Pierre Money Mart Blog

This year, before you shop to fill the stockings, remember to “Feed the Pig.” The American Institute of Certified Public Accountants in conjunction with the National Ad Council encourages people to save and reverse the trends of living beyond their means. “‘Feed the Pig’ is a call to action for young adults to take control and improve their futures,” Florida Institute of CPAs CEO/Executive Director Kathryn Anderson said.

Below are some tips from the Florida Institute of CPAs for expressing your love this holiday season without breaking the bank.

The Reason for the Season — Look for low-cost activities. Ice skating, caroling or classic Christmas movie nights are all great ways to spend time with family and friends. Invite friends or family to take a drive or a walk and look at the holiday lights in your neighborhood. End the night with hot chocolate and cookies or popcorn at home.

Save on Entertaining — Host a holiday brunch instead of a sit-down dinner. The food and drink costs are less expensive, but you can still have a great time visiting. Host a potluck, instead of doing it all on your own. This is a fun, inexpensive way to entertain and your guests will be happy to pitch in. Plan a progressive dinner with friends. One person can host the appetizer; the next home can provide soup and salad and so on. Throughout the night, you can visit a number of homes without any one family having to work or spend too much.

Gift Giving — Give the gift of time. Make a coupon for babysitting, dog walking or yard cleanup. The possibilities are endless, so think of what would be most helpful to the person on the receiving end! Draw names — it’s a great way to cut down the number of people you need to buy for and it is a lot of fun! Wrap your gifts with something different — use comics, newspapers, cloth or recycled gift bags. Let the kids make wrapping paper using plain brown craft paper and finger paints.

Comparison Shop — Separate shopping trips (when going to compare prices, quality, value, etc.) from spending trips (when going to make a purchase), and resist taking cash, credit cards or a checkbook on the shopping trips. Ask retailers when the items you are interested in buying are coming on sale. Most retailers will reveal sale dates because they don’t want you to shop their competition. Liquidators, buying clubs and factory outlet stores usually offer lower prices. Bulk-buying with other family members or friends can also yield savings. Sometimes shopping later in the season will allow you to take advantage of clearance sales.

Take an Inventory — Assess your child’s current inventory of toys before deciding to buy new toys. Ask yourself, “does Johnny really need this or am I just buying this because I am ‘commercializing’ Christmas?” Consider giving books instead of toys. Books are great gifts, tend to be more beneficial, and usually last much longer than toys.

Ask for Suggestions — Have family members suggest four or five desired items within your price range. Allocate dollar amounts for everyone on your gift list and be sure to stick to it. Then choose one of the items to purchase — if and only if it is within your dollar limit for that person. Do not waste your money buying someone a gift that they do not want. You worked hard for your money, so buy items that are wanted and useful. Consider giving a gift certificate from their favorite store.

Don’t Spend More than You Have — Pay cash for all gifts and leave the credit cards at home. If you cannot pay your credit card bill in full in January when the statement arrives, then you probably cannot afford the gifts you are now buying in December.

Be Creative with Gift Giving — Consider gifts that don’t cost a lot of out-of-pocket money. Giving a card to a young family which entitles them to emergency baby-sitting time, for example, will result in savings for both families. Laundry or shirt-ironing for a bachelor, a bimonthly sight seeing outing for senior citizens or gardening, housecleaning and car washes for grandparents are useful and often much-needed gifts.

Organize Holiday Shopping and Limit Unplanned Purchases — Make lists of gifts, decorations and food items that you need to buy. If you’ve had a tough year financially, shrink your gift list or gift price amount.

Delay Your Personal Gratification — Shop for yourself the day after Christmas instead of before Christmas and take advantage of the great sales. You will get more goodies for your money. Invest the money you would have spent on a gift for yourself in a mutual fund, savings bond or purchase shares in a store where you shop regularly.

For more information on creative ways to save money this holiday season, visit www.feedthepig.org.

The size of your monthly payment depends on the loan amount and loan terms. To calculate your loan amount, subtract the net trade-in value of your current auto and any down payment from the purchase price.

If you receive a rebate, subtract that amount from the purchase price too.

For example, assume the purchase price of the vehicle is $20,000, including fees and taxes. The dealer gives you $5,000 on your trade-in vehicle and offers a $500 rebate. Your lender requires you to make a down payment of $1,000. Since you owe $2,000 on your current vehicle, the net trade-in value is $3,000. If you subtract $3,000, $1,000 and $500 from the $20,000 purchase price, your loan amount is $15,500.

Your calculated monthly loan payment should be less or equal to the amount that you think you can afford. Keep in mind, however, that additional costs of owning a car — insurance, registration and maintenance, for instance — are not included in calculating a monthly loan payment.

Whether you’re worth $100 million like Ms. Spears or $100, the same simple strategies can help ensure a comfortable retirement.

In case you missed it, some bombshell news came out of the personal finance arena last week. No, I’m not referring to the Federal Reserve’s rate cut or the record-breaking price of oil.

I’m talking about Britney Spears: She isn’t saving for retirement.

Though the 25-year old pop star is hauling in some $737,000 a month (yes, per month), the Associated Press reported that according to court documents, she’s not saving or investing a penny of it.

More than $100,000 each month is going to entertainment, gifts and vacations alone.

While most of us may be shocked by this excess, Ms. Spears’ saving habits are actually pretty normal.

The truth is, the overwhelming majority of American 20-somethings aren’t saving anything for retirement, either. Research from Vanguard shows that two-thirds of all 25-year-olds who have access to a 401(k) plan aren’t contributing.

And the worst part is, they aren’t taking advantage of their biggest asset: time.

Let’s go back to Ms. Spears’ retirement plan for a minute. Now I know that she’s richer than you and I, worth in the neighborhood of $100 million from her previous sales and touring (she didn’t always spend it all). But let’s say she was forced to start from scratch, like any other 25-year-old. She could still maintain her lavish lifestyle in retirement.

Assuming she could scrape by on 70% to 80% of her pre-retirement income in retirement – or about $590,000 a month in today’s dollars – Ms. Spears would have to accumulate a nest egg of just over $300 million by age 65.

Sound daunting? Nah. All she has to do is keep working and put away 8% or so of her monthly $737,000 income until she retires and she’ll hit that goal.

So what’s the point of this exercise? Well, the very same strategy can work for you too.

Being sure to set aside just a little each month can help you maintain your lifestyle in perpetuity.

A 25-yr old making $30,000 a year, for instance, and putting away the same 8% of his pay into a 401(k) plan annually for the rest of his career is virtually guaranteed a comfortable retirement by time he hits his 60s.

Assuming average historic rates of inflation and investment returns, and a typical company matching contribution in his 401(k), he would wind up with a nest egg of nearly $2 million by age 65, enough to replace more than 90% of his working income.

I realize that, unlike Ms. Spears, you may also have student loans to pay back at this point in your life. But unless it’s a private loan, don’t sacrifice your 401(k) contribution to make extra payments on the loan. If it’s a federal loan, and you’ve consolidated it, you likely have a fixed after-tax rate of 5% or less. Over the longer haul, you will handily beat that return in your 401(k); if you get a company matching contribution, you’ll trounce it.

And you don’t need to hire a team of people to handle your investments. Just put your 8% in a so-called target-date retirement fund – every major fund company offers them, including Fidelity, Vanguard, and T. Rowe Price.

Here, you make your fund choice based on the expected year of your retirement. For instance, if you were planning to retire in 40 years’ time, you might pick the T. Rowe Price Retirement 2050 fund. Right now, it has an 88% allocation to stocks, 10% to bonds and the rest in cash.

As time passes, and you get closer to retirement, the fund will automatically adjust that mix of stocks and bonds to more conservative levels. The best part with these funds is that you do nothing.

And that means you’ll never have to say, ‘Oops! I did it again’ when it comes to your retirement.

A prepaid credit card is not really a credit card, as no credit is offered by the card issuer or a lendor: the card-holder spends money which has been “stored” via a prior deposit by the card-holder or someone else, such as a parent or employer. However, it carries a credit-card brand (Visa or MasterCard) and can be used in similar ways. As more consumers require a suitable solution to rebuilding credit, recent changes have allowed some credit card companies to offer pre-paid credit cards to help rebuild credit. They are hard to find and have higher APR fees and higher interest costs.

After purchasing the card, the cardholder loads it with any amount of money and then uses the card to spend the money. Prepaid cards can be issued to minors since there is no credit line involved. The main advantage over secured credit cards is that you are not required to come up with $500 or more to open an account. Also most secured credit cards still charge you interest even though you are not actually “borrowing” any money. With prepaid credit cards you are not charged any interest but you are often charged monthly fees after an arbitrary time period. Many other fees also usually apply to a prepaid card.

Prepaid credit cards are often marketed to teenagers for shopping online without having their parents complete the transaction.

Because of the many fees that apply to obtaining and using credit-card-branded prepaid cards, the Financial Consumer Agency of Canada describes them as “an expensive way to spend your own money”. The agency publishes a booklet, “Pre-paid cards”, which explains the advantages and disadvantages of this type of prepaid card.

Defensive driving is a form of training for motor vehicle drivers that goes beyond mastery of the rules of the road and the basic mechanics of driving. Its aim is to reduce the risk of driving by anticipating dangerous situations, despite adverse conditions or the mistakes of others. This can be achieved through adherence to a variety of general rules, as well as the practice of specific driving techniques.

Crash and vehicle break-down scenes

* Approach a broken-down vehicle or crash scene with caution, but do not be distracted by it. Watch for pedestrians and wandering animals at the scene.
* If your vehicle develops mechanical or tire trouble and begins to slow, drive it to the side of the road as far as possible from traffic.

If your vehicle breaks-down on the road in an exposed position, or for crashed vehicles blocking the road:

* Activate the vehicles hazard-warning lights.
* Immediately, switch off the ignition of immobilized crashed vehicles to reduce risk of fire.
* Have passengers leave the vehicle if and when it is safe to do so, and keep them well clear of traffic. Appreciate that a stationary vehicle can be pushed many meters by impacting traffic.
* Wear a bright, reflective safety vest or shirt when attending to urgent traffic control duty. (UN Transport Division social policy item for all road users. A low cost, cheap life insurance item).
* Carefully place a hazard-warning triangle to the side of the road, or side of an affected traffic lane to improve the alert-time given to approaching drivers of danger, if it is safe to do so, and as required by legislation in some jurisdictions. Within ‘built-up areas’ and on low-speed roads, place the triangle up to 50 meters away. Outside built-up areas on rural roads, place the triangle at 100 meters, for motorway class roads, 150 meters from the scene. Hold the triangle facing near-side approaching traffic when walking to place it, and when returning it to store, to aid in your pedestrian safety. In some countries, heavy vehicles are required to carry a set of three warning triangles and these are placed within the 50-150 meter range as appropriate and legislated. (Buy only a good quality triangle such as one complying with UN/ECE Regulation 27 in Transport).
* Where legal to use; during an on-road emergency use a CB radio recognized ‘road channel’ to alert approaching traffic of danger. Some countries have dedicated CB radio emergency channels that might be useful for raising help should other methods fail.
* Avoid working on the traffic side of your vehicle.
* Avoid any naked flames or electrical items where the potential risk of a spark exists. Example: that caused by the momentary separation of battery from its device near flammable petroleum products!
* Watch carefully all approaching traffic for potential loss of vehicular control and be prepared to get out of the way.

Training and Courses

Because of the increased need for an awareness and practice of defensive driving, several government agencies and non profit organizations have launched specialty courses that improve the public’s driving skills. In the United States a few of the familiar courses in defensive driving include Alive at 25, DDC or Defensive Driving Course, Coaching the Mature Driver, Attitudinal Dynamics of Driving, Professional Truck Driving, and DDC for Instructors. In relation to this, the government has launched active Air Bag and seat Belt safety campaigns that encourage High Visibility Enforcement.

Instructors have specialized courses that tackle various aspect of defensive driving like

* Emergency Care
* Specialty Vehicle courses that tackle specialized vehicles like ambulances, fire trucks, police cars, vans and lift trucks.
* Roadway work courses on Flagging and the design and supervision of Temporary Traffic Control.
* OSHA Compliance
* Principles of Safety
* Fleet Safety
* On-site Emergency Response Planning
* Safety Communication and Training Techniques.
* Smith System Advanced Defensive Driving Course

Save lives, save money: drive safe.

Defensive driving is a form of training for motor vehicle drivers that goes beyond mastery of the rules of the road and the basic mechanics of driving. Its aim is to reduce the risk of driving by anticipating dangerous situations, despite adverse conditions or the mistakes of others. This can be achieved through adherence to a variety of general rules, as well as the practice of specific driving techniques.

Assume the worst in others

* Never trust an indicator; expect that a vehicle indicating that it is about to turn, may not do so.
* Similarly, expect that a vehicle which is apparently not turning may turn.
* Assume that stop signals will be ignored by others and be prepared for it. Beware of a stale green light.
* Expect that a red traffic light will be “run” (so don’t take off too quickly on your green light).
* Assume that any and all other drivers have not seen your vehicle.
* Assume that any and all other drivers are not capable of preventing an accident.
* Watch for drivers talking on cell phones while driving and be aware that their driving skills are severely diminished, even greater than a drunk driver. They often drive through stop signs and traffic signals, change lanes without warning and are probably unaware of their surroundings.
* At intersections never assume that you have the right of way.

Maintain an exit route

* Keep the space on either side of your car free. Leave yourself an out.
* Drive in the outer lane on freeways. In case of a problem, you won’t have to cross a lane of traffic to get to the shoulder. Be aware that the left lane is used for passing. Continue to yield its use to faster moving drivers.
* Keep wheels straight when waiting to turn across oncoming traffic. If your car is rear-ended, it won’t be pushed into the opposite lane.

Avoid danger

* Do not drive next to large vehicles longer than necessary. The driver may not see you, and a turning truck can suddenly cut off all exit routes.
* Maintain a three second following distance behind other vehicles. Increase that to five seconds in fog, rain, or other adverse conditions. It takes most people at least half a second to react to an emergency condition. Following a car closer than one second effectively guarantees an accident if the leading car brakes unexpectedly.
* Conversely, change lanes or pull over if tailgated. If that is not possible, slow down, and / or maintain extra distance to the car in front, to allow for both yourself and the tailgater to stop safely.
* Avoid visibly damaged or defective cars. A history of accidents indicates that the owner has poor driving skills.
* Avoid cars that weave, do not stay in their lane, brake too late at intersections, stop abruptly, or respond slowly to traffic signals. The drivers of such vehicles may be intoxicated or distracted.
* Never drive over any object on the road that can be safely avoided — a plastic bag can conceal more dangerous items, ropes can wrap around axles, and even mundane objects like sticks can puncture a tire or the fuel tank.
* On roads of 3 or more lanes, take care not to change lanes as another vehicle in the next one over moves into that lane. Vehicles in the left lane and the right lane can collide if they try to change to the center lane simultaneously. In most jurisdictions, you are required on motorway category roads to be in the outside lane if it is clear of traffic – regardless of speed, only merging then to the middle lane or lanes, and/or the inner (central median area) lane to overtake. You must then return to the outside lane once you have passed traffic, if it is clear and safe to do so. Even when not required by law, it is dangerous driving on the inside lane continuously. If a faster vehicle comes up from behind you, they are more likely to be on the inside lane. Remember 95% of fatal collisions on a undivided four lane highway occur in the inside lane and that you can avoid this danger by simply driving in the outside lane.
* Always Stop, Look and Listen at railroad crossings with no lighted signal. At crossings that have signals slow down and make sure your visual distance of the track is adequate, in case the signal is not working properly.
* Be wary of learning drivers as they are far less experienced than most other drivers on the road. They may stop or turn abruptly without necessarily paying due attention to where you are.
* The side view mirrors on either sides extend beyond the vehicles body. Always keep a safe distance from adjacent vehicles on jam-packed roads to avoid colliding the side-view mirror with that of the vehicle on your left (or right).

Save lives, save money: drive safe.