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The Fed Reports Depressing Consumer News
Tweet Share on Facebook February 13, 2009 Comment (3)The Federal Reserve is out with new data on consumer finances, and as one might expect, the news is not good. While the data was collected before the financial crisis of late 2008, the economists are able to draw some conclusions about how consumers have likely been affected. Among the report's highlights:
- Mean family income rose 8.5 percent between 2004 and 2007, while median income barely budged. That difference is largely explained by income distribution: Because wealthier families experienced some of the greatest income increases, the mean skews upwards.
- A 44 percent drop in average net worth for people in the lowest-quartile of net worth offers another sign of growing inequality in the distribution of wealth.
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Sugar Daddy Dating: A Very Personal Stimulus
Tweet Share on Facebook February 13, 2009 Comment (48)This guest blog entry, from Stephan Smith, a blogger at SeekingArrangement.com, explains the popularity of financially-motivated dating from the perspective of someone who's done it. For more on why the recession seems to have created growth in this industry, see "Sugar Daddies and the New Prostitution Index."
I never strongly opposed the idea of finding a sugar daddy, but it wasn’t until after the economic collapse that I began to reexamine my reservations about being spoiled in return for my ‘companionship’. My journey as a male ‘sugar baby’ seeking a ‘sugar daddy’ began on SeekingArrangement.com – a new site that’s becoming much more than just a dating site for many young, struggling sugar babies like myself.
Sugar daddy arrangements are fast becoming a popular alternative for those seeking no frills instant gratification.
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Your Tax Questions, Answered
Tweet Share on Facebook February 12, 2009 Comment (9)Confused about your taxes? Not sure whether to count that stimulus check as 2008 income? To help answer your tax-related questions, I spoke with John Hewitt, chief executive of Liberty Tax Service. Excerpts:
What should people know before filing their taxes this year?
First, the IRS is finding that 15 percent of taxpayers who received their stimulus payment are putting it on their tax return incorrectly. That would slowdown any tax refund. Make sure that you don't make a mistake on that.
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Valentine's Day Book Club: Love & Money
Tweet Share on Facebook February 12, 2009 Comment (1)At first glance, The Secret Currency of Love: The Unabashed Truth About Women, Money, and Relationships, edited by Hilary Black, gives the impression that women truly are hopeless when it comes to money.
One contributor admits to not knowing the passwords to her bank account or how much her mortgage costs each month. Another finds herself drawn only to penniless and financially dependent men. Another prefers men who can lavish her with luxury.
I wondered where all the women with normal, healthy relationships with money were. But as I read on, drawn in by the honesty of the writers, I realized, it's not that these women have disastrous relationships with money, it's that it's complicated. And by delving into the subtleties of those relationships, the book makes some fascinating revelations. -
Learning Frugality From Our Grandparents
Tweet Share on Facebook February 11, 2009 Comment (3)When my sisters and I were growing up, my dad never missed a chance to tell us about my grandparents' frugality. If we left anything on our dinner plates, he pointed out that his parents, who raised their four sons in post-World War II England, wouldn't have allowed him to waste food like that. If one of us suggested driving the short distance to the grocery store, he reminded us that his father would certainly have walked.
My sisters and I usually rolled our eyes and proceeded with our wasteful ways, but now, as our generation experiences its deepest recession, those lessons aren't looking so antiquated. In fact, tips and tricks from the Great Depression and earlier eras of thrift are experiencing a renaissance of sorts. According to Jed Lyons, chief executive of the Rowman & Littlefield Publishing Group, guides to living frugally are so popular that he's reissuing decades-old books. Among them: The Guide to Good Cheap Hunting, Green House: Eco- Friendly Disposal and Recycling at Home, and Candlemaking.
In the spirit of such self-reliance, I went in search of other long-lost lessons from those who experienced the Great Depression firsthand. I found myself repeatedly awestruck by the depth of their resourcefulness -- and wondering whether many of us could replicate their techniques if we had to.
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Consumers Fail to Avoid Investing Fees
Tweet Share on Facebook February 10, 2009 Comment (5)Fees on retirement account mutual funds can sap thousands of dollars away from nest eggs. They're often buried away in paperwork, but new research suggests that even if consumers know about the fees, they're not good at avoiding them.
On Capitol Hill yesterday, researchers from RAND shared those disturbing findings, which are based on a survey of over 1,000 respondents. The participants were asked to invest money in funds carrying different fees. One fund was clearly the best; it offered the lowest annual fees as well as lowest sales commission charge (also known as "load"). All of the funds were S&P 500 index funds, so would produce equivalent returns.
But only half of the people selected that low-fee fund. In fact, one-third put their money in the most expensive fund. They were, in other words, effectively throwing money away.
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Audio: 7 Ways to Make Extra Money
Tweet Share on Facebook February 10, 2009 CommentOver the weekend, I spoke with WTOP in Washington about ways to earn extra money. Ideas include starting a blog, designing T-shirts, and selling products Avon or Pampered Chef.
LISTEN NOW: 7 Ways to Make Extra Money
Subscribe to Personal Finance With Kimberly Palmer
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Nadya Suleman's Challenge: Paying for 14 Kids
Tweet Share on Facebook February 9, 2009 Comment (190)If just one child costs an average of $13,000 during the first year of its life, then how will Nadya Suleman, the mother of eight newborns (plus six older children) manage to feed, clothe, and educate her kids?
Most families can prepare financially by saving up at least $5,000 to $10,000 for baby-related costs, practice living in a way that allows them to save $1,000 a month (the average cost of child care), and building up an emergency fund for at least three months of living expenses. In theory at least, Suleman has another tool her disposal: Celebrity status. She could try to go the way of Jon and Kate Plus 8 and The Duggars, who star in their own television shows.
But signs so far suggest it will be difficult for Suleman to make much money off of her now-famous story. For some reason -- is it because she's a single mom? Because she already has so many kids? Because she lives with her mother? -- Americans have reacted with more anger than sympathy. Jezebel reports that Suleman's own mother has been publicly criticizing her, while the New York Times notes that large families in general have come under fire from judgmental strangers. For some reason, people have shifted from embracing large families to being skeptical of them. (Although no one seems to mind when rich celebrities like Angelina Jolie and Brad Pitt develop a large brood -- maybe because they can easily afford it.) -
Elizabeth Warren: Middle Class Lacks Security
Tweet Share on Facebook February 9, 2009 Comment (6)With her appointment to head up congressional oversight of Uncle Sam's $700 billion bank, Elizabeth Warren has come to symbolize much of the skepticism surrounding how that money is being spent. An expert on the middle class and a law professor at Harvard, Warren has long warned about predatory lending and growing household debt levels. Her panel has already criticized the Treasury Department for not doing more to help struggling families and has called for greater transparency in the use of the bailout funds. I spoke with Warren about the state of the U.S. economy and its impact on middle-class life. Excerpts:
What caused our current recession?
This recession started years ago with declining wages and rising core expenses. Families tried to adjust by working more jobs and longer hours, depleting their savings, and taking on debt. Now, the American family is crushed by debt, and job problems will make the problem worse. ... The financial system can't be stabilized without stabilizing families. If families continue to choke on debt they cannot pay, the whole system will continue to falter.
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Gender Battles at the Dry Cleaners
Tweet Share on Facebook February 6, 2009 Comment (9)I've often wondered why my shirts cost double -- or more -- to dry clean than my husband's. Even women's trousers seem to come with a higher price tag. Finally, someone is investigating this discrepancy. Janet Floyd, president of Floyd Advisory, reports that on average, women in New York pay 73 percent more than men for laundered shirts.
The reason, according to dry cleaners, has to do with the shape of women's shirts and the machines available. It seems strange that we've had no technological innovations that would make it easy to press women's shirts, given the preponderance of women donning suits every day. But Sadie at Jezebel makes a good point about the current economy: Given the fact that dry cleaners are strapped right now, they probably don't want to spend money investing in new machines, even if they existed.
