Saturday, December 25, 2010
Friday, December 24, 2010
Your End of Year Money Moves
Silicon Valley Blogger on 12/20/2010
December is a significant time for most of us, when we get to celebrate the holidays with cheer and maybe a touch of chaos. It’s also when we take stock of the past year and start thinking about our financial and personal goals for the following year.
The winter season sets the tone for reflection and contemplation. Most of us look back on the months behind us with a heart grateful for the wonderful things that have happened, as well as with a mind that’s been made aware of mistakes made, lessons learned and a hope and resolve that we’ll do better going forward. This form of reflection can help us tie up the loose ends of the past year and allow us to prepare for what’s ahead. Just as we clean out our attics, basements and closets, it may be time to take a look at our financial house and do a little cleaning before we ring in the New Year. Mint has taken a look around the financial blogosphere to put together some tips on how to do just that.
First up is Pick One, Just One. MoneyCrush has an honest observation about the act of making New Year’s resolutions: often, we just don’t end up fulfilling them. So her suggestion makes sense: Why don’t we pick just ONE major life change to pursue for 2011, and follow through with it? We may just be able to achieve one of our more important goals if we take her advice.
Then, when you’ve set your major goal for 2011, how about clearing the cobwebs in your mind? The Simple Dollar suggests: Out With The Old, In With The New: Do a Mind Sweep. Find out how to move any distracting concerns out of the way, then assess how to prioritize the important concerns. What are those things that are most important to you? Let’s determine how to organize our thinking so that we can become more effective and efficient.
Financial management is something that falls into our high priority bucket by the time the New Year rolls around. Kay Bell from Don’t Mess With Taxes writes about the crucial documents that you need to put in order, in her article, Year-end financial details, Dec. 2010. This may be somewhat of a chore to do each year, but as they say (and as you often hear), “Somebody’s gotta do it.”
To motivate you further to get your taxes in order, here are 10 Ways to Save on Taxes Now from Personal Dividends. For instance, think about boosting your retirement fund — this may allow you to experience extra tax benefits as well, which would improve your bottom line. So why not get motivated about increasing your retirement savings and kill two birds with one stone?
With the important things out of the way, how about a bit of fun? Mr. and Mrs. Not Made of Money recommend some great tips on What to Do With Your Christmas Bonus. There’s a lot you can do with your windfall, and this post seems to have covered all the bases.
It’s also a time of travel for many, with a lot of folks visiting their families and loved ones to celebrate the holidays. If you’re thinking of flying, make sure you check out these Smart Tips On Buying Discount Airline Tickets from The Digerati Life, which discusses some ways you can save on travel by reviewing your earned rewards and airline miles that you’ve accumulated throughout the year via your credit cards. Watch out for the tips on how to best use your cash back rewards, as it pertains to travel.
And before we go, Free Money Finance shares a great tip or two in his book review 16 Mindsets of the Cheapskates Next Door. This review gives an outline of the book, as well as FMF’s insights on certain topics. It’s time to do away with old bad habits and take on better habits that have worked to make cheapskates succeed in accumulating wealth. Wouldn’t you like to take a peek into the frugal mindset? If you’re looking to be more thrifty this 2011, then this may be a good book to absorb.
Indeed, it’s time to sweep out the clutter, break bad habits and work to improve our attitudes. Are you ready to welcome 2011 with a fresh enthusiasm about your finances?
December is a significant time for most of us, when we get to celebrate the holidays with cheer and maybe a touch of chaos. It’s also when we take stock of the past year and start thinking about our financial and personal goals for the following year.
The winter season sets the tone for reflection and contemplation. Most of us look back on the months behind us with a heart grateful for the wonderful things that have happened, as well as with a mind that’s been made aware of mistakes made, lessons learned and a hope and resolve that we’ll do better going forward. This form of reflection can help us tie up the loose ends of the past year and allow us to prepare for what’s ahead. Just as we clean out our attics, basements and closets, it may be time to take a look at our financial house and do a little cleaning before we ring in the New Year. Mint has taken a look around the financial blogosphere to put together some tips on how to do just that.
First up is Pick One, Just One. MoneyCrush has an honest observation about the act of making New Year’s resolutions: often, we just don’t end up fulfilling them. So her suggestion makes sense: Why don’t we pick just ONE major life change to pursue for 2011, and follow through with it? We may just be able to achieve one of our more important goals if we take her advice.
Then, when you’ve set your major goal for 2011, how about clearing the cobwebs in your mind? The Simple Dollar suggests: Out With The Old, In With The New: Do a Mind Sweep. Find out how to move any distracting concerns out of the way, then assess how to prioritize the important concerns. What are those things that are most important to you? Let’s determine how to organize our thinking so that we can become more effective and efficient.
Financial management is something that falls into our high priority bucket by the time the New Year rolls around. Kay Bell from Don’t Mess With Taxes writes about the crucial documents that you need to put in order, in her article, Year-end financial details, Dec. 2010. This may be somewhat of a chore to do each year, but as they say (and as you often hear), “Somebody’s gotta do it.”
To motivate you further to get your taxes in order, here are 10 Ways to Save on Taxes Now from Personal Dividends. For instance, think about boosting your retirement fund — this may allow you to experience extra tax benefits as well, which would improve your bottom line. So why not get motivated about increasing your retirement savings and kill two birds with one stone?
With the important things out of the way, how about a bit of fun? Mr. and Mrs. Not Made of Money recommend some great tips on What to Do With Your Christmas Bonus. There’s a lot you can do with your windfall, and this post seems to have covered all the bases.
It’s also a time of travel for many, with a lot of folks visiting their families and loved ones to celebrate the holidays. If you’re thinking of flying, make sure you check out these Smart Tips On Buying Discount Airline Tickets from The Digerati Life, which discusses some ways you can save on travel by reviewing your earned rewards and airline miles that you’ve accumulated throughout the year via your credit cards. Watch out for the tips on how to best use your cash back rewards, as it pertains to travel.
And before we go, Free Money Finance shares a great tip or two in his book review 16 Mindsets of the Cheapskates Next Door. This review gives an outline of the book, as well as FMF’s insights on certain topics. It’s time to do away with old bad habits and take on better habits that have worked to make cheapskates succeed in accumulating wealth. Wouldn’t you like to take a peek into the frugal mindset? If you’re looking to be more thrifty this 2011, then this may be a good book to absorb.
Indeed, it’s time to sweep out the clutter, break bad habits and work to improve our attitudes. Are you ready to welcome 2011 with a fresh enthusiasm about your finances?
Wednesday, December 22, 2010
Tuesday, December 21, 2010
Types of Unit-Linked Insurance Plans (ULIP)
By Ronald Kimmons, eHow Contributor
Unit-linked insurance plans (ULIP) are types of insurance that offer a coverage, such as life insurance, with a certain type of investment. However, the policyholder makes this investment, and therefore, the risk of investment is his. The insurance company offers investment options, but the policyowner decides which investment option to use. This can be more profitable than a traditional insurance policy, but it also has a higher risk.
ULIP Life Insurance Type I
ULIP Type I is a life insurance policy linked to an investment account, usually called savings. When you purchase a ULIP Type I, you get an assured death benefit combined with an investment instrument. The amount you pay every month is a mixture of your monthly premiums, which pay for the death benefit, as well as a portion of money that you desire to invest. However, upon death, ULIP Type I only pays for one of these two amounts. Should you pass away, the insurance company looks at the death benefit for your policy and the amount of money you've accrued from your investments and pays you whichever is more, keeping the lesser amount of the two. At the point at which your investments have accrued to the same level as your death benefit, you can ask your company to raise the amount of money allotted to your death benefit. However, you usually must agree to new medical exams to do this.
ULIP Life Insurance Type II
ULIP Type II also links life insurance to investments. However, in this case, your monthly premiums are higher than they are with Type I. The reason for this is that, upon death, ULIP Type II pays your beneficiary both amounts: your death benefit amount and the sum of your investments at that point. Outside of this, Type II works very similarly to Type I, in that you still choose the funds for investment and you take the risk of loss. Because the investment aspect of a ULIP comes at a high level of risk, you shouldn't abandon your policy early on, as this results in almost no return on your investments.
Pension ULIPs
A third type of ULIP is the pension ULIP. As with the other types of ULIP, this is insurance that links two types of benefits: life insurance and retirement income. The part of this insurance that relates to life coverage is similar to Types I and II: Upon death, the company pays your beneficiary the death benefit that you purchased. However, the investment part of this type of ULIP is designed for retirement purposes. If you live to retirement age, a pension ULIP gives the premiums and accrued interest back to you in full. The money you're investing is exclusively an investment for retirement, but it's also linked to high risks. You can lose part or all of your funds, depending on economic fluctuations. For this reason, it's important not to abandon these plans before retirement age.
Unit-linked insurance plans (ULIP) are types of insurance that offer a coverage, such as life insurance, with a certain type of investment. However, the policyholder makes this investment, and therefore, the risk of investment is his. The insurance company offers investment options, but the policyowner decides which investment option to use. This can be more profitable than a traditional insurance policy, but it also has a higher risk.
ULIP Life Insurance Type I
ULIP Type I is a life insurance policy linked to an investment account, usually called savings. When you purchase a ULIP Type I, you get an assured death benefit combined with an investment instrument. The amount you pay every month is a mixture of your monthly premiums, which pay for the death benefit, as well as a portion of money that you desire to invest. However, upon death, ULIP Type I only pays for one of these two amounts. Should you pass away, the insurance company looks at the death benefit for your policy and the amount of money you've accrued from your investments and pays you whichever is more, keeping the lesser amount of the two. At the point at which your investments have accrued to the same level as your death benefit, you can ask your company to raise the amount of money allotted to your death benefit. However, you usually must agree to new medical exams to do this.
ULIP Life Insurance Type II
ULIP Type II also links life insurance to investments. However, in this case, your monthly premiums are higher than they are with Type I. The reason for this is that, upon death, ULIP Type II pays your beneficiary both amounts: your death benefit amount and the sum of your investments at that point. Outside of this, Type II works very similarly to Type I, in that you still choose the funds for investment and you take the risk of loss. Because the investment aspect of a ULIP comes at a high level of risk, you shouldn't abandon your policy early on, as this results in almost no return on your investments.
Pension ULIPs
A third type of ULIP is the pension ULIP. As with the other types of ULIP, this is insurance that links two types of benefits: life insurance and retirement income. The part of this insurance that relates to life coverage is similar to Types I and II: Upon death, the company pays your beneficiary the death benefit that you purchased. However, the investment part of this type of ULIP is designed for retirement purposes. If you live to retirement age, a pension ULIP gives the premiums and accrued interest back to you in full. The money you're investing is exclusively an investment for retirement, but it's also linked to high risks. You can lose part or all of your funds, depending on economic fluctuations. For this reason, it's important not to abandon these plans before retirement age.
Back to Basics: What You Will And Won’t See In Your Credit Reports
By John Ulzheimer on 12/20/2010
Credit reports are generally broken down into five to seven areas, depending on what credit report you’re looking at and whether it’s a “consumer” version or a “users” version. Here’s are the sections and what you’re likely to find in each:
Personal Identification Data
This is where you’re going to find your name, any variations of your name, current and former addresses, date of birth, social security number, and perhaps your current or previous employer.
Inquiries
This is a list of who pulled your credit reports and on what date. The “consumer” version of the credit report is going to have all of your inquiries. The “user” version is only going to have hard inquires. I wrote about inquiries here if you want to take a refresher course on the subject.
Collections
There is a separate section on a credit report for 3rd party collections. This is not the internal collection department at your bank or credit card issuer. This is when your creditors have either sold or consigned your delinquent debts to an outside company for collection efforts.
Trade
The trade section is going to make up the bulk of your credit report. This is where all of your accounts with lenders are going to show up. Some times they’re called “trade lines” as well.
Public Records
On some old credit report formats the Public Records’ section also houses 3rd party collections despite the fact that a collection is hardly a public record. In the newer consumer versions they are called out as their own unique item leaving the public record section to only house liens, judgments and bankruptcies.
Consumer Statement
You might not know this but you have the right to add a short statement to your credit reports. In most states this is limited to no more than 100 words so you’ll need to bust out your best Twitter or text messaging skills to fit an explanation of why you stopped paying on your credit cards.
So now that we know what you WILL see on your credit reports, let’s address what you probably won’t see on your credit reports.
Under most circumstances you won’t see…
Gym Memberships
These were reported at one time but only when they went delinquent. Do you remember when gyms would sign people up for 3-5 year contracts and if you decided you were buff enough and cancelled they’d try and hit you up for the full amount?
Public Utilities
You won’t normally see your gas, power, cable, or telephone service account on your credit reports while they’re in good standing. There are some exceptions. I’ve seen NICOR accounts on credit reports reporting month after month just like any other loan. NICOR is a gas provider in Illinois. Most of the time if you see these types of accounts on a credit report it’s because they’ve been sent to collections and the collector is reporting it.
Rental Payments
You’ll rarely, if ever, see your rental payments on your credit report because most landlords don’t have accounts with the credit reporting agencies and they are unable to report. Even if you are living in an apartment complex with hundreds or thousands of units it’s unlikely you’ll ever see the payments on your credit reports. Of course if you default on your lease they’ll turn it over to a collection agency and you’ll see that on your credit reports lickety split.
Insurance Payments
Almost all insurance companies will allow you to pay your insurance premium in installments. I’m quite certain most people would consider that a form of extending credit, and I’d agree with them. However, insurance companies do not report the installment payments to the credit reporting agencies. If you don’t pay them they’ll just cancel your coverage. And of course driving without insurance is illegal. Talk about the ultimate leverage over their borrowers!
John Ulzheimer is the President of Consumer Education at SmartCredit.com, the credit blogger for Mint.com, and the author of the “credit history” definition on Wikipedia. He is an expert on credit reporting, credit scoring and identity theft. Formerly of FICO, Equifax and Credit.com, John is the only recognized credit expert who actually comes from the credit industry. He has served as a credit expert witness in more than 70 cases and has been qualified to testify in both Federal and State court on the topic of consumer credit.
Credit reports are generally broken down into five to seven areas, depending on what credit report you’re looking at and whether it’s a “consumer” version or a “users” version. Here’s are the sections and what you’re likely to find in each:
Personal Identification Data
This is where you’re going to find your name, any variations of your name, current and former addresses, date of birth, social security number, and perhaps your current or previous employer.
Inquiries
This is a list of who pulled your credit reports and on what date. The “consumer” version of the credit report is going to have all of your inquiries. The “user” version is only going to have hard inquires. I wrote about inquiries here if you want to take a refresher course on the subject.
Collections
There is a separate section on a credit report for 3rd party collections. This is not the internal collection department at your bank or credit card issuer. This is when your creditors have either sold or consigned your delinquent debts to an outside company for collection efforts.
Trade
The trade section is going to make up the bulk of your credit report. This is where all of your accounts with lenders are going to show up. Some times they’re called “trade lines” as well.
Public Records
On some old credit report formats the Public Records’ section also houses 3rd party collections despite the fact that a collection is hardly a public record. In the newer consumer versions they are called out as their own unique item leaving the public record section to only house liens, judgments and bankruptcies.
Consumer Statement
You might not know this but you have the right to add a short statement to your credit reports. In most states this is limited to no more than 100 words so you’ll need to bust out your best Twitter or text messaging skills to fit an explanation of why you stopped paying on your credit cards.
So now that we know what you WILL see on your credit reports, let’s address what you probably won’t see on your credit reports.
Under most circumstances you won’t see…
Gym Memberships
These were reported at one time but only when they went delinquent. Do you remember when gyms would sign people up for 3-5 year contracts and if you decided you were buff enough and cancelled they’d try and hit you up for the full amount?
Public Utilities
You won’t normally see your gas, power, cable, or telephone service account on your credit reports while they’re in good standing. There are some exceptions. I’ve seen NICOR accounts on credit reports reporting month after month just like any other loan. NICOR is a gas provider in Illinois. Most of the time if you see these types of accounts on a credit report it’s because they’ve been sent to collections and the collector is reporting it.
Rental Payments
You’ll rarely, if ever, see your rental payments on your credit report because most landlords don’t have accounts with the credit reporting agencies and they are unable to report. Even if you are living in an apartment complex with hundreds or thousands of units it’s unlikely you’ll ever see the payments on your credit reports. Of course if you default on your lease they’ll turn it over to a collection agency and you’ll see that on your credit reports lickety split.
Insurance Payments
Almost all insurance companies will allow you to pay your insurance premium in installments. I’m quite certain most people would consider that a form of extending credit, and I’d agree with them. However, insurance companies do not report the installment payments to the credit reporting agencies. If you don’t pay them they’ll just cancel your coverage. And of course driving without insurance is illegal. Talk about the ultimate leverage over their borrowers!
John Ulzheimer is the President of Consumer Education at SmartCredit.com, the credit blogger for Mint.com, and the author of the “credit history” definition on Wikipedia. He is an expert on credit reporting, credit scoring and identity theft. Formerly of FICO, Equifax and Credit.com, John is the only recognized credit expert who actually comes from the credit industry. He has served as a credit expert witness in more than 70 cases and has been qualified to testify in both Federal and State court on the topic of consumer credit.
Would You Pay $4 Million for the World's Most Expensive Stove?
By Elina Shatkin, Mon., Dec. 20 2010 @ 7:00AM Comments (1) Categories: Kitchen tools
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Iron Dog
The Iron Dog 05 Huraxdax
Bloated with absurdly extravagant baubles, even the Neiman Marcus Christmas catalog pales in comparison to the Iron Dog 05 Huraxdax.
At $4 million, this gold-plated, wood-fired range is the world's most expensive stove. (Iron Dog also makes a cheaper version in silver for the profligate penny-pincher.)
Designed by sculptor Joseph Michael Neustifter, the Huraxdax is made to order and takes two-and-a-half months to fabricate. Not quite a last-minute stocking stuffer. Not a show pony either.
The Huraxdax stands two-and-a-half feet high, weighs 572 pounds and works at 82% efficiency. (We have no idea how that last statistic was quantified, but it sounds very official.) The gilded range heats up to 1,000-square feet of space, which also makes it the world's most expensive space heater.
Indeed, the Huraxdax is full of practical applications and "can be put to everyday use," according to the Iron Dog website. Perhaps for making pizza. We'd be wary of soiling Midas' stove, but if one can drop $4 mil on a stove, one can spring for a maid.
Stamped on the sides and back of the stove is the word "huraxdax." Our Bavarian is a tad rusty, but we want to believe the reported translation -- "decampment of joy" -- because that makes this the world's saddest and most poetic stove. Maybe your joy departs when you realize you've spent $4 million on a stove. (Don't ask how much the vegetable peeler costs.)
"Nothing is as free as art and the people who love it," the Iron Dog website declares. And nothing is as excessive as the Iron Dog 05 Huraxdax and the people who buy it.
Share30 132diggsdigg
Iron Dog
The Iron Dog 05 Huraxdax
Bloated with absurdly extravagant baubles, even the Neiman Marcus Christmas catalog pales in comparison to the Iron Dog 05 Huraxdax.
At $4 million, this gold-plated, wood-fired range is the world's most expensive stove. (Iron Dog also makes a cheaper version in silver for the profligate penny-pincher.)
Designed by sculptor Joseph Michael Neustifter, the Huraxdax is made to order and takes two-and-a-half months to fabricate. Not quite a last-minute stocking stuffer. Not a show pony either.
The Huraxdax stands two-and-a-half feet high, weighs 572 pounds and works at 82% efficiency. (We have no idea how that last statistic was quantified, but it sounds very official.) The gilded range heats up to 1,000-square feet of space, which also makes it the world's most expensive space heater.
Indeed, the Huraxdax is full of practical applications and "can be put to everyday use," according to the Iron Dog website. Perhaps for making pizza. We'd be wary of soiling Midas' stove, but if one can drop $4 mil on a stove, one can spring for a maid.
Stamped on the sides and back of the stove is the word "huraxdax." Our Bavarian is a tad rusty, but we want to believe the reported translation -- "decampment of joy" -- because that makes this the world's saddest and most poetic stove. Maybe your joy departs when you realize you've spent $4 million on a stove. (Don't ask how much the vegetable peeler costs.)
"Nothing is as free as art and the people who love it," the Iron Dog website declares. And nothing is as excessive as the Iron Dog 05 Huraxdax and the people who buy it.
Friday, December 10, 2010
Oil Prices Headed Higher: What You Can Do to Prepare
By Carla Fried | Dec 6, 2010 | 3 Comments
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One of the few bright spots for consumer wallets during the recession was a steep drop in energy costs thanks to a global demand slump. Well, so much for that. With a recovery in full swing — at least in emerging markets — oil prices have been on a tear the past few months. The per-barrel price now sits at a two-year high of $90. That’s a 30 percent jump from the recession low, and analyst forecasts suggest we should now brace ourselves for oil rising to $110-$120 a barrel in 2012.
That potential 20 percent to 30 percent rise means we are going to be feeling plenty more pain at the gas pump. Air travel costs will also rise, and homeowners in the Northeast and Midwest who heat their homes with oil are facing a double-digit rise in keeping their homes warm.
Blame It on the Recovery
The good news is we’re not looking at a return to the $4-a-gallon prices we saw in mid-2008 anytime soon. But with the global recovery in motion, energy demand has followed, especially in emerging markets that are recovering a lot faster than we are. One recent forecast said global demand for 2010 will be about 30 percent higher than originally thought and is expected to continue rising in 2011 and beyond. With OPEC not likely to increase production anytime soon, the upshot is a continuing climb in oil prices.
There’s also the Bernanke factor as well: oil across the globe is priced in U.S. dollars, and any weakening in the value of the U.S. dollar relative to foreign currencies sends the price of oil higher. To the surprise of many, the dollar has held up better than anticipated as the Federal Reserve embarked on its second round of quantitative easing (QE2), but as the Federal Reserve Chairman told 60 Minutes this past weekend, the Fed will not rule out even more easing in the coming months. If that triggers dollar weakness, oil prices will climb even more.
Here are some tips on how to cope with the surge in energy prices:
1. Gas
Typically about 60 percent to 70 percent of the cost of a gallon of gas is tied to what’s going on with the price of crude oil. So no surprise, the cost of a gallon of gas has already risen more than 15 percent this year, with about half the jump coming in just the past three months:
Source: Gasbuddy.com
I realize this may not help you handle your current cash flow, but it is worth remembering that today’s prices are still way lower than what we were dealing with in the recent past. Here’s a three-year chart from gasbuddy.com:
Okay, enough with the perspective. The more pressing issue is that the Department of Energy expects gas prices to rise another 7.4 percent in 2011 to an average of $2.97 for a gallon of regular. And if oil prices do hit $110 to $120 a barrel in 2012, that could translate to a 20 percent or so rise in the price of a gallon of gas from its current level. To squeeze even better mileage out of your current cars, check out 9 Smart Ways to Save on Gas and Six Myths About Gas Mileage.
And if you’re in the market for a new car, maybe it’s time to think seriously about cars that deliver the highest fuel efficiency, including the new Chevy Volt and Nissan Leaf electric-only models. Unlike gas prices, the cost of residential electricity is not expected to budge much from its current level. The Energy Department expects a 1.3 percent rise in 2011.
2. Home Heating
If your home is heated with natural gas or propane, you’re sitting pretty, as the cost of those fuel sources aren’t expected to rise. But households that rely on home heating oil are going to feel the pinch of the run-up in crude prices. According to Department of Energy, home heating oil prices will be 10.4 percent higher this winter, and with a forecast for bone-rattling cold in some areas, we’ll need to use more heat, pushing total household spending on heat this winter 12.6 percent higher. The regional breakdown for home heating oil this winter:
Northeast: Heating oil price up 10 percent. Total spending on heat up 14.5 percent to an average of $2,225 per household.
Midwest: Price up 13.5 percent. Total spending up 11.2 percent to an average of $1,630 per household.
West: Price up 10 percent. Total spending up 8.6 percent to an average of $1,403 per household.
South: Price up 10.4 percent, but the expectation for warmer weather will give southerners a price break, with a 3.3 percent decline in total spending to an average per household of $1,628
If you haven’t yet converted to a high-efficiency heating system, and a Snuggie doesn’t fit your fashion sense, maybe those price forecasts are enough to get you motivated. Also, if you hustle to get a new high-efficiency furnace installed in the next few weeks, you could qualify for a federal tax credit of as much as $1,500 that expires at the end of this year. And if you’re looking to buy a home anytime soon, energy costs are a good reason to steer clear of McMansions; the smaller the home, the lower the utility costs.
3. Air Travel
Higher crude oil prices will also impact the price at the jet-fuel pump. The Department of Energy forecasts a 10 percent rise in jet fuel prices in 2011 which it says could trigger a 5 percent or so rise in ticket prices. Let’s just hope that’s not another excuse to raise checked-bag fees as well. If you’re planning a big get-away in 2011, booking sooner than later seems to be the best way to lock in your cost now ahead of rising energy prices.
ShareEmailDiggFacebookTwitterGoogleDeliciousStumbleUponNewsvineLinkedInMy YahooTechnoratiRedditPrintRecommend0facebook twitter digg buzz
One of the few bright spots for consumer wallets during the recession was a steep drop in energy costs thanks to a global demand slump. Well, so much for that. With a recovery in full swing — at least in emerging markets — oil prices have been on a tear the past few months. The per-barrel price now sits at a two-year high of $90. That’s a 30 percent jump from the recession low, and analyst forecasts suggest we should now brace ourselves for oil rising to $110-$120 a barrel in 2012.
That potential 20 percent to 30 percent rise means we are going to be feeling plenty more pain at the gas pump. Air travel costs will also rise, and homeowners in the Northeast and Midwest who heat their homes with oil are facing a double-digit rise in keeping their homes warm.
Blame It on the Recovery
The good news is we’re not looking at a return to the $4-a-gallon prices we saw in mid-2008 anytime soon. But with the global recovery in motion, energy demand has followed, especially in emerging markets that are recovering a lot faster than we are. One recent forecast said global demand for 2010 will be about 30 percent higher than originally thought and is expected to continue rising in 2011 and beyond. With OPEC not likely to increase production anytime soon, the upshot is a continuing climb in oil prices.
There’s also the Bernanke factor as well: oil across the globe is priced in U.S. dollars, and any weakening in the value of the U.S. dollar relative to foreign currencies sends the price of oil higher. To the surprise of many, the dollar has held up better than anticipated as the Federal Reserve embarked on its second round of quantitative easing (QE2), but as the Federal Reserve Chairman told 60 Minutes this past weekend, the Fed will not rule out even more easing in the coming months. If that triggers dollar weakness, oil prices will climb even more.
Here are some tips on how to cope with the surge in energy prices:
1. Gas
Typically about 60 percent to 70 percent of the cost of a gallon of gas is tied to what’s going on with the price of crude oil. So no surprise, the cost of a gallon of gas has already risen more than 15 percent this year, with about half the jump coming in just the past three months:
Source: Gasbuddy.com
I realize this may not help you handle your current cash flow, but it is worth remembering that today’s prices are still way lower than what we were dealing with in the recent past. Here’s a three-year chart from gasbuddy.com:
Okay, enough with the perspective. The more pressing issue is that the Department of Energy expects gas prices to rise another 7.4 percent in 2011 to an average of $2.97 for a gallon of regular. And if oil prices do hit $110 to $120 a barrel in 2012, that could translate to a 20 percent or so rise in the price of a gallon of gas from its current level. To squeeze even better mileage out of your current cars, check out 9 Smart Ways to Save on Gas and Six Myths About Gas Mileage.
And if you’re in the market for a new car, maybe it’s time to think seriously about cars that deliver the highest fuel efficiency, including the new Chevy Volt and Nissan Leaf electric-only models. Unlike gas prices, the cost of residential electricity is not expected to budge much from its current level. The Energy Department expects a 1.3 percent rise in 2011.
2. Home Heating
If your home is heated with natural gas or propane, you’re sitting pretty, as the cost of those fuel sources aren’t expected to rise. But households that rely on home heating oil are going to feel the pinch of the run-up in crude prices. According to Department of Energy, home heating oil prices will be 10.4 percent higher this winter, and with a forecast for bone-rattling cold in some areas, we’ll need to use more heat, pushing total household spending on heat this winter 12.6 percent higher. The regional breakdown for home heating oil this winter:
Northeast: Heating oil price up 10 percent. Total spending on heat up 14.5 percent to an average of $2,225 per household.
Midwest: Price up 13.5 percent. Total spending up 11.2 percent to an average of $1,630 per household.
West: Price up 10 percent. Total spending up 8.6 percent to an average of $1,403 per household.
South: Price up 10.4 percent, but the expectation for warmer weather will give southerners a price break, with a 3.3 percent decline in total spending to an average per household of $1,628
If you haven’t yet converted to a high-efficiency heating system, and a Snuggie doesn’t fit your fashion sense, maybe those price forecasts are enough to get you motivated. Also, if you hustle to get a new high-efficiency furnace installed in the next few weeks, you could qualify for a federal tax credit of as much as $1,500 that expires at the end of this year. And if you’re looking to buy a home anytime soon, energy costs are a good reason to steer clear of McMansions; the smaller the home, the lower the utility costs.
3. Air Travel
Higher crude oil prices will also impact the price at the jet-fuel pump. The Department of Energy forecasts a 10 percent rise in jet fuel prices in 2011 which it says could trigger a 5 percent or so rise in ticket prices. Let’s just hope that’s not another excuse to raise checked-bag fees as well. If you’re planning a big get-away in 2011, booking sooner than later seems to be the best way to lock in your cost now ahead of rising energy prices.
New Year’s Resolutions: 7 for Your Money
New Year’s Resolutions: 7 for Your Money
By Farnoosh Torabi | Dec 6, 2010 | 1 Comment
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Americans apparently have a bit more confidence in their own financial health (as if we couldn’t tell by the shopping stampede on Black Friday).
The evidence: A new survey by TD Ameritrade finds that 27% of us are less likely to make New Year’s resolutions about our personal finances this year than last year, saying health and relaxing are more important. Rather than “save more money” - a common goal for 2010 and 2009 - Americans now say they feel confident enough to return to a more balanced take on life, to focus on their families, career and health, in addition to their finances.
While that sounds good, it’s still important to save. And we don’t have to sacrifice our health or happiness to do so. Here are seven money resolutions that can improve your mind, spirit and bank account.
1. Be More Charitable
Studies show charitable giving fell in 2010. Whether donating to charity or treating your friend to a cupcake, giving is not only thoughtful but can make you happy. A survey of more than 600 volunteers by researchers at Harvard Business School and The University of British Columbia concluded that spending just $5 a day on someone else would make you more happy than spending that money on yourself. Not to sound selfish, but how does this help our bottom lines? Well, there’s always the tax deduction! Give to a legitimate charity and pay less to Uncle Sam on April 15.
2. Find a Money Buddy
It’s key to have a partner in your financial life who can knock some sense into you when you feel the impulse to spend or when you are ignoring your bills. It might be your best friend, sibling, or parent. Relay your goals to this person so that he or she can help remind you of them when your judgment gets cloudy. Turn to them for advice. We often assume that our financial strife is unique – the sooner you begin networking and discussing your problems with others, the sooner you’ll realize that others have been in your shoes and have persevered.
3. Stick to Cash
While it’s important to maintain good credit and using our credit cards responsibly helps to achieve that, keep in mind that credit card users tend to spend more money than if they used cash. A recent Dunn & Bradstreet study found that people spend 12-18% more when using credit cards than when using cash. (Another study found that people who paid cash at the grocery store were healthier than their plastic-wielding counterparts.) And McDonald’s found that the average transaction rose from $4.50 to $7.00 when customers used plastic instead of cash.
The other reason I insist on using cash is because it keeps us honest with our money. We make better choices because we are forced to think twice or three times about our purchases, especially if we have to break big bills like a $50 bill. Bye-bye, impulse purchases!
4. Create a Money Zone
This is all about staying organized and clear of financial clutter. Find a space in your home - it could be a table in your kitchen, sunroom, bedroom, wherever - and design this space so that you actually want to go there to set goals, pay your bills and deal with budgeting. Surround your “money zone” with images of your goals, family and inspirations - all the reasons you should stay motivated. Have folders for all your monthly statements. Have a safety box for secure papers like insurance certificates, your deed, etc. And have smaller boxes for business expense receipts and warranties.
5. Establish a Rule of Thumb
As humans, we like rules of thumb because they’re handy. They help when we have trouble making decisions. We have diet rules of thumb - “no sweets during the week” or “no midnight snacking” - and they help us stay on track. Some good money rules could be: “I won’t buy anything over $100 without consulting with my spouse or partner” or “No more open tabs at the bar!”
6. Automate
Save and pay your bills automatically. You’ll sleep better at night knowing you did. It’s less painful than taking money out of your paycheck yourself and depositing it in a savings account or handing it to your utility company. According to a recent survey by the Consumer Federation of America and the Financial Services Roundtable, 83% Americans say the most effective way to build personal savings is to automatically transfer funds from your paycheck to a savings account. Research also finds that people with the highest level of well-being had a high level of financial security. Many of them automated their payments so they didn’t feel the sting of the pain of payments.
7. Turn a Passion or Pastime into a Paycheck
Who doesn’t want to make more money in the New Year? One of the best ways to do that is to identify a skill or hobby that you’re passionate about and turn that into a revenue stream - teaching a foreign language, designing web sites, making jewelry. When you work a job you love, it won’t feel like work
By Farnoosh Torabi | Dec 6, 2010 | 1 Comment
ShareEmailDiggFacebookTwitterGoogleDeliciousStumbleUponNewsvineLinkedInMy YahooTechnoratiRedditPrintRecommend0facebook twitter digg buzz
Americans apparently have a bit more confidence in their own financial health (as if we couldn’t tell by the shopping stampede on Black Friday).
The evidence: A new survey by TD Ameritrade finds that 27% of us are less likely to make New Year’s resolutions about our personal finances this year than last year, saying health and relaxing are more important. Rather than “save more money” - a common goal for 2010 and 2009 - Americans now say they feel confident enough to return to a more balanced take on life, to focus on their families, career and health, in addition to their finances.
While that sounds good, it’s still important to save. And we don’t have to sacrifice our health or happiness to do so. Here are seven money resolutions that can improve your mind, spirit and bank account.
1. Be More Charitable
Studies show charitable giving fell in 2010. Whether donating to charity or treating your friend to a cupcake, giving is not only thoughtful but can make you happy. A survey of more than 600 volunteers by researchers at Harvard Business School and The University of British Columbia concluded that spending just $5 a day on someone else would make you more happy than spending that money on yourself. Not to sound selfish, but how does this help our bottom lines? Well, there’s always the tax deduction! Give to a legitimate charity and pay less to Uncle Sam on April 15.
2. Find a Money Buddy
It’s key to have a partner in your financial life who can knock some sense into you when you feel the impulse to spend or when you are ignoring your bills. It might be your best friend, sibling, or parent. Relay your goals to this person so that he or she can help remind you of them when your judgment gets cloudy. Turn to them for advice. We often assume that our financial strife is unique – the sooner you begin networking and discussing your problems with others, the sooner you’ll realize that others have been in your shoes and have persevered.
3. Stick to Cash
While it’s important to maintain good credit and using our credit cards responsibly helps to achieve that, keep in mind that credit card users tend to spend more money than if they used cash. A recent Dunn & Bradstreet study found that people spend 12-18% more when using credit cards than when using cash. (Another study found that people who paid cash at the grocery store were healthier than their plastic-wielding counterparts.) And McDonald’s found that the average transaction rose from $4.50 to $7.00 when customers used plastic instead of cash.
The other reason I insist on using cash is because it keeps us honest with our money. We make better choices because we are forced to think twice or three times about our purchases, especially if we have to break big bills like a $50 bill. Bye-bye, impulse purchases!
4. Create a Money Zone
This is all about staying organized and clear of financial clutter. Find a space in your home - it could be a table in your kitchen, sunroom, bedroom, wherever - and design this space so that you actually want to go there to set goals, pay your bills and deal with budgeting. Surround your “money zone” with images of your goals, family and inspirations - all the reasons you should stay motivated. Have folders for all your monthly statements. Have a safety box for secure papers like insurance certificates, your deed, etc. And have smaller boxes for business expense receipts and warranties.
5. Establish a Rule of Thumb
As humans, we like rules of thumb because they’re handy. They help when we have trouble making decisions. We have diet rules of thumb - “no sweets during the week” or “no midnight snacking” - and they help us stay on track. Some good money rules could be: “I won’t buy anything over $100 without consulting with my spouse or partner” or “No more open tabs at the bar!”
6. Automate
Save and pay your bills automatically. You’ll sleep better at night knowing you did. It’s less painful than taking money out of your paycheck yourself and depositing it in a savings account or handing it to your utility company. According to a recent survey by the Consumer Federation of America and the Financial Services Roundtable, 83% Americans say the most effective way to build personal savings is to automatically transfer funds from your paycheck to a savings account. Research also finds that people with the highest level of well-being had a high level of financial security. Many of them automated their payments so they didn’t feel the sting of the pain of payments.
7. Turn a Passion or Pastime into a Paycheck
Who doesn’t want to make more money in the New Year? One of the best ways to do that is to identify a skill or hobby that you’re passionate about and turn that into a revenue stream - teaching a foreign language, designing web sites, making jewelry. When you work a job you love, it won’t feel like work
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