Tuesday, 26 February 2013

Waiting for Spring

February always seems like the longest month of the year; all 28 days. This February seems longer than ever. We have had more snow this month than all of winter and the cold days are not going away. In fact, we are in the midst of another winter snow blitz as we post this blog. We are peppered with a warm day every now and then, where you can shed the winter coat, but it is just a tease of what is to come. Perhaps that is why it is such a long month.

I’m also looking at seed catalogs and dreaming about a bountiful harvest from my backyard garden. I’m anxious to start to work in the dirt, plant seeds and see nature take its course. The taste of fresh tomatoes, sweet corn, lettuce cut from garden is something I’m longing for. A back yard garden is not only good for your health; it is good on your wallet. You can harvest loads of fresh fruits and vegetables for pennies comparatively.

The sun is coming up earlier and setting later. In walking the dogs over the gardens in the snow, I can visualize the vineyard I am going to plant this spring, and the straight rows of corn in the field.

Maybe all of this dreaming of what is to be -is making February longer; but it is my way to get through the longest month of the year…February. Let us know how you get through February and what your dreams are for Spring. It will be here before we know it.

Sequester the Sequestration?

Federal Government Expenditures as a Percentage of Nominal GDP

I don't know the official reason that Washington elites give when asked why they decided to call automatic budget cuts "sequestration" but it sure is ironic because one of the meanings of the verb form, "sequester," is to remove property from the possession of the owner temporarily until a lawsuit or other dispute is settled. Could it be that the federal government thinks that taxpayers' money is its own property so when a dispute over its use arises in Congress the funds have to be "sequestered?" A more interesting question is why Congress remains deadlocked over the budget. The simple answer is that a significant percentage of Americans, but by no means all, believe that the federal government has grown too big.

Are they right? Well, that (too) requires making a valuable judgement. But they certainly have empirical reasons to be concerned, as the time series chart above suggests. What it shows is that the U.S. government was first tiny compared to the overall size of the economy (Remember, the dispute between Hamilton and Jefferson was over whether the government would be tiny or teensy weeny, not "large" or "small" as reported in too many textbooks ... see my One Nation Under Debt for details.). During major wars (1812, Civil, WWI, WWII, all clearly visible on the graph), federal expenditures grew as a percentage of GDP, only to subside after the war. (Note, though, that they never went back to their prewar level. This is what economist Bob Higgs has called the ratchet effect.) Since the Depression, however, government expenditures/GDP have trended upward, first due to the New Deal, then to a series of minor "wars" (Korea, Vietnam, Cold, Drugs, Terrorism) and "races" (space, missile).

The growth of federal spending as a percentage of GDP was not monotonic after World War II but rather exhibited ups and downs with a clear upward trend that was not attenuated until the 1970s and partially reversed in the 1990s. (It wasn't that the government shrank -- nominal expenditures have grown every year but one since 1956 -- but rather that the economy grew faster than government expenditures under Clinton.) Since Obama has taken office, however, government expenditures have surged while the economy has been stagnant. Expenditures over GDP is therefore at a peacetime high.

Americans might be quite happy to allow government expenditures to continue to expand faster than the economy if they believed that they benefited from it in a significant way. Most don't, however, as evidenced by the dismally low approval ratings for Congress and other federal institutions, like Social Security (which people like when it is paying them or relatives but despise when its Fubar characteristics are explained).

The best of all worlds would be for Congress to increase the government's efficiency, to have it do what it currently does well with fewer resources and to have it stop doing things it does not/cannot do well. That is not going to happen, however, because few in Congress have the requisite brainpower and none have the necessary incentives to make such decisions.

Second best will be to suffer the sequestration cuts, skimp through the growth slowdown/recession likely to follow, and prepare for the economic boom likely to begin a year or two out.

Worse will be for Congress to "kick the can down the road" yet again (enact more temporary measures). The worst measure would be for Congress to continue to force huge deficits down the throats of our children, grandchildren, and great grandchildren.

Sunday, 24 February 2013

Sequester = Politician Self-Interest

We are only a few days away until the automatic government budget cuts and Congress and the President can't come to agreement on specific budget cuts and/or increasing revenue. Ramifications will be across-the-board cuts, effecting defense, education, national parks, air traffic controllers and all services provided by our Federal government.

Why can't the congress agree? To me it all comes down to self-interest, not willing to step up to hard choices and not agreeing on common values. Roy Disney is quoted as saying "When values are clear, decisions are easy." What does Washington value? “How I am going to get reelected” -not what is best for the country?

If a family is in debt, they have to agree on how they are going to reduce that debt. It typically is achieved by a combination of reducing spending and increasing income. If the family agrees to common values, decisions on what to cut and where to increase income become easy. The family looks inward on where to cut and makes sacrifices to balance their budget. The cuts are difficult but the family makes the difficult decisions and works to balance the budget.

On the other hand, our Federal Government can't make difficult decisions so everyone gets cut. It saves the politician's political career because they did not vote to cut anyone's project. Yet they can look good by restoring federal funding. As a country, we need to decide what we value.

The sequester tells me what the politicians do not value the fiscal commitments of the United States. They do not value how hard the tax payers work to earn money to pay their taxes. The sequester could put our economic recovery on hold which impacts everyone. The politicians do not value cooperation and working for the common good.

Politicians were elected to work for the common good. Now is the time to get to work, make the hard decisions, put aside partisan politics, and agree to a budget before the sequester goes into effect. Please do what you were elected to do - damn it!

Friday, 22 February 2013

A Financial Literacy Blog for Teachers and Teens

Personal Finance for Teens Unleashed
A Financial Literacy Blog

I started Personal Finance for Teens Unleashed in 2013 – a great year for new beginnings.  I added Unleashed to the name because this blog explains personal finance so anyone can understand it, especially teens.   It is all about teaching financial literacy and money management skills to teens.  It is set up to be a helpful resource for teachers of personal finance, business and economics.  It offers links to fun, hands-on money management lessons that you can’t find in any book.  They are tried and true time savers for teachers and designed with middle school and high school students in mind.  The key word to making these lessons different is DISCOVER!  They are set up so students DISCOVER the answers to their money questions via resources on the Internet.  After a lesson on purchasing a car, no one will need to tell them if they can afford the car of their dreams – they will discover the answer for themselves – Oh so empowering! And the only reason I needed to start this blog. 

Free Lesson on Setting Financial Goals

If you teach high school or middle school and are looking for a great hands-on lesson for setting financial goals check out Wonderful life, a FREE lesson, at Teachers pay Teachers, an open marketplace for educators where teachers buy, sell and share original teaching resources.

Wonderful Life is a great lesson for any Personal Finance class. It is fun, interactive and gives students a chance to get to know each other while setting goals and sharpening communication skills.

The assignment addresses national standards for personal finance and includes four pages of teacher notes, eight pages of detailed student instructions with graphics, a completed sample project, and a grading sheet ALL for FREE at TPT!


If you are looking for ways to get students talking about money management check out...

The Personal Finance Conversations Starters, Money Talks, are designed to get students talking about personal finance and money management and can be found at TPT.

The conversation starters are 160 question cards on a wide range of personal finance topics including saving, spending, investing, ambitions and goals, career choices, college, starting a business, charities, retirement, wills, job loss, the cost of health care, and bankruptcy. There are no right or wrong answers to the questions, only honest answers. To be successful students need only explain the reasoning behind their answers.


Friday, 15 February 2013

MarketPlace Money Fun

From Barbara Bogaev on Marketplace Money, “We're still fresh off of our love hangover from Valentine's Day here at Money this week, so we've invited a couple of personal finance experts to answer your questions about money and relationships. Bob and Kristy Walker ..."

The show airs this weekend (2/15/13) on most National Public Radio Stations. If you don't find it on your local NPR station, here is a link where you can listen: http://www.marketplace.org/topics/your-money/letters-how-can-i-budget-when-im-self-employed

It is a great show, regardless if we are on or not so we highly recommend you tune in weekly to enjoy and learn. -Happy Listening

Tuesday, 12 February 2013

Can’t Buy Me Love – Happy Valentine’s Day

As Valentine’s Day quickly approaches, I think back to the Beatle’s song “Can’t Buy Me Love.” The Wall Street Journal was also thinking of the little things that show love in their article “Small Acts, Big Love.” By putting the other person’s needs above yours, spending a little time, and being creative in your approach, really shows that you appreciate and care for them and you don’t take them for granted.

Some key things to remember when you demonstrate your love through actions:
• Don’t expect a pay back
• Think about what your partner would like, not what is easy for you
• Put your partner’s needs first
• Show respect and appreciation
Here are a few little things that say ‘I Love You’ every day of the year:
• On cold days, start their car and scrape the ice off the windshield
• Make the bed
• Pack their lunch
• Open doors
• Leave the toilet seat down
• Leave the bathroom sink clean
• Pick up after yourself
• Empty the dishwasher
• Make a meal
• Say “thank you”
• Anything that your partner usually does for you, take your turn and do it for your partner

Show your love and appreciation 365 days a year, not just on Valentine’s Day. It doesn’t have to cost a penny and to quote the Beatles “Money can’t buy me love.” Happy Frugal Fun Valentine’s Day – every day of the year.

Tuesday, 5 February 2013

Building Blocks

Hosting a baby shower? Hate shower games? Pinched for funds?

Try this one. We took scrap wood and cut them up into 2x3x3 inch blocks, sanded and painted a baby-powder white. As the guest arrived, they selected a number or a letter to feature on their block. We had acrylic paint pens for everyone to work with. It was a fun opportunity to release our inner artist. We coated each block with a protective spray, and wa la! Our guest have collectively created a one-of-a-kind set of blocks.

The project cost $5 in paint material and provided not only a group project, but a very special gift for that little one.

Very frugal and fun!