What I’ve Been Up To

This Week In Your Wallet: Budget-Friendly Tips For Treating Yourself

If you’re going to “treat yourself” this holiday season, you’re certainly not alone. Over 55% of shoppers are self-gifting this year, spending an average $130 doing so, according to the National Retail Federation.

Adding your name to the gift list has become somewhat of a norm (the number of people who admit to doing it has nearly doubled in the past two years). And as long as you’re factoring your personal gifts into the budget, then discretionary “gimmes” won’t mistreat your wallet. But if you’re looking to cut back on the self-gifting, then look to my Advent Calendar of Savings for strategies. For example, you could try the one in/one out rule, which can help you cut down on stuff in general. Here’s how it works: Before you allow yourself to buy another pair of boots (or pants, or iPod), you must get rid of one you already own. Even better, sell the oldies (either at a consignment store or online) and use that money to make a dent in the new purchase.

Another idea is to make a 30-day list for the things you’d like to gift yourself. With this, you write down the items you’re coveting – like that Fitbit – and revisit the list in 30 days. If you still can’t imagine living without the item a month later, then consider the buy. Chances are the item will have been long forgotten. We’re unlocking more savings tips everyday at Today.com. (Try the ones we’ve uncovered so far here.)

Hassle-Free Holidays

In addition to our calendar, we just wrapped a week of Hassle-Free Holiday segments. If you need a reality check on not just self-gifting, but your spending overall, then learn how to set up spending roadblocks. Sometimes the key to not shopping is to simply make it harder – rather than easier – for you to shop, by either putting something in your way or removing a convenience. When you think about it, this makes sense. One big reason we leave money in our 401(k)s is that there’s a barrier (i.e. a penalty – to getting it out before retirement). An example? Don’t save credit information on websites (the fact that you have to put it in every time means you have to think about it).

If you’re worried about going into credit card debt – or amassing more of it – this holiday season, watch this. And if you like the sound of an early retirement, then meet, as Paul Sullivan of The New York Times dubbed them,  “supersavers.”  We crashed his party to ask for more specific details of how they learned how to save upwards of 50% of their income.

“A Done Deal”

November’s strong jobs report (released Friday) has economic experts and publications alike (including The New York Times) saying you can consider a Fed rate hike “a done deal.” ICYMI: Employers added 211,000 jobs last month, the unemployment rate held steady at 5% and average hourly earnings increased by 2.3% from this time last year. The Fed has its policymaking meeting next Tuesday and Wednesday, and – if everything goes according to plan – this will be the first rate increase since June 2006.

I recently spoke with Mark Zandi, Chief Economist of Moody’s Analytics, who predicts a slow pace of rate increases (maybe three or four times) in 2016, and a more aggressive stance in 2017 and 2018 with a target of 3.5%. So what are investors to do? Your answer depends on how far away you are from retirement. If you’re 20 or more years away from retirement, then having a balanced portfolio with more in stocks is a safe bet. Now, if you’re only several years away, Zandi suggests beefing up your cash position (e.g. if you’ve been sitting at 5-10%, move up the dial to 25%). Continue reading on Fortune.com.

Out With The Old

Last month’s budget deal gave the popular Social Security strategy, file-and-suspend, six months to live. Once repealed, you can no longer file and suspend so that your spouse can file for a spousal benefit, simultaneously allowing both of your benefits to grow. Choose to file and suspend after the six-month mark, and you’ll also suspend payments for spouses and dependents (based on the same work record) when doing so.

So if you’re at full Social Security age and you’re considering this, the time to act is now. As the Wall Street Journal reports, if you file before May, you’ll be grandfathered in, allowing your spouse to still have the option to claim a spousal benefit based on a suspended one. This strategy has helped couples boost their retirement incomes by tens of thousands of dollars, which is why taking it off the table makes it all the more important for couples nearing retirement to rethink their plans. The Wall Street Journal offers guidelines for two different types of couples: dual-earners and couples with one primary earner.

For dual-earner couples — while there are some exceptions — it’ll generally make sense for both spouses to collect benefits based on their respective earnings. Though it will pay for the higher earner to delay claiming for as long as possible, generally until age 70. For every year you delay from age 62 until age 70 you get an annual bump in benefits of about 8%. Sometimes though, based on your life expectancy, it may make sense to tap your benefits at a different age.  The Consumer Financial Protection Bureau has a handy new free widget that you can use to figure out what to do. Continue reading here.

Have a great week,

Jean