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How to Solve the Financial Literacy Problem

Opinions are generally clear about why such a large percentage of the American population winds up in financial jeopardy. There's no formalized way to learn how… Read more...

How to Solve the Financial Literacy Problem How to Solve the Financial Literacy Problem

Home Mortgage Interest Deduction

Although the home mortgage interest deduction is one of the most oft-cited benefits of owning a home, most taxpayers don't take advantage of it because it requires… Read more...

Home Mortgage Interest Deduction Home Mortgage Interest Deduction

Suze Orman’s New Prepaid Debit Card: The Approved Card

As Ron Lieber reported in the New York Times, personal finance guru Suze Orman is launching her own debit card brand, the Approved Card, following in the footsteps… Read more...

Suze Orman’s New Prepaid Debit Card: The Approved Card Suze Orman's New Prepaid Debit Card: The Approved Card

Binding Arbitration: Wells Fargo Taking Away Customers’ Rights

If you enter into an agreement with a company, and that company does something to wrong you, most of the time you can avail yourself of the American judicial system… Read more...

Binding Arbitration: Wells Fargo Taking Away Customers’ Rights Binding Arbitration: Wells Fargo Taking Away Customers' Rights

Could You Survive at the Poverty Line?

This guest article is written by YFS, owner and author of Your Finances Simplified. YFS was born and raised in west Philadelphia and is now a financial adviser,… Read more...

Could You Survive at the Poverty Line? Could You Survive at the Poverty Line?

Why Americans Take Fewer Vacation Days

In most workplaces throughout the United States, employees receive vacation days to use every year as a benefit, and in some cases, unused vacation days expire at… Read more...

Why Americans Take Fewer Vacation Days Why Americans Take Fewer Vacation Days

Do people have any kind of control over whom they fall in love with? Perhaps Cupid’s arrow strikes randomly, and there is no choice but to obey the heart — or chemicals in the brain — or sexual urges. But once that initial response has subsided, if you and your partner are headed for a life-long or major long-term relationship, there should be some discussion about money.

What role does that discussion have in determining the path of your relationship?

Relationships coupleA recent study explains that opposites don’t attract in relationships. If you’ve ever looked at relationships where each member of the couple is on a different side of a money-related philosophy, you’ve probably suspected this to be the case. A habitual spender in debt and a frugal saver could have a relationship full of conflict; or, if to avoid conflict money is never part of a conversation, the financial damage could be worse in the future.

Avoidance of tough discussions about money, deliberately hiding financial problems, and outright lying about a financial situation could be more damaging than the financial problems alone. When everything is out in the open, and the couple is fully aware of their individual finances, would a difference in philosophy be enough to curtain the relationship before it progressed to a more serious state?

Ginger, who wrote a guest article for Consumerism Commentary, argued that smart women should marry for money. Although the article was misunderstood by many readers, she was not saying that women should marry for quantity of money, but for their approach to money. A smart, independent woman shouldn’t need to take care of a husband as if she were his mother. The same may be true for men, though traditional sex roles tend to make the man-supporting-woman paradigm more acceptable.

There is more that goes into a successful relationship that being financially compatible. Differences in religion, social issues, values, and goals are important to address. This is a financial website, though, and readers are generally focused on their thoughts surrounding money. In planning to move a relationship forward, how important is a compatible philosophy of money when compared to other matters that define compatibility? Would you be willing to accept a difference in opinion about a divisive political issue before you accept someone who doesn’t share the same financial values? Or do you feel that you might be able to sway your partner’s approach to money more easily than changing other philosophical differences?

I’m interested in hearing opinions from every reader. What was or should be the role of money in choosing a relationship? Leave your comments below.

Photo: Dragunsk
Wired

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There’s a chance you could become a multi-millionaire after repeatedly slamming your head into other people and suffering through the resulting mini-concussions and minor brain damage, but not everyone can be a professional football player in the NFL. There’s a safer and less harmful path toward financial independence.

Cognitive ability is an important part of your human capital, and your human capital measures, among other things, how likely you’ll be able to support yourself financially, particularly through difficult economic times. Cognitive ability is important because many jobs requiring intricate skills and the best careers that offer opportunities for advancement require the ability to learn and adapt, and that’s the core of cognition.

The ability for the brain to process information changes throughout one’s lifetime, and without stimulation, cognitive ability can decline. When companies like Google or SAS ask puzzling interview questions, they’re testing, among other things, cognitive ability. To be hired as a software engineer, you would need to show that you have a strong command of whatever primary programming language is popular at the time, but in an industry that changes so quickly, strong cognitive ability will show that you can learn and adapt to the changing environment.

Rubik's CubeThe key is instilling cognitive ability in children at an early enough age. As we get older, we can continue to refine cognitive ability, but only to a small extent. These tactics may no longer work for me; the best adults can generally do to keep cognitive skills sharp is to get enough sleep and exercise, and eat nutritious food.

If you’re interested in helping your child prepare for a life full of challenges, there are some tactics you can employ.

Learning a new language

As a child, I enjoyed learning languages. I never became fluent in anything other than English, but I enjoyed the process of learning the rules. As a kid, I was fascinated by languages, and spent time learning a little bit of as many as possible. Like many kids, I learned a little Spanish from Sesame Street. I learned Hebrew and tried to teach myself Yiddish. I studied Latin in middle school, was taken out of usual classes to study Greek independently, and took five years of German. I learned programming languages like BASIC, Pascal, lisp, and C. And as a younger kid, I dabbled with creating my own languages and codes.

Music and mathematics have features in common with languages, as well. Music, particularly learning to play an instrument instead of just listening to Mozart, has been shown to improve cognitive ability.

As an adult, learning a new language or a musical instrument is a time-consuming task. There are programs that help frequent travelers learn languages quickly, but you could get a bigger cognitive benefit by learning a language through a more academic curriculum or through immersion. Rather than focusing on key phrases that help you get by in a foreign land, incorporating a new language into the way you think can help keep your brain active. On the other hand, young children, even those learning their first language or languages, can often learn multiple languages concurrently without being confused. Language skills not only improve cognitive ability, but they can make someone a more marketable employee around the world or increase the chance of international success in their own businesses.

Completing puzzles

Elementary school is a great time to focus on solving puzzles whose solutions require thinking “outside the box.” I seem to remember this being called “lateral thinking” when I was younger, but I don’t know if that term is widely used today. These are the types of puzzles that stymie job applicants at companies like Google. But puzzle solving as an adult won’t have the same impact as puzzle solving when the brain is at its most impressionable.

  • Logic puzzles are kind of like the game Clue. You often have two or more dimensions to work with, and the goal is to pair each of the dimensions together based on a limited number of clues. A grid helps eliminate incorrect pairings to discover what’s correct. The more dimensions included in the puzzle, the more brain power necessary to solve the puzzle.
  • For a child, a Rubik’s Cube can be an engaging puzzle. While the answer now comes packaged with the toy, and there are numerous Youtube videos describing how to solve the puzzle in about twenty moves, the cognitive challenge is in working to find patterns of movement that move closer to the result.
  • Text adventure games open up a child’s mind to being able to control their environment. Video games have changed since I was a kid, but I enjoyed the early text adventure computer games like Scott Adams’ Adventureland. (Classic game lovers can play Adventureland here.)

Reading and writing

Reading and writing help develop important cognitive skills focused on processing information the same way they’ll need to make sense of problems as adults. Writing, particularly creative writing, improves the command of language and can help children find clarity when expressing their ideas. Writing is a skill that will easily set someone apart from the competition, as might be necessary in tough job markets. I’ve personally seen atrocious written communication among co-workers throughout the many jobs I’ve had. I will never say I’m a great writer, but these skills are lacking in my former non-profit and corporate environments.

When I compose a well-worded communication, the supervisors shouldn’t be surprised. Every employee with a college education should be able to express himself or herself somewhat eloquently.

These cognitive skills nurtured at an early age can help prepare children for financial success in life. The best careers need smart and flexible employees to take on unforeseen challenges. People often predict what the hottest careers may be one generation from now, but the specific opportunities are irrelevant if children are prepared today to handle any problem that presents itself.

What did you do as a child to improve your cognitive ability? If you have children, how are you helping them prepare for the future?

Photo: Don Wright

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Cash back credit cards can help consumers practice responsible spending while earning a little extra for their efforts when used properly. It wasn’t long ago that the best cash back credit cards were offering rewards as high as 5% for all purchases, but that is unfortunately no longer the case.

Today’s cash back credit cards are all similar in nature, generally offering 1% cash back on all purchases. However, if you look hard enough, you’ll find a number of credit cards with higher cash rebates than just 1%. This article lists the best cash back credit cards you can find today, and I update the article when there is new information to share. Along with a brief description of each of these best cards, I have included the cash back percentages and any tiers or restrictions, so there are no surprises if your cash back credit card isn’t earning as much as you first thought. Keep in mind that in order to make a rewards program worthwhile, you must avoid interest charges and late fees by paying your bill on time and in full every single month.

Editor’s choice

Chase Freedom® Visa - $200 Bonus Cash BackChase Freedom® Visa – $200 Bonus Cash Back. The Chase Freedom Visa – $200 Bonus Cash Back offers a standard 1% cash back on all purchases, as well as the opportunity to earn 5% cash back on select purchases throughout the year, subject to a maximum. Every three months, the categories in which you can earn 5% cash back change, so for example January through March could be gas stations and Amazon.com, April through June might be grocery stores and movie theaters, July through September could be gas stations and restaurants while October through December could be hotels, airlines, Best Buy and Kohl’s. In order to qualify for the 5% cash back, you must have an account in good standing and follow the terms and conditions set forth by Chase. Categories will be announced to cardholders before they happen, so look out for updates from Chase.

The Chase Freedom® Visa – $200 Bonus Cash Back also offers up to an additional 10% cash back (up to 11% total cash back) on purchases made at select merchants when you shop online through the Chase website. The card also carries no annual fee. To qualify for the $200 cash back, you must spend only $500 during the first three months, making it the easy choice for best cash back credit card.

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It’s not often that a young, female star of music, movie, and television can avoid financial scrutiny. Tales of financial woe tend to be much juicier, anyway. It’s not difficult to remember the Britney Spears train wreck. She couldn’t handle earning more than $700,000 a month. At least her antics kept her in the news.

I’ve been recently enamored with Zooey Deschanel. She’s a fine actor and a fine singer; I own her three albums on vinyl — including a Christmas album, something of a stretch for me. But today I learned something that increased my respect for her: she spends responsibly. According to the financial disclosure she included when she filed for divorce last year, obtained by TMZ, she keeps her spending under control.

Zooey DeschanelThat’s not to say she doesn’t spend extravagantly. According to the disclosure, she pays $4,000 per month for a mortgage ($3,000 of which is interest on the loan), $1,000 per month on groceries, $1,000 on entertainment, and $2,600 on clothes including laundry. In all, Zooey spends more than $27,000 a month. That’s not exactly frugal living.

That doesn’t tell the full story. The actor also disclosed that she earns $95,000 per month. She owns her own businesses:

  • Oscar Jaffe Productions, a loan-out company. This is a type of organization used in entertainment so that when a film or television producer hires an actor like Zooey, the production company pays the actor as a corporation, not as an employee. Since the actor wouldn’t be an employee, it reduces the tax liability for the company producing the show or movie (all other things being equal).
  • She & Him LLC, a music licensing company. Again, with a corporation owning the licensing rights to her music, there might be some tax advantages above and beyond what might be the case if Zooey were to own the licensing rights herself.

From the earnings of these two businesses, she passes $95,000 to herself as income. All of Zooey’s expenses, including debt, add up to less than 30% of her pre-tax income. That’s not bad — but it’s not too hard to accomplish when you have $95,000 per month to work with.

Photo: breezy421
TMZ [pdf] via Well Heeled Blog

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Consumer Financial Protection Bureau Wants Payday Loan Feedback

by Flexo
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While the mainstream financial industry has faced a dizzying array of government and quasi-government regulations through most of the last one hundred years, non-bank financial products have, for the most part, evaded regulations. Catering to lower-income communities, payday loan storefronts and check cashing establishments have managed to justify their business models. The more desperate you ... Continue reading this article…

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Buy Airfare Six Weeks in Advance

by Flexo
Airplane

Airlines Reporting Corporation (ARC), a company that processes airline transactions for travel agents and consumers, has analyzed 144 million transactions for domestic flights in 2011 to better understand airlines’ pricing schemes. The study found the lowest fares were available six weeks in advance of the departure date. I’ve always been under the impression that the ... Continue reading this article…

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The Lonesome, Pet-Free Life

by Flexo
Rupert

For almost as long as I’ve been living without a human roommate, I’ve enjoyed the company of my cat, Rupert. I adopted Rupert from my friend who determined his newborn daughter was allergic to cats. He had already owned Rupert for a long time, and I knew I’d be the cat’s new owner for the ... Continue reading this article…

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Fix the Tax System By Taxing Consumption

by Flexo
Ferrari

An elegant answer to the over-complicated tax system is to shift the basis of the system from income to spending. There have been a variety of proposals to make this happen. It’s the core of the so-called Fair Tax and Herman Cain incorporated its concept into his 9-9-9 tax plan. Other proposals have called for ... Continue reading this article…

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Podcast 144: Best Things to Buy During Winter

by Flexo

Today on the Consumerism Commentary Podcast, Bryan J Busch talks to Andrea Woroch, consumer savings expert. They discuss when and why it can be smarter to shop for certain items during the winter. Consumerism Commentary Podcast Best Things to Buy During Winter: S06E17 / 170 Download – RSS – iTunes Table of contents [00:00] Introduction ... Continue reading this article…

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How Is Your Budget Doing These Days?

by Phil Cioppa

This is a guest article by Phil Cioppa of Arbol Financial Strategies, LLC. Phil has over 10 years of financial service experience and specializes in asset management strategies, insurance planning and taxation issues. A budget is an important part of any financial plan, and right now is the best time to take another look at ... Continue reading this article…

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