Maggie Ellis

Get Paid to Look at Porn – Strange Ways to Make Money

September 1, 2010 By Maggie Ellis 29 Comments

If you’ve ever wanted to be paid for the time you spend surfing the Internet for porn, I’ve got good news for you. It is possible to get paid to look at porn on the Internet. We all know that the Internet is a big place and that it is difficult to police. User generated content sites that don’t want any pornography on them such as YouTube, Facebook, PhotoBucket, and others have a hard time keeping offensive content off their sties. Other problems crop up when content that is deemed illegal in certain jurisdictions is posted on the Internet.

Computer filters can only catch so much and sometimes they filter legitimate content. There is no substitute for the human eye when it comes to determining what is acceptable or legal content. As a result, there are companies and organizations that will pay people to surf for porn. If you want to get paid to look for porn, here are some places that might hire you.

Law enforcement: Local, state and federal law enforcement organizations are always on the lookout for pornography and other offensive content. Despite freedom of speech rights, there are still some things that are illegal, particularly if it involves children or coerced behavior. You could get paid to search for questionable content and hunt down criminals.

Work for a software security firm: Someone has to make up those lists of banned sites that filtering programs use. While many sites are already in the databases, new sites crop up every day. These companies hire people to look for sites that need to be added to the list.

Work at a user-generated content site like YouTube or MySpace: Individual sites hire people to review uploaded content and check for acceptability. You’ll not only look for porn, but any other content that the site does not want posted such as drug use, gang activity, or hate speech.

Work at a firm that is used by the big sites on an outsource basis: Not all sites hire their own content reviewers. Some outsource the work to content review companies. Crowd Flower and Cloud Crowd are examples of companies that handle this outsourced work. If you work for one of these companies, you may be called upon to review content on several different sites. They also handle other outsourced work, so you might not surf for porn all the time.

Find postings on sites like Craigslist, Mechanical Turk, Live Work, etc: Sometimes the big content review companies even outsource their work to individuals. You can find postings on various Internet contract employment sites. Some smaller websites also use these contract work sites to find people to help police their content.

You won’t make much money looking for porn. Most content reviewers make between $8 – $12 per hour. Individual tasks may pay much less. There is also another downside to this type of work. No matter how much you might want to look at porn, chances are you will eventually run across something that you find horribly offensive or disturbing. Even the most jaded people eventually run across something that disturbs them greatly. Many of the content review companies keep therapists on staff or on call to help people deal with things they may see. Just like working in an ice cream parlor makes you hate ice cream, surfing for porn for a living can take all the fun out of looking at porn. However, if you’ve always dreamed of getting paid to look at porn, this type of work might be for you.

Dave Ramsey Financial Peace University Review: The Final Analysis

May 20, 2010 By Maggie Ellis 9 Comments

After thirteen weeks, Financial Peace University has come to an end. So, was it worth it? Was it something that I would recommend to someone in financial trouble? The answer isn’t a simple yes or no. There were many things about the class that I enjoyed, but there were many things that left me shaking my head, too. The easiest conclusion is that Dave is great for some people, but others would be better off following a different program. While I went over the specifics of each lesson in earlier posts, I wanted to take this last opportunity to discuss the overall value and worth of the class.

Is Dave Ramsay’s Financial Peace University Worth the Price?

First, let me address the price of the program. You don’t have to pay the $100 for the class to learn the same material. All of what Dave teaches can be learned for free. If you want to follow Dave, you can buy or borrow his books and do the program on your own. The concepts he teaches are very basic and are commonly available in many other books and on many websites. There are also independent websites devoted to following Dave’s programs. If you are self motivated, you will have no trouble learning his information at your own pace without paying for the class.

That said, $100 isn’t a bad price for the program. You get thirteen weeks of lessons, many materials (although there was nothing special about the website and certainly nothing I would continue to pay for once the class ended), and a fairly entertaining evening. If you have a great small group, you can also make some new friends. It’s far cheaper entertainment than going to the movies every week. I came to regard the Monday night classes as a chance to spend the evening with my spouse and socializing with some other interesting adults. I would say that if you are really strapped for cash you should try to learn the material on your own. Use the $100 to pay a bill or build an
emergency fund. However, if you have the money to spare and think you would enjoy the class, there’s certainly no harm in taking it and you might find it fun.

Financial Peace University Too Religious for Some

If you do decide to take the class, you need to think about whether the religious aspects of it will bother you. It is a Christian based program with scripture worked into the lessons and discussions of things like tithing and prayer. Tithing comes up again and again and is the most prevalent religious topic. However, there’s no overt attempt to convert you or force you into a Christ-centered life. It’s pretty mild as religious programs go. However, what happens in your small group may be different. You may get a small group that really delves into religion. Mine only touched on it briefly, but each group/class/church is different. If this sort of thing will bother you, you should find another program. If you’re able to enjoy those topics or ignore them, then you won’t have a problem. Just be aware that religion is a component of the program and decide accordingly.

Financial Peace University Best for Money Newbies

The class itself is a basic introduction to financial concepts. If you’ve never worked with money before you’ll probably find much of the material valuable. The lessons don’t go into anything very deeply, though. Much of it is in the category of a “quick overview.” However, it may inspire you to look for more information and learn more on your own. If you already know how to budget, are familiar with retirement vehicles, insurance, and property sales, much of this will be repetitive and you might be better off looking for a more advanced program.

Dave can be a good starting point for learning, but you need to be willing to look for additional information. Dave just can’t provide enough information (even in thirteen weeks) to teach you everything there is to know about personal finance. If you do the class and assume you’re set for life, you’re going to fall behind again. The early lessons about getting out of debt and budgeting are pretty comprehensive, but when the class gets to the bigger topics like insurance, investing, retirement, and property the lessons become more superficial. Once you’ve done the class you still need to learn a lot more about insurance, investing, and retirement savings if you really want to have a secure financial future.

Class Quality Depends Your Motivation and Your Group

If you’re familiar with financial concepts but not good at implementing them, the class can be motivating. You may know the material, but Dave may provide you with a kick in the pants to get on the right track. Dave is good at firing people up and making them want to get their financial house in order. Taking the class does make you more accountable than doing it on your own. You’re expected to contribute to the group discussions and to do the homework. Just the act of showing up each week may make you more accountable and therefore more successful.

Which brings me to the next point: To get the most out of the class you need to participate. If you’re not willing to do the homework or speak up in small group, you might as well go it alone. You won’t get anything out of it if you don’t do the work. Filling out the worksheets and getting to know your financial status is the whole point. If you don’t do that, you’ll be amused by the class but very little about your situation will change. In the busiest weeks the homework took a couple of hours. If you can’t commit to that, don’t waste the money on the class.

Finally (and this is the one thing you can’t really know about beforehand), a good small group makes all the difference. If you’re fortunate enough to get into a group with great leaders who can really direct a discussion and great participants who want to share, that can be worth the price of admission on its own. Those people can be great sources of support and information and may even become long time friends. The group can hold you accountable and push you to a level of success you might not reach if you did the program on your own. On the other hand, if you get a dud of a group with poor leaders and people who won’t talk, it can make for long nights. You can’t control how great your group is but if you get stuck in a bad group, ask your class coordinator if you can switch.

Final Thoughts

Dave, just like any other financial guru, isn’t for everyone. If you think you might want to take the class but aren’t sure, see if you can find someone who is currently taking it. During the program there were nights that we were allowed to bring guests so you might want to try that and see how you like it. You might also want to read his books first and see if the material interests you. If you don’t like his books, you won’t like the class. In the final analysis I found it to be a good, but not great, program that hits the high points of finance. It can be motivating for some, irritating for others. Some people find it helpful, others find it boring. I hope that over the last fourteen weeks I’ve given you the information you need to decide whether nor not the class would work for you.

Finally, if you aren’t interested in attending the course yourself, consider getting the Dave Ramsey Financial Peace University DVD Home Study Kit (9 Week Course) 2012 Release. It retails for between $185.00 and $199.00 on Amazon.com.

This is the final column in a series of posts about what you will find in Dave Ramsey’s Financial Peace University course. You can find the previous posts here: week one — week two — week three — week four — week five — week six — week seven — week eight — week nine — week ten — week eleven — week twelve — week thirteen

Dave Ramsey Financial Peace University Review: Week 13

May 13, 2010 By Maggie Ellis 6 Comments

This final lesson was about Baby Step 7, Build Wealth and Give. Everything has been leading up to this. We’ve been taught how to get out of debt, save money, and invest so that we can build wealth, not only for ourselves but so that we can give some away. I’ve mentioned the religious nature of the class before and be forewarned: If discussions of theology, scripture, and doctrine make you nervous, this is not the lesson for you. Dave teaches this lesson from the Christian perspective of giving, which means tithes and offerings to the church. While he does mention some non-Christian giving anecdotes, the majority of the lesson is about scripturally-based giving. If this offends or bothers you, skip the last lesson.

The idea behind this final lesson is that, even if you do everything Dave has taught up until now, you will never have true financial peace unless you understand the value of giving. When you build significant wealth, there’s only so much you can do with money. You only need so many cars, or houses; only so many pairs of shoes or TV’s. Stuff reaches a point where it isn’t enough anymore and you have to find fulfillment in other ways. The most significant of those is to give to others.

Many people mistakenly believe that the only way to have more is to hold onto your money tightly. This is what Dave calls the Great Misunderstanding. However, Dave contends that relaxing that grip and giving your money freely is the way to bring true abundance into your life. Your blessings may not always take the form of money, but you will be blessed in other ways, including with personal joy and happiness.

The lesson delves deeply into the scripture and doctrine of tithing from here on and I won’t get too deeply into that. Everyone has their own opinion about tithing. Suffice it to say that Dave comes at it from an evangelical Christian point of view. His basic contention is that we are only stewards of the Lord’s money, so it’s not ours in the first place. We need to give it away to fulfill God’s plans for us and to make us into more mature Christians. (You can separate the Christian teaching from some of this and take Dave’s points that giving simply makes you less selfish, more fulfilled, and more likely to “win” at life and money.) Dave makes the point that we can argue over theology and doctrine all we want, but basically you can’t be a “winner” in life unless you give to something bigger than yourself.

If tithing isn’t your thing or you don’t have a church to support then giving to any organization or person you feel is worthy will achieve the same result. If you’re inclined to give according to the Christian tradition then that’s great. But if you’re not, it’s still important to give. Giving makes you feel better and it is a great thing to do. Personally, I believe that giving makes me a better person and that it does reflect back in my own life. I think people are wired to help others and that doing so makes you appreciate your own life so much more. It doesn’t matter whether you choose to give to churches, homeless shelters, environmental groups, or children’s charities. Whatever moves you is what you should give to. And you should do it with an open heart and without the expectation of a return.

At the conclusion of this lesson Dave talks about the four areas of your life that need to be working well and in harmony if you want to win with money and in life.

The physical: Take care of your body because it’s the only one you’re going to get. Without a healthy body, your options are limited.

The mental: Dave argues that you need to take care of your mind so that you are able to make good, informed decisions. He notes that the average millionaire reads one non-fiction book per month. If you want to succeed, you need to read.

The emotional: Dave wants us to “unpack our baggage.” If you have issues that you need to deal with, do so. If you need to talk to a counselor, do it. Don’t go through life burdened by emotional junk.

The spiritual: Dave believes that this means having a relationship with Jesus Christ but if this doesn’t work for you, then get in touch with whatever spiritual being/entity that’s bigger than you that you choose. Nurture the spiritual side of yourself.

He then urges us to get involved by helping others. Give of your money, your time and your knowledge to make the world a better place.

The highlight of small group this week was a little “graduation” party. Since this was the last class, it was a chance to say goodbye to our classmates over some cake and soda. We talked a little bit about the lesson (we all agreed that we need to give more, if not to the church than to something) but mostly we talked about the class overall. Our group leader asked us what was the most important less we learned in FPU. The answers included how to save money, how important it is to take care of your estate, how to find a better job, that retirement is coming sooner than we think, and that debt is neither necessary or a great idea. All stuff that you would expect to hear. However, one man said that the most important thing he learned was how to use the Internet. It sounds silly, but this is an older gentleman who never had much use for computers. He said that taking this class forced him to learn how to get online. At first he wanted to get on just so he could use the online tools at Dave’s site. But once he got online, he discovered the ease of managing his bills and accounts online and the money saving things we talked about so often like coupons, codes for online retailers, online savings accounts that pay more interest and on and on. He got a copy of Quicken, too, so he could track his spending and accounts better. He said that in each class he wrote down websites and ideas he encountered in small group and went home and looked them up. He discovered all of the money saving things on the Internet that I and many others take for granted for the first time because of this class. In that sense the class opened up a whole new world for him.

Personally, the biggest lesson I learned was how money management is not the slam dunk for many people that I sometimes believe it is (or should be). Because I spend my days dealing with this stuff, it often seems to me like everyone should know it. It’s like someone who can speak four languages just taking for granted that everyone can understand them no matter which language they use. However, this class reminded me that money management has to be learned and that many people never had the opportunity to learn it, or if they did it didn’t “stick.” Weeks of watching people gasp in revelation at ideas like couponing, compound interest, and the need to save for an emergency showed me that it’s just not simple for many. The things that I think are basic are advanced to many people. I think this class will make me more tolerant and sensitive toward others when it comes to teaching money concepts.

Many people shared stories of how their life and outlook has changed since starting this class. We have three people who are now debt free with the exception of their mortgage, and we have a few more who are almost there. We have some who have a couple of thousand dollars in the bank for the first time ever. There are a few who are more aggressively saving for retirement, or beefing up emergency funds that were small when class started.

There are a few, too, who I don’t think got too much out of the class. The family with the motorcycle and all the other toys still have them and have no plans to get rid of them. They’re trying to pay off the debts, but without much enthusiasm. It means sacrifice and hard work and they just aren’t ready to make that leap yet. Maybe someday. There is another couple who never participated and never did the homework who pronounced the class pretty useless on the last day. The wife basically said that they just didn’t think it was that important at this time to take care of their finances because they had so much else going on. Dave was interesting, she said, but ultimately not for them. That’s okay. Some things resonate with some and not all; maybe they’ll find their way to financial security some other way. However, I was happy to see that most of my fellow group members got something out of the class and, in many cases, that something was life changing. I wish them well.

Homework roundup: None! We’re finished! However, next week I will have one final entry in this series where I take a look at the overall value of the class, the pros and cons, and how, if you choose to take it, you can get the most benefit out of it.

Lastly, if you aren’t interested in attending the class yourself, consider getting a copy of the Dave Ramsey Financial Peace University DVD Home Study Kit (9 Week Course) 2012 Release. It sells for between $185.00 and $200.00 on Amazon.com.

Next: Dave Ramsey Financial Peace University Review: Final Analysis

This is a series of posts about what you will find in Dave Ramsey’s Financial Peace University course. You can find the previous posts here: week one — week two — week three — week four — week five — week six — week seven — week eight — week nine — week ten — week eleven — week twelve

Dave Ramsey Financial Peace University Review: Week 12

May 6, 2010 By Maggie Ellis 1 Comment

This week we tackled Baby Step 6: Pay Off Your Home Early. Or I should say that was what the lesson was supposed to be about. Instead we got the most boring lesson of the bunch, and one of the longest. I was looking forward to some creative and sound ideas for paying off a mortgage early but what I got was a laundry list of things to do when buying and selling a home. Almost nothing in this lesson had to do with paying off a loan early. The only thing mentioned was that you can make your mortgage payments bi-weekly (but never pay a fee to the bank for the service because you can do it yourself), which will add up to one extra payment per year, allowing you to pay off the balance sooner.

I understand that this list of do’s and don’ts could be valuable information for someone who has never bought or sold property before. But it was like Dave was trying to cram so much into this one lesson that he had to read it like a list. There was very little humor and very few of his amusing anecdotes here. This was strictly a listing of do’s and don’ts that can be found in any book or on any website about real estate basics. (If this recap reads like a list, I apologize. But there’s just not else much to do with this material.) I don’t think I was the only bored person there. I noticed quite a few people get up and leave during the video, something that I’ve seen very little of in previous lessons. So be warned: If you already know a little a bit about buying and selling a home, this might be the one lesson you want to skip.

Dave begins by discussing what to do when you want to sell a home. He advises you to think like a retailer and spruce it up. Make it as perfect as you can by fixing things, cleaning up, sprucing up the yard, and painting. You’ll get more money from a house that looks good than one that looks like it’s been abused. He also urges you to make certain your home is listed on the Internet, since 77% of buyers now do research on the Internet. You should also get a good realtor who has a lot of experience. A good realtor can bring in far more for your home than you can get on your own, thus offsetting their commission.

Dave then switches to buying a home. Owning a home is a good idea, he says, for three reasons. First, it’s a forced savings plan. Second, it’s an inflation hedge. And, third, it grows virtually tax-free since you pay zero tax on much or all of your gain as long as you hold the home for two years. When buying you should get title insurance and a land survey to protect you from disputes. Also get the home inspected to protect you from unpleasant surprises. Always buy with an eye toward the day you will sell. You should buy at the bottom of your desired neighborhood’s price range because you will have an easier time selling the less expensive house. Get a great location, with a view if possible since houses in good locations and with great views sell for more than those in less desirable locations. Never buy trailers, mobile homes, or timeshares since these are all depreciating assets.

Next it’s on to a list of mortgage do’s and don’ts. Dave argues that you shouldn’t take out a mortgage at all and instead pay cash. If that’s just not realistic, you can take out a 15-year, fixed mortgage with at least 10% down and pay it off early. But you should never buy a home until you are debt free and have a fully funded (3-6 months of expenses) emergency fund. Saving for a down payment becomes, in essence, Baby Step 3b. After you’ve saved your full emergency fund, but before you start saving for retirement, you should save for your down payment. Dave points out that there’s nothing wrong with renting while you save up and get your financial house in order.

When you’re ready for the mortgage, never take out an ARM, interest only, or reverse mortgage. They are all bad ideas. You don’t want a rate that will adjust or a mortgage where you never pay any principal. Get a conventional mortgage if at all possible. FHA and VA loans are available if you can’t get a conventional loan, but they are likely to be more expensive and carry more fees than a conventional loan.

However you go about financing your home, don’t let it become a financial nightmare. Your payment should be no more than 25% of your take home pay. Buy only when you’ve saved up a good down payment, have a fully funded emergency fund, and you have no other debt. Don’t buy just because everyone else is, or because your financial advisor is telling you that you need to own a home, or because there are tax incentives available.

I know many people don’t listen to Dave’s advice and I’m not certain I’d take it to the extreme of saying you have to have all your debt paid off before you buy. If that were the case, people with student loans might not own a home until they are 40 or older. If you’re making a good salary you can carry some debt and own a home, as long as the debt is not overwhelming or detrimental to the mortgage payment. I do agree that too many people rush into home ownership and don’t do their homework. They get into payments that are too big and too much given all their other obligations. Or they get sucked into a bad mortgage that comes back and bites them later. Maybe you don’t have to follow Dave’s advice exactly, but you do have to take the time to do research and educate yourself so you don’t get in over your head. A home is likely the biggest purchase you’ll ever make. It deserves careful thought and number crunching.

Homework roundup: Now that we’re nearing the end, there is very little work left to do. We only had to complete the last part of our Financial Snapshot which we’ve done every three weeks. The only change on mine over the last time is that I’ve gained about $4,000 more in savings. That means that during the thirteen weeks of this class my grand total added to savings was about $9,000. Granted, some of that was from tax refunds and some was from some unexpected freelance work, but it’s pretty good. I would have saved a good portion of that anyway since I use automated payroll deductions, but while in the class I was much more conscientious about funneling extra money to the savings to see how fast it would add up.

Our other homework assignment is to plan a graduation party for next week. We’ll see what my group comes up with…

Lastly, if you can’t attend the class yourself, think about buying the Dave Ramsey Financial Peace University DVD Home Study Kit (9 Week Course) 2012 Release. It retails for between $185.00 and $200.00 on Amazon and allows you to learn at your own pace.

Next: Dave Ramsey Financial Peace University Review: Week Thirteen

Dave Ramsey Financial Peace University Review: Week 11

April 29, 2010 By Maggie Ellis 3 Comments

All of our other lessons up to this point have focused on saving money and paying off debt. But this week’s lesson was about making money. It makes sense. You need to make good money to pay off debt, build wealth, and plan for a secure financial future. That doesn’t have to mean hundreds of thousands of dollars per year, but you do need to make a wage that allows you to pay your bills and put some extra away.

While you could chase the “hot” careers and the “good” money, Dave advocates a different approach: Find work you love and that suits your personality. You may not make a fortune, but people who are happy with their work tend to make more money over time because they are committed to the job and are willing to work harder at it than someone who doesn’t care. Plus, you don’t want to spend forty years of your life completely miserable. Dave’s career coach of choice, Dan Miller, says that money alone will never be enough compensation for doing a job. You have to be happy, too. Those who work in their strengths and according to their tendencies, values, likes and dislikes have a better chance of finding fulfillment in their work and succeeding than those who fight their own personality everyday at work.

To that end, Dave recommends finding work that suits your personality style using the DISC profile. DISC stands for four different personality types:

D = Dominant: This person is bold and aggressive. They like to be the leader and in charge. They are task oriented and approach situations as problems that need to be solved.

I = Influencer: Dave calls these people the party looking for a place to happen. They are fun, people oriented, people-pleasers. They’re outgoing, impulsive, entertaining, and can lose focus.

S = Stable: These people are steady, loyal, calm, slow to act, concerned about pace, and tend to avoid conflict.

C = Complaint: These people love procedure and clearly defined steps. They are analytical, detail oriented, factual, rigid, serious, resistant to change, and logical.

Once you identify the type of personality you are, you need to seek out work that allows your personality type to shine through. You don’t want to be an Influencer stuck in an accounting job better suited for a Compliant person, for example. Similarly, you want to try to find an organization with people who are like you. While some differences are to be expected, if you are the only Stable person in a company full of Dominant people, you’re likely to get eaten for lunch. There are other types of personality assessments out there, so if you don’t feel like the DISC works for you, look into some others. The point is to know who you are and what you like in order to find out what you should be doing with your life.

After the DISC discussion, Dave spends some time talking about the basics of resumes, job hunting, and interviewing. He didn’t offer anything that hasn’t been written in hundreds of career guides over the years. Get yourself a copy of “What Color Is Your Parachute,” by Richard Nelson Bolles and you’ll have the same information and a lot more.

The lesson ended with a look at overtime and extra work. Dave points out that raising your income over the long term requires a good career track. Find meaningful work, get and keep good jobs, educate yourself, and build a long term career. However, if you just need to raise your income in the short term (to pay off debt), you’ll probably need a part time job or to work a lot of overtime hours at your current job. It’s probably not going to be much fun, either, but you have to make the sacrifice to win. It can help if you have a detailed plan so you can see that this cruddy job has an end date. Know how much you need to make and when it’s done, move on. You also have the option to start a home based business venture to make extra money. If you’re lucky, it might become your full time job. The point is to make enough money, pay off debt, and invest wisely so that you can quit the part time job and eventually get to a place where you don’t have to work so hard. Dave says that if you do his plan correctly, you should eventually reach a point where you only have to work when you want to.

In small group many people expressed dissatisfaction with their current occupations. Most don’t actively hate their jobs, but feel like there’s something better or more satisfying out there. Only two of the people in class have any real plan for dealing with that dissatisfaction, though. One is currently working retail (which he hates) while he pursues his Master’s in Library Science. Once he graduates, his dream job is to work in a university library. The other is currently working as a bank teller while she tries to launch a home-based cake decorating business. Both of these people are on their way to creating more meaningful work for themselves because they know what they want and are actively working to get it.

We talked about what type of work we would do if money were no object. A couple of people mentioned ideas like craft-type businesses or woodworking, and another mentioned gardening. These are the hobbies that they pursue and would love to do as a “real job,” but can’t figure out how to make them pay the bills. We talked about how part of the reason for becoming debt free is so that you can do the work you love, even if it pays less. When you have to pay a mountain of bills, you have to take a job that you might not love just to bring in money. But when your bills are few, you have a lot more freedom to do work you love and work on your own schedule. You don’t need as much money to live, so if the job doesn’t pay much you can still do it.

We also talked about trying to find work now that will prepare you for the dream job in the future. We brainstormed with the guy who wanted to do woodworking to try to find ways for him to start preparing for that now. He could do the woodworking as a side business for now. He could take a job at a place that makes furniture or cabinetry. He could go work at Home Depot in the lumber, contractor, or cabinetry departments. He could teach woodworking classes at the local community college. He could even go work in forestry to get a better sense of the types of wood available and the process of turning trees into workable wood products. Even a simple office job for another small business would expose him to the intricacies and legalities of running a small business. There are lots of ways he could be preparing to strike out on his own, and it’s the same for everyone else. Even if you can’t do your chosen job right now, you can find other types of work that prepare you for what you want to do. You just have to brainstorm and think about the skills you need to learn and how to get them.

Homework roundup: This week we had to do two things. First, we had to look at the DISC plan in the workbook to see if our current occupation fits our personality style. I think I’m a “C” type, or Compliant. I’m analytical, love detail, am logical and factual, and can seem rigid, serious and resistant to change; all hallmarks of the “C.” Not a flattering picture, but writing is well suited to my personality type. It’s the sort of job that requires a detail orientation and a love of facts. It also doesn’t offer a lot of drama or excitement, which is good for someone who doesn’t like change. I’m also not the most social person and writing is a pretty solitary activity. I’d say I’ve chosen my occupation well.

The second thing we had to do was to lay out a three year plan where we identify where we want to be professionally three years from now and then plan the steps needed to get there. Three years from now I’d like to be doing what I’m currently doing, although I’d like to be a novelist by then, too. The steps to get there are: 1) Finally finish the novel(s) that are rattling around in pieces on my hard drive, 2) Polish them to perfection, 3) Send them to agents and publishers and try to get them published. I could also take some courses in novel writing. My plan is pretty simple, but I’m lucky to be happy doing what I’m already doing. The novelist thing would be a nice add-on, but I really like where I am professionally. I could have really used this class about eight years ago, though. Then I would have had a much different plan because I hated where I was back then. A plan would have helped greatly at the time. As it was, I just sort of stumbled around until I hit on what I was meant to be doing. A plan would have helped and I can see the value in doing this exercise, particularly if you’re unhappy with your current occupation.

Finally, if you don’t have time to go to the course, consider buying the Dave Ramsey Financial Peace University DVD Home Study Kit (9 Week Course) 2012 Release. It sells for under $200.00 on Amazon, which is a pretty good deal considering how comprehensive it is.

Next: Dave Ramsey Financial Peace University Review: Week Twelve

Dave Ramsey Financial Peace University Review: Week 10

April 22, 2010 By Maggie Ellis 2 Comments

This week we moved on to Baby Steps Four and Five, which are saving for retirement and saving for your kids’ college education. Baby step four was on deck first, which is to save 15% of your household income in tax-advantaged plans. Dave points out that, at the time this class was filmed, 53% of all workers had less than $25,000 in retirement vehicles. Further, when asked how they plan for retirement, 44% said that they guess at the amount they’ll need and the investment products to use. Those are some scary numbers. Most people figure retirement’s too far away or they’re too busy living for today that they “forget” to take care of their future. Big mistake. Since pensions are almost a thing of the past and Social Security cannot be counted on, most of these people are going to have a hard time making ends meet in retirement.

Dave spends the first part of the lesson discussing the most popular retirement products, including the 401(k), IRA, SEPP, and other speciality plans like 403(b)’s and 457’s. The most commonly used are the 401(k) and the IRA (and it’s cousin, the Roth IRA). The point of any of these plans is to use tax-favored money to save for your retirement. You’re either putting in pre-tax money and allowing it to grow tax free (IRA, 401(k)), or you’re using post-tax dollars that will grow tax free and not be taxed when you withdraw the money (Roth IRA).

Dave strongly advocates for the Roth IRA. In a Roth IRA, you invest after-tax money but your earnings grow tax free and you are not taxed on any withdrawals when you retire. There’s also a little more flexibility with a Roth in terms of early withdrawals without penalty. Dave argues that you have more investment choices with a Roth, also. That’s probably true when compared to a 401(k) that offers only a few funds, but you can open a traditional IRA at any brokerage and have access to thousands of funds and stocks, just like with a Roth. The ability to withdraw money tax free after you retire is the big draw. If you’ve saved a lot of money, you’ll likely be in a higher tax bracket when you retire since most of your deductions will be gone and you may be pulling in more per year than you did when you were employed. If that’s the case, tax free withdrawals are great news.

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Dave Ramsey Financial Peace University: Week Ten

I have nothing against the Roth, but I don’t believe in it as strongly as Dave does. I just cannot imagine that in the thirty years I have until retirement that the government will not find some way to tax those withdrawals. I cannot see them letting that large pool of money remain untouched. I think it will be at a low rate, but I think it will be taxed. There was a time when Social Security earnings were tax free and that is no longer the case, so the government has proven to go back on its promises. I prefer to hedge my bets and use a regular IRA. Yes, I’ll have to pay taxes when I withdraw the money, but at least for now I’m able to reduce my taxable income each year. Since I hover right on the brink of a higher bracket, that reduction in taxes now is worth more to me than a promise that might not be honored by the time I’m retirement age. You might consider using both types of IRA’s and taking some deductions now, while hoping for tax free withdrawals later.

After discussing the types of retirement plans, Dave offers a reminder to roll your retirement money directly into another qualified plan if you leave your job. Never touch that money or you’ll have to pay taxes and penalties on it. You want it to roll seamlessly into another plan. He also counsels us to never borrow against retirement money. Not only do you lose out on the compound interest, but any loans must be repaid within 60 days of leaving your job. If you can’t repay it, you’ll be taxed and penalized on that money.

As far as what to do with the 15% of your income that you’re saving, Dave suggests this order:

1. Fund your 401(k) or other work plan up to the amount that your company will match.

2. Above the matched amount, or if the company does not match at all, fund Roth IRA’s up to the amount you’re allowed by the tax code.

3. If you still haven’t hit 15% of your income yet, go back and put the remainder into your employer’s plan.

His plan isn’t a bad one. It gives you a good distribution of your assets in plans that use both pre- and post-tax dollars and which have different tax structures for the withdrawals. If you don’t have a plan at work, I would suggest putting some money into a regular IRA and some into a Roth. That way you get the same type of tax structure.

Dave then moves on to saving for college. This part of the lesson is very short. He advocates using an Education Savings Account (ESA which is like an IRA for education. You invest pre-tax money into the account and the money is taxed when it’s withdrawn. If you can’t use an ESA, then Dave recommends a 529 plan. Just make sure that you stick with one that gives you complete control over the money and does not make any type of automatic adjustments based on the child’s age. Dave does not recommend using any other savings products including insurance, savings bonds, or pre-paid college tuition plans. Most of these simply don’t make the returns you’ll need to adequately grow your money. Some are also ripe for scammers.

You should do Baby Steps 4 and 5 concurrently, which is why Dave caps the retirement savings at 15% of your income. Ideally that leaves you with some left over to put away for college. Dave does not say this, but I will. If you are older and need to really catch up on your retirement savings, I say skip the college savings and put as much as you can into your retirement. Kids can find work, scholarships, and financial aid to pay for college. You can’t find aid to pay for retirement. Similarly, if you don’t have kids and don’t plan to, go ahead and funnel as much extra as you can into retirement. Don’t just accept the 15% cap. The more you can save, the better off you’ll be.

In small group we talked a little bit about our fears for retirement. We have several people in our group who are in their late forties and fifties, so this is a topic that scares them. Several of them admitted to being below even the reported average of $25,000 in retirement, with no pensions to pick up the slack. A couple of them admitted that they just never gave it much thought until now. They were so busy raising kids, working, and building a life that they let time slip away. They are like the people Dave brought up in the beginning of class who just live for today without much conscious thought for the future. They’re worried now that they won’t be able to retire or, if they can, that they won’t be able to have any fun. They mentioned that, having gone through this class, they are committed to saving from this time forward, but they worry that time has run out and that they’ll never be able to save the kind of money that will give them a good retirement.

From there we talked about what motivates you to get serous about retirement. Every single person in the room listed total fear as their primary motivator. Fear of having to work at Wal-Mart until they die, fear of living on state assistance, fear of not getting the health care that they need, fear of eating Alpo in their old age, and fear of not being able to do anything that they want to do. Fear is a powerful motivator, no doubt. Now that many people in the class are considering this seriously for the first time they are realizing just how far behind they are and how the safety nets they assumed would be there (pensions, Social Security) just aren’t going to be there. It’s scary stuff. Our group leader suggested we try to think of some positive motivators for planning for retirement, just so that terror isn’t the only reason. We came up with wanting to have fun, wanting to give to good causes, wanting to be able to help grandchildren, and wanting to leave a life changing amount of money to our heirs.

We also talked about why it’s a bad idea to borrow from or cash out a retirement vehicle to pay off debt, no matter how much you may want to be out of debt. One man in our class took out a 401(k) loan and used it basically as a debt consolidation tool. He paid off all his credit cards and high interest loans with it to the tune of about $40,000. This worked well until, two months later, he was laid off from his job. That loan was due within 60 days or he was going to have to pay the taxes and penalties on about $38,000. Ouch. He tried all he could to raise the money, but given that he was already living on the financial edge, he couldn’t do it. That 38K was considered income by the IRS and he had to pay the tax bill, plus the penalties for early withdrawal. He ended up losing a big chunk of his money, not to mention the amount of compound interest he lost by moving the money out of the account in the first place. It was an expensive lesson to learn; one from which he is still trying to recover.

As most of the people in the class are older with grown kids or no kids, we didn’t talk much about the college saving aspect of the lesson. However, we did wonder about the amount of guilt people feel if they don’t save for college. Many people put college savings before retirement because they feel so bad about it. But we talked about how a kid can work through school, or get loans or scholarships, whereas a parent has to fund his or her own retirement with no help from outside sources. The parents have to take care of themselves, first.

If you remember, last week we had to do the worksheet that showed how much money debt is robbing from retirement (or other long term goals). The results came up in group and they were eye opening. A quick calculation (using Dave’s charts) of the average in my class showed that debt has cost each person in that room about $2 million dollars in retirement money. The numbers will continue to grow until all of the debt is paid off so the total in the end will be much higher, assuming that it takes most of them several years to get out of debt. One woman said that this exercise motivated her to get out of debt more than anything else in the class so far. She’s probably in her mid-forties, so retirement isn’t that far off. once she saw how much she’d lost over the years, she got very scared and then very serious about paying off debt. Good for her!

This was one of those weeks where we had a really good discussion. Retirement is one of those things that everyone has an opinion on. It’s also something that scares and intimidates many people. I think this weeks’ discussion ended up being like a therapy session for many. It gave them a chance to air their fears and talk with others who are in the same boat. Maybe it made it seem a little less scary.

Homework roundup: This week we have to complete the monthly retirement and college planning forms to determine how much money we should be saving towards these goals. This is to give us a definite number to shoot for instead of just guessing, which is most people’s method of calculation. I don’t have kids so I skipped the college funding worksheet.

The first step in this exercise is to determine what sort of annual income you want to generate in retirement. I shot high and said $100,000. I’d like to travel a lot and I know that medical care and inflation are going to eat away at any income I have, so I aimed high. I doubt I’ll really need that much but I’d rather aim higher than lower.

We then divide that number by .08. The .08 comes from the idea that you are saving at a 12% return, but inflation is 4%, giving you a net gain of 8%. (As I said last week, I think his returns are high, but since this is homework I’m using his numbers.) Using this formula, my target number is $1,250,000.

To figure out your monthly savings amount, Dave has you multiply your target number ($1,250,000) by an 8% factor that matches your age (he provides a table that lists the factors at every five years of age, starting with age 25). Since my age falls slap in between two factors, I did this calculation twice. I need to be saving between $838 and $1,313.75 per month to reach my target number. The higher figure assumes the older age, while the smaller figure assumes the smaller age. Turns out that, according to Dave’s formula, I’m right on target. I currently save $1,227 per month in tax-advantaged accounts (the maximum I’m allowed by law based on my compensation) and another $300 per month in regular investment accounts for long term savings. So I’m at just over $1,500 per month or ahead of Dave’s calculation.

Lastly, if you aren’t interested attending the course yourself, consider picking up the Dave Ramsey Financial Peace University DVD Home Study Kit (9 Week Course) 2012 Release. It sells for between $185.00 and $200.00 on Amazon. This is pretty good deal when you factor in the time savings relative to attending the full course.

Next: Dave Ramsey Financial Peace University Review: Week Eleven