Monday, January 28, 2013


FACT: Consumer spending is increasing, despite the tepid economic environment.

Consumer spending reached a four-year high in December 2012. Americans reported spending an average $83 per day in stores, online, and in restaurants - up from $73 in November and the highest monthly figure Gallup has reported since December 2008.

Retail sales were up 4.4% in December 2012 from last year, according to the U.S. Census Bureau.

Outstanding consumer loans reached $1.1 trillion in the first week of January, a 3% increase from January last year.

FACT: Consumers are paying off credit card debt are record levels.

During the third quarter of 2012, delinquencies on credit cards issued by banks fell to an 18-year low, according to results from the American Bankers Association’s Consumer Credit Delinquency Bulletin.

The number of consumers more than 30 days late on payments falling to 2.75% in the third quarter, well below the 15-year average of 3.89%,

FACT: Payroll taxes could potentially weaken consumer spending in 2013.

On January 1, 2013, the payroll tax reverted to 6.2% of workers’ salaries from its temporary setting of 4.2%.
The increase means households will have $18 to $20 less to spend each week on average, or $900 to $1,000 less a year, according to the Tax Policy Center.

FACT: Consumer confidence headed into 2013 is shaky at best.

Consumer confidence dropped off sharply in December due to fiscal uncertainty, according to the Conference Board report. This is expected to continue until the debt ceiling is resolved.

Consumers expecting business conditions to improve over the next six months declined to 17.6% from 21.3%, while those expecting business conditions to worsen increased to 21.5% from 15.8%.

Consumers anticipating more jobs in the months ahead declined to 17.0% from 19.5%, while those expecting fewer jobs increased to 27.3% from 21.2%.

Thursday, January 24, 2013

Know the 8 emotional spending triggers

To get a handle on why you overspend, understand underlying causes

By Gary Foreman

The New Frugal You
New Frugal You columnist Gary Foreman
Gary Foreman is a former financial planner who currently edits The Dollar Stretcher website and newsletters. He writes "New Frugal You," a weekly Q&A column about frugal living, for Ask a question.
'New Frugal You' archive
Question for the expert
Dear New Frugal You
This probably sounds stupid, but I just don't know where my money goes. I make a reasonable salary and I don't think that I do a lot of shopping (OK, I do buy too many shoes!). So where does the money go? I've tried keeping track of all my expenses for a month, but nothing seems wrong with what I'm doing? Can you help? -- Mercedes

Answer for the expert
Dear Mercedes,
Good question! Sometimes it's really hard to understand our finances. The standard budget planning process starts just as you did it -- by carefully tracking spending for a munth. But turning that pile of information into something real and useful is the harder trick.
Often a struggle such as yours is not caused by the data itself, but by our lack of understanding it -- not so much on the financial level, but on an emotional level.
Any attempt to understand our spending patterns requires a bit of introspection. There can be emotional triggers to many of our spending decisions and without understanding them, that pile of information will stay just that. So let's try to consider what motivates us to make each purchase.
That will require you to go through the expenses you tracked. Consider each purchase. Use the list of emotional spending triggers below and see whether any of these symptoms seem to ring true.
    1. Protecting our image. We care what others think of us, and we make purchases so that others can see that you own those things. Designer clothes, Rolex watches and McMansions are good examples.
    2. Spending up to our income level. You may find that you spend money just because you can. A raise or unexpected income could be the trigger. The tell is not what you buy, but the fact that you always spend money as soon as it's available.
    3. The emotional high of spending. Many of us get an emotional kick out of spending. We buy because it "feels right" and then question the purchase when we come down from our high.
    4. The need to feel powerful. Being able to make decisions and back them up demonstrates power. That can feel good. Expecially when others react and acknowledge our power. If you're buying to demonstrate your power, you'll tend to buy "high end" products and services -- ooking to get something better than the typical consumer.
    5. The need for immediate gratification. We live in a "now" world. Instant Internet, instant food and instant credit. So when we see something that promises to satisfy one of our needs, we want it now. When all purchases were made with cash, scratching this itch was harder. Credit cards have made instant gratification much easier.
    6. The desire to protect our standard of living. Unless you're intentionally trying to simplify your life, you'll assume that any expenses incurred protecting that lifestyle are necessary. But changes in income, age and family status may suggest a different, more-modest standard of living. Purchases made just "because I've always done that" are a telltale sign.
    7. The need to overcome past problems. If you were materially deprived early in life, it's natural to want to avoid repeating those times. You might get a candy bar every work break to make up for the ones you didn't have as a child. Or you might only buy new cars because your parents could only afford old beaters.
    8. Convince ourselves of self-worth. Some people need to spend money on themselves in an effort to bolster their self-esteem. Often these are items that are self-centered (think manicures, fancy jewelry, personal convenience or care items). One way to identify these purchases is that they're often justified by a "I deserved it" claim.
      When reviewing your past monthly purchases, notice if any of these triggers fit into your spending patterns.
      The purchases may only be the symptom, with the underlying psychology being the cause. Unless you deal with the root cause, it's unlikely that you'll ever control your spending.
      Don't be afraid to confront those causes. Often, once you know they exist, it's easy to overcome them. In any case, it's a battle that's worth fighting.

      Read more:
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      Monday, January 7, 2013

      13 Tips For Better Credit in 2013

      Good credit habits will translate into lower interest rates and down payments and will help protect you from identity theft.
      This post comes from Jeanne Kelly at partner site

      It's that time of year when many of us start to think about New Year's resolutions.

      Image: Credit card © Mike Kemp, Getty Images, Getty Images
      Chances are, you're thinking about losing the Christmas pounds gained from eating more food than you intended. Maybe you're thinking about other good habits like quitting smoking or visiting the gym a little more frequently. New Year's resolutions are all about improving yourself by adopting better habits.
      Why should it be any different with your credit? You already know how important your credit is (after all, you're smart enough to be reading about it here). So taking steps to improve yourself by improving your credit habits is a smart way to transform your year.

      Here are 13 New Year's resolutions to adopt in 2013 that can help you maintain good credit:

      • I will learn my credit score from all three credit reporting agencies and I will use my newfound knowledge to handle my credit wisely, to pay less interest, and to have access to money when I need it.
      • I will be proactive with my credit, aggressively taking positive actions that result in healthy credit and avoiding negative actions that result in unhealthy credit.
      • I will establish my own credit so that I am not completely reliant on my spouse's credit.
      • I will pay my bills on time and (if possible) in full to help maintain a healthy credit history.
      • I will pay down my credit card debt to 20% of my credit limit (or less) to help keep my credit utilization low.
      • I will pull my credit reports from each of the three major credit reporting agencies -- Experian, Equifax and TransUnion -- through once every year and I will review them diligently to ensure that there are no errors. Further, I'll keep tabs on my credit and credit scores throughout the year using's free Credit Report Card.
      • I will educate myself about identity theft and work to prevent it from happening to me, and I will use my credit reports to help ensure that my identity is safe.
      • I will apply for only the credit I need instead of the credit that is offered to me, because too many applications can hurt my credit scores.
      • I will ensure that I use all of my credit wisely, keeping it active (although never more than I can afford) to help maintain good credit.
      • If I need to apply for an important loan or mortgage, I will be conscious about when I apply for credit so that new applications won't negatively affect my score.
      • I will work with debt collectors to eliminate any and all of my collections items. I will make 2013 the year that I am finally free of overdue debt.
      • I will revisit the credit mix that I have and make sure that I have a good balance of installment credit and revolving credit, and I will open new accounts and manage them wisely to re-balance this mix.
      • I will set aside a few minutes every day to educate myself about credit and debt, knowing that this investment of knowledge will pay dividends for the rest of my life.
      Choose the habits you want to adopt this year and mark them on your calendar. And as a bonus tip: Set reminders on Jan. 15 and Feb. 1 to stick with these resolutions, since those are the most frequent times of year when people drop their resolutions.
       If you stick with these resolutions, you'll develop better credit habits that can help you get access to loans, lower interest and down payments, and protect yourself from identity fraud. Start 2013 off on the right foot with proactive credit habits.

      13 tips for better credit in 2013

      13 tips for better credit in 2013