What I’ve Been Up To

This Week In Your Wallet: Fend Off Bullies at the Checkout Counter

Happy Thanksgiving everyone! It looks like more of us will be traveling for the holiday this week. In fact, it’s more than any other year since 2007, according to AAA. If you happen to be one of the 46.3 million Americans either jet setting or hitting the road in the coming days, here’s a quick forecast for your wallet.

For the 90 percent of people who plan to travel by car, you can be grateful for cheaper gas prices. As MarketWatch reports, we will see the lowest Thanksgiving gas prices in five years. Last year at this time gasoline averaged $3.28 a gallon. Last week it was $2.85. Analysts say to expect the same for this week.

Those flying aren’t going to get the same break. Airfares are up 1 percent from last year. So are hotel rooms (8 percent) and car rentals (10 percent). This week, the average hotel room will cost you $154 a night, and renting a car will cost you roughly $55 a day. So far, some Americans have paid nearly $600 for this week’s travel itineraries.

We’re also heading into the biggest shopping weekend of the year…

Pressured into plastic

“Would you like to open a credit card account and save 15% on your purchase?” How many times have you been asked that question? For that matter, can you count the number of times you’ve tried to paywithout being asked that question?

Now think about it another way: Has a store clerk’s persistence to open a retail credit card ever crossed the line into bullying? More than 30 percent of Americans say it has, according to a new survey from credit.com. Discounts aside, almost half of Americans surveyed regret their decisions to open store cards during the holiday shopping season. Some 36 percent said they own too many cards as it is — and others ended up spending more than they had originally planned. Considering the above, credit.com created five questions  to ask yourself before opening a store card — especially under pressure.

Start by asking yourself, “How much will I really save?” Sure, any amount of savings can be alluring, but could the savings come from a coupon or code instead? In fact, did you look for coupons before heading into the store? You can always ask the clerk to put your items on hold, check (and price compare while you’re at it) and then return with savings, no strings attached. (And remember, if it’s 50 percent off, it’s still 50 percent on.) Another consideration: how often do you shop at said store? If you shop there on a regular basis, then perhaps it’s worth it. Once in a blue moon? Not so much. Above all, will this card reward you for shopping at the store and regularly save you money? Or, will it cost you more than you think in fees? Know that not all retail cards are created equal. The average APR on retail cards has increased by more than 2 percent to 23.23 percent —  8 percentage points higher than your average general-purpose credit card.

Leaning in and feeling blue

Switching gears to another recent piece of research: I write often in this newsletter (and other places) about the progress women are making in the job market, with salaries and their overall finances. So, although it’s demoralizing, it’s also important to report that women with job authority (power to hire, fire and pay employees, for example) possess more depressive symptoms than women without power. For men, it’s the opposite. It’s important to remember that women overall are more prone to depression than men. But earlier research has shown that socioeconomic advantage (i.e. job authority) is good for you. You’re at a social advantage with more money, and will likely have a better education, and overall better physical and mental health. So what gives?

For women, power authority often comes with “interpersonal stressors,” like “the problem of legitimacy.” In other words, powerful women are more likely to be met with resistance, because powerful women aren’t the norm. On the other hand, male authority figures are natural dominants in society, making their power more “legitimate” not just for them, but for the people they supervise.  Want to learn more? Jump to the full article on Fortune.

Mr. 300

How would you define your lifestyle in financial-speak? Is it modest? Lavish? Conservative? Frugal? For Darrow Kirkpatrick, former software engineer and man behind the blog, CanIRetireYet.com, adjectives don’t suffice. To him, your lifestyle is a list of your monthly recurring expenses — both essential (i.e. housing, food, insurance) and discretionary (cable, gym memberships, housecleaning). As he writes on MONEY, his definition was inspired by his Rule of 300: “‘The amount of money you must save to meet a monthly expense in retirement is approximately 300 times that expense.’”

He got to the 300 figure by using two multipliers: 12, which represents converting your monthly expense into one annual one, and then 25, which represents the “4 percent rule” for retirement savings withdrawals. As Kirkpatrick writes in his article, “The 4% rule is another way of saying you need to save 25 times your annual expenses to retire safely.” (He also acknowledges that this rule is under scrutiny right now for being too optimistic.) Putting the Rule of 300 into practice, let’s say your monthly gym membership is costing you $40. After applying the rule, you would need to save $12,000 ($40 x $300) to fund your membership in retirement.

Circling back to those monthly recurring expenses — these are the ones Kirkpatrick believes will inflate your lifestyle. Why? Because they’re usually automatic. And if you’re not tracking your expenses or balancing your accounts, then automatic charges can go unnoticed and cost you more than you originally bargained for. There’s a reason why businesses make monthly services so easy to sign up for and so difficult to cancel. Bottom line: Before you add any regular, financial commitment to your monthly cash flow, multiply it by 300. Not just to get an idea of how much it would cost you in retirement, but to consider how much work it would take to earn that sum of money. Not adding automatic payments to your monthly budget might help you retire earlier than you think.

Have a great week,

Jean