.  Additionally, the company I ended up purchasing from includes the first year of maintenance for FREE.  I had to weigh my options, and decided that it was in my own personal best interest to have a reliable vehicle, with an excellent resale value.  And after shopping around, I was able to see that I could afford a new car, and then began the next step in the car-buying process.  First, I chose 2-3 vehicles (different makes/models).  I did some comparison research on each one, to have an idea of what options they have, and what prices to expect, and then I took a day to go to Dealerships and test drive.  This is one of the most important steps, as you will be able to narrow your search just by a simple test-drive.  I went into the process thinking I wanted one particular model more than the others, and ended up changing my mind after the test drive, liking another vehicle much better.

An excellent resource is the Consumer Reports Car-Buying issue (showing Pros and Cons of different vehicles), check your local library or their website:  http://www.consumerreports.org/cro/index.htm

There are multiple websites that can help you compare pricing in your local area: True Car https://www.truecar.com  and Edmunds www.edmunds.com/

These websites can show you what other people have purchased specific vehicles for most recently in your local and surrounding areas.  And you can use this information to your benefit when negotiating with the Car Dealerships.  This also works for Used Vehicles.  Interestingly enough, when I was car shopping, I ended up negotiating with at least 4 different dealerships.  You do not have to feel loyalty to one particular dealership, even if you did test-drive with them.  Many of them will negotiate with you via email or text, so that is even easier for communication, less intimidating, very simple and to-the-point.  In the end, I purchased my vehicle from a Dealership in another City from a Salesman that I never met, and they delivered it to me at my home, which is over 90 miles from the Dealership.  I had no idea this was an option before beginning this process!  Since I didn’t have a car at the time, when I looked online at Dealerships in other areas, I checked for Free Vehicle Delivery.  I even negotiated for All-Weather floor mats!  I told the Salesman that was giving me the best price, “If you throw in the all-weather floor mats, we have a deal,” and it worked! 

Tip # 5:  Don’t give too much information; there is power in your silence.  At the car dealership, you may be asked, “How much do you want to pay per month?”  They don’t tell you their lowest price; they want to know your highest price!  So, use your power of silence and don't say a number.  Just say that you are not interested in purchasing anything today, you’re just beginning to shop around.  Once you remove that lingering pressure for purchase, you are free to ask questions about the vehicle and make your comparisons, also that way the Salesperson is aware of your intentions.  Now, during negotiation, you will have to talk price.  And when Salesmen told me their price, I would ask if they could come down from that price because it was too high for my budget.  Most likely they will say, “What number are you thinking you want to pay?”  I would then say a price and most times, they would say that it was impossible.  I presented one particular Salesman a quote from another Dealership to show that it was possible, and they did come down to meet that number! Now, it did take a day or two for their response, however they did meet my “impossible price”…this is the time when you really have to be patient. 

Tip #6:  Be sure to research the offered warranties and see what is best for your needs. The Finance Manager will most likely try to convince you that you need many additional extended warranties, which will drive up the price.  Be prepared for this conversation, do your research ahead of time. In my case, I decided that I only wanted the Road Hazard package for the tires.  I made it very clear to the Dealerships during negotiation that I would only be purchasing the Road Hazard warranty and that helped take the pressure off of having to say “no” so many times.  These extended warranties may be something that you are interested in purchasing, just be aware it will raise the price of the vehicle. 

Bottom line, it is always best to educate yourself, just try not to get overwhelmed, because it is a lot of information to process.  My negotiations lasted 4-5 days after almost one month of research, and I had moments of frustration but, it was all worth it when I finally negotiated the deal that was best for me.  Once you realize you have the power to say yes or no, you take control of the entire process.

My Money Smart Challenge

I have completed the first three modules of FDIC's Money Smart financial literacy curriculum! Honestly, I thought these courses would be informative yet easy. I was highly mistaken. At the beginning of each module I was asked a series of questions to test my knowledge. I never passed a pre-test. Here are some I missed:

Which of the following is an example of a secured loan?
a. Home loans and home equity loans
b. Most credit cards

c. Personal loans
d. Student loans

In which two of the situations below would you need to see the customer service representative at a bank?
a. Refer you to a person who can help you
b. Deposit your money for you
c. Take applications for loans offered at the bank
d. Answer general questions

Which of the following must be included in the Truth in Lending Disclosure? Select all that apply
a. Amount financed
b. APR
c. Finance charge
d. Total payments

Did you think you knew the answers? You better recheck! The first one is a, second is a and d, and the third is a, b, c, and d.

Here are some major benefits from just the first three modules of FDIC's Money Smart curriculum I'd like to share with you. 

1. Choosing the right financial institution for your specific needs will save you much frustration. For example, when I moved out of my parent's home to attend a university I never thought about changing banks. However, without the joint support of my parents as well as my student level income I was charged numerous bank fees. I could have easily avoided those fees by simply doing a little research and choosing the best checking account for me.

2. Its good to know how much your financial institution is insured. Insured institutions are guaranteed by the FDIC (Federal Deposit Insurance Corporation). So, if the institution fails the FDIC would return your money, up to the insured amount. To calculate the insurance coverage of your accounts go to FDIC's Electronic Deposit Insurance Estimator at www.myfdicinsurance.gov/  

3. Financial institutions may share your information with other companies to offer you other products and services. Federal privacy laws give you the right to opt out of some sharing of your personal financial information. To learn how to opt out go to www.optoutprescreen.com 

Financial literacy is the first step out of asset poverty. See my previous blog for more information on what exactly is asset poverty at http://newcenturyida.blogspot.com/2013/11/my-asset-poverty-status.html. Our New Century IDA program uses  FDIC's Money Smart for partnering Crosby Scholars participants. Info on Crosby Scholars programs can be found at http://crosbyscholoras.org/ , to participate contact EISR’s Barbara Johnson at barbara.johnson@eisr.org 

Be on the lookout for the next blog on my Money Smart Challenge progress!

My Asset Poverty Status

I recently had the opportunity to attend a conference entitled Pathways to Prosperity: Integrating Asset-Building throughout Communities. It was here that a term I had never before heard was being thrown around, asset poverty. Being a contradictory set of words I was instantly confused until I learned the meaning. “A family can be defined as asset poor if it has insufficient net worth to support itself at federal poverty level for three months in absence of income, i.e., net worth less than $4,577 for a family of three in 2009” (Assets & Opportunity Profile). As I was assumedly standing in a room of mostly asset stable professionals I realized I might be the only asset poor individual in the room.

My predicament

• As an AmeriCorps member I serve at poverty level and make only about $1,000 monthly
• I would consider my educational degree of a B.A. in Art History an asset. With this I may be able to expedite time without employment if I was to lose my current position
• I have no economic assets such as a vehicle, home, or significant savings
• However, I currently only have two bills, rent and utilities, about $550 monthly

As you can see, if for any reason I lost my position or received a surprise expense, I would be in hot water very quickly. On the other hand, I learned at the conference ways to combat my asset poverty status. I decided to take the Money Smart Challenge. Money Smart can be found at http://www.fdic.gov/consumers/consumer/moneysmart/adult.html and is a free, highly reputable, financial literacy curriculum. New Century IDA uses Money Smart for Crosby Scholars participants. Info on Crosby Scholars programs can be found at http://crosbyscholars.org/, to participate contact ESR’s Barbara Johnson at barbara.johnson@eisr.org. With the Money Smart curriculum I can learn techniques to become more economically savvy and begin to implement savings. I will also learn about credit building options.  Since I have no credit to date, learning these methods will help. I plan on using this information while choosing my first credit card!

I know that once I establish stable savings and build credit then I can look into making my first asset purchase such as my own home or vehicle.  What do you think? Would you consider yourself asset poor? If not, prove it with http://www.playspent.org/

If you want to look into ways out of asset poverty like me or if you’re interested in helping build asset stable communities I suggest reading Asset & Opportunity Profile: Winston-Salem and Forsyth County found at http://www.forsyth.cc/housing/Documents/WinstonSalemMEOPReport.pdf

Be on the lookout for the next blog on my Money Smart Challenge progress!

Works Cited

"Assets & Opportunity Profile: Winston-Salem and Forsyth County." ASSETS & OPPORTUNITY PROFILE. (2012): n. page. Web. 31 Oct. 2013.

Smart Phone on a Tight Budget: Doable

Well, I did it. I went against everything I had said previously, my declaration to society, and a promise made to myself to wait until I paid off my student loan. I got an iPhone.

Allow me to explain.

I have wanted a smart phone for a really long time, and particularly an iPhone. I didn’t care whether it was the 4, the 4S, or the 5. I just wanted to be able to look stuff up on Google whenever I wanted and have a GPS at all times. However, my carrier would require a $30 data charge on top of what I was previously paying ($60), and $90 seemed like way too much for a cell phone bill at this point in my life. Not wanting to switch carriers (I explain why here), I chose to wait until my student debt was paid before I added another expense to my monthly bills. I announced to my friends, family, and the world via blog what my plan was, and I intended to stick to it. That was until my phone started messing up.

Right after my blog, my flip phone, which I have had for almost 2 ½ years, started giving out. I became increasingly frustrated that people on the other end could barely hear me despite how loud I talked. I was trying to make it work, and I honestly intended to until my loan was paid (which, honestly, could have taken a couple of years or ten).

I received a message from my carrier’s marketing department which offered the iPhone 5 for $100 and $60 a month. I was pretty excited about this offer, but like most people, I wondered about all the strings attached. I picked up the phone, got some information, and was surprised to learn that it was a legit offer, but I forgot to ask about added fees. I was frustrated enough with my phone and it was a deal I could not pass up. I made plans to get the phone, and I was so excited!

Sometimes life doesn’t always turn out the way you think it will, and most of the time, it is better.

Here’s what I ended up with:

An iPhone 5 (enter ridiculous amount here)

$42 per month with insurance

Unlimited talk, text, and data (first 500 mb = 4G)

And… T-Mobile instead of Verizon

Why? Well, it was a deal I couldn’t pass up. The phone was a gift, but even if it was an expense out of my pocket, look at what I am saving each year:

If I stuck with my flip phone another year, which realistically wouldn’t last, I’d pay $720.

Over the next year, with insurance (which I didn’t have with Verizon) I’ll pay $504 with T-Mobile.

If I got the Verizon iPhone, I wouldn’t get insurance because it would be an added expense, and I’d be looking at paying around $780 a year with hopes that my phone does not mess up because iPhones are not covered the same way as a regular phone would be under warranty.

I mentioned previously about not wanting to switch carriers because I loved Verizon’s service, and that is honestly still true. But at this point in my life, T-Mobile saves me money and does what it is intended to do which is provide methods of communication. I’m glad I have a reliable way to contact someone because while my old phone might have had great service, it could have given out at any moment.

For those of you out there who are debating on how to save money with your phone service, do your research! Many employers offer discounts for particular cell phone carriers, and some will even pay for all or part of the bill. I am definitely happy to be saving money!

February Spending Diet

As I wind down my first month on The Spending Diet, I can’t help but feel at least particularly happy with my financial progress and grasp on my money situation. I honestly thought I had it all figured out before now, but it turns out I didn’t. In fact, I still don’t have it all figured out, as budgeting, saving, and cutting costs will always produce new tips for me to learn. Well, here goes; this is my progress so far:

• I spent my allotted $100 for the month (mostly on coffee, one trip out of town, and Valentines Day. Oh! And eating out).
• THEN I took back some stuff I didn’t need and never used (The Spending Diet encourages this) and got about $30 back, which I spent on nothing (which is really something but it was insignificant in the fact that they were probably consumables).
• THEN I went $25 over on my budget eating out.

So total, on non-necessities, I spent about $155 on random stuff. I went over on my budget by $55 (I am going to count the $30 of take-backs because I should have put it towards my loan), BUT compared to last month, I did really well. I spent way less this month than last because I was consciously aware of it.

Negatives: I went over my budget by $55. I didn’t save that extra $30 I got from stuff I took back. There were times when I felt cheap or I felt like a mooch (like when someone pays for me and I can’t later return the favor(although I could if I was better with my budget)). When I see something at a store and I want to buy it. Like last night I saw a beach towel that I really wanted even though it is still winter and I won’t be using it at least until June.

But on the other hand…

Positives: I spent less money than I would have if I had never started The Spending Diet. I spent less money on non-necessities than I did during January. I learned a lot about living frugally and overcoming impulse buying. I helped inspire some budgeting. I don’t own more stuff that just takes up space and I am not stressing out about not having enough money or trying to live a lifestyle that is above my means.

Overall, I learned a lot about myself and my ability to spend less and go back to my old ways as a 15 year old that refused to spend any money. I learned that I have some growing to do in order to resist temptations like going out to eat when my budget doesn’t allow, or spending extra money when it should be saved. I’m excited to follow my budget whether my impulsive buying likes it or not for the rest of the months!

College Application Deadlines and Fees for UNC Schools

Interested in going to college this fall? Check out these deadlines for four-year public universities to make sure you have the best chance of getting accepted:

University	Application Deadline	Application Fee
Appalachain State University	February 1, March 15	$55
East Carolina University	March 15	$70
Elizabeth City State University	May 1, June 1	$30
Fayetteville State University	June 30	$35
NC A&T State University	February 15, Trans: April 1	$45
North Carolina Central University	June 1	$40
North Carolina State University	February 1	$70
UNC Asheville	February 15, Trans: April 15	$50
UNC Chapel Hill	January 7	$80
UNC Charlotte	February 1	$60
UNC Greensboro	March 1, July 15	$55
UNC Pembroke	July 15	$45
UNC Wilmington	February 1	$60
UNC School of the Arts	January 18, March 15	$95
Western Carolina University	February 1, March 1, April 1	$50
Winston Salem State University	March 15	$50
North Carolina School of Science and Mathematics	January 15	$0

Remember that getting everything in on time is an important, and sometimes determining, factor in the admissions process so keep deadlines in mind.

If you are unable to afford the application fee, there are fee waivers available to you. See your guidance counselor for details.

Although community colleges are not listed, they are most certainly not discouraged. Most community colleges will accept applications at any time with a free application fee. Keep in mind that classes fill up fast so try to apply early.

Post-College Financial Lessons

My post-grad experience has been typical of many of my friends, complete with college debt, no money, and certainly no money to jump into being able to pay for an apartment or put a down payment on a house. My friends and I share our experience with thousands, of college grads all over the United States who are living at home to save money and pay off any debt before really settling down. Graduating from college comes the pressure to know exactly what you want to do and how to get there. But the reality is that it isn’t that easy. Many of us don’t know what we want to do with our lives, and statistics about people like us that surface the internet simultaneously give us comfort that we are not alone, while also putting added pressure on us to defy the stereotypes placed on us.

I don’t want to spend time feeling sorry for myself or my fellow peers in writing this blog, because truly, that won’t get any of us anywhere. What I would like to do instead is to explain what I would do if I could do it all over again.

These are my mistakes. This is what I would do differently:

1. I would live at home throughout college. If I did nothing else different, I would have half of the debt I have now.
2. I wouldn’t have spent half my savings my sophomore year of college. I would have significantly more money now and life would be so grand.
3. I would have gone to a tech school to get my associates before going to a 4 year college. If I did that, and lived at home all through that time, I would have have ¼ of the debt I have now, maybe less.
4. If I did number 3, coupled with working throughout college and paying my tuition as I went, I would have NO debt! No debt! People do it every day, and it is amazing!
5. I would have majored in something really really awesome that I love! I wasn’t crazy about my major and I put myself through a lot of unnecessary stress because of it. If I went to get my associates first, that would have given me time to figure out my passion (which I have learned a lot about over the past several years). I say that only because I don’t plan on getting a job in what I majored in, and I almost knew that from the beginning. I am one of the thousands of people who don’t know what they want to do with the rest of their life, and that really affected me in college. I would have been able to pinpoint a job with my degree a lot better had I majored in something I planned to use.
6. I would have gone to a tech school and been done. Maybe I would have done graphic design or welding. I don’t know.
7. I would have done more research when I was applying for college. Enough said.

I thought I knew everything when I was in high school and college. Turns out I was wrong. These ideas are ways I could have saved money, but I didn’t do it all wrong. Here are some tips that worked for me:

1. When I wasn’t spending, I was saving.
2. I worked in college so I didn’t use my refunds from my loan to live off of. Sending my refund checks back really cut down on my total loan cost.
3. I lived at home 2 out of 4 years of college which saved on dorm and apartment costs.
4. I went to a state school. Private schools are quite expensive.
5. I joined a program after college that would help pay my student debt.
6. I continue to live at home and defy social norms post-college to save money.
7. I never buy anything full price.

Just some things to think about as you go to school, graduate, or start living on your own. I am always interested in financial lessons learned by others if you are willing to share. What is your story?

The Spending Diet: Challenge Accepted

I like to be honest when I blog because I when I read other people’s writing, I like to be able to either relate, or not relate. For instance, someone who makes tons of money and lives debt free might not get as much from the blogs I write compared to the low-moderate income person who is trying to pay down debt. We are all different, and when it comes to making life better and easier for us, we have to find out what works for us. That is why there are so many diets and acne medicines out there. Different solutions work for different people! I say this as a preface for the advice I write about. Most of what I write about is from research or my own personal experiences. I find finances really fascinating. I grew up in a house that talked a lot about finances and celebrated saving money and getting out of debt. I am always interested to hear others’ success stories and challenges. So when I came across a blog written by a woman named Anna who was able to pay off $24,000 of debt in 15 months by cutting spending, I had to know how she did it.

First, she made a list of her needs. From those expenses, she saw where she could cut costs. I decided to immediately make this list, and here is what I came up with:

-Student Loan

-Car Insurance

-Gas

-Cell phone bill

-Gym Membership

-Gifts (had a really hard time with this one. She says it’s not a need, but I feel it is a necessity to give people gifts on occasions and holidays)

-Coffee (morning ritual; she says it is a want, but it is something I could cut down on)

Next, she says to stop spending money except for things that are on your NEEDS list.

Since this is The Spending Diet as apposed to the Spending Fast, she is allowing herself to spend $100 a month on non-needs (entertainment, clothes, etc.). This was a hard one for me (I am not quite ready to embark on the Spending Fast). Cutting down my non-needs to $100 is going to be tough, but the money left over can go to my student loan!

February Expenses:

-Coffee $20 (giving up coffee for lent starting February 13)

-Gift for a friend $0 (going to make it homemade this time which is hard for me because I love to buy people gifts)

-Superbowl $10 (gotta eat delicious food)

-Trip to Raleigh $40 (doing the Krispy Kreme Challenge)

-Valentines Day $20 (making and buying simpler gifts than what I usually try to do)

-Other $10

Wow. This is a big difference from last month. Anna says once the money is gone, it is gone. You can’t buy anything else besides needs for the rest of the month!

This is going to be tough but I am going to do this for my remaining 6 months and track my progress. I am excited to see where this will take me. If I keep this up, I could put quite a bit of extra money towards my student loan each month. We will see just how much extra I have at the end of the month. Will you take this challenge with me?

For more information on The Spending Diet, visit Anna’s website at andthenwesaved.com.

Marriage and Money

When it comes time to find that special someone to share your life with, we all kind of know what we are looking for. Some people want someone fun and kind, who wants kids, and has similar religious and political views. Other people might be looking for someone who loves music, hates the mountains, but likes cooking and movies. It comes as no surprise that we want someone compatible, which is why millions of people have turned to dating sites so they can filter through to find someone who shares their interests and values.  And while it is easy to get caught up on the trivial things like the necessity for blonde hair and a golden doodle puppy, how many people think about important factors like money when they are looking for a potential spouse?

There have been plenty of successful marriages between people of differing views on money, but it isn’t easy. In fact, money is the number one argument between married couples today. Whether it is about living beyond your means, or too much independent spending, there is no denying, good or bad, that money plays a big role in marriage.

I am not married nor do I plan to be anytime soon. But when I finally decide to tie the knot, I want to share the same financial practices and goals as my spouse. I want to save money every month, only eat out a certain amount a month, enroll in the company I work for’s 401k, and invest. But this is so much easier said than done because I can’t just change the habits I might have, or that my significant other might have, in an instant. Why is all this important? Why should couples have the same financial goals and practices? Why can’t we have the fancy cars and the big house right now if we can afford the monthly payment? Why why WHY?

In order to make this lifestyle change that affects not only you, but the future of the inhabitants of your home, you have to know why what you are doing is important:

You must save money from every paycheck.

It is important to save for emergency situations and for the future of your family. Experts say having 3-6 months of living expenses in an emergency fund is vital in case something were to happen to your job or your spouse’s job. This isn’t just for married couples – this is for everyone! Put aside money each month into your savings account. If you aren’t able to have it automatically in there when your check is deposited, check out online banking and move it each month on your own which is what I do. Saving money gives you stability and can help you with big purchases. If you are tired of living in an apartment and paying the rent of your landlord (In one year’s time, you will spend an average of $9000 if you are renting. Live in an apartment for five years, and you have put in $45,000 of money you can’t get back), start saving! Cut out extra expenses like eating out and stop impulse buying. Before you know it, you will have enough money for that down payment. When you have your house, it will be your own. The more payments you make, the more equity you will have in your home, whereas with an apartment, the more payments you make, the more you lose. If you are having trouble saving and/or are interested in down payment assistance, visit our website at www.newcenturyida.org.

You  have to think about debt.

Whichever lucky person marries me will inherit $30,000 of debt! Yay! Debt is definitely something to talk about. You don’t want any surprises. You don’t want to find out after you are already married that the IRS has been garnishing your spouse’s wages and they haven’t filed taxes since 1990. Or that your spouse has thousands of dollars of credit card debt and collection agencies won’t stop calling. You have to be open and honest and make it your goal to pay off your debt. Don’t hide from it! It will be such a relief when it is paid off! Not only that, when you wait to buy something until you can afford it, you are doing you and your family a favor. Sure, it might be nice to drive around in a nice car and live in a huge house, but would you rather be strapped for cash with a fancy car or have a manageable car payment/a car paid in full that is average or above? I’ll take the latter.

Budget

When you get married, you become a partnership. You have to stop thinking in terms of “I,” and instead think in terms of “we.” What do we need? What do we want? How should we fix this situation? So if your spouse goes out and buys a $100 pair of shoes, but you don’t have enough money to put food on the table, there is a problem. If you are trying to save, that means that the rule you guys established about not buying Starbucks for a while applies to you, too! It is important to know where your money is going each month. I know some couples who have a certain amount of money each week, and when it is gone, it is gone (single people can do that, too; I haven’t managed to make it work yet, but I am working on it). Whatever works for you and your family.

Living paycheck to paycheck is stressful.

Not having any savings and depending on that check every two weeks to get by is so so stressful. Saving and budgeting is soo important if you want to feel happy about your money. It doesn’t mean you can’t have fun, but do so within your (agreed upon) financial limit. Also, you want to start thinking about your future. Do you still want to be working at 70 years old? If not, you and your spouse should look into joining your company’s 401k plan. If it doesn’t have one, talk to a trusted investor about saving for retirement.

I am no financial expert nor do I have any experience being married, but I do understand how important communication and being on the same page is when it comes to money and everything in between. This post is to raise awareness to talk about money before tying the not, and most certainly isn’t to discourage anyone from marrying the love of their life. So talk about it, read about it, and plan for your future!

What should parents pay for?

When I was little, I rarely bought anything at all. I’d collect my money in a little tin box and only take it out when I was desperate. And rarely was I desperate. I’d want this or that so I would try to convince my mom to buy it so I wouldn’t have to spend the precious cash I had been saving for so long. When she said no and that I could buy it with my own money, I was usually immediately cured of wanting it. After all, who wants to spend their own money?

As I get older and learn to depend less on my parents and have more responsibilities, I am fascinated by what parents are willing to pay for and for how long. When I graduated college, I was scared to death to have my car’s title in my name and to be responsible for paying taxes on it. And while my parents still pay for stuff like food and shelter since I live at home, I know it is just a matter of time before I am out on my own and bills like that become my own.

Although there have been some major changes since I graduated college, transitioning from paying for 60% of life’s expenses to 75% hasn’t been much of a change for me. But this isn’t the case for all high school and college graduates. Many of them are still being taken care of by their parents and often have a skewed concept of money and budgeting. While this is a subject that I feel passionately about, I won’t lie by saying I have always been the most financially savvy person. After being so tight with money all my life, during my sophomore year of college, I spent half my savings on clothes and entertainment. After learning a big lesson, I have spent a lot of time and energy trying to get it back. I’ve made my share of financial mistakes but have come far since. My parents have helped me tremendously and there is no way I’d be where I am at today if it weren’t for their mercy and understanding. But, I’ve learned to make it mostly on my own and I worry that our generation is falling behind on their own financial independence.

Take Anna, for example. Anna has never paid for her cell phone bill, insurance, trips overseas, or college education. But she does pay for any extra expense like clothing, gifts, and gas. Mackenzie bought her first car in cash and pays for rent, her cell phone bill, college, and food, but her parents pay for gas and her car insurance. Samantha pays for car insurance, cell phone bill, gas, and student loans but doesn‘t pay for rent. Jeff paid for his car, pays for his car and health insurance, cell phone bill, any car repairs (and there are many), any new purchase such as a laptop, iPod, etc., shampoo, clothes, car insurance, gas, and the electric bill. Is this fair? When should parents cut their children off?

When I hear of parents who pay for their kid’s expenses at an older age, I usually hear it is because they are doing so well and working so hard. I get that. Perhaps they have gotten into a great school that requires a lot of work and there is no room for a part time job. Or maybe they can’t find work but are determined to be independent and their parents are willing to help them out. Maybe their parents have the resources and wouldn’t have it any other way. Whatever the reason may be, it is interesting to see how choices and opportunity hinder and enable kids to be financially independent.

Years before college loans were such an issue, people could graduate college and most of the time move into a house upon graduation. Work was available, and in general, people spent less and saved more. But 2013 is different. Student loans are through the roof, and there are so many ways to spend money,so few people are able to put a down payment on a house when it is time to move out. So back to the initial question. What should parents pay for during and after high school? Through experience, this is my (non) expert opinion:

Every situation is different, so it depends.

Anna did great in school (high school and college) and is dedicating her life to helping people by being a social worker and English/Spanish translator. She’s worked hard to get where she is at and doesn’t waste any talent or resource she’s been given. No matter what her parents do or don’t pay for, she will be grateful.

Mackenzie is the thriftiest person I know. She isn’t going to pay a lot of money for something or buy unnecessary things. She has the best budget and is extremely giving. She was the Valedictorian of her college and she deserves any help she gets.

Samantha is saving for a house and taking the financial burden of student loans from her parents. She contributes with housework and cooking.

Jeff is helping his parents with bills and is responsible for his assets.

This works for them. While it may not be perfect or what I or my family might do or you and yours, it works for their families. These people and those like them are learning to save and budget in their own way. In my previous posts, I talked about how millennials are given an expectation to be at the same point post high school and college that those before them were at their age. But times are different and therefore, expectations must change with it. What I worry about the most are kids who pay for little and have no concept of money. The people mentioned above had a good sense of financial responsibility and are trying to better themselves. But what about those kids that live at home until they are 25 and older? What should they pay for?

I won’t pretend to know the answer to this question, but I will share what I would do. I went to an IDA class that said any child over 18 that is living with their parents should pay rent. My parents started this with my sister when she had a hard time saving in her younger years, but they did something different. They led her believe that they were using the money for this or that (we would go to dinner where my parents would pay and she would make comments on them actually paying with her rent money), but they were actually saving it for her. When she got ready to go back to college, they gave her the rent money back to use on her tuition. What a great surprise! My suggestion is to help your child in any way possible. If you can, have them give you money each week or month so they can use that money for a big purchase later on (such as a down payment for a house or a car). Financially educate yourself and teach your children the same values so that when they finally do leave the nest, they will be financially smart and independent.

Smart Phones on a Tight Budget: Good or Bad Idea

I have iPhone fever. For months now, I have agonized over whether to upgrade my flip phone when my contract ends (which ended this past October), or use my current phone until it dies, then try to revive it and use it again. I have talked about my small budget in previous posts, and that, accompanied with my student loan debt, truly has no room for luxuries like a smart phone which would add $30 a month to my bill. But what if I cut out other stuff like eating out, coffee, or my gym membership I rarely use? Could I afford it then? And even after I cut all that out, should I really use the extra money on a data plan each month when I have student loans to pay? After lots of asking around and research, this is what I have come up with:

I have too much debt.

I never wanted to be someone who complained about money and bills and then spent money on stuff I didn’t need and couldn’t afford. I see people who aren’t able to put food or gas in their car with their $90 a month cell phone plan (and I know how much it costs-I have been doing research for months), and I don’t get it. I hear of people who have their loans in forbearance because they cannot afford the monthly bill but have a smart phone. People think that when their cell phone contract expires, they have to run out and get a new phone. With all the advances in smart phones, people want them more and basic phones less so companies aren’t making basic phones as much. It is almost companies are forcing us to buy smart phones. Your phone can and will last more than the year and a half it takes for your phone upgrade. It will! I want to be able to afford gas in my car when I need it and to pay my student loan and car insurance when it’s due. Thirty extra dollars a month adds up. That is $360 a year that I could apply to my student loan!

I am willing to cut some stuff out of my budget, but not enough.

I would be crazy to cancel my gym membership to afford a smart phone. I need to go to the gym because that is all the exercise I get, and I most certainly don’t need a smart phone. Once I figured out that was not going to work, I started actually going to the gym to make use of the membership I was paying for every month. Health>portable internet. Always. As for the other stuff in my budget, anything I cut down or out should be used to go towards my debt, not a data plan.

Where I am at in my life cannot make room for a smart phone.

I live at home and thankfully do not pay rent. Most people my age have moved out and have many more bills to pay than I do. Until I can get to the point where my debt is clear and I am out of the house, there is no way I should think about an iPhone! Financial independence is much more important to me than being able to do FaceTime with friends.

I don’t want to give up the cell phone company I am with for something cheaper (sounds high maintenance but I worry about being stranded with no service).

I looked into not renewing my contract with Verizon (where I would be paying $90 with a data plan versus the $60 without) and paying less per month with another cell phone company. I found pre-paid and not pre-paid options out there with good phones that I would have to pay top dollar for (around $500-700) with a cheap monthly service ($30-50). Doing some math, if I had the prepaid service for 2 years and paid the above amount plus the amount of the phone, I am still paying less than getting a free phone from Verizon and paying $90 a month. Good deal, right? Maybe. However, as much as I drop stuff, I couldn’t justify forking out all that money for a phone whether I had a fancy Otterbox or not, nor did I want to part with Verizon’s top notch service. Sounds biased because it is, I guess, but it is how I feel.

I have the rest of my life to buy cool stuff.

I don’t need everything I have ever wanted right now. I am 22 years old. I have plenty of time to buy an iPhone, live in my dream house (for a while I thought about what it would be like to live in my dream house at 22 when I actually found my dream house for sale), settle down and have kids, or get the job with the big money. All good things will come with time.

So, I’ve decided…

To wait until I have paid off my student loans to get an iPhone. There might be an iPhone 12 at that point, but I will get it and love it and it will be great. I have done some serious consideration and been so bold as to post my decision for the world to see because we all know what happens when you tell everyone a big decision. You have to stick with it or you deal with a lot of outside scrutiny. When my education is paid for, I will celebrate with a smart phone. Until then, I will keep the era of flip phones alive.

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.