This Week in Your Wallet: August 7, 2012
The Olympics are always filled with inspiring stories of comebacks, and the London Games have already delivered in spades. From “Blade Runner” (and double-amputee) Oscar Pistorius defying critics and making it into the semifinals of the 400-meter dash to Andy Murray earning redemption (and gold) on the courts of Wimbledon, there’s been no shortage of inspiration. But my favorite story has been that of American track star Sanya Richards-Ross.
Richards-Ross won bronze at the 2008 Beijing Games after fading in the last 100-meter stretch of the 400-meter race. In the years after Beijing she struggled with a rare systemic disease that affected her training and competition. Yet, she staged a fantastic comeback, and on Sunday night ran away with the gold that had eluded her in Beijing.
According to the latest financial headlines, Richards-Ross and her fellow Olympians aren’t the only ones staging comebacks; some experts are saying the American economy is poised to improve its performance, too. If you’re struggling to pay the bills or find a job, it might be hard to believe — and I don’t blame you for being skeptical. However, I give you three reasons to be a little more optimistic:
#1: It’s all about expectations. As this article in the Atlantic says, “Since the crisis of 2008, most Americans have come to expect gloom rather than gold in the near future… The reality is, at 2.5 percent growth, the U.S remains the fastest-growing rich economy, and is in fact regaining some of the recent ground lost to newcomers like China.”
The article goes on to argue that our economy should be measured against the current competition, not the records it set in the 1990s or 2000s. When measured against the current competition, the American economy looks pretty good: this year, it will grow faster than the global average for the first time since 2003.
#2: Car sales are going up. The New York Times reports that car sales (which fell below 11 million in2009) are expected to surpass 14 million this year. By 2015, that number could exceed 16 million cars sold, which would be close to the pre-crisis peak.
Why is this good? To quote the Times, “This positive view can occasionally be self-fulfilling. If the auto industry believes 2015 will be better, it will invest in bigger plants, hire more employees, place bigger orders with its suppliers and do countless other things that can push a recovery along. Other industries, like retail or housing, might react to these newly hired autoworkers and invest accordingly.”
#3: Employers plan to be a bit more generous next year. CNN reports that employers are planning raise workers’ pay by 2.9 percent next year. This is up from the 2.7 percent increases workers saw in 2010 and 2011. But the best news of all? So-called “superstar” employees can expect a 4.5 percent pay bump.
Now, this isn’t to say that things will immediately get better, but I do think there’s good reason to “look on the bright side of life.”
And now, here are the other headlines for the week:
In case you’re REALLY fed up…
Over at the Times, Ron Lieber knows that all the positive headlines in the world might not make up for some of the bad headlines we’ve seen over the past few months. So for those of you saying, “The deck is stacked. The game is rigged,” Lieber has your back. He tested all the ways you can store and manage your money without going near the “bad guys” of our financial system. Among his tips: store investments in member-owned brokerage firms that use profits to pay dividends to customers, consider investing in municipal bonds that help pay for schools and regional projects and look into peer-to-peer lending.
Protecting your children from campus thieves
If you have a child going off to college in a few weeks, I’d recommend sitting them down and showing them this Wall Street Journal article about on-campus theft before they leave. In it, an identity fraud victim recounts how his own roommate stole his cards (and identity) while he wasn’t looking. This isn’t to say that you should be immediately suspicious of anyone who shares a living space with your child, but you and your college student should be aware of the risks around campus. Last year, identity thieves were able to steal an average of $2,693 off college students, compared to $1,513 for all other identity theft victims.
Among the things you can do to help: take inventory of what valuables are in the dorm room before the school year begins, and store all credit card statements and financial documents in a drawer with a lock. Above all, tell your kids to be smart: leaving their brand-new MacBookPro on a table in the library while they go for a coffee run is a recipe for disaster.
Resisting temptation
Want to effectively cut carbs from your diet? Stop spending? According to a new article in the Harvard Business Review, the key to successfully completing those goals might be to have a friend goad you into doing the opposite. The author, Peter Bregman, writes about his effort to avoid sugary desserts. However, as his friend taunted him with a berry pie (whose description had me ready to try a bite), Bregman actually felt his resolve not to eat the dessert grow. Why? He knew that if he caved, he’d never live it down. As an added bonus, after the meal was over, he felt a boost in his confidence and found it easier to say no to other sugary desserts. And while he was talking about desserts the whole time, I think this method could easily be applied to saving and spending. So the next time you want to minimize your spending, take a friend shopping with you — and the more she begs you to buy that awesome shirt, you’ll feel more and more resolved not to.
One last note
I just want to quickly thank everyone who emailed me about the workshops. We really appreciate your interest and that you took the time to reach out. We’re still working on specifics, but stay tuned — we’ll be sure to provide more details as soon as we know them!
Have a great week!
Jean
