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Are You Looking For A New Job?

Written by William Cowie - One Comment

If so, you might be in a better position than you think. The Bureau of Labor Statistics, or BLS as it’s more commonly known, keeps track of more than just unemployment statistics. Any time geeks try to analyze something, they go into inordinate detail, which glazes over the eyes of everyone trying to understand what they say, until the audience finally cries, “No! Stop! Please … just bottom-line this for me.” Always happy to oblige, the geeks then distill everything down to a single number. You would think that would make the readers/hearers happy. You would be wrong, of course, because then the audience complains that the single number doesn’t say everything.

The BLS has more than your average population of geeks, because statistics are their reason for being. Many people, as you may know, are highly critical of the most common unemployment statistic which is blasted over the news waves every month. It doesn’t capture this, or it misstates that. Geeks are people, too, and their feelings get hurt, too. So they do what stats boffins usually do: They compensate by adding more statistics … and we’re the beneficiaries.

Other Job Data

Few people probably know or pay attention, but the BLS runs a set of statistics called JOLTS, for Job Openings and Labor Turnover Survey (and yes, you can just imagine the committee meetings that went into picking a name to make up a cute acronym like that).

I like the JOLTS data set, because it provides a depth and a color to employment statistics which the more commonly known Current Employment Statistics (CES) doesn’t capture. Because it’s a survey, it is hard to hang your hat on the absolute numbers offered for any point in time. However, because the methodology has been relatively consistent, the true value of the JOLTS is that you can track trends over time. That’s probably of more value than the absolute number on a particular date, anyway.

The two statistics I follow for my tracking of the economy are job opportunities and what they call quits, which is the number of people who quit voluntarily (as opposed to be being laid off or fired). The reason these two statistics are important is they both represent what I call the true measure of employment opportunities.

Here’s why: When you’re looking for a job and there aren’t any jobs available, your chances of getting a job are pretty slim. When your job options are limited, you are not easily going to leave it unless you have a sure thing lined up to replace it, are you?

On the other hand, as the number of job openings increases, so do your chances for getting the job you want. No guarantees, of course, but your odds improve because of the improving climate.

Therefore, those two statistics, (opportunities and quits) offer a different perspective on the state of employment in America. I usually combine them, for no reason other than (again) to try and create a single trendline.

Here’s what it looks like as of June, 2014 (the latest available).

Job opportunities and quits

From the chart, you can see the number of job opportunities is close to the pre-recession peak. However, many people have remarked that that doesn’t say much: Many of the posted openings are for entry-level jobs, or jobs which pay close to minimum wage. Fast-food joints and hospitality jobs make up the bulk of those jobs. You can’t raise a family on minimum wage, so you can’t count on those kinds of jobs to prosper, individually or as an economy.

In other words, you have to consider not just the number of jobs, but what they pay.

So I put on my glasses and went to the data. The Census Bureau’s data indeed seems to support the criticism. Take a look a median household income since the mid-eighties:

household income job

Here’s an interesting observation: Median household income took a dive shortly before each official recession, and lingers a year or two beyond the trough of the recession. Then it recovers. In the two economic cycles before the Great Recession, the period of prosperity (blue arrows) was longer than the period of pain (red arrows).

Not so with the Great Recession. The runup in income before its peak was shorter than any of the prior two cycles, and the slide is already longer than the preceding runup and any of the previous slides.

In other words, it would seem that pay levels have gone down. (In passing, this could explain why a relatively low rate of inflation feels so much more painful than the numbers imply.)

But, here’s the paradox: When you look at how many people quit voluntarily, you would expect a tough job market to discourage people from quitting on their own. However, the data says they are increasing in numbers — real people voting with their feet:

Job quits

Two trends are evident from the chart: since 2000, the general level of quits seems to be trending down. Because this recovery hasn’t run its course fully yet, it’s too early to say if this peak will end up being higher than either or both of the previous two peaks. (In case you were wondering, the quits number does not include retirements.)

There Is Good News

The second trend, though, is the one that should encourage you if you are thinking about changing jobs: The dotted line arrow shows how the number of quits has been steadily rising for the five years since the previous recession bottom of late 2009.

You all know the old truism, “The economy always goes up and down.” Few people know how to anticipate those swings and, more importantly, how to get the most value out of them. You can’t go by feelings or what the media tell you: They’re only interested in attracting eyeballs, and sensationalism always draws more of those than sober truth (to which the world’s geeks sadly sigh).

The charts above give you a general idea of job prospects. Now is as good a time as you’ll probably get in the next ten years to make a move.

It’s not going to be long before the next recession hits. There is always a recession (and a recovery) in your future. Those cycles usually last seven to ten years from one bottom to the next. The last bottom was in 2009, which means the next one is probably due between 2016 to 2019. Keep in mind that it takes about two years to reach the bottom from the peak.

History, then, suggests that the next peak will happen any time between 2014 and 2017.

You also know when times are tight, employers freeze hiring and focus on thinning the herd, so to speak. You may have another year or two to chase that opportunity you were eyeing.

Don’t wait.

Also, now is the time to cement your stature in your department or division. No matter what anybody says, layoffs are not always done only with seniority in mind: Employees with the most flexibility and competence always survive. Those willing to do tasks outside of their formal job description, with a helpful attitude, and the ones who increased their job skills.

In conclusion, the early years after the Great Recession, and what you read in the media, may have convinced you this is not a good time to make that change you’ve been contemplating for years. Conditions may not be perfect (when are they ever?) but they are probably as good as they’re going to be anytime in the next ten years.

What do you think people should do with this information?

Published on August 20th, 2014
Modified on August 18th, 2014 - One Comment
Filed under: Economy, Working

Buyer, be very wary

Written by Richard Barrington - 5 Comments

I recently spent the better part of an hour being tortured by bankers.

Given the contentiousness of the conversation, it is entirely possible that they saw themselves as being tortured by me. However, considering that they had my money and were the ones getting paid to be there, I see it the other way around.

I am not going to name names, of either personnel or the bank, because I do not believe the purpose of this kind of platform is to vent my personal beefs. Also, the point I really want to make is that what went on with my bank could go on with hundreds of other banks. Therefore, the purpose is not to call out one bank, but to caution people about what to watch out for with banks in general.

Life’s too short

A couple years ago, a bank that had kept me very happy for 25 years sold off its branches in my area. I did not like what the bank that took over my branch was offering, so I went bank shopping. I found one nearby which offered free checking and a 1 percent interest rate on a money market savings account. I took the bait.

A few months into the relationship, they slipped a monthly fee into the account. I was able to straighten that out with a phone call. Later though, I noticed that the interest rate on the money market account had declined. I knew bank rates were falling generally, so I did not think too much of this; but a few statements later, I noticed that the money market rate had fallen all the way to 0.03 percent.

These changes so soon after signing up were especially irksome. As important as it is to shop for good bank rates and cheap checking accounts, it is equally important to find consistency and trustworthiness. You should keep an eye on your accounts, but life is too short to constantly police what the bank is trying to do to you.

Counting on inertia

When I went into the bank to discuss this, it came out in the course of a conversation that ultimately involved an assistant manager and a manager that their money market rates are designed to steadily ratchet down over time. This goes beyond just offering a temporary promotional rate. Even after that expires, the rate you get will slowly decay, like so much radioactive material, until it approaches zero.

This means the bank is counting on customer inertia. They will offer an attractive rate to get your business, but they figure if they slowly diminish that rate down to nothing, you either won’t notice or won’t bother to change banks. This is an insultingly complacent attitude toward existing customers, but the bank only gets away with it because customers let them.

Not so full disclosure

I was not too happy about this, but I also did not want to change banks again if I could avoid it, so I wanted to see if I could find a viable solution in-house. I asked about CD rates, and it turned out they had a decent rate on a 4-year CD. I am concerned that interest rates will rise in the next four years, so I asked about the penalty for early withdrawal. “Ninety days,” said the branch manager.

That sounded pretty good, so I agreed to transfer most of my money market fund into a 4-year CD. I was immediately asked to sign a statement saying I had received a copy of the bank’s policies and disclosures. I said I had received no such thing. After repeatedly assuring me that those documents were “no big deal, just the type of thing you’ve seen over and over,” the assistant manager rather huffily provided me with two booklets, plus a certificate for the new CD I was going to open.

The certificate stated the interest rate, but not the penalty for early withdrawal. I asked where that was in writing. The manager started frantically flipping through the two booklets. Eventually, he found the relevant section. “There!” he said triumphantly. “The penalty for early withdrawal shall be 90 days’ worth of interest.” I peered at the surrounding print. “This applies to CDs of one year or less. I’m getting a four-year CD.” I looked down to the next box. The penalty for CDs of more than a year was 180 days.

I called the manager on this. He said, “Ooooohhh, my bad. You can still do the calculation and see if it’s still in your best interest.”

“No,” I replied. “I mean, I could, but I won’t. Don’t you get that asking someone to sign off on something they haven’t been shown is wrong? And that telling a customer completely inaccurate information is even worse? I’m out of here.”

And so I was. And a few days later, my money followed. So much for inertia.

Published on August 18th, 2014
Modified on August 15th, 2014 - 5 Comments
Filed under: Banking

Burglary Explained by Burglars

Written by FCN Staff - Leave a Comment

This guest post from our partner site Zing! was written by Tim Krebs, corporate communications manager for Protect America Home Security. Tim regularly contributes to the Protect America Home and Life Blog and covers a variety of homeowner-related topics. Protect America recently released its “Interview with a Burglar eBook, which visualizes some of the data found by researchers when surveying over 400 burglars.

If you haven’t fallen prey to burglary, you probably know someone who has. It’s shocking and disturbing how thieves can rip through homes without a care, completely disregarding others’ privacy and rights. But why? Why do criminals burglarize and how do they do it? A UNC Charlotte study entitled “Understanding Decisions to Burglarize from the Offender’s Perspective” interviewed over 400 seasoned burglars about their motivations and methods in an attempt to understand this crime. What they learned may surprise you, but how you can defend yourself could as well.

What Is the Most Common Motivator?

I’m guessing you’re not shocked that drugs and money are major motivators for burglary. 88% of interviewed criminals cited these as reasons. Of the 37% who reported money as their motivator, many admitted they needed it to buy drugs. Interestingly, a good portion of the respondents also reported searching homes for prescription drugs during burglaries.

Where Are They Coming From?

The answer? Everywhere. These results were all over the place. Some burglars reported traveling hundreds of miles (perhaps to avoid identification), while others said they would walk or drive a few blocks away. The distances varied from .5 to 250 miles. In our experience, it’s not unheard of to be burglarized by someone living in close proximity to you (and even by someone you know).

Are Burglars Planners?

Only some of them. The study found that most burglars are impulsive to some degree. Only 12% admitted that they commonly planned a break-in, and 41% claimed that most of their burglaries happened on a whim. Nearly half of those who did plan their crimes committed them within a day.

What Dissuades Burglars from Picking Certain Homes?

Active and busy neighborhoods with traffic and people walking by, for one. Other common reasons were home security systems and signs, outdoor cameras, surveillance and dogs inside. Have a combination of these things? That’s a great start. 60% of interviewed burglars said the presence of an alarm would completely dissuade them from a particular home, and it was a huge deterrent for the burglars who were heavy planners.

How Do They Do It?

It appears as if most burglars aren’t master lock-picks like you see in the movies. In fact, only one in eight thieves reported picking a lock or using a stolen key. Most enter through open doors and windows or by forcing them open. One thing that is similar to your silver-screen burglar: One in five criminals admitted to cutting telephone or alarm wires in advance.

How Can We Fight Back?

It’s a simple question with a complicated answer. In a word – proactivity. Burglars are counting on us to become complacent in our daily routines, and it’s easy to do. Does that mean we should lay awake at night clutching the panic button? Absolutely not. However, a few steps can help deter a burglar from paying you a visit.

Don’t Share

Remember when mom taught you to share? It’s not always a great idea, especially when it comes to social media. Constantly updating the world as to your whereabouts can actually be a really bad idea – especially if you’re going on vacation or will be gone for an extended period of time. There are plenty of documented cases where criminals used social media platforms like Facebook, Twitter and Instagram to learn that their victims were gone. Yes, check your privacy settings, but consider not posting so many details until you return.

Use Your TV

It’s not uncommon for homeowners to put lights on a timer to create the illusion of being home, but consider putting your TV on a timer as well. The blue glow emitted from a television (particularly at night) is a great deterrent. This glow is a very distinct sign that there is activity in your home.

Consider a Security System

There are plenty of options for any home, family and budget. Many are controllable and able to be monitored via your smartphone.

No More Hidden Keys

Hiding a spare key under a mat, a rock or anywhere around the home is a traditional but risky practice. It’s so widely known that many police departments adamantly recommend homeowners not try it. Burglars seek these out specifically, and we’re guessing many of them get lucky.

Be a Good Neighbor

The more allies you have in your neighborhood, the safer it becomes. It’s common sense, but a neighbor is much more likely to notice suspicious behavior around your home if they know you and they know what cars to associate with your home and family.

What do you think? What are some steps you’ve taken to protect your home? Let us know in the comments below!

More stories from Zing:

How to Maximize Your Summer on a Minimal Budget

Are Timeshares Worth the Money?

Get Around Town with These Taxi Apps

Published on August 15th, 2014
Modified on August 8th, 2014 - Leave a Comment
Filed under: House & Home, Identity Theft, Travel

New Businesses Foreordained to Failure

Written by Jeffrey Steele - One Comment

In this rapidly changing world, it’s comforting to know that some things never change. They are as immutable as the Rock of Gibraltar, as permanent as the sands of the Mojave, and as unalterable as the seven seas and stars above.

Want an example? Try new business failure rates. The percentage of new businesses that go belly up is high today, and likely was high shortly after Adam and Eve went after the low-hanging fruit. Depending on what statistics you believe, either nine of every ten new businesses these days expire in infancy, or 50 percent of them are gone within four years. Either way, as he shreds his business cards, the dazed failed entrepreneur is left with one question: Would he have been worse off hanging out his shingle or suffering a case of shingles?

Reasons for new business flameouts are numerous. Failure to understand their customers, the dearth of a unique selling proposition and inability to correctly surmise whether folks will buy the product or service are all factors in the premature demise of many new businesses. So are poor locations, lack of capital, ill-conceived business plans, bad marketing and finance strategies, and the unwillingness of key outside salespeople to regularly apply deodorant.

Failure Was in the Cards

When sizing up a start-up. venture capitalists tend to ask more questions than a three-year-old. Many of the questions concern the character of the entrepreneur at the helm of the company. There’s good reason these questions are asked.

Based on what I’ve seen, heard and read about new business failures, I have to believe that many of them are 100 percent foreseeable. All you have to do is probe the founder’s performance over time not as Mr. or Ms. Start-up Launcher but as John or Jane Q. Public.

If the entrepreneur launching the business is constantly battling personal credit card debt, is there any reason to expect his company will operate in the black? If the individual behind the launch doesn’t research savings accounts rates or best credit cards, could we expect her to conduct other forms of due diligence? If the pair with their names on the business plan love the high life, where’s the evidence they will show the fiscal restraint to maintain low business expenses?

Before You Sign

Let’s say a friend or relative comes to you with the request you invest in his or her fledgling company. Before eagerly grabbing for your checkbook and pen, it might be wise to size up the would-be entrepreneur’s everyday traits.

Be especially cautious if you see the following behaviors before the enterprise is established, which may lead to the following dismal results after launch.

Before: When driving anywhere, the aspiring entrepreneur races to red lights, then slams the brake pedal through the floorboards and skids 400 feet to a halt. After impatiently waiting out the light, he leaves other motorists in a gassy exhaust cloud, rocketing away from the corner like a latter-day A.J. Foyt.

After: This individual stands a good chance of being the future business owner who, after finding his company in Chapter 11 bankruptcy court, laments his inability to keep costs in check. “All those little nickel-and-dime expenses!” he will be heard to moan. “I just could never get a handle on ‘em!”

Before: This potential company founder has always had an unfortunate tendency to be too trusting, leading acquaintances, strangers, friends and family members to take advantage of her. That’s one reason her husband left her for a traveling carnival acrobat several years ago.

After: As she announces plans to shutter her company, the trusting failed owner bemoans her failure to check references and the accuracy of resumes. Had she only done so, she says, she never would have tabbed notorious check-kiting grifter “Eddie the Embezzler” to oversee accounting.

Before: This entrepreneurial hopeful has always insisted on the newest, largest and most dazzling consumer goods on his block. He’s the first to shell out for each new generation of big screen TV, trades in his Smart Phone each month as the latest updated version is introduced, and his chef’s quality backyard grill is substantial enough to have fed the 151st infantry.

After: In the wake of the big spender’s business being boarded up, a former customer will be overheard commenting, “Y’know, I think he had a pretty good company and I liked his product. But did he really need to advertise on the Super Bowl and take out retail space in a skyscraper? I mean, he owned a hot dog stand, for God’s sake.”

Before: This future business owner is glued to her mobile device 24 hours a day, taking it with her to bed and into the shower. But the place she’s most likely to be seen peering at it is behind the wheel while driving 45 to 80 miles an hour.

After: Sizing up the failure of her company, she will later admit she took her eye off the big picture, getting too involved in little inconsequential details. The months she spent in traction after auto accidents didn’t help either.

Published on August 13th, 2014 - One Comment
Filed under: Working

Tips to Save Money on Back-to-School Shopping

Written by Suba Iyer - One Comment

According to the National Retail Foundation’s 2014 Back-to-School Survey, the average family with children in grades K-12 will spend $669.28 on apparel, shoes, supplies and electronics. It is even higher for college students. It is about this time that parents start eyeing ads for back-to-school shopping. Here are some tips to help you save this year.

Take inventory: Take inventory of the items you already have. Look in basement bins, closets and junk drawers. Round up all the items that will be useful for school. Put them in a separate bin and compare it with the list of items you have to buy. You might be surprised by the number of items you already have. It is a good de-cluttering exercise too. If you find you won’t be using any of these items, donate them and get a receipt for use during tax season.

Form your own co-op: Buying in bulk always saves money, but you don’t need a 100-pack of pens even if your kids lose quite a few of them throughout the year. Talk to other parents who are shopping with the same list, buy in bulk and split the cost so you can bring the per-person cost down much lower than if you were to buy alone.

Shop during the sales tax holidayFifteen states have a sales tax holiday in August to help with back-to-school shopping. If you plan your purchases well, depending on your state’s sales tax amount, the savings could be significant.

Buy discounted gift cards: You might not be able to combine coupons, but you can certainly use a coupon with a gift card. Buy gift cards from giftcardgranny.com or similar discount gift card sites to stretch your dollar.

Use the right credit card: If you shop mostly at Target, the REDcard offers five percent cash back on purchases and an extra 30 days for return. Most small business cards offer five percent cash back on office supplies.

Use technology: Social media has become a great tool for shopping. Embrace the technology to save money instead of avoiding it. There are several ways to save with social media.

  • Use apps for organizing and comparison shopping. Load up your shopping list on Evernote or Cozi. As soon as you find a deal on one of the items, make a note of the store and the price. Apps like RedLaser will let you scan an item and look for the lowest prices, both online and locally. If you shop mostly at Walmart and don’t want to spend any time comparison shopping, use Walmart’s new tool SavingsCatcher. All you have to do is enter your Walmart receipt number. The tool then scans the circulars of top competitors and matches eligible items on your receipt. If there is a lower advertised price, you get the difference as a Walmart gift card.
  • Follow shops on Twitter to get coupons and sale alerts: Many companies send exclusive coupons and offers to their social media fans. Here are some stores to start with @Staples@OfficeDepot@Target and @Walmart.
  • Use Facebook pages for swaps and to find used items: There are now hundreds of local Facebook groups that work similar to Craigslist, only with fewer no-shows. You can buy, sell, or swap items from around your home with other local families.

Use student discounts: Don’t forget to factor in student discounts from stores that offer them when you do your comparison shopping.

Get money back: If you are shopping online, don’t forget to go through cash-back sites like ebates or fatwallet. You won’t pay a different price for going through them; you will get back a small percentage of what you pay. If you prefer to shop in-store, there is an app for that! Load up ibotta or Shopkick. Shopkick even gives you points (which you can redeem for gift cards) for just walking into stores like Target or Best Buy.

Shop multiple stores for loss leaders: If saving money is your main goal rather than saving time, don’t do all the shopping at one store. Every store will have a few loss leaders (things that are heavily discounted to less than their cost) to get you to the store. The hope is that once you get to the store you will buy more than just the loss leaders. This scheme might allow you to check things off your shopping list with significant savings.

Hit garage sales and thrift stores: Gently used clothing, backpacks and other supplies can be picked up for pennies on a dollar.

Use the store’s price-matching policyWalmartStaples (110 percent price-match guarantee), Office DepotOffice Max, and Target all offer price-matching. Many of these stores offer to price-match even online prices. Use an app like Retale app, which gives you access to all the store ads online. This will save you the trouble of carrying tons of paper ads around. Simply pull up the specific ad on your smartphone and show that to the cashier.

Have a craft party: Buying branded items can be a lot more expensive than generic supplies. Stores are stocking up on “Frozen” backpacks, lunch boxes, even notebooks and pencils. If your kids want themed supplies, ask them to get crafty. Have a craft party with their friends to convert generic items to themed items. You will save money; they will learn some skills.

Dollar stores: Finally, don’t forget dollar stores. They normally have incredible bargains for most back-to-school supplies.

What are your savvy money-saving tips for back-to-school shopping?

Published on August 11th, 2014
Modified on August 3rd, 2014 - One Comment
Filed under: Consumer, Family & Life, Frugality, Planning

Follow These Tips to Save Money When Renting a Car

Written by FCN Staff - One Comment

This post comes from Anthony Fontana at our partner site Zing!

It may not feel like it outside yet, but summer is just around the corner. That means it’s time to start planning vacations. Whether you’re flying somewhere or taking a long road trip, one thing’s for certain: You’re going to need a car at some point. If you’ve never rented a car, it may seem like a somewhat daunting task. Between determining what company to go through, what kind of car to get and many other factors, it can be complex. It doesn’t have to be though. Just follow the below steps and you’ll be in the front seat of your rental car in no time!

Avoid the Airport

Due to the convenience, airport locations can be as much as 30% or more expensive than off-airport locations. If you’re flying into an airport, you’re probably better off taking a cab, shuttle or bus to the rental location to lock in a better deal.

Look for Promotional Codes

A little bit of work can go a long way. Use websites such as PromotionalCodes.com and CouponWinner.com to knock off as much as 40%. Also, be sure to check with any frequent flyer programs and other organizations you have memberships with, such as AAA or Costco. You’d be surprised what discounts you can find.

Avoid Name Brands

Everyone has heard of big brands like Avis and Hertz. However, take advantage of websites such as CarRentals.com that do business with independent agencies. Due to lower operating costs, you can save as much as 30%.

Prepay

Some rental car companies offer discounts to travelers who prepay. If you’ve got the money upfront, why not take advantage of such discounts? You could save near 15%. Beware that if you prepay and then have to cancel the rental, you could be charged $50 or so.

Check the Difference Between Weekend and Weekly Rates

Weekend rates can be much lower than renting a car during the week. Selecting to return a car later in the afternoon could mean locking yourself into a weekend rate, saving you a chunk of change. Even if you return the car a couple hours before your selected return time, you can still get the weekend price reduction.

Don’t Buy Insurance You Don’t Need

Your regular insurance policy may cover car rentals as well. If not, you’ll often find that your credit card provides rental car insurance. Be sure to check beforehand to see what your options are before it’s time to pick up your car.

Renting a car doesn’t have to be difficult at all. All it takes is a little research, and you’ll be driving off in your rental car at a cheap price.

Does anyone out there have any additional tips when it comes to renting a car? Let us know in the comments below!

More stories from Zing:

How to Maximize Your Summer on a Minimal Budget

Are Timeshares Worth the Money?

Get Around Town with These Taxi Apps

Published on August 8th, 2014 - One Comment
Filed under: Automotive, Consumer, Travel

When Will You Own A Tesla?

Written by William Cowie - 10 Comments

What do you think about electric cars? That’s a question which evokes a surprisingly strong reaction. Few people, it seems, are indifferent to the topic of changing what we drive. Some think electric cars will help save the planet; others think they’re a do-gooder’s overpriced and overrated flavor of the month.

History

The automobile, one of the icons of the Industrial Revolution, has been with us for more than a hundred years. During that time, it has evolved to an astounding degree of complexity that surprises many. For instance, many family SUVs today perform better than the exotic Ferraris and Porsches of just a few decades ago, with improved safety, gas mileage and reliability (not to mention the on-board entertainment systems, air conditioning and power steering, brakes, and windows).

Ironically, though, electric cars were more popular than the gas-powered internal-combustion-engined cars we take for granted today. John D. Rockefeller and Henry Ford used their considerable wealth and influence to steer development in directions which made them the most money, and when gas stations outnumbered electric charging stations, the fate of the electric car was sealed.

In the previous century, all the major manufacturers dabbled with electric cars, especially after the first oil crisis of 1973, which saw dramatic hikes in the price of oil.

Technology

An electric motor has several significant performance advantages over an internal combustion engine. Electric motors last about ten times as long as an internal combustion engine, and weigh much, much less.

But where electric cars really outshine conventional automobiles is in their ability to accelerate. If you have ever tried to pull away from a stop light in your car, you might have noticed your engine struggling at low revolutions per minute (RPM), building up “steam” as the revs climb.

An electric motor, by contrast, has full power right from the start. That means an electric car doesn’t need a four- or five-speed transmission to keep the engine operating in its sweet spot. In fact, it doesn’t need any transmission at all (other than a switch between forward and reverse).

One of the most vivid examples of the electric car’s power advantage over conventional engines is a 1972 Datsun, which accelerates from 0-60 in under 2 seconds, performance generally reserved for exotic super cars costing well over a quarter of a million dollars.

Given the immense power advantages of an electric motor versus an internal combustion engine, one might wonder why high-performance cars haven’t all switched to electric motors.

So, Where Are All the Electric Cars?

What’s keeping electric cars from taking over and saving our planet? In a word, storage. Your conventional automobile stores its energy in a gas tank, while an electric car requires its batteries to store energy. That leads to the vast differences between the two types of vehicles:

  • You refill your standard car’s energy needs for the next 300 miles in a few minutes, but that kind of refill for an electric car can take all night.
  • There are hundreds of refilling stations for internal combustion engines, but far, far fewer for electric cars.
  • Then there’s also the vast difference in the weight needed to carry enough energy for a 300 mile range — so much so that most electric cars have to make do with shorter ranges.
  • Batteries and gas tanks fulfill the same function — storing energy for your next few trips, but a pack of batteries costs hundreds of times more than a single gas tank which holds the same amount of energy.

It’s that weight factor that led most manufacturers to focus on low-end models for their electric cars. Chevy’s Volt and Nissan’s Leaf are both compacts, as was the GM EV-1 of the 1990s.

gm ev-1 electric cars

The EV-1 met a controversial end: General Motors scrapped them all, despite the fact that many owners were willing to buy them at inflated prices and indemnify the auto giant from all liability.

In the years following the demise of the GM EV-1 and Honda EV Plus, green motoring shifted from all-electric vehicles to hybrids, which are powered by both electric and internal combustion engines.

Along Came Tesla

Elon Musk, the founder of Tesla Motors, grasped that electric motors have a much larger advantage over internal combustion engines when it comes to higher-end applications. It appears he thought a high-end electric car can compete much more effectively against its peers than an economy electric. So he first launched a sports car, and then he aimed straight at the heart of the high-end car market — the Mercedes-Benz S class.

The numbers seem to vindicate Mr. Musk. His Tesla S has outsold the Mercedes S-class in 2013 by more than 30 percent:

electric car sales 2013

How Does This Affect You?

At this point, you might say, “Well, that’s all nice and dandy if you can afford cars in that price bracket. I’m not in it, so why does this interest me at all?”

Here are a few reasons:

1. Mr. Musk is planning to move down-market as Tesla develops new models. His commitment is to capitalize more fully on the inherent advantages of electric cars with each successive model. That means the odds are good that Tesla’s lower-end models will outsell their peers making them the new standard.

2. Along the way, electric recharging stations will become more plentiful and the range from battery packs will grow. The world as we know it may well be in for a change.

3. The pressure on the electricity generation industry and the grid will grow. That growing stress may well result in power outages becoming more common … or further the growth of alternative energy sources.

4. We may be witnessing the birth of a new normal, a bit like the Model T created new ways of living, many of which we still take for granted. Because Tesla has opened their inventory of patents for anyone to use, it is entirely possible that the market may become flooded with electric cars which deliver on the full promise of the inherent technology — so it’s not Tesla the company that might change our lives, but the industry it helps to foster and grow.

Changes to the way we live never happen smoothly or without controversy and bumps in the road — and this change likely won’t be an exception to the rule either. However, the sales success of the Tesla S is opening more peoples’ eyes to the inherent superiority of the electric car. Forget the environment; we’re just talking as a car. As technology addresses the battery problem, electric cars will become more and more integrated into our lifestyles.

When that happens, the car you want to buy in the future will move into the sights of those designing electric cars. The question is: When they do that, will you be open to something that different?

Published on August 6th, 2014
Modified on August 7th, 2014 - 10 Comments
Filed under: Automotive

Are You Getting Ahead or Falling Behind?

Written by Richard Barrington - One Comment

People have long spoken of “haves” and “have-nots,” but perhaps never in modern times has the economy seemed so separated between those who seem to be getting ahead and those who are falling behind.

What complicates things is that appearances can be deceptive. The easy availability of debt can make a household believe it is living well when in fact it is working itself into trouble. Failure to put money toward certain responsibilities can also boost a lifestyle in the short term but leave you facing a big bill in the long term.

So, to help look past that kind of illusion, the following are nine questions that will help you determine whether you are getting ahead or falling behind:

  1. Does your income exceed your expenses? Credit is often so easy to obtain that your lifestyle really does not reflect whether you are getting ahead or falling behind. Don’t confuse getting ahead with simply getting the things that you want. If you are relying on debt to fuel your lifestyle, you are falling behind because you won’t be able to afford that lifestyle indefinitely.
  2. Have you identified how your expenses will grow over time? For the reasons discussed above, living within your means is an important first step toward getting ahead, but you need to anticipate that it may become more difficult as your expenses grow. Things like having kids, going back to school, or moving to a more expensive neighborhood may represent higher expenses on the horizon, as might any variable rate debt, from credit cards to adjustable-rate mortgages.
  3. Is your debt heading toward zero, or infinity? Debt is definitely one of those aspects of financial life in which people are usually either getting ahead or falling behind, with little middle ground in between. It is not enough to be slowly chipping away at debt, because interest expense is always trying to build it back up. Similarly, continually tapping into home equity means you just keep taking on more interest expense. If your debt is not on track to reach zero within the foreseeable future, you are not really getting ahead.
  4. Are you building your assets? Getting ahead means that the net value of your assets is growing. This includes home equity, savings, retirement funds, etc. Alternatively, people who are falling behind may have assets, but their value is diminishing because they are spending against that value.
  5. Do you save in advance for big ticket items? Certainly, you can borrow to make big purchases like a new car, but that means your subsequent income will be offset by the amount of your loan payments. In other words, you may acquire an asset now, but your budget going forward will be reduced. If you save up in advance, when you acquire the asset your budget going forward will be free and clear of such payments.
  6. How well do you maintain expensive resources? Speaking of cars, things like cars and homes will last much longer if you maintain them properly. In a sense, that type of maintenance helps you get ahead, because it prolongs the useful life of your assets. In contrast, if you use things roughly, you will face a shorter repair or replacement cycle that will cost you more in the long run.
  7. Are you taking care of your health? You can think of your health as similar to the type of maintenance mentioned above. If you are healthy, you will be able to work longer and earn more. If not, you face diminished earnings and higher healthcare expenses.
  8. Is your retirement saving on track to fund your needs? An important aspect of retirement planning is to try to fund your life style once you are no longer working. If you cannot do that, you are effectively falling behind because you face a drop-off in lifestyle in the future.
  9. Are you managing your career successfully? Working hard, keeping your skills up to date, and generally being valuable to your employer and in demand on the job market are all things that could affect your future earnings. If you are not putting a sincere effort into your career, you may be falling behind because it is eroding your future earning power.

Obviously, wealth and income have a lot to do with determining who society’s haves and have-nots are, and not everyone is in a position to control those things. However, how you manage what you do have also matters a great deal, because plenty of rich people have blown their fortunes, while people of modest means have managed to keep their finances on course. So, whether or not you are getting ahead or falling behind is not so much a question of what you have now as one of which direction your finances are heading.

Published on August 4th, 2014 - One Comment
Filed under: Debt Reduction, Frugality, Planning, Retirement, Saving & Investing, Working

20/20 Vision on 20-Something Investing

Written by Jeffrey Steele - One Comment

About 35 years ago, when I was new to the corporate world and fired with ambition, but not the least bit fired-up about staying with my big corporate employer, I had a series of bewildering conversations with colleagues, many even younger than I.

See, the place where I worked had long been the number one name in its field, and that status conferred a certain sense of stability. So when I talked with co-workers about what job they expected to jump to next, where they intended to go professionally, and what bold new career worlds they hoped to explore, many responded in very clear terms that they had no intention to go anywhere.

“There is such a feeling of security I get from having a job with an industry leader,” I was assured by one 21-year-old with nearly a half century of career ahead of her. “If I left this company and went someplace else, I’d be throwing away the security that I always, always would have a job.”

This comment would prove akin to someone in the port of Southampton in 1912 reporting, “Traveling across the Atlantic on most vessels is risky. So I’m setting sail on this one — this unsinkable Titanic!” But the irony in my co-worker’s pronouncement wouldn’t be fully evident until quite a bit later.

One to two decades after the preceding discussion, this household-name employer fumbled away its number one status in its industry and became an also-ran. Today, with another two decades of water under the bridge, the company has become a punch line. It is a shadow of its former self and frequently turns up on the lists of once-mighty corporate giants predicted to pass from the scene within the next 12 months. The department to which I was assigned was eliminated at least a generation ago, along with all the employees who once toiled by my side. Some of my ex-colleagues had been promoted out of that department by the time it was shuttered. But at last check, even the most diehard had moved on to new employment opportunities with companies that aren’t corporate cadavers.

Shred the security blanket

The example underscores the fact that seeming Rocks of Gibraltar can crumble, and other entities that appear ephemeral have a way of growing huge and powerful and lasting. More, spending your 20-something years counting on the world never changing will likely leave you very unhappy and may also consign you to the poorhouse.

That’s why I don’t recommend anyone in their 20s with decades ahead of them be conservative and security-minded. Too much can change over your lifetime; and if there’s any life stage where you want to take on some risk, it’s when you have the luxury of four decades to undo any damage your youthful moves inflict. Sure, study savings account rates and seek a high-yield savings account, but also research and invest in higher-risk, higher-return instruments.

Evidence that this wisdom hasn’t been absorbed by today’s generation of 20- and 30-somethings arrived recently in a survey by Fidelity Investments. It found that those born between 1978 and 1988, known as Generation Y or Millennials, appear to select cash as a favored long-term investment. That’s a concern because Fidelity found that the largest projected gap between what they will have and what they will need in retirement is experienced by Millennials.

The survey discovered Baby Boomers born from 1946 to 1964 are on track to reach 81 percent of their retirement income needs, by and large. That percentage falls to only 71 percent for Generation-Xers born from 1965 to 1977. Millennials are projected to have the largest income gap at 62 percent, Fidelity found.

Regardless of the generation, Americans aren’t saving enough, Fidelity learned. As a whole, 40 percent of those surveyed saved less than 6 percent of their work income, a number far lower than the 10 to 15 percent recommended by financial experts. But for Millennials, the percentage saving less than 6 percent isn’t 40 percent. It’s 51 percent.

The survey also revealed that younger people are taking far too cautious an approach to investing. Of Millennials surveyed, half said they had less than 50 percent of their investment assets in the stock market. In reporting the survey, Fidelity noted that the rule of thumb is for 30-year-olds to have up to 90 percent of their portfolios in the asset class of stocks.

Evidently, Millennials are eschewing the market. That despite the fact that if they’d checked, they’d notice the S&P 500 has gained 17 percent over the last 12 months, while most cash investment yields are south of one percent.

And that’s also despite the fact that if they’d been paying attention, they would have noticed that virtually every expert advises young people to be in the market. After all, they have the time horizon to weather the stock market’s ups and downs. What’s more, over time, inflation will chew up and spit out their meager earnings in CDs and similar cash investments.

Risk in pursuit of security

Perhaps I should restate my observation of above. Your 20-something years are not the time to forget the goal of security and stability; rather, it is the time to be embracing a reasonable degree of risk as a way to ultimately achieve security and stability.

Of course, it’s possible you might be afraid of the stock market, and consider cash much safer.

It’s also possible a traveler in May 1937, looking to avoid the fate of Titanic passengers years earlier, assured friends and family he’d chosen a much safer mode of trans-Atlantic travel — the Hindenburg.

Published on July 30th, 2014 - One Comment
Filed under: Planning, Retirement, Saving & Investing

Do You Know About This Movement?

Written by William Cowie - 5 Comments

Is there a new movement happening in your backyard that you are unaware of? A new reality television series has probably never been the impetus behind a major change in how we live, but could this one be different? The show in question is called “Tiny House Nation,” and it kicked off earlier this month on FYI, an A&E cable channel.

There is a growing interest in the movement, which goes by many names, like “small houses,” “micro-homes” and the ever more popular “tiny homes.” There are as many definitions of what a tiny home is as there are definers. Everyone agrees it’s smaller than about 700 square feet of living room, but most high-profile-tiny-home advocates celebrate postage stamp homes: less than 250 square feet.

Now, just about everyone who has left home and struck out on their own started with a small apartment not much bigger than the aforementioned 700 square feet. However, the general attitude always used to be: This is a place to be coming from, not going to. The fact that you could live there didn’t mean that you wanted to live there forever.

That attitude is starkly visible in the data. From these Census Bureau numbers, you can see how Americans have disdained smaller homes (orange line) for what has become known as “McMansions (blue line):

large vs small homes

The numbers clearly show that the tiny home movement hasn’t gone mainstream just quite yet. However, that might be changing. If you look at popular mainstream media, from NBC to Huffington Post, you’ll observe more and more discussion of the tiny home movement, usually with the breathless proclamation that this could be the next big thing. There is also, as you would expect, a growing chorus of blog sites dedicated to the phenomenon, from purely talk to help-for-pay.

Why?

What prompts the sudden interest in what most people gladly left behind?

1. Cost

According to the Census Bureau, the typical cost for the average house of over 2,000 square feet is well over $250,000. In contrast, the average cost of a tiny house is less than one tenth of that.

2. Debt

Mortgage debt is the number one form of debt in America today, and it amounts to over $13 trillion, or about $100,000 per household. In an era when the American Dream seems to be fading for many, getting out of debt is acquiring a compelling attraction, and what better way to get out of debt than to shift your thinking about your living quarters?

3. History

Until the 1950s, most houses averaged around 1,000 square feet. Tract homes were introduced in the ’50s and dropped the cost of housing considerably. That, and the availability of mortgage debt, soon enticed most Americans to increase the square footage they live in (and mow) to where it is well over 2,000 square feet, not counting garages.

The fact that millions lived quite well, for so long, in 1,000 square feet is beginning to resonate with an increasing portion of the population. If it’s been done before, it can be done again, only this time with better planning and gadgets.

4. Environmental Impact

More people are becoming aware of the burden unnecessarily large homes impose on the planet. The main item is energy consumption; but it extends to other items, too, like materials used in construction and water usage. The smaller the house, the smaller the footprint (literally) on the environment.

Why Hasn’t Tiny Housing Taken Off Yet?

The environment may appreciate a switch to tiny houses; but the environment, unfortunately, doesn’t have its own bureaucracy, banks and code. We live in a society built to accommodate the status quo, and any new innovation has to either comply with legacy requirements or wage an uphill battle to get taken seriously.

So, why is the tiny home movement not being taken seriously yet?

There’s no pressure

During the Great Recession, a few more people were motivated to scale down their housing than usual. You can see both the blue and orange lines in the chart above leveling out during that dark period. However, as soon as the economy recovered, America returned to its McMansion ways and continued building fewer small homes and more mini-castles.

Cars didn’t become more fuel-efficient until the oil crisis of the ’70s, and it seems the tiny home movement will need some external event to give it a significant boost in awareness and popularity.

Ignorance

Most people are simply not aware how advances in architectural planning have enabled us to live comfortably in a smaller footprint. Most of the tiny homes featured in TV and magazine articles are extreme: 200 square feet or less. That might cause many to nod in agreement; but few would change their habitat.

However, in order to make those microscopic homes habitable, owners and architects have come up with ingenious solutions. Simply by applying those inventions, it would be possible to make a 1,000 square foot home as livable as a McMansion. However, until the majority of home builders and buyers become aware of these innovations, their widespread adoption will languish.

Bureaucratic hurdles

Any government is a reflection of its people and their culture. In a culture of growing homes, it is not surprising to find that local governments and banks both tend to associate small homes with poverty and blight. As a consequence, when you attempt to get permission to build your little 300 sq. ft. marvel of architectural ingenuity, you’re likely to run into a bureaucratic brick wall.

The way most tiny home builders are getting around this hurdle at the moment is to build their homes on trailers. That makes a home a non-permanent structure, which doesn’t need to comply with any codes.

That immediately raises the question: Why not simply live a motor home or travel trailer, then? Most RVs are designed for temporary vacation types of living. Their layouts are not designed with permanent living in mind, and they choose construction materials for weight saving, not durability. But, more than that, a motor home simply doesn’t “look like home.”

Conclusion

Reading about the tiny home movement and watching the TV show is, at the very least, entertaining and educational. If you are really serious about cutting your expenses and getting rid of debt, a tiny home is a doable alternative. That’s not to say it’s an approach without sacrifices and compromises.

But what good things in life are?

What do you think? Is this just an oddity, or a portend of something as profound as compact imported automobiles turned out to be?

Published on July 28th, 2014
Modified on July 25th, 2014 - 5 Comments
Filed under: House & Home

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