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Signs of Optimism Among Family-Owned Businesses

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AN1APG Hispanic family owned bakery
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By Kate Rogers

Family-owned businesses are the original mom-and-pops of Main Street, and they're feeling optimistic in the new year, according to new data.

Pricewaterhouse Cooper's "US Family Business" survey finds family businesses are feeling upbeat on growth projections, as 79 percent of respondents expect "steady growth" in the next five years. What's more, 70 percent reported revenue growth in the past year, according to the survey released Tuesday.

This sunny outlook is also in line the National Federation of Independent Business' optimism index for December, which broke 100 for the first time since October 2006.

PwC's survey was conducted among 154 family-owned and operated U.S. businesses across industries from manufacturing to retail to wholesale.

These businesses are putting more into resources like finding top talent, or making investments in technology.

The research found recruitment of tech talent is at the top of the respondents' agenda, with one-third saying this is a main priority. Such hiring commitment also signals that business owners are optimistic and want to invest for the long haul.

"These businesses are putting more into resources like finding top talent, or making investments in technology," said Alfred Peguero, a PwC Family Business Services leader. "You don't do that if you don't think your business will be doing well in the future."

Despite such optimism, succession planning remains a perennial challenge.

Nearly a third of businesses in the U.S. are family-owned, according to the U.S. Census Bureau's most recent data.

Many family-owned businesses struggle with handing off the reigns to their successors as nearly 60 percent say they will stay on at their company longer than planned, according to the PwC survey.

Growing Difficulties

What's more, 47 percent of next-generation family members working in the business view succession as becoming more difficult because of the growing age gap between the current leadership and those in line to take over.

Peguero says this is because older business owners are staying on longer than they have in the past. "We are seeing more hesitation on behalf of older generations. We're calling it 'sticky baton syndrome.'"

The survey found family-owned businesses with solid, formal succession plans are scarce.

Nearly 75 percent said they don't have a documented succession plan in place for senior roles in the company, PwC said. This maybe because many businesses think succession plans are a long, drawn-out process, said Ted Clark, executive director of the Northeastern University Center for Family Business.

"They think it's a series of smaller preparations, a buy-sell agreement-but really it's just understanding who would take over if something happens, and a plan to execute it," Clark said.

But for entrepreneurs like Dennis Groth, who runs Groth Vineyards & Winery in Oakville, California, it's just having the framework in place, rather than formal documentation. The 72-year-old Groth says he plans to one day pass on the business to his daughter, who is currently vice president of sales and marketing.

"My only succession plan is a plan from the standpoint that my wife and I discuss it on a regular basis," Groth said. "I love the business, I am still the CEO. ... My daughter wants to pick it up, but also doesn't want me to disappear.

 

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The Best Online Banks for Linked Checking, Savings Accounts

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AlamyAlly Bank, Bank of Internet USA and Bank5 Connect offer fewer fees compared to some brick-and-mortar branches.
By Erin Lowry

It should come as no surprise that bank accounts are not made equal. Fees, interest rates and minimums all vary from bank to bank. The savvy consumer looking to get the most out of a bank account probably opened a checking account with Bank A and a savings account with Bank B to maximize a no-fee checking account and highest interest savings account.

But not everyone wants to deal with the potential hassle of funds being held by two different financial institutions. The shrewd consumer who would prefer to just use one bank should look to those that offer the best deals on linked checking and savings accounts.

Before looking for the best deal, customers should become acquainted with online-only banking. Online-only banks offer higher interest rates and fewer fees than traditional brick-and-mortar banks. These banks are also FDIC-insured and secure money just as well as the big name traditional banks. The banks below all fit these criteria:

Ally Bank is one of the most well-known online-only banks. The bank's Interest Checking Account is a free account offering:
  • 24/7 live customer service
  • Mobile check deposit
  • No monthly fee
  • No minimum fund requirements
  • No ATM fees
  • ATM reimbursements on fees charged by other banks or ATM terminals in the United States
Ally does charge a $9 overdraft fee or insufficient fund fee a maximum of once aday. This charge can be avoided by linking a checking account to a savings account for overdraft protection. Unlike many traditional brick-and-mortar banks, Ally doesn't charge to move funds from savings to checking to cover an overdraft.

The Interest Checking Account offers 0.10 percent on a daily balance less than $15,000 and 0.60 percent on a daily balance of more than $15,000.

Ally's Interest Checking Account can be linked to the Ally Online Savings Account, which currently offers 0.99 percent APY with no minimum to open and no tiered interest rates structure.

Tip: Link your savings account to checking in order to protect yourself from an overdraft fee.

Bank of Internet USA offers a true no-fee checking account with the bank's Rewards Checking account as well as these perks:
  • No minimum monthly balance
  • No monthly maintenance fees
  • No overdraft fees
  • No ATM fees
  • ATM reimbursements on fees charged by other banks or ATM terminals
There is a $100 minimum to open an account, but no minimum balance requirements after the account is open. This account does offer a tiered reward system to earn interest on checking, but customers should really focus on utilizing the fee-free checking account and receiving a higher interest rate on a savings account instead. Requirements for the checking account interest of 0.416 percent APY include monthly direct deposits of $1,000 or more and using the account's debit card 10 or 15 times a month on transactions $3 or more.

Bank of Internet USA offers a flat 0.61 percent APY on the High Yield Savings account. The savings account can be linked to checking to provide overdraft protection and avoid any bounced checks or insufficient funds. However, if customers don't set up overdraft protection, the bank still doesn't penalize them and simply denies the charge. Keep in mind, this could result in a missed bill payment for people who set up autopay. For example, if you set up autopay with your cable company and don't have sufficient funds in your account, Bank5 Connect will deny the payment instead of allowing your account to be in the negative.

Tip: Setting up a direct deposit for $1,000 or more will earn 0.416 percent APY on checking. Unless you set up direct deposit, don't focus on earning interest with the checking account.

Bank5 Connect offers customers a High-Interest Checking Account without the hoops to jump through. Bank5 Connect provides 0.76 percent APY on its checking accounts with minimum balances of $100 or more. Customers only need to pay $10 to open an account. Bank5 also minimizes fees:
  • No monthly maintenance fee
  • No ATM fee
  • $15 reimbursement each statement cycle for other banks' ATM surcharges
  • No overdraft charges with overdraft protection
Bank5 Connect does charge $15 for an overdraft charge or insufficient funds charge for customers who don't use overdraft protection.

Customers can use Bank5 Connect's High-Interest Savings Account to opt into overdraft protection. The savings account offers 0.90 percent APY on accounts with a minimum balance of $100. Similar to the checking account, it only costs $10 to open the savings account.

Tip: Keep track of ATM fees to avoid spending more than $15 a month.

The Case for Making a Switch

Consumers who feel it's not worth the hassle to break an existing bank relationship to move to another bank need to just look at the numbers. Many of the traditional brick-and-mortar banks charge asininely high fees such as:
  • Upwards of $32 for an overdraft fee
  • $12 for overdraft "protection" to move money from savings to checking to cover an overdraft
  • $12 monthly maintenance fee
Brick-and-mortar banks also tend to offer insanely low interest rates of 0.01 percent on savings accounts. For perspective, a customer with $10,000 in savings would only earn $1 in interest. A switch to an online-only bank offering 0.90 percent would provide $99 in interest.

Customers deserve better from their banks and fortunately real alternatives exist, if they're willing to make the switch.

Erin Lowry writes about personal finance and manages social media for MagnifyMoney.com, a site dedicated to helping consumers save money by finding simple, transparent financial products. She is also the founder of the personal finance blog Broke Millennial.

 

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Chipotle Pulls Pork at a Third of Its Locations

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Chipotle!
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Casual dining chain Chipotle Mexican Grill (CMG) is pulling pork sales at a third of its U.S. locations, according to Reuters. When a food business with more than 1,700 restaurants yanks a product off the menu, the cause is typically bad and often is the result of an outbreak of food poisoning among patrons. Not in this case.

The problem was not some food-borne bacteria or spoilage, but an existing vendor's first failure to pass an animal welfare audit. Chipotle requires suppliers to ensure that pigs have outdoor access or "deeply bedded barns" that are more comfortable for the animals, as the Wall Street Journal reported.

A routine audit revealed the problem, and so, for the first time, the company will stop offering a particular topping -- carnitas, or pork meat -- in its burritos or bowls, the Associated Press reported. In this case, however, there will be no substitution. Carnitas are added by customers to between 6 percent and 7 percent of entrees.

Unwilling to Compromise

There have been times when Chipotle has had signs that said it was serving meat that was not up to the company's "responsibly raised" standards. The issue in such cases is the routine use of antibiotics or hormones and the meat is called "conventionally raised."

"This is fundamentally an animal welfare decision, and is rooted in our unwillingness to compromise our standards where animal welfare is concerned," a Chipotle spokesman told DailyFinance.

It's very unusual for commercial pork producers to give pigs outdoor access, Paul Shapiro, vice president of farm animal protection for The Humane Society of the United States, told AP. The animals are usually kept in crates with concrete floors. Only a "very small portion of the pork industry" gives outdoor access to animals, Shapiro said. Even then, it isn't necessarily a happy life for the pigs. "It doesn't mean these animals are living in ideal conditions on Old MacDonald's farm," he said.


Chipotle is looking into ways to reduce its carnitas shortage, including using different pork cuts or having other suppliers help fill the gap. The company says that it hopes the unnamed vendor will solve its problems and return as a regular supplier.

 

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How Low Can Gas Prices Go? $1.75, Expert Says

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Close up of a customer's hand pumping fuel into car's gas tank.
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Gas prices have hit their lowest levels since April 2009, according to Reuters. As of a Jan. 9 survey, the average price for regular gasoline was at $2.20 a gallon. That's down $1.14 from the same time last year -- and dropping.

How low the price at the pump could go? According to Carl Larry, an energy consultant at market research firm Frost & Sullivan, about $1.75. To understand the answer, it's necessary to know something about the market dynamics.

Gasoline prices are down because crude oil costs have plummeted. Gasoline is made of petroleum, and when the fundamental component drops in price, so will the byproduct. If some producers tried to maintain higher prices, others would drop their price to attract more customers, and the law of supply and demand would take hold.

The Oil Price Two-fer

But the drop in oil prices is a reaction to a number of factors. One is that Europe still hasn't pulled out of its recession. "That's causing the foreign price of oil go down," Larry told DailyFinance, because slow economic activity means less demand for oil and, so, lower prices under that law of supply and demand.

The U.S. isn't under the same economic pressures, but oil is a global market. "American crude price follows global prices," Larry said. "If the global price is dropping, so is [U.S.] crude."

Then there is a second factor: U.S. domestic energy production. "We've nearly doubled our production of US crude oil," Larry said. Although the country still imports millions of barrels of oil a day, it has replaced roughly 4.5 million of them, which means more supply on global markets and, therefore, lower prices. "So long as the U.S. is producing 9 million or more barrels a day, you're not going to see $100 a barrel for quite a long time," meaning close to five years, he said.

In addition, American oil is "the best oil you can use to make gasoline," according to Larry, and increased production of natural gas has replaced a significant amount of oil use in energy generation, so there's more oil to turn into gas.

"Prior to 2013, we imported 900,000 barrels a day, 1 million barrels a day of gas," he said. Now gasoline imports are at 500,000 barrels a day, which is the lowest level since 1999, vs. the peak of 1.3 million barrels a day in 2007. And domestic gas consumption has dropped. Again, supply and demand says this affects gasoline prices, making lower prices at the pump more competitive.

What Goes Down Comes Back Up

But while the price of gas is still dropping, there is only so far it can practically fall. The lower prices have convinced consumers that they can afford to drive more, and sales of larger, less gas-efficient vehicles, have been rising, as Fortune has reported.

"The low gasoline prices are increasing demand," Larry said. "At this price level, we see the consumer saying this is a great deal and I'm going to go out and drive more."

That means the other part of supply and demand will kick in, putting a brake on how far pump prices can fall. As unemployment goes down, demand will also increase as more people travel to work.

As DailyFinance has reported, low prices could also tempt politicians to raise gasoline taxes as a revenue boost.

Larry thinks that the combination of increasing demand and additional taxes means that gas is unlikely to drop below $1.75 because, at that point, these factors will counterbalance falling prices and create a floor for consumer expectations. It's already close. In a nationwide survey, Forbes on Dec. 15 found one Ohio station at $1.85.

 

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More Banks to Offer Free Credit Scores for Customers

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Credit card score number financial credits credit report free fico credit score
Cassandra Hubbart/AOL
By Bob Sullivan

More than half of U.S. adults will have free access to their credit scores this year, President Obama announced Monday in a speech devoted to identity theft and privacy. That's big news for consumers, who have been frustrated for years by the secretive nature of the scores, which often affects their ability to borrow money and participate in other parts of the economy.

Joining Discover (DFS) which began offering free FICO scores to cardholders last year, will be JPMorgan Chase (JPM), Bank of America (BAC) and Ally Financial (ALLY). USAA announced it will offer the FICO competitor VantageScore for free to members. Last fall, Citigroup (C) announced it would join the free credit score group early in 2015.

"I'm pleased that more banks, credit card issuers and lenders are stepping up and equipping Americans with another weapon against identity theft, and that's access to their credit scores, free of charge," Obama said, speaking at the Federal Trade Commission in Washington, D.C. "This means that a majority of American adults will have free access to their credit score, which is like an early warning system telling you that you've been hit by fraud so you can deal with it fast. And we're encouraging more companies to join this effort every day."

Free FICO scores have become more available to consumers since 2013, when Fair Isaac (FICO) announced its FICO Score Open Access program, which gave banks the right to share a score with consumers. Additionally, banks claim the scores have increased customer loyalty.

The Details

"Consumers who regularly see their FICO scores are more engaged, increasingly loyal and make positive changes in credit management behavior, resulting in improved FICO scores," Fair Isaac said in November while discussing free score programs offered by Barclaycard (BCS) and First Bankcard (FRBA). Here are some more details on the new score programs.

Ally Financial: Will offer FICO scores, beginning with a pilot program in February and a full launch this summer to auto finance customers.

Bank of America: "We will begin offering credit scores to our consumer credit card customers later this year. No more details to share at this point," Bank of American spokeswoman Betty Riess told Credit.com.

Citigroup: The White House announced in October that the bank would begin offering free FICO scores in 2015. That's an estimated 23 million consumers.

JPMorgan Chase: Plans to offer FICO credit scores at no charge to Slate cardholders "in the coming months," said spokesman Paul Hartwick.

USAA: Will offer cardholders access to the Experian VantageScore, a competitor to the FICO score. USAA is testing the program and expects it will be available to all consumers by March.

You Have Many Credit Scores

Keep in mind that there are dozens of credit scoring models out there, and each source may be using a slightly different model from the next as well as data from your credit report a different credit reporting agency. This means that if you get credit scores from different sources, you may see minor -- or even relatively major -- variation among the scores you receive. While it can be educational to see how your credit is measured by different scores, don't let the differences confuse you. If you're using your free scores to track your credit-building progress, or to monitor for changes that are a sign of fraud or an error, it's especially important to monitor the credit changes for the same score over time.

In other words, be sure you're comparing apples to apples. It's also important to keep in mind that credit score ranges differ between models as well. For example, if you have good credit you may receive a credit score rating of 700 in one model, but in another model you may be scored an 820 because the scale is different. You can also get your credit reports for free once a year from each of the major credit reporting agencies under federal law. Beyond that, there are many other sources where you can get your credit information for free, like Credit.com, where you can get two credit scores for free every month -- your VantageScore 3.0 and an Experian credit score -- as well as an explanation of why they are what they are.

 

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Fed Survey Finds Moderate Economic Growth Nationwide

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New Home Sales
LM Otero/AP
By MARTIN CRUTSINGER

WASHINGTON -- The U.S. economy was growing at a moderate pace in December and early January, helped by gains in sales of autos and other consumer products, but a big drop in oil prices was starting to have an impact in Texas and other energy regions, the Federal Reserve reported Wednesday.

The Fed said business contacts in its 12 regional banking districts were seeing "modest" or "moderate" growth. General merchandise retailers in the New York area reported largely sluggish holiday sales while high-end merchandise in Philadelphia and San Francisco did well.

Payrolls grew in a variety of sectors but significant wage gains were seen only by workers with specialized technical skills.

The Fed report, known as the beige book for the color of its cover, will form the basis of discussion at the Fed's next meeting on Jan. 27-28. The Fed at its last meeting in December said it expected to remain "patient" as it decides when to begin raising interest rates.

End of Low Rates?

Many economists say the country's moderate growth will allow the Fed to stay patient through the first half of this year with June the most likely date for the first increase in its benchmark rate, which has been at a record low near zero for the past six years.

Analysts said the latest beige book struck a more subdued tone than the December report, noting that holiday sales were disappointing in many regions. A government report Wednesday showed that retail sales fell 0.9 percent in December, the biggest drop in 11 months.

Outlooks for the first half of 2015 are very uncertain and significantly weaker than the prior reporting period.

Jennifer Lee, senior economist at BMO Capital Markets, said the new Fed report was more muted than the December survey.

The Fed's "business contacts suggest that while economic activity continued to expand in the New Year, the pace slowed," she said in a research note.

The new report, based on interviews with business contacts around the country, found several indications that the recent sharp slide in oil prices was starting to have an impact on the economy.

The Dallas Fed said that some energy firms in its district were reporting hiring freezes and layoffs with demand for oilfield services falling.

"Outlooks for the first half of 2015 are very uncertain and significantly weaker than the prior reporting period," the Dallas Fed said. It said oilfield service firms were expecting anywhere from a 15 percent to 40 percent decline in demand for their services.

Boost From Cheap Oil

Many private economists believe the big drop in oil prices will provide a boost to the overall economy by giving consumers more money to spend on other products but they have cautioned that energy-producing regions could suffer from job cutbacks.

The Atlanta Fed said that lower gas prices had boosted the sales of larger vehicles but the St. Louis Fed said that some auto dealers in its region were seeing excess inventories of luxury cars.

The Fed said that reports of rising wage pressures were less prevalent in the latest survey than in its previous report although there was continued upward pressure for high-skilled labor in such areas as high-tech.

Various tourism contacts reported a brisk business with Broadway theaters in New York City saying that attendance and revenues were 10 percent higher than a year ago. Tourism was also reported up in the Richmond and Kansas City regions but ski resorts in the Philadelphia Fed district were struggling to attract visitors in the midst of unseasonably warm weather in December. The warm weather was also having an impact on winter tourists in the Minneapolis region.

 

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U.S. Chamber Calls for Cooperation to Boost Economy

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U.S. Chamber of Commerce President and CEO Thomas Donohue speaks at the State of American Business 2015 event in Washington, Wednesday, Jan. 14, 2015. (AP Photo/Jacquelyn Martin)
Jacquelyn Martin/APU.S. Chamber of Commerce President Thomas Donohue assesses America's business.
By Tom Risen

Predicting modest growth for the country in 2015, U.S. Chamber of Commerce President Thomas Donohue on Wednesday denounced excessive regulation and called for bipartisan cooperation among lawmakers to further boost the U.S. economy and labor market.

The U.S. is in its greatest period of job growth since 2006, and the economy will likely improve "moderately" this year following signs of increased hiring, bolstered consumer spending and a housing sector that "continues to improve in fits and starts," Donohue said during a speech laying out his group's policy priorities for the next year.

But the country is "not out of the woods yet," he warned, citing a recent Labor Department report showing 17.7 million Americans are unemployed or underemployed, and that the 62.7 percent labor participation rate is the lowest since 1978.

"The chamber expects to see growth at 3 percent to 3.5 percent at least through the middle of the year," Donohue said. "Interest rates, energy prices and inflation should remain low for the time being. There's no reason to think that another recession is lurking out there on the near-term horizon."

Call for Keystone XL to Be Approved

Hoping Congress will move past progressive and conservative leanings, Donohue called on lawmakers to find a "governing center" that would help them "get things done" to improve the economy.

The chamber has sided with Republicans in pushing for approval of the proposed $5.4 billion Keystone XL pipeline extension from Canada to the U.S. and has called for changes to the Dodd-Frank Act regulating Wall Street, so the group has high ambitions for the new Republican majority during this session of Congress.

The U.S. economic outlook is less optimistic in the long term due to slowing growth in China and the potential of a recession in Japan, Donohue said. But boosting international trade is a major pillar of the chamber's agenda, so the group has supported President Barack Obama's move to normalize relations with Cuba and his efforts to increase trade with China. "Ninety-five percent of the people we want to sell something to live outside the United States," Donohue said.

Fearing that regulations like the Affordable Care Act will add potentially burdensome health care expenses to businesses, Donohue said the chamber will continue to push to remove fines mandated by the act, including the medical device tax. Donohue also said the chamber will support any chance of tax reform, but not if it would lead to increased taxes on businesses.

"Some 4,000 new regulations will pour out of the regulatory pipeline this year," he said. "Successful financial regulatory reform can't be measured by the sheer number of new regulations or the size of the fines extracted from financial firms."

Time to Act on Technology, Immigration, Education

Citing the tech sector and the Internet as major drivers of U.S. growth, Donohue said the chamber's new Center for Advanced Technology and Innovation will spearhead an effort to "defend technology companies and advance their policy interests" around the world. Supporting the tech industry matches the chamber's call to ease immigration restrictions to attract foreign workers. "It is in the best interests of both parties to act [on immigration] before the next election," he said.

The chamber opposes net neutrality rules being proposed by the Federal Communications Commission, which is expected to vote on a proposal next month. Net neutrality on principle aims to ensure all websites can compete and have equal access to Internet speeds, but Republicans broadly claim new FCC rules would discourage investment in the tech sector by adding regulatory uncertainty.

Recent hacks of companies like Sony Pictures Entertainment and JPMorgan Chase also highlight the vulnerability of business networks and the need for cybersecurity legislation. Obama on Tuesday discussed his proposal for legislation to boost cybersecurity enforcement, including a bill that would ease data-sharing lability and enable companies to better collaborate with the government on network threats. "We are calling for the Congress to pass a new cybersecurity information-sharing bill without delay," Donohue said.

Education reform additionally is important to the chamber, as Donohue said lack of access to quality teaching is "fundamentally unfair" and "where the real inequity happens in America." Solutions he proposed include broadening access to charter schools, along with measures to raise pay for quality teachers while "removing the few" poorly performing educators.

 

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Market Wrap: Wall Street Ends Down on Global Growth Worries

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Financial Markets Wall Street
Richard Drew/AP
By Caroline Valetkevitch

NEW YORK -- U.S. stocks fell for a fourth day Wednesday as a World Bank forecast fueled concerns about global economic weakness and copper prices sank, although a late-day rebound in energy shares left the market well off its lows after a volatile session.

The S&P energy index ended up 0.1 percent after falling as much as 2.6 percent. It rebounded late in the day as oil prices jumped by the most in more than two years ahead of options expiration. Crude oil prices remained near six-year lows despite the day's jump, however.

S&P 500 materials and financial sectors were the day's worst performers, both falling more than 1 percent.

With an earnings season just getting started, there's a lot of nervousness, given we've had six years of up markets.

The price of copper, a key industrial metal, touched its lowest in five and a half years, weighing on shares of producers, after the World Bank cut its economic growth forecasts for this year and next.

Adding to investor concerns, U.S. retail sales registered their biggest drop in 11 months in December The S&P retail index fell 0.8 percent.

"You look at the obliteration in oil, copper ... there are a lot of questions about worldwide demand and growth," said Michael James, managing director of equity trading at Wedbush Securities in Los Angeles.

"With an earnings season just getting started, there's a lot of nervousness, given we've had six years of up markets. Are we due for a down market?"

The Dow Jones industrial average (^DJI) fell 186.59 points, or 1.06 percent, to 17,427.09, the Standard & Poor's 500 index (^GPSC) lost 11.76 points, or 0.58 percent, to 2,011.27 and the Nasdaq composite (^IXIC) dropped 22.18 points, or 0.48 percent, to 4,639.32.

U.S. crude oil settled up 5.6 percent and Brent ended up 4.5 percent, snapping a four-day slide.

The S&P 500 briefly broke below its 120-day moving average, a technical support level, and hit a new low for the year at 1,988.44. S&P e-minis also broke support and hit an intraday low for the year.

The S&P 500 is now 3.8 percent below the record high reached on Dec. 29.

Shares of copper producer Freeport McMoRan (FCX) tumbled for a second day. Shares ended down 10.9 percent at $18.74 and the stock was the S&P 500's biggest percentage decliner.

Expectations for U.S. fourth-quarter earnings have fallen sharply in recent months, with growth now estimated at just 3.6 percent compared with an Oct. 1 estimate for 11.2 percent, according to Thomson Reuters data.

JPMorgan Chase (JPM), the biggest U.S. bank by assets, ended down 3.5 percent at $56.81 after reporting a 6.6 percent drop in quarterly profit. Wells Fargo (WFC) shed 1.2 percent to $51.25 after posting quarterly results.

A large trade in the options on the S&P 500's tracking ETF suggested positioning for a further decline in the market within the next week and a half. A trader paid $1.23 a contract for 43,830 SPY puts at the $195 strike price, which corresponds to the 1,950 level on the S&P 500.

Declining issues outnumbered advancing ones on the NYSE by 1,856 to 1,238, for a 1.50-to-1 ratio on the downside; on the Nasdaq, 1,743 issues fell and 994 advanced for a 1.75-to-1 ratio favoring decliners.

The benchmark S&P 500 index posted 13 new 52-week highs and 29 new lows; the Nasdaq composite recorded 39 new highs and 130 new lows.

About 8.1 billion shares changed hands on U.S. exchanges, compared with the 7.1 billion average for the last five sessions, according to data from BATS Global Markets.

-With additional reporting by Chuck Mikolajczak and Saqib Iqbal Ahmed.

What to watch Thursday:
  • At 8:30 a.m. Eastern time, the Labor Department releases the Producer Price Index for December and reports weekly jobless claims; the Federal Reserve Bank of New York releases its survey of manufacturing conditions in New York state.
  • At 10 a.m., the Federal Reserve Bank of Philadelphia releases its survey of business conditions in the Mid-Atlantic region.
These selected companies are scheduled to release quarterly financial results:
  • Bank of America (BAC)
  • Citigroup (C)
  • Fastenal (FAST)
  • Intel (INTC)
  • Lennar (LEN)
  • PPG Industries (PPG)
  • Schlumberger (SLB)

 

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15 Free Ways to Burn Calories Without the Gym

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Simple Ways to Burn Calories Without a Gym

By Maryalene LaPonsie

It's a new year and that means, if polls are to be believed, nearly half of us have made resolutions to make this year the most awesome one ever.

While some of us might have our sights set on reading more books or achieving the perfect work-life balance, for many of us, resolutions are all about that waist. We want to lose weight, exercise more or become healthier. Signing up for a gym membership may seem like the perfect way to meet those goals, but before you succumb to high-pressure sales tactics by impressively toned sales reps, consider these wallet-friendly ways to burn off unwanted pounds.

1: Increase Your NEAT-ness

Hands down, the easiest way to burn more calories per minute is to up your NEAT level -- your non-exercise activity thermogenesis -- the energy you use when you aren't sleeping, eating or exercising. It's the calories you burn by twiddling your thumbs, tapping your feet or waiting in line at the DMV.

The term was coined by Dr. James Levine, who discovered that individuals with manual or agrarian jobs have higher levels of NEAT. He also learned that as we get wealthier and more industrialized, our NEAT decreases. In other words, the more active we are, the more our metabolic rate increases and the more calories we burn even when we're not exercising. Many of the following suggestions are intended to help increase your NEAT. Beyond those, the key is to stand more, sit less, and move as much as possible.

2: Hit the Pavement

With its high-tech treadmills, elliptical machines and stair climbers, the gym may seem like a perfect place to get a workout 365 days a year. However, you can get almost that same workout for free, right outside your door. Don't let the cold air and snow deter you. Strap on your boots, bundle up and hit the sidewalk or the trails for a walk that will wake you up. It may seem less than ideal, but as someone who tries to walk regularly outside in the winter, let me tell you that you warm up quickly as you move.

3: Get in Touch with Your Inner Jane Fonda

But maybe no amount of cajoling is going to get you outside to walk or run in the cold. That's OK because, thanks to the endless supply of workout videos available through your library or online, you can exercise indoors for free, too.

4: Put Your Kids' Gaming System to Good Use

If videos aren't your thing, how about video games? Don't let your kids have all the gaming fun. I've had great success with EA (EA) Sports Active 2. I found it amazing how effective these workouts were when it came to helping me lose weight and build strength. I set my alarm for 30 minutes earlier so I could be done before the kids needed to be up for school. Of course, there's also Zumba, yoga and dozens of other fitness titles available for all the major gaming systems. Check your library to see what's available to burn these calories for free.

5: Park in the Back 40

Another simple, easy and, of course, free way to burn calories is to park in the most distant spots available in the lot. Depending on the size of the lot, you might add a couple minutes to your trip to the store, but is that time really going to break you? And as long as the store provides carts, it probably won't kill you to push your purchases back to the car either.

6: Stand as Much as Possible

This goes back to the NEAT levels we discussed in the first point. You burn more calories standing than sitting. According to the BBC, you burn about 50 more calories per hour, to be exact. You won't start dropping pounds like mad just from standing, but those 50 calories can add up over time. To get on your feet more often, try to find a place to set up your computer so you can stand and type. I have a kitchen counter that is the perfect height, and as a bonus, for some reason, I find I'm remarkably more productive when I stand.

7: Walk While You Talk

Another option to get on your feet is to walk whenever you're on the phone. It doesn't have to be anything strenuous. You could even multitask by doing mindless cleaning while you talk, such as returning dirty dishes to the kitchen or picking up books and toys.

8: Move During Commercial Breaks

If you watch TV the old-fashioned way -- that is, without a streaming service or a DVR -- you can expect some commercial breaks. What are you doing with that time? Now, some people might suggest doing sit-ups or push-ups during commercial breaks, but that sounds like a lot of work to me. How about you simply get up and stretch? Or refill your glass of water (water, not soda)? Or put the paper in the recycling bin?

This all goes back to your NEAT level. You don't have to be exercising. You just have to be moving. So use those commercial breaks as your cue to get up off the couch, even if it's just to stand for a minute until your show comes back on.

9: Become a Stair Master

Another option that can increase your movement each and every day is to take the stairs whenever possible. In some buildings, the stairs are hard to find, but if you know where they are, skip the elevator or escalator and hoof it instead. If you can't make it all the way to your floor or if it's impossible (looking at you, dear readers, who work in high-rise office buildings), walk a couple flights and take the elevator the rest of the way. Remember, anything is better than nothing.

10: Fire the Hired Help

Does someone else mow your lawn, shovel your walk and wash your car? Say adieu, and do it yourself. Not only will it help you move more, but it's good for your wallet, too. It'll be like getting paid to burn calories.

11: Add Some Kick to Your Food

As a slightly offbeat suggestion, you might want to consider adding some spice to your life in the form of red pepper. At least one study found that you expend more energy after eating a gram of red pepper. The effects seem to be particularly pronounced in those who don't normally eat spicy foods.

12: Get More Sleep

It doesn't get much easier than sleeping your way to a healthy weight, am I right? The next time you're tempted to feel guilty for turning in early, remind yourself that adequate sleep may be what helps you stay in shape. A 2011 study found that acute sleep deprivation led healthy men to have lower energy expenditures the next morning. In other words, you'll burn fewer calories if you're sleep-deprived and dragging through the day.

13: Look to the Funny Side

Here's a reason to pick the comedy rather than the brooding drama flick. Back in 2005, researchers discovered you burn 20 percent more calories laughing than when you're not laughing. That means laughing 10 to 15 minutes a day could help you burn enough calories to drop 4.4 pounds a year.

14: Find an App for That

Your smartphone can do all sorts of things, including help you burn calories. Fitness apps run the gamut from those that help you track your food intake to those that help you exercise smarter. Some apps even let you earn cash by meeting your health goals. There are plenty of apps to choose from. PC magazine offers what it deems the top 25 picks.

No. 15: Strap on a Pedometer

Most of the suggestions in this article are absolutely free. However, if you're willing to shell out a little money, a pedometer can be a cheap motivational tool. Once you realize just how much (or how little) you're moving, you might be encouraged to step away from the TV or the computer screen more frequently.

If you want to splurge on a pedometer, the latest trend is a fitness band that combines the features of a pedometer with the convenience and versatility of an app. My Christmas gift to myself was an UP 24 by Jawbone, but for others, Fitbit seems to be all the rage. Other noteworthy options include bands by Nike (NKE), Garmin (GRMN) and Microsoft (MSFT).

Is getting healthy and in shape one of your goals for 2015? Leave a comment below or head to the Money Talks news Facebook page to tell us how you plan to do it.

 

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3 Ways to Get a Job You Love

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Are you feeling stuck in your current career? Like it's a dead-end job, or just isn't fulfilling in the way you thought it would be? You're not alone.

According to a Gallup poll, only 13 percent of workers feel happy and totally satisfied with their jobs. Meanwhile, 24 percent said they feel actively disengaged -- in other words, they hate their jobs. Others fell somewhere in between, but the majority of workers were unhappy and unfulfilled.

Don't settle for that in the new year. Instead of continuing to be miserable at your job, why don't you take charge of your career path and get a job you love?

You can ma
ke your own job. It's more realistic and possible today than ever before with so much free information available online -- and the openness of the digital economy, too. While it's not an overnight process by any means, you can start working to develop a path to your dream job.

There are three ways to get there: start a side hustle, develop your skills, and volunteer. Consider which option makes the most sense for you. Or try a combination approach and work to develop your career by exploring all three paths:


1. Start a Side Hustle

If you haven't heard of the term before, a side hustle is what it sounds like -- a job you work on the side of your full-time job, in your free time. It's usually part-time and flexible in nature.

Whether you love your current job or not, it's a smart idea to have another source of income in case your primary one dries up. It's also a great way to diversify your skill set and to see if you have what it takes to be your own boss.

Many people freelance or consult on the side to have a creative outlet. If you have a passion for writing, graphic design, coaching or taking photos, there's room for your services in the marketplace. You can also drive for ride-sharing services, create a one-person landscaping company or look for a traditional part-time job that has a flexible schedule.

Many people stick with their side hustles and continue to build their work until they have a legitimate side business -- and then transition from the job they disliked to running their own, full-time business. Starting up a project on the side can be one way to an entrepreneurial life.

But others are content for their side hustles to stay strictly on the side, and that's fine. That's what making your own career path is about. You don't necessarily need to pursue something full-time. As long as your work on the side leaves you feeling happy and fulfilled, you may enjoy keeping it part-time while also taking advantage of the good things about your day job (like benefits or insurance, for example).

2. Develop Your Professional Skills


Are you working in the field you majored in? Few people do. But that doesn't mean you're stuck in your current industry or career if you want to make a change.

Continuing your education after college is crucial if you want to grow professionally. There's no reason to limit yourself to what you can do. If you're unhappy, research various fields you think you might be interested in working in and then look at developing your skills so you're qualified to make a career switch.

And no, that doesn't have to cost another four years' worth of college tuition -- thanks to all the free learning resources online. If you want to learn how to code a website, how to become a photographer or how to design logos, you can take a course on it. You can take a course on just about anything -- or at least watch countless YouTube videos that instruct you on how to succeed at a particular task.

Or make the effort to actually speak with people in the job you really want. Seek out people in industries and fields that appeal to you and ask to pick their brain about what's required. This can help guide you if you're unsure of where to start expanding on your skills and abilities. And networking is always valuable, especially when making a drastic career change.

Once you've found something that you think will be a good fit, dedicate your free time to taking a few courses on it. Lynda, Khan Academy, Udemy, Coursera and Skillshare are all either free or very affordable options (compared to what your degree cost) and offer a wide range of course material. There are many options for formally continuing education online and for free, too.

3. Volunteer

Yes, volunteering takes up your time and doesn't pay for the work you do. Think of this as an unpaid internship or as another way to network and see if you truly like the industry/job you have in mind. And hey, if you love what you do and you're not getting paid for it, that's a good sign you're passionate about it,

Volunteering is a great way to develop the skills you need and (hopefully) receive one-on-one training with someone who works at the company or nonprofit, too. While not getting paid to perform a job after having a full-time paid position might not sound attractive, think of it as a learning adventure and a positive, productive way to spend some free time.

You could volunteer (or take a free course, or work to develop your side hustle) instead of spending hours watching the TV. It's your choice how you spend that time. If you choose wisely, you can start down the path to getting your dream job.


Sophia Bera is a virtual financial planner for millennials and the founder of Gen Y Planning. She is location-independent but calls Minneapolis "home." She offers a free Gen Y Planning newsletter and is getting ready to publish her first ebook to provide a Gen Y guide to empowered personal finances.

 

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Mutual Fund Investors May Face Unexpectedly Big Tax Bill

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If you're one of the millions of Americans who invest in mutual funds, get ready for a tax shock. The 1099 tax form you're getting soon is likely to mean a much bigger tax hit than ever incurred before.

A confluence of events has forced many funds to pay out unusually large capital gains distributions. That may sound like a good thing, but if your money is invested in a taxable account, you could be socked with a big tax bill from Uncle Sam, even if you never sold a share of your mutual fund investment. However, if all of your mutual funds are stashed in tax-free or tax-deferred accounts -- such as 401(k)s and Roth IRAs -- you don't have anything to worry about, and can stop reading right here. Well, I take that back. There's some really good stuff that you'll need to know to avoid making investment mistakes that could lead a tax hit next year or in years to come.

Overall, the stock and bond markets performed pretty well last year. The S&P 500 (^GPSC) was up more than 11 percent. More importantly, the bull market is now in its sixth year, and many stocks have doubled in value since bottoming out after the financial crisis. In recent years, mutual funds (and individual investors) were able to use losses incurred during the recession to offset some or all of the gains that came later, but those losses are all used up by now.

Understanding the Capital Gains Tax

Here's how the tax law works. If you own an individual stock, you are required to pay a capital gains tax when you sell it, if you made a profit. For most people, that's 15 percent of the profit. But if you own a mutual fund, you pay as you go, even for long-term buy-and-hold investors. If the fund sells stocks that have appreciated, it is required to distribute those gains to shareholders each year. And if you own that fund in a taxable account, you will have to pay the capital gains tax.

"The way mutual funds work, investors are hit with a tax bill whether they sold or not," according to David Santschi, chief executive of TrimTabs Investment Research. He notes that many actively managed funds were indeed very active. "It surprises me how actively some of these funds trade," he said, noting that some have a turnover rate of 150 percent or more, meaning that they have in essence bought and sold everything in their portfolio more than once during the calendar year, and that can trigger a big tax bill for investors.

"After the long rally, many funds are selling some of their highly appreciated winners," says Christine Benz, director of personal finance at Morningstar (MORN). "This phenomenon comes in waves, along with a sustained bull market." By some estimates, 2014 will go down as one of the worst years ever for fund distributions.

A Lot of Distributions

Mark Wilson, chief investment officer at Tarbox Group, says he has found more than 500 funds that distributed more than 10 percent of the net asset value last year, which he says is a record for the industry. Some examples from popular funds: the Vanguard Explorer Fund (VEXPX) paid out more than 13 percent of its net asset value; Fidelity's International Small Cap Fund (FISMX) paid out nearly 16 percent; and American Funds' Growth Fund of America (AGTHX) paid out nearly 10 percent.

How much will you owe in taxes on those big distributions? If you're in the 25 percent income tax bracket and you own $10,000 worth a fund that pays out 12 percent of its net asset value, you will owe $180 in taxes. ($10,000 times the 12 percent distribution equals $1,200. Multiply that times the 15 percent cap gains rate equals $180.)

It's too late to do anything to change what happened last year, but the experts say understanding the rules can help you avoid some the tax pain going forward. Some investment managers might argue that the tax you owe probably means you made a profit and that you shouldn't complain. Not so, says Benz. She says taxes are not a natural outgrowth of making money. "This wave of cap gains distributions makes me think that I would be hard-pressed to say individuals should hold actively managed funds in their taxable account." She and others suggest that investors hold those funds in tax-deferred accounts instead, and use index funds and exchange-traded funds for your taxable accounts. That way, you have much greater control over when to incur the tax. It's also worth noting that about 80 percent of the thousands of actively managed mutual funds on the market failed to outperform their index target.

Investors worried about big distributions in 2015 and beyond might be tempted to sell some of the tax-inefficient funds they hold, but that presents a Catch-22 situation. Such preemptive selling could trigger a cap gains bill on the sale of those shares that could be larger than anything you get hit with through the annual distributions. The bottom line is investors need to be aware of the tax obligations you might incur before making any future investments in taxable accounts.

 

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Is Your Mailbox (Real and Virtual) Ready for Tax Season?

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By Adam Levin

During the holiday season a missed or stolen package can be aggravating, which is doubtless why you eagerly watched for deliveries all December, calling the nanosecond you suspected a problem. Unfortunately, many employers don't send tracking numbers when the packet of vital documents marked "Important Tax Information Enclosed" hits the mail destined for your home address.

We receive some of the most sensitive, potentially damaging mail deliveries of the year during these post-holiday months, and a wayward envelope during tax season can wreak immense financial havoc. Your employer W-2s and 1099s, annual statements from banks, brokerage firms and credit card companies-all needed for tax preparation-are headed your way. And tax documents aren't the only missives you will be receiving. There are explanations of health benefits, membership renewals, new health care credentials and other service-related roundups that include essential facts about your life. Everything you spent and everything you donated; everything you do for your health, fun or profit; each investment, every gain and loss-all of that and more will be hitting your terrestrial and digital mailboxes in the coming weeks, and all of it is manna to identity thieves.

Many Criminals Start with Your Mail

The crimes that can be committed are almost too numerous to list here. There's the health care grab, where someone pretends to be you to acquire diagnoses, cures or prescriptions in your name, which can permanently change your health record and future medical decisions in potentially life-threatening ways. Identity thieves may use your annual statements -- and other information that travels by mail this time of year -- to either worm into your credit files or create new ones. A recent story out of Miami involved more than 1,000 student debit card accounts that were allegedly used for collecting tax refunds from fraudulently filed tax returns. One student alone allegedly grabbed more than $50,000. The windfalls for crimes of this nature are huge, and often go undetected for a long time.

Identity thieves know you can't possibly keep track of the entire paper trail that's in transit to your door (virtual or otherwise), and they are always crawling through the cracks and crevasses of your life to grab as much of your sensitive personal information as they can.

So what should you be looking for? It may be a prompt from TurboTax or an email from American Express, or you may have to be alert and sensitive as to what hasn't arrived. While my best advice is to stay on top of your mail-you are in the best position to know what's supposed to come this time of year, so be on the lookout-there are strategies that can make you less of a target.

1. File Your Taxes Early

The longer you wait to file your tax return, the more time someone who isn't you can file it and steal your refund. When that happens, you aren't going to see your money for a very long time -- oftentimes the wait can be as long as 300 days.

Unfortunately, if you are the victim of tax-related identity theft, there's an even bigger problem. For someone to be in a position to file a return and apply for a refund, they have to know your Social Security Number. Heaven knows what else it's being used for, and because of that you're going to need to take evasive measures-like credit notifications and freezes-to make sure you aren't scammed further and forced to look over your shoulder for the rest of your life.

If you know that your SSN has been compromised, you should absolutely file your taxes as early as possible, and also let the IRS know that you've been compromised. It's not a quick process to get an Identity Protection PIN code, but once you do, it is impossible for a fraudster to file a tax return in your name (unless of course they figure out how to get that number. Unfortunately, stranger things have happened).

2. Go to the HR Department at Work

Most companies allow you to pick up your tax information directly. This shuts down one avenue of exposure, provided you don't open another by failing to properly secure your data once it's in your possession.

3. Sign Up for Two-Step Verification

With paperless statements on the rise, your email inbox is also in danger. Most email providers and other online services offer a way to keep other people out of your inbox, though. Two-factor authentication should be enabled for your most important accounts. With this second layer of security, if hackers have possession of your login and password it will be difficult for them to gain access without a code to authorize the device they are using.

4. Check Your Account Activity

On the accounts that matter the most -- banks, credit cards, health care -- frequently check activity and also check your notification and forwarding settings. Know that email can be delivered to you and a second account without your knowledge simply by setting a forward in your account settings. Make sure you know when, where and with what device your most important accounts have been accessed.

While you're in there, activate account activity notifications so that every transaction sends a text or email confirming that fact.

5. Monitor Your Credit

Check your credit reports regularly for accounts or debts that don't belong to you, and pull your credit scores routinely to look for big, unexpected changes that tell you something has gone very, very wrong. You can get your free credit reports once a year from each of the major credit reporting agencies, and you can pull your credit scores and a free credit report summary, updated monthly, on Credit.com.

6. Check Your Mail

It sounds simple, but you have to either personally collect (or arrange with someone you trust to collect) your mail every day, and make sure it's not accessible to third parties. If you don't live in an apartment building with locking mailboxes, or have a mail slot in your front door, consider buying a stand-alone mailbox that locks.

It comes in dribs and drabs; it arrives by the bagful by snail mail and via email. You may even have SMS text notifications set up to let you know when some kinds of crucial information become available. Now that we've entered the richest part of harvest season for identity thieves, it's your job to make sure you're getting everything that's coming to you and to stay safe.

 

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U.S. Foreclosures Drop to a Level Last Seen in 2006

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The inventory of distressed U.S. properties has fallen to the lowest point since 2006, before the financial crisis sent foreclosure filings, default notices, property auctions and bank repossessions soaring, according to RealtyTrac, a housing data company.

RealtyTrac's new Year-End 2014 Foreclosure Market Report shows that U.S. foreclosure filings were reported on 1,117,426 properties in 2014, down 18 percent from 2013 and down 61 percent from the peak in 2010. The number represents the lowest annual total since 2006, when 717,522 properties had foreclosure filings nationwide.

The report also shows that 0.85 percent of all U.S. housing units -- one in every 118 -- had at least one foreclosure filing in 2014, the first time since 2006 that the annual foreclosure rate had fell below 1 percent of all housing units.

Stabilization Forecast

The numbers show "a foreclosure market that is close to finding a floor and stabilizing at a historically normal level," said Daren Blomquist, a RealtyTrac vice president.

However, the housing market isn't doing cartwheels just yet. After 27 consecutive months of decreases, U.S. foreclosure starts in December increased 6 percent from the previous month and 14 percent from a year ago -- the second month in a row that showed increases.

December foreclosure starts increased from a year ago in 26 states, including Massachusetts (up 323 percent), New Jersey (up 262 percent), Nevada (up 194 percent), Missouri (up 88 percent) and New York (up 33 percent).

Blomquist said that a year-end surge in foreclosure starts and scheduled foreclosure auctions indicate that lenders in some markets are gearing up for "a spring cleaning of deferred distress" properties in the first half of 2015. This could flood some local markets with distressed sales and impact home prices.

This recent uptick largely reflects failed attempts to rescue distressed properties, rather than new loans going bad, he said. "Many of these properties have been in mediation, loan modification, efforts to try to prevent foreclosure. Unfortunately for some of these homeowners, none of those solutions stuck, so they're finally going into foreclosure ... casting a lingering shadow on the housing market."

 

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5 Things to Know About Filing Your Taxes and Obamacare

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By STEPHEN OHLEMACHER

WASHINGTON -- The IRS is cutting taxpayer services just as President Barack Obama's health law is making filing a tax return more complicated.

The agency blames budget cuts enacted by Congress. An IRS watchdog says service problems at the tax agency will make complying with the law harder for well-intentioned taxpayers.

"Without adequate support, many taxpayers will be frustrated, some will make potentially costly mistakes, others will incur higher compliance costs when forced to seek information and assistance from tax professionals," said Nina E. Olson, the National Taxpayer Advocate, an independent office within the IRS.

"Still others," Olson said, "will simply give up and not file."

Olson released her annual report to Congress on Wednesday, less than a week before the start of tax filing season Tuesday.

Five things to know about the tax filing season:

Why Is It Getting Harder to File a Tax Return?

For the first time, tax filers will have to report information about their health insurance during the previous year. For most people who get health coverage through work or through government programs like Medicaid, it will mean simply checking a box.

Others who got insurance through state and federal marketplaces will have to file a new form, while people who received subsidies will have to provide more detailed information.

People who didn't have health insurance last year face fines unless they qualify for a waiver, which requires more paperwork.

The subsidies were based on projected incomes, so families will need to report if actual incomes were higher or lower. If higher, they might have to pay back some of the subsidy, either through a smaller tax refund or a payment.

If their incomes were lower, they might qualify for a larger tax refund.

Why Can't the IRS Answer My Questions When I Call?

The tax agency says only half of the 100 million people expected to call this year will be able to reach a person.

Callers who do get through may have to wait on hold for 30 minutes or more to talk to someone who will answer only the simplest questions.

IRS Commissioner John Koskinen says budget cuts are forcing the agency to reduce taxpayer services and other functions.

Congress cut the IRS by $346 million for the budget year that ends Sept. 30. Koskinen says the agency's $10.9 billion budget is its lowest since 2008. When adjusted for inflation, the budget hasn't been this low since 1998, he said.

Why Did Congress Cut the IRS Budget?

Republicans in Congress adamantly oppose Obama's health law, so some have been working to starve the IRS of funds just as its role in implementing the law ramps up.

It won't work, Koskinen said in an interview. The agency, he said, is required by law to help implement the health program. "The only places we have discretion are in information technology, tax enforcement, customer service."

Where Can I Get Help Filing My Tax Return?

The IRS wants you to visit its website. The agency has devoted a section to answering questions about the health law.

The IRS website includes videos, tax tips and frequently asked questions about the health law.

Koskinen's advice to taxpayers with questions: Don't call the IRS unless you absolutely have to.

More than half of all filers pay someone to prepare their returns. Private tax preparers, such as H&R Block, also have websites with information about the health law.

Will IRS Budget Cuts Reduce My Change of Getting Audited?

Yes. Last year, the IRS had fewer agents auditing returns than at any time since at least the 1980s. This year the number of agents will be cut again -- by about 1,800 agents, Koskinen said.

That will result in at least 46,000 fewer audits of individuals and businesses this year. Less than 1 percent of individuals will have their tax returns audited.

Budget cuts, however, come with a cost: Having fewer enforcement agents will cost the federal government at least $2 billion in lost tax revenue this year, Koskinen estimated.

 

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Producer Prices Post Biggest Drop in More Than 3 Years

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M. Spencer Green/APWorkers perform final inspections on 2015 Ford Explorers at the Chicago Ford Assembly Plant.
By Lucia Mutikani

WASHINGTON -- U.S. producer prices in December recorded their biggest fall in more than three years on tumbling energy costs while underlying inflation pressures were muted, a cautionary note for the Federal Reserve as it ponders its next step on monetary policy.

Other data Thursday showed the number of Americans filing claims for unemployment benefits increased to a four-month high last week. That, however, probably doesn't alter the improving jobs market landscape as the data is difficult to adjust for seasonal variations around this time of the year.

The Labor Department said its producer price index for final demand declined 0.3 percent, the biggest drop since October 2011, after falling 0.2 percent in November.

In the 12 months through December, producer prices increased 1.1 percent, the smallest gain since November 2013, after rising 1.4 percent in November.

Economists had forecast the PPI dropping 0.4 percent in December and increasing 1 percent from a year ago.

A broader measure of underlying producer inflation pressure that excludes food, energy and trade services edged up 0.1 percent after being flat in November. It was up 1.3 percent in the 12 months through December.

Fed officials largely view the energy-driven weakness in inflation as transitory. But with retail sales and average hourly earnings, another key inflation measure, falling in December, that could give pause to some policymakers.

In a second report, the Labor Department said initial claims for state unemployment benefits rose by 19,000 to a seasonally adjusted 316,000 for the week ended Jan. 10.

Firming Labor Market

Economists had forecast claims falling to 291,000 last week. The four-week moving average of claims, considered a better measure of labor market trends as it irons out week-to-week volatility, rose by only 6,750 to 298,000 last week.

It has remained below 300,000, which is associated with a firming labor market, for 18 weeks.

U.S. stock index futures pared losses after the data, while yields on U.S. Treasuries trimmed earlier declines. The dollar was lower against a basket of currencies.

The U.S. central back has kept its short-term interest rate near zero since December 2008. Most economists expect the first interest rate hike in June, but U.S. futures traders have cut their bets to the second half of this year.

Low Inflation

Inflation is running below the Fed's 2 percent target. Consumer inflation data Friday is expected to show price pressures remaining muted in December.

Last month, wholesale energy prices dropped a record 6.6 percent after falling 3.1 percent in November.

They have now declined for a sixth straight month, reflecting falling crude oil prices against the backdrop of weakening global demand and increased shale production in the United States.

A strong dollar, as the domestic economy outperforms its global peers, is also helping to curb inflation.

Concerns about global weakness had undercut copper prices Wednesday. Copper rose Thursday on a mix of bargain-hunting, short-covering and hedging by consumers, a day after its biggest slide in more than three years, but more losses were expected.

In a third report, the New York Federal Reserve said its Empire State general business conditions index rose in January to 9.95 from December's revised -1.23 reading, which was its first negative mark since January 2013.

 

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Charlie Hebdo Tragedy Generates Market for Collectibles

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APTOPIX France Attacks Charlie Hebdo
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Collectors hoping to cash in on historic copies of the "Je Suis Charlie" issue of Charlie Hebdo magazine may be disappointed. After the dust settles and a reported 5 million copies are eventually published, the greatest value of each may be as a reminder of the high price of free speech.

Collectibles experts say the mass production of tragedy memorabilia -- magazines, T-shirts, mugs and key chains -- makes the likelihood that each piece will grow in value remote.

"The things that are most valuable are what people once perceived to have no value," said Joe Mannarino, director of comics and comic arts at Heritage Auctions, a worldwide auction house. "Who would have thought to keep a TV Guide that came out every week? But TV Guides are worth money. Wouldn't it be cool to have the TV Guide that had Elvis Presley on it?"

Charlie Hebdo's core staff was murdered on Jan. 7 during an attack by Muslim extremists on the satire magazine's Paris office. An Al Qaida branch has claimed responsibility for the rampage that killed 12, saying it was revenge for Charlie Hebdo's depictions of Mohammed.

'Je Suis Charlie'

Within hours of the attack, supporters of the magazine and free speech scooped up T-shirts and other memorabilia emblazoned with the phrase of solidarity, "Je Suis Charlie" ("I Am Charlie").

The first post-attack issue hit stands Wednesday. The cover shows a weeping Mohammed saying, "Tout Est Pardonné" ("All Is Forgiven") and holding a "Je Suis Charlie" sign. Hours after Paris newsstands opened, copies sold out at about $3.50 each and soon after showed up on auction sites, with buyers reportedly paying up to $1,150 for a copy of the magazine, whose normal press run is 60,000. Some sellers were asking as high as $118,000 for a copy in mint condition.

However, collectibles experts doubt whether magazine copies will appreciate in value. "There is some collectibility, but it doesn't have a huge staying power," said Martin Nolan, executive director of Julien Auctions, a Las Vegas company that specializes in celebrity memorabilia. "What you're buying is memories. The bigger market of collectibles is in areas where people have happy memories."

Crossover Appeal

Plus, the more mint copies available, the less each will appreciate in time. In the world of collectibles, "less is more," Nolan said.

Collectors would be better off buying any one-of-a-kind object connected to Charlie Hebdo. Mannarino said the original art for the Jan. 14 issue could "bring a great deal of money -- five figures, if not six."
"For every cartoon, there's an artist that created the original drawing, and that's one of a kind," he said.

Also, collectibles that combine popular icons with Charlie Hebdo, say Mickey Mouse wearing a "Je Suis Charlie" shirt, could be a good investment. "Look at how unusual that would be and the crossover appeal," Mannarino said.

 

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7 Steps to Managing Your Student Loan Debt Better in 2015

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College Commencement Then and Now
Jessica Hill/AP
By Brian O'Connell

NEW YORK -- Student loan debt is second-highest among household debt expenditures (behind mortgage debt and just ahead of credit card debt) at an average of $32,264 each household. In total, Americans owe $1.3 billion in student loan debt, up 8 percent from 2013 to last year.

Student debt burdens are weighing on the economic fortunes of younger Americans...

That's a lot of money, and paying it back is not only an obligation, it's a must if you want to maintain good credit.

Unfortunately, studies show that excessive student loan debt is holding young college graduates back in life.

"Student debt burdens are weighing on the economic fortunes of younger Americans, as households headed by young adults owing student debt lag far behind their peers in terms of wealth accumulation," says a May study from Pew Research.

To catch up, what student loan borrowers really need is a battle plan to alleviate all that debt. College tuition lender SoFi.com offers a seven-point plan for grads to pay it off as quickly as possible:

1. Set up automatic payments. This is a "two-fer" you can't miss. If you set up a automatic transfer, "not only does it minimize the chances of missing a payment, most lenders offer a 0.25 percent interest rate discount for doing so."

2. Make bi-weekly payments. Add an extra payment and cut your student loan bill faster. Paying every other week instead of monthly adds up to an extra month's worth of payments each year, Sofi points out.

3. Keep forbearance to a minimum. Forbearance may buy you some time if you can't make payments, but it's not a real problem solver. "Forbearance can be a lifesaver, but in most cases, interest continues to accrue while the loan is on hold -- costing more in the long run," Sofi says.

4. Learn your loan lingo. To pay down your loan more quickly, you really have to do your homework and understand student loan terminology. "To make informed choices, learn how 'interest capitalization' works or what the difference between student loan consolidation and refinancing is," the company says.

5. Consider refinancing. With student loans, you always want the lowest interest rate possible -- that reduces your monthly and your total loan payments. "The two best ways to save money on student loans are to prepay and/or refinance your loans at a lower interest rate," Sofi says. "Refinancing is usually an option to explore after you've left school, increased your income and improved your credit. The lower your new rate is, the more you'll save on interest."

6. Break down your goals. Sofi says its helps goal-setting if you do it while remembering the acronym SMART, standing for "specific, measurable, achievable, results-oriented and time-bound" and then to "keep them front and center."

7. Figure out federal loans. You actually can refinance federal student loans. "There's a common misconception that federal loans can't be refinanced, but in fact a handful of lenders (including SoFi) do just that."

 

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Panera Turns On Tech to Heat Up Its Stale Business

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Food Panera Calories
Charles Krupa/AP
Panera Bread (PNRA) is falling out of favor with diners and investors, and the chain of bakery cafes is hoping that a tech-heavy makeover can win back both parties.

In a test that rolled out early last year at dozens of locations, Panera has begun installing touch-screen tablets that customers can use to place orders without having to line up when the queues are long. Customers can also just fire up their smartphones to place orders. The Panera 2.0 makeover isn't just about giving customers new convenient ways to piece together their sandwiches, pastas, soups, and salads: Unlike the traditional Panera experience where pagers start buzzing to beckon a customer back to the counter when an order is ready, the new platform staffs servers who bring orders out to tables.

The quality of the food remains the same. The key at Panera is to make the experience less hectic and more enjoyable.

When Hot Ovens Go Cold

Panera 2.0 may sound more like an operating system than a concept redo, but the chain of 1,845 restaurants that combine bakeries with cafe fare can't afford to slip out of consumer fancy in the fickle world of fast-casual. The concept isn't as hot as it used to be. Net sales that used to consistently grow at a double-digit pace have inched just 8 percent higher through the first three quarters of 2014.

Many chains would love to grow their sales by that much, but Panera historically has been serving up double-digit gains on the top line. Making matters worse, net income has actually declined through the first nine months of 2014. Analysts see profitability slipping for all of 2014 and barely bouncing back in 2015.

Panera used to be a market darling. It was one of the few stocks to move higher every single year since 2007 -- including the tumultuous 2008 -- before closing slightly lower in 2014. Can the company that began as the Saint Louis Bread Co. bounce back?

Convenience Isn't Cheap

There's a lot riding on Panera 2.0, and it all starts with a sizable investment. The typical conversion sets Panera back $125,000, and that's before another $20,000 to $30,000 that goes to transition and training costs. The eateries then experience an increase in operating expenses as labor costs (servers to deliver the orders), credit card fees (since mobile and in-store kiosks don't take cash), and information technology support bump up the overhead.

Panera hopes to make up for the capital investment and higher operating expenses with an increase in net sales. Customers won't leave when they see a crowd at the register, and the convenience of mobile and kiosk orders could encourage patrons to spend more.

The ultimate math has to be working. Panera's test wouldn't be closing in on what is now roughly 100 of its 1,845 locations running Panera 2.0 if it wasn't bearing fruit. The one thing that should concern investors is if this high-tech makeover doesn't work. If improving convenience isn't enough to make Panera a cult fave again, it will have bigger problems than wiping a fleet of tablet touch screens at the end of the day.

Motley Fool contributor Rick Munarriz has no position in any stocks mentioned. The Motley Fool recommends and owns shares of Panera Bread. Try any of our Foolish newsletter services free for 30 days. To feast on our favorite high-yielding dividend stock ideas for any investor, check out our free report.

 

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U.S. Takes First Steps to Ease Cuba Embargo

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US Cuba Miami Protests
Lynne Sladky/APProtesters stand for the American and Cuban national anthems during a rally against President Obama's plan to normalize relations with Cuba last month in Miami.
By Anna Yukhananov and Krista Hughes

WASHINGTON -- The United States rolled out a sweeping set of measures Thursday to ease the half-century-old embargo against Cuba, opening up the country to expanded travel, trade and financial activities.

Defying hardline critics in Congress, President Barack Obama made good on a commitment he made a month ago to begin loosening some U.S. economic sanctions against the communist-ruled island as part of an effort to end decades of hostility.

Today's announcement takes us one step closer to replacing out-of-date policies that were not working and puts in place a policy that helps promote political and economic freedom for the Cuban people.

The Treasury and Commerce Departments issued a package of new rules that will allow U.S. exports of telecommunications, agricultural and construction equipment, permit expanded travel to Cuba and authorize some kinds of banking relations.

It was the first tangible U.S. step to implement the changes Obama pledged on Dec. 17 when he and Cuban President Raul Castro announced plans to restore diplomatic relations between the Cold War foes.

"Today's announcement takes us one step closer to replacing out-of-date policies that were not working and puts in place a policy that helps promote political and economic freedom for the Cuban people," U.S. Treasury Secretary Jacob Lew said in a statement.

The new regulations will allow Americans to travel to Cuba for any of a dozen specific reasons, including family visits, education and religion, without first obtaining a special license from the U.S. government.

The revamped rules will also make it easier for U.S. companies to export mobile phone devices and software as well as provide Internet services in Cuba.

In addition, there will be a change in the definition of "cash in advance" payment required by Cuban buyers, which could help a variety of business interests, most notably U.S. agriculture, in gaining greater access to Cuban markets.

The rollout comes days after Cuba completed the release of 53 prisoners it had promised to free and a week before high-level U.S.-Cuba talks in Havana aimed at starting to normalize ties.

While Obama is using executive powers to poke holes in trade barriers with Cuba, only Congress can lift the longstanding embargo. With Republicans controlling the Senate and the House, there is little chance of that happening any time soon.

 

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Target Takes Aim in Canada, Misses and Leaves

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target canada
Dave Chidley/The Canadian Press via AP
Target's (TGT) great experiment in northern exposure through a Canadian subsidiary is officially over, according to a company news release. Target Canada, technically a separate company that launched in 2013, has filed in Toronto for protection from its creditors. Minneapolis-based retailer Target, the parent corporation, plans a $59 million fund for the 17,600 employees at 133 stores who will lose their jobs. That would be about $3,352 per person.

"When I joined Target, I promised our team and shareholders that I would take a hard look at our business and operations in an effort to improve our performance and transform our company," said Brian Cornell, Target chairman and CEO in the release. "After a thorough review of our Canadian performance and careful consideration of the implications of all options, we were unable to find a realistic scenario that would get Target Canada to profitability until at least 2021."

The employee fund would ensure that "nearly all ... receive a minimum of 16 weeks of compensation, including wages and benefits coverage for employees who are not required for the full wind-down period," according to the release. The stores will remain open for liquidation. Some employees will continue to have positions until the locations are closed.

$5.4 Billion Write-Down

The parent will also provide $175 million to finance operations during the liquidation. The costs to discontinue Canadian operations are expected to run between $500 million and $600 million, most of which will hit Target's books this year. The closing will become a $5.4 billion write-down for last quarter and another $275 million in fiscal 2015. The total is higher than the costs to discontinue operations because it takes into account Target's investments to start the Canadian division.

Target Canada had been experiencing problems for some time, according to CBCNews. Prices for consumers were higher than expected, a problem for a discount chain, and shelves were often empty of product because of supply chain issues. The company had lost $1 billion in its first year. In November, Cornell said that the operations needed a "major step-change," although there were signs that losses were narrowing and sales had increased by as much as 44 percent in the July-September quarter.

The death knell for the company was the last calendar quarter of 2014. Traditionally the holiday season is the busiest and most profitable time of the year, but the improvement wasn't large enough to satisfy the parent.

"The Target Canada team has worked tirelessly to improve the fundamentals, fix operations and build a deeper relationship with our guests. We hoped that these efforts in Canada would lead to a successful holiday season, but we did not see the required step-change in our holiday performance," the release quoted Cornell.

 

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