How I Save More Than Just Money By Cutting the Cable

I was one of those kids that watched just about every show on television and could only fall asleep if the TV that was in my room was on. When I discovered one of my friends did not have cable, I couldn’t help think how abnormal it was. Now fast-forward to today’s time, and I am the abnormal one.  While streaming shows is becoming much more accepted and popular, my husband and I still get a lot of weird looks when we say we don’t have cable. However, by streaming our favorite shows through Netflix, Hulu, and Amazon, we have saved three things.

First, we have saved over $1000 a year by cutting the cable. The number seems a little too large to be true, right? Well, it isn’t. Cable would cost us an extra $100 a month. Sure, there are tons of deals and bundles right now, but usually you only get a specialized rate for a year. So even with the special rate, we would be spending an extra $600 a year.

Secondly, we save a lot of time. We are the type of people that would watch television just to watch it, which can be a bad thing. Why waste your time to watch shows like Hoarders or Tanked just because it is the only thing on at that moment? With Netflix and Hulu, we know which shows we want to watch and don’t watch much else.

Cutting the CableFinally, it saves a lot of stress. Okay, maybe not a lot of stress, but definitely some degree. We babysat my sister-in-law’s kids one weekend and thought we would enjoy their ginormous television package with over 900 channels. It was Friday night, so it would seem pretty easy to find several good shows or movies to watch, right? Wrong. It was a little stressful scrolling through hundreds of stupid channels (infomercials and such) and trying to find something we both could agree on. I think we wasted an hour just trying to find something on. I am sure once you get use to your channels it is easier to find something, but I do still think it is ridiculous to have so many channels, yet still so very few selections in good things to watch.

With Netflix and Amazon, it is also nice to know that my children will be able to watch their favorite shows without ever seeing a commercial. This means I will not have to get dozen of requests for a Barbie with blue hair that turns into a dolphin underwater or for those special chicken nuggets with green goo in them (these two products are totally made up now, but don’t be surprised if they become a real thing).

So now you know. My decision to stay cable free is much more than just saving money. It is nice to save a huge chunk of money, but it is also nice to know that something does not control my time, my stress, and my finances.

What would you save if you went cable free?

original img credit:Alyssa & Colin, on Flickr

Oregon Changing Student Loan Repayment?

Could the landscape of student loan repayment be changing?  I have to admit, I don’t cover a whole lot of college topics here (because I’m a bit removed from that age group), so I almost missed this altogether.  But, it kept coming through on feeds, and it finally piqued my interest enough to get me to take a look.  I’m glad I did, because it’s actually gaining traction and could be something that becomes normal in the years to come.

What is the Oregon Pay it Forward loan repayment plan?

oregon changing student loan repaymentPay it Forward seems to have had an interesting life cycle. It was originally devised by a class of college students, working with the Economic Opportunity Institute, and then presented to the state legislature.  From there, it appears that the Working Families Party of Oregon, who happen to have been co-founded by the students’ teacher, took it under their wing and started pushing it.  According to this article in the New York Times, the resulting bill passed the Oregon House and Senate earlier this month.

From there, I would imagine that it’s got all kinds of structural work to be done in order to put the systems and processes in place to be fully functional.  But, once that’s done, it should become available to students in a few select universities and colleges sometime around 2015.

The plan, as it’s stated on the Working Families Party of Oregon website, will operate with a dedicated fund from which the tuition will be paid to the school.  After the student graduates, and gets a job, the student will then pay a fixed % of their salary back into the fund for 20 years.  The % that the graduate pays will depend on how much schooling they’ve received.

Under the proposed system, you would pay .75% of your adjusted gross income (AGI) for each year of school, or 45 credits. This means a student who goes for a 2-year degree would pay 1.5% of their AGI per year, while a student seeking a 4-year degree would pay 3%.

That should account, mostly, for the discrepancies of cost in tuition from a two-year degree vs. a full four-year degree.  The website also states that should a graduate be unemployed, there would be no repayment necessary until the graduate attains a job.

Is the Oregon Pay it Forward plan a good idea?

In my opinion, it’s both good and bad.  It all depends on how you look at it, really.  If you’re like me, and intend to work in a profession that basically requires a degree of some sort to even get your foot in the door, it could be a really good deal.  Heck, I’ve been out of college for 7 years.  Almost half way to their repayment period.  I’m not even close to half way to the end of my student loans, yet.

So, in that way, the plan might be a good thing.  It lowers the financial barrier to higher education, and makes less of a burden of the repayment of any tuition bills.  The lowering of barriers is also why I think it could end up being a bad thing.

Part of the reason that I think the higher education system is under so much fire is because it’s already too easy to get a student loan and go to college.  If anyone can do it, suddenly everyone must do it. If you want any sort of foothold in the professional community of your choice, you’ll need that degree.  That causes problems.  Demand for a college education never decreases.  The law of supply and demand says that the supplier (colleges in this case) can charge whatever the market will bear based on the fluctuations of demand.  If demand decreases, so too should supply.  If you want demand to increase, you reduce the cost of whatever you’re selling until demand begins rising again.  But, if demand never decreases, why should the cost of the education?  The supply of college attending students increases, increasing the demand for classrooms to teach them in and professors to teach them with.  School expenses increase due to the new buildings and additional staff.  If the fund for the plan doesn’t keep up, the money has to come from somewhere else.  Know where?  The state.  More specifically, the taxpayers of the state.

It’s too early to pass judgement on whether the plan will work or not.  Heck, the ink is barely dry on the bill itself.  It’s still got all kinds of tape to work it’s way through before it can begin being used.  I doubt that we’ll see any real results aside from an increased enrollment in the schools that pilot the program for at least 5-10 years.  Remembering that repayment likely won’t start for 4 years from the first enrollment.

I think it’s clear that the current state of student loans and their repayment needs to be reworked.  It’s unclear, however, whether this plan is the right answer.  It might be part of the answer though.  Combine something like it with a more rigorous acceptance process, and you might have a winner.

What do you think?  Is Oregon changing student loan payment forever? Is the program the right answer?  What would you change?  Would you have used it if you had the opportunity when you enrolled in college?  (I would have)

 

We’re All Financial Optimists, and It’s Hurting Our Bottom Line

Are you an optimist or a pessimist?

Do you see the glass half full or half empty?

No matter your answer, I have a secret for you.  We’re all financial optimists, and it’s hurting our bottom line.

Don’t believe me?

I didn’t expect you to.

You might say, my finances are a mess.  I have debt; I’ve pulled money out of my 401(k).  I’m definitely not a financial optimist.

But, I’d argue that you are.  When you look into the future, you don’t see bankruptcy and years of the same financial mess.  You likely think that eventually things will get better, and you make decisions based on that.

If your financial situation isn’t that bad, you’re probably even more of a financial optimist.  Say you’re getting ready to buy a house, and you know that your limit is a house that costs $250,000.

You find the perfect house.  The problem?  It costs $270,000.  Still, you decide to buy it, even though you know you can’t afford it.

What do you tell yourself?

  • It’s in a good neighborhood, and the house will appreciate.
  • In just a few years, inflation will make your now nearly unmanageable payment much smaller, and paying it won’t be such a hardship.
  • You’re just starting your career, and in a few years you’ll be making a lot more money, so the house payment will be easier to afford.

Sound familiar?

Just a few years ago, millions of people thought their houses would appreciate, and then they were caught up in the housing crisis.

Houses don’t always appreciate, but we optimistically think ours will.

Sure inflation will make your house payment more manageable, but you’ll have other expenses in a few years that you’re not thinking of because you’re thinking optimistically.  In a few years, maybe you’ll have a few kids to fill that house, and they’ll cost a lot of money.  You’ll be spending more on food, health care, transportation and day care, just to name a few things.  Suddenly, having a manageable house payment doesn’t really make a financial difference because you’ll have so many other expenses competing for your money.

If you’re lucky, your career will soar, and you’ll make more money, but that doesn’t always happen.  You might get laid off and have to find a job that pays less.  You or your spouse may decide to quit so one person can stay home with the kids.  Or, maybe you do get raises, but at the same time your health care premiums go up every year so your pay essentially stays stagnant.

Of course, thinking optimistically is beneficial to our mental health, but for our financial health, recognize that thinking optimistically hurts your bottom line.  When you get ready to make a large purchase like a house or a car, don’t forecast into the future.  Determine if you can afford the item now, in your current situation.  If you can, you’ll tie up less of your future money and benefit from this.  If you can’t, it’s best to pass it up.