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Video: Gifts Ideas with Maria Bartiromo
Tweet Share on Facebook December 22, 2008 Comment (3)Over the weekend, I spoke with CNBC's Maria Bartiromo on her show The Wall Street Journal Report with Maria Bartiromo about the hottest gifts this season. You may have already considered the Blu-Ray DVD player, but what about Toshiba's less expensive version? You can watch part of the clip here.
The rest of my recommendations include the Aluratek USB Internet radio jukebox, Mark Bittman's How to Cook Everything Vegetarian, and charitable donations.
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Why a Low Prime Rate Won't Help You
Tweet Share on Facebook December 22, 2008 Comment (5)Over the weekend, my bank -- Wachovia -- sent me an update about my credit card terms. With the Fed cutting rates to new lows, I thought perhaps Wachovia was informing me that the interest rate it charged me on my balance (if I had one) was going down. But that wasn't it at all.
In turns out that Wachovia is changing its policy so that even when the Prime Rate -- that rate that banks use to set consumer interest rates for everything from personal loans to mortgages to auto loans -- goes below 6 percent, my default annual percentage rate will not go below 29.99 percent. (For cash advances, the interest rate is 21.15 percent.)
The average annual percentage rate for credit cards is currently 14.33 percent, according to IndexCreditCards.com.
That suggests banks, in order to protect their own bottom lines, won't be passing on the Fed's low rates to consumers.Has anyone else experienced changes to the credit card terms or other types of loans lately?
UPDATE: To clarify, the default rate is different from the rate charged on balances. That rate will also be increasing, although the amount was not specified.
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Tipping During Recession, Part 3
Tweet Share on Facebook December 22, 2008 Comment (4)Jim at Blueprint for Financial Prosperity shared his own perspective on tipping, which is influenced by his former days as a waiter. His take? If you can't afford to tip, consider staying home. (The opposite of Nick's view posted Friday.) Jim writes, "You can cook your own food for far less than eating out, so if money were really the issue then you wouldn’t be ordering or dining out, you’d be cooking yourself."
Read more -- and the 30-plus comments -- here.
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Tipping During a Recession Debate Continues
Tweet Share on Facebook December 19, 2008 Comment (22)I've received several angry emails over the last few days from readers who say my tipping logic is flawed. Before turning the floor over to one of them, I want to clarify something.
I did not mean to imply that anyone who can't afford a 20 percent tip should stay home. While 20 percent tip on the pre-tax amount of a restaurant meal has become standard, it is also generous, and not in any way obligatory. Tipping 15 percent is still acceptable. While I believe consumers should consider tips part of the cost of going out -- after all, those waiters and bussers are working hard -- I don't think you need to stay home if you can only swing a 15 percent tip. I'm sure the restaurant owners will still appreciate your business.
And now, here is the message from Nick:
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Podcast: Earn More by Freelancing
Tweet Share on Facebook December 18, 2008 Comment (2)For this week's Alpha Consumer Podcast, I interviewed Michelle Goodman, author of My So-Called Freelance Life. She explains why it's possible -- and in some ways, even easier -- to launch a freelance career during a recession. Doing some freelancing on the side also helps to provide additional income security at a time when many workers are worried about keeping their jobs.
LISTEN NOW: How to Earn More by Freelancing
Subscribe to Personal Finance With Kimberly Palmer
You can also pick up this week's Alpha Consumer Tip of the Week on why 2009 isn't something to dread, despite the opinion of some analysts.
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Bernie Madoff Lesson: Diversify
Tweet Share on Facebook December 17, 2008 Comment (5)The stories about families losing their life savings because their money was invested through Bernie Madoff are heartbreaking. In addition to the wealthy and powerful, such as the Uma Thurman’s fiancé, plenty of ordinary folks have also lost out because of the alleged $50 billion fraud perpetuated by Madoff.
Perhaps it’s not always possible to make sure your money in 100 percent safe, but the basic rule of investing – to diversify -- would have helped these victims avoid their fate.
Diversification – in stocks, market segments, and institutions -- reduces the chances of losing everything. If one fund goes under, you still have the others. The families that put all their money with Madoff would have been much less exposed if they spread out their savings to multiple institutions and investors.
Of course, in hindsight, it’s easy to see what the victims could have done better. Now all they can do is wait – and hope to recover some of their assets.
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Should You Tip Less in a Recession?
Tweet Share on Facebook December 16, 2008 Comment (32)I spoke with NPR's Neal Conan today on Talk of the Nation about whether it's okay to cut back on tips during the current recession. Callers who work in the service industry let us know that their tips are down a lot this year. (There were some exceptions -- a couple servers at high-end restaurants said their tips have actually gone up.) One Chinese food delivery man said he barely got $20 in tips from over $400 worth of deliveries.
Passions flared on both sides. I received an E-mail from one consumer who said he didn't think anyone should tip over 15 percent.
What do you think? Is it okay to cut tips when your own budget is squeezed? I tend to think that if you can't afford to tip, then you shouldn't go out to the restaurant.
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3 (More) Ways to Save for Retirement Now
Tweet Share on Facebook December 16, 2008 CommentThis is part two of how to retire during a recession. For part one, click here.
Don’t be tempted by the cash in your retirement account. About 1 in 5 consumers has pulled money out of retirement accounts early, according to the survey. The most common reasons were to pay off credit card debt and to pay down a mortgage. Doing so not only generates penalties, but it also means missing out on any upswing in the market while the money is not invested. While paying down high-interest debt—such as credit card balances—is a priority, Averill says money should be taken out of tax-protected retirement accounts only as a last resort.
Dust off your calculator and crunch some numbers. Most Americans say they don’t know how much money they need for retirement. Some 60 percent say they either have not started planning for retirement or they’re behind schedule. A Bank of America retirement survey conducted back in March found that 53 percent of consumers were behind schedule or had not started, which suggests that the financial crisis has caused even more Americans to get off track.
Don’t let Uncle Sam take your money. More than 1 in 3 Americans with access to a tax-protected account such as a 401(k) do not participate, which means losing out on potential savings. One in four survey respondents reported still having accounts with former employers. In general, financial experts recommend consolidating accounts so it’s easier to monitor them.
[Read full article: 7 Ways to save for Retirement During a Recession]
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4 Ways to Save for Retirement Amid Recession
Tweet Share on Facebook December 16, 2008 CommentWith the recession in full force, saving for retirement isn't as easy as it used to be. A new survey from the Bank of America reveals just how severely people have been affected. About 4 in 10 Americans say they will stay in the workforce longer than they expected to because of the economic downturn. Meanwhile, almost 1 in 5 has withdrawn retirement assets prematurely, often to pay off credit card debt and make mortgage payments.
[Read full article: 7 Ways to save for Retirement During a Recession]
Scale back on the Gucci purchases. Six in 10 respondents said they’re spending less than they were three months ago, with 3 in 10 calling their spending “sharply lower.” Affluent consumers—defined as those with $100,000 to $3 million in investable assets—were just as likely to report cutbacks. Those ages 30 through 49 appear to have it worst, with 7 in 10 reporting cutbacks.
Put the money in your piggy bank instead. Even though respondents said they were spending less, they reported saving less, too, which underscores how difficult it is to put money away during tough economic times. About half of survey respondents said they were saving less than they had been three months ago, with 2 in 10 saying they were saving “much less.” Averill says he thinks consumers are putting their cash toward reducing debt and paying for items that have gone up in price, such as food and, until recently, gas. Also, he says, many people are supporting adult children who have recently graduated from college and can’t find jobs.
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Jackie Onassis: Keep Money Separate
Tweet Share on Facebook December 15, 2008 Comment (10)Jackie Onassis popped up in the New York Times Modern Love column over the weekend with a message about marriage and money. The author, Karen Karbo, recounts:
Years ago, I sat next to Jackie Onassis at a literary event in Boston. We got to talking (or rather she talked and I sat in breathless awe) as she told me the piece of advice she often gave to young women: that they should never marry or mix their money. There was another young woman listening in, and I could see her expression harden in disapproval. But I thought, Exactly! For those of us predetermined to be breadwinners, it’s more fun to date a man than to marry him. We understand that the more people we have under our roof, the more it costs us. I am appalled by how unromantic this sounds, but there you have it.
Whether to combine money or keep it separate comes up often on this blog; in general, I tend to favor combining money for the logistical ease. Still, I can see the benefits of having a stash of one's own, as well. What do you think?
