Tag Archives: Personal Finance

5 Financial Decisions That Sound Smart but Are Really Dumb

By U.S. News

Vector illustration ? Empty head and money brain.

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Alashi, Getty Images


Norma Yaeger, 83, of Encino, Calif., thought she was making a smart financial decision last fall, when, after pulling into a Ralph’s supermarket, she impulsively hired two men to fix her car.

“Two nice gentlemen came over to me and look at my fender, which was badly scratched. They said that they had a compound that will remove the scratches and restore the paint,” Yaeger says.
They would fix it, for just $50.

Yaeger isn’t a rube — she was, in fact, the first female stockbroker to work at the New York Stock Exchange (and recently wrote an autobiography, “Breaking Down the Walls”). She also served as president of two stock brokerage firms. The men who approached her seemed honest, and Yaeger was self-conscious about her fender. She paid the $50, a snap decision that seemed perfectly reasonable.

Instead — and you knew this was coming — when she returned from grocery shopping, her car fender hadn’t improved. In fact, it looked far worse. Yaeger drove to a mechanic and was told that it would take several days and $1,000 to fix her car.”The worst part was that I had to tell my husband about this embarrassing story,” Yaeger says.

[See: 12 Money Mistakes Almost Everyone Makes.]

Most people have made a financial mistake that seemed sensible at the time, but in hindsight turned out to be pretty stupid. With that in mind, here are some thoughts from a slew of personal finance experts on five financial decisions that sound smart but are likely a waste of money.

The Mistake: Buying something because it is interest-free for awhile.

Why It Can Seem Smart. It’s tempting to buy something with a zero-interest window, such as a “90-day, same-as-cash” offer, in which you’re charged no interest if you pay for the product within 90 days.

Why It May Be Stupid. Many people don’t end up saving the money or putting it aside when they get it, “and they end up paying accumulated interest at a high rate plus compounding interest on the balance going forward,” says Kelley Long, a Chicago-based certified public accountant.

She says consumers make such mistakes when they open a store credit card to get a 15 percent discount, for example, but then carry a 22 percent balance. Paying for things with a rewards credit card to earn frequent flier miles can also be a mistake if you’re not paying off the card in full each month. “The interest expenses end up far outweighing the price of an airline ticket,” Long says.

The Mistake: Buying long-term care insurance when you’re broke.

Why It Can Seem Smart. Who wouldn’t want long-term care insurance? It helps pay for basic activities that people need to do on a daily basis, …read more

Source: FULL ARTICLE at DailyFinance

How the American Dream Is Keeping Us Broke

By LearnVest

American Dream window shopping

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Our grandparents grew up in a time when you had to learn to be resourceful.

Things were fixed and not replaced, women made their own clothes, and neighbors shared one phone. Things were purchased because they were necessary, not because they were simply wanted — and guess what? No one would ever have dared to refer to your Nana as a cheap-ass.

So where did we go wrong? Research from Ohio State University found that people in their late 20s and early 30s carry significantly higher credit card debt than older generations and pay it off much more slowly. Much of this can be attributed to the rising costs of education, but the bigger problem, in my opinion, is our generation’s fear of looking cheap.

Looking Rich Doesn’t Make You Rich

Success is naturally equated to wealth, and no one idolizes someone who isn’t successful. The younger generation adores ultra-rich celebrities, and this has only helped to morph the American Dream into a whole new level of status and luxury we all think we can achieve.

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In pop culture today, having the appearance of wealth trumps actually having any money. We see rappers in chinchilla jackets popping Ace of Spades champagne in their videos, not driving a Toyota and having game night in with their friends. Kanye said it best: “What you think I rap for, to push a fu@#ing Rav4?” What needs to be understood, though, is that people who are really wealthy actually attribute their frugal habits to getting and staying there.

The number one quality of successful people is living below their means: For example, there are 1,138,070 millionaire households living in homes valued under $300,000, yet at the same time, 86 percent of people driving the most expensive “status” cars are non-millionaires.

Most people who actually have money are not scared of seeming cheap — that’s how poor people think, and it keeps them poor.

Why ‘Cheap’ Isn’t an Insult

Pictured: Ashley Stetts
Pictured: Ashley Stetts

I’ve lived in New York City — a not particularly inexpensive city — for nine years, and I saved almost a half a million dollars before I was 30. I didn’t create some stupid app that I sold for a bunch of money — I was a waitress and a model. I wasn’t even a big model. Not even close, actually … I mean, I’m not ugly or anything, but you get the point.

I lived in an affordable apartment, I never took taxis, and I never feared being labeled as cheap. Did people call me that because I always looked for better deals and watched my spending? Sure, but while they racked up debt

Source: FULL ARTICLE at DailyFinance

What Is Cost-Benefit Analysis?

By Selena Maranjian

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April is Financial Literacy Month, and our goal is to help you raise your money IQ. In this series, we’ll tackle key economic concepts — ones that affect your everyday finances and investments — to help you make smarter choices with every dollar decision you face.

Today’s term: cost-benefit analysis.

Most of us are familiar with the term, and have a basic grasp of it. It refers to how a project or decision might be evaluated, comparing its costs with its benefits. In many cases, it’s a like a quantified pros-and-cons list.

Applying cost-benefit analyses in the business world and your own personal finances can be very effective, helping decision makers avoid just going with their gut or with very rough calculations.

The Most Bang for the Buck in Business

In the business world, companies’ managers might think in terms of costs and benefits if they have several possible actions they can take. For example, a cost-benefit analysis can help them determine whether to build another factory, buy a certain company, issue more stock, or expand their employee retirement benefits.

Economists apply cost-benefit analysis when they want to estimate the effect of various actions, such as government incentive programs to support the housing market, or subsidies for certain industries, or changes in tax rates, or spending on infrastructure.

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The analysis can take various forms, and can involve varying degrees of complexity and precision, everything from considering opportunity costs (i.e., what is given up by making a given choice) to applying probability estimates to outcomes, to calculating the net present value of various options (which involves translating future costs and benefits into current dollars).

Assessing the costs and benefits helps zero in on the action that offers the most bang for the buck. It’s good to remember, though, that these analyses are not necessarily precise, as they often include estimates, especially for qualitative factors.

Cost-Benefit Analysis in Our Lives

When pondering big decisions (or even some small ones), using cost-benefit analysis can help you be a bit more rigorous in your decision making process and more confident in the final decision you make. It comes in handy in all sorts of situations, such as when you’re:

  • Weighing different career or job options. In this case, you might factor in any costs associated with getting the required training, the amount you’ll expect to earn, the degree of enjoyment you’ll get, the location, the commute, the wardrobe, the hours, the employee benefits, and so on.
  • Deciding whether to rent or buy a home, and what kind of home, too. You might consider costs such as the down payment, mortgage, insurance, monthly rent, along with the cost of commuting from various spots, the satisfaction provided by each location and home type, the expected cost of repairs and

    From: http://www.dailyfinance.com/2013/04/19/cost-benefit-analysis-definition/

What Is Inflation?

By Selena Maranjian

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April is Financial Literacy Month, and our goal is to help you raise your money IQ. In this series, we’ll tackle key economic concepts — ones that affect your everyday finances and investments — to help you make smarter choices with every dollar decision you face.

Today’s term: inflation.

You probably think you’ve got the term down pat: Inflation means prices rising over time. Well, yes, that’s pretty much right. But there’s much more to inflation, and it’s much more relevant to your life than you might think. Inflation can go in the opposite direction, for example, and it can spiral out of control.

First, a quick review.

Inflation is about purchasing power. It’s a way to measure the changing purchasing power of our currency by tracking changes in the prices of things we buy. The national banks of various countries try to keep inflation under control through their actions and policies (such as via the interest rates they set); many aim for an annual inflation rate of about 2 percent to 3 percent.

If inflation is at our long-term national average rate of about 3 percent, you can expect that something that costs you $100 today will cost you $103 next year, and $116 in five years. Plenty of online inflation calculators can give you a peek into the past, too. For example, per the U.S. Department of Labor’s calculator, it would cost you $62 in 1993 dollars to buy what costs you $100 today.

It’s not as simple as it seems

While the concept of inflation seems simple, as in the examples above, it’s actually a bit more complicated. For one thing, prices of various goods and services tend to grow — and sometimes shrink — at significantly different rates.

Think of college tuition, room and board, for example. Between the 2000-2001 and 2010-2011 school years, that cost has grown by an annual average of 5.5 percent overall, at both private and public schools combined. Meanwhile, the average selling price of a new vehicle rose just 1.7 percent, on average, annually between 2001 and 2011, and the price of gas averaged 8.9 percent annual growth during that same period.

Changes can be quite different in different time periods, for different items, and even in different regions — think of the housing market, for example.

Inflation is calculated in different ways, too. Its most basic form, as calculated by the Bureau of Labor Statistics, is the Consumer Price Index or CPI, which reflects the changes in prices of a basket of goods and services, such as food, gasoline, newspapers, postage, lodging, furniture, dental services, socks, cigarettes, pet food and more. There’s also the “Core CPI,” which excludes energy and food prices, as they can be especially volatile.

Another key thing to understand is that each of

From: http://www.dailyfinance.com/2013/04/17/inflation-definition/

How 'Chained CPI' Will Hit Your Pocketbook

By Chuck Saletta

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Getty Images

President Obama’s new budget proposal includes changing a couple of key inflation calculations to something called a “chained CPI.” The shift is getting a lot of attention right now because of the expected effect it will have on individuals.

There are two key places where a chained CPI — short for consumer price index — will have a direct impact on your pocketbook: income taxes and Social Security benefits. All else being equal, over time, your income taxes will be higher and your Social Security benefits will be lower than they are under current inflation calculations.

The key difference between the chained CPI and the traditional consumer price index is how the index measures consumer behavior. The chained CPI assumes that as prices rise on one product, some portion of consumers will be willing to substitute less expensive alternatives for what they used to buy.

That changes the product weightings used in the inflation calculation. By incorporating information from those new product weightings, the chained CPI typically produces a lower inflation level.

Here’s how it works.

The Impact on Income Taxes

If you pay income taxes, your tax bracket is determined by the amount of taxable income you make. The cutoffs for each bracket generally rise over time with inflation.

The two charts below show the IRS “Schedule X” brackets for single taxpayers; the first is for 2012, and the second is what’s currently expected for 2013:

Chart for 2012 from the U.S. Internal Revenue Service
Chart for 2013 from the U.S. Internal Revenue Service

While the 39.6 percent tax rate is new for 2013, note that the other brackets have higher cutoffs for 2013 than they did for 2012. That’s thanks to the inflation adjustment made to the tax brackets.

If the law is changed so that the chained CPI is used, the tops of those brackets are expected to rise more slowly, exposing more of your income to higher tax rates than under current law.

The Effect on Social Security Benefits

Similarly, Social Security benefits are increased based on the inflation rate. By tying the payment increases to the chained CPI — an inflation rate that grows more slowly than the current measure — those benefit payments will grow less quickly as well. As a result, over time your Social Security checks will be smaller than they would have been under the old inflation calculation.

The annual changes aren’t too extreme — they’re estimated to be somewhere in the vicinity of 0.1 percent to 0.3 percent per year, depending on what the future brings. But …read more

Source: FULL ARTICLE at DailyFinance

California Judge Rules Motorist Can't Use Smartphone Map

By The Associated Press

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Justin Sullivan/Getty Images


SAN FRANCISCO — Steven Spriggs was stopped in a traffic jam near downtown Fresno and thought nothing of whipping out his iPhone 4 and clicking on the map feature to see if there was an alternate route around the construction mess.

He was startled when he looked up and saw a California Highway Patrol motorcycle officer ordering him to pull over. He showed the officer that he was looking at a map and not texting or talking.

“‘Pull over,'” Spriggs recalled the officer as saying. “‘It’s in your hand.'”

A little more than a year later, Spriggs is at the heart of a novel court case that has technology blogs and social media sites buzzing about the $160 ticket plus court costs he was ordered to pay for “distracted driving.”

A court commissioner and then a three-judge appellate panel of the Superior Court found Spriggs guilty of violating a California law that bans motorists from texting or conducting phone conversations with hand-held devices.

The judges rejected Spriggs’ argument that they were expanding the law by refusing to toss out the ticket he got in January 2012.

Spriggs, who graduated from law school but isn’t a practicing attorney, represented himself before the commissioner and then the appeals panel. He initially brought a paper map to court to argue that it was legal to hold it while driving. Not persuaded, the traffic court commissioner found him guilty.

Next, he appealed to the three-judge panel of Fresno Superior Court, arguing in a legal brief that the iPhone has a flashlight feature and other functions that can be useful to a driver and aren’t as dangerous as texting or talking. That hearing last all of 30 seconds because no one from the CHP or district attorney’s office appeared to oppose the appeal by Spriggs.

He still lost.

Fresno County Judge Kent Hamlin, writing on March 21 for the three-judge panel upholding the commissioner’s ruling, said “the primary evil sought to be avoided is the distraction the driver faces when using his or her hands to operate the phone. That distraction would be present whether the wireless telephone was being used as a telephone, a GPS navigator, a clock or a device for sending and receiving text messages and emails.”

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The ruling doesn’t apply outside of Fresno County.

Nevertheless, Spriggs said he is troubled that police can now pull over motorists they suspect of simply holding their mobile phones.

Spriggs, a fundraiser for Fresno State University, said he’s unsure if he has the time or money to pursue further appeals to the California Court of Appeal and the state Supreme Court.

“I’m just a little guy who is frustrated,” Spriggs said. “I don’t see how they can extend this law.”<br …read more

Source: FULL ARTICLE at DailyFinance

The 10 Best-Paying Cities for Women

By 24/7 Wall St.

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​Methodology: 24/7 Wall St. identified the metropolitan areas that have the smallest pay disparity between men and women by comparing the median earnings for the past 12 months of both men and women working full-time, year-round in the country’s 100 largest metropolitan statistical areas. We also reviewed employment composition in different sectors and the wages for both men and women in each. All data was from the U.S. Census Bureau for 2011, the most recent period available.

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…read more

Source: FULL ARTICLE at DailyFinance

Pay Down Debt or Save for a Rainy Day: Which Should You Do First?

By Dan Caplinger

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Millions of Americans have outstanding debt, and limited savings. So when a rare bit of spare cash appears — say, for example, a tax refund — they face a tough question: Should they use it to pay down their debt, or save it in an emergency fund or for a long-term goal like retirement or buying a house?

The right answer is a bit more complicated than you might think — it depends on the type of debt you have and what you plan to do with your savings.

But it’s not hard to determine which is the smartest decision to fit your situation.

What People Are Doing With Tax Refunds

For many people, tax refunds represent their biggest fiscal windfall of the year, and this year more people will use their refunds to pay down debt rather than to save. According to a survey from dealnews.com, 44 percent of taxpayers getting a refund expect to use it to pay debts, compared to 34 percent who plan to save it. The results show a rising appreciation for financial responsibility: Only 22 percent said they would spend their tax refund.

To figure out whether you’re better off saving a windfall or using it to pay down your debt, there are a few things you need to look at more closely. Once you have answers to the following questions, you’ll be able to make a smarter decision.

Question 1: What Interest Rate Are You Paying on Debt?

From a purely financial standpoint, the more you’re paying in interest charges on your debt, the more you gain by paying it off.

In general, you can break down what you owe into “good debt” and “bad debt” based on its interest rate and repayment terms. For instance, most credit-card debt gets treated as bad debt, because prevailing interest rates on credit cards are very high — typically well above 10 percent, and often above 20 percent. By contrast, mortgage debt is often good debt, because rates right now are extremely low, and most people can deduct the interest they pay on their mortgages on their tax returns.

With some types of debt, though, the distinction isn’t always as clear.

Some promotional car loan rates can be very low, for instance, while other sources can charge much higher interest rates. Similarly, student loans come in different flavors, with federally subsidized loans typically offering better rates than private loans.

Whatever you do decide to put toward paying down debt should almost always go toward the highest-rate debt you have so it will make the biggest positive impact on your finances.

Question 2: What Return Can You Expect to Earn on Your Savings?

The other half of the debt/saving question is how much of a return you’ll earn on what you save. If you plan …read more

Source: FULL ARTICLE at DailyFinance

In Hard Times, People Who Grew Up Poor Spend More, Cut Less

By Michele Lerner

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Jahi Chikwendiu/The Washington Post via Getty Images

What would your response be to the following questions?

  • Would you prefer to have $20 tomorrow or $30 a month from now?
  • Would you prefer a certainty of receiving $20 or a 60% chance of getting $50?
  • Would you rather have $40 today or $50 next week?
  • Would you rather be certain of receiving $30 or have a 40% chance of getting $45?

Now, consider how your answers would be different if you grew up in a wealthy family or if you came from a poor one.

Recently, a team of researchers from MIT Sloan School of Management posed these questions to subjects in a series of experiments to confirm the impact of “life-history theory,” which says that your early life environment creates a pattern of behavior and responses that emerge even more strongly in adults during stressful times.

What they found was that the economic environment in which you are raised influences how you handle financial problems as an adult. No surprise there. What’s eye-opening about their findings is how people from different walks of life act during times of economic crisis.

In a nutshell: Poor people spend more than rich people during difficult economic times.

Stress Response: Save or Spend?

You’d think that when times are tough, everyone’s natural instinct would be to pull back on their spending and switch to save mode. It also seems logical to expect that those who grew up in families that struggled financially would be more cautious about money when faced with a weak economy.

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But when measuring the survey responses, Prof. Joshua Ackerman and his fellow researchers found that people who grew up in rich households were more risk-averse and reacted to an economic crisis by slowing their spending. Meanwhile, people who grew up poor were more impulsive and took more risks than those from wealthy backgrounds.

A supplementary experiment testing how recession cues affect decisions to save rather than to spend money from a paycheck gave the researchers similar results: Individuals from wealthier backgrounds chose to save for the future, while those from low-income childhoods opted to spend money to improve their current quality of life.

Why Do People Who Grew Up Poor Spend More?

On the surface, spending more when times are tough may just seem foolish, but Ackerman says that people who come from a poor background are behaving rationally according to their psychological instincts.

Ackerman explains it this way: If you grew up poor, your life history may lead you to think your chances of surviving a recession and coming out ahead are very low. Your expectation that your lifespan may be shorter — again, based on your life history — means that instead of taking measured steps to preserve the little money you have, you’re more likely to take risks …read more

Source: FULL ARTICLE at DailyFinance

What Is Net Worth?

By Selena Maranjian

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April is Financial Literacy Month, and our goal is to help you raise your money IQ. In this series, we’ll tackle key economic concepts — ones that affect your everyday finances and investments — to help you make smarter choices with every dollar decision you face.

Today’s term: net worth.

In a nutshell, net worth is what you get when you subtract liabilities from assets — what you owe from what you own. Like many economic and financial terms, net worth can apply in a variety of situations.

If you’re evaluating a company for your portfolio,you might glance at its balance sheet to get a handle on its net worth. Balance sheets break out assets (such as cash, inventory, and receivables) and liabilities (such as debt and accounts payable). Subtracting the latter from the former gives you net worth, which is also referred to in this context as shareholders’ equity or book value.

Here’s an example: As of the end of 2012, IBM’s (IBM) assets totaled $119 billion, and its liabilities totaled $100 billion. Thus, its net worth, or shareholders’ equity, was $19 billion.

Net Worth in Our Lives

Each of us has an individual net worth, too, and it’s arrived at in similar fashion.

First, grab a sheet of paper and list all your assets. These would include the contents of your bank accounts, your investments, the equity you have in your home, your retirement accounts, the current value of your car(s), the value of your jewelry, the contents of your wallet or purse, and so on. Be thorough — your sizable board game collection might be worth several thousand dollars, for example.

Next, list all your liabilities, or debts. These would include what you owe on your mortgage or car loan, your credit card debt, any school loans outstanding, and any other debt, such as a home equity loan.

Finally, subtract the liabilities from the assets. What’s left is your net worth.

Ideally, your net worth is positive and will grow over time. If your net worth is in negative territory, that’s not great, but by saving aggressively, paying down your debts, and being careful in your spending you can reverse the situation over time.

How Does Your Net Worth Compare?

For the record, a typical net worth for an American family these days is between $100,000 and $200,000.

The aggregate net worth of Americans has risen recently and is finally back to pre-recession levels. But much of those gains have gone to wealthy Americans and can be traced to the stock market‘s recovery.

Middle-class Americans have about two-thirds of their net worth represented by their home equity, and home values have not recovered as much as the stock market at this point. The Dow Jones Industrial Average has more than doubled …read more

Source: FULL ARTICLE at DailyFinance

Automakers Expected to Report Highest U.S. Sales Since 2007

By The Associated Press

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Stan Honda/AFP/Getty Images General Motors’ 2014 Chevrolet Corvette Stingray convertible on display at the New York auto show, which runs through April 7. Consumer interest in new cars has grown as the economy has slowly improved, fueling expectations of higher sales in March.


DETROIT — U.S. car and truck sales are expected to hit their highest level in nearly six years in March, as buyers armed with tax refund checks were lured by flashy new vehicles and low interest rates.

Auto companies release U.S. sales figures Tuesday.

Analysts predict total sales of nearly 1.5 million cars and trucks, a number not seen since May 2007. That’s almost double the 855,000 vehicles sold in March 2009, the low point for sales during the economic downturn, according to Ward’s AutoInfoBank. Sales are expected to be up 3 to 5 percent over last March.

Alec Gutierrez, a senior market analyst with the car pricing company Kelley Blue Book, said the improving job market is boosting sales. The number of Americans seeking unemployment benefits fell to a five-year low during March. Low interest rates are also making new-car purchases more appealing, Gutierrez said. The average rate for a 60-month new-car loan is now 4.12 percent, down from 4.52 percent at this time last year, according to Bankrate.com.

And Gutierrez says tax refunds can also spur purchases. The average federal tax refund this year is nearly $3,000, or enough to cover the down payment on a three-year lease of a Toyota Camry hybrid or a BMW 3-Series sedan.

Full-size pickup truck sales are expected to rise nearly 15 percent in March, following big gains in February, Kelley Blue Book said. Construction companies are rapidly replacing their truck fleets as the economy improves and they win more business.

Gutierrez said incentive deals — such as the $7,500 cash back now offered for the Chevrolet Silverado pickup — are helping truck sales, and should continue for a while. General Motors Co. (Ford Motor Co. (GM wants to clear out older models before introducing its new Chevrolet Silverado in a few months.

"Consumers looking for a new pickup truck should not hesitate to pull the trigger," he said.

Crossovers are also gaining, thanks to redesigned models like the Ford Escape and Toyota RAV4. Small cars are down slightly, in part because gas prices are relatively low. Gas averaged $3.64 per gallon at the end of March, down from $3.78 at the end of February and $3.91 in March of 2012, according to AAA.

Honda Motor Co.'s (HMC) sales gain should be among the best for March. Sales rose nearly 9 percent, according ...read more
Source: FULL ARTICLE at DailyFinance

1 in 4 Teens Plans to Rely Financially on Parents Until Age 27

By Business Insider

Teen talking about his future with father

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By Mandi Woodruff

April is Financial Literacy month, which is the personal finance industry’s cue to ramp up its message that high school — and the home — is ground zero for the movement. After all, if we can teach teens to handle money responsibly, we can ensure that the next generation of adults won’t make a mess of things. Right?

Unfortunately, teens don’t have quite as much faith in their own financial futures as most people, according to a new survey by Junior Achievement USA/Allstate Foundation.

Nearly 60 percent of teens said they don’t expect to be ready to financially support themselves by age 24 — a far cry from the same survey two years ago, when 75 percent of teens felt the same. Only 25 percent of teens said they’d be prepared by age 27.

That’s a more than double the number in the same survey two years ago, when just 12 percent of teens felt the same.

To be fair, they have reasons to be wary of flying the coop. The job market, though slowly improving, isn’t exactly stellar, the cost of college tuition is perpetually rising, and student loans rates have tripled in the last decade.

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“Parents continue to be the No.1 influence on teens when it comes to money, so helping their teens set financial goals and take steps to meet them should pay off financially for both teens and their parents,” said Don Civgin, president and chief executive officer of Allstate Financial.

Therein lies the central issue of financial literacy: Whose job is it to teach kids how to manage money — their teachers or their parents?

Mom and Dad may know which snacks to pack, how to fix a flat and when to lecture about college and safe sex, but it’s not like they have to pass a financial literacy test before bringing children into the world.

In a T. Rowe Price survey, more than half of parents said they only feel ‘fairly’ prepared to discuss finances with their children. Another 18 percent said they aren’t prepared at all.

On the other hand, financial literacy is part of the curriculum in roughly half the country in the U.S. There are free financial literacy services for teens, but convincing them to learn about budgeting in lieu of playing after school sports is likely a tall order.

There’s a solid case for either side of the debate. The reality is that it will likely take both.

More From Business Insider:


<a target=_blank …read more
Source: FULL ARTICLE at DailyFinance

8 Tips for Protecting Your Finances Before You Move In With Someone

By Business Insider

Couples moving in together in an apartment

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Couples getting ready to move in together should enjoy the excitement, but they should also be prepared for the worst.
A recent study by Rent.com of 1,000 renters found that 38 percent of renters had ended a personal relationship with someone they were living with at some point in their lives. And the majority of those — more than 60 percent — continued to live with their significant other for another month or more after breaking up as they worked to split up their stuff and find new places that fit their single budgets.

Respondents said that the most difficult part of moving out was splitting up possessions (not finances); and their No. 1 precaution (and lesson learned) was to save more money before moving in with someone else.

To learn more, we reached out to life coach Dr. Michele Callahan, who has been featured on “Oprah” and “Dr. Oz,” as well as in other media, and she sent us her most important financial advice for couples who live together:

Add your name to the lease. In the unfortunate event that you break up with your partner and one of you has to move out, the person whose name is on the lease is in the best position to maintain possession of the space. If both names are on the lease, you each have a close to equal opportunity to remain in the apartment and renew the lease.

Create a personal budget. Before you agree to rent a new apartment or pay a mover, stop and create a budget for your new monthly bills that includes rent, utilities, and anything else that you may now be paying for on your own. Don’t forget to include your moving expenses, such as moving supplies, security deposit, new furniture, etc.

Purchase items individually. That way, in the unfortunate event of a breakup, the person who paid for the TV or bed is entitled to it, and the person who bought the sofa can take it or swap it with their partner for something else.

Keep good financial records. Keep receipts, bank statements, credit card statements or a journal of shared expenses and purchases to make it easier to divide things up later.

And if you end the relationship:

Determine who can afford to move. After sharing rent and household expenses, it can be a challenge for people to save enough money to find an apartment they can afford on their own, in addition to covering moving expenses and a new security deposit.

Close joint bank accounts. If you and your partner have any joint accounts, now is the time to fairly divide the balance of those accounts and close them. If you have any automatic payments coming out of the accounts or any direct deposits going into it, you …read more
Source: FULL ARTICLE at DailyFinance

Fewer U.S. Taxpayers Expecting Refunds This Year

By CNNMoney

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Fewer Americans are expecting the financial boost of a tax refund this year. In an American Express survey of roughly 1,500 adults, 59 percent of respondents said they expect a refund check this year, down from 64 percent last year.

At the same time, 19 percent expect to owe money come tax time, compared to just 13 percent in 2012. And nearly 30 percent of respondents with a household income greater than $100,000 said they expect to owe the IRS this year.

The growing number of people who owe taxes is likely a sign that the economy is improving, said Will McBride, chief economist at the Tax Foundation, a nonprofit research group.

“They are earning more and that means they get less from the IRS,” he said.

Of those who will owe money, most said they would pay with cash from their checking or savings account. But nearly 15 percent said they would pay with a credit card, up from 7 percent last year.

Of those expecting a refund, 37 percent plan to use it to pay down debt or bills, while 26 percent plan to save the money. Only 28 percent said they expect to spend their refund check on themselves or family, travel, home improvements or a big-ticket item.

“The mentality from the recession is still there,” said Melanie Backs, an American Express Co. (AXP) spokeswoman. “While people are feeling more confident, they learned some valuable lessons.”

The coveted refund checks, which averaged about $2,700 last year, should come in handy as consumers deal with smaller paychecks after a two-year payroll tax “holiday” expired this year.

Pennsylvania resident Kelly Benedetti said she and her husband would love to spend their expected tax refund on travel abroad. But instead, Benedetti, 32, and a research scientist with a doctorate in educational research from the University of North Carolina at Greensboro, said she will put the extra cash, which she estimated will be less than $1,000, towards her student loan debt from graduate school.

“Nine years in higher education really gets you,” she said.

A newlywed and new homeowner, Benedetti said she was surprised to be receiving a refund at all because she aims to pay the exact amount of taxes she owes throughout the year to avoid giving “an interest-free loan to the government.”

“I just don’t understand how people want these huge giant refunds,” she said. “It means they’ve overpaid all year.”

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Financial Advice for the Sandwich Generation

By Molly McCluskey

UPPER MARLBORO, MD- AUGUST 16: Daniel Sherrett, 28, who returned home to live with his mother, Marie, and older brother Mark, 31, after completing his bachelor's degree at the Culinary Institute of America, prepares dinner as part of his deal to live at home, on Tuesday, August 16, 2011.  (Photo by Michael Temchine/For The Washington Post via Getty Images)

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Michael Temchine/For The Washington Post via Getty Images Daniel Sherrett, 28, who returned home to live with his mother, Marie, and older brother Mark, 31, after completing his bachelor’s degree at the Culinary Institute of America, prepares dinner as part of his deal to live at home.

Between the growing number of adult children moving back in with their parents, and a growing population of senior citizens becoming financially dependent on their children, the Sandwich Generation can’t seem to catch a break.

Nearly half of all adults between the ages of 40-59 are giving financial support either to a parent over the age of 65 or to their offspring. Nearly one in seven adults are supporting both. So says a new study by Pew on the rising financial burdens of those adults — the generation that overlaps both the Baby Boomers and Generation X.

Multigenerational Impacts of Unemployment

The middle-aged Sandwich Generation has been hit especially hard by the recession and its aftermath. With unemployment still at 7.7 percent in February, and mass layoffs of nearly 135,000 in January alone, the long-term financial pressure is hitting those supporting multiple generations particularly hard.

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Older parents may face forced retirement, and its sudden impacts. Parents of teens may face impending college expenses. Grown children with children of their own may suddenly face their own unemployment and be forced to move back home.

Although older workers were more likely to have held onto their jobs during the recession than their less experienced counterparts, workers over 50 who were laid off during the recession are finding it difficult to find new work. Too young to retire, this age group was recently called “the new unemployable” by the Sloan Center on Aging and Work at Boston College.

Meanwhile, younger workers are less likely to be employed than they were just a few years ago, and those with jobs are earning lower wages, due in part to the competition from older, underemployed workers willing to work for less.

How to Navigate the New Terrain

Even though being financially sandwiched seems like being stuck in a vise that can only get tighter, with tax breaks and deductions for long-term care, retirement planning doesn’t have to be a pipe dream. If you find yourself in this situation, here’s some advice:

Don’t dip into savings: Sandwichers should avoid dipping into personal and retirement savings if possible. Instead, evaluate all options for both the care of parents and the well-being of children. Investigating long-term care insurance before it’s needed for aging parents, and knowing what expenses will have to be paid out-of-pocket might help make difficult decisions easier.

Explore all cost-savings options: Families with students heading off to college should explore less expensive options. …read more
Source: FULL ARTICLE at DailyFinance

Tips to Help You Finish Your 2012 Tax Return Now

By Kiplinger

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By Sandra Block

Haven’t filed your taxes yet? Chances are you fall into one of two categories: You owe the IRS money, or you’ve managed to find a lot of things to do before tackling the paperwork, such as regrouting the bathroom tile.

In either case, April 15 is fast approaching, so it’s time to gather your W-2s, your 1099s and the rest of your tax documents and get to work. Although dealing with the tax code remains a formidable task — the IRS‘s national taxpayer advocate, Nina Olson, estimates that Americans spend more than six billion hours a year preparing their taxes — not a lot changed in 2012.

Unless your income rose or declined significantly, your tax rate probably remained the same as in 2011. (The new top rate for high-income taxpayers doesn’t apply for 2012; it takes effect this year. And under the new tax law, you probably won’t have to worry about the dreaded alternative minimum tax, unless you’ve had to pay it in the past. In that case, you’re probably still out of luck.)

Here’s what you do have to worry about: overlooking deductions, credits or other tax breaks so you end up paying more than you owe. Even worse, in your haste to meet the April 15 deadline, you’re more likely to make mistakes that could get you in trouble with the IRS.

Mind the ‘Boomerang Breaks’

Congress resurrected several tax breaks that expired at the end of 2011. Among them: a $500 tax credit for energy-efficient home improvements, such as new windows, doors and skylights. Be advised, though, that $500 is the lifetime maximum, so if you claimed $500 in energy-efficient credits before 2012, you can’t do so again. The old restrictions for specific projects remain — for example, the most you can claim for new energy-efficient windows is $200. (A separate credit that covers up to 30 percent of the cost of installing renewable-energy equipment, such as solar panels, has no limit and is available through 2016.)

The new law also revived the state and local sales-tax deduction for 2012 and 2013. The provision gives you the option of deducting state income taxes or state and local sales taxes. That’s an easy choice for taxpayers in the nine states with no income tax. But in some instances, even taxpayers in states with an income tax could get a bigger tax break by deducting sales taxes, particularly if they made some big purchases in 2012. The IRS provides tables and an online calculator to show how much residents of various states can deduct, based on state and local tax rates. But if you bought a big-ticket item, such as a boat or a car, you can add the sales tax for that purchase to the …read more
Source: FULL ARTICLE at DailyFinance

Cyprus Votes Against Silly Deposit Tax (or Theft)

By 24/7 Wall St.


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The parliament of Cyprus has just voted against stealing assets from depositors to fund the nation’s bailout of its banking system. This is good news because it sends a message to the European Union that they cannot just steal money from the public. The bad news is that this leaves Cyprus in a situation where its bailout is now back in limbo and might not come about.

We are not seeing much of a recovery in the ADRs which would be tied closer to this situation in Cyprus. Shares of the National Bank of Greece SA (NYSE: NBG) are down another 7% to $0.892 on three-times normal trading volume after hitting a 52-week low of $0.872 today. The Global X FTSE Greece 20 ETF (NYSEMKT: GREK) is still down 4% at $16.05 on the day, but its trading volume is light at just over 35,000 shares.

We are glad to see that the Cypriot parliament voted against this measure. We are not glad to see that this means that the risks to the nation are back front and center.

Filed under: 24/7 Wall St. Wire, Austerity, Banking & Finance, Economy, International Markets, Personal Finance, Tax Tagged: GREK, NBG

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Source: FULL ARTICLE at DailyFinance