Your Next Credit Card Might Have a Wifi On/Off Switch

August 12, 2014, 5:34 am

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Filed under: Identity Theft, Consumer Ally, Credit Cards

By Christine DiGangi

Emerging technology gives consumers the ability to turn their credit and debit cards on and off through a smartphone app, a capability that can not only help families and businesses control how authorized users shop with the card but also, and perhaps more importantly, help prevent card fraud.

One of the companies developing this tool is Ondot Systems, which works with payment processors to make the technology available to banks and their customers. The on-off function, in addition to other control preferences, is available to cardholders through their bank or credit union's mobile app. Some financial services companies are working to develop their own technologies as well.

A Remote Control for Your Credit Card

"The basic idea is very simple," said Rachna Ahlawat, founder and executive vice president of products at Ondot Systems. "Almost everybody has a credit or debit card in their wallet, and most everybody has a smartphone, so what we essentially created is a remote control for the cards they already have in their wallet."

With CardControl, the primary accountholder has a suite of preferences at his or her fingertips, Ahlawat explained. There's the simple on-off switch, which prevents any transaction when a card is turned off, whether it's in a bricks-and-mortar store or a card-not-present transaction, such as a phone or Internet order.

If someone attempts to use the card when it's off, the cardholder receives an alert -- if he was trying to use it but forgot to turn the card on, the cardholder can just flip the switch on his smartphone. Otherwise, the cardholder has just been alerted to attempted unauthorized use of his card.

Location and Category Preferences, Too

CardControl goes even further (if you want it to): You can set location preferences, so the card doesn't work outside certain areas, as well as merchant categories. This feature comes in handy for cardholders with authorized users on their accounts, Ahlawat said. "My daughter, her card is open for use at gas stations around the San Francisco Bay area and for department stores," she said.

Her daughter is an authorized user on her card, and her daughter can also set preferences of her own (within the parameters set by the primary account holder). Because you can also set spending limits, parents can prevent their kids from abusing authorized user privileges.

These features can benefit company accounts, as well. Not only does this help the card administrator better control use of company cards, it can reduce company risk exposure, since business cards don't have the same fraud liability protections as consumer credit cards.

Prevent Fraud With Current Technology

Ondot Systems works with payment processors -- they're essentially the middlemen between merchants and banks, and consumers don't interact with them -- and these authorization entities work with banks to incorporate the technology into their consumer offerings.

CardControl is currently available through about 10,000 U.S. financial institutions, Ahlawat said. Even if your bank or credit union doesn't offer such technology, it likely gives you the option to set up transactional monitoring, which can help you spot unauthorized activity. You can set up alerts for transactions greater than a certain dollar amount, and because mobile applications are widely available for financial institutions, you can easily check your card activity daily.

Consumers should prioritize such account monitoring because credit and debit card fraud can seriously damage your finances, even if it's just for a short time. Debit card fraud can be particularly troubling, because no matter how quickly you spot the issue, the missing money could cause you to miss a payment or overdraft your account.

The credit damage you sustain from fraud could put you in a serious bind if you're applying for financing, setting up utilities, looking for a job or apartment hunting. Depending on the extent of the fraud, it can take months to get back to normal, so take the time to review your card activity regularly, request your free annual credit reports and check your credit scores for signs of anything suspicious. You can see two of your credit scores every month for free on Credit.com.

 

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More Music for Less Money -- Savings Experiment

August 12, 2014, 5:50 am

≫ Next: From Daydream to Dream Job: Jackson Hole Buffalo Meat Co.

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Filed under: Savings Experiment

If you like to listen to your favorite songs online, you've probably noticed all the music-streaming services competing for your attention. But with so many choices out there, do you stick with the free services or are the premium ones really worth the extra cost?

Let's look at your options, beginning with the free services. If you want to stream live radio, iHeartRadio will give you unlimited access to more than 1,500 different radio stations across the country. It also has the largest catalog of all the radio apps.

You'll be able to stream over 15 million songs, cost-free and ad-free. Keep in mind, this service works like an actual radio station, so while you can steer it in a musical direction, the program selects the songs you hear.

Now, let's talk about Spotify. This popular streamer offers more options than any other free service and is best for people who want total control over which songs, albums, and playlists they want to hear. However, the free version does have quite a few ads. If you don't want any interruptions, you can always upgrade to the premium version, but for a cost.

This brings us to our next category: paid music streaming. The three main benefits you'll get with paid services are unlimited downloads, no ads and offline listening. The good news is that the cost is usually the same across the board, about $10 per month.

Rhapsody has the largest selection of songs of them all, with over 32 million -- that's 10 million more than anyone else. Meanwhile, Google Play's "All Access" subscription will get you on-demand streaming of millions of songs, and you'll be able to add up to 20,000 of your own songs to play on any device.

So, when it comes to music streaming, paying extra will get you some perks, but depending on what you're into, it's not always necessary. Think about what your music needs are before you spend for songs.

View Poll

 

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From Daydream to Dream Job: Jackson Hole Buffalo Meat Co.

August 12, 2014, 6:20 am

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Filed under: Retail, Small Business, Food & Beverage, Entrepreneurs, This Built America

When Dan Marino was 14, his family drove through Jackson, Wyoming on a summer road trip. "We came in through Togwotee Pass in the north," he remembers. "I saw the Snow King ski resort, and I tapped my mom on the shoulder and said, 'I'm moving here.' "

He never said another word about that daydream until he graduated from high school. That's when he loaded up his 1966 Mustang with everything he owned. "My mom said, 'Where on earth are you going?' I said, 'Jackson Hole,' and I never looked back," says Marino, now 53.

Making a living in a resort town wasn't simple. For years, Marino ran a power washing business, cleaning everything from log homes to commercial kitchen stove hoods. And he worked part-time cutting steaks and filleting fish at the now-shuttered Cadillac Grille, a popular restaurant on Jackson's historic town square. He met his wife, Suzanne, there. She was an owner and chef.

Then in 1997, Suzanne saw a tiny classified ad in the local newspaper. The Jackson Hole Buffalo Meat Co., founded in 1947, was for sale.

"It was the perfect fit," Suzanne says of the company. It seemed to epitomize Dan's love of Jackson, the nearby Teton Mountains and the broad valleys cut by the Snake River. "He's just so passionate about this place."

They bought the business, which sold buffalo jerky as well cuts of game meat out of a small storefront and via mail order, and set out to see if they could combine business with the love of the land.

Chapter One: Where the Buffalo Roam

Turns out that the Marinos ended up loving the buffalo, not just the land they called home. The more they learned about the animals, technically the American bison, the more fascinated they grew.

Bison will go through almost any barrier, even barbed wire, and can jump a six-foot fence from a standing position. While they weigh up to 2,200 pounds, they can run up to 35 mph and are powerful swimmers. "They are spectacular to see," Dan says.

Their prowess adds a new level of meaning to the phrase "where the buffalo roam," he adds, explaining that the massive animals wander "anywhere they want to."

Most of the United States and parts of Canada were once the perfect fit for the American bison with its tall-grass prairies and ample water supply. Millions of them roamed for thousands of years from New York to Idaho and from the Yukon Territories to the Gulf of Mexico.

For the Plains Indians, the huge herds were a source of food and shelter. They ate the meat and used the hides for teepees and clothing. But instead of forcing bison to follow them -- as Europeans had done when they domesticated cattle -- Native Americans followed the herds.

The animals also helped make the Plains Indians a formidable enemy to the U.S. government and the country's plans for westward expansion. So throughout the 1800s, a campaign of extermination began, and an estimated 50 million buffalo were killed.

"They did it to put stress on the population of the Native Americans," Marino says. "Take away their food source, take away their shelter source, take away their livelihood, and you can control them."

By the early 1900s, all that remained of America's bison was a herd of an estimated 25 animals protected in the confines of Yellowstone National Park about 60 miles northwest of Jackson.

From that decimated base, the American bison began to come back in the mid- to late 20th century. Today, there are enough bison, often farm-raised, to supply firms like Jackson Hole Buffalo Co., which processes about 350 to 400 animals a year. The bison population now is in the several hundred thousands, including wild and farmed herds.

While far eclipsed by the multibillion dollar beef industry, Dan says bison is a good alternative to cattle for a number of reasons. Cattle are content standing in one spot and "buzz the grass to the ground," he says. "Bison always leave grass instead of destroying the ecosystem. They're just easier on the environment."

Chapter Two: Buffalo Jerky and the Internet

When the Marinos bought the company, the owner was running it primarily as a mail-order business. He also operated an ice-making company and a photography studio that took sepia-tinged photos of tourists dressed up in frontier gear. Dan says the man was ready to retire after running all those businesses for several decades.

The Marinos, only the third owners of the company, wanted more focus and believed they could turn the business into something bigger by sticking to selling buffalo and game meat. The previous owner, with all his other businesses, had taken that business only so far. He had shifted the operations from primarily a cold storage company, where people could store their game meat, to making jerky, elk salami and selling a few cuts of meat to locals and tourists.

But his marketing was simple and local. Paper flyers for the local meats were displayed in racks around town that also included flyers for fly-fishing on the Snake River and outfitters who would take people to the top of the 13,776-foot Grand Teton.

Marino keeps one of the flyers, returned in the mail a few years ago after being lost for at least a decade, on the wall in his cramped office. The dog-eared piece of paper is a reminder to keep thinking ahead.

We do sales every month now that we used to do in a year.

Instead of waiting for people to mail in the card to receive a catalog, he decided to turn the flyer itself into the catalog. So he kept the same size to fit in the racks, but added more pages filled with descriptions of what he had to sell. It didn't take long before "we had customers walking in and saying, 'I'll take this and this.' "

And then there was the Internet, which in 1997 was just taking off as an e-commerce platform. The Marinos created a website to sell their products as well as bison, elk and even wild boar sausage throughout the U.S. "We do sales every month now that we used to do in a year," he says.

But if the future hinges on one product, Marino is betting it's the jerky. That business is booming along with the popularity of diets like "Paleo" that mimic, ironically, Native American diets -- more protein, nuts, and berries. Marino's team of 10 employees used to make jerky every two weeks. Now they make it every day.

The way Marino makes jerky isn't that dissimilar from the way the Plains Indians and the trappers who followed their lead made dried meat centuries ago. He just does it inside and faster. He also adds a few extra ingredients such as white ginseng and vitamin B-12 into his Wild Times jerky, which is popular with hunters and hikers. Marino refers to it as an "energy bar in jerky form."

"The Indians cut the meat with whatever they had -- obsidian and then tools they made out of metal they scavenged or took from wagon trains -- they would drape the strips of meat over aspen or willow branches in a teepee and then smoke it to cure it," he says.

At Jackson Buffalo Meat, there are no teepees. The jerky, along with salami and sausages, is made in a 1,400-square foot-factory connected to the retail store by a heavy metal swinging door. On the other side of the door, the smell of smoking meats and salty-spicy smell of jerky seasonings takes over, as does the hand-made work that transforms bison roasts into dried meat.

For the popular "trapper jerky," the bison meat is sliced thin on an industrial slicer and laid in layers in red plastic tubs. Sylvia Vargas then expertly seasons the meat. Sylvia, who with her husband Isaias, has worked with the Marinos for more than 20 years.

The meat is then refrigerated for 24 hours and then the slices are laid on trays in a smoker that pulls moisture out, cures the meat and turns it into jerky. The result is jerky that is less chewy and tough than other commercially produced products. Bison, whether in jerky or on a grill, also is leaner, with less fat and fewer calories than other meats, including beef.

Chapter Three: Daydream to Dream Job

But the Marino's operation isn't big enough to handle growing demand. So almost two decades into owning the business, they are looking to expand. Dan would love to double his factory and his production.

Making that next dream happen will take even more skill and planning as the Marinos face what so many made in America companies have to overcome -- finding skilled labor and a reasonably priced place to expand.

Jackson remains the same tourist town it was when Dan first saw it as a teenager almost 40 years ago. But now it is even more expensive to live here and even more expensive to build a manufacturing facility. The lack of available property could mean moving the core of the business up to 35 miles away to find land to build on or place to buy.

Shifting even some production from Jackson, which is part of the company's selling point, is a tough decision for a couple that turned a daydream into a dream job. They want to start the jerky meat expansion in the next year and are considering all options, including expanding right where they are in a strip mall on the outskirts of Jackson.

Until that next step into a bigger future, Marino keeps his focus on the land he loves so much and the business that has allowed him to thrive in it. Every week brings familiar routines that remind him of just how far he has already come.

"I get in around 9 a.m. I might do deliveries and then I'll be back cutting tenderloins and rib-eyes," Dan says of a typical day. "On Saturdays, we set up the food truck and cook buffalo burgers. But then we head out north and spend the night on Jackson Lake. Then we jump up the next morning and get back to work."

 

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E-Z Pass Users Beware: New Phishing Scam Is Targeting You

August 12, 2014, 6:56 am

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Filed under: Consumer Ally, Consumer Protection, Junk Mail and Telemarketing, Ripoffs & Scams

For the drivers of 24 million cars in 15 states, having an E-Z Pass transponder makes going through tolls a breeze. You pay in advance, usually with a credit card, and every time you drive through a toll booth, E-Z Pass draws down from your account. In many places, you barely have to slow down as you breeze through.

So if you got an email from E-Z Pass telling you there was a problem with your credit card, or you received a notice that you were at risk of being penalized for failing to pay tolls, naturally, you'd want to update your account or pay your bill quickly.

Not so fast.

Convincing you that there's a problem with your E-Z Pass account is the ruse behind a new series of scam emails being sent to potentially millions of E-Z Pass users, the Federal Trade Commission warned on Tuesday.

The phishing email looks similar to legitimate ones sent by E-Z Pass.You can see an example of one on the E-Z Pass page. People who click on the emails run the risk of downloading malware that could infect their computers and potentially steal personal information. Those who respond with the requested credit card or bank account information are setting themselves up for identity theft.

The FBI Is on the Case

E-Z Pass warns users to not click on the emails, and notes that the FBI is aware of the scam. Anyone who gets an email from E-Z Pass and isn't sure if it's legitimate is urged to contact their local E-Z Pass service center.

The FTC offers the following tips about handling emails like these:

• Never click on links in emails unless you're sure who sent you the message.
• Don't respond to any emails that ask for personal or financial information. Email isn't a secure way to send that information.
• Type an organization's URL yourself, and don't submit personal or financial information at a website unless the URL begins with https (the "s" stands for secure).
• If an email looks like it is from E-Z Pass, contact E-Z Pass customer service to confirm that it is really from the agency.
• Keep your computer security software current.

The FTC offers these tips if you have been tricked by a phishing email:

• Forward it to spam@uce.gov and to the company impersonated in the email.
• File a complaint with the Federal Trade Commission at ftc.gov/complaint.
• Visit the FTC's Identity Theft website. Victims of phishing can take steps to reduce the risk of becoming victims of identity theft.

 

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Treasury Budget Deficit Shrinks, But Spending Still Rises

August 12, 2014, 7:48 am

≫ Next: Market Wrap: U.S. Stocks Move Lower on Tension Overseas

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Filed under: Economy

The U.S. Treasury Budget for July was announced Tuesday afternoon. Tuesday's results followed close enough to analysts' expectations that it should not rock the boat too much in either direction. The Treasury reported a $94.59 billion deficit for the month of July. The consensus estimates from both Bloomberg and from Dow Jones (WSJ) were for a deficit of $96.0 billion in July.

The budget level also fell squarely within the range of economist estimates, which was -$100.0 to -$90.0 billion.

We are now ten months into Uncle Sam's 2014 fiscal year. It might look like good news that the deficit is down 24% from 2013 so far, at -$460.5 billion versus -$607.4 billion. Total receipts have come in up 8% to $2.469 trillion, while total spending is up 1% to $2.93 trillion. Despite the good news, spending has still grown.

The 10-year historical average for July was not far off from predicting what the Treasury released today — at a deficit of $93.7 billion which was only 1% off. The July budget level from the previous year was reported as a $97.6 billion. However, over the past 5 years this average climbs to $128.5 billion.

Filed under: Economy

 

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Market Wrap: U.S. Stocks Move Lower on Tension Overseas

August 12, 2014, 9:43 am

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Filed under: Market News, International Trade, Investing

By KEN SWEET

NEW YORK -- The stock market pulled back slightly Tuesday, following two days of gains, as investors focused on the damage that ongoing geopolitical tensions were causing the global economy.

Energy stocks were among the biggest decliners, dragged down by lower oil prices.

U.S. stock indexes opened modestly higher but turned lower at mid-morning and stayed there for the rest of the day. Investors took a cue from Europe, where Germany's benchmark index fell more than 1 percent and France's CAC 40 fell nearly 1 percent.

An indicator of German investor confidence dropped to its lowest level in 20 months. Investors worried that the Ukraine crisis will start dragging down the German economy, Europe's largest. The continent is much more exposed to Russia than the U.S. is. Europe also gets most of its natural gas from Russia.

The Ukraine situation has dragged the German stock market down more than 8 percent from its early July peak.

"The Ukraine-Russia situation may be at a standstill politically, but it is weighing on the German economy and, more broadly, the eurozone," said Sean Lynch, a managing director at Wells Fargo Private Bank.

It has been a quiet week for investors overall, with little economic data or company earnings to work through. Absent hard data to pull the market higher, the current trend for the market is down, Lynch said.

Fears of a Russian invasion of Ukraine have faded in recent days, but worries about conflicts around the globe are likely to keep investors on edge in the coming weeks.

A convoy of more than 260 Russian trucks, reportedly packed with supplies, moved toward Russia's border with Ukraine on Tuesday, but Kiev said the goods would only be allowed to cross if they were inspected by the International Red Cross. Ukraine is fearful that Russia could use the move as a cover for sending troops into the separatist-held territory.

Investors are also watching political machinations and violence unfold in oil-rich Iraq. On Tuesday, that nation's embattled prime minister, Nouri al-Maliki, tried to stay in power as Iraqi politicians and the international community rallied behind a political competitor.

The Dow Jones industrial average (^DJI) lost 9.44 points, or 0.1 percent, to 16,560.54. The Standard & Poor's 500 index (^GPSC) fell 3.17 points, or 0.2 percent, to 1,933.75 and the Nasdaq composite (^IXIC) fell 12.08 points, or 0.3 percent, to 4,389.25.

Energy stocks in the S&P 500 fell 0.7 percent, the most of the 10 sectors in the index. Kinder Morgan declined nearly 2 percent after rising 9 percent the day before on news it would combine several companies under its control. Anadarko Petroleum (APC) and Diamond Offshore Drilling (DO) fell more than 2 percent.

Energy stocks have declined noticeably in the last month, due largely to falling oil and natural gas prices. Brent crude, which is traded in the U.K. and is considered a broader gauge of the international oil market, is trading at a nine-month low. U.S. crude is trading at a seven-month low.

The price of U.S. crude oil slipped 71 cents to $97.37 a barrel Tuesday. That followed three days of increases over concerns about the reliability of Iraqi oil production.

There were other signs that investors were in a "risk-off" mode. The Russell 2000 index, which is made up primarily of smaller and riskier companies, fell 0.8 percent, much more than the rest of the market.

In individual stocks, Kate Spade (KATE) plunged $9.87, or 25 percent, to $29 after executives for the handbag company warned that sales growth could slow this year and profit margins were being hit. The comments came after Kate Spade reported a better-than-expected quarterly profit.

The yield on the 10-year Treasury note rose to 2.45 percent. In metals trading, gold rose 10 cents to $1,310.60 an ounce, silver fell 19 cents to $19.51 an ounce and copper fell two cents to $3.15 a pound.

What to Watch Wednesday:

• The Commerce Department releases retail sales data for July at 8:30 a.m. Eastern time, and business inventories for June at 10 a.m.

These major companies are scheduled to release quarterly financial statements:

• Cisco Systems (CSCO)
• Deere & Co. (DE)
• Macy's (M)
• Pinnacle Foods (PF)
• SeaWorld Entertainment (SEAS)

 

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How to Boost Your Retirement Savings Before Year-End

August 12, 2014, 11:00 pm

≫ Next: Fall Financial Fixes: 6 Money Tasks to Tackle This Autumn

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Filed under: Saving

By Kimberly Palmer

Are you ready to make a final push toward ramping up your retirement savings for the year? There's still time to bulk up your contribution rate into tax-advantaged retirement accounts, like 401(k)s, or to open up an account if you don't already have one. For extra motivation, you can use a retirement calculator to help crunch the numbers for you. That way, you can generate a savings target for yourself, and work backward to estimate how much to put away (or what percentage of your salary) for each pay period.

Financial advisers generally recommend that people be able to replace at least 80 percent of their income in retirement, and that employees save at least 15 percent of their salary throughout their working lives. (Sometimes people scale back during crunch periods, but workers can also scale up with catch-up contributions, which allow for higher limits on contributions into tax-advantaged accounts after age 50.)

Here are six strategies to employ to make sure your retirement savings are fully funded:

Save a higher percentage of your income all year long. The Employee Benefit Research Institute reports that on average, employees contribute just 7.5 percent of their income to their retirement accounts. But people generally should be aiming to save at least 15 percent of their income, financial advisers say. If you've already contributed less than that for a good chunk of your working life, then it's not too late to make a change -- you'll just have to save a higher percentage to catch up. August is a good time to review your current contribution rate and consider raising it so you can put more money away for the 2014 tax year.

Use the end of the year to bulk up your contributions. You can contribute up to $17,500 to your 401(k) in 2014; for those 50 or older, the limit is $23,000. If you're nowhere close to that amount, consider ramping up your contributions to take advantage of tax-advantaged accounts. For individual retirement accounts, the contribution limit is $5,500​ with a $1,000 catch up addition for those age 50 and over. If you want to max out your retirement savings, now is the time to start putting more money away. (You can contribute up to the 2014 limit until April 15, 2015.)

Consider opening an after-tax savings account. If you find yourself hitting up against the savings limit on your tax-shielded retirement account, consider opening an additional after-tax account that's dedicated to your retirement. Just because the law prohibits you from putting more than $17,500 into your 401(k) doesn't mean that's all you should be saving -- it's just all you'll be saving out of pre-tax money.

Use special savings accounts during work breaks. Just because you're not earning a steady paycheck doesn't mean you should put retirement savings on hold. Spousal IRAs for non-working spouses and Roth IRAs can make this easy. Roth IRAs are particularly useful for freelancers, students and other people with unpredictable income streams, because you contribute money to the account after paying taxes on it, which means you can decide how much to contribute after considering your other expenses. If you think your tax rate is lower now than it will be when you take the money out in retirement, you'll benefit.

Don't forget about taxes. According to the Michigan Retirement Research Center, married college graduates -- people who are otherwise among the most prepared for retirement -- often forget to consider just how much of their retirement income will be going to Uncle Sam. Only 3 in 4 people in this group are prepared for retirement after taxes are taken into account; otherwise, 92 percent report being ready. Many online calculators allow users to consider taxes in their retirement calculations.

Lower your fees. Expenses can take a big chunk out of your investment return. But fees vary widely, typically from 0.1 to 2 percent of your total investment on an annual basis. Think tank Rand calculates that even just 1 percentage-point difference in annual fees adds up to $3,380 after 10 years on a $20,000 account balance. But Rand found that when people were presented with various fund options, including one that clearly had the lowest fees, only half selected the lowest-fee fund. One in three people inexplicably selected the fund with the highest fees. (All of the funds exhibited equivalent returns.) Index funds often offer lower fees, which means investors can keep more of their money.

When you're directing a significant chunk of your income into retirement savings, you want to make sure you'll see it again one day.

Kimberly Palmer is a senior editor for U.S. News Money. She is the author of the new book, "The Economy of You." You can follow her on Twitter @alphaconsumer, circle her on Google Plus or email her at kpalmer@usnews.com.

 

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Fall Financial Fixes: 6 Money Tasks to Tackle This Autumn

August 12, 2014, 11:00 pm

≫ Next: American Consumers Are Spending More - But Carefully

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Filed under: Personal Finance, Saving, Financial Education

With summer wrapping up, kids headed back to school and the pace going from vacationing to wrapping up 2014 productively, here are six financial issues that are often overlooked, but best handled with planning starting this fall.

​Mary Beth Storjohann is a certified financial planner for Gen Y. She created Nine Steps to Workable Wealth to help you make smart choices with your money.

 

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American Consumers Are Spending More - But Carefully

August 12, 2014, 11:00 pm

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Filed under: Saving

American consumers are back!

That's the upshot of the latest report on growth in gross domestic product, or GDP, released by the Bureau of Economic Analysis on July 30. Reporting that the U.S. economy expanded at an annualized rate of 4 percent in the second quarter of 2014, the federal government report shows that even after a lackluster, snow-covered first quarter, the economy has made up its losses -- and then some.

"Personal consumption expenditures" -- spending by the American consumer, who we've often been told accounts for 70 percent of the country's economy -- helped to pull the economy out of its slump in the second quarter. (So give yourself a pat on the back). And yet, the 2.5 percentage points of consumer spending growth reported by the bureau still pales in comparison to the growth exhibited in such categories as "real nonresidential fixed investment" (up 5.5 percent), and "real exports of goods and services" (up 9.5 percent).

So what's up with that?

You Better Shop Around

A recent Gallup poll gives us a few clues. It turns out the American consumers who are spending again are doing so very carefully. Check out these results on how American shoppers, polled by Gallup, say they spent their hard-earned cash from mid-May to mid-June:

• 83 percent of shoppers polled said they purchased generic of store-brand (private label) goods.
• 61 percent say they "shopped around," visiting different stores to buy different items, depending on who had the best sale.
• 59 percent used the Internet to research where such deals could be found.
• 58 percent used coupons.
• 40 percent bought "it's new to me" goods -- aka used items.

Waste Not, Want Not

Meanwhile, Gallup noted several trends suggesting that American shoppers are keeping tight leash on discretionary purchases:

• 55 percent said they held themselves to a "strict budget" when going out shopping.
• 52 percent agreed with the statement "I only shop for exactly what I need."
• 75 percent labeled themselves "careful about how I spend my money."

In contrast:

• 27 percent said that they laid out more than a week's pay on any single purchase during those four weeks.
• 31 percent reported that they indulged in "shop therapy," aka shopping for fun.
• 38 percent admitted to making an "impulse purchase."

The Gallup data gives a pretty clear impression that Americans are still feeling pretty miserly about their money. Perversely, that could turn into a problem over time.

After all, it's sometimes noted that what can be good for individuals (saving money, shopping for bargains and spending below your means) can be bad for the economy at large. If everyone in America suddenly starts shopping smart, saving savvily and generally pinching pennies till they scream, then who's going to be left to do all the extra spending necessary to keep the economy growing?

If we want 4 percent GDP growth to become the new norm in America, chances are, more shoppers will need to loosen their death-grips on their wallets first.

Motley Fool contributor Rich Smith is embarrassed to admit that he's probably "part of the problem" of shoppers not spending freely enough.

 

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Is Netflix Looking to Make Nice With Its No. 1 Rival?

August 12, 2014, 11:00 pm

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Filed under: Company News, Media, Netflix, Entertainment Industry

In the arena of premium video services, Netflix (NFLX) and Time Warner's (TWX) HBO can be fierce competitors. It may not seem that way to viewers entertained by "Game of Thrones" on HBO and "House of Cards" on Netflix. After all, there's nothing to stop someone from subscribing to both services, and many TV buffs do exactly that. However, as the industry's two leading premium video subscription platforms, they do ultimately compete for the same viewer dollar.

HBO has typically taken the high road, but Netflix CEO Reed Hastings has a history of taking potshots at his biggest rival. But a new Facebook post finds Hastings softening his tone -- possibly because the rivalry led HBO to strike a lucrative licensing deal with streaming competitor Amazon.com (AMZN) for a lot of HBO classic shows.

It should be said that HBO drew first blood. Time Warner CEO Jeffrey Bewkes decided to take a little jab at Netflix four years ago when asked if the then nascent streaming video service threatened HBO's business. "Is the Albanian army going to take over the world?" he joked at the time. "I don't think so."

Let's go over some of the biggest hits in this public rivalry.

Hastings on the Attack

HBO's popularity remains strong, but Netflix's global subscriber base has more than doubled since Bewkes' comment. Hastings hasn't forgotten the remark, and he's also not been shy about taking shots of his own.

• "Excited to see HBO join us in offering stand-alone streaming service in Scandinavia," Hastings posted on Facebook two summers ago when Time Warner's premium channel announced that it would be made available in a few Scandinavian countries as a streaming platform without the need for a costly cable or satellite television subscription that it requires closer to home. "What about the USA? We thought the first match-up would be in Albania."
• Last summer after "House of Cards" and "Arrested Development" locked up a combined dozen Emmy nominations, Hastings posted on Facebook: "Albania takes it up a notch."
• Earlier this year, during Netflix's fourth quarter earnings call, Hastings was asked about HBO's diminishing concerns about the popularity of shared HBO GO passwords. In a head-turning moment, Hastings joked that HBO CEO Richard Plepler's HBO GO password is "Netflix" and followed that up with an expletive.

Mending Fences

Hastings clearly isn't afraid to take shots in public, but his latest missive -- bragging about finally surpassing HBO in terms of subscription revenue -- had a surprisingly conciliatory tone last week.

"Minor milestone: last quarter we passed HBO is subscriber revenue ($1.146B vs $1.141B)," Hastings posted on Facebook last week.

However, instead of following that up with a comment about the Albanian army taking over the world, he had some kind words for Time Warner's premium movie channel. He conceded that HBO is still beating Netflix when it comes to profitability and Emmy awards. He also admitted to watching and enjoying HBO's "Silicon Valley," claiming that it hit close to home. "HBO rocks, and we are honored to be in the same league," he concluded.

The jab is still there, of course. Netflix generated more subscription revenue in its latest quarter. However, heaping HBO with praise and compliments is a new turn.

Of course, this isn't going to change the fact folks can now watch "The Sopranos," "Six Feet Under" and other classic HBO shows on Amazon's Prime streaming service. It's not going to make HBO any more likely to cough up "Game of Thrones" or any of its other shows through Netflix. However, it is an olive branch. It's possibly a cease-fire as the premium video services realize that there's more to gain in working together than against one another.

Then again, all of this will go out the window if the next Facebook post that Hastings puts out is another knock on HBO. There's a lot of money to be made in this niche, and being cruel hasn't gotten in the way of kind success.

Motley Fool contributor Rick Munarriz owns shares of Netflix. The Motley Fool recommends Amazon.com and Netflix. The Motley Fool owns shares of Amazon.com and Netflix. Try any of our Motley Fool newsletter services free for 30 days.

 

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Amazon Debuts Mobile Payment App, Card Reader

August 12, 2014, 11:33 pm

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Filed under: Amazon.com, Retail, Shopping, Internet, This Built America

By MAE ANDERSON

NEW YORK -- Amazon.com (AMZN) is taking direct aim at mobile payment systems such as Square by introducing the Amazon Local Register, a credit-card processing device and mobile app designed to help small business owners accept payments through their smartphones and tablets.

The move places the largest U.S. e-commerce retailer in competition with Square and other established mobile payment processing systems such as eBay's (EBAY) PayPal Here and Intuit's (INTU) GoPayment.

Amazon's technology includes a card reader that attaches to a smartphone, Kindle or tablet. The reader processes credit or debit card payments via a secure Amazon network, the same one that processes Amazon.com purchases. The service is designed to serve on-the-go small business owners who might otherwise only accept cash or checks, including massage therapists, food truck operators and artists who sell their work at outdoor fairs.

Small businesses can start using Local Register by creating an account at http://localregister.amazon.com. Businesses must buy Amazon's card reader for $10, and download the free mobile app from the Amazon app store, the Apple app store or Google (GOOG) Play. The app works on most smartphones and tablets, including the Kindle Fire.

Similar to Amazon's strategy in many of its businesses, the company aims to compete on price in the mobile payment arena. For customers who sign up for the service by Oct. 31, Amazon will take as its fee 1.75 percent of each payment processed, or each "swipe" of the card, a special rate that will last until Jan. 1, 2016. For people who sign up after Oct. 31, Amazon will take a service fee of 2.5 percent of each payment processed.

The first $10 in transaction fees will be credited back to the customer, essentially paying for the card reader.

That's below most of its competitors' rates. Square takes a fee of 2.75 percent of each transaction. PayPal Here takes 2.7 percent of each transaction and Intuit's GoPayment rates start at 1.75 percent per transaction if businesses pay a $19.95 monthly rate or 2.4 percent of each transaction without a monthly payment.

"I've actually heard some business owners say the only thing that would make them change [point of sale] systems is cost savings," said Matt Swann, vice president of local commerce for Amazon.

"Payments are hard and that's one of the things that gets in the way of serving customers, especially for small businesses," Swann said. "Payment tools need to be inexpensive, simple and trusted to get the job done."

Local Register is part of a slew of new products and services that Seattle-based Amazon has introduced this year. The company's Fire smartphone debuted this month. In April, it began selling the Fire TV, a media streaming device. Meanwhile, Amazon is expanding its same-day delivery service and offering grocery delivery and video and music streaming for its Prime loyalty club members.

Investors have largely given Amazon a pass on profit as it focuses on spending the money it makes to grow and expand into new areas. But there are some signs patience may be waning. The company's most recent quarterly report in July showed a deeper-than-expected second quarter loss despite surging revenue. Since then, the company's stock has fallen about 11 percent.

Amazon has been expanding into the payment space with other products: Amazon payments, which lets users with stored credit card or banking information on the Amazon site use their Amazon login to pay at sites other than Amazon. And Amazon Wallet, a beta app that lets users store gift cards, loyalty and rewards cards and membership cards and redeem them in store or online.

 

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Robin Williams: The $5 Billion Man at the Box Office

August 13, 2014, 12:04 am

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Filed under: Media, Entertainment Industry, Celebrities, This Built America

By Julia Boorstin and Matthew J. Belvedere

Robin Williams leaves behind a legacy of Hollywood success that spanned decades and generated billions of dollars.

The actor-comedian's movies, which included his Oscar-winning role in "Good Will Hunting," and Golden Globe awards for "Good Morning, Vietnam," "The Fisher King" and "Mrs. Doubtfire," have grossed $3.2 billion in U.S. box office sales, according to the number-crunching website Box Office Mojo. Worldwide his films pulled in $5.2 billion. (The numbers aren't adjusted for inflation).

"There's only a few I can think of who can so nimbly step back and forth between drama and comedy like Robin Williams did," film critic Richard Roeper told CNBC on Tuesday.

"The first actor who comes to mind is Tom Hanks, one of the great actors of all time," he continued in a "Squawk Box" interview. "But the distinction where Robin Williams has even one more amazing ability, Tom Hanks was never a stand-up comic."

The impact of Williams at the box office isn't only about his past movies. He had wrapped up shooting on a couple films scheduled for release later this year. He reprised his role as Teddy Roosevelt in Fox's "Night at the Museum: Secret of the Tomb," the third film in that franchise due out Dec 19. He co-starred in another upcoming movie called "Merry Friggin Christmas" with Candice Bergen, which is set for release in November.

A sequel to the 1993 hit "Mrs. Doubtfire," which made $441 million worldwide, was planned but Fox hadn't started production.

He also made his mark as a stand-up comedian and a television star. He landed on the scene in ABC's "Mork and Mindy," which aired from 1978 to 1982. He became a comedic icon with signature improvisations and rapid switching between different characters.

"Williams was really the comic ... who took us out of the Nixon era. The guy came out and he was this bundle of energy with enormous intelligence," said MovieCityNews.com Editor David Poland.

"Robin Williams in addition to the sitcoms, in addition to the iconic comedies, in addition to dramas like 'One Hour Photo,' he was one of the top stand-up comics. He'd be on the 'Mount Rushmore' of stand-up comics with Richard Pryor and George Carlin," Roeper agreed.

Most recently, Williams had starred in "The Crazy Ones" on CBS (CBS), which was canceled after one season.

The apparent suicide of Williams on Monday at age 63 has been met with an outpouring of grief around the world from entertainment industry giants, like Disney (DIS) CEO Bob Iger and filmmaker J.J. Abrams, to President Barack Obama to Defense Secretary Chuck Hagel, who praised him for his work entertaining the troops.

Tributes to Williams have flooded Twitter and other social media services since news of his death was reported Monday evening. Billy Crystal tweeted overnight: "No words." On its Facebook page, "Sesame Street" wrote: "We mourn the loss of our friend Robin Williams, who always made us laugh and smile."

Williams appealed to fans of all ages. "Many millennials on Twitter were [also] remembering him for his roles in such roles as ... 'Jumanji' and 'Hook,' " Variety Film Editor Ramin Setoodeh told CNBC.

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Retail Sales Ring Up Flat as Wary Consumers Eye Spending

August 13, 2014, 1:36 am

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Filed under: Retail, Shopping, Economic Indicators, Consumer Goods, Stores

By Lucia Mutikani

WASHINGTON -- U.S. retail sales unexpectedly stalled in July, pointing to some loss of momentum in the economy early in the third quarter.

But with job growth holding sturdy, sales activity was likely to rebound in the coming months, economists said.

The Commerce Department said Wednesday that retail sales, which had increased 0.2 percent in June, were in part held back by a second straight month of declines in receipts at auto dealers. July's reading was the weakest since January.

[W]e expect this slowdown to be short-lived and we look for consumer spending to rebound strongly in the coming months.

"Given the strong gains in labor market activity, along with other indications of strengthening domestic growth momentum, we expect this slowdown to be short-lived and we look for consumer spending to rebound strongly in the coming months," said Millan Mulraine, deputy chief economist at TD Securities in New York.

Economists had forecast sales, which account for a third of consumer spending, increasing 0.2 percent last month.

The economy has experienced six consecutive months of job growth above 200,000. Layoffs and job openings are back to their pre-recession levels. Data on manufacturing and services sectors have suggested the economy was growing solidly.

Still, the pause in retail sales could give the Federal Reserve ammunition to maintain its very easy monetary policy stance for a while. The U.S. central bank has kept its benchmark overnight interest rate near zero since December 2008.

"It will provide Fed Chair Janet Yellen with some of the rationale she needs to justify why the Fed should move gradually and keep interest rates low for longer than hawks within the Fed would like," said Diane Swonk, chief economist at Mesirow Financial in Chicago.

Separately, retailer Macy's (M) cut its full-year same-stores sales forecast after second-quarter sales fell short of expectations, another cloud over the retail sector.

Macy's shares fell more than 5 percent, while shares of retailers Tiffany (TIF), Kohl's (KSS) and Nordstrom (JWN) also were down sharply.

The S&P retail index was up at midday, but lagged the broader stock index, which was trading higher as tensions in Ukraine and Iraq eased. The dollar was little changed against a basket of currencies, while prices for U.S. government debt rose.

Core Sales Barely Rise

So-called core retail sales, which strip out automobiles, gasoline, building materials and food services edged up 0.1 percent in July. These sales correspond most closely with the consumer spending component of gross domestic product.

May and June core retail sales, however, were revised lower.

That and another Commerce Department report showing non-auto retail inventories rose only modestly in June suggested the government could cut its estimate for second-quarter growth from the brisk 4 percent annual pace report last month.

JPMorgan estimated that second-quarter growth would be cut by 0.4 percentage point.

"People are just not parting with their hard-earned funds and that is a concern," said Joel Naroff, chief economist at Naroff Economic Advisors in Holland, Pennsylvania.

In July, receipts at auto dealerships fell 0.2 percent after dropping 0.3 percent the prior month. Sales at non-store retailers, which include online sales, fell.

There were also declines in sales at furniture, electronics and appliances, and general merchandise stores. Receipts at clothing retailers rose as did sales at sporting goods shops and building materials and garden equipment suppliers.

 

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Macy's Cuts Full-Year Forecast, Blames Harsh Winter Weather

August 13, 2014, 1:42 am

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Filed under: Company News, Macy's, Earnings, Retail, Consumer Goods

By Devika Krishna Kumar

Macy's (M) cut its full-year same-store sales forecast, after second-quarter sales failed to make up for weakness in the first quarter when harsh weather kept shoppers away.

Macy's earnings for the quarter ended Aug. 2 also missed the average analyst estimate as the company discounted heavily to win business, squeezing gross margins.

Shares of the company, which also owns the high-end Bloomingdale's chain, were down 5 percent in early trading Wednesday.

Many customers still are not feeling comfortable about spending more in an uncertain economic environment.

Macy's said it expects same-store sales to increase 1.5 percent to 2 percent for the full year. It had earlier forecast an increase of 2.5 percent to 3 percent.

"Many customers still are not feeling comfortable about spending more in an uncertain economic environment," Chief Executive Officer Terry Lundgren said in a statement.

U.S. retail sales unexpectedly stalled in July, data showed Wednesday, pointing to some loss of momentum in the economy. The sales were the weakest since January.

Shares of Macy's rivals Kohl's (KSS) and Nordstorm (JWN) were down 2.7 percent and 1.8 percent respectively.

Macy's stores sell clothing, accessories, jewelry and home goods to mainly middle-class shoppers.

The company, which has remodeled many stores, including its flagship Herald Square store in Manhattan, plans more promotions and discounts for the important back-to-school season as it tries to make up for lost sales.

The company stuck to its full-year earnings forecast of $4.40 to $4.50 a share.

Analysts remained positive on Macy's long-term prospects.

"Its focus on improving the merchandise assortment while enhancing the customer experience both in stores and online will likely continue to drive strong results," Stifel Nicolaus analysts wrote in a research note.

Three brokerages including Stifel reiterated their "buy" ratings on the company's stock.

Macy's has spent nearly $2 billion in IT and e-commerce projects over the past five years and has benefited from services such as in-store pickups and ship-from-store.

The ship-from-store service allows customers to order from another Macy's store if the item is not available and have it sent to their home. This helps Macy's keep a tight hold on inventories, especially at its smaller stores.

The in-store pickups will be available at all Macy's stores in the fall and holiday shopping season, the company said.

Same-store sales, which include sales at macys.com and bloomingdales.com, rose 3.4 percent in the second quarter.

Net income rose to $292 million, or 80 cents a share, from $281 million, or 72 cents a share, a year earlier.

Total sales rose 3.3 percent to $6.27 billion, after declining about 2 percent in each of the previous two quarters.

Analysts on average had expected earnings of 86 cents a share on revenue of $6.3 billion, according to Thomson Reuters I/B/E/S.

Shares of the company were down 4.7 percent at $56.95 in early trading.

 

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Universal Steams Ahead with 1 Million Hogwarts Express Riders

August 13, 2014, 3:00 am

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Filed under: Company News, Industry News, Entertainment Industry, Travel Industry, Investing

It's no surprise that the biggest winner among theme parks this summer is Comcast's (CMCSK) Universal Orlando. The Wizarding World of Harry Potter's ambitious Diagon Alley expansion at Universal Studios Florida is drawing huge crowds since opening last month.

Comcast hasn't spelled out how many more guests have gone through its turnstiles at Universal Studios Florida and the adjacent Islands of Adventure this summer, but last week we got a good indication of how successful it has been when Universal Orlando announced that one million passengers have now ridden the Hogwarts Express train ride that connects the two parks.

Guests board the richly themed trains for the short virtual trip between London at Universal Studios Florida and Hogsmeade at Islands of Adventure. Antics ensue while on board, but there's no point in playing spoiler to one of the more unusual transportation rides ever built. Universal Orlando has a hit on its hands, and a million riders know that.

A Million Tickets to Ride

Last month's opening of Diagon Alley was initially riddled with reports of the expansion's thrill ride -- an indoor Gringotts coaster -- suffering outages and long lines. However, Diagon Alley's more important ride -- the family-friendly train ride that bridges the two Potter-themed areas -- is making headlines for the right reasons now.

Universal celebrated the million-passenger milestone by treating 200 park visitors to Butterbeer-flavored ice cream. It should be pointed out that this is no ordinary feat. A ride on the Hogwarts Express involves leaving one park and entering another. Patrons need to prove that they have admission to both parks, scanning their tickets before hitting the boarding platform. Guests with single-park tickets can pay to upgrade their passes at the train stations.

In saying that a million guests have ridden Hogwarts Express in its first month of operation Universal Orlando is also saying that attendance to its parks has gone up by at least one million. It's incremental, since every ride results in a turnstile click -- and that's on top of the organic uptick in front-gate attendance that's clearly taking place this summer.

The impact of this single ride can be dramatic. According to the Themed Entertainment Association, 8.1 million guests visited Islands of Adventure last year. Universal Studios Florida clocked in with nearly 7.1 million visitors. If the trend continues with Hogwarts Express sending a million guests a month to the other park, we're talking about an increase of 6 million admissions to each park over the next 12 months.

A single ride causing a combined 12 million incremental admissions would be outrageous. It would find the two parks rivaling the annual guests entertained at many Disney (DIS) parks.

The Ups and Downs of Levitation Spells

Unfortunately for Universal Orlando, we have to keep the hype in check. Some guests taking the train would've just walked over to the adjacent park. It's just a brisk five-minute walk between the front gates.

More importantly, guests who take a roundtrip journey on the Hogwarts Express -- and that's highly recommended since each trip is unique -- would register three admissions during the day, but they won't necessarily stay longer than a patron enjoying just Universal Studios Florida or Islands of Adventure on a single-park ticket.

This doesn't mean that Universal Orlando isn't going to make a lot of money this summer. Between the upgraded dual-park admissions, original food and beverage items and licensed merchandise, a lot of money is being spent at the resort. The ultimate attendance numbers may need their asterisks, but Comcast is going to make a ton of dough from fanatic muggles.

Everybody Wins

Disney and smaller park operators will be rightfully jealous. Walt Disney World's new additions this summer are mostly a Snow White-themed mine coaster at the Magic Kingdom and several temporary "Frozen"-themed attractions at Disney's Hollywood Studios. SeaWorld (SEAS) actually discontinued a sea lion show this past weekend in Orlando, and a thrill ride at Busch Gardens Tampa has had its opening delayed.

However, all of the parks should ultimately benefit from the influx of visitors hitting Central Florida to check out Diagon Alley. Many guests coming down for a week make time to visit some of the other attractions in the area. We've already seen Orlando hotels check in with their highest occupancy for June in nearly a decade -- and that was before Diagon Alley opened. This will only help.

It's safe to say that Harry Potter has cast a spell of enchantment over Orlando this summer.

Motley Fool contributor Rick Munarriz is a seasonal resident of Celebration, Florida, and owns shares of Walt Disney. The Motley Fool recommends and owns shares of Walt Disney. Try any of our newsletter services free for 30 days.

 

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July Retail Sales Get Third Quarter Off to a Bad Start

August 13, 2014, 3:19 am

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Filed under: Economy

Retail sales did not have much to show for in the first month of the third quarter. The Commerce Department reported Wednesday that retail sales were flat at 0.0% change in July. This fell short of the economists' expectations of a 0.2% growth, according to Bloomberg, but was within the range of -0.1% to 0.4%. This reading also fell short from the previous month's 0.2% retail sales growth.

Lower auto sales in July were one reason for the muted report. Taking out autos, retail sales were still up by only 0.1%, while the consensus estimate was all the way up at 0.4% growth. June's reading was also up by 0.4%.

Retail sales have disappointed since April, when the they were up 1.1%. In May, retail sales increased by 0.5%, followed by weaker growth in June and none in July.

Sales increased in areas such as clothing and accessories, health, personal care, food and beverage, sporting goods, food service, and drinking places. However, sales decreased in mostly big ticket areas such as general merchandise, furniture, appliance stores, home furnishings, electronics, and nonstore retailers.

What is at issue now is that it seems likely that GDP expectations will have to be adjusted down to reflect the lack of consumer spending.

Economists are hoping that the third quarter continues to rebound from the second quarter. With July being the first month of the quarter, this report gets the third quarter off to a crummy start.

Filed under: Economy

 

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Scared About Social Security's Future? Take These Steps Now

August 13, 2014, 3:57 am

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Filed under: Retirement, Retirement Plans, Social Security, Planning

For millions of Americans, the idea of retirement without Social Security is unthinkable. According to the Social Security Administration, about 41 million retirees and dependents receive retirement benefits from Social Security, with disabled workers and their dependents making up nearly 11 million more recipients and 6.2 million survivors relying on Social Security benefits as well.

Yet with the $863 billion that the SSA anticipates paying out in benefits this year making up almost a quarter of federal spending , concerns about the long-term financial sustainability of Social Security have made many younger Americans nervous that they'll never see benefits at all.

Before you panic about the uncertainty over Social Security's future, though, it's important to take stock of the program's full condition. In addition, there are steps you can take to shore up your own financial situation to ensure that no matter what happens to Social Security, you'll be in the best position possible to take care of your own money needs in retirement.

Will Social Security Be There for You?

A recent survey from the Transamerica Center for Retirement Studies looked at attitudes among adults aged 18 to 35 about Social Security and other economic and political issues. More than 80 percent said they were concerned that Social Security was unlikely to be there for them by the time they retired. And two-thirds expect to get most of their retirement income not from Social Security but rather than their own savings and investments, either inside or outside of specific retirement-savings vehicles like individual retirement accounts and employer-sponsored 401(k) plans.

Of course, millennials have the benefit of one of the most valuable resources in investing: time. With 30 years or more before they expect to retire, millennials have the most flexibility in tailoring their finances to balance current financial needs and wishes against future money issues.

But even if you don't have that long a time horizon, you can still handle the uncertainty about Social Security.

1. Know the Worst-Case Scenarios

Despite the survey's revelations about our fears, the reality is that it's unlikely that Social Security will disappear entirely. Even once the Social Security Trust Fund runs out of money, which is currently projected to happen in 2034, ongoing payroll taxes are expected to provide the program with enough income to pay more than three-quarters of scheduled Social Security benefits.

So at this point, what many see as the potential worst-case Social Security scenario is that, then the Trust Fund is exhausted, benefits will have to be cut by around 25 percent to keep the program stable. A trim of that size to the average monthly benefit -- currently around $1,300 -- means you'll be losing about $350 of the monthly income you could have expected. You'll either need to replace that money with your own investments, or tighten your belt.

2. Get Smarter About Investing for Retirement

One of the most impressive findings of the Transamerica survey was the extent to which millennials are taking action sooner rather than later. An estimated 70 percent of millennials have already started saving for retirement, and they typically began saving at 22. More than 75 percent have discussed saving, investing and retirement planning with family members, friends and other respected peers. That's encouraging -- and a wise choice whatever your age.

Moreover, taking advantage of opportunities to save for retirement through work has become essential. The typical millennial contributes 10 percent of their annual pay to a 401(k) plan, taking full advantage of company matches and using vehicles like target-date funds or strategic allocation funds to get age-appropriate diversified exposure to a variety of different investments.

3. Keep Your Job Skills Competitive

One of the most discouraging aspects of the recent economic downturn was that high unemployment rates lasted for a long time even after the recovery began. More recently, job growth has started to pick up somewhat, and that has put Americans in better position to provide for their financial futures.

Nevertheless, it's more important than ever to remain valuable as a worker. For many who are close to retirement age, the best way to make sure their limited resources last through retirement is to work for a few extra years. But in today's sharply competitive labor market, getting the opportunity to stay in your job isn't a given. So for workers nearing retirement age, consistently demonstrating your value to your employer is essential if you are to remain employed as long as you choose. Somewhat younger workers have even more at stake to stay at the top of their game to reduce the chance of an early layoff, and looking at educational opportunities to bulk up your skills can be a smart way to protect against a drop in eventual Social Security retirement income.

Fixing Social Security's long-term financial woes will require either raising taxes, raising the retirement age, modifying how benefits are paid, or some combination of those -- none of which are politically feasible in the current environment, so repairs aren't likely to happen soon. Your best bet for getting financial security you desire is to take matters into your own hands by boosting your own savings and investing. That way, Social Security can be less of a necessity and more of a welcome supplement by the time you retire.

You can follow Motley Fool contributor Dan Caplinger on Twitter @DanCaplinger. For more on ensuring a comfortable retirement for you and your family, see our free report in which Motley Fool retirement experts give their insight on a simple strategy to take advantage of a little-known IRS rule to boost your retirement income.

 

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Business Inventories Buildup Brings Weaker Expectations

August 13, 2014, 4:57 am

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Filed under: Economy

The Commerce Department reported on Wednesday that Business Inventories were up by 0.4% for the month of June. The consensus estimate of economists polled by Bloomberg was spot on at 0.4%, and the range of estimates was 0.3% to 0.6%.

The inventory-to-sales ratio was unchanged at 1.29. Nationwide, business inventories posted gains in each month of the second quarter.

The month-to-month change in retail inventories for June was 0.5%, coupled with only a 0.2% increase in sales. This raised the inventory-to-sales ratio to 1.42 from 1.41.

For comparison, in May, business inventories rose 0.5% and business sales rose by 0.4%. The inventory-to-sales ratio remained unchanged at 1.29.

Elsewhere on Wednesday, the Commerce Department said July retail sales were flat at 0.0% growth. A lack of sales growth has resulted in the backup of inventories for the month of July. There was also a lower buildup of wholesale inventories reported last week.

The flat growth in July retail sales and the buildup in retailer inventories from the prior month, may prove to increase an inventory glut if retail sales do not pick up in the next couple of months. In short, this could all bring about lower GDP estimates ahead.

Filed under: Economy

 

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Creative Ways to Reduce the Cost of Child Care

August 13, 2014, 5:33 am

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Filed under: Family Money, Personal Finance, Budgeting, Having a Baby

Diapers: check. Stroller: check. Onesies: check. You're all set for your baby, right? But what about child care?

A recent survey by Care.com, a website for finding and managing child care, found that 75 percent of American families say they were "surprised or overwhelmed" by the cost of child care and 42 percent) don't budget for it. According to the company, the average family spends approximately $18,000 per year on child care -- often their single largest expense.

Sheila Lirio Marcelo, founder, chairman and CEO of Care.com, says for many families, child care accounts for a bigger portion of their income than their food and housing. "According to our research, the average family spends 18 percent of its income on child care," Marcelo says. But new parents may not know the scope of expenses they need to budget. What's more, the survey found that 52 percent of families aren't aware of tax breaks for child care expenditures.

Resources for Child Care Costs

The best budget for all things -- especially big expenses like child care -- is an accurate one. The first step, says Samara Gonzalez, a certified credit counselor with ClearPoint Credit Counseling Solutions, is to research cost ranges for different types of child care in your area. "Sometimes this involves word-of-mouth as well as calling around to get a sense of the costs," says Gonzalez.

Those costs may seem overwhelming, but there are resources that can make them more manageable. Employee benefits, tax breaks, and subsidies can reduce your out-of-pocket child care expenses, but you need to search for them.

• Flexible Spending Account. If your employer offers an FSA ,you can set aside up to $5,000 of your salary before taxes to use for child care expenses. "This simple step saves the average family about $2,000 per year," says Care.com's Marcelo.
• Employee benefits. Look into your options for on-site day care or a flexible work schedule to reduce your child care costs. Marcelo says you should ask your employer's human resources department about possible benefits, such as child care reimbursements and resources to help you find a nanny or back-up care.
• Child care tax credit. "If your company doesn't offer an FSA, you can still get the child care tax credit, which lets you itemize up to $3,000 in expenses per child, per year on your tax return up to an annual cap of $6,000," says Marcelo. You can find out more information about the tax credit on the IRS website.
• Subsidized care. Depending on your income level, you may qualify for subsidized care. Ask providers if they offer fees based on your income.

Types of Child Care

While nannies, au pairs, day care centers and in-home day care centers are among the most common methods of child care, parents can devise alternatives.

Some parents rely on friends and family who are retired or unemployed; others are able to work out a flexible schedule or telecommute to reduce or eliminate child care expenses, says Rebecca Gershowitz, a counseling manager at ClearPoint. Another option is to look into sharing child care services -- such as a nanny -- with other parents. "Others may barter for skilled services they can provide, such as hairdressing or carpentry," she says. "They may also employ church-operated day care centers and schools in order to take advantage of need-based financial assistance."

If you're thinking of a more traditional child care system, here are some pros and cons:

• Nanny: Nannies are professional caregivers who come to your home and plan activities specific to your kids, but this tends to be the most expensive option, says Marcelo. "You should definitely do the math, though; when you have two kids, a nanny might be the cheapest option," she says.
• Au pair. Marcelo says an au pair works best for older children, since these tend to be young people from another country with varied experience with kids. She says an au pair from an agency will generally cost you $360 per week as a stipend, plus room and board.
• Day care center. This can be more affordable than having someone in your home, but the downside is that your child gets less attention and you'll have less flexibility.
• Home day care providers. Marcelo says home day care, where one or more caregivers watch a small group of kids in their home, can be the most affordable option for families. She recommends that you check out the program to be sure it is state accredited.

"The in-home vs. day care facility was the biggest decision I had to make when I had a child," says Gershowitz. "For those who opt for in-home day care, there are other challenges, such as that many are not tax-deductible. Also, if the provider is sick, you're stuck scrambling to find someone else to care for your child for the day. Some facilities provide temporary care for the day, but that's often pricey. One I checked into was $70 a day. Or you have to call out from work and lose income if you don't have vacation time."

One of the most cost-effective ways to provide child care is to organize a babysitting co-op with other parents. She says some ClearPoint's clients have found it more lucrative to start a day care business rather than return to a traditional job.

Finding the right child care is not just a financial decision, but an emotional and lifestyle one as well. Researching your options and determining what's realistic for your budget will help ensure that the decision you make is the best one for your entire family.

Michele Lerner is a Motley Fool contributing writer.

 

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Is There Life After 'Candy Crush' for King Digital?

August 13, 2014, 6:48 am

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Filed under: Company News, Earnings, Entertainment Industry, Stocks, Investing

King Digital Entertainment (KING) has tried to set itself apart from casual gaming rival Zynga (ZNGA) in its brief life as a publicly traded company. Unfortunately, it's failing to.

The company behind "Candy Crush Saga" posted disappointing quarterly results on Tuesday afternoon, sending the stock reeling on soft guidance and continuing fears that its flagship game has peaked in popularity. Gross bookings clocked in at $611.1 million. That may be 27 percent ahead of the prior year's take, but that's well short of the $641.1 million it scored during the first three months of this year. In fact, that's also lower than the $648 million in gross bookings that it generated when it peaked during the third quarter of last year and the $632 million it nabbed during the fourth quarter of last year.

This was always the fear when it came to investing in King Digital. Gamers are fickle, especially when it comes to free or nearly free apps.

Zynga investors got burned when they bought into the "FarmVille" and "Words With Friends" publisher's initial public offering in 2011 because gross bookings peaked a year later. King Digital could be even worse: It now seems like its performance peaked the year before it went public.

The Empty Piñata

There are plenty of problematic metrics in King Digital's second quarter report. Monthly unique users, daily active users and monthly unique payers all declined relative to this year's freshman quarter. However, the most glaring weakness is the fading popularity of the game that put King Digital on the map.

King Digital released "Candy Crush Saga" a little over two years ago, and the game proved to be instantly addictive for smartphone owners and folks playing apps on Facebook. However, it's been all downhill, since gross bookings for the game peaked in the third quarter of last year. After ringing up $493 million in gross bookings during the holiday quarter, we've seen King Digital score just $429.5 million in gross bookings during this year's first quarter and now $360.5 million during the second quarter.

The trend is probably only going to get worse. King Digital spooked investors by lowering its guidance for all of 2014. It now sees just $500 million to $525 million in gross bookings, its worst showing in more than a year and implying a fourth consecutive sequential slide in gross bookings for "Candy Crush Saga."

King Digital went public at $22.50 in March, but now it seems more like an exit strategy than it does an investing opportunity. Those who stayed away from the stock -- fearing that it would be Zynga revisited -- may have been on to something.

Zynga With Friends

Zynga's been the class clown of the IPO class of 2011, shedding more than two-thirds of its value since going public at $10 a share. Its quarterly report this month was a stinker, with gross bookings sliding and it, too, had to dial back its outlook.

The big difference between Zynga and King Digital is that Zynga wasn't as successful in 2012 when it peaked as King Digital is now. Zynga's guidance for gross bookings for this year is roughly a third of what King Digital is forecasting. However, worrywarts can spin that as a cautionary tale ending with King Digital having that much farther to fall.

There has never been a mobile game as financially lucrative as "Candy Crush Saga," but its time at the top peaked late last summer. King Digital has tried to diversify by pushing out new games that it markets to the dwindling base of "Candy Crush Saga" players, but clearly that strategy didn't work for Zynga when "FarmVille," "Mafia Wars" and "Draw Something" were hot.

King Digital also declared a one-time dividend on Tuesday afternoon, but the payout -- amounting to 46.9 cents a share -- is merely a diversion tactic. King Digital needs a new "Candy Crush Saga," and it needs it quick.

Motley Fool contributor Rick Munarriz has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our newsletter services free for 30 days.

 

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