Monday, December 29, 2008

How you can save money by giving more to charity in this time of great need

For people who are unlikely to itemize deductions on their taxes every year, bunching your deductions into a single year is often a very effective strategy.   The general idea is that you try to combine as many tax-deductible expenses into a single year as possible in order to get maximum benefit from itemizing, and then the following year you can go back to the standard deduction.  This can work with all sorts of deductions, but it's especially effective for charitable donations because there's so much flexibility in when you choose to give.  

And now more than ever is a good time to give a double dose of donations to your favorite charities.  Donations are down, thanks to the economy's effect on the individuals and businesses who usually do the giving.   Charities are also getting fewer foundation grants, because foundations' giving is usually a percent of the total assets in the foundations' endowment (a minimum of 5% a year) and most foundations have seen their assets shrink significantly as a result of stock market declines-- even the huge Bill and Melinda Gates Foundation is cutting back its planned grant-making for 2009.   Charities are also having a harder time borrowing money, like everyone else.   Yet simultaneously, many charities are dealing with higher demand, particularly
if they're serving the needy-- for example, food pantries nationwide are seeing an average of 30 percent higher demand, up to 60 percent or more in some places.   Times are really tough for many of these charities; making bigger donations can make a very big difference.

(And there are other benefits to doubling up on charitable donations, too, especially if you like recognition and thank-you gifts... bunching can turn your usual $50 donation into a $100 donation or a $500 donation into a $1000 donation, which can snag you extra goodies or VIP treatment!)

If you're concerned about your own finances and don't feel able to give much more in cash to charities right now, donating goods (like clothes, toys, books, cars, computers, and more) increases your deductions too, so now could be a good time to gather the things you've been meaning to give away and drop them off before it becomes 2009.  (Here's the details from the IRS on what receipts you need and how to figure the tax-deductible value.)  If you're driving to volunteer or drop off goods, you can deduct 14 cents per mile.   (And of course, regardless of the tax implications, these organizations will appreciate your volunteer hours and donated goods even if you can't afford to give much in cash.) 

(You can also donate appreciated stock and deduct the full value without paying taxes on the capital gains-- yes, stocks that're worth more than when you bought them are harder to find these days, but if you have them it can be a very good deal to donate the stock rather than selling it and making donations in cash. The Motley Fool has some suggestions of stocks with positive 5-year returns.)

As for me, I'll be itemizing my 2008 taxes for the first time-- it never made sense when I lived in Illinois, with no mortgage and a 3% state income tax, but now my DC taxes are high enough that combining those with my annual giving budget gives me a total right around the standard deduction.   If I gave my budgeted amount in both 2008 and 2009, I wouldn't gain much from itemizing and would probably just take the standard deduction.  But if I accelerate my 2009 giving and do it all before the end of 2008, I'll end up significantly higher than the standard deduction, which means I save hundreds of dollars on my taxes in 2008 (and can still take the standard deduction in 2009, so that tax situation stays exactly the same.)

This has been my plan for months-- since well before the economic downturn accelerated-- but it's especially satisfying to know that my larger-than-usual gifts come at a time when they're especially needed.  Now here's hoping that by the end of next year, when I'm giving little or nothing because I did it all in 2008, things have recovered enough that non-profits are on the upswing...

Saturday, December 20, 2008

Charitable holiday gifts: a great solution for those awkward gifting situations

We all occasionally (or more than occasionally!) have those gift-giving situations we can't figure out how to handle-- do we give this person a gift or not? Often the biggest part of the awkwardness is not wanting the other person to feel obligated to reciprocate. Sometimes this translates into no gift at all, even if you really want the person to know you're thinking of them; sometimes it means you give a small gift so as not to overwhelm, which often leads to a cycle of exchanging little trinkets that neither of you really want or will use. But this year in just such a situation, I think I've hit upon a great solution-- charity-related gifting!

There are some big benefits:

  • Shows you're thinking of them. Giving a gift to a charitable organization in someone's name definitely shows them that you care and that you took the time to think about them during the holiday season. And if you can find an organization that's a good fit for their interests, it's especially thoughtful.
  • Less likely to make them feel awkward or obligated about giving back to you. Because you're not sending them an actual gift, but instead making a donation in their name, there's less of a sense of "Oh, so we're gift-exchangers now." At worst, it creates a cycle of charitable giving, which is the best kind of giving cycle!
  • Keeps the "stuff" to a minimum. These gifts typically do come with some kind of tangible recognition, often a certificate and/or nice photograph. To me that seems just about right-- often you want the person to have something to hold in their hands, but "a little something" is less wasteful than the kind of stuff that you might otherwise buy in this situation.
  • Giving to a good cause. And then there's the fact that your money is going to a worthy cause. That's wonderful in and of itself, and it also could mean that if you consider it part of your "giving budget" then you have little or no extra expense. (Or if you don't have a giving budget and it is an extra expense, at least it's a tax-deductible one.)

As for me, I'd been struggling with how to approach giving gifts to my boyfriend's family. I haven't spent the holidays with them in person yet, so we haven't exchanged gifts so far, but after getting to know them better this year I wanted to show them I was thinking of them. Yet I also didn't want them to feel obligated to reciprocate (or embarrassed that they hadn't.) But once I started to think along the lines of charitable gifts, it all fell into place. I adopted half an acre in the Northern Rockies for his father, who really enjoys nature in general and that area of the country in particular, and I sponsored an animal for his sister, who's a real animal-lover. (There are a lot of other great choices, too; Oxfam America Unwrapped is one of my personal favorites, but there's a ton of options of all sorts listed at Changing the Present.) I think everyone wins-- I get to show them I'm thinking of them, they feel cared for, and more money goes towards conserving nature and protecting animals.

What's your take on giving to charity as a gift to others? And how else do you approach these awkward "do I or don't I?" gift-giving situations?

Friday, December 12, 2008

Tips and links for holiday gifting that's cheaper, saner, and greener

The holiday gifting season is upon us again... time to take a deep breath and figure out how to think outside the box to make your holidays cheaper, greener, and saner.

I had a whole post on this last year-- Holiday Gifting: 14 Ways to Give More Meaning and Less Stuff-- with tips in categories like "give to fewer people," "give to a good cause," "give non-'stuff' gifts," and "give non-purchased gifts."  I'm trying to do all of those things this year!  I'm particularly excited about one gift which falls into two of those categories, as both a non-"stuff" experience-based gift and a gift to a good cause-- I'm taking my Mom to Taste of the Nation, an event held in many U.S. cities in which you can sample great food from top-tier chefs and 100% of the ticket proceeds go to fighting childhood hunger.  I think she'll really enjoy experiencing it with me (and vice versa!), and it's win-win for me because the ticket costs can come right out of my giving budget.  (The ticket cost is partially but not entirely tax-deductible-- it goes 100% to charity but when you get something of value in return you can't deduct the full amount.)   And there's absolutely no clutter or wasteful plastic packaging involved! 
I'm also buying fair trade products for my cousins, who at 5 and 9 are still very much in the "we want presents we can unwrap and hold in our hands" stage, so I'm taking advantage of some of the sites and discounts I posted earlier this month (December discounts on socially/eco-conscious gifts.)
There've been a ton of great posts lately along similar lines:   
How are you making your holiday gifting cheaper, saner, and/or greener?

Wednesday, December 03, 2008

December discounts on socially/eco-conscious gifts

You all know that I'm a big proponent of giving more meaning and less stuff for the holidays. But if you are buying gifts, I encourage you to look at the types of places that are in Co-op America's National Green Pages-- companies that are screened and verified as socially and environmentally responsible and values-driven. You can use their search engine to find bricks-and-mortar stores in your community, and here are some online sales currently being offered by National Green Pages companies:

Tuesday, November 25, 2008

Greening your Thanksgiving and saving money too

This Thanksgiving, whether you're interested in saving the environment, saving money, or both, check out these tips from the Cool Foods Campaign, which looks at the connections between food and global warming.

First, they have 5 money-saving green tips for Thanksgiving. Here they are, with my comments:

  • Buy from the bulk foods section. This not only saves money but decreases packaging. And when stuff's transported in bulk rather than packages, more fits in a single vehicle, meaning a lower environmental impact.
  • Buy dried beans rather than canned beans. It's obviously cheaper, but it's also better for the environment because the dried beans are lighter and easier to transport than beans full of water and surround by liquid. And soaking beans is easy!
  • Use non-processed foods. It's cheaper, healthier, and it's better for the environment because of the energy that goes into all that processing (and typically extra packaging.)
  • Avoid food waste by using your leftovers. Apparently we waste 27% of our food, and big meals like Thanksgiving are a big part of the problem. Take a few minutes after the meal to make plans for the extras. Be honest about what you'll actually eat in the next few days, and stick the rest in the freezer or send it with your guests.
  • Make cheap, edible, biodegradable decorations. Rather than paper or plastic turkeys and pilgrims, why not string up some popcorn or cranberries? You can eat or compost them afterwards.

But they also have general green tips for Thanksgiving, and several of them are money-savers too. For example:
  • Use less meat in your meal. It's estimated that animal production is responsible for almost 20% of greenhouse gas emissions worldwide (and Americans are less than 5% of world population but consume more than 15% of the world's meat.) It takes a lot more energy to produce meat than vegetables and grains, because the animals eat much more than their weight in feed over their lifetime. So if you're looking to lessen your impact, cutting back on the meat (and dairy) is a great way to do it. Plus meat's typically more expensive than many great vegetarian options!
  • Don't use disposable plates, cups, and utensils. The logic-- both environmentally and financially-- is pretty obvious, even if it's tempting to find ways to do less dishes.
  • Store leftovers in Tupperware or in serving dishes rather than foil and plastic bags. Ditto.
And here are the rest of those top 10 tips for a "cool" Thanksgiving:
  • Keeping it local means less carbon's emitted to get it to you, plus you're supporting your community and your neighbors. And a focus on local foods creates a more authentic connection to your local area's heritage (and the history of Thanksgiving!)
    • Get a local, free-range organic turkey.
    • Buy local produce.
    • Choose local wines and beers.
  • Buy organic for as many of your food purchases as possible. Organic products are free of synthetic fertilizers and pesticides, which is not just good for your health but also for the environment-- besides the ill-effects of the chemicals on the earth, they also take a lot of energy to produce and emit greenhouse gases when applied.
  • Recycle your cooking oil. I can't find a good website that centralizes the info, but in a surprising number of places around the country you can donate your used vegetable oil to be turned into biodiesel to power vehicles. Just Google your city or state, "donate"/"recycle" and "cooking oil"/"vegetable oil."

Happy Thanksgiving! And if you're interested in more about the environmental impact of your food choices, the Cool Foods Campaign website is a great place to start.

Thursday, November 20, 2008

Round-up: free chocolate, coffee, and soda-- plus how to green your Thanksgiving!

Thanks for bearing with me as I try to juggle a few different things going on in my life...

Tuesday, November 04, 2008

Go vote, then go get free stuff!

Today is a big day-- whoever you support, go out and make your voice heard. Wait on the long line if that's what it takes, stick it out through the rain if that's what it takes, but take a stand on the future of your country. Then reward yourself with these deals:

  • Ben and Jerry’s: free ice cream 5pm-8pm (no proof of voting needed, apparently)
  • Krispy Kreme: free star-shaped donut (with "I Voted" sticker)
  • Starbucks: free tall brewed coffee (with "I Voted" sticker or voter registration card)
  • Shane's Rib Shack: free "Vote America meal" (chicken tenders and a beverage) with "I Voted" sticker
  • BooksAMillion: free coffee (with "I Voted" sticker)
  • Eat'n Park: free coffee in PA, WV, and OH, dine-in only (with "I Voted" sticker)
And check out this Slickdeals thread for other, more local offers (or discounts rather than freebies.)

Sunday, October 26, 2008

Round-up: Blog Action Day poverty posts (plus a free coffee coupon)

October 15th was Blog Action Day 2008, when more than 12000 bloggers of all sorts wrote about the topic of poverty (2007's topic was the environment.) Below are some great posts, mostly from the personal finance blogosphere. But first, I wanted to point out this coupon for a free hot drink (coffee, cappuccino, tea, etc) at Barnes and Noble through Oct 31st.

Now, on to the posts:

Enjoy! (By the way, my Blog Action Day post was Debunking the scapegoating of low-income homebuyers.)

Monday, October 20, 2008

Fair Trade Month: Sales, tastings, Halloween, and a clip from John Oliver!

It's Fair Trade Month!

  • If you need a refresher on what fair trade is, click here-- the short version is that it's about ensuring decent wages and working conditions for the people who make/grow the things you buy.
  • From New York to North Carolina to California to Milwaukee, there are fair trade events going on (including yummy tastings!)
  • Have a Fair Trade Halloween! Send the kids around to do reverse trick-or-treating: they can hand out fair trade chocolates and/or info sheets (print 'em here.) Find fair trade costumes and decorations here.
  • Global Exchange is giving away free chocolate with every order in October to celebrate Fair Trade Month. Divine Chocolate has a sale on their Halloween milk chocolate foils. And Sweet Earth Chocolates doesn't have a sale but their Halloween-themed chocolate is awesome.
  • Take a picture of what fair trade means to you and submit during October-- you could win a trip to meet fair trade producers!
  • And for a humorous take, here's comic John Oliver on fair trade. ("What is fair trade, when you boil it down, other than basic human politeness?… Rather than praising fair trade, we need to be demonising unfair trade. So, I suggest that from tomorrow onwards, all unfairly traded products should be forced to carry this logo: It's a cartoon of an international businessman urinating upon an African boy. I think that might really help nag at your subconscious when you're queuing up at the supermarket with a basket full of shattered lives.")

Wednesday, October 15, 2008

Debunking the scapegoating of low-income homebuyers (Blog Action Day 2008)

It's disturbing how often you hear people blaming the subprime meltdown and financial crisis on low-income homebuyers and their supporters. It's bad enough to single out low-income borrowers for the exact same thing that happened all across the income spectrum-- people borrowing beyond their means, taking out a larger loan than was prudent. But there's also a whole bundle of false assertions and assumptions bundled into the accusations:

Myth: Most subprime loans went to low-income borrowers.
Facts: More than two-thirds of high-cost loans went to middle or upper-income borrowers (80% or more of median income) in 2006, with less than 8 percent to the lowest income group (50% of median income or below.) The Wall Street Journal analyzed the last decade of mortgage records and found that "the data contradict the conventional wisdom that subprime borrowers are overwhelmingly low-income residents of inner cities. Although the concentration of high-rate loans is higher in poorer communities, the numbers show that high-rate lending also rose sharply in middle-class and wealthier communities."

Myth: Low-income borrowers end up with subprime loans rather than prime loans because of their poor payment histories and high risk.
Facts: That plays a role but is far from the whole story. For one thing, an estimated 50 million Americans have no credit score thanks to a thin or non-existent credit history, and low-income borrowers are disproportionately represented in this group, which means they're often denied for prime loans due to their lack of "official" credit history rather than a history of payment problems. Yet studies have found that alternative credit scoring models (incorporating information like payment history for rent and utility bills) are just as accurate at predicting risk as traditional credit scores; a study of the "FICO Expansion" score found that more than 50 percent of thin-file/no-file credit applicants had scores under the alternative model that would qualify them for prime interest rates. (Not to mention the whole issue of deceptive, predatory, and fraudulent lending that's targeted to low-income people and minorities... Countrywide recently agreed to a more than $8 billion settlement after being sued for allegedly hiding fees, marketing in deceptive ways, and encouraging its employees and brokers to make risky loans.)

Myth: Subprime, high-cost loans are the only way to increase low-income homeownership, and the high foreclosure rates are inevitable given the risks.
Fact: Lenders who make an effort to responsibly promote low-income homeownership (rather than focusing solely on turning a profit), and the borrowers they lend to, are weathering the "subprime crisis" remarkably well. NeighborWorks America is a network of community organizations which partner with local banks to promote home ownership in low-income communities; only 0.21% percent of their mortgages entered foreclosure in the second quarter of 2008-- far better than the 4.26% of subprime mortgages beginning foreclosure in that time period, but also better than the rate of conventional mortgages (0.61%)! And while I haven't been able to find more recent numbers, in 2006 community development financial institutions wrote off 0.45% of their mortgage loans, compared to 0.39% for conventional lenders. While there are many factors in this success, it's clear that a key factor is the way the loans are structured; a recent study which looked at outcomes for subprime borrowers found that "all other characteristics being equal, borrowers are three to five times more likely to default if they obtained their mortgages through brokers. When the feature broker-origination channel is combined with the adjustable rate and/or prepayment penalty, the default risk is even higher."

Myth: Efforts to promote low-income homeownership, such as the Community Reinvestment Act (CRA), played a significant role in increasing the number of subprime loans and creating the crisis.
Facts: Only one of the top 25 subprime lenders in 2006 was subject to the CRA. By 2006, about 3/4 of subprime loans were made through brokers not regulated under the act. And as the President of the Federal Reserve Board of San Francisco put it in March 2008, "There has been a tendency to conflate the current problems in the subprime market with CRA-motivated lending, or with lending to low-income families in general. I believe it is very important to make a distinction between the two. Most of the loans made by depository institutions examined under the CRA have not been higher-priced loans, and studies have shown that the CRA has increased the volume of responsible lending to low- and moderate-income households." Besides, affordable housing advocates have been criticizing subprime and predatory lending tactics for years, not promoting them.

It would be a shame if the result of this crisis is less lending in the future to low and moderate-income families, especially considering that the crisis itself has had a devastating effect on many who refinanced with a subprime loand and are now losing their homes. Home ownership can be an important pathway to build wealth and improve quality of life for these individuals and families, and it seems clear that if it's done right it can be safe and profitable for lenders too.

I'm so proud that at a time when so many are running from low-income communities, my bank (ShoreBank) is using my savings account (with a healthy interest rate of 3.50% APY, by the way) to help struggling homeowners refinance their subprime mortgages and avoid foreclosure. If you want to fund responsible lending in low income communities, try banking with a community development bank or credit union (find one here.)

Sunday, October 12, 2008

Understanding the financial crisis: the basics

The causes of the current financial crisis are obviously complicated, but many of them are rooted in human nature-- the way people tend to think about decisions in general and financial decisions in particular-- and there are lessons from the crisis we can apply to our personal finances.

I've spent a lot of time lately reading about what has happened, and I've also had a fascinating time learning more about behavioral economics. (Traditional economics assumes that people always make rational decisions. Behavioral economics explores whether or not this is true-- and suggests that it often isn't.) In future posts, we'll look at some of the rationality-skewing factors that were at play. But to start, we need a basic understanding of what actually has happened. So here's the chain of events (to the best of my understanding):

  • In the last few years, a significant number of mortgages were issued to people who were at risk of being unable to pay if housing prices did not continue to rise. Most of these were adjustable-rate mortgages, with lower interest rates in the first few years but the risk or certainty of higher payments afterwards (unless the mortgage was refinanced based on a higher home value.) These risky loans were not entirely subprime mortgages (mortgages where the borrower paid a higher interest rate than the prime rate), but there is a strong overlap, both because riskier borrowers are more likely to be charged subprime rates and because subprime terms themselves can make repayment more difficult for borrowers. Subprime borrowers were a wide-ranging group-- about 45% had bad credit, but the rest had credit scores of 620 or above; approximately 10% were investors or speculators, about half were refinancing their home "for cash-out purposes," and the rest were home-buyers; the majority were white and middle or upper-class, but blacks and Hispanics were twice as likely to have higher-cost subprime loans as whites with the same income and loan amount.
  • Most of those loans, and their associated risk, did not stay with the businesses that issued them. In many cases, commission-based mortgage brokers who never owned the debt were making the loans. And regardless of who actually issued the loan to the borrower, by 2006 75% of subprime mortgages were being "securitized"-- which meant the loan and the risk was not held by a single bank, but spread around by being made into securities in the financial markets.
  • Banks used subprime loans to create and sell complicated financial instruments. Financial institutions, especially investment banks, bought a lot of subprime mortgages and pooled them together into what are called mortgage-backed securities (MBSs), and then sold a few different types of bonds based on each pool, earning themselves big commissions and fees. The pools as a whole were considered somewhat risky because everyone expected that some of the homeowners would default on their mortgages-- but the banks segmented the risk by selling some people "super-senior" bonds and promising that they would be paid in full before anyone holding the more junior bonds got paid. This made the most senior level of bonds very safe, as long as mortgage defaults were within the range that people expected. It also made the highest-paying highest-risk junior bonds so risky that they actually call it "toxic waste." Sometimes they rebundled the medium-risk and/or toxic waste from a bunch of different pools into what's called a CDO (collateralized debt obligation) and re-sliced it, making new super-senior bonds out of the riskiest parts of a risky pool.
  • Ratings agencies gave super-senior bonds backed by subprime mortgages the lowest-risk rating. They almost always got AAA ratings, the lowest-risk designation there is, the same as U.S. government bonds. This was based on the belief, backed up by computer modeling, that it was extremely unlikely that enough of the underlying mortgages would default to cause super-senior bond-holders not to be paid in full. The computer models only included the worst-case scenarios that their programmers at the rating agencies thought possible: a relatively low level of mortgage defaults.
  • Some buyers of the bonds hedged their bets by purchasing credit-default swaps (CDSs), essentially insurance in case the bonds they bought didn't pay out. But because they thought the scenario was so unlikely, issuers of these CDSs (who ran the gamut from insurance companies like AIG to investment banks to other institutions) sold many more than they could actually afford to pay back, including selling many CDSs to people who didn't own any bonds and were just placing a bet that the bonds would default. And because many buyers thought default was unlikely, not all of them bought CDSs, especially on the highest-rated bonds.
  • The bonds, which paid higher interest than other options with the same risk ratings, were very popular and there was high demand for as many as could be produced. But to make more MBSs and CDOs, you needed more mortgages. The bond buyers made it very profitable for the investment banks to buy and pool and slice mortgages and they didn't mind (and sometimes preferred) high risk loans-- so the investment banks made it very profitable for the subprime lenders and mortgage brokers to make mortgage loans and theydidn't mind (and sometimes preferred) high risk loans-- so the subprime lenders and mortgage brokers did everything they could to push as many mortgages as possible, marketing their loans aggressively, steering borrowers towards bigger loans, and getting riskier and riskier with mortgages that sometimes didn't require any verification of income or assets. (This chain of supply and demand also sometimes led to deceptive and predatory practices by lenders and brokers.)
  • And then the "unthinkable" happened: home prices fell and many more people defaulted on their mortgages than expected. I won't go into all the details of why and how it happened, but suffice it to say, it was a bubble and the bubble popped-- and as home values began to fall and people began to lose their homes, the problem fed into itself, leading to bigger drops in value and more non-paying borrowers.
  • Because there were so many defaults on mortgages, the value of the bonds fell. This was/is partially because that they're paying out less than expected and are thus actually worth less than initially thought-- but also because they're so complicated (after slicing and double-slicing) that no one knows what they're actually worth, so they fear the worst and won't buy except at rock-bottom prices. Yet another reason for falling prices is a much higher supply to go along with that low demand: along with those trying to sell the bonds because they wanted to get rid of them, were many institutions who had to sell the bonds once they were no longer rated low-risk AAA (since investors like pension funds are required to hold only AAA bonds.)
  • Banks were especially exposed to these risks, and things have been going downhill for them over the last year or two, with a sharp acceleration recently. Banks held a lot of these bonds (ones they bought from other issuers and/or the risky parts of their own that they couldn't sell) and sometimes they had to buy back bonds from their buyers because they'd guaranteed to do so if things got bad. And because they had used the bonds as collateral to take out loans for investing purposes, when the value of the bonds fell they often had to sell (even at rock-bottom prices) in order to somehow come up with enough cash to pay back the loans. They were also hurt by the CDS situation in several ways-- sometimes banks had issued CDSs which they now had to pay out on; the prices of CDSs on their bonds went up now that it was clear how risky they were; and the issuers of the CDSs on their bonds (often banks or insurance companies who'd issued many more CDSs than they could afford to pay back) were often struggling financially, raising fears that they would not be able to pay out to the banks.
  • Banks got pushed towards collapse, which began to snowball. As banks' situation got worse, their share prices fell and investors in their financial products pulled out their money, worsening their financial condition. And as each bank (or insurer) collapsed or came close to collapse, it raised worries about how a collapse would affect the finances of all the other banks, increasing the nervousness still more.
  • Banks are now much less willing to lend out money because they're worried about having enough cash to keep themselves afloat. They can't sell their mortgage-backed securities to raise cash, and they don't know if they'll get payouts from any CDSs they have. And banks now think that lending to eachother is too risky, which is a problem for everyone. Interbank lending is important because the timing of banks' income (payments from loans) and the debt payments they pay out don't always match perfectly; typically this is solved by banks making short-term loans to each other. But that process has frozen up because banks are afraid that if they lend to another bank it might collapse before they get their money back. That makes banks reluctant to lend the cash that they do have to people or businesses, because they don't know if they can get an interbank loan to make up for it if needed. And when businesses can't get loans, that slows down our economy.

Well, I didn't promise it would be an uplifting story! But by taking a closer look at how we got into this mess, we can think about how to avoid dangerous, irrational decisions in our personal finances (and about what policies and regulations in the financial system can prevent against future disasters like this on a larger scale, too.) And that's what the other posts in this series will be all about.

Tuesday, October 07, 2008

Five great posts from Lazy Man and Money

Baseball's regular season is over, which means fantasy baseball is over too. Nine of us personal finance bloggers squared off against each other in a league this year, and in the end, Lazy Man and Money came out the winner. (I'm just proud that I ended up in second place after spending much of the first half of the season near the bottom!)

As his prize, here are five posts of his that you should check out:

Thursday, October 02, 2008

10 great socially/eco-conscious companies: vote for your favorite!

Co-op America is running their annual People's Choice Award for Business of the Year, which means they're featuring ten great companies and taking votes for a winner through October 9th. They're all listed in Co-op America's National Green Pages (along with thousands of other businesses) which means they've been screened and verified as socially and environmentally responsible and values-driven; they also all have many fans who made them the top 10 nominees for Business of the Year.

Here are the ten nominees, in alphabetical order, along with descriptions from proud customers:

Alter Eco (San Francisco, CA)
"They are 100 percent committed to Fair Trade, and use responsible practices throughout their company, like employing disabled workers to package products, and running a green office."
--Carlota O., Dallas, TX

Babyworks (Portland, OR)
"They provide a wonderful assortment of cloth diapers and organic baby clothes. They also have wonderful toys that are not made of plastic, not to mention the fantastic service that you recieve from them."
--Mari W., Vancouver, WA

Frontier Natural Products Co-op (Norway, IA)
"They are a cooperative committed to helping the planet and its people through renewable energy, carbon neutral shipping of their organic products, and their commitment to educating their custormers and the public through their Tall Grass Prairie Project."
--Carol M., Sioux Falls, SD

Gaiam, Inc. (Boulder, CO)
"This company offers responsible choices in many areas-- from cleaning products to linens to solar and wind power systems. Even their own green buildings promote responsibility to our earth."
--Ellen R., Wilmington, DE

Kate's Caring Gifts (Fremont, CA)
"Kate, who owns the business, is one of the most sincere and selfless people I know. She gives so much more to the community with little thought of gain to herself. I truly respect her and what she is accomplishing with her green business!"
--Lin-Lin O., San Jose, CA

Mountain Rose Herbs (Eugene, OR)|
"All herbs are organic or ethically wildcrafted, they support students with a 10 percent discount, their products hold to the highest standard, and their customer service is amazing!"
--Julie C., Madison, WI

Mountains of the Moon (Chicago, IL)
"Not only do they provide eco-friendly and organic hemp clothing, but it's sophisticated and wearable in the real world! I get so many compliments from non-green people, and that opens up the conversation on the benefits of going green!"
--Druanne M., Elkins Park, PA

Pizza Fusion (Fort Lauderdale, FL)
"They practice what they preach! As the first franchise restaurant to be totally green, they cook organic, recycle, and drive hybrids to deliver. Their slogan, 'saving the world one pizza at a time,' is right on the money."
--Lisa N., Thompson Station, TN

We Add Up (Mentor, OH)
"We Add Up has continued to support the green rebuilding in New Orleans, and promotes education on the everyday things that we can all do to turn the tide on climate change. They are social greentrepreneurs with heart!."
--Cristal W., Slidell, LA

West Paw Design (Bozeman, MT)
"Great and innovative dog products using recycled/reclaimed materials. All products show great durability and design and they are made in the US with fair labor practices."
--Beth F., Indianapolis, IN

Enjoy these ten socially/eco-conscious businesses and the thousands of others featured in Co-op America's National Green Pages-- and don't forget to vote for your favorite!

Tuesday, September 30, 2008

Round-up: financial crisis explained by stick figures (and more!)

  • I recently came across The Subprime Primer-- a 45-page stick figure cartoon that is fun, painless, and actually suprisingly helpful in understanding how we got into this crisis. It was done last year, so it doesn't talk about what makes the situation so acute right now, but it definitely lays the groundwork. Enjoy (though beware of adult language!)
  • And on the subject of the financial crisis, this is so simultaneously infuriating and amusing that I have to share it. An investigation of the credit rating agencies, which routinely gave lowest-risk AAA ratings to risky mortgage-backed securities, found an e-mail by one of the analysts bemoaning their reckless practices by saying: “It could be structured by cows and we would rate it.” (On the less-amusing side, “Let’s hope we are all wealthy and retired by the time this house of cards falters.”)
  • My Two Dollars has an interesting discussion at Friends Asking Friends For Donations - How Do You Handle It?
  • The Psychological and Emotional Attachment to What We Have and What We Want is a thoughtful recent post from The Simple Dollar.

Monday, September 29, 2008

Because you can't go wrong with cat pictures...

It's taking me more time than I expected to finish up the long, complicated, interesting post I'm working on. I should have it for you soon, but in the meantime, enjoy this:

Tuesday, September 23, 2008

Round-up: free museums and ice cream and more

Hope everyone's week is off to a good start! Now, without further ado:

Sunday, September 21, 2008

Thousands of socially/eco-conscious items in one place at

Looking for products that are fair trade, environmentally friendly, support a cause, or mesh with your values in other ways? Tired of searching through dozens of individual websites that each only have a small selection? Enter, formed in partnership between eBay and a fair trade company, which is already listing nearly 10,000 products.

I was a little hesitant of the idea given the eBay angle, but I'm actually really liking Not only is it incredibly convenient to have so many items in one place, but they're doing a terrific job of displaying (and letting you search based on) the social and environmental impacts of the products, and they seem to have a good method to ensuring that sellers and products are on the up-and-up.

There are two unique features attached to every WorldofGood listing: Trustology and Goodprint. Trustology is a listing of the independent organizations that have verified the seller and/or product-- groups like TransFair which certify a product is fair trade, or Rainforest Alliance which certifies on environmental and social standards, or Co-op America which certifies that the business or organization is deeply committed to social and environmental standards, or more than a dozen other groups. If a seller hasn't been verified by at least one WorldofGood-approved Trust Provider, they can't sell on WorldofGood; the Trustology box in an item's listing will show all applicable Trust Providers, and you can also search by Trust Provider.

Goodprint fills in the details of the social and environmental impacts of the products. There are four big categories (People Positive, Eco Positive, Animal Friendly, Supports a Cause) and subcategories within those (for example, "economic empowerment" and "preserving tradition" are two of the options within People Positive, while Animal Friendly could mean "animal welfare" or "species preservation.") And when you get to an item's page, you can delve even deeper-- there are thirty different detailed statements that can be associated with each product! These range from "Producer receives more than 75% of the retail price" to "Made in a producer-owned cooperative" to "Green energy fulfills 50% of required energy" to "From 100% sustainably harvested materials" to "No animal harmed, no animal testing, no animal ingredients." I love the level of detail here (although I wish you could actually search by these statements, rather than just by category and subcategory.)

Now, the Goodprint statements are not individually verified in any way, which is unfortunate, but it's probably unrealistic to expect otherwise. But nothing's stopping you from doing your own research, plus you can look at the certifications in the Trustology box to ease your mind-- those organizations may not vouch for individual Goodprint statements, but knowing what a third party guarantees is true helps you give the benefit of the doubt on the further details they put forward.

As I mentioned, you can search by Trust Provider and/or Goodprint category or subcategory; you can also search by type of item, price, and/or the region where it was produced. (Products are sold at fixed prices, not auctioned like on eBay, FYI.) WorldofGood also has a Community section where buyers, sellers, and Trust Providers can create profiles, write blogs, and post articles-- there's some activity there but it seems kind of slow to me, but maybe things will pick up over time.

All things considered, I'm pretty excited about the new site, both personally and more broadly. Personally, I think it's going to make my holiday shopping much easier! And more broadly, I think (or at least hope) that the all-in-one-place convenience will encourage more people to give it a whirl and consider social and environmental factors in their buying decisions. Plus the eBay connection can help spread the idea of conscious consuming to new eyes, since WorldofGood listings get cross-posted on eBay (and supposedly eBay's promoting WorldofGood on the main site, although I couldn't find anything on a quick look today.)

Have you looked at WorldofGood? What do you think of the set-up? Do you think it'll make you and/or others more likely to buy products that are in tune with your values?

Tuesday, September 16, 2008

Round-up: free smoothies, free credit monitoring, happiness, and strategic charity

Sorry that things've been quiet around here-- some personal stuff (which is hopefully over now)-- can I make it up to you with a great round-up?

Monday, September 01, 2008

Improve your finances: organize a union at your workplace!

On this Labor Day, here's some personal finance advice that might surprise you-- if you're looking to improve your financial situation, organize a union! (Or if you've got one already, work on making it stronger and more effective.)

There are a lot of big financial benefits to being a union member:

  • Wages. The average "union wage premium" in the U.S.-- the amount that union members make above non-union members-- is currently 11.9%, after controlling for age, gender, race, education, industry, and state. This effect is particularly pronounced for low-wage workers, in the range of 20%, but even at the high end there are still significant benefits: workers at the 80th percentile of wages (those who make more than 80% of other wage-earners) have a wage premium of 9.0% and those at the 90th percentile have a wage premium of 6.1%, still significantly higher than the cost of union dues (typically around 2%, sometimes lower.)
  • Benefits (most of this is from the government's Employee Benefits in Private Industry, March 2007 Summary, a PDF):
    • Health Insurance. In the private sector as of 2007, 88% of union members have access to health insurance through their employer and 78% participate, while 69% of non-union members have access and 49% participate. The difference in take-up is probably because non-union workers have to pay much more of the premiums than union members do; union members in the private sector on average pay 8% of the premium for single coverage and 12% of the premium for family coverage, while non-union members pay 20% of the premium for single coverage and 32% of the premium for family coverage. (Union workers are also significantly more likely to have dental, vision, and prescription drug coverage.)
    • Retirement. Union members are significantly more likely to have access to retirement benefits than non-union workers (among private sector workers it's 85% of union members and 59% of non-union members; among public sector workers, 97% of union members and 83% of non-union members.) However, it's even more dramatic when you look at defined-benefit pension plans, which 69% of private-sector union members have access to, compared to just 15% of non-union workers.
    • Other benefits. Union members are more likely to have access to a whole host of other benefits, too. 76% of union members in the private sector get life insurance from their employer compared to 56% of non-union members; 61% of union members have short-term disability coverage from their employer compared to 36% of non-union members. Union members are more likely to have paid holidays (84% to 76%) and those who do have paid holidays have more on average (10 for union members compared to 8 for non-union workers.) They're also more likely to have a number of other types of paid leave (from vacations and sick days to funeral leave and jury duty), albeit generally by relatively small margins.
  • Security/Stability. Unlike the "employment at will" at most non-union jobs in which you can be fired without notice for any reason, in a union job after you're off probation typically you can only be fired if there's actually just cause for it (determined by a neutral third-party.) There's also often language prohibiting the contracting out of work that can be done by employees. And if you do get laid off there's more likely to be severance pay, and you may be kept on a recall list and have the first shot at it if your job or a similar job returns.
  • Career development. Union members are more likely than non-union workers to receive employer-paid benefits for education and training. The other great part about career development in a union is fairness in promotions; the effects of favoritism are greatly diminished when you can challenge being passed over for someone who's less qualified than you.
  • Health and safety. I can't access the primary sources that it's citing, but this link talks about a number of studies which found that health and safety is better at union workplaces-- injury and illness rates are lower. Not only does work-related illness and injury effect your quality of life, but it can have short and long-term financial consequences, too.
These are all extremely important, and on a personal note I really appreciate them. I love having no monthly health insurance premium, a $10 co-pay for doctor's visits and paying $1 for prescriptions. It's a cool feeling that I've qualified for a pension at age 26 (a small one, and rightfully so, but I'll get at least $7000 a year-- even after considering inflation that's probably the equivalent of $1000-$2000 today, which isn't too shabby-- and if I stay longer the amount keeps going up.) And as I watch as my boyfriend has to haggle personally for every dollar, I truly appreciate knowing I can count on a couple of wage increases every year, and that when it comes time to bargain new ones, my coworkers and I are all working collectively to do so.

But as a proud union member, I have to say that some of my favorite benefits are actually the non-economic ones. Solidarity-- knowing my coworkers are on my side and I'm on theirs if something goes wrong, that we can and do stand up for each other and support each other. A voice at work-- having labor-management committees in which employees can sit across the table with management and talk about where we think our employer should be going, what changes could be made to help us be more effective. The knowledge that I am accountable to my employer, but my employer is also accountable to my coworkers and me.

Of course unions have their downsides too, and some unions can be very ineffective. But really, unions are as strong or weak as their members. If you have a union you're not happy with, then organize your coworkers and make some changes! Do what you can to make your next contract negotiations more successful. Go to your union meetings and start discussions about the issues that concern you. If you think that some of the priorities and provisions in your contract are off, make your case to your coworkers-- and organize them! Run for an elected position in your union. If you've got a problem with the higher-ups at your union rather than the people at your worksite, then look for another union to affiliate with or go independent. There's no reason not to insist on getting your dues' worth and beyond.

Are you a union member or have you been one in the past? What pros and cons have you experienced? What do you think the net financial (and non-financial) effects are/were for you?

Wednesday, August 20, 2008

Round-up: quiz yourself!

And... I'm about to head off on vacation again. (I love having 23 vacation days!) See you in a week.

Sunday, August 17, 2008

The true costs of driving-- how much could you save on transportation?

Could you save money by switching from a driving commute to a transit (and/or carpool/biking/walking) commute? There are more costs to be considered than simply the price of gas, and these calculators will help you figure them out:

  • For a simple approach, the American Public Transit Association has a handy calculator which lets you plug in your commute mileage and enter the precise gas prices, MPG, parking costs, and public transit costs that fit your situation. It also includes (based on the size of your car) an estimate of the increased expenses per mile you drive for maintenance and tires, an important addition that often gets left out of back-of-the-envelope calculations. Check it out here.
  • This calculator is similar to APTA's, but lets you customize the value for maintenance/tires, and has a field for per-mile savings on depreciation/insurance/taxes/financing.
  • If you want to get more detailed there's a really cool "Car-Free Diet" website (sponsored by Arlington, VA but it works fine for people anywhere.) It not only explores the cost of driving vs transit/carpool/walking/biking, but also the calories you could burn by walking or biking, and the environmental benefits as well. It's extremely customizable-- from picking the actual make, model, and year of your car, to entering up to 3 different driving routes at a time, to including your weight and age for the calorie-burning calculations! Then you can see numbers and graphs for the money saved, calories burned, and CO2 emissions reduced if you changed each trip to transit, carpooling, biking, walking, or telework (ie "What if I took transit to work twice a week and walked to the grocery store on Sundays?") It's a pretty incredible tool-- check it out here!
  • And if you want to take it a step farther and really explore the externalities (costs that are borne by people other than yourself) of your driving, try this calculator called The True Cost of Driving. Not only does it add a few other factors to your personal driving costs such accounting for the average cost per mile of car accidents (health care and property damage), but it also lays out things like how much the government pays for highway maintenance, repairs, and waste clean-up per mile driven; a variety of pollution impacts per mile driven; and a bundle of other effects your driving has on society.

How much does your transprotation cost you? Have you run the numbers recently? How do you do your calculations? Is there anything these calculators are missing?

If you're thinking about switching, check out:

Wednesday, August 13, 2008

Round-up: contentment!

I wish I was as content as the people featured in this week's round-up. I'm not... but I'm working on it!

Tuesday, August 05, 2008

Link round-up: the "Can you help my zucchini plant?" edition

I'm getting mixed results from my container garden.  My tomatoes are growing and reddening and the first ones will probably be ready to eat within the week (yay!)  But my zucchini plant, on the other hand, has not grown a single female flower, which means no chance for zucchini to grow.  I know that it's fairly common for there to be only male flowers for the first couple of weeks, but it's been about a month now and still no females.  I'll make the most of it by eating the many tasty male flowers that keep blooming, but does anyone have any advice, or am I just doomed to a zucchini-less plant?
Anyway, on to the links:
  • I've seen this story linked a number of times lately, about a family downsizing their home and selling the proceeds to charity.  Here's FMF's take, When is Enough Enough?
  • I liked Blunt Money's post Of personal legends"When he was a child, that man wanted to travel too. But, he decided first to buy his bakery and put some money aside. When he's an old man, he's going to spend a month in Africa. He never realized that people are capable at anytime of their lives of doing what they dream of."
  • Then there's Dangerous Norms: When a Treat Becomes a Routine Matter, a guest post at Get Rich Slowly that's by Trent of The Simple Dollar.
  • Wondering where all the women are in the personal finance blogosphere?  There's a near-comprehensive list up:  Wise Bread Spotlight: List of Top Personal Finance Blogs by Women

Sunday, August 03, 2008

Get free cab fare home in these 50+ cities/counties with Guaranteed Ride Home programs

If you commute to work any way other than driving solo-- if you take mass transit, bike, walk, or carpool-- then you should investigate if your local transit agency or your employer offers a Guaranteed Ride Home program that'll pay for taxi rides home if your usual arrangements fall through. And if you are a solo driver who's thinking about switching over but afraid of what'll happen in emergencies, well, you should read on too!

Guaranteed Ride Home (or Emergency Ride Home) programs are designed to get commuters off the road and onto public transit or another method of transportation, by helping assuage fears about how to get home in emergency circumstances. They are often sponsored by counties, cities, or transit agencies, but may also be sponsored by individual employers. If you enroll in such a program, then the sponsor will cover the costs of you getting home if unexpected circumstances interfere with your regular plans. Each program has its own rules, but typically "emergencies" are defined as unpredictable events like illness/injury of yourself or a family member, unscheduled overtime (verified by your employer), an emergency at your home (like a flood/break-in/fire/etc), or the early departure of your carpool driver. Covered events for bikers and walkers may also include severe weather.

If you register for the program, you'll qualify for a set number of trips home per year (often two to six.) If an emergency arises, typically you call the Guaranteed Ride Home coordinator and they'll call you a cab, although in some programs you can skip that step and just call the cab yourself (either filing for reimbursement later or using some sort of voucher.) Some programs cover the tip, some don't. They may also cover the costs of a stop at your child's school or daycare on the way home.

So without further ado, here are links to more than 50 Guaranteed Ride Home programs in more than 30 states across the U.S. (If yours isn't included, try searching for one anyway, since I certainly might have missed it.) There are also many employer-sponsored Guaranteed Ride Home programs, so you can check to see if your employer sponsors one (or advocate for it if they don't!)

Tucson, AZ

Alameda County
Contra Costa County
Los Angeles County
Monterey County
Orange County
Riverside County
San Bernadino County
Ventura County
San Diego


Washington DC


Broward County
Miami Dade County
Palm Beach County

Volusia County
Tampa Bay area



Madison County

Southeastern Indiana

Des Moines

Northern Kentucky
Northern Kentucky


see DC

Southeast Michigan

Kansas City
St. Louis

Minneapolis/St Paul


Southern Nevada

Upper Valley (New Hampshire and Vermont)

Santa Fe


Durham County
Orange County
Wake County

Southwest Ohio
Central Ohio

Eugene/Springfield metropolitan area

Southeastern Pennsylvania

RI:Rhode Island

Anderson County
Blount County
Knox County
Loudon County
Jefferson County
Sevier County



Frederick County
Middle Peninsula
Roanoke Valley

Kitsap County

Washington County

Thursday, July 31, 2008

Return and round-up

Yes, yes, I'm back, and slowly getting back up to speed. It was a good vacation, but sometimes the stress of getting ready for vacation and the stress of coming back from vacation really cut into the net relaxation I get from taking a vacation...