On this article “I Owe U: Student debt is on track to top $1 trillion this year. What happens when diplomas stop opening doors?,” the author lists many sad cases in which students incur tremendous amount of debts, yet upon graduation, unable to find a job or well-paid one to meet its debt obligations.

“OMG, how could one borrow nearly $170, 000 to study documentary filmmaking? You can’t even find a job with that major. How can you pay off your debts if you don’t have a job?” my daughter commented. The sad part is we have too many unfortunate cases like this.

While I applaud for those who chase their dreams and follow their passions, regardless of the cost, I lament the hard consequence of this impractical approach to life. I believe they are much better off chasing something practical if they cannot excel by a giant step in their dream yet not-marketable field. After all, one needs food and shelter and a decent human existence before anything else.

Against the advice given by the article, I believe the best strategy is to retire as early as possible, without having to stress out and burn away your life for that meager 30%.

Here’s a simple math: on the one side of equation is stay on till full retirement age + a high probability of poor health with a huge medical bills + 30% retirement benefit; on the other side is early retirement + time to take care of your body with a small medical bill – 30% retirement benefit. See how little that 30% counts?

When you have more time to take care of your dear body, you can have a better chance of living up to 100 and going strong from there. Plus, you can use a small percent of your early retirement benefit to invest and make more money. If your return is greater than 30%, hey, you beat Uncle Sam more than once, while having a good time!

All this is made possible by your total savings. If you are short on savings, too bad you have no choice but to toil till you drop. How dreadful to be poor!

The first crucial issue is the time of retirement. The article advices people to stay on their positions till full retirement age, 67 or 70, whichever the government defines, instead of the earliest possible age, that is 62. The argument goes like this. If you start getting social security benefit at the earliest possible age, you only receive 70% of what you would get monthly if you were to stay till full retirement age. You will suffer a “permanent reduction” of your monthly social security benefit for the so-called early retirement.

The argument makes sense if you could live long enough to enjoy the full benefit. This is the key, which, sadly to say, no one can guarantee. When I look at our chemotherapy infusion room, with people in their 60s and 70s and their quality of life, I have no doubt that they would rather retire early and be able to enjoy what little life has left for them, however reduced is their benefit.
To be continued…

China is doing the opposite: (1) Under consumption, over production; (2) Over saving. Hence, China lends the surplus to the US so that US can keep importing from China, which will perpetuate the consumption in the U.S. and the running of factories in China.

Sometimes, I see China as hard-working parents who toil themselves to generate value and save them for their children (the dear Americans), while the US behaves like spoiled children who demand high-level consumption even running on empty purse. We would expect the US, with a mountain of debts, to save more and spend less and China does the opposite. It is not likely to happen this way, though. The children must be spoiled because of their dollar dominance in the world. Something will happen eventually. Let’s wait and see.

It is very hard to become sanguine when we vision a few years down the road. The US economy is very much consumer driven, consisting of consumption by US government and ordinary citizens. Now, with Republicans calling for government spending cut and consumers increasingly squirreling away their meager savings for lack of confidence, we are seeing less and less spending instead of the other direction as people have expected?

Now talk about increasing productivity and revenue, a sheer empty talk. With the majority of manufacture jobs moving overseas and the lack of the required skills for the emerging technology market, where do productivity come from? No job, no income.

To be honest, forgoing the Worlds of Fun is a small sacrifice compared to the fact that many people will have to face the shrinking of their retirement pension and health care service. Keep in mind the government always stands by the side the rich and powerful while the poor and the powerless can never escape bearing the brunt of economic woes.

16. Not reading the fine print.
17. Mismanaging your flexible spending account.
18. Being an inflexible traveler.
19. Sticking with the same service plans and the same service providers year after year.
20. Making impulse purchases, when on second thought you don’t really need or you can get it cheaper elsewhere.
21. Dining out frequently.
22. Trying to time the stock market. In trying to buy low and sell high, many people actually do the opposite. Instead, employ the simple strategy of “dollar-cost-averaging.” By investing a fixed dollar amount at regular intervals, you smooth out the ups and downs of the market over time. If you take out the emotion and guesswork, investing can become less stressful, less wasteful and more successful.

23. Buying insurance you don’t need, e.g liability for an old car.
24. Buying new instead of used. Cars lose 20% of their value the moment they’re driven off the lot and 65% in the first five years.
25. Procrastinating. Time is an asset money can’t buy. Start investing for retirement as soon as possible. For instance, if a 40-year-old saves $300 a month with an 8% return per year, he’ll have $287,000 by age 65. If he had started saving 15 years earlier at age 25, he’d have more than $1 million.

P.S. my son called yesterday morning. He sounded rather sleepy, not fully awaken. I was concerned, as he seldom called this early, “What is the matter, son?” He said, “Happy Mother’s Day, mom.” On occasions like this, both of my children know not to upset me by squandering unnecessarily on my behalf. Indeed, a call phone like this will make my day.

1. Carrying a balance on your credit cards. Debt is a shackle that holds you back.
2. Overspending on gas and oil for your car.
3. Keeping unhealthy habits like smoking and indoor tanning.
4. Using a cell phone that doesn’t fit. Your phone is not a status symbol. It is a way to communicate.
5. Buying brand-name instead of generic.

6. Keeping your mouth shut. By simply asking, you may be able to snag a lower rate on your credit card.
7. Buying beverages one at a time instead of a box of 12 or 24.
8. Paying for something you can get for free, like using library.
9. Stashing your money with Uncle Sam rather than in an interest-earning account.
10. Being disorganized. e.g. Lost bills and receipts, forgotten tax deductions, and clueless spending.

11. Letting a large quantity of your money wallow in a low-interest account.
12. Paying late fees and missing deadlines.
13. Paying ATM fees. Expect to throw away nearly $4 every time you use an ATM that isn’t in your bank’s network.
14. Shopping at the grocery store without a calculator.
15. Paying for things you don’t use and you can get it free from the Internet, like cable TV.

Continued…

I kept all the old rental agreement thinking someday I would buy some apartment complex nearby a university and lease them to college students. I would use their rental fees to pay for the mortgage. I would need to learn how to create leasing agreement for my tenants. I started harboring this idea ever since I took accounting classes in 1993, back in Ohio.

One of them is from Dolley Madison Apartments in McLean, Virginia on 1/25/1997, 2-bedroom apartment monthly rent for $930. We lived there between 1/1997 and 5/1998.

The other from Corinth apartment in Prairie Village, Kansas, 2-bedroom for $603. We stayed there between 5/1998 an 7/1999. Another one from Jamestown townhouse, in Fort Wayne, Indiana back in 1994. We left Indiana for Virginia in January 1997 when my daughter was two months shy of two years old.

Well, these documents at least serve to witness a dream or a plan that I once had but never materialize. I don’t know exactly what stopped me from carrying out my plan, but I know my brain does not work well when it comes to accounting.

The loveliest part is her strong feeling against buying any designer stuff. She lampooned those who chased designer clothes or designer bags. “I am not like those suckers who work their butts off to spend $700 on a designer bag.” She really sees through it all when she said, “Those designers can live in their majestic mansions and drive their limousines because of all these stupid suckers [who are] willing to dump in their hard-earned money for these designer stuffs. Those designers suck every hard-earned penny out of those suckers so that they have everything they want.”

Nothing is more true than this. Once the smart ones set the fashion, the opposite ones follow to the letter. That is how the rich get rich and the poor stay this way forever. Too bad there are too many people who fall for this schema. That is how the social order is well maintained.

The recession seemed to have changed some people’s spending behavior. When people are running low, they try to get to places with less gas. I hope people can keep up the thrifty habits even after economy picks up. Here is the list of these 15 things.

1) Basic Computer Software; there are so many free downloads
2) Your Credit Report; you can always get a copy during a free trial period.
3) Cell Phone, absolutely. You don’t really need to keep up with the new products.
4) Books, of course — that’s why we have libraries. And no more books to crowd your room.
5) Water. It is also good for the environment when we consume less bottled water.
6) Credit Card. Why pay an annual fee for a credit card when there are plenty of free ones?
7) Debt Reduction Help. This is the last thing you should pay for, when you don’t have money to pay your debt. But I do know someone who hires an agent to manage all her bills.
Basic Tax Preparation. Do it yourself unless you have half a million to work on. I know some people are too hopelessly lazy to do it themselves.
9) News. Either go online and read or go to your local library or even bookstore. It is simply too old fashioned to buy news now.
10) Budgeting Tools; download free tools from the internet.
11) Pets. There are many lovely pets in animal shelters. You might have done a good deed by providing a home for one of them.
12) Shipping; look for free shipping deals.
13) Checking Account. Why pay for this when many banks offer a free checking account?
14) DVD Rentals. You can watch anything from the internet or get free rentals from insideredbox.com
15) Exercise. Nothing is more true than this. You can exercise anytime anywhere, with free air and free sunshine.

Actually, there are a lot more things that people don’t need to buy, especially during back-to-school days. The weekend before school started, I saw many parents shopping for school supplies with a list from the school. What happened to the old school bag and supplies that they used last year? Why do people have to get a completely new set of school supplies every year?

I couldn’t stop thinking and feeling sad long after I closed her chart. I don’t know exactly what went through her head when she waited till the tumor became a palpable mass. Didn’t she understand that mass could kill her? Maybe she didn’t.

That evening I shared it with my daughter, “It is so dreadful to be this poor and ignorant. That’s why people of lower social status have both high morbidity and mortality rate. They cannot afford to seek medical help when they should and they don’t know the risk of delay.”

I feel so unpatriotic when I constantly talk about saving, the opposite of spending and boosting up our economy. After all, consumer spending makes up nearly 70% of the nation’s GDP. If everybody were as thrifty as they should, we would never see the rebounding of our economy.

Still, you would not want to see this happen to you — “It’s still a week until payday, but your checking account is almost empty already. Where did all your money go?”

The money has been drained away by some of the following bad habits. Below is from Bradley’s article.

1. Window Shopping or internet goods browsing. To be sure, those window showcases are not without purpose.

2. Carrying Lots of Cash You know that paying with plastic is bad, but carrying lots of cash can be just as bad a habit. Avoiding plastic is great, but budgeting is just as important when choosing to pay cash.

3. Saving Your Info With the online Vendors. Those online shopping sites are so considerate to save your address and credit card information — some even have one-click ordering buttons, so you can buy something in just a second. It’s very easy, but also very dangerous.

4. Clipping Unneeded Coupons. The truth is that coupons can make us buy things even we didn’t plan for.

5. Shopping With Your Emotions — the worst type of shopping behavior. It was a rough week, or a good one, or you want to reward yourself for losing a few pounds, so you go shopping. You earned that new dress, that new gadget, that big pie — it was on sale, too. Letting your mood dictate your buying decisions is the quickest way to go broke. Sober up before shopping.

6. Not Planning Ahead. It’s Tuesday, you’re tired, and have no idea what you’ll make for dinner. A great night for takeout, right? Using data from the BLS, it’s estimated that the average family of four spends over $4,000 on eating out — a very expensive habit that will make you broke in a hurry.

I am writing this while thinking of the spending habits of my children. I surely wish they are all free from these wasteful habits.

1. Convenience Stores. Remember you have to pay for the goods and the convenience. Nothing comes free. People who like to buy on the spur of the moment are the biggest losers here.

2. Cell or your home phone plans. Be careful of your monthly bill. You might be paying more than you sign up for

3. Soft Drinks at restaurant. It always costs more than the one bought at grocery store.

4. Unnecessary Bank Fees
5. Magazines. Indeed, with the speed of internet, who needs to subsribe magazines? Or you can always spend some time at local bookstore or library.

6. Annual Credit Card Fees. It makes no sense when there are so many fee free credit cards.

The last piece of advice given by the author is “Be Proactive –Spend a couple of hours and go over the above categories along with any other regular habits you may have accumulated over the years. The time will be well spent as it could mean hundreds of dollars of recurring annual savings.”

Her explanation is faulty on several accounts.
(1) She should not spend more than her income, unless it is absolutely necessary, like buying a house.

(2) She is unable to think ahead and foresee any possibilities in the near future and prepare for the unexpected. e.g. what would happen if she lost her $40K job? In the long run, it is best to save first, spend second instead of the other way around.

(3) Together with an expensive car, she has to equip it with high insurance and maintenance.

(4) When she has very limited income, she has to sacrifice her other necessities in order to enjoy that luxury car.

My daughter thinks she should put aside some of her earnings and should not buy that expensive car since she doesn’t need it and cannot afford it. I am glad to see even my teenage child has more commonsense than this adult woman.

(1) Cut spending to the bone, which means no dining out, no entertainment.

(2) Be honest about what is a want and what is a need. That is, avoid wasting on your want. Put food on the table before anything else.

(3) If you have to borrow, spend borrowed money on the basic necessities only. Yes, don’t we know better than this?

(4) Don’t touch your retirement savings.

(5) If you’re nearly tapped out: take any job offer. The key is to generate income while you continue to look for a better job. Remember beggars can’t be choosers. Too bad that’s not what most people do. Some of them, with some skill and education, would not stoop to any unskilled job.

(6) Stay where you are if you can unless you absolutely must move. Because moving always involve extra cost.

(7) If you’re thinking of walking away your house: talk to an expert and exhaust all other options first.

(8) If you watched in horror as your retirement fund took a plunge, do nothing. It will climb up eventually.

I learned one monitor used fans instead of air conditioner to save energy, the other living up north has tried to keep her bill under $100.

Who ever said Americans are wasteful? Not all of them at least. To be sure, they are hard-working monitors, and they are also exceptions to the rule in exercising financial discipline on themselves. They are the thrifty minorities, more so than most Americans that I have known.

To my surprise, I could not find on the statement one few-hundred-dollar deposit that I made on 4/16. I was intrigued and was determined to find out why. So here I was in front of a bank teller, asking him to help me see where this deposit should show up. While he was reading my statement and my deposit slip, his face turned red. I could sense there was something not right.

It turned out that the money that I deposited went to another person’s account, by accident as I was told. I will never know how that has happened. My mind was running fast through numerous deposits that I have made over the last decade and who knows how much money have gone to some unknown accounts this way, when you would think you can trust all bank people to do the right thing all the time. Even if it is a pure accident, the loss is on me and I have no idea how much I have lost over the years.

I can see my old habit of trusting people blindly is hurting me financially. I am not sure if it is a blind trust or I have been too lazy to do a check myself, cheating myself with the belief that I should trust these bank people. The moral lesson is when it comes your money, you cannot trust the bank or anyone without doing your own checking.

I shared this joke my daughter on the weekend before mid-autumn festival. A person needs to send a coat overseas. He takes out the buttons from the coat before sending so that it would weigh less and cost less. My daughter said, “That must be you, mom.” I am flattered. In fact, I am not as resourceful as this person.

On the same day, my daughter and I went to Border’s bookstore. When she saw me carrying a small cup of coffee, she said, “Let me guess. It must be free.” Yes, she was right. It was a free gift sent to me by Border’s on my birthday. She knows I always carry my own tea cup when we go there.

There is one article called “It’s so loud. I can’t hear my budget” by Emily Anthes. It answers a question that has puzzled me since 2008. During that year I frequented places like Aeropostale with my daughter. While she took time trying clothes, I was waiting outside, deeply disturbed by the loud ‘music’ or rather noise pollution in the store. I felt so miserable by the deafening noice that I kept asking her to hurry up, “Get a piece and let’s get out of this place.” I even asked the salesperson to turn down the volume. He told me it was company’s policy throughout all stores nationwide to set noise at this level.

Emily Anthes’ article finally reveals the ulterior purpose behind the deafening noice.

(1) The loud music creates a permanent party atmosphere. Loud music means party, fun, cool clothes, and youth. “If it’s too loud, you’re too old.”

(2) “People make more impulsive purchase when they are overstimulated. Loud volume leads to sensory overload, which weakens self-control. Overload makes people move into less deliberate mode of decision making. People might be more likely to be lured by discounts on items that they might not really want, and susceptible to other influences.”

As a dutiful consumer, I feel fooled and manipulated. I wish people can see through this trick and become wiser. As my daughter suggests, “Put on your ear plugs if you have to go to those stores.”

There is one interesting fact in the report on Income, Poverty, and Health Insurance Coverage in the US: 2009. That is, the report “indicates Americans of Asian origin are the richest, while black people are the poorest.” I am sure the white would come up the richest if you only counted the Jews.

This seems to be self-evident when you look at the dominant population in institutions of higher education and those of incarceration. You can write tons of books on the differences between these two ethnic groups, suffice it to say that one salient difference is that of culture.

While Asian Americans live in a culture that is gravitated toward financial success, whatever that is, black people must have something missing in their culture that can help them in that direction. To be sure, we are all products of our culture.