Money Management

The Holidays: Time To Overspend?

November 28, 2017 By Twila Van Leer

It happens every year. Despite good intentions, more than half of Americans admit they are planning to spend more during the holidays than they have on hand. Fifty-six percent fall into that category and 16 percent of them expect to spend at least six months paying off the overage.

The American Research Group predicts that the average person they surveyed will spend $929 on gifts this season. Among parents, the numbers can go higher. Newly released T. Rowe Price data indicate that on average, parents expect to pay some $422 per child. And 34 percent say they will spend $500 or more.

How do they manage the beyond-budget spending? About 25 percent take drastic measures, withdrawing money from 401(k)s or their emergency savings. Or they take out payday loans to finance their holiday spending. Even among families who start the year with good intentions, 58 percent fail to stick with the holiday budget they have set.

A large number will whip out the credit cards to finance gift-buying, with the inevitable result of laying on credit interest. For instance, using the $929 average figure as a base, if your credit card charges 18 percent interest, you’ll spend $1,022, and each month it takes you to pay off the total amount, the interest cost will rise. While cards are irresistible when you want to give gifts, they can be dangerous if you can’t resist temptation to keep buying until you are maxed out and are not prepared to pay them off right away.

Avoid dipping into the emergency fund. That money is there to take care of such things as car emergencies, leaky roofs and other bona fide emergencies. And the risk doesn’t decline simply because Santa Claus is coming to town.

Retirement savings also should be inviolate. Now matter how much your child or grandchild covets a very expensive toy for Christmas, it isn’t worth the 10 percent penalty you’ll pay, if you’re under 59.5 years old, for the early withdrawal. You’ll also lose the accrued interest on that money. If you are earning an average annual 7 percent return, that $900-plus withdrawal represents loss of about $9,600 by the time you’re 65. And there are all the Christmases to come, remember? If you use the same tactic to finance more Yuletide wishes in the years to come, the loss could be considerable.

That’s not to mention the taxes you’ll pay – about $225 on a $900 withdrawal.

It’s probably useless to advise better planning for this year, but for future reference: Set aside some cash each month in anticipation of the gift-giving season. Stick to your good intentions. Santa will thank you. When you shop, let a list be your guide and don’t get swept away in visions of your own largesse. Impressing friends and family during the holiday season won’t take away the sting when the holidays are over and your finances are in shambles. Don’t take more cash to the stores than you intend to spend.

Control Your Holiday Budget

November 24, 2017 By Twila Van Leer

If you are prone to go all out for Christmas and end up facing a New Year saddled with left-over debt, begin now to stay in control of your holiday spending.

Start the annual binge with a realistic view of how much you have to spend. Review your income and set expenses. What’s left over is what you can spend. (This is the time of year when too many people remember that they vowed last year to start a savings account especially for the holidays. Too late now.)

Work from a list, Write down every person to whom you want to give a Christmas remembrance. Even co-workers, the teachers and the neighbors. Remember to expect the extra expenses in foods, decorations and charitable donations you give at this time of year. If there are parties and special events that might dip into your budget, add them. If your plans include travel, that’s a big one. Start with that and build around it.

Go through the list and realistically determine how much you can spend for everyone on it. Homemade is good. Simple is easy. Trying to impress the recipient usually gets you into trouble budget-wise. This is a time when the old saying that “It’s the thought that counts” becomes operational.

Stick to the plan. It doesn’t take much of a hard left turn to put you off-track. Calendar your shopping, trying to categorize into foods and gifts. Don’t try to cram too much into a single shopping trip. When you get tired, you’ll be tempted to “buy anything” just to get the task behind you. Don’t weaken.

Keep track as you go through the process. Make adjustments if necessary, with your eye on the bottom line at all times. Keep your list up-to-date, crossing off the items as you purchase them. Once you have crossed them off, forget them. Second thoughts can be costly.

If you can wake up on Jan. 1 free of worry and ready to begin a new year with a clean slate, you’ll be glad you took the trouble to make your holidays debt-free.

Beauty Products Great Christmas Gifts

November 18, 2017 By Twila Van Leer

Beauty Products Christmas Gifts — Beauty products have been at the top of the gift lists for many women each Christmas

Traditionally, beauty products have been at the top of the gift lists for many women each Christmas and the merchants who deal in such items are doing what they can to make the gift-buying easier. Some stores, including Walmart and Target, are rearranging their displays and adding less expensive niche brands to their selections.

Korean-produced beauty products are being featured in some discount and drug chains. Glow Studio, created by the online Korean retailer Glow Recipe, is one of them. Ulta, whose whole product line is beauty goods, has gone to pains to offer products in a wide range of prices and features brow bars at some locations. Online merchants such as Colourpop and Glambot, feature high-end brands at lower prices.

With all that availability, there are some suggestions you might want to take shopping for beauty products. Here are five, compiled by BeautyStat.com.

First, know what you have to spend and decide how far you can make it go. If you choose to make a $100 expenditure for a high-end face cream, consider how it will be replaced in the future. Some stores, including Walgreen’s, share weekly circulars that include coupons that can cut the outlay. Aim for Black Friday for even better deals. J.C. Penney, which features Sephora displays in its 600 stores, doesn’t wait for the holidays. It has its products half off every Thursday.

Shop online. Use your phone to compare prices while you shop and read reviews on beauty products ahead of time. Check out eBay and Overstock.com. Glambot will trade your new but unloved products for cash.

Follow the bloggers, who keep current on product trends. They often can provide information on drug store deals on beauty products.

Take advantage of merchants’ offers to test the products before buying. Some have concierge services that allow customers to get first-hand information about such things as color-matching. Target has such services in 75 of its outlets. There also are subscription sites such as Birchbox that allows you to test five samples tailored to y our skin, hair and style. Subscriptions range from $10 a month to $100 for a year.

Sign up for loyalty programs. Sephora and Ulta have reward programs that offer points on purchases. If you spend $400 in a year, you qualify for Ulta Platinum, which gives you 1.25 points for each dollar you spend. The points can be used in conjunction with couples and other discount offers. Be aware that at Sephora, your loyalty points expire if you haven’t purchased for 18 months or more.

With such smart shopping, you can look forward to putting your best face on the holidays and sharing the same with those on your gift list.

Secrets Of Some Millionaires

November 12, 2017 By Twila Van Leer

Millionaire Secrets — According to financial guru Dave Ramsey, more than 80 percent of America’s millionaires are ordinary people who have accumulated their wealth in one generation.

Everyone knows that when you have a million dollars, give or take a few, that you live high. Right?

Wrong. In some instances, people with a lot of money continue to live modestly. For instance, in 1958, Warren Buffet, whose net worth today is pegged in excess of $75 million, bought a home in a quiet Omaha neighborhood for $31,500. He still lives there, although its value now is more than $800,000. That’s still pretty tony, but not what you’d expect for one of the richest men in the world.

Actually, according to financial guru Dave Ramsey, more than 80 percent of America’s millionaires are ordinary people who have accumulated their wealth in one generation. Their stories are told in a book by Thomas Stanley, “The Millionaire Next Door.”

Among the lessons Stanley draws from his study of the ultra-rich:

They read. On average, they read at least one non-fiction book a month. Quoting late-President Harry S Truman, “Not all readers are leaders, but all leaders are readers.” A constant desire to learn is a hallmark of the successful. They spend more time in books, particularly biographies and leadership how-tos than with the latest reality show. When they have free time, they use it wisely.

They understand the principle of delayed gratification. Many of those with money have spent a lifetime of sacrificing immediate gratification for long-term gain. They aren’t afraid to own a used car, live in a modest neighborhood and wear inexpensive clothing. They don’t waste time and resources in the elusive race with “the Joneses.” They tend to save for the things that they want, including education, a down payment for a home, retirement.

The popular concept of “debt as a tool” evades them. They avoid debt and prefer to save for what they want. Car payments, student loans and same-as-cash financing are things they avoid. They end up with more of their own cash to do with what they want.

Budgets are important to them. Ending up with a million or more dollars doesn’t just happen to the majority of the wealthy. They plan and they budget to reach their goals. On a monthly (or more frequent) basis, they assess where they are visa vie their money. Even those with plenty of money to spend, such as Ramsey, track it down to the penny.

They share. The majority of those with money to spare share it with those less fortunate. They tithe at their churches, contribute to charities, give to more needy persons in their circles of family and friends. They plan ahead to look after loved ones through sufficient inheritances, instead of spending it all on too-much house, $500-per-pair jeans and other unnecessary items.

You may never have to deal with money on the level of a millionaire, but the same principles can work for you.

Ready for Retirement?

November 10, 2017 By Twila Van Leer

Saving for retirement is getting harder. Not many Americans are accumulating the amount of money the experts say they will need to tide them over the remainder of their lives, and the U.S. Congress is taking steps that complicate the process further.

The idea is circulating in D.C. that the tax breaks associated with 401(k) savings should be curtailed. As our representatives look for ways to adjust taxes, that idea is still on the table.

Most Americans facing retirement become painfully aware that they will need a substantial amount of savings as well as Social Security payments to get by. The cost of health care is a bug-a-boo for too many as they age and general inflation takes a swath out anything that is set aside for the future. Here are some things to consider:

About half of Americans have a retirement account such as a 401(k) provided by an employer or and Individual Retirement Account (IRA), according to the Federal Reserve.

Not all jobs offer the 402(k) option. Only 35 percent of low-income working households have the job savings plan or anything similar that automatically sets money aside for retirement. For high-income households, the figure is about 80 percent, according to a study by the U.S. Government Accountability Office.

The average savings of most households that have a savings account is $60,000, but there is a wide range on both sides of the average. The typical household headed by someone under 35 had savings of only $12,300 last year, if they had savings at all. The savings cushion ranges from $403,000 at the top to a median of $25,000.

Millennials have more tucked away than their parents did at the same age, Compared with 1989, when a family headed by someone under 35 had just $7,500, today’s family in the same age group has $12,300, after accounting for inflation.

The age at which individuals can qualify for Social Security is rising. Sixty-six is now the threshold for receiving full retirement benefits. The figure is slated to go up slowly until it hits age 67 for those born in 1955.

The average life span is increasing. A woman at 65 can expect, on average, to live another 20.6 years. For men, the figure is 18 years. Retirement income has to last longer for most Americans.

Projections for health care costs are scary. A 65-year-old couple will need some $275,000 to cover medical needs through retirement, according to Fidelity. That doesn’t take into account nursing home or long-term care if necessary.

Fewer companies are offering formal retirement plans for employees. Only 13 percent of private-sector workers were enrolled in such a plan in 2014, says the Employee Benefit Research Institute. In 1979, the figure was about triple that number at 38 percent.

All of these factors suggest a more careful analysis of your prospective retirement income, with adjustments if necessary.