Budgets

Make That Windfall Count

February 7, 2018 By Twila Van Leer

An unexpectedly large birthday gift, a cash bonus at work, a bequest from a deceased relative. You just never know when you might find yourself with $1,000 or more that isn’t committed to your current budget.

What to do with it? David Bach, New York Times bestselling author and co-founder of AE Wealth Management, has three suggestions that will make the gift more valuable than it appears on the surface. (Sure, allow yourself a little splurge, but don’t blow the whole amount.)

• Build up your rainy day fund. If you haven’t yet reached a goal of having six months’ living expenses on hand in case of a financial emergency, you can buy another $1,000 (or whatever amount) of mind’s ease. A safety net can spare you a dilemma when life takes a sharp right turn and you lose your job, have a medical emergency, car repairs – any one of those little clinkers that make life interesting. Your emergency fund will grow faster if you put it into a high-yield online savings account, or a money market account that pays reasonable interest.

• Increase your 401(k). The more you set aside in your employer-sponsored retirement account, the better. Use your windfall to increase your contribution to the retirement plan by 2 percent. Especially if your employer matches a set amount of the contribution, you’ll have a deeper cushion when you retire. A 401(k) offers significant tax advantages.

• Open a “dream account”. If you are looking into the future and seeing yourself at a Super Bowl game, signing up for grad school, traveling outside the country – you name it – a bit of unexpected money can give you a jump start. Open an investment account specifically for that dream. Commit yourself to adding to the amount regularly and before you know it, you are en route to the end point of that goal.

Personal Finance For Every Income

January 29, 2018 By Twila Van Leer

Some people hear the phrase “personal finance” and assume that it is meant for people with lots of money. Not so. In fact, it may be that the less money you have, the more important it is to track it and make the best use of it.

Even if you are living paycheck to paycheck, there are usually things you can do to make savings possible.

Start with a budget. Seeing your income and outgo in black and white gives you a good starting point. Then analyze your spending and see where there might be some wiggle room. Having a clear picture of where you are can help to plot out a direction.

Eating out too often? There is something to save if you discipline yourself to make less expensive meals at home. Lower the speed on your Internet. Choose a less expensive cable package, or dump cable altogether. Avoid compulsive purchases. Even if an item of clothing is on sale, it isn’t a good deal if it derails your savings intentions.

If you cut all the corners you can and still aren’t able to put a consistent amount into savings, it may be time to look at more extreme options, such as taking a second job temporarily so you can pay off debt.

Downsizing your living space may be possible. That means saving in several areas, including the housing itself and the cost of the utilities it takes to live there. Making drastic changes for the short haul to come out better over the long term is smart.

Bottom line: Don’t wait until you can easily afford it to begin a savings program. Scrimping a bit now will pay off in the future when your income is likely to be larger. You will have developed the habit so that retirement savings will come natural.

Will They Be Ready For Retirement?

January 7, 2018 By Twila Van Leer

Even though it appears that young workers today can look forward to less benefits from government programs and pensions when they retire, they don’t seem to be bothered enough to start saving.

Forty-eight percent of those aged 18 to 30 have zilch in their savings accounts, according to a GenForward poll conducted by the Black Youth Project at the University of Chicago. Associated Press-NORC Center for Public Affairs Research collaborated.

While some of those in the research sample would still be in school, those at the other end of the spectrum are doing no better. In the age group 25 to 30, the great majority had nothing set aside for retirement. All this is occurring at the same time that traditional pensions offered by employers are disappearing, leaving future retirees dependent on their own resources.

Contributing to the problem are new Social Security rules that keep increasing the age limits for participants. It used to be possible to apply for full SS benefits at age 66. Now it is 67. The rising generations have less faith in the federal retirement program than did their parents. Only 5 percent say they have confidence in the program and 28 percent are “somewhat confident.” That leaves well more than half who are not counting on Uncle Sam to underwrite their retirement.

Still, the young people look at the situation through rose-colored glasses, expressing confidence that they will be able to maneuver through retirement okay.

Many are relying on company-sponsored savings plans such as 401(k)s to see them through. One young man who took a finance course in college, was alerted to begin saving at age 20 to secure his retirement. He didn’t begin until several years later, but at least has the concept in mind. He and his wife both have 401(k)s. Some of the younger set reported taking second jobs to give them a savings boost.

There is no simple formula for deciding how much you need to squirrel away for retirement. Depends on when, where and the lifestyle you anticipate. Fidelity suggests as a rule of thumb that you dedicate 15 percent of your current income to that future need. Some young workers have looked at their personal situations and expect to be working beyond usual retirement age — until they are 70 or more.

Some of the confidence these younger generations exhibit is founded in the knowledge that they are just getting started in their careers. They expect to increase their earnings as time passes and to have more leeway for saving. But based on well-founded common wisdom, about half of them are already behind the curve and they may wake up to find themselves retired — and broke.

Biggest Cyber Monday Ever

January 5, 2018 By Twila Van Leer

The phenomenon that has changed the face of shopping in American — doing it online — proved itself well entrenched when Cyber Monday took place on the first Monday after Thanksgiving. When all the calculations are completed, the day devoted to electronics-related items may well have set new records.

Adobe Analytics, the research arm of giant software maker Adobe, reported that as of 4:30 p.m. on Cyber Monday, some $3.4 billion in sales had been recorded, a 17 percent increase over the 2016 Cyber Monday. Web traffic from mobile devices also took an uptick, surpassing desktop computers for the first time. Even a seasoned expert such as Frank Yanover, retired Amazon exec, found he could be persuaded by what they found online. He bought a Vitamix blender for $300, a $200 discount. He also succumbed to a deal from Best Buy for an iPad, ordering by phone and then picking it up from a nearby store. He finished up his unscheduled online spree with his voice-activated Echo by purchasing Amazon’s Echo Dot for $30 — a $20 reduction.

Echo Dot was, in fact, Amazon’s top-selling electronic item for Cyber Monday, followed by Fire TV board games, Fingerlings and Legos over in the kid’s section.

At eBay, they were selling a $745 Apple MacBook Air every five seconds. J.C. Penney reported its top-selling Website item were towels, $25 diamond stud earrings and Liz Claiborne handbags (which, incidentally, features a built-in phone charger. What’ll they think of next?)

Walmart, which has been trying to play catch-up with Amazon, offered three times the number of items online that it did last year, but Amazon appeared likely to retain the record, with 50 percent of all online sales growth this year.

Overall the most popular items sold online during Cyber Monday were computers and small electronics, followed by clothing, according to America’s Research
Group. Ease of shipping is a factor.

People who actually showed up in a store were almost the exception. Parking areas in some of the most popular stores were only half full as shoppers stayed away in droves to do their shopping in the convenience of their homes or offices. Of course, for those who still want the store experience, that means fewer shoppers to compete with.

Holiday Sales Grow From 2016

December 30, 2017 By Twila Van Leer

The 2017 holiday shopping season appears to be a very good one for America’s retailers, many of whom have not had much reason in recent years to be merry. The successful end-of-the-year selling shows that traditional retailers are adapting to the shift to online buying.

The tax overhaul recently passed by Congress could signal more shifts in shopping as ordinary Americans figure out how the changes might affect them and their ability to spend. If they are in the brackets that might benefit from the tax re-do, they might spend more. Or they might put the “savings” into savings.

As the year wound down, it appeared that the 2017 holiday season would stack up very well against previous years. One factor is that unemployment is at a 17-year low, contributing to the highest level of consumer optimism in years. The current spending spree is the most intense since the recession that is now about 10 years in the past.

Consumers are not only spending more this year, but they are putting more of their money into electronics, clothing and toys to a greater extent, according to the National Retail Federation. The federation noted with elation that the week before Christmas, the most critical time for retailers, saw a lot of traffic in stores. Many retailers see 20 percent of their foot traffic during that week. The fact that there was a full weekend immediately before Christmas also boded well for the industry, as late shoppers continued to flood the stores in search of last-minute gifts and stocking stuffers.

Most online shoppers have completed their buying before the last week to allow time for deliveries. They then are more likely to show up in the stores, bypassing the convenience of online shopping for the assurance that their gifts will be on time. Even so, the numbers of shoppers buying online continues to grow. Now, the growth in online sales is about double that level at stores, according to First Data, a payment technology firm. Online giant Amazon accounts for a considerable amount of the growth. Amazon has expanded into new areas, putting more categories of retailers on alert. The firm reported that its Cyber Monday sales tallied the highest in its history. Estimates are that Amazon accounted for more than 60 percent of the total sales for that day.

Some families have begun exchanging “wish lists” before the holidays, consisting of many web links. The shopping then becomes easier and the satisfaction with gifts more consistent.

Stores are responding to the online onslaught by offering more weekend deals and upping their loyalty programs.