Top 5 Ways to Save Money on an Apartment

August 16, 2011 – 4:05 pm by How-To Hannah

ScholarshipExperts.com

Welcome to this week’s edition of our Tuesday Top 5, Econ4U’s weekly tips post to help you manage your money in five easy steps.

At the beginning of the summer, we brought you our tips on finding your first apartment. Now it’s time to make your space your own. Read on for our advice for doing so on the cheap.

  1. Buy secondhand furniture. Ikea may be cheap, but it isn’t necessarily the least expensive way to furnish your apartment. Stalk Craigslist and Kijiji for deals on used furniture in your area and you can score excellent deals on high-quality pieces (just don’t forget to negotiate — sellers expect it!). One caveat: A lot of cities are experiencing a bedbug epidemic, so it may be best to steer clear of upholstered furniture and used mattresses unless you can be certain they’re pest-free.
  2. Vet your roommate(s) carefully. When you sign a lease with other people, you’re tying your home life to them. So first make sure you’re all on the same page about the financial rules and who is responsible for paying each bill on time. Nagging a previously good friend for his share of the rent every month or begrudging her for eating your cereal is a surefire way to erode friendly feelings fast.
  3. Use a good credit score to negotiate on utility deposits. Got a great FICO score? That could be your ticket to getting utility companies to reduce or waive deposits on starting service. At the very least, it doesn’t hurt to ask. If your credit score could use some rehab, here’s how to go about it.
  4. Read the fine print on interest-free loans. It’s par for the course for appliance stores to offer zero-percent interest on purchases for a set period of time. But miss a payment and the interest rate becomes exorbitant. Before you splurge on an awesome media center or laundry set, know what you’re putting your signature to.
  5. Don’t always buy in bulk. Going to a big-box store to stock your pantry is always a good idea, right? Not necessarily. Everything you buy and don’t use for a long time is money that’s sitting in your pantry instead of earning interest in a bank account, so bulk-buy wisely. (For more tips on saving money on groceries, click here.)
Posted in Housing, Personal Finance, Tuesday Top 5 | Tagged , , , | Comments (0)

The Economics of Health-Insurance Premiums

August 15, 2011 – 4:41 pm by Audrey

Kaiser Family Foundation

The New York Times yesterday published a review of the Kaiser Family Foundation’s analysis of health-insurance premiums across the nation on its Prescriptions blog, which covers health-care issues. However, there is an economic fallacy lurking in its analysis worth pointing out.

The blog says:

If you live in Massachusetts or Vermont, the average monthly premium topped $400 a month in 2010, compared with just $136 a month in Alabama. The average across the country was $215 per month.

The authors of the analysis point out that some expensive states have higher insurance premiums because they make it easier for people with potentially expensive pre-existing conditions to get coverage.

The authors believe that the new federal health care law will probably reduce the variation in premiums, although they note that a state’s cost of living and overall cost of health care also contribute to the differences in premiums.

While it’s true that the Affordable Care Act will make premiums more uniform regardless of where you live, that idea is misleading. They’ll be more uniformly high — and covered up by subsidies for households between 133% and 400% of the poverty level, which puts the financial burden squarely on taxpayers. Additionally, the new law glosses over the reasons that certain states’ premiums are higher than average, like existing mandates for guaranteed coverage.

All of which leads us to question: “affordable care” for whom?

Posted in Economy, Education, Government Policy | Tagged , | Comments (0)

Is There Still Prestige in a Platinum Credit Card?

August 9, 2011 – 1:14 pm by Audrey

AmericanExpress.com

In the good ol’ days, a gold or platinum credit card signaled that you had arrived. It meant lenders considered you a good credit risk with significant spending and a sterling payment history. With that came perks, most often a higher credit limit and cash back on purchases as a concession for a bank’s best customers (and typically accompanied by an annual fee).

However, these days even recent college graduates are carrying around prestige cards. (I’m one of them: I got my first platinum plastic when I was 23 with just five years of credit history to my name.)

The average American has four credit cards with an average balance of $15,799 among those with credit-card debt. (Only 25 percent of Americans do not have any credit cards, and 30 percent of Americans pay off their balances every month.)

There are still perks-paying cards for those who actually avail themselves of such services. Take the American Express Centurion, a.k.a. the “Black Card,” which remains invitation-only. Just to qualify, a consumer has to charge six figures on an American Express account annually (exactly how much, the company will not disclose). And once your application is accepted, you can expect to pay a whopping $2,500 annual fee in addition to a one-time $5,000 initiation fee. In return, customers receive top frequent-flyer status on several airlines, free nights at the world’s most exclusive hotels, personal shoppers at stores like Gucci and Neiman Marcus, and 24/7 international concierge services.

Still, smart consumers are more interested in talking turkey: What’s the annual fee? What’s the interest rate? And are those perks worth the money?

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Build a Budget That Will Grow With You

August 5, 2011 – 2:12 pm by How-To Hannah

PerfectWeddingMag.com

If you’ve followed the conventional wisdom of making a budget to live within your means, you may think you can just kick back and reap the benefits, right? Not exactly.

There are a number of life changes that will require you to tweak or even completely redo your budget. Here are a few of the most important changes you can make to ensure your budget can adapt to major life events.

  • You get a raise. You may be tempted to spend a chunk of that money on a bigger apartment or a fancy new car, but resist. If you allow your expenses to expand every time your income increases, you’re not any more secure financially than you were before the raise. Keep your monthly expenses the same, though, and your savings accounts will reap the benefits.
  • You lose your job. When your paycheck evaporates, it’s time to tap into your nest egg. However, maintaining your previous lifestyle without an income is a fast way to deplete your emergency fund. What you need now is a [blank]-hit-the-fan budget. Strip down your spending to stay current on the essentials for survival (housing, utilities, food) and any debt obligations (student loans, minimum credit-card payments, and other loans) to keep your credit in good standing.
  • You get married. When you legally become a two-income household, the IRS starts looking at your earnings in a new light. Sit down with your new spouse to make sure you’re paying the correct amount in taxes every payday to avoid an unhappy wedding gift from the taxman next April 15.
  • You have a baby. Not a newsflash: Kids are hardly cheap. The Department of Agriculture calculates it costs $226,920 to raise a baby to adulthood. However, the early years need not be the most expensive. An infant doesn’t need dozens of toys, books, or expensive outfits (especially considering she will outgrow all of the above at record speed), and as long as it’s safe, he won’t care how much you spent on his nursery furniture. Resist the urge to splurge gratuitously on your new arrival. And here are some important other financial milestones to hit before Junior arrives.
Posted in Budgeting, Education, Personal Finance, Saving Money | Tagged , , , , , | Comments (0)

2011 Is the Summer of Discontent for Teen Unemployment

August 2, 2011 – 1:29 pm by Collegiate Carrie

MSNBC.com

Last weekend, D.C. Mayor Vincent Gray granted an audience to high-school and college students in the Nation’s Capital to discuss the high teen-unemployment rate. At the beginning of the summer, the Bureau of Labor Statistics reported that teen unemployment had skyrocketed, with half the states showing unemployment rates above 25 percent. Even more depressing, the jobless rate for minority teenagers is 42.1 percent nationwide.

The D.C. government attempted to pre-empt this trend by spending more than $20 million to place 14,000 District youths in jobs at government agencies and local businesses. Still, many young people were left disgruntled at the reality of being unemployed for the summer, leading one 17-year-old to tell The Washington Post: “I think it’s not anyone’s fault. We need to go out there and get jobs, but at the same time, they could come to our schools and make it easier for us to sign up.”

However, we feel that sentiment misses a key economic point. With such a high teen-unemployment rate, the demand for summer jobs has clearly outstripped the supply. Teens who wish to work must show some initiative in pursuing the jobs that do exist, and lawmakers could rethink minimum-wage policies that tie employers’ hands in hiring less-experienced workers such as the young people who attended this town-hall meeting.

Beyond that, there are plenty of ways that teens can stay busy and earn money outside of traditional employment. If you’re looking to drum up a little extra cash before school is back in session, check out our tips post here.

Posted in Econ4U, Education, Government Policy, Students | Tagged , , , | Comments (1)

Famous Financial Flubs: Broke NFL Stars

July 29, 2011 – 1:11 pm by Paparazzi Paige

NYDailyNews.com

News has broken that there will be a 2011 pro football season after all (woohoo!). Under the deal, veteran NFL players will still be paid millions for doing what they do best. However, the ability to earn an outsize paycheck doesn’t mean that all NFL stars are financially secure.

The Wall Street Journal reports this week that two big names on the gridiron are fending off creditors instead of opponents on the field:

Former NFL defensive back Rick Sanford has admitted to fumbling. Sanford, also a former University of South Carolina football star, pleaded guilty to bankruptcy fraud and was given 30 days’ home confinement and 100 hours of community service, according to the State. The newspaper noted that Sanford’s legal troubles began after he filed for Chapter 7 in 2009. When a bankruptcy trustee challenged his list of assets—which included two Lexuses and a time share—he withdrew his bankruptcy petition.

Sanford wasn’t the only footballer in the news this week. Veteran quarterback Mark Brunell’s finances may become more strained Friday, as the New York Jets cut the 40-year-old backup, the Associated Press reported. That means Brunell won’t have his $1.25 million salary to draw on as he attempts to right his financial ship following his bankruptcy, which was largely wrapped up this off-season. Another team, however, may still sign Brunell. Under the former Pro Bowler’s debt-elimination plan, Brunell had committed to paying $16,300 for his personal effects—including a Super Bowl ring—to prevent them from heading to the auction block.

As we’ve mentioned before, pro sports players seem especially prone to bankruptcy when they start living outside their means. This news just goes to show that it’s not what you earn, it’s what you keep.

Posted in Athletes, Celebrities, Famous Financial Flubs, Financial Illiteracy | Tagged , | Comments (0)

Top 5 Ways to Save at the Grocery Store

July 26, 2011 – 4:55 pm by How-To Hannah

MarthaStewart.com

Welcome to this week’s edition of our Tuesday Top 5, Econ4U’s weekly tips post to help you manage your money in five easy steps.

After paying for housing and utilities, the grocery bill is often the largest single line item in a household budget. So if you haven’t already tried these tips to shave dollars off the cost of feeding yourself and your family, they’re worth a shot.

  1. Organic foods aren’t proven to be healthier. If you are on the organic bandwagon because of environmental reasons, that’s fine, but there’s no compelling health argument to justify paying more for organic. The Mayo Clinic says there’s no nutritional difference between organic and conventionally grown produce, so don’t feel bad about not paying the premium.
  2. Don’t let a sale price entice you to buy something you don’t need. Remember: The easiest way to save money is not to spend it. Saving 20¢ on pudding still means spending two dollars that you weren’t planning to part with, so ask yourself first whether you really need it.
  3. Plan your meals before you hit the supermarket. We’ve all been guilty of buying a nice piece of fish or a bunch of kale with the best of intentions, only to find days later it’s wilted and starting to smell up the fridge. Knowing what you plan to cook and when can go a long way to saving you from throwing away spoiled food.
  4. Skip convenience foods. Pre-washed, cut, and bagged broccoli can be double the cost of a head of the cruciferous veggie. You’ll also pay extra for salad kits instead of lettuce and dressing, baby carrots over bunches, and pre-formed hamburger patties rather than a package of ground beef. Take the extra time to prep your food and your savings in the checkout line will add up.
  5. The freezer is a budgeter’s favorite appliance. Buying the value pack of chicken breasts and the giant bag of peas is always smart because frozen meat and vegetables can keep up to six months in the freezer. Learn to read the cost-per-ounce section of every label to stretch your grocery dollar as far as possible.
Posted in Budgeting, Personal Finance, Saving Money, Tuesday Top 5 | Tagged , , | Comments (1)

Three Things You Need To Know About…the Trade Deficit

July 25, 2011 – 10:00 am by Market Mike

Welcome to the latest installment of our new series! We’ve rounded up experts in the fields of economics and personal finance to answer common questions young people have about their money and the economy. For this column, we’ve asked an expert on finance and business for his insight on a little-understood topic that’s often in the news–the US trade deficit. Got a question you’d like to see addressed in this space? Shoot us an email at info@econ4u.org.

Today’s expert is Mark Perry, a professor at the University of Michigan-Flint, a visiting scholar at the American Enterprise Institute, and blogger at the website Carpe Diem. At Econ4U, we talk a lot about how you spend your money. But where is that money being sent? And is it a bad thing if we’re buying things made in other countries? We asked Perry for three things you should know about the “trade deficit.”

1.     Trade deficits are a positive consequence of cost-conscious American consumers and businesses shopping globally for the best value, quality, and price.

It’s frequently lamented that the United States has a trade deficit with China, Japan, and the rest of the world, meaning we buy more goods and merchandise from those countries than they buy from us. But it’s important to understand that it’s not countries that engage in international trade—it’s American businesses and consumers who actually do the buying and selling.  International trade reflects the voluntary behavior of millions of Americans who have collectively found great value by purchasing products—like iPods, trucks, computers, clothing, and so forth—produced overseas.

2.     The trade deficit as most people understand it doesn’t exist.

It was recently reported the U.S. had a $141 billion trade deficit with the rest of the world during the first quarter of this year (This means we imported $141 billion more in goods and services into the country than we sent abroad). But what doesn’t get reported is that the trade deficit was exactly offset by a $141 billion foreign investment surplus during the first quarter (This means that foreigners purchased more financial assets like U.S. stocks and bonds than Americans invested overseas).  The net result is that America’s total trade with the rest of the world was perfectly balanced in the first quarter of 2011, just like it is in every quarter and every year.

3.     Trade deficits are most often associated with periods of strong US economic growth—not decline.

Researchers at the Cato Institute found that, over the last thirty years, the U.S. economy grew at a healthy annual 3.6% pace in those periods when our trade deficit was growing larger—and an annual rate of only 1.0% when the trade deficit was shrinking. A recent example illustrates the relationship: even though it was reported that the trade deficit was “improving” (decreasing) in 2008 and 2009, America at that time was suffering from one of the worst economic downturns and financial crises since the Great Depression.

 

Posted in Blog Beat, Featured Posts, Three things you need to know, Uncategorized | Comments (3)

Sales Tax Holidays to Look Forward to This Summer

July 22, 2011 – 1:06 pm by Shopaholic Suzi

PotteryBarnKids.com

While we can’t offer you respite from the heat wave oppressing much of the country, we can bring you good news of upcoming sales tax holidays to ease the burden on your back-to-school shopping budget. (Don’t have a household budget? This is a perfect time to create one and educate your kids about what all those new clothes, shoes, books, school supplies, and computers cost.)

Check out the following list to see if there is a tax-free shopping day coming to a state near you. (Live in Louisiana? Lucky duck!) And be sure to investigate additional discounts that stores may sponsor to coincide with the dates and get people through the door.

  • Alabama (August 5-7): computers up to $750 per transaction, clothing up to $100, school supplies up to $50, books up to $30.
  • Arkansas (August 6-7): clothing up to $100, no limits on school supplies.
  • Connecticut (August 21-27): clothing and footwear up to $300.
  • Florida (August 12-14): books and clothing up to $75, school supplies up to $15.
  • Iowa (August 5-6): clothing and shoes up to $100.
  • Louisiana (August 5-6): all purchases up to $2,500.
  • Maryland (August 14-20): clothing and footwear up to $100.
  • Mississippi (July 29-30): clothing and footwear up to $100.
  • Missouri (August 5-7): computers up to $3,500, clothing up to $100, school supplies up to $50.
  • New Mexico (August 5-7): computers up to $1,000, clothing up to $100, school supplies up to $15.
  • North Carolina (August 5-7): computers up to $3,500, instructional materials up to $300, computer equipment and accessories up to $250, clothing up to $100, school supplies up to $100, sports equipment up to $50.
  • Oklahoma (August 5-7): clothing up to $100.
  • South Carolina (August 5-7): no limits on computers, school supplies, and clothing.
  • Tennessee (August 5-7): computers up to $1,500, clothing up to $100, school supplies up to $100.
  • Texas (August 19-21): clothing, backpacks, and school supplies up to $100.
  • Virginia (August 5-7): clothing up to $100, school supplies up to $20.

(via the Federation of Tax Administrators)

Posted in Budgeting, Personal Finance, Saving Money, Taxes | Tagged , , | Comments (0)

Top 5 Ways to Save for a Rainy Day

July 19, 2011 – 2:56 pm by How-To Hannah

RetireSensibly.com

Welcome to this week’s edition of our Tuesday Top 5, Econ4U’s weekly tips post to help you manage your money in five easy steps.

CDs, money markets, and Roths — oh my. The world of saving for the future is an alphabet soup, but we’ve put together this handy glossary for helping you figure out where you should stash your cash for a rainy day.

  1. Savings and checking accounts. A savings account is probably the very first account you ever opened — perhaps back when going to the bank meant a free lollipop. These linked accounts are the simplest way to put away money and have access to it when you need it. Just make sure you’re not accidentally draining it by paying overdraft or ATM fees.
  2. Online money market account (MMA). If you would like to make better interest on your money than what your savings account is offering, consider an online money market account. Online banks can pay a higher interest rate on savings because of a lack of overhead (you can check yields here). However, transferring money to your checking account can take 3 days and you may be limited to a certain number of debits per month, so it’s not the best place for a true emergency fund that could save your hide in a crisis.
  3. Certificate of deposit (CD). A CD is a perfect option if you have cash you won’t need for a few years (like for a down payment) and want it to grow with very little risk. Bankrate reports that 3-year CDs are currently paying between 1.5 and 1.9 percent in interest, many with no minimum deposit. However, if you withdraw that money before the CD matures, you’ll pay a penalty that will cancel out whatever you’ve earned in interest.
  4. 401(k) and 403(b) plans. These common retirement account is available through many employers: 401(k)s through companies and 403(b)s through nonprofit groups. If you get a company match or are looking to pay less in taxes, it is your best bet for saving for your golden years. You can deduct any money that you contribute to it and pay taxes when you withdraw it in retirement. Also, a company match is free money that your workplace is trying to put in your pocket, so take them up on that benefit!
  5. Traditional and Roth individual retirement accounts (IRAs). A traditional IRA is similar to a 401(k) in that you can contribute pre-tax dollars to it (up to $5,000 per year). But you can open it yourself at a bank of your choosing in any year in which you earn income. If you are not offered a company match or you think there’s a chance taxes on retirees will be higher in the future than they are now, the Roth IRA is a better bet. You fund it with post-tax earnings so you do not get the tax savings now, but the money can grow and you won’t have to pay taxes on it again in the future. And remember: They earlier you start contributing, the more your money can grow.

Still undecided about how best to save? Check out our features on retirement savings and starting an emergency fund.

Posted in Education, Personal Finance, Saving Money, Taxes, Tuesday Top 5 | Tagged , , , , , | Comments (0)