The U.S. Labor Department gave us the formal inflation reading for the month of July on Tuesday morning. The good news is that inflation concerns have abated. July's Consumer Price Index (CPI) rose 0.1% on the headline report. It is down from the 0.3% reading from June. Bloomberg estimated it at 0.1%, with a range of 0.1% to 0.2%.
The core CPI rate without the more volatile food and energy components was up only 0.1%, versus the Bloomberg estimate of 0.2%. This is the same increase that we saw from June.
On a year-over-year basis, this puts the headline CPI up 2.0%. On an ex-food and energy basis, the core CPI rose by 1.9% from the prior year.
Food and shelter prices marked increased levels from the June numbers, but these were offset by a decrease in energy. The energy index had its first decline since March, and this was throughout all the major energy components — you have probably even noticed it at the gasoline pump.
Crude oil continues to come down and other commodity prices have not been rising handily. After having tracked higher prices, much of the inflationary concerns have dwindled.
For a takeaway, this was the slowest rise in CPI since February. The good news is that this reading allows for the Federal Reserve to be more flexible in maintaining its policies with the coming end of quantitative easing.
READ ALSO: 10 States Where Manufacturing Still Matters
ShutterstockYou'll need good credit to get the best rates on a mortgage refinance, and you'll need to be able to document your income.By Teresa Mears
Mortgage rates have been hovering near historic lows for five years. While the current average rate of 4.13 percent for a fixed, 30-year mortgage is not the lowest it's ever been -- that was 3.35 percent in December 2012 -- it's still lower than at any time between 2010 and 1971, when Freddie Mac started keeping records.
Exactly when rates will rise significantly is anybody's guess, but there's no question that will happen. This could mean you'll never see a better time to lower your mortgage rate and your monthly payment by refinancing -- but if, and only if, refinancing will save you money.
"We're still at the lowest rate we've been in 30 years," says Don Frommeyer, president of the National Association of Mortgage Professionals and a mortgage broker in Indianapolis. "Now's the time to do it. Who knows what's going to happen in the next 12 to 24 months?"
But, he adds, to find out if refinancing is the right move for you, you need to consider your goals and crunch some numbers. "If you're just going to refinance to refinance, that's not a good idea," he says.
When weighing whether to refinance, many people rely on a rule of thumb that a reduction of 1 percentage point makes refinancing worthwhile. But that formula ignores important considerations. For one thing, closing costs are vastly more expensive in Florida, for example, than in California, meaning it will take you longer to earn back your refinancing costs.
Another common formula adds up your closing costs and determines how many months it will take for your payment savings to recoup those costs. For example, if you pay $3,000 in closing costs and save $300 a month, it will take you 10 months to recoup your costs, making refinancing a good deal if you plan to stay in the home more than 10 months.
But those formulas don't tell the whole story, says Casey Fleming, author of The Loan Guide: How to Get the Best Possible Mortgage and a mortgage professional in the San Francisco Bay Area. For one thing, they fail to account for the fact that you'll be paying on your loan for more years, and you'll be paying less principal than before.
Fleming advises calculating how much you'd save if you paid the loan back in the same number of years. So, if you had 25 years left on a 30-year mortgage and were refinancing into a new 30-year loan, calculate how much your payment would be if you paid the new loan back in 25 years. Then divide that number into your closing costs and see how many months it will take to recoup your costs.
Fleming also suggests estimating how long you're going to keep the property. Then you can get an idea of what the principal balance will be when you're ready to sell and compare that with what the balance will be if you don't refinance.
"It drives me crazy when people overpay," he says. "People end up paying more money to the bank because they refinanced," not realizing that the interest rate wasn't the only important number.
Many lenders will offer to refinance your loan with no closing costs. That merely means you don't pay the costs upfront, but they are rolled into the cost of the loan, either as a higher mortgage rate or an addition to the principal.
If you've done the math and refinancing looks like a good deal, the next step is getting estimates from several lenders or brokers. You'll need good credit to get the best rates, and you'll need to be able to document your income. If you're self-employed or work on contract, lenders will want to see contracts and also a track record of two years of self-employment income high enough to repay the loan. Sometimes meeting income requirements is challenging for those who write off a lot of expenses because lenders consider the net, not the gross, income if you're self-employed. Everyone, self-employed or not, should expect more paperwork.
"You will have to provide significantly more documentation, and there will be a lot more questions about your documentation," Fleming says.
The house will also have to pass muster. The Federal Housing Administration is especially picky about issues such as chipped paint and ceiling cracks. Appraisers are asking for termite inspections, foundation inspections and other reports to document the condition of the house, Fleming says.
If you're not taking cash out, you can refinance to 90 to 95 percent of your home's value on a conventional mortgage, 97 percent on an FHA loan and 10 percent on a Veterans Affairs loan, although you will have to secure private mortgage insurance or its equivalent if your loan is for more than 80 percent of your home's value.
If you want to take out cash, the limit is 75 to 80 percent on a conventional loan and 85 percent for FHA. And, Fleming says, you'll pay a higher interest rate.
The Home Affordable Refinance Program even allows people who are underwater on their mortgages but current on payments to refinance to take advantage of lower interest rates. HARP loans have to be backed by Fannie Mae or Freddie Mac, but those entities back most loans.
Remember that just because you can refinance doesn't mean you should. Here are some things to consider:
How long are you going to be in your home? The longer you plan to stay, the more advantageous it is for you to cut your monthly payment.
Do you want a longer mortgage? If you're 10 years into a 30-year mortgage and you refinance, you've now got 30 more years to pay. Are the monthly savings worth 10 more years of payments?
Do you want a shorter mortgage? Homeowners nearing retirement age may want to refinance into a shorter mortgage, especially if they can get a better interest rate. In recent years, 15-year, 20-year and even 10-year mortgages have grown in popularity. The shorter the mortgage, the less interest you pay.
What are your closing costs? Make sure you take all costs into consideration, including title fees, local taxes, lawyer's fees and loan-related fees.
Should you pay points to get a lower rate? "In most cases, it makes a lot of sense to pay money to bring down the interest rate," Fleming says. Paying three points, for example, could lower your interest rate from 4.25 percent to 3.5 percent. (Points are fees. One point is equal to 1 percent of the loan amount, so one point on a $200,000 loan would be $2,000.) Over years, that could shave way more than you paid in points off your balance. "It's a huge difference, much, much larger than you would think," Fleming says.
Is taking cash out for home improvements a good idea? If you take out $20,000 in cash on your 30-year mortgage to remodel your kitchen, you're actually paying for that kitchen for 30 years. You may have to make some of those improvements two or three more times before you're finished paying off the first round. "You're financing a paint job for 30 years," Fleming says.
Should you refinance to pay off debt? Be careful. "Debt consolidation almost never makes sense in the long run," Fleming writes in his book. "It almost always works out to be a very long-term, expensive solution to a short-term problem." If you don't make your credit card payments, you won't lose your house. If you roll that debt into your mortgage and you don't make the payments, you can lose your house.
Would a home equity line of credit be better? Possibly, if your needs are short-term. The current interest rate is prime plus 1, or 4.25 percent, about the same rate as a 30-year mortgage. However, equity lines have variable interest rates. Historically, prime has been much higher, so your rate could rise substantially in the future.
Do you have an FHA loan? You may be eligible for a streamline refinance, which doesn't require verifying income or assets or doing an appraisal.
While we all use tupperware in our kitchens, some types can be harder on your budget in the long run. So, what's the most cost-effective and safe option? Let's do a comparison.
When it comes to the price, plastic tupperware beats glass hands-down. However, that lower price doesn't mean quality. Plastic degrades much quicker over time than glass, especially if you're constantly heating up your leftovers.
Additionally, recent studies have shown that most plastics, even BPA-free ones, can secrete harmful chemicals into your food when heated. With glass, you won't have those risks. In fact, it's the only packaging material that's generally regarded as safe by the FDA.
Next, we have the food-spoilage factor. Since plastic is more porous than glass, food tends to go bad faster in these containers, and that's just more money down the drain. Over time, plastic also tends to absorb the smells and color of food since it's so permeable.
So, while glass may be a bit more costly up front, it's a much better long-term investment. The next time you have to buy tupperware, choose this budget- and eco-friendly option.
Twee Art
Estate sales aren't just for dead people -- there are many other fine reasons to call in the experts at turning used stuff into cash. Maybe you're downsizing like I am, or you want to make some money and simultaneously clear out some clutter -- or maybe "Hoarders" is begging to film you. Whatever your story, here's how to hold an estate sale (or shop at one).
Setting Up an Estate Sale
In one sense, an estate sale is basically a glorified yard sale with more stuff and better advertising. But don't try to do it yourself -- an estate sells takes a lot of labor, some of it more specialized than you might think, so contract with a company. Look for listings on estatesales.net (also a good way to find estate sales to shop) and connect with a firm that has a longer track record and good reviews on Angie's List or other review sites. Most estate sales companies won't handle your sale if the goods aren't worth a minimum value -- often $10,000 or more.
If your sale is accepted, an evaluator will look over your belongings and write up a contract. The commission and set-up fees can run 30 percent or more of proceeds to advertise and run the sale, plus contacting collectors if you have specialized items.
I hired a company that has been in business for 40 years. I was advised to lock away anything I didn't want sold -- and I mean anything, from framed children's artwork to the toothpaste tube on the sink -- or mark it "NFS " (not for sale) with blue masking tape. Several weeks after my evaluation, a crew of eight came out and went through my house top to bottom, pricing, organizing and setting up displays. By the end of the day, my house looked like a three-story department store.
I highly recommend being available on set-up day. It helped for me to be on hand to answer questions ("Are there more pieces to this collection?"), provide interesting backstories for some items (it apparently helped my company sell some photographic equipment), share the prices I had found on eBay (EBAY) for comparable pieces, and -- vital -- make sure things you don't want sold are held in a place inaccessible to the public. Also, as unpaid manpower, I helped clear out a room to display high-end items.
Get Out of the House
On the day of the sale, though, I left the house early. Like real estate brokers, estate sale staff advise owners to be away when potential buyers arrive. Customers can be extremely snarky about items that means a great deal to you. Who needs to hear that? I only came home to sleep, shower and make the bed ready for another day of the sale.
On the second day, everything was discounted by 25 percent -- except for items that had minimum prices, such as a few pieces of furniture I knew I'd rather keep than sell at too low a price to replace. On the third day, everything was discounted by 50 percent -- with the same minimum rule. If I had been getting rid of the contents of the entire house, I could also have contracted for a charity pickup or trash clean-out for a fee -- a rather substantial fee -- so I opted out of those.
I received a check for my share of the proceeds about two weeks later. It wasn't as much as I expected, and entire categories of items -- like tableware and clothes -- hardly moved at all. Books didn't sell briskly in this age of e-books. What people will buy and for how much can differ considerably from what you'd expect. You may see reviews online about estate sales from people complaining that their items were sold at bargain-basement prices. If you want top prices for what you're selling, you'll have to do some research, and likely sell the pieces online yourself, or go though an auction house and set minimum bids, instead of holding an estate sale.
And here are a few tips for shoppers:
Going early (shoppers lined up two hours before the sale began) is best for collectibles, and going early on the last day offers the best deals.
The estate sale company will usually only hold purchases until closing on the last day.
If you go to an estate sale in which the owners are moving rather than being deceased, household staples, kitchen equipment and sofas will likely go with them.
The Upshot
All that said, it can be a wrenching experience to sell your things for less than you expect -- or see them not sell at all. My own experience was fairly good. Comic books, records, photo equipment and some furniture (but not the antiques, surprisingly) moved out the door in the first few hours, according to the nightly email reports I got from the company.
I was paid quickly, but because not as much sold as expected, the company took out its minimum cut, which ended up to be almost half of the proceeds. I was still left with a large amount of stuff, most of which moved with me to my new, smaller home, or was carted off to the Salvation Army.
If you don't have the time to run multiple yard sales, trundle everything off to auction, or put up individual items on eBay, an estate sale may be your best option for cleaning out a house fast. In my case, I was left with more than I had hoped for, but tomorrow is another day -- for my own yard sale.
Mike Derer/APTelebrands' A.J. Khubani with an Instabulb.
Following hundreds of complaints and an undercover investigation, one of the biggest names in the as seen on TV business is being sued by New Jersey for allegedly using "unconscionable commercial practices" to dupe consumers.
New Jersey-based Telebrands, whose success was propelled by the Ped Egg, was accused by the New Jersey Division of Consumer Affairs and the state attorney general of violating the state's Consumer Fraud Act and engaging in the shifty tactics that has given the industry a bad name. Telebrands, on its websites and through its automated phone ordering system, "aggressively" upsells consumers and doesn't give them a way out of its intense ordering process, sends them items they didn't order, and uses advertisements that mislead customers, the complaint alleges.
Consumer Affairs said that it had fielded 340 complaints about Telebrands' practices between 2012 and last month. In settling a complaint with the state more than a decade ago, the company promised it would abide by New Jersey's business conduct rules or risk greater penalties.
"As demonstrated by its alleged actions, Telebrands cannot be trusted to do right by its customers or to even honor its own 2001 pledge to follow our consumer protection laws," acting N.J. Attorney General John J. Hoffman said in a statement about the five-count complaint. "We are bringing this action to end the abusive business practices that Telebrands allegedly is inflicting upon consumers."
Live Operators Hard to Reach
Consumer Affairs investigators bought several Telebrands products -- including the Instabulb, the Olde Brooklyn Lantern and the Pocket Hose -- to test the company's purchasing system, advertising claims and return process. Most calls, Consumer Affairs said, are routed to the company's automated system, which continually offers more products and keeps customers locked into calls that can continue for more than 30 minutes. One investigator was offered seven more products when trying to buy an Instabulb. And purchasers can't speak to a real person during theses calls, find out about cancellation or return policies, or even know for sure what they've ordered.
Because Telebrands doesn't make it clear, either online or on the phone, what has been added to a customer's order, consumers can end up buying far more than they intended or thought they had, state officials said.
"This action against Telebrands alleges that consumers were repeatedly pressured through gimmickry, misrepresentations, and high-pressure sales tactics to buy products they didn't want," Steve C. Lee, acting Consumer Affairs director, said in a statement. "What's just as unconscionable is that when consumers attempted to return unwanted products and obtain refunds, they allegedly couldn't reach actual customer service representatives and were subjected to return policies that differed from what was represented in ads and on the company's website."
The state wants restitution for consumers, penalties against Telebrands, and compensation for the cost of its investigation.
"Consumer satisfaction is always our top priority," Telebrands founder and President A.J. Khubani said in a statement. "We are confident that this matter with the state of New Jersey will be resolved in short order."
Alamy
Verizon Wireless has been named the top provider of mobile network service in America, according to a survey by market research firm RootMetrics. Ranking No. 1 (or tied for No. 1) in 48 states for overall performance, 44 states for reliability, 45 states for speed -- and particularly good with mobile Internet, where it tops the rankings in 46 states for data, Verizon Wireless is now officially the best mobile provider in the country.
But what about wireless's 20th Century cousin? Turns out, the news is less than happy for consumers still attached to fixed, "wireline" service.
Honey, the Internet Pipes Are Clogged Again
There's a theory floating around out there on the Internet that too many people are downloading too many movies on Netflix (NFLX) and Amazon.com (AMZN) Prime, and that all of this downloading is clogging up the Internet's "series of tubes" and creating congestion.
If that were true, then the logical -- the economic -- solution to the problem would be for ISPs to charge more for Internet access, or set limits on Internet usage and charge more for customers exceeding those limits. Such actions would curb demand for Internet access, reduce downloading activity, and unclog the pipes.
That's the theory. Now here are the facts.
Sorry, Sir. I Can't Find Anything Wrong With Your Pipes
Last week, the U.S. Government Accountability Office released the preliminary results of a survey it conducted among ISPs, industry experts and consumers regarding Internet usage and congestion. What it found was that, indeed, "some wireless ISPs" have congestion issues. And to solve the problem, they do indeed impose data usage caps and higher prices for exceeding those caps.
However, GAO also asked the major wireline ISPs -- companies like Comcast (CMCSA), AT&T (T) U-verse, and yes, Verizon (VZ) FiOS as well -- what they're seeing, Internet traffic-wise. Surprisingly, "wireline ISPs said that congestion is not currently a problem."
And yet, according to GAO, these wireline ISPs are nonetheless beginning to charge their customers based on the volume of Internet data they use, a policy known as "usage-based pricing," or UBP. So far, only about 25 percent of Internet users say they've run into UBP demands by their ISPs -- but that number seems set to increase. GAO's survey shows that seven of the top 13 wireline ISPs now impose UBP on their customers "to some extent."
The reason: UBP can generate more revenues for ISPs."
Paying the Price, for One Reason or Another
Could this mean that, even in the absence of congestion, ISPs are starting to impose UBP and charge for Internet traffic just because they can?
ISPs and other industry experts argue that they need more revenue "to help fund network capacity upgrades as data use grows." And maybe that's true. After all, ISPs forecast that wireless data traffic will grow 20 percent annually between now and 2018.
Then again, a quick look at the financial statements these companies have on file with the Securities & Exchange Commission shows that they aren't exactly hurting for revenues -- or profits -- to begin with.
AT&T, for example, did nearly $129 billion in business last year, and earned $18.2 billion in net profit on those revenues -- a 14.1 percent net profit margin.
Verizon's 2013 revenues totaled more than $120 billion, and the company earned $11.5 billion in business on these revenues -- a 9.5 percent profit margin.
Even Comcast, lacking the phone companies' massive wireless business as a source of sales, sold $64.6 billion worth of goods and services in 2013. Its $6.8 billion in net profit yielded a profit margin better than Verizon's, if not quite so rich as AT&T's -- 10.5 percent.
So as businesses, all three of these companies appear to have plenty of revenue already, with which "to help fund network capacity upgrades," were they so inclined. What's more, their profits are increasing at a phenomenal rate. Data from S&P Capital IQ show that net profit margins at each of Comcast, AT&T, and Verizon expanded in each of the last two years.
Follow the Money
As for what these companies actually do with the profits they earn, let's look at another example. Data from S&P Capital IQ show that Comcast's cable division in particular (Comcast also owns NBCUniversal) boasted earnings of $21.4 billion -- 41 percent of revenues -- before accounting for the costs of interest on the firm's $44 billion debt load, for taxes, depreciation and amortization costs. So most of those "EBITDA" profits were actually earmarked for paying down these costs.
And how much of Comcast's revenue was earmarked for capital spending "to help fund network capacity upgrades"? That was a much smaller figure: $5.4 billion.
Don't be surprised if in your next cable bill, they ask you to chip in to make up the difference.
NEW YORK -- A summer swoon for the stock market appears to be over for now.
The Standard & Poor's 500 index (^GPSC) closed within six points of its all-time high Tuesday, less than two weeks after slumping on concerns about rising tensions in Iraq and Ukraine.
Investors were encouraged by economic reports that suggested growth may be poised to pick up, while inflation remains subdued. A pair of company earnings reports also hinted that consumers may be getting more confident and spending more.
Home Depot (HD), the nation's largest home improvement retailer, rose after raising its annual profit forecast following a strong spring selling season. TJX (TJX), the parent company of T.J. Maxx, Marshalls and other stores, climbed on strong earnings.
"The economic reports ... have been coming out better than expected," said Robert Pavlik, chief market strategist at Banyan Partners. "There's been a shift in the focus of investors away from some of the geopolitical events."
The Standard & Poor's 500 index gained 9.86 points, or 0.5 percent, to 1,981.60. The index is up 1.4 percent for the week and is approaching its record close of 1,987.98 reached July 24. The Dow Jones industrial average (^DJI) rose 80.85 points, or 0.5 percent, to 16,919.59. The Nasdaq composite (^IXIC) climbed 19.20 points, or 0.4 percent, to 4,527.51.
TJX, the parent company of T.J. Maxx, Marshalls and other stores, was the biggest gainer in the S&P 500 on Tuesday. The company's stock rose $4.66, or 8.6 percent, to $58.56 after it reported that its quarterly income climbed 8 percent as sales strengthened in the U.S. and abroad. The results beat the estimates of Wall Street analysts. TJX also lifted its full-year earnings forecast.
Home Depot jumped $4.64, or 5.6 percent, to $88.23 after the company said its quarterly income surged 14 percent. Spring is the biggest season for home-improvement retailers as homeowners work on their yards and gardens. Home Depot has also been helped by an improving housing market.
"Home Depot's earnings give you a measure of confidence in housing, to an extent, and a measure of retail confidence," said JJ Kinahan, chief strategist at TD Ameritrade. "Those are two areas where we like to look to see how the consumer is really feeling."
A report that showed inflation remains subdued also gave stocks a lift.
U.S. consumer prices rose in July at the slowest pace in five months, held back by a drop in gasoline prices. Consumer prices edged up 0.1 percent, after larger gains of 0.3 percent in June and 0.4 percent in May. If inflation remains constrained, investors judge that the Federal Reserve will be able keep its key interest rate low for longer.
The Fed is currently winding down its economic stimulus but hasn't yet said when it will start raising interest rates.
Beauty products company Elizabeth Arden (RDEN) was one of the big losers on Tuesday.
The company slumped after reporting lower sales and a loss that was bigger than analysts' had expected. The company said the decline in sales of celebrity fragrances, particularly the Justin Bieber and Taylor Swift scents, was steeper than had been anticipated. Arden's stock dropped $4.56, or 23 percent, to $15.05.
Benchmark U.S. crude fell $1.93, or 2 percent, to $94.48 a barrel in New York and is now down nearly 4 percent for the month of August as crude supplies remain ample. Bond prices didn't move much. The yield on the 10-year Treasury note was unchanged at 2.40 percent from Tuesday.
In metals trading, gold slipped $2.60 to $1,296.70 an ounce. Silver fell 22 cents to $19.41 an ounce. Copper fell two cents to $3.09 a pound. In currency trading, the dollar rose 0.3 percent to 102.89 yen, while the euro fell 0.3 percent against the U.S. currency to $1.3318.
What to Watch Wednesday:
The Federal Reserve releases minutes from its July interest rate meeting at 2 p.m. Eastern time.
These major companies are scheduled to release quarterly financial statements:
ollyy/Shutterstock
A financial storm is almost always stressful, but paying your monthly bills during one is even more difficult if your main sources of income are freelancing or working for yourself.
These days, for a variety of reasons, more people are choosing to freelance full-time or to bring in income on the side. How many is a bit of a mystery. Freelancers Union counts 42 million independent workers in the U.S., while Businessweek reports 10 million Americans work as freelancers. I joined the ranks of self-employed a little over two years ago to help my wife run the business she had started several years earlier.
Be Prepared for the Money to Come to a Halt
The one thing you can bank on in self-employment is that your business will come to a standstill at some point. That was the situation shortly after I left my corporate role. Prospects seemed great, but nothing was coming in. While you can use times like these to market yourself, thought blogging (if you're a writer or in another creative field) or networking, for example, these activities don't address your immediate financial needs.
Speaking from experience, I can say that the key to handling your own personal financial downturn is this: Don't panic, but do go into financial lockdown mode. Avoid rash behavior and unnecessary spending, and find any reasonable ways to bring in some supplemental income. If you don't already use a budget, this is the time to craft one.
Budgeting and Goals
Among the excuses I've often heard people use for for not sticking to a budget is that they don't earn enough, or that they have a fluctuating income. But those excuses only highlight the common misconceptions about living on a budget. If you're a freelancer and depend on that income to make ends meet, then there is no time like the present to get a clear handle on your money situation.
Starting a budget from scratch when you have a fluctuating income presents a special challenge. However, budgeting as an entrepreneur can be done and done well. My wife and I had a budget during my days of corporate employment, but the decline in our household income forced us to look at further ways to cut the fat. This resulted in a "minimum-needs" budget.
A minimum-needs budget allows you to pay all your bills, closely monitor all non-mandatory spending, and also hit your savings goals -- albeit at lower levels. The key is to quantify each lower level goal. For example, saving for retirement while living on a fluctuating income is certainly possible -- you just have to work harder at it.
How to Handle the Surges
Just as any entrepreneur will tell you there are going to be lean times, there are also going to be good times that will tempt you to overspend. Avoid that temptation as much as possible.
Instead, apply your surging income to the goals you have set in your minimum-needs budget. Personally speaking, we use our surges to max out our retirement planning goals, but you can do such things as:
Top off your emergency fund (three to six months of living expenses).
Pay extra toward debt.
Put more toward saving for college if you have children.
The point is to make those extra funds work for you in the best way possible. When you're a freelancer, income waxes and wanes. Don't get caught wishing during a slow time that you had managed money more wisely when it was flowing in. Instead, you want to use those good times to hit stretch goals you have established for yourself and smooth out future downturns.
John Schmoll is the founder of Frugal Rules, a finance blog that regularly discusses investing, budgeting, and frugal living. He is a father, husband, and veteran of the financial services industry who's passionate about helping people find freedom through frugality. He also writes about wise ways to manage your money at WiseDollar.org.
Goodluz/Shutterstock
College today is horrendously expensive. Beyond tuition bills that look like significant percentages of the national debt, and room-and-board costs that make you wonder if the school is housing your child in the Ritz-Carlton, pricey textbooks and laptops are a near universal requirement.
DealNews looked at the computer prices in the school stores of U.S. News & World Report's five top-ranking public universities and one of the top private universities. (Private universities are often finicky about letting non-students into their online stores, so there were fewer options.) The site then compared the most and least expensive laptops as well as the cheapest tablet to similar configurations in back-to-school deals available from retailers.
Better Deals at Walmart, Target
On the average, campus prices were 35 percent higher than those offered by retail stores. Most of the equipment at the schools also seemed to be sold as is, without additional software or tech support. When DailyFinance asked, a DealNews representative confirmed that the site took into account all the installed software when comparing prices. For example, the University of Virginia sold a first-generation iPad with 16GB of RAM for $299. That was $100 more than Walmart (WMT) and Target (TGT) charged in their summer deals.
Some schools had reasonably priced equipment. But 68 percent of the time, families would have been better off buying the gear off-campus. Even when there are educational discounts, like with Apple (AAPL) equipment, major stores were sometimes less expensive by up to $50.
That said, there are a few situations when the lower price you could get from an off-campus retailer might not be such a smart deal.
Specialized software. Some software, like in areas of engineering, may be free. Others could require specific commercial packages. For example, if your kid is studying photography, design or art, Adobe (ADBE) software could be required. Check to see if you can get the same software deal as the school does. If not, you might find that the lower software prices more than make up the cost difference of the hardware.
Maintenance. Laptops can take a beating. Does the school include a full maintenance plan? You don't want your student stuck with an expensive brick and no option for fixing it. Plus, you might also need to install various applications and utilities. The time and irritation alone, particularly when things are pressed as you send the scholar on his or her way, might be worth the extra money. If you worry that you'll buy the wrong thing, purchases at the school store can reduce your stress.
Financing. The school might provide financing that is significantly cheaper than what you might have available to you via a credit card.
But chances are good that you won't have to give up anything to keep some extra green in the wallet. And you know the kid will be calling soon enough asking if you can spare any cash.
Auremar/Shutterstock
A serious illness, family crisis or death in the family can bring out the best behavior among relatives -- or the worst. According to the 2014 Intra-Family Generational Finance Study by Fidelity Investments, 64 percent of parents older than 55 who have at least $100,000 in investable assets and their adult children over 30 aren't on the same page about when the right time is to have conversations about estate planning. Even among those families that do talk about these topics, few get into the level of detail that's recommended. The study found that 31 percent of parents say they haven't talked in detail about estate planning; an additional 10 percent haven't discussed the subject with their offspring at all.
One reason that estate planning is so complicated and emotionally fraught is that adult offspring often confuse love and money. "What many parents don't understand is that their children do not see an inheritance as dollars, they see it as 'love units,' " says Ken Moraif, a certified financial planner or at Money Matters, a wealth management and investment firm in Dallas-Fort Worth.
Problems can arise when parents decide to leave a bigger inheritance to one child because, for example, that child isn't doing as well financially as another. "The child that received the smaller inheritance interprets that as 'Mom and Dad loved my sibling more than me,' " says Moraif. "This creates resentment and ill will that the parents had no intention of creating." He says parents should individually explain a disproportionate inheritance to each adult child and allow them to vent their frustrations, so that they don't feel punished for their success or less loved.
Hurt feelings and misunderstandings aren't the only inheritance troubles that can plague families. Consider the following real-world stories of times when estate plans (or lack thereof) went awry.
1. Failure to Plan
"We recently faced an unfortunate situation with a grandson who had lived with his grandfather for 30 years because his mother wasn't in his life and his father had died," says Pat Simasko, founder of Simasko Law in Mount Clemens, Michigan. The grandson put his life on hold to take care of his grandfather as he got older, but when the grandfather passed away, the grandson wasn't entitled to any inheritance.
"The grandfather never put his $750,000 estate in proper order," says Simasko. "There wasn't anything that could be done. It truly amazes me that if a person would take one to two hours to properly plan, future disappointments could be avoided."
2. Derailed by Simple Administrative Details
Craig Myers, a financial adviser and president of CR Myers & Associates in Southfield, Michigan, says he met with a woman whose mother left a trust that stated that her children were to inherit 100 percent of the estate. There was even a prenuptial agreement with her new husband stating that all of her assets prior to the marriage were to go to her daughter.
Unfortunately, the beneficiary designations on the accounts were never changed to name the trust, and as a result of this oversight, her new husband received 100 percent of her estate. "Someone may have a trust that explains their wishes upon death," Myers says, "but if their beneficiary designations are not properly titled, they could disinherit their family without meaning to do so."
Dan White, a financial adviser and founder of Dan White and Associates in Philadelphia, had a similar problem with a client whose husband passed away from a heart attack during their vacation in Spain.
"Her husband was a self-employed lawyer," says White. "He put together all the paperwork, but forgot to take care of the biggest item. ... He never named a beneficiary. Everything had to go to probate, and it took her months to sort out this mess." White stresses to his clients the importance of having a professional review all paperwork. "One proofread through the document, and all of the delays would've been avoided."
3. Cross-Country Squabbling Siblings
A client of John O. McManus, an estate attorney and founding principal of McManus & Associates in New York City, had a client whose daughter lived on the West Coast and son and daughter-in-law lived close to her on the East Coast. The children had joint power of attorney, and the daughter would sign blank checks so that her brother and his wife could pay for things their mother needed without constantly needing her signature.
"The son wrote his wife checks from his mom's account as a salary to pay her for taking care of his mother, which caused some tension between the siblings," says McManus. "Due to the son's history of run-ins with the law, the daughter was wary of letting him have too much power over his mom's estate."
Ultimately, the mother named the daughter as sole executor. But after the mother passed away, the daughter-in-law took things out of the house that she claimed were hers or were "intended for her" by the deceased mom. "The daughter called the cops to have the daughter-in-law arrested when she would not leave the home of the decedent," says McManus.
McManus was able to get both parties to agree that the daughter-in-law could go through the house with the estate sales team to select items that she claimed were left to her, and the company would value these items to be deducted from her share of the deceased's estate.
To avoid situations in which relatives fight over individual property, it's best to include a written list of items of value with designated recipients in your will.
4. Blended Family Brouhaha
Lauren Brouhard, vice president of retirement at Fidelity Investments, says that census data shows that blended families now outnumber traditional families in the United States. And stepparents, stepsiblings, and half-siblings can make estate planning much more complicated.
For example, a mother may want to leave different inheritances to her biological children than she does to her stepchildren, or want to protect her biological family's inheritance in the event anything happens. "Without a meaningful discussion with the family about her intentions -- and some follow-up steps to ensure these intentions are carried out -- things can end up quite different than expected," says Brouhard.
McManus recalls a client who died, leaving an administrative mess that led to an extended and complicated estate settlement process involving the man's ex-wife, kids and current girlfriend.
For more than a year, there was a fight over who could open one of the client's storage units. "Finally, we were able to find a day that lawyers from all the represented parties could go together to open the unit," McManus says. "We had to count every item down to the socks to create an itemized list of contents to be divided among the heirs."
The haggling over every detail of the deceased's estate continues, McManus says: "His ex-wife, kids and current girlfriend are still fighting over anything and everything, including airline frequent flyer miles. We had to value the miles, investigate the transfer of ownership to an estate name and then equitably divide them."
Don't Leave Your Heirs a Mess
A detailed will, properly identified beneficiaries, and designated recipients of effects from an estate can reduce the chances of a free-for-all after a death, although when multiple parties are involved who were already arguing before the parent's death, the chances are high that lawyers will be brought into the fray.
"The point is, if parents don't make it clear what they want when it comes to things like estate planning, there's a strong likelihood things won't end up that way," says Brouhard. "Adult children have an important role to play in helping to clarify and carry out their parents' wishes, but this can only happen by talking things through as a family."
Michele Lerner is a Motley Fool contributing writer.
Gene J. Puskar/AP
WASHINGTON -- Average long-term U.S. mortgage rates declined this week, with the 30-year loan rate hitting its 52-week low.
Mortgage company Freddie Mac said Thursday the nationwide average for a 30-year mortgage fell to 4.10 percent from 4.12 percent last week. The average for a 15-year mortgage, a popular choice for people who are refinancing, slipped to 3.23 percent from 3.24 percent.
Mortgage rates have fallen in recent weeks after climbing last summer when the Federal Reserve began talking about reducing the monthly bond purchases it was making to keep long-term borrowing rates low.
Mortgage rates often follow the yield on the 10-year Treasury note. The 10-year note traded at 2.43 percent Wednesday, close to its low for the year of 2.41 percent. It was trading at 2.42 percent at midday Thursday. Bond yields rise when bond prices fall.
At its 52-week low of 4.10 percent, the rate on a 30-year mortgage is down from 4.53 percent at the start of the year. Rates have fallen even though the Fed has been trimming its monthly bond purchases, which are intended to keep long-term borrowing rates low. The purchases are set to end in October.
The low rates appear to have boosted U.S. home sales. Data released Thursday showed that sales of existing homes rose for the fourth straight month in July to their highest level in nearly a year, the latest sign that the housing recovery is picking up after stumbling at the start of the year.
The National Association of Realtors said home sales rose 2.4 percent to a seasonally adjusted annual rate of 5.15 million, the highest since last September.
To calculate average mortgage rates, Freddie Mac surveys lenders across the country between Monday and Wednesday each week. The average doesn't include extra fees, known as points, which most borrowers must pay to get the lowest rates. One point equals 1 percent of the loan amount.
The average fee for a 30-year mortgage was 0.5 point, down from 0.6 point last week. The fee for a 15-year mortgage was unchanged at 0.6 point.
The average rate on a five-year adjustable-rate mortgage fell to 2.95 percent from 2.97 percent. The fee remained at 0.5 point.
For a one-year ARM, the average rate rose to 2.38 percent from 2.36 percent. The fee was stable at 0.5 point.
Cindy Ord/Getty Images
It may be back-to-school shopping season, but this doesn't mean that moms -- or other well-to-do fashionistas -- can't snap up a seasonal bargain. There may never be a better time to buy designer totes, satchels or shoulder bags.
This is the time of year when Coach (COH), Michael Kors (KORS) and Kate Spade (KATE) usually discount some of their dated product lines ahead of new fall arrivals. But the markdowns may be even juicier this summer.
Gross margins are contracting, and inventory is starting to build up. This is bad news for handbag makers and investors, but it should be good news for folks looking to buy a luxury purse.
Let's Fly Coach
Coach is the largest of the three luxury handbag makers, but that's about to change. After yielding market share to Michael Kors and to a lesser extent Kate Spade in recent years, analysts see Michael Kors overtaking Coach this upcoming holiday shopping season.
Coach isn't doing very well. Sales and adjusted earnings are fell 7 percent and 35 percent, respectively, in its latest quarter. However, investors were braced for an even sloppier showing. Strong international sales, particularly in China, helped offset some but clearly not all of the domestic shortfalls (Coach suffered a 16 percent decline in North American sales).
Coach was the only one of the three publicly traded luxury handbag makers to see its stock climb the trading day after announcing results. The other two are growing, but there are problematic signs for investors across all three players.
Calling a Spade a Spade
Kate Spade is the smallest of the three, and it was the last of the three to report. After unloading its Juicy Couture apparel and Lucky Brand premium denim lines, Kate Spade has been able to focus on its booming premium handbag and accessories business.
Kate Spade's sales soared 49 percent in its latest quarter, and it was able to turn a year-ago deficit into an adjusted profit this time around. The stock still took a 25 percent hit on the news as Kate Spade scared the market with weak gross margins. Kate Spade blames the contraction on having to discount the Kate Spade Saturday brand. Investors dumped the stock despite Kate Spade boosting some of its outlook metrics for all of 2014.
Crash Kors
Michael Kors reported after Coach but before Kate Spade. It experienced a 43 percent spike in sales, and earnings climbed 50 percent. The stock still moved lower on the news. Kors disappointed investors by warning that margins will contract in the current quarter.
It also posted a 65 percent increase in inventory. Seasoned investors know that it's not a good sign when inventory is growing faster than sales. It usually suggests that the company has more unsold merchandise around, and that's often a precursor to margin-gnawing clearance sales.
The markdowns are already happening. Kate Spade, Michael Kors and Coach all posted lower gross margins this time around than they did last year. We can't blame this on seasonal blips since we're comparing one early summer quarter to the same period the year before.
Making things even more interesting is that Coach hired a creative executive late last year. This may indicate that Coach will be in more of a discounting mood than usual as it emphasizes new handbag lines. Either way, the message is clear: Go out and get a great deal on a designer handbag now, but wait until the rubble settles before buying the actual premium handbag designers.
Motley Fool contributor Rick Munarriz has no position in any stocks mentioned. The Motley Fool recommends Coach and Michael Kors Holdings. The Motley Fool owns shares of Coach and Michael Kors Holdings. Try any of our newsletter services free for 30 days.
NEW YORK -- The stock market advanced for a fourth straight day Thursday, pushing the Standard & Poor's 500 index to a record high.
Investors were encouraged by news that the number of people seeking unemployment benefits remains at a multi-year low. Hewlett-Packard (HPQ) rose after delivering better results, while Sears (SHLD) plunged after reporting that its loss doubled from a year ago.
The S&P 500 (^GPSC) rose 5.87 points, or 0.3 percent, to 1,992.37, four points above the record close the index set on July 24.
The Dow Jones industrial average (^DJI) rose 60.36 points, or 0.4 percent, to 17,039.49. It was the Dow's first close above 17,000 since July 24. The Nasdaq composite (^IXIC) rose 5.62 points, or 0.1 percent, to 4,532.10.
Hewlett-Packard was the biggest gainer among the major indexes. The technology giant rose $1.88, or 5.4 percent, to $37.00 after reporting better-than-expected results and its first sales increase in nearly three years. HP has been undergoing a multi-year restructuring under CEO Meg Whitman, who has laid off employees and cut back businesses that aren't profitable.
Bank of America (BAC) was also among the market's biggest advancers. The company reached a $16.65 billion settlement with the Justice Department over its sale of mortgage-backed securities in the months leading up to the financial crisis. The settlement is by far the largest deal the Justice Department has reached with a bank over the 2008 mortgage meltdown. Bank of America rose 64 cents, or 4 percent, to $16.16.
Stocks opened higher and remained there throughout the day, although buying did pick up in the last hour of trading. Investors were encouraged by a report from the Department of Labor that claims for unemployment benefits, a proxy for the number of people who recently lost their jobs and are looking for work, fell by 14,000 last week to 298,000. The less-volatile four-week average was 300,750, below the average before the Great Recession.
Stocks have been rising steadily all month, due to better economic data and a cooling of tensions in Ukraine, Gaza and Iraq. The S&P 500 is on pace to have its best month since February.
"We've have been able to breathe a sigh of relief that those worst-case scenarios have been avoided, at least for the time being," said Ryan Larson, head of equity trading with RBC Global Asset Management.
Investors now turn to Friday, when Fed Chair Janet Yellen will give a speech at the Fed's annual conference of central bankers and other policymakers in Jackson Hole, Wyoming. Investors will be watching closely for clues into her thinking on the timing of interest rate increases.
Yellen's speech will come two days after the minutes from the Fed's July meeting showed that a majority of the central bank's policymakers believe the U.S. economy is improving enough for the bank to start raising interest rates sooner than previously thought. The debate on when the Fed should begin increasing rates, which have been near zero since 2008, has intensified in recent months as the Fed winds down its other economic stimulus.
Overall, it's been a quiet week for the market. Volumes are low as many Wall Street workers try to fit in their vacations before trading picks up after Labor Day. Thursday was the 10th-slowest trading day of the year and Wednesday was the fifth-slowest.
Benchmark U.S. crude for October delivery rose 51 cents to $93.96 a barrel in New York. In metals trading, gold fell $19.80 to $1,275.40 an ounce, silver fell eight cents to $19.42 an ounce and copper was little changed at $3.18 a pound.
The yield on the 10-year Treasury note dipped to 2.41 percent from 2.43 percent the day before.
In individual companies:
Dollar General (DG), Dollar Tree (DLTR) and Family Dollar all fell after Family Dollar(FDO) rejected Dollar General's unsolicited $9 billion buyout offer, citing antitrust concerns. Also weighing on Family Dollar's decision was a deal Family Dollar reached with smaller discount retailer Dollar Tree last month. Dollar Tree fell 72 cents, or 1.3 percent, to $54.28, Dollar General fell 15 cents, or 0.2 percent, to $63.61 and Family Dollar fell 40 cents, or 0.5 percent, to $79.41.
Sears Holdings lost $2.57, or 7 percent, to $33.38. The owner of Sears and Kmart said it lost $573 million in the last quarter, more than double what is lost the year before. It was the struggling company's ninth straight quarterly loss.
What to Watch Friday:
Federal Reserve Chair Janet Yellen delivers a speech on labor markets in Jackson Hole, Wyoming, at 10 a.m. Eastern time.
Ann Inc. (ANN) and FootLocker (FL) release quarterly financial statements before U.S. markets open.
Fotosearch
The days leading up to my childhood birthdays were ones filled with suspense. I'd watch the mailbox like a hawk, awaiting two cards -- one from my grandma and the other from my great aunt and uncle. Each contained cold, hard cash, totaling six whole dollars. And for a 7-year-old, that amount could buy a lot of 10-cent Airheads from the grocery store.
But before any of that money could be exchanged with the store clerk, my parents required that I set 10 percent of it aside for religious tithes. As I got older and made more money, the 10 percent contributions continued. And they weren't much of a sacrifice since my parents paid for almost all of my needs and wants.
And then I grew up and got married to a guy who was also brought up paying 10 percent in tithes. We were young and poor and in debt, and what little money we had was going toward the bare necessities. Right after we'd said "I do," we opened a joint checking account and pooled our meager savings.
Unified Commitment
We'd both tithed our whole lives, but we realized giving away 10 percent was going to hurt a lot more than it had before we were married. We were trying to save for our future now. We wanted to get out of debt. Uncle Sam was already taking a hefty percentage from us. When we thought about it too much, we knew there was no way we could afford to part with that 10 percent to our church.
So we did what any responsible adult would do -- we stopped thinking about it. As soon as we got our paychecks, we paid our utilities, our rent and our tithe. We treated it like one of our bills that just had to be paid. And thanks to making that decision once early on in our marriage, we've never had to make it again. We've also never felt the absence of that 10 percent since.
While tithing itself hasn't necessarily been a boon to our finances (especially after we calculate what our true net income amounts to after tithing and taxes), the mindset we've adopted because of it has helped us be responsible with our money in more ways than one.
Putting Money into Savings Each Month
We approach our savings the same way we do tithing. Before we've spent a cent of our paychecks, we put a certain percentage into savings. Like tithing, we treat it like a bill that needs to be "paid." We've set up an automatic transfer from our checking account so that we don't even have to worry about spending it. Currently, we're also saving for a down payment, and so part of our savings automatically goes toward that savings fund specifically, helping us to make consistent progress.
Saving for Retirement
As with our savings, we save for retirement similarly. Whenever we've had a 401(k) match option with our employers, our contributions are always taken out before we ever see them. It's much harder to miss money you've never seen. Since we don't currently have a 401(k) option, we max out our Roth individual retirement accounts at the beginning of the year before we even have a chance to second-guess ourselves.
Paying Our Credit Cards Off in Full
Each month, no matter what we've spent on our credit cards, we pay the balance in full. We decided from the beginning that if we were going to have credit cards, this is how we would handle them. On the first day of every month, we pay off the balance of every credit card. With a system in place, we once again take the monthly decision-making out of the scenario. In the process, it also ensures that we never spend more than we can pay off, which keeps us far, far away from carrying credit card debt.
Anyone can have this mindset to money. Tithing isn't the magic ticket -- it's just what helped us learn these principles early in marriage. The key is to make a decision once so that you never have to make it again. This helps to take the emotion out of those hard financial decisions. We never allow ourselves to wonder what we could buy with the money we're putting toward retirement or savings or tithing. Instead, we trust our prior decisions and never look back.
NEW YORK -- Jell-O has lost its jiggle and nobody knows how to fix it.
The dessert was invented more than a century ago and helped popularize a delicacy reserved for the rich into a quick, affordable treat. Americans of all ages are familiar with the famous "J-E-L-L-O" jingle and TV ads featuring comedian Bill Cosby. Knocking back Jell-O shots made with alcohol is a college memory for many.
Yet despite its enduring place in pop culture, sales have tumbled 19 percent in the past four years, with alternatives such as Greek yogurt surging in popularity. Executives at Kraft Foods (KRFT), which owns Jell-O, say they're confident they can revitalize the brand. But their efforts so far have been a disappointment.
After years of marketing sugar-free Jell-O to dieters, for instance, Kraft last year launched an ad campaign that switched back to playing up the family angle. In one TV spot called "Comb Over," a man with the title hairdo tells his son how Jell-O makes up for life's troubles, such as being stuck in traffic. The visual gag is when the child imagines himself going through life with a comb over.
"Kids thought it was hilarious," said Dan O'Leary, senior director of marketing for Kraft desserts.
Declining Sales
Unfortunately, it didn't get people in the mood to eat Jell-O. After showing signs of improvement for a couple years, Jell-O sales in the U.S. hit $932.5 million in 2009, reflecting box mixes and ready-to-eat cups of gelatins and puddings, according to market researcher Euromonitor International. But they've been declining ever since, and by last year, sales had seen a double-digit percentage drop to $753.8 million.
Part of the problem is that people have become more finicky about what they eat. They're increasingly seeking out foods they think are natural or wholesome, and Jell-O's bright reds, greens and blues may inadvertently serve as warning signals to moms about the artificial dyes they contain. The second ingredient listed for the Jell-O gelatin cups is also high-fructose corn syrup, a cheaper sugar substitute that more people are shunning.
Nutrition more broadly is another issue. Jell-O has long positioned itself as a lighter alternative to cakes and pies (as the slogan goes, "There's always room for Jell-O"). But the trend now is toward foods that claim some sort of benefit, such as protein and fiber.
Even for those who have fond memories of eating Jell-O, the problem is just that -- it's a treat associated with the past.
"It almost seems childish to cook it now," said Ted McGrath, a 34-year-old painter in New York City who thinks of Jell-O as being in the same category as Twinkies or fast food.
Ignored Brand
Kraft CEO Tony Vernon concedes Jell-O wasn't "getting the attention it deserved" as a storied brand. That's because the company for many years was preoccupied by more popular snacks, such as Oreo and Chips Ahoy cookies. But in late 2012, Kraft split into two companies and the newly formed Mondelez International (MDLZ) walked away with those higher-profile snacks.
Since the separation, Kraft has vowed to boost the performance of neglected brands such as Jell-O. None of the efforts so far have worked, but executives remain optimistic.
In a rapidly changing food culture, they see new opportunities. Those in their 20s and 30s, for instance, love expressing their creativity through cooking, yet also want the convenience of packaged foods, O'Leary notes.
So Kraft says it's encouraging people to get creative with Jell-O on social media sites such as Pinterest, Facebook and Instagram. By posting images of Jell-O creations, the company says others get inspired to share their own, such as an image of a red, white and blue Jell-O ring one follower posted on Facebook (FB) posted on July 4. It's also pushing new Jell-O molds, such as a line of university molds that allow people to make Jell-O in the shape of their school mascots.
A 'Rich' Dessert
In a way, the strategy traces back to Jell-O's roots in the early 1900s, when salesmen distributed free Jell-O recipe books in an effort to boost sales. The idea was to let everyday people make fancy Victorian desserts, such as the "Roman Sponge" a concoction made with maraschino cherries, whipped cream and walnuts.
Such dishes had been out of reach for many because they could be time consuming and require unappetizing ingredients such as fish bladders, said Lynne Belluscio, director of the LeRoy Historical Society in Le Roy, New York, where Jell-O was invented.
"Jellies were extremely elitist," Belluscio said. "In Europe, the economics of a family or its social standing could be judged on its pudding or jelly mold."
But Jell-O helped make those dishes accessible for everyone, she said.
Increased Competition
Today, there's a proliferation of sweets and snacks touting more pristine ingredients, such as Fage Greek yogurt and Kozy Shack puddings. But Jell-O can cling to one advantage: the nostalgia it evokes.
That's on display at the Jell-O Gallery in Le Roy, New York. The museum -- essentially a room in the town's historical society -- still gets between 10,000 to 13,000 visitors a year, according to Belluscio.
Admittedly, many of those visitors decide to pull over on a whim after spotting the sign on the New York State Thruway for the gallery. When a storm knocked down the sign one year, Belluscio said visits dropped dramatically.
Still, the Jell-O Gallery remains by far the star attraction in the building, beating out the transportation exhibit in the basement and the genealogy and history library on the main floor. And once people step inside, the memories come tumbling forth.
"It's really funny how many people come here and say, 'Oh man, I haven't had Jell-O in so long,' " Belluscio said.
Why do some people make such bad financial decisions? We don't save enough. (A recent BankRate study shows that 36 percent of Americans aren't saving for retirement.) We spend too much. (Consider all the credit card debt). When we invest, we try -- in vain -- to "beat the market," paying silly fees to experts who dangle the prospect in front of us, but rarely deliver. When we borrow, we do so at ridiculously high interest rates.
It may have to do with how people perceive time.
I spent nearly 15 years in banking, and I have often asked people about their biggest financial mistakes. I hear stories like these:
I was out drinking with my friends. I decided to buy everyone a round. And then another. The next morning I woke up with a headache and a bar bill I couldn't afford. That seemed to happen every weekend, until my credit card was maxed out.
When I am in a store, I just can't stop myself.
I knew how much I should have spent on my home. But I saw an amazing house down the street with granite counters. I could just imagine our family living there -- so I bought it.
I know I should make more time to look at my investment portfolio, but I just don't have the time. And, when I heard that everyone was investing in that fund, I just decided to follow the crowd.
All too often, we have the financial understanding necessary to make the right decisions, but we don't. To understand why this happens, and to see how we can help people make better decisions, I reached out to Dr. Philip Zimbardo, a psychology professor at Stanford University. I was a student of his and felt honored to be able to work with him. He's famous for the Stanford Prison Experiment, but he has also been studying our time personality for more than 40 years.
In an ideal world, we would have good memories of the past. We'd have an ability to enjoy the present. And we'd plan for the future. But, often, our approach to time can get out of balance:
You can get stuck in the past. If something bad happened to you in the past, you can have an excessively negative view of the past.
You can get stuck in the present. When we are born, we enter the world perfect little hedonists. We want everything now. We don't care about the consequences of our actions. Over time, most of us learn that there are consequences, but some people don't and just want to enjoy the present. These people are the life of the party, but they tend to have addictive personalities.
You can have an obsession with the future. Tomorrow is always more important than today. People who are too future-oriented have long to-do lists, are always stressed and never have enough time in the day. They are so goal-oriented, that they let the world pass them by, working for that better tomorrow.
Your time personality becomes the lens through which all decisions are made in the present. A highly negative view of the past makes you skeptical of new opportunities. A hedonistic view of the present means you are ready for anything exciting, so long as it happens now. And being excessively future-oriented means that you will only do something if it fits into your longer-term plan. And, even then, it will just be added to your to-do list.
Time is of the Essence
Zimbardo and MagnifyMoney (the website that I co-founded) sponsored a study in six nations with more than 3,000 people. We gave them each a traditional financial literacy test. We tested them for their time personality. And we assessed their financial health.
The results were clear: Just because you're financially literate doesn't mean you'll be financially healthy. A stronger correlation existed between your time personality and your financial health. In other words, being able to do the math doesn't mean you'll make good financial decisions. But your time personality has a big impact on your financial decisions.
People with highly negative views of the past tended to be risk-averse. The good news: They are more likely to avoid financial ruin, because they won't take massive risk. The bad news: Sometimes a diversified portfolio is better than just cash.
People who are highly present-hedonistic have a high risk of being financially sick. If anyone should listen to the advice of Dave Ramsey, it's present hedonists who have trouble controlling themselves. Cut up your credit cards and switch to cash. Say no to new credit offers. Create a savings account that is separate from your bank account so that you can't access the funds as easily. Sign up for 401(k) contributions to come out of your paycheck automatically so that you never see -- or miss -- the funds.
But not everyone needs to follow Ramsey's advice so strictly. Past- and future-oriented people should not feel guilty using credit cards to earn rewards points, for example, because they can control themselves.
People who are are highly future-oriented are exposed to a different type of risk. Because they tend to be career-oriented and always stressed, they don't give themselves enough time to make good decisions. And they really like insurance products. So, if that's your personality, make sure you give yourself time to think about your options and listen to expert advice. Don't just follow the investment tips of other "successful" people. And have a plan for insurance: Don't just respond to it every time it is sold to you.
How Can You Use This Concept?
Find out your time personality. It doesn't take long. And, once you know your time personality, you can better understand where you are most at risk of making bad financial decisions. And, you can try to set up a system that understands your own weaknesses.
So much of the financial advice we see is one-size-fits-all. It shouldn't be. Traditional financial literacy is important. But it is not sufficient.
Your time personality impacts the decisions you make. Understanding the potential weaknesses of your time personality can help you develop a better approach to making financial decisions.
Nick Clements is the co-founder of MagnifyMoney.com, a website that makes it easy to compare and save money on banking products. He spent nearly 15 years in consumer banking, and most recently he ran the largest credit card business in the United Kingdom.
Getty ImagesTo protect your accounts, make sure to create complex passwords that don't include your Social Security numbers or date of birth.By Jenna Lee
Sometimes it feels like the only stories in the news these days are about data breaches. Just this week alone, the Identity Theft Resource Center has reported a whopping 480 breach cases, a 21.5 percent increase over the same period last year. Between breaches of major retailers such as Neiman Marcus and Michaels, to financial institutions like American Express (AXP), millions of consumers' social security numbers, credit card numbers, account details, passwords and other forms of personal information have been stolen, costing merchants billions of dollars and creating countless headaches for the unfortunate victims of fraud.
More importantly, identity theft can ruin your credit history and cause you to be unfairly denied for credit or have to pay outrageous rates and fees that you don't deserve.
Since data breaches probably won't stop anytime soon, now's the time to proactively protect your credit before irreversible damage occurs. Here are some strategies to maintain your good name:
1. Secure your devices and online accounts. While mobile devices often make our lives easier, they're also great opportunities for thieves to steal your information. With this in mind, limit the chances of your identity being compromised by password-protecting your devices and taking advantage of the auto-lock function, no matter how annoying it may be to input a code each time you want to access your device. Keep your malware protection software updated, and constantly run tests to ensure your computer is virus-free.
You've probably heard this countless times, but one of the best ways to secure your online accounts is by choosing strong passwords. Password123 may be easy for you to remember, but it's also super easy to guess. Instead, build long, complex passwords that include different letter cases, numbers and symbols and don't include parts of your Social Security number, date of birth or other identifying information. Even better, use a program like LastPass to generate random and ultra-secure passwords for you. Also change your passwords regularly -- not just when you hear of a data breach.
Lastly, get into the habit of logging out after you've completed your session, even if you're using your own device (and especially if you're using someone else's or a public computer). This can help prevent others from snooping around, and it only takes a second!
2. Shop safely online. With 24/7 access, no crowds and variety, online shopping is often a convenient alternative to brick and mortar stores -- that is, if you're careful about where you shop. Internet scams are becoming more elaborate, so do your research before entering your personal information online. In particular, look for these signs that may help indicate a site is trustworthy:
It encrypts your personal information. If the company's URL begins with "https" and/or has a padlock icon next to it, it indicates that it has security measures in place to prevent others from accessing your personal information.
Other people trust it. Visit the company's Better Business Bureau page or read reviews and complaints to see how they've treated previous customers.
Keep in mind that no matter how secure a site is, your information may still be vulnerable if your Internet connection is not secure. Public Wi-Fi is fine for casual browsing, but hold off on important tasks like paying bills and purchasing items until you're on a private network.
3. Shred documents that contain personal information. It may seem old-fashioned, but this standard piece of advice still rings true. If thieves sort through your trash or recycling bin and find forms, bank statements, credit card bills, receipts or other documents that contain personal information, they could easily piece together enough data to create fraudulent accounts in your name. Buying and using a shredder to destroy confidential material is a quick and easy way to minimize this possibility.
4. Proactively guard key information. A huge part of protecting your identity comes down to you. While it's great to see the best in people, adopt a skeptical mindset when it comes to sharing your personal information. Question why someone is asking for it, and withhold as many details as you can. Did you know that providing your ZIP code, phone number or email address to retailers isn't typically mandatory? Merchants usually just use this information to create a profile of you. Financial institutions also seldom solicit sensitive information via email. If you receive a legitimate-looking email asking you to click on a mysterious link or requesting your Social Security number or password, call the official customer service number or go directly to the site, just to be safe.
Another way to protect yourself is to limit what you bring with you. While carrying around all of your credit cards and login information may feel easy and convenient, your life could easily turn into a nightmare if someone steals your wallet or purse and your identity disappears along with it. Do yourself a favor, and carry only what you need.
5. Check your credit and financial accounts regularly. While this technically won't help prevent identity theft, monitoring your credit report information, account balances and financial transactions regularly may be one of the best ways to quickly catch fraud and stop it before it gets out of control. There are many great services that can help you keep an eye on your finances for free; CreditKarma.com offers a free credit monitoring service that will notify you when something significant changes on your credit report. Mint.com allows you to easily see your financial accounts all in one place. And pulling and scrutinizing your credit reports from the three major credit bureaus each year from AnnualCreditReport.com is highly recommended to help you spot and dispute errors to keep your credit history accurate.
The Bottom Line: Your credit score is an extremely important factor that may affect whether you're approved for credit and how much you'll pay to borrow. Don't wait until identity theft happens to you -- by putting time and effort into protecting your information today, you may save a lot of hassles in the future.
Jenna Lee is the social media manager for Credit Karma, a free credit monitoring website that helps more than 22 million people access their credit score for free.
Do you need $1 million to retire, as some experts have suggested? Or is it $2 million for a retired couple? Or is it 10 times your current annual salary, or 12 times?
There are many ways to figure how much money you need in retirement, just like there are different methods to make money in the stock market. But here's the best method I've seen, which requires a bit of math but nothing too challenging.
First, figure out approximately how much you'll need to spend, either on an annual basis or a monthly basis. If you do it by the month, don't forget to add in expenses that only come once or twice a year, such as insurance bills, tax bills and vacation bills.
How do you estimate how much money you'll spend in retirement? You know how much money you're currently earning. So that tells you roughly how much you're spending now. It provides a baseline number for how much you'll spend in retirement. But there are adjustments:
Deduct the amount you've been saving every month. Obviously, after you retire, you won't be saving for retirement anymore.
Deduct what you've been paying in payroll tax since you won't have a paycheck anymore. You might also estimate a new income tax level, which likely is less than what you're paying now.
Deduct how much you'll save in taxes, utilities and other expenses if you're moving to a less-costly housing arrangement, either by downsizing, moving to a cheaper area or both.
Factor in your changes in lifestyle. For people who intend to travel the world in retirement, those expenses might actually increase. But for most people, the expenses will go down. You won't have commuting expenses, your clothing budget may be less and your grocery bill may even go down since you'll have more time to shop for sales.
Factor in any changes in what you'll spend on your kids. This is a number that varies widely depending on the situation -- and it may change over time -- but you still need to take it into account.
All these adjustments should bring down your cost of living significantly, by as much as 30 percent, or even 40 percent or 50 percent.
You have a lot of control over how you're going to live your new, retired life, and therefore you have a lot of control over your expenses.
Finally, factor in an adjustment for health care. A few people -- those who've been paying for their own individual health insurance -- might actually see their medical insurance expense go down when they join Medicare. But most people will likely spend more on health-related services as they get older. So you need to check your health insurance options and also do a realistic evaluation of your own health.
Financial experts estimate that the average person, after it all nets out, will need about 75 percent to 80 percent of their preretirement income to sustain their standard of living after they retire. But this is just a rule of thumb. Do your research, and then do the math to see how much retirement savings you need. Here's the math:
Add up the retirement income you'll receive on a regular basis -- again either monthly or annually -- from Social Security, a pension, rents or royalties and any other recurring income.
Subtract your income from your expenses. If your result is zero or negative ... congratulations! You have more than enough income. But in retirement, most of us will have more expenses than income, so we'll end up with a positive number that represents the income gap we need to close with our savings.
Now multiply the number of your yearly gap by 25. That gives you the amount of savings you need so you can withdraw the recommended 4 percent annually.
For example, suppose you'll spend $5,000 a month to keep yourself fed, clothed, housed and happy in retirement. You estimate you're getting $1,500 a month from Social Security and $1,500 a month from your pension, for a total of $3,000 a month. That results in a shortfall of $2,000 a month, or $24,000 per year. And $24,000 x 25 = $600,000. That's the amount you need in your individual retirement account, 401(k) or other savings vehicle to close the gap of $2,000 a month.
Like all the other numbers you project into retirement, these are estimates and averages. But you're probably not average. So by doing some homework, you can customize your own retirement plan and finance your own retirement lifestyle.
Tom Sightings is a former publishing executive who was eased into early retirement in his mid-50s. He lives in the New York area and blogs at Sightings at 60, where he covers health, finance, retirement and other concerns of baby boomers who realize that somehow they have grown up.
John Locher/APFederal Reserve Chair Janet YellenBy MARTIN CRUTSINGER
Federal Reserve Chair Janet Yellen said Friday that the Great Recession complicated the Fed's ability to assess the U.S. job market and made it harder to determine when to adjust interest rates.
Yellen's remarks to an annual Fed conference in Jackson Hole, Wyoming, offered no signal that she's altered her view that the economy still needs Fed support from ultra-low interest rates. The timing of a Fed rate increase remains unclear.
The Fed chair noted that while the unemployment rate has steadily declined, other gauges of the job market have been harder to evaluate and may reflect continued weakness. These include high levels of people who have been unemployed for more than six months, many people working part time who would like full-time jobs and weak pay growth.
Record-Low Rates to Remain
Yellen repeated language the Fed has used at its last meeting that record-low short-term rates will likely remain appropriate for a "considerable time" after the Fed stops buying bonds to keep long-term rates down. The Fed's bond buying is set to end this fall.
But Yellen said the Fed's rate decisions will be dictated by how the economy performs.
"Monetary policy is not on a preset course," she said. The Fed "will be closely monitoring incoming information on the labor market and inflation in determining the appropriate stance of monetary policy."
Yellen also suggested that pay gains, which have been sluggish since the recession ended five years ago, could rise faster without necessarily igniting inflation.
John Silvia, chief economist at Wells Fargo, said Yellen's remarks confirmed his view that the Fed's first rate increase will occur next June.
"Yellen still wants more time to evaluate the data," he said.
Silvia also said the speech hints that the Fed is "willing to take a little more inflation to achieve their labor market goals." If inflation were to top the Fed's target of 2 percent, "I don't think they're going to panic."
Yellen delivered her remarks at the opening of the annual conference sponsored by the Kansas City Federal Reserve Bank at a lodge with a backdrop of the Grand Teton Mountains. This year's conference is devoted to the subject, "Re-evaluating Labor Market Dynamics" and Yellen's comments addressed the difficulty the Fed faces in trying to determine how much weakness remains in the job market given changes caused by the 2007-2009 recession.
She noted "considerable uncertainty about the level of employment consistent with" the Fed's goal of maximum employment and stable prices.
Paul Dales, senior U.S. economist at Capital Economics, wrote in a research note Friday that "despite the faster-than-expected decline in the unemployment rate, Yellen does not appear to have changed her view that there is still 'significant' slack in the labor market."
Yellen's comments came two days after release of the minutes of the Fed's July 29-30 meeting. Those minutes showed that officials engaged in an intensifying debate over whether to raise rates sooner than expected if the economy keeps strengthening.
Need to Move Promptly
Some officials, the minutes said, thought the Fed would need "to call for a relatively prompt move" to begin raising short-term rates from record lows, where it has kept them since the financial crisis struck in 2008. Otherwise, they felt the Fed risked overshooting its targets for unemployment and inflation.
In the end, the Fed made no changes at the July meeting. It approved, 9-1, maintaining its current stance on rates. But the minutes pointed to a distinct division among officials over the timing of an increase.
That debate has continued at Jackson Hole, with Fed officials expressing clashing views during a series of TV interviews before the conference began with a reception and dinner Thursday night.
Charles Plosser, president of the Fed's Philadelphia regional bank, said he was uncomfortable with the Fed's current policy statement that it expects to keep its key short-term rate unchanged for a "considerable time" after its bond purchases end. Plosser cast the lone dissenting vote at the July meeting.
In an interview with CNBC, Plosser said he felt the Fed was "running a very risky policy" given the steady signs of strength in the economy.
"I would prefer to begin raising rates sooner and raise them more gradually," he said.
Raise Rates 'Sooner Rather Than Later'
Esther George, president of the Kansas City Fed, which sponsors the Jackson Hole conference, said in an interview on the Fox Business Network that she also thought the Fed needed to "begin sooner rather than later" raising rates to give the economy time to adjust after a prolonged period of low rates. George, like Plosser, is viewed as a "hawk" -- someone who thinks the Fed should be more concerned about avoiding high inflation than about continuing to try to boost the economy.
John Williams, president of the San Francisco Fed, said in a separate interview on CNBC that he thought, based on his own forecasts of the economy's performance, that a "reasonable guess" for the first rate hike would be next summer. But he said that the timing would ultimately depend on economic data and that if the economy accelerates, the Fed could act sooner.
Williams has been a supporter of the majority of officials who back Yellen's view that the job market still isn't healthy enough for the Fed to start boosting rates.
Many economists still think the Fed will wait until mid-2015 to start raising rates. In its July policy statement, the Fed acknowledged that growth was strengthening. But it indicated that it needed to see further improvement in the job market before it starts raising its key short-term rate.
Nicholas Colas, chief market strategist at the investment firm ConvergEx, said Yellen's speech did nothing to change his expectation that the Fed will begin to raise short-term rates in the second quarter of 2015.
"Janet Yellen is maintaining as much space for herself for policy flexibility as she possibly can," Colas said. "She's underlining how complex this is."
-AP Economics Writers Christopher S. Rugaber and Paul Wiseman contributed to this report.
TOKYO -- Suppliers to Apple (AAPL) are scrambling to get enough screens ready for the new iPhone 6 smartphone as the need to redesign a key component disrupted panel production ahead of next month's expected launch, supply chain sources said.
It's unclear whether the hiccup could delay the launch or limit the number of phones initially available to consumers, the sources said, as Apple readies larger-screen iPhones for the year-end shopping season amid market share loss to cheaper rivals.
But the issue highlights the risks and challenges that suppliers face to meet Apple's tough specifications, and comes on the heels of a separate screen technology problem, since resolved, in making thinner screens for the larger iPhone 6 model.
Cupertino, California-based Apple has scheduled a media event for Sept. 9, and many expect it to unveil the new iPhone 6 with both 4.7 inch and 5.5 inch screens -- bigger than the 4-inch screen on the iPhone 5s and 5c.
Two supply chain sources said display panel production suffered a setback after the backlight that helps illuminate the screen had to be revised, putting screen assembly on hold for part of June and July. One said Apple, aiming for the thinnest phone possible, initially wanted to cut back to a single layer of backlight film, instead of the standard two layers, for the 4.7-inch screen, which went into mass production ahead of the 5.5-inch version.
But the new configuration wasn't bright enough and the backlight was sent back to the drawing board to fit in the extra layer, costing precious time and temporarily idling some screen assembly operations, the source said.
Output is now back on track and suppliers are working flat-out to make up for lost time, the supply chain sources added.
Japan Display, Sharp and South Korea's LG Display have been selected to make the iPhone 6 screens, the sources said.
Representatives for those three suppliers, and for Apple, declined to comment.
Wider Impact
Apple is known to make tough demands on its parts suppliers for new iPhones and iPads as it competes to create designs, shapes, sizes and features to set it apart and command a premium price in a fiercely competitive gadget market.
This can cause glitches and delays, including screen problems that crimped supplies at last year's launch of a high-resolution version of Apple's iPad Mini.
It also highlights the danger for suppliers of depending too heavily on Apple for revenues, creating earnings volatility.
Earlier this month, Japan Display, said to be the lead supplier for the new iPhone panel, said orders for "a large customer" -- which analysts said was Apple -- arrived as expected, but shipments may be delayed in the July-September quarter.
Japan Display's reliance on Apple's cyclical business has spooked some investors. UBS Securities has forecast that Apple will contribute more than a third of the Japanese firm's total revenue in the year to March 2015. Japan Display's share price dropped to a 12-week low of 501 yen after first-quarter earnings on Aug. 7 lagged market expectations.
Production Disruption
In Taiwan, home to several Apple suppliers and assemblers, export orders grew less than expected in July, even as factories rushed output ahead of new smartphone launches, reflecting the erratic nature of the business.
"Currently, there's a small shortage in supply of a specialized component for our communication devices," said a spokesman for Pegatron, which assembles iPhones. "This kind of problem regularly occurs and the impact on production is negligible."
Supply chain sources had previously said challenges with the new iPhone's screen in-cell technology, which eliminates one of the layers in the LCD screen to make it thinner, caused a delay in the production of the larger 5.5-inch version. One display industry source said the in-cell issues had now been resolved.
The pressure on Apple for stand-out products has increased as Samsung Electronics and, more recently, a clutch of aggressive, lower-cost Chinese producers such as Xiaomi and Lenovo Group have eroded the U.S. company's market dominance.
The iPhone 6 unveiling has been widely anticipated to bolster momentum for Apple shares, which have risen by a third, to above $100 each, since the company posted strong first-quarter earnings in late-April.
-Additional reporting by Michael Gold in Taipei, Taiwan, Sophie Knight in Tokyo and Christina Farr in San Francisco.
The U.S. Labor Department gave us the formal inflation reading for the month of July on Tuesday morning. The good news is that inflation concerns have abated. July's Consumer Price Index (CPI) rose 0.1% on the headline report. It is down from the 0.3% reading from June. Bloomberg estimated it at 0.1%, with a range of 0.1% to 0.2%.
