Viewing Category: Master of Financial Arts
December 18, 2012 • Comments (0)
Check out the We Are the 99% website. It features people holding signs that tell the story of their financial situation. Many of them are college graduates.
October 30, 2012 • Comments (0)
Here’s an interview with Larson Gunness, author of Peace, Love, and Financial Planning: Financial Literacy for Right Brained People. Also see the accompanying website which features a blog, financial tips, terminology, and lessons.
My name’s Larson Gunness, a graduate of the MFAIA program ‘10. Like many creatives, I have a split personality in that I have many interests - some of which might seem contradictory. For example, my business is in the field of giving financial advice to clients. In my creative work, I am a writer and musician (I have a band named Bay Spring Folk).
I got into finance/financial planning about 15 years ago. I saw it as a field that interested me a lot, but also offered the eventual possibility of a flexible work schedule. I began my work by going to business school, then working for a series of big corporations. The big company culture was not for me, but offered lots of good training. About six years ago, I launched my own “single shingle” practice, which I run out of my house in Barrington, RI.
I got into the arts the same way that I suspect most of us did: I was always oriented towards creativity and creative people. As a child, and then throughout highschool, college, and beyond, I was very involved in music and visual arts. Music (folk, rock, blues, eclectic, bluegrass, etc.) was always with me. I was in bands in high school and college. Tried to start a couple of bands after college, but got distracted by feeling the need to get a “real job.”
Most people I think see the arts and finance as very different fields of work/study. The incentives are very different. The types of people drawn to each are quite different. In fact, it sometimes seems to me that the world of finance and the arts/music world are quite isolated or insulated from one another. There are many reasons for this: for example financial people (brokers, advisors) have worked hard to earn a bad reputation among artsy types. So many artists simply don’t trust financial types. On the other hand, brokers and advisors are trained to scan the world for potential clients. And they just don’t often see much business opportunity among the ranks of the starving artist crowd, so they avoid it. There are other reasons for the gulf between these groups, but the ones I mention above are big ones.
I don’t think I so much made a leap from financial planner to artist so much as I found a place where these two disparate parts of my life and brain could coexist. I kept these to communities very separate, for many years. But, the collapse of 2008-2009 really sent me in a new direction. I was spending all of my time talking with panicked people about their financial lives (and let’s be clear, when people talk about money, they aren’t talking about dollars and cents, they’re talking about deeper emotions, like fear, shame, pride, guilt, satisfaction, etc.).
During 2008-2009, as I watched the economy collapse, I remember being motivated in two ways: first, I realized I had knowledge about an industry whose demise was affecting everyone. Second, I kept coming across super cool artist/musician/writer friends who struck me as relatively ill-equipped or under-skilled in terms of their own financial management skills. I also saw how the financial industry was (and is) totally committed to a sales orientation. Everything is a sales opportunity. The industry also seemed (seems) institutionally corrupt.
I didn’t mention it above, but after college I was a Peace Corps Volunteer for two years (in the Dominican Republic). Watching the financial turmoil during 2008-2009 did not make me want to flee the topic of money, it made me want to dig in and make something positive happen. The Peace Corps Volunteer in me won out. It struck me that instead of being on a sales model, financial resources and skills should be approached from an educational perspective. “Teach a man to fish…”
I realized that, because of the gulf between artists and the mainstream world of personal finance, many artists simply avoided accessing financial information. But, at the same time, many artists have quite robust and rigorous approaches to other parts of their lives (such as their creative practices). So, I began to give a series of workshops about the basics of finance to arts groups in Rhode Island and Boston (I did two at Goddard as well). After many of these workshops, I had accumulated a lot of materials, so I decided to “complete” them by making them available first online and then in a book format. And, I saw that a fun way to present material to artists would be to do this project as a collaborative arts project. I gathered several illustrators and painters and over time, developed the book and web site.
The response from artists has been terrific. Once people recognize that I am sincere in my efforts to teach rather than sell, they really begin to plug in. This is a topic that touches everyone’s life… no matter what. I like to say that you can ignore money, but it won’t ignore you… I’ve had just such an enthusiastic from the local arts crowd in RI, because people are so hungry for a resource that feels accessible.
The most common mistake I see is, I guess denial. This is a very real and difficult issue (and by no means unique to artists). Many people would rather think about anything other than, say, their mountain of debt or their sporadic income. But, alas, we have to face these things and only by facing them can we make positive progress. Another saying I like is “avoidance is expensive.” It might be annoying and painful to pay attention to one’s personal financial situation, but ignoring it will eventually hurt worse.
On the other hand, artists do quite well once they find the way to incorporate financial management into their lives in the way that is a correct fit. Artists are naturally entrepreneurial and like to be in charge of their own destinies. If they can use these tendencies to develop, over time, systems that address their financial challenges, then they can develop very stable and fulfilling lives where they are the ones in charge. It can take time, but I know many artists who have tinkered with their financial questions steadily enough that they’ve found workable long term solutions.
I think MFA programs do a bit of a disservice to students by not adequately addressing the cold cruel realities of life after graduation. I understand that when we are engaged in deep creative thinking, the realities of money and income and expenses can feel unwelcome to say the least. But I think that MFA students would be well served if they were forced to consider some of the realities of the artist life, while they are still in school. Why can’t faculty or administrators hold a session about questions such as: do you know how much you’ll owe on your student loan each month? How much will you have to make to pay those off? Of course these would be unwelcome discussions, but really really helpful I think - students sharing their thoughts and answers, before they are off on their own, would help.
My big beef with the student lending infrastructure is that it is waaay more easy to borrow money than it is to pay it back. Financial aid offices all have workshops or counseling sessions to address this, and I’m sure these are well-meaning. But at then end of the day, there is (it seems to me) many more resources dedicated toward giving out loans than toward paying them off once the student has graduated and isn’t on campus anymore. There are also financial incentives given to colleges by student loan providers… that doesn’t seem like a good thing, now does it? What if, for example, it was much much harder to get a loan? What if students had to convince a skeptical lender about their plans for how they will pay the money back, before they got the loan? What if students got turned down, en masse, because they didn’t have good plans in place for repayment? What if lending could only cover a smaller portion of a student’s total obligation; and the rest had to be covered by savings, grants, etc.? I don’t hold out much hope for perfect solutions to these questions, because they would require the system of student lending to slow down, lend less, and devote more time and resources toward helping students become better at repayment.
Advice I’d give to a person considering going to school and taking out $50,000 to do so is, wait. What’s the rush? What if you waited for two, three, four years and saved your money in the meantime? Or, is there another school that would be cheaper? Also, I’d ask whether they’d actually figured out how much they will have to pay, per month, for some 20 plus years? It might be frustrating to slow down the excitement of heading off to that great MFA program. But, if it’s so great, why not plan for it over the course of several years? You might value it even more.
In my book, Peace, Love, and Financial Planning, I cover many topics in basic personal finance. I address topics such as how to get a mortgage, how credit scores work, how to formulate a budget that works for you, what are the basics of investing. And, I tried to do it all in a way that would be appealing, even funny, for artists and other creative types. It’s basic stuff, but a lot of us don’t know for sure all of the basics. So I think everyone can learn something here.
E. Larson Gunness Bio
September 20, 2012 • Comments (1)
Someone somewhere is right now dreaming up a new way to milk money out of prospective college students. It’s not just art students who are being targeted, but I’m only going to talk about artists as that’s the focus of this blog.
First, lets look at Freddy Reynoso who borrowed $160,000 dollars from Education Finance Partners, UBS. Had Freddy paid back his loan on schedule, it would have ended up costing him $279,000. And that’s just one of his student loans.
If you’re not familiar with Freddy’s story, he borrowed money to attend Berkley College of Music in Boston. Certainly if you’re going to attend a music college and become a working musician, Berkley would be the place to go. Sadly, Freddy died in a car accident after graduating and the loan companies are now after his father who co-signed the loans.
His father is an American immigrant from Mexico who wanted to do whatever it took to help his son be the first in the family to get a college education. Now he’s dodging calls from collections agencies and wondering how he’s going to retire.
Meanwhile at another college, rather than getting a refund check, students were given a Higher One bank card, which could be used like a credit or debit card. Higher One charges $20 for replacement cards, 50 cents for using your PIN instead of swiping as credit, and there’s a $19 fee for inactive accounts. In 2009, Higher One earned approximately $75 million in revenue and reported 57.8 million in the first quarter of 2012 alone. It is now trading publicly on the NYSE.
Universities nationwide have signed on to the Higher One program because the card reduces their administrative budgets. Meanwhile, beyond the fees, students’ financial transactions are traceable and demographic information becomes available for credit card companies, universities, and everyone in between.
Students are not presented with hard numbers before borrowing for school. Tuition prices rise every year. There are books, supplies, and fees that can’t be accounted for up front. Artists sign on the line and figure it will work itself out later. That often means dropping art and working a job you hate.
If you want to be an artist that creates things and makes people think and feel, start feeling and thinking yourself. If you applied and got accepted to college but you don’t have the money to go, use your artist ways to think outside the box and figure out how to live as an artist without taking on debt.
There’s one surefire way to keep the loan companies from taking advantage of you: Don’t borrow money for art school!
September 13, 2012 • Comments (0)
You heard that college was your ticket to a better life.
You pay to apply to colleges, asking them to allow you to be a student. You get accepted and enroll in art school.
Even if they gave you partial scholarships, you can’t afford the tuition and so you borrow money in the form of student loans.
You’ve never had a limitless line of credit before.
The financial aid office has you sign a contract that allows them to disburse money to you over the next several years without you having to oversee the process. They find private and federal loans to cover the costs of your education. It seems like they’re working on your behalf but they’re really making sure the college gets paid.
Say your tuition is $10,000. They get you $12,000 or $13,000 and refund you the difference. You’re 18 (or 38) and you’ve just been handed a check for two to three thousand dollars. You’re in school full-time. You can pay the refund back immediately to the lender or you can live off of that money for the semester. Chances are you buy food, pay rent, and get school supplies, books, or a new laptop computer.
Soon you look forward to your two or three thousand dollar check each semester so that you don’t have to work too much outside of taking classes and doing homework.
Several years go by and you’re ready to be done.
During the graduation formalities, you are required to to sit for your student loan exit session.
In this short presentation, they tell you how much time you have before you’re expected to begin making payments.
After each segment of the computerized presentation, you have to take a quiz and click the correct answer to prove you were paying attention. If you get it wrong they simply reiterate the correct answer and tell you all of the bad things that will happen to you if you default on your loans.
At the end, they tell you the approximate amount of your monthly payment. It might be $50 per month and it could be up to $600 or $800 per month or more—for twenty years.
That’s when it hits you.
September 04, 2012 • Comments (0)
If you are considering taking out student loans to go to art school, ask your financial aid officer the following questions.
Are you getting loans? Does the school offer full scholarships? If so, how do you apply and how does the school choose who gets awarded the scholarship funds?
There are different types of student loans. Federal loans are different from private loans. Private loans are less preferable. Federal loans are usually cheaper, have fixed interest rates (as opposed to variable rates) and they’re more easily available. There are often more options for repayment with Federal loans.
Ask for an estimate on the total cost of your education. Chances are your financial aid officer will not be in a position to give you a total estimate with the reason being that there are too many unknown factors that could change the total amount before you graduate. Ask for a best and worst case scenario.
Run the numbers yourself. Add up the tuition costs per semester and multiply it times two per year for however many years you plan to be in the program. Then consider your rent, transportation costs, food, etc. How does it make you feel—afraid or energized?
Talk to graduates who took out the similar amounts in students loans as you. Ask if they feel if it was worth it. It’s especially helpful if you can talk to someone who had the same major as you. Ask that person if they’d do it again and, if so, how they’d do it differently. If you can’t find anyone in person, post in the Education Forum on Craigslist or search the name of your school on Facebook or LinkedIn.com and try to connect with a graduate there.
Use this loan calculator to figure out approximately how much you will have to pay per month and for how long after you graduate. Sit with your financial aid assistant and go over the numbers together to see if they’re accurate. How much money will your education cost after you have paid on the loan for X number of years with interest? Your $50,000 education can end up costing you almost $93,000 if you take 20 years to pay it off.
Assuming you progress directly through the program and graduate, ask for the due date of your first student loan payment and approximately how much that payment will be. It used to be that you had a six month grace period after graduating but that has changed.
Loans get bought and sold all the time. Chances are whomever is lending you the money will not be who you end up paying after graduation because your lender will sell the loan once you’re done. Find out who your lender is, ask if they’ll sell your loan, and ask about how that might effect you.
Once you’ve got the numbers in front of you, ask yourself it there’s a better way to get your education or to become an artist. If you think there is, keep looking until you find it.
When you have all of the information before you, how do you feel? If the financial aid officer can’t answer your questions, ask yourself why you’re moving ahead with the contract. You wouldn’t buy a car from a dealer who couldn’t tell you how much the car is going to cost. Why would you sign a contract and set yourself in debt for the rest of your life if you’re not sure that it’s going to make a positive difference for you or your career?