Avoid the Holiday Shopping Hangover

by Gerri Willis

By Gerri Willis

It’s the most wonderful time of the year! Ah, the holidays. For those of us who like to shop, it doesn’t get any better than this. Massive discounts. Price matching. Shopping apps. This year in particular, retailers are going to all kinds of lengths to get your attention. Some are opening on Thanksgiving, others are starting their Black Friday offers a week in advance. But consumers’ zeal for the deal sometimes gives way to getting all your shopping chores crossed off your list at any price. And, that can leave you with a holiday shopping hangover come January when you get your credit card bill at the end of the month.

The truth is December is the single, most active month on the calendar for credit card usage.  On average, we load our cards with $131 billion in December, that’s 16.4 percent more than the average month. During November and December of last year, consumers spent more than $246 billion on their bank credit cards, according to TransUnion, the credit monitoring company. With $847 billion dollars ALREADY on our charge cards this year, according to the Federal Reserve, we could be facing a particularly debt-heavy Christmas season.

Holiday debt is bad enough, but when you consider that the average interest rate on a balance transfer card is 15.8 percent, well, you can begin to see just how dangerous this debt can be. In other words, your debt is going to grow like topsy until you pay it off.  Let’s say you charge the average amount of money that middle income homes are expected to spend this holiday season, or $1,035.00, according to a Gallup survey. If you make minimum monthly payments on that debt of interest plus 1 percent of your balance (or $23.29 to start), it will take you nine years to pay off. Worse, you will have paid a total of $773 in interest alone—nearly the amount that you borrowed. You’re probably too smart to pay only credit card minimums, but even so it makes sense to analyze how long it will take you to pay off your holiday debt. Let’s face it; nothing is worse than postponing your summer vacation because you are still paying off holiday debt. A good place to go to analyze your credit card debt is bankrate.com, where there are loads of calculators to help you determine the best way to reduce your debt.

Other ways to save this holiday season: Don’t succumb to the offers by department stores for discounts if you open a new charge card. That’s because while you bank the one-time discount, you’ll also be likely to spend more. Plus, department store charge cards typically carry higher interest rates. For that reason, I like to shop in the virtual world with a list in hand. I find it more difficult to overspend when I’m not in the mall fingering the merchandise. Plus, having a list can keep you focused on what you really need to buy. For the adults in my family, each of us buys a single, funny gift and we play a game in which they are traded and exchanged. It’s fun and nobody spends too much. I typically pay with a credit card with a rich rewards program and pay it off as fast as I can.  That means no holiday hangovers and no spending regrets.

Don't miss The Willis Report TONIGHT starting 6pmET on FOX Business.

The Harsh Realities of Online Shopping

by Gerri Willis

By Gerri Willis

I couldn’t blame you if you decided to do all of your holiday shopping online this year. After all, fighting the crowds seems a lot worse than wrestling the mouse. But the reality is this: There are pitfalls to online shopping as well and the most pernicious are not obvious.  This is the time of year that thieves are out in full force, hoping that you make a mistake so they can sell you counterfeit goods, steal your credit card number or even your identity.

Here’s what you need to know to avoid the downsides of online shopping:

  • Don’t rely on your own powers of observation to determine whether a website is shady or not. There was a time when you could spot fakers because the sites were loaded with bad spelling and grammar. Not anymore.  Consumer Reports’ Tod Marks says it is almost impossible to determine whether a site is legit or not by just looking at it. Instead, make sure that the URL contains “https:” that “s” stands for secure. Check our retailer ratings at Better Business Bureau, where you can also find consumer complaints and reviews. It doesn’t hurt to stick with retailers you already know, and avoid obscure vendors. And, by the way, pay by credit card rather than debit card. That way, if there is a problem with merchandise, you can get your money back.

2.) Watch out for the shyster moves. The fine print is what can get you online. Watch out for sites that say you can’t return defective items. That means the sites are revoking an implied warranty that is acknowledged in many states. If you are buying a high end item make sure that the site is an authorized dealer for the goods by reading the terms and conditions on line.

3.) Check out the online privacy policy. Many retailers give you the option to opt into special offers or promotions. My suggestion is to limit the information you provide to what is needed to actually make the purchase. I prefer dealing with retailers who allow me to decide whether they can share my information with others.

Ultimately, it looks like the majority of us will spend some time online shopping for holiday gifts. My suggestion: Don’t allow the pressure of getting that last minute gift compromise your security. Don't miss tonight's Willis Report starting 6pmET on FOX Business.

User's Guide to Shopping: The Best Toys Ever

TOYS:

  • Monopoly
  • Etch A Sketch
  • Slinky
  • Easy Bake Oven
  • Hot Wheels
  • Mr. Potato Head
  • Hula Hoop
  • LEGOs
  • Bears
  • Barbie

 

  • Monopoly—The best-selling board game actually has its roots in an earlier game called The Landlord’s Game that aimed to teach people what an awful thing it was to have (or be) a money-grubbing, price-gouging landlord. Instead, people adapted that game, added street names from their own communities, and created a folk game with the goal of driving their friends and family into bankruptcy—it’s fun! Charles Darrow applied Atlantic City properties to that folk game and created the game we know and love today. I have a Monopoly: Here and Now version from about six years ago in my office that would be easy to bring. It updates the game with new playing pieces (Toyota Prius, Motorola cell phone, Starbucks mug), substitutes airports for railroads, and uses famous landmarks from across the U.S. like the Mall of America and Fenway Park rather than Boardwalk and Park Place.
  • Etch A Sketch—This toy was invented in France and was originally called the Magic Screen. Based on the principle of static cling, just like acrylic sweaters coming out of the dryer, it operates by using a stylus that scrapes a coating of aluminum powder off the back of the clear screen to leave a black line. A little company from northwest Ohio called Ohio Art finally paid what they considered an outrageous sum--$25,000—on the rights to make the toy in the U.S. Renamed Etch A Sketch, it was a big hit for the holidays in 1960 and remains a popular drawing toy to today, with no paper, markers, or crayons required.
  • Slinky—The springy toy started as an invention to cushion naval instruments in World War II but, once its creator saw it walk off a shelf, he marketed it as a plaything instead. Slinky got off to a slow start in the market—who wants to pay $1 for what looks like a mattress spring?—but sales soared once people saw demonstrations of it walking down stairs and making that slinkety sound (a good advertising jingle helped too).
  • Mr. Potato Head—Originally the famous spud was going to be a cereal box premium. You’d find eyes, ears, nose, and a mouth in a packet at the bottom of your cornflake box. The Hassenfeld Brothers (they later shortened their company name to Hasbro) got wind of the concept and thought it was way too good to be a giveaway. So Mr. Potato Head was born and he received one of the very first toy product launches with TV advertising, a strategy that proved exceptionally successful. Originally, kids had to supply their own potato and jab it with the facial features. Pierced potatoes moldering under beds and in closets undoubtedly led to smelly tuber meltdowns that weren’t popular with moms and later versions came with plastic potatoes.
  • Hula Hoop—The miracle material of molded plastic turned bamboo exercise hoops from Australia into a pop culture sensation. In 1958, WHAM-O could hardly make them fast enough to keep up with demand. Eventually the craze passed but the fad toy didn’t go away. It had BBs added in the 1960s for Shoop-Shoop Hula Hoops and has enjoyed a recent comeback as an exercise device. (As a bonus, Susan and Shane can testify that I’m willing and ready to Hula Hoop at any time, including a clip on The Tonight Show with Jay Leno about 10 years ago.)

What to Put on and Take Off Your Holiday Shopping List

by Gerri Willis

Don't miss our special "User's Guide to Shopping" tonight on The Willis Report 6pmET FOX Business. Black Friday beckons shoppers to malls all over the country with the promise of good deals. Last year, day-after Thanksgiving sales totaled $59.1 million and this year 55 percent of us are expected to shop on Black Friday. But getting good deals is more art than science. In truth, some of the so-called deals aren’t all they are hyped up to be. In fact, Black Friday may benefit retailers more than it helps consumers. After all, that’s where Black Friday gets its name. It marks the first day of the year that some retailers actually stop operating in the red, and begin to make a profit. The good news is this: Because forecasts for the season show consumers may be stingier this year, spending 2 percent less than 2012, retailers are likely to be more aggressive with markdowns.

 So what should you put on your shopping list and what should you leave off? According to the folks at dealnews.com, there are three things you will want to avoid buying on Black Friday. First off, toys are typically better bought closer to Christmas. No doubt you might get some kind of discount on Black Friday, but ask yourself how you will feel if you buy now and see a lower price later. Likewise, stay away from the brand-name high definition televisions.  Other sets are typically discounted at this time of the year, but not the brand name ones. You’ll have to wait until after Christmas to get the best deals. And, finally, hands off the Christmas decorations (for now at least.) You’re probably not shopping on Black Friday to snag decorations, but it’s all too common to add them to your shopping basket. Hold off on the impulse buys and wait till closer to the holiday (or even after) to get that Musical Charlie Brown Christmas tree.

 To get the real deals, the biggest markdowns will go to the most creative. Demand for wedding dresses nearly disappears at Christmas, so the markdowns are the biggest. Likewise, most of us aren’t shopping for apparel or shoes. Apparel, especially high-end apparel, is heavily discounted at luxury retailers on Black Friday. Last year, Nike, Puma and Rockport had site wide sales of up to 50 percent off. For the techies in the crowd, watch for Microsoft Surface tablets – the first generation – to be marked down.

Good luck, and remember, the best deals will go to those with the most patience. 

Holiday Shopping: Not So Simple Anymore

by Gerri Willis

Don't miss our special "User's Guide to Shopping" 6pmET tonight on FOX Business. Remember the good old days when you would go to an actual, physical store to get a look at a product you wanted to buy, and then go back home and purchase that same product online for less money? This year, it just won’t be that simple anymore. That’s because major retailers and big box stores who experienced the brunt of the “showrooming” trend, that is to say squeezing the Charmin in the real world and going home to buy online, are having their revenge. They are beefing up their price matching policies this year and hoping more of us “webroom,” that is shop online and buy in store.

They may win. A survey of shoppers conducted by Accenture, shows 65% of shoppers this year will browse online and buy in store versus 63% who will buy online.

If the trend is the friend of brick and mortar retailers, they are trying to exploit it to their advantage. More and more of them are opening their doors on Thanksgiving. Best Buy will open at 6 p.m. next Thursday, while Toys R Us will open for four hours from 5 p.m. tp 9 p.m. Target will open at 8 p.m. Macy’s and Kohl’s will open on Thanksgiving for the first time this year. And, then there are the stunt promotions. Best Buy just announced the exclusive sales of the blue Samsung Galaxy S4 starting Nov. 14.  

There is a lot at stake in this year’s holiday shopping season. Sales are expected to be down 2% from last year and retailers are using every trick in the book to land sales. For example, retailers have found that people who access a store’s website or app while in the store are 33% more likely to buy an item that day, says Andrea Woroch of Kinoli Inc. For that reason, Target is offering free Wi-Fi in its 1,750 stores. Macy’s is using what it calls “social retailing” to lure buyers, for example, promoting a “Magic Fitting Room” in which shoppers can try on styles virtually and put up the results online.

Watch, too, for location based deals. Brick and mortar retailers, taking a page from daily deal and flash websites, will offer coupons and discounts to shoppers via their mobile devices. Watch CouponSherpa, Foursquare and Shopkick for rewards and “check-in” deals.

It’s a brave new world when it comes to shopping for the holidays. Let’s just hope Mom and Dad can keep up!  

Is Black Friday Turning into Black November?

by Gerri Willis

Don't miss our "User's Guide to Shopping" special starting 6pmET tonight on The Willis Report. Does it feel like holiday shopping sales are starting earlier and earlier? You’re not wrong. Faced with a short holiday shopping season and forecasts of lower spending, retailers are expected to be more aggressive than ever in rolling out early sales before Thanksgiving. According to the National Retail Federation, we’ll spend $738 on average for gifts, that’s 2 percent less than last year. But the retail industry’s pain is going to be your gain. Retail experts say to watch for big discounting as retailers try to lock in sales early.

So what should you put on your shopping list if you are headed to the mall the day after Thanksgiving? Black Friday is typically the only day of the year Apple discounts its products. If they don’t offer discounts, check out retailers like Best Buy to see if they are offering any price breaks or discounts for people who buy multiple Apple products at one time.

Other categories which are typically discounted this time of year: non brand-name televisions, cookware and household appliances and clothing (but not coats or other winter apparel). Better label cookware seldom gets discounted and so it’s a good opportunity to get a low price for you or a loved one.

What should you leave off your shopping list? According to the folks at dealnews.com, there are three things you will want to avoid buying on Black Friday. First off, toys are typically better bought closer to Christmas. No doubt you might get some kind of discount on Black Friday, but ask yourself how you will feel if you buy now and see a lower price later. Likewise, stay away from the brand-name high definition televisions.  Other sets are typically discounted at this time of the year, but not the brand name ones. You’ll have to wait until after Christmas to get the best deals. And, finally, hands off the Christmas decorations (for now at least.) You’re probably not shopping on Black Friday to snag decorations, but it’s all too common to add them to your shopping basket. Hold off on the impulse buys and wait till closer to the holiday (or even after) to get that Musical Charlie Brown Christmas tree.

Cyber Monday is typically the biggest day for online discounts. Candice Cerro, a consumer savings expert, says the big theme this year will be online deals and sales, which could be bigger than Black Friday sales. So, in your search for the best price on any given gift go online first this year.

Obamacare: What to Expect

by Gerri Willis

Join us for a special show tomorrow night starting 6pmET – a panel of experts answers all your Obamacare questions! E-mail me, tweet me @GerriWillisFBN & call our show at 1-877-249-9626 to have your questions answered LIVE!

All week we’ve been talking about open enrollment for the Obamacare insurance exchanges but October is also when sign ups start for corporate health plans. Of Americans who are of working age, 58 percent get their health insurance coverage through employers and for those who do it’s an essential part of their compensation.  Last year, employees paid just 21 percent of overall health care premiums. Employers picked up the rest.

So what can we expect this year?

  • You’ll pay more for coverage. Aon Hewitt’s experts see prices rising – not because employers are spending less but because they are keeping the percentage of their contribution at year-ago levels while overall healthcare prices rise. Aon forecast last year that for 2013 premiums would rise a whopping 6.3 percent. Employee costs  were expected to rise to $2,385 for premiums and  $2,429 for out of pocket costs like co pays and employee contributions. Employer costs were expected to rise to $11,188 for the year. What’s more, almost one in five employers are facing increased surcharges for adult dependents for access to coverage elsewhere.
  • Watch out for more high-deductible plans, also called consumer-driven health care. These plans carry low premiums but employees with this coverage can be on the hook for huge costs if they experience an emergency health problem or life-threatening illness. But the low costs of these plans have made them popular with younger workers, and employers are moving to satisfy that demand. In fact, some employers are making these plans more attractive by subsidizing premiums at higher levels than other plan options.
  •  More free stuff for people who engage in healthy behaviors, like smoking cessation classes or gym memberships. (Of course, more companies may offer more penalties, as well.)
  • A redrawing of the lines of who gets coverage. Aon says Obamacare and the individual mandate is pushing companies to reconsider who can get coverage.

Bottom line, employers are trying to reduce or at least hold even their costs for employee health care. For that reason and the fact that the plans are changing, you’ll want to do more than just check the box for the plan you had last year. Aon health and welfare benefits leader Craig Rosenberg recommends carefully reading and understanding the details of each of the plans you are offered.

 

 

Congratulations, You've Graduated! Now what?

by Gerri Willis

Join us for our week-long series on education on The Willis Report 6pm & 9pmET on FOX Business.

If there’s one thing I learned this week listening to the pros talk about college and the job market, it’s this: Nothing is going to come easy. The truth is, even though the unemployment rate for people aged 20 to 24 is well above the national average at 13 percent, good candidates are still finding jobs. Just this morning, I spoke with a college administrator who said her university had placed 60 percent of their graduates.

The question is this: How do you get to be one of the lucky ones? One answer to that is to attend one of the many institutions that place a priority on helping graduates get jobs. Some schools are just better than others. Penn State University’s job office starts meeting with students in their Freshman year to get them thinking about how they will apply their education in the real world.

“Some students think the only way to get a job is to simply find a job announcement and apply for it, or simply go to a career fair and approach an employer. It’s not as simple as that,” says Jeff Garis, the university’s Career Services Director. “It’s all about the student taking personal control with the help of their university in developing their goals, and developing a good, proactive job search. Most students get their jobs by going out after positions.”

Taking personal control can take many forms. One way is to get experience in your chosen field before you graduate. Even if that experience is unpaid, it’s valuable when it comes to finding a real job.

And, be sure to bring a little something extra to the table. Too many marketing majors, for example, pitch themselves as the perfect salesman for any product. Instead, they would be better off developing a niche or specialty that they can show off in an interview. By showing that you can narrow down and be specific in your approach to a problem or task, you give a potential employer evidence that you know how to problem solve and shape your talents to a specific client.

And, speaking of being specific, if you do use a print resume (not everybody does these days), be as concrete and detailed as you can in your description of your work history and experience. Leave out the high faulting language about your aspirations for your career. Human resource executives don’t have time for the boilerplate nonsense.

And finally, as everybody told me this week – it’s all about networking. Listings on the major job sites like www.monster.com can draw hundreds of thousands of resumes in seconds. Standing out in a crowd that big can be tough. Worse, a lot of human resource departments use computer programs to separate the wheat from the chaff.  In an automated HR world, you’re better off developing relationships with people who get to know you over time.

Consider your job search an exercise in seven degrees of separation. If there is a particular company you want to work for, you need to develop a relationship with people who already work there. Social media is key to getting in the game and making contacts with people who can help. These days, companies maintain active Twitter feeds, follow your prospects to learn what they are interested in and talking about.

 And, for anyone out there looking for a job: Good luck!

The Do-It-Yourself Degree

by Gerri Willis

Join us for our week-long series on education on The Willis Report 6pm & 9pmET on FOX Business. When it comes to paying for college, desperation was the soul of invention for Jay Cross, the founder of www.doityourselfdegree.com. As a junior at the University of Connecticut, Cross was in the uncomfortable situation of needing 30 credits to graduate and get his bachelor’s degree, but the college was not offering the classes at the time. Infuriated, he began researching how he could get the course credit and get out into the real world without spinning his wheels.


“I came across this credit-by-examination strategy where you could take a test instead of a course,” Cross recalls. Inspired, he decided to join the few thousand students across the country who were already testing out of course work and he finished his degree and promptly started the website to help other students get access to the information on credit-by-exam which had been scattered all over the Internet.


Cross admits that a DIY degree isn’t for everybody and says that some study areas are more likely candidates than others, such as business, accounting, psychology and computer science. However, many of the so-called STEM courses in math, engineering and the sciences are not a good fit because of the need for hands-on learning.


Cross’ solution is one of many that parents and students across the country are seeking out to reduce the costs of going to college. With outstanding student loan balances approaching $1 trillion, the heat is on to find ways to lower fees and tuition. Lynn O’Shaughnessy, author of The College Solution, says that one of the problems is that parents have no idea what they will end up paying. Most of them see the “sticker price,” that is, published tuition numbers, but it’s difficult to know exactly how much aid your child might get. Fortunately, the College Board has a net price calculator that can help you figure out what your real costs will be. Go to www.netpricecalculator.collegeboard.org for details.


She also suggests getting off the beaten trail. Big schools in big cities along the coasts, she says, have the highest prices and skimpiest aid packages, like New York University, Santa Clara, and Northeastern. Value schools can be found throughout the Midwest, mid Atlantic, the South, and interior West.


And, finally, she recommends choosing a school that has high graduation rates. Only 31 percent of students at public schools and 52 percent of students at private schools graduate in four years. You can find that information at the Chronicle for Higher Education’s College Completion website, at www.collegecompletion.chronicle.com.

Getting the Right Financial Aid Package

by Gerri Willis

Join us for our week-long series on education on The Willis Report 6pm & 9pmET on FOX Business! First the good news: don't regard that eye-popping tally of frosh college costs your son or daughter just handed you as the last word.  In fact, a better analogy is that it's just the sticker price, the suggested payment that school administrators hope you fall for.  Paying for college these days isn't a matter of making good on their wish list, but putting one together that works for you.

The reality for many schools is that they are competing mightily for a declining number of students. In today's environment, don't assume a large state or public school is the best option. Even with a higher sticker price, a small, private school may still give your son or daughter more free money. The flip side of that competition is this: Shop with care. More than one higher education finance expert told us that a small number of the nation's 4,495 degree-granting institutions may not even be around in four years because of declining state funding dollars and enrollment.  The last thing you want to do is pick an institution because of its great aid package only to find out it's not open the following year. Watch out for a new tactic by out-of-state public schools. With federal aid dollars dwindling, they are looking to make up the difference from out-of-state students. That "safety school" plan you envisioned may need an update.

The building blocks of a typical aid package are the following: Federal need-based grants, work-study funding, and subsidized Stafford loans. Subsidized means the government pays the interest on your loan while you are in college. Plus, there are merit-based scholarships offered by the institutions themselves. Then there are unsubsized federal loans and parent PLUS loans for mom and dad. The last of the list are private loans offered by banks. Generally, the further you travel in this laundry list, the more you pay in interests and fees.

You have to fill out the Free Application for Federal Student Aid (FAFSA) to be considered for any of these options. To get the best results, start early, way early. According to Kal Chany, author of "Paying for College without Going Broke," parents should think about college planning like they do tax planning. He suggests applying for aid as early as the ninth of tenth grade to get a sense of how you fit in.

As you begin to assess what you can afford, understand this: If you think there is any chance of getting financial aid, don't put any money in your child's name. That's because federal aid assessment formulas will require that you put more of your child's money to work. The name of the game is keeping control over your money. According to those formulas, typically 20 percent of your child's assets and 50 percent of the child's income will be assessed in determining how much they can afford to pay for school.  For parents, those levels are 47 percent of income and 5.65 percent of assets.

In other words, federal rules would require a $2,260 payment from a $40,000 college fund held in the parents' name versus an $8,000 payment from a fund of the same size held in the child's name.  At that rate, your college fund will be depleted fairly quickly.

"The schools won’t tell you how to position yourself for the most aid," says Chany. "You have to be savvy with process."

Chany also suggests that parents minimize discretionary income. Adjust withholding to minimize refunds, avoid early distributions from retirement plans, minimize capital gains, and don't cash in savings bonds in the years your income is being analyzed for student aid and loans (typically a year before you need the money.) The college expert says he's he has seen parents take college planning too far by turning down raises or having a spouse quit their job. Chany says that's going to extremes. Delaying a bonus into the the next tax year makes sense, but turning down income does not.

It's not just the parents who should be on the hook for financing a college education. Prospective students can contribute as well. I was a work-study student, earning money that helped pay for my education even as I took classes. That's still a good option. Another is applying for scholarships. Some college counselors urge students to apply for every possible scholarship imaginable, hoping some obscure fund will pick up 100 percent of Johnny's costs. Truth is, lucrative scholarships attract thousands of applicants. A better option for many students is applying for local, small scholarships awarded by community organizations, like your church or chamber of commerce.

Two-thirds of college students take out loans. For that reason, keep in mind that some are better than others. Exhaust federal loans first because they lock in fixed interest rates and have flexible repayment options, such as reduced monthly payments for low earners. Stafford is the best, and in late July, Congress passed legislation that ties undergraduate Stafford interest rates to the 10-year Treasury, adding 2.05 percentage points. Your rate is locked for the life of the loan, but can readjust each summer for new borrowing to a cap of 8.25 percent. This academic year, they have a fixed 3.86 rate for undergrads.

Dependent students can borrow up to $5,500 for their first year of college, with no more than $3,500 subsidized. Beyond that, parents can take out federal PLUS loans to a maximum of the cost of attendance. But watch out Mom and Dad, the interest rate is 6.41 percent (Treasury plus 4.6 points). The cap is 10.5 percent.  Another possibility that some parents have found attractive is using home equity loans that carry a lower rate of interest than the Plus loans.

The landscape of college loans and grants is changing and mightily. Chany reminds parents that once you strip away the ivy, what you have is an education business. And, that means parents should negotiate for the best aid package they can get.

 

 

 

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