Personal Finance News

Half of Americans Are Just One Paycheck Away From Financial Disaster

May 16, 2019 Leave a Comment

A new study from NORC at the University of Chicago, an independent social research institution, found that 51% of working adults in the United States would need to access savings to cover necessities if they missed more than one paycheck. MarketWatch reports:

Certain communities were more prone to economic hardship in the event of missing a paycheck. Roughly two-thirds of households earning less than $30,000 annually and Hispanic households would be unable to cover basic living expenses after missing more than one paycheck, the researchers found.

“Even short disruptions in pay can cause significant hardship, as most Americans appear to be living paycheck-to-paycheck,” Angela Fontes, director of the Behavioral and Economic Analysis and Decision-Making (BEAD) program at NORC at the University of Chicago, said in the report.

Adult Children Are Costing Many Parents Their Retirement Savings

April 24, 2019 Leave a Comment

Financial independence, once a hallmark of adulthood, has gone by the wayside as adult children increasingly depend on their parents to help them cover the cost of rent, student loans, health insurance and more. But parents’ desire to give their children a financial assist could be misguided — and even backfire in the long run. Half of American parents are unable to save as much as they’d like to for retirement, and their grown offspring — whom they still count as dependents — are to blame, according to a new Bankrate.com study.

CBS News reports:

Half of American parents have cut back on their retirement savings to help pay their children’s bills, a Bankrate.com study shows.
Parents are putting their kids’ car insurance, cell phone bills, credit card debt and health care costs ahead of their own needs to grow their retirement funds.
Kids miss out on learning to be independent. “When you write your first rent check or car loan check it feels so good to be able to face some problem and fix it for yourself,” says one expert.

Getting Rid of Debt Makes Your Brain Work Better

March 29, 2019 Leave a Comment

Getting rid of debt doesn’t just unburden finances, it takes a weight off the mind that clears up cognitive functioning, lessens anxiety and improves impulse control. MarketWatch reports:

The findings come from researchers at the National University of Singapore’s Social Service Research Centre, who studied almost 200 low-income people who unexpectedly had portions of their long-running mortgage, utility and municipal debts paid down by a charity.
The study found:
• Average error rates in the cognitive function tests fell to 4% after the debt was paid down, compared to a 17% error rate beforehand.
• The proportion of participants showing generalized anxiety disorders went from 78% to 53% after the debt relief.
• Numbers of people showing so-called “present bias,” which favors instant gratification, dropped to 33% from 44%, a sign that their impulse control had improved.

Average U.S. Mortgage Size Hits Record-High $354,500

March 13, 2019 1 Comment

The average size of mortgages U.S. consumers were looking to obtain to buy a home or to refinance one hit a record high of $354,500 last week, suggesting resilience in the higher end of the housing market, the Mortgage Bankers Association said on Wednesday. Reuters reports:

On the other hand, the rise hints that first-time buyers face a challenge in finding their home of choice heading into spring, which is typically the busiest time of the year for home sales, the Washington-based industry group said…
The average interest rate on 30-year fixed-rate mortgages with conforming loan balances of $484,350 or less decreased to 4.64 percent from 4.67 percent.
Most other fixed mortgage rates that the MBA tracks fell by 0.05 to 0.06 percentage point last week.
However, interest rates on 30-year “jumbo” mortgages with loan balances greater than $484,350 averaged 4.45 percent, up from 4.41 percent the week before.

Phone Scammer Gets 6 Years in Prison After He Made the Mistake of Calling William Webster, Ex-FBI and CIA Director

February 12, 2019 Leave a Comment

The Washington Post reports about phone scammer Keniel A. Thomas, who made the mistake of calling William H. Webster. Thomas told 90-year-old Webster that he had won $72 million and a new Mercedes Benz in the Mega Millions lottery, but that he needed to send $50,000 in taxes and fees to get his money. Instead of sending $50,000 to the random caller, Webster performed reverse phone sting for FBI.

Thomas also told Webster he’d done his research on the top winner. “You’re a great man,” the scammer cajoled. “You was a judge, you was an attorney, you was a basketball player, you were in the U.S. Navy, homeland security. I know everything about you. I even seen your photograph, and I seen your precious wife.”

Thomas’s research didn’t turn up everything. He didn’t learn that the man he was calling was the former director of the FBI and the CIA, the only person ever to hold both jobs. And he didn’t know that Webster would call him back the next day with the FBI listening in.Thomas was arrested in late 2017, after he landed in New York on a flight from Jamaica. He pleaded guilty in October and faced a prison term of 33 to 41 months under federal sentencing guidelines. But with Webster and his wife in the courtroom, Chief U.S. District Judge Beryl Howell on Friday added another 2 years to Thomas’s sentence, giving him nearly six years to serve. Howell said that the scam qualified as “organized criminal activity” and that Thomas posed “a threat to a family member of the victim.”

Most Americans Just One Serious Illness Away From Bankruptcy

February 12, 2019 Leave a Comment

A study of bankruptcy filings in the United States showed that medical expenses contribute to two-thirds of bankruptcy filings in U.S. For many Americans, putting one’s health first can mean putting one’s financial status at risk. Study Finds described:

The study, led by Dr. David Himmelstein, Distinguished Professor at the City University of New York’s (CUNY) Hunter College and Lecturer at Harvard Medical School, indicates that about 530,000 families each year are financially ruined by medical bills and sicknesses. It’s the first research of its kind to link medical expenses and bankruptcy since the passage of the Affordable Care Act (ACA) in 2010.
“Unless you’re Bill Gates, you’re just one serious illness away from bankruptcy,” Himmelstein says in a release by the Physicians for a National Health Program. “For middle-class Americans, health insurance offers little protection. Most of us have policies with so many loopholes, copayments and deductibles that illness can put you in the poorhouse.”

World’s 26 Richest Own As Much As Poorest Half of Humanity

January 20, 2019 Leave a Comment

In an annual wealth check released to mark the start of the World Economic Forum in Davos, the development charity Oxfam said 2018 had been a year in which the rich had grown richer and the poor poorer. As a result, the report concluded, the number of billionaires owning as much wealth as half the world’s population fell from 43 in 2017 to 26 last year. The Guardian reports:

Oxfam said the wealth of more than 2,200 billionaires across the globe had increased by $900bn in 2018 – or $2.5bn a day. The 12% increase in the wealth of the very richest contrasted with a fall of 11% in the wealth of the poorest half of the world’s population …
Among the findings of the report were:
* In the 10 years since the financial crisis, the number of billionaires has nearly doubled.
* Between 2017 and 2018 a new billionaire was created every two days.
The world’s richest man, Jeff Bezos, the owner of Amazon, saw his fortune increase to $112bn. Just 1% of his fortune is equivalent to the whole health budget for Ethiopia, a country of 105 million people.

The Truth About Becoming an American Millionaire

January 17, 2019 Leave a Comment

The American dream is alive and well, and Americans who aspire to build wealth and become rich may be surprised to know they don’t need a flashy job. or come from an affluent family to build a fortune. The truth is, eight out of 10 millionaires reach that milestone through their company’s 401(k) plan, according to the National Study of Millionaires by Ramsey Solutions. Additionally they are hitting it years before the traditional retirement age. Julia Limitone writes on Fox Business:

“Typically they are hitting it around 25 to 28 years, so right before age 50,” said Chris Hogan of Ramsay Solutions to FOX Business’ Maria Bartiromo. on Tuesday. “So that shows using the 401(k) and 403(b) and IRAs puts people on the path to build wealth over time.”
What’s more, it’s not the glamorous jobs like being a professional athlete or entertainer that are raking in the dough. Rounding out the top five professions were engineers, accountants, teachers, managers and attorneys, Hogan said.
Hogan also offered tips for the pursuit of millionaire status. In his opinion, one of the biggest mistakes made is not understanding the threat associated with debt.
“Any time you have debt in your life, you’re paying interest and so that’s preventing you from growing your money,” he said.

Jack Bogle, Founder of Vanguard Group and Creator of the Index Fund, Dies at Age 89

January 16, 2019 Leave a Comment

Jack Bogle, who founded Vanguard Group, an investing juggernaut now with more than $5.1 trillion in assets under management, and created the world’s first index mutual fund, has died. He was 89. CNBC reports:

Bogle passed away on Wednesday in Bryn Mawr, Pennsylvania, according to a statement from Vanguard.
Bogle, who preached buy and hold investing, was considered one of the world’s greatest investors. His index mutual fund enabled investors to achieve high returns but at lower costs than for actively managed funds.

He founded Vanguard, the world’s largest mutual fund organization, in 1975, and later served as chairman and CEO until 1996. Vanguard now manages assets from more than 20 million investors in about 170 countries.

The US Middle Class is Disappearing…Into the Upper Middle Class

January 16, 2019 1 Comment

Yes, the America middle class is disappearing. 38% of US families were middle class in 1979 vs. 32% in 2014. But where did that 7% (6.8 percentage points to be exact) go? James Pethokoukis writes on American Enterprise Institute:

“Well, of the five income groups (poor, lower middle class, middle class, upper middle class, and rich) displayed, the bottom three got smaller, the top two bigger. The poor shrank by 4.5 percentage points, the lower middle class by 6.8, the middle class also by 6.8% But the upper middle class got a lot bigger, expanding by 16.4 points, and the rich by 1.8 points.”

Here is how upper middle class is defined, using research from economist Stephen Rose of the Urban Institute:

“Using Census Bureau data available through 2014, [Rose] defines the upper middle class as any household earning $100,000 to $350,000 for a family of three: at least double the U.S. median household income and about five times the poverty level. At the same time, they are quite distinct from the richest households. Instead of inheritors of dynastic wealth or the chief executives of large companies, they are likely middle-managers or professionals in business, law or medicine with bachelors and especially advanced degrees.”

How to Invest in Property and Look After the Planet

January 3, 2019 Leave a Comment

If you’re looking to invest in property, saving the planet can be easier than you think. Choosing a sustainable development by a trusted property developer is a great way to make sure the housing of the future is eco-friendly. Consumers have considerable impact on the market and the number of both tenants and investors wanting a property that is better for the planet is constantly on the rise. As there are more renters than ever before, more of them are looking for a landlord and a rental property that is eco-friendly, proving a lucrative new investment opportunity.

The environmental impact of a new building is high on developer’s agendas, and they take several steps to ensure the sustainability of a development. West Point Manchester, sold by RW Invest is a great example of an eco-friendly property development, which offers environmentally friendly living as well as all of the modern amenities tenants expect. This new apartment building features innovative features and low carbon technology, with 100% energy efficient LED lights. Solar panels generate energy, as does an air source heat pump and a state of the art heat recovery ventilation system to reduce how much energy is wasted. There are a number of sustainable property developments available on the market, that are perfect for those looking for an eco-friendly property opportunity.

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Joy From Giving Lasts Much Longer Than Joy From Getting

December 24, 2018 Leave a Comment

According to two new studies conducted by researchers with the University of Chicago and Northwestern University, giving to others rather than to ourselves makes us happier. Study Finds explains:

Have you ever noticed that your enjoyment in a repeated activity or event decreases over time no matter how wonderful it is? When this happens, you are experiencing what researchers call hedonic adaptation. The joy of having our own desires met is always fleeting. Perhaps surprisingly, however, giving to others creates a more lasting happiness.
“If you want to sustain happiness over time, past research tells us that we need to take a break from what we’re currently consuming and experience something new,” says study co-author Ed O’Brien, of the University of Chicago Booth School of Business, in a releasefrom the Association for Psychological Science. “Our research reveals that the kind of thing may matter more than assumed: Repeated giving, even in identical ways to identical others, may continue to feel relatively fresh and relatively pleasurable the more that we do it.”

Jeff Bezos Earns More In 30 Seconds Than The Average Worker Makes In A Year

December 10, 2018 Leave a Comment

While millions of Americans no doubt enjoyed some degree of schadenfreude watching the correction in FAANG stocks wipe out nearly $1 trillion of value from the largest US tech firms: Mark Zuckerberg alone has lost nearly $100 billion of his personal wealth since the beginning of 2018, and Amazon CEO Jeff Bezos has lost as much as $13 billion or more in a single day. But that doesn’t change the fact that the world’s billionaires enjoyed their highest-earning year on record in 2017 as their wealth increased by a combined $9 trillion. ZeroHedge reports:

Helped by the asset-friendly policies of the world’s largest central banks, the wealthiest 1% of the world now owns nearly half the wealth. The 54 billionaires living in the 54 UK alone have an aggregate $160 billion in wealth, equivalent to over 6% of Britain’s GDP. Meanwhile, the average worker earns about $37,000 a year. Virgin CEO Richard Branson earns that amount in roughly 25 minutes.
Even more galling, Facebook CEO earns the same sum every 60 seconds. Bezos earns the same sum every 28 seconds.

How Is Your Home Insurance Rate Calculated?

December 10, 2018 Leave a Comment

Home insurance is one of those things that can just seem like an added monthly bill that is completely unnecessary but should there ever be a time when you require that insurance, it could quickly pay for itself many times over. No-one likes to think about emergency situations happening, damage to their home, and other issues that can require some rather costly repairs, but the reality is that life happens.

If you’ve decided it’s time to start looking into homeowners insurance and at least consider some basic coverage, then you are probably curious as to how your rate is determined. The amount you pay for home insurance is actually determined by a number of factors, some of which will be under your control whereas others won’t. Let’s take a closer look.

The Home Itself

Insurance Land, an insurance company located in Florida says the biggest factor in determining your insurance premium is the house itself. Any insurance company is going to look at such things as the type of structure, the size of the home, the age of the home, and even what kind of material has been used to build the home.
Insurance Land also points out that if you happen to have an older home, sometimes your rate can be higher, but that can depend on the building materials used. This is exactly why they offer free quotes, which can be done online so that you can get an idea of what your rate may be.

What is Your Claims History?

Another big determining factor is your claims history. Perhaps you have owned other houses in the past, and maybe you’ve had to make an insurance claim. That will remain in your history and can sometimes act as a red flag for an insurance company. At the very least it can push you into the higher premium category.

If you’ve had a number of claims in the past, it may not only mean you will pay more for insurance, but you could find it difficult to be insured at all.

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American Debt is Set to Hit $4 Trillion

December 1, 2018 Leave a Comment

It’s only been five years since Americans hit a grand total of $3 trillion in consumer debt and yet, by the end of 2018, that figure is expected to jump by another trillion. CNBC reports:

In the first nine months of 2018, Americans had a cumulative $3.93 trillion in debt, excluding mortgages, with $1 trillion of that from credit cards and $2.93 trillion from other sources such as student loans and auto loans. With holiday shopping underway, Americans’ credit card bills are set to increase by at least 5 percent, according to mortgage site LendingTree. That $600 million or so in extra spending is likely to bring consumer debt to a new high of $4 trillion.

Still, LendingTree’s chief economist Tendayi Kapfidze says consumers shouldn’t worry. “It’s a big number, but it’s actually not that concerning, because of the income growth we’ve seen since the crisis,” Kapfidze tells CNBC Make It.

One reason he’s not too worried, Kapfidze says, is that the economy is more stable in 2018 than it was in 2008, and real estate values and consumer bank deposits have grown more than debt has. “Deposits have grown by $2.5 trillion more than consumer debt, and homeowners have nearly $10 trillion more in home equity than they did a decade ago,” he says.