Money Quote Friday – Character, Conduct, and Capacity Edition.

Between persons of equal income there is no social distinction except the distinction of merit. Money is nothing: character, conduct, and capacity are everything. There would be great people and ordinary people and little people, but the great would always be those who had done great things, and never the idiots whose mothers had spoiled them and whose fathers had left them a hundred thousand a year; and the little would be persons of small minds and mean characters, and not poor persons who had never had a chance. That is why idiots are always in favor of inequality of income (their only chance of eminence), and the really great in favor of equality.“ – George Bernard Shaw

I could not agree more, George. Making money truly means nothing to me after I have enough to be comfortable; it’s what else I do with my life that matters. Have a great weekend everyone.


Why I Am Not Claiming My Donation To The Haiti Relief Effort.

President Obama recently signed into law a bill that allows you to claim any donations you may have made to the Haiti relief effort on your tax return for last year (2009) or the current year (2010). If you donated any money between January 11th – March 1st, 2010, you can claim it on your return for either 2009 or 2010, whichever you want. Personally, I won’t be taking the deduction at all because I don’t feel it is right to give money to those less needy – and then take a write-off for it. I have the money to give, so I should give it without strings. I have always felt this way and have always donated money with the same intentions. My donations of “goods” to the Salvation Army or Goodwill are claimed, but any cash money donated is never claimed. Am I being foolish? Maybe. But it feels better to me to give the money without wanting any of it back, so I don’t ever claim it. I gave an entire day’s earnings from my sites to the relief effort and I don’t want any of it back from my own government; those people have nothing and I have a lot, in the grand scheme.


Do you claim your donations on your tax return? Like I said, I claim “goods” but I don’t claim cash money. I don’t give a lot of cash money to charities throughout the year, so when I do I don’t feel comfortable asking for some of it back when I have so much and they have so little. But most people do claim the donations, including most of my good friends. So maybe I am the weird one out!


Getting Financially On Track And A Book Giveaway.

The following is a guest post from Manisha Thakor, MBA, CF. Manisha and Sharon Kedar, MBA, CFA, are the authors of the book Get Financially Naked: How To Talk Money With Your Honey. Lucky for you guys, the publisher is sending me a copy to give away to a reader, so don’t miss how to enter at the bottom of this post!

Now that we are in the beginning of the New Year, it’s the perfect time to poke your head up and ask, “Am I on Financial Track?” Here are some rough rules of thumb that you can use to benchmark your progress as you move through life’s decades.

IN YOUR 20s: Your key challenge is to learn to live within your means. Steps to take include: Avoid credit card debt like the plague. Make at least the minimum monthly payments on your student loans, on time, every month. Build a starter emergency fund of at least $2,000, and start contributing your employer 401k/403b.

IN YOUR 30s: Your key challenge is to build a solid financial foundation. Save for a home down payment ““ but don’t bite off more house than you can chew. Build that emergency fund up to at least 3 and ideally 6 months of living expenses. If you have children make sure you have term life insurance equal to 10x to 15x your income and a Will naming a guardian.


IN YOUR 40s: Your key challenge, as you enter into your peak earning years, is to avoid lifestyle creep. If you have not been saving at least 10% of your gross income in your 20s & 30s for your retirement, it’s time to kick it into high gear by committing to save at least 15%. If you have kids and want to help them pay for college, it’s time to open a 529 plan account (if you haven’t already). Resist the urge to splurge, these are your peak earning years”¦ and they should also be your peak saving years.

IN YOUR 50s: Your key challenge is to resist the temptation to make up for lost time by swinging for the financial fences. Check your asset allocation in your retirement plan ““ this is the time to start easing up on stocks. “100 minus your age” is good rule of thumb for the maximum percentage of your portfolio to have in stocks at this stage if you are a man. “110 minus your age” is a good rule of thumb if you are woman. Consider long-term care insurance. Make sure your Will & related documents (medical & durable power of attorney) are updated for any life changes since original creation.

IN YOUR 60s & 70s: Your key challenge is to not over-nibble on your nest egg. Think long and hard about spending more than 4% of your savings annually once you are in retirement. If you have not amassed your desired savings nest egg, it’s time to think about working longer or part-time. Talk to your children about your estate planning wishes.

IN YOUR 80s & beyond: Enjoy, you’ve earned it! (and share that hard-won wisdom, it would be an honor to learn from you.)

So, you would like to read this book, would ya? OK then – let’s give away a copy! Here are the rules for entry:

To enter, please leave a comment (with a valid email address, so we can contact you) as to why you would like to win the book
Only one entry per person. Period. Please don’t try to use different email addresses, etc, as the IP numbers will be checked.
Entries must be from residents from the U.S.
1 winners will be chosen at random from all eligible entries received
Book will be shipped via Media Mail via the USPS
– Giveaway closes on Friday January 29th at 7am MST and any entries received after that time will be voided.

Good luck to everyone, and thanks to the publisher for giving away a copy for you guys!


Which Stores Are Closing Down In 2010.

I just found out that the Borders Bookstore in my neighborhood is going out of business. It kinda sucks because it is the only bookstore within a very close distance and I thoroughly enjoy spending time in there looking for new books to pick up. Of course, this is after the Circuit City left a vacant building here too and the shoe store has a “Going out of Business” sign on its front door, so it’s really not all that surprising. But it got me thinking about what kind of situation a store must be in to actually close it’s doors, which in turn led me to an article online about who was closing stores in 2010. Wow, what an eye-opener…

Borders Books – closing an estimated 200 stores during the three months ending January 31.

Blockbuster – could be closing another 600+ stores this year in addition to the 300 they closed in 2009.

Jones Apparel Group – will be closing 196 stores in 2010.

Starbucks – interested in closing 250 stores this year in addition to the 566 last year. (Then again, this isn’t a bad thing – we don’t need a Starbucks on every single corner in America)

The list also has information on previous closings and their outlook for the future, which was pretty interesting. Seems stores have to be in really good shape, both financially and by location, in order to survive this economy. What are you seeing in your area? Are stores doing just fine, or are they starting to be hit hard?


Poor Debt Management By UK Soccer Clubs.

The following is a guest post by My Two Dollars reader James Watson.

Football in the UK (or “soccer” as the residents of the US know it!) has always been a lucrative business, and no more so than since 1992 with the introduction of the Premier League and the partnership with Sky TV. Since then there have been unimaginable riches in football, and it looked like there would be no boundaries to the amount of money flying around the league.

Fast forward to 2010 however and things are not looking so prosperous. Many of the top clubs are saddled with lots of debt, and while currently they can sustain it, their debt management plans and business models are linked to what happens on the field. This means that any dip in certain club’s success could essentially bankrupt them, and as we know football is not a game one can predict.

We are now looking at the prospect of Portsmouth, a Premier League club, going under due to their mounting debts. They are unable to pay the wages of the players and they have to sell players to pay off their debts. It still may not be enough however as they are up in the High Court on 10th February, and if they have not sorted their debt problems by then there is a very good chance that they will be wound up and cease to exist. The club think they can stop this happening and it is likely that someone, somewhere will intervene to save them, but this would only be a temporary solution to the problem. It used to be that administration and bankruptcy was something that happened to the smaller lower league clubs, but once Premier League teams start to end up in this position you know that something is wrong. Their problems came when a rich foreign investor turned out not to be quite so rich, and this does not bode well for the many other clubs with similar rich and powerful investors ““ things go wrong in the business world and football clubs will then seem less important to these businessmen, and the clubs can be dropped like an old toy.


Even Manchester United, arguably the biggest team in the world, have an estimated £700 million worth of debt ““ something that certainly puts your credit card bill into perspective, right? Liverpool football club are in a similar position to Manchester United yet both of these clubs turn over many millions each year. However due to the poor policies and debt management of the owners, they are both just one bad season away from some potentially massive problems. Two years ago teams like United, Liverpool and Portsmouth were splashing out up to £30 million on signing single players, but have had to cut back now. Rumours around Manchester United’s financial concerns were furthered last year when they sold their star player, Cristiano Ronaldo, for £80 million, yet did not invest any of that fee back into the team!

The big teams like United and Liverpool qualify for the lucrative Champions League every season, and this is essentially what a large part of their business models rely on. If they don’t qualify they will lose a big chunk of their revenue, and probably be forced into selling players.

If this happens, we could be heading for a big change, one where money does not necessarily rule the way and where well run clubs with good managers may once again be able to reap the rewards without having to get a billionaire in to invest.

It goes to show, though…. poor debt management is rife at even the highest financial levels. Perhaps some of these club owners could benefit from classroom money management lessons!

Photo from Shutterstock

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