CAN I GET RICH ON A SALARY

Money Hacks Carnival #12 — The Twelve Labours of Heracles

noreply@blogger.com (G Blogmaster) — Wed, 14 May 2008 09:56:00 +0000

Heracles was the son of Zeus—King of the Gods—and Alcmena. He carried the strength of many men in his shoulders and the blood of immortals in his veins. He was handsome and well-built and could get away with walking around in a loin cloth through day and night. More celebrated than any of these though, Heracles was a master of the personal-finance arts.

Little surprise that Zeus’s wife, Hera, Queen of the Gods, was none too happy about the product of Zeus’s transgression. One day, Hera sent a madness to Heracles. In the fit of insanity, Heracles threw out his budgets and coupon books, was late making the payments on his high-interest credit cards, chased speculative returns through high-load, high-fee mutual funds, refused to rebalance his portfolio, and borrowed from his 401(k). And then… he spent more than he earned!!!!

When Heracles came to, he was shocked and upset by what he’d done. He consulted with the Oracle of Omaha, who told him, to regain his honor, he must complete twelve Labours. Feats so difficult they would seem impossible.

Heracles knew he would need all of the best money hacks to prevail.

The First Labour was to retrieve the impenetrable skin of the Nemean Lion. What good would his arrows be against such a lion? Heracles knew learning and career advancement would have to show him the way. He knew he would need hacks on:

College and Career

Paying for College at CampusGrotto
Withdrawal Rules for Different College Accounts at Saving for College - About.com
A contest to help new graduates in $50 Amazon Gift Card Giveaway at My Dollar Plan
Proving Your Worth at Save and Conquer

Thus armed, Heracles outsmarted the lion and completed the Labour. The Second Labour was to slay the Lernean Hydra. A monstrous serpent with nine heads and poisonous venom. Worse, when one head was cut off, two new ones sprang forth to replace it. If this were not a blatant metaphor for a never-ending battle against debt, what was? This was a time for snowflaking. A time for money hacks on:

Frugal Spending

By applying the small amounts he saved through each hack against the hydra’s heads, Heracles was able to prevent the new heads from growing—and slay the beast. The Third Labour was to retrieve the Hind of Ceryneia, which was sacred to the goddess Artemis. How to win the favor of the goddess to be allowed intrusion on her sacred deer? Heracles arranged a match to show Artemis his good heart:

Match Made on Mt. Olympus

How I managed to spend almost $9000 on lunch this year at brip blap
How to reduce spending on lunch in Lunchtime Terror at The DebtFree Playbook Blog

Touched by Heracles, Artemis allowed him to complete the Labour. The Fourth Labour was retrieving the Erymanthean Boar. Now the price of the Boar was obscene. But Heracles worried not. It just meant he would earn more miles, and this time he would pay off his balance in full. He knew the money hacks involving:

Credit Card Rewards

The Fifth Labour was the cleaning of the Augean Stables. Augeas, King of Elis, had 3,000 years of inattention to his personal finances. His stables were filled to the roofs with unopened bills and account statements, receipts, and other financial records. Worse still, Heracles had only one day to complete the task. “Isn’t there some kind of software for this?” Heracles lamented. He needed money hacks on:

Budgeting, Planning, and Organization

Using free software to manage your personal finances in Mint.com Money Management Software Review at Moolanomy
The Easy Way to Budget for Irregular Expenses Using A Separate Checking Account at Think Your Way to Wealth
Addressing The Problem of Accounting and Budgeting For Cash Expenses at Personal Financier
5 Ways To Beat The Budgeting Blues at Know The Ledge
Top Ten Tips - Managing Your Personal Budget at Tip Diva
How to Create an Effective Spending Plan at Financialzip.com
Spending without using credit in Financing Paperwork Signed - N/A at I've Paid For This Twice Already...
Drawing Up a Blueprint at Dreaming of Ferraris
How to manage (and how long to keep documents) in Financial record keeping for individuals and households at The Wealth Accumulator
Getting Rid of Clutter Step 2: Sale and Donation at Sound Money Matters
Ways To Keep Up With Personal Finance Blogs - RSS, Carnivals, And More at Free From Broke

With software and budgeting ideas at his disposal, Heracles organized Augeas’s finances quickly. The Sixth Labour was to drive away the vicious man-eating Stymphalian Birds, which represented the dreaded erosion power of Inflation. Heracles considered countering with Treasury Inflation Protected Securities—but he was a more aggressive investor than that. He broke out his money hacks on:

Stocks, Mutual Funds, and Other Trading

And the birds quickly fled, or at least seemed to have fled when the return was taken on average over a period of ten or more years. The Seventh Labour was capture of the Cretan Bull. A relatively simple task for one of Heracles’ strength. But where to house the bull? Heracles needed the money hacks on:

Buying a Home

Mortgage Questions to Ask – Make Sure You Get the Right Mortgage at DebtBlog
Withdrawing money from a Roth IRA to buy a house in First Time Homebuyer Qualification Rules at Roth IRA Explained
Inside information on Open Houses - Did You Know? at Tallahassee Real Estate Blog
Is your mortgage a debt? Mmmm that’s a tough one! at Until Debt Do Us Part

The Eighth Labour was to get the terrible man-eating Horses of Diomedes, yet another seemingly gentle animal that eats people in the Heracles legends. The horses would take up even more room than the bull. So Heracles moved to the money hacks on:

Investment Real Estate

Managing expenses on an investment property in I Know Where My Economic Stimulus Check Is Going at Single Guy Money
The Foreclosure Investor’s Cheat Sheet: 100 Useful Web Resources at International Listings Blog
Condo-Hotels: Questions and Answers at Michael Emilio

The Ninth Labour was to gain the Belt of Hippolyte, Queen of the Amazons. Heracles knew Hippolyte would suffer no fools. She’d not give up her belt without promise of return for herself and the Amazons. “What about a partnership or joint venture?” offered Heracles. So Heracles and the Amazons opened up a business together, with money hacks on:

Running Your Own Business

Operations tips for small businesses in We’re All Looking For Diamonds at The Money Kings
Who Can Apply for Business Credit Cards? at CreditAddict

The Tenth Labour was, well, you can guess by now. Go get some animals and bring them back. This time it was the Cattle of Geryon. Geryon was a horrific monster with three heads and three sets of legs all joined at the waist. But Geryon fancied himself an intellectual as well. An economic theorist. So Heracles engaged him on topics of:

Economy and Philosophy

The Eleventh Labour was to retrieve the Golden Apples of the Hesperides. Through participation in a personal-finance discussion forum online, Heracles found that only Atlas could access the garden where the apples were kept. But Atlas was occupied holding up the sky so that it would not crash to the earth. He literally bore the weight of the world on his shoulders. “What else feels this heavy?” Heracles thought to himself. And he knew then that he needed his money hacks on:

Taxes

Understanding Taxes and my Paycheck at Saving to Invest
Pondering an “Internet sales tax” in Amazon.com vs NY & The Internet Sales Tax at HelpMyCashGrow.com
Claiming a “mine cart” as an Alternative Fuel Vehicle in A Memo from the Office of Steven R. Lawlor, CPA, to Indiana Jones at Riding with Rickey

Using his great understanding of taxes to relieve Atlas of his burden temporarily, Heracles completed the Labour. The Twelfth Labour was the most fearsome of all: master the creature known as Cerberus. To those who waited too long to start saving, Cerberus could seem like a ferocious monster with three heads of wild dogs and a serpent for his tail. But Heracles had started saving at a very young age. He had the money hacks on:

Retirement

What's Your Retirement Vision? at Dividends 4 Life
Using a retirement calculator in INGYourNumber Review at HarvestingDollars

Being able to determining how much he could safely withdraw each year from his retirement portfolio, Heracles found Cerberus to be a friendly sort, and the last Labour no chore at all.

And thus, Heracles regained his honor and was able to enjoy a secure retirement. Sipping mai tais on the beach, Heracles was also able to make:

Heracles’ Picks

Though already mentioned above, here were the favorite hacks of Heracles from this week’s Carnival:

The Easy Way to Budget for Irregular Expenses Using A Separate Checking Account at Think Your Way to Wealth — A practical way of handling irregular expenses that come only once or twice a year. We do something similar.
Mint.com Money Management Software Review at Moolanomy — Free is a favorite flavor… and it sounds like it works well! Plus, Pinyo always has great graphics and layout to illustrate his posts, and in this case, they are great for showing how the software works.
Best Online Discount Brokers at Blueprint for Financial Prosperity — A great place to get started if you are looking for an online broker. Jim includes mentions of several magazine and other rankings, as well as adding his own thoughts about the brokers.
Generic Drugs are Cheaper - A Complete Guide! at FIRE Finance — I heard on the radio the other day that some people were cutting back on their prescription medicines because of their fears about the economy!
Ways To Keep Up With Personal Finance Blogs - RSS, Carnivals, And More at Free From Broke — A nice introduction for relative newcomers to personal-finance blogs or those unfamiliar with RSS and blog readers
How to Bargain in a Slow Economy at Prime Time Money — My better half would like this article, as she never likes to pay full price! My one add-on tip, more for “big ticket” items: be prepared to walk away as part of your negotiating.

Editor’s Endnote: Thanks for all the submissions—62 of ‘em! Please remember, under the Money Hacks Carnival rules, you can only submit one article per blog per week. You can submit through this link for the next Money Hacks Carnival. The next edition will be hosted by Moolanomy. Past and future editions can be found at the Money Hacks Carnival homepage.

What Can You Make As an MBA?

noreply@blogger.com (G Blogmaster) — Tue, 13 May 2008 16:33:00 +0000

Have you ever thought about getting an MBA?

Apparently, when the economy is down, people go back to school—and BusinessWeek says there will be a flood of applications to MBA programs. Its article, “As Interest in B-School Surges, The Outlook for Grads is Mixed,” also reports current business students are “more pessimistic about their five-year career prospects than their counterparts were last year.”

But looking at the numbers shows that pessimism should all be taken with a grain of salt. The article reports that the pace of salary increases for new MBAs is not as fast as past years—but the expected starting salary of a 2008 MBA appears to be over $85,000. Still healthy and robust.

As for the five-year outlook, the survey seems to have covered ten highly-regarded business schools. The students at half of the schools expected their incomes five years after graduation to be somewhat lower than their counterparts had said, a year earlier. But who knows if they’ll be right—and at these numbers, who cares?

In the 2007 survey, the students at these schools expected to be making $194,764 to $279,275, five years after graduation. In the 2008 survey, the students expected to be making $183,884 to $278,364, five years after graduation. The numbers aren’t all that different, and they are very, very high in the grand scheme of salaries in the U.S. by most any measure.

The survey covered only “top-tier” schools, though it’s not quite clear by whose or what rankings. It would be interesting to see if the numbers change with a broader range of schools. But in any event, an MBA would seem to hold the potential of increasing many people’s income.

Now in many cases, going to business school could mean incurring debt—and would in any event cost money. How might one assess that?

I recall that the blogger at the personal-finance website Free Money Finance has an MBA, so I thought I’d check and see what he’s written and what blog discussions he’s had about getting an MBA. Sure enough, there are plenty! Here are links to a few: The Value of an MBA (at Free Money Finance); Help a Reader: Is an MBA Worth It? (at Free Money Finance); and Help a Reader: Get an MBA? (at Free Money Finance).

Where Are The Jobs In This Economy?

noreply@blogger.com (G Blogmaster) — Tue, 13 May 2008 12:40:00 +0000

Trying to “get rich on a salary” contemplates having a salary—and unfortunately, times are getting tougher. The May 19, 2008 issue of BusinessWeek has two articles discussing how different industry sectors in this economy are doing—and what the outlook for jobs are: “Services: A Heavyweight in a Hard Fight” and “The Slump: It’s a Guy Thing.”

Based on these articles, generally speaking, manufacturing and goods-producing sectors look bad and services look good:

INDUSTRY SECTORS
Shrinking (or Looking Weak)	Growing (or Remaining Strong)
Auto Construction Manufacturing Securities	Education Government Health Care Nursing Services

In 2008, through April, jobs in manufacturing are down 358,000; and jobs in services are up 98,000. Interestingly, BusinessWeek points out that men are concentrated in the weaker sectors while women are concentrated in the stronger sectors. From November 2007 to April 2008 (in the U.S.), men lost about 700,000 jobs, while women gained about 300,000 jobs. Despite this, however, men continue to earn more than women (on average). This difference is exacerbated at higher salaries: 75% of people earning more than $100,000 in 2007 were men.

The job outlook may be rosier for imminent college graduates. The article, “Class of 2008 Steps Into Good Job Market (at JobWeb),” reports that employers plan to hire 16% more new college graduates than the year before:

Hiring projections are strong across the board—regardless of industry, economic sector, or geographic region. Hiring expectations are especially strong in the Midwest, where employers anticipate hiring 25 percent more new college graduates this year. Competition is expected to be particularly fierce for graduates in the engineering, computer science, and accounting fields.

Service-sector employers have the most aggressive hiring plans and expect to increase their college hires by nearly 18 percent over 2006-07. Manufacturers anticipate an increase of nearly 15 percent in college hires.

The new-college-graduate outlook in manufacturing is apparently different and better than it is for those already in manufacturing. These “increases” appear to be looking only at hiring at the new-college-graduate level—so some of these sectors (like manufacturing) could be shrinking overall even if their new-college-graduate hiring is increasing.

For a longer-term outlook, such as where jobs will be by 2012, check out: Job Outlook for Tomorrow’s Jobs (at Career Overview).

Poor Economy May Make It A Good Time To Buy A New Car

noreply@blogger.com (G Blogmaster) — Mon, 12 May 2008 13:49:00 +0000

Forbes and Kiplinger’s are both featuring articles this month on how to save money on the purchase of new cars—Forbes in “America’s Best New Car Deals” and Kiplinger’s in the Mark Solheim column, “Save Big on New Cars,” in its June 2008 issue (hard copy). They both note that gas prices are on the rise, new car sales are down, and car manufacturers are under pressure to move cars. So dealers are offering incentives and may be more willing to negotiate.

Here is a list of cash rebates for the cars on the “Best Incentives” list in the Forbes article:

NEW CAR CASH REBATES (Source: Forbes)
	Base MSRP	Cash Rebate
Nissan Altima (hybrid)	$25,070	$1,262
Mitsubishi Galant	$19,999	$2,900
Hyundai Elantra	$14,625	$1,727
Hyundai Sonata	$18,870	$2,621
Subaru Outback Wagon	$21,995	$1,249
Chevrolet HHR	$16,820	$1,528
Dodge Journey (2009)	$19,985	$1,087
Jeep Patriot	$15,475	$2,439
Ford Edge	$26,735	$2,199
Ford Escape	$20,140	$2,025

These numbers are from the online “sidebars” linked from the article—though the main text of the article notes the rebate for the Altima averaged $1,249. It also notes a federal tax credit for the Altima of $2,350, for being a new hybrid to the market.

Chrysler is even offering a “$2,99 Gas Guarantee” program, packaging some of its cars with a card that will only charge you $2.99 per gallon of gas for the next three years, no matter what retail is.

Kiplinger’s said incentives are on the rise generally, noting GM is spending $3,300 per car, compared to $2,800 per car a year ago.

Both Forbes and Kiplinger’s said luxury cars have more room for negotiation than in the past. Kiplinger’s pointed specifically to there being room to negotiate on the Acura TL, the BMW 7 series, and the Infiniti EX35—with manufacturers supplying dealers with money on those models to use in incentives or otherwise, however they like.

Now none of this helps determine whether it’s time for you to buy a car, whether you can afford a new car, or whether you ought to buy a new car versus a used car. Here a couple of links to articles more along those lines: Is It Better/Cheaper to Lease a Car? (at Free Money Finance); Auto Leases (at The Simple Dollar); How Big Should My Car Down Payment Be (at The Simple Dollar); and Depreciation on New Cars Can be Very High (at Free Money Finance) (though noting his preference to buy new).

Success Stories: Elementary School Teacher Becomes Multimillionaire Through Saving and Investing

noreply@blogger.com (G Blogmaster) — Fri, 09 May 2008 12:20:00 +0000

Silicon Valley Blogger’s post, Serious Savers Who Died Very Wealthy, at The Digerati Life, tipped me off to the story of Roberta Langtry—an elementary school teacher who accumulated millions in wealth—and donated much of it to charity and other causes anonymously up until (and upon) her death in 2005.

The short version of her story made me want to learn more, so I started digging. I found a Wikipedia entry on Langtry, what appears to be a news article on Langtry reprinted at the CharityFocus.org blog (which also appears to be accessible at the Globe and Mail newspaper website for a fee), a post on Langtry on the Families.com blog, and a note on Langtry at the Nature Conservancy of Canada website. And here’s what I’ve pieced together.

Langtry was born in 1916 in Manitoba and passed away in 2005, at age 89. She served as an elementary school teacher and speech therapist in Toronto for over 55 years—having started teaching at age 16. She is described variously as “unassuming” and “modestly paid,” with some commentary noting that Toronto public-school teachers were not particularly well paid.

She made headlines when she bequeathed $4.3 million (Canadian) (approximately $3.8 million (U.S.)) to charity, namely, the Nature Conservancy of Canada. It was the largest bequest ever to the Conservancy (established 1962)—and the largest bequest ever to the cause of conservation in Canada. Even in her death, Langtry held true to the role of “unassuming.” It sounds like her identity was not disclosed at the time of her gift—though the executor of her estate revealed her some months later.

Langtry’s net worth has not been disclosed, but her will apparently included several other sizeable gifts to charity apart from the Conservancy—making clear her net worth exceeded the $3.8 million (U.S.) amount of the Conservancy bequest.

So by age 89, Langtry’s net worth exceeded $3.8 million (U.S.).

How was she doing along the way? It looks like Langtry may have first sought professional investment counsel in 1973—at the age of 57. Retaining a gentleman named Robert Borden, she turned over $500,000 to him to manage. In 1973, the Canadian-U.S. exchange rate ranged from 0.9984 to 1.0039 (Source: Economagic). So we can roughly equate her $500,000 (Canadian) to $500,000 (U.S.). If you then try to translate that to 2007 U.S. dollars (using the Measuring Worth relative-value calculator, and using consumer price index as a reference point), that’s about $2,332,305.96 (U.S.).

So by age 57, Langtry’s net worth probably already exceeded the equivalent of $2.3 million (U.S.).

How the heck did she do it? Much is left to extrapolation and speculation—but a few high-level concepts were revealed by Borden. And the two themes that come up are: frugality and good investments.

Borden described Langtry as “incredibly frugal.” Not many specific examples were given, but she lived in a modest one-story home in East Toronto; and apparently, Borden had a hard time persuading her part with a 15-year-old Volvo in the mid-1990s.

Her investments shone with some skill and perhaps some luck:

Langtry’s big pay-off looks like it came from her “prescient” purchase of IBM stock in the 1940s or 1950s—stock which she likely held for well over 50 years (as she still had it at the time of her death).
Other than IBM, however, Borden had Langtry put most of her money into “safe bond investments and solid Canadian blue-chip stocks, such as those of the banks and insurance companies, that appreciated nicely over the decades.”
Langtry was interested in higher-risk investments, especially where they meshed with her anti-pollution/conservation interests. But Borden limited her investments in these to “a conservative 10 per cent of her portfolio.”
It is possible that Langtry had a modest side income. She apparently developed some puzzle-based educational games that were sold in the U.S.; and in 1960, she co-authored a teacher’s guide that was published.

There are lots of questions and gaps. But in a lot of ways, Langtry was many personal-finance bloggers’ and pundits’ dream child. She didn’t have much of a salary. She was entrepreneurial and may have developed some side income. She was frugal. Her investments followed a very, very long-term buy-and-hold strategy, primarily in conservative investments and apparently at least somewhat diversified. And though she made some riskier picks, including individual stocks (possibly some younger or start-up companies in anti-polllution or conservation fields), they were mostly limited to 10% of her portfolio.

Bloggers by the Half Dozen

noreply@blogger.com (G Blogmaster) — Thu, 08 May 2008 13:52:00 +0000

As I learned from Wikipedia’s entry on 6, 6 is the second smallest composite number; 6 is a unitary perfect number; 6 is the largest of the four all-Harshad numbers; 6 is the number of sides of a hexagon; 6 is the number of basic trigonometric functions; and 6 is the number of convex regular polytopes in four dimensions. Hmm. I think I followed that hexagon part. But what I do know is: 6 is the number of blog carnivals through which we are going to dance in our weekly rundown!

[Editor’s Note: In case you are not familiar with blog carnivals, a blog carnival is a multi-blog event in which a number of bloggers aggregate their articles within a certain theme or subject area into one post. The “host” of the carnival writes up the post on his or her blog and includes links to the various articles. Hopefully, this helps readers as they get a “one stop shop” of articles. I post a weekly recap of the blog carnivals in which I have participated—and try also to cull out a few articles that I’d like to share with you here.]

Carnival of Personal Finance:

Alpha Consumer hosted the 151st edition of the Carnival of Personal Finance, “Bloggers on Surviving the Squeeze,” putting on the squeeze on May 5. Here are a few articles that sparked my attention:

Green Panda Treehouse explains how to rent in an appealing neighborhood…
MoneyNing asks: Should I be frugal on my honeymoon?...
Saving to Invest joins the debate over husbands, wives, and money with an exploration of who handles the finances in households…

There are loads of other great posts at the Carnival, succinctly summarized and organized helpfully by Alpha Consumer, so don’t miss out! My post, Who Wears the Pants Around Here Anyway?, is included under “Money Management.”

Festival of Stocks:

Hey mate! Finance ViewPoint presented, From the Land down under, here is the 87th Edition of the Festival of Stocks, on May 5. Finance ViewPoint mixes in some photos of his homeland—my favorite is the crocodile jumping high out of the water. You should definitely check out the Festival! Here are a couple of posts I’ll show as a preview:

George presents Ultimate 2008 Berkshire Hathaway Annual Meeting Guide posted at Fat Pitch Financials.…
FIRE Finance presents Vanguard's Managed Payout Mutual Funds - A Primer posted at FIRE Finance.

My post, Allocate 50% to Non-U.S. Stocks, According to Wharton Professor, was included under “These are beauties mates (Editor’s Picks).” Thanks for the honor!!

Festival of Frugality:

Frugal for Life hosted Festival of Frugality 124 - the Name Edition, going down the alphabet on May 6. As always, there were lots of great frugal tips and lists; and here are a few to get you started:

I’ve Paid For This Twice Already - Frugal Vs Cheap ~ Shopping For The New Furnace…
Money Smart Life - Tips on Spending & Budgeting for Newborns…
My $mall C€nts- The Ethics And Economics Of Used Baby Clothes…
Prime Time Money - Avoid these 5 Frugal Spending Traps…
Saving Advice Blog - Frugality: Normal or Extreme Behavior?...
The Dough Roller - 25 Ways to Save Money on Gas.

Go partake in the rest of the Festival! My post, Going Overseas for Major Surgery — Frugal, Cheap, or…?, is also included.

Carnival of Money Stories:

Free From Broke hosted Carnival Of Money Stories #58 - Dollar Coins Edition, on May 6. There were lots of well-spun stories this week—here’s a small taste:

Lisa Spinelli presents Free Time or More Money-Which is it? posted at Greener Pastures: Personal Finance…
RC presents The Health Savings Account (HSA) and Can I Do Better Than a Health Insurance Company? posted at Think Your Way to Wealth.
SingleGuyMoney presents Remembering How Lucky I Am posted at Single Guy Money…
Dorian Wales presents How to Fortify Your Job: 10 valuable (and challenging) Tips posted at The Personal Financier…
M.B. presents My First Mystery Shopping Experience posted at Be Thrifty Like Us.

Be sure to take a gander at the other stories! My post, Success Stories: Retired At 51 With Over $1.4 Million—And Staying Aggressive, is included under the dollar coin featuring James Monroe.

Money Hacker’s Carnival:

Save and Conquer hosted Money Hacks Carnival #11 - Ebb and Flow Edition, letting the waves loose on May 7. Here were some of the ebbs and flow I enjoyed riding out:

Money Blue Book - All About Balance Transfers and How They Work.
The Sexy Secretary - Are You Ready to Buy a House?...
Master Your Card - 20 Common Credit Card Fees to Watch Out For! …
Millionaire Money Habits - Being in the Business of Me…
Grad Girl at This Writer’s Wallet - The Way to Wealth: Rudeness?
Know the Ledge - Go For What You Love Early In Your Career…
Finance Gets Personal - Angie’s List (“reviews of local companies, contractors and even doctors”).

Visit the rest of the Carnival when you can! My post, Do I Really Need Long Term Care Insurance In My 30s?, is also included.

Carnival of Financial Goals:

DebtFREE-Revolution hosted the Carnival of Financial Goals, on May 7. My post, Six Ways To Set Personal-Finance Goals Without Doing Much Math, is included. The host has a neat idea—rather than selecting “Editor’s Picks” (which is a common practice for many blog carnivals), she is opening it up for “Reader’s Choice” picks! So definitely, go check out this carnival and leave a comment with your vote!

Gen Y is Stupid, Smart, Lazy, and Diligent About Money

noreply@blogger.com (G Blogmaster) — Wed, 07 May 2008 12:22:00 +0000

As I understand it, Gen Y includes those folks who were born from 1978-1994 (according to the Wikipedia entry on Gen Y) or 1979-1994 (according to a BusinessWeek article on Gen Y), or maybe just 1977-1988 (based on the back cover of The Generation Y Money Book, by Don Silver).

The definition of Gen Y is the least of its concerns. Gen Y seems to be all over the news, blogs, and other media regarding their treatment of money and career. Are they bad with money, insufficiently serious about their careers, spoiled, and unrealistic? Are they attentive to money, conscientious and community-oriented, and just unlucky to be saddled with skyrocketing costs of education and healthcare?

I’m not a member of Gen Y (under any definition, though don’t think I didn’t try to find a source that would allow me to redefine myself as a 20-something). But all the buzz about Gen Y piques my curiosity.

What is the deal with Gen Y and money?

Simple enough question, right? So I did some digging, and here are some simple enough answers.

Gen Y is terrible with money.

“They’re called Generation Broke by the media.” (The Money Book for the Young, Fabulous, and Broke, by Suze Orman (inside cover flap).)
“20- and 30-somethings are in a financial mess. Is it because we're dumb, arrogant or simply uneducated?” (“Why Generation Y is Broke,” at MSN Money (tagline to article).)
Their median credit-card debt is $8,200, and they make up a disproportionate amount of U.S. bankruptcies. (“Why Generation Y is Broke,” at MSN Money.)
They live in Peter Pan’s Never Never Land by living with their parents, relying on their parents for financial help generally, and otherwise refusing to grow up. (“Narcissists in Neverland,” at Newsweek.)
Only 31% of those working already contribute to their 401(k) plan. (“Youth Is Wasted on the Generation Y Investor,” at NYTimes (citing Hewitt Associates study).)
They “haven’t a clue on how to allocate their funds”—on average putting 35% of their investments into fixed-income options like bond funds and stable-value funds, meaning they are investing more conservatively than their parents. (“Youth Is Wasted on the Generation Y Investor,” at NYTimes (citing Hewitt Associates study).)

Gen Y is great with money.

“They have financial smarts.” (“Generation Y: They’ve arrived at work with a new attitude,” at USAToday.)
37% (total) and 46% (of those already working) expect to start saving for retirement before age 25. (“Generation Y: They’ve arrived at work with a new attitude,” at USAToday (citing Diversified Investment Advisors survey).)
70% of those working already contribute to their 401(k) plan. (“Generation Y: They’ve arrived at work with a new attitude,” at USAToday (citing Diversified Investment Advisors survey).)

Gen Y doesn’t care about money.

They would “overwhelmingly rather ‘pursue their passions’ than ‘make lots of money.’” (“Narcissists in Neverland,” at Newsweek (citing Manpower study).)
They place a higher value on “self fulfillment.” (“Generation Y: They’ve arrived at work with a new attitude,” at USAToday.)

Gen Y cares a lot about money.

81% say that getting rich is their most-important or second-most-important life goal. (“Generation Y’s goal? Wealth and fame,” at USAToday (citing Pew Research Center poll of 18-25 year olds).)
74.5% say it is "essential" or "very important" to be "very well off financially" (“Generation Y’s goal? Wealth and fame,” at USAToday (citing Higher Education Research Institute survey of college freshmen at the University of California-Los Angeles—noting this figure is rising and was 41.9% in 1967).)
They view education as “a passport to greater earning potential.” ("Why do most students go to college? To get a job and earn more money," at Young Money (citing University of Phoenix study).)
They are less interested in “developing a meaningful philosophy of life” (“Generation Y’s goal? Wealth and fame,” at USAToday (citing Higher Education Research Institute surveys, showing 85.8% of respondents showing interest in that in 1967 and only 45% in 2005).)

Gen Y doesn’t want to work as much.

They want to work less and care a lot about “work life balance.” (“Generation Y: They’ve arrived at work with a new attitude,” at USAToday.)

Gen Y is working a lot.

They (the teenagers) are working more than their parents did (as teenagers)—averaging 17 hours a week compared to their parents’ 8-10. (“Generation Y Savings,” at CNNMoney.)
They work through college—with 70% working while in school at an average 23 hours a week, and with 30% working more than 30 hours a week. ("Why do most students go to college? To get a job and earn more money," at Young Money (citing University of Phoenix study).)

Gen Y doesn’t like to talk about money.

1 in 5 would rather visit the dentist than discuss long-term financial planning. (“Generation Y Money Fears” at Young Money (citing Nationwide survey).)
1 in 8 would rather have a colonoscopy than discuss estate planning. (“Generation Y Money Fears” at Young Money (citing Nationwide survey).)

Gen Y is open about money.

They’re “open” with and “happy” to discuss their finances with each other. (“Gen Y more open with money talk,” at The Daily Telegraph.)

Phew! Glad we got that all cleared up. One of my favorites was: 31% or 70% of working Gen Y is contributing to 401(k). Really gives me a lot of confidence in surveys.

Why all the contradictions—or perhaps paradoxes? To some degree, I think it really doesn’t matter. Part of me thinks the desire to categorize people into neat little boxes just relates to marketing—marketing personal-finance books and products specifically to women, marketing personal-finance books and products specifically to young people—and specifically to baby boomers, specifically to Gen X, and now specifically to Gen Y. If you’re a member of Gen Y and have your financial house in order, great. If you don’t, and it’s useful to look at personal-finance books or blogs or other products aimed at Gen Y, great. (In addition to the Silver and Orman books mentioned above, I noticed, for your possible reference: Generation Debt: Take Control of Your Money--A How-to Guide, by Carmen Wong and Generation Debt: How Our Future Was Sold Out for Student Loans, Bad Jobs, No Benefits, and Tax Cuts for Rich Geezers--And How to Fight Back, by Anya Kamanetz.)

Maybe the way in which they approach personal finance speaks to you.

Maybe it doesn't.

What do you think of Gen Y and money—whether you are Gen Y or just see them on TV? Bad rap, good rap, accurate rap,…?

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