Question about helping out our Adult Kids
We have three grown kids. Two are doing fine, but the youngest one is married with two kids and is struggling financially. They are behind on their mortgage and credit card bills and they are constantly coming to us asking for help . . . and we've been giving it. What should we do to help them? We don't want to enable them, but we want to help our grown kids. Is it crazy to want to help them?
Answer about Adult Kids and your Money
Please proceed carefully. You're right, we don't want to enable our grown kids. As we’ve seen in the news, whether it's a government or a bank, bail-outs are not an effective way to solve a long-term financial problem. And when you're dealing with family relationships, giving money can really muddle things. Adult children may need some "tough love," from caring parents if they are going to learn the from their circumstances.
Over time we’ve developed some guidelines that have worked well when it comes to providing a financial hand-up rather than giving a hand-out for families dealing with adult kids who ask for money.
Don’t give them cash.
People who are struggling financially usually get there because of poor spending decisions. Giving them money is like giving an alcoholic a drink. It usually doesn’t solve anything.
Do give them food.
We always have extra food in our pantry, so often times will just fill a grocery bag and give it to some one who needs help. If your kids live out of town, mail them a grocery gift card.
Do give them gas.
Buy some gift cards for a near by gas station or a monthly bus pass to help with transportation costs.
Do pay a utility bill.
Offer to mail a check directly to one or two local utility companies — don’t give them the cash — mail the bill yourself.
Coaching and Encouragement.
Encourage them to surround themselves Read More...
Question about accelerating a mortgage pay-off
I've read in your books and in several interviews that you paid off your first home in 9 years. Could you explain how you paid off your house so quickly?
Answer about how we paid off our mortgage in record time
There are five things we did to pay off our first home in nine years:
1) Save a larger down payment
Years ago, when borrowed money was easier to get, down payments could be lower or non-existent. Even today, FHA homes only require a minimum of 5% down. At the time we purchased our first home we were earning about $20,000 per year and had managed to save enough to put a 15% down payment on the house. The larger down payment meant that we'd have a smaller monthly payment because we borrowed less. Read more about how we managed to save our down payment here.
2) Buy a smaller home
We bought a small (1,458-square-foot) repossessed house and financed less than the bank said we could. Many people think that buying a bigger house is better. Larger houses cost more to heat, cool, insure and maintain, and you pay more in property taxes. Don’t buy a larger house to impress your friends and family — they aren’t the ones who will lie awake at night worrying about making the payment, or have to pay the higher utility bills or maintenance costs. Thinking small helped keep our payments manageable and allowed us to pay extra each month.
3) Have a Budget to Control Spending
Having a way to control your saving and spending is the key to reaching your financial goals. Our budget allowed us to save in advance of all anticipated expenses. It also revealed when we had extra money, which we used to pay off the house. Our first additional principle payment was only $1 extra. The next month it was more, and then as our income increased, so did the amount we paid on extra principle. But the key to paying extra was that we had a great budgeting system (that we still use today) that let us know whenever we had extra money and how much extra we could afford to pay.
4) Hate debt (with a smile)
We avoid debt like the plague. It’s an attitude we both share. If someone tries to entice us to make a purchase with credit, we simply walk away. We are so addicted to living within our means that the lure of buying now and paying later is very unattractive. So paying off our house was more of a priority to us than buying new cars or taking fancy vacations. We bought gently used cars when needed and took enjoyable annual vacations, spending only the money we had saved for that specific purpose. By avoiding debt, we were able to keep our monthly expenses lower and raise the amount we paid off on the house each month. Our book, America's Cheapest Family Gets You Right on the Money descries many ways that we have found to get better quality items for much less than retail!
As we watched our house’s principal balance plummet, we experienced a feeling of euphoria. This led us to find more ways to save money on other expenses such as Read More...
What’s on the mind of your average 15-year-old?
Most likely it’s a combinatory of prom dates, SATs and driver’s education classes. Well, that’s not the case for Maddie Bradshaw. At the age of 15, Maddie pitched her first business idea on Shark Tank, convincing Mark Cuban, Robert Herjavec and Lori Griener to invest $300k for 30 percent of her company, M3 Design. Three years later, Maddie enrolled at Stanford University. Today, she made Inc.’s list of the “Top 40 young people to become millionaires by the age of 20.” Maddie Bradshaw is a prime example of why it is never too early to teach your children basic entrepreneurship skills.
Children see the world from a different perspective than adults. They see niches that adults miss, they become enamored in play, and they’re not afraid to let curiosity guide their creative explorations. As a parent, you have the unique ability to teach your children the lessons and skills they need to become successful entrepreneurs. These skills include the art of observation, marketing basics, and financial management 101.
While it can be daunting to learn all of the skills one needs to be a successful entrepreneur in today’s market, it is easy to get started teaching kids the basics. Here are a few skills that you can include in your lesson plans:
Look for Problems and Niches
Teach your kids to observe the world around them and encourage a culture of problem solving. Point out products they might like and ask your children to tell you what they like about them. Ask them how they would make a particular item better. If your kids ask for a toy or product, ask them where they can buy it. If something they like breaks, ask your children how they would fix it.
Get Your Children Out of the Box [Store]
Walmart and Target seem to carry every item in the world, but box stores can be limiting. Teach children outside the box thinking and encourage kids to search out and stumble upon differentiated value and off-beat products by shopping at specialty stores, rummaging through thrift shops, adventuring at flea markets, and perusing through antique shops…teach your kids that a good idea can be found anywhere.
Educate Your Kids About the Marketplace
Now that your kids have gained a creative edge, they need to learn about the world of products and services. Did they find a cool toy from a long time ago that they could repurpose? Did they notice that people in the neighborhood need help raking leaves or that they have a penchant for cold lemonade? Once they have an idea, hit the library, open up Google and ask, “Who else is doing this?” Are there competitors, and if so, can you be different in some way? Maybe your kids can provide a local version of a service that is not yet available (and it can teach them the basics of supply and demand in the process). Maybe they can provide lemonade for cheaper than the corner store. If the idea is more complex and requires some research to build it, watch Do-It-Yourself (DIY) videos on YouTube or take some free background classes at sites like Khan Academy.
Share Opportunities with Print and Electronic Marketing (And How to Stay Safe)
Now that your kids have developed their ideas into products or services, it’s time to get the word out! If they are offering a local product or service, they can make some signs to put up around the neighborhood or in the local newspaper. If they are computer whiz kids, they can even advertise for free on Craigslist, build a website, or pay a little money to place locally-focused Google AdWords or Facebook ads. Teaching online advertising skills early on is cheap and easy. Further, teaching these technical skills will help them succeed in the future. Targeting online tests may take a few tries, but whether the attempt at sales succeeds or fails, the investment in skills development will pay dividends far into the future.
Throughout this learning curve, keep a close eye on your child’s Internet activity and email. The Internet opens up new business audiences, but also attracts predators and spammers. Help your children understand what types of messages are business-related and which are sent from unreliable sources. If you are meeting a potential customer, attend the meeting with your child and meet in a well-lit public place.
Encourage Financial Management
Business ideas may succeed, fluctuate, or fail, but, long term, the underlying financial structures don’t change much. It is therefore paramount to teach your children prudent financial management skills. Here are three basic ways to build financial knowledge and confidence over time:
We love changing our home's decor for each season. With summer here, we tried something new on our fireplace mantle - we filled a lantern with baseballs and softballs in honor of that All-American past time! Throw in a string of twinkly lights and you've got a simple and beautiful piece of seasonal decor.
Click here for more details—especially how we found most of our baseballs— and other summer craft ideas.
The buying and selling of used stuff is a big business.
Seven Reasons Why We Love Buying Used Stuff
1) Used Stuff Costs Less
Retailers have to make a profit, someone selling an unwanted item usually doesn’t have to make as much. A re-seller also realizes that they won’t get retail value for their item, and usually this person has no need for the item anymore—it’s just taking up physical and mental space. Consequently, they’ll gladly accept less than retail for it.
2) Used Stuff Works Fine.
Think about it – does a used book read just as well as a new one? You bet. Does a used bicycle ride as well as a new one . . . most likely. Sure, it may need a few adjustments or new parts, but it will ride just as well. How about a used car? If you’re careful and have a good mechanic check it out for you, you’ll likely save a boodle and enjoy the ride just as much as if it were brand new.
3) Used Stuff Depreciates Less.
We’ve all heard that a new car loses value as soon as you drive it off the lot—that’s depreciation. But what if you buy a used car—is there instant depreciation? Not as much, if there is any at all. Your used car will hold its value better (more about this in a minute) . . . and it will hold its value longer.
What makes up your Net Worth? Did you realize that your Net Worth is in large part the value of your used stuff? To calculate your net worth you add up all of your bank accounts, investments, IRAs and 401ks, and then figure the estate sale value of your other possessions (cars, furniture, jewelry, musical instruments, artwork, clothes, etc). You calculate the used value of your stuff. If I come to an estate sale to buy a Kitchen Aid Mixer, it won’t be selling for its retail price: it’ll be selling for 50 to 90 percent of retail. It will be worth its depreciated value.
Two recent examples:
A) Becky’s truck. Our daughter Becky saved for several years and finally purchased the truck of her dreams in 2009. She paid $11,500 cash for a gently used 2003 Toyota Tacoma with 70,000 miles on it. In December of 2012 Becky purchased another Tacoma, this one was a 2007 with four wheel drive. She listed her 2003 Tacoma on CraigsList and sold it in 3 days for . . . watch this . . . $12,000 – it had 90,000 miles on it. She drove her truck for 3 years and sold it for $500 more than she paid! That’s reverse depreciation—her used truck APPRECIATED!
B) Steve’s Back. Last year Steve was working through some lower back pain and was told that an inversion table would help bring some relief. He found a gently used Teeter Inversion Table on CraigsList for $60 (with delivery included). For three months he did chiropractor prescribed exercises and used the inversion table. When he was feeling better we decided the inversion table needed to go (it took up too much space in our family room). We researched comparable models on CraigsList and listed ours for $100. It sold in two days, just before Christmas!
Remember we mentioned buying a used Kitchen Aide mixer a minute ago: we did find one at a thrift store a Read More...