How to Save Money

This article discusses the various methods for college graduates to save there money. It suggests three primary ways to save money and spend less. First, which is the most obvious suggestion, is for graduates to cut down on their spending. By giving up a few miscellaneous habits they developed they can save up to an extra $50 per week and it will help prevent them from living so extravagantly. The second suggestion was to save 10 percent of their weekly income. By doing this, they will be getting a head start on their retirement fund. Lastly, the author suggested that graduates recruit a roommate to cut down on the living expenses.

I believe the author's first suggestion of cutting down on spending money on unnecessary items would be very beneficial for me. I noticed that when I have money I tend to spend in on items I don't necessarily need and would not want if I didn't have the money. Usually, I just spend money because I have it. Maybe when I graduate from college I will be a little bit more responsible with my money.

Taxes-How Does The Government Spend Money?

The federal government spends the collected tax money on various different things including transportation, education, military and medicare. Below is a chart that shows 2006 estimates of how the Federeal Governemtn spends each tax dollar. The greater part of the tax money collected goes towards social security which is predicted to be diminished within the next 50 years. Next, is National Defense which gets the second greatest amount of American's tax dollars. This money goes towards activities such as the war in Iraq. It is a shame how opponents to the war have no choice but to pay their taxes and indirectly fund and support the war. Then comes income security, medicare, health, net interest on debt, education and so on and so forth.

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On the other hand, the New York State government spends its money on other things such as education, economic development, Medicaid and debt. It is easy to see that there is not a big difference between how NYS spends their tax money and how the federal government spends their money.

Savings and Debt

When I first read the article I wasn't too surprised that the family had a lot of debt because many families today are in debt. However, I was very shocked when I saw how much debt they had accumulated in such a short period of time. For them to accumulate $50,000 worth of debt in only seven months didn't seem too smart on their part especially when they know they already knew they had over $5,000 in debt.

I think the main problem people have when it comes to managing their finances is how to shuffle between different bills and cards, as stated in the article. People easily get into debt when they begin to overestimate how much money they can afford to spend. They spend their money on miscellaneous items that are not necessary, especially in the case of the Moellerings. Spending $800 on a television was a very bad decision since they have children, bills and even a pet to take care of. If people would splurge a little less or a little more within their budget they wouldn't continue to add on to their already ridiculoulsy high debt.

Another contribution to a person's debt is finance charges. Finance charges can be very harmful to a person's finances. Usually people do underestimate or do not include their finance charges when they are determining their budget. Such is the case with the Moellering's. Their Sear's credit card had monthly finance charges of $155 and their CashBuilder Elite Visa had a $200 monthly service charge. These are all things that need to be factored into a person's budget in order to avoid more debt.

Below is a chart that shows the decline of the U.S. savings rate from 1950-2010. By observing the chart you can see how Americans are gradually starting to save less and less money. It is no secret as to why this change has occurred. DEBT! It's hard for people to save money when they are constantly trying to make and living and pay off all their debt. It's a shame how hard it is for people to just make a decent living without having to worry about making ends meet.

DECLINING SAVINGS RATE OF THE U.S.
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U.S. SAVINGS RATE COMPARED TO OTHER NATIONS
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Critique of GDP Podcast

Today I reviewed Jared and Mari's Gross Domestic Product (GDP) podcast. The first thing about the podcast that stood out to me was the way they presented the information. I think it was very creative to set up the podcast as if it were a phone call. It is so realistic that it gets the audience interested. I think they did an excellent job in the creativity department.

The next thing I noticed about the podcast was how good their recording sounded. The recording was very clear and they made sure they did not mumble. On another note, the images were satisfactory. Although they coordinated with each subject they were discussing they did not add to the podcast or provide any additional information.

Lastly, the most important question. Was their podcast educational?

Jared and Mari touched on all the major points about gross domestic product and answered all of the questions listed in the original assignment. They discussed its definition, how it is calculated, how it effects other nations and the difference between GDP and per capita income. They explained everything so thoroughly rather than rush through all the details, which was also very good on their part.

Overall, I believe Jared and Mari did a fantastic job with their podcast.

5 stars for Jared and Mari!!!

U.S. Trade Deficit: Getting Better?

'Rising Exports Putting Dent in Trade Gap' discusses the how the U.S. trade deficit (when the number of imports exceeds number of exports) is gradually decreasing as a result of the increase in exports. The trade deficit is also expected to go down even further because of the U.S. dollar's weak value. It forces the U.S. to rely more on their own products to use and sell rather than relying on imports. A weak dollar can also benefit the U.S. in other ways as well.

As a result of a weak dollar, also has an effect on employment. During inflationary periods, the demand for goods is greater than the supply. This causes prices to increase and the value of the dollar to decrease because more money is in circulation. As a result, people buy more goods. Therefore, companies have to increase their productivity in order to keep up with the demand of the people, which subsequently causes employment to increase.

Also, a weak dollar affects other nations. If the U.S. dollar is weak that means inflation is occurring and the price of goods is going up. Therefore, the prices of our goods in other countries go up as well.

Taxes-How Does The Government Get Money?

Type of Tax	Specific Tax: How It Is Collected
Federal Taxes	Payroll Tax: Collected from wages and salaries only Income Tax: Collected from wages, salaries, interest from bank accounts, rents, royalties and dividends Corporate Income Tax: Collected from a corporations net income Excise Tax: Collected from sales of items such as tobacco, alcoholic beverages and gasoline Estate Tax: Collected from a deceased person’s estate Gift Tax: Collected during the transfer of property between living people
State Taxes	General Sale Tax: Collected mostly from general sales Excise Tax: Collected from sales of items such as tobacco, alcoholic beverages and gasoline Estate Tax: Collected from a deceased person’s estate Inheritance Tax: Collected from a person after they have inherited something from a deceased person
City/Local Taxes	General Sale Tax: Collected mostly from general sales Excise Tax: Collected from sales of items such as tobacco, alcoholic beverages and gasoline Property Tax: Collected from financial and real assets, this includes, stocks, bonds, houses, cars and artwork
Miscellaneous Taxes	Pollution Tax: Collected from companies that produce air, water, oil or water pollution

Student Loans-Beware

The main reason many culinary school students took out such large student loans was because they came from low to medium income families. These families clearly couldn't afford the high price of $48,000 for a two year program. It is a shame that these culinary schools do not provide the students would sufficient financial assistance. Culinary students such as Rick Park, who currently makes a measly $10.50 an hour, struggle to support themselves and pay off their students loans at the same time. Luckily for him, his mother helps him in pay his monthly student loan payments. However, not all culinary students are that fortunate.

After reading article on student loan, my view of student loans has changed. During my freshman year in college I will be taking out $3,500 in student loans which is low compared to many other students; however, I am still very fearful because the amount of students loans I will take out will vary each year. I am afraid that when I graduate I will have accumulated over $20,000 in student loans and my payments will be very high. Hopefully, this will not be the case.

Critique of Federal Reserve Podcast

Today, I reviewed Ashley and Justin's podcast on the Federal Reserve, which was very well presented. Not only was it very informative, but it was easy to listen to. It also touched on all the major points about the Fed, including its purpose, responsibilities and structure.

Another good aspect of the podcast was its style. It was created in the form of a study session between two students in an economics class. Although that would appear to be the most common format, it was very unique amongst the many podcasts; especially the pictures with the captions at the beginning and the ending of the podcast. The simplistic language they use also helps to make the podcast more listenable. It is much easier to listen to two students converse about the Federal Reserve rather than a teacher lecture about it. All in all, I believe this podcast was very educational.

I GIVE IT TWO THUMBS UP!!!

Compound Interest and the rule of 72

Compound Interest
When people talk about Compound Interest they are referring to the amount of money made solely through interest. Compound Interest is just the formal way of saying "making interest off your interest." Here is an example:

Example 1: Let's say I put $100 in the bank and my interest rate is 10%. After the first year, I will have made $10 interest on my $100, leaving me with a total of $110. Then, after another year I will have made $11.00 (10%) interest on my $110, which leaves me with a total of $121. Within 10 years, I would have made $159.37 interest on my $100. That's a lot of free money that I could use for college.

The Rule of 72
The Rule of 72 is an equation (72/x) used for compound interest. It allows a consumer to calculate the amount of time it takes to double their money, based on the annual interest. Likewise, it allows consumers to determine the required annual interest rate in order to double their money in a specified amount of time. Here are two examples:

Example 1: I have invested $100 in the bank. I would like to double my money within the next 5 years. In order to do that I have to use the following equation:

(72/x), where x is the number of years.
So, 72/5 is equal to 14.2.
Therefore, the annual interest rate must be at least 14.2%
for me to double my money in five years.

Example 2:I have invested $100 in the bank. My current annual interest rate is 7%. In order to determine the number of years it will take for my money to double I must use the following eqaution:

(72/x), where x is the annual interest rate.
So, 72/7 is equal to about 10.29.
Therefore, it will take me 10.29 years in order to
double my money with an annual interest rate of 7%.

Insider Trading Scandal-What Happened?

On Thursday, March 1, 2007, thirteen people were arrested for insider trading dating back to the 1980’s. According to the New York Times, some Wall Street Journal employees have been secretly exchanging information with employees of USB and Morgan Stanley. These secrets allowed them to buy or sell stocks before the news is made public. Amongst these people included Mitchel Guttenberg, a executive director at USB, David Tavdy, Erik Franklin, and Randi and Christopher Collotta. They were charged with conspiracy to commit securities fraud and securities fraud. If convicted guilty, they will serve about 25 years in prison.

Dow down 416 pts! - Why

Over the weekend, Chinese Investors began to sell their stocks because they were concerned that the government would increase the interest rates, in an attempt to slow down China's fast-paced economy. China produces most goods used in America today. For this reason, "the U.S. and Chinese economies have become co-dependent on each other." Therefore, the U.S. investors followed the trend and began to sell their stocks.

All of these famous declines were caused by big sell-offs. The Dow dropped about 90 percent during the Great Depression, about 22 percent in 1987 and about 9 percent during the 9/11 attacks. In my opinion, I think it is best to buy a good amount of stock now that the stocks are low because in a way, there is no where to go but up. The stocks have become very cheap lately so if enough people start buying stocks again, the value of the stocks will rapidly increase. Therefore, I am going to buy a few penny stocks.

Opportunity Costs

When economists talk about opportunity costs they are talking about the sacrifice a person is making when making a decision. This can be illustrated when looking at the stock market. For every stock a person buys, the amount of money they have to spend on other stocks decreases.


Opportunity costs are the things a person gives up when making a decision. This opportunity cost can be, but is not limited to monetary values. For every decision a person makes, there is alternative decision (opportunity costs). For example, if a high school has $10,000 to spend however they choose, and they decide to spend it on textbooks for AP classes, the opportunity cost would be not being able to spend the money on other items for the school. Another example would be a person decorating their bedroom. Let's say there is a lovely view of the lake through the window and the decorator decides to put a chair next to the window, the opportunity cost would be not being able to put the bed next to the window and see the view when they're going to sleep. An example of oppportunity cost in my life would be getting a job. If I get a job, I will have to work the majority of the work week adn weekend. My opportunity cost would be not being able to stay in the Dance Company and not being able to join the Outdoor Track team.

Types of Economic Systems

Traditional Economies
An economic system in which the decisions are based on the customs, beliefs, religions and etc.

Centrally Planned (Command) Economy
An economic system in which all decisions concerning the production and distribution of goods are made by the political representatives.

Market Economy
An economic system in which the decisions are made by individual businesses and consumers.

Mixed Economy
An economic system in which the decisions are made by both private and public companies.

What is the difference between communism and socialism?
In a communist society, the productions of goods relies solely on the labor of the common people. Therefore, the economy relies completely on the labor of the common people, who work for the "common advantage" rather than personal gain. Although communism and socialism are relatively the same, socialism is based on the production of goods by social need and other factors that nature, while communism is based on the production of goods through common labor for a common benefit.

Stock Market Game - 1 - Initial Investment Strategy

I plan to buy a lot of small stocks that are on the rise because they have a lot of potential to expand. I want to buy approximately 2-3 micro caps, 1-2 small caps and 1 medium cap. Hopefully, there will be a large variety of micro cap technology companies to buy stocks in.

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