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Posts Tagged ‘spending’

The $45,000 Cell Phone

August 23rd, 2010

After writing yesterday’s post about the True Cost of a Car, I took a look down and saw my cell phone. I thought about how much a cell phone really costs, in the context of financial freedom.

A $45,000 Cell Phone

How much does a cell phone really cost? How much do you pay? For a cool phone like an iPhone, it costs $299 for the phone, plus $36 for an activation fee. Then, it costs about $110 per month for calls, data and text. Add taxes and other fees and it comes out to about $135 per month. Divide the startup costs by 24 (months), and the average monthly cost is $150.

Why does it cost $45,000?

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Is Connecticut Bankrupt?

August 19th, 2010

This article on Yahoo finance really got my attention. It’s about how the state of Connecticut is about to run out of money. It’s interesting because many states are in dire financial straits, but most people are, as usual, blissfully unaware.

Recently I did some research about bonds, and was interested in purchasing some. I discovered that municipal funds are supposed to be among the safest bonds that you can buy! I thought, “Isn’t that funny. Many states and cities are going bankrupt, but people think these bonds are very safe.” It sounds like the same game the ratings companies have been playing for decades: give the bond a AAA rating even if it is risky.

Why are municipal bonds more risky in this financial environment?

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I.O.U.S.A the Movie

July 24th, 2010

Thanks to Robert, I found a great new resource about America’s precarious financial situation and the future financial chaos. It is a movie called I.O.U.S.A. What better way to learn about economics than through a video?

Curiously, embedding the movie is disabled, so here is the preview instead:

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Is America Sinking into Hopeless Debt?

July 23rd, 2010

After reading this article on Yahoo about the ever-growing national debt, I took a look at the U.S. National Debt Clock. Not only are we having record deficits each year, but the debt per American has reached unsustainable levels.

As you can see, the debt has reached $42,698 per American! And, $119,524 per taxpayer. The average savings in America is a small percentage of these figures.

How is this ever going to get repaid?

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Enjoy Now, Pay Later – The American Way

July 16th, 2010

On of the reasons that our economy is in a precarious position is that it is composed mostly of spending. Specifically, it is created by the desire to consume ever greater amounts of newer and bigger stuff. And we don’t need most of that stuff.

The American Dream

Contrary to popular opinion, most people only spend about 30% of their money on things that they really need. People don’t need a cell phone. They don’t need new clothes or to go out to eat. They can survive just fine on cheap food like pasta or rice or vegetables.

The challenge is that we grow up thinking that if we can buy just one more thing then we will be happy. And the problem is exacerbated by easy financing. The cell phone is a perfect example. If you sign up for service, you can get a deal on the phone and start using it now.

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Is America’s Heyday Over?

July 15th, 2010

After reading this article, it reminded me that the U.S. will not be the most powerful country forever. The article says that U.S. debt is not as safe as everyone thinks.

Image courtesy of The Heritage Foundation

America has had a free ride for the last hundred years. America has had the most natural resources, the most immigration, strong investment in industry,  and, most importantly, the ability to print money without limit. Why? Because the dollar has been the world’s reserve currency.

That means that the demand for U.S. debt has been unquenchable. Whenever a country or individual wanted to invest in a safe way (whatever that means), they would buy dollars denominated U.S. debt. Whenever the government needed money because it did not manage its finances responsibly, it would just issue more debt.

So, what’s the big deal?

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Do You Expect the Government to be Frugal? Really?

July 7th, 2010

There’s a decidedly strong backlash against government spending.

There’s always a backlash against government spending. It’s only right: we’ve all done our due diligence cutting our own spending, trying to invest properly, and finding new sources of revenue.

We’ve managed to create and live on a budget.

But here’s the thing.  This is nothing new. The movement to force government into the frugality has been going on for a long time. But, each time government services are cut, there’s a huge backlash against that, too. Reagan faced it. In the 1990s, when national parks began to close, budget-cutting was demonized.

What about earmarks? We all hate earmarks, but gladly vote for politicians who hold big check photo-ops into our neighborhood, right?

Here’s the question then: what are we prepared to do to make our government more frugal?

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How Greece Will Affect Your Bottom Line

May 13th, 2010

Pic by phaul @ Flickr

Just when you thought it was safe to start spending and investing again, right?

The recent turmoil in Greece has had a bubbling effect throughout the world. The crisis may or may not have been responsible for about a trillion dollar drop in the stock market, but it was definitely responsible for a trillion-dollar bailout.

But, who cares? Those things are not on your personal financial radar map.

Or are they?

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Weekly Wisdom: Great Reads for a Great Week

April 11th, 2010

Pic by bjohnson @ Flickr

It’s always good to keep up on your personal finance and self-improvement readings. It should actually be a habit, a space you carve out in your day to research, study, and learn.

This keeps you on track and keeps you motivated. I try to vary my reading habits from week-to-week, checking out blogs that specialize in the three legs of personal finance: saving, investing, and spending.

Here are a few links I had a chance to read over the week.

Enjoy!

Studenomics clues us in on Financial Literacy Month.

MarketSci blog takes a look at the correlation between past and future volatility.

Get a look at your financial checklist for April at Personal Dividends.

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What Does Money Mean to You?

March 23rd, 2010

pic by Muffet @ Flickr

Money is the root of all evil.

It takes money to make money.

A penny saved is a penny earned.

We are living in a material world and I’m a material girl.

These are all common expressions that teach us what money means. Most of us agree what money is, but none of us agree on what money means.

We all have our approach to making and spending money, as well as an opinion on people who make and spend money.

These beliefs affect our personal and our global economy, believe it or not. Obviously they affect your own bottom line, but as these personal beliefs turn into group beliefs, the meaning of money can literally change the world’s markets.

What does money mean to you?

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