The Financial Crisis Explained to Joe the Plumber

When many people lose half their retirement plan, they are entitled to an explanation. Do not expect it to come from the politicians. They say 'It's a crisis' like they would say 'It's a hurricane'. We are left in the dark, grabbing any little hope we can find in the news and trying to understand, the best we can, how such a thing can happen to us.

For many centuries civilizations have used money based on gold and silver. They had one advantage. Their value was in their weight. The time could change but an once of gold was always worth an once of gold. It could also be divided into many little coins. That made it a convenient means of exchange. In the 20th century things started to change. In 1933 President Roosevelt outlawed ownership of gold by private citizens (except for jewelry). In 1971, President Nixon decided to put an end to the trading of gold at the fixed price of $ 35 / once. That was the end of the gold standard.

We needed to introduce more flexibility in the system and we got more flexibility than we could ever have dreamed of. A dollar bill became a means of exchange that was worth whatever you can get for it. The government was free to print as many dollars as necessary to satisfy the needs of the economy ... and its own. Politicians felt like a kid in a candy store. Whatever they wanted could have paid for by creating more dollars. They had a good excuse. The economy was growing. It created many more things to buy and that required many more dollars. The government was more than willing to oblige. It even created more dollars than needed by the economy. That is called inflation. It reduces the value of the dollars in your hand. We are supposed to know that. We have been told since 1971 that our currency is not a storage of value. We call it 'fiat' money. It is only a means of exchange. In other words: Use it or lose it. The system worked as long as the amount of money in circulation could be absorbed by the economy ... more or less. If you increase money faster than it can be put to use you will have inflation and prices will go up. If you increase the amount of money in circulation much faster than the economy can grow you will get to a point where the economy will get an indigestion of dollars. That seems to be our case. Our national debt has doubled in recent years. We had so much difficulty absorbing those dollars that the banks had to make loans to people who obviously could not pay them back. It was force feeding followed by throwing up.

Maybe the economy is not the beautiful machine we thought it was, with accountants making sure that what gets IN equals what gets OUT. A living organism may be closer to reality. It is made, after all, of millions of people like you and I who do not react like machines. They are driven by feelings that can not be expressed by numbers. We can abuse fiat money like we can abuse food. Kids like sugar but too many candies lead to bad teeth. Abuse it for many years and a day will come when you get a toothache. It hurts. You are going through a crisis. The government can not remove the excess dollars from the economy any more than you can remove excess candies from the child. The only solution is that somebody, somewhere will have to lose those dollars. This is what happened to your retirement plan. This living organism is trying to get rid of excess dollars in any possible way. Logic, reasoning and our sense of justice do not apply. It seems that the system will use any way at its disposal whether it is fair or not. It will make banks lose money on bad loans. It will sell businesses for 10 cents on the dollar. It will make companies and people declarable bankruptcy. A patient in a lot of pain has no morality!

You may think that adding more money to the system would be doing more of what got us in trouble in the first place. You may have a point there! Unfortunately, this is the only thing politicians know how to do. Do not expect much help from them. In October, 160 economists sent a letter to our treasury secretary to tell him that his second plan would not work any better than the first one. Our only consolation is that the dollars that we may be able to keep through the storm may be worth more in the future than the ones we are losing today.

By the time this crisis is over many ideas will be explored by people like you and I looking for an explanation. We are not experts. Our only tool is common sense. We could say, for instance, that we may have neglected a law of nature. Have you noticed that what was created by nature coming with a self limitation that you do not find in humanventions? Our stomach limits how much we can eat in one meal. Our sense of hearing is limited. We can not see outside the range between red and violet. Nature keeps us within limits. On the other hand, human technologies come without any self-limitation. Computer games are fine but nothing will prevent you from getting addedicted. Antibiotics and X rays are very useful but should not be abused. After learning how to use a cell phone, we have to learn not to abuse it. Credit cards are very convenient as long as your self control keeps you out of trouble. There is nothing to prevent a government from creating more money that the economy can absorb. Nature keeps telling us 'Use but do not abuse'. Unfortunately, we do not always pay attention.

Think of the way future historians will talk about this crisis. They will tell our grand children: 'There is some analogy between the way we learned to use fiat money and the way our ancestors learned to use fire: We got burned. We learn much faster when it hurts! For many centuries our commerce used only precious metals. It was in the 20th century that we developed the use of paper money and it was only in the 21st century that we learned not to abuse it, under the gentle but firm guidance of nature. We learned that creating, year after year, more money than the economy can use will lead to a lot of money piling up and a financial crisis. One way or another many innocent people will have to lose the excess money created. It seems to be a lot of pain and suffering to learn an idea as simple as: Use but do not abuse. '

If we learn that lesson we will say that it was well worth it. If we do not ... this crisis will only be vain suffering. The choice is ours. As you can see, there is a price to pay for everything!

Printable Play Money Helps Kids Learn

Helping kids learn the value of a dollar (or 10 or 20) is easier when they can practice hands-on using play money. With play money, including bills that can be printed for free via the Internet, children can gain many useful skills without the need to raid their parents' pocketbooks. Little Alex P. Keatons of the world can prep for a career in finance by wheeling and dealing with parents, teachers or friends using pretending cash. Playing "store" is also a fun and popular way to teach kids about monetary denominations and the value of a buck.

When selecting a fake money design to use with children, parents and teachers may opt for cartoon-style money or more realistic bills.

For older children, realistic play money is usually the best option, since it is very close to the bills they will see in everyday life. And there's no need to worry about being carted off to the slammer, because the faux cash offered by reputable Web sites is altered enough to comply with federal regulations.

Once you find a play money design you like, download and print it in color on your home printer. Cut the bills apart and start doing business! For added durability, you might want to print the bills on cardstock or even laminate them, especially in a classroom setting.

When working with very young children, start by teaching them to identify the various denominations. Print out multiple copies each of $ 1, $ 5, $ 10, $ 20, $ 50 and $ 100 bills. Kids can learn which presences are on which bills for a bonus history lesson! Toddlers and preschoolers may do best with oversized play money, as it can be easier for little hands to hold.

Children who are a little older can begin to add and subtract with the help of fake money. Consider setting up a pretend store with items priced for "sale" at prices that match simple combinations of bills. For example, a child can quickly learn that a $ 20 item can be obtained by exchanging a $ 20 bill, or two 10s, or four 5s or a 10 plus two 5s.

Printable play money can also be used as a replacement for bills that are missing from family board games, or in gaming tournaments or fund-raisers. The paper can also be used as a "currency" given for chores and redeemable at a later date for real cash.

There's really no need to pay to print play bills, as they can often be found for free on the Internet.

Copyright 2009 by Kevin Savetz

Teach Kids About Money With A Savings Account

When children see toys advertised on television, clothes in a store or candy on the shelf, they immediately want them. They have no understanding that those things cost money. And if a parent says well honey, that costs a lot of money, children think that parents have an endless supply of money that simply appears magically out of their wallets. That is why it is important to teach children early about the value of money by looking into bank accounts for children.

Teaching children about money will help them make smart buying decisions, develop strong savings habits and show them that they can not always get everything they want the minute they want it. If they get a sense of the importance of buying things that you need, instead of things you want.

Start your child's financial education by teaching them that money is earned by working for it. No one is going to just give them money when they're adults, so do not set up that expectation now. Kids can earn money by doing chores around the house - cleaning bathrooms, sweeping floors, putting dishes away. There are household chores suitable for every age.

The first step in saving money is to get a piggy bank or something similar. Kids, especially younger kids, are very literal and concrete. Seeing physical money accumulate will get the point across better than anything you could say. If they want a toy or something that costs more than one or two weeks worth of allowance, show them how they can get it. They just need to put a portion of their allowance away each week until they've saved enough to buy what they want.

Once your child has a handle on the idea of ​​saving cash at home, it's time to teach them about banking by opening a savings account. Many banks, both online and brick-and-mortar, offer savings accounts for kids. This gives them the chance to start an account without a significant minimum balance or fees that would wipe them out.

You should open the first account using both your name and the child's name, which indicates a custodial account. Make sure you provide the required forms of identification, as well as birth dates, both of your social security numbers and current address.

Go over the bankbook with your child and encourage the child to place the bankbook in a safe place. Many bank account representatives will take the time to go over all the steps with your child, such as the importance of accurately entering deposits and withdrawals, as well as dates and explanations. Of course your child will not remember this when it's time to make a deposit or withdrawal, so you'll need to walk them through the process again.

The key at this point is to keep it simple. Your child is not starting a checking account and does not need to know all the details that are involved with maintaining this type of account, at least not yet. Your child will stay encouraged about saving money once the bank statements arrive and the child can see the bank account grow. Some families also find that it discourages children from making unnecessary purchases because they want to save money. Opening a bank account for children can open their eyes to the importance of saving and managing money. All it takes is a little praise and encouragement from the parents to help build their kids financial future.

The Best Way to Understand Personal Finance

When we are trying to understand Personal Finance, the best thing to do is to understand what Personal Finance is NOT.

Many people think that accounting and personal finance are the same, but Personal Finance is NOT Accounting.

On the surface they may seem the same; they both have something to do with money. However, the definitions will help us better understand the differences.

Merriam-Webster's definition of accounting is "the system of recording and summarizing business and financial transactions and analyzing, verifying, and reporting the results."

Based on this definition, we see that accounting is the process of analyzing and recording what you have already done with your money.

This is why having an accountant is usually not enough when it comes to your personal finances.

Accountants generally do not concern themselves with personal finance (there are some exceptions to this rule). Unless your accountant is also a financial adviser or coach, he or she will likely just look at what you have done with your money at the end of the year and provide you with a report of their analysis.

This report is usually your tax return; what you owe the government or what the government owes you.

Very rarely does the accountant provide an individual with a Balance Sheet or Income Statement or a Net worth statement; all very helpful tools that are necessary to effectively manage your personal finances.

Personal Finance is looking at your finances from a more pro-active and goal oriented perspective. This is what provides the accountants with something to record, verify and analyze.

The Merriam-Webster's (Concise Encyclopedia) definition of "Finance" is the "process of raising funds or capital for any kind of expenditure. , while savers and investors have funds that could earn interest or dividends if put to productive use. Finance is the process of channeling funds from savers to users in the form of credit, loans, or invested capital through agencies including COMMERCIAL BANKS, SAVINGS AND LOAN ASSOCIATIONS, and such nonbank organizations as CREDIT UNIONS and investment companies. Finance can be divided into three broad areas: BUSINESS FINANCE, PERSONAL FINANCE, and public finance. All three involve generating budgets and managing funds for the optimum results ".

Personal Finance Simplified

By understanding the definition of "finance" we can break our "personal finance" down into 3 simple activities: -

1. The process of raising funds or capital for any kind of expenditure = Generating an Income.
A Business gets money through the sale of their products and services. This is labeled "revenue" or "income". Some businesses will also invest a portion of their revenue to generate more income (interest income).

A Person earns money through a job, or a small business (self employment, sole proprietorship, network marketing or other small business venture). The money coming in can be a salary, hourly wage, or commission, and is also referred to as income.

A Government gets money through taxes that we pay. This is one of the main ways that the government generates an income that is then used to build infrastructure like roads, bridges, schools, hospitals etc for our cities.

2. Using our money to make purchases = Spending Money.
How much we spend relative to how much we make is what makes the difference between having optimum results in our personal finances. Making good spending decisions is critical to achieving financial wealth - regardless of how much you make.

3. Getting optimum results = Keeping as much of our money as possible
It's not how much you MAKE that matters - its how much you KEEP that really matters when it comes to your personal finances.

This is the part of personal finance that virtually everyone finds the most challenging.

Often people who make large incomes (six figures or more) also tend to spend just as much (or more) which means that they put themselves in debt and that debt starts to accrue interest. Before long that debt can start to grow exponentially and can destroy any hope they would have had to achieving wealth.

Personal Finance made simple

Personal Finance does not need to be complicated if you keep this simple formula in mind:

INCOME - SPENDING = WHAT YOU KEEP

For Optimal Results you simply have to make more than what you spend and spend less than what you make so you can keep more for you and your family!

If you are not actively working towards an optimal result you will by default get less than optimal results

It really is that simple!

Now that you understand personal finance and WHAT you need to do, the next step is learning HOW to do this!

The best way to start is following these 3 simple steps: -

1. Know what you want to achieve - "if you do not know where you are going, any road will take you there" has become a very popular quote, probably because it is so true. One of the practices that Stephen Covey highlights in his book "7 Habits of Highly Successful People", is to always start with the end in mind. Knowing where you want to go will be a big help in ensuring you get there.

2. Have a plan - that you can follow that will get you to your goals. Knowing how you will achieve your goals in a step by step plan is invaluable. Sometimes this is easier with the help of an advisor or a financial coach.

3. Use tools and resources - that will help you to stick to your plan and not become distracted by the things in life that could limit our imports and make us spend more than we should. Do not try and work it all out in your head! You will end up with a massive headache and your finances will become one gigantic dark fog!

AOCS Currency, Your Community and You

Have you or do you plan to purchase silver or gold in the very near future? Has the news of the day gotten you drooling over Lakota silver rounds or other AOCS barter rounds? If so, you are not alone.

The current uncertainty about the national and global economy has many people concerned about everything from runaway inflation to complete economic collapse. Could the US Dollar go the way of the Zimbabwe currency? How can individuals and communities protect themselves in the event of the collapse of our currency?

Historically, gold and silver have been viewed as an inflation proof store of value. Whenever people get concerned about economic instability, they start buying silver and gold. The thinking goes something like this: if I own silver and gold and the value of the dollar falls, I can hang onto my silver or gold and sell some of it off for dollars right before I need the money. The value of the metal would remain the same and in a situation of inflation, I would receive more dollars for it than I paid when I bought it. A more extreme version of the thinking holds that in a total currency collapse people who own gold and silver can start using it to buy what they need.

Stocking up on silver and gold as you have the ability is definitely a good idea, and AOCS barter medallions are an excellent choice. However, individuals have to consider the limitations. Just because gold and silver are precious metals does not mean that in a crisis everyone will suddenly know what to do with them. It has been years since the US currency was made of or even backed up by silver or gold so many people have never seen these metals.

The key is actually to approach using silver and gold as money on a community level. Communities as a whole can place a hedge around their local economies by introducing commodity backed treaties (often known as silver currencies) into circulation.

Several communities in the US are beginning the process of circulating their own commodity backed contracts. Some examples are the Mattole Self-Sufficiency Project, Shire Silver, Community Dollar, Northern Colorado Community Barter, and Boulder Currency. There is even a virtual country called Wirtland with its own silver and gold pieces mean to circulate as currency.

Each community issuing a silver currency takes a different approach. For example, Shire silver is locally mined using a homemade striking device, whereas the Mattole Self-Sufficiency Project uses an industrial mint. There are also different approaches in how the silver is valued. The value of Mattole money is closely tied to the spot price of silver and as a result changes repeatedly. Community Dollar, Northern Colorado Community Barter, and Boulder Currency all adhere to a face value of fifty (usually interpreted as mean fifty dollars) for one ounce silver rounds used in their communities. This allows for the currency's value to be perceived as more stable.

Not all communities issuing a silver currency are starting from scratch. The American Open Currency Standard is a system of commodity backed currencies intended to circulate anywhere in the United States. AOCS is best known for its Lakota silver rounds. However, it has also produced the Go Local Local medallion and a series of rounds promoting various educational and ideological causes. Most AOCS barter rounds have a face value of fifty per ounce, allowing them to trade around the country at equal value. Most importantly, AOCS works closely with communities who wish to issue a silver currency and can streamline the process of designing and minting the physical currency pieces.

Of the examples listed above, Northern Colorado Community Barter and Boulder Currency both use AOCS currency within their communities. AOCS barter medallions also have a strong presence in Dallas, Fort Worth, and Austin, TX, as well as in some parts of the Great Lakes region, and in the Lakota and Soto Nations. As the economy continues to limp along, the presence of AOCS currency is only going to increase.

All of this makes AOCS barter medallions an excellent choice for people who are looking for silver rounds for sale. AOCS Mint has recently reduced the minimum order requirement on most AOCS barter medallions making it very affordable to get started. In addition, AOCS Mint has recently started the AOCS coin club, where you can automatically pay a set amount of dollars in exchange for a shipment of AOCS silver each month. If your community already has an AOCS currency, you will be able to immediately spend your AOCS barter medallions at face value. If your community does not yet have an AOCS currency you may still find a merchant or two who will accept it, or you could be the one to get the ball rolling on starting one.

The Gold IRA Rollover: Learn How to Invest Like a Billionaire

It's been said that imitation is not only a great form of flattery, it's also the best way of learning and modeling on the success of others. If it's financial success you're looking for, what better role model could there be than a billionaire?

What Billionaires Know

Though their world views may have little in common, billionaires like George Soros, John Paulson, and Carlos Slim have all admitted to holding a part of their wealth in gold. Even Warren Buffet, who personally prefers what he calls "productive investments," admits that gold has served investors well especially during times of inflation.

Do you remember those dark, dark days of 2008 when the stock market's near crash caused retirement accounts to lose $ 2 trillion in a mere 15 months? Guess where your money could've been at that very same time gaining in value instead of losing it?

That's right, gold.

Had you purchased gold in 2001, by 2011 you'd have seen your investment grow by 700%. Let's say that again: a growth of 700%. This same decade was also one of the rockiest economic periods in human history. As the stock market fell, gold thrived. Why? Because when the stock market tumbles and big money investors look for other safer places for their money, precious metals is often where they go.

Could this all happen again? Well, today we're inside the largest stock market bubble in history. Many experts believe it's only a matter of time before that bubble bursts again. If you do not want to again see your retirement accounts lose their value because of another collapse of the economy, the time to change your investment process is now.

Why the Billionaires Own Gold

Gold is nature's hard asset. Gold has been civilization's store of value for thousands of years because gold is a tangible and finite resource with high intrinsic value. Gold is an alternate form of money all over the world. (It was mentioned in the Bible 417 times.) Gold is not subject to the sections of dilution and devaluations of other paper investments like stocks, bonds, and mutual funds. Neither is the value of gold at the mercy of governments or financial institutions. It can not be printed like money, and unlike stocks, it will not ever merge or split. Gold historically moves against the direction of the stock market. Billionaires know that gold is an excellent way to reduce the volatility and vulnerability in their capitals.

If you want to protect and preserve your wealth, there's no better place than gold.

When Is the Best Time to Buy Gold?

Many market oracles believe, at the time I'm writing this, that gold is in the final stage of a bear market. Some experts believe that at current prices gold is still undervalued by as much as 50%. This may be the epic rise that gold experts have been overing over the years.

But even if it does not experience an epic rise in value, gold is still a necessary means to protect the value and diversify the portfolio you've got.

The best time to buy gold may be now.

How to Bring Gold into your IRA

If you have a self-directed IRA , you can direct some of your IRA funds to be invested into gold. The only requirement is that the gold meets certain purity and refinement standards. The easiest way to invest in gold is through a self-directed IRA.

A self-directed IRA investment is like a regular IRA except that you the investor get to choose how your IRA funds will be invested instead of the trustees or custodian. This gives you flexibility to invest your money in whatever way you feel comfortable. It can also ensure that you are always aware of where your money is and how it is being invested.

In this IRA the gold does not get delivered to you once you purchase it. The reason for this is that delivery of the gold would be considered a disbursement of your IRA and you would probably be obligated to pay penalties. Therefore, once you've decided to put your money towards gold, you will then have that gold delivered and held for you at a designated depository. You will be informed when your gold reaches the depository and you will never have to worry about your gold ever being taken out of the depository or used by anyone but you.

Learn What the Billionaires Know

Billionaires may not have to worry about retirement 401 (k) s and IRAs, but the rest of us do. Now you can learn to invest like a billionaire by downloading our new FREE mini-course entitled "Essential Guide to Successful Gold & Silver Investing." This powerful course was designed to offer tips and expert advice appropriate for both the savvy investor and the beginner and could save you thousands of dollars in your own investing decisions. While you may not be able to live like a billionaire, at least today you can learn to invest like one.

Modern Family Cars for the Modern Family

As we progress through life we ​​go through different types of cars. It starts out with a fun sporty car for your younger years until, ever, you require a family car for your whole family. These are the best family cars for the modern family who still wants to be trendy.

Kia Soul

The Kia Soul is a large car that has sufficient space for a family. Not only is it large but it also is not difficult to drive because of its practical size. It has been engineered to be regularly sized on the outside but spacious on the inside.

Honda CR-V

The Honda CR-V is the typical SUV that works for any family. Road trips and travels became easy with this fantastic design. The Honda CR-V is compact, easy to drive and manoeuvre yet it has lots of space for your family.

Subaru Outback

The Subaru Outback is one of the latest SUV models that Subaru has released recently. The car is a cross between a wagon and an SUV. With extra space in the back your family will be comfortable. The rear seats are designed to support child seats too so that your little infant will experience comfort as well.

Toyota Highlander

Some families prefer to go on adventures in the mountains or camping by the rivers. It is important to have an off-road car that has sufficient space for your children in the back. The Toyota Highlander has been manufactured to have enough trunk space for luggage as well as leg room in the back seats.

Safety is an important factor when traveling with your children. Children may not understand the concept of safety and that's why it is important to have a safe traveling car that does not have faults. You should also make sure that you teach your children that wearing seatbelts are important when traveling to any destination.

Before considering any car you should always test drive it to make sure that you can handle its power. Checking the reputation of the vehicle manufacturer is also necessary when considering it for you and your family's travels and adventures.

It is also important that you always check the mechanisms of the car before you travel to any far destination. Make sure that you check that all the lights are working and that the brakes are functioning regularly without stickiness or pulsations. Also ensure that the wheel supplier has properly fitted, aligned and balanced the wheels on the car.