Wednesday, April 11, 2012

Financial Superstitions for Friday the 13th

I admit it.  My mother and her mother were very superstitious women.  It used to drive them batty when I would walk down the sidewalk with them, stepping on the cracks, as they warned, “Step on a crack and you break your mother’s back.”  Since they were my “mothers”, I couldn’t resist testing this theory and the null hypothesis was always accepted.  On any given Friday the 13th, they were beyond disbelief.  They would refrain from anything the least bit risky, including hosting a party – for fear people wouldn’t come - or going to the doctor – for fear he would discover a dread disease.  So, in honor of the barrels of salt I’ve watched being hurled over a shoulder, should you accidently spill the salt, it seems like a good idea to see what “money superstitions” exist and have some fun on Friday, April 13, 2012.  (These are from the “Don’t Mess with Taxes” website.) My comments are in italics.

1. Never give a person a wallet or purse without money in it, or they’ll always be poor.  One thing is certain, if you don’t put any money in it, you’re not helping them be rich.

2. If the palm of your right hand itches, you will soon be receiving some money, if you don’t scratch it. If it’s your left hand, you’ll be paying out some money.  My advice is to keep your hands in your pocket if you are carrying your wallet and in a bad part of town.

3. If your front door faces your back door it means money in, money out.  Huh? If you live in such an oddly designed house, you are definitely poor.

4. If you put your handbag on the floor/ground you will never have money.  While this is from Trinidad and Tobago, Americans have also been known to leave their purse behind.

5. Money attracts money, so never leave your pockets, purses or wallets completely empty and never completely empty your bank account. Always have at least a coin or two.  This is from Greece.  Apparently, they did not pay attention to the advice of their mothers.

6. Placing a piece of snake skin into your wallet will help you become rich or find money. Snakes are a symbol of money and wealth in Japan. If you kill a snake, you will lose your money.  While this is from Japan, what does one do if they live in Ireland?  How do you get the snake skin for your wallet, if you don’t kill the snake?

7. Find a penny, pick it up and all day long you’ll have good luck!  OK, I was told that it has to be “heads-up” for good luck and “tails-up” was bad luck.  Actually, I never pass up a coin on the ground.  For, a penny found is a penny found.

8. Write with a green pen whenever you can, and profits will flow from your hand.  If this were true, President Obama would be passing out green pens to every American corporation.

9. Shooting stars are rare indeed, but if you happen to see one say “money, money, money”.  Can you tell me why I should say “money, money, money”, other than to look stupid to my fellow campers?

10. Always place a bill with a person’s face on it with the person’s face facing down. If you leave the bills with the faces facing up in your wallet, they will want to peek out and leave. But if they are facing down, they will want to stay buried inside your wallet.  OMG!  My money is alive!

11. If you make money on Monday, keep it and the amount will increase during the remainder of the week.  Seems to me that the more you keep, regardless of the day of the week, the amount will increase.

12. Wrap a penny in paper and carry it with you. This will make sure you never go broke.  Good idea, but if you use bills with pictures of presidents to wrap it in, see #10.

13. On January 1, be sure to have greens (spinach is my favorite) and black-eyed peas to ensure prosperity for the coming year. The greens represent paper currency and the peas are for added coinage throughout the year.  Actually, this is true.  If you learn to eat low cost food and refrain from dining out, you will have more money.  Case closed.

If you suffer from paraskevidekatriaphobia, you are probably not reading this, for that means you are totally paranoid about Friday the 13th.  Today, look at your superstitions, consider the irrational “rules” you live by, or the money practices you have learned from others.  Those lessons may, or may not, be ones you need to disregard or relearn. So, even if you walk under a ladder while a black cat crosses the street in front of you, you are able to overcome irrational fears and to create financial success.  Finally, if your hand itches and you see a penny on the ground, pick it up and put it in your snakeskin wallet.

Thursday, April 5, 2012

Choosing your major

by Ryan Law

 

We have written in the past about the costs and benefits of a college education[i][ii], and I feel strongly that most people can benefit from a good education – after all, college grads make more than high school grads[iii] and have lower overall unemployment rates, but the data researched has generally been for college graduates as a group. Georgetown Center of Education and the Workforce[iv] recently did a study to determine unemployment and earnings for recent college graduates. Here is a summary chart:

Getting a college degree is generally smart, but if you financing it on student loans, it’s important to realize that it may be difficult to make the payments on $50,000 worth of debt if you are making $30,000 as an Arts or Recreation major. If someone is making $55,000 as an Engineering major or $46,000 as a Computers major the payments will probably be more manageable.

 

The authors of the report feel that for most, college is a good investment, but conclude that “Today’s best advice, then, is that high school students who can go on to college should do so — with one caveat, they should do their homework before picking a major because, when it comes to employment prospects and compensation, not all college degrees are created equal.”

 

Michelle Singletary wrote about this report[v] and said, “A college education is not an investment in your future if you are taking out loans just for the college experience. It’s not an investment if you’re not coupling your education with training. It’s not an investment if you aren’t researching which fields are creating good-paying jobs now and 30 years from now.”

 

I completely agree with Singletary – students, parents and advisors should be careful about the amount of student loans they take out and get practical training along the way. Here are two quick stories to illustrate the point:

 

1.       One student had a combined federal and private debt load of about $150,000. She had majored in the Arts and had lived in nice apartments during school and had travelled abroad a few times, all financed with student loans. She came to get help because she was graduating and had no job yet. Her dream was to work with horses and travel the world. Unfortunately, with that debt load and no job she was moving back in with her parents and taking whatever job she could find. She might have enjoyed her time in college, but will likely spend the rest of her life paying for it.

 

2.       Another student had been going to school for years and had gone to law school but dropped out because he didn’t like it. He then tried medical school but also didn’t like that. He tried out a number of different majors and had multiple degrees. He finally realized that he really wanted to teach History at the college level so he got a Ph.D. in history. He had about $180,000 in private and federal student debt, and was worried that he was only going to make a salary of about $32,000. When asked why he wouldn’t make more as a professor he said “because history teachers are so plentiful they can pay that little.” He actually didn’t have a job offer yet, and figured that he would end up working any random job to make ends meet. This student, too, will spend the rest of his life paying for his education and may never get to work in the field he really wants and spent so much to get.

Obviously these two stories are extreme examples – after all, most students graduate with about $24,000 in debt and many will find a job and make their payments. If you are a student, though, you can maximize your chances for getting a high-paying job my choosing the right major and getting experience in your field as you go through school. Even if your major doesn’t require an internship you can still try to find work in the field. If you are a parent or advisor you would be wise to sit down with the students you are working with and help them understand the realities of how much people in certain majors make and the realities of paying off debt.

 

I don’t want to leave the impression that you should choose your major based solely on earnings potential – after all, we would all be doctors or lawyers if that were the case, but considering earnings potential is an important part of the evaluation process.

 

Ryan H. Law, M.S., CFP(r), AFC

 

Personal Financial Planning Department

Office for Financial Success Director

University of Missouri Center on Economic Education Director

 

162 Stanley Hall

University of Missouri

Columbia, MO 65211

 

573.882.9211 (office)

573.884.8389 (fax)