Archive for the ‘recycling’ Category

How to Teach Kids to Learn to Save Money.

April 18, 2014

I don’t know that I would be a natural saver, planner, or budgeter if I had not seen what my parents did.  My  father would come home from work and empty his pockets and put his coins in coin banks.  My mother would make lists & never go shopping without a list.

My mother was the most influential.  My father turned over his paycheck to her, and she was responsible for bills and household expenses.  I am sure they were both on the same page when it came to  how to  plan for the future.  I knew that not all my mother’s friends were as savvy about money, because she opened ‘Christmas Club’ bank accounts with several of them. When I asked her why she had these (joint) accounts, she told me that ‘M’ would not save money every week if  it weren’t for the match my mom made.   I guess I am dating myself, as I don’t think any banks have that kind of account anymore. The idea was that you would open the account  two or three months before  Christmas, put money in once a week, then get a big check at the end.  The irony is that these accounts paid less interest than a regular passbook account.

Back then, in the  1960’s and ’70’s, some accounts paid simple interest, some paid compound interest.  It was known that ‘Savings & Loan Associations’ paid more interest on accounts than banks, and  nobody had heard of credit unions —except union members and farmers.  Certificates of Deposit were new products, and hardly anyone  knew what mutual funds were.  Instead, many people, like my father, trusted insurance agents and their products.  Funny, they were so opaque, but  it was your relationship  with your insurance agent that got you suckered in.

As a teenager, I really had no idea how much it cost to live.  My mother told me that  one week’s pay should cover  my rent and utilities for a month.  That was my ballpark.  I made an average of $20 a day grooming dogs, I am not kidding, Of course, my  share of the rent was $ 35 a month.  A can of tuna was 25c, and you paid for long distance phone service.

I didn’t get serious about saving until I  was entering my  thirties, and going to school and planning to travel.  Long story short, my first  house cost me $23,000, and I sold it  10 years later for $125,000 and bought the next house for $119,000.  This  kind of thing can be done again, with the ‘market correction’.  You just have to  decide what is a necessity.

These days, I try to pay for as much as I can with a credit card because mine gives me 3–5% cash back—which  sort of cuts the sales tax in Illinois.  I also have a record of what I spent at the end of the month.   I learned from my mother to pay off the balance at the end of the month, or  I’d be paying 10–25% more for everything with the fees.  That makes no sense. I am thinking of switching to a debit card, but that doesn’t give me cash back.

So…how do you teach kids to save?  By teaching them what  things cost, first.  Sort of like The Price is Right.  You can set up various packaged goods on a table  and have them guess.  Then, take them shopping and have them do comparisons of the various products.  Take them to different stores as well.  It’s important to teach kids that fresh food in season costs less than   prepared foods (canned or frozen, unless something is on sale or a loss leader).

When they ask for toys  or  luxuries, ask them what  it costs.  Ask them to compare costs or various brands.  Ask them how they plan to earn money, and give them ideas. My father had us separate a bucket of screws, nuts, and bolts into  about 20 different categories.    I think he paid us $1 an hour (minimum wage at the time was $1.60).  Kids can baby sit, do yard work, go shopping, do laundry, help  neighbors. I have also collected cans when I walk my dogs, Aluminum pays 40—50c a pound, Copper pays much more.

When I was in 8th grade, we had a section in a social studies class on  capitalism, and developing a business with a business plan.  Every school should have that, and if your school doesn’t, find out why.  A 10 year old can figure this out.

When I left home, at 18, I had no idea what anything cost, I just had the confidence that if I  shared the rent and household expenses, I would be ok.  I had a friend who had another friend who  moved out and back in to her parents home three times before she turned 26.  She didn’t want a roommate, and she was very fashion conscious.   I had a client who continued to live with her parents for several years after graduating from college. She worked as a trader  (with the internet, you can do a lot more than without).  She managed to save not only enough money to buy investment property, but also to return to school to get another degree. It just depends on your priorities.

What kick started me to economic security was  joining an investment club, and learning to do the research. Nobody ever got rich by saving.   Although I do own stock in a few companies, mostly I own  mutual funds. There is less risk and greater chance of reward. Still you have to know what your goals are and what kinds of investments meet your needs.  If you are going to pay someone else to mind your money, and have less than  $250,000,  you are really taking a risk and are going to pay a lot.  I remember when the concept of the Individual Retirement Account (IRA) was introduced in the early 1970s. Contributions were tax-deductible, but you had to keep the money in until you retired or there was a penalty.  I thought that was a great idea.  I had no idea that  Social Security would not be enough, but no matter.    It took me a while to get  with the program, but I  have 3 IRAs and  put as much in as I can.

The work I do, dog grooming, is very seasonal. That means in some parts of the year I am very busy and make a lot of money, but when the weather gets bad,  my wealthy clients leave town, and the rest make excuses.  I had to learn to save for those bad times.    I often do dog walking or over night pet sitting  in those lean times.

My checking account is  attached to a money market. That means it pays interest, but I have to keep a certain balance.  So, I put money in but it is not in the checkbook.  I see it on the statement, but it is not there to spend.  I divide my tips in three.   1/3 goes into savings, 1/3 is in the reserve, and 1/3 is to spend.  At the end of the month, if there is more than $100, it all goes into savings.  My guilty pleasures are  movies, dog shows, and going out to eat with friends.  Also, vacations, and most recently, books.  I live near a recycling center, and in Chicago there are a lot of church rummage sales and used bookstores. No need to pay for a book unless I really want it.  I consign books, clothes, and jewelry that I don’t intend to  use or keep.  I also donate a lot and keep very good records, as  I am self-employed and the tax write-off for ‘donations in kind’ is significant. I upped my  tax refund 40% by keeping track of donations-in-kind and using ‘client valuation’ guides—which you can find online.  I am not very fashion forward.  I buy clothes that are functional and durable, mostly at used clothing stores.  Several  of my male friends have disparaged  my  clothing, but since they are all in debt, I laugh them off.  Idiots.

So—- how can you teach a  child to save money?  Talk over all that I mentioned and encourage them to be curious and discerning.  Don’t pay for everything they want.    Don’t be judgemental if they make choices to spend money on stuff you wouldn’t.

For  more information on  financial education, check out  “RichnessofLife.org”  Great nonprofit doing financial education all over  the USA.

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The End of Poverty, by Jeffrey Sachs (book review)Now all we Need is the Money!

September 13, 2012

We all want to end poverty and injustice.  It’s why I joined Peace Corps:  t do my part.  There are some small things  people can do that make a big difference.    The Grameen Bank was revolutionary.  However, where there is no local political will things get complicated, and unjust.  You can not give people power, They must take it.  Also,  you can’t do just 1 thing.

Worth  reading is Jeffrey Sachs book, The End of Poverty.  It’s much longer than it needs to be, but  he spends about half the book  justifying his credentials.  I have no problem with that.  He’s obviously an extremely talented economist.  He also managed to be in the right place at the right time to be able to earn his street cred.

When I originally hears about his Millenium Developement Goals, I thought he was very arrogant. This guy is, essentially, a jet setting  policy wonk, flitting all over the world and hob-nobbing with elites.  What could he possibly know about  poverty?  Well, he made a point to educate himself.  He understood, that for every  economic crisis he  helped fix, he caused other problems.    That was before he started addressing acute poverty.

What I particularly like about the book, and what absolutely everyone in the developed (that is, North America, Europe, much of Southeast Asia, and a few very wealthy islands) world should understand,is,  what he addresses on pages 252—255 in his Chapter 13:  Making the Investment Needed to End Poverty.  He justifies why governments need to make infrastructure and social investments that ultimately benefit us all.  That  create economic vitality.  That’s it. Bottom line.

The trouble is….the IMF and World Bank are still their own fiefdoms and supported,  for no logical reason, by donor countries, including the USA…And they still allow—heck—they FUND  corruption and mismanagement.

Sachs discounts the impact of corruption (it probably is only 20% of why there is poverty in Africa), and spends a decent part of this book explaining to  World Bank and IMF funders that if they  funded what is proven to work, instead of their cronies’ schemes,  all humans could have a decent standard of living—but they don’t give a shit.  Full stop.  However,  while he is excellent with the numbers, as an economist, he  believes the  amount of aid should be based on a country’s GNP.  In theory, that’s a great idea.  Unfortunately, for the developed world,  were there surplus GNP,  we’d be paying the debt for the  stupid wars we’ve engaged in, as well as the politicians/government workers unfunded pension plans.

Sachs then  expresses astonishment at the Bush era tax cuts to the wealthy, making the rich richer.   While he got the Gates Foundation, and a few other  compassionate uber-wealthy  donors on board—well, he didn’t get Mitt Romney, Paul Ryan, and a bunch of people who believe that capitalism is really about who dies with the most money. Otherwise, their greed & selfishness makes no sense.  I think that Sachs  realized he’s been working for the wrong team for too many years.

As a Returned Peace Corps Volunteer, working in Malawi, where hunger, chronic disease, and lack of political will destroyed a society, I agree with Sachs’ approach, and in fact, there are many small groups trying to help distinct communities. I  support several.  However, Sachs is right:  the capital is there.  Just not the political will.  & face it: our  ‘development’ policy, whether put forth by Republicans or Democrats, is to make the rich richer.

The late Wangari Maathai really did so much in Kenya, and her work was often sabotaged by the Kenyan government.  I  believe  Sachs gives too big a pass to the many  sub-Saharan governments he claims are well-managed, without addressing their political will.

If you don’t know anything about why so much of Africa is impoverished, this is a good read  to supplement much of what else is written about development economics. As Americans, we have to understand that  we have allowed our government to support war to benefit elites over  poverty  eradication which, ironically, would have gotten rid out our enemies for good more quickly.

Update:Maximising donations-in-kind

November 2, 2011

I have posted  before on making the world a better place.  These past few years have been difficult for us all, but  we are not running out of stuff.  Since I live in a very  high density (some people would call it the ghetto, or slum…but they haven’t been to urban Africa or Indian…) neighborhood, lots of multi-unit housing,  I find a lot of stuff.

People move all the time, & they  have some very nice things they no longer want. But they don’t have the time to sell it or take it to people who need it, so they  put it by their trash bins. We  alley entrepreneurs take the stuff  to use ourselves or  to give to people who need the stuff.

Shoes & used clothing are the most frequently put out items, but  often I find cookware, small furniture and appliances, and books and toys.  I manage  to  find people who need stuff because we have many non-profit organizations that   provide assistance to the needy.  Some  specialize in  serving  homeless women, some teen mothers, some the elderly.  One  organization (I do some volunteering for them),  Heartland Alliance for Human Needs,  provides resettlement services for refugees.

It used to be that virtually all these people were eligible for  some sort of welfare:  Temporary Assistance to Needy Families, or Social Security. Well, the fact it, eligibility has been greatly curtailed since the Clinton era…no joke.  By making it harder to get welfare, he appeased the Republicans (at the time) &  balanced the federal budget.  He also gave people  an incentive to make a way for themselves.  They may not be on the payroll to somebody, but that does not mean they are not earning money.

That’s neither here nor there.  I  don’t know if  mental illness preceeds job loss & displacement, or job loss & displacement preceed mental illness.  No matter.  People are in need.

In the early 1980’s, I was a founding board member or Uptown Recycling Station, in Chicago. We board members were coming to recycling from different interests. Some of us were particularly interested in environmental conservation, and several were interested in job creation for entry level workers.  We got  a loan from a religious order,  some assistance from the father of recycling in Chicago, Ken Dunn, and some help from the city.  This was under the Harold Washington administration. I doubt we would have gotten the help from the administration of any other mayor.  We turned a cute, hippie idea into 3 full time and several part-time jobs for entry level workers, and advanced the cause of recycling in Chicago.

But we did not all live happily ever after. It’s been slow going.  We managed to get the city to pay us a diversion credit.   What that meant was…for every  cubic ton of waste we kept  from going to a land fill, the city gave us money.  We barely made a dent.  We had to nag out elected officials for years to take recycling—for import substitution, seriously.

So, now it is 2011, and an idealist with a plan, Brittany Martin Graunke, got an idea to  put up a waste exchange—or , rather, a clearing house for  donations-in-kind, online.  It’s called http://www.zealousgood.com   She gets nonprofits needing donations-in-kind to pay a monthly fee to post their wants.  I found her  by accident, but  I am hoping to help her  market the site an the idea to area non-profits.  This is not recycling glass/metals/paper/plastics, which is feedstock  for manufacturing, like we did at the recycling station.  It is  repurposing  value added stuff.

I have been self-employed  for a  good long time, and  the first thing my father taught me was, “Get a receipt.”  For years, however, I was  donating stuff  without thinking, and NOT  itemizing the receipts.   By chance, I found a book called, Cash for Your Used Clothing,” which is a client valuation guide approved by the IRS.  Goodwill Industries, the Salvation Army, and yes, the IRS publish similar guides online.  If you itemize on your taxes, and aren’t an active stock/bond trader, you  must take advantage of every tax deduction you  can legally take.   If you don’t inventory your donations, you are most likely  undervaluing  your donation, and paying more taxes than you have to.  Your donation  is actually  whatever your taqx braqcket is.

Because I had managed  thrift stores for  two nonprofit organizations, I know how valuable the  donations-in-kind are.  Currently, Goodwill Industries  reminds their donors that by donating stuff, they are creating jobs for people.  It’s true. It’s a lot of labor to sort, clean, tag, and display stuff (I am sure anyone who works in a retail store will tell you this).  From a nonprofit perspective, I also know that  people donate cash to organizations that take stuff, as they have a social link with that organization.

From the perspective of a donor…I’ve just heard too much whining from  donors about how poor they are (this is a constant refrain), and they complain about their taxes, but I have to do a lot of ‘hand holding’ to get them to inventory and  categorize stuff to maximize a donation that can result in a significant tax deduction.

I know that, due to the  federal deficit, that  our lawmakers are looking to get rid of tax deduction loopholes, but I certainly hope the nonprofits  are vocal about the need to continue to allow this  transfer of ‘wealth’.  It is significant,  I am not in a position to give money at this time, but I know that generally I donate over  $2000 worth of stuff to area nonprofits. I know this, because I inventory and evaluate, and I sell a lot of stuff.

People give me stuff to donate all the time, as they know I would know  someone who could use it.  They ask what I will take. I tell them what I won’t take:  If it stinks, or sticks, we can’t use it.

If you support an  organization that needs more money, take the donations-in-kind and resell the items you  and your clients can’t use.  Encourage yur organization to network with other organizations.  Consider sponsoring a retail store, like Goodwill, the Salvation Army, and  several other Non-profits in Chicago (The Ark, Brown Elephant, Save-a-Pet) do.  To me, if you throw away a usable item…you are throwing away money.