It is time for savers to pay more attention to prices. That assumes savers are still interested in saving, but frustrated with ever lower interest rates.
In a depressed economy like we have in the United States, low interest rates should increase borrowing, spending and then jobs.
It should, but it may not. For example, low interest rates may encourage existing home owners to refinance at lower interest rates rather than encouraging those who are renting to buy a new house. In the case of refinancing, there will be few jobs created; in the case of a new house there will be construction jobs.
Those who refinance and save with lower monthly payments have more money to spend which might add to new spending. I say might because lower interest rates mean lower earnings for savers, which will cut their income and discourage spending as well as saving.
Right now, lower interest rates are not generating much spending, just lots of talking and proposing.
Low interest rates need to finance borrowing where something actually happens like building a new factory or a new house. Lending transactions that generates more schemes to buy low and sell high will not generate jobs.
Low interest rates are only one potential change that can help revive spending. Lower prices on goods and services can do that as well.
Just as lower interest rates can put people to work, lower prices get people to buy more, which means more work, more production of goods and services, followed by more jobs and more income.
Lower prices also translate into personal savings. Low gas prices help us save as individuals, but also generate mass savings that supports spending in other sectors.
There is other regular and discretionary buying that has potential for savings. Try the grocery store where savings on week-in and week-out buying can easily translate into four figure savings over a year. I never buy cereal, chips, crackers, or most prepared food unless it's on sale.
Yesterday, the local grocery had an end of aisle display announcing chips at 2 for $7. Chips on sale are supposed to be 2 for $5, but worse I took a bag down to check the size and found 10.5 ounces instead of 11.5.
I walked away, which we all realize is a tiny gesture in a mass market, but I still have my $7 bucks. In a computer age, the wholesalers back at the warehouse know exactly what the larger market thinks of their new price.
If others pay more attention to pricing and show more resistance, it will translate into price cuts and personal savings. We can also realistically hope it will work to revive our declining economy.
Fred Siegmund covers America's jobs as part of work doing labor market analysis and projections for a client base of recruiters, trainers and counselors. Visit him at www.americanjobmarket.blogspot.com
Can you hit your financial goals without budgeting your spending each month? What about if you're tracking every penny you spend, but not setting aside certain amounts for each category?
For the past year or so, we've been tracking all of our purchases to find how much we are totalling at the end of the month, but not planning out how much we will spend for groceries, entertainment, and other expenses that fluctuate month-by-month.
But would it be better to establish budgets for the expenses that change every month?
This month, we're trying it. (We used to do this when we first started saving money, but stopped after a while).
The past few months have been a bit expensive — our out-gos have been higher than our incomes. But since we treat savings as expenses, we're basically moving money from our cushion into savings.
Our paycheck to paycheck mentality makes our checking account levels relatively low, but this forces us to really watch what we spend.
What do you think: If you're automatically set to save money, is tracking your spending as good as budgeting?
With three weeks left in the year, have you started to plan out your 2009 finances? Where do you want to be in December of next year?
It's time to figure it out.
The best way to reach your goals is to plan for them. If you don't know where you're going, there's no way you're going to get there.
This week, we participated in 3 (count them, 3!) carnivals:
Check out some of the great posts, including:
FNBO Direct vs ING Direct - Reader Compares Online Savings Accounts - Money Smart Life
The main complaint I hear about FNBO Direct is that it’s user interface is a little behind the other online savings accounts available in terms of functionality. The reader seems to agree with this sentiment, preferring the ING Direct web site but he isn’t as pleased with their interest rates. I agree the interface isn’t as flashy but the FNBO Direct interest rates and customer service are better.
8 Money Management Tools for iGoogle - About.com Financial Software
You probably already know that iGoogle pulls information from a wide variety of sources to give you a highly customizable online personal start page. Here are some of the best financial gadgets to add to your iGoogle pages.
How to Save Money on Your Monthly Technology Bills - Free Money Finance
Here are some thoughts from Kevin Brand, EarthLink's SVP of product marketing on how to save on tech bills.
- Assess your Needs
- Take Advantage of Freebies
- Avoid Bundles
- Study your Bill
- Pay Smart
This guy found out the hard way.
ING Direct filed a civil suit against Breck Yunits in U.S. District Court last week, claiming the 2007 Duke University graduate used the ING trademark and potential customers’ e-mails to improperly gain close to $10,000 from the bank’s “Refer a Friend” program. …
In the suit, ING alleges Breck Yunits created a Web site with an address and domain name “ingdirect25.com” in May, a move that infringed on the corporate name and trademark, the lawsuit said.
Further, through the Web site, ING alleges Breck Yunits referred 918 new customers – far more than the limit of 25, resulting in a profit of $9,180, far in excess of the $250 limit, per the rules of the promotion, the lawsuit said.
While the suit is technically over the use of ING Direct's name in his site's promotion, Yuntis's brother alleges the bank paid out all of the referral bonuses — and then took them away from his account with no warning.
“They never, ever notified him, never sent a written notice, never told him to stop, never issued a cease and desist,” Conor Yunits said. “In fact, he had been getting phone calls from them all summer long, thanking him for the referrals.”
For a bank with such good customer service and technological foresight, it's surprising to hear that they would be sloppy enough to let any user use more than 25 referrals.
Massive hat tip: The Sun's Financial Diary
If you're thinking about opening up a new online savings account, WTDirect has a new bonus for you.
When you open a new account using this link and fund with an online transfer by December 22, 2008, you can earn up to a $250 bonus (depending on your deposit).
Here are the deposit amounts and the bonuses attached:
Balance | Bonus
WTDirect says they will average the account balance between 1/1/09 and 2/28/09 to determine where you fall, and deposit the bonus in mid-March.
The bank's current APY is 3.06%.
One of the first things you should do after you get a raise at work or pay off a recurring debt is to continue to live at your existing levels.
Don't take that 'extra' money you now have and start to live larger. Instead, automatically transfer it to a savings account and watch your net worth grow.
Rather than accumulating extra stuff, you're increasing your savings without cutting back on your lifestyle. It's a win-win situation.
Today, on Cyber Monday, do the same thing. Instead of buying something you see online, take the price of the product and transfer that amount to your online savings account.
Spending money isn't bad. But wouldn't you rather spend money on yourself than on having more stuff?
The best gift you can give yourself is financial comfort. Today, make it happen.
Since we're at the end of the month and almost the end of the year, it's time to start looking forward to your financial status when the calendar flips.
Check out a few of the great stories from the two carnivals:
Online Bank Accounts and More Savings Options To Keep Your Money Safe - The Digerati Life
In light of the current financial turmoil, many are exploring alternatives to the traditional brick and mortar bank for saving and securing their assets. Here are some of the options.
We’ve discussed Internet coupon sites here in the past (and of course, we’ve had the fabulous Kyle of Rather-Be-Shopping.com do a bunch of guest posts!), so they’re not new to us. But there are other sites out there and other ways to spend less or get rebates, and I’m wondering which do you like?
Is Your Cash Flowing on a Daily Basis? - Debt Free Destiny
As more and more people are creating budgets to stay on track in a turbulent economy, it is important for those people to recognize their own cash flow situation and seal with it. Even if, on paper, your income meets your needs for paying bills, you still may not be off the hook.
Look around you. What do you have in your life to be thankful for?
It's probably more than you think.
So much of our society places an unneeded desire on material possessions, wealth and status. But that's not as important as you might think.
Believe it or not, you've got it good.
There are so many people in the world who have way less than you do. A lot less.
Even if you think you're in a bad situation, look at yourself through the eyes of the less-fortunate.
Whether it's family, a home to live in, or food on your table … you could have it a lot worse. And many people do.
So on this day of Thanksgiving, remember to be thankful for what you have. It's not all about the Fortune 500 job, the fancy new car or even being debt free. It's about taking a moment and putting your life into context.
There's always someone who has it much worse than you.
Be thankful for what you have. Have a happy Thanksgiving.
This week, you'll be bombarded with commercials, blog posts and newspaper ads for Black Friday, the biggest day of the shopping year.
It's almost impossible to avoid hearing about the sales and specials and people who think it's a good idea to get up at 2 AM to go stand in line to buy stuff.
But you don't have to get caught up in the hype. Here are three ways to avoid it.
Have you ever found yourself buying something you really don't need? Black Friday is the day that will happen.
Avoiding more stuff is one of the central tenants of a frugal lifestyle. If you don't really need something, you shouldn't buy it. Even if it's such a great deal you can't pass it up, ask yourself this: are you just getting more stuff?
You can only be tempted into purchasing stuff if you allow yourself to be marketed to. Instead of sitting at the computer or watching TV, use the holiday for the right reason — to spend time with your family.
Unplug from the marketing and promotion machine. It's not worth it. For real.
If you don't let them talk to you, you won't be affected by them.
When you've got money in your hand, take a second and think about what it's going to be doing for you. You want your money to work hard for you — is it better spent paying off your debt? How about saving for a house?
It's your decision to make.
It's been a pretty busy week around here — a guest column on the US dollar, results of a study on how people feel about online banking, and a look at how budgets are affecting the number of hours people work.
We also participated in 2 — yep, read it 2 — carnivals this week. In addition to the Carnival of Personal Finance, hosted by Money Ning, we were a part of the Money Hacks carnival, hosted by Moolanomy.
A few of the highlights from the carnivals include:
Rate Chasing with High Yield Savings Accounts - My Dollar Plan
Chasing a rate when you have $500 in the bank doesn’t make much difference. However, if you have $50,000 in the bank, a few basis points can make a big difference.
12 Fun and Free Entertainment Websites - Fiscal Zen
The Internet has a lot to offer: communication, news, investment research, and money saving opportunities but to name a few. But sometimes, you just need to take a break and have a little fun. So with that in mind, I’ve put together a list of 12 fun and free websites that are great for entertainment.
6 Situations Where I Still Need Cash - Student Scrooge
The time has finally come — for the first time in almost two months, tomorrow I will be visiting an ATM. My local ATM and I used to be much better friends, but it just does not serve the same role in my life which it once did. Using my credit card (responsibly) has enabled me to pay most of my expenses over the past few weeks without cash, with added budget tracking benefits. As part of my build-up to tomorrow’s ATM visit, however, I want to take a moment and reflect on some of the expenses that still keep me using cash every now and then.