From the Editor’s Desk

Gary Foreman

 

A Commitment to Financial Literacy Is Saving You Money

Hello to all my Frugal Friends!

“Financial illiteracy and personal financial problems have reached epidemic level. Little is being done – personal finance is not taught at most schools or by most parents. People are still learning about money via the “school of hard knocks” and have few trusted sources for content with true educational value. This situation leads many to persistent long-term financial problems, obstacles, and stress.” (source: National Financial Educators Council website)

Last year they did a survey asking people to estimate how much money their lack of education cost them. $1,200 was the estimate for the prior year’s loss.

That’s why I’m glad that you’re here. You’re making a difference in your finances and in your life. We’ll do our best to help you along the way.

Here are just a few of the hundreds of ways to help your finances that are available to you:

So I invite you to help yourself to a big batch of practical financial information! Save some of that $1,200 that other less informed people are wasting each year. Oh, and if you know one of those people, invite them to subscribe to The Dollar Stretcher.

On a different note, I wanted to share something that I think will benefit all of our readers. Back in 2006 we began a newsletter called “Inflation Fighters” that dealt with the rising prices of the time. When the recession of 2008 hit, we redirected it to “Surviving Tough Times” and it’s continued that way until now.

We have some great articles coming up that we want to share with all of our readers. So beginning in February we’re going to combine “Surviving Tough Times” with “The Dollar Stretcher.”

How will this benefit you? We’re going to deliver The Dollar Stretcher twice a week. Different articles in each issue. Whether you currently are a subscriber to The Dollar Stretcher or Surviving Tough Times, beginning January 31, you will receive The Dollar Stretcher both Sunday evening and Wednesday morning.

If you’re currently only receiving Surviving Tough Times, you might want to add dollar-stretcher@hub.thedollarstretcher.com, the email address from which The Dollar Stretcher is delivered, to your list of emails that you want to see.

Our goal is to make as much useful information as we can available to you.

Keep on Stretching those Dollars!
Gary

A Look at Government Waste

Hello to all my Frugal Friends!

As Dollar Stretchers, we all dislike waste. I don’t like throwing out food that’s gone bad in the back of the fridge. I don’t like overpaying for an auto repair. I don’t like spending money on something that doesn’t do what it should. And I don’t like spending money on things that are useless.

Another area where I don’t like to spend money is on government waste. That’s why I found the Festivus Report on government waste particularly interesting. It highlighted $54 billion of your dollars that were spent with very little, if anything, to show for it.

I know that $54 billion is a tiny fraction of the $6.5 trillion that the federal government spent this year. But let’s put it in perspective. The spending highlighted in the report averages $10,006 per taxpayer. I don’t know about you, but I sure didn’t waste $10k of my own money last year! And I doubt that you did either! Or how about this? $54 billion is enough to buy EVERY American a 40″ flat screen TV.

If you’d like to know what the money was spent on, I’ve selected a few items for your review.

  • Asks why stress makes hair turn grey (NIH) $36,831,620
  • Gives cigarettes to adolescent kids (NIH) $896,994
  • Tested if hot tubbing can lower stress (NIH) $2,004,704
  • Spends 5 years monitoring elections in Zimbabwe (USAID) $10,000,000
  • Helps disconnected Tunisian youth not feel like a problem (USAID) $48,000,000
  • Develops a wearable headset to track eating behavior (NSF) $2,075,074
  • Lost equipment designated for Syrians fighting ISIS (DOD) $715,800,000
  • Bought COVID test tubes but received unusable soda bottles (FEMA) $10,502,997
  • Sprayed alcoholic rats with bobcat urine (NIH and VA) $4,575,431

Seems like they’ve covered most of the major ways to waste money. Ranging from the stupid, to the dangerous, to the none of our business, to the silly, to the hoodwinked.

I hate to admit it being angry, but I can’t help it when they waste that much money while you and I struggles to save a few dollars. Plus, I’m betting that there’s much more that could be found if someone took a good hard look at ALL the ways our government spends money.

What can you and I do about it? Probably not much unless the President gets the ability to have a line item veto. That way, members of Congress (and their K Street lobbying friends) can’t stuff all this wasteful spending into so-called ‘omnibus’ bills. The way it works now is they wait for a bill that must pass (COVID relief or a continuing spending resolution) and tack on things that have nothing to do with the main bill.

Perhaps you’d like to join me and send a copy of this to your representative and 2 senators. You can find your rep’s email address here and your senators’ here.

Maybe if enough of us raise a fuss about the waste, we might actually get them to stop. Then again, unless there’s a groundswell all across the country that gets noticed, we’ll probably get another Festivus report next year of another batch of wasteful government expenditures.

Keep on Stretching those Dollars!
Gary

Are You Viewing Your Retirement Savings Plans With the Eyes of a Child?

Hello to all my Frugal Friends!

I just read an interesting article on the National Association of Plan Advisors website. They’re the folks that manage retirement plans. The writer compared how we viewed Santa Claus as children to how we view our retirement savings plans as adults.

He wrote that most children believed that Santa would not look past bad behavior. That the result would be coal in their stockings on Christmas morning. That belief caused them to modify their behavior and end up on the ‘nice’ list.

He compared that to how little people save for retirement. They’ve been naughty (they haven’t saved) but expect that there will be plenty of good stuff in the Christmas stocking (a happy, fulfilled retirement). He pointed out that they were mistaken.

Social Security will only replace a fraction of most people’s pre-retirement income. Generally, a little less than 50%. And, for most there’s no retirement savings to supplement SS. According to the Government Accountability Office (GAO), about half of households age 55 and older have no retirement savings (such as in a 401(k) plan or an IRA). And, many of the remaining half don’t have nearly enough saved.

If you’ve been naughty in your retirement savings, you’ll want to read When You’re Really Late to the Retirement Planning Game.

Employer Matching Savings Plans will give you a good idea of how to use these plans to your best advantage.

Whether you’re behind or not, there are some things that you can do now to change what’s going to be in your retirement Christmas stocking.

Not only do I appreciate the retirement analogy, but I would actually expand it. How often do we make bad financial decisions and believe that somehow things will just work out? I suppose that’s only natural when so many people try to shield us from the consequences of our decisions.

As parents, I believe that part of our job is to teach our kids to be careful. Naturally we don’t want them to get hurt. But sometimes a little discomfort is a great teacher. The accidents I had on my bike as a boy made me a more careful driver when I turned 16. I learned to make better decisions.

When your 30-year old son comes to you and says that they’re having a hard time making their car payment and wonders if you can help, naturally you want to help. But are you really helping by making their car payments? Could you be setting him up for more financial mistakes in the future? Could it be that the real help would be to let him struggle to make those payments even if it meant some discomfort? At some point helping actually becomes enabling.

Here’s what some readers said about Loaning Money to Adult Children.

Lest I be accused of being heartless, let me point out that I’m all for helping those who cannot help themselves. But I also know that most parents die before their children. What happens to an adult child who has never learned to be responsible for their own finances when their parents die? What will they do then?

Going back to my bicycle example, I still bear the scar on my knee from a mishap when I was young. Yes, it hurt badly. At least at the time. But I do believe it’s made me a safer driver.

And, some of the lessons were financial, too. There were some purchases that seemed essential to a 16 or 17-year-old that were soon discovered to be a waste of money. That, too, taught me some lessons that have lasted into adulthood.

So I’d encourage everyone to take responsibility for their financial decisions. And to teach their children to do the same. Had more college students been better informed, they wouldn’t be in student loan debt purgatory today.

Keep on Stretching those Dollars!
Gary

About the Author

Gary Foreman is a former financial planner and purchasing manager who founded The Dollar Stretcher.com website and newsletters in 1996. He's the author of How to Conquer Debt No Matter How Much You Have and he's been featured in MSN Money, Yahoo Finance, Fox Business, The Nightly Business Report, US News Money, Credit.com and CreditCards.com. Gary shares his philosophy of money here. Gary is available for audio, video or print interviews. For more info see his media page.

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