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While the price of food and other essentials continues to climb, some costs are bucking the trend.

 

As the economy recovers, rising prices can seem inevitable. But they’re not universal.

Experts say some items and expenses are bucking the trend, and may actually be cheaper in the new year. In some cases, the drop is due to evolving technology and increased competition. In others, shoppers are making choices that may result in lower bills — without leaving them feeling deprived.

In particular, the cost of these four essentials may seem less daunting in 2013:

Automobiles

Used-car values have been on an upswing in recent years, with lower supply from fewer leases and inventory cleared out by 2009’s federal Cash for Clunkers program.

But after peaking in 2011, used-car prices have begun to ebb again. “Consumers shopping for a used car will find that pricing will be more affordable in 2013 than in 2012,” says Alec Gutierrez, senior market analyst for Kelley Blue Book.

He expects prices to be 1% to 2% lower by the first quarter, and 3% to 4% lower by the end of 2013. Many cars in the new used-car supply will be recent off-lease returns.

Drivers in the market for a new car may also see some savings, although that opportunity is more about the ability to downsize than falling prices. Compacts and subcompacts in the $25,000-and-under category are getting more features typically found in full-size and luxury cars, Gutierrez says.

“That’s part of what’s been driving additional sales in the smaller-car segments,” he says. The category also includes a few hybrids, such as the popular $20,000 Toyota Prius C.

Cable television

The cable bill itself isn’t getting any cheaper. Prices for expanded basic service rose 5.4% in 2011 from the year before, according to the Federal Communications Commission. But there may be less need to pony up for a subscription.

Talk of cord-cutting — ditching paid television subscriptions in favor of a combination of free and inexpensive streaming options — has been on the rise in recent quarters, as providers like Netflix and Amazon.com gain more partnerships to stream movies and television shows. During the third quarter of 2012, providers lost an estimated 127,000 subscribers, according to reports from research firm Sanford C. Bernstein, after losing 400,000 in the second quarter.

But experts say the trend isn’t yet an option for everyone. Live sports aren’t always available for streaming, nor are many TV shows — especially those on premium channels.

Flat-screen TVs

It has become cheaper and easier for manufacturers to make large flat-screens, which has steadily pushed set prices down.

Average prices for 32-inch sets have dropped nearly 50% since 2010, from $600 to just below the $300 mark, says Mike Fridgen, the chief executive of price-comparison site Decide.com.

Fewer consumers are in the market for a new TV, and the competition among manufacturers and retailers is likely to fuel further drops, he says. Global demand for new TV sets fell 4% this year and is expected to stay flat for 2013, according to DisplaySearch, a division of research firm NPD Group.

But surprisingly, falling prices may spur consumers to spend more — on a bigger set. The $600 budget that in 2010 might have bought you a 32-inch set would today be enough to get one measuring 40 to 55 inches, depending on the brand.

Digital media

Prices for electronic editions already often edge out their print counterparts. Barnes & Noble, for one, sells the novel “Gone Girl” in hardcover for $14.34 and as an e-book for $12.99. The gap could widen in 2013.

In recent months, four publishers reached settlements with the Justice Department in a lawsuit alleging that they and Apple had conspired to raise e-book prices. (Apple and the fifth publisher named in the suit, Macmillan, will continue to litigate, according to the DOJ.)

The settlements give retailers more pricing flexibility. Deeper discounts are likely to pop up on current best-sellers and trendy topics, says Peter Hildick-Smith, president of consulting firm Codex Group.

As more people opt to buy tablets instead of e-readers, though, consumers may not buy as many e-books. “What we find is when someone has a tablet only, they’re spending a lot less time reading books on it,” says Hildick-Smith.

E-reader owners spend five hours a week reading on the device, according to Codex Group. But iPad owners spend two hours per week reading books and 72 minutes reading newspaper and magazine tablet editions.

Compliments of: Martha Small | Austin Portfolio Real Estate | 512.587.0308

Original Article by: MSN Money partner

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Now is the right time to simplify your financial life for 2013. But conventional wisdom on how to do it might be dead wrong.

 

The old-school advice for simplifying your finances boils down to “less is more”: Consolidate your accounts, cancel unused credit cards, and streamline your investments.

In today’s world, however, less is often less. Trying to simplify your financial life can boomerang on you with unexpected consequences.For instance, cutting down to one or two credit cards — or doing without them entirely — can hurt your credit scores. Consolidating your financial accounts could actually cost you more, and even leave you more vulnerable to lawsuits.

Here are some thoughts on avoiding pitfalls as you simplify your finances for an easier 2013.

Start with a purge. Don’t hang on to paperwork “just in case.” You should have a clear reason for hanging on to documents. If it’s tax-related, you typically should store it for seven years. In many cases, you can scan a document and toss the original (but don’t trash official documents such as marriage, birth and death certificates). Financial institutions are required to keep copies of your statements for six years, so you don’t necessarily need to keep hard copies.

Two gadgets can make your paperwork decluttering go faster: a cross-cut shredder and a really fast scanner, like the ScanSnap from Fujitsu.

Streamline your credit cards the smart way. I cringe when I hear people being advised to close credit card accounts, especially if they’re told to do so because “a large number of cards could hurt your credit rating.” The FICO scores used by most lenders don’t punish you for having “too many” lines of credit. In fact, having multiple open accounts is usually a positive factor in your scores.

What can hurt your scores is shutting credit accounts, or piling all your charges on one or two cards. The FICO scoring formula is sensitive to how much of your available credit you’re using. Reducing available credit by closing accounts, or using too much of your available credit on any card, can cause your scores to drop.

The less of your credit limit you use, the better. That’s true whether or not you pay your balance in full every month (which you should, by the way). A good rule of thumb is to use 30% or less of your credit limit at any given time. If you regularly use more than 50% of the limit on any card, consider shifting some charges to a second or even third card to ease the burden on your scores.

You can switch to cash or debit cards for everyday purchases. For big-ticket or online purchases, however, you’ll probably want to use credit cards, since they offer consumer protections that other methods of payment lack.

If your FICO scores are high (say, 750 and above), and you won’t be in the market for a major loan within the next year, you can consider closing some unused accounts, particularly retail store accounts you don’t use or cards that charge an annual fee. Otherwise, a smarter course is to keep those accounts open.

If you’re having trouble keeping track of all your credit accounts, consider using an aggregation service such as Mint.com. Checking in weekly will help you monitor your balances and spot any fraudulent charges on otherwise dormant cards.

Remember, the only smart way to use credit cards is as a convenience. If you have credit card debt, you need to make a plan to get it paid off as quickly as possible. If it would take you five or more years to pay off this debt, you may want to check with a legitimate credit counselor (find one here) or bankruptcy attorney.

Consolidate, but with caution. It can be tough to monitor multiple retirement and investment accounts. You could pay more in account fees and find it difficult to maintain appropriate asset allocations.

But that doesn’t mean you should lump all your accounts together, or even bring them all under one financial institution’s roof.

Let’s take the common recommendation to roll old 401k accounts into individual retirement accounts, for example. You’ll likely have more investment options with an IRA, but you could end up paying more for them if your 401k gave you access to the lower-cost institutional funds provided by many large-company plans. (There’s a reason financial institutions are so eager for you to roll over into an IRA — they’ll typically make more money by charging you retail rather than investor prices!)

Also, funds in IRAs have fewer protections from creditors, should you be sued or wind up in bankruptcy court, than 401k’s. IRAs are typically protected up to $1 million, while protection for 401k’s is unlimited. That’s not a concern for most people, but if you have a large balance (or are likely to accumulate one) you might want to factor this into your decision.

Another option to consider is rolling your old 401k accounts into your current employer’s plan, if that’s allowed. Again, that will make it easier to keep track of your investments, but you’ll want to make sure you’re not transferring your account away from a really good plan unless your current one is better.

Insurance is another consideration. The chances that you’ll ever need the coverage provided by the Securities Investor Protection Corp. are slim. SIPC pays back investors if a brokerage goes broke or if securities are stolen by a broker. If a failed firm can’t be merged with another brokerage, SIPC divides up the broker’s remaining assets among customers and then uses its own funds — up to $500,000 per account, including a maximum $250,000 for cash claims. If your claim exceeds those limits, which is rare, the broker often has insurance that will make you whole. Still, some people are uncomfortable keeping more than $500,000 at any one brokerage firm. If you have substantial assets, you may want to spread them around.

Simplify your investments. You may need to keep your money in different investment accounts, but you’d be smart to seek simplicity when choosing your actual investments. You can eliminate the hassles of asset allocation and re-balancing by choosing so-called lifestyle or target-date maturity funds. These funds offer broad diversification and regular re-balancing so that your portfolio stays in tune with your long-term goals. The best such funds don’t try to beat the markets, since most funds that attempt to do so fail miserably. Instead, they use low-cost index and exchange-traded funds to match the market returns. If you don’t have access to good-quality lifestyle or target-date funds, look for a good balanced fund (60% stocks, 40% bonds) or build a simple portfolio using low-cost index funds and then re-balance back to your target asset allocations once a year.

Set up savings “buckets.” When I had a single savings account, it was hard for me to keep track of how much of the money was earmarked for various purposes. If I had an unexpected car repair, would there be enough left to pay our property taxes when they’re due, plus cover our insurance premiums and our holiday splurge? Now each goal has its own labeled savings account at an online bank that doesn’t have minimum balance requirements or charge monthly fees. Each month, money is automatically transferred from our joint checking account at a brick-and-mortar bank into each of these savings buckets. Every large, irregular expense — from vacations to car repairs — has its own account, and I can tell at a glance where we stand. If a car or home repair exceeds the amount we have saved, I can shift money from our emergency fund or cut our spending until the bucket is refilled. The system sounds more complicated than maintaining one savings account. In fact, it has greatly simplified our lives, because I know the big expenses are covered.

Automate your payments. If paper checks are still a big part of your financial life, explore the advantages of electronic banking. Direct deposit means no more standing in line at banks to cash your paycheck (plus fewer opportunities for thieves to steal or alter your check). Electronic bill payment typically is safer and more secure than sending checks through the mail. Plus, many bills can be automated. You have several choices: setting up recurring payments through your bank’s bill payment system (a good option if the bill amount is the same every month), having bills charged to a credit card or authorizing billers to take the money directly from your checking account. Even if you’re nervous about ceding control of other bills, you should make sure that minimum payments to credit cards and loans are made automatically, so you don’t run the risk of missing a payment and damaging your credit scores.

Rethink consumerism. Buying less leaves more money in your pocket for saving and investing. Buying less also means less hassle. The less stuff you buy, the less stuff you have to maintain, insure, repair and replace or donate when you’re done with it. Breaking the habit of shopping and spending can be a surprisingly powerful way to simplify your life.

Compliments of: Martha Small | Austin Portfolio Real Estate | 512.587.0308

Original Article by: Liz Weston, MSN Money

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What a great way to spend the beginning of The New Year!

 

Everything here only costs a few bucks or takes a few minutes, but the impact? Huge.

1. Train a service pet. A $5 gift to canine assistants.org covers a week of food for a puppy learning to aid people with disabilities.

2. Buy groceries for a needy family. Nearly 50 million Americans are facing hunger; $21 to feedingamer ica.org feeds a family for two weeks.

3. Donate your old phone to cellphonesforsoldiers.com, which recycles them and uses proceeds to buy calling cards for our troops abroad.

4. Restore vision. $50 to unite forsight.org gives surgery to one of the 94 million people who are blinded or visually impaired by cataracts.

5. Rehabilitate women who’ve been trafficked. Senhoa.org hires survivors to make jewelry and helps them safely transition back into society.

6. Provide a kid with peace of mind. Holiday bulbs designed by celebs like Brooklyn Decker support the Child Mind Institute, which researches mental illness in kids ($40, available at bloom ingdales.com).

7. Help more teens in the U.S.graduate. A million drop out each year. Tutor and assist in an at-risk classroom for 10 months with cityyear.org.

8. Keep an infant HIV-free. In Africa, more than 800 babies are born with it daily; $50 to m2m.org teaches an expectant mom to avoid transmission.

9. Donate your wedding gown or veil to brides againstbreastcancer.org. They’ll sell it at a bridal show and help pay for support groups for patients.

10. Comfort the homeless. At projectnightnight.org, $20 provides a blanket, book, and stuffed toy to one of the 334,819 kids in shelters nationwide.

11. Beautify a city park. $15 to tpl.org goes toward playground equipment in a new or renovated green space for boys and girls across the U.S.

12. Ready young mothers. $50 to nursefamilypartnership.org coaches five first-time moms about healthy pregnancies and smart parenting.

13. Save a life in South Sudan. $5 to doc2dock.org ships unused supplies from U.S. hospitals to remote clinics, where shortages threaten lives.

14. Give Internet access to Afghan women. $25 to youngwomenforchange.org donates a desk to the first-ever female-only Web café in Kabul.

15. Prep an animal for its new home. Just $10 to petfinder foundation.com vaccinates four shelter dogs or five cats, keeping them ready for adoption.

16. Invest in health. 17% of American young people are obese; $50 to actionfor
healthykids.org buys PE tools for a class in a struggling district.

17. Inspire a new author. M. Ward and Zooey Deschanel’s holiday album ($11, amazon.com) benefits 826 National, which helps disadvantaged students build writing skills.

18. Stop partner violence. In honor of Yeardley Love, who was killed by an ex-boyfriend, joinonelove.org educates us all to prevent abuse.

19. Pay for a terminally ill child’s getaway. $25 to givekidstheworld.org helps affected families take a vacation to its Florida resort.

20. Volunteer from your desk. Sparked.com asks about your skills and passions, then gives ideas for using your talents to better the world.

21. Fight lung cancer. A donation to lcfamerica.org funds research to predict, detect, and treat the top cancer killer among Americans.

22. Take care of amputees. $300 to brac.net provides a prosthetic arm or leg to a Haitian who lost a limb due to the 2010 earthquake.

23. Prevent illiteracy. Order yourself a new book at better worldbooks.com, and they’ll send one to a needy child in the U.S. or abroad.

24. Raise a roof for a struggling family. Spend a day at one of womenbuild.org’s 27 sites and help put a low-income family into a home.

25. Groom women for government with a gift to the nonpartisan wufpac.org, conservative shepac.com, or liberal emilyslist.org.

26. Keep at-risk youth drug-free. For $25 to deaeducationalfoundation.org, one girl can attend after-school dance classes for 10 weeks.

27. End hunger. Spend $120 on a Feed tote full of gourmet snacks (deandeluca.com), and 15 meals go to kids in Africa, Asia, or the Middle East.

28. Soothe a scared kid. Send a stuffed animal to projectsmile.org; police officers and paramedics will hand them out to trauma victims.

29. Give land to a poverty-stricken woman. For $150, landesa.org secures a plot for a woman in India to live and grow food with her family.

30. Rush in relief when disasters like Hurricane Isaac strike. Teamrubiconusa.org uses your $11 to keep a veteran ready to deploy to crisis areas.

31. Rebuild schools after devastation. Every dollar to happyheartsfund.org, created by former Glamour Woman of the Year Petra Nemcova, does just that around the globe.

Compliments of: Martha Small | Austin Portfolio Real Estate | 512.587.0308

Original Article by: Emily Mahaney

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