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Should You Spend Your Money or Your Time?

Written by Suba Iyer - Leave a Comment

We’ve all heard that time is money. It can mean various things to various people.

  • Over time, if you save and invest, you will have more money.
  • If you waste time, the money you earn will be less.
  • The clock is ticking, and every moment you aren’t earning is money lost. Every moment you aren’t enjoying life is life forever lost.

If we spend our time instead of our money, we miss other opportunities. If we spend our money instead of our time, we lose the money.

When we first start out in life, we often don’t have a lot of money and don’t have much choice other than to spend the time. After we have been at it for a while, however, we often do have a choice. We can decide when we want to do something ourselves and when we want to spend the money to hire someone.

But how do people decide whether to spend money or time?

Spend time when you don’t have the money

It is a pretty easy choice if you don’t have the money. Either you do without or you do it yourself. It isn’t necessarily a bad thing to be forced to try new tasks. You may find that you actually enjoy whatever it is you feel you have to get done. There are so many resources available now that make it easy to figure out how to do things: You Tube videos abound with people showing you how to do everything from sewing a seam to building a house; Internet searches yield many options on things others have tried and used to get a job done; and of course, the library and mentors are also available to assist.

Spend time when you want to learn a new skill or have a new experience

People are curious. We like to explore and try new things — just to see if we can. You don’t have to limit yourself to trying new fun things like skydiving or surfing; you can find satisfaction in learning how to change a toilet flapper valve or refinishing a piece of furniture.

I think we are the sum of our biology and our experiences in life. Learning new things adds to our individuality and uniqueness (and sometimes our resume).

Spend time when you want to teach someone else a new skill

This one is especially true with your children or grandchildren. Teaching someone else a skill or concept can be very enriching for both of you. You get the thrill of seeing someone else benefit from your knowledge and experience as well as the joy of building a deeper relationship. They get the benefit of a hands-on mentor, showing and telling them how to do something and guiding them step by step to independently performing the task.

Spend time when you enjoy doing the thing in question

Why pay someone else to do the things you enjoy? Life should be filled with enjoyable experiences and many of the things we need to do will fit that category. If you enjoy the outdoors and like exercise, perhaps you should cut your own lawn or do your own gardening. If you like puzzles, fixing a broken item may be a nice little puzzle for you to solve.

Spend money when it is more profitable for you to do something other than the task at hand

Business 101 advice is to hire someone to do the things that you don’t do well and that take your time away from more productive tasks (when your business reaches the point where you can afford to do so). The same can apply to your personal life: If your life experience benefits more from running the local charity drive, then go ahead and free up your time to do so by hiring a house cleaner or lawn service.

Spend money when you don’t have the expertise and aren’t interested to acquire it

Some things just never appeal to us. We avoid trying to learn about them. If you have the money and are presented with such a task, consider delegating it to someone for pay. I’ve never been very interested in learning how to work on a car engine or install new shocks and the like. I don’t really want the expertise. I can’t imagine needing it very frequently, and it would take me a long time to learn. Since I have the money, I farm out that kind of work to others that are trained for it.

Spend money if safety is an issue if you did the task

I would not cut down a large tree close to my house. Climbing up to chop off the limbs would be dangerous for both me and my house. I would not represent myself in a lawsuit. Doing so could be dangerous to my money and my freedom.

How do you decide when to hire it out to get it done and when to do it yourself?

Published on September 8th, 2014 - Leave a Comment
Filed under: Consumer, Frugality, Productivity

Fannie Mae is Ending the Home Path Program

Written by FCN Staff - Leave a Comment

This post comes from Mike Nickele at our partner site Zing!

I’ve got some good news and some bad news on the housing front. First, the good news: The market is ticking up and the inventory of foreclosed homes is dwindling. The bad news: For just that reason, Fannie Mae is ending its HomePath program.

Fannie Mae’s HomePath program helps buyers of foreclosed properties get cost-effective mortgages, including cash for repairs and remodeling on homes owned by Fannie Mae. The HomePath program currently offers a number of incentives for home buyers: You can put down as little as 5%, there’s no mortgage insurance requirement, and you don’t have to get an appraisal.

Also to end is Fannie’s HomePath Renovation Mortgage, which allows buyers to borrow extra cash – up to 35% of the purchase price, with a maximum of $35,000 – for light to moderate repairs and updates to a foreclosed property.

You can check out the HomePath program at HomePath.com, but be forewarned that it all comes to an end on October 6, 2014 – so you better act fast if you still want to get in on it!

But don’t be forlorn, as Fannie’s making up for these program withdrawals with a number of financing flexibilities. Fannie Mae will allow interested-party contributions (contributions from the seller, the lender or anyone who stands to benefit from the sale) of up to 6% of the selling price, up from 3%. And, it also now allows properties with Fannie Mae-imposed resale restrictions – restrictions which require a length of time before reselling the property – to qualify for Fannie Mae-backed mortgages.

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 September 5th, 2014 - Leave a Comment
Filed under: Mortgages

Is Burger King Guilty of Tax Inversion?

Written by William Cowie - 8 Comments

“Burger King abdicates US citizenship,” shouted the normally staid BBC. Burger King seems to be vilified everywhere for its plan to merge with Tim Hortons, the Canadian breakfast giant. Why? This thing called tax inversion.

The goal of this post is simply to break through the rhetoric and lay out the basic issues of the deal.

Tax inversion: what they say

The way critics present it, it’s nothing less than outright treason. Pres. Obama, speaking at a college in Los Angeles, called them “corporate deserters … technically renouncing their U.S. citizenship … fleeing the country to get out of paying their fair share of taxes.” Ouch. Sen. Sherrod Brown of Ohio went further, urging a boycott of Burger King in favor of competitors like Wendy’s and White Castle, because they “… haven’t abandoned their country or customers.”

In other words, corporations guilty of this thing called tax inversion are not going to get ticker tape parades in their honor anytime soon. Congress has responded to the practice with legislation likened to an “iron curtain,” keeping those corporations in the USA by legislative force. In 2004, they passed a law which stopped the growing trend of tax inversions in its tracks, as this chart from Bloomberg clearly shows. However, the law had to leave an opening for genuine mergers, and this is the opening an increasing number of companies have jumped through in the past two or three years. So, they tightened up those iron curtain laws again in 2012.

And now this. First it was the highly publicized Pfizer/AstraZeneca merger. Congress, frustrated at the impertinence of these corporate traitors, is throwing up yet another iron curtain: laws with inflammatory titles like the Stop Corporate Inversions Act and the No Federal Contracts for Corporate Deserters Act.

On the other side of the debate, you have capitalist apologists who think it’s the divine right of every corporation to pursue the almighty dollar, the heck with money-grubbing politicos and bureaucrats.

What exactly is tax inversion?

Is tax inversion really an American corporation fleeing its country like the draft dodgers of a few decades ago, and abandoning its employees and customers as the good senator from Ohio called it? Is a company firing all its U.S. staff, packing everything in a U-Haul convoy, and hightailing it across the border to set up shop all afresh, all so they don’t have to pay a nickel of taxes while they reap the benefits of doing business in America?

The truth is far more mundane. Tax inverting corporations don’t leave, they don’t lay people off, they don’t move offices, and they can’t renounce any citizenship because they don’t have such a thing as a citizenship. So, in reality, nothing happens, nobody abandons anybody.

Really? Yes. The central issue surrounding tax inversion is America’s quirky requirement that corporations headquartered in America pay tax on money they earn in other countries.

Why is that quirky? Recognizing that we all live in a global village, most countries have tax codes which tax corporations only for income earned in that country. In other words, they don’t tax income earned in other countries. America is different. We tax corporations on all income they make everywhere. We give them a credit for the income taxes they pay in Canada, Ireland, or wherever — but, in total, they still have to pay the American corporate income tax rate on all worldwide income, no matter where they earned the income.

An example

Imagine two identical companies, Canadian Tim and American King. Both earn $1 million in profits. Therefore:

  • American King pays $350,000 in income tax, while
  • Canadian Tim only pays $250,000, because Canada’s corporate tax rate is a bit lower.

In total, both companies pay $600,000 in taxes to their respective governments. Now let’s say the two want to merge. There are two ways they can do it:

Option 1: Canadian Tim buys American King. Their new tax bill will look like this:

  • Pay $250,000 to Canada on its Canadian operations.
  • Pay $350,000 to the IRS on its U.S. operations.

The total comes to $600,000 – no different than it was before, when the two companies were separate.

Option 2: American King buys Canadian Tim. Now their new tax bill will grow:

  • Pay $250,000 to the Canadian tax authorities on Canadian operations (as before)
  • Pay $350,000 to the IRS on American operations (as before)
  • Pay $100,000 to the IRS on Canadian profits (the difference between the U.S. 35 percent and the Canadian 25 percent)

So, the Option 2 total tax adds up to $700,000 – for the exact same operations in the exact same countries.

The “Super Tax”

That last $100,000 in Option 2 above, then, amounts to a “super tax” on non-American earnings for corporations headquartered in America.

In the example, the new merged entity’s tax bills stay the same as before the merger. There are no savings, reductions, escapes or dodges. All there is, is no increase.

And that, as you probably guessed from the example, is what’s about to happen with the Tim Hortons / Burger King merger: Burger King’s 70 percent owner is going to create an entirely new corporation in Canada. That corporation (as yet unnamed) will purchase both Burger King and Tim Hortons.

After the merger, Tim Hortons will continue its Canadian dominance (it’s bigger than McDonald’s there, despite being primarily a breakfast destination). Burger King will continue to operate from its Miami headquarters, employ the same American workers, serve the same American customers and pay the same American taxes it paid until now. It is not fleeing the country, it’s not dodging any of the taxes it has been paying on its American operations, and it’s not doing anything illegal or even “wrong.”

Its only crime is that the new entity will avoid paying the American “super tax” on its Tim Hortons earnings. Lost in the rhetoric is the fact that Tim Hortons has twice the revenues and earnings of Burger King. They’re a dominant Canadian institution, like Starbucks and McDonald’s are here in America. Why would America feel cheated that those earnings are not going to be “super taxed” in America? Does it make sense to you now that they’re structuring the merger to have the new HQ in Canada?

Unfortunately, because the super tax compelled them to base the company in Canada (all the major players are American), it doesn’t take a rocket scientist to guess that all Burger King’s existing foreign operations will be moved to Canada as well. Because of that, the USA will lose the super tax it received on BK’s existing foreign operations in the past.

Last point on the merger: Remember those new laws Congress is furiously working on now? The Burger King / Tim Hortons merger would still be legal, because of how big Tim Hortons is. The fact remains: Any legislation has to allow for legitimate business combinations across borders.

Is there a solution?

That losing of the super tax on foreign operations, that is the main conflict between corporations and government. Pfizer’s proposed purchase of British drugmaker AstraZeneca could have led to a significant reduction in the $4 billion of income taxes Pfizer currently pays (25 percent of their pretax income). When compared, the less than $90 million Burger King pays is a pittance.

In theory, all Congress has to do is lower the corporate tax rate to something in line with most other countries, which would seem to be in the 20 to 25 percent neighborhood. Corporate income tax at present makes up only about 11 percent of U.S. income taxes:

US Tax revenue by source 2013
U.S. Tax revenues, 2012 (in $’ billion)

Of the corporate tax revenues, the super tax probably doesn’t add up to more than around 1 to 2 percent. (It’s only on foreign earnings, after all.) However, it is well known that both parties in Congress have hardened their ideological battle lines, so the odds of a sensible tax code change are slim.

The goal of this post was to lay out the issues behind the proposed Burger King/Tim Hortons merger in order that you can judge for yourself how much is rhetoric. Then, when the next tax inversion deal is announced or rumored, you’ll be able to figure out what’s really happening.

Moral of the story?

When you look for companies to invest in, look for those which derive a growing portion of their income from overseas. It’s only a matter of time before they escape the “super tax,” either through tax reform or finding a way to restructure the business in a way that removes the “super tax” burden.

What do you think of the “super tax”?

Published on September 3rd, 2014
Modified on September 9th, 2014 - 8 Comments
Filed under: Saving & Investing, Taxes

Saving for Retirement: How to Avoid the Roads to Ruin

Written by Richard Barrington - Leave a Comment

They say there are many paths to financial success, but if you accept the idea that these are two-way streets, that means there are also many paths to financial ruin.

Maybe my view is skewed by the fact that people tend to come to me for financial advice once they are already in serious trouble. Then again, my interactions may just be representative of the national condition. A recent study by the Urban Institute estimated that some 77 million Americans have outstanding debt which has been reported to a collection agency, with an average amount owed of $5,200.

That amount owed isn’t even the real problem. The real problem is that if they are not keeping up with their bills, these people almost certainly are not saving enough for retirement. That will lead to even bigger problems later on.

How do these people get into such bad financial condition? There are many pathways, but some you see taken over and over. Examining how people got into financial difficulty should not be an exercise in criticism or pity; it should be a learning experience about the nature of financial risk.

Roads to ruin

Here are some of the roads to financial ruin that seem all-too-frequently traveled:

  1. Overspending. This has classically been attributed to a keeping-up-with-the-Joneses mentality, but there may be an even more sinister form of peer pressure at work here. As Americans sink further and further into debt, it has become commonplace to know someone with tens of thousands of dollars in credit card balances. That can make a person feel better if he only owes a few thousand. Do not measure yourself by today’s debt standards; those standards are dangerously low.
  2. Job setbacks. The economy in recent years has made periods of unemployment or underemployment commonplace, and the mistake I see most often is people trying to carry on their previous lifestyle, in the belief the setback is only temporary. A drop in pay may not be temporary, and even if it is, why get yourself into a debt hole in the meantime?
  3. Inadequate retirement savings. The problem is that retirement savings is easy to ignore, right up to the point where you run out of money. This is just one of those things that requires willpower and a long-term outlook — and a no-excuses mentality.
  4. An investment setback in retirement. The saddest cases I’ve seen have been people who thought they had done all the right things, and made it to retirement with a decent nest egg only to suddenly suffer major investment losses. Bad luck can happen to anyone, but there seems to be a desire among people accustomed to making a good living to still to be getting ahead after they retire. This can lead to excessive risk-taking and, if it backfires, it is tough to recover from in retirement.

It would be all too easy to look at these as examples of individual mistakes that people have made, except that the same type of mistakes occur so frequently that it might be more instructive to look at each of these as a form of financial risk.

Omnipresent risk

You can probably cite additional examples of ways people you have known have found themselves facing financial ruin, and the fault is often not their own. That’s the most sobering thing about this. The number of setbacks possible on the road to retirement is a reminder of just how multifaceted and omnipresent risk is.

In turn, that realization puts retirement planning in perspective. We generate our assumptions, we crunch our numbers, and we spit out detailed results. That detail can give this all the illusion of precision, but it is an illusion. It is not an exact science, and if any one of those assumptions is off by a little bit, the results will be very different when you project them out thirty years or so.

That doesn’t mean retirement planning is futile. It just has to be approached as a hands-on process where you take nothing for granted. The omnipresence of risk means four things:

  1. Regularly check your assumptions. There are a lot of moving parts to retirement planning, so keeping them in line is a constant effort.
  2. Don’t spend your lead. If your investment portfolio gets a little ahead of where you thought it would be, don’t view it as a bonus to be spent. View it as a cushion against the next setback.
  3. Don’t take a contribution holiday. Several big-time pension plans did this in the 1990s, with disastrous results. Just because investment results have been good doesn’t mean you should ease back on your retirement plan contributions.
  4. Retirement is not the finish line. If you make it to retirement with your savings in good shape, congratulations, but remember you have years of work still to do.

Sadly, there are many roads to financial ruin, but avoiding complacency is your best approach to staying off those roads.

Published on September 1st, 2014
Modified on August 28th, 2014 - Leave a Comment
Filed under: Planning, Retirement, Saving & Investing

Moving ASAP? Follow These Steps!

Written by FCN Staff - 2 Comments

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

Is there anything worse than moving? Before you call me lazy, I’m not talking about moving from the couch to the refrigerator for a beverage. I’m talking about moving from one home to another. It’s a pain, right? Not only do you have to find a new place to live, you’ve got to deal with switching addresses, packing and finding a new favorite pizza joint – to name a few.

One thing that many people have going for them when it comes to moving is time. Time to find a new home. Time to pack and make sure nothing important is left behind. Time to plan.

Every situation is different though. What happens when time is minimal? Whether it’s relocating to take a new job that begins ASAP or moving to get a fresh start, sometimes there isn’t a whole lot of time. What do you do when this happens? In my experience, I curl up in a ball, lay on the couch and hope everything will magically come together. Note: Don’t follow after me. It doesn’t work.

Instead, follow these steps:

Take What You Need

This means get rid of the junk. Start with clothes. Everyone has clothes they haven’t worn in years. Donate them. A short peek into my room would reveal college books I haven’t looked at since … well … college. The next time I move, I can assure you they will be first on my list of things to get rid of. A general rule of thumb is if you have to think about whether or not to keep something, you probably don’t need it.

Save Money by Wrapping Breakables in Clothing

You don’t have time to go out and purchase stuff like wrapping paper at this point. Good thing you’ve got t-shirts you can use to wrap your favorite coffee mug and picture frame. This can also go a long way when it comes to budgeting for gas, food or an overnight stay if your new location is far away.

Label Boxes

You don’t want to move into your new home with 50 boxes full of mysteries. Even though time is of the essence, it won’t take long to label boxes with tags like “Main Bedroom,” “Living Room,” “Bathroom,” etc.

Change Your Address

During my last move, I completely forgot to change my address. When it came time to get Internet, gas and electric at my new residence, it was brought to my attention that I had a previous balance to pay because I hadn’t cancelled anything at my old place. Don’t forget to contact your bank, magazine subscriptions and any other services that may be registered at your old address.

Minimize Grocery Shopping

If you know you’ve got two weeks before you have to move, don’t go pick up enough groceries to last a month. The less you have to bring with you, the better.

Don’t Be Afraid to Ask for Help

That’s what friends and family are for. Whether it’s helping you pack, cleaning up your old home or anything else you need, I’ve found that beer and pizza are motivating factors. If you need more help, consider hiring movers. With a limited amount of time, hiring a company may be your best bet.

When you’ve got to move quickly, you don’t want to wait around. Be proactive. Use your free time to pack, clean or plan. You’ll be thankful you did in the long run.

Has anyone been forced to move with a limited amount of time to plan? Do you have any additional pointers? 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 29th, 2014
Modified on August 8th, 2014 - 2 Comments
Filed under: Family & Life, House & Home, Planning, Real Estate, Working

I Was the Victim of a Financial Bully

Written by Jeffrey Steele - 3 Comments

These days, there’s a lot of attention being focused on the subject of bullying. This emphasis is well justified. The whole bullying experience tends to be destructive and wreak long-term consequences. As one who was, at times, both bullied and a bully as a kid, I can testify that while I have almost repressed the former experience, I’ll never be able to live down the latter. I join the chorus of those arguing the more we can reduce bullying, the better off society will be.

It’s fitting, too, that we are finally getting around to acknowledging there is such a thing as financial bullying, just a couple eons after the first spouse was castigated for shelling out too many beaver pelts for a bushel of corn.

The typical financial bully, it seems to me, falls into a particular subcategory of humankind: the garden variety control freak. Financial bullies closely monitor credit cards, seize their significant others’ paychecks, and dictate the budgetary terms by which their partners will abide, among other controlling acts. If that’s not a perfect descriptor of Joe or Jane Control Meister, what is?

To the list of signs that you are the victim of financial bullying, I will add another. It is one with which I’m woefully familiar. Yes, I too was the target of a financial bully. Actually, I was the victim of — not one, but several — big bad bullies who liked nothing more than pushing me around. I’ll get into that tawdry tale later.

First, let’s examine some of the telltale signs of financial bullying.

You’re a bully if . . .

Start the laundry list of financial bullying with the issue of allowances. The act of putting someone on an allowance is fine if you are a parent, but can’t be justified if you are a spouse. What’s next, promising an offending bed partner a visit by the Tooth Fairy if he shows responsibility? It is far better, say experts, to ensure that both spouses are on allowances. That’s called living within a budget.

Speaking of budgets, another act of bullying occurs when the bully freaks over his or her significant other slipping up and going over budget on occasion. A simple reminder that both partners are expected to live up to the terms of the agreed-to budget is sufficient, the experts report. There is no need to scream that the other party ought to be caged in the same cell with Bernie Madoff.

There are few more obvious scarlet letters attesting to a bully’s true nature than the act of trying to remove credit cards from a spouse’s possession. If too many purchases are going to plastic, it’s time to set boundaries on what purchases should or shouldn’t be put on credit cards. Taking away plastic could be the bully’s gateway to seizing the spouse’s car keys, denying him or her TV privileges and eventually sending the other to bed without supper.

Dividing spare cash inequitably is yet one more sign of a bullying individual. If there is a little extra money at the end of a month, each spouse should claim half. No one spouse should abscond with the lion’s share of the dough. For instance, it’s a clear sign of bullying if a husband takes sufficient amounts of the extra cash to buy himself a Rolex watch while allowing his wife just enough for a PEZ dispenser.

One more sign

I’ve scoured the lists of bullying monetary behaviors but have not found one list that cites what I believe to be an obvious signpost of a dictatorial bully. And this particular action is one I’d like to add to the list.

The action is bullying your partner by calling him a miserly, penny-pinching cheapskate.

It is this bullying act of which I’ve been victim. Just because I purchased the relationship’s first 15 dinners out on two-for-one coupons, insisted on entering movie theaters through fire escapes, forgot to remove price tags from holiday gifts bought at Bubba’s Bargain Basement and spent entire romantic getaways searching the Web for zero percent APR credit cards, there’s no excuse for me to come under a barrage of bullying bombast.

As bruised and battered as I have been by the bullying, I take pride in the fact that I placed the money saved in the best savings account I could find. With interest, I now have enough to graciously treat my date to movies, as long as they aren’t at theaters showing first-run films.

If your partner is a pushy, browbeating bruiser on money matters, try getting him or her to resolve money issues by talking them out sensibly and calmly.

If you can pull that off, you will have earned from friends a complimentary exhortation: “Bully for you!”

Published on August 27th, 2014
Modified on August 26th, 2014 - 3 Comments
Filed under: Family & Life

Stretch Your Dollar with Fabulous Freebies

Written by Suba Iyer - One Comment

After having my baby, I quit my job to stay home with her and money has been tight. Grocery couponing doesn’t work well for our family. So to stretch our dollars further without spending too much time and effort, I started paying attention to freebies around our everyday activities. I already wrote about free summer activities for the whole family. This post will extend it further and explore ways to find free stuff for kids, free repairs, services and skills.

Free services

  • Learn more about personal finance, investing or wealth planning: You read this site, which is a great start. If you are more of a classroom-learning sort of person, check out your library, local banks and credit unions. They offer great financial literacy classes. Some might even offer one-on-one investing advice. Just be wary of a sales pitch that is thinly veiled as investing advice.
  • Free résumé advice and job coaching: The Department of Labor has a plethora of free resources for job seekers. Their one-stop career center will review your résumé, offer job coaching, new skills training, counseling on how to pay for school if you are considering that option, and will even help with salary negotiation. Find a center close to you here: CareerOneStop.
  • Free jewelry cleaning: If you have always paid for jewelry cleaning, you might want to check out stores like Fred Meyer Jewelers and Kay Jewelers. They will clean your entire collection for free while you wait; it doesn’t matter where you bought the jewelry.
  • Eyeglass adjustments: Do your glasses fit properly? Many vision centers like LensCrafters or Visionworks will do an adjustment and cleaning for free.
  • Free mini hair-do and a conditioner: If you have a JCPenney Dry Bar Xpress near you, you can get a mini hair-do and a free mini hair spray or conditioner just for checking them out.
  • Free facials: The Origin store offers free mini-facials, including exfoliation and brightening services.

Free kids stuff

  • Free Disney movies: If you want to keep your kids occupied, the Disney Movies Anywhere app will let you play your favorite Disney movie on any mobile device.
  • Free food for kids: Want to feed your kids for free on your day out in the city? The KidsMealDeals app will keep you updated on no-cost bites near you.
  • Free ticket for circus: If you sign up for the Baby’s First Circus program, you will receive a voucher that can be exchanged for a circus ticket to any Ringling Bros. and Barnum & Bailey performance.
  • Free Broadway ticket: Catching a Broadway show? Take your kids for free with one adult ticket purchase. Check out the Kids Night on Broadway for details on how to get your free ticket.
  • Imagination Library: Dolly Parton’s Imagination Library will mail, for free, one age-appropriate book a month to kids from infancy to age five. Check out their website to see if your neighborhood is registered; if not, you can help get one started.

Free classes and knowledge

  • Free cooking classes: William-Sonoma offers a wide variety of cooking and hosting classes at their store; as a bonus, you get 10 percent off the merchandise used in the class if you purchase it on the same day. You do not have to buy anything from the store to attend.
  • Free yoga classes: Lululemon stores offers complimentary yoga classes every week at their store. You can find one closest to you here.
  • Free beauty clinics: Sephora offers classes on picking the right makeup for your skin type and creating a skin-care routine. Some stores even offer complimentary makeup for special occasions if you buy $50 worth of merchandise.
  • Free outdoor knowledge: Want to know how to fix a flat tire on your bike or how to prepare for your mountain-climbing adventure? Check out your local REI store. They offer clinics on everything outdoors including wilderness medicine and photography.
  • Free online courses: Want to take classes at MIT? Several prestigious universities are now offering their classes online.

Miscellaneous free stuff

Of course, there are plenty of other additional free resources like local, state and national parks, museums around the country, seasonal free offers and giveaways that are common knowledge, so I didn’t make mention of them in this post.

What are your favorite freebies? Can you recommend any additional resources for other readers?

Published on August 25th, 2014
Modified on August 20th, 2014 - One Comment
Filed under: Consumer, Frugality

A Home Warranty Can Be a Great Safety Net for First-Time Home Buyers

Written by FCN Staff - 2 Comments

This post comes from Mike Nickele at our partner site Zing!

First-time home buyers have enough to worry about, like finding the right house for the right price, coming up with a sensible down payment and securing a mortgage. After putting down a hefty sum for the purchase, many first-timers may not have the extra cash on hand for major fails like the furnace, the air conditioner or kitchen and laundry appliances; a home warranty can be a good fix. What’s a home warranty? How does it work and what does it cover? Let’s find out!

What Is a Home Warranty?

Let’s start with the basics. A home warranty is a home protection plan that helps cover any unexpected repairs. And, since many first-time buyers may not have a lot of experience maintaining a home, it’s a pretty good idea.

How Does a Home Warranty Work?

If/when something breaks down, you call your home warranty provider and make a report. They’ll get in touch with a third-party contractor with whom they have a business arrangement, and that contractor will contact you to schedule an appointment. The repair or replacement will be paid for by the warranty provider, however, you will have to pay a trade service fee that can range from $75 to $125.

What Does a Home Warranty Cover?

Each warranty and/or warranty provider is different, but typically these things are covered:

  • Systems: air conditioning, heating, electrical, plumbing, water heater, garbage disposal, central vacuum
  • Appliances: refrigerators, dishwashers, dryers, washers, range/oven/cooktop, built-in microwave oven, ice maker, trash compactor, garage door opener, built-in processors

How Much Does a Home Warranty Cost?

Sounds like another expense, but it can be well worth the price, which will range from about $200–$600 per year, depending on how comprehensive the policy is.

How Do I Get One?

First off, ask the seller if they are offering one as a sales incentive. If not, ask your real estate agent if he/she offers one. If they don’t offer one, you should ask for one. If they want the sale bad enough, they might spring for the first year of coverage.

You also have the option to purchase one on your own from a home warranty provider. If you’re buying a new construction home, the warranty may already be included in the sales agreement. While new construction reduces the chance that you will need the warranty, it will provide some extra peace of mind.

What Can Go Wrong?

There are a few cases where coverage for a repair or replacement can be denied. Some include

  • Lack of maintenance
  • Improper installation
  • Code violation
  • Excessive wear and tear
  • Pre-existing conditions
  • Appliance or system is not included in the policy

How Do I Find a Home Warranty Provider?

Check out HomeWarrantyReview.com. It lists a number of national and local companies, as well as reviews for you to compare providers.

Home Warranty = Peace of Mind

As a first-time homeowner, you’ll find the experience very rewarding, and maybe sometimes a little scary. A home warranty can ease your mind when it comes to impending expensive home repairs.

Do you have a home warranty? Do you think it’s worth the cost of the policy? Which company provides your policy? Are you satisfied with the coverage and service? Tell us all about it in the comment section 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 22nd, 2014
Modified on August 8th, 2014 - 2 Comments
Filed under: Consumer, House & Home

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 at 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 22nd, 2014 - One Comment
Filed under: Economy, Working

Buyer, be very wary

Written by Richard Barrington - 6 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 - 6 Comments
Filed under: Banking

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