Darla Mercado writes on CNBC Personal Finance: “Investing in an effective and tax-efficient manner isn’t the No. 1 financial goal for most Americans. That’s the findings from a new report by BMO Wealth Management. The bank polled 1,018 adults online, asking them about their financial priorities and anxieties. When asked ‘What is the single financial priority that is most important to you?’ 31 percent — the largest share of participants — said debt reduction was their top financial goal.” (cnbc.com)
Morgan Quinn writes: “Taking an early withdrawal from your 401(k) is not only costly in the short term, it can also jeopardize your long-term retirement goals… Because of the severe financial penalties, withdrawing money early from retirement accounts should be done only in an extreme emergency, ideally after any emergency funds and investments have been depleted.” Withdrawing money early from your retirement accounts carries heavy financial consequences, but here are 4 scenarios that’s OK to dip into 401(k):
- You become totally and permanently disabled
- You’re drowning in medical debt
- You’re getting divorced
- You’re starting a business
According to 2016 Auto Financing Report from WalletHub, buyers who have fair credit will end up spending about six times more to finance a vehicle than someone with excellent credit, which equates to $6,304 in additional interest payments over the life of a $20K, five-year loan. As the auto industry witnessed its highest sales in 15 years, WalletHub realeases a study to help you make an informed decision about your next vehicle. Here are other key findings:
- Interest Rates: For new cars, interest rates are at their lowest point in the past three years, with the average new-car loan today charging 17 percent less interest than the average used-car loan.
- Credit Standing: Buyers with fair credit will end up spending about six times more to finance a vehicle —about $6,304 in additional interest payments over the life of a $20,000, five-year loan — than consumers with excellent credit.
- Financing Sources: Consumers in the market for a new car should begin their search for financing with car manufacturers (rates at 38 percent below average) and credit unions (rates at 29 percent below average). Secondary options include national banks (rates at 2 percent above average) and regional banks (rates at 30 percent above average).
- Transparency: Car manufacturers continue to lack transparency when it comes to leasing offers, with the average automaker receiving a WalletHub Transparency Score of 4.68 out of 10.
The mob burns Venezuela man alive over $5 as the country sinks deeper into chaos and the justice system falls apart. Five dollars might not be a lot for you, but in Venezuela it could have bought a family a week’s worth of food. The AP reported: “The mob didn’t know at first what Roberto Bernal had done, but he was running and that was enough. Dozens of men loitering on the sidewalk next to a supermarket kicked and punched the 42-year-old until he was bloodied and semi-conscious. After all, they had been robbed of cell phones, wallets and motorcycles over the years, and thought Bernal had a criminal’s face. Then a stooped, white-haired man trailing behind told them he’d been mugged. The mob went through Bernal’s pockets and handed a wad of bills to the old man: The equivalent of $5. They doused Bernal’s head and chest in gasoline and flicked a lighter. And they stood back as he burned alive.” One of the participant, Eduardo Mijares, said: “We wanted to teach this man a lesson. We’re tired of being robbed every time we go into the street, and the police do nothing.” (ap.org)
Thanks to aggressive credit card pushing by banks and growing consumer confidence, credit-card debt balances are poised to hit $1 trillion this year, coming close to the all-time peak of $1.02 trillion in July 2008. Consumers are taking on other forms of debt, too. Auto-loan balances surpassed $1 trillion in the first quarter, a record for the industry, according to a report Thursday from credit bureau Experian. Banks are aggressively pushing their plastic and cashing in on the profit from consumers. “Credit cards are the best business in banking,” said Robert Hammer, who runs the consulting firm. (wsj.com)
Two-thirds of Americans would have difficulty coming up with the money to cover a $1,000 emergency, according to the poll conducted by Associated Press-NORC Center for Public Affairs Research. Three-quarters of people in households making less than $50,000 a year and two-thirds of those making between $50,000 and $100,000 would have difficulty coming up with $1,000 to cover an unexpected bill. Even for the country’s wealthiest 20 percent — households making more than $100,000 a year — 38 percent say they would have at least some difficulty coming up with $1,000. Having a modest, immediately available emergency fund is recognized as critical to financial health. Families that have even a small amount of non-retirement savings, between $250 and $749, are less likely to be evicted from their homes and less likely to need public benefits, an Urban Institute study found. (ap.org)
The first few months of a new year can be a stressful time financially. The Christmas holidays typically lead to depleted savings and higher credit card balances, while tax season is right around the corner. Unfortunately for most us, this isn’t a seasonal dilemma but a chronic problem that brings anxiety throughout the year. Indeed, as many as 44 percent of American households don’t have enough savings to cover basic expenses for even three months. Without a savings cushion, even regular seasonal expenses like holiday celebrations may end up feeling “unexpected” and lead households to turn to credit to cover costs. U.S. consumers currently hold US$880 billion in revolving debt, with an average credit card balance of almost $6,000. The picture is even more dire for lower-income households. So how can we turn this around? [Read more…]
After deciding it doesn’t want to promote predatory lending practices that are harmful to consumers, Google decided to ban ads for payday loans on their ads systems. “Research has shown that these loans can result in unaffordable payment and high default rates for users so we will be updating our policies globally to reflect that,” Google’s product policy director, David Graff, writes in a blog post. Payday loans often come with extremely high interest rates if they aren’t paid back immediately, which can push people further in debt. Georgetown’s Center on Privacy and Technology notes in a statement, “Payday lenders profit from people’s weaknesses — particularly poor people and people of color. Every time someone clicks on those ads, search engines profit, too.” Of course Google will lose the revenue from the banned ads, but it will earn more trust from visitors for its other ads. Payday loans will be banned from Google globally starting June 13th.
You probably have heard of the latte factor. That little innocent morning latte could cost you tens of thousands of dollars over the course of your working life. If you have trouble saving money for emergency fund, to pay off debt or to invest for retirement, there are some quick ways to save by making small changes to your spending habits. Assuming you plan to retire after 40 more years and that your savings will grow by 7.8% annually, here are 7 quick ways to save over $100,000 during your working life:
- Eating out too much: $207,598
- Taking cabs often: $235,963
- Smoking: $579,957
- Buying coffee every day: $79,085
- Paying for a gym you don’t use: $131,808
- Streaming commercial-free music: $32,919
- Ordering the wine: $151,579
Large debts are not good for individuals nor countries. Individuals can take care of their personal finance to fix the debt problem. What’s about country’s deficit? Warren Buffett says he could fix the U.S. deficit problem very quickly. He told CNBC: “I could end the deficit in five minutes. You just pass a law that says that any time there’s a deficit of more than three percent of GDP, all sitting members of Congress are ineligible for re-election.” (cnbc.com)
Starting June 25 Fannie Mae introduces new rules to make it harder to get a mortgage if you carry a credit card balance. Basically, the new guidelines use trended credit data as a rating system to evaluate borrower’s ability to manage revolving credit card accounts. “A borrower who uses revolving accounts conservatively (low revolving credit utilization and/or regular payoff of revolving balance) will be considered a lower risk. A borrower whose revolving credit utilization is high and/or who only makes the minimum monthly payment each month will be considered higher risk as it indicates the borrower may have trouble making payments in the future.” Kristin Wong on Lifehacker points out that “if you pay your balances in full every month, you’re probably good. If you have a revolving balance, you’re considered a risk, and depending on how much debt you’re revolving, it could prevent you from getting a loan.” (lifehacker.com)
For middle class earning between $40,000 and $100,000, 44 percent could not come up with $400 in an emergency. 27 percent of those making more than $100,000 also could not. This is not poverty. So what is it? Rebecca Rosen on The Atlantic argues the financial insecurity “that has no name” derived from the costs associated with raising children, especially housing and education. Not surprisingly housing and education the biggest sources of debt. American middle class households are falling into circles of financial hell as they are pressured to make sure their kids succeed. Rosen pointed out that “housing and education appear to be two distinct categories of spending, but for many families they are one and the same: For the most part, where a family lives determines where their kids go to school, and, as a result, where schools are better, houses are more costly. This is both cause and effect: Where houses are expensive, the tax base is bigger and schools have better resources, and where schools are better, there is more demand for housing.” (theatlantic.com)
Kathleen Elkins writes on Business Insider: “Earning a lot of money doesn’t necessarily make you rich. At the end of the day, no matter what your paycheck reads, you still have to save and invest your money if you want to accumulate wealth.” Here are 9 signs you aren’t saving enough money:
- You can barely pay your bills each month
- You tell yourself you’ll save more when you start making more
- You haven’t started saving for retirement
- You don’t set aside money for big, upcoming purchases
- You haven’t started investing
- You don’t have an emergency fund
- You spend over 40% of your income on housing
- You don’t track your expenses
- You can’t pay more than the minimum on your credit card balance
Elkins also shows tips on how to improve for each of the shortcoming in the article. (businessinsider.com)
Beware of the subscription-fueled future of online shopping, a business model that attracted a billion-dollar bet from venture capital investors. Bloomberg reported about this future of shopping that traps you in a club you didn’t know you join. Hailee Taylor purchased a lingerie item from an e-commerce website called Adore Me for $19.95 but ended up costing her more than $300. Adore Me maintains a subscription model in which it charges users a fee of around $40 a month, even if customers don’t purchase anything. Adore Me isn’t the only shopping portal or service that runs this sort of tactic. “It’s the new thing,” says Francisca Allen, the deputy district attorney of California’s Santa Clara County. “There’s thousands and thousands of companies that do this.” These companies have made it frustratingly difficult to cancel these subscriptions by making you to sit through a one-hour call to the customer representative. “Hundreds of customer complaints against Adore Me and other subscription e-commerce businesses are stacking up at the Federal Trade Commission, according to records obtained by Bloomberg. They follow a pattern: Shoppers believe they’ve been tricked into signing up for recurring credit card charges, often for a relatively small amount that can be easily overlooked in a monthly bill. Then companies make it an exasperating hassle to quit and get a refund.” (bloomberg.com)
The federal debt has increased by more than $1 trillion in 6 months since budget deal was passed. As reported by CNSNews, “at the close business on Oct. 30, 2015, the total federal debt was $18,152,981,685,747.52. By the close of business on April 28, 2016—the latest date for which the Treasury has published the number–the total federal debt was $19,186,207,744,589.55. That is an increase of $1,033,226,058,842.03. The $1,033,226,058,842.03 increase in the debt in the six months since then equals approximately $6,828 for each of the 151,320,000 persons whom the Bureau of Labor Statistics estimated had a full or part-time job in the United States as of this March.” Uncontrollable debts are not good for individuals, families, cities or countries. (cnsnews.com)