Clark Howard Leads The Charge

Clark Howard is the consumer advocate who took on Bank of America when they refused to help a man who incurred legal charges as a result of B of A calling in the police. They suspected the man was in the middle of a criminal act when he was innocently brought a fraudulent check. For more, see here and the post from yesterday.

Clark Howard

Howard is a nationally syndicated consumer advocate who “advises consumers how to save more, spend less and avoid getting ripped off.” He hosts a radio show that is broadcast every day on more than 200 radio stations throughout North America. After a career swinging between jobs in both the public and private sectors, he set up a travel agency business in 1981. Six years later, he retired at the age of 31, having sold what he had developed into a chain that spread across metro Atlanta.

A spontaneous guest appearance on a travel show in Florida led to his own program, The Clark Howard Show, which was soon syndicated by Dial Global. In early 2009, The Clark Howard Show was expanded to HLN (formerly the Headline News channel). He is the author of eight books, some of which sat comfortably in the New York Times Bestseller list. While his books are all available through GetClarkSmart.com, Clark tells his listeners that they are cheaper used and can be had for free at the public library!

I think this tells you a lot about the man. I also want you to know that my books are available new and in e-book form on amazon.com, so it shows what kind of man I am.

Clark also invests in his native Atlanta community. He started several civic programs, including Atlanta Volunteer Action, Volunteer Action, Inc., The Big Buddy Program and Career Action. Together with listeners, he has helped Habitat for Humanity built 30 homes in and around metro Atlanta.

Habitat - a great place to volunteer

I think in today’s economic climate, it is hard to act, hard not to just shut down and weather the storm. If you can do that and live with the clock that’s ticking for you, all power to you. For the rest of us, we could do worse than finding a teacher, someone we trust and can follow. This person shouldn’t make money out of your actions. Pay him/her for their time, books etc., but not the products or services that they advise you to buy.

When learning Tai Chi, I met a man who spent considerable money and time, going to every workshop and studying every form of Tai Chi  with every teacher he could find. When we practiced together, his technique was bad. I wondered how someone who learned from so many of the biggest names had failed to grasp the rudiments of the martial art. The answer comes in depth and not breadth.

Do Little, Achieve Much

Jewish proverbs teach us to find a teacher and learn everything we can from them. Only when we have mastered all they have to teach us, should we move on to another teacher. The trick, of course, is finding the right teacher and recognizing that they bring experience and knowledge, but not the gift of foresight. The best thing we can do for ourselves right now is to find the best financial teacher for each of us and then to listen.

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Alon Shalev is the author of The Accidental Activist (now available on Kindle) and A Gardener’s Tale. He is the Executive Director of the San Francisco Hillel Foundation, a non-profit that provides spiritual and social justice opportunities to Jewish students in the Bay Area. More on Alon Shalev at http://www.alonshalev.com/and on Twitter (#alonshalevsf).

The Latte Factor

No, this is not another coffee post, though I’m sure there will be more (If you are missing them, this is one of my favorites). As you can probably guess from some of the blog posts in the last week, my thoughts are focused on personal finance. I have been listening to an audio book – Start Late, Finish Rich by David Bach. By the way, at the time of writing, if you go to his website and sign up for his newsletter, you can receive a free download of the book which is great, because though it is a good listen, the narrator lists all the references that David provides. While this makes his book a great resource, it is hard to listen to – all those www’s.

This is not meant to be an article promoting David Bach. I am very impressed by his book and, since I am listening in the car, I am frustrated that I can’t make notes. But I want to share one particular chapter that he wrote because I found myself changing my behavioral patterns almost subconsciously. If I write anything here that does not reflect what David wrote, it is all my fault (feel free to correct me, Bach followers). I am not referring to his book as I write.

People often say how they wish they could save, how they know they need to save more, and then they come up with a number of reasons why it isn’t happening and why they’ll start tomorrow. Always tomorrow.

The Latte Factor is finding something that you do regularly, even daily, that can be a sacrifice in order to start savings, something that you can go without. It could be the upgrades to your basic gym membership that sounded so good at the time. Perhaps you don’t need all those cable channels or the Internet bundle on your phone (though many smart phones now seem to make it mandatory). But I want to take Mr. Bach’s example of coffee.

Apparently, there are many people who, on their way to work, purchase a latte or cappuccino or other such espresso drink every day. Let us assume it is a latte and that it costs $4. That is $20 a week (5 days x $4). This comes to $1,040 a year, not including weekends. If you are a writer, you are certainly in the coffee-house on the weekend. Start compounding this (in hopefully a higher interest yielding climate) and you are beginning to build a nest egg.

For the last two weeks, every time I have ‘saved’ in this way, I have put the money aside. I mean literally. It is going into a purse at home and I plan to save it as it mounts up. The morning java is a good example (even if you purchase the $2 brewed coffee, there is still a significant saving and you still get your caffeine fix). One thing that fascinates me is the American propensity everyday to buy lunch during a work day. Why not bring a brown bag lunch? No time to prepare it in the morning is often offered as an excuse. So I thought (or most likely read somewhere), why not make an extra portion of the dinner you made the night before? If you spend $7.50 on lunch (and this is frugal if you stay away from McFastfood – which while you save, may well cost you in health bills later on), then: $7.50 x 5 days a week x 52 weeks = $1,950.

David Bach actually provides you with a calculator to do your own mathematics. He calls it his Latte Factor Calculator.

Finally, let me paraphrase David. Money doesn’t make you happy, but a lack of it can make you stressed. Is this the way you want to live out your golden years? Which brings me back to the blog post I wrote the other day and the question: why isn’t this being taught in schools?
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Alon Shalev is the author of The Accidental Activist (now available on Kindle) and A Gardener’s Tale. He is the Executive Director of the San Francisco Hillel Foundation, a non-profit that provides spiritual and social justice opportunities to Jewish students in the Bay Area. More on Alon Shalev at http://www.alonshalev.com/and on Twitter (#alonshalevsf).

 

The Psychology of Money

I recently attended a workshop on personal finance facilitated by a man who had transitioned into the profession of Personal Finance Coach from being a psychologist. He feels that one of the reasons that he can help his clients is that he understands the psychology of money.

However, he warned, there are those who understand this field far better than the personal finance coach. Top of their field are the credit card companies, followed by the retail industry. They are the experts at persuading you that you have the desire and the ability to purchase something. You need it and you can afford it.

When my parents visited last year from the olde countrye, I gave them our ‘spare’ cell phone. “Why do we need this?” they asked. I suggested that they could call me whenever they had a question. “But we see you every evening after you finish work.” True. But they wouldn’t have to wait for me in the hotel lobby, not sure how long it would take me to negotiate the commute from San Francisco to the East Bay. I could call them when I was near. “We can wait in the lobby. It’s comfortable. We paid to use it.”

Hard to beat the logic. And yet we have decided that cell phones are a necessity. We need to be able to be contacted 24/7 except when we turn it off. But then who does that? Not only this, but we seem to need an awful lot of things that come with the cell phone – internet, email, e-reader, navigator, music, camera, espresso machine. Spoiler! That comes with the iPhone 8, which incidentally will be so fast that you can talk to someone by just thinking of them.

So now we are not just paying $10-$20 for a carry-around phone. We are paying $60-$70 per phone as a national average. Families are easily paying $200. When did we decide that we had to have all this? When did it become a necessity?

What would you think of someone who interviewed for a job in your company and when you said you would call their cell, they told you they didn’t have one? Maybe they tell you that they don’t see the need. I bet you would think twice about hiring them.

Now I am not against cell phones. If my better half is stuck in traffic or delayed for whatever reason, I worry and call her cell. I probably would talk more to my parents if they lived in the US because of my cell phone (regardless of whether they had one too).

Back to the credit card companies: how are they able to persuade us to rack up debt so easily? Sure you don’t feel the pain when sliding that plastic like handing over bank notes. There is a connection between credit card companies and retail. One thrives on the slickness of the other.

The only ones who suffer are the consumers. By the way; the average credit card debt per family is in the region of $15,000. With the absurd rates of interest, it is a hole that is so difficult to climb out of, never mind building  nest egg for the future.

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Alon Shalev is the author of The Accidental Activist (now available on Kindle) and A Gardener’s Tale. He is the Executive Director of the San Francisco Hillel Foundation, a non-profit that provides spiritual and social justice opportunities to Jewish students in the Bay Area. More on Alon Shalev at http://www.alonshalev.com/and on Twitter (#alonshalevsf).

 

They Never Teach This In School

Surprisingly (or not), the most discussed point from my April 1st post was number 8:

Personal finance will be taught in high school, including budgeting, the dangers of credit card abuse, and long-term saving benefits.

It seems so obvious, so relevant, and not a moment too soon to give such advice to those cell phone-toting, credit card-wielding high school kids. So many people seem to only begin to learn the mechanics of personal finance when they have already dug a hole for themselves.

Last year I met a young man who had an MBA and was working in the financial world. He was in his late twenties, maybe early thirties, and seemed to fit the exact opposite of someone who works in the capitalist world. So I asked him why he did what he does. His answer was stunning.

He told me that he had a tough childhood, which he blames totally on money. His middle class parents led middle class lives and deluded themselves that they were living the American Dream.

Then it all fell apart – bad investments, lost jobs and such like, nothing that couldn’t happen to any one of us. The two parents blamed each other and took it out on the children.

This young man left home at eighteen and vowed that he would become financially independent at the age of forty. He may or may not retire, but it will be his choice. He thinks he will find a profession that he enjoys and transition into that. I asked him what and he smiled, telling me that he doesn’t allow himself to think about it as it might derail his plan.

Wow! He’s focused. I went online to see if I could find any books about how to retire at forty (or even in your forties). The only books I found are from the 1970’s.

So why don’t they teach finances in school? My 2nd Grader is learning mathematics using money so why not continue from there?

It just seems so obvious that they should be taught this. I can’t help wondering if there isn’t a giant conspiracy out there. We are going to look at this in the next few blog posts. But if you have any ideas, please drop me a line

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Alon Shalev is the author of The Accidental Activist (now available on Kindle) and A Gardener’s Tale. He is the Executive Director of the San Francisco Hillel Foundation, a non-profit that provides spiritual and social justice opportunities to Jewish students in the Bay Area. More on Alon Shalev at http://www.alonshalev.com/ and on Twitter (#alonshalevsf).