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Are Lower Prices Encouraging People to Spend?
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
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Instead of Spending, Sock That Cyber Money Away
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.
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Are You Thankful For What You Have?
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.
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3 Ways to Avoid Black Friday Hype
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.
Remind Yourself: You Don't Need More Stuff
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?
Disconnect From the Media
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.
Consider the Alternative: Where Else Could Your Money Go?
It's almost the end of the month. If you're thinking about going shopping on Black Friday, consider how much you might spend. Wouldn't that be better placed in your savings onion?
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.
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4 Tips for Shopping at Thrift Stores (Or How Not to Spend Like Sarah Palin)
The Washington Post ran an article on Vice Presidential candidate Sarah Palin titled After a $150,000 Makeover, Sarah Palin Has an Image Problem.
The article reports $75,000 bills at Neiman Marcus and $50,000 bills at Saks Fifth Avenue along with a $10,000 handbag among recent purchases, none of which goes well with her efforts to have an "Ah shucks," hockey mom image.
I think it's fair to assume savers on this blog share at least some of my annoyance, but I decided to curb that and let her excess be an opportunity to report a modest but pleasing savings I made just three days before on a pair of $175 Nunn-Bush shoes. I got them for $7.99 at a Goodwill thrift shop.
Better yet they were absolutely 100 percent new; not a scratch, not a scuff, on the tops, on the soles, anywhere.
Finding a brand new pair of shoes at Goodwill is lucky, but there is more to it than luck. Savings at thrift stores comes with strategy and patience. Never shop at a thrift store if you need something right away.
If it's Friday afternoon and you have to get new and respectable shoes for your sister's wedding, then it's not the time to go to Goodwill or any thrift.
Savings at thrift stores is a long-term process requiring regular, but short visits. At Goodwill stores and Salvation Army stores, especially in big metropolitan areas, the good stuff turns over very fast. That is important because infrequent visits mean lots of good stuff will come and go and you'll never see it.
- Frequent visits make it easier to spot the good stuff.
- Plan to stay twenty minutes to a half an hour, but never longer.
- Have a departmental route: pants, shirts, shoes, furniture, electronics, sporting goods, books and so on.
- Don't linger. If the bargain is there, you will see it. If you stay too long you'll get depressed looking at worn out stuff and begin thinking thrift shops are hopeless when they are not.
Thrift shops are a special preserve for those who like a challenge, but they pay off, especially when you find something you might not buy otherwise. The above mentioned shoes are only one of many fun buys.
Include new to nearly new Ralph Lauren, Tommy Hilfiger, Bill Blass and Brooks Brothers shirts, Jos. A Banks pants, 3 all leather belts, New & Lingwood sweaters, a Harris Tweed sports coat, all bought for a song. Take that Sarah Palin.
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
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Price Fixing is Legal: Why It Matters
Savers should beware that the U.S. Supreme Court recently reversed earlier Anti-Trust rulings preventing price fixing.
Under new rules established a year ago, manufacturers are now allowed to fix minimum prices for resale of their products and coerce retailers to stop discounts by cutting off supplies and refusing to sell to them. The practice is called Resale Price Maintenance and can be expensive for savers.
A recent Wall Street Journal article, Price-Fixing Makes Comeback After Supreme Court Ruling, quotes from the Court's ruling that Resale Price Maintenance "could foster competition by giving retailers enough profit to promote a brand or offer better service." In the ruling the phrase "giving retailers enough profit" suggests that retailers should be happy with the decision.
The article quotes many retailers and all of them detest resale price maintenance because it hurts their business. Higher prices definitely hurt consumers.
A discount retailer of baby products was quoted as saying that it "prices a baby car seat made by Britax, the Boulevard Convertible, at $309.99, the manufacturer's minimum. If he didn't, Britax would cut off the supply of a popular product." The retailer is also quoted as saying he could sell the seat of $229 and still make a $50 profit.
However, there is previous experience with Retail Price Maintenance because Congress passed a Fair Trade Act in the 1930s that permitted states to craft their own Resale Price Maintenance. Experience shows it goes with branded products, especially apparel, shoes, consumer electronics and home furnishings and it will raise prices for brand name products.
Savers can save by avoiding brand loyalty and concentrating on price and finding store brands or generic labels.
If the practice catches on, experience shows that retail outlets that go along with resale price maintenance for branded products have a drop in sales at the higher price. Their drop in sales gives them incentive to resell their surplus supplies in the wholesale market to other retailers, especially discount retailers.
Some years back, reselling took place in the designer jeans market where designers were trying to maintain their image with a high price. Jeans were resold as "bootlegged" products to discount retailers. Since the only way for manufacturers to enforce their restrictions is to cut off supplies, it was hard for them to know where the "bootlegged" supplies were coming from and therefore who to cut off.
The courts' ruling is anti-competitive despite the suggestion it could "foster competition." Free enterprise includes the freedom to set price at all levels of the marketing chain. Competition includes price cutting and allows for new entrants who attract customers with a lower price. We suspect that the court has underestimated the power of competition.
In the meantime, take care before you buy and ask yourself if a brand name is really worth it.
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
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What Can You Do Without Spending Money?
Since we're in full-on savings mode in preparation for our vacation to California, our weekend was kind of … well, quiet.
Not that that's a bad thing — Debbie was under the weather, but we didn't really have any plans. For us, not having plans is a bad thing.
When we don't have any plans, we tend to do the one thing we definitely do not need to be doing now — spending money. Whether it's going to the mall, going out to eat, or frivolously shopping, we spend money.
So with no major plans but no desire to spend money, what do you do?
Obviously, there's a lot that can be done. We cleaned the house, watched a movie, spent time with family, played some Wii, planned our trip, and more. Yes, it's not that exciting, but it doesn't have to be.
We managed to have an enjoyable weekend without doing any damage to our bank account.
Then next time you're sitting around with nothing to do, think about all the things you could be doing without spending money. Maybe it's going outside for a walk, spending time with your family, blogging, playing a game, taking a nap, cleaning your house …
The list goes on and on.
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Diamond Shopping On a Frugal Budget
I've finally done it. I am now engaged.
All of the trepidation I had about taking this step did not stem from a fear of commitment, but rather from a severe inability to find and purchase a ring. I had a good idea of what she wanted, but the nuances involved in the selection are incredible.
Anyone who has shopped for an engagement ring knows the "four Cs," the major characteristics of a diamond which determine its price. Because these diamonds are not mass-produced, no two are completely alike, and thus comparison is extremely difficult.
So for someone who hates shopping and has no previous knowledge of jewelry, buying an engagement ring is beyond daunting, especially when you don't want to be ripped off. Being frugal, I have a difficult time spending money on something that I consider to be conspicuous consumption.
I guess I don't have the power to change societal customs, though.
In the end, I ended up using a diamond my mother had given to me, and got it set into a new band. Not only did it save me money, but it also has sentimental value.
And I think it saved me from losing my mind completely.
Tom Valenti is a marketer and project manager who currently works for a financial institution in New Jersey. For more info, visit him at http://tomvalenti.com.
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What Are You Doing With Your Tax Rebate?
We're not getting much of a tax rebate this year — which is a good thing, by the way — so the $132 will either go toward our upcoming vacation or housing fund.
MSNBC.com recently polled some of its readers, asking them what they plan to do with their tax rebates.
In a sign of either a slowing economy or a return to personal finance best practices (unfortunately, I think it's the former), nearly all of the published responses focused on paying bills or adding to savings funds.
A few of the responses:
I should just sign the check over to Exxon Mobil. It’s all going to cover higher gas prices anyway.
Jim Smith, Sebastian, Fla.Spend? You must be kidding! No way! It is going in my savings account.
Alex deCastro, Klawock, AlaskaIf I get a rebate, I will add it to my grandkids’ college funds. They will have to have a good education to exist, much less thrive.
Sue North, Howell, Mich.I am putting it aside to use on my family's summer vacation.
Martha Davidson, Mechanicsville, Va.I am paying down my credit cards. It is useless to do what the president says in regards to spending the money. He obviously does not know how money-strapped the working class is.
Chez Escudero, Virginia Beach, Va.If you're getting a tax rebate this year, we want to know: what are you doing with it?
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Why an iPhone is a Worthy Investment
I love gadgets. I can't hide that.
I've written before about wanting to buy a PlayStation 3 (to play Blu-ray movies) and Rock Band (to jam out), but talked myself out of it.
Apple's iPhone, however, is a different story.
Since it came out, Debbie and I have pretty much lusted at the iPhone. It's gorgeous. It's groundbreaking. And it's pretty cool, too.
But we didn't pull the plug. The price was too high — $500 to start — and it required switching to a different cellphone provider (AT&T).
Until recently. Debbie's contract with Sprint is up (we don't get service in the house, anyway) and AT&T started selling refurbished iPhones online for $250.
Since her birthday was last week, I bought her a refurbed iPhone — and now we're proud owners.
What makes the iPhone worth it is that it's a practical gadget. So many times, we find ourselves wanting to know how to get somewhere in the car or to look up some information when we're away from the computer.
Now we can do that.
The iPhone is a pretty sweet gadget, but it has real-world, practical use. It's not like the PS3 or Wii, where you only derive entertainment value from it — the iPhone can save you time and money.
For that, it's a worthy investment in my book.
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