I was listening to the news this morning on the radio while I was getting ready and they had a quick story about a Realtor in our area.   When he sells a house he gives 25% of his commission to the local school where the house was sold.

That’s genius!!

Think about it.  First off, most deals that Realtors offer are to the seller, but right now finding houses to sell isn’t the problem, it’s finding people to buy them.  So offering deals to sellers isn’t going to help your business. As a Realtor in this market you need to find incentives for buyers to come to you over the hundreds of other Realtors in the area.  But what do you offer someone who is already getting your services for free?  Well, you offer something to their new community.  It’s fantastic.

If you have 5 Realtors to choose from and one is offering 25% of his commission to the school your children will be attending next year, which one would you choose?  The choice is pretty clear.  Plus the more school aged kids they have, the more they will value the offer.  The more kids they have, the bigger house they need.  Bigger houses are more expensive.  Expensive houses offer more commission.

So this Realtor not only offers something of additional value to people who already get his services for free, he also targets the buyers who will make him the most money.

Plus 25% of his commission is a significant amount of money, especially to a struggling school.  It gets him all kinds of attention (I mean, here I am blogging about it.) and goodwill from the communities.

I love it!

pic by: Hassan abdel-rahman

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Here are 10 things I’ve seen around my neighborhood that I believe are due to the state of the economy.  Please share anything that you have noticed in your life.

1. Front parking spaces at almost any retailer…

2. Except for Costco.  Costco is packed.

3. Improved customer service.

4. Brand new BMW parked in an empty lot with a hand written for sale sign.

5. More stray pets.

6. Foreclosure signs in my neighborhood.

7. No waiting for a table at the most popular steak house in town…

8. But the local pizza place is packed.

9. Dads at the park in the middle of the day…during the week.

10. Larger clearance sections in the store.

pic by: Jim Fenton

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What is a good birthday gift for someone who is laid off?

My brother in law is currently laid off and his birthday just passed.  Under normal circumstances we would have gotten him an actual gift for about $25 or so.  My husband had a gift picked out for him.  Something for his Playstation I believe, I’m really not sure.  Anyways, it just seemed so frivolous.  But at the same time I felt kinda bad giving him a gift card to the grocery store, or something equally practical.

On one hand we wanted to use this opportunity to help them out with something they actually need.  On the other hand, we know he won’t be buying anything for himself for a long time and it is his birthday.  I know I would have a hard time getting something for myself if I was worried about supporting my family. But everyone is different and maybe they are ok.  His wife works, and I certainly don’t know every detail of their financial situation.

We went back and forth a dozen times.  In the end, we got him a $50 gift card to someplace where he could either buy himself something, buy his family something, or both.  We spent twice as much as we would have normally but that way he can get what he wants and still put some towards groceries if he wants.  Or if they are really worried about bills then we helped out a little extra.  Or he can get himself something extra good for his birthday… which is fine too.

pic by: Manassas cakery

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I’m upside down in my van and I feel strongly that I deserve a bail out.  The government should forgive some of the principal of the loan.  Don’t think so?  Let me explain.

You see… I bought my 2007 Kia Sedona two years ago for $22,000.  I didn’t put a dime down.  In fact, I even financed the tax and license.  It’s true.  My husband and I walked into the dealership, signed some papers, and drove away in a brand spankin’ new minivan.  (and a loan for $24,000)

The problem is that right now we owe just under $17,000.  Which is totally not fair!  I just saw an ad for the 2009 version of our van for only $15,000!  I don’t think that’s right.  I shouldn’t have to keep making the payments on my van when I could buy a brand new van for $2,000 less than I currently owe.  It’s not fair!  I think the government should wipe $7,000 off the principal of my loan.

Isn’t it the right thing to do?  I mean, just because I agreed to pay $22,000 for my van doesn’t mean that I should have to actually pay that amount.  It’s the dealerships fault that I paid as much as I did.  They should have told me that the prices would drop this much.

It’s not fair!  If they are doing it for houses, they should do it for cars.

So I’m going to stop making the payments and wait for my piece of the bailout pie.

(For those who don’t know me… I’m totally kidding.)

Pic by: Matt McGee

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I know this chart is hard to read, but I felt I had to share it. I saw it about a week ago and haven’t been able to get it out of my mind.

The chart is an index of American housing prices going back to 1890.  It is based on sale prices of standard exisiting homes, not new construction.  It shows housing prices in today’s money.

The second shaded area is the Great Depression.  The fourth and fifth shaded areas are the booms during the 70’s and 80’s respectively.  The last shaded area is the current boom.  Wow.  Check that out!

The important thing to notice is that after each boom, or depression, the average standard house price returns to levels that have been consistent since the 1950s.  The dotted line is an estimation of future housing prices.  The last year listed on the bottom is 2013.  So according to the chart housing prices won’t reach bottom until about 2017.

Gulp!

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Today I have a guest post from Not the Jet Set.  I hope you enjoy it and I encourage you to see what else they have to offer.

About Not the Jet Set

He’s a spender, she’s a saver. Together, they’re Not the Jet Set.

Fed up with working too hard to not have any money, we made the decision to take control of our finances. We began a mission to get out of debt and stay out of debt - forever. On June 23rd of 2006, we completed Baby Step 2 by paying off over $42,000 in 20 months. During that time and ever since then, we’ve seen it as part of our calling to help others achieve what we have - financial peace.

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One of my classes this semester is an Accounting class.  Last night I was talking to the woman who sits next to me.  She works for a charter school in the area in their accounting department.  She said that they have 400 employees and yesterday they were all given a choice.  They could either agree to a 3% pay cut, or 25 people were going to get laid off.

OUCH.

She is going to agree to the pay cut.  One reason is that she is the low man on the totem pole in her department so she is pretty worried about getting laid off.  She also said that she wouldn’t feel right keeping it knowing that people got laid off so she could have that little bit extra in her check.  Hopefully everyone else feels the same way.

If the pay cut passes, the school promised no layoffs this school year.  But no promises about next year.

Hearing this story the woman who sits in front of us turned around and said she works for an Accountant.  She recently took a call from a woman who knew the bare minimum take home pay she could live on and wanted to know what the gross pay was that would give her that take home.   She is going to go to her boss and offer a pay reduction to try to save her job.  That’s gutsy… and sad.

It’s getting bad out there folks.  Have you, or anyone you know, done anything bold to try to save your job?

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My husband sent me this article the other day that says America’s debt has shrunk for the first time ever.

They said…

The government reported Thursday that household debt in the third quarter fell for the first time ever. Meanwhile, net worth dropped by the largest amount on record based on data going back to 1951.

Household debt fell by a seasonally adjusted $30 billion, or an annualized 0.8% in the third quarter to $13.91 trillion, according to the Federal Reserve’s flow of funds report.

They quote both the fact that interest rates have increased which has lead to less spending on credit and the fact that credit in general is harder to come by.  Another major factor is that so many people have lost their homes.  When the bank forecloses they take the debt onto their books, removing it from the homeowner.  This will show as less overall debt on consumers.

They go on to say…

“There has been a particularly steep rise in the savings rate recently,” said Englund. “With a large part of thriftiness due to panic, this trend could continue for a long time.”

“Consumers are going through a major change in their spending and savings habits,” said Lyle Gramley, a former Fed Governor. “Throughout the housing bubble, consumers had a savings rate of zero, relying on the rising price of their homes. Now they’re saving money for the future instead of spending it.”

I’m not entirely sure what to say.  When I hear that saving rates are up and debt is down it makes me happy.  But I know that these changes are what’s driving this horrible economy.  While my family has been negatively affected, I know that others have been hurt much worse than us.  But over the long term I think it will benefit our country if we keep up these trends.

An economy built on debt is not sustainable.  At some point the house of cards will come crashing down.  Is that what’s happening?  I have no idea.  But when the whole thing folds in on itself a stronger economy will emerge.  I’m willing to sacrifice my net worth, my retirement accounts, and my fancy things so that my children will have a strong economy.  It’s unfortunate that people who didn’t create this mess are going to be the ones picking up the tab.  But someone is going to have to pay for it, and if I have to choose between me or my kids.  I choose me.

pic by: The Jamoker

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Several times over the last few days I’ve heard on the news how the city is getting ready to lay people off.  The reporter always notes lower sales tax revenues and property taxes are the reasons for the city wide layoffs.  On the surface that seems reasonable.

But the whole thing rubs me the wrong way.  My first thought is “If the city can run on less, then why weren’t they doing this the whole time?“  I mean, you’ve all seen the scene on the side of the road.  Three guys standing around while one guy is working.  It shows me the government is no different than my neighbor.  Spending just because they can, no plan, no restraint, money burning a hole in their municipal pockets.  Except I get no secret pleasure when the city has to cut back, like I did when my neighbor put a for sale sign on his Hummer.

Secondly,  wouldn’t it be nice of while the private sector was booming the government was holding back.  If the government would lay people off while jobs were plentiful and growth was abounding it wouldn’t hurt so much.  Those people could easily find jobs.  Meanwhile the government could try to mitigate the private sector’s rapid growth.  Attempt to hold that pendulum from swinging too far. They could sit back and collect their nice big tax revenues and save (ha. ha.) for times like right now.

Then when that pendulum comes screaming back the other way and the private sector beings to struggle, the government could then inject all their savings into the economy.  They could call it a stimulus package if they wanted! They could be hiring right now, rather then laying people off.  They could be building roads, expanding programs, spending money, and creating jobs.  The government could be helping to fix the economy in a real and local way.

Take my neighborhood for example.  My house was built in 2004.  Literally a mile away they were also building a new freeway.  Now, it should have taken 3 months to build my house.  But it took 7 because labor and materials were so hard to come by.  We had to wait for concrete for the foundation, then we had to wait for framers to be available, and on and on.  If the government had restricted their building they wouldn’t be right in there competing for these precious resources.  They could let the private sector have the workers and materials.  Imagine if they were building that freeway right now.  Think of the jobs they could be providing, of the business they would be helping.

But instead the government is struggling right there with the rest of us.  It’s too bad.

pic by: Rick

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I found this interesting article that talks about what you should say to your kids about the economic crisis.  It can be an interesting time for parents.  While you are feeling pretty pessimistic about our economy, you don’t want to burden the kids with worries.  On the other hand you want to be honest.  So how do balance honesty and optimism?

While I do believe that you should never burden children with adult problems, kids are smart and perceptive little devils.  They often know more than we expect them to.  If your little ones are showing concerns about the economy then there are ways to ease those fears while still being honest.

Try not to say “We can’t afford that”.  Even in good economic times we should avoid those words.  They aren’t accurate for most scenarios, especially ones that your kids will be involved in.  A more truthful way to say it is “We choose to spend our money on other things”.   Not only is that true, it also conveys the point that choices have consequences, and that we have control over our situation.  If the child pushes you can explain that buying a new car means that you wouldn’t have enough money left over to pay the electric bill.  And what fun is having a new car in the drive way if you don’t have power.

I was at a store one time and there was a candy machine.  A little kid wanted a quarter to put into the machine and the dad said, “No, we can’t affor… We don’t spend our money on things like that.”  I had to smile.  I wanted to go over and commend him, but I thought that would be weird.

Have them help with frugality.  Kids love to be involved.  Tell them you want to plan a family fun night but that you don’t wan to spend any money.  I bet the kids can come up with a half dozen things to do.  I know my daughter can.  We would be dressed up in fancy clothes having a tea party in the backyard, complete with home made cookies.  This is a great time to let them see that you don’t have to spend money to have fun.  Plus, it lets them feel in control of the situation.  They dont’ have to sit back and hope for the best, they can be involved in getting the family through this tough time.

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