Category: Personal Finance
Think you’d hand in your notice if you suddenly struck it rich? You’d be surprised.
When Keith, a Silicon Valley entrepreneur, worked at a technology company that went public, he became rich overnight. He was sure he’d never need to work again.
His pay-out from the initial public offering was well into the “tens of millions” of dollars, he says, a life-changing amount. It gave him the type of financial security that most of us can only dream of.
He stayed on at first, but soon stopped working. He spent a year travelling and spending money on “frivolous things” but found it difficult to enjoy his life, he says.
Like most people, Keith (who asked that his last name and identifying details not be used due to the personal nature of his story) had long believed he worked simply to make money. He was wrong. And so even with savings that would last a lifetime, Keith started another job search.
“I just felt unhappy at the lack of structure and not knowing what my purpose in life was. My skills were deteriorating and I was finding it difficult to interact with other people intellectually,” says Keith, now in his mid-thirties. “There’s a higher reason why we all go to work.”
Now, he’s back at work — and significantly happier than he was not working. You’d think striking it suddenly rich would be the ultimate ticket to freedom. Without money worries, the world would be your oyster. Perhaps you’d champion a worthy cause, or indulge a sporting passion, but work? Surely not. However, remaining gainfully employed after sudden wealth is more common than you’d think.
After all, there are numerous high-profile billionaires who haven’t called it quits despite possessing the luxury to retire, including some of the world’s top chief executives, such as Amazon’s Jeff Bezos and Facebook’s Mark Zuckerberg.
But it turns out, the suddenly rich who aren’t running companies are also loathe to quit, even though they have plenty of money. That could be, in part, because the link between salary and job satisfaction is very weak.
According to a meta-analysis by University of Florida business school professor Timothy Judge and other researchers, there’s less than a 2% overlap between the two factors. In the long run, we derive job satisfaction from non-monetary sources, which include positive peer relationships, the ability to work on meaningful projects and even leadership opportunities.
But, most of us take our jobs and the nonmaterial things they bring us for granted. We don’t realise that, though, until we’re faced with a situation of extreme wealth, says Jamie Traeger-Muney, an Israel-based therapist and founder of the Wealth Legacy Group who works with clients all over the world.
About 98% of her patients continue working in some way after they are financially secure, she adds. For some, it’s about a sense of purpose; for others it’s a way to keep a much-needed routine.
“Money is a much smaller driver of happiness and fulfilment from work than we anticipate,” she says. “There’s a difference between what they fantasise about and what actually feels meaningful, motivating and fulfilling.”
There’s another, more egotistical reason why some of us can’t stand not being in the game: status. Imagine the embarrassment of being so highly-accomplished, so associated with your work successes and then, as time passes, you can’t answer the question of “What do you do?” so easily, says Brooke Harrington professor at the Copenhagen Business School.
Going back to work — or never quitting — helps maintain an identity that’s derived from our professional achievements, especially if that identity has long been tied to our work, says Harrington.
“We lose status when we’re not employed in a job that can help others place us in the social hierarchy, and help us place ourselves [in the hierarchy],” she says. In short, it’s hard to know where you fit in when you’re not at least on the ladder.
As a serial entrepreneur, Karen Gordon, the founder of an employee engagement firm that she launched more than a decade after starting a telecommunications firm, decided that starting something new — and staying at work — was more important than spending her profits over the years.
“People enjoy accomplishment and enjoy [being] able to be competitive — and to win,” says Gordon, who is based in Austin, Texas in the US. She also craved the daily challenges that come with working as team, she adds.
The UK has voted to quit the European Union – a decision that will bring change for currencies, trade rules, and the status of UK markets and regulations. It’s a transition that could take several years to play out in full, so what does it mean for the items on your average UK shopping list or household budget?
The value of the pound versus the euro, dollar and other currencies sank following the results and the outcome will likely mean a rise in inflation, albeit from a very low level.
BBC Capital wanted to find out if and how a vote for the UK to quit the EU might impact the cost of the things we love, use and rely on every day – some might feature in your shopping basket, while others might be something your family spends on annually. This is an informed view of what could happen, but not a conclusive or definitive view as many drivers of prices currently remain unclear.
We have gone to multiple expert sources for the information contained in this infographic – trade bodies, unions, government organisations, think tanks, financial institutions and research organisations – some of whom have expressed publicly whether they believe the UK should vote in or out.
The Healthy Option
Nearly 90% of UK tomato imports come from the EU, mostly the Netherlands (40%) and Spain (35%). Higher import tariffs could raise prices. UK tomato production may step up to fill the import gap.
The price of clothes and footwear might fall if Brexit allowed the UK circumvent import tariffs. Foreign retails would still be welcome on our high streets, local authorities are committed to free competition.
If the UK is no longer bound by an EU rule banning rooming charges from April 2017 consumers could continue to pay a premium to use their phone abroad. Phone companies may well be unwilling to put charges back up just for UK consumers.
Your Daily Vitamin C Shot
Citrus fruit is not grown commercially in the UK, 770.000 tonnes of fruit was imported in 2015, over 40% from Spain. Rising import costs could affect prices.
Current customs rules allow virtually unlimited amount of duty paid alcohol and cigarettes to be brought to the UK from the EU. ıf the allowance tightens, expect fewer booze cruises between Britain and France.
French, Spanish and Italian wines could become more expensive if import costs rise. The EU currently charges a 32% tariff on its wine exports to non EU countries.
The UK is likely to negotiate a a better deal than this and would be free to remove existing import tariffs on ‘New World’ from countries such as New Zealand and California.
EU Budget Contribution
Likely to fall by around 25%, according to HM Treassury. Norway and Switzerland contribute to the UK budget, but a lower level than EU members. The UK would also be able to decide how to spend the money transferred back to it from the EU.
The Dinner Party Must-Have
Harvesting asparagus is highly seasonal, labour intensive work often performed by EU migrants, who made up 6% of UK agricultural workers in 2014. Labour shortages could hit UK production.
Half of UK farming income comes from EU subsidies. While a Brexit could could give back more control over spending, many are worried a lot of farmers would quickly go out of business without the support of the Common Agricultural Policy (CAP).
Your Fromagerie Habit
The UK import 62% of of its cheese, and 98% of this comes from the EU. If prices rise, consumers may be tempted to swap Gouda and Roquefort for Cheddar and Stilton.
The UK has its thriving cheese industry and higher initial prices may provide an incentive to increase domestic production, driving down prices in the long run.
If the pound falls, then foreign currency will become more expensive, according to the Association of British Travel Agents. For budget airfares to remain, the UK will have to negotiate access to the European Common Aviation Area (ECAA), which includes several non-EU mombers. Alternatively , the UK could try to reach a bilateral aviation agreement with the EU.
Importing cars from Europe could take longer and cost more. Cutting EU red tape could affect pricing either up or down. The Euro could also fall, which would cancel out changes in the value of the pound for travellers to Europe.
Are you a shop-a-holic? Or a mall-a-phobic? Let the stars size up your shopping style: Back to school means back to the stores.
Leos love taking chances, going to dances, having romances-and stealing all the boys’ admiring glances! Your charisma is legendary… and so is your lion-size temper! Still, when you flash that sunny smile and clown it up, you’re the life of the party. In fact, it feels like a party just to be with you. You’re a magnet with that classy laugh, superb posture, and bodacious mane of hair!
Guess what: Your circle of friends is going to expand over the next year. New and old pals will revive your social life; join as many clubs and groups as you want for the best luck.
Aries (March 21 to April 20)
The decisive shopper. You like to zip in and out fast. Long lines and pals who take all day to decide drive you crazy. Shop alone at malls, where you can pop into small stores and make a speedy getaway.
Taurus (April 21 to May 21)
The quality shopper. You like to go to department stores, where you’d rather get a great pair of jeans than three cheap ones that fall to pieces in six ugly weeks! You shop slowly, carefully, and wisely.
Gemini (May 22 to June 21)
The perennial shopper. Boutiques, five and-tens, department stores, malls-you love them all. You like to hang out with friends, buy clever doodods, study the latest fashions-and then shop some more!
Cancer (June 22 to July 23)
The queen of shoppers. You love to shop at home–by raiding your mom’s closet! You love old clothes. And as a champion bargain finder, you have a sixth sense for finding fantastic clothes at sale prices.
Leo (July 24 to August 23)
The princess shopper. Saks, Bloomingdale’s, and the Neiman-Morcus catalog are Your Majesty’s favorites. You like the best, and you don’t mind returning items if they fail to please you, either!
Virgo (August 24 to September 23)
The nervous shopper. You loathe the tacky atmosphere in discount stores; you feel crawly because you think the clothes might be dirty. You like bargains but prefer liner stores: The hems stay in longer!
Libra (September 24 to October 23)
The true shop-a-holic. Shopping is an essential function for Librans, like eating. You were born to shop-anytime and everywhere. When you can’t shop, it’s time to call in the doctor.
Scorpio (October 24 to November 22)
The fussy shopper. You’re very sure of what you want, but you don’t often find it. Take a Libra along to help. Intense and emotional, you agonize over choices. You hate crowds and love discount outlets.
Sagittarius (November 23 to December 21)
The impulse shopper. You like a big sale, a deal, a bargain, auctions, outdoor flea markets, and ethnic and foreign shops. You already own 101 pairs of sweatpants; you snicker at designer labels.
Capricorn (December 22 to January 20)
The organized shopper. You pore over the paper searching for sales; when you find an item you like, you get two in different hues. You’re an extremist, too: It’s either the best or the cheapest for you!
Aquarius (January 21 to February 19)
The eccentric shopper. Thrift shops, secondhand stores, garage sales, army/navy stores, and pretty boutiques have the cowboy boots, odd hats, and wild stuff that you enjoy so much!
Pisces (February 20 to March 20)
The shoe shopper. Soon you will have 4,907 pairs of shoes in the closet, but it doesn’t hurt to look for more, eh? You like nice, quiet boutiques, too, but shopping solo is no fun. Bring a friend.
“I need to go shopping!” said every woman, ever. We’ve all said or heard it, and we all know that when it comes to clothes, the word ‘need’ is grossly overused.
So how to tell the difference between wanting to treat yourself to something cute and an actual need for new clothing? Let’s visit a few scenarios where ‘need’ might actually be used in the literal sense.
1. It’s Easier to Dress for Halloween
Go-go boots? No problem. Sequins and feathers? You’ve got plenty. While your Halloween game may be as strong as Arnold Schwarzenegger in the 90’s, you’ve still got 364 other days to worry about. It’s totally fine to keep some stellar statement pieces tucked away in your closet, but try relegating them to under 1/10th of your sartorial collection. Once you’ve cleared away the baubles, it’s time to work in some new goodies for those days that don’t require a costume.
2. Your Friends Won’t Borrow Your Clothes
Let’s try a little test, shall we? Invite your most stylish friend over and offer her full access to your closet. If she politely declines or tries to change the subject, it’s time to upgrade. The more uncomfortable she is, the faster you should run, don’t walk, to the nearest mall. If you’re not quite sure where to start, bribe your friend with churros to come with you. Works every time.
3. You’re Twinning With Your Pre-Teen Niece
Sure, twinning is in, but dressing identically to someone who has yet to pass her driving test? Not so much. While keeping a youthful attitude is something to be applauded, your wardrobe should reflect a general age range – yours! If you can spot every piece you own at a One Direction concert, you might be ready to work in a few new items.
4. Your Shirt Has Its Own Twitter Account
If you wear the same article of clothing too often, there’s a chance people might end up knowing you more by your shirt than anything else. And when your shirt is more famous than you are, that means it’s time to expand your regular outfit rotation. Here’s a great rule of thumb: if your shirt is in more than three of your social media profile photos, it’s time to swap in a few new options.
5. Climbing Kilimanjaro Is Easier Than Getting Dressed
If getting dressed in the morning feels like climbing a mountain, it’s time to rethink the process. Aside from lack of coffee, the culprit to sartorial stuckness can often be not having the right items for your everyday routines. Work at an office? A new blazer can suddenly make a camisole work-appropriate. Meeting friends for brunch? Pair that cami with a new maxi skirt, and you’ve got a totally different outfit. Bring on Kilimanjaro, you’ve now got the outfit for it!
6. You Wore Your Nicest Dress to Prom
While that pink one-shoulder tulle gown may have scored you a slow dance with the cutest boy in school, it might not work the same magic at a wedding or cocktail party. Say sayonara to ‘Prom Queen’ and hello to ‘Best Dressed’ by kissing that prom dress goodbye and scoping out a sizzling LBD. Not only are you set for any last minute events, but the jaws will hit the floor at your next high school reunion.
7. You Have Nothing to Wear
Your bedroom looks like an atomic bomb went off, with garments strewn across the floor in a fit of desperation. You’re sitting in the middle of a large pile of clothes, lamenting that you have nothing to wear. Sound familiar? You’re not alone! While you obviously have the ability to clothe yourself from the piles of despair that surround you, they’re just not the right clothes. So what do you do? Ditch those suckers for some snazzy basics you’ll want to wear over and over again.
8. People Think You Own One Pair of Pants
Keeping a uniform a la Steve Jobs is definitely efficient. Having to explain to everyone that no, you don’t just own one pair of pants but several pairs in the same style and color, is not quite as efficient. Adding a few new pairs to your wardrobe should help keep those rumors at bay. Which means you can get back to being the visionary you truly are.
Many people around the country live outside of their means. Whether it is trying to keep up with the Jones or having an unexpected emergency happen, it’s very easy to go outside of your budget and plunge into debt.
In fact, according to Credit.com, 80 percent of Americans are in debt. This includes types of debt such as credit card and mortgage. If you are one of the millions of American who are plagued by debt, here are five simple ways to get out of it.
Formulate a Budget
Create a weekly or monthly budget and stick with it. You can easily make a template for a budget in a Microsoft Excel document. Be honest with yourself and include all of your bills that must get paid monthly, including your rent or mortgage, utility expenses, car payment, credit card bill, and other necessities, including your weekly food shopping list. Plan on paying all of your bills in full and on time.
Living within your means can be difficult at first, but is a necessary habit to abide by if you wish to get out of debt.
Create a Savings Account
Open up a separate checking or savings account and set aside some money every month that is designated for savings. Do not touch that money unless you absolutely need to. You never know when a rainy day is going to come.
Different Sources of Income
If you find that you’re not making enough money to cover all bills, it may be helpful to find a supplement source of income. Pick up a part time job for a period of time to help you pay off some of your debt. You can also invest in real estate, stocks, or other items to pick up some extra cash.
Lower Your Rates
Do you know your exact credit card rates? You may be paying high interest rates on existing debts that can really mount up, making it almost impossible to pay off.
Based on your credit, you may be able to qualify for better interest rates on your existing credit cards. Or you may be able to consolidate all of your credit onto one card for easier payment options.
Get the Numbers
Once you have consolidated your debt and know the exact number you need to pay off, it’s time to formulate a real goal to work towards. Total the three-year pay-off amount of your debt and add monthly payment of everything else you owe. Write the results down and that is your total monthly payment.
Getting out of debt and bankruptcy is totally doable. You just need to make a plan of action and stick with it.
As suggested above, there are many similarities between lines of credit and other types of borrowing, but there are also many important differences that borrowers need to understand.
Like credit cards, lines of credit effectively have preset limits – you are approved to borrow a certain amount of money and no more. Also like credit cards, policies for going over that limit vary with the lender, though banks tend to be less willing than credit cards to immediately approve overages (instead they often look to renegotiate the line of credit and increase the borrowing limit). Also like credit cards, the loan is essentially pre-approved and the money can be accessed whenever the borrower wants, for whatever use the borrower intends. Lastly, while credit cards and lines of credit may have annual fees, neither charge interest until/unless there is an outstanding balance.
Unlike credit cards, lines of credit can be secured with real property. Prior to the housing crash, Home Equity Lines of Credit (HELOCs) were very popular with both lending officers and borrowers. While HELOCs are harder to get now, they are still available and tend to carry lower interest rates. Credit cards will always have monthly minimum payments and companies will significantly increase the interest rate if those payments are not met. Lines of credit may, or may not, have similar immediate monthly repayment requirements.
Like a traditional loan, a line of credit requires acceptable credit and repayment of the funds, and charges interest on any funds borrowed. Also like a loan, taking out, using, and repaying a line of credit can improve a borrower’s credit score.
Unlike a loan, which generally is for a fixed amount, for a fixed time, with a prearranged repayment schedule, there is much greater flexibility with a line of credit. There are also typically fewer restrictions on the use of funds borrowed under a line of credit – a mortgage must go towards the purchase of the listed property and an auto loan must go towards the specified car, but a line of credit can be used at the discretion of the borrower.
Pawn Loan / Payday Loan
There are some superficial similarities between lines of credit and payday loans, but that is really only due to the fact that many payday loan borrowers are “frequent flyers” that frequently borrow, repay, and/or extend their loans (paying very high fees and interest along the way). Likewise, a pawnshop or payday lender does not care what a borrower uses the funds for, so long as the fees/loans are paid/repaid.
The differences, however, are more considerable. For anyone who can qualify for a line of credit, the cost of funds will be dramatically lower than for a payday/pawn loan. By the same token, the credit evaluation process is much simpler and less demanding for a payday/pawn loan (there may be no credit check at all) and the process is much, much quicker. It is also the case that payday lenders will seldom lend the amounts of money often approved in lines of credit (and banks will seldom bother with lines of credit as small as the average payday or pawn loan).
Need some money? Don’t ask your friends or family. Find out why.
For many people, there comes a time when it becomes absolutely essential to borrow money to pay important expenses or make bills. If you are late with a lot of bills, you could end up facing huge costs for late fees, utility shut-offs and other penalties. You could damage your credit and you could end up facing eviction or the repossession of your car.
Unfortunately, many people go through these kind of financial problems at some point in their lives and they need to find somewhere to turn for help.
If you are facing any kind of financial problem, from unexpected home or car repairs to being unable to pay bills, you may be tempted to turn to your friends or family members in order to get the money that you need for your bills. The reality, however, is that this is almost always a terrible idea.
Borrowing money from friends and family should be an absolute last resort only after you have exhausted other possible loan options that may be available to you. There are myriad reasons why you should never even borrow money from friends or from family members unless or until you have exhausted all possible other resources and are in a truly emergency situation.
Some of the many reasons why you don’t want to borrow from family and friends include the following:
You could put your family or friends in an uncomfortable position
Many people in the United States today are living paycheck to paycheck and your friend or family member that you ask for money may not actually have any cash to spare to give you, even in a temporary basis.
When you ask them for money, you’ve thus put them in a very uncomfortable position. They might have to admit to you that they are also facing financial struggles, which could be something that they don’t really want to say to you.
If they are a close friend or a close family member, they may also feel too badly to say no to your request especially if they know that you really need the money.
The result could be that your friend or family member lends you money that he or she doesn’t really have to give and thus you could drag someone you love into a bad money situation.
You could ruin the relationship and be uncomfortable whenever you spend time together
Owing someone money can make you feel very beholden to that person, even if they don’t say anything and are gracious about giving you the loan. You could feel uncomfortable and no longer like the equal of the person that you borrowed money from. This can undermine your relationship and make it less fun for you to be around a person who is important in your life.
The person who you borrowed money from could also become resentful of the fact that you took the loan, especially if they see you spending cash on something else or if they feel that you are taking too long or not trying hard enough to pay them back. You do not want to take a chance on alienating the people in your life who you care about because of a financial transaction.
You could end up being unable to pay the loan back
People generally do not borrow money with the intention of defaulting on the loan and not paying it back (especially when they borrow from a family member or a friend).
Unfortunately, sometimes life gets in the way of your best intentions. Even though you have every intention of paying back the person that you borrow from, you could end up simply being unable to do so.
This is likely to make you feel a tremendous amount of guilt and it is likely to make your friend or loved one feel resentful and possibly feel financial pressure as a result of the bad loan.
These are just a few of the many reasons why you do not want to take a chance of borrowing from a family member or from a friend. Instead, consider all other possible sources of loans available to you.
Even people who have bad credit may be able to obtain a car title loan from a trusted provider like TitleMax.com or a loan through a bank or other lender. Apply for loans and exhaust all options available before you ever even consider asking someone you love or care about for money.
Donald Trump became the presumptive Republican presidential nominee this week, casting a more serious light on the policy proposals he has put forth during the GOP contest. Here’s a quick look at how some of Trump’s economic ideas could broadly affect your finances should he prevail with both voters and Congress (keeping in mind that his plans are likely to evolve as he prepares further policy speeches and chooses his running mate).
Your purchasing power
The hefty tariffs on imports Trump has proposed include many goods we take for granted and don’t have the capacity to produce within our own borders, said Mark Hamrick, Washington bureau chief and senior economic analyst at Bankrate.com. “Certainly agricultural sources in Mexico, they either become more expensive or unavailable,” Hamrick said. “Good luck eating dandelion greens for four months of the year.”
The threat of a 35 percent tax on auto imports from Mexico troubles Sam Stovall, U.S. equity strategist for S&P Global Market Intelligence. “That’s certainly going to hurt, because basically everything is imported, either in U.S. or foreign-made cars,” he said. And tariffs often spark retaliation, affecting U.S. exports as well.
On the other hand, if the tough talk succeeds in wresting concessions from partners, it could improve our trading position, Stovall said.
If Trump’s tariffs were enacted, including a 45 percent levy on Chinese goods, it would badly damage the economy and cost a lot of jobs, said Mark Zandi, chief economist at Moody’s Analytics. And if his tough immigration stance were put in place, Zandi warned, “it would be, to steal a phrase from him, a disaster.”
“If Trump could deport even a fraction of the 11 million immigrants, it would be very disruptive to business,” he said, creating a hole in an important sector of the labor force and removing a lot of consumers from the economy. “If he deported all 11 million, it could lead to a recession. It would be a mess.”
Repatriating foreign earnings and possibly enacting some corporate tax reform, as Trump has discussed, could bolster stocks and benefit investors. Companies have twice as much cash on their books as they did 10 years ago, Stovall noted, and a lot of it is overseas. If they get more favorable tax treatment in the U.S. and bring that money back, they “will have additional money with which to do dividends, do share buybacks, and it could help companies looking to build new plants and equipment.” That, he said, could bring “better performance of the shares of the companies that we’re invested in in our 401(k)s.”
But a repeal of the Affordable Care Act “would do nothing but throw the health-care industry into a tailspin,” Stovall said.
A recent change in the candidate’s views on the minimum wage would affect such industries as retail and restaurants. Trump said earlier that he would not raise the wage but now says he is “open to doing something” with it, though Stovall doesn’t think he would go as far as $15 an hour.
There really is something to the maxim that Wall Street dislikes uncertainty, said Hamrick. It weighs on financial markets and the performance of the economy. “That Trump is unpredictable is quite distasteful for many people trying to price in risk and opportunity,” he said. “Certain businesses are going to be cautious about making investments until they have a bit more clarity, and that includes clarity on how the leadership of the Congress is determined. There’s a lot of cash sloshing around in the system, but it’s not being put to work.”
If a business is booming, the uncertainly is less of a factor, he said. “If you’re a business on the margin, however, and wondering if you should take a risk, you might be more risk-averse.”
The Tax Policy Center, which analyzed Trump’s proposal to reduce marginal rates for individuals and businesses while boosting standard deductions, says the plan would provide an average tax cut of $1.3 million to the top 0.1 percent of earners. It could also mean $9.5 trillion less in federal revenue over its first decade, the Center figures. If huge spending cuts don’t come with it, the group said, it “could increase the national debt by nearly 80% of gross domestic product by 2036, offsetting some or all of the incentive effects of the tax cuts.”
The proposal is in flux, however. Trump told CBNC this week that “when you put out a tax plan, you are going to start negotiating.”
The smartest move you could make right now, amid the election year’s sound and fury, is simply to focus on building your financial future, said Kate Warne, investment strategist at Edward Jones. With so much uncertainty on both the domestic and foreign fronts, that means owning both bonds and stocks, especially international stocks while the dollar is strong, and diversifying both across and within asset classes.
And no matter what the candidates say, remember that the U.S. is running a budget deficit, so you need to prepare for the possibility of higher taxes, Warne said. Investing in tax-free municipal bonds and taking advantage of any tax-deferred accounts, such as IRAs and 401(k)s, is a great way to start.
In short, she advises, pay less attention to the political discourse and more to what you need to do now. Certainly don’t sit on the sidelines, she said. “Stocks don’t wait,” Warne said. “So you shouldn’t wait either.”