Farnoosh Torabi's Blog, page 59
October 10, 2012
The Truth About Layaway
As the holidays approach, many are considering layaway to help make expensive shopping lists more affordable. In fact, about a third of consumers say they’re “somewhat” likely to buy a gift on a layaway this year, according to CouponCabin. More than half say layaway helps them budget and buy larger items they couldn’t afford to pay all at once. It also helps with avoiding credit card debt and reserving popular items that may sell out quickly.
The service became popular in the United States during the Great Depression as an option to finance purchases with retailers. One could simply hold an item with a store, making incremental payments until it was finally theirs. But with the advent of credit cards, layaway fell out of favor -only making a comeback recently in the aftermath of the 2008 recession.
Fast forward – consumers are more leery of credit cards and facing a sluggish economy so it’s no surprise that Wal-Mart reportedly racked up $400 million in layaway sales last month, half of the amount they had during the entire 2011 holiday season. With other retailers experiencing similar trends, it’s clear that consumers still see layaway as a useful tool, but should they?
While there are obvious pros to layaway, you may also want to consider some potential pitfalls.
Read the Contract Carefully
Remember that layaway is a contractual obligation with fees and liabilities. Sears, Wal-Mart, Toys “R” Us and BestBuy are just a few retailers with layaway payment plans. Most of these stores charge fees to initiate and cancel a layaway contract along with a fixed cost or percentage (whichever is more) as downpayment on your item. At Sears, for example, it costs $5 per item for a new layaway and $20 or 20% as a downpayment on the item. And if for any reason you have to cancel your layaway, it’ll cost you an additional $15. Worst yet, when canceling your layaway with most retailers, you forfeit the money you’ve already spent in fees. You could also miss out on deals in the event that your item goes on sale after you’ve put it on layaway.
Also See: DIY Layaway Strategies
Calculate Your Options
Before financing anything, it’s important to calculate the cost of your options. Let’s take a hot holiday gift like the a new iPad. With a $500 price tag, putting the device on layaway with BestBuy would require a non-refundable fee of 5%, or $25. After a 25% downpayment of $125, you could make bi-weekly payments of $63 until it’s yours. Now let’s say you put the gadget on your credit card and make equal monthly payments. It would cost much less, $11 to be exact, at the average interest rate. But if like many Americans you lower that payment to a minimum of around 10%, you could end up paying $82 in interest for the same item.*
Photo Coutesy, Tax Credits.
*I used a calculator from ConsumerCredit.com with an interest rate of 16.89%, the average rate as of Sept. 30.
October 9, 2012
Keep Your iPhone Safe
People are still buzzing about the iPhone 5. Searches on Yahoo! for Apple’s latest version of the smart phone are up 536 percent. When iPhone 5 debuted on September 21, eager consumers weren’t the only ones who couldn’t wait to get their hands on the smart phone. Thieves were also looking forward to its release. Here are some tips for keeping your iPhone safe. Read more over at Yahoo! Finance.
What’s the worse accident your smart phone has had? Connect with me on Twitter @Farnoosh and use the hashtag #finfit.
3 Ways to Spend Less
[image error]Thinking twice about those shoes you purchased over the weekend? You’re not alone. A recent survey finds that most Americans have issues with spending too much — even the wealthy.
A poll by the National Foundation for Credit Counseling found that consumers’ biggest financial regret was overspending. It trumped common financial insecurities including: inadequate savings, insufficient preparation for retirement and not buying a home.
Overspending is pandemic and not just limited to those of us that struggle without limited finances. For example, it was reported recently that Philadelphia Eagles quarterback Michael Vick spent $29 million of the $31 million he’s earned since 2008. He tweeted earlier this week warning followers to be smart(er) with their money.
Author Don McNay’s book “Life Lessons From The Lottery” examines cases like Vick’s where Americans have blown through large sums of money and finds the financial lessons in them that we all can use. McNay writes that people who overspend do it for five reasons. First it’s to impress family and friends, either by being overly generous or showing off (e.g. lavish dinners, trips, etc.) Next, it’s because they’ve chosen to receive money from a contract or settlement in a lump sum, in lieu of installments, making the money trickier to manage. McNay also says our impulses urge us to make unhealthy financial choices. There’s also the excuse of bad habits and advisers. Finally, he says, not having a purpose for your money is another surefire way to blow it.
Is there any hope for us? Of course, but only if you’re willing really examine your behavior and choices – and commit to a few changes.
Here are a few ways to help you spend less:
Identify Patterns
To understand why we spend, it helps to examine how and when we spend. Look for repetition in mood or timing, as it pertains to your spending. Are you an emotional spender? Many of us go on shopping sprees to engage in a little “retail therapy” when we’re upset. Others of us are social spenders who are typically good with budgeting, but tend to lose control when eating, shopping or travelling with friends. There are also impulse shoppers who don’t feel the need to spend money but, when presented with a good sale, simply can’t turn it down. Probably the most common pattern however might be among those of us who shop absentmindedly, often paying too much for items or being simply unaware of how much we’re spending when using a credit or debit card. Visa did a survey a few years back and found Americans “mystery spend” about $1,000 a year.
Keep Your Checking in Check
Budgeting apps like Mint, MoneyWise and iWallet can help keep track of your inflow and outflow. While you’re there, attache specific goals to your budget to give your money some purpose. Planning to save for a family vacation may make it easier to resist a new pair of shoes. Your bank may also offer features through online banking that allow you to categorize your spending and set goals.
Carry Cash
It may not be as convenient — but that’s the point. Go to your bank’s ATM once a week and take out enough money for your weekly spending. Sticking to cash – instead of plastic – makes you think twice about each and every purchase. In the end, surveys show we can save up to 20% when adopting a cash diet. Doing so should help to limit any splurging and also provide a constant reminder of your balance.
Photo Courtesy, stuartpilbrow.
Six Things to Keep in Your Wallet
An overstuffed wallet can be a hassle. A simple and well-organized billfold can save you time and if you stay organized, even earn you rewards. Here are the only six items to keep in your wallet. Read more here.
As always, we want to hear from you. What’s in your wallet? Connect with me on Twitter @Farnooshand use the #finfit.
October 8, 2012
How To Split the Dinner Bill
We’ve all been there. You’re out at a lovely dinner with friends or colleagues and everything is going great until the check comes. For those of us that despise math and uncomfortable talks about money, splitting the bill can be an uncomfortable experience but it doesn’t have to be.
Prepare For the End
“This is a common dilemma that we all experience,” says Diane Gottsman, national etiquette expert and the owner of the The Protocol School of Texas.”The good news is that you already know it’s coming.”
Gottsman says the time to consider payment is at the very beginning of the meal, not the end. She suggests the savvy diner to discuss getting a separate check with the server prior to ordering, especially if you’ve planned the outing. In a CNN “lunchtime poll,” more than half of the respondents preferred to ask for separate checks at the beginning of the meal.
This comes in handy, especially, when you know you’re not going to be ordering much that night. Meanwhile, a friend treats themselves to a steak dinner and a few glasses of wine. “If you consistently go out with someone that orders extravagently, tell the server upfront that you’ll have seperate checks,” says Gottsman. For a group situation, she shares the following trick: Annonce that you may have to leave early, allowing the server to bill your meal separately with no fuss or uncomfortable discussion of who had what.
When In Doubt, or It’s Awkward…Split Evenly
If there are no separate checks, best to avoid busting out your calculator to itemize the bill. Gottsman advises that if separate checks can’t be given, it’s best to split the check evenly. Business etiquette coach Patricia Rossi agrees. “You don’t want to nitpick,” she says. “If you’re with friends, or people you dine with regularly, a couple dollars here and there really sort themselves out over time.” If you’re not the best at math, let someone else do it to save the table time and your frustration. Pay with card where you can to avoid the hassle of cash, but if you’re at a restaurant that limits the use of cards, Gottsman says it’s fine to offer a fellow diner cash to cover the cost of your meal. These are your friends after all.
Tip a Little Extra
The difficulty doesn’t end with who had what. Everyone tips differently and this can be another source of confusion for the table. According to the experts, the standard for a decent tip is between 18-20%. “Fifteen percent is still the standard,” says Gottsman, “but tip more if you’ve had a good dining experience.” And when it comes to the table, she advises to once again take charge by asking simply, ”What are we going to leave for the tip?”
Need to Collect? There’s an App For That
Technology has come along way in solving this age-old problem of getting paid back – when you generously spotted your friend at dinner. Apple has a new app, SpotMe, which allows the transfer of money between friends and family. There’s also Venmo and WePay. These fund transfer apps work like Paypal and can carry small transaction fees.
Photo Courtesy, 401(K) 2012
#AskFarnoosh: Retirement or Credit Cards?
Jessica asks on Facebook:
My husband and I just paid off one of our cars and we have that extra $500 to use towards something else. He wants to use it towards his 401(k), which I admit we have skimped on these past years, but I want to use it to pay off our credit card debt. It’s near $10,000. I feel like once that is paid off we can invest in the 401K whole-heartedly. What do you think we should do?
Hi Jessica,
Such a great feeling to pay off that car loan. Your question is not an uncommon one, as many people wonder whether it’s best to save or pay off debt. My advice? Try not to think of this as an either/or situation. I agree with you that you should address that $10,000 in credit card debt sooner rather than later. But I also agree with your husband and think you shouldn’t sacrifice your retirement savings Too often the 401(k) gets ignored for far too long.
Is there a way for you to address both? Yes, that $500 per month can go a long way in destroying that credit card debt. You’ll be debt free in less than 2 years at that pace. But could you go halfsies and contribute, say $250 towards the credit cards and $250 towards retirement? Then with any windfalls of cash – such as a raise – commit to using that extra money to accelerate the debt pay-off. And in the meantime, examine your spending. Are there any expenses you can eliminate – or at least trim – in order to shore up some additional savings towards the 401(k)? In my experience, there’s always something that you know you can do without…it may not be easy to give up at first…but if you seriously long for a retirement that’s stress-free and financially comfortable, you may be willing to make the trade-off.
October 5, 2012
Who’s Hiring Now
Americans continued to land jobs last month. The Labor Department reported this morning that the country added 114,000 jobs in September. The jobless rate fell to 7.8%.
All great signs of a job market that’s moving (er, dragging) in the right direction. But for the millions who are still without work, consider these hiring forecasts and upcoming job openings.
Retail, Health & Other Hot Sectors
With the holidays season rapidly approaching, expect more openings in the world of retail. that retail sales will increase more than 4% this holiday season and, according to reports, major retailers are looking to hire up to 625,000 temporary workers going into Thanksgiving and Christmas.
In addition to retail, health assistance, biomedical engineering, carpentry, plumbing and masonry are all expected to see growth according to projections by the U.S. Bureau of Labor and Statistics. In fact, the agency expects each field to grow by more than 50% by 2020. Companies like UnitedHealth Group, SAIC and PPR Healthcare are just a few currently offering jobs in those areas. Indeed.com and SimplyHired are great resources to find openings in your area. Indeed, for example, currently lists more than 400,000 jobs related to healthcare and another 100,000 in construction.
Consider Seasonal Employment
Wal-Mart, Target, Toys”R”Us and Macy’s have employed the most seasonal workers in recent years. After a rise in sales last quarter, Target is leading the pack with a plan to hire 80,000-90,000 temporary employees this holiday season. Macy’s also has big plans, expecting to bring on 80,000 workers. Wal-Mart, Kohl’s and Toys”R”Us have announced hiring to the tune of nearly 50,000 employees each. The companies will offer the usual opportunities for in-store sales, as well as jobs in its call and distribution centers.
Some advice about temp jobs this winter: Don’t wait to submit applications. The busiest day of the holiday season, Black Friday, is less than two months away. Employers will want workers in place and trained long before then, so the sooner you begin your job search the better. Focus on stores where you like to shop and have knowledge of the products or services for a leg up in the hiring process. Finally, stay flexible. Most retailers are looking for help in the evening and during weekends. You’ll be a strong candidate if you can make yourself available during these times.
October 4, 2012
Sales You Should Ignore
Scoring a deal can be exhilarating, but not all bargains are created equal. Just because an item’s on sale, doesn’t mean you’re getting the biggest bang for your buck, and some sales you may actually want to ignore. Click here to read more.
And, as always, we want to hear from you. What are some sales you know to ignore? Connect with me on Twitter @Farnoosh and use the hashtag #finfit.
6 Ways to Get More Done
[image error]We’ve all faced days where we know we have a lot to do, but sit for minutes, even hours, not knowing where to begin. Or, perhaps you’re the type who “puts out fires” all day at work – exhausting yourself and only putting yourself further behind.
The Pareto Principle – or the 80-20 Rule — is a common rule of thumb in business that’s based on the idea that 80% of your activities help produce only 20% of your results, so here’s some advice on how to flip that equation and spend less time getting more done.
Commit to a Plan
If you take 15 minutes each morning to assess your workload and make a specific action plan, you’ll be better equipped to accomplish more. In their book The Power of Full Engagement, authors Jim Loehr and Tony Schwartz write about a study in which a group of women agreed to do a breast self-exam during a 30-day period. A full 100% of the women in the experimental group who identified where and when they were going to do the self-exam completed it. But only 53% of the group that didn’t make a plan completed the task. The lesson? Write out a who/what, where, when and how plan for your day, including a description of the task, where and when you’ll do your work, and how long you plan to spend on each activity. Even if you don’t stick to your schedule, you’ll have the day’s road map in mind, as you move from task to task.
Do the Most Important Stuff First
Identify what has to be completed by the end of the day, jobs that if you fail to accomplish them, will only make you stressed out, or even get you fired. Place them at the top of your “To Do List.” But don’t just make it about your day-to-day — identify the highest value activities that will have the largest impact on your success and happiness at the end of the day, week, month – and even year. Maybe it’s drawing up a new business plan, or plotting a major career move. Always make time to move these crucial activities forward, even if it’s just an hour a day.
Focus On the Details Later
Instead of spending an hour on one rough draft for an article you may write, spend 10 minutes creating six brainstorms for the article — and then pick the best topic. You’ll be able to write more efficiently when you’re confident you have a solid idea to work from, and aren’t going down dead ends with your research. Likewise, rather than spending an hour reading a few articles in detail (which may not be relevant to you), spend 15 minutes skimming through multiple articles, and then spend time fully reading the best three.
Limit and Delegate Obligations
Sometimes we spend too much time on unnecessary and low-value activities or obligations, work-related or not – like volunteering to run the Co-op you belong to, or doing the lion’s share of the housework (when your spouse is just as capable at splitting up the activities). Learn to delegate tasks, and eliminate unnecessary obligations for a more productive day. A good rule of thumb: Take your annual salary, subtract the last three digits and, and divide by 2. That’s your hourly rate. (For example, $50,000 becomes $50. Then divide by 2 for $25 per hours) If it costs you less than your hourly rate to have someone perform a task for you – be it, laundry, car washing, organizing your closet – it’s worth it to outsource.
Pinpoint When You’re Most Productive
This requires a bit of homework, but for a week, track your time by jotting down what you’re doing every 15 minutes. By mapping out your day, you can more easily identify bad habits, and even figure out when you’re at your peak efficiency (i.e., you may figure out you’re less efficient after lunch, or a slow-starter in the morning). Schedule the hardest, most difficult tasks when you’re the most efficient and alert. While you’re at it, keep a watchful eye on time-sucking activities that may be sabotaging your progress and success.
Take Breaks
Speaking of breaks — your body and mind NEED to rest at regular intervals throughout the day. Working five hours straight may seem productive, however, spending long hours focused on one thing fatigues the brain and makes problem solving harder. By taking regular breaks to refresh the mind and body, you’ll work more efficiently. A simple 10 minute time-out to stretch, grab a coffee or even power nap goes a long way.
Photo credit courtesy of North Caroline Virtual Public School
October 2, 2012
3 Keys To Protecting Your iPhone 5
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A few weeks ago, Apple’s latest gadget, the iPhone 5 ,went on sale amidst lots of excitement. Consumers lined up outside stores to be the first to get their hands on the smart phone and in just the first weekend, sales reached 5 million. But at a starting price of $649, losing or replacing your iPhone could be a hefty expense.
To be exact – Americans have spent an estimated $5.9 billion since 2007 to repair their damaged iPhones, according to a SquareTrade report. The study also found, embarrassingly, that 6% of iPhone users have taped their broken phones back together and 11% use them despite cracked screens. The most common cause of damage: dropping, followed by “immersion in liquid” – what I’m sure means a drop in the toilet.
But basic safeguards could save you money and the hassle of being without your phone. Here are 3 ways to protect your new (or even old) device.
Insure It
You have 30 days to apply for AppleCare, Apple’s coverage for spills, shattered screens and other damage – up to two incidents. The plan costs $99 for two years, plus a fee of $49 per claim and is the most common insurance for the device. Downside: It doesn’t cover the loss of your phone. Insurance plans through Verizon and AT&T do however, along with coverage for damage or stolen theft – also over two years. AT&T’s plan costs just $6.99 per month and Verizon slightly more at $9.99, but both get pricier when you make a claim, charging deductibles of $199.
Case It
With high deductibles, it’s best to do whatever you can to avoid damaging your iPhone. Cases are a cool way to accessorize your device but also a necessary protection. Otterbox, Belkin and Case-Mate all offer highly-protective cases to protect your phone from drops, scratches and spills. The cases are specially designed to fit the iPhone 5’s new larger screen and, between 20 and $50, are much cheaper than filing a claim.
Secure It
But an iPhone is more than the sum of its parts. Despite Apple’s great reputation for defending against viruses, you need to protect your system. First: Never jailbreak your iPhone. This software hacking may allow you flexibility outside of Apple’s iOS but also opens you up to the world of malware that can damage your system. While we’re on the topic of software, be sure to download Apple’s “Find My iPhone” app. It’ll help you locate your iPhone, using another device if lost, and assist the police in case it’s stolen. Hands down this free feature beats the $200 deductible for a new device with insurance or as much as $850 without it.
Odds are you won’t damage your phone over its lifetime. Just 30% of iPhone users have in the past year and only 17% have more than once. In the case that you’re especially clumsy, a cost-effective alternative to insurance is to just have it repaired. Fortunately, a recent look at the iPhone 5′s hardware shows it’s easier to repair than previous models. Apple has certified service shops where you can have your phone fixed for the most common types of damage, usually between $50 and $100 depending on the damage. Other repair shops can also perform common fixes, though doing so will void your warranty. Be warned, though, that not all damage is repairable and there’s no fix for a lost or stolen device.
Photo Courtesy,William Hook
