Inspired by a suggestion from a reader on my other blog to read the NJ Real Estate Report (linked on our sidebar now), I came across a post that compared renting a home to owning a home. In truth, the article was linked from another source, but it gave some interesting points of view on the classic owning vs. renting debate. For my part, after I read Rich Dad, Poor Dad series I began thinking about money in a different way. What I like about the article linked on the NJ Real Estate Report is that it talks about some of the same principles (in a roundabout type of way) that Rich Dad, Poor Dad talks about. For example…

The NJ Real Estate Report post lists 5 different reasons why you should rent instead of own. One of these reasons is because it’s cheaper. The post says:

Cheaper. When you consider the cost of being a homeowner — mortgage payments, association dues, property insurance, property taxes, repairs, maintenance and upgrades to protect your home’s value — most of the time, renting will be cheaper.

This is true. The financial planners who subscribe to the theory that a home is one’s biggest asset are at odds with these realities. Assets should appreciate in value (not in this market!) and they really shouldn’t cost you too much money. Look at the costs above from a New Jersey perspective: mortgage payments are between $1200 and $1500 depending on the size of your mortgage and the rates; I’ve seen association dues range from $175 per month to $350 per month; property taxes are out of control in New Jersey and for the places that I’ve been looking at, they are around $4000 per year; repairs, maintenance, and upgrades - let’s place a conservative $200 per month into this pot. All in all, you could wind up spending $2400 per month on your house alone! That doesn’t take into account utility bills, food, gas, clothing, etc.

Now, as the Rich Dad, Poor Dad series taught me, let’s say you spend $1000 per month on rent. That leaves about $1400 open each month. If you were to sock that $1400 away in a the stock market, a high-yield savings account, even bonds - you’d get a higher annual return than your house would appreciate. This ridiculous current housing bubble aside, houses appreciate between 3% and 7% per year depending on market factors. Long-term returns from the stock market show double-digit gains for investors.

Makes you think - is it really worth losing money to own a house?

Minding the Campus is a great website that keeps an eye on the many oddities that seem to take place at college campuses. You know these oddities - the private school that believes they do not have to follow American law, the public school that believes they can restrict a student’s right to freely express their views (in a non-harmful way), the college professor that bashes and berates America…while he lives and raises a family in the very country he seems to hate. There are illogical happenings all over college campuses and Minding the Campus is one of the best sites to monitor what’s going on.

Just recently they posted a commentary by Charlotte Allen that discussed the increasing costs of college textbooks. This is one of the most thoughtful, thorough discussions of this topic that I’ve read and the comments on the post are equally as thought-provoking. If you have the time in your day, I highly suggest reading this commentary.

For what it’s worth, my stance as an Adjunct Professor is to assign textbooks that deliver the message of the course and - most importantly - help students learn the material. If that goal can be achieved with a used text or text that is cheaper than a brand new book, then I’m happy to assign an older text for the students.

Did you know that the Democrats have already voted to increase your taxes three years from now? Okay, so they didn’t raise your taxes, per se, but they did endorse a plan that WILL raise your taxes in the coming years. I understand that taxes weren’t raised so much as the existing “Bush tax cuts” are now set to expire, but for the millions of workers who have entered the workforce since 2001 and for the millions of families who can barely afford to get by as it is - this is nothing more than a major tax hike.

Believe it or not, though, I don’t place the blame on the Democrats. I don’t place the blame on the Republicans, either. Who is to blame? We are. This is a country whose contemporary populous demands to be taken care of from cradle to grave. As a perpetual student of American history, this is sickening. America was once a country put together by revolutionaries who not just fought against being taxed without representation, they waged a war against it. Now, Americans are being taxed into oblivion by a government that would prefer to spend money on entitlement programs instead of a comprehensive plan to fix America’s finances once and for all.

But hey, no one cares…so what’s the point in complaining? No one is going to change it. Of the 3 major Presidential contenders, the two Democrats have already claimed that they are raising taxes and I’m not sure if the Republican even has a financial plan.

Oh well. Another day in America.

Most people hate tax season…even those who work for the Internal Revenue Service. I saw a story the other day about an IRS agent from my hometown of Roxbury who was convicted on tax evasion charges. How about that, huh? Even the IRS hates paying taxes!

Just another example of how we are all human…even those in real or perceived positions of authority.

In the mean time, check out New Jersey Carpet Cleaning for the best carpet cleaning in the Garden State!

Ever since I started paying back my student loans some 20 months ago, I’ve been complaining about how inept and downright rude the people at the New Jersey Higher Education Student Assistance Authority are on the telephone. Not only do they treat you like you are trying to get away with something, but they fail to understand the basic fundamental purpose of their organization - to provide low-cost student loans to New Jersey residents so they may earn a higher education degree.

Well, it looks like these folks are finally going to get what’s coming to them. The Asbury Park Press reported the other day that an independent monitor will begin looking at the NJHESAA as a part of the national student loan scandal that is unfolding. Good.

I don’t know all of the nitty gritty details of what’s going on at NJHESAA and I really don’t want to know them right now. I’m glad that this organization is being monitored and that new borrowers will think twice about whether or not this is the proper vehicle for their higher education financing needs. If I could go back in time and NOT take a NJHESAA loan, I would do that in a heartbeat. I’d rather have a loan from a large traditional financing institution that sees me as nothing more than a profit on their books than deal with the arrogant, demeaning people at NJHESAA.

And they charge me too much for my loan. Thanks to Dave for sending me this link a few weeks ago.

With all of this talk about the subprime mortgage market meltdown, I hope that this country doesn’t forget about the student loan scandals that are silently rocking higher education. Just as people were duped into loans that were bad for them, many students were duped into consolidating with organizations that provided a kickback to schools that referred a certain number of students.

If America wants to remain a country balanced between capitalism and socialism, then we cannot forget student loans. In other words, if this is a country where the free market can create situations where private organizations trick borrowers into signing mortgages that are inherently bad for the borrower and if this is a country where the people demand our government fix this “injustice,” then this also needs to be a country that does the same with ALL forms of financial contracts. That would include student loans.

Providing a bailout for the unfortunate masses who were tricked into signing these subprime mortgages means that we need to provide a bailout for those students who were tricked into consolidating with companies that had profit motives over the best repayment option for the student.

Thank God for the American federal government! What other organization can bring so many people so many laughs in one fell swoop? You may remember that a few days ago, the government was thinking about sending each taxpayer an $800 check (married couples would obviously receive $1,600). Well, in a move that only our ridiculous government could make, they’ve decided that instead of each taxpayer getting $800, they’ll probably get $300 instead. The reasoning is that the $800 per person economic stimulus package would have only given checks to the 180 million or so Americans who pay income tax. The $300 per person economic stimulus package allows for all Americans to receive a check, including those who don’t make enough to pay income taxes.

In other words…

For those taxpayers who earn higher incomes in the middle class of America, not only are you going to continue to bear the brunt of this country’s weakening economy, but you’re also not going to get the same proportional handout that those in the lower class will receive. For a person who is making so little that he or she doesn’t pay income taxes, $300 is a big deal and really can help in getting a person out of financial rut.

But for the rest of the people who do pay taxes and who are living in the middle class, a $300 check from the government to “stimulate” the economy is bullshit. All $300 does for anyone in middle class America is remind you how screwed you are in the bigger picture. Those who don’t need the $300 will disagree with that statement, but those who needed the $800 will not only agree - they’ll get pissed since $800 isn’t even enough for most people to make one month’s mortgage payment.

We’re all screwed.

The President and the Congress are discussing ways to give America an economic boost. Anyone who is paying the attention to the news and the markets knows that part of this country’s current problems are rooted in the housing bust and part of the problem is due to the fact that banks are becoming more conservative with their lending policies. There’s nothing much you can do about the banks - they’ll do what they want with their money and that’s that. Sucks. And for those of us who have worked in the housing market and studied the housing market, we saw the big downfall coming years ago, but no one listened.

All of that aside, I am glad that the Republican President and the Democratic Congress are working together in a spirit of bipartisanship to give America the boost that it needs. One of the ideas going around is to give all taxpayers an $800 rebate check as early as in the next few weeks. I have to say, this is scary for a variety of reasons.

First, I don’t know what your finances are like, but while I certainly wouldn’t scoff at $800 it really isn’t enough to make a dent in my financial portfolio. And I should preface the previous sentence by saying that I spend between 45 and 60 minutes each day going over my finances and that I’ve made tremendous strides financially in the last 18 months. Still, getting an $800 check would be nice, but it would only remind me how much of a hole that I’m in (thanks student loans!).

Second, I can only think about those bozos down in New Orleans who got free government and charity money to the tune of some $2,500 per person…and then spent that money on alcohol, new shoes, lingerie, and electronics. Folks, while these creature comforts may give you a feel good feeling right now, they’re not going to do a damn thing to help your financial well-being in the long run. I just imagine some 280 million taxpayers getting an $800 check and the only companies that see their profits go up are Nike, Apple, and Sony.

Finally, the cost of living isn’t stabilizing - it’s going up! The cost of a gallon of gas is getting higher each month, the cost of milk (yes…milk) is going up, and the cost of general groceries is going up. If it is used wisely, getting an $800 check today will help put food on the table tomorrow. But will it provide food for our tables this summer? Next fall? Next year? Unlikely.

Unfortunately this is one of those situations where there are no easy answers. Part of me wants to say that we, as a country, made this bed for ourselves and now we have to lie in it. Mortgage borrowers largely knew that their subprime loans were loaded with risky features and they knew that they were buying houses that were too big for their budgets. Yes, there was some chicanery in some housing markets, but of the millions of subprime loans only a fraction fall into that category. So in this respect, part of me believes that we have reaped what we’ve sewn.

Believing that, however, isn’t going to kick the economy in the ass. What should we do to stimulate the economy? Those $800 checks are a good start, but reducing the cost of living for all Americans will be a great second step.

Yes, you read that right. The “victims” of Hurricane Katrina are suing the US Government for $3,014,170,389,176,410. In the written word, we’d call that three quadrillion, fourteen trillion, one hundred and seventy billion, three hundred and eighty nine million, one hundred and seventy six thousand, four hundred and ten dollars. This is absolutely disgusting.

I was among the first to say that the US Government really bungled the clean-up efforts with Hurricane Katrina. It was obvious and we all watched it happen on every cable news network.

However…

We watched BEFORE the storm as thousands of residents said they were not leaving their homes in New Orleans no matter what. We watched BEFORE the storm as local politicians allowed dozens and dozens of school buses to sit empty on school property as opposed to transporting out those residents who did want to leave. We watched AFTER the storm as roving street gangs fired gunshots in the air to ward off other street gangs. We watched AFTER the storm as residents who were given relief debit cards to buy food and clean drinking water spent that money on alcohol, Victoria’s Secret, and $100+ sneakers.

If this case isn’t immediately dropped as soon as it hits a judge’s desk, then I think the rest of America has the right to file a one hundred quadrillion dollar case against New Orleans. That’s right…one hundred quadrillion dollars!

This whole thing is so stupid it actually makes me sick.

The folks at MSNBC.com finally posted something worth reading. The other day they had an article that talked about how charities are finding it harder to plug the holes in their budgets with donations. As someone who makes a lot of donations each year and also works in and studies the nonprofit industry, I found this article very interesting. For me, one of the best parts of the article was:

It costs more to acquire new donors than to retain them, experts say. But churning through donors also makes it harder to woo benefactors. “Donors don’t want to be funding fundraising,” says Sargeant. “They want to be funding the work you’re trying to do.”

And they’re demanding much more accountability from the nonprofits they bankroll. If they don’t get it, they walk, says Penelope Burk, president of the fundraising consultancy Cygnus and Associates.

This is it - this is what the nonprofit industry comes down to. First, are you asking for someone to make a donation that goes to a cause or goes towards paying for salaries? Second, are you willing to explain your expenses and why money is put in certain places as opposed to others? Third, are you doing what you actually said you would be doing?

The answers to these three questions are why I donate to the Sigma Pi Educational Foundation. When I donate to the SPEF, I am giving a tax-deductible donation to two specific funds (both of my choosing) that are managed by people I know on a first-name basis and can e-mail at 1:00pm and receive a personal response by 2:00pm. These funds are under the oversight of a Board where I know many of the members on a first-name basis and have many of the cell phone numbers in my phone.

That level of trust is hard to come by in the nonprofit sector.

I helped put these two funds together and I know where each dollar is spent. I know how much of the fund’s earnings are spent on administrative expenses and I know how much goes back to the overall end-user and it what forms (scholarships for the undergraduate fraternity brothers). At any time I can pick up the phone and call the President of the SPEF and have a discussion with him.

There’s a level of trust and reliability there that you cannot build very easily. Hell, my own company is a nonprofit and I’ve yet to donate or invest any money with them! I’ll be changing that in the New Year, but it has taken me the better part of 16 months as an employee to even reach that level of comfort.

So be sure that you know the places that you’re donating to and be sure that you know where the money is being spent. And hey, if you feel like you can’t make an impact with any organization, then donate to the Sigma Pi Educational Foundation! It’s a good group with a good cause which I’d be more than happy to talk to any of you about!