Will Cash Become an Endangered Species?

Do you pay with cash? The number of people using cash to purchase items has continued to shrink, thanks in large part to credit and debit cards. But cash has a new enemy, it’s called Mobile Payments. This new technology allows one to wave a Smartphone over a special reader that captures the payment information utilizing Near Field Technology (NFC). This can be done even faster than swiping and processing a credit card transaction. Technology continues to change the way we spend, save and give. Read more in an article here.

 

Is Blackberry in Danger of Becoming a Relic Like Atari?

Blackberry, who once commanded half of the smart phone market, is trying to figure out how to avoid becoming part of the Hall of the Fallen Giants (like the Palm Pilot and Polaroid Instant Cameras). Their market share has shrunk to 10%, and their stock price has fallen by 75%. It’s new Chief Executive has 3 options going forward. Read more here.

What’s In Store for 2012?

Debit Card usage has been on the rise for the last several years. With the rise of “rewards” accounts offering higher interest rates for higher debit activity, people have been incentivized to use their debit card. But that trend may be apt to change in the near future. What is the catalyst? – The Durbin Amendment. This was a piece of the elephant sized financial legislation that went into effect in 2009. This amendment caps what banks can make on debit card interchange income. It has cut that number in half from 44 cents to 22 cents. Thus in 2011, when big banks saw their debit interchange income cut in half, they reacted by charging monthly fees for debit cards. Bank customers didn’t like this at all, and started leaving big banks in droves for smaller community banks. This backlash led to multiple banks repealing their debit card fees – for now. In addition to the loss of income on interchange income, banks are watching fraud costs accelerate at an astronomical pace. With more debit card usage comes more debit card fraud. People are increasingly seeing their debit card information compromised in restaurants, gas stations, and online merchants (you may have had it happen to someone you know). The twin problems of lower debit interchange income and escalating fraud costs may cause a drift back toward credit card usage in years ahead. For banks, credit cards are now more profitable. For disciplined consumers credit cards are, for now, safer. Watch for a migration toward credit card usage in 2012 (unless Durbin is repealed).

It is truly amazing that the S&P 500 ended the year relatively flat. If you would have been told in January of last year that in 2011 there would be a last minute decision on raising the US debt ceiling, a worsening debt crisis in Europe, an organized Greek default, and that the US would lose its AAA rating from S&P, you might have predicted that the S&P 500 would be down 20%. That was the reality in much of the world with the stock markets in India down 38% and Russia, China, and Brazil down over 20%. But the S&P 500 ended the year relatively flat. This shows amazing resilience for US markets, and reminds us that the United States is still the safest and most stable place in the world to do business.

Speaking of surprises in 2011, what surprises might be in store for 2012? Byron Wein of the Blackstone Group has been publishing his “10 Surprises List ” since 1986. You can read the list here. We’ll share a few of his prognostications below and make a comment or two:

• Crude Oil Falls to $85 per barrel – This would be a huge help to our fragile economic recovery.
  
• S&P 500 exceeds 1400 – Few things fuel confidence more than an improving stock market. With alternative investments in CD’s yielding around 1% (and going even lower this year), Mr. Wein may have a good case.
  
• US GDP exceeds 3% and Unemployment Drops below 8% – The Economy should improve in 2012. The question is how much?
  
• Obama faces Romney for President; Democrats win House but Lose Senate – All eyes will be focused on the election this year. 2012 will determine whether the country’s current trajectory continues, or whether we choose another course.
  
• Europe solves its Sovereign debt crises – Although they may figure out a way to restructure their debt, contraction in European economies remains likely.
  
• Computer Hackers Attack Major Financial Institutions – Information Security will be one of the buzz phrases of 2012 with more resources spent to fight crime online than ever in history.
  
• Syrian President Bashar al-Assad is ousted – Countries demanding new regimes that promise something closer to a democracy will continue to assert themselves. Syria isn’t the first, and won’t be the last.
  
• China, India, and Brazil stock indices surge – After a disappointing 2011 with these countries down over 20%, 2012 could set the stage for a recovery in those markets.
  

Chad P. Wilson, CFP – Foundation Bank – division of McKenzie Banking Company – 731-554-2423    The above is strictly informational and does not constitute any sort of recommendation. Please consult your own financial advisor for specific tax, loan, or other investment advice.

Does It Really Matter Who You Work For?

At least 40 of our 112 waking hours during the week are spent in the workplace. This means over a third of our time is spent outside your home, furthering the goals of the organization we’ve chosen to partner with. It also follows that we may spend more time with co-workers than our own families. This underscores the importance of choosing wisely when it comes to where we will spend those 40 hours each week.

A recent annual survey by careerbliss.com polled 100,000 employees in 10,000 companies to compile its list of the top 50 Happiest Companies for America. The Top 10 Included: Hilton, Fluor, Johnson and Johnson, Nordstrom, BASF, Centex, the US Air Force, Ericsson and Chevron. The number one company in 2010 was Google. For whatever reason, they didn’t even make the Top 50 this year. Read more about the survey here.

Chances are that you don’t work for a company large enough to be a part of this poll. So what do you think about who you work for?  Remember that we live in a fallen world, and that no company is perfect. Every workplace has its share of challenges. So it would be wise to distinguish between company inconveniences, and major institutional flaws. There are so many variables at play to determine your happiness in the organization you serve. Your supervisor is one variable that has a huge effect on how you feel about your employer. Personality conflicts or differences in values are often culprits of employee dissatisfaction. A second variable is the composition of your work. Are you doing something you enjoy? Do you spend most of the day forcing yourself to keep working? A third variable is corporate values. Is the organization heading in a direction that you agree with. Can you row in the same direction the company is rowing? Can you get behind the mission and purpose of the company you work for? These are helpful questions to ask. These questions will either lead you to a firmer commitment to your employer, giving you a shot in the arm for motivation’s sake. Or these questions will cause you to consider alternatives for your future career. Life is too short, and too many hours are spent in the workplace to be miserable.

What do you do if you find you are genuinely not happy in your current environment? If you have a good relationship with your supervisor, talk to them. It may be that if you shifted to a different seat on the bus, you might be happier and more effective for the organization  Supervisors can’t help if they don’t know there is a problem. If you are a valuable teammate, they will do all they can to address your concerns. If you don’t have that level of trust with your supervisor, give your concerns a little time to mellow. It may be that you are in a busy season that will pass. It is possible that current difficult circumstances are not permanent circumstances. In busy seasons, people often jump out of the frying pan and into the fire by hastily leaving one organization only to find the next is even worse. Lastly, seek counsel. Friends that you trust can offer objective advice to help you think through your situation more carefully. In addition, prayer is one of the most valuable disciplines to help you sort out career decisions. Regardless, be slow to leave, and quick to be patient. The grass is often not greener on the other side. Planting yourself, and laying down roots with a good organization is a lost art today. But you might be a happier and more successful teammate if you do!

Your Year End Financial To-Do List

As we tie up loose ends on 2011, you might wonder how to finish well regarding your finances. Money Talks News provides a few suggestions including taking a look at your credit report, changing your online passwords, making an IRA contribution, and reviewing your budget for 2012. Investing a mere 15 minutes a day between now and the end of the year to whittle away at this list could pay big dividends in 2012. See the list here.

Is the Money in Mattresses?

In this environment, you might think the title of this month’s newsletter refers to stuffing money in your mattress for lack of investing alternatives. But I am actually referring to how much you pay might pay for a good night sleep in the future? Recent studies point to people investing more on sleep in days ahead. The reason behind this begins with a recent survey by the National Association of Homebuilders. The survey indicates that newly built homes in the future will be smaller. In addition to a general square footage decrease, there will be fewer formal dining rooms and combined great-room kitchen areas. You might ask “what does this have to do with sleep?” With a decrease in size and attention to other parts of the house, there will be an increase of attention on the bedroom. With homeowners 65 and older growing from 13% of the US population to 20% by 2050, the increase in number of seniors may lead to investments in comfortable, spacious bedroom areas that can accommodate them through the remaining phases of life. This includes wider doorframes and larger bathrooms to accommodate wheelchairs, space conducive to future hospital beds, and more comfortable mattresses to ease those aging backs. You might be surprised to know that in a very difficult economic climate, the International Sleep Products Association indicates that bedding units are up 1.9% for the first eight months of the year, while the dollars spent on bedding is up 7.8%. A good night’s sleep might be a priceless investment for the future.

We’re a few weeks away from black Friday, but you might want to consider doing your Christmas shopping on a different day of the week. A study by Extrabux, a price comparison website, found that computers and televisions purchased online are typically cheaper on Monday’s, and most expensive on Friday’s. The same study also finds that, major appliances bought online (washers, dryers and microwaves) are cheaper on Sundays. The price fluctuation has to do with the ebb and flow of online shopping demand. Speaking of online shopping demand, the National Retail Federation expects online sales to be up 15% or more this holiday shopping season. But the online shopping landscape as we know it is likely to change. For many shoppers in many states today, one can buy online purchases without sales tax. But that party may come to an end. Simon Property Group recently sued the Indiana Department of Revenue for not enforcing state law that requires Amazon.com to pay sales tax for all sales made in the state. So…for now some online retailers have an edge, and thus you can save money by buying online. But don’t expect this to continue indefinitely.

Do you find yourself behind on funding your Christmas list for this year? Here are some tips for next year that can help you get ahead of the game:

Save your extra paychecks. If you are paid weekly, there are four months each year in which you receive a fifth paycheck. If you are paid bi-weekly, there will be two months each year in which you receive an extra paycheck. Socking away these extra paychecks, instead of spending them, can add up over the course of the year – allowing you to have money ready to take care of those Christmas presents. You don’t want to run up a bunch of credit card debt to pay for Christmas.

Secondly, Wal-mart is bringing back layaway. Don’t be afraid to set aside an item, and pay for it over a course of several weeks. We tend to save better on a weekly, or bi-weekly basis, and Wal-Mart is making provisions for you to do that.

A third solution for Christmas savings is to open a Christmas Club account. These are essentially savings accounts that earn as much or more interest as a CD. You pick an amount to deduct from your checking account monthly, and you are sent a check for the balance in October. It provides a little forced discipline, since you cannot access the account throughout the year. Yes…we offer Christmas Club accounts and would love to talk with you about them.

 

The Real Reason Behind Debit Card Fees

Senator Bob Corker (TN) released this statement regarding the side-effects of recent government financial legislation. Corker blames the Durbin Amendment, which caps what banks can make on debit card transactions, as the reason large banks have recently transitioned to charging $3-$5 monthly to have a debit cards. He highlights it as an example of the unintended consequences of “price fixing” by the government. He also raises the question of how long free checking can continue to exist in its current form. Read more here.

Keep in mind that several community banks (including Foundation Bank) are not charging monthly fees for debit cards at this time.

A Self-Admitted Leftist Liberal’s Confession

Jon Friedman admits that the liberal left media (of which he considers himself a part) has lost touch with Main Street. He says that they have allowed their biases to influence them to such an extent that they ignore stories that don’t fit their particular worldview. He highlights a drift from reporting the news to reporting your views and says that  the “ear to the ground” that was once a media norm has all but disappeared. Twitter and Facebook are attempting to fill the gap. Read more here.

How Would you Like to Pay 9% on Your Income Taxes?

This is just one of the pieces to the Herman Cain 9-9-9 plan. The Republican Presidential Candidate is proposing a 9% flat income tax, a 9% corporate tax rate (from the current cap of 35%), and a national sales tax of 9%. It’s bold, and its simple, but does it have any merit? I’m not endorsing him or any particular political candidate, but elements of this plan seems worth discussion. It would not be surprising if a piece of the plan eventually makes its way into the mix of solutions for fiscal reform over the next 5 years. Cain happens to be gaining steam in the polls at the present. Read more here.

We Need More jobs, but we Need even more Jobs

America lost one of its most enterprising minds last week. The passing of Steve Jobs is the end of an era of effective leadership in the arena of innovation. His story with Apple is an amazing. Starting Apple in 1978 out of his garage, he was one of the first to bring PC’s to market. In a bizarre move in 1986, the company actually asked Jobs to leave. As a result, the company languished for 10 years. Apple came to its senses in 1997, and asked its founder to “come home.”. Not long after his return, Apple reassumed its market shaping role by reinvented portable music – burying Sony’s Walkman in a matter of years by promising that a device called and iPod would enable you to carry 1000 songs in your pocket. Jobs also led Apple to reclaim its place in the PC space, inventing computers that were sleek, fast, and virtually impervious to viruses and lock-ups. In 2007, Apple revolutionized the market again with the iPhone. More recently, the launch of the iPad created a new space for devices no one even knew they needed. Fewer companies have had a greater impact on the world in the last 15 years than Apple. Even fewer leaders have been able to stay at the helm and manage that kind of impact. In a day when we see the worst of Corporate Executives – when CEO’s are assumed to be taking from society more than giving – it is good to be reminded of the potential of one man to shape a company, and ultimately the world. It would not be a stretch to say he is the Henry Ford of this generation. Steve Jobs represented what is good about America – stellar innovation which leads to job creation, leading to satisfied customers, leading to happy shareholders. We need more like him. We need more CEO’s that see their business as a platform to make a positive difference in the lives of their teammates, clients and shareholders. American Entrepreneurship must be about more than profit – but about a grander purpose. It probably wouldn’t surprise you that Jobs only paid himself $1 per year in salary? For him, it was certainly about more than money. At a time when the unemployment rate still hovers above 9%, many are pontificating on what it will take to create jobs. I think Steve Jobs career makes the answer very clear. We need to clear the way for more innovative leaders to create products and services that have the potential to make life better for the world. It is more important to remove obstacles to entrepreneurship than it is to create programs that tell people how to run their business. If we want more jobs, we need more people like Jobs. Read more on his life and legacy here and here.

Much of the volatility in today’s market can be attributed to the uncertainty surrounding the Super Committee’s proposals for deficit reduction. If you will recall, the legislation to increase the debt ceiling required that a bi-partisan committee (dubbed by the media as the “Super Committee) of 6 democrats and 6 Republicans from the House and Senate must make a deficit reduction proposal prior to Thanksgiving. This recommendation cannot be amended, and will require a simple majority up or down vote to be passed. If their recommendation is not passed, the Federal Budget will be cut by 4% across the board, with nothing other than Social Security being immune. When the stroke of the pen could reduce billions of dollars spent in multiple industries, it is no wonder that Wall-Street is having fits and starts. The Committee has no less than 32 proposals to consider at this point. So what is some common ground that seems to be emerging? A gradual increase in the retirement age seems to be certain. Higher cost sharing with Medicare seems inevitable. Farm subsidies are likely to decrease. Defense spending is also likely to be reduced.

Bush’s tax cuts appear to have a good chance of being extended yet again, but some degree of revision to the tax code looks likely. They minimum target for cuts is $1.2 trillion over a 10 year period. It is going to take creativity and a lot of compromise to pull that off – but necessity is the mother of invention.

The European Union still has its work cut out for it. Eventually, countries like Germany will tire of propping up weaker members of the Union. An eventual default of Greek Bonds, and perhaps another country or two would not be a shock. Actually, the market might have already priced in that assumption. It causes one to pause and be thankful for the country in which we live. We have our share of significant problems, but I would rather be in business here than anywhere in the world.

Chad P. Wilson, CFP – Foundation Bank – division of McKenzie Banking Company – 731-554-2423    

The above is strictly informational and does not constitute any sort of recommendation. Please consult your own financial advisor for specific tax, loan, or other investment advice.