Personal Finance News

Latest News About Personal Finance

U.S. Household Net Worth Set Record at $92.8 Trillion

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As reported by the Federal Reserve, U.S. household net worth rose to $92.8 trillion during the fourth quarter of 2016. Rising values in the stock market and real estate contributed to the record net worth.

Compared to the previous period, household net worth rose $2 trillion, up from $90.7 trillion.

Meanwhile, household debt increased at an annual rate of 3.8 percent in the fourth quarter of 2016. Consumer credit grew 6.2 percent, while mortgage debt grew 3.1 percent at an annual rate.

With the U.S. economy adding 235,000 jobs in February, surpassing economists’ expectation, the central bank is widely expected to raise interest rates this month.

Millennials Struggle As College Degrees Don’t Guarantee Jobs

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Millennials are finding that education only guarantees debt, not a stable job. Even in STEM (Science, Technology, Engineering, Mathematics), graduates are struggle to find a good job. CBC News reported that 33% of the engineers in Ontario are now underemployed. “I actually thought that coming out of school I would be a commodity and someone would want me,” said one 21-year-old mechanical engineering graduate. “But instead, I got hit with a wall of being not wanted whatsoever in the industry.” He’s applied for 250 engineering jobs, resulting in four interviews, but no job offer, and he’s since broadened his job search to the deli counter at the local grocery store, because “It’s a job.”

“More than 12% of Canadians between the ages of 15 and 24 are unemployed,” reports CBC News, “and more than a quarter are underemployed, meaning they have degrees but end up in jobs that don’t require them. The latest numbers from Statistics Canada show that the unemployment rate for 15-to-24-year-olds is almost twice that of the general population… A 2014 Canadian Teachers’ Federation report found nearly a quarter of Canada’s youth are either unemployed, working less than they want or have given up looking for work entirely.”

CBC News also points out that the number of students enrolled in Canadian universities has more than doubled since 1980, from 800,000 to over two million. More graduates will soon find out that a post-secondary education is no longer a guarantee of stable employment. (cbc.ca)

Money Makes the World Go Round

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When money topic arises, what does money mean to you? Of course, money is one of the most important thing in life. From buying your food to paying your bills, money facilitates the business transactions around the world. Overall, money makes the world go round.

Money is essential to society in the world of commerce. At individual level, it shapes the way entrepreneurs think about their small businesses. After all, you create your business to make money right? But there’s a danger in it. If you only focus on making money, you will probably end up miserable. Instead, your business goal should be based from your passion. Money will eventually come with your success.

With the right amount of money, you can buy a lot of stuff and solve a lot of problem in your life. However, can money buy happiness? That’s a great topic and many personal finance bloggers have written about.

Research suggests that people are often happier when they spend their money on experiences rather than things. Also, you should use your money to buy many small pleasures instead of few big ones. Happiness is more strongly associated with the frequency than the intensity of the experience. Thus, by treating yourself to frequent, fleeting pleasures (rather than more sporadic but prolonged experiences), you can capitalize on the burst of delight that accompanies the first minute of body massage, the first bite of chocolate cake, and the first sight of the sea.

Anyway, here’s the money song, from the musical drama film Cabaret, for you to enjoy: Money Makes the World Go Round.

Highest Paying Jobs in America

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Job site Glassdoor collected data from employees with positions that have at least 100 reported salaries to come up with the list of highest paying jobs in America. There’s no surprise as physicians occupied the top spot with a median base salaary of $187,876. Medical and STEM fields dominate the list. Here’s the top 25 jobs along with median base salary.

Highest Paying Jobs

1 Physician $187,876
2 Pharmacy manager $149,064
3 Patent attorney $139,272
4 Medical science liaison $132,842
5 Pharmacist $125,847
6 Enterprise architect $112,560
7 Physician assistant $112,529
8 Applications development manager $112,045
9 R&D manager $111,905
10 Corporate controller $110,855
11 Software engineering manager $109,350
12 IT architect $105,303
13 Software architect $104,754
14 Nurse practitioner $104,144
15 Solutions architect $102,678
16 Data architect $102,091
17 Actuary $99,507
18 IT program manager $98,883
19 UX manager $98,353
20 Systems architect $97,873
21 Plant manager $97,189
22 Scrum master $95,167
23 Financial planning and analysis manager $94,862
24 Nuclear engineer $94,852
25 Attorney $94,695

[Read more…]

Restaurant Billionaire: “We Can’t Afford” to Give Workers Healthcare

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Billionaire Tilman Fertitta, sole owner of Landry’s Inc., a corporation responsible for a number of recognizable chain restaurants including Landry’s Seafood, Claim Jumper, Bubba Gump Shrimp Co., Rainforest Cafe, and McCormick & Schmick’s Seafood & Steaks, said that he can’t afford to give his employees in San Francisco healthcare.

Billionaire Fertitta employs as much as 60,000 people. Recently San Francisco requires certain types of businesses to contribute to their workers’ healthcare coverage. That means Fertitta has to offer healthcare to his San Francisco employees out of his profit or pass the costs to consumers.

Fertitta believes that San Francisco shouldn’t mandate his restaurants to pay employees’ healthcare. “Do you realize, all the restaurants in San Francisco, we all have an added charge?” says Fertitta. “We have a 3 percent or 4 percent or 5 percent add-on to the menu because they make us give all our employees full healthcare. We can’t afford to do it.”

Americans Consume More Bottled Water Than Soda for the First Time Ever

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Annual sales of bottled water surpass soda in the U.S. for the first time ever. The Wall Street Journal reported: “Americans now officially drink more bottled water than soda. It’s a shift that decades ago might have seemed unthinkable—that consumers would buy a packaged version of something they could get free from a tap. But bottled-water sales have been growing in the U.S. ever since the arrival of Perrier in the 1970s. The gains accelerated in recent years amid concerns about the health effects of sugary drinks and the safety of public-water supplies. Bottled-water consumption in the U.S. reached 39.3 gallons per capita last year, while carbonated soft drinks slipped to 38.5 gallons, according to industry tracker Beverage Marketing Corp.” (wsj.com)

Sources: Beverage Marketing Corp.

 

How to Cash Out Pension Plan Early

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The Pension Plan is a tax qualified retirement plan designed to provide you with additional income when you retire. Most of the time you don’t need to make any contributions and the money is funded solely by your employer. This cash-balance pension is kept in a safe interest bearing accounts. The interest credits on your pension balance might be based on the annual interest rate on 30-year U.S. Treasury bonds. Any distribution of benefit you receive from the Pension Plan is considered taxable income.

So can you cash out a pension early? Yes you can. The best way to avoid any penalty when you cash out your pension early is to roll your money into an IRA when you leave the company. But first, let’s talk about the penalty when you cash out your pension early.

Penalty for Cash Out Pension Plan Early

If you receive a lump sum distribution prior to reaching age 55, you may be required to pay an additional 10% Federal income tax. You can avoid paying the additional tax on a lump sum distribution by rolling over this distribution into an IRA, Roth IRA, or another eligible retirement plan, which is usually sponsored by another employer. [Read more…]

Secret to Warren Buffett’s Investment Success

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Warren Buffett is well known as a nice and lovable gentleman. For decades Buffett shows that allocating capital in the game of investment can be really fun. After all, he’s in love with his job at Berkshire. So what’s the secret to Warren Buffett’s investment success?

Whenever the world’s third richest man makes his calculated investment, Warren Buffett chooses ruthless and aggressive cost-cutting CEO’s to manage his companies. That’s the key ingredient to create his $78.5 billion net worth.

Buffett is a classic success story about capitalist. On the outside he’s a nice guy, but he intentionally picked ruthlessly millionaire lieutenants to manage his extensive businesses. For instance, one of his superstar CEOs, Mark Donegan, lead a company that Buffett bought for $37 billion. As profiled by Bloomberg: “Those who know the CEO best describe a manager who’s highly effective but at times strains basic decency. These people, most of whom asked that their names not be used for fear of retaliation, say they have witnessed Donegan using profanity and violent language. One heard him threaten to stab someone in the eyes with a pencil. Another says the CEO threatened to rip an employee’s arms off so he could hit the person with the bloody stumps. On more than one occasion, the people say, he has called male employees ‘c—ts.’ His yelling could be so loud that sometimes staff would avoid that portion of the office during reviews, they say.”

To be so successful in the world of investment, Buffett carefully handpicked brutal CEOs who wring expenses out of their businesses and treat employees as numbers to squeeze out the most profit for shareholders. One of his fans questioned about how Buffett’s tough embrace of ruthless bosses was compatible with his feel-good business principles that he preached. Buffett defended his choice of those men that brought him billions by extolling the virtues of efficiency and productivity. After all, those virtues are “the all-important factor in America’s economic growth over the past 240 years,” he wrote in his annual letter to shareholders.

It’s really nice to be super rich and let other guys do the dirty works.

U.S. Has Highest Corporate Tax Rate in G20

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Terence P. Jeffrey reported for CNSNEWS: “The United States has the highest top statutory corporate tax rate—39.1%–of any nation in the G20, according to a study released Wednesday by the Congressional Budget Office. That rate is nearly twice as high as the 20-percent rate in Russia, which, along with Saudi Arabia and Turkey, has the lowest statutory corporate tax rate in the G20. The U.S. won the top spot on the statutory-corporate-tax-rate list after Japan and Germany, which formerly ranked first and second, cut their rates. According to CBO, the United States made no change in federal corporate tax rates between 2003 and 2012, and by 2012 it had the highest top statutory rate in the G20.”

Source: Congressional Budget Office

Landlord Renting Tiny 30-Square-Foot Apartment for $2000 HKD

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Today houses in US are getting larger and the living space per person has doubled over last 40 years. The square footage of living space per person has increased to 980.7 square feet. But in certain high-cost cities it gets crazily expensive to afford a decent living space. In Hong Kong, a 30-square-foot subdivided apartments are renting for $2000 HKD a month (around $250). These subdivided apartments come with toilet, bed and a sink. No kidding!

In a documentary film, reporter from magazine HK01 checked out the listing ads at a rundown low-rise building in the city’s Kwai Chung district and found this 30-square-foot toilet subdivided room.

The tiny apartment includes a toilet with a sink. To increase the quality of life just a bit, the landlord built in a divided wall so you don’t have to sleep right next to the toilet every day. Just be aware that you have to squeeze in your legs if you are over five feet tall to fit in the room while sleeping at night.

No wonder Hong Kong is rated as one of the least affordable city in the world. For some Hong Kong family where entire families live in rooms smaller than your typical kitchen, this tiny apartment might not be that strange. But would you live in this tiny 30-square-foot apartment? Comment below!

Learning Personal Finance from Khan Academy

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Khan Academy, a leader in online learning, has great resources for personal finance. Bookmark and visit khanacademy.org often to learn more about personal finance. There are many topics for anyone to learn about personal finance. Here a few topics that you can learn today:

Khan Academy 20-Part Youtube Series

Also, if you want a good challenge then try to watch one of 20-part Youtube Series on Personal Finance per day with the longest is around 18 minutes. In three weeks your personal finance knowledge would improve tremendously. The series consists of:

  • Part 1: Institutional Roles in Issuing and Processing Credit Cards
  • Part 2: Roth IRAs
  • Part 3: 401ks
  • Part 4: Basics of the U.S. Income Tax Rate
  • Part 5: Inflation Overview
  • Part 6: Mortgage Interest Rates
  • Part 7: Time Value of Money
  • Part 8: Term and Whole Life Insurance
  • Part 9: Open-Ended Mutual Funds
  • Part 10: Estate Tax
  • Part 11: Unemployment Rate Primer
  • Part 12: Traditional IRAs
  • Part 13: What It Means to Buy a Company’s Stock
  • Part 14: Relationship Between Bond Prices and Interest Rates
  • Part 15: Introduction to Bonds
  • Part 16: Introduction to Compound Interest
  • Part 17: The Rule of 72 for Compound Interest
  • Part 18: Annual Percentage Rate (APR) and Effective APR
  • Part 19: What is Bankruptcy?
  • Part 20: Introduction to Mortgage Loans

[Read more…]

Americans Are Having Less Sex Than Before

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Income and money are strongly related to happiness up to a certain point. Similarly, there’s a linear association between sex and happiness up to a frequency of once a week. Recently, a new study published in the journal Archives of Sexual Behavior found that Americans are having less sex than 20 years ago. Ars Technica reported:

American adults reported having nine fewer romps a year in the early 2010s than they did in the late 1990s—dropping from an average of about 62 times a year between 1995 and 2000 to around 53 a year between 2010 and 2014. Researchers saw declines across ages, races, religions, education levels, employment statuses, and regions. They linked the sagging numbers to two trends: an increase in singletons over that period—who tend to have less sex than married or partnered people—plus a slow-down in the sex lives of married and coupled people. But the drivers of those trends are still unclear.

The study is based on data from a long-standing national survey called the General Social Survey (GSS). It involves a nationally representative sample of Americans over 18 years old, surveyed most years between 1972 and 2014. The new study involved responses from 26,620 Americans.

Specifically, researchers found that married people’s annual whoopee frequency dropped from an average of nearly 69 in the 1995-2000 period to just below 56 in the 2010-2014 period. The unmarried saw their lovemaking drop from 54 per year to 51 in the same timeframes. Meanwhile, the number of people without steady partners—married or otherwise—rose from 26 percent of survey respondents in 2006 to 33 percent in 2014.

People who took the biggest hits in the bedroom since the 1990s were those with a college degree (about 15 fewer times a year) and people living in the South (about 13 fewer times a year).

Strategy to Claim Social Security Benefits

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The amount of your Social Security retirement benefit is based on your year of birth, your age when your benefits begin, and the earnings on which you paid Social Security payroll taxes—not on the amount of taxes you paid. I will claim my social security benefit at 70 years old while my wife, Mrs. PFN, will claim at 68 years old. Here is how I deride our plan to claim social security benefits.

Background of Social Security Benefits

Retirement income from Social Security has the extra benefit of an automatic cost-of-living adjustment (COLA) that increases your payments annually to keep pace with inflation. You should apply for benefits about three months before you want them to begin. You may apply for your benefits to begin between the ages of 62 and 70 if you have at least 10 years of coverage. Benefits are permanently reduced if they begin before full retirement age. A retired worker’s spouse can apply for benefits at age 62 or later.

A surviving spouse of a worker or retired worker can apply at age 60 or later. Since both Mrs. PFN and I were born after 1960, our full retirement age is 67. At first we plan to use the file-and-suspend strategy to maximize our benefits: I will file and suspend my benefit at the age of 67 while my wife claim the spousal benefits. However, Congress passed the new law that close the file-and-suspend strategy. May 1, 2016 is when the laws grace period ends, eliminating people’s ability to file-and-suspend in order to trigger benefits for a spouse. So we have to come up with a new plan. [Read more…]

Study: Americans Believe Robots Will Take Everyone Else’s Job But Theirs Will Be Safe

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CNBC report: “You may accept, by now, that robots will take over lots of jobs currently held by human workers. But you probably believe they won’t be taking yours. Though other industries are in danger, your position is safe.

That’s according to a report released Thursday by LivePerson, a cloud-based messaging company that provides customer service messaging software to companies and which surveyed 2,000 U.S.-based consumers online in January. Their researchers find that only three percent of respondents say they experience fear about losing their job to a robot once a week. By contrast, more than 40 percent of respondents never worry about it.

And a whopping 65 percent of respondents either strongly or somewhat agree that other industries will suffer because of automation, but theirs will be fine.”

Why Dave Ramsey’s Debt Snowball Method Works for the General Public

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One way to reach financial freedom is to completely pay off all debts, except the mortgage. Dave Ramsey’s strategy to accomplish this financial goal is detailed in his Baby Step 2: The Debt Snowball.

In the debt snowball method, Dave Ramsey advocates paying off the debts one by one starting from smallest to largest. His method ignores the debt’s interest rates, which bother many rational savers including me. But this method really works for the general public and here is why.

In Sun Tzu’s Art of War, when you are doing battle, seek a quick victory. A protracted battle will blunt weapons and dampen ardor. By tackling the smallest balance first, you can quickly eliminate that debt to claim a small victory. In turn, it motivates the general public to achieve the ultimate personal finance goal of paying off all debts. [Read more…]