DailyFinance.comhttp://www.dailyfinance.comDailyFinance.com%http://www.blogsmithmedia.com/BlogURL%/media/feedlogo.gifDailyFinance.comhttp://www.dailyfinance.comen-usCopyright 2012 Weblogs, Inc. The contents of this feed are available for non-commercial use only.Blogsmith http://www.blogsmith.com/Readers' Tips for Financial Renewal, Part 4: Get the Right Jobhttp://www.dailyfinance.com/2012/02/09/readers-tips-for-financial-renewal-part-4-get-the-right-job/http://www.dailyfinance.com/2012/02/09/readers-tips-for-financial-renewal-part-4-get-the-right-job/http://www.dailyfinance.com/2012/02/09/readers-tips-for-financial-renewal-part-4-get-the-right-job/#commentsFiled under: ,

Job searchWhen we asked DailyFinance readers for their best tips for putting your financial house in order, we weren't prepared for the deluge. From saving to spending to investing, they suggested dozens of great ways to lay the groundwork for a long, happy financial life. But to grow your money, you first need to make some money ... which means, of course, that you'll need a job.

Seems like a no-brainer of course ... but in this economy, there's nothing simple about finding employment. So even if it doesn't quite fit the traditional "boost your finances" motif, we're going to pass on some of those reader suggestions, too.

To begin with, many advised that the first step toward financial stability lies in giving up the dream of finding a job that you love in favor of finding a job you can depend on. "Meek6" suggested that real money -- and security -- lies in finding a job that may not be a lot of fun, but is a necessity: "Pick something that needs to be done, but that most people do not want do." After all, he notes, people "will pay to have someone else do" jobs that are less enjoyable, or less attractive.

He also notes that there's a lot more security in jobs that require some education. This isn't a fresh idea, but Meek6 puts a somewhat new spin on it: Rather than using higher education as the measure of a good job, he suggests considering licensure: "If [a job] requires a license, so much the better, it requires an entry hurdle that takes effort, time and some money to achieve." Since many people won't go through the trouble of studying, applying, and qualifying for a license, Meek suggests, people who do so will be competing against a much smaller pool of applicants.

Meek6's theories have been borne out by the job market: Careers in home health support, nursing, medical assistance, funeral planning, and security installation -- for example -- may not sound like a lot of fun, but they are predicted to be among the top growth sectors in the next 10 years. Not surprisingly, most of these jobs require some measure of education and licensing. His idea -- looking for a relatively unpleasant hole in the job market and seeking to fill it -- may be a solid strategy for long-term career stability.

Working for Yourself

The idea that the true path to wealth lies in owning your own business is nothing new, and several of DailyFinance's readers suggested that hanging out your own shingle is the best way to get full value for your work. However, the success rate for new businesses is extremely low: More than half shut their doors within five years and more than two-thirds do so within a decade.

So how does someone find a business that will survive? Part of the secret to success lies in going with what you know, rather than what you want. As many experts note, entrepreneurs often start businesses -- like restaurants -- in highly-competitive industries, and they often pick fields in which they have minimal or no experience. Doing that is, of course, a recipe for failure.

Another suggestion of DailyFinance readers involves changing your standards of workplace satisfaction. Rather than looking for happiness based on impressing friends or owning the business of your dreams, search for satisfaction in the work itself. "JetDevil 68" puts it this way: "My reward is answering only to my customers and myself."

And that reward needs to be sufficient, as there is a tremendous amount of work involved in owning a small business. As JetDevil 68 goes on to note, "I started my business sixteen years ago, and I've taken two weeks of vacation in those sixteen years. I'm on the road or in the shop for 10-12 hours a day, Saturdays included, and I spend most nights catching up on paperwork."

While these reader suggestions aren't especially groundbreaking, they do plot a course toward financial security. What's more, as "lkec9444" reminds us, the benefits of hard work are not entirely financial: "My job has given me rewards beyond belief."

Bruce Watson is a senior features writer for DailyFinance. You can reach him by e-mail at bruce.watson@teamaol.com, or follow him on Twitter at @bruce1971.

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]]>Bruce Watsonjob openingsjob search adviceJobOpeningsjobsJobSearchAdvicelicensingself employmentSelfEmploymentstart your own businessStartYourOwnBusinessTwitterwork for yourselfWorkForYourselfBruce WatsonThu, 09 Feb 2012 12:20:00 ESTTwice the Heart, Half the Cost: Our Readers' Budget Valentine's Day Suggestionshttp://www.dailyfinance.com/2012/02/08/budget-valentines-day-gift-ideas-suggestions/http://www.dailyfinance.com/2012/02/08/budget-valentines-day-gift-ideas-suggestions/http://www.dailyfinance.com/2012/02/08/budget-valentines-day-gift-ideas-suggestions/#commentsFiled under: ,

FireplaceValentine's Day is looming, bringing a tidal wave of chocolate, roses, lingerie ... and rich revenues for the retail industry. In search of gifts that say more about the heart than the wallet, I asked DailyFinance's readers for their best tips for inexpensive but meaningful ways to express your love on Valentine's Day. Starting with their suggestions, I've compiled a list of ideas that can -- hopefully -- let you demonstrate your love without bruising your bank account.

In the interests of full disclosure, I should admit that, like many men, I can't stand Valentine's Day. I love Thanksgiving, get giddy around Christmas, eagerly anticipate Easter, and spend weeks preparing for Halloween. But when candy hearts go up in stores and flower prices go through the roof, my mood heads south.

Part of this has to do with the pressure of the day. For young men in freshly-minted relationships, Valentine's Day is a high-pressure exercise in blindly gauging their own feelings, as well as those of a potential significant other. And, not unlike the Grail scene in Indiana Jones and the Last Crusade, the wrong choice can be deadly: A poorly thought out gift can kill a promising romance or -- possibly worse -- keep an ailing, better-off-dead relationship on life support far past its expiration date.




Either way, perils abound.

Jewelry, Chocolate and ... Sheepskin?

Valentine's Day -- or at least the version that shows up in the local mall -- often seems to have more to do with commerce than with romance. This is hardly accidental -- the Valentine's industry, with its emphasis on showing your love through consumption, is designed to help fill the post-New-Year's slow spot in the retail calendar. And this strategy works: According to the National Retail Federation, this year's average Valentine's celebrant will shell out $126.03 to buy chocolates, champagne, jewelry and other gifts for families, friends, significant others and pets (yes, pets). And, as one might expect, these expenditures will break along a fairly strict gender line: the average man will spend $168.74, while the average woman will spend just over half as much: $85.76.

Of course, Valentine's Day isn't just about love and money: it also has a quasi-religious veneer. Officially called St. Valentine's Day, it was originally designed to honor one of the 14 saints who has that name. However, it has been off the Catholic liturgical calendar for over 40 years, due in no small part to the fact that nobody really knows anything about the St. Valentine who was martyred on Feb. 14. In fact, today's celebration of love actually has a lot more to do with Lupercalia, a Roman holiday honoring the wolf that suckled the founders of Rome. In the middle of February, half-naked men would drunkenly reel through the streets of the city, whacking women who wanted to be fertile with furry strips of sheepskin.

(Lest you're considering reviving old customs, be warned: Your significant other will probably not respond well if she opens a heart-shaped box to find a sheepskin whip.)

Showing How You Really Feel

So how can you transform a high-pressure, high-consumption cash grab by America's retailers into a meaningful, heartfelt expression of your love? One reader, "Leah," suggests that real romance is about the little things:
If I come home and (after a long day of his own) my hubby has a fire started, a bottle of Cabernet breathing, and something (anything) simmering on the stove, I am irrevocably lost. Don't buy me flowers, chocolates, or jewelry ... just let me know you see ME.
Another reader, "Stan H," offers a similar perspective, noting that some of his gifts to his wife are the simple things he does every day, including "the household chores like the dishes and laundry." To make the day special, "I also take her out to dinner. She's disabled, so I try to do quite a bit of cooking for her."

For "E.R.W.," Valentine's is a time for remembering how love began -- and how it continues to grow. He advises readers to channel young love by "recreating your first date or first meeting together." Given that many of us met our loved ones when we were a bit poorer, he notes that "More than likely, your first date didn't cost a lot of money. In my case, it was pizza and a movie -- inexpensive, but the conversation was priceless and led to our marriage, now forty-three years strong."

Valentine's Suggestions for Younger Couples

Recapturing old memories is great, but what if your romance is still in its infancy? "Williamsburg 2001" offers a suggestion for a Valentine's gift that will keep growing with your relationship:
On our first Valentine's day after we were married, my husband gave a beautifully wrapped notebook. Just a plain old black and white spotted binded notebook, like you kept in school for your journal or poetry writings. He told me to look at the first page and there was a quick note telling me the date and how much he loved me. He then informed me that he would write something about me, our love, and our lives together each and every day. And believe it or not he did!
Over the years, her husband filled the book with memories of his wife. On their tenth anniversary, "he had it printed and bound in our own book." The tradition didn't end there, though: "He bought me another black and white notebook for the following Valentine's day, and still continues to write little tidbits for me. I look forward to getting up every morning, just to read what he has written."

If you're not sure where your relationship is going to go, there are still several playful, reasonably-priced options. As "Leah" and "Stan H." suggest, a home-cooked meal can be a nice, intimate way to celebrate the holiday. Ziplist has a handy checklist to help plan the evening, while Allrecipes.com offers a selection of aphrodisiac dishes that range from the subtle (strawberry and feta salad) to the incredibly obvious (oysters Rockefeller). And if you're looking for something to do after dinner, Coupon Cabin has several reasonably-priced romantic movie suggestions.

And Something for the Guys

While Valentine's Day shopping can be difficult for men, it's no picnic for women either. Most online gift suggestions for boyfriends and husbands focus on things like memberships to the microbrew of the month club or baskets full of preserved meat. Not to question the value of beer or bologna, but some may argue that suds and processed meats aren't particularly romantic.

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Finance correspondent Nicole Lapin offers a few low-priced ideas that may help bridge the gender gap on Valentine's Day. She notes that downloading the free Kama Sutra app on a boyfriend's iPhone sends a definite message, as does a suggestive bag of candy. She proposes Hershey's kisses ("the little black dress of Valentine's gifts"), and advises gift-givers to "spice it up with Red Hots and say 'you make me red hot.'"

Personally, I'd argue that some gifts know no gender, and that the perfect present is one that can be shared. With that in mind, it's hard to do better than a half pound of "Pig Candy" -- chocolate-covered bacon -- from Roni-Sue chocolates. Alternately, if you decide to go the alcohol route, think about something unique that you can enjoy together. For example, Santa Theresa 1796, a Venezuelan rum, is aged in bourbon and cognac barrels and splits the difference between rum and whiskey. At $35, it's a little expensive, but still comes in far below the average price for a man's Valentine's Day gift. And with a few more weeks of winter to go, there's plenty of time left to curl up with your beloved and a couple of mugs of hot buttered rum.


Bruce Watson is a senior features writer for DailyFinance. You can reach him by e-mail at bruce.watson@teamaol.com, or follow him on Twitter at @bruce1971.

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]]>adviceBruce WatsonbudgetchocolateEntertainmentFerrara Pan Candy Companyflowersgifts on a budgetGiftsOnABudgetKama SutraNicole LapinRoman HolidayromanceSaint ValentinetipsValentine's DayBruce WatsonWed, 08 Feb 2012 15:40:00 ESTBank Fee Backlash Cost Big Financial Institutions More Than 2 Million Customershttp://www.dailyfinance.com/2012/02/07/bank-fee-backlash-cost-big-financial-institutions-more-than-2-mi/http://www.dailyfinance.com/2012/02/07/bank-fee-backlash-cost-big-financial-institutions-more-than-2-mi/http://www.dailyfinance.com/2012/02/07/bank-fee-backlash-cost-big-financial-institutions-more-than-2-mi/#commentsFiled under: , , ,

Bank feesNobody likes to leave their bank. Apart from the hassle of setting up a new account, switching your direct deposit, re-entering all of your automatic bill payment information, and getting used to a new network of ATMs, there's the fact that banks are supposed to be our partners.

That's how they advertise themselves, after all -- as the steady friends who hold our money, gently push us towards our dreams, and even pay us a little bit of interest for hanging around. Looked at from this perspective, leaving a bank isn't a spur-of-the-moment decision like switching from Pepsi to Coke or McDonald's to Wendy's: It's more like breaking up with your friendly-but-slightly-abusive girlfriend.

The emotional roller coaster aside, thousands of people switch banks every day, for a host of reasons: better interest rates, easier access to their money, or because they're leaving one town and moving to another. Last fall, however, an estimated 610,000 people dumped their significant bankers for a very specific reason -- to protest steep bank fees.



According to a recent study by Javelin Strategy and Research, 11% of the 5.6 million people who switched banks over the last three months did so as part of "Bank Transfer Day," an event inspired by Bank of America's (BAC) decision to begin charging its customers $5 per month to use their debit cards for purchases. BofA ended up scrapping the plan, but it, and many other banks, added a variety of other fees. In fact, as a 2011 Pew study showed, the average bank account has 49 fees, many of which -- like the confusing "'Staff Assisted Requests for Any Item or Statement Copy' fee, the 'Foreign Check Clearing Services for up to US $5,000 Drawn from Canadian Banks' fee, the 'Online External Transfer to Your Accounts at Other Financial Institutions' fee and the 'Large Amount of Coins Deposited' fee" -- charge for services that used to be free.

(Full disclosure: The author recently discovered a new $25 monthly fee that his bank is now charging him because his balance is below $15,000. This fee was added late in 2011, and was not part of the original banking agreement. The author is currently trying to get his money back, is exploring other banking options, and is attempting to remain unbiased in his discussion of the greedy, soul-sucking clever, fee-adding folk who run many of America's largest financial institutions.)

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On the one hand, Bank Transfer Day was hardly the overwhelming consumer uprising that big banks might have feared and activists had hoped for. More than 218 million Americans have some form of bank account, so in the grand scheme of things, the transfer tidal wave of 610,000 was more like a trickle. Even so, many banks -- including Citigroup (C) and Bank of America -- managed to give themselves PR black eyes as they called in security guards and police officers to keep protesters from withdrawing their money. Predictably, videos of these skirmishes found their way online, vignettes that are eerily reminiscent of the bank run scene from Mary Poppins.

But while the number of customers who were able to move their money on Bank Transfer Day itself was relatively small, many others have joined them over the following months. As Javelin reports, a further 26% of people who switched banks during the last 90 days -- about 1,456,000 customers -- also cited new bank fees as the reason for their moves.

This pattern of a slow diaspora from big banks dovetails with the demographic data that Javelin collected. Judging by the videos of Bank Transfer Day skirmishes, one might assume that the bank exodus of 2011 was largely composed of wild-eyed radicals -- or, as one Javelin researcher reported, "young, low-income hipsters." Not so: According to Javelin, people who switched banks "trended toward higher incomes." As these higher-wealth, generally older consumers continue to consider their banking options, it seems likely that America's largest banks are going to continue hemorrhaging customers.

Bruce Watson is a senior features writer for DailyFinance. You can reach him by e-mail at bruce.watson@teamaol.com, or follow him on Twitter at @bruce1971.

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]]>bankbank feesBank of America Corpbank transfer daybank+feebank+of+americabankfeeBankFeesbankofamericaBankTransferDayBruce Watsoncanadian+bank+feescanadianbankfeesCitigroupcredit unionsCreditUnionsDebit CardsDebitCardsFinanceprotestorsTwitterBruce WatsonTue, 07 Feb 2012 13:20:00 ESTReaders' Tips for Financial Renewal, Part 3: Investing for the Long Termhttp://www.dailyfinance.com/2012/02/06/readers-tips-for-financial-renewal-part-3-investing-for-the-l/http://www.dailyfinance.com/2012/02/06/readers-tips-for-financial-renewal-part-3-investing-for-the-l/http://www.dailyfinance.com/2012/02/06/readers-tips-for-financial-renewal-part-3-investing-for-the-l/#commentsFiled under: ,

investingA few weeks ago, we asked DailyFinance readers for their best tips for putting your financial house in order. Many offered advice on saving and careful spending, but the general consensus was that the best route to financial security lies in making your money work for you. And, ultimately, most agreed, that requires patience: While some suggested ways to achieve fast gains, most agreed that staying in the market for the long haul is the best way to ensure that you end up with a full bank account -- not an empty wallet.

Before we go any further, a caveat: While some of those who offered advice claim to be certified investment professionals, we did not verify their credentials or their claims. We're passing on many of their investment suggestions, but we ask our readers to take these suggestions advisedly -- and to consult with an investment professional before making any bold moves.

Slow and Steady Wins the Race

Many of those who offered advice began with the idea of defining your goals: Start by figuring out where you want to end up -- and what it will take to get you there. "Meek6" advises readers to calculate how much money they need "to generate income for the future and keep the principal intact." Once you reach that amount, he suggests, "retire when your financial bucket is full."

"Ed P" suggests that we "stick with a diversified group of mutual funds and hang on through thick and thin." Aged 70, he writes that "I have moved about one third of my portfolio into various fixed income funds." Given the fluctuations of the market, Ed's strategy may seem overly optimistic, but in his view, the future isn't quite so cloudy: "Just have a little faith that the capitalist system will rebound and survive."

"Francesmous" suggests a similarly restrained strategy: "You should always invest not with the goal of 'making a killing,' but of holding on to a solid stock for the long haul." With that in mind, she advises, the key is finding long-term, consistently performing stocks, not short-term Roman candles that are likely to flame out: "Do your homework and select stocks that pay a reasonable dividend and that have performed well historically," she suggests. "Put as much effort into choosing a stock as you would when researching a new car purchase."

Go With What You Know

And what do those stocks look like? Sometimes, opines "Chris W," they're brands you already know and trust. When he decided to manage his own money, he focused on "a couple of stocks with publicly available information, and importantly, companies whose products/services I could understand." In his case, they were Apple, Ford and Google, although he pulled out of the carmaker when things started to go south. But now that Ford is doing better, he's reconsidering: "I now like Ford again. I may lighten up on Apple a bit at some point in the near future and put one third of my money back in Ford."

Chris isn't the only reader who likes Ford, although others viewed the automaker's stock more as a short-term investment. "JMoss111" says his strategy is to "Watch for stocks that have tanked, but you know the company isn't going away." The example he uses is Ford, which he says he "bought at $3.00 and sold at $17."

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But while JMoss111's short-term strategy worked out well in that instance, most readers advise taking the long view. "Doc Dearth" advises "dollar cost averaging," a strategy that involves consistently investing the same amount of money at specific time intervals -- every paycheck, for instance. Using this method, DocDearth notes, "you buy more stocks, mutual funds, or ETFs when the market is down and less when it is up." Done properly, dollar cost averaging "eliminates and evens out the fluctuations and volatility the market gyrations that scare people off."

"Sue S." agrees with a lot of the preceding advice, but she's applying it to a different asset class: real estate. Part of her strategy lies in thinking about long-term fundamentals, not short-term gains: "While most of the nation was caught up in the housing frenzy, my husband and I invested in a small college town. We started slow and plan to hold on to the properties for a long time." The college town idea was solid -- after all, higher education is a growth industry, and students will always need a place to lay their heads. In Susan's case, the first place they bought "has been consistently rented to college students," and has paved the way for other purchases.

Everyone Loves Dividends

Those who submitted advice universally agreed that it's worthwhile to pursue stocks and mutual funds that pay dividends. Likewise, all suggested that the smart move is to continually re-invest those dividends, as it effectively compounds the investment. "Ray" notes that his dividends are a major source of income: "My annual dividends now exceed the amount I invest on an annual basis."

But not all investment decisions are so easy ... or so uncontroversial. For example, "Doc Dearth" strongly encourages readers to max out their 401(k) investments. In his view, if you aren't taking full advantage of your employer's 401(k) or similar plan -- and especially getting the full matching funds they offer, you're being "beyond foolish. There is no better way to save and invest regularly than having this money deducted directly from your pay check."

But "Rogsuehull" advises exactly the opposite course: "Ditch the high cost mutual funds in IRA's and 401k's as soon as you can," he says. Instead, he suggests, "Convert to high dividend individual stocks as you go."

That contrarian advice aside, Rogsuehull also offered some of the conventional wisdom offered by other readers, noting that investors should buy stock for the long run, should invest additional money every month, and should reinvest dividends. Steady investing, he says, will make you "happy for the rest of your life."

Bruce Watson is a senior features writer for DailyFinance. You can reach him by e-mail at bruce.watson@teamaol.com, or follow him on Twitter at @bruce1971.


Previous articles in This Series
o. Readers' Tips for Financial Revival, Part 1: Smart Saving
o. Readers' Tips for Financial Revival, Part 2: Spend Wisely





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]]>401kBruce Watsonbuy what you knowBuyWhatYouKnowcollege townsCollegeTownsdiversificationdividend stocksDividendStocksdollar cost averagingDollarCostAveragingLong term investingLongTermInvestingMutual fundsMutualFundspersonal financePersonalFinancereal estateRealEstateTwitterBruce WatsonMon, 06 Feb 2012 10:15:00 ESTGive Us Your Ideas for a Thoughtful -- and Frugal -- Valentine's Dayhttp://www.dailyfinance.com/2012/02/03/give-us-your-ideas-for-a-thoughtful-and-frugal-valentines/http://www.dailyfinance.com/2012/02/03/give-us-your-ideas-for-a-thoughtful-and-frugal-valentines/http://www.dailyfinance.com/2012/02/03/give-us-your-ideas-for-a-thoughtful-and-frugal-valentines/#commentsFiled under:

breakfast in bedValentine's Day is coming, which means that tens of millions of husbands and boyfriends are getting ready to drop money on Whitman's samplers and overpay for red roses. But there are other options out there -- and we know that our faithful DailyFinance readers have explored at least a few of them.

According to the National Retail Federation, the average man will spend $168.74 this year, and the average woman just over $86. (Most of this money will go to buying jewelry, candy, flowers and clothing for significant others, of course, but a respectable fraction will get spent on friends and other family members.)

We'd like to share your suggestions for ways to save money on Feb. 14 while still showing that you have heart. So please send us your ideas -- either via the comments section below or by e-mail to bruce.watson@teamaol.com. The best suggestions will be featured in an upcoming article, so please only send your ideas if you're willing to have them published.

Thanks for your help -- and happy Valentine's Day!


Bruce Watson is a senior features writer for DailyFinance. You can reach him by e-mail at bruce.watson@teamaol.com, or follow him on Twitter at @bruce1971.

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]]>Bruce WatsonchocolateEntertainmentflowersfrugalNational Retail Federationpersonal financePersonalFinancereader suggestionReaderSuggestionromance on a budgetRomanceOnABudgetsave moneySaveMoneyTwitterValentine's DayWhitman'sBruce WatsonFri, 03 Feb 2012 14:25:00 ESTAs Facebook Files for Its IPO, a Look Backhttp://www.dailyfinance.com/2012/02/03/as-facebook-files-for-its-ipo-a-look-back/http://www.dailyfinance.com/2012/02/03/as-facebook-files-for-its-ipo-a-look-back/http://www.dailyfinance.com/2012/02/03/as-facebook-files-for-its-ipo-a-look-back/#commentsFiled under: , ,

FacebookIt's hard to believe that Facebook has been around for less than eight years. Initially conceived as a way for Harvard students to socialize with each other, it rapidly transformed into the most influential online social network in the world, fundamentally changing the way hundreds of millions of people connect, relate to, and stalk each other.

On Thursday, the site that made it possible for you to reconnect with your third-grade girlfriend and unfriend your annoying cousin started its latest evolution into a publicly traded company. As its IPO filings offer a glimpse behind the blue curtain -- and the company's move points to the next iteration of the world's most loved (and hated) networking site -- we decided to take a look back at some of the high points in Facebook's brief but captivating history.

Gallery: Facebook - A Timeline




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]]>Cameron WinklevossConnectUFacebookFacebook IPOFacebook PlatformFacebookIpoFinanceHarvard UniversityhistoryMark ZuckerbergMarkZuckerbergNew YorkNews Corpphoto galleryPhotoGalleryRetrospectiveThe Social NetworkTyler WinklevossWayne ChangBruce WatsonFri, 03 Feb 2012 10:50:00 ESTHow Can You Get Romney's Tax Rate? (Hint: You Can't)http://www.dailyfinance.com/2012/02/03/how-can-you-get-romneys-tax-rate-hint-you-cant/http://www.dailyfinance.com/2012/02/03/how-can-you-get-romneys-tax-rate-hint-you-cant/http://www.dailyfinance.com/2012/02/03/how-can-you-get-romneys-tax-rate-hint-you-cant/#commentsFiled under:

Mitt RomneyIn the week since Mitt Romney released his tax returns, the media has been abuzz with debate over his career history, his method of compensation, his amazingly high income and his incredibly low tax rate. Amid all the chatter, many pundits -- among them, DailyFinance's Dan Caplinger -- have wondered why more people don't take advantage of the deliciously low capital gains, dividend and carried interest tax rates that Romney enjoys.



The answer, of course, is that most people can't -- at least not on a level large enough to make a difference in their finances.

To begin with, Romney's most controversial income tax break, carried interest, is only available to a few employees of hedge funds and private equity funds. It's difficult to determine how small this group is: Roberton Williams, a senior fellow at the nonpartisan Tax Policy Center, notes that carried interest is a subset of capital gains tax, and is not explicitly differentiated in U.S. federal tax documents -- which means there's no easy way to separate out its beneficiaries. That said, the financial services industry as a whole employs about 5.77 million people, or about 3% of all workers in the U.S. Of that 3% few, only a small fraction are eligible for carried interest earnings.

Cream for the Top 20%

But, as some commentators have noted, anybody can take advantage of the low capital gains and dividend tax rates, and many families do: According to the Tax Policy Center, about 16.4% of all taxpayers paid capital gains and dividend tax on some portion of their income in 2011.

These lucky taxpayers are spread across the economic spectrum, but, unsurprisingly, the percentages are heavily skewed toward the richest end: 45% of all people who paid capital gains and dividend taxes in 2011 were in the richest 20% of the population, while only 5% were in the lowest 20%. The middle 20% -- the middle-est of the middle class -- only makes up 15% of investors.

And less well-off investors aren't exactly getting rich off their capital gains and dividends: In 2011, investors in the bottom 20% of the population brought home an average of $1,504 from their investments. On the opposite end, those in the top 20% averaged $43,202. In this case, the middle 20% are effectively lumped in with their poor cousins: Those average middle-class investors claimed about $2,442 in investment and capital gains income.

Tip of the Pyramid

At the top of the heap, the numbers get even more skewed. Among the top 1% -- Occupy Wall Street's bete noir -- 86.2% of people reaped some form of investment income, and the amounts were hardly chicken feed -- an average of $362,682.

But even the 1% paled beside the 0.1%, the super-rich, whose entry point is $1.6 million. On average, 94.5% of this group got some portion of its money from investments. And these investments paid well: The average take in 2011 was $2,275,145.

Romney, by the way, made out superbly even on the 0.1% scale: He made $20.9 million in 2011, and most of it came from investments.

Why the Poor (And Middle Class) Don't Invest

It's worth asking why more middle and lower-quintile workers don't invest their money. After all, a 15% tax rate is far preferable to the higher percentages that most taxpayers pay, especially when one factors in the Social Security and Medicare taxes, neither of which are deducted from investment income.

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But investing isn't easy for people in the lower end of the economic spectrum. According to the Bureau of Labor Statistics, for the bottom two-thirds of the country, the average income is $31,718, and the average expenditures on necessities total $28,283. In other words, for two out of three families in America, after food, shelter, transportation, clothing, health care and insurance are paid for, there's only $3,345 left over to spend on things like education, entertainment, savings ... and, oh yes, investing.

By comparison, the average family in the top 5% brings home $228,585, and spends $101,247 on the same necessities. At the end of the year, this leaves them $127,338 -- more than 38 times as much -- to put into discretionary items like investing.

But even if these medium and lower-income families were able to scrape together some money to invest, they wouldn't have quite the same options as those on the higher end. Most hedge funds -- the investments with the highest rate of return -- require a minimum investment of $1 million. Setting aside $3,345 per year -- the entire non-necessity budget of the average lower and middle-class family -- this would take about 299 years to raise.

On the bright side, some venture capital funds have dropped their buy-in to $250,000, which means that a middle-income family could hope to take advantage after only about 75 years of socking away their pennies.

When critics raise questions about Mitt Romney's tax rate, the standard rejoinder is that these disagreements are based in class warfare, or at least in some sort of socialist wealth-redistribution scheme. These attacks aside, the question that Mitt Romney -- and his fellow tax-cut partisans -- need to answer is why the tax code already contains a massive tax break that really only benefits our wealthiest citizens.

Bruce Watson is a senior features writer for DailyFinance. You can reach him by e-mail at b

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]]>Bruce Watsoncapital gains taxCapitalGainsTaxdividend+tax+ratedividendtaxrateFinanceMiddle ClassMitt Romneymitt+romney+capital+gains+taxmitt+romney+tax+ratemitt+romney+tax+returnmitt+romney+taxesmitt+romneys+taxesmittromneycapitalgainstaxmittromneystaxesmittromneytaxesmittromneytaxratemittromneytaxreturnOccupy Wall Streetromney+tax+returnsromneys+tax+rateromneystaxrateromneytaxreturnsSocial SecurityTax Policy Centertax ratestaxesTaxRateswealthiest 1 percentWealthiest1PercentBruce WatsonFri, 03 Feb 2012 06:00:00 ESTReaders' Tips for Financial Renewal, Part 2: How to Spend Wiselyhttp://www.dailyfinance.com/2012/02/02/readers-tips-for-financial-renewal-part-2-how-to-spend-wisely/http://www.dailyfinance.com/2012/02/02/readers-tips-for-financial-renewal-part-2-how-to-spend-wisely/http://www.dailyfinance.com/2012/02/02/readers-tips-for-financial-renewal-part-2-how-to-spend-wisely/#commentsFiled under:

spending habitsA few weeks ago, we asked our DailyFinance readers for their best advice on how to get your financial house in order. As many noted, part of living well is spending wisely -- after all, while saving money is vital for your long-term security, there are times when, like it or not, you'll need to part with a pile of cash. With that in mind, here are some great tips for making your money stretch further -- and fighting the urge to spend at all.

Many readers offered simple, no-nonsense advice. "DocDearth," for example, suggested that readers keep their cash in the bank -- and out of their wallets. After all, "if you don't have it in your pocket, you're much less likely to spend it." Similarly, "Joe the Tightwad" reduced intelligent spending to a simple equation: "Make two cents spend one, result: prosperity. Make two cents spend three, result: misery." Admittedly, as "Joe" noted, this wasn't his own quote -- it was adapted from David Copperfield.

Motivate Yourself!

Just saving money, though, isn't usually so simple, especially given the complex emotions that often underlie spending. "Frank S." suggests that readers have to "Stop the 'live up to the Jones's' syndrome."

But while it's easy to chalk up some purchases to a combination of envy and competition, the simple fact is that living within one's means -- or, as "Daniel W." suggests, living "BELOW your means" -- can often be difficult. The simplest advice, as "Donut999" notes, is to always ask yourself "Is this something I WANT or something I need?"

One big key is motivating yourself to save. "Whitney G." suggests that developing a long-term plan can help with short-term motivation: "Each year, make up a personal financial statement to see how much you have gained in net worth. If you spend one penny more than you take in, you're going backward!" For that matter, it also helps to have clear-cut goals: In Whitney's case, this was a brand-new car: "I drove second-hand cars until I was 50 and invested the couple thousand dollars I saved each year into land. Now I can afford to drive a new F-150 XLT!!"

"J.H." suggests working on the emotional spending problem from the other side of equation: Only desire things that you can afford. Channeling a hint of Buddhism's Four Noble Truths, he observes that "Cruises, skiing, and driving BMWs are all fun, but so are crossword puzzles. If you don't already have them, find things you enjoy doing that cost little or no money."

Pay Yourself ... Not the Bank

Another way to make your money stretch further is to avoid paying interest; after all, every penny that goes to your credit card company is a penny that doesn't go into your bank account. With that in mind, several readers suggested staying out of debt. "David A," "Fercoop" and "Donut999" all took this to a logical conclusion and decided to pay off their mortgages ahead of time.

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That runs counter to what most financial planners suggest -- keeping your mortgage, as the tax deduction combined with low interest rates can often translate into a hefty benefit. However, as "David A" wrote, the lack of a mortgage payment "allowed us to weather a bad job move and steep drop in pay a few years ago." Similarly, "Fercoop," who has made extra mortgage payments to pay the loan off faster, notes that "I can begin to consider taking jobs that truly interest me, instead of worrying about how much money I'll make."

Speaking of lifestyle decisions, several readers noted that the condition of one's finances makes a big difference when it comes to the choices that one can make. "Bob S" offered a particularly clear-eyed and unsentimental view of financial responsibility: "No children until you can pay for them." Also, he suggested: "Get rid of bad debts. It may require a divorce."

Get Out of Town ... or Out of the Country

Some readers took the "modifying your lifestyle to improve your finances" path to an extreme. "Joel B" said that he and his spouse moved to Puerto Vallarta, Mexico, "where the cost of living is much less than in Los Angeles, our previous home." The L.A. equivalent for his $200,000 Mexican home, he says, "would easily have topped $1 million." As for health care, he noted that a recent root canal and crown implantation cost him $425. In L.A., he says, "the total would have been $2,700."

But even if you don't move to another country, you can still save by taking advantage of less expensive economies. As "Susan S" notes, vacationers can save a lot of money by "visiting countries where the dollar is strong." She and her family went to Peru, which she describes as "an amazing country with majestic mountains, ancient ruins, and a world-renowned culinary scene." Best of all, "The dollar is very strong, making travel more affordable."

As many readers noted, saving money is all well and good, but ultimately, financial security may lie with spending well and wisely. What's more, they pointed out, the possessions that you think about the most carefully -- and the gratification that you delay the longest -- often become the most rewarding. In the end, perhaps one secret to a life well lived is a budget carefully considered.


Bruce Watson is a senior features writer for DailyFinance. You can reach him by e-mail at bruce.watson@teamaol.com, or follow him on Twitter at @bruce1971.

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]]>Bruce Watsonbuddhismcredit cardsCreditCardsDavid CopperfielddebtFour Noble Truthskeeping up with the jonesesKeepingUpWithTheJonesesLos Angelesmortgagespay cashPayCashpersonal financePersonalFinancespending habitsSpendingHabitsstrong dollarStrongDollarTwitterwants not needsWantsNotNeedsBruce WatsonThu, 02 Feb 2012 12:25:00 ESTWho's Buying Your Next President? Sheldon Adelson Makes His Bidhttp://www.dailyfinance.com/2012/01/31/whos-buying-your-next-president-sheldon-adelson-makes-his-bid/http://www.dailyfinance.com/2012/01/31/whos-buying-your-next-president-sheldon-adelson-makes-his-bid/http://www.dailyfinance.com/2012/01/31/whos-buying-your-next-president-sheldon-adelson-makes-his-bid/#commentsFiled under: ,

Sheldon AdelsonOver the past few weeks, Sheldon Adelson made headlines for his outsized gifts to Newt Gingrich, which have quickly turned him into the biggest individual spender in the 2012 election cycle. But while the casino mogul's huge donations have elevated Gingrich's chances in the Republican primaries, they've also raised quite a few eyebrows.

Thanks to the Supreme Court's Citizens United ruling and the rise of super PACs, billionaires and corporations are able to make almost unlimited political donations, leading an growing number of pundits to wonder aloud if the U.S. presidency is now for sale. And if Adelson is the highest bidder, who will end up running the game?

A Self-Made Man

Adelson is pretty much the definition of a self-made man. The son of Ukrainian Jewish immigrants, he dropped out of City College of New York before starting several businesses, including a chartered bus tour company, a business selling toiletry kits to hotels, and an investment firm. In 1979, he hit pay dirt when he helped create COMDEX, which became the premier computer trade show. A few years later, he purchased the Las Vegas' Sands hotel and casino. It became the first property in a resort empire that stretches now around the globe. A former Democrat, he switched parties when he became wealthy and wanted to reduce his taxes. As The New Yorker reported in 2008, he allegedly told an associate, "Why is it fair that I should be paying a higher percentage of taxes than anyone else?"

Sheldon

With a personal fortune of $21.5 billion -- he's the eighth-richest person in America -- Adelson can bring a seemingly-unlimited war chest to bear for a candidate who captures his interest. Right now, that's Newt Gingrich, whose low-tax, pro-Israel stances appeal to Adelson. And the casino owner has shown his approval in the form of fat checks: He and his wife have given $10 million to "Winning the Future," a pro-Gingrich super PAC.

Enough Money to Pay a Small Town

It's hard to put these donations into the context of an average American household: To begin with, most Americans don't contribute to political candidates, and, when they do, their gifts are modest. According to the Center for Responsive Politics, only 0.12% of the adult American population has given more than $200 in this election cycle -- that's 12 in 10,000 of us -- and a mere 0.03% -- fewer than 71,000 people overall -- gave more than $2,500. Forget the 1%: Adelson and his wife are the 0.00000001% who stand at the pinnacle of the 0.03%.

To put it another way, the Adelson's $10 million contribution to the Gingrich campaign equals the yearly salary of more than 200 average American households. Yes, Adelson and his wife gave the yearly income of a small town in order to help Gingrich win the South Carolina primary and keep his head above water in Florida. The average political donor -- or voter -- can hardly hope to keep up.

Super-PACs

On the surface, at least, there are restrictions in place to keep the rich from controlling the political conversation. Officially, individuals are only allowed to donate $5,000 to a presidential candidate -- $2,500 in the primary, and $2,500 in the general election. However, super PACs -- political action committees that are, allegedly, not connected to specific candidates -- are allowed to collect unlimited amounts of money.

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Until a few years ago, such groups weren't allowed to specifically endorse candidates: They had to limit themselves to "issue advocacy," in which they ostensibly educated voters on a specific issue. This, for example, is why a group called Swift Boat Veterans for Truth was able to attack John Kerry's military record, but was not allowed to specifically endorse his opponent, George W. Bush.

But that carefully drawn line disappeared in 2010 with the Supreme Court's Citizens United ruling, which allowed nonprofit groups like Swift Boat Veterans for Truth -- or Gingrich's Winning the Future -- to directly endorse candidates. The only catch is, the super PAC can't have a direct relationship with the candidate. In other words, "Winning the Future" can run unlimited ads endorsing Gingrich, but its leaders can't take their marching orders directly from the candidate. Allegedly, they draw their ideas from his speeches and from the topics of the day.

Separated ... Like the Corsican Twins

Yet this separation is hard to prove -- and harder to believe. Winning the Future takes its name from Gingrich's book of the same title, and the super PAC's president, Becky Burkett, was previously the head of fundraising at American Secrets for Winning the Future, a Gingrich-owned PAC. A senior adviser, Rick Tyler, was previously Gingrich's press secretary. In other words, while Winning the Future's leaders may not be talking directly to Gingrich or his campaign, at least two of them are very used to figuring out what Newt is thinking. To get an only slightly exaggerated idea of how this works, one need look no further than the recent super PAC storyline on The Daily Show.

Gingrich's Winning the Future and Colbert's Americans for a Better Tomorrow aren't the only super PACs whose relationships to candidates are somewhat questionable. Priorities USA, a pro-Obama super PAC that plans to raise $100 million, is run by two former Obama aides, while the treasurer of pro-Romney super PAC Restore Our Future was legal counsel on the candidate's 2008 presidential bid.

So while Adelson is currently the big man on campus when it comes to bloated super PACs, it's likely that he is only the harbinger of things to come. As the liberal magazine Mother Jones recently reported, several individuals have already donated more than $1 million in the current election cycle, and with wealthy donors like the progressive George Soros and the ultra-conservative Koch brothers waiting in the wings, this should be an exciting election -- unless you're a middle class voter who wants your voice to be heard too.




Bruce Watson is a senior features writer for DailyFinance. You can reach him by e-mail at bruce.watson@teamaol.com, or follow him on Twitter at @bruce1971.


NEXT:

Gallery: Thanks Mitt and Newt: A Dozen Tax Tips for the Rest of Us

Tax-free InterestPoints on a Second HomeDonate Appreciated Assets to CharityWrite off Alimony PaymentsMake the Most of Worthless Stock


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]]>adelsonAdelson GingrichAdelsonGingrichBarack ObamabillionaireBruce Watsoncampaign contributionsCampaignContributionsCitizens UnitedGeorge SorosGingrich Adelsongingrich+adelsongingrichadelsonLocalNewt GingrichSheldon AdelsonSheldon Adelson Newt Gingrichsheldon+adelson+newt+gingrichsheldonadelsonnewtgingrichsuper pacsSuperPacsSupreme Courtthe rich controlling politicsthe+rich+controlling+politicstherichcontrollingpoliticsU.S.Winning the FutureBruce WatsonTue, 31 Jan 2012 17:25:00 ESTReaders' Tips for Financial Renewal, Part 1: Ideas for Smart Savinghttp://www.dailyfinance.com/2012/01/30/readers-tips-for-financial-renewal-part-1-ideas-for-smart-sav/http://www.dailyfinance.com/2012/01/30/readers-tips-for-financial-renewal-part-1-ideas-for-smart-sav/http://www.dailyfinance.com/2012/01/30/readers-tips-for-financial-renewal-part-1-ideas-for-smart-sav/#commentsFiled under:

Rainy DayA few weeks ago, we asked DailyFinance readers for their best tips for putting your financial house in order. Many were quick to note that the foundation of financial security lies in being ready when disaster hits. With that in mind, here are some of their best suggestions for planning ahead for rainy days -- and making sure your umbrella is big enough.

In 2008, more than 2.6 million people lost their jobs. Some were prepared, but many found themselves raiding savings accounts, selling possessions, and moving out of their dream homes in desperate attempts to get their finances on a firmer footing. As "Frank S." noted, much of that frantic effort could have been avoided with better planning. "Save up to six months in the event you get laid off," he suggests.

Several other readers expressed similar sentiments: "Ray" noted that he has "saved at least 10% of what I have earned since I first began to work in 1971." "DocDearth" suggested going even further: "The more you can afford to save in the way of a percentage of income the better. Between 10% and 15% ... is a good benchmark."

Many of you pointed out that planning for retirement is vital for long-term financial security. To accomplish that goal, some said, they saved all of their bonuses, lived off of only one spouse's income, or maxed out their 401(k) accounts. "DocDearth" puts this especially well, reminding us that we should put money in our retirement accounts before spending on anything else: "The number one rule of financial planning is 'PAY YOURSELF FIRST!!'"

When It Rains, It Pours

But saving can only take you so far. As many readers noted, another vital part of keeping your finances healthy is avoiding the sorts of situations that can decimate them. For example, in 2010 and 2011 20% of people seeking bankruptcy counseling blamed medical bills for their dire financial straits. In 2009, The American Journal of Medicine put the number even higher: According to a study published by the journal, up to 60% of bankruptcies could trace their financial woes to out-of-control health bills.

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"Susan S.," who describes herself as a "secret millionaire," takes a proactive approach to the problem: Her simple answer is doing everything she can to avoid getting sick. "You cannot control for all diseases, but keeping yourself as healthy as possible will save on healthcare. Eat your vegetables, exercise, don't smoke or drink to excess, and wear protective equipment such as bike helmets." Also, as many readers noted, even expensive health insurance can be a bargain if a serious medical problem arises.

Divorce is another financial disaster: In the past, it was women who were most often left financially bereft when marriages fell apart, but a rise in divorce judgments against men, combined with increased policing of their child support and alimony payments, has shifted the trend. Today, the percentages of men and women whose economic fortunes take a nosedive when their marriages break up are almost the same.

But while the financial impact of divorce has become more fairly divided, there is no question that the overall cost remains high. "Meek6" advised "Chose a life partner and stay married. Divorce is the biggest loss you can ever have." "David A" echoed the sentiment by telling a bit of his own private story: "My beloved wife and I will be celebrating 34 years together in 2012. Divorce is one of the most costly mistakes you can make to derail your finances."

When it comes to your finances, there are many ways to scrimp and save. However, as DailyFinance's readers note, perhaps the best way to live well is to be prepared when disaster comes knocking.

Bruce Watson is a senior features writer for DailyFinance. You can reach him by e-mail at bruce.watson@teamaol.com, or follow him on Twitter at @bruce1971.

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]]>&esrc=s&source=newssearch&cd=70&ved=0cgkqqqiwctg8&url=http://www401kadvicebankruptcyBruce Watsondivorceemergency fundEmergencyFundhealth insuranceHealthInsurancemoney tipsmoney+saving+tipsmoneysavingtipsMoneyTipspersonal financepersonal+finance+renewalsPersonalFinancepersonalfinancerenewalsreadersretirement savingsRetirementSavingssaving moneySavingMoneysmart+financialsmartfinancialstay healthyStayHealthyTwitterBruce WatsonMon, 30 Jan 2012 10:56:00 ESTMiddle-Aged Workers Flock Back to School ... and Student Loanshttp://www.dailyfinance.com/2012/01/27/middle-aged-workers-flock-back-to-school-and-student-loans/http://www.dailyfinance.com/2012/01/27/middle-aged-workers-flock-back-to-school-and-student-loans/http://www.dailyfinance.com/2012/01/27/middle-aged-workers-flock-back-to-school-and-student-loans/#commentsFiled under: ,

Middle aged studentsForget part time work, job fairs and temp agencies: To find a secure, long-term job, most pundits agree, the best route runs through the classroom. So with unemployment still high and underemployment even higher, it's hardly surprising that droves of middle-aged Americans are rushing back to school -- and borrowing more money than ever. In fact, while every age group are borrowing more money in student loans, the fastest-growing demographic isn't in its 20s; it's in its 40s.

In 2011, educational borrowing -- and the furor over student loans -- reached a boiling point. Right now, the average college grad leaves leaves school carrying more than $25,000 in debt, and overall student loan debt is on track to exceed $1 trillion this year.

These fresh-faced grads are being joined by an ever-growing cadre of returning students. According to credit score tracking site CreditKarma, the number of 35- to 49-year-olds who are borrowing money for college increased by 47% in the last three years. The amount they're borrowing is also going up: During the same period, the average loan debt of people in this group went up from $9,000 to $12,000.

On the one hand, $9,000 is a far cry from the $14,000 debt that the average college grad in her late 20s is carrying. On the other hand, middle-aged students have less time to reap the returns on their educational investments.

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When it comes to determining how much a degree is worth, the standard rule of thumb is to consider a year of salary: Students are advised to calculate the average salary of a graduate of the program and borrow no more than that amount. Assuming a 10-year loan repayment schedule, a graduate following that rule would have to pay 10% per year (plus interest) to service their debt. According to the Student Loan Network, students whose debt payments exceed 15% of their income "tend to default."

For a 25-year-old, this translates into 10 years of repayment, followed by 30 or more years of earnings that (presumably) start out higher, grow steadily and aren't reduced by student loan payments. For a 49-year-old, it means a repayment schedule that ends only eight years before social security kicks in. Denied the years of slow (but compounded) salary growth, their return on investment is likely to be much smaller.

This isn't to say that going back to school is always a bad idea. As The Atlantic's Jordan Weissmann points out,
If a worker's skill set is outdated, and it's unlikely they'll be picked up by a new employer, then going to school is probably the closest they'll get to an escape hatch. Plus there's no opportunity cost, since nobody is paying them anyway, and taking classes gives them a new resume line.
The key is to find a degree or certification program with a high rate of employment, as well as good prospects for the future. A good starting place is "What's It Worth," Georgetown University's report on the economic value of college degrees. But in a constantly-changing job market, one thing is clear: Even the best degree is still a gamble. And, if you're a returning student, the stakes may be higher and the odds may be even steeper.

Bruce Watson is a senior features writer for DailyFinance. You can reach him by e-mail at bruce.watson@teamaol.com, or follow him on Twitter at @bruce1971.

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]]>back to schoolBackToSchoolBruce Watsoncollege debtCollegeDebtcost+of+older+workerscostofolderworkersGeorgetown Universitygraduate degreeGraduateDegreejob searchJobSearchmiddle ageMiddleAgepersonal financePersonalFinancesalaryStudent Loansstudent+loan+debtstudentloandebtStudentLoansTwitterunemploymentBruce WatsonFri, 27 Jan 2012 12:20:00 ESTState of the Union: 3 Economic Themes Obama Is Sure to Focus Onhttp://www.dailyfinance.com/2012/01/24/state-of-the-union-3-economic-themes-obama-is-sure-to-focus-on/http://www.dailyfinance.com/2012/01/24/state-of-the-union-3-economic-themes-obama-is-sure-to-focus-on/http://www.dailyfinance.com/2012/01/24/state-of-the-union-3-economic-themes-obama-is-sure-to-focus-on/#commentsFiled under:

what to look for in the state of the union addressIn most years, for most presidents, the State of the Union is something of a chore, an annual address that the chief executive is constitutionally obliged to make to Congress.

But tonight's speech is -- or, at least, could be -- something more. For President Obama, looking ahead to a potentially tough reelection fight, the State of the Union could be a springboard to his last campaign, a moment when he can outline what he has achieved over the past three years and give a glimpse of his vision for the next five. And, for both the president and for the middle class families who will be watching the speech, the central issue of this election will be the economy -- which many see as a sore point for the Obama Presidency. With that in mind, here are three key points that he is likely to hammer home tonight:

Jobs: In a historical sense, the current 8.5% unemployment rate is nothing to crow about, but it represents a significant drop from the staggering 10% high of late 2009. Expect Obama to mention the 3.2 million private sector jobs that have been created in the last two years, the rebirth of the American auto industry, and growth in manufacturing jobs. Obama will likely also address his plans for future job creation in the remainder of 2012 and in a potential second term.

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Income Inequality: According to a recent Pew study, the majority of Americans view wealth inequality as the biggest dividing line in the U.S. That's a narrative that dovetails nicely with Obama's political philosophy, and it seems likely that the State of the Union will bring up the dangerous gambles taken by the financiers of Wall Street, the outsized bonuses that its workers received, and the legislative remedies that Obama has championed for restructuring the financial system.

Supporting the Middle Class: In a move heavily criticized by Republicans, Obama gave Richard Cordray a recess appointment to lead the newly created Consumer Financial Protection Bureau. Combined with the restrictions he put on credit card banks in CARD Act, he has built a record for protecting the interests of ordinary consumers. Expect reminders of those actions to be woven into the narrative of his support for America's struggling middle class.

When joblessness is high, U.S. presidents tend to get pink slips -- the most notable recent exception being President Reagan, who managed to secure reelection despite what was then viewed as a daunting 7.2% unemployment rate. By comparison, the 8.5% unemployment rate Obama faces now is astronomical, and creates a mighty hurdle that he will struggle to overcome. Tonight's speech may be one of his best opportunities to convince the voters again he's the right man for the job.

Bruce Watson is a senior features writer for DailyFinance. You can reach him by e-mail at bruce.watson@teamaol.com, or follow him on Twitter at @bruce1971.

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]]>Barack ObamaBruce WatsonCredit CARD Act of 2009economic+state+of+the+unioneconomicstateoftheunionincome inequalityIncomeInequalityjobsLocalMiddle ClassMiddleClassPresidency of Barack Obamapresidents+state+of+the+union+addresspresidentsstateoftheunionaddressRichard CordrayRonald ReaganState of the Unionstate+of+the+union+themesStateOfTheUnionstateoftheunionthemesthree+main+points+of+state+of+the+unionthreemainpointsofstateoftheunionTwitterU.S.unemploymentWall StreetBruce WatsonTue, 24 Jan 2012 18:38:00 ESTMitt Romney's Sweetest Tax Break: The Dirty Little Secret of Carried Interesthttp://www.dailyfinance.com/2012/01/24/mitt-romneys-sweetest-tax-break-the-dirty-little-secret-of-car/http://www.dailyfinance.com/2012/01/24/mitt-romneys-sweetest-tax-break-the-dirty-little-secret-of-car/http://www.dailyfinance.com/2012/01/24/mitt-romneys-sweetest-tax-break-the-dirty-little-secret-of-car/#commentsFiled under: ,

Mitt Romney"Oh, I'm sure people will talk about it," GOP presidential hopeful Mitt Romney told a Florida audience Monday night, on the eve of the much-ballyhooed release of his tax returns. "But -- but I pay all the taxes that are legally required and not a dollar more."

And as Romney's returns showed, that was absolutely the truth -- the former Massachusetts governor pays all the taxes that are legally required ... and not a dollar more. The surprise for many voters, however, will not be not that Romney's taxes are in order, but just how small a percentage of his income goes to Washington.

According to his returns, Romney made $21.6 million in 2010, and paid a little over $3 million in taxes. This works out to 13.9% of his income. By comparison, the average U.S. household making $79,000 pays an effective income tax rate (income tax minus deductions) of 14.4%. In other words, Romney's 2010 tax percentage was lower than that of a family making 0.3% of his income.

How did Romney manage to pay taxes at such a low rate? The "secret formula" isn't so secret: It's just out of reach for most Americans. Romney's money came from investments, not wages. Under the current tax code, anyone with a salary of $379,150 or more per year pays taxes on it a 35% tax rate. However, people who derive their income from stock dividends, capital gains or carried interest only pay 15%. Those three categories account for the vast majority of Romney's income.

There's a case to be made for taxing capital gains and dividends at lower rates. It goes something like this: Invested money was taxed when it was first earned, and corporations pay taxes on their profits. From this perspective, taxing dividends and capital gains is like taxing the same money a third time.

Other pundits and tax critics claim that investment tax breaks are good for the economy, as they encourage people to keep money in the market, where it helps fund startups, business expansion, and other economically worthwhile endeavors.

It's Not What You Think

Mitt RomneyBut a big chunk of Romney's income doesn't come from stocks that he personally holds. In 2010, he made $7.4 million from carried interest.

You haven't heard of carried interest? Basically, it's a share of investment income that goes to the private equity manager who oversaw the investment. Romney's carried interest income doesn't come from dividends on stock he owns, nor from the sale of stock that he once owned. The money wasn't generated from income that he had already paid tax on. Think of it as being sort of like a tip skimmed off the top of all the money that his company makes for its investors.

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But unlike tips for a waitress or cabbie, which are taxed at the same rate as wages, Romney's carried interest income is taxed at the same 15% rate as other investments. The discounted carried interest tax rate -- which is moderately controversial, but would be probably be seriously controversial if more people understood it -- has come under heavy attack in recent years, but is still in effect.

A few moments after announcing the release of his tax returns, Romney told his audience that "I'd like to see our tax rate come down." His leading Republican opponent, Newt Gingrich, agreed, noting that "I'd like to bring everybody else down to Mitt's rate, not try to bring him up to some other rate." He went on to announce that, if he were in the White House, the tax rate on capital gains would be zero.

It only took a second for Romney to understand the implications of Gingrich's tax proposal: "Under that plan, I'd have paid no taxes in the last two years!"

Bruce Watson is a senior features writer for DailyFinance. You can reach him by e-mail at bruce.watson@teamaol.com, or follow him on Twitter at @bruce1971.

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]]>Bruce Watsoncapital gains taxCapitalGainsTaxcarried interest taxcarried+interestcarriedinterestCarriedInterestTaxFinancegop primaryGopPrimaryincomeLocalMitt RomneyMitt Romney tax returnsmitt+romney+carried+interestmitt+romney+taxesmittromneycarriedinterestmittromneytaxesMittRomneyTaxReturnsNewt Gingrichromney+carried+interestromneycarriedinteresttax ratestax the richtaxesTaxRatesTaxTheRichTwitterU.S.Bruce WatsonTue, 24 Jan 2012 16:10:00 ESTWhat Would <i>You</i> Do With a Billion Dollar Bank Error?http://www.dailyfinance.com/2012/01/19/what-would-you-do-with-a-billion-dollar-bank-error/http://www.dailyfinance.com/2012/01/19/what-would-you-do-with-a-billion-dollar-bank-error/http://www.dailyfinance.com/2012/01/19/what-would-you-do-with-a-billion-dollar-bank-error/#commentsFiled under: ,

Parijat SahaIt's a cliche that dates back to Monopoly: A bank error in your favor leaves you with an unexpected windfall. But for Parijat Saha, an Indian schoolteacher, the Community Chest card came to life in a big way when he discovered that his bank account suddenly held $9.8 billion.

"I was expecting an amount of a little more than 10,000 rupees ($200)," Saha told the BBC. The teacher, whose monthly salary is roughly $700, was stunned to find his account filled with a Buffett-level balance. He quickly notified bank officials, who subsequently announced that the huge sum was listed as "uncleared," which means that Saha couldn't have withdrawn it.

Saha's honesty is commendable, but it raises an interesting question: What should bank customers do when they find themselves the beneficiary of a bank error?

The other route, grabbing the money and hitting the road, can be alluring -- for awhile. In 2009, a New Zealand couple, Leo Gao and Kara Hurring, were surprised to discover that a bank error had left them with a $6.2 million overdraft account. The two quickly withdrew about $2.3 million and went on the lam. In 2011, Hurring voluntarily returned to New Zealand, and Gao was arrested a few months later. She's scheduled to go on trial in February and he is being held pending a bail hearing.

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While among the most impressive accidental millionaires, Gao and Hurring are hardly the only people who have found themselves on the wrong side of the law after falling victim to the temptation to take advantage of a bank's blunder. In 2008, Pennsylvania couple Randy and Melissa Marie Pratt used a bank mistake to make off with $177,250. They were later apprehended in Florida, and ended up behind bars. Similarly, when Susan R. Madakor, a Brooklyn, N.Y., woman, spent part of a $701,998 windfall that mysteriously appeared in her Chase Manhattan account, she ended up doing two years in prison for bank larceny and bank fraud.

But bank error stories don't always end up quite so badly. In 2007, Harriet and Herbert Starbird, another Pennsylvania couple, spent about half of $280,276 that their bank erroneously deposited in Mr. Starbird's account. When the case came to court, they were forced to repay the money, but didn't end up doing time. While there are several reasons that Herbert Starbird got off relatively easily, the fact that he didn't try to flee and repeatedly tried to return the money likely factoring in heavily.

The moral is clear: if you see a mistake in your balance, contact your bank immediately. The statute of limitations on bank errors that benefit customers can vary from state-to-state, but most jurisdictions give banks several years to discover their mistakes and seek restitution. And, needless to say, customers who spend their ill-gotten gains will likely find themselves facing the wrath of hordes of well-paid bank lawyers.

Bruce Watson is a senior features writer for DailyFinance. You can reach him by e-mail at bruce.watson@teamaol.com, or follow him on Twitter at @bruce1971.

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]]>bank error in your favorBankErrorInYourFavorBBCbillion dollar errorBillionDollarErrorBruce WatsonChaseCommunity ChestmonopolyNew ZealandParijat SahaParijatSahaTwitterBruce WatsonThu, 19 Jan 2012 14:55:00 ESTWhat Unions Really Should Have Said in New Ad Campaignhttp://www.dailyfinance.com/2012/01/19/what-unions-really-should-have-said-in-new-ad-campaign/http://www.dailyfinance.com/2012/01/19/what-unions-really-should-have-said-in-new-ad-campaign/http://www.dailyfinance.com/2012/01/19/what-unions-really-should-have-said-in-new-ad-campaign/#commentsFiled under: ,

Union workersDo you belong to a union? If so, you're one of a dying breed: As The New York Times reported last year, union membership has sunk to less than 12% of all workers, its lowest level in 70 years. Looking at last year's headlines, it isn't hard to see why: Between public-sector union fights in Wisconsin and Ohio, attacks against unions from politicians across the country, and Wall Street Journal editorials accusing them of fomenting class warfare, it would appear that 2011 was the year for scapegoating organized labor.

On Tuesday, the unions fought back by launching a $1.5 million ad campaign that they unveiled in Pittsburgh and Austin, and that will soon spread to several other cities. The centerpiece is "Work Connects Us All," a slick commercial featuring firemen, teachers, cooks, and a various other stereotypical laborers as an NPR-toned narrator mouths platitudes like "Work is what shakes us awake every morning ... and knocks us out every night." Here's the video:




At first glance, it's not a bad ad. After all, the unemployment rate is hovering around 8.5%, the "underemployment" rate tops 15%, and there are approximately 6 million long-term unemployed who aren't counted in the official unemployment figures because they've given up looking for a job. Selling "work" in this environment is like trying to convince a starving man that sandwiches are mighty tasty.

So, unions have linked themselves to an idea sure to draw plenty of support. The problem, as critics will undoubtedly point out, is that "work" and "unions" are not synonymous. On the other side of the argument, advocates of right-to-work policies claim that unions increase unemployment by making workers less competitive in the global market. For that matter, union concessions like two-tiered wage scale systems -- in which new hires get paid far less than their predecessors -- have been hailed as the salvation of Detroit's auto industry, and a major factor in the creation of new jobs. In other words, when unions get out of the way, opponents argue, work becomes more widely available.

What Unions Actually Do for You

A more effective way for unions to draw support would be to respond directly to the claims leveled against them. For example, while right-to-work fans argue that unions increase unemployment, there's a considerable body of evidence to suggest that they actually boost employment, as well as the average standard of living. According to Gordon Lafer, an associate professor at the Labor Education and Research Center at the University of Oregon, Oklahoma's right-to-work policies resulted in a steady rise in unemployment, an average income drop of about $1,500, and skimpier benefits packages for workers. And the impact extends far beyond union members: A 2011 study by the left-leaning Center for American Progress showed that the ten states with the lowest union membership -- North Carolina, Georgia, Arkansas, Louisiana, Mississippi, South Carolina, Tennessee, Virginia, Oklahoma and Texas -- also have the weakest middle classes. Conversely, where union wages increase, the study showed, so do non-union wages.

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And if unions want to cast the net a little wider, they can take justifiable credit for a variety of work benefits that most Americans today take for granted. Among other things, unions helped bring about minimum wage laws, the 40-hour work week, the end of child labor, and the passage of the Family and Medical Leave Act, which makes it possible for new mothers to take time off to care for their babies.

But perhaps the best way for unions to make the case for their worth would be to use the It's a Wonderful Life approach: Offer Americans a glimpse of what life would be like if unions had never existed. They wouldn't have to look far: 1911's Triangle Shirtwaist Factory fire, which killed 146 workers, illustrates the tragedies that can result from poor workplace conditions, and the 2010 fire in Dhaka, Bangladesh, which killed 28 garment workers shows that the issue is still relevant today. Side note: the Bangladesh factory makes clothes for Gap (GPS), Sears (SHLD), Target (TGT), and several other American retailers that used to employ union labor, but outsourced the work to countries where unions are persecuted and worker protections aren't on the books.

For anyone who works in America -- and enjoys its worker protections -- unions should be a pretty easy sell. Of course, it would help if the unions could learn to better market their message.


Bruce Watson is a senior features writer for DailyFinance. You can reach him by e-mail at bruce.watson@teamaol.com, or follow him on Twitter at @bruce1971.

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]]>Bruce WatsonFMLAIt's a Wonderful Lifejobsminimum wageMinimumWageohioorganized laborOrganizedLaborright to workRightToWorkTriangle Shirtwaist Factory fireTwitterunemploymentunionswisconsin protestsWisconsinProtestsworkers rightsWorkersRightsBruce WatsonThu, 19 Jan 2012 11:55:00 ESTNew Safe-Sex Porn Law Could Cost Los Angeles Billionshttp://www.dailyfinance.com/2012/01/18/new-safe-sex-porn-law-could-cost-los-angeles-billions/http://www.dailyfinance.com/2012/01/18/new-safe-sex-porn-law-could-cost-los-angeles-billions/http://www.dailyfinance.com/2012/01/18/new-safe-sex-porn-law-could-cost-los-angeles-billions/#commentsFiled under: ,

Porn videosIt's nothing new for an industry to complain that new government regulations are bad for business, but when the complaints are coming from the adult film biz, and the regulation in question is a new law requiring performers to wear condoms, people stand up and take notice. On Tuesday, the Los Angeles City Council voted 9-1 to approve an ordinance that would deny film permits to adult video companies that don't require their actors to use condoms. Predictably, many industry leaders were up in arms.

The ordinance isn't law yet -- it still has to be approved by L.A. Mayor Anthony Villaraigosa. In the meantime, the City Council plans to create a committee to determine how the ruling could be enforced.

An Expensive Proposal

The L.A. City Council's ruling will have a far-reaching impact on one of the region's biggest businesses: In 2006, U.S. Internet porn sites alone generated $2.84 billion, and experts say the industry as a whole is worth $8 billion. An outsized portion of this money finds its way to Los Angeles: The San Fernando Valley, much of which lies within the city's boundaries, is America's porn heartland, and 90% of the country's adult movies are produced there. In other words, if adult film companies choose to leave Los Angeles, they'll take a lot of money -- and jobs -- with them.

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But would adult film producers really leave Tinseltown over a little thing like condom usage? According to one of the industry's largest producers, the answer is an unqualified yes. Steven Hirsch, co-founder and co-chairman of Vivid Video, an industry leader, told the Associated Press: "Ultimately I think what they will find is people will just stop shooting in the city of Los Angeles. That's a given."

Critics of the ordinance also note that the adult film industry has a highly vigilant -- and largely successful -- self-policing system. Designed with the help of former adult video star Sharon Mitchell, the program has been in place since 1998, and regularly tests performers for AIDS, syphilis, gonorrhea, chlamydia, hepatitis and several other venereal diseases and disorders. New performers are required to have a full screening upon hiring, and all actors are screened once a month. In spite of the vigilance of the industry's screening program, however, there have been two AIDS outbreaks among porn performers -- in 2004 and 2010 -- since it was enacted.

Condoms for safe sexEnforcing Existing Law

In some ways, L.A.'s new rule is actually a bit of lily-gilding, as there's already a state law on the books that would require adult film performers to use condoms. Following the 2004 HIV outbreak, the California Occupational Safety and Health Administration fined two companies $30,560 apiece for allowing actors to perform unprotected sex -- an action that, it asserted, violated "the state's bloodborne pathogen standard, a regulation that requires employers to protect workers exposed to blood or body fluids on the job."

For years, safe-sex proponents have been pushing California to enforce its bloodborne pathogen standard, to little avail. Tuesday's legislative victory largely belongs to the AIDS Healthcare Foundation, which began an end-run around the L.A. City Council in 2011 by collecting signatures from voters who supported a condom-usage ordinance. According to the Los Angeles Times, the council agreed to pass the ordinance in order to avoid having to finance a $4 million special ballot on the measure.

The Ultimate Effect

Some critics argue that a mandatory condom-usage law would actually make performing in adult films more risky. According to industry experts, many customers, particularly those in other countries, won't watch safe-sex movies. Alexandre Padilla, a professor of economics at Metropolitan College of Denver, argues that the council's decision wouldn't end no-condom sex in movies, but would drive it underground, where it would be hidden from the oversight both of L.A. regulators and the porn industry's current self-policing system:
Movies featuring no-condom sex would not only still exist, but those actors and actresses would no longer be required to participate in the industry's HIV testing program, increasing the risk of an HIV outbreak in the industry and the population at large. One need only look at prostitution to see what happens when an industry operates underground.
If Padilla is correct, the council's decision might have several unintended -- and dire -- consequences for the city. Los Angeles is one of the more expensive locations in the country -- there are several similarly sunny, urban alternatives where the cost of living (and, not incidentally, of operating a business) is far cheaper. For an adult film industry in search of a less restrictive business environment and a more attractive cost of living, Florida, Nevada, or even Louisiana may be calling.

Bruce Watson is a senior features writer for DailyFinance. You can reach him by e-mail at bruce.watson@teamaol.com, or follow him on Twitter at @bruce1971.

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]]>AIDS Healthcare FoundationBruce WatsoncondomsHealthHIVinternet pornInternetPornLos AngelesLos Angeles Timespornregulationsafe sexSafeSexSan Fernando ValleysexSharon MitchellSharonMitchellTwitterVivid EntertainmentBruce WatsonWed, 18 Jan 2012 15:35:00 ESTThey Studied What?! 10 Celebrities with Surprising Graduate Degreeshttp://www.dailyfinance.com/2012/01/16/10-celebrities-surprising-graduate-degrees/http://www.dailyfinance.com/2012/01/16/10-celebrities-surprising-graduate-degrees/http://www.dailyfinance.com/2012/01/16/10-celebrities-surprising-graduate-degrees/#commentsFiled under: ,

Ashley Judd Whether you're a famous ballad singer, a slapstick comedian, or a granite-faced movie villain, it never hurts to have a backup plan. Little surprise, then, that many well-known entertainers have also pursued graduate degrees. But while some went for the obvious educational path -- can anyone really be shocked that Sigourney Weaver has a Master of Fine Arts from the Yale School of Drama? -- these 10 performers chose far more surprising options.


Gallery: 10 Surprising Celebrity Degrees

Dolph LundgrenPeter WellerDavid DuchovnyMayim BialikRon Jeremy




Bruce Watson is a senior features writer for DailyFinance. You can reach him by e-mail at bruce.watson@teamaol.com, or follow him on Twitter at @bruce1971.

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]]>Art GarfunkelAshley JuddBrian MayCalifornicationChristy TurlingtonDavid DuchovnyDolph LundgreneducationEntertainmentFox Muldergraduate degreeGraduateDegreeHarvard UniversityHollywoodMayim BialikMr. BeanNew York UniversityPeter WellerRon JeremyRowan AtkinsonThe Big Bang TheoryThe X-FilesTwitterBruce WatsonMon, 16 Jan 2012 01:00:00 ESTIt's Official: Wealth Gap Has Turned America Into a Seething Pit of Class Resentmenthttp://www.dailyfinance.com/2012/01/13/its-official-wealth-gap-has-turned-america-into-a-seething-pit/http://www.dailyfinance.com/2012/01/13/its-official-wealth-gap-has-turned-america-into-a-seething-pit/http://www.dailyfinance.com/2012/01/13/its-official-wealth-gap-has-turned-america-into-a-seething-pit/#commentsFiled under: ,

Class divideDo you think that the biggest conflict in America is between the rich and the poor? If so, join the club: According to a recent poll published by the Pew Research Center, nearly two-thirds of Americans believe that the wealth gap is the greatest cause of tension in America.

According to the poll, which was released Wednesday, 66% of Americans believe that there is a "strong" or "very strong" conflict between the rich and the poor. These numbers are particularly noteworthy when one considers that in July 2009 -- less than three years ago -- only 47% of respondents expressed those opinions. What's more, the number of respondents who stated that there was a "very strong" conflict has more than doubled, and is currently at the highest level since Pew began asking the question in 1987.

America: Melting Pot or Boiling Cauldron?

Pew's findings are also surprising when one considers all the other things that cause social tension. Essentially, during the past three years, more traditional sources of friction -- race, gender, religion, sexual preference, age and national origin -- have become vastly overshadowed by distrust over wealth.

According to Wednesday's poll, the biggest jump in class awareness has occurred among white respondents: While 74% of black and 61% of Hispanic respondents said they believed that there is a serious class conflict in America, the increase in people holding that opinion since 2009 among both those groups was less than 13%. By comparison, the number of white respondents who believe that there is a strong or very strong conflict between the rich and the poor has shot up from 43% to 65% -- an increase of more than 50%.

The Political Equation

According to the survey, Democrats are most likely to perceive class tension in America, but respondents across the political spectrum overwhelmingly agreed that there is conflict between the rich and the poor. In 2009, only 38% of Republicans said they thought there was a strong conflict between classes. Today, 55% do. Among independent voters, the numbers were even more stark: in the last three years, the percent of people who perceive a serious class conflict has jumped from 45% to 68%.

This perception of class conflict has already changed the contours of the 2012 Presidential race. Earlier this month, Rick Santorum attacked Mitt Romney and Barack Obama for using the term "middle class":
The governor used a term earlier that I shrink from. It's one that I don't think we should be using as Republicans: "middle class." There are no classes in America. We are a country that don't allow for titles. We don't put people in classes. There may be middle-income people, but the idea that somehow or another we're going to buy into the class-warfare arguments of Barack Obama is something that should not be part of the Republican lexicon. That's their job -- divide, separate, put one group against another.
While Santorum might be uncomfortable with Gov. Romney's terminology, it would appear that the two are in agreement about the issue of class warfare. In a later interview, the Today show's Matt Lauer asked Romney if there are legitimate questions to be asked about the fairness of wealth distribution in the country. Romney responded by suggesting that any such questions were based in envy and class warfare, and left little question about who he felt was behind these arguments:
You know, I think it's about envy. I think it's about class warfare. When you have a President encouraging the idea of dividing America based on the 99% versus 1% -- and those people who have been most successful will be in the 1% -- you have opened up a whole new wave of approach in this country which is entirely inconsistent with the concept of one nation under God.

Not Just a Democratic Issue

But Romney may be misreading his audience: There is evidence to suggest that Democrats aren't the only people who are concerned about wealth distribution in America. In addition to the growing number of worried Republicans that the Pew poll identified, an earlier poll by Bloomberg and The Washington Post found that 53% of Republicans believe that taxes should be increased on households making more than $250,000 per year.

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While all of the major Republican candidates endorse tax cuts for the wealthy, Romney's personal wealth and his perspective on class warfare have made him especially vulnerable to attacks on the issue. A recent Newt Gingrich ad features a collection of Romney gaffes, including the now-famous clip in which he tries to make a $10,000 bet with Gov. Rick Perry, and the campaign rally in which he explicitly asserts that "corporations are people." Meanwhile, Winning Our Future -- a political action committee that endorses Gingrich -- has released "When Mitt Romney Came to Town," a half-hour video that links Romney's position as CEO of Bain Capital, a private-equity firm, to job losses across the country.

While it remains to be seen how much the struggle between the rich and the rest will affect the next election, one thing is clear: For a growing number of voters, one eye will be on the ballot box, and the other will be on the bottom line.


Bruce Watson is a senior features writer for DailyFinance. You can reach him by e-mail at bruce.watson@teamaol.com, or follow him on Twitter at @bruce1971.

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]]>99 percent99PercentBarack ObamaBruce Watsonclass warfareClassWarfaremiddle classMiddleClassMitt RomneyNewt GingrichOccupyPew Research CenterRick PerryRick SantorumtaxTwitterU.S.wealth gapWealthGapwealthiest 1 percentWealthiest1PercentBruce WatsonFri, 13 Jan 2012 11:55:00 ESTOWS Prepares to Occupy Martin Luther King Jr. Dayhttp://www.dailyfinance.com/2012/01/13/ows-prepares-to-occupy-martin-luther-king-jr-day/http://www.dailyfinance.com/2012/01/13/ows-prepares-to-occupy-martin-luther-king-jr-day/http://www.dailyfinance.com/2012/01/13/ows-prepares-to-occupy-martin-luther-king-jr-day/#commentsFiled under: , ,

Between being kicked out of Zuccotti Park, barred from touching the Wall Street Bull statue, and arrested for lying down, it isn't hard to see why the protesters of Occupy Wall Street have had a hard time finding their feet in 2012. But on Sunday and Monday, the movement will take to the streets again to honor one of America's most famous protesters: Dr. Martin Luther King Jr. The events will begin with a Sunday night vigil at New York's Riverside Church, to be followed the next day by a baker's dozen protests across the nation against the Federal Reserve Bank.

For those who wonder how OWS -- which has largely focused on economic inequality -- can find a legitimate link between its causes and those of the slain civil rights leader, OWS press representative Kanene Holder makes the connection clearly.

While King is best known for his efforts to curb racism, she explains, his social justice efforts were actually far more extensive. "Everyone is familiar with Rev. King's 'I Have a Dream Speech,' " Holder notes, "But most people aren't aware of how much he embodied an anti-war and anti-poverty stance, as well as an anti-racism stance."




These themes are especially clear in "Beyond Vietnam," a 1967 speech he made at the Riverside Church. Speaking out against an overseas war in another decade, King drew a connection between economic injustice in America and military actions abroad:
We as a nation must undergo a radical revolution of values. We must rapidly begin ... the shift from a thing-oriented society to a person-oriented society. When machines and computers, profit motives and property rights, are considered more important than people, the giant triplets of racism, extreme materialism, and militarism are incapable of being conquered.
Later, King offered a terse analysis that crystallizes much of the OWS message: "True compassion is more than flinging a coin to a beggar. It comes to see that an edifice which produces beggars needs restructuring."

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The Sunday night vigil will feature performances by a host of musicians, including Patti Smith and Steve Earle, as well as speeches by Russell Simmons, Yoko Ono, Norman Siegel and other notables. The following day, OWS plans a march from New York's African Burial Ground to the city's Federal Reserve Bank, which is located mere blocks from Wall Street. The event, called "Occupy the Federal Reserve," will be one of thirteen linked protests taking place in every city that has a Federal Reserve Bank, as well as Los Angeles (which doesn't have a Federal Reserve Bank, but is pretty important anyway).

Asked why OWS has taken aim at the Fed, Holder argues that the institution has become a key driver of economic injustice in America: "The Federal Reserve undermines our democracy. It's filled with bankers who are pushing for a deflated currency that will help inflate their pockets."

But ultimately, she notes, Sunday and Monday's protests will focus on honoring Dr. King's legacy of social engagement -- and making sure that it continues: "We're hoping to help inspire a new generation of activists and visionaries."

Bruce Watson is a senior features writer for DailyFinance. You can reach him by e-mail at bruce.watson@teamaol.com, or follow him on Twitter at @bruce1971.

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]]>Bruce Watsoneconomic inequalityEconomicInequalityFederal Reserve SystemLocalLos AngelesMartin Luther King, Jr.mlk dayMlkDayNew YorkOccupy Wall StreetPatti SmithRiverside ChurchRussell Simmonssocial justiceSocialJusticeSteve EarleTwitterU.S.Wall StreetYoko OnoZuccotti ParkZuccottiParkBruce WatsonFri, 13 Jan 2012 06:00:00 EST3 Ways to Take Control of Your Finances in 2012http://www.dailyfinance.com/2012/01/12/3-ways-to-take-control-of-your-finances-in-2012/http://www.dailyfinance.com/2012/01/12/3-ways-to-take-control-of-your-finances-in-2012/http://www.dailyfinance.com/2012/01/12/3-ways-to-take-control-of-your-finances-in-2012/#commentsFiled under: ,

BudgetAfter the overspending, overeating, and general overextending of December, it's hardly surprising that so many people choose to spend January turning over new leaves. But even beyond the month of new diets, new workout programs, and new strategies for resisting the siren song of cheesecake, the beginning of the year is the perfect time to try out new ways to manage your money.

Admittedly, personal finance websites are hardly new: For years, Mint.com and similar sites have offered users a centralized place to view their accounts, manage their money, and -- in many cases -- even pay their bills. But for many of the new entries to the game, online money management isn't just about watching accounts and moving money: It's also about changing the way people look at and manage their finances.

As anyone who has ever tried to quit smoking can attest, changing basic behaviors is hard, and a method that works for one person may be ineffective for another. The three websites below -- LearnVest, Payoff.com and ReadyForZero -- use very different approaches. In the end, though, they all have the same goal: Helping you take control of your finances.

The Personal Trainer: LearnVest

LearnvestWhen Harvard business school student Alexa von Tobel decided to create a website to help people manage their money, she set her sights high: "I wanted to build a Weight Watchers for personal finance."

At the time, von Tobel notes, there were sites that aggregated accounts, sites that offered news-based investing advice, and sites that led users to large banks, but she wanted something a bit more user-oriented. "I wanted a site that would give trusted, straightforward financial planning help that was unbiased and not news-focused."

LearnVest, von Tobel's site, is certainly straightforward. In addition to providing a space where users can link their bank accounts, it also offers a variety of free resources, including three newsletters and a selection of seven "Bootcamps," educational programs that help users tackle very specific problems, like buying a home, building credit, or preparing to have a baby.

"The bootcamps are very goal-oriented," she says, "They have very specific to-do lists."

In addition to its free offerings, LearnVest also offers personal financial counseling at prices that, von Tobel claims, are far below the market rate. The site's basic budgeting plan costs $69, for which users get a one-time phone consultation with a financial planner, a customized budget plan, three months of e-mail access to the planner, and enrollment in a budgeting course. For $229, users get a five-year financial plan, access to all of LearnVest's courses, an additional phone check-in to consult with their planner, and an additional three months of e-mail access to the planer. The website's premium offering, the $349 "Complete Financial Plan," includes six more months of e-mail access and two more phone check-ins.

Providing affordable financial planning advice is a major part of LearnVest's purpose: "The average financial planner in America charges between $150 and $250 per hour, and setting up a full financial plan can take ten hours or more," von Tobel says. "Our goal is to make financial planning available to millions of people who couldn't afford it otherwise. If you don't have a lot of money, you probably need financial planning more than somebody who does."

The Best Buddy: Payoff.com

Financial planning can often feel like visiting the dentist: a moderately painful, but necessary, chore.

"Most money sites are utility-oriented," says Scott Saunders, founder and CEO of Payoff.com. "We wanted to create a site that is lighthearted and fun."

And when Saunders and his partners were building Payoff.com, they quickly discovered one reason why money management has gotten such a negative reputation: banks.

"You don't hear from your financial institution unless you've done something wrong," Saunders says. "We wanted to change that. We want to motivate users and applaud their good behavior."


Payoff.com Product Explanation from Payoff.com on Vimeo.



To achieve that goal, Saunders consulted with game designers, behavioral psychologists and academics to create a fun, engaging site. "We use games, awards and community support to help motivate our users," Saunders says. "We help them set goals and dreams, which they can then share on Facebook and Twitter. We try to create feedback loops to encourage good behavior."

One of the site's techniques should be familiar to any fan of Foursquare: It awards badges for financially responsible behavior. "We give users badges for anything that we can verify," Saunders says. The site also regularly quizzes users about their finances, generating pop-up questions about everything from credit card balances to the cost of recent purchases. In return for correct answers, users get points, which can then be applied to prizes.

Underneath the fun, Payoff has a serious goal. "On a foundational level, we want to help individuals get out of debt," Saunders stresses. With that in mind, his site tries to offer the kind of support that banks rarely provide. "We want to treat money management through preventative medicine. Instead of waiting for customers to get in trouble, we want to work with them from the day after they sign a loan. We want to root for their success."

Payoff directly links a user's spending to specific retailers, like Starbucks and Target, instead of lumping it under broad categories like "restaurants" and "department stores." Partly, Saunders suggests, this is because it more closely mimics the way people view their expenses -- while they might not be aware of how much money they spend on "snacks," they probably know how often they go to McDonald's.

Beyond that, Saunders hopes to partner with retailers: "If companies care about your well-being, they can build long-term relationships with you." In order to help these relationships, Payoff is trying to get retailers more closely involved with users. "We've put together a financial ecosystem in which any interested party can participate toward the financial betterment of their customers."

The Nagging Mother: ReadyForZero

When it comes to financial planning, some people need a little more structure. That's where ReadyForZero comes in. "Debt is complicated, and it's easy to become overwhelmed," says Rod Ebrahimi, the site's co-founder and CEO. "We're trying to take the thinking out. ReadyForZero gives its users highly-opinionated advice about what you should do with your money."

The idea for the site came from Ebrahimi's experience counseling his girlfriend. "When she got out of college, she had a ton of debt," he explains. "She thought about going to one of those guys on the radio who promises to clean up your finances. When she got all the paperwork back from him, we found that it was confusing and full of charges." To help out, Ebrahimi created a spreadsheet that helped her understand her debt, and plotted a way for her to improve her finances. The program he created became the earliest version of ReadyForZero.

Ready for Zero

Simplicity is key at ReadyForZero. One thing the site does is add up all of its users' debt -- including credit cards, mortgages, student loans, and auto loans -- into a single, easy-to-understand number. It then lets users know how much they are paying off every day, as well as how much money they are paying in interest.

Unlike LearnVest and Payoff, which address financial education and motivation, ReadyForZero is narrowly focused on paying down debt. "When you're ready to tackle your debt, this is the place to go," Ebrahimi says. The site regularly reminds users of their finances, payment due dates, and the effect of their purchases through e-mails and text alerts. The site even offers users special stickers to cover the numbers and data strips on their credit cards, which make them harder to use. "You'd be surprised at how effective the stickers are," he says. "When you're standing in line, pulling the stickers off your cards, you think twice about using them."

ReadyForZero has been in business for a year; in that time, Ebrahimi claims, it has helped manage more than $150 million in debt. "According to our records, regular ReadyForZero users get out of debt twice as fast," he says. For that reason, the site has also drawn the attention of banks: "We change people's payment behavior and keep them out of trouble. We've been approached by banks who are trying to partner with us to help create incentives -- like better interest rates -- for our users."

While they use different methods to help users deal with their finances, von Tobel, Saunders and Ebrahimi all agree on one thing: Understanding your finances is the key to getting them in order. As Saunders points out, this means being honest with yourself: "You need to make realistic assumptions -- not wildly optimistic assumptions -- about your expenses."


Bruce Watson is a senior features writer for DailyFinance. You can reach him by e-mail at bruce.watson@teamaol.com, or follow him on Twitter at @bruce1971.

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]]>Bruce Watsoncredit cardsCreditCardsdebtfinancial adviceFinancial advisorfinancial planningFinancialAdviceFinancialAdvisorFinancialPlanningget out of debtGetOutOfDebthousehold budgetHouseholdBudgetlearnvest.commoney managementMoneyManagementPayoff.compersonal financePersonalFinanceReadyForZeroTwitterBruce WatsonThu, 12 Jan 2012 10:00:00 EST