Personal Finance Blog

Tips And Stories To Help You With Managing Money

What Not To Buy In 2014

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Save Money On Traveling
Extra Leg Room On Trips – Is It Worth The Price?
Technologies are changing and require more review of intended purchases if you’re in the market for products. Here is a list of products from around the web that you might want to avoid if you want to keep your money in your wallet.

1 – Landlines

Landline telephone services are rapidly being replaced by wireless phones. Two in five households had switched to wireless the first half of last year, up slightly from the first half of 2012. In the past decade, some 90 million adults, 38 percent of the population, became wireless-only. Scrapping the landline allows you to drop one of the monthly bills. And you needn’t be restricted to a cellphone. There’s Skype, which is free and puts you in touch with friends and family around the world via smartphone and other devices. FaceTime video may be free with a Wi-Fi connection. MagicJack Plus can be connected to a USB port, computer or regular phone router. It may cost $49.95 for the device and six months of service, after which the monthly service is $1.67 to $2.50 per month.  Some folks may want to retain their landline as well. There is more security in case of disruptions caused by bad weather or other problems.

2 – GPS

Before investing up to $300 to purchase a GPS device, look at new developments that serve the same purpose. There are GPS apps on many smartphones, a fair number of them free to upload.  A growing number of new cars come with a GPS option. Forty-nine percent of 2013 vehicles have a navigation system.

3 – Cable Television

Cable television is being replace by other technologies. Since 2004, subscribers to cable have been dropping out in favor of services such as Hulu and Netflix NFLX, which provide comparable service at a much lower cost. Using an Internet connection, consumers can stream many cable shows, news programs and sports events, as well as movies, directly to their TVs. Some channels offer access to programs through their websites. These services are available primarily to those who don’t care if their shows have been previously aired and who are willing to give up live programming.

4 – Hotel Rooms

The demand for hotel rooms, along with their rates, are going up. There are some alternatives, including apartments and homes where prices are lower and there is usually more space. The average daily rate at U.S. hotels is $110.59, up 4.1 percent from 2012 and 12.6 percent from 2010. The average is expected to rise to $115.68 in 2014, according to PricewaterhouseCoopers. Agencies such as Airbnb and Vacation Rentals By Owners, offer an assortment of homes you can rent. Some provide free airport pickup and drop-off services. This approach is particularly effective for large groups or families traveling together. Advantages may include many bedrooms and facilities for meal preparation. The downside: such arrangements usually offer less security than do hotels.

5 – DVD & Blue-Ray Players

DVD and Blue Ray player sales are down. Sales for DVD and Blu-ray units totaled 21.3 million in 20l2. That’s down 20-plus percent from a year prior and 24.8 percent from 2010.  More people are opting to stream movies from Internet services such as Hulu and Netflix. Many gamers can use their consoles to watch DVDs.

6 – Computers

Desktop and laptop computers are becoming obsolete to a degree. Tablets perform the same functions and they’re portable.  The price differential is considerable, with Apple’s IMac starting at $1,299, compared with an iPad at $299. Graphic designers and traders, obviously, will find it necessary to stay with large screens, but for the vast majority of users, the smaller versions fill the bill. Worldwide shipments of PCs fell 4 percent in 2012 over the prior year, an indication that PCs are losing ground in the computer market.

7 – Leg Room On Airplanes

Airlines are changing their approaches to giving passengers more amenities — for a fee. It has been common practice to provide an extra three to six inches of legroom in coach for an additional cost of up to $180. The seats often are in the exit rows or the first row in economy. But for a payment of $100 to $200, a traveler can be upgraded to business class, where seats are more comfortable and service is more accommodating. These are options that used to be reserved for frequent fliers, but now they are offered to any passenger willing to pay a bit more when they check in or at the gate.

8 – Credit Cards With Rewards

Credit card companies are altering rewards programs. Consumers should be wary now of promotions that offer rewards in points or miles. Many of the card issuers are requiring a greater outlay by the consumer to get the “free reward” they could have obtained earlier with fewer points. Many of the cards now come with annual fees ranging from $30 to $75. Instead, consider a credit card with a cash-back offering, a much more straightforward plan.  The usual kickback is 1 percent to 5 percent of the number of dollars involved in the purchase.

9 – Digital Cameras

Digital cameras are suffering an identity crisis. With competition from cell phones with photo capacities and an expanding range of options for picture-takers with particular goals in mind, there is a confusing array of choices.  Digital point-and-shoot cameras that have been the rage for years are seeing a decline in demand. Sales are down some 44 percent since 2012 and they’re expected to keep dropping. “Real” photographers are choosing larger, DSLR cameras, while those bent on action shots are finding models such as the Go-Pro best meet their needs. Be sure that what you get is what you really want.

10 – Credit Reports

By law, credit card reports cannot be more than $11.50 per report. Your credit score is often not included in these reports. You can order three different FICO scores – one from each credit reporting bureau – but it will cost you – $59.85. Some credit cards like Discover Card are showing customers credit scores every month when consumers sign on to their accounts. You can’t beat free credit scores!

As a consumer we want you to save money on all your purchases in 2014. If you know about other good savings tips, please share with us!

Mortgage Rates Are Down

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mortgage-ratesAnyone who has ever ventured into the world of home buying has learned something about the interest rates that are an integral part of the deal. They yo-yo up and down almost daily. In early May, they hit the lowest level they have been for awhile, at 4.21 percent for a 30-year fixed rate house loan. That was a decline from 4.29 percent the previous week. For a 15-year loan the rate 3.32 percent, a drop from the 3.38 percent of the previous week. The 15-year option is popular for those refinancing existing mortgages.

These rates were the lowest since last November.

The question for most lay folk not privy to the ups and downs of the housing market, the question is: What causes the swings? Why do they rise and fall so consistently and so fast?

Believe it or not, such things as global unrest and a weak U.S. economic recovery from the recent recession are major factors. What happens in Africa and Russia and China sends shock waves into the American economy and affects transactions at the most basic levels. The old saying that it’s a small world is especially true when it comes to the fluctuations in the American housing market.

Negative economic effects in other places on the globe contribute to the ongoing bid for Treasury debt, which drives yields down, with a subsequent dip in mortgage rates as well, financial gurus say. That’s good news for those in the market for a home. The practical effect is a lower house payment. For instance, on a $200,000 home with a 30-year fixed rate mortgage, the monthly payment would be $979 a month at rate of 4.21 percent. At the norm of 6 percent, the home buyer could expect to shell out about $1,200 per month. Though the fractional increases or decreases in the interest rate seem negligible, they make a big difference when you’re making a long-term loan.

There are, of course, other factors at play. Stricter lending standards have to some extent limited the impact of the lower interest rates, according to data compiled by the National Association of Realtors. A high credit score can even the effect. But for those with lower scores, credit is still very tight, the association reports. Many of those who would like to jump into the housing market can’t find financing, despite the attraction of a lower interest rate.

The best solution for those whose credit is marginal is to work on improving the credit score to make themselves more appealing to those who made loan decisions.

Identity Fraud Victim List Going Up and Up

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Identity fraud can be devastating. Don't let this happen to you.
Identity fraud can be devastating. Don’t let this happen to you.
In case you want to be scared before Halloween, just take a look at the latest statistics on identity fraud. That’s the unauthorized use of your personal information by someone who wants financial gain at your expense. According to the Javelin Strategy and Research organization, there’s a new victim every two seconds. The 2013 data included in the update issued in February 2014 include these disquieting items:

  • The number of identity fraud victims rose to 13.1 million, an increase of more than 500,000 over the previous year.
  • A dramatic increase in account takeover was reported.
  • Data breaches became even more damaging. Information has been stolen from eBay, PayPal, Amazon and other Internet accounts. One in three people who received a data breach notification during the year was added to the growing list of victims.

About the only good news in the 2013 report is that the amount of money taken in identity fraud incidents was down to $18 billion, a $3 billion decrease over the previous year-end well below the high of $48 billion that occurred before counter-measures were begun. That’s small consolation to the millions who have suffered losses.

Fraud can range from simple unauthorized use of another person’s information to make purchases to elaborate schemes of taking control of existing accounts or opening new accounts. Javelin Strategy and Research contacted 5,634 U.S. consumers to compile its data.

The decrease in the total money impact of fraud in 2013 was attributed to education and other steps that are fighting the problem, said Al Pascual, senior analysts of Security, Risk and Fraud for the researchers. In response, criminals appear to be adapting their approach to focus on account takeover, which becomes easier when there are major breaches in huge accounts. There is no room for letting down defenses, he said. “Any complacency will provide fraudsters renewed opportunities.”

Data breaches have become by far the greatest risk factor for identity fraud, allowing criminals more latitude for their ever-more-sophisticated schemes.

Javelin offers these safety tips for consumers, who are advised to work with established institutions to fight the problem:

  • Keep your personal data private. Use and frequently change passwords and keep personal information locked in a storage device at home, at work and on your mobile device. Don’t mail checks to pay bills unless they are printed on high security paper. Shred documents that contain information. Monitor accounts and use updated security software. Use a trusted and secure Internet connection rather than a public Wi-Fi site when transmitting personal or financial information. Have regular income checks direct-deposited.
  • Use two-factor authentication when possible. Some institutions offer this added layer of security, beyond username and password. You will then be notified each time someone tries to access your account. You can deal with suspicious incidences in real time.
  • Resist any requests for your Social Security Number. The great majority of banks and credit card issuers will allow access to your account to someone using your SSN. The numbers can’t be changed so they’re valuable to fraudsters. Ask your financial institution to put a note on your account that you will never provide your SSN when identification is requested. Then if someone attempts to get access to your account with this information he or she will automatically be identified as a fraudster.
  • Be proactive and enlist others in the effort to stem fraud. Sharing alerts issued by banks can reduce the risks for more people. An array of services are offered to consumers who want extra protection, including payment transaction alerts, credit monitoring, credit report fraud alerts, credit freezes and database scanning.
  • Take any perceived data breach seriously. If your financial institution or retailer provides free monitoring after a breach, take advantage of the offer, closely monitor your accounts and ask that a fraud alert be attached to your credit report.
  • Report problems immediately, even if your only suspect fraud. Contact your financial institution to see what resolution services they offer, including loss protections and methods to secure your accounts. Quick action can reduce the likelihood of losses and help law enforcement agencies to pursue fraudsters.

Do everything you can to avoid becoming an addition to the fraud statistics for the next reporting period.

When Rent Payments Are Too High

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Rent. When Is It Too High?

Are rent payments more than 50% of your income?
Are rent payments more than 50% of your income?
Depending on where you live in this country, you could be putting up to two-thirds of your income into rent. That’s twice the percentage usually advised by the financial gurus. But, what are you going to do?

One in three Americans is now shelling out the standard one third of income for rent, but for many, for instance those in the Bronx borough of New York City, it is more typical to see 66 percent of the household’s income disappear into the hands of landlords. That’s the worst it gets, according to RealtyTrac. To add to the woes of the Bronx dwellers, the overall median income is under $35,000, with the average rent at $1,800 per month.

The dilemma is spreading to other some cities, the realty oversight company says, with growing numbers of pockets of low-income renters. In Philadelphia, Brooklyn, Baltimore and Miami many must part with 50 percent of their income monthly to keep a roof over their heads.

The fallout from the recent recession is contributing to the problem. The crisis in foreclosures turned millions of former homeowners into renters. And the continuing uncertain economy has discouraged many renters from becoming homeowners, according to Harvard’s Joint Center for Housing Studies. Increased demand has seen rents climb by 21 percent since the housing market peaked in 2006.

At the same time, real income – after inflation – has dipped by 14 percent, creating a double whammy for the renters. The Harvard center found that about one in four renters overall is paying more than 50 percent for housing. The result is inevitably that there is less to spend on food, healthcare and retirement.

The rent reality becomes a factor when a person considers a job change that has, initially, less pay but offers more opportunity in the future. The immediate demands may trump the potential. Additional education also may be sacrificed even if, in the long run, it would improve an individual’s future prospects. Saving for a new home becomes difficult, if not impossible. Bottom line: Reasonable rents contribute to the overall financial health of the country.

Women Today Earn Nearly Three Times What Their Mothers Did

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"More women are in the labor force now than a generation ago, and they are working longer hours and earning more money than mothers did."
“More women are in the labor force now than a generation ago, and they are working longer hours and earning more money than mothers did.”

Today’s working woman probably makes three times what her mother did. But they don’t earn on par with their dads, or their brothers. So the male component retains the more frequent breadwinner status, with the female members of the families supplying supplemental income.

A study by the Pew Economic Mobility Project compared what women who were about age 40 earned in the late 1960s and early 1970s earned, in comparison with their daughters in the same age group in the 2000s.

“Increases in hours worked and wages translate into higher annual
earnings: Women today earn nearly three times what mothers did.”

The research showed that a higher percentage of women work today and they work longer hours at higher wages. Four times more women work outside the home now than did in the earlier time frame. Men’s jobs suffered more in the Great Recession, making women’s income more important to the family’s well-being.

All wages are adjusted to 2009 dollars. Daughters’ and sons’ characteristics are measured from 2001 to 2009 and mothers’ and fathers’ from 1968 to 1972.
All wages are adjusted to 2009 dollars. Daughters’ and sons’ characteristics are measured from 2001 to 2009 and mothers’ and fathers’ from 1968 to 1972.

At every income level, today’s women outstripped their mother’s earnings by at least 50 percent, the project learned. The wage differential between fathers and sons was lower, but the sons emerged as the group that leads in earnings.

Daughters have made big advances, but in comparison with their dads, are still at the bottom of the earnings ladder. Their per-hour income is less than Dad’s was thirty years ago, the study showed. Women leaving the workforce temporarily or permanently to be mothers accounts for some of the difference.

The Pew researchers, however, look ahead to trends that show the wage differences will continue to shrink. Women are graduating from college at higher rates now than men. The wages of the youngest women in the sampling are more on a parity with their male peers, assuring that their financial contributions to their families in the future will be even more important.