Opinion: Homesteading frugality is one way to make life sweeter and less complicated

A frugal life has fewer decisions and offers more peace.
(Frugalwoods photo)

Learning from Americans who live as homesteaders is one way to embrace —and even relish — living frugally.

"It's uncommon to hear someone espouse the virtues of frugality for frugality’s sake," writes Elizabeth Willard Thames for Frugalwoods, a financial newsletter. "Frugality gets a horrendous rap, primarily from those who peddle the pricey products we’re lured to believe will equal the good life. I didn’t realize at the time that my frugality would become a destination and an enriching element all its own."

Thames shares 19 reasons why frugality can make life better. A few of her homesteading ideas and habits are below.

Honoring your priorities is what frugality is all about. A successful frugal budget allocates money "only on the most important things, and a happy frugal person only allocates their time to their highest priorities," Thames explains. "I know that my time and money are both limited, so why fritter either away on stuff that doesn’t bring me happiness?"

Frugality creates a life filled with learning. Thames writes, "By embracing the art of DIY, we’re never at a loss for what to do with our time. If it’s a sunny day, we’re out in the garden or hiking. Rainy? We’re inside writing, baking, reading."

Frugal people become more creative. Thames notes, "We innovate, we experiment, and we do it ourselves. We devise our own food, our own entertainment, our own gifts, our own way to live."

Living frugally means making fewer decisions. Thames notes, "Research has proven that the glut of choices we face in making decisions in our modern economy do not, in fact, make us happier."

Keeping things simple can help build community. "Frugality encourages a reliance on one another, a sharing of skills, of time, and of stuff," Thames adds. "The frugal life is an interconnected life where you acknowledge that you need help and have gifts to offer."

More than anything else, "frugality gives you options. Or, more precisely: frugality gives you a level of financial stability that affords you options," Thames explains. "When you’re not in debt and you’re not living paycheck-to-paycheck, you are able to make decisions based on what you want to do with your life, not what you have to do."

Both parties agree medical debt is a burden for many Americans and are working to pass laws that offer relief

Solving Americans' medical debt problems has
bipartisan support. (Photo by K. Sikkema, Unsplash)

Lawmakers from both parties agree too many Americans are saddled with medical debt and the problem requires bipartisan intervention. "Democrats and Republicans in statehouses around the country have been quietly working together to tackle the nation’s medical debt crisis," writes Noam N. Levey of KFF Health News. Florida House Speaker Paul Renner, a conservative Republican, told Levey, "Regardless of their party, regardless of their background . . . any significant medical procedure can place people into bankruptcy. This is a real issue."

Some states have passed laws banning unpaid medical bills from consumer credit reports and "restrict medical providers from placing liens on patients’ homes," Levey writes. A significant medical debt can cause a financial spiral for people who end up "draining savings, taking out second mortgages, or cutting back on food and other essentials."

States are trying different approaches to address the problem. "When Arizona consumer advocates put a measure on the ballot in 2022 to cap interest rates on medical debt, 72% of voters backed the initiative."

Legislative efforts to bar medical debts from consumer reports or to limit a hospital's collection activity vary from state to state. "When Colorado last year became the first state to bar medical debt from residents’ credit reports, just one Republican lawmaker backed the measure," Levey writes. "New Mexico state Sen. Steve Neville, a Republican who backed legislation to restrict aggressive collections against low-income patients in that state, said he was simply being pragmatic."

Despite a rural veterinary shortage, many vets 'swooped in' to help treat animals hurt in the Texas fires

The extreme losses in western Texas 'can translate into
trauma.' (Texas A & M photo via Ambrook Research)

The wildfires that decimated western Texas in late February created thousands of miles of scarred earth and dead cattle. Adding to the disaster: There weren't enough veterinarians to treat the thousands of burned and wounded livestock and farm animals.

"The overwhelming number of injuries contrasted dramatically with the number of veterinarians who could respond quickly across a vast swath of charred Panhandle ground," reports Stephanie Stephens of Ambrook Research. "With an acknowledged shortage of rural veterinarians nationally, animal specialists from outside the area swooped in to collaborate with local vets whose plates were quite full. They made the difference, in so many cases, between animal life and death."

A cattle death toll of more than 7,000 doesn't tell the story of the profound loss ranching families feel for their animals. Andy Holloway, a county extension agent for Texas A&M AgriLife in Canadian, Texas, pop., 2,500, told the story of meeting a rancher who had lost all but one of his cows. Holloway told Stephens, "He collapsed into my arms, sobbing. He lost hundreds of mother cows … only one survived."

To treat every cow that survived the fire, including helping farmers decide which ones to cull, the Texas A&M Veterinary Emergency Team team "deployed to Canadian for 10 days as part of a seasoned group of university professionals who helped triage emergency care through five counties," Stephen reports. Some cattle were burned so badly they were euthanized. "Others were burned and could be cared for. Still others with hooves damaged by heat, and burns to lower legs and feet, sometimes showed dire injuries after four to seven days." Cows that cannot stand have to be euthanized. Some surviving cattle face smoke-induced respiratory problems.

Still, the people of western Texas are finding ways to help one another. Those who have grazable land are offering to share it. Others are donating fencing for animals and pets that survived. But for many ranchers, there are hard days ahead. Tara Haskins, a nurse practitioner focused on mental health programming, told Stephens: "The destruction of animals can translate into trauma. This is brought on by the massive depopulation, the conditions of those still suffering, the triaging of animals, removal of carcasses, and the burnout — producers manage all these moving parts, which can include financial devastation.”

"The need remains extraordinary as difficult assessments and treatment continue," Stephens writes. "For ranchers who need to find help or explore disaster relief options, or readers who want to donate money or supplies, a comprehensive list of vetted options is available at AgriSafe, Texas Farm Bureau, and Texas A&M AgriLife Extension . . . . General needs include hay and hay-hauling equipment, fencing supplies, salt blocks, and cattle cubes comprised of at least 20% protein."

The sting of high interest rates is hurting farmers, home buyers, consumers and small businesses

Graph by Karl Russell, NYT, from Federal Reserve data

Painful interest rates are not going away anytime soon, and when borrowing money costs more, business sectors, agriculture and consumers all take a hit. "Home buyers, entrepreneurs and public officials are confronting a new reality: If they want to hold off on big purchases or investments until borrowing is less expensive, it’s probably going to be a long wait," reports Lydia DePillis of The New York Times. The sting of rate hikes may be nearing an end, but "market-based measures of long-term borrowing costs have continued rising . . . Governments are paying more to borrow money for new schools and parks. . . . .Companies, forced to refinance debts at sharply higher interest rates, are more likely to lay off employees — especially if they were already operating with little or no profits."

Because borrowing money costs more, smaller banks have chosen to limit the amount of money they borrow from the Federal Reserve and lend more selectively. DePillis writes, "Small banks are at the epicenter of America’s credit crunch for small businesses." Mary Kay Bates, the chief executive of Bank Midwest in Spirit Lake, Iowa, told DePillis, "It’s a trickle-down effect for everyone. . . . We’re not looking at rates coming down any time soon. I really see us taking a close watch and an internal focus, not so much on innovating and getting into new markets but taking care of the bank we have."

For smaller businesses, the increasing costs of credit may mean downsizing. For entrepreneurs, survival becomes the focus. Even farmers are facing some of the fallout. DePillis reports, "Commodity prices have been dropping, helping to bring down overall inflation, but that has depressed farm income. At the same time, high interest rates have made buying new equipment more expensive."

The problem could eventually spread to affordable housing developments and auto manufacturers. "The real problem may arrive in a couple of years, when a new generation of renters begins searching for properties that never got built because of high borrowing costs," DePillis adds. "Car dealers may feel that shift soon. In recent years, dealers made up for low inventory by raising prices. Carmakers have been offering promotional interest deals, but the average interest rate on new four-year auto loans has climbed to 8.3 percent, the highest level since the early 2000s."

October is for estate planning: Start thinking about it, get a free kit and 'plant the first seed'

Photo by Imso Gabriel, Unsplash

Each year, October is designated National Estate Planning Awareness Month, highlighting individuals' need to outline financial and inheritance plans alongside future health decisions. A person doesn't have to be rich to need an estate plan, and although planning may take a bit of time, many resources are free and, once completed, offer peace of mind for individuals and families.

The ETV Endowment of South Carolina website has free resources and encourages everyone to take time to "Plant the First Seed" of their plan: "It is estimated that more than 120 million Americans do not have proper estate plans to protect themselves or their families in the event of sickness, accidents or untimely death. This costs many families wasted dollars and hours of hardship each year that could be minimized with proper planning. . . . No matter your age or income, now is a great time to get started on your plans."

Many Public Broadcasting Service affiliates, public universities, colleges and Cooperative Extension Service offices offer free planning tools with online discussions, attorney guidance, resources and tips to make the process less intimidating. For people who like pen and paper, some PBS stations will mail an estate planning kit to homes for free. Most sites emphasize that you don't have to be wealthy to need a plan, and once completed, people are glad they took the time.

Child-care cost increases more than overall inflation, and some families struggle to 'take the hit'

Wall Street Journal graph, from Bureau of Labor data

Besides the stubbornly high food prices, an even greater financial stress looms over some families--child care expenses. "The national average price of daycare and preschool services rose 6% in July from a year before, the Labor Department reported recently. That was nearly double the overall inflation rate of 3.2%, which was down from its recent peak of 9.1% in June last year," reports Christian Robles of The Wall Street Journal. "Parents could see their child-care bills climb higher this fall as providers boost tuition to cover rising costs and federal pandemic aid ceases."

Parents or caregivers have few options for child care in the first place. Danielle Ganje, a communications director and mother of three, "said she is paying about $2,500 a month for child care this summer. That is at least 10% more than last summer and more than her monthly mortgage payment." She told Robles, "We don't have many other options, so we just have to take the hit."

Much of the increase is attributed to labor, food and utility costs. Robles reports, "Child-care workers earned an average of $19.95 an hour in June, up 4.6% from a year earlier, according to the Labor Department. Providers are also facing the end of child care stabilization grants, which began in 2021 and helped providers stay open during the pandemic. "By the end of last year, more than 220,000 child-care providers serving as many as 9.6 million children had received such funding, according to the Department of Health and Human Services."

"Nationwide, a lack of affordable child care has pushed many Americans, particularly women, out of the workforce, economists say. Providers can pass on only so much of their rising costs to parents before some cannot afford their services, Robles reports. Jeannie Farewell, owner of Tiny Tot Daycare, in rural Chambers, Neb, population 288, "said federal assistance totaling at least $7,200 covered some of her increased costs including for propane and bags of potatoes. She works 60 hours a week for about $10.50 an hour, Nebraska’s minimum wage. She has raised pr.ices to $3.50 from $3.00 an hour per child since May 2022, to cover rising costs."

Less expensive states attract big-city remote workers with cash grants and amenities such as university libraries

 Diners at Vera Mae’s Bistro in Muncie, Ind. (Photo by Gary Coronado, L.A. Times)

The cost of living has risen everywhere, but in states like California, some people are looking to get away from expensive living by taking "moving grants and non-cash inducements" from states that are seeking to gain well-employed, mobile workers and their families, reports Don Lee for the Los Angeles Times. He cites Indiana, where "Dozens of counties and cities are practically stepping over one another in what has become the new competition across the land: attracting the pandemic-enlarged horde of people with remote jobs who no longer feel the need to live in more expensive urban centers such as Los Angeles or New York."

Many Midwestern places have lost population to more urbanized locations, but in the wake of the pandemic, they are selling their cozier size and local offerings as strengths. "Many see opportunities to attract people looking for a quieter, cheaper and friendlier place to live," Lee reports, citing Stanford University studies that "show about 10% of all workers are fully remote, five times pre-Covid-19 levels. "Typical relocation packages include grants of around $5,000, although several areas in West Virginia, including Morgantown and Lewisburg, say they'll pay each qualified worker who moves $12,000 in cash. . . . To qualify, most places require that you move from out of state and have a remote job and a minimum income, usually around $50,000 a year. . . . Non-cash inducements run the gamut. Gym memberships, entertainment passes and access to co-working office space are common."

Poplar Bluff, Mo, pop. 16,000, "is offering passes to stay at vacation cabins to enjoy the nearby waters and mountains of the Ozarks. They're among 17 incentives valued at $11,000," Lee reports. City Manager Matt Winters told Lee, "I think we have a lot to offer. Our cost of living is low. . . . Rural America is attractive to some people. It takes me five minutes to get to work every morning, and that's if I'm not in a hurry."

In Indiana, "More than 400 people have moved to Indiana, and an additional 350 are on their way, said Christie Hurst," spokeswoman for "MakeMyMove, which is based in Indianapolis and helps cities across the U.S. recruit remote workers," Lee reports. Neaby Muncie's "package includes $5,000 in cash and passes to use Ball State University's library and fitness center. . . . Rudy Ramos, 41, of Fremont, Calif., will be moving to Muncie, taking with him a remote consulting business that helps build laboratories and medical facilities. . . . Ramos is single and has lived his entire life in California, but said he just couldn't keep up with the rising cost of living. He signed a lease for a three-bedroom house in Muncie for $950 a month. In Fremont, he had been paying three times that much for a two-bedroom place." Ramos told Lee, "Honestly, it's just way too expensive here. All I'm working for is my housing. I don't have an opportunity to reinvest in my business. . . . I love learning new knowledge. I'm going to take full advantage of that library."

Diapers' cost can strain poor families' budgets; Tennessee becomes the first state to have Medicaid pay for them

Volunteers stack hundreds of diapers at the Nashville Diaper
Connection. (Photo by Mark Zalesk, The Tennessean)

Babies need plenty of naps and diapers. Naps are free, but diapers? Buying diapers at an average cost of $80 a month often stresses family budgets, but poor families in Tennessee may be getting some help. "Tennessee could soon be the first state in the nation to cover part of the cost of diapers for babies on the state's Medicaid program," reports Vivian Jones of The Tennessean. "With funding approved last month by the state legislature, TennCare is working to implement a benefit offering half of the diapers a baby needs for the first two years of life. The benefit is expected to be in place by January 2024. . . . Funding for the benefit comes from the $330 million in savings the state realized by restructuring how the state receives Medicaid funding from the federal government." (The impact won't be as great as it could be; Tennessee is one of the 10 states that has not expanded Medicaid to househols with incomes up to 138 percent of the federal poverty level.)

The need and expense of diapers are a shared pain for most parents. Danielle Cast, a single mom working two jobs, told Jones, "You need diapers all the time – you can't not have them. When you don't have them, and you need them, it's a heck of an emergency." Jones reports, "Casto is one of about 4,500 parents in Middle Tennessee served by the Nashville Diaper Connection – Tennessee's largest and oldest diaper bank." Despite help from such non-profits, more diapers are needed, Jones writes: "Unlike food, diapers are not targeted by any in-kind federal assistance program – no food stamps or WIC benefits cover them. About one in three families in Middle Tennessee struggle to provide the diapers their infants need. . . . Without enough diapers to keep a baby clean and dry, infants are at higher risk for diaper dermatitis and urinary tract infections. . . . Most daycare facilities require parents to provide a day's worth of diapers for their child – which poses a significant burden to families facing financial insecurity."

Casto told Jones that the new benefit "is going to be an extraordinary help. Lots of parents struggle with bills or their groceries – being able to have half your diapers already, it takes off half the burden, and it'll allow you to buy groceries that you might need, or gas that day, or medication for your children. . . . It's rough, especially the way that inflation has gone up recently – nobody planned for that. It's hard for parents to go and tell everyone how bad they're struggling – like, 'I don't have groceries' or 'I don't have diapers.' It's not something someone wants to brag about. It's uncomfortable, it's embarrassing – it's hard."

Doug Adair, founder of the Nashville Diaper Connection, told Jones, "It's a stupid, broken economic system: we want you to support your family, we want you to have a great job, and a solid career and go to school – but people really don't want to talk about diapers. . . . You can't buy diapers with food stamps. You can't buy diapers with WIC. You can't leave a day's worth of diapers [at daycare]? No daycare. No daycare? No work." Jones reports, "Adair said TennCare's new diaper benefit is something he's been hoping to see for a long time." Adair added, "It's essential. It's basic. It's empowering. It's a little burden off."

Small banks have a lot to offer to their customers and communities; there's little risk and lots of service

Thanks the FDIC local banks are just as safe as larger ones.
(iStockphoto,WSJ Photo Illustration)

Remember Banking 101 from "It's a Wonderful Life"? "During the first bank run, George was able to convince people not to pull all of their money out and instead take out only what they needed in the short term so the bank could stay afloat," Bourree Lam retells for The Atlantic. "Instead of George Bailey, Americans have the Federal Deposit Insurance Corp., which was created to insure bank deposits precisely so people wouldn't fear losing everything and pull cash out of the financial system in a panic, triggering bank failures."

"In the past few weeks, many small bank-account holders have gotten jitters: The surprise collapse of Silicon Valley Bank and Signature Bank has sent customers scrambling to larger competitors," reports Martha C. White of The Wall Street Journal. "Thinking of joining the stampede? Experts say now may be the time to consider what small banks offer. Thanks to FDIC insurance, they are just as safe as larger competitors. And right now, they're competing harder than ever for your dollars—many are offering deals for savers that leave their big-bank rivals in the dust."

It may be natural to leave what feels financially risky. "Depositors appear to be fleeing small banks because they fear problems in the banking sector could spread beyond the tiny number of troubled banks that have made headlines so far," White writes. "While many small and regional banks have seen their stock prices take a hit, the problems don't appear contagious." Michael Finke, professor of wealth management at the American College of Financial Services, told White, "A lot of the flight to capital to large banks is driven by emotion and not by true risk."

When offerings and protections are combined, reconsidering your small bank could yield good things. "Small banks tend to shine when it comes to being able to deliver personal, caring customer service and commitment to their local neighborhoods," White adds. "Just how much of your savings will be covered? FDIC insurance protects savings and checking account deposits up to $250,000—an amount much higher than most Americans keep as cash savings. Joint accounts, say between you and your spouse, are covered for up to $500,000. And if you have to protect still more than that, there are other simple strategies you can use to guarantee even larger sums." Finke told White, "The FDIC is going to protect you."

Interest-rate risks could sneak up on some community banks; regulators may need a stricter approach

Photo by Immimagery via stock.adobe.com

Big banks aren't the only ones that stocked up on bonds only later to regret it. "Dozens of other banks — most of them quite small — are deeply underwater on their bond investments and could hit trouble if they were unexpectedly forced to liquidate the investments. That's according to an American Banker analysis of regulatory filings by the country's more than 4,700 banks," reports Polo Rocha of American Banker. "The losses, a result of banks' bonds losing their value when interest rates rose, remain 'unrealized' and only theoretical. They would only cause trouble if a bank needed cash and was forced to sell the bonds early for less than it bought them, thus making the losses real."

"Bert Ely, a bank consultant, said it 'boggles the mind' that banks took on the same type of interest rate risk that brought down hundreds of savings and loan companies starting in the 1980s," Rocha adds. "Ely, who predicted what became the savings-and-loan crisis, said American Banker's analysis shows a need for regulators to take a stricter approach on the issue. Commenting on the large degree of risk many banks took on, Ely told Rocha, "It just absolutely astounds me that they can be in compliance with the regulations."

"Several bankers contacted for this story pushed back on any concern that they'd ever need to get rid of the bonds to raise cash. Those bankers said they have plenty of cash available. . . . The Federal Reserve Board launched a new program this month aimed specifically at helping banks with underwater bonds," Rocha reports. Still, "The review of call report data reveals how some banks appear to have misplanned for a scenario in which interest rates rose sharply. . . They effectively took the same position as Silicon Valley Bank, where executives thought interest rates would stay ultralow for years and were caught by surprise when the Fed raised rates aggressively." Cliff Rossi, a University of Maryland professor and former chief risk officer of Citigroup's consumer lending division, told Rocha, "It was Risk Management 101. They need to be all over that."

"The Federal Deposit Insurance Corp., whose chairman has warned about unrealized bond losses across the industry since at least May 2022, declined to comment," Rocha adds. "Bank lobbying groups, as well as several of the banks in question, said American Banker's analysis is incomplete and paints an inaccurate picture of those banks' health. . . .Hugh Carney, a top executive at the American Bankers Association, said a single metric such as unrealized bond losses 'does not accurately capture the risks or health of an individual bank.'"

Ex-FDIC chair worries bank 'bailouts' could drive deposits out of community banks; they'd have less money to lend

Federal officials' determination that two bank collapses posed “systemic risk” to the banking system, justifying their guarantee of uninsured deposits at the banks, poses a threat to smaller banks, a former chair of the Federal Deposit Insurance Corp. told James Jacoby of PBS's "Frontline."

Ex-FDIC chair Sheila Bair (PBS image)

“I do worry about community banks, in particular,” said Sheila Bair, FDIC chair in 2006-2011. “For these larger institutions, $100 billion, $200 billion, that’s not huge. But if you’re a $1 billion community bank, it’s a big difference. And what happens to them if the market starts assuming anybody, say, over $100 billion is going to have their uninsured deposits protected? Then that money is going to start going out of the community banks into those institutions that are viewed as having favored status. So these one-off bailouts that are particularly just for a couple of institutions create a lot of distortions and competitive disadvantages for others.”

Referring to what she called "bailouts" of Silicon Valley Bank and Signature Bank, Bair said "It’s extraordinary that they’re singling out just a couple of midsized institutions to basically bail out all their uninsured depositors. That is extraordinary. I have never seen that before. And the systemic-risk exception itself, which is the legal mechanism they’re using, is very extraordinary to trigger. It is meant to be used very rarely when things are really dire. . . . If they think just a couple of these small institutions have to be bailed out, how resilient is the system, really?" Later, Bair said, "At this point, I still think these risks can be managed. I think that Silicon Valley Bank in particular was unusual, in that it had a lot of uninsured deposits. And it was a very concentrated group of depositors … Silicon Valley folks. And word spread very fast precipitating a bank run and that had a cascading effect on some other banks that had somewhat similar vulnerabilities though not as severe." That said, "The FDIC and the Fed have quietly bailed out most uninsured depositors since 2008," notes Los Angeles Times Washington columnist Doyle McManus.

What about us? "I would say, if you have your money in a traditional community bank or regional bank, one where you banked for a long time, that has lots of households and businesses that do business with them, have done business with them for a long time, most of their deposits were insured or with institutions that have loyalty and multiple relationships with them — that’s the vast majority of the regional banks and community banks in this country. Stay where you are, right? Don’t get scared. If you’re a household, make sure you’re under the insured deposit limits," $250,000 per depositor, per bank, in each account ownership category. "If you are, the FDIC has a perfect record. … Again, I think most banks are okay. What we need to guard against is just contagion: otherwise healthy banks starting to lose deposits just because everybody gets scared."

The threat to smaller banks is a threat to small busienss, report Justin Lahart and Telis Demos of The Wall Street Journal: "Even if any outflows are halted or reversed, small banks may now grow cautious, such as by simply sitting on more of their cash as a defensive measure. Doing so would effectively reduce their capacity to extend credit. For small and midsize businesses that rely on smaller banks, this would be worrisome, says Raghuram Rajan, an economist at the University of Chicago’s Booth School of Business and former governor of India’s central bank. Loans to them are often based on so-called soft information that local lenders have built up over years." Rajan told the Journal, “These are loans built on strength of character and a handshake.”

Woes of the pandemic prompt more states to require financial-literacy classes for high-school graduation

"The Covid-19 pandemic, which revealed how many American adults live on the financial edge, has boosted ongoing efforts to make financial literacy lessons a school requirement," Elaine S. Povich reports for Stateline, a news service of the Pew Charitable Trusts.

Seven states require a stand-alone financial-literacy course to graduate from high school, "and five additional states' requirements take effect in the next year or two," Povich reports. "About 25 mandate at least some financial training, sometimes as part of an existing course. This year, another 20 states or so have considered setting or expanding similar rules."

Opponents of such required courses say they are well motivated but "infringe on limited time available for other high school electives and would impose costly teacher training or hiring requirements," Povich reports. Some opponents of mandates say it should be a local decision. However, support for required courses is "remarkably bipartisan," Povich reports, noting bills signed by Republican Gov. Ron DeSantis of Florida and Democratic Gov. Dan McKee of Rhode Island.

"About 16% of 15-year-old U.S. students surveyed in 2018 did not reach the baseline level of financial literacy proficiency, according to the Organization for Economic Cooperation and Development," a multinational agency, Povich reports. 

Consumer Financial Protection Bureau says rural areas face unique difficulties accessing banking services

The Consumer Financial Protection Bureau, an independent agency Congress created during the Great Recesssion, launched an initiative last month to focus on financial issues rural Americans disproportionately face. This week, CFPB issued a follow-up report detailing the banking disparities rural Americans often contend with.

"The report highlights that many of these communities lack access to physical bank branches, are more likely to seek credit from nonbanks, and are heavily affected by medical bills. The CFPB will be expanding its efforts to address these and other challenges facing the people and families of rural America," CFPB reports. "Local financial institutions, such as community banks and credit unions, often offer products and services that fit the local economic terrain. However, rural communities are experiencing a fast-paced exodus of in-person banking services, with rural communities 10 times more likely than urban communities to be located in banking deserts. In fact, the Federal Reserve has identified more than 2,100 existing and potential banking deserts across the country with more than 1,500 located in rural areas."

Other key findings of the report:

• Rural Americans are more likely to depend on brick-and-mortar bank branches and smaller banks.
• Rural Americans are less likely to have a credit history (i.e., have held and used a credit card). Lack of a credit card, or the credit history to get one, makes it more difficult to address short-term financial emergencies, seek new opportunities (such as moving or starting a business), or fill short-term income gaps.
• Unpaid medical bills affect rural access to credit, housing, and unemployment. Also, health-care and insurance costs tend to be higher in rural communities than in suburban or urban areas.

As part of its Rural Initiative, CFPB is conducting more research to figure out root causes of rural financial disparities, and plans to conduct roundtables with rural stakeholders across the country, as well as work with federal partners to improve rural financial policy. Rural residents are encouraged to use the CFPB's complaint tool to bring attention to shady, inadequate or inaccessible financial services.

Ag economists offer tips for farmers in financial distress

As farmers are increasingly stressed over financial issues, agricultural economists at the University of Kentucky are offering tips that could help them and connect to other resources that can help.

First, farmers must have a good understanding of financial statements and key financial performance measures to effectively measure a farm's financial health. That includes balance sheets, income statements, financial performance measures (such as profitability, liquidity and solvency). Farmers in Kentucky can access the Kentucky Farm Business Management Program for help with understanding financial statements and measures; other states may have similar programs.

Experienced farmers are likely familiar with the U.S. Department of Agriculture's loan programs, but new farmers should make sure to learn about them and understand how each can help: the guaranteed loan program, farm operating loans, and emergency loans.

A farmer considering quitting or retiring needs to fully understand the tax consequences first and how to plan ahead to for minimum tax penalties. That means considering how to dispose of assets like grain in storage, market livestock, equipment, and land.

Bankruptcy may be necessary as a last resort; it's important to understand the different types of bankruptcy and how one can recover and possibly continue to operate their farm afterward.

If a farmer wants to transition to another profession or work part-time off the farm for extra income, it's important to remember that that doesn't mean failure; 91% of farm households have at least one family member working an off-farm job. The article finishes up with a list of resources that farmers may find helpful in managing farm stress and mental health.

Federal Reserve chair notes rural lag in recovery from Great Recession, says it could hurt nation as a whole

Leflore County
(Wikipedia map)

The Great Recession officially ended in 2009, but the residents of rural Leflore County, Mississippi, are still hurting. Since 2009, "the number of jobs fell 4 percent and nearly 8 percent of the businesses disappeared," Howard Schneider reports for Reuters. "Average annual pay at private firms stalled. The median age spiked a full three years as working age adults voted with their feet and left. Home ownership rates tipped from just over half of families to below it."

Many other rural places in the U.S. are in the same boat, and federal lawmakers worry the slow rural recovery is increasing political tension between urban and rural areas, as well as hurting the nation's overall economy.

"There has been more of a recognition that what happens in low-income communities bubbles up," said Daniel Davis, assistant vice president and community affairs officer at the Federal Reserve Bank of St. Louis. The average family in rural Mississippi must spend 40 percent of its household budget on housing, which Davis observed "makes it harder to save, for the future, for college, to make the decisions that households with more 'padding' can make."

At a conference on rural poverty earlier this week at Mississippi Valley State University, which is in Leflore County, Federal Reserve Board Chairman Jerome Powell acknowledged the gap between rural and urban recovery rates, Schneider reports.

"We say we are close to maximum employment and at the national level we are," Powell said. "There are pockets that are not. The obvious way to grow the size of the economy is to bring people in that are at the edges . . . Make it easier for people to get into the labor force and stay in the labor force." But rural entrepreneurs might not be able to get loans or mentorship to start their own business in the current economic conditions, he said, which could further slow rural recovery.

"The ability of monetary policy to affect local outcomes is limited, since the Fed’s main influence on the economy is through national financial markets. Some argue that the Fed’s two years of hiking interest rates may make progress harder," Schneider reports. "But with the current trend of concentrated growth and job gains likely to get even stronger as a next wave of technology arrives, the central bank and others feel it is something they need to understand, for the future of communities like Leflore County, and for the nation as a whole."

Survey: rural millennials less likely to invest income

Rural and urban millennials have very different investment habits, says a new survey. Younger adults in urban areas tend to be more financially secure and savvier than their rural counterparts, the survey found, while "adults aged 22-37 from rural areas are less likely to invest over the next five years, less assured in making investment decisions and have fewer investment accounts. They are also less optimistic about financial markets," Janna Herron reports for USA Today.

Part of the reason rural millennials invest less is that fewer of them have steady work or a college degree. Though overall poverty rates in rural and urban areas are almost the same, rural millennials are less likely than urban millennials to have full-time employment (50 percent vs. 70 percent). And only 39 percent of rural millennials believe they'll someday escape a paycheck-to-paycheck existence, compared to 49 percent of urban millennials. And even among urban millennials who don't have a bachelor's degree or more are still more likely to invest, Herron reports.

Robert Stammers, director of investor engagement at the CFA Institute, a co-sponsor of the survey, said rural millennials could use online tools like apps and planning calculators to get more comfortable and informed about investing, but said lawmakers must work to increase access to such tools in rural areas. Increasing broadband access in rural areas would surely help in such an endeavor.

Quick hits: Rural folks worry more about money; bump stock bans hit bumps; there is a rural creative class . . .

Here's a roundup of stories with rural resonance; if you do or see similar work that should be shared on The Rural Blog, email heather.chapman@uky.edu.

Personal finance: Americans' anxiety about their finances is worsening across the board, but rural residents are even more pessimistic: according to a Pew Research Center report, only 36 percent of rural Americans believe their financial situation will improve in the future, as opposed to almost half of those living in urban and suburban areas, Jacob Passy reports for MarketWatch.

Guns: Months after a deadly Las Vegas shooting, seven states banned the sale and possession of bump stocks, which enable semiautomatic rifles to fire at the rate of fully automatic rifles, and several other states are expected to pass bans soon. But states that have passed the ban are having a hard time enforcing it. New Jersey residents were supposed to turn in or destroy their bump stocks by mid-April, but "So far, New Jersey State Police say, they have not received a single one," Matt Vasilogambros reports for Stateline.

Rural innovation: "One of the most persistent myths in America today is that urban areas are innovative and rural areas are not. While it is overwhelmingly clear that innovation and creativity tend to cluster in a small number of cities and metropolitan areas, it’s a big mistake to think that they somehow skip over rural America," Richard Florida reports for CityLab. A series of studies from the Department of Agriculture's Economic Research Service digs into the drivers of rural innovation, and finds that not only are innovative businesses common in rural areas, but that rural innovation gets a boost from the arts. Read more.

"For all the ways Americans are divided today along urban and rural lines, the two groups are at least united in this: Majorities of both, according to a new Pew Research Center survey, believe that everyone else is looking down on them," Emily Badger reports for The New York Times.

Dave Ramsey says more people worry about finances, perhaps thinking that politicians will improve their fortunes

Financial guru Dave Ramsey advises millions of Americans to gain wealth by paying off debt, via his weekly radio show, a book, and classes. He says he's worried about what he's hearing these days from people who are in debt, Tim Alberta writes for Politico. Ramsey's radio show is the third-most popular on the airwaves, right behind Rush Limbaugh and Sean Hannity, and has an obvious appeal to rural Red-Staters with his Tennessee accent, homespun sayings and bootstrappy approach to financial discipline. Perhaps coincidentally, high personal debt tends to cluster in rural and disproportionately rural areas such as the Central Appalachian coalfields, the Mississippi Delta, the Black Belt in the South, and rural Texas. (Politico map from Urban Institute data)

Map colors show each county's percentage of population that is the target of at least one debt collector.

Ramsey told Alberta that he hears from a lot more people, both Democrats and Republicans, who are terrified about their finances than when he started his radio show 25 years ago, and said part of it is because people seem to have lost hope in their ability to dig themselves out of financial problems, instead looking to the government to fix things. He believes the elections of both Trump and Obama were driven by voters' beliefs that their candidate would increase their financial security, a notion Ramsey scoffs at, but believes is a direct consequence of the Great Recession.

"I now have to spend more time talking someone into believing they control their own destiny than I used to,” Ramsey told Alberta. "I don’t know if I blame that all on 'hope and change' from Obama, or 'Make America Great Again.' They’re both hope slogans. Different ideologies, different politics, but both hope slogans: I’m going to deliver something for you that you can’t do for yourself."

Older Americans happiest in Hawaii, Ariz., least happiest in W.Va., Ky. says Gallup well-being index

Older Americans are happiest in Hawaii and least happy in West Virginia, says the annual index of well being by The Gallup Organization. Following Hawaii, other states with high well-being scores for people 55 and older were Arizona, New Hampshire, North Dakota and Colorado. At the other end of the spectrum, Kentucky was next to West Virginia, with Oklahoma, Ohio and Indiana nearby.

The data come from 115,000 interviews are are based on five categories: Purpose (liking what you do each day and being motivated to achieve your goals); Social (having supportive relationships and love in your life); Financial (managing your economic life to reduce stress and increase security); Community (liking where you live, feeling safe and having pride in your community); and Physical (having good health and enough energy to get things done daily).

Hawaii was No. 1 for Purpose, Community and Physical; Arizona was tops for Social, and North Dakota led for Financial. West Virginia was last for Purpose, Social and Physical. Mississippi had the lowest score for Financial and New Jersey was lowest in Community.

"There is one cluster of states with high rankings in a section of the Midwest, but for the most part, the high- and low-ranking states are evenly distributed," Tara Bahrampour reports for The Washington Post. Dan Witters, research director for index, told her, “The 55-and-over crowd in those top states … report always making time for regular trips and vacations with family and friends, reaching their goals in the last 12 months, using their strengths and aptitudes as a human being, in other words, doing things that are a natural right fit for them." (Post graphic showing states colored by quintiles, or fifths of 50)

Community-bank association chief says megabanks hinder efforts to help his members

Camden Fine, Independent
Community Bankers group

A lobbying battle is brewing between big banks and community banks, Ben McLannahan reports for Financial Times. "As regulators pushed through new laws to rein in the biggest and most complex lenders such as Citigroup, Goldman Sachs and Bank of America, their smaller rivals have complained of being swept up in the effort." Small banks say "Congressional attempts to free them from an expensive, inflexible and inappropriate regime have been repeatedly thwarted by the big banks."

Jamie Dimon, CEO of JPMorgan, the nation's largest bank, wrote an op-ed for The Wall Street Journal arguing "that big and small banks should unite as allies, not enemies, as they are 'interdependent' as customers as well as competitors," McLannahan writes. Camden Fine, head of the Independent Community Bankers of America, which represents more than 6,000 banks with almost $4 trillion of assets, responded with a letter of his own. Fine said "the reliance of the biggest banks on 'a government guarantee against failure' had 'destabilised the banking ecosystem.'"

Fine also pointed out that "Democrats rejected a Republican bill to extend relief to community banks because they said it contained a host of unacceptable concessions for Wall Street," McLannahan writes. Fine told The Financial Times, “We could probably pass our agenda tomorrow, if the megabanks didn’t constantly interfere. And so the tactic of Jamie Dimon and some of the other CEOs and their trade-group allies is to try and paint this picture that community banks are somehow hurting Wall Street banks, when the truth is just the opposite.” (Read more)