Miscellaneous

5 of My Favorite Personal Finance Books

May 6, 2021 By Rachel Slifka Leave a Comment

People sometimes ask how I got into personal finance. The simple answer is by reading. Admittedly, I didn’t know much about money as a young adult. It wasn’t until I graduated college and found myself struggling to pay off my student loan debt that i decided to pick up my first personal finance book. Since then, I’ve been hooked! Here are 5 of my favorite personal finance books.

1) Rich Dad, Poor Dad by Robert Kiyosaki

Rich Dad, Poor Dad is unique for its conceptual descriptions. If you’re interested in wealth building versus simply earning more money, then this is the book for you.

Kiyosaki describes growing up with his father (the Poor Dad) and his friend’s father who was a business owner and mentor (the Rich Dad). In his book, he compares the thinking of his Poor Dad versus his Rich Dad and the lessons he has learned from both.

What I like the most about this book is the story behind it. It’s not a book that spews advice and facts to you. It’s concepts are very simple, but they are effective, and it’s an enjoyable read.

2) Total Money Makeover by Dave Ramsey

Although he can be controversial, there’s no doubting Dave Ramsey knows his stuff when it comes to money. Total Money Makeover was one of the first books I read when I was paying off debt, and I used most of his tactics to pay off my student loans.

If you’re struggling financially and aren’t sure where to start, this is a great book. Ramsey’s “baby-steps” map out the exact next step to take. His snowball method for paying off debt has helped thousands of people become debt-free. Defi8nitely worth the read!

3) Hustle Away Debt by David Carlson

Looking to make more money? Or, start a business in your spare time? Then read Hustle Away Debt by David Carlson.

Carlson, who runs the popular personal finance site Young Adult Money, has been a side-hustler for years. In his book, he talks about how to leverage a side hustle along with your day-job to pay off debt.

Personally, I was inspired by the site Young Adult Money to start my freelance writing side hustle in order to pay off debt. Eventually, I actually started writing for Young Adult Money as part of my side hustle! Without Carlson’s site and book, I wouldn’t have been able to pay off my student loans as soon as I did!

4) The Psychology of Money by Morgan Housel

Most people think about the math behind the money, but what about the psychology? The Psychology of Money by Morgan Housel discusses the behaviors associated with personal finance.

If you understand the basics of money, but are interested in why we spend the way we do, then this is a must-read for your list. It’s fascinating to understand the behaviors behind our relationship with money.

5) You are a Badass at Making Money by Jen Sincero

Jen Sincero has a few books in this series, but You are a Badass at Making Money is one of my favorites. If you are looking to increase your income but aren’t sure you can, Sincero’s book is for you. It’s an easy and fun read, and Sincero is genuine and approachable. If you doubt your ability to make more money, then give this book a chance!

Will Supply Shortages Cost Consumers More

April 25, 2021 By Max Erkiletian Leave a Comment

Production cuts during the pandemic, drought in Asia, increased demand, and a shipping bottleneck. All are factors in current and coming supply shortages that have exposed the frailty of supply chains around the world. To you, that means a scarcity of some goods and higher prices.

We will examine supply shortages that have and will lead to price increases in general. However, let’s first take a look at three resources in short supply now that are pushing prices upward.

Gas Prices Increase

Despite an increase in demand, prices at the pump have remained fairly steady, according to the American Automotive Association (AAA). So far this month, a gallon of gas has averaged $2.86 reports AAA. However, that is about $1 higher than this time last year.

One of the reasons gas prices have climbed is OPEC production cuts. The cartel decreased production earlier this year. However, on April 1, it announced gradual production increases. That may stabilize prices for now, but future production changes could increase what you pay at the pump.

Outlook Steady

“For all of 2021, we expect U.S. retail prices of regular-grade gasoline to average $2.66/gal and retail prices for all grades to average $2.78/gal,” states the U. S. Energy Information Administration, “which would result in the average U.S. household spending about $480 (31%) more on motor fuel in 2021 compared with 2020.”

Traditionally, demand for gas increases as people hit the road on vacation. That didn’t happen much last year. However, this year is expected to be different. More vaccinated people with more money are expected to increase their travel this summer. That will increase demand. If supplies do not keep up, prices will increase.

Rubber Supply Shortage Expanding

Natural rubber climbed to a four-year high this week, trading at $2.20 per kilogram. The price increase is attributable to a rubber supply shortage. How nice, you say, for those traders who bet on rubber. But how does that affect me?

It means you will pay more for many things you use every day.

Rubber Used in Many Products

As you go through your day, take note of the rubber in all the products you use. Do you walk across a floor? There is rubber under the carpet or wood. In fact, your shoes probably contain rubber. Do you go to a doctor? Those gloves they wear are made of rubber. Do you drive or take public transportation? Rubber is used in the tires and belts of those vehicles. It is also used in adhesives, clothing, and many other products.

Tire Prices Rising

Because rubber is used in so many products it is hard to break down price hikes in each one. However, one of the most noticeable products being affected by the decreased rubber supply is tires.

Major tire manufactures have raised prices an average of eight percent in recent months.

The China Factor

Contributing to the rubber supply shortage was a drought in Thailand and Vietnam. However, China has had an impact. It began stockpiling rubber in 2012. As rubber made its way to the market this year, China has been quick to make purchases.

Wood Growing Scarce

If you are building a new home, you will pay on average $24,000 more this year than in 2020, according to the National Association of Home Builders (NAHB). The increase is due to increasing lumber prices.

“The escalating lumber prices are largely due to insufficient domestic production and extremely large lumber mill curtailments that lasted well into the 2020 building season,” says the NAHB.

Other Causes of Supply Shortages

Though there are specific causes for some shortages, there are some general causes that impact almost all products.

The Pandemic

Many companies cut production in anticipation of reduced demand during the height of the pandemic. They also reduced production capacity by exercising safety precautions. Those safety measures, such as social distancing, reduced the workforce. As a result, fewer goods were produced.

Jammed Seaports

Consumer demand has increased as the economy recovers. As a result, international shipping has accelerated and ports are clogged.

As many as 41 container ships have been forced to lay at anchor waiting for a birth in the Los Angeles/Long Beach port, according to a report in the Seatrade Maritime News. Other ports are also jammed. As a result, there is now a backlog in rail shipping.

Economic Recovery and Consumer Spending

Some factors such as drought in Southeast Asia or a deep freeze in Texas are unpredictable forces of nature. However, they may not be as big as human actions.

People and computer models trying to forecast supply needs did not anticipate the economy rebounding as quickly as it has.

The ramped-up vaccine rollout and increased stimulus money have got more people out and spending. Consequently, we are buying more gas and ordering more products than businesses planned for.

Light at the End of the Funnel

One person who thinks the supply shortages will not last is Federal Reserve Chairman Jerome Powell.

“It’s not like the supply side will be unable to adapt to these things,” Powell said at a March 17 press conference. “It will—the market will clear. It just may take some time.”

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Weekly Financial Wrap: Workers Want Flexibility; Banks Earnings Explode; and Supply Shortages Push Prices Up

April 24, 2021 By Max Erkiletian Leave a Comment

Most Workers Do Not Want the Old Office Routine

With vaccinations increasing and the economy opening up, more people are talking about the workforce returning to normal. But, what will the new normal be?

A recent survey by Harvard Business School (HBS) found that 81 percent of those forced to work from home during the pandemic want to continue working remotely in some manner. Of that number, 27 percent want to work from home full-time. Another 61 percent favor a hybrid of two or three days in the office and two or three days at home.

Only 18 percent of those surveyed wanted to return to the office full-time. Parents with children at home and married people wanted back in the office more than singles and those without children.

More Flexibility, More Productivity

“The past year has been difficult for everyone, but what’s surprising is how well people feel they’ve performed at work, while at home,” said HBS Online Executive Director Patrick Mullane. “Now, as we’re preparing to get back to ‘business as usual,’ it seems professionals don’t want ‘business as usual.’ Instead, they want flexibility from their employers to allow them to maintain the new work/home balance and productivity they have come to enjoy.”

Other Findings in the Survey:

1-in-3 felt both their overall performance and quality of work was better than the year prior
1-in-3 were actually able to better focus on work from home.
35 percent read more for professional growth.
29 percent continued their education.
34 percent took online courses for career development.
70 percent spent more time with loved ones.
1-in-3 drank more alcohol.
1-in-3 used more recreational drugs.
14 percent bathed less.

Big Banks Boom

Earning season, when companies began reporting earnings, major banks took the lead. Many hit levels not seen since the 2008 financial crisis.

JP Morgan Chase notched record revenues of $33.1 billion. That pushed earnings up 477 percent to $4.50 a share.

Revenues of $17.7 billion for Goldman Sachs almost doubled first-quarter earnings last year. That moved earnings per share to $18.60.

Profits for the first quarter at Bank of America (BofA) doubled. Citigroup’s profits tripled.

Two factors contributed to bank profits and earnings.

Increased Stock and Bond Trading

Stock and bond trading moved at a fevered pace in the first quarter of 2021. That included an explosion of Initial Public Offerings (IPOs) and Special Purpose Acquisition Companies (SPACs). That meant more investors were buying and selling. The result was more profits for the big banks.

Goldman increased equity-underwriting revenues 40 percent over the last quarter. In addition, Citigroup’s investment banking revenues were up 50 percent.

Improving Economy

Lenders began predicting a brighter economic future earlier this year. Much of that is due to stimulus from the federal government.

Spendmenot, a website covering financial trends, estimates Americans are sitting on $3.9 trillion savings. Much of that accumulated from stimulus checks. In addition, the research firm says consumers may be poised for a spending spree. That will boost the economy and banking.

Release of Reserves

The banks brought billions of dollars out of reserve in the first quarter. That also bloated their bottom line.

The uncertain pandemic economy led banks to stockpile reserves of cash in 2020. However, with loans performing better than expected and the bright economic outlook, those reserves are no longer needed. For example, JP Morgan now expects $4.2 billion loans it had anticipated would default to be paid. In addition, BofA added $1.9 billion it had put in reserve to its bottom line. Other big banks made similar moves.

Short Supplies, Higher Prices

It’s not just the pandemic. A host of problems have clogged the supply chain. As a result, there are more shortages coming. That will lead to higher prices of many items we use every day.

Sunday, SA takes a look at supply shortages and their impact on the goods you buy in the future.

Jobless Claims Decline

Unemployment insurance claims continued downward Thursday. The U. S. Department of Labor reported 547,000 people filed for unemployment insurance for the first time last week.

That figure is 39,000 below last week’s revised figure. In addition, it was the lowest initial claims report since March 14, 2020. At that time 256,000 people filed unemployment claims for the first time.

Unemployment Rate

Unemployment stayed at six percent. However, that is well below the peaked of 14.7 percent in April 2020. That month 6.2 million made their first application for unemployment benefits, according to the Labor Department.

Conclusion

The new normal in the work environment may be a lot like the COVID work environment if employees have their way. Regardless, strong banks with more people working and spending are accelerating the economic recovery. Although prices may be higher until the supply chain catches up to consumer demand.

5 Ways I Treat Myself Without Breaking the Bank

April 21, 2021 By Rachel Slifka Leave a Comment

During the chaos of the Coronavirus pandemic, it’s become clear that self-care is essential to your well-being. But if you’re on a budget, or even out of work due to the pandemic, you may not have extra funds laying around to go treat yourself. Typical self care, like massages, facials, and manicures all cost a pretty penny. Here are 5 ways I treat myself without breaking the bank.

1) Buy Flavored Coffee

If you’re a coffee drinker like me, you know just how luxurious a delicious cup of joe can be. But before you go running out to your local coffee shop and splurge on a pricey drink, consider making your own instead.

I bought a cheap French-press at Ikea to make my own coffee at home. But I will splurge on buying nicer, flavored coffee, like caramel, French vanilla, and hazelnut. While the flavored coffee is a little more expensive than the old-school brands you can buy in bulk, overall, it’s still much more affordable than going out to grab a coffee on the go.

And you can take it a step further by buying flavored creamer, a milk frother, and a pretty coffee mug. It truly starts my day off on the right note, and doesn’t cost much money at all.

2) Do an At-Home Spa Night

Once a week, I like to treat myself to an at-home spa night. All you need is time and a few of your favorite products!

You can go as simple or as in-depth as you want. From hair treatments to bubble baths, at-home manicures, and homemade facials, you can pamper yourself without breaking the bank.

3) Go for a Walk

During a chaotic day, there’s possibly nothing better than taking a short break to take a walk, especially if it’s a nice day. And best of all? This is totally free!

Plus, you can take a timeout to listen to your favorite music or podcast. Personally, I love to take my dogs with me, which always puts me in a better mood.

4) Cook a Healthy Meal

Admittedly, I’m not a great cook. I tend to eat on-the-go, and rarely give myself time to really enjoy a meal, let alone cook one.

But recently, I have been experimenting with cooking simple, healthy meals. I have to say, it’s fun! You can take a few basic ingredients and make it into something delicious that makes you feel good.

So try out a new recipe and get out the nice dishes. Your body will thank you.

5) Take a Nap

Lastly, when I find myself really stressed or anxious, I love to treat myself to a quick nap. After all, how liberating is it to take a timeout to take a nap? I find that a nap is essential when I’m overwhelmed, especially on busy days. Then I can wake up rejuvenated and focused.

If you’re able to, find time to build a quick power nap into your day. It’s a luxury that’s completely free!

The Weekend Wrap: Financial Education, Student Loans, Recovery, Jobs, and a Crypto IPO

April 10, 2021 By Max Erkiletian Leave a Comment

With all the emphasis on stimulus checks, you might have missed some of the personal financial changes in the American Recover Plan. You might also want to know where the job market is heading; what is planned for student loan debt; the push for financial education; and a first in an IPO.

Efforts to Require Financial Education Rising

You can see Americans at international sporting events and political gatherings shouting: “U.S.A, U.S.A.” and “We’re number one!” However, you don’t see proud parents and grandparents outside schools chanting, “We’re number 14!”

America’s Financial Literacy Declining

Fourteen is significant because that is where the nation ranks globally in financial literacy. In fact, only 57 percent of Americans are financially literate, according to a Standard & Poor’s Survey.

American’s lack of financial knowledge has spurred an increasing number of states to mandate financial education in schools. Today, 21 states require personal finance to be taught in high school. That is an increase of four states since 2018. Florida dropped its financial education requirement but retained a personal finance elective.

To make matters worse, financial literacy is declining. Only 34 percent of Americans correctly answered four out of five personal finance questions in a 2018 Financial Industry Regulatory Authority (FINRA) survey. That is down eight percent from 2009.

Economic Divide

Students from low-income families suffer the most. The Council for Economic Education is a non-profit that promotes financial education. It found that in states without mandatory financial education, poor students had much less access to financial information than wealthier students.

Research from a University of Montana study indicates students who have had financial education in high school make better financial decisions. That research shows those students incur less educational and personal debt.

Student Loan Forgiveness

Up next, we are going to look at some of the lesser-known elements of the relief plan enacted last month. But first, let’s take a look at provisions for something that was left out of the law.

Student loan forgiveness was not included in the American Rescue Plan. However, section 9675 of the law makes student loan forgiveness tax-free from 2021 to 2025.

That is great, you say. But if my student loan can not be forgiven, what’s the big deal?

The big deal is this. Making student loan forgiveness tax-free is the first step to obtaining loan forgiveness. It is the horse that must come before the cart. Now that it is in place, what’s next?

Sunday’s edition of Saving Advice will examine the latest in the push for Student Loan Forgiveness.

More Than a Stimulus Check

Everyone knows that the American Rescue Plan Act signed into law by President Joe Biden last month gave most Americans a stimulus check. But you may not know some of the other aid it offers. Here is a brief rundown.

Child Tax Credit Increase

The main takeaway here is that this tax credit has been increased from $2,000 to $3,600 for each child under six and to $3,000 for each child between six and 18. The benefit is available for couples making under $150,000 a year or single parents making under $112,500.

Another significant change is that the child tax credit will be sent directly to families on a monthly basis. Previously, parents had to wait until their tax refund came through to get the money.

“This change will allow struggling families to receive financial assistance now,” according to the treasury department, “rather than waiting until the 2022 tax filing season to receive the Child Tax Credit benefit.”

Schools and Childcare Block Grants

The law designates $130 billion to reduce class sizes, improve ventilation, purchase personal protection equipment, and other measures to help schools K-12 open safely. Another $40 billion is set aside for childcare providers and $1 billion for Head Start.

College students will have access to $40 billion in emergency financial aid.

Homeowners and Renters

The moratorium on evictions and foreclosure ended March 31. The law does not extend that ban. However, it does provide funds to help you keep a roof over your head and keep the lights on.

The law provides $10 billion in aid to homeowners and another $21.6 billion for renters.

You can access funds through your state, territory, or tribal government to make delinquent mortgage payments. State, territorial and local governments will also handle the money targeted for rent and utility payments.

Unemployment and COBRA

Unemployment benefits of $300 a month will be paid through Sept. 6, 2021. That is $100 less than originally proposed. However, a surprise tax benefit makes the $300 plan more advantageous.

The first $10,200 in unemployment is paid tax-free. In addition, if you paid taxes on unemployment benefits in 2020 you will be able to recover those funds when you file your 2020 tax return.

COBRA gets a full subsidy. That allows you to stay on your employer’s health plan through the end of September.

Food Aid

The Supplemental Nutrition Assistance Program (SNAP) gets an increase through Sept. 30. Just over $2 billion will go toward nutrition assistance. Another $490 million will go to increase cash vouchers in the Women, Infants, and Children (WIC) program.

Aid for Businesses

Businesses get $7.25 billion to cover payroll and other expenses as part of a boost in the Payroll Protection Plan (PPP). One change is that non-profits are now included in PPP.

Restaurants and bars get extra help. $25 billion is provided to cover payroll, utilities, rents, and other operating expenses.

Public Health and Safety

You may not see it in your personal finances. But state and local governments have incurred more expenses as a result of the pandemic. They have also lost tax revenue.

To help, the law allocates $350 billion dollars to state, territorial, and tribal governments.

“In addition to helping these governments address the revenue losses they have experienced as a result of the crisis,” according to the treasury department, “it will help them cover the costs incurred due to responding to the public health emergency and provide support for a recovery.”

The New Job Market

With Unemployment dropping to 6 percent, you may be tuning up your resume. New jobs are opening whether you are reentering the workforce or you are making a career change.

The post-COVID employment picture will look a little different than it did before. For instance, most economists were surprised that 110,000 new construction positions were part of the 916,000 jobs added to the economy last month.

In addition, the Biden Administration has proposed a massive infrastructure plan that could add all sorts of jobs in various fields.

Health, Tech, and Green

Most employment for 2021 and beyond will be in technical, medical, and green jobs, according to the U. S. Department of Labor. Among the top ten jobs, Labor includes in its list of the fastest-growing occupations, six or in the health field. The other four are wind turbine service technicians, solar installers, statisticians, and information security analysts.

A serious shortage of skills in fast-growing fields was emerging prior to the pandemic according to an American Action Forum (AAF) report. As the economy reopens, that shortage will rise again.

“This study estimates that, over the next decade, employers in nearly every state will face significant shortages both of workers with an associate degree or some college,” wrote AAF analysis Tom Lee in 2019.

FYI on IPO for Coinbase

Mark your calendar for April 14. That day history will be made.

Coinbase Global, the largest cryptocurrency exchange in the United States, will go public next Wednesday. It is the first major crypto company to launch an IPO.

Trading on the Nasdaq, Bitcoin will be listed under the symbol COIN. However, the company will not follow the traditional IPO route. Instead, current investors will convert 114.9 million shares for offer to the public. That practice is known as a direct offering.

We will follow up on Coinbase in next weeks The Wrap

Coinbase Offering Price

Coinbase plans to announce its reference or opening price the day before it goes public.

The company released a flush earnings report Tuesday. It announced 2021 first-quarter earnings exceeded earnings for all of 2020. Revenue of $1.8 billion produced earnings of between $730 million and $800 million in the first three months of the year, according to the Coinbase report.

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3 Money Rules I Live By

April 7, 2021 By Rachel Slifka Leave a Comment

There’s a ton of financial advice out there. How do you know what will actually work for you? As a personal finance geek, I’ve jumped on board and tried just about every financial trend and pieces of wisdom. Some tips worked for me, while a lot didn’t. But when it’s all said and done, here are the 3 money rules I live by, no matter what.

Money Rule 1: Check in on your finances daily

First on my list of money rules – I check in on my finances daily. I set this rule for myself when I was a recent college grad. I wasn’t earning much money, and I carried several thousand dollars of student loans. While it was definitely tempting to put my head in the sand and ignore my financial situation, I decided to face it head on. No matter how ugly my finances looked, I made it a point to check in on my accounts daily.

This step may seem small, but it was single handedly the best thing I have ever done for my finances. By checking in daily, I got a real-time snapshot of exactly where I’m sitting. That helped drive my spending decisions during the day. After all, that $5 latte loses its appeal when you see how else you could use that money.

Checking in daily also kept me motivated towards my financial goals. Once I started making a tiny bit o progress in paying off my student loan debt, my motivation increased. Seeing progress is key!

Money Rule 2: Never carry a credit card balance

Fortunately, I implemented this rule in my life early enough to never have had credit card debt. I am an avid credit card user. I use the points to pay for travel and vacations. However, I made it a point to never carry a balance on my credit cards, and I’m glad I did.

Credit cards have insanely high interest rates, making it extremely difficult to get out of debt. Instead of relying on credit cards in an emergency, I worked to build my emergency fund. Even when I was in student loan debt, I kept my emergency fund. Even a small, $500 emergency fund can save you when you need it.

Money Rule 3: Pay cash for large purchases

Out of all my money rules, this is likely the most debatable, but I always pay cash for large purchases. Most large purchases, such as cars, furniture, or home improvement expenses will allow you some sort of financing option. The interest rate, if you choose to finance, is typically pretty low here, so most people choose to finances versus pay cash for these types of large expenses.

So why do I always pay cash? The primary reason is I simply don’t like owing anyone anything. Once I paid off my student loans, the only debt I had was my mortgage. It feels liberating to own something outright and not have to worry about making payments on it.

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Secondly, I can use cash as a bargaining tool. For instance, I can walk into furniture with a $2,000 budget and see a couch for sale for $2300. By having cash, I can make quick decisions and offers. Most of the time, I can get that $2300 couch for $2000 simply because I can pay in cash and leave today with the item. Not everyone will bite at a cash deal, but it’s fun to use this tactic to try to negotiate the best price!