All too often that extra money makes people splurge, even while they imagine they're saving it, says CNBC. How do you make sure this year's windfall makes your life better long term? We have plenty of ideas.
Put It in Your Paycheck
First, remember that your refund isn't a gift. You earned it but chose to bank with the Treasury Department instead of taking it in your paychecks. This year, wouldn't an extra $225 a month make your life a bit saner? If so, do this:
Gather your pay stubs and last year's income tax return.
Use the IRS withholding calculator to learn if you should change the tax amount withheld from your paychecks. Read the instructions carefully to see if adjusting is a good idea for you.
Fill out IRS Form W-4, adjusting your withholding amount.
Bring the completed form to your employer's payroll department.
Now for nine ways to make life better with that refund money:
1. Pay Down High-Interest Debt
High interest rates can lead to devastating debt. Eventually you can end up with payments so large that it becomes difficult to do more than pay the minimum required each month. That's a losing proposition, Money Talks News founder Stacy Johnson says: "Suppose you've got a $10,000 credit card debt and pay 15 percent interest. If you pay $250/month, you'll pay the card off in five years and pay about $4,000 in interest. But lower the interest to 10 percent, and the same $250 will pay the card off in only four years, with an interest tab of $2,215. The lower rate saves you nearly $2,000 and a year of debt."
Here's the No. 1 rational thing to do with a windfall: Use it to pay down, or pay off, if you can, your debts with the highest rates. Think of this way: Paying off a debt with a 15 percent interest rate is like earning 15 percent, risk-free and tax free; something virtually impossible to find these days.
When you've paid down your debt, don't stop. Your goal should always be to improve your life. Charging and borrowing leads you in the opposite direction. If credit-card debt, payday loans or other high-rate debts have been a problem for you, use this moment to escape the cycle. Choose from the trustworthy sources of free credit counseling and get help so your 2014 refund improves your life permanently.
2: Pay Off Small Debts
Paying off high rate debt first makes sense, but it may not work for you. Some people get more motivation from demolishing smaller debts first. "If you can focus enough to pay off your debts in a relatively short amount of time, the higher interest rates on other accounts may not add up to much extra money," U,S, News explains. Money Talks News has said the same in posts like The Best Way to Pay Off Debt. Of course be careful here, too, not to run up new debt and dig yourself back into the same hole.
3. Fatten Your Emergency Fund
You are debt-free? Bravo! In that case, strengthening your financial safety net may be the next best use of a tax refund. Opinions differ on how much to save for emergencies. Many experts advise keeping enough money to cover your expenses for six months. But maybe the question is: If you lost your job, how long could you expect to be unemployed?
FiveThirtyEight, an economics blog, says how long people are unemployed depends on what the economy is like when they lose their jobs. That's obvious, I suppose, but it tells you the goal for your emergency fund may vary: smaller in fat times, larger in lean ones. The size of your fund also may vary depending on how hard it is to find work in your field, or how stable your current job is. And your savings should be greater if you're older because it often takes older workers longer to find work.
MarketWatch quotes AARP's 2014 analysis of data from the Bureau of Labor Statistics on the average length of unemployment for workers:
Age 54 and younger: 34.7 weeks.
Age 55 and older: 45.6 weeks.
I know someone who lived on savings for a couple of years while hunting for work during the recession. He'd set aside a big bonus so he did OK, but the experience made such an impression that he now tries to keep a year's worth of savings for an emergency.
4. Save for Retirement
Retirement savers are a lot like professional football players, says Money Talks News writer Maryalene LaPonsie. They keep their eye on the clock, for instance. And they accept that you can make progress a few yards at a time. Read her six tips for retirement savers.
5. Save for College
Whether it's your education or that of your kids, apply your refund check to a college savings plan or 529 plan that offers tax benefits in addition to saving for college.
6. Invest in Your Productivity
Get more education. Sign up for a workshop or course or go to a conference or webinar, whether to upgrade your skills or try out a new field.
Subscribe. Sign up for professional publications, or the Wall Street Journal and New York Times, or cable TV or satellite radio channels that help your work acumen. Buy software you need to get ahead. Buy a premium LinkedIn subscription to network or find work.
Invest in the right clothes. Get a tasteful, understated but impressive outfit for work or job interviews, one that makes you feel like a million bucks. Include good shoes.
Buy the equipment you need. Get the new laptop, tool or piece of electronic equipment you need to move ahead in your field.
Get therapy. Career advancement isn't only about the right tools, skills and credentials. A chip on your shoulder, depression, anxiety, a fear of success or problems at home can prevent you from reaching your earning potential. See WebMD's thorough primer, How to Find a Therapist.
7. Hire a Career Coach
Career coaching can help you learn your strengths, identify where you could use help, set goals and strategize. There are many ways coaching can help further your career. "Some people want to be coached through their job search, but others want help with their current work performance," Hallie Crawford, certified career coach and founder of the Atlanta-based company Create Your Career Path, tells U.S. News.
"After an initial free consultation, most coaches charge hourly fees, ranging from $50 to $500 (the priciest tend to be coaching sessions with executives)," Next Avenue says: "The average cost is $161 an hour, according to the International Coach Federation." Get started with The Wall Street Journal's How to Find a Career Coach.
8. Contribute to Charity
Do good for others while helping yourself earn a healthy tax deduction on your 2015 taxes by supporting a charitable cause. Make sure to get a receipt for your contribution, and be sure the organization you support is a legitimate 501(c)(3) charity, defined here by the IRS.
9. Start a Business
Make your money your grubstake. Start the business you've been dreaming of, whether consulting, opening a coffee cart or retail outlet, selling your crafts or patenting an invention.
Bonus: Four Idiotic Ways to Blow Your Refund
Because tax refunds inspire some of the dumbest splurging possible, we feel duty-bound to warn you against:
Frittering it away. Won't you feel like a dope if your money's gone and you can't say where it went? If you must spend it on consumption, use it for something memorable -- maybe an experience with family or friends that you'll remember forever.
Going on a spree at the mall. Impulse buys are like drinking too much: You feel icky in the morning. When spending your refund check, aim for something that gives a feeling of increased safety and security.
Creating more debt. Don't use that refund as a down payment on a car that puts you deeper in debt. Put that money instead in a bank account dedicated to saving enough to pay cash for a used car.
Letting it gather moss. There's no standing still with money. Either it's growing in value or inflation (even the modest inflation today) is eating it away. Here's Johnson's guidance on investing in mutual funds.
Let's hear it: What will you (really) do with your tax refund this year? Post your comments below or at Money Talks News' Facebook page.
Casey Rodgers/Invision/History/AP"American Pickers" can be considered educational TV.By Jason Notte
Here's a new defense of reality television: It improves your ability to haggle.
According to an online survey by Cincinnati, Ohio-based vehicle lease marketplace Swapalease.com, television shows are playing an increasingly important role in consumers' ability to negotiate the prices and terms of their purchases. After conducting an online poll of 2,500 people throughout North America, Swapalease found that 32.5 percent of men and 78.2 percent of women said television shows including A&E's Storage Wars and History's Pawn Stars and American Pickers helped make them better negotiators.
"There is an art to negotiation, and this includes many intangibles such as tone, eye contact and knowing how much your first offer should be. Information on the Internet doesn't specifically address any of these," says Scot Hall, executive vice president of Swapalease.com. "What's interesting is that we're finding through this study that some of today's popular TV shows are in fact filling this void. People are able to watch and observe how other negotiators handle certain pressure-filled situations, and they have been translating that into their own instances either at the dealership or when they're making transactions with other consumers."
It's Not Fun -- or Is It?
That isn't exactly making it a lot more fun to negotiate, mind you. Of those surveyed, 54.8 percent of men said they don't look forward to environments where negotiation takes place. And 66.7 percent of women share that apprehension.
But once you have seen a few people squabble over the contents of a storage space or go hunting for antiques, only to get chased off of a farmstead by an owner with a shotgun, suddenly it seems just slightly less daunting. For the folks at Swapalease.com, that means 64.3 percent of men and 59.6 percent of women now look for ways to negotiate the terms of an auto lease with a previous leaseholder looking for some freedom. That's up from 61.2 percent and 38.4 percent, respectively, just a few years ago.
That also makes them more likely to negotiate on items such as cash incentives (which 56.3 percent of men and 32.1 percent of women do) and transportation fees (48.5 percent of men, 52.3 percent women). "Whether it's pricing data, trade-in numbers or even credit scoring, the Internet has equipped a large number of people with the information they need to make more informed decisions," Hall says. "This has certainly helped with their negotiation process, because knowledge is the baseline of power in any negotiation. However, there are still some aspects of negotiation that make men and women uncomfortable that go beyond price and other data points."
So which shows really get everyone wheeling and dealing? For 39.6 percent of men and 34.2 percent of women, it's the poor unfortunates of "Pawn Stars." Men, meanwhile, are way more likely to relate to the opportunistic raiders of "Storage Wars" (64.2 percent) than women (29.7 percent). As for "American Pickers," only 38.1 percent of men find inspiration in the hunt for neglected antiquities, while 68.4 percent of women would talk you out of every oil lamp on your property.
Each time Uber angers customers with another surge pricing incident, or angers a city by ignoring its laws, an army of fans jump to its defense and cry "free market." This is followed by a litany of complaints about stupid consumers or old fart city leaders, along with an easy, breezy explanation of supply and demand. The New York Times recently declared, "Uber improves life, economists agree."
The ride-for-hire service is making a lot of people into amateur economists, including, it seems, many professional economists. It's a trap many have fallen into before: thinking a free-for-all market is a free market. I like the concept of Uber and Lyft, the ride-hailing company notable for its large, pink mustaches. I use them. Uber has clearly demonstrated a better way to move people around. Cheers to you, aggressive ride-hailing firms.
The trouble begins because Uber prices are too low.
But a hard-headed economic analysis suggests that Uber is driving itself, its passengers and perhaps America's public transit systems toward a dangerous disaster. It can, and should, be saved, but that won't happen until folks stop defending the firm's bad behavior with ill-considered assertions about the "free" market and Silicon Valley "disruption."
I, too, am an amateur economist, so I went to a real one for insights on Uber's pricing strategy. His name is Dr. Joe Sulmona, a transportation strategist and economist in Vancouver, British Columbia. He's helped plan major transportation systems around the globe, He likes Uber, too. But he's very worried that it has begun a race to the bottom that no one can win, and no one is talking about. I asked Uber if it wanted to talk but did not get a response.
The trouble begins not because Uber prices are too high for New Year's Eve drinkers (though that's a problem, too), but because Uber's prices are too low. Let's consider the six problems that Uber has wrought.
1. Destructive Competition
Uber is a raging success right now for one simple, oft-ignored reason: People hate taxis and deservedly so. They can be scammy. They are inefficient. They are rude. They often smell. They are expensive. They are ripe for creative destruction, mainly because consumers will do almost anything to find an alternative.
I'd call this the Netflix effect, which I explored in great detail in my book "The Plateau Effect." It was a really dumb idea to snail-mail millions of movies to people right as high-speed Internet access was slithering its way toward people's homes. But Americans hated Blockbuster and its insane late fees so much that they put up with the decidedly low-tech solution. Netflix users weren't signing up for a service as much as they were joining the resistance. This happens to a lot of industries that get fat, old and lazy. Uber, and it users, are gleefully escaping the bonds of a deeply flawed industry.
So far, so good. Thanks, Uber, for scaring taxi drivers. But outside of some very marginal gains in deployment of available car resources, don't fall for the theory that Uber has created a new product with great value or invented game-changing efficiency improvements. The costs -- largely gas -- are still the costs. Its "product," an app, is easily copied.
It has begun a cycle of destructive, and fatal, competition.
Why is this important? There are only two ways to make money: Invent something new that creates value out of thin air or Suck money out of some existing value chain. Uber is much more the latter than the former. That means its fate is sealed. It has begun a cycle of destructive, and fatal, competition. It doesn't end well.
Uber's ethos is to turn virtually anyone with a car into a potential part-time income earner. No fussy taxi medallions to purchase, no rules to hold back innovation. Sounds great! But that means there is virtually no barrier to entry in the car-for-hire business. It means the price will ultimately sink lower and lower and lower, until it approaches the price of gas itself. And what happens then? The same thing that happens in every industry that has ever suffered the same fate. Car-for-hire companies operating without rules will continually undercut each other until two terrible things happen: "Destructive competition drives prices so low, at some point it comes apart because people can't make a living at it," Sulmona warns. "Cars fall apart. You are into safety issues."
In other words: Some drivers who begin to lose money will quit or disappear, making the service unreliable. Others, in order to survive on thinner and thinner margins, will take excessive risks, like driving too many hours, driving without insurance or cutting maintenance corners.
As if on cue, the day after I spoke to Sulmona, Uber announced price drops in 48 cities where it has a small presence to drum up business. "Why not drop the fares by 95 percent, then we could all expect about 50 rides per hour?" wrote one concerned driver, the New York Times noted.
This is why cities have rules. Rules don't just hassle business owners, they create a barrier to entry that improves safety and has the effect of setting a price floor. Of course, rules don't always work well. But the only thing worse than regulation is no regulation. You don't want people opening restaurants that don't have to pass health inspections. You don't want truck drivers hauling goods for 20 straight hours. And you don't want Uber breaking down all rules to selling rides.
2. Uber Is Like Enron
Dynamic pricing sounds like the Holy Grail for free marketeers. The price of goods rises and falls instantly based on supply and demand. Not enough cars? Raise prices and attract more cars! Then prices go back down again. Everybody wins! At least, that's true in a perfect world, and it's kind of true in the commodities markets, where prices, supply and demand can all adjust in milliseconds.
Here in the real world, all sorts of things prevent dynamic pricing from functioning as it seems it might. It's not easy to get 20 drivers out of bed to flood a car-starved neighborhood in two minutes or less. What does that mean? Everybody still has to guess.
But for fun, let's assume these logistics weren't the massive problem they are, that Uber's surge tactic is a magic potion that erases all market friction. The most serious problem with surge pricing still remains: it's called market power. When Enron rampaged through America's energy markets, it turned spectacular profits in part because it realized that the best way to make money was to artificially decrease supply and raise prices. Even slight constrictions on supply can lead to large spikes in prices.
And it makes sense: If you're freezing cold in winter, and there's just not quite enough gas to go around, you'll pay just about anything to beat out other bidders for the last bit of it. Sound familiar? Even in situations where there's "competition," as in the energy markets, suppliers are very good at signaling to each other and artificially decreasing supply/increasing demand. It's just too easy to raise prices this way. That's why energy auctions are so heavily regulated (and probably not regulated enough).
Uber is in a destructive race to the bottom, and its drivers are severely underpaid.
And that's why, even with some competition in Uber-land, it will be very easy to raise prices during times of even moderate demand. In fact, drivers themselves could collude to create surge pricing in certain areas simply by making side agreements to stay out of each other's way.
But why would Uber do this? Back to point No. 1: Uber is in a destructive race to the bottom, and its drivers are severely underpaid, but for the promise of surge pricing. It's in everyone's interest here (except the consumer) to ramp up surge revenues as soon as possible. In fact, it's essential to Uber's survival. Just ask the Uber drivers in Seattle who quit after yet another price decrease last year.
Dynamic pricing is far easier to manipulate than amateur economists realize. Far from being market Utopia, it's almost certainly going to become market hell, unless serious safeguards are enacted. We should have a hint already. Name another good or service with a price that can fluctuate 500 percent, or even 1,000 percent, during a single evening? Price controls are obviously terrible for an economy; but so is the death of the price tag, one of my favorite topics. When people don't have any idea what things will cost, when prices don't exhibit some reasonable degree of predictability, there is no free market. Free markets require perfect information on all sides of a transaction. Here, Uber feels a lot more like a Third World economy with inflation so fast that this morning's taxi fare dollars can't pay for the evening's taxi ride home.
But wait, how can I complain about too-low pricing and too-high pricing at the same time? Well, because that's what economic theory predicts. "The theory in perishable markets (where there are time-limited goods, like car ride seats) says early predatory pricing will eventually lead to market concentration," Sulmona said. And of course, those with the deepest pockets can ride out the predatory pricing phase.
That's not to say there isn't logic to raising prices during times of great demand, sure there is. That's the future of our roadways, implemented with tools such as HOT lanes and a reasonable energy plan. The problem is the black box. With pricing a practical mystery, abuses are certain to occur. You could say you trust Uber not to do these kinds of things, but given the firm's explicit rejection of local and state laws - and some would say, decency - that trust would seem ill-placed. But even if you trust Uber, do you trust its competitors?
Predictable "surge" pricing, on the other hand, creates some interesting opportunities. Say Uber announces that all rides from 11 p.m. to 2 a.m. on New Year's cost triple. That would be an interesting start. So would prepurchase of a round-trip fare. These things would also solve the next problem I want to describe.
3. Unreliability and Drunken Driving
You might not care if drunks are price gouged on weekends when trying to get home after a night of partying, but Sulmona says you should. Because you will end up paying for the messes they make.
You go out on a Friday night and spent $20 with Uber to get to a bar. You plan to come home with Uber at 1 a.m., and the cost will be $20 or $50 or $110. You don't know. That's nuts. If traveling creates unpredictable risks that could triple or quadruple the price, then many rational actors will choose not to travel.
Rational Uber drivers, meanwhile, won't be able to help themselves from playing a "wait for the surge" game. Wouldn't you sit on the sidelines waiting for your pay to double or triple? Of course you would. Especially if you save money by not driving at the normal, depressed rates, which barely cover your gas. There are anecdotal reports of Uber drivers canceling rides when they realize surge pricing has just begun, so they can get the higher rate. Of course they are.
Unreliability has other consequences, too. Sulmona once helped British Columbia design its anti-drunken-driving program, and he approached it with a simple notion: Don't expect people to make good choices at 1 a.m. The choice to drive drunk or to stay safe is made back at 9 p.m., when the partier sets out for the evening. If transportation is reliable, people will make better choices. If folks go out and don't know how they can get home, or what it might cost, they are more likely to choose to drive.
4. Stranger Pricing
Transportation is not precisely a utility, like energy or water, but it has some elements of a utility. We all have an interest in making sure folks have reliable, predictable transportation to and from their evening fun. But it's not just partiers, of course. What about the elderly, or the handicapped? Folks who suffer car accidents or layoffs and are without cars for a while? Do we really want them to effectively negotiate a new price each time? Do you want to do that?
Remember, anything goes with dynamic pricing. As we've seen in the airline industry, and in some cases, e-shopping, dynamic pricing can be used to punish loyal customers. People can and are charged more for products when companies discover they are buying on autopilot. When will Uber start charging you more than the person on the street next to you because it knows you? Or, they charge you more because you are elderly and unlikely to notice? Or, using traditional economics terms, they ask more because you are a tourist and not a local?
Forget surge pricing; Sulmona worries about "stranger pricing." "Now tourists don't have to be driven through Staten Island to get ripped off," Sulmona says. "You don't have to do surge pricing, just stranger pricing."
Think about all Uber knows about you. Reportedly, the firm can even decipher who's making late-night booty runs. Why wouldn't it create dynamic pricing that maximizes revenue at every turn? Again, perhaps you trust Uber not to do this. I don't know why you would. I know, Uber riders have a chance to see the price before they book the car, through Uber's (very helpful) fare estimate tool. Don't forget, it's still an estimate. But don't believe riders at airports or in cities late at night are in fair bargaining positions to provide the necessary counter-leverage to prevent dynamic pricing abuses. Dynamic pricing is information warfare, and consumers are fighting supercomputers with an abacus.
5. Common Carrier
Charging an elderly person more because they are elderly is illegal. As would be charging an African American more. Not that these things don't happen now in the taxi world. (Remember, no one is defending taxis here). It's just that systematic redlining in an Uber-like world becomes very easy.
How easy? An Uber driver I spoke to recently said he has to drive twice as many hours in Washington, D.C., to make the money he made driving a yellow cab, but he does so gladly because of the quality of the clients. "It's much less dangerous," he told me.
While D.C. cab drivers are not known for their honesty or their accurate math skills, I take him at his word that he makes less, but feels safer, driving for Uber. I sympathize. But picking up only clients with smartphones is already a form of class warfare, and it might run afoul of common carrier laws. I know, Uber denies it's a common carrier, but that's kind of like denying English. It carries people around. And it cannot make discriminatory decisions, such as refusing to pick up certain kinds of people or charging people more based on this or that personal characteristic. It already does that, implicitly. As Uber becomes more ubiquitous, it will be even more essential that it accepts the role of common carrier. Those problems are easy to predict.
6. The End of Mass Transit as We Know It
Could Uber drag down mass transit with it? On this last point Sulmona offers another Ubernomics disaster that I hadn't considered. It's one thing to refuse to serve certain people in certain places. It's another to cherry-pick only the best fares for transporting large groups.
Imagine if an Uber-like ride-hailing firm started hiring drivers with vans who could sprint up and down only the busiest streets in America's cities, charging half-priced fares and offering nicer seats. It would be illegal in most places, but that hasn't stopped Uber before. But why would Uber do that? How could that be profitable?
Transit systems operate on an equation that is terrible for businesses, but (theoretically) good for society. The busy bus lines are profitable and subsidize the nearly-empty bus lines and late-night routes that exist because the transit system sees value in reliability and in extending transportation to less-populated parts of the city. If Uber or an Uber-like bus appeared, it could operate at a much lower cost, cherry-pick only profitable routes and destroy revenue for public transit.
Would Uber really do this? If attracting bus riders was the only way to expand the service, of course it would.
What If Uber Crashed and Burned?
You might be reading these concerns thinking they are flawed, or at least premature, because Uber is still a niche product offering little more than an additional option to passengers with extra money and someplace to go. Were that true, most of these predictions about the flaws in Ubernomics would fall apart. The high incidence of taxi strikes around the country, and around the world, should divest you of that notion. So should the $40 billion valuation of the company. To justify that, Uber has to be a world beater. And the only thing worse than Uber succeeding at that goal is Uber failing, and burning down the taxi business and other modes of transportation along the way
The best thing to do with a market failure is to intervene and clean it up before it causes a disaster.
But it doesn't have to be this way. I've described a bunch of market failures that are either predictable or already here. The best thing to do with a market failure is to intervene and clean it up before it causes a disaster. You inspect the planes before, not after, the plane crash.
"You need to get back to the reason that regulations were created in the first place," Sulmona says. Yes, it's undeniable that cities can sound silly as they try to make sense out of Uber. Seattle proposed coping with the threat by passing seemingly arbitrary rules such as limiting the service to only 100 cars at a time. It's hard to set good rules on new markets. That sure doesn't mean throwing all rules out, however.
"The old transportation for hire rules have to change. To me that is pretty clear. ... Credit Uber for showing the better way," Sulmona says. "But we've really got to be careful. If we don't have smarter regulation, we're going to discover the need for smarter regulation, because the market will fail ... just to throw away the economic regulations with the dear hope that the invisible hand of the market will just sort all this out is nonsense."
Sick of all those piles and boxes taking up space in your garage? If you've been putting off clearing it out, here's an added incentive for you: that "junk" of yours could be worth a decent chunk of change.
Just because you no longer need the things you've stored away, that doesn't mean someone else can't use them. In fact, someone might be willing to pay you to take them off your hands, especially if these items are in decent working order.
If you've got a little time and vision, you could start a little side business for yourself by clearing through that unwanted stuff and turning it into cold, hard cash. Here are 10 ways to turn a profit on the items you no longer need.
Paula Pant ditched her 9-to-5 job in 2008. She's traveled to 32 countries, owns seven rental units and runs a business from her laptop. Her blog, Afford Anything, is a gathering spot for revolutionaries who understand that they can afford anything -- just not everything. Visit Afford Anything to learn how to crush limits, create wealth and live life on your own terms.
Compared to the length of retirement, 15 minutes is no time at all. But that's all you need to learn the basics of developing a plan to make your savings last as long as you need them. Still, many investors don't take this time-putting their retirement in jeopardy.
Investors' biggest errors often occur long before any buying or selling takes place. They tend to have poorly defined objectives, no real sense of their time horizon (how long they need the money to last) and don't quite understand that any investment has risks and returns to consider.
*Source: 2007 US Total Population Life Table (revised as of 6/28/2010). National Vital Statistics Reports, Volume 58, Number 21. Life expectancy rounded to nearest year.
To start, ask yourself how long you'll need your retirement savings.
Most investors need their savings to last as long as they do-sometimes longer if they'd like their portfolio to support a younger spouse, children or charity after they're gone. So exactly how long that could be for you isn't black and white. Average life expectancies are published every year, but they can only tell you so much. After all, an average is the middle, and you probably aren't "average."
To get a better idea, consider your heredity-your family's history of health and longevity. Be sure to consider advances in health care and technology. Merely because your father died at 70 doesn't mean you'll do the same. Most people outlive their ancestors, hence rising average life expectancies. Planning early for a longer life is smart.
You could also be underestimating the amount of cash flow you'll need after retirement.
Maintaining your lifestyle becomes much more costly if your expenses are heavily tilted to categories of goods or services with fast-rising prices-like health care. Overall inflation has averaged about 3% annually-a retirement plan that doesn't account for inflation has a significant hole.*
Our 15-Minute Retirement Plan can help get you get started on a successful path.
If you have a $500,000 portfolio, download the guideby Forbes columnist Ken Fisher's firm. Even if you have something else in place, this must-read guide includes research and analysis you can use right now. Don't miss it!
*Source: Global Financial Data, Inc., as of 1/18/2013. Based on US BLS Consumer Price Index from 1925-2012.
Patricia Hofmeester/Shutterstock
As goes January, so goes the year: that's the basis of the January Barometer, devised by the Stock Trader's Almanac.
The idea is that what we see from the S&P 500 (^GSPC) in the first month sets a tone for the rest of the year. Taking out the Januarys when the index barely budged, it has correctly predicted an up or down market for the full year better than 75 percent of the time since 1950.
If that correlation holds this year, 2015 could be a rough one for investors. The S&P fell 3.1 percent in January. "Almost every single down January up until last year was followed by a bear market, a 10 percent correction or a flat year," according the Jeffrey Hirsch, editor of the almanac.
'Not Everything Is So Rosy'
Hirsch says the drop this January indicates "that not everything is so rosy, but it does not mean we're going down 20 percent from here." This January has been especially volatile, as the Dow Jones Industrial Average (^DJI) swung up or down by 1 percent or more (about 170 points) 10 times in 20 days of trading, including Friday's 251-point slide.
The market has been roiled by the plunge in crude oil prices, which sent energy company stocks tumbling, the slumping economies of Europe and Russia and disappointing earnings news from blue chip companies, such such as Caterpillar (CAT) and Microsoft (MSFT).
The S&P and the Dow both set dozens of record highs over 2014, as stocks entered the sixth year of the current bull market. "These markets don't go up forever," said Hirsch. "We see a little more upside, but I don't think this market will go up for many more years." He and other Wall Street pros have been saying that for some time. The market is due -- some say overdue -- for at least a correction, but the endurance of this bull market has been consistently underestimated.
Hirsch says that while the January Barometer, devised by his father Yale back in 1972, is a valuable indicator, it has been trumped in recent years by the Federal Reserve's massive quantitative easing program, which pumped billions of dollars into the economy and provided support for the stock prices.
Many Predictors, Indicators, Barometers and Theories
There are hundreds of Wall Street indicators, barometers and theories -- ranging from the silly Super Bowl Predictor to some wonky ones based on serious numbers-crunching. Hirsch believes the January Barometer should be taken seriously, "even though it does not live in a vacuum; it's not perfect."
Some analysts say the January Barometer is a pretty good indicator when the market is up for the month, but is unreliable when it's down in January.
Hirsch sees more upside for the market in the first half of 2015, with the S&P rising to another all-time high of about 2,250 and the Dow to 19,000 by April or May, "but not much after that."
WASHINGTON -- Troubled by consumer complaints and loopholes in state laws, federal regulators are putting together the first-ever rules on payday loans aimed at helping cash-strapped borrowers avoid falling into a cycle of high-rate debt.
The Consumer Financial Protection Bureau says state laws governing the $46 billion payday lending industry often fall short, and that fuller disclosures of the interest and fees -- often an annual percentage rate of 300 percent or more -- may be needed.
Full details of the proposed rules, expected early this year, would mark the first time the agency has used the authority it was given under the 2010 Dodd-Frank law to regulate payday loans. In recent months, it has tried to step up enforcement, including a $10 million settlement with ACE Cash Express after accusing the payday lender of harassing borrowers to collect debts and take out multiple loans.
Our research has found that what is supposed to be a short-term emergency loan can turn into a long-term and expensive debt trap.
A payday loan, or a cash advance, is generally $500 or less. Borrowers provide a personal check dated on their next payday for the full balance or give the lender permission to debit their bank accounts. The total includes charges often ranging from $15 to $30 for each $100 borrowed. Interest-only payments, sometimes referred to as "rollovers," are common.
Legislators in Ohio, Louisiana and South Dakota unsuccessfully tried to broadly restrict the high-cost loans in recent months. According to the Consumer Federation of America, 32 states now permit payday loans at triple-digit interest rates, or with no rate cap at all.
The CFPB isn't allowed under the law to cap interest rates, but it can deem industry practices unfair, deceptive or abusive to consumers.
"Our research has found that what is supposed to be a short-term emergency loan can turn into a long-term and expensive debt trap," said David Silberman, the bureau's associate director for research, markets and regulation. The bureau found more than 80 percent of payday loans are rolled over or followed by another loan within 14 days; half of all payday loans are in a sequence at least 10 loans long.
The agency is considering options that include establishing tighter rules to ensure a consumer has the ability to repay. That could mean requiring credit checks, placing caps on the number of times a borrower can draw credit or finding ways to encourage states or lenders to lower rates.
Payday lenders say they fill a vital need for people who hit a rough financial patch. They want a more equal playing field of rules for both nonbanks and banks, including the way the annual percentage rate is figured.
"We offer a service that, if managed correctly, can be very helpful to a diminished middle class," said Dennis Shaul, chief executive of the Community Financial Services Association of America, which represents payday lenders.
APMaranda Brooks stands outside a payday loans business in Cleveland that she frequented in the past. Ohio was third among states in the number of consumer complaints to the CFPB about payday loans.
Maranda Brooks, 40, a records coordinator at a Cleveland college, says she took out a $500 loan through her bank to help pay an electricity bill. With "no threat of loan sharks coming to my house, breaking kneecaps," she joked, Brooks agreed to the $50 fee.
Two weeks later, Brooks says she was surprised to see the full $550 deducted from her usual $800 paycheck. To cover expenses for herself and four children, she took out another loan, in a debt cycle that lasted nearly a year.
"It was a nightmare of going around and around," said Brooks, who believes that lenders could do more to help borrowers understand the fees or offer lower-cost installment payments.
Last June, the Ohio Supreme Court upheld a legal maneuver used by payday lenders to skirt a 2008 law that capped the payday loan interest rate at 28 percent annually. By comparison, annual percentage rates on credit cards can range from about 12 percent to 30 percent.
Members of Congress also are looking at payday loans.
Sen. Sherrod Brown of Ohio, the top Democrat on the Senate Banking, Housing and Urban Affairs Committee, plans legislation that would allow Americans to receive an early refund of a portion of their earned income tax credit as an alternative to a payday loan.
Sen. Elizabeth Warren, D-Mass., wants the U.S. Postal Service to offer check-cashing and low-cost small loans. The idea is opposed by many banks and seems unlikely to advance in a Republican-controlled Congress.
Short in days, but not on deals, February is a busy month for bargain shoppers. And while Valentine's Day traditionally steals the spotlight, February's best sale has nothing to do with Cupid.
Year after year, we've noticed that Presidents Day offers better bargains on a larger variety of merchandise than its more popular rival, Valentine's Day. And though we're still a few weeks away from both events, you can never be too prepared. So we've created the guide below to help you prepare for this year's Presidents Day sales.
Sales Will Start Early, End Late
As we saw in November, retailers will do anything to extend their sales. The same concept applies to Presidents Day. While the majority of sales will commence on Presidents Day itself (Feb. 16), many will start several days before the big event. For instance, in 2013 Bass Pro Shops started its Presidents Day sale on Feb. 5, whereas last year Dell Home was the first major retailer to celebrate Presidents Day on Feb. 7. For 2015, we predict that this trend will continue, with sales starting the first week of February. However, the bulk of retailers will still launch their deals on the Friday before Presidents Day.
Additionally, Presidents Day sales tend to linger. That means shoppers can expect a minimum of two weeks' worth of Presidents Day deals across the board. In fact, last year we saw Presidents Day deals that lasted as long as Feb. 22, which was five days after the holiday had ended.
Clothing and Tech Dominate Presidents Day Sales
For the past few years, winter apparel has dominated most Presidents Day sales, accounting for 32 percent of all deals during that holiday. Even better, in the past two years we've noticed that discounts have gotten steeper. In 2013 we saw price cuts of up to 67 percent, while last year we saw discounts as high as 85 percent. That said, some retailers, such as Macy's (M) and Barneys Warehouse, will gravitate toward lower price cuts ranging from 10 percent to 20 percent off. But even in these cases, the price cuts are stacked atop already-discounted clearance items. Otherwise, expect Nordstrom (JWN), 6pm, Eddie Bauer and The Children's Place to hold sitewide discounts with little to no limitations.
Shoe shoppers take note: While you may find some shoe deals this Presidents Day, your choices will be limited; last year, shoe deals made up less than 5 percent of our Presidents Day sales. Nevertheless, the most noteworthy sales came from 6pm and Joe's New Balance Outlet, both of which slashed the prices of boots and sneakers from 60 percent to 85 percent off.
In 2014, electronics accounted for 32 percent of all Presidents Day sales. These sales generally came in two forms: those with stackable coupons and those that discounted a variety of items. For the former, you can expect Office Depot (ODP), Staples (SPLS) and Dell Small Business to feature Presidents Day coupons that take from $10 to $50 off entire purchases. (Some retailers may require a minimum purchase amount.)
For sitewide sales, we recommend turning to Amazon (AMZN), TigerDirect, Newegg, MacMall, and Best Buy (BBY), which discounted a variety of HDTVs, laptops, and tablets by up to 81 percent. Unfortunately, there was no apparent theme to any of the sales. Back-to-school sales, for instance, traditionally apply to laptops and desktops, but most Presidents Day tech sales apply to a vast collection of electronics.
Home Furniture Deals Will Shine
February is traditionally one of the best months to buy new furniture. That's because new furniture collections debut during the first two months of the year, which in turn makes the start of the year a great time for furniture purchases. As far as Presidents Day is concerned, 17 percent of sales on this holiday will offer furniture deals.
Last year Ikea led the pack with an impressive 80 percent off discount. Not to be outdone, Kmart (SHLD) took 50 percent off patio furniture, whereas Wayfair slashed up to 70 percent off its furniture collections.
Mattresses and Jewelry Were Last Year's Wild Card
April and September are traditionally the best months for mattress deals, but last year Sears and Kohl's (KSS) discounted their collection of mattresses by up to 50 percent. Kohl's took an extra 20 percent off via stackable coupon codes for an overall discount of 70 percent. By comparison, April and September see mattress sales of up to 83 percent off. So while these February mattress deals are limited, they're still impressive if you're in the market for a mattress and can't wait the extra months.
Jewelry is another item we wouldn't expect to see discounted on Presidents Day, but last year 8 percent of all deals included or exclusively discounted jewelry. This included big box retailers like Sears and Kmart, as well as jewelry-specific stores like Szul, which took up to 90 percent off its jewelry with an extra 10 percent off via stackable coupon. However, keep in mind that many Valentine's day sales will also discount jewelry, so if it's a wide selection of deals you're after, you'll see a better variety on the days leading up to Valentine's day.
Though it traditionally doesn't get the attention of other sales, Presidents Day is a great holiday for deal hunters. But as with all sales, use caution when making your purchases. And make sure to begin your deal-hunting here at DealNews, where we'll be highlighting the top deals for you throughout the entire season. You can also sign up for the DealNews Select Newsletter to get all the best deals, including Presidents Day sales, delivered to your inbox.
There's an art to getting what you want from customer service people. If you don't have the skills that make up that finesse, you're going to get stuck with a lot of "we're real sorry" boilerplate responses. However, if you know how to perfect this fine art, you're not just going to get what you're asking for -- a lot of times, you're going to get a whole lot more.
Get a Decision Maker
Jordan Harbinger is a former Wall Street lawyer and a founder of The Art of Charm, a Los Angeles company that helps men hone their professional and social skills. He advises to start off by making sure you're talking to someone who can address your concern. "The wording is important," he said. "You don't want to talk to someone who's just reading off of a screen."
To that end, he suggests specific language like "Are you able to refund $1,000 in unused services" or "Who do I talk to about refunding several months of unused service?"
Be On Your Best Behavior
It's never fun to call customer service. Harbinger advises that you do your best to keep your cool. "Even if they can't help you, getting mad is just going to make you all rattled when you finally talk to someone who matters. They don't care if you're angry. It's not their problem."
Instead, try to get the customer service representative on your side. "Some wording I might use is 'I don't mean to come across as short with you, but I'm really upset,'" he said. "At this point, you're increasing the chances that the person actually wants to help you." After all, these people deal with angry customers all day. Being the one person who was polite to them can win you big points with the right people. "Try and identify with their role," he said.
Ask the Right Questions
As you can probably already gather, what you ask is just about as important as how you ask it. So when you start getting somewhere, it's important to ask a variant of "Is that the limit of your authority?" Harbinger notes that a lot of times you hit a wall because the computer doesn't allow the person on the other end of the phone to give you what you want. He also says that you need to be prepared at this point to learn that no one can give you what you want. Still, if it's going to make you feel better, escalate just to create a record of your complaint.
However, Harbinger said that it's probably just best to cut your losses when you hit the ceiling of what someone can actually do. "If you haven't looked at your statement for the last 11 months, you probably should have," he said. "Accept that it's partially your fault when it is."
Take Things to Social Media
Dave Kerpen, "the Crunch N Munch Guy" and a participant on the reality show "Paradise Hotel," is also a social media expert, and he points out the United Breaks Guitars video, a viral sensation by Canadian musician Dave Carroll chronicling how United Airlines (UAL) broke his guitar. "No one wants to be in that situation," he said.
"Your first step isn't a loud, angry complaint," Kerpen said of a social media complaint. "Your first step is telling them how much you love their company." If that doesn't get a response, you start complaining loudly and vociferously -- with a little bit of signal boost from your friends. "The bigger your following, the better the chance is you're going to get a resolution you're happy with," he says.
The biggest mistake? Not asking for what they want explicitly. "You need to ask for it from the start," Kerpen said. "If you say what you want, you're far more likely to get it."
Kerpen encourages people to record customer service calls. In the event of a problem, you can post them -- but check your local laws about recording phone calls.
"At the end of the day the most important tool is empathy and a little bit of charm," Harbinger said. "No amount of cool scripts is going to make up for the fact that they think you're a jerk -- so don't be one."
Dollar stores can be great places to pick up inexpensive items, but sometimes you get what you pay for.
Rather than ending up with a bargain, you could end up with junk or, even worse, something dangerous. In the video above, Money Talks News money expert Stacy Johnson rounds up the items you should probably avoid. Watch the video, and then keep reading for more information.
1. Electric cords and other electric devices. If you would rather not reduce your home to embers, we suggest you steer clear of cords and electric devices from dollar stores.
That may sound overly dramatic, but dollar stores don't have a great track record of quality control when it comes to cords and electronics. As far back as 1999, the U.S. Consumer Product Safety Commission warned about faulty power strips, extension cords and surge protectors being sold at discount stores. More recent warnings have highlighted faulty extension cords, holiday minilights and portable heaters.
2. Toys. The problem, to be blunt, is that dollar store toys are junk.
Safety is an issue as a result. Dollar store toys are often subject to recalls because they contain lead or parts that can break off and present a chocking hazard. You can search for all the CPSC recalls here.
Beyond that, we suggest that you're better off paying a little more and steering clear of the tears and frustration.
We're talking about stuff that breaks if you look at it wrong. The wheels will fall off, the batteries won't work, or your 3-year-old will snap it in two before you've even hit the parking lot. Then, you'll be left a buck (or two) poorer with a broken toy and an upset child.
3. Shampoo and beauty products. Opinions seem to be mixed on dollar store shampoo and beauty products, but they get a thumbs down from us. Not because of any safety concern, but because they often don't provide great value.
Dollar stores may sell brand-name products, though some skeptical shoppers don't believe these products to be the same as the full-priced versions sold elsewhere.
Leaving that aside, we find that many dollar stores stock itty-bitty bottles compared with what you get in other stores. So you may not be paying a lot, but you're not getting a lot either. A better value might be to combine coupons and deals at drugstores for shampoo, conditioner and other beauty products.
4. Kitchen knives. Quality concerns also get kitchen knives placed on the do-not-buy list.
Dollar store knives can be flimsy and dull. Both are bad when you're trying to cut your food and not your finger.
5. Bathroom tissue. You're welcome to try dollar store toilet paper, but we don't recommend it. Often having fewer fibers than other brands, using no-name paper can make for a less than ideal outcome. We won't elaborate.
As for the brand-name toilet paper, tissues and paper towels at dollar stores, you may find the same problem we discovered with shampoo. Small sizes and fewer sheets mean the dollar store price isn't much of a bargain. Try hitting your warehouse club or otherwise buying in bulk to get the best quality for the lowest per-unit price.
6. Canned and boxed foods. Most dollar stores carry a selection of canned, boxed and bagged foods that may include many brand names. Some stores may even have a full grocery section complete with meat and produce.
While the dollar pricing may seem like a bargain, you could also find many of these items on sale at your grocery store for less. In particular, grocery supercenters such as Walmart (WMT) seem to win on the price war for canned and boxed foods.
7. Batteries. Finally, we come to batteries. In a pinch, dollar store batteries will work just fine, but don't expect them to run like the brand names.
Rhett Allain, an associate professor of physics at Southeastern Louisiana University, put Dollar General (DG) batteries to the test against Duracell and Energizer. He discovered the dollar store batteries contain significantly less energy and their voltage drops off quickly. Apparently, a major difference between the brands is that Dollar General batteries aren't alkaline and likely zinc chloride instead.
Of course, dollar stores vary widely, but we think your best bet is to stay away from these seven product categories. Do you agree? Tell us in the comments below or on our Facebook page.
Steve Mawyer/AOL
From a leading automaker trying to gain share in a challenging market to a dot-com darling hoping it can impress the market in 140 characters or less with its latest report, here are some of the things that will help shape the week that lies ahead on Wall Street.
Monday -- It's a Rental
The new trading week kicks off on Groundhog Day. One of the companies serving up quarterly results will be Rent-A-Center (RCII). The chain of 3,020 stores that rent out everything from living room furniture to PCs is a good gauge for how the less affluent are faring. The poor and low-middle class that live paycheck to paycheck often lean on Rent-A-Center for appliance essentials. In a sign of the wireless times, Rent-A-Center even began offering smartphones last summer.
Rent-a-Center's core U.S. business has been sluggish lately, but it still provides an important snapshot on consumer trends.
Tuesday -- The Happiest Earnings Report on Earth
Disney (DIS) reports on Tuesday. The family entertainment giant hit an all-time high earlier this year, and naturally a strong report could help propel the stock even higher.
Disney's been hitting on all cylinders lately. Its theme parks are posting record attendance. ESPN has never been more popular. There's excitement building for upcoming Pixar, Marvel and now Lucasfilm projects. At a time when content is king, Disney continues to be the undisputed leader of family-friendly fare.
Wednesday -- GM Revs Up
Wednesday will be another busy day this earnings season, and one of the bigger names reporting is General Motors (GM). We already saw Ford (F) post quarterly reports this past Thursday, paving the way for GM's numbers. Ford came through with better-than-expected earnings despite pesky losses in its European operations.
Analysts see flat sales growth at GM, but they're holding out for healthy gains on the bottom line. Wall Street's forecasting a profit of 83 cents a share, up nicely from the 67 cents a share it posted a year earlier.
Thursday -- Home Tweet Home
We take social media for granted these days. No one even still uses the "Web 2.0" term that came to define sites that feasted on user interaction. We'll get a glimpse into that world on Thursday when Twitter (TWTR) checks in with its latest quarterly financials.
The challenge for Twitter has always been monetization. The microblog juggernaut gets plenty of traffic. That would normally lend itself to a barrage of advertising, but folks aren't ready to see a ton of ads creep into their feeds. If they're consuming brief broadcasts, how many "promoted by" sponsored tweets will they put up with sandwiched between the missives that they're following? Twitter is getting better at things, and recently it began testing a premium "buy" button for those selling products and services to stand out.
Twitter reports on Thursday, and all of its monetization efforts appear to be paying off. Wall Street sees profitability tripling, with revenue nearly doubling for the quarter.
Friday -- He Lives in a Pineapple Under the Sea
The end of the trading week is when new movies hit the silver screen. After a few weeks in which the highest-grossing films were adult-oriented fare, the top draw this weekend could be the kid-friendly "The SpongeBob Movie: Sponge Out of Water."
Viacom's (VIA) popular Nickelodeon show has been the network's most popular show for a long time. The first SpongeBob theatrical release topped $85 million in domestic ticket sales 11 years ago. We'll find out soon enough if the franchise still has sea legs.
Motley Fool contributor Rick Munarriz owns shares of Ford and Walt Disney. The Motley Fool recommends Ford, General Motors, Twitter and Walt Disney. The Motley Fool owns shares of Ford, Twitter and Walt Disney. Try any of our Foolish newsletter services free for 30 days. Is your portfolio ready for what the new year has to offer? Check out our free report for one great stock to buy for 2015 and beyond.
Radius Images/AlamySeveral requirements must be met for your workspace to be considered a legitimate home office.By Molly McCluskey
It's the sexiest and scariest of deductions, and it's often shrouded in mystery. It's the home office deduction, and rumors abound about who qualifies, how it's calculated and whether taking it automatically flags an IRS audit.
Unlike more obvious deductions, many people aren't sure if they qualify to take the home office deduction. But with the large number of American small businesses based out of an owner's home -- including more than half of all small businesses, according to the Small Business Administration -- those who qualify shouldn't hesitate to claim the home office deduction.
According to the IRS, a portion of your house might be considered a legitimate home office if it meets a few requirements: It's your primary workplace (i.e., you don't have a separate office space that you are required to attend from 9 to 5 every day); it's used exclusively for work; you regularly meet with clients there; and/or you have a place such as a garage that you use to store work-related supplies.
Jeff Porter, certified public accountant and principle of Porter & Associates in West Virginia, says some people simply shouldn't take the deduction. "If you're someone who has an office that you go to every day, and maybe you bring work or files home, or you check emails after hours, this isn't really a home office," Porter says. "The exception would be if, for instance, you work at your regular office four days a week, and on Fridays you work from home, and have client meetings there. Then it would count."
There are two types of expenses that go into calculating the home office deduction: prorated and dedicated. Prorated expenses are ones for your overall home where a portion is claimed, such as a mortgage or rent, utilities and Internet. Dedicated expenses include items bought exclusively for the home office, such as furniture or new paint.
The simplified option is just that -- an option, and it can be more convenient to take it than to calculate all your expenses over the course of the year.
Recognizing that calculating the percentage of a mortgage and other expenses by the square footage of a home office can be a trial, the IRS instituted in 2013 what it calls the "simplified option" for calculating the home office deduction in 2013.
"What the simplified method says is that you can claim $5 a square foot, up to a maximum of 300 square feet, so you have a maximum $1,500 deduction and you don't have to go through keeping track of all your utilities and various expenses," Porter says. "But the important thing is the criteria is the same. You still have to qualify under the regular rules, but the calculation is easier."
"The simplified option is just that -- an option, and it can be more convenient to take it than to calculate all your expenses over the course of the year," says Don Zidik, a CPA in Needham, Massachusetts. "It's a more common-sense way of calculating."
Porter recommends using both methods of calculation each year to get a sense of which one is the better choice for filing. One thing to keep in mind is opting for the simple versus itemized deduction could have implications on depreciation should you sell your home, which is something you may want to factor in for long-term planning.
An Automatic Flag?
Unlike deductions for dependent children, the home office deduction has a bit of a reputation as the wild child of deductions. Rumors abound that taking it will automatically flag an audit.
Porter says he's heard that worry from some of his clients. But the truth is, the home office deduction is no more or less likely than any other aspect of your return to flag an audit.
"From time to time, if the return itself has reasons for an audit, then the home office might be something the IRS looks at," Porter says, "but I've never seen an audit for the sole purpose of an office in the home."
Part of the reason it's not an automatic flag is that the maximum amount, $1,500, is relatively small in the grand scheme of things. After all, if people are going to attempt to defraud the IRS on their tax return, they're more likely to go bigger than a mere home office deduction.
Getty ImagesTesoro's oil refinery in Anacortes, Wash.By Erwin Seba
HOUSTON -- Union workers were on strike for a second day on Monday at nine U.S. refineries and chemical plants as they sought a new national contract with oil companies covering laborers at 63 plants.
The walkouts were the first in support of a nationwide pact since 1980 and targeted plants with a combined 10 percent of U.S. refining capacity. One of the plants, Tesoro's (TSO) 166,000-barrel-a-day Martinez, California, refinery, was being shut because it was in the midst of planned maintenance work.
The other refineries appeared set to continue running normally as operators initiated contingency plans, calling on trained managers as replacement workers. U.S. gasoline and diesel fuel prices rose Monday on concerns over supply, as well as a bounce in crude.
Talks broke down against a backdrop of plunging crude prices, down nearly 60 percent since June, prompting oil companies to cut spending.
The United Steelworkers union said Royal Dutch Shell (RDS-A), the lead industry negotiator, halted negotiations early Sunday after the union rejected a fifth proposal from the company. Shell said it would like to restart talks.
Shell activated a strike contingency plan at its joint venture refinery and chemical plant in Deer Park, Texas, to keep operating normally.
Tesoro said management was operating its refinery in Carson, California, and that managers would take over from union workers at its plant in Anacortes, Washington, in the next 24-48 hours.
Besides Shell and Tesoro, the union said strikes were called at three plants belonging to Marathon Petroleum (MPC) in Texas and Kentucky, and LyondellBasell Industries' (LYB) plant near Houston. At least two of the plants on the list have a history of deadly accidents.
United Steelworkers said all other refineries it represents, including Exxon Mobil's (XOM) plant in Beaumont, Texas, would operate under rolling 24-hour contract extensions.
Contract Negotiations
The expiring three-year national contract covers about 30,000 hourly workers at plants that together have two-thirds of U.S. refining capacity.
The latest rejected proposal was the fifth turned down since negotiations for a new three-year contract began on Jan. 21.
The union is seeking annual pay raises double the size of those in the last agreement. It also wants work that has been given in the past to non-union contractors to start going to United Steelworkers members, a tighter policy to prevent workplace fatigue, and reductions in members' out-of-pocket payments for healthcare.
Gene Oliver, president of the union chapter at LyondellBasell, said the company brought 10 issues to the table and didn't want to discuss all of the 36 points raised by the union.
"They were unwilling to work on the issues," he said.
Independent refiners, such as Valero Energy (VLO), have made big profits recently by tapping cheap crude oil from the U.S. shale boom, while refining units at integrated companies such as Exxon have provided a cushion against low prices hurting upstream operations.
But the drop in oil prices from $100 a barrel last summer has hurt the union's hand, analysts said.
WASHINGTON -- U.S. consumer spending recorded its biggest decline since late 2009 in December, with households appearing to save the extra cash from cheaper gasoline, which could support future consumption.
Other data Monday showed factory activity slowed in January, suggesting economic growth continued to cool early in the first quarter.
The Commerce Department said consumer spending, which accounts for more than two-thirds of U.S. economic activity, fell 0.3 percent after a 0.5 percent gain in November.
It was the largest drop since September 2009 and reflected big declines in spending on both durable and nondurable goods. When adjusted for inflation, consumer spending was the weakest since last April.
In a separate report the Institute for Supply Management said its national factory activity index fell to 53.5 last month from 55.1 in December. A reading above 50 indicates expansion in the manufacturing sector.
U.S. stocks were trading lower on the reports. Prices for U.S. government debt fell and the dollar eased against a basket of currencies.
The spending data was included in Friday's fourth-quarter gross domestic product report, which showed the economy growing at a 2.6 percent annual pace, with consumer spending rising at a brisk 4.3 percent rate -- the fastest since 2006.
Despite ending 2014 on a weak note, lower gasoline prices and a firming labor market are expected to provide a huge tailwind to consumer spending in the first quarter.
"This all bodes well for consumption growth in early 2015," said Paul Diggle, an economist at Capital Economics in London.
Households have so far used much of the extra income from cheap gasoline to pay down debt and boost savings, according to economists. Gasoline prices have plunged 43 percent since June, according to U.S. government data.
In December, income at the disposal of households after accounting for inflation increased 0.5 percent, the largest rise since last March. The saving rate rose to 4.9 percent from 4.3 percent in the prior month.
Keeping Inflation In Check
Lower gasoline prices put a damper on price pressures in December, with key inflation gauges slipping further below the Federal Reserve's 2 percent target. A price index for consumer spending fell 0.2 percent after a similar decline in November.
In the 12 months through December, the personal consumption expenditures, or PCE, price index rose 0.7 percent, the weakest reading since October 2009, slowing from a 1.2 percent increase in November.
Excluding food and energy, prices were unchanged for a second straight month. The so-called core PCE price index increased 1.3 percent in the 12 months through December.
While the Fed has repeatedly said it viewed the oil-driven decline in inflation as transitory and expected inflation to move back to its target, some economists say benign price pressures could see the U.S. central bank delaying a much- anticipated mid-year interest rate increase.
"We continue to think it will be hard for the Fed to remove 'patient' from their policy language in March, thus signaling a June tightening," said Michelle Girard, chief economist at RBS in Stamford, Connecticut.
-With additional reporting by David Gaffen in New York.
If you're looking to find ways to make easy money, then you're in the right place. Looking for new job or getting a raise at your existing one are not your only options when it comes to boosting your income.
Sell the Side of Your Car
You've probably seen a car with ads on it. You might even have wondered about it. I'm sure you sat there looking at the ads with curiosity or perhaps perhaps you thought it looked odd. But did you know that putting an ad on your car is the easiest way to earn a passive income? All you have to do is drive your car around like you would normally do, including going to work, dropping the kids off or going to the grocery store.
Depending on your driving habits, an advertiser can choose your car for their ads. You can make anywhere from $50 for a rear window decal to $400 for wrapping your entire car. The average length of time to showcase the ads range from six to 24 months, according to FreeCarMedia.com. All you need is a fairly new car, insurance and a valid driver's license.
Shop, Scan, Snap and Share
In this digital age, you can actually earn money by taking selfies. With the free Stylinity app, you can take selfies, tag the items in your picture by scanning barcodes, upload it and then share it on your social media networks for others to search and buy. Every time someone makes a purchase, you earn points that you could redeem for cash. If you're already taking a lot of selfies, why not make a little extra cash on the side for your efforts?
Sell Your Hair
You can sell your hair to buyers who will then take your hair to create wigs and other hairpieces. Search "make money by selling your hair" on Google to find sites where you can upload a picture with specific details of your hair. You can set the price or have buyers submit their best offers. You could make hundreds to thousands of dollars, depending on the length and health of your locks.
Be Someone's Friend
I'm sure you have a lot of friends, but now you can actually earn a good living by being someone else's friend. Whether it's going out to dinner with someone who doesn't want to dine alone or working out alongside someone who travels, there are many reasons why one would rent a friend. According to RentAFriend.com, most friends start at $10 an hour, with some friends making up to $2,000 a week for being a full-time friend. Similar to renting a room in your home, make sure you find out a little more about the person before you agree to be their friend for the day or week. If you think this is a way for you to make some extra cash, sign up to be a friend.
If you're in need of some extra cash or would like to make money the unconventional way, look into some of my suggestions above. Sometimes thinking outside the box can give you more options and choices as to how you can earn an income. Some of these suggestions might sound crazy to you, and that probably means it's not for you -- but it might work great for someone else.
General MotorsA much-improved version of the Cadillac Escalade was introduced last spring. U.S. sales of the Escalade, one of GM's most profitable products, rose more than 50 percent in 2014.
When General Motors (GM) reports its fourth-quarter and full-year 2014 earnings next Wednesday, Wall Street analysts expect its fourth-quarter earnings will be stronger than the 67 cents a share it reported in the fourth quarter of 2013, as GM's operations continue to perform well despite last year's record wave of recalls.
Behind the Recall Drama, GM Appeared to Perform Well in 2014
GM executives have been saying for a while that the company's 2014 pre-tax profits would improve on the $8.6 billion it earned in 2013, but with an important caveat: That result excludes the costs of GM's record recalls in 2014.
GM issued 84 recalls in 2014, covering over 30 million vehicles, at a cost of about $2.3 billion. GM also took an additional $400 million charge to cover the estimated cost of a settlement fund it established for victims of an ignition-switch defect in cars made last decade.
That will all weigh on GM's net earnings for the full year. But the point that GM CEO Mary Barra and other executives have been trying to make is that, behind the noise of the recalls, General Motors had a pretty good year in 2014.
In China, its full-year sales rose 12 percent, outpacing the overall market. In Europe, its Opel and Vauxhall brands posted a 3.4 percent increase for 2014, again ahead of the overall market's gain. And in the U.S., a key driver of GM's performance, GM's sales rose 8.8 percent during the fourth quarter, with big gains in profitable segments like full-size pickups.
GM's Improved Products Are Earning More Money on Every Sale
Those gains came without huge costs. GM's incentives in the U.S. continued to be in line with rivals', and considerably lower than in the recent past. Its gains in truck sales came not from heavy discounting, but from the strength of its new Chevy Silverado and GMC Sierra pickups, which left it well-positioned to take advantage of the shortages faced by rival Ford (F) as it worked through a difficult conversion to its new 2015 F-150.
Its new and much-improved SUVs also saw good gains in the quarter, and throughout 2014. Sales of the Chevy Tahoe rose 17 perecent last year, while its Cadillac Escalade sibling gained over 50 percent. These are high-margin products that make outsize contributions to GM's North American profits; their success bodes well for GM's fourth-quarter and full-year numbers.
Meanwhile, GM continued to add more high-margin products to its portfolio in China. A major effort is underway to make the Cadillac luxury brand a significant player in the world's largest auto market. That effort is still several years away from fruition, but it's making progress: Cadillac sales in China surged 47 percent last year.
And in Europe, its star of the moment is the Opel Mokka SUV, a twin of the Buick Encore sold in the U.S. and China. The Mokka has become a surprise hit for GM in Europe, and its global scale means that GM is making good profits on every sale.
Sales Gains for Profitable Products Should Mean a Good Quarter
So what does all that mean for GM's fourth-quarter results? Last quarter, GM surprised Wall Street with solid results that showed that it was less vulnerable to situations in Latin America (particularly Venezuela) and Russia that had hammered rival Ford's bottom line.
That bodes well for another positive surprise this time around. Wall Street analysts expect GM to report a profit of about 83 cents a share, but it's possible that GM could come in a bit higher. While its new-product cadence continues to be aggressive, GM has completed its most expensive launches: the overhaul of its full-size truck and SUV lines.
With those products in place, profits in North America should continue to be robust. Incremental improvements in Europe and China should also help. Barring any surprises, the upshot should be a pretax profit in the neighborhood of $2.5 billion or a bit more, as GM delivers on its optimistic 2014 guidance.
Motley Fool contributor John Rosevear owns shares of Ford and General Motors. The Motley Fool recommends Ford and General Motors and owns shares of Ford. Try any of our Foolish newsletter services free for 30 days. Find out the easy way for investors to ride the new mega-trend in the automotive industry in our free report.
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After a decade-long boom in both oil production and job growth, the oil industry may be in for a major setback in 2015. Crude oil is trading below $50 a barrel, and drilling is grinding to a halt in the U.S. because few shale producers can drill new wells that produce oil economically for $45 to $50 a barrel.
As the industry slows to a crawl, companies are beginning to announce layoffs. It's a natural by-product of a slowing business environment, but it could come as a rude awakening for thousands of oil industry workers around the country.
Pink Slips Already Handed Out
Some companies are already beginning to lay off workers; public releases put the job losses at 31,000 by late January, a number that will continue to rise sharply throughout 2015.
Energy industry service provider Schlumberger (SLB) has made the most dramatic move, cutting 9,000 workers in anticipation of slowing revenue this year. The company provides a variety of products and services to shale drillers, so as activity slows down, so will its business.
More than 1 in 100 of all workers in the U.S. will be directly affected by falling oil prices and slowing production.
Fellow service supplier Halliburton (HAL) announced 1,000 job cuts in December and on a recent conference call said it expected more layoffs in the near future. Baker Hughes, which Halliburton agreed to acquire late last year, just announced 7,000 job cuts, 11 percent of its workforce. By the time the merger closes in late 2015, the combined entity could be significantly smaller than anyone expected. "We will have to make reductions to our structure as any prudent business would," Halliburton CEO Dave Lesar, adding that market conditions are driving the layoffs, not the merger. No matter the reason, when three of the largest oilfield service providers in the country are announcing layoffs by the thousands, it's troubling for the industry.
One reason the picture isn't already worse is that there's a long lag between dropping oil prices and falling employment in parts of the industry. Drillers like Whiting Petroleum (WLL) and Continental Resources (CLR), two of the largest drillers in the Bakken Shale, are still producing oil from wells drilled in 2014 and will still be fracking them in 2015. But if new wells aren't being drilled, there's only so much that can be done before additional workers will go idle later in the year.
With 2.1 million people employed by the energy industry, more than 1 in 100 of all workers in the U.S. will be directly affected by falling oil prices and slowing production. According to the U.S. Bureau of Labor Statistics, 216,000 workers are in oil and gas extraction alone, up from 121,200 in 2004, the last time the price of oil stayed below $50 per barrel for an extended period.
No One Knows Where the Bottom Is
Many industry experts continue to be bullish on the future of oil drilling. T. Boone Pickens and Continental Resources CEO Harold Hamm have been two of the biggest cheerleaders, predicting that the price drop will be temporary. But they have a vested interest in being bullish on oil because that's how they've made their billions. We may actually not be in for an imminent recovery in drilling.
OPEC has decided to maintain its 30-million-barrel-a-day production target, leaving the world oversupplied by 1 million to 2 million barrels a day. Someone will have to cut production to send prices higher. The problem is that Russia, Saudi Arabia and the U.S. combined are expected to produce more oil in 2015 than they did last year. That only makes the situation worse, even if U.S. producers stop drilling new wells.
On the demand side, the U.S. and Europe have both seen oil demand drop slowly over the past decade. China has been the main country propping up global demand, but it's uncertain whether China's economic growth is going to slow down in 2015, as some fear, or continue steady expansion. At the end of the day, China's demand may have more to do with oil prices than most people think.
U.S. Oil Consumption data by YCharts
If oil stays below $50 a barrel, the industry could be in for major cutbacks in 2015, and I wouldn't be surprised to see a handful of highly leveraged oil producers go out of business. At least 31,000 jobs have already disappeared from the energy industry within the last few months, and if the price of oil remains this low, that number will easily top six figures by the end of the year.
This is the boom-and-bust nature of energy in the U.S. It's really good when energy prices are high, but when the market busts, the U.S. oil drilling industry could quickly become a ghost town.
Motley Fool contributor Travis Hoium has no position in any stocks mentioned. The Motley Fool recommends Halliburton. Try any of our Foolish newsletter services free for 30 days. To read about our favorite high-yielding dividend stocks for any investor, check out our free report.
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Plenty of stocks go up and down in any given week. The gainers inspire us to keep investing. The decliners keep greed in check while reminding us about the risks of the equity markets. Let's go over some of last week's best and worst performers.
Sometimes it's the acquirer that gets a Wall Street pop. Shares of CommScope moved higher after the company announced that it would shell out $3 billion for TE Connectivity's (TEL) broadband network solutions business.
It's a big bite for CommScope, which commanded a market cap roughly in line with the $3.8 billion in revenue that it has generated over the past four quarters ahead of the news. However, TE Connectivity should boost CommScope's revenue by 50 percent, and there should be operating synergies that translate into even bigger gains on the bottom line. The market doesn't usually like it when a company goes on a shopping spree, but it warmed up to this deal.
The leading online retailer moved higher after posting a strong quarterly report. Amazon's adjusted profit of 45 cents a share was nearly three times better than the 17 cents a share in net income that analysts were forecasting.
Sales growth for the holiday quarter did decelerate to 15 percent, but that's still better than that of most traditional retailers. Amazon's spending a lot of money on new growth initiatives, but its operating profit still managed to inch higher.
Universal Display (OLED) -- Up 13 percent last week
Shares of Universal Display spiked after the company announced a deal with TV manufacturer LG (LPL) that covers Universal Display's patents as well as a purchase agreement for materials. Universal Display is a pioneer in organic light-emitting diodes. OLEDs have emerged as a cost- and energy-efficient lighting source for TVs, monitors, and appliance displays. Universal Display has had its ups and downs over the years, but the market clearly likes when it expands its reach with a major player.
Shares of the prepaid credit card specialist shed nearly a quarter of their value after it posted uninspiring financial results. Green Dot clocked in with revenue and net income that fell just short of analyst forecasts.
Green Dot also initiated its 2015 guidance. It didn't wow Wall Street pros, who went on to lower their profit estimates on the company.
Tuesday Morning (TUES) -- Down 15 percent last week
Shares of the chain of nearly 800 discount stores fell after the company posted quarterly results. The financials appear solid on the surface. Net sales rose 5.5 percent, fueled by a 7.6 uptick in comparable-store sales. Operating income soared 32 percent, but the eventual profit of 54 cents a share fell just short of Wall Street targets. This is the third quarter in a row that Tuesday Morning has missed analyst earnings estimates.
Subscription-based referral website Angie's List closed lower in each of the week's five trading days. Investors got cold feet after the panel of Indianapolis' City-County Council moved to table a proposed $18.5 million tax incentive for Angie's List if it hired 1,000 new employees in the city and relocated the 800 existing hires to a depressed neighborhood.
Tabling the decision was done to give Angie's List more time, but given its recent struggles, one has to wonder if it's ready for that kind of bump in payroll.
Motley Fool contributor Rick Munarriz has no position in any stocks mentioned. The Motley Fool recommends and owns shares of Amazon.com and Universal Display. Try any of our Foolish newsletter services free for 30 days. Check out our free report on one great stock to buy for 2015 and beyond.
Andrew Harrer/Bloomberg via Getty ImagesBy ANDREW TAYLOR
WASHINGTON -- Promising to help America's middle class, President Barack Obama on Monday sent Congress a record $4 trillion budget that would hammer corporate profits overseas and raise taxes on the wealthy while boosting tax credits for families and the working poor.
Obama's budget also would steer hundreds of billions of dollars to the nation's crumbling infrastructure of roads and bridges, help provide two years of free community college and reverse the across-the-board, automatic budget cuts that have slammed the Pentagon and nearly every government department.
In the face of certain opposition from Republicans, an optimistic Obama hailed a "breakthrough year for America" of new jobs, lower unemployment and shrinking deficits after the great recession of 2008, and he called for moving past years of "mindless austerity." The blueprint for the 2016 budget year that begins Oct. 1 represents a 6.4 percent increase over estimated spending this year, projecting that the deficit will decline to $474 billion.
However, Obama's plan ignores the new balance of power in Washington, with Republicans running both the House and Senate. The GOP found plenty to criticize in his proposed tax hikes that would total about $1.5 trillion.
Republicans cited the nation's $18 trillion debt and assailed what they call Obama's tax-and-spend policies for failing to address the spiraling growth of benefit programs such as Social Security and Medicare.
"Today President Obama laid out a plan for more taxes, more spending, and more of the Washington gridlock that has failed middle class families," said House Speaker John Boehner, R-Ohio. "This plan never balances -- ever."
Republicans will respond this spring with their own plan, a balanced-budget outline promising to ease the burdens of the national debt on future generations, curb the explosive growth of expensive benefit programs and reform a loophole-cluttered tax code.
While Obama's plan was rejected out of hand on budget day, proposals to ease automatic cuts and boost transportation funding are likely to return later in the year and require extensive negotiation.
'Practical, Not Partisan'
"These proposals are practical, not partisan," Obama said of his overall plans. "They'll help working families feel more secure with paychecks that go further, help American workers upgrade their skills so they can compete for higher-paying jobs, and help create the conditions for our businesses to keep generating good new jobs for our workers to fill."
Some people would pay more. Many wealthy Americans would be able to take tax deductions at the 28 percent rate only even if their incomes were taxed at 39.6 percent, and some would also see an increase in their maximum capital gains rate.
However, a couple earning up to $120,000 a year would qualify for a new "second earner" tax credit of up to $500 as well as a maximum $3,000 child care credit for two children, triple the current credit of $1,000.
Obama's initiatives to tax the wealthy and to welcome an influx of immigrants into the United States are going nowhere in the new GOP-run Congress.
But there is a bipartisan desire to ease automatic spending cuts that are the product of Washington's failures to cut deficits beyond an initial round in 2011. Both Republicans and Democrats are howling that such broad cuts savage the Pentagon. Obama said he won't give more money to the Pentagon without receiving domestic funds he wants.
"It would be bad for our security and bad for our growth," Obama said Monday at the Department of Homeland Security.
Capital Gains Tax Rise
The centerpiece of the president's tax plan is an increase in the capital gains rate on couples making more than $500,000 a year. The rate would climb from 24.2 percent to the Reagan-era top rate of 28 percent. Obama also wants to require estates to pay capital gains taxes that reflect the increase in value of assets like homes and stocks prior to death instead of after inheritance. And he is trying to impose a 0.07 percent fee on the roughly 100 U.S. financial companies with assets of more than $50 billion, raising $112 billion over 10 years.
All told, Obama proposes higher receipts of about $2 trillion though his budget: about $1.5 trillion from tax increases and almost $500 billion from fresh revenue as immigration reform lifts the economy and provides new workers.
His proposals would boost federal spending by $74 billion -- divided between the military and domestic programs -- and would result in a spending increase of $362 billion over the remaining six years the spending caps were to have been in place.
The deficit would remain under $500 billion a year through 2018, but would rise to $687 billion by 2025, according to administration projections -- though levels of red ink could still be considered manageable when measured against the size of the economy.
But the cost of financing the government's debt -- currently more than $18 trillion -- would spiral as the debt grows to more than $25 trillion by 2025 and interest rates on 10-year Treasury bills rise to 4.5 percent in coming years, according to the projections. Interest costs would jump from $229 billion this year to $785 billion in 2025.
Focus on Infrastructure
A principal theme this year is infrastructure -- the budget books' cover photo is the deteriorating Tappan Zee bridge over the Hudson River -- and the plan includes a six-year, $478 billion transportation and infrastructure plan. Gasoline tax revenues would cover only half the cost, so Obama proposes a 14 percent tax on overseas corporate profits to bring in $238 billion. The combination would permit about a one-third increase in spending, with transit programs being the biggest winners.
"The president's proposal would close a lot of the tax breaks that encourage corporations to move jobs and capital overseas and invest more of that in jobs and infrastructure here at home," said Rep. Chris Van Hollen of Maryland, top Democrat on the budget panel.
Obama's plan contains a lengthy roster of proposals that have been repeatedly rejected by lawmakers: $600 billion in additional revenue over a decade by limiting tax deductions for upper bracket earners; $95 billion from nearly doubling the cigarette tax to $1.95 a pack, and $35 billion through a minimum 30 percent tax rate on million-dollar incomes.
He wants to increase the security fee paid on air travel from $5.60 to $7.50 per one-way ticket. And there's a new 10-year, $2.5 billion proposal to limit the deductibility of gifts that boosters of college teams give to earn the right to buy basketball and football tickets.
The White House claims $1.8 trillion in deficit savings over 10 years but does so by taking liberties such as ignoring the cost of preventing Medicare cuts to doctors' fees and extending refundable tax credits for the working poor and couples with children that expire in 2017.
-Associated Press writers Martin Crutsinger and Jim Kuhnhenn contributed to this report.
The new year got off to a bad start with the major market exchanges moving slightly lower in January. Investors will be hoping that stocks in general will bounce back in February, but that's not the only thing that the market will be keeping an eye on this month. Let's check out some of the potentially market-shaping events that will take place in the coming weeks.
Feb. 10: Coca-Cola Earnings
The world's largest beverage company pours out its latest quarterly results next week. It's not going to be pretty. Coca-Cola (KO) has been suffering from years of declining soft drink sales in this country, and the rest of the world is also starting to cool off on carbonated beverages.
Coca-Cola isn't giving up. It's expanding into new beverage categories that aren't going out of style, making big investments last year in energy drinks and coffee. The slide is likely to continue for now. Analysts see Coca-Cola posting a 2 percent decline in revenue with a slightly bigger fall in profitability.
Feb. 12: King Digital Earnings
King Digital Entertainment (KING) has been one of the bigger IPO disappointments of last year. The mobile gaming giant behind "Candy Crush Saga" went public at $22.50 in March, and it has gone on to shed more than a third of its value.
It probably didn't help that its flagship game had peaked in popularity during the fall of 2012. King Digital is still generating a lot of money from the game. It's also making waves with some of its newer games. However, the market's been largely unimpressed. It reports quarterly results next week, giving it another chance to win back jaded investors.
Feb. 20: Jet Warehouse Club Opens
Many have assumed that Amazon.com (AMZN) will always be the king of the hill of online retail, but one potential challenger is starting to generate some buzz. Jet.com will begin taking limited sign-ups on Feb. 20. It is setting itself up as a warehouse club model with folks paying $49.99 a year for the right to buy everything -- from clothing to electronics to media -- at prices lower than can be found elsewhere.
It's an ambitious goal, but Jet's turning heads because the founder already sold a company to Amazon. Marc Lore sold Diapers.com parent Quidsi to Amazon for $550 million in 2010, spending a couple of years at Amazon after that to learn its inner workings. Taking on Amazon has been a losing challenge in the past, but this long shot could be interesting.
Feb. 24: Hewlett-Packard Earnings
Hewlett-Packard (HPQ) has become the bellwether for the PC industry now that smaller rival Dell is privately held. HP has suffered with the digital and mobile revolutions. The mobile revolution has seen smartphones and tablets grow at the PC's expense, and the digital revolution finds folks sharing photos and documents digitally without having to print them out on one of HP's signature printers.
HP has expanded into software and other areas, but it hasn't been enough. Revenue has fallen for three consecutive fiscal years, and later this month we'll be checking out HP's results for the fiscal first quarter of 2015.
Feb. 27: Third Season for 'House of Cards' on Netflix
Netflix (NFLX) roared to life last month after a blowout quarter, and a big reason that the premium video service will top 60 million global subscribers this quarter is its growing catalog of dynamic proprietary content. Its biggest original series so far has been "House of Cards," and the third season of the critically acclaimed show returns at the end of the month.
These productions don't come cheap, but they're paying off for Netflix. The revitalized dot-com darling revealed during last month's earnings call that original content is cheaper than the movies and TV shows that it's licensing when divided by actual viewing time. In other words, Netflix may pay up for proprietary content, but it's getting watched so much that it's a better bargain than existing content.
Motley Fool contributor Rick Munarriz owns shares of Netflix. The Motley Fool recommends Amazon.com, Coca-Cola and Netflix. The Motley Fool owns shares of Amazon.com and Netflix and has the following options: long January 2016 $37 calls on Coca-Cola and short January 2016 $37 puts on Coca-Cola. Try any of our Foolish newsletter services free for 30 days. Check out our free report on our favorite high-yielding dividend stocks.
