No, Seriously, Buy Local

A lovely visual, care of SRA, which illustrates the difference between spending $100 at a locally owned business vs a non-locally owned business.  This is good to consider when thinking about the cerazy deals at Best Buy this weekend. 

Click to enlarge!

source: LocalFirst.com

This image is from localfirst.com, an initiative to buy local in West Michigan.  Their campaign includes a local business directory and a buy local coupon book.  Bellingham (where I live) has a similar organization, called Sustainable Connections.  Local businesses produce more jobs, and more stable jobs, than non-local business.  Also, when I go to the local indie theater here in Bellingham and look at their sponsors board, it's all local businesses.  A robust local economy creates a resilient, inter-reliant community.  Best Buy doesn't.

WHAT'S HOT this Tax Season: Prepaid Cards

So I was on a "webinar" yesterday and I actually learned something new.  An IRS presenter said that for the first time, tax refunds can be deposited onto prepaid debit cards.  I said, uhhh that sounds like a really lame excuse for a bank account.  Now that I think of it, the first prepaid card I ever heard of was for teenagers- sort of a plastic training tool.  I did some research, and prepaid is actually not as lame as I thought.  In fact, it may even be sorta useful.  The hope is that when people receive a refund on a prepaid card, they will start to use that card as a financial tool for the rest of the year.

As we learned from our deep investigation into predatory lending, people who are unbanked or underbanked pay through the nose to manage their finances.  Prepaid cards could represent an intermediate step towards more traditional banking services.  The biggest reason I think they might be useful: you don't need as much ID to get one.  Also, you don't need a credit check.  For this reason, prepaid is already popular with immigrant populations - for some cards, you can even apply with foreign ID only.  This Dec. 2006 New York Times article explains in more detail how immigrants utilize this service.  Many of the users are relieved to be able to replace wads of cash under mattresses with this more secure format.  On many cards, the maximum liability for a cardholder if the card is lost or stolen is $50.  Additionally, a great number of people say they have a very good understanding of the fare structure.  Confusing fees are a prime reason people avoid banks.

Here's what I see as advantages to prepaid:

• less ID needed
• no credit check
• more secure than cash
• difficult to overdraft
• reduced cost compared to check cashing and payday lending
• immediate liquidity - funds added are available instantly
• fee structure is clear and easy to understand
• they look like credit/debit cards, socially accepted

Of course, there is a premium for this service.  Although direct deposit onto the cards is generally free, loading cash onto a card might be $4.50, an ATM withdrawal could be $2, there may be a $1 monthly fee.  They add up.  But they will likely be cheaper than relying on check cashing.  And I'm mostly interested in prepaid as a preliminary step towards traditional banking, which can be even cheaper.  These cards also don't offer much opportunity for credit building - the card company will only report automatic bill payments to the credit bureaus.

If you're really psyched on this, you can read this large pdf Nonprofit's Guide to Prepaid.  I did. Part I is worth it.

Shoo Jimmy Choo is the Worst Title For a Book. Ever.

Here is an interesting article about financial books targeting women. To summarize, it basically says that tons of books are written each year with inane titles (Does This Make My Assets Look Fat? and SHOO!, Jimmy Choo are really deplorable titles) teaching women about financial management, but comparable books are not written for men. However, examining the data, it's not clear that women are less good at managing money than are men. Ramit Sethi, a person-finance blogger, ran a survey and found that the major difference between the genders is actually a level of confidence related to money management.

Since I spent a lot of time right now thinking about research studies, media-framing, and causal direction, it lead me to ponder the following: are women less confident about money because this market exists and the media frames issues in such a way that women are convinced that they are less good with money, or does an innate lack of confidence lead to the market?  Man, chicken and egg problem. I'll be honest, I actually suspect it's the former, at this point, but I have absolutely no empirical evidence to back that up. I do wish that women were more confident with money, but, perhaps more importantly, I wish Does This Make My Assets Look Fat were not the 30th most popular book in the Women and Money Management category on Amazon. Preposterous.

How to Battle Advertisements

Ads make you want things.  When you see a lot of them, you may feel like getting those things will make your life better.  Consumer Reports says that the average American is exposed to 247 commercial messages a day.


See fewer ads, buy less useless crap.  Below is a brief list of strategies to defend yourself against the dark arts of advertising and marketing.


Ads on the internet:

• Use an adblocking plugin for your browser, such as Adblock for Firefox.  Sure, some ads sneak by the filter, but many are blocked.  Ad space will just show up as empty space.

Ads on the radio:

• Difficult to avoid.  Turn down the volume for a random period of time.
  

Ads on TV:

• Do not own a television, and definitely don't turn it on to "see what's on."  Commercials are on.
• Download torrents of your frequently watched TV shows instead of streaming them.  Vuze is a pretty user-friendly bittorrent client.
• If you do watch shows on TV or on hulu or something, mute the commercials.

Ads in magazines:

• You read magazines? On purpose?  Come on, people.  Internet.

Ads on apparel:

• If you don't buy clothing/bags/shoes/umbrellas with logos on them, you will spare yourself and the people around you from staring at ads.  Potential quandary: a free t shirt with a big logo on it.  Your options: forgo the t shirt (you seriously don't have enough t shirts?); spray paint something else over the logo; wear it to sleep.  We're not talking Run for Fun '97 t shirts, which are a great way to show other people your track record of fun, we're talking gratuitous corporate logoage.
• Express your distaste when other people flagrantly display logos.  Be rude about it; attack their self esteem.

Ads on billboards/bus stops/in the metro/on the bus:

• Yeah, these are tough.  Bring a book?  But not if you're driving.  Audiobook?  Distract the mind?  
• If an ad on the metro is made of paper, you can easily remove it and turn it over to the blank side.
• For billboards, I suggest utilizing paint cannons, brought to you by hipster science.  Or this quirky government-funded anti-billboard mere miles from where I live.

Ads on those fly-by-the-beach airplanes:

• Shoot 'em down.  Shoot 'em right on down.

Ads that are sneaky (product placement in tv shows, movies, that new Gap logo "hoopla"):

• For example, Vin Diesel drinking a Sobe in xXx.  Or hark - perhaps he is on the DIESEL industry payroll?  
• Check out this heartwarming article from, um, productplacement.biz, about the number of product placements on American Idol (4,349 placements during Season 6).
• How to defend against these when, by nature, they sneak up on you?  Avoid mainstream movies and tv shows that attract big advertisers, I guess.  I wanted to say, make sure you notice when there IS a product placement and not just let it slip subconsciously by, but then I'm telling you to pay special attention to an ad?  Web of lies.

These are some basic tactics.  Arm yourselves!

Hand in Hand in Hand in DOOM

Check out this fun doomweb from a wonderfully titled report, "The Predators' Creditors," which was published in September by National People's Action.  It outlines how big banks fund big payday lending and check cashing companies.

source: National People's Action

As you can see from the image, Wells Fargo is preeeeetty evil.  From their summary: "Wells Fargo is the biggest single enabler of payday lenders, the report finds, followed by Bank of America, JPMorgan Chase, US Bank, Banco Popular and Wachovia. Wells Fargo finances about one-third of this predatory industry based on SEC and other government filings from public companies only.

"Bank of America and Wells Fargo, specifically, played a crucial role in the rise of the largest payday lender, Advance America, which operates more than two times as many storefronts as its next closest competitor. Bank of America Wells Fargo and Wachovia provided $40-50 million in credit to Advance America before the company operated a single store. Both banks continue to finance Advance America."

Be a Tax Clinic Volunteer! WHEEEE

The best volunteer gig I have ever had was at a low income tax clinic in DC.  The Volunteer Income Tax Assistance (VITA) program trains volunteers to staff low income tax clinics nationwide.  Laura and I did this in DC through Capital Area Asset Builders and their DC EITC program.  Laura did several hours of IRS training to learn how to prepare taxes.  I promoted DC Saves, a savings account program, and did interpreting.  I started to get interested in financial education and all of these other issues when I was volunteering there.  We went once a week to the site (ours was in Adams Morgan) for a four hour shift leading up to TAX DAY.

Laura is already signed up to do it again this year in Philly.  It's a really rewarding gig because you're helping low income people get large sums of money.  Plus, learning how to do taxes will be pertinent to your life every year, and friends will bake you cookies in exchange for tax help.

If you are interested in being a VITA volunteer, "send an e-mail to the IRS at wi.taxprep.volunteer@irs.gov indicating the city and state where you want to become a volunteer. You’ll receive an acknowledgement e-mail from the IRS.  Your information along with your email address will be forwarded to sponsoring partners in your area for further contact." (taken from this IRS page)

source: kensgarbagecan.wordpress.com

Community Investing: Move on Up

I have something you will like, my little friend.   It is community investing! It is fun, easy, and delicious.  I just loaned The Reinvestment Fund, based in Philadelphia, some money for a term of 3 years at 2.50% interest.  My investment is basically a CD (certificate of deposit) and I can't get at it until the term is up without penalties.  What is my money doing during those 3 years? Increasing fresh food access in low income communities, building energy efficient affordable housing, and financing charter schools in the Greater Philadephia area.  It feels like I'm making a donation, but I'm getting it all back! Plus interest - a lot more interest than most savings accounts or CDs are getting nowadays.  You'll probably want to start listening to Move on Up immediately because it will last for 9 minutes.



More generally, community investing is "financing that creates resources and opportunities for economically disadvantaged people in the US and overseas who are underserved by traditional financial institutions. Community investors make it possible for local organizations in rural and urban areas to create jobs, provide financial services to low-income individuals, and supply to capital for businesses, affordable housing, and vital community services, such as education facilities."  This definition is from The Community Investing Center, an extremely useful website, really the only useful website about this.  When I searched their database, I wanted to find an institution in Greater Philadelphia, but there are lots of parameters you can select.

There are so many options! The Cooperative Fund of New England finances cooperative housing, worker-owned businesses, and community-oriented non profits in New England.  Owen's housing coop got a loan from them last year to finance maintenance on their coop house. Oikocredit requires a minimum investment of only $20 to invest online in global microfinance.  Pick a global one or a tiny local one.  Four Bands Community Fund loans only to the Cheyenne River Indian Reservation in South Dakota and offers investors interest rates of 0-4% for loans longer than 5 years with a minimum investment of $5,000.  I bet you will find something intriguing.

Minimum investments vary, but many I've seen are about $2,000.  Each fund also has a different investment term, sometimes one year, sometimes three.  Generally the investor can choose up her interest rate (up to a maximum), allowing investors to select less if they choose to be more generous.  This article by Timothy Freundlich (a Wes film major, surprisingly) offers a better primer on community investing than I have here.  I'm just here to get you psyched.  Look, from a pure investment standpoint, where else are you making a sure 3% right now?  Plus your money is being awesome when you make a community investment.  TO THE DATABASE!