We’ve heard more news from the financial sector in the past two months than we’ve ever paid attention to before. Here are some lessons we can all take from the recent news

AIG Bailout

AIG announced that it was going under about one month. This was due to overly risky investments and bad assets.

Lesson: Be very careful with your investments. Risky investments can bring higher returns, but they can also be lost, thus they are riskier. when investing, be sure to draw a line to how much you’re willing to risk.

We, the taxpayers, gave them an $85 billion loan.

Lesson: Don’t make or accept loans that may not be repaid.

AIG took their tax executives on an extravagant vacation.

Lessons:  When you take out a loan, someone else is trusting you with their money. If you get a loan from family/friends, realize that it is their hard-earned money that you are being a steward of and thus, it should be used wisely and repaid responsibly. If you take a loan from a bank, realize that you are borrowing money from the bank’s depositors, just like gov’t loans come from taxpayers. The bank compiles our deposits and loans them out and that is why we get interest rates on our savings accounts. So, again, use loans wisely, you are borrowing from everyday people and your choices should be made with a sense of gravity.

Also, if you are in financial trouble, you should tighten your belt and use every extra penny to get out of debt and back on your feet and to plan for your future. Don’t spend money frivolously. That’s likely how you got in this mess to begin with.

If you loan someone money, and you feel that they are not being good stewards of your money, you have every right to recall that loan. It goes back to how much risk you’re willing to put your money under. It’s your money, you can loan it out, but you can also ask for it back if you think that the road the borrower is on will guarantee that you will never see your money again.

The Gov’t gave AIG another 37.8 billion

Lessons:  When someone else is screwing around with your money. DON’T GIVE THEM ANYMORE!

Don’t borrow more money if your existing loans are already weighing you down!

Sheriff Halts Evictions

This Sheriff In Illinois has chosen to no longer carry out evictions.

Skipping past the right/wrong and legal/illegal discussion, the lesson is that in these tough times, we need to rally around one another as communities and help one another out.

Passive Dad gives some great ideas to help friends facing a foreclosure

Other ideas are:

  • offering to babysit every now and then if you’re home while they work — it will cut down on their daycare expenses.
  • Pass along good advice/finds/coupons. I always forward Sale email or interesting articles to a group of friends.
  • Split bulk buying trips. If your household won’t use 25lbs. of rice and neither will theirs, you can go to Sam’s or Costco together, split the 25lb. bag and you both save money.

Learning to Live with Less

These IReporters are cutting back

Re-evaluate what your needs vs. your wants are. Cut out things you could do without in your life. Whether or not you’re experiencing financial trouble right now, it’s time to reduce debt, and save money. You never know what tomorrow will bring, and that’s all too true today.

Cut back where you can and put your money away or cut away at your debt. Be as wise as you can be with the money you have.

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I checked my WaMu savings account this morning and my APY has fallen from 4% to 3%. It is still a pretty good rate, but no longer the highest out there. There’s your update for the day.

So, my fears came true, and it wasn’t so painful.

My family banks at WaMu because I’ve always thought they were great with the free checking, high yield savings, free checks, etc. I started to get worried these past two weeks as things at WaMu got worse and worse. It was my intention for us all to withdraw our money from WaMu in order to avoid the long lines seen from the IndyMac ordeal when WaMu got taken over by the FDIC. However, I also didn’t want to jump the gun and knowing that it is the panicked withdrawing of money that tips bank over the brink, I also didn’t feel good about withdrawing all of our money like that.

Anyhow, just as my sister and I made the decision yesterday to go to the bank Friday afternoon and withdraw our money we turned on NPR to find out that WaMu had indeed just been taken over by the Feds, but then promptly bought by JPMorgan Chase and it would be business as usual in the morning. I checked our accounts this morning and everything is indeed business as usual. No change in my accounts. Debits/Deposits are posting, my debit card works just fine.

Congratulations to JP Morgan. If a bank has to go down, this is exactly the way it should go. I will certainly continue with them, just as long as they maintain the qualities that made WaMu such a great place to bank at.

So we’re back on the financial emotional roller coaster.

How does one go from making independent sole decisions based on you and what’s important to you to joint decisions taking in both ideas and priorities without wanting to kill the other person?

A few days ago we sat down to talk about our financial plans and goals and granted the conversation did not go so well, we did agree about what our short term goals are. This was my hangup that day because all of our short term large expenses would be for me. I have a $2,000 expense I need to take care of as soon as possible, also soon after that I’ll have to pay for my tuition and soon after that I would like to travel to Colombia along with my husband and sisters. He and I both agreed that these would be our common saving goals along with establishing an emergency savings account, 401K contributions, debt reduction, and saving for a down payment on a new house. My expenses are immediate, wheras everything else was deemed to be part of a long term plan.

Last night we sat down to do our budget to see where we stood for the rest of the month and to set up next month’s budget as we will be traveling out of town for our reception, etc. Barring any cash surge (reception gifts) or emergency (car breaks down/whatever), accroding to our budget we should have approximately $2,200 saved up by November 1st.  So I said perfect! We have the $2K for my first big expense, which means I can get that out of the way next month and we can start on saving for my tuition and our trip starting in Novemeber and we’ll have $200 left over.

Well, this sparked an all out fight. He thinks we should put a few hundred aside for my expense and break the money up so that in 6 – 8 months we can take care of everything. I blew up because I have been waiting to take care of this matter 16 years and when it is in my grasp he tells me we should wait 6 – 8 months until we have more bankroll and that we never agreed that that was what our money would be saved for or for immediate use.

Now, mind you, the $2200 saved up means we’ve paid all of our bills, he’s paying down his credit cards, we’ve spent money on his  birthday, my sister’s bday, my birthday, alloted for miscellaneous spending, etc. and then we have $2200 left over. So, it’s not like taking the $2K immediately would leave us off badly financially, it’s just that he won’t see our savings grow for 6- 8 months before it gets spent, but rather we would spend it as we accumulate the amounts required for each expense, but wither way in 6 – 8 months the exoense would be taken care of and the “savings” would be gone.

However, between Tuesday and Thursday things changed from “it’s OUR money and your priorities are our priorities”‘ to “you’re being selfish, everything can’t be about what you want, and I don’t agree with that plan”. It is driving me crazy that I have to get “permission” from him to spend the money we save. I wish I was alone or that we had not merged our finances then I would be half way to my goal and I would cut down every expense for the next month to save the other $1K by the end of Novemebr and I wouldn’t have anyone to ask, “do you agree?” I owould just make my own plan and follow it! I hate this merging finances/lives and being hadcuffed when making decisions, because we both have to agree! ugh! $1K of that money is mine! plus we would be saving part of my paycheck to come to the $2K and using my paycheck to pay for our household expenses etc just as much as his paycheck. ugh! I just want to be on my own again!

On top of that, the damn house is his because he bought it and now I live with him so last night when I wanted to just lock myself away somewhere and be on my own I had nowhere to go. I couldn’t drive back to my place and just be alone. I didn’t want to be in our master room because , well it’s ours. I went to the guest bedroom, but that’s his room. The only place I could go to was our study, but tha’s still our common area and it’s in his house! I need my own space! My sister has her own suite upstairs, he’s got the guest bedroom, and I have no place that isn’t a common area. Sometimes I jsut want my apartment back. I just want a place to call my own again.

So, after my whole thing about not having any money and feeling so inadequate, etc. I got a check in the mail from State tax returns for $1,000. Woo hoo. Ok, so $1K is not really that much money, but it cna certainly re-start my savings account, which I emptied for wedding costs. I am feeling much happier now, specially because I have a WaMu savings account with a wonderfully high 4% APY my little state tax return will earn me about $40. That makes me smile….ooohh…I could get a new sweater dress just with my interest. I hope WaMu doens’t go under with the stock market crisis because I LOVE their services.

I was blog surfing earlier today and ran across Simple Mom . I’m not one to read the Mommy Blogs, because, well, I’m not a mom and I think most of the stuff they talk about is pretty boring. However, I did go from being a single woman in a one bedroom apartment to a married woman with a husband and a teenage sister to care for and a big house to manage in under 6 months. Needless to say, I’m suddenly in unfamiliar territory.

I’ve always been a big fan of to do lists and organizational tools. Simple Mom teaches one how to create a Home Management Notebook . I think this is a great read, specially for someone like me, who out of nowhere has a household to take care of.

At the same time, I’m hooked on My Dollar Plan and using a lot of her advise to begin creating a financial plan for my husband and I. Specifically because we both want to go back to school, my 19 year old sister lives with us and she has school to pay for also. My other sister is 11 years old and I see her college years fast approaching at a rate I can’t imagine trying to save for. On top of that, I want a new house. I would like for both of us to retire early. We want to travel to Colombia within the next 6 – 8 months.

With so much to plan for, I’m thinking of merging Simple Mom’s tools and Dollar Plan’s ideas to create a Life Management Notebook. A place where I can create a financial plan both short and long term for my mixed up family. I can create a personal plan to go back to school. And I can manage this big house I’m in and the household needs.  I definitely believe my household needs a cleaning weekly/monthly plan. Another awesome idea from Simple Mom is using Google Calendar to plan a monthly menu. Thank you, and I’m on it. I think that if I plan the menus ahead of time, I’ll shop better at the grocery store and be able to save money too.

Ok, that’s all for now, I’ll update as I start creating out Life Management Notebook

This week’s biggest story is the Wall St. Bail Out discussions going on in DC. This entire thing is so incredibly complicated that there is no one simple answer.

First of all, I believe this is another one of Bush’s Iraq War. He sees the country in crisis and is trying to therefore slip in legislation that will change the course of the nation and benefit his friends under the guise of resolving a problem. The Iraq war gave many of Bush’s friends great (if not, unbelievably generous) contracts and screwed the country out of a ton of resources.

Bush’s bail out plan threatens to do the same. His idea is to put $700B in the hands of a few people with no restrictions. Who does this benefit? Certainly not you or I. It certainly will not benfit John Smith who put his savings into the market with hopes of retirement. It won’t help Jose Garcia who works for any of these banks that will evetually close and put him out of a job. It won’t help Ed Jones who can no longer afford to pay his mortgae.

It WILL help the CEO who made the choice to get into predatory lending to trap Ed Jones into a mortgage he would later have to defualt on. That CEO will get paid millions just to leave the job. It will also help the VP who decided to lay off Jose Garcia so they could cut costs. It will also help the VP who ignored the well being of his shareholders and helped steer the company to the brink of death and lost John Smith’s retirement money in the process. All of these excutives will walk away wealthy and without any negative consequences. The people who will pay for the consequences of the executives’ choices are the laypeople of this nation. The employees of these companies, the out of job realtors, the boomers who have lost their retirement funds, the homeowners being crushed under predatory loans, and the taxpayers . That is what Bush proposes.

What we need is a bail out plan that will protect the retirement funds, the jobs of the bank employees, help stabilize the home market, and protect or modify default mortgages. This plan should penalize the executives for their bad decisions. They should leave without a penny, and what’s more they should pay back the company for the time they took to drive it into bankruptcy. Certainly the government/taxpayer should get to maintain a stake in the company if it gets bailed out. If we pay for your mistakes, we own at least a part of you. They shouldn’t get to be bailed out for free. The gorvernment should have the ability to modify these ridiculous mortgage contracts that these bail out companies got so creative with.

Earlier, I expressed that I am a very independent woman. I have lived on my own for 5 years and I rarely like to turn to my parents for any sort of help. I have certainly never taken any financial help from a man. 

Life has always been about how hard I can work and what I can get for myself. Of course, I always have also tried to do as much as I can for my sisters as well, but I htink of them as an extension of me. When I have needed something, I have just figured out how to get it for myself or go without it. I have had help from friends at the times I needed it, but even accepting that help was hard for me.

My husband is seven years older than me and obviously, we came together at two different point of our lives; financially, emotionally, spiritually, etc. The first bump in our road was from the emotional differences between us.  I was not used to getting emtionally attached to anyone, and I had to break that in order to allow myself to fall in love. He stood patiently by my side as I struggled with it all.

Now, we are trying to plan out our finances. Specially since I have been reading many personal finance blogs, such as My Dollar Plan. We have been able to sit down and do our budget together within 2 weeks of being married. It was admittedly a little difficult for me because I did not like the idea of having to explain my expenses to someone else. Specially since I’ve alway had a part of my income going towards my sisters. We got through it, but we busted the budget anyway, so now we have to sit down ad re-do it. We didn’t bust it in the sense that we spent more than what we have, but in the sense that we overspent in some areas. Namely, my sisters and my eating out.

Last night we set down to plan for the future and discuss debt, 401Ks, CDs, investments, Expenses, etc. Teh discussion did not go the way I had hoped at all. I had hoped we would talk about different options for saivng and investing money. Rather, we spent some time talking about m y creidt history and how to fix it. Also we talked about the upcoming expenses, which are all really my expenses, as they benefit me (tuition, travel to Colombia, other). I felt terrible because I simply felt like he had the upper hand in our relatioship, financially. He contributes to his 401K monthly. I have not contributed in 2 years. He has the house and the equity and large tax returns involved with that. I seem to have nothing. These are all the reasons I didn’t want to get married until I was 30. I wanted to be stable and have things to bring to the table, rather than feel so incredibly inadequate.  I realize that many of these things are not really problems as I am only 23 and most people my age don’t have a nest egg and investments, etc. I just don’t like being the financially inferior one in any situation. 

He, of course, being the wonderful man that he is, explained that since he only lived alone in the house for about 6  months and we have been there the other 6 months paying into the mortgage and expenses, etc, we have as much stake in the equity and tax return as he does. He also told me that we’re married now and evertyhing is ours. From my expenses to his assets. Yeah, I guess, but still the independent woman in me is not very happy with the entire situation. I wish I had more money. Sometimes I even wish I had waited to get married.  In the end, we didn’t really even make a plan because it didn’t go so well after I got upset at my own situaiton.