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Holiday Spending – Should You Save Instead?

Individuals listening to politicians, looking at the movements of the stock market, and reading recent news reports almost inevitably get a boost in confidence. After all, “improvements” are being seen everywhere. But does the macroeconomic upturn really affect your daily life? It is good to have some level of optimism. It is a different matter altogether if you use this as an excuse to spend more or become irresponsible with your financial obligation.

Take note that even if the stock market improves, it does not necessarily mean that there is an improvement in the GDP, which is the factor that decreases unemployment. Spending too much money at this point is not only ill-advised; it can also be devastating to your finances. Also, try to ask yourself whether you really want to return to your old holiday shopping habits under these conditions. Some blogs that tackle this topic further are listed below:

Marketing Profs uploaded a recent blog post titled, “Weaker Online Holiday Spending Expected”. The article revealed that despite the improving economy, consumers will still hold on tightly to their money. Nielsen’s survey showed that 42 percent of consumers intend to spend less this year compared to last years. In addition, they will spend a smaller percentage of their budget online.

The Project Economy Blog has an interesting article titled “Investors Eye Consumers’ Holiday Spending”. While research shows that shoppers will spend less this year because of the difficult economic times, the number of buyers will actually increase. It also talked about the importance of holiday shopping because most retail outlets rely on it for 40 percent of their profit. The actions of consumes during this period can make or break the industry.

Kelly from Almost Frugal asks her readers “How Much Are You Spending for the Holidays?” She recounts her own family’s experience when it comes to spending. This is a more personal blog post because she talked about how her family coped with spending for birthdays, weddings, Thanksgiving, and anniversaries.

When To Quit Your Job – How Much Money Do You Need?

Everyone has probably thought of it. Whether it is easing into early retirement, starting your own business, or earning passive income, people want to live the good life. Quitting your job and seeking better opportunities is a perennial topic but it is more relevant today than ever before. So many people are either working part-time, unemployed, or fearing that they will be part of the next batch of lay-offs. As a result the real unemployment rate has only gone higher and higher.

The situation is a lot worse in the United States because people don’t want to lose their group health insurance. But even if you decide to get your own insurance, the main question is how much do you need to survive without your job? Would you also buy life insurance if were not provided? This is one of the main factors that keep people stuck to where they are.

What Kind of Escape do you want?

Determine what kind of escape you want – whether it is a change in career, semi-retirement, or retirement and then plan accordingly. Also, try to gauge your current standard of living. A civil servant might be happy to live on his pension and may not need anything else. But a highly-paid executive may not be happy with this set-up. Basically, the pile of cash you need depends on your circumstance and preference.

Are You Willing to Relocate?

If you are shifting from one job to another, some people would recommend having at least six months worth of savings. However, if you’re looking to start your own business, it is a different matter altogether. For people who had been there, they recommend at least two years worth of savings – in a very accessible, liquid form. The good news is relocating from one area to another can stretch your dollar significantly.

How Far with Your Dollars Stretch over the Long Term?

There are a lot of factors that can affect the value of your money today. Even a person investing conservatively should earn at least 3 percent annually to cover inflation. Anyone who is seriously considering an escape should take a look at their cash flow.

Will You Be Willing to Cut Back – Significantly?

It is a fact that middle-class households usually have budgets that can be dramatically cut. But people see their neighbor’s luxury as their necessity and this is where the problems occur. Use the zero-based accounting to determine how much you can cut back each month.

High Credit Card Rates before the Holidays

Just when you thought things cannot get worse, it did. Millions of Americans who are already struggling with the economic downturn and credit card debt have received notice that their credit card companies are raising interest rates – just in time for the holiday season. Many have seen their rates doubling, some even tripling. Cash-strapped individuals are looking at more debts ahead.

The situation is worse for certain individuals. Those who are used to longtime fixed rate will see their interest rates soar to double-digits because of the shift to variable rates. Most of the activities such as giving consumers lower credit limit, interest rate hikes, and the increase in minimum monthly due are tied to the new federal policies set to start in late February. These measures will hinder banks from continuing their predatory practices.

As a result, the trend these days pose very little options to the ordinary consumers. According to customer surveys, consumers are now faced with unpleasant alternatives ranging from closing accounts to accepting tight credit terms. Rasmussen Reports conducted a survey which also revealed that around 50 percent of its respondents experienced rate hikes in the last six months.

At a time when banks are seen as the villain, these measures are greeted with censure. The legislative director of Consumer Federation of America said that “It seems like they’re hurting the customers they need the most.” Right now, the industry has already lost the trust of clients but they are still coming up with tricks to milk more money from struggling clients.

One method that was uncovered includes making notices of interest-rate hikes look like junk mail. Their purpose is to encourage consumers to throw these letters out without reading them. Everyone is affected by the current trend – whether you have a poor credit rating or the highest.

Home Buyers Tax Credit Extended

In an effort to jumpstart real estate prices, the Obama administration has extended a key tax credit for first-time home buyers and “move-up” home buyers. The HR 3548 also offers more help for unemployed individuals as well as people struggling with mortgage delinquency. The $8,000 tax break for first time homeowners will be valid until May 1, 2010. Meanwhile, “move-up” buyers need to sign the purchase agreement before May 1, 2010 and then close the deal before July 1 for the tax credit to be valid.

It should be noted that not everyone is eligible for the tax break. For example, individuals with adjusted gross incomes of above $125,000 a year and couples with over $225,000 a year cannot get this advantage. However, the new bill still provides a better deal compared to the previous one as the latter set the incomes at $75,000 and $150,000 respectively. This means that an additional segment of the market can get assistance. The following blogs provide more details about the extended tax credit:

Bob @ Broker for You uploaded an informative article titled “Move Up Home Buyers Tax Credit”. The content is particularly beneficial for individuals who are looking to buy a better home for themselves or their families. For example, it lets you know how long you should have stayed in your current home in order to be eligible for it as well as other details.

Alexis @ BV on Money wrote the blog post “6,500 Tax Credit for Home Buyers: Owners Have Good Reasons to Buy”. It talked about the main benefits of getting the tax break. Individuals who intend to buy a house in the near future should consider the credit because it is not everyday that a deal like this is available from the government.

Jeff @ Good Financial Cents has an interesting article. The “$8,000 First Home Buyer Tax Credit is Extended and $6,500 Credit Added” post provides basic insights about what you can expect from the recently passed bill. He also cited the effects this bill will have on individual households and the economy in general.

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