Beating Broke

Personal Finance from the Broke Perspective

A Two-Step Approach to Preparing Kids for a Giving Holiday: Part One

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While you may not want to think about it yet, the holidays are right around the corner.  The commercial machine is cranking into gear.  My local Costco already has rows upon rows of Christmas presents for kids and Christmas trees and wrapping paper. . .Soon, there will be endless Christmas ads on television for all the latest toys and electronics your kids will beg for.

Each year, Christmas seems to become more and more about spending money and over consuming.  If you’ve come to dread the holiday season and the gimmes that come with it, now is the time to plan a different type of holiday.  Now is the time to plan a giving holiday.  Make a plan now, before the holiday is in full swing.

You can take a two part approach to this.  Part one is to allow your children to have an opportunity to give.  Part two is to reduce your child’s expectations for the gifts they will receive at Christmas.

Preparing Kids for a Giving HolidayToday, we’ll be talking about part one.

Strategies to Allow Your Children to Give at Christmas

While it’s nice to get things for Christmas, giving is also nice.  Well before Christmas starts, sit down with your kids (if they are old enough) and discuss how you’d like to give of your time.  If they’re still young, say under 5, you can just start a new tradition of giving of yourselves during the holidays.  You’ll experience very little resistance from the little ones.

Put in time.  One way to give, especially if you’re on a tight budget, is to give of your time.  You could volunteer to work in a soup kitchen or to help assemble thanksgiving meal baskets at your local church.  You could go through your closets and donate excess clothes or other items.

Give your money.  If you have more money than time, you can give your money to help make the holidays better for another family.  You could pick a name from a giving tree that pops up in December.  (The post office often has one as does Whole Foods and other grocery stores.)  Take your child with you to buy a present for the child in need.

Or, you could donate to a charitable organization like World Vision.  Look through the catalog and either choose to sponsor a child or to make a one-time contribution.  Let your child know how the money will be used and help him to realize how much more he has than the family of the child who will be receiving the money.

Another organization, Samaritan’s Purse, has a giving project, Operation Christmas Child.  You fill a shoebox with simple toys and school materials for a needy child.  This is a nice project to do with your children, and you can give without spending a lot of money, if your money is tight.

If you want to get away from the consumer driven holiday season, know that you CAN have a different kind of holiday this year.  However, you’ll need to start now and take the first step–teaching your children the importance of giving at the holidays.  Next time we’ll talk about the next step, adjusting expectations.

What’s your favorite way to teach your kids the importance of giving during the holidays?

Original photo credit: Theresa Thompson, on Flickr

Propaganda Alert: Visa Direct Deposit Prepaid

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There I was driving home from work, when an ad on the radio catches my attention.  It was an ad for a Visa Direct Deposit Prepaid card.  Apparently not satisfied with a plethora of prepaid cards that are terrible for users (some are O.K., just not most), Visa would now like you to believe that it’s the next best thing to sliced bread to have your paycheck direct deposited to a prepaid visa card.  Yeah, you read that right.

Prepaid Direct Deposit

The radio ad is the voice of a woman, and she talks about how she has her paycheck direct deposited to a Visa prepaid card.  She goes on to talk about how she doesn’t have to drive all the way downtown and stand in a line at her bank to cash the check.  Not content to simply portray the card as a time saver, the ad goes on for the woman to say that because she’s not driving all the way downtown and standing in line, she now has so much more time with her daughter.  Now, the prepaid direct deposit card is not only a time saver, but a family bringer-togetherer.  No, that’s not an actual word/phrase.  I don’t care.

I have a friend from college that used to make fun of infomercials by saying that all they really did was demonstrate how terribly impossible common everyday tasks can be and then show you a miraculous new gadget to “fix” that impossibility. The problem is that most of those every day tasks aren’t all that impossible.  Most able-bodied humans can do them easily without any help from the gadget.  It loses a little something without his “demonstration” of the whole situation.  Obviously, the tactic works though, or we wouldn’t have those infomercials.

Welcome to the Infomercial-ization of Prepaid Cards

Not that we haven’t seen some of this done before.  Heck, the level of celebrity endorsements of prepaid cards with outrageous fees is still amazing to me.  But, this goes a level further.  They aren’t just banking (see what I did there?) on your needing a card with Justin Bieber’s face on it anymore.  No, they’re going right for your heartstrings.  After all, what parent among us doesn’t desire to spend more time with our children?  And this card can deliver it to you!  (You should read that last sentence in your best Billy Mays voice.  R.I.P. Billy.)  In fact, maybe they need the Sham-Wow guy to do the next voice-over for a commercial!

Visa Direct Deposit Prepaid : Solution to a Problem that Doesn’t Exist

Visa Direct Deposit Prepaid Card

Much like those infomercials, the problem that they claim the card fixes just doesn’t exist.  Direct deposit isn’t a new service.  Most employers offer it.  In fact, most actually require it now.  It’s just easier for them.  No lost checks to try and track down.  No delay in mailing a check from a payroll service.  And, most of the time, if they direct deposit the check, it gets deposited into a checking account.  And, do you know what most of those checking accounts have attached to them as a service?  A debit card!  It’s exactly like a prepaid visa card, but without most of the fees!  Mine has no fees.  I’m not sure there are many places that do have fees, in fact.

Maybe I’m wrong.  Maybe there’s a whole population of the country who’ve been waiting patiently for someone to come along and solve this very problem.  Maybe they still bank at an institution that keeps their account records on old green ledger books.  If that’s so, I’d like to introduce them to the amazing egg shell separator that I’ve created.  Yes, it looks exactly like the lip of a mixing bowl.  But, it doesn’t have the added bulk of the bowl!  It’s just a convenient shard sized device that helps you separate your egg shells without having to have the whole mixing bowl there!  Yes, I came up with the idea when the bowl I was cracking eggs into suddenly grew heavy in my arm and fell to the ground, breaking into lots of small pieces.  And one of those pieces was the prototype for the amazing egg shell separator!

What do you think?  Am I wrong?  Was there a need for a product like this?  Or is Visa just pulling on emotional strings to get more cards in peoples’ wallets?

original img credit: classic visa (the inception of the “we’ve got you covered” campaign) : london underground ad (1988) by torbakhopper, on Flickr

What is Financial Independence

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In my post “Are we Doing Personal Finance Wrong“, I talked a little bit about “Financial Freedom”.  Of all the comments that the post got, that was the one thing that was mentioned most of all.  Which, to me, means it bears some further discussion.

Financial freedom, or financial independence, can be defined a little bit differently depending on the person doing the defining.  Like most personal finance, it’s highly dependent on the values of the person.  What I define financial independence as might be a whole lot different from what you define it as.  I think, no matter who is defining it, the real keystone is the word freedom or independence.  We all want freedom and independence.  Some autonomy from the rat race.  The idea of having the financial ability to declare our independence is alluring.

What is Financial Independence, for me.

Financial IndependenceMy definition of financial independence is likely pretty similar to most.  In it’s most broad sense, I define it as the ability to not be swayed by financial needs.  Breaking it down a bit more, it means not “needing” a job just to make ends meet.  It means not “needing” a job to keep a roof over my head.  It also means having the ability to take advantage of opportunities to improve my situation.  Whether that means having the cash on hand to be able to buy or start a business, buy a rental property, or just take a month off to travel or learn something new isn’t all that relevant.  It’s that I have that ability.

Something that needs to be said here is that at one point, not that very long ago, I thought of it as being synonymous with “independently wealthy”.  Which may or may not be true depending on your definition of independently wealthy.  For sure, I don’t believe that it matches up with the definition I had back then.  Back then, I would have told you that independently wealthy meant retirement and not doing a dang thing.  Sitting on the beach all day, every day, being utterly non-productive.  That definition has changed.  A lot.  Financial independence, if it’s synonymous with independently wealthy, doesn’t mean that you don’t work, but that you have the financial freedom to do the work you want to do.  Because you are free from the “need” part of the financial equation, you have the ability to do the work that you feel called to do without regard for how much it pays, whether it’s part-time or full-time, or whether it’s a short term project or not.

What is Financial Independence, for you.

As I mentioned above, your definition might differ slightly (or a lot) from mine.  Maybe, for you, it really does mean sitting on a beach somewhere, doing nothing.  Maybe it means not having to work and spending all your time volunteering instead.

However our definitions might differ is somewhat irrelevant.  Our personal definitions still mean that it’s something worth pursuing to each of us.  And, if our end-game is to be financially independent, I still don’t think we’re doing personal finance right.  I still don’t think we’re even close.  I think we need to break away from the systems we have, find the ones that work for our personal finances, and then achieve our financial independence.

Achieving your Financial Independence.

Breaking away from the systems we have for personal finance won’t be easy.  Heck, our definition of financial independence will probably change along the way and require a new system again.  But, achieving that financial independence should be our primary goal.  Not retirement.  Not our childrens’ college education.  And certainly not saving up cash to pay for that big SUV.  Our primary goal in our personal finance should be achieving financial independence.  Once we’ve achieved that, retirement, education, and big trucks will come.  And they’ll come without sacrificing anything.

The Path to Financial Independence.

Much like our definitions differ, so too will our path to financial independence differ.  Undeniably, I think that the first landmark on that path has to be the complete and utter destruction of all debt.  Before we worry about anything else, we have to be free of the yoke of debt.  Joan Otto, the community manager at Man Vs. Debt, wrote about this recently specifically referencing retirement accounts.  Take a minute or two and read it.  Then, pay special attention to the comments.  Aside from a few people, almost all of the comments are people who think she’s off her rocker.

Is she off her rocker?  Or is she just developing a new system for her personal finance that leads towards her financial independence?  It takes a certain amount of courage to admit to the thoughts and ideas that she does in that post.  (I should know, see: Why I’m Withdrawing from an IRA)  But, then try and remove what you’ve been taught about retirement and saving from your mind for a minute and re-read section 4 of her post.  She’s not being irrational.  In fact, I’d argue that she’s being overly rational.  I think I’ll have to write more about that in another post, but the Vulcan, logic loving, part of me thinks she is right.

Our paths to financial independence will vary.  Some of those people in the comments of Joan’s article will achieve it using the current system.  Many of them will have started saving early, and found ways to drastically save.  But, will they have the liquidity available to make a move on an opportunity in the 30’s, 40’s, or even 50’s?  Or will it have to wait until they’re past “retirement” age and have penalty free access to their nest eggs?

Find your path.  Start the journey, and achieve your financial independence.

Have you already started on your journey?  Have you found your path?  Have you achieved your financial independence?  There are many of us here, including myself, that are new to the journey or haven’t even begun yet that could benefit greatly from your story.  Will you share it with us?

img background credit:Fireworks at Swindon by Stephen_Gunby, on Flickr