Here’s how much more expensive life is for you than it was for your parents

If everything feels more expensive than it did 10 years ago, it’s because everything really is more expensive than it was then. And not simply because of inflation.

It costs more than ever to buy a home. In 1940, the median home value in the U.S. was $2,938. In 1980, it was $47,200, and by 2000, it had risen to $119,600. Even adjusted for inflation, the median home price in 1940 would only have been $30,600 in 2000 dollars.

That’s partly why the typical homebuyer is now 44, whereas in 1981, the typical homebuyer was 25-34.

And it’s not much easier to rent. As of June 2016, the annual rise in rental prices was nearly four times the overall inflation rate.

Education is more expensive, too. In 1971, tuition at Harvard University cost students $2,600 annually. For the 2016-2017 school year, students had to fork over $43,280 for tuition, and more than $60,000 total including room, board and fees. That makes the cost today almost 17 times as much as in 1971 — a markup of more than 1,550 percent.

The rising cost of higher education has led Americans to owe a collective $1.4 trillion in student loan debt. In 2012, 71 percent of graduates from four-year colleges carried debt, with students at public schools owing an average of $25,550 and those with degrees from private colleges owing an average of $32,300, Student Loan Hero reports.

And as the U.S. continues to recover from the Great Recession, the cost of consumer goods has steadily crept back up, as shown by price jumps in things like apparel and gasoline.

While some prices have risen more drastically than others — and some have even decreased — one thing is clear: The cost of everyday life in 2017 is drastically higher than it was in the 1970s or 1980s.

The little-known history of the 401(k)

How 401(k) retirement accounts changed everything

As Helaine Olen wrote in her book “Pound Foolish,” families in the 2000s put 75 percent of their discretionary income toward housing, health care and education, as compared to the 50 percent families used to put toward those big-ticket items in 1973.

Of course, wages have risen as well: For example, the Federal minimum wage in 1945 was $0.40 per hour. In 1980, it was $3.10. And in 2009, it rose to $7.25, though several states have since mandated higher minimums. But these increases haven’t been enough. These days, in no state does working 40 hours a week for minimum wage enable a person to rent a median two-bedroom apartment, let alone begin to build wealth for the future.

Don’t miss:

The most expensive ZIP code in every state

Here’s how much the average American family has saved for college

7 ways to eat healthy without going broke

History of the 40-hour workweek

History of the 40-hour workweek

Here’s how much money you should have in your emergency fund, according to financial expert Suze Orman

This CEO gifted his employees $500 to encourage them to invest

This boss gives each new employee $500 to invest

0:03
/
1:00

GETTING A RUN FOR YOUR MONEY: HOW DO YOU CONSOLIDATE CREDIT CARD DEBT

Spending is such a hard habit to break, especially when people use their credit cards. Once they get addicted, they continuously endure the agony of spending in spite of imminent problems that tag behind.

And when things eventually get out of hand, most people will soon realize that they are already stuck with a mountain load of credit card debts. And mornings after mornings, they will wake up each day with worries in their head about how they can repay all of those instant splurges.

There?s one way to get out of credit card debts?consolidation. Here?s a list of ways how to do it:

1. Make a balance transfer.

One way of consolidating a credit card debt is through a balance transfer. In this way, the person who has a huge outstanding balance on his or her credit cards will get another credit card with a lower interest rate. Once approved, they should immediately get a cash advance and use it to pay off their standing balance on the other credit card. In that way, they consolidate all of their payables into one credit card. Plus, they get to have only one rate to worry.

2. Home equity loans can do the job.

This is a very workable strategy provided that it will be used properly.

Getting a home equity loan is probably one of the easiest things to do. Best of all, home equity loans can offer tax deductions for the interest rate of the loan.

However, there is a drawback. The debtor?s house will serve as the collateral. But nevertheless, it still one good way of consolidating credit card debts. The debtor should only keep in mind that the money from the loan should only be used in paying credit card debts. If used on other things, it will only worsen the problem.

3. Make use of retirement funds.

There are instances wherein debtors can make use of their retirement funds in order to consolidate credit card debts. But this should only be made if there are no other options available. This is because this type of consolidating credit card debts can be very tricky.

Loans on retirement funds are not actually tax deductibles. However, the problem sets in when the fails to pay back the loan within five years or when he or she will resign from work.

Indeed, there are no nippy fixes when consolidating credit card debts. The bottom line is that, it is better if the person will stay out of debt so as not to worry on consolidation matters.

CPP_author

Controls Interest Rate-Banking Structure Very Complex

The banking structure in this country is actually very complex and it will take most people a little time to digest everything. Having said that, though, I can provide you with some very basic information about who sets and controls interest rates.

The Federal Reserve, or the Fed, is an independent organization that doesn’t need the approval of the president or Congress to enact it’s policies.

I suspect most people didn’t know that… I sure didn’t. The Fed’s mandate is to create a stable economy with high employment, minimal inflation and low interest rates.

Basically to ensure that the economy keeps rolling along with as few bumps in the road as possible.

They have several tools to help them accomplish that goal. One of the most important of these tools is the ability that it controls interest rates.

Setting the interest rate is a very important in keeping the economy on a smooth course. The interest rates will directly influence how much money is put into circulation.

The general rule of thumb is that if you have too much currency in circulation it can lead to inflation but too little currency in circulation can lead to a sluggish economy.

The Fed has the responsibility to try to maintain the perfect balance at all times so the economy can grow but inflation doesn’t get out of control.

The Fed uses their economic analysis as the basis for determining what actions they need to take. This comes directly form their Washington D.C. headquarters as well as being compiled from district banks around the country.

These banks are located in large cities from coast to coast. Each of these banks will collect regional economic information and create a profile.

That regional information will be compiled into a comprehensive report that helps the Fed get a complete economic picture of the entire country.

Based on the report the Federal Open Market Committee, a twelve member board which is an arm of the Fed, will meet to determine what changes in policy need to be enacted.

They generally meet every 6 weeks. When the FOMC decides that either more or less currency needs to be in circulation, they will either issue a buy or sell order for U.S. treasuries.

When the FOMC issues a buy order it will result in an increase in the amount of currency in circulation. More currency in circulation means easier borrowing and lower interest rates.

If they issue a sell order, there will be less currency in circulation, and that will translate into higher interest rates – less borrowing and can help reduce inflation.

As I stated above, this is a complex issue and it may take you a little more time and information to fully digest it all.

It is important for you to have as deep of an understanding as possible of the way our economy works.

I know, we are all busy and this information can be confusing, but knowing how it works will allow you the best chance at making smart financial decisions for you and your family.

And now, at least, you have some basics on the inner workings of our economy and insight into who controls interest rates.

GETTING A RUN FOR YOUR MONEY: HOW DO YOU CONSOLIDATE CREDIT CARD DEBT

Spending is such a hard habit to break, especially when people use their credit cards. Once they get addicted, they continuously endure the agony of spending in spite of imminent problems that tag behind.

And when things eventually get out of hand, most people will soon realize that they are already stuck with a mountain load of credit card debts. And mornings after mornings, they will wake up each day with worries in their head about how they can repay all of those instant splurges.

There?s one way to get out of credit card debts?consolidation. Here?s a list of ways how to do it:

1. Make a balance transfer.

One way of consolidating a credit card debt is through a balance transfer. In this way, the person who has a huge outstanding balance on his or her credit cards will get another credit card with a lower interest rate. Once approved, they should immediately get a cash advance and use it to pay off their standing balance on the other credit card. In that way, they consolidate all of their payables into one credit card. Plus, they get to have only one rate to worry.

2. Home equity loans can do the job.

This is a very workable strategy provided that it will be used properly.

Getting a home equity loan is probably one of the easiest things to do. Best of all, home equity loans can offer tax deductions for the interest rate of the loan.

However, there is a drawback. The debtor?s house will serve as the collateral. But nevertheless, it still one good way of consolidating credit card debts. The debtor should only keep in mind that the money from the loan should only be used in paying credit card debts. If used on other things, it will only worsen the problem.

3. Make use of retirement funds.

There are instances wherein debtors can make use of their retirement funds in order to consolidate credit card debts. But this should only be made if there are no other options available. This is because this type of consolidating credit card debts can be very tricky.

Loans on retirement funds are not actually tax deductibles. However, the problem sets in when the fails to pay back the loan within five years or when he or she will resign from work.

Indeed, there are no nippy fixes when consolidating credit card debts. The bottom line is that, it is better if the person will stay out of debt so as not to worry on consolidation matters.

CPP_author

Complete Idiots Guide To Getting Out Of Debt

If you are up to your eyeballs in debt, you are probably looking for some straight-forward useful information on how to fix it. We have put together a short list of tips that are basically the complete idiot?s guide to getting out of debt.

Educate Yourself

This may seem obvious, but a lot of people who find themselves in debt don?t actively seek out information on the issue. Or they look on the internet for a minute and decide that is sufficient. If you are having debt problems, go you?re the library or bookstore and find books on the subject. Look up budgets, debt, credit scores, and anything that relates to your situation. Arming yourself with a bunch of information is your best bet for getting out of debt and staying debt free.

Organize Your Bills

You need to know exactly how much debt you have gotten yourself into before you can make a plan on how you are going to fix it. Clearly lay out what your minimum payments are every month and who they are owed to. Figure out what your collective payments are each month along with how much debt you have total.

Make a Budget and Stick to It

Once you have all of this figured out you can make a budget. Getting out of debt requires that you make a budget that covers all areas of your life. This way you don?t overspend anywhere and cut yourself short on paying your bills. Make sure you stick to this budget to keep from getting into further financial trouble.

Get Rid of High Interest

If you discover that you have extra money at the end of the month, which you should, use some of that money to pay extra on your debt. Pay off the credit with the highest interest rates first so that you aren?t wasting money on interest. This can save you a lot of money in the long run.

Cut Back on Spending

This won?t be fun, but any complete idiot?s guide to getting out of debt will tell you that cutting most of your spending is going to be required. You got yourself into a bad situation, and now you need to redirect your money to get yourself out of it.

Diversify Your Income

If you can start bringing some extra income into the house it will be easier to pay extra on your debt each month. Now this may not mean going and getting another ?job.? This could be something small and easy such as babysitting on the weekends instead of going out with friends or diving into a hobby in your spare time, then selling what you make. It may not seem like much, but even a couple hundred dollars extra a month can take debt out quickly. If you look online and in the newspaper you can probably find a lot of people who just need odd jobs done for a little cash.

By laying out some plans for getting out of debt and sticking to them you will start seeing progress quickly. It won?t be fun, but every time you pay off a credit line, you will be able to breathe easier.

6 Ways You’re Wasting Money Without Even Realizing It

Bags of money in trash can

Money bags in trash can | Source: iStock

If you’re trying to save some cash, the first thing you’ll need to do is take a look at your current spending habits. You might be surprised at how much money you’re throwing away without even noticing.

Personal finance expert Michelle Singletary said the impulse to overspend can get the best of us at times, so try not to feel too bad about it. However, once you’ve seen the error of your ways, it’s time to clean up your act. “… All of us consume more than we need. We shop so much we don’t even stop to think about what we’re buying. How many times have you gone to Walmart or Target with the intention of buying just a few things, but you ended up tossing more than a few things in your shopping cart? You get to the register, and a trip that should have cost you $20 ends up costing you $200. If we all waited longer before making many of our purchase, we’d have more money,” said Singletary in The 21-Day Financial Fast: Your Path to Financial Peace and Freedom.

Here are some ways you’re letting money slip through your fingers without even realizing it.

1. Not returning items

Man holding bags

Shopping | Source: iStock

It can be a hassle to return a defective or unwanted item, but it’s worth it in the long-run. Don’t throw away cash unnecessarily by letting unwanted purchases sit in your closet. Set aside time to pack up your items and send them back so you can get your refund.

2. Only buying name brands

Man holding shirt

Man shopping | iStock

Give up your name-brand obsession and opt for a generic from time to time. A generic brand can be just as good as its name-brand counterpart, especially when it comes to groceries. A Consumer Reports grocery store survey found some store brands give more popular brands a run for their money when it comes to taste and price. You can save up to 25% when you switch to a store’s brand.

3. Not taking advantage of rebates

Man holding one hundred dollar bills

Man holding cash | Chung Sung-Jun/Getty Images

Did a rebate come with one of your purchases? Don’t be lazy. Some manufacturers actually want to give you money for buying their products. Make an effort to fill out the appropriate forms so you can get cash back.

4. Ignoring your retirement match

Blue piggy bank

Piggy bank | Source: iStock

If your employer offers a match, take advantage of it. Why give up free money? Pad your retirement account by contributing at least the minimum required to get the match.

5. Not using your gym membership

Man at gym

Man doing push-up | Source: iStock

Have your New Year’s resolutions fallen to the wayside? If monthly fees are being deducted from your bank account but you haven’t lifted a weight since January, it’s time to do something. Go over your contract and see if you can cancel early.

6. Impulse shopping

Man holding gift bags

Man shopping | Source: iStock

Unplanned purchases will chip away at your hard-earned cash before you know it. Resolve to resist making a purchase unless you budgeted for it beforehand. Always ask yourself if you really need something before pulling out your wallet.

Borrowing Money From Your 401K-Only In Emergency’s

Sometimes you really just find yourself needing some money. Unexpected events such as a car breakdown can put a damper in your budget no matter how well you plan. In situations where you need money and need it quick, you can look into Borrowing money from your 401 K. Typically, when someone makes a 401k plan they do not expect to take any money out of it until it has grown and matured.

But life does not always go the way we hope and sometimes we need to delve into whatever source of money we can find, and sometimes that means taking money from our 401k. This has been thought of and that is why most 401k plans will actually have that type of loan available.

While taking a loan from your 401k can often make the difference between paying off a bill and falling further into debt, there are risks involved. If you do not handle the loan carefully you can not only run the risk of having to pay much more down the road, but you also run the risk of ruining your 401k.

Not all 401k plans are the same and so there is no universal method for getting money out of them. You need to check into the specific plan you have and find out what restrictions apply when Borrowing money from your 401 K. For most plans they will require that you borrow a minimum amount of money, usually anywhere from five hundred to a thousand dollars. They often will also have a maximum amount that you can borrow, usually around fifty thousand dollars. However, again, every plan is different so you will need to look and see whether this applies to you or not.

While taking money from your 401k plan may be a life saver, you may not be able to. While most plans are different, there are usually similarities in the form of requirements. Most plans will not let you borrow money from them unless you can meet the requirements they put in place. If you do not meet these requirements they will not lend you the money. So this is another reason for why you should look over your plan carefully and read the fine print so that you are properly educated.

Like most loans, a loan from your 401k will have a set repayment plan that you will have to adhere to. This can be anywhere from 5 to 15 years depending on what type of loan you took out and what type of plan you are on. The nice thing about Borrowing money from your 401 K is that, while you of course have to pay it back, the interest rates are fairly low and are actually put back into your 401k.

While taking a loan from your 401k is a good option, there are some additional fees that you may have to pay. Such as yearly fees or fees if you miss a payment. If your company has someone who manages 401k plans you should talk to them in case you have any questions.

Borrowing Money From Family-Think Twice

Borrowing Money From Family can be a tricky business to say the least. When you borrow money from say, a bank, and you are unable to make your payments they will simply come after you for collateral. But what happens if you lend money to a family member and they are unable to pay you back? Are you going to go and take their car? Of course not. This is what makes lending money to family members so difficult.

If you are planning to lend money to any family members, you need to be prepared to say goodbye to that money forever. In most situations the odds of you being paid back are quite small, so you need to be aware of that. Since lending money to family members can be difficult, there are some tips to help make it easier.

1: Never lend out money that you need or want. If you yourself are on a tight budget you can not afford to go giving money to friends and family. It may sound harsh but you have to come first, if you go broke who is going to help you? As I stated above, any money you give you need to be prepared to never get back. So if you have no money to spare, then you can not give any away.

2: Assess the risk involved. When someone is Borrowing Money From Family they will of course tell you they will pay you back. But you need to assess the situation they are in to see if they can pay you back. Every circumstance is different, but if that family member has a history of not paying back loans or are reckless with their money, why would you lend it? Make sure they are able to pay you back, or at least make sure you know what you are getting into.

3: Never co-sign on loans. In certain situations family members may require a co-signer for a loan. The bank may not like their situation enough to give them a lone unless they get someone to co-sign for them, and so they may turn to you. However, it is advised you do not co-sign on loans. It puts you at risk for having to pay back the money should the other person default on their payments, money you may not have.

4: Give money freely as gifts. Seems a bit counter productive since so far I have been saying to be careful when people are Borrowing Money From Family. But that is something we forget as we age. When we are teenagers we often get money as gifts, but we really do not need it. When we grow up and actually need the money, nobody will give it to us.

Give your adult children and family members money for birthdays or holidays, if you can afford to. Not only can it help them out, but it also gives you some leverage should you ever be forced to deny them a loan. So it ultimately helps both you and your family members.

Strategies For Success In A Home Business

Many people are interested in learning how they can become their own boss. Most people aren’t sure where to start in their journey to start their own business. This article contains tips that can help you get started with your home business and start working for yourself, in no time at all.

Designate a room or an area of a room as your “office” for your home business. It can be a whole room or just a part of another room. Having your own office space will assure all of your business materials are in one spot, and it will help you to be more efficient.

Make sure your web page has the capability to host an e-store. Customers like the convenience of being able to purchase an item over the internet; sometimes it is refreshing to be able to quickly get what you need without interacting with anyone. You will also be able to sell your product to people who would not have a chance to order it otherwise.

Arrange to have a toll free 800 number associated with your home business. Taking this step allows you to keep your personal information private. If your business is successful, having an 800 number also leaves your home number free to take calls from your friends and family, who might have difficulty getting through otherwise.

Before you start your home business, it is very important to have a solid understanding of what you want to do, be able to visualize how you are going to do it, and know what resources you will need to make it happen. The answers to these should not just be in your head but also on paper. Write a business plan! It will not only clarify what you are getting into but also point out where you might be lacking.

Invest in a toll-free number for your home business. An 800 number makes your business look larger, established and professional to customers. It also gives you a way to separate business calls from personal calls so you can “turn off” your business at the end of the day and make time for family.

The name you select for your home business is critically important and will play a large role in determining whether your business succeeds or fails. Your business’s name must make sense and be easy for consumers to remember. When deciding on a business name it is also a good idea to find out if the domain name is available. Ideally, your domain name should be the same as your business name.

Manage your time and priorities to allow the main operations to be completed efficiently and properly. This may sound to be obvious, but there are many that fail to realize time and priority management as such an essential practice. Managing time and priorities ensures that you give your main operations the best focus and most efficient care possible.

Most people are interested in starting their own home business and becoming their own boss. However they are not quite sure, how or where they should start. After reading this article, you should have a better idea of how to get started with your own home business and becoming your own boss.