This Week in Your Wallet: WhatsApp, Debt and Couples’ Finances
In last week’s newsletter, I asked you this question:
I’m curious, when you think of saving do you think of: A) Putting money away for the future, or B) Scoring a great deal? Let me know in a reply to this email, and I’ll report your answers next week.
The vast majority – more than 90% — said A. I particularly enjoyed this response from Mary Ann who wrote: “I think saving is putting money away for the future. I finally realized that the best sale still has me taking money out of my wallet.” That’s Money Rule #41, by the way: When it’s 50% off, it’s still 50% on. And Mary Ann, I’m sending you a copy of the book.
I’m focused on saving because this is America Saves Week – and new research from the Consumer Federation of America and the American Savings Education Council shows, once again, that we’re not saving enough. Most strikingly: The proportion of people with a savings plan with specific goals dropped from 55% in 2010 to 51% in 2014. Likewise, the proportion of people with a plan that allows them to save sufficiently dropped from 46% in 2010 to 40% this year.
So this week, I want to try to get at the secret sauce behind saving. Tell me: At those times in your life when you’ve saved well, what has given you the oomph to do it?
A) A life event (baby, marriage, divorce, etc.)
B) Automation (I set it and forget it)
C) Age (I hit my 50th and realized I better get going)
D) Something else
Let me know in a reply to this email!
And, just a reminder, if you haven’t been able to save, tonight is the Budgeting Bootcamp class. I have never seen a budget where I can’t find some money to save. In tonight’s class I’ll show you how. And now for the other news of the week.
Don’t raise your debt ceiling
Just because Congress raised the nation’s debt ceiling, it doesn’t necessarily mean you should raise yours. Unfortunately, many people aren’t getting that message. As TIME reports, Americans’ current consumer debt totals to $11.52 trillion — it’s highest since 2011 — according to a new study by the Federal Reserve of New York. Moreover, it’s quickly piling up. This debt, which includes credit cards and loans (i.e. mortgage, auto and school), increased by 2.1% (or $241 billion) in the last three months of 2013. The last time a raise this significant occurred was back in 2007, right before the recession. Yikes.
Before we panic, these numbers can mean a few different things. For starters, they don’t mean we’re at the onset of a recession. (For the specifics, read the full article.) As financial planner Carl Richards says in TIME, consumers’ willingness to take on more debt could be indicative of the relatively improved economy. On the flipside, these stats, in conjunction with the Bankrate.com report we discussed in last week’s newsletter could also mean that Americans’ personal finances, specifically their concepts of savings, could use some redefining.
What’s up with WhatsApp?
The big news in the tech world last week was Facebook’s acquisition of WhatsApp for the eye-popping price of $19 billion. The deal caught my attention after the New York Times reported our wallets might benefit from Mark Zuckerberg’s purchase too. If you’re still scratching your head wondering what is WhatsApp and why Zuckerberg hit the “Like” button, let’s first see what the hype is all about before we talk potential savings.
WhatsApp is a messaging application that boasts around 450 million users worldwide. Zuckerberg, a man who made his billions by helping millions of people connect around the world, was impressed with the app’s ability to do the same. What differentiates this messaging system from SMS, the text messaging we have on our phones, is both the method and cost. WhatsApp allows you to exchange unlimited messages (with other app users) for practically no cost using your phone’s Internet data plan. (The service is free to download, free for your first year and only $1 per year after that.) By using the Internet, this allows you to bypass paying for SMS, or extra fees if you (or your teens) have overzealous thumbs.
For years carriers have been charging us for SMS, when it’s practically free for them to provide, according to the Times. And given that text messaging is generally bundled into our plans nowadays, we sometimes forget that we are, in fact, paying for it. WhatsApp, and other web-based messaging systems alike, have forced carriers to reduce SMS prices, or eliminate them altogether to compete. As the Times suggests, messaging is headed towards the price it should have been all along, which is free!
A “don’t” before “I do”
If you’re a couple living together before marriage, play it safe and don’t buy property together. As the Wall Street Journal writes, the decision to buy a house together is, “the financial equivalent of having a child.” Not only is it a huge life decision in general, but doing it before there’s a ring on it is both a financial risk and relationship roulette. The safer investment: rent. For more, you can check out the full post here.
Have a great week,
Jean
