Category Archives: Finances

How to Successfully Negotiate Better Terms with Your Credit Card Company

woman credit card phoneLately every credit card company seems to have a trick up its sleeve. I don’t just mean the countless tempting offers that come in the mail. At least once a week I get a letter from companies I’m already using, letting me know they’ve changed the terms and conditions—again.

Companies have been reducing credit lines and raising interest rates. Basically, they’re trying to cut back on risk and stay competitive in this down economy. I understand that they’re in business to make money, but as a customer, it’s alarming to see the rules keep changing.

If you continue to let your credit card company walk all over you, you may end up with a card that offers no real benefits. Before that time comes, you need to call customer service and start negotiating better terms. It’ll take a significant time commitment, but you’ll come out ahead if you follow these five credit card negotiating tips.

1. Show Them a Competing Offer
Can you get a lower interest rate, bigger credit line, or better rewards from another credit card company? If so, use the competing offer as leverage when negotiating with your current provider. The day that you receive a better offer in the mail is the day you should call your company to explain your position. If you ask for a better rate and back it up with another offer, you start the conversation from a powerful position.

2. Make Some Concessions
It’s a negotiation, so you’ll need to be willing to give something up in return for a better deal from the company. You can control of the negotiation by reminding your credit card company that you can do something for them too. If you carry a balance, for example, offer to increase your regular payment.

Recently, after my credit card company increased my rate a couple of points, I gave them a call to discuss the matter. Rather than simply ask for a lower rate (I didn’t have the luxury of a competing offer) I decided to explain my position. I told the rep that restoring my original rate would give me an opportunity to make more than the minimum payment. This may have been a “little white lie” but it worked. Of course, I paid my balance in full the next month so both of us got what we wanted.

3. Accept Temporary Changes
I am not gullible enough to believe that after a successful negotiation, my credit card company is going to restore my rate indefinitely. At some point they’ll want to raise it again, so they’ll send another notice, and I’ll be back at square one. It’s a frustrating game, but you can take advantage of the situation. There’s nothing wrong negotiating a temporary change. Accept that nothing’s permanent, and you can get your provider to lock in a lower rate for a limited time, such as three or six months. Call again when the end of that term nears, and start up a new negotiating session.

4. Don’t Give Up
Resilience is a key factor in a successful credit negotiation. First, your initial call to the company probably won’t be enough. The first person to take your call may try to thwart your negotiation. If they do, hang up and call back. You may be surprised to find that the next person is friendlier and better able to help.

If you don’t get anywhere on the first day, you won’t necessarily be out of luck tomorrow or next month. Credit card companies are always changing their policies and programs. A “no” today could be a “yes” next week.

5. Speak with a Supervisor
When those initial discussions frustrate you and the reps sounds like they just can’t help all, it’s time to go up the ladder. But remember, raising your voice isn’t going to help anyone see your point of view. Establishing communication with an entry-level customer service staffer is tough enough, and language barriers can make them even more difficult. Be patient. Remain calm.

Your best bet is to explain that you want to speak with somebody else, preferably a supervisor. When you talk to somebody in charge, at least you know that they will hear you out. Sometimes the rep who answers the phone is more of a gatekeeper anyway, daring you to get up the guts to ask to speak with a supervisor. But once you do actually ask, often the supervisor is more than willing to accommodate your wishes to keep you a satisfied customer. If you’re not getting the help you need, you’re well within your rights to ask for someone else. Go for it.

Final Thoughts
Credit card companies change their policies all the time. You deserve answers when they want you to accept a new agreement. Negotiation isn’t easy, so you need to prepare for battle. Block off some time when you won’t be distracted, and summon the strength to hold your ground. If you can resist the urge to give in just because they’re a big corporate machine, you can experience the victory of getting the terms you want.

Have you had a successful negotiation with your credit card provider? How did you get ready for the call, and how long did the changes last?

4 Ways Buying a Smartphone Can Save You Money

woman smartphoneFor a long time, I was firmly against purchasing a smart phone. I figured I was just fine with my old cell phone, saving money by avoiding expensive monthly data plan fees.

However, after talking it over with friends and family, I finally decided to purchase one. I paid nothing for the actual phone, and my plan includes unlimited talk and text, along with a moderate amount of data, for only $50 a month. Considering that I paid $30 for my old phone, the price increase was pretty easy to justify.

Now that I’ve owned my smart phone for a few months, I have found a variety of ways to save money that easily make up for the additional expense.

1. Daily Purchases
For things such as groceries and gas, there are plenty of apps available that can help you save money. With Cheap Gas!, you can find neighborhood gas stations with the best prices, and by using RedLaser, you can easily compare prices of two different sized food items to see which one offers the best price per unit. Grocery Gadget saves you money right at the register, as it displays bar codes for current coupons on your phone’s screen, which the cashier scans to give you an immediate discount. The days of clipping coupons are over.

2. Large Purchases
Whether I’m purchasing a laptop computer or a major home appliance, I always have a lingering feeling that I’m not getting the best price, despite my Internet research. This ended once I put my smart phone to work.

When I find what I think to be the best price for the item I wish to purchase, I scan the bar code using the Shop Savvy app to see if a better deal exists. If one is found, I show the price to the salesperson to see if they’ll match it. Often they do.

3. GPS
Many smart phones come with built-in GPS capability, meaning you will no longer need a separate GPS device. I have found that the map displays are more accurate when viewed through my smart phone.

If your phone does not come with GPS, try the AmAze GPS app. It’s free and offers turn-by-turn voice capability.

4. Time

I’ve found plenty of ways to use my smart phone to save time, which is often as good as saving money. I lead a pretty fast-paced life and am almost always on the go. Being able to read my emails and pay bills throughout the day frees up more time when I get home from work. And with my note-taking app Evernote, my life is now more organized than ever.

Final Thoughts

There are far too many money-saving apps on the market to list here. Simply put, with a smart phone, you have the world at your fingertips. You can organize your finances with Pageonce, save on restaurants with BiteHunter, and get cheap international calling with Skype. There are times when spending a little more money up front will help you save in the long run, and I consider a smart phone to be a good investment.

How do you save money with your smart phone?

Obscure Types of Insurance Policies That May Help You in the Future

obscure insuranceMost people know a thing or two about auto insurance, home insurance, health insurance, and life insurance. It makes sense, as these are common policies that tens of millions of people pay for, month after month. But while these may be the most common types of insurance, there are others that offer very targeted coverage that you should be aware of. Just because a policy is obscure doesn’t mean that you should avoid it.

Consider the 5 types of insurance listed below:

1. Wedding Insurance
There is no denying that weddings are expensive. In fact, the average wedding costs more than $20k. But what happens if you spend all that money and nothing happens? What if the groom decides he doesn’t want to get married? What if bad weather throws a wrench into your plans? These unforeseen situations are where wedding insurance can really come into play.

Believe it or not, wedding insurance only costs between $200 and $500, depending on the amount needed and the disasters that are covered. If you’re already spending thousands upon thousands of dollars on your big deal, why not buy a policy that will protect you financially?

2. Fantasy Sports Insurance
Every year, millions of people get involved with a fantasy sports league. And every year, many people lose because one or more of their players is injured in real life. If your star pitcher tears up his shoulder and is out for the season, your chance of winning just went down the drain. As crazy as it sounds, with fantasy sports insurance, should something like this happen your entrance fee will be refunded.

3. Key Person Insurance
Every company has at least one “key person” who is essential to the overall well being of their organization. Most of the time this is the Chief Executive Officer. So what would happen if this person was injured or suddenly died? With a key person insurance policy in place, the company would receive a payout. While this is certainly no consolation, it is better to have the money than to be stuck and searching for a quick replacement.

4. Kidnap and Ransom Insurance
This is nothing fun to think about, but as of late kidnap and ransom insurance policies have become popular. This is due, in large part, to increased terrorism. Many big companies and wealthy families buy this type of protection. It is very common amongst companies and individuals who do business in high risk areas (where kidnapping is common), such as the Middle East.

5. Art Insurance
Do you have a lot of expensive art in your home? If so, your homeowner’s policy may not cover the entire value, if anything at all. It is better to pay a small monthly premium than to hope that your art is never damaged or stolen. No, a piece of art can never be replaced. That being said, you can be compensated for the value, should it be stolen.

Insurance policies can be had for a myriad of situations and scenarios. Some of these insurance policies may seem completely unnecessary, while others may be a perfect fit for your needs and lifestyle. However, the more you learn about these types of insurance policies, the better prepared you’ll be when and if disaster – in all its different forms – ever strikes.

Do you own any of these types of insurance policies? Do you have a policy even more obscure than these? Sound off in the comments and let us know whether you think these insurance plans are worthwhile or not.

(photo credit: Shelley Panzarella)

Luxury Items for Your Dog: What to Buy, What not to Buy

luxury dog suppliesPeople love their pets. This is particularly true with dog owners. Our beloved dogs are pampered, groomed, and even clothed. We make them into a regular part of the family. As more and more canine “luxury items” have begun to hit the marketplace, we’ve jumped on board to spoil our furry friends with these things, too. But have we gone too far?

When it comes to your dog, yes, there are definitely some luxury items that are worth buying. However, there are also some things that are nothing more than a waste of money. You need to know how to differentiate between the two, and ensure that you are spending your money wisely. Once educated, the level of love you give your pup is up to you.

What to Buy

1. Organic Dog Food
This is one luxury item that’s really worth some consideration. Many dog owners have found that traditional dog food is full of ingredients that may not be best for Fido. For this reason, the organic dog-food industry is taking off.

Since organic food is made from all organic ingredients, it is healthier for your dog. Additionally, this choice carries the same perceived environmental benefits as the organic foods that you yourself might choose to eat. Some of the most popular brands include: Wellness Dog Food, Canidae Dog Food, Natural Balance Dog Food, Blue Buffalo Dog Food, Solid Gold Dog Food, and HALO Dog Food. If you are interested in buying organic food for your dog, compare the brands above before making a purchase.

2. Homemade Dog Treats
This may be a stretch for some owners, but your dog deserves something special from time to time. There are many places to purchase homemade dog treats. For example, shopping malls have kiosks, and you can even find independent bakeries. Of course, you can buy all the proper ingredients, find a recipe online, and do it yourself.

This is definitely considered a luxury, but it is one that you should consider giving your dog. After all, homemade treats don’t cost much more than those that you can buy at the grocery store.

3. Orthopedic Furniture
Believe it or not, there is a huge market for orthopedic dog-furniture. For example, does your dog have a bad hip? If so, try an orthopedic bed. These are meant to alleviate pain and increase comfort for your ailing pet. These cost more than standard dog beds, but since they are made with memory foam, they are able to alleviate pressure on the joints and bones.

What Not to Buy

1. Luxury Clothes
Your dog is not a person! It does not need sweaters that cost $50 or shoes that are more expensive than the ones you have on your own feet. If you are going to purchase clothes for your dog, stick to affordable items. You can get something that looks great at a bargain price. After all, your dog won’t treat a luxury sweater with any more concern than a sale sweater.

2. Excess Furniture
From chairs to sofas and loungers, the dog furniture industry is booming. The question remains: does your dog really need the same furniture options as you? What happened to letting Spot sit on the floor? Pick the right-sized crate and maybe splurge on a nice bed, and you’re probably good to go.

3. Gold-Plated Dog Bowls
That’s right, these do exist. Seriously, does your dog really deserve to eat out of a bowl while you serve yourself dinner on a paper plate? Your dog does not care if it’s eating from an expensive bowl; it just wants food. Save your money for something more important, or better, take the amount you would have spent on a sparkly bowl, and donate it to a shelter in your area.

As you shop for luxury items for your pet, consider the points above. These will help you determine where to spend your money, as well as what you should and should not be buying.

(photo credit:

The Kardashian Sisters Launch Their Own Prepaid Credit Card

Beauty, fashion, reality TV, frangrance and now a financial product?

Mobile Resource Card, a provider of custom prepaid card programs, has partnered with the Kardashian sisters – Kourtney, Khloe, and Kim – to add a prepaid credit card to their empire of products.

The Kardashian sisters say, “We are excited to partner with mobile Resource Card to create our very own financial products. Now our fans will be able to take us with them everywhere.”

According to the NYPost, the new Kardashian PrePaid Credit Card is being marketed as helping parent keep their kids safe by allowing them to monitor their teens’ spending through their cellphones.

PrePaid Credit Cards for Teens?

While I do not condone the possibility it may be released to teens as young as 13 years old and that credit cards should be a sign of glamour with bling and celebrities, I do think cards – whether debit or credit cards – will far out weigh ‘cash is king’ in the near future. It might be worthwhile to teach teens how to responsibly use a prepaid credit card.

How do you teach a teen the concept related to using a prepaid credit card? Let us consider a few things.

Prepaid Charges

As parents, you need to teach your children about fees, charges, penalties, and any other associated costs that come with the card. What are some of the fees and additional charges?

Most prepaid cards impose transaction fees every time a cardholder withdrawals money from an automated teller not associated with the card issuer. The cardholder may also be required to pay declined transaction fees if they fail to replenish funds on their prepaid credit card.

Sit down with your child to read the terms and conditions associated with the card. Help them understand the fees and costs that come with being a responsible card holder.

Prepaid Card Rates

Now that you discussed the fees and costs associated with having a prepaid credit card, the next things to help them understand is the interest rates. Although, a prepaid credit card does not impose interest rates because there is not a hold balance with the card company, it does impose interest for overdrawn transactions.

Parents need to encourage their children to spend less than the available balance on their prepaid cards. This way, they can avoid learning about interest the hard way.

Teach them to Budget

As with any card holder, there also comes the responsibility of maintaining a personal budget. This is the most important lesson you can teach any child to help them manage their finances more effectively.

As parents, help them draft a simple budget that will track:

  • Money earned through household chores, allowances, and odd jobs
  • Balance available on the prepaid card
  • Money spent during the month

Teach your children to track it frequently to stay on budget, spend no more than fifty percent of their available card balance, and to pay it in full each month. This will help them build a great credit score in the future.

If the lesson of building a budget is embedded in their minds at a young age, for sure they will become financially responsible individuals in the future who can handle their finances and plastic cards responsibly.

Review the statement

Some of the prepaid credit cards will send you a monthly statement. And almost all the card issuers offer online account management tools, where you can help your teen track their spending and transaction time in accordance with their budget.

Sit down with your teen once a month to review if they are staying within the budget and spending plan; review any fees or costs. Continue to guide them in using a credit card responsibly.

The the Kardashian PrePaid Credit Card will be available the day after the official launch, on November 10, 2010.

{photo credit: starpulse}

Stop Living Paycheck to Paycheck

A few years ago, our family lived by being dependent on receiving a weekly paycheck. Both the husband and I maintain great jobs, but we were hardly able to pay the bills. Borrowing from Peter to pay Paul – we would push one bill to lapse its due date to pay another we ‘forgot’ about. We were never able to get ahead. It took me painstaking long years to realize that the debt ridden life was all our own making, due to poor financial habits and choices, and that I was no longer going to stand for it.

Today, things have gotten better, although we are still not in the black yet. We have an emergency fund, paid off several smaller debts and work diligently to pay off the big accounts (like the student and debt consolidation loans), and hope to pay off the Lending Club loan by the beginning of next year. We are on track to be debt free in two years and half years, with a good future in the forecast. We have also increased our contributions for retirement, learned to plan for weekend staycations, and live with a frugal mind. Our finances are much better off today than they were three years ago. It amazes me how far we have progressed and how indulgent becoming debt free feels.

If you are in a state of financial despair, like my family once was, you can climb out of it to become a your own success story. Stop living paycheck to paycheck. Take control of your financial life. I would like to share my thoughts about what has worked for our family, what I know works by having lived through this experience.

To begin, many financial advisers and blogs, typically recommend to start by tracking your spending on a daily basis. It is definitely worthy advice, but not always practical as keeping track of daily spending can be difficult. I advise you to track your expenses, but if you don’t, for whatever reason, do not let that stop you from fixing your finances.

Here is my recommendation, whether or not you track your spending (but you should), at least do the following:

Learn to walk before you run

Set up your accounts. Consider setting up one savings account, a checking account strictly for bill pay, and an account for your variable expenses (like groceries, gas, and entertainment). This method has worked great for my family. You can find about more about my bank account set up, here.

Halt. Stop using your credit cards immediately! Cut them up, or put them in the freezer in a ziploc bag filled with water, effectively freezing your cards. Also stop taking other loans, either from financial companies, banks, or family and friends. Stop getting into more debt!

Save now! Yes, you do have money to save (even if it starts out with a very small amount). The next most important step you can take, in the beginning, is to start a small savings account if you haven’t already. Begin by depositing into it regularly, at least 10 percent of your gross paycheck. If you can’t find the 10 percent then see the next step how. Set up a payroll deduction with your employer’s benefits department to have 10 percent automatically deposited from each paycheck to your savings account. If you don’t see the transfer of money, you don’t feel the pain. A savings account will help you bare the waves of Murphy’s – when an emergency comes up, like your car breaking down, you won’t be thrown back into debt trench or end up broke. You will have some cash to pay for that emergency, and you can use your regular paycheck for regular expenses.

Look at voluntary spending. If you can’t find 10 percent to save per paycheck, then you need to cut some things from your spending. This is where tracking your spending comes in handy, but even if you don’t, you know some of the extras you spend on — coffee, snacks, eating out, shopping for gadgets and clothes, going out – these are just a few of the examples. You don’t need to cut everything out, but if you can cut a few of them, that can add up (pay extra attention to your food budget). Then, take the money you didn’t spend on those voluntary spending items and add that amount into your savings each payday.

Start a debt snowball to get out of debt. Yes, there is debt tsunami and the the cash cascade, but those are for seasoned debt free adventurers. If you have not tried a debt snowball, it is easy. List out your debts and arrange them in order from smallest balance at the top to the largest at the bottom. Then focus on the smallest balance first, putting as much as you can into it, even if it’s just $20 extra. When the amount is paid off, celebrate (frugally)! Then take that total amount you were paying (say $30 minimum payment plus the $20 extra for a total of $50) and add that to the minimum payment on the next largest debt. Continue this process, with your extra amount snowballing as you go along, until you pay off all your debt. This could take several years (will be 6 1/2 years for us to be debt free), but it is very rewarding. By focusing on the smaller debts first keeps you motivated on your debt free journey.

Walk a steady pace

After taking those first steps, it’s time to pick up the pace. Time to start on these steps:

Start a budget (b-u-d-g-e-t). Yup, I said it. I know the word stinks like Limburger cheese. But it doesn’t need to be hard, and if you set it up right, it’s fairly simple. Here is a great link to learn about setting up your first budget.

Use the bill pay feature for your bills. As much as possible, set up your bills to be automatically paid through your bank’s bill pay feature. For those that can’t, use your bank’s online check system to make regular automatic payments. Like many of the bank’s commercials, using bill pay really can take only five minutes of your time. Now, I log on once a month to my bill pay account, set up the payments, and hit submit. Five minutes normally, ten minutes tops.

Save for your irregular expenses. Personal finance author Mary Hunt calls it a Freedom Account, it is the key to ensuring that you have smooth finances and that you stick to your budget is to take into account all your irregular expenses, such as insurance, car maintenance or repairs, gifts (think Christmas!), medical and other such things. List them out, estimate your annual spending, and begin saving for them each month. Our family saves an extra $1,000/year for increased summer camp costs. So, we put away $38/paycheck and the summer is stress free. Some banks will allow you to set up sub-accounts within your saving account for each expense and then use a spreadsheet to keep track of each. Again, this way your regular budget is used just for that, regular expenses. The Freedom Account is for the irregular expenses (just remember stress free).

Set up personal finance goals, start planning for them. When do you want to retire? How often do you want to travel? When do you want to buy that dream house? Do you want to save for your kids’ college education? Think about what you want in life, and start planning to save for them, especially once you’ve done all the above. It took our family a long time to be able to implement this step, but it did come forth. First we started with small goals like planning to pay cash for our annual camping trip. Then we were able to plan for our family’s first big vacation to Maui (the awesome memories will last a lifetime for us).

Once you’ve gotten beyond these steps, you should be past the dependency of living paycheck-to-paycheck. Now, personal finance options like investing your money for your goals become available to you. But getting past these first stages is important.

(photo credit:

Frugal to survive or frugal to be rich?

My goal with starting this blog was to hold myself accountable for getting out of debt. When that goal was reached I could track building my wealth.

Frugal to Survive

So, for the past couple years my frugal way of thinking was led by a need to survive or scrimp to pay off debt. Being mindfully frugal allowed me to save money that was redirected to paying down my debt faster. I sold some of my stuff on eBay and Craiglist so I could just stick to my budget and to find some wiggle room from living paycheck to paycheck.

The 3 Tips to Paying off Debt:

  1. Create a Budget

    Getting out of debt requires a plan. Creating a budget is your roadmap to a debt free life.

  2. Live Below Your MeansMost people give up on their budgets within two months because they find it hard to acclimate to living within plan and/or it’s boring. No one said it would be fun.

    Don’t become a sorry statistic, before giving up on your budget consider a few things. One, reevaluate your budget to see if you strapped yourself too thin; make a bit of wiggle room (yes, you still need to eat). Two, find some frugal blogs to discover small ways to save big (like packing your lunch for work). Three, come to the realization you need to hustle some side jobs for extra cash to help dig you out of your debt trap.

  3. Create an Emergency Fund and Snowball your DebtUse Dave Ramsey’s 7 Baby Steps to get the personal finances in order. The first two steps are key when climbing out of debt.

Currency (, a service of American Express. Check out my recent articles, 6 Tips on Eating Out With Kids and Staying Sane, Don’t Wait Another Day to Plan Your Retirement. Trust Me., and Setting Up Your First Budget.

Frugal to be Rich

Although, I still have debt my way of thinking is slowy evolving into frugal to be rich. Which is ironic because I wanted to be rich and spend lavishly – like Hollywood show, Lifestyles of The Rich and Famous.

Now, I find myself being mindfully frugally so that I can maximize my retirement account or put more cash into my savings account.

I can see it now, pitching a show called, The Lifestyles of the Thrifty Millionaires. You think Hollywood swoop up my idea? Not likely. 😉

You see, becoming a millionaire recycles The 3 Tips for Paying off Debt and takes it a few steps father.

Here are 5 Tips to Become a Millionaire:

  1. Create a Financial PlanNot only is creating a budget a road map for a debt free life, its also a road map for creating wealth. Now is a good time to add annual goals, too. Some goals to include are financial goals for 5, 10, and 20 years ahead; like saving for a house or being able to pay the children’s college tuition.
  2. Live Below your Means (Frugal)Don’t give up on frugality now! Just because you have money to spend doesn’t mean you need to start buying designer clothes or a big flashy house. To continue living below your means creating extra cash flow to save.
  3. SaveThere is no secret here if you want to build a million dollars you need to save. By making more money than you consume, allows you to put the remainder sum into a high interest savings account or investment vehicle. I wonder if I’ll become a stingy saver like multi-billionaire Walmart founder, Sam Walton. He drives a 15-year old truck.
  4. Make you Money Work for You (Invest)Time to put that hard earned money to work for you. Open an investment account and diversify those stocks. You can commonly expect returns up to 10 percent on investments held for the long term.
  5. Consider Starting your Own BusinessWhile it’s possible to become a millionaire by working full-time for someone else, there is more wealth to be earned becoming an entrepreneur.

    Thomas J. Stanley, author of The Millionaire Next Door, found that two-thirds of the millionaires are self-employed, with 75 percent of them entrepreneurs.

Paradigm Shift

I am on this total frugal kick right now. Bare with me as I spill my frugal thoughts into my posts. I have been doing things like washing out my Ziploc bags, washing my clothes in cold, cooking with more whole foods, borrowing movies from my friends and drinking tea or water with my meals.

This paradigm shift from frugal to survive to frugal to be rich is a nice change. It is fun knowing I saved $3 by making coffee from home versus buying it at my local coffee shop. And now that I can stretch my money arms, I am beginning to combine the steps towards reaching my goal to becoming wealthy. Steps like being frugal to save money to invest into starting my own business.

Frugality by itself will not make you rich, but by consuming less you are creating more to save. By making the steps work together you can reach your goal towards becoming debt free or building wealth. Please, do not give up on your financial goals! I know reaching them will be completely worth the hard work!

(photo credit: r.i.c.h. via Flickr)

Peter Thiel wants to give 20 under 20 Kids $100,000 to Drop Out of College

Billionaire Peter Thiel recently announced at the TechCrunch Disrupt conference in San Francisco that he will award 20 people less than 20 years old cash grants of $100,000 to drop out of school.

The Thiel Foundation was created to help innovate the next generation of tech visionaires. He believes there is more value for the entrepreneur to launch a tech or scientific idea immediately that to wait the full four years of college or eight years of grad school. Is Thiel doing the irresponsible thing by telling kids to stop going to college or is his forward thinking the next big thing?

It’s often been debated if kids should be sent off to college to help them become successful in their life. With the changes in economy, I am beginning to think the idea of sending them off to college is becoming old fashion.

Scarcity of Jobs

I know the youth of today feels the weight on their shoulders. My 16-year-old son is out looking for a minimum wage job at the local theater and fast food joint but is told, “we’re not hiring right now.” I cannot remember a time it was difficult as a teen to obtain a job. It is concerning that my son and his friend’s constantly discuss what a challenging era they are growing up in (not just economical, but environmentally).

There is no doubt in one’s mind that getting a job is more difficult these days. The Bureau of Labor Statistics reports some states have a 14.4% unemployment rate (Aug 2010).

Some of the Hardest Hit States (11% and higher):

Rank State Rate %
51 Nevada 14.4
50 Michigan 13.1
49 California 12.4
48 Rhode Island 11.8
47 Florida 11.7
46 South Carolina 11.0

To help the unemployed cope, unemployment insurance is extended to 99 weeks for some hard hit areas.

Richest self-made Americans

And college doesn’t look so enticing when you see that these self-made billionaires dropped out of college to seek out their passions and succeed (Forbes 2003).

William H. Gates III (AKA: Bill Gates)
Harvard University, dropout
Net worth: $43 billion

Paul Allen
Washington State University, dropout
Net worth: $21 billion
Microsoft; Charter Communications

Larry Ellison
University of Illinois, dropout
Net worth: $15.2 billion

Michael Dell
University of Texas Austin, dropout
Net worth: $11.2 billion

And here is the reason why Thiel and others alike believe entrepreneurs need to launch their technical and scientific innovations now:

“Because education seeks to impart past knowledge, when you are trying to create a technological breakthrough, you have to create new knowledge, and there is no way to teach that.”

They need to take their passion, drive, and self-taught knowledge to develop innovations. Bravo (I love that quote above, but it also explains why I can get so frustrated in the tech world – that’s why I love Google to find answers to my quandaries in a pool full of results).

Student Loan Debt

College students are being over consumed with student loan debts in their 20s. Parents facing their own money battles from the economic crisis cannot foot their child’s tuition bill. While college tuitions continue to rise, government scholarships and grants are dwindling. So, our children are taking on a blind faith that taking out large student loans will make for a worthy investment when they graduate (it makes me cringe when I hear of people carrying $100,000 worth of student loan debt).

We are making our children responsible young adults by putting them in debt? To struggle for survival? This is what we want for our kids? I don’t think so. And neither does Thiel.

Expand your thinking

There is a new movement taking place. A scarcity of jobs cause people to hustle ‘side jobs’ either because of the need to survive or to stashing away money to make ourselves financially responsible. Another reason is because we found we need to believe in ourselves – we are designing our own lifestyles – when we want to work, where we want to work. And the concept is working.

Technology is definitely expanding and designing our future, too. From computers, cell phones, to genomic sequencing machines – technology is a force that will drive the economy. Thiel’s program makes sense.

The Thiel foundation is awarding grants of $100,000 each to twenty participants for a two year program that will make them ultra-entrepreneurs. That is offering them a $50,000 salary or start-up money per year for these students to pursue their passion. This program will allow students to work on their ambitions before taking on the possibility of mass student loan debt.

The Thiel Foundation defends and promotes freedom in all its dimensions: political, personal, and economic. The Thiel Foundation supports innovative scientific research and new technologies that empower people to improve their lives, champions organizations and individuals who expose human rights abuses and authoritarianism in all its guises, and encourages the exploration of new ideas and new spaces where people can be less reliant on government and where freedom can flourish. For more information, see

(photo credit: Accelerating Future)