This Week In Your Wallet: What The Jobs Report Means For You
This week, I want to dive right in, starting with Friday’s (May) jobs report. It showed U.S. companies hired at the slowest rate in more than five years — only 38,000 jobs were added. Yikes.
This was not what anyone — including economists surveyed by The Wall Street Journal who predicted payrolls would rise by 158,000 — expected. The result: The interest rate hike pretty much everyone thought was in the offing (at the upcoming Fed meeting June 14 and 15) is now essentially off the table. As The New York Times reported, Fed Chairwoman Janet Yellen gave a speech a few weeks ago in which she indicated that rate hike would be happening within the next few months. But when she spoke again on Monday, she didn’t repeat the message, which Fed watchers take to mean it’s not happening. At least not now.
Yellen’s view on the economy doesn’t preclude it from coming later this year, however. Aside from the jobs news, she pointed to the fact that the economy and wages are still growing. Of the jobs that were added, a significant amount were in the health care field — and along with technology, data from the BLS suggests it’s one of the fastest-growing fields for the future. On the other side of things, the mining industry lost jobs, and the number of jobs in the information industry decreased due to the Verizon strike.
What’s your cue from this news? If you’ve been waiting for your credit score to rebound to lock into still-low interest rates, the jobs report just bought you a little additional time. As for your 401(k) and other investments, there’s nothing here that should prompt tweaking your portfolio (unless it’s time for rebalancing in general).
Rebalancing, by the way, is just one of those habits you should have long-ago added to your financial regimen. Forbes has three money habits to practice every month that just might be simpler than you think. Among them? Savings — especially automating so money goes right from your paycheck to a savings or retirement account, and designating accounts for specific goals (like travel). Knowing what you’re saving for — a trip to Italy, a beach house to retire to — is a great motivator. Another tip? Whip spending into shape by figuring out how to get the things you want for the lowest out-of-pocket expenses, like opting for free books, movies and even tools from libraries and selling your stuff on sites like thredUP and eBay.
And if you’re working on getting on track yourself, don’t forget to take the kids along for the ride, too, when it comes to money smarts. This week on my podcast, HerMoney with Jean Chatzky, Ron Lieber of The New York Times and I talked kids and money — we covered the tooth fairy, cell phones and college tuition. Please subscribe and give it a listen. Then let me know what you think about it by leaving a review on your iTunes account.
As for other recommended listening/viewing — John Oliver recently addressed debt on his show, “Last Week Tonight,” by buying and forgiving $15 million in medical debt. It’s brilliant and a must-see in my opinion.
Woes For Loan Co-Signers
In other news — have you ever co-signed on a loan? Maybe for an extended family member or, even more likely, a child? If you answered yes, you’re not alone — about one in six U.S. adults have co-signed either a loan or credit card. But a new CreditCards.com report shows why “Money Rule #90: Don’t Co-sign” exists. Some 38% of co-signers had to pay some or all of the bill because the primary borrower did not, and 28% experienced a drop in their credit score because the other person paid late or not at all. Worse — 26% of co-signers said the experience damaged their relationship with the person they co-signed for. Which types of loans cause the most trouble? Auto-loans, followed by personal loans, student loans and credit cards.
Millennial Money
And while we’re talking about the younger cohort… A recent report by TD Bank shows millennials make more discretionary purchases than the average consumer but spend less money overall, except in the categories of coffee and fast food. (Sound familiar?) What’s interesting is that they’re using their credit cards substantially less than the average consumer. Overall, they use debit cards, cash and checks for 50 percent of their monthly spending — only 33 percent went to credit.
Is this good news? Or not so much? It’s a little bit of both. We know millennials are more risk-averse than other generations – a completely understandable reaction to the fact that they graduated from college/entered adulthood in the throes of the Great Recession and are shouldering massive student loan debt. As credit card debt rises to levels we approached in 2008, it’s good to know millennials are being cautious. Still, building credit is an important thing to do — particularly before you try to buy homes, cars, etc. If you suspect you (or a millennial you love) has a thin credit file or none at all, getting a credit card, using it sparingly and paying it off every month is a way to thicken it up in a hurry. (You can and should check your credit report for free at AnnualCreditReport.com). And if you’re turned down for that card? A secured card — where you make a small deposit with the issuing bank — is the card with training wheels that can put you on the road. You can find a list here.
Have a great week,
Jean
