Personal Finance Blog

Tips And Stories To Help You With Managing Money

Christmas Shopping Budget Tips

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The crunch is on. With a few days to Christmas, too many shoppers are in panic mode and throwing the budget out the window. If it’s happening to you, stop, take a deep breath and take back control.

Even those who manage to keep a lid on Christmas shopping during the early days of the shopping season sometimes find the temptations too much in the final days leading up to Dec. 25, credit counselors say.

Merchants —literally— bank on it. They offer last-minute bargains designed to bring the shopping throngs through their doors. Free photos with Santa, holiday food samples, special in-store events, buy-one-get-one-free deals are all crafted with the buyer —and his wallet—in mind. Keep firmly in mind that nothing is a bargain if you can’t afford it. Keep your Christmas shopping budget in mind.

Experts offer several strategies to help you avoid temptations during the final days of the annual frenzy.

Stick with the budget you made to begin your shopping spree. Avoid the temptation to add to your list or fudge a little on what you planned to spend for each recipient. Trying to be Santa to too many is a sure-fire budget-buster. Be a friend all year round instead. Biting off more than you can reasonably chew is a sure way to take the ho-ho-ho out of the holidays.

If last-gasp gift requirements do pop up, consider gift cards. They’re more convenient and less time-consuming than looking for bargains. The longer you spend in a place of merchandising, the greater the temptations become. If you go, have specific items in mind, find them, pay for them and go home. Browsing only gives you time to weaken.

Remember that groceries are part of the equation. The come-ons in the grocery aisles can be as tempting as those in other stores. Plan what you want to offer family and friends and stick with it. A cupboard full of crackers is not a particularly good Christmas leftover.

Shift your focus to other things. Avoid the stores. Think of places to go to celebrate the season without the urge to lay out cash, checks or the plastic. Remember for whom the till tolls. It tolls for you. Find some good entertainment that doesn’t involve walking through a mall. Or throw on the holiday music and spend some feet-up time. Contemplate the good things about the season, spending aside.

Avoid credit cards. Leave them home if you are venturing out. In extreme cases, have someone you trust put them away for the duration.

Communicate, even if it is belatedly. If the first 11 months of the year were tough, leaving your Christmas budget on the thin side, say so. Share your situation with relevant family members. Look for unique gifts that won’t break the bank. A little of your time may be more appreciated than a lot of your money. Chances are that if you talk with others, you’ll find they are hoping to cut back on their Christmas outlay too.

Use some of the time you are saving by avoiding the stores to look ahead to next year. Plan in advance to keep expectations reasonable and to make the season fit your situation. Plant firmly in your mind this year’s temptations for last-minute spending and recognize it when the same thing happens next year.

How To Woo The Media

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The competition among small business to get their stories into the media is fierce. Getting onto the pages of the local newspaper or on radio or television, however, is basically free advertising and trying to get there is worth the effort.

If you have been sending out news releases to alert the media to new products or events without much success, here are some suggestions that might land you in the public’s eye more frequently:

Know about current events in your community and see if there is a way to relate them to your company’s products and activities. Look beyond the community, in fact, to what’s in the news in your state, the nation and internationally. Media outlets are always looking for ways to make out-of-area news more relevant by relating it to what’s happening locally. Things from the outside may, in fact, affect what you do. Let the media know that. The issue of employment is currently hot-item for news reports, whether you’re up or down. In most cases, the old saying that “any publicity is good publicity” still holds true.

Look for unique stories to tell. Within your ranks there may be good human interest stories that will get your name into the media. Many in the media refer to such “human interest” stories as “fluff,” but they nevertheless are always on the lookout for good ones. Be aware of special stories inherent in those you work with. Some of them may be dealing with unique family problems or have talents that would merit media attention. Is your company involved in charitable causes? Are there members of your group who are in the military? Plumb the depths and see what you can find.

Be as professional as possible. Press releases that contain typos and blatant errors usually end up in the trash can. Few reporters are willing to make a call to try to clarify the press release. Have two or more people proofread the press release before sending it out. Make your releases good to look at. Be certain each release has all the germane information, such as dates, times, etc., and include a telephone number or e-mail address that will direct queries to the person with the information.You might want to put together an informative packet that a news organization can put on file for future reference. Showing up in a media office in person to pass such a packet along couldn’t hurt.

Getting acquainted with the business writers/editors is helpful. And understanding the newsroom process is invaluable. You will impress those you hope to cultivate if you understand the realities of deadlines and the hierarchy that puts an editor more directly in charge of the day’s content than a reporter. An assignment editor usually is the nerve center of a newsroom, making many of the decisions on what, where and how items will be placed. However, it is the reporter who puts together that content. Develop relationships where you can, but don’t expect special favors. Remember that the number of choices editors and writers have on any given day far outstrip the available amount of press space or air time. Avoid last-minute notice of timely events if you want media announcements.

A picture may be worth a thousand words. But be sure photos, video or audio bits are good ones. Don’t waste the photo editor’s time. Provide good photo opportunities. and describe them well so reporters and photographers/cameramen are not wandering around at a loss. Remember that the media is almost always in need of information before the fact, except in “live” story situations. If you call during your company’s big event , don’t expect a news person to arrive in time to clean up the dishes.

Buy advertising. Then when a news event relates to what you do, the editors and writers will remember your business name. Ad purchases do not position you for favoritism or guarantee spots in the news columns, but they make your name familiar.

Deadline is a firm fixture among the media. Be efficient, flexible and respectful in your interactions. In most cases, reporters have one day to turn around a story. If you miss an interview, it may not be convenient to reschedule soon. If you cannot meet a request for an interview, try to find someone else in your organization who can. Good old fashioned manners work with the media, as with anyone else. Some of the media, granted, have reputations for being pesky. But if you react in kind, the chances are that the word will get around the newsroom, squelching your chances for future favorable interactions.

Don’t just expect to deal with media issues when they arise. Work on a strategy and have a plan. Develop the relationships that count and understand how the media works. You may find yourselves in the headlines more often.

Will Mortgage Interest Deduction Be Targeted?

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Hold onto your wallets, folks. The failure of the congressional “Super  Committee” to specify ways the United States can reduce spending in the next ten years means that everything having to do with taxes is likely to be scrutinized in the effort to shore  up national solvency.

Some say that the mortgage interest deduction —the biggest break available to many American taxpayers— is sacrosanct and not likely to be scrubbed.  But there is the lingering memory of the time when interest on all debts, not just a home, could be deducted when tax preparation time came around. Interest on credit card debt, car loans, student loans and other large-ticket purchases could be taken out of the final tax tally.  In the mid-1980s when they were eliminated, then-President Reagan pled for retention of the mortgage interest deduction or it may have met the same fate. Reagan defended the mortgage interest deduction as a factor in promoting home ownership, one of the prime elements, he claimed, of the “American dream.” The fact that those other interest benefits were axed is enough to make taxpayers wary as the debate heats up again.

The Joint Congressional Committee, in its widespread look at all the possibilities, noted that the mortgage interest deduction cost the country’s tax coffers some $90 billion in 2010. According to IRS figures, 51.1 percent of all homeowners in the United States claimed the deduction, while 31.6 percent did not have a mortgage and 17.3 percent  didn’t claim the deduction.  The loss of the deduction would be highly unpopular with a large portion of the population and it certainly would be a hard-fought battle.

Although American homeowners have come to expect this tax break, few comparable countries—Australia, Canada and Great Britain among them—do not provide their taxpayers this advantage. They might wonder what behavior the U.S. would be trying to encourage by removing the benefit. Rentals as a preference over home ownership?

Appearing before the U.S. Senate Committee on Finance recently, Robert Dietz, an economist and vice president of the National Association of Home Builders said removal of the home interest benefit would increase the disparity in economic income and cause further shrinkage in the middle class.

However, the deduction overwhelmingly favors the rich. The limits are quite high—up to $1 million on a mortgage’s value and an additional $100,000 for home equity loans. The amount that can be deducted does not fall as people’s incomes rise. Someone with two or three homes falling under the $1 million limit significantly benefits.  It hasn’t become an open issue yet among the people who support movements such as the Occupy Wall Street line of thought, but it could if the tension between the haves and have- nots intensifies.

Most experts agree that in the current housing market, elimination of the mortgage interest break could exacerbate conditions that already are problematic. The effects of the deduction are not the same everywhere in the country, but the many factors that will enter into any debate on the matter tend to be emotional, especially among those who  teeter on the edges of being able to afford a home.

Experts say there would be some trade-offs. A spokesperson for Moody’s Analytics noted that the tax deduction is written into the cost of a home. Its elimination would  have a negative impact initially, especially  in higher-end housing. On average, its demise would cost a taxpayer no longer able to claim the deduction about $2,400 a year in additional taxes.

No one knows where the current rancorous stalemate in Washington will lead. But it seems inevitable that the debate over finances portends study of every element of the current tax system. And the conversation in today’s financial atmosphere is likely to focus more on federal revenues than on what the mortgage interest deduction is supposed to accomplish in behalf of home ownership.

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Depreciating Assets Can Hurt Your Finances

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Everyone has them— depreciating assets. What are they? Assets that lose value over time rather than gaining value. It isn’t possible, it seems, to avoid purchasing a car, major appliances and electronics. They are financial realities. However, the trick is to purchase what you need rather than what you want and to be aware up front what depreciation rates assets can have. There are some assets you probably could do without if you took into consideration how fast they depreciate. If you can’t do without them, take special care in acquiring them.

Common Depreciating Assets

Timeshares: Many people purchase them without realizing the money holes they can become. Unlike the majority of standard real estate, most timeshares lose 50 percent of their value immediately upon their purchase from a resort. Additional depreciation, up to 90 percent, occurs over the next few years.

Boats: There is a reason why boat owners often lament that the two happiest days of their lives were the day they bought their first boat and the day they sold that same piece of property. The dream of boat ownership is quickly absorbed in the reality of the expense such ownership entails. Boat rental may seem an expensive alternative, but it is usually far less expensive than to own your own. Your own boat is usually a depreciating asset you could do without.

Recreational vehicles: Just like cares and boats, RVs love a large percentage of their retail value the minute you depart from the dealer’s parking lot and they continue to lose value as they age. Few people use RVs as much as they expect to when they plunk down the purchase price. Add the costs of gas and the space rental many people have to pay for the RVs when they are not in use and ownership doesn’t make much sense.

Luxury cars: There is not much chance of avoiding a car purchase forever, but keep in mind that it is a depreciating asset. To get the most out of your purchase, focus on what you really need, not what suits your ego or what will keep you in the running with the Joneses. A used car in good condition has already seen much of the initial depreciation priced out. The corollary is someone who wants to have the benefit of gold’s stability and buys jewelry instead. You can’t have it both ways.

Electronic Gadgets: They not only depreciate, they do it quickly. Owning the latest and, purportedly the greatest in computers or electronic gadgets may be popular, but it also is the least cost-effective option. The latest models always come with a premium price. Last year’s model is usually just as effective for most people. And last year’s models will be heavily discounted as soon as the new model appears on the horizon. Make sure your purchase checks out with your wealth building plans.

The prospect of any large purchase should trigger the question: “Do I really need this?” If the answer is “Yes.” proceed wisely. Opt for the product that fulfills your actual needs at the best possible value. Depreciating assets eventually affect your finances, so avoid them when possible and consider devaluation as one of the factors to evaluate as you make your purchasing decisions.

Eight Holiday Savings Tips

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Save more for the holidays. Shop online —wisely

Faced with the fallout from a lingering bad economy, many online merchants are offering deep discounts on the most-wanted holiday gift items, often throwing in free shipping with low or no spending threshholds. The holiday promotions began before the masks were off the Halloween trick-or-treaters. Lands End was one of the first, with a $40-off deal on orders of at least $100 and free shipping if the tab goes over $50.

Nearly 93 percent of online retailers say they will offer free shipping at some point through December, says the National Retail Federation. A good number of the merchants say the promotions will be more tempting than last year. Shoppers put off by the sense of a very slow move toward a robust economy will want some special deals to prod them into digging into their pocketbooks, experts say. The Federation says it expects the average shopper this season to do about 36 percent of his buying online. Last year, the figure was 32.7 percent.

Some online retailers such as Walmart, are offering not only expanded free shipping for those who purchase at least $45 in goods, and they have online-only bargains that can’t be found in stores. A spokesman for Bradsdeals.com predicts all-time low prices on televisions, computers, cameras and tablet computers.

In what has become a well-entrenched custom, the holiday online shopping frenzy is expected to launch on Black Friday, the day after Thanksgiving, with more to come on the following Cyber Monday.

Shoppers can multiply their holiday shopping benefits by following these tips from the experts:

MONITOR DAILY DEALS

Sites such as Groupon.com, Eversave.com, Living Social.com and PlumDistrict.com offer half-off buys from a variety of online dealers. For example, Groupon recently offered a $40 Body Shop certificate for $20.

KNOW RETURN POLICIES

Not all online merchants allow to return an item in-store. Find out up-front and save the hassle.
COMPARE PRICES: Begin your shopping with a Web search of the particular product you have in mind or consult a comparison site such as Bizrate.com or PriceGrabber.com

READ PRODUCT RATINGS

One of the great advantages of online shopping is being able to access websites that include customer ratings of products.

AVOID SHOPPING CHARGES

Many retailers recognize shipping costs as one of the deterrents to online shopping. They offer ways to get around them. Amazon.com offers free “SuperSaver” shipping on orders over $25, although the deal doesn’t apply to all products. Some of the free-shipping offers are tied to a spending minimum . Freeshipping.org can be a guide. Some online dealers offer a buy-online, pick-up-in-the-store option, eliminating the shipping charge.

USE COUPON CODES

Among websites that can give you information about money-saving coupons are RetailMeNot and Coupon Cabin. Some sites will accept more than one coupon code per order. For the best savings, compare coupon offers between a couple of sites. There are many combinations, so do the math.

GO SOCIAL

Many major online merchants are offering more money-saving offers via Facebook and Twitter. Get on the “Like” or “Follow ” lists of your favorite retailers.

GET CASH BACK

Ebates.com, ShopatHome.com and FatWallet.com and other cash-back websites earn a small commission for referring shoppers to online merchants. They then share that commission with shoppers who buy. Start with one of these Web pages and then click on the merchant with whom you would like to shop. Not every merchant works with a cash-back site, but many do.