Personal Finance Blog

Tips And Stories To Help You With Managing Money

Save Money On Travel

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Save Money on Travel
Take advantage of frequent flyer programs. There is no cost to join and you can start collecting miles on your first flight after joining.
Whether you are a regular traveler or just an occasional vacationer, there are ways to cut your costs, Follow these tips to save money so you can travel more:

Plan trips for the off-season. Many destinations have their heaviest demand for the summer months. National parks, Europe and Canada fall into this category. Aim for spring, fall or winter to book a vacation. Ski resorts and Caribbean cruises work well with this approach.

Look at a package. Smart travelers book airfare with a hotel or car rental added on. Airlines offer deep discounts on unbooked seats by rolling the fare into a package. Shop online for deals.

Vacation closer to home. Vacation sites you can drive to save big bucks compared with airfare. Have you heard friends talk about the wonderful things you can see and do in your own state? A tour guide book for your own city might surprise you, so latch onto your camera and get to know your own area better.

Be willing to dicker. Independent and regional chain hotels that lack the advertising power of the larger chains may tack on an extra day’s stay or be willing to give a discount to those who ask. Doesn’t hurt to make the request.

A few nights of camping out can give you more money to spend on sightseeing and other activities. Many camps offer setups for under $20 per night. Opting for less than the Ritz makes it possible to make more forays to the mountains or beaches.

Hostels are cheaper than hotels or motels. A dorm-style room may be available for $15 to $35 per night. Some offer amenities such as internet access, game and TV rooms, hot tubs and organized activities. Another option is a private home. Many families leave their homes empty as they spend vacations elsewhere and they offer their accommodations for much less than a regular hotel. Trading homes is a money-saving option. The advantage of being able to cook meals instead of eating out is another way to cut vacation expenses.

National, state and local parks, beaches and forests have miles of hiking and biking trails, beautiful landscapes and good fishing and usually are less crowded than the high-priced resorts.

Cruise ships often make good deals on cabins when people who have booked fail to show up. Check on last-minute bargains.

Take advantage of frequent flyer programs. There is no cost to join and you can start collecting miles on your first flight after joining. Over time, you’ll accumulate points for free flights, hotel stays, merchandise and other perks.

Sales Tax Ruling Benefits E-Tailers

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Sales Tax Online Shopping
The losses in sales tax revenues from the online sales have cost states as much as $33 billion each year
The recent U.S. Supreme Court decision that will allow states to have online retailers collect sales taxes, just as local retailers do, will go a long way toward leveling the advantage the online businesses have historically had.

The court’s landmark 5-4 vote on the issue will take away the special break the e-tailers have enjoyed and overturns a 1992 decision that they were exempt from collecting sales taxes.

The Supreme Court ruling specifically addressed a South Dakota situation. That state filed a 2016 lawsuit against online retailers Wayfair, Overstock.com and Newegg over the issue of state tax collection. The high court decision means that online merchants can no longer claim an exemption from collecting sales taxes based on the fact that they have no presence in the states where they sell their wares.

Justice Anthony Kennedy, representing the majority of the justices, said that vast marketing changes no longer justify the practice. It has given the e-commerce marketers an “arbitrary advantage over their competitors who routinely collect state sales taxes,” he said.

The losses in sales tax revenues from the online sales have cost states as much as $33 billion each year, Kennedy noted. In 1992, only 2 percent of Americans had internet access. That figure today is about 89 percent and the percentage of online sales rises regularly. Today, some 9 percent of all retail sales are made on the net, and the rate is growing at four times the rate of the increases in the brick-and-mortar outlets.

Retailers in general applauded the Supreme Court action, realizing that it levels the playing field among merchants online and off. “The Supreme Court has acted correctly in recognizing that it’s time for outdated sales tax policies to change as well,” said Matthew Shay, president and CEO of the National Retail Federation.

Retailers are urging Congress to step up to the plate and craft additional legislation that will permanently resolve the inequities caused by the sales tax issue. The complexities grow as large e-tailers such as Amazon acquire smaller businesses and the mix between big-box stores and small outlets and the erosion of boundaries between in-state and out-of-state sales increases.

Pay Raises Don’t Keep Pace

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Pay Raises
Pay raises are not keeping pace in a growing economy, robbing some people of the benefits of the upswing
With just about every economic factor pointing to a positive time for America, one element of the picture is lagging. Pay raises are not keeping pace in a growing economy, robbing some people of the benefits of the upswing.

Jerome Powell, chairman of the Federal Reserve, was asked during a news conference what was keeping pay from reflecting the general growth and he had no satisfactory answer. It’s a puzzle, he said.

With employment at the highest in several decades, there still are unfilled jobs as employers fail to find qualified workers. Those factors would logically portend an era of healthy pay raises, but it hasn’t happened, at least in the country’s leading industries.

Powell could offer only a guess: the economy’s relatively low productivity growth. In essence, he suggested, American workers aren’t generating enough extra value for each hour on the job.

Some economists lay the blame on failure of companies to invest in capital equipment that would improve productivity. Others say that earlier technological breakthroughs have not been duplicated.

Bottom line, as Powell said, “It’s a mystery. A puzzle.”

Part of the mystery, as Powell said in 2017 when he was a Fed governor, is that inflation remains below the central bank’s 2 percent target after years of monetary stimulus. He estimated that inflation will run slightly above that target over the next few years, fueled by President Trump’s tax cuts, low unemployment and a gaping federal budget deficit.

In the meanwhile, hourly wages are flat in many fields, according to the Labor Department, and have actually fallen slightly in others.

Americans Are In A Spending Mode

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Americans Spending Mode
Government figures show that retail sales in May were up by 5.9 percent over the same month last year
If you’ve been on a shopping spree recently, you have lots of company. Government figures show that retail sales in May were up by 5.9 percent over the same month last year. That’s a 0.8 percent increase for this year.

Americans are flocking to clothing stores, restaurants and home-improvement stores at a higher rate, the economists report. The increase at “physical stores” outpaced that in “nonstore retailers” such as Amazon, the figures show.

A strong economy and a booming job market, with unemployment at its lowest rate since 2000, are credited with the surge in spending. Tax cuts enacted last year also put some discretionary money into many purses. Spenders watched to see what would happen with taxes and the cuts were an all-clear signal for a shopping bonanza.

At the beginning of this year, economists predicted a 3 percent expansion of the economy. Now they are looking at 3.5 percent.
But, it is not likely that the spending spree will go on indefinitely.

Savings have suffered as the household money went into purchasing. The rate dipped to 2.8 percent in April, one of only three times since the 2008 recession that the figure has been below 3 percent.

Responding to the current spending climate, the Federal Reserve has upped the prime interest rate, and is expected to make additional increases this year. Another factor that could cool the heated economy is the tariff wars going on between the United States and other countries. Combined these market effects could put an end to big spending.

Auto sales are expected to jump sharply if the Trump Administration carries through with threats to put tariffs on cars from Europe and Japan. That would put a damper on car sales, which have shown a 4 percent increase over a year ago. Gas prices also are a factor, with a 17.7 percent increase in gas prices over last year. Fewer car sales and higher gas prices may be the deciding factors for people anticipating a car purchase.

Navigating The Trade Wars

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Trade Wars
Small companies may not be able to maintain global supplier networks, but they can look for other way to cultivate relationships in Asian markets
Small businesses are warily watching to see how the effects of international trade wars will affect them. Will they have to massage their own practices to compete with a new set of trade realities? With steel, for instance, being one of the topics for international wrangling, might a producer of steel barbed wire have to rise to stay even?
Government agencies involved in international trade issues are suggesting that small businesses:

Stay Informed. Not being prepared for the upshot of the disputes could be fatal. Even if a small company does not import raw materials or machinery from China, for example, they could be affected by suppliers down the line who do. The U.S. has published a list of some 1,300 products that could be affected by tariffs. If any of those products are used by small businesses in the United States, they need to be aware.

Look for Alternatives. Small companies may not be able to maintain global supplier networks, but they can look for other way to cultivate relationships in Asian markets. A consultant may be available to guide you through the intricacies of the current markets so you have more than one source to obtain imported items.

Create Ties to Larger Partners: Small companies that are part of larger supply chains have a better chance of getting to multinational companies to purchase raw materials and survive trade disruptions. When then-President George W. Bush imposed tariffs on steel imports in 2002, that’s how some small businesses absorbed the shock. The large auto companies now use their purchasing power to negotiate long-term steel prices and pass the benefit on to suppliers.

Use the Loopholes: If a small business hasn’t been able to find the type of steel it needs in the United States, it can petition for an exemption from tariffs. There is a process to request an exclusion from steel and aluminum tariffs.