Posts Tagged "spending"

turkey illustration

Happy Thanksgiving!

The staff at Squared Away  hope our readers enjoy their time with family and friends during the holiday weekend.
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Video: Overtime Rule to Benefit 4 Million

Just hours after the following blog went live on Tuesday, major media reported that a Texas judge blocked implementation of the new overtime regulation in response to challenges by a group that included 21 states and businesses. The future of this regulation is now in question.

On Dec. 1, an additional 4.2 million U.S. workers will potentially be eligible for overtime pay when the annual earnings cap doubles to $47,476 under the new federal overtime rule.

Retail workers bracing for the holiday onslaught will be among those receiving overtime if they work more than 40 hours per week but earn less than $47,476.   The previous cap, $23,660, was set in 2004.

Under the new rule, employers must pay overtime to any eligible full-time or part-time worker, according to the U.S. Department of Labor (DOL), which produced the above video explaining who will benefit from its recent rule change.

This will mean bigger paychecks for low-wage workers but permanent raises for others earning slightly more. That’s because one option for employers seeking to avoid overtime pay is to increase annual pay for, say, middle managers to just over the $47,476, exempting them from the rule.

Inevitably, some employers will try to ignore the rule. It’s important that workers know their rights under the law – so watch the video and read this.  The overtime rule is enforced by the DOL’s wage and hour division offices in 50 states. …Learn More

Kids sleeping at daycare

Day Care Costs Factor into Mom’s Work

Table about daycareIn 26 states, the average cost of full-time care for just one infant at a day care center approaches or exceeds $10,000 a year, according to ChildCare Aware of America.

No wonder many new mothers (and sometimes fathers) ask themselves: Is it even worth it to work in the first place?

Proposals by both presidential candidates to subsidize care for the nation’s 11 million pre-schoolers amount to non-partisan recognition that parents need some help.

The IRS does provide a child care tax credit of up to $3,000 for one child and to $6,000 for two. But despite this, the United States lags well behind Europe in the financial assistance extended to parents of young children.

The result is that the child care costs shouldered by two-earner American families – the percent of their after-tax incomes that go toward care – are two times what parents pay in countries that subsidize care, such as Germany, Australia, Sweden, Denmark, France and Greece, according to the OECD.

A series of academic studies over more than two decades document a deep and enduring link between steep child care costs and mothers’ decisions to drop out of the labor force.

One study in 2005 found a “striking” impact on mothers when Quebec made child care for pre-schoolers affordable by putting in place subsidies for private day care in the late 1990s, which capped parents’ daily costs at $5. The program spurred big increases in child care use in the province. The study found that universal day care also significantly increased married women’s labor force participation, by 14 percent. …Learn More

Annuities Have Real Value

Woman falling on money parachute

The value that annuities can provide to retirees may not be obvious, but it is real.

Annuities are also becoming increasingly valuable as fewer people have that traditional source of reliable retirement income: an employer pension.

Insurance company annuities, like pensions, pay out a monthly income no matter how long you live. These payments come from three sources: 1) the initial amount invested to purchase the policy; 2) the interest earned on the amount that’s invested before it is paid out; and 3) “mortality credits.”

These mortality credits are the essential element that protects retirees from outliving their savings.  As a retiree moves through her 80s, a growing share of the other people in the annuity pool die.  The funds they leave behind in the pool are used to continue making monthly payments to those who are still living.

This is the starting point for a new summary of academic research on annuities by the Center for Retirement Research at Boston College, which supports this blog. To fully understand the individual studies, it’s necessary to read the report.   But here are some takeaways: …Learn More

Diamond ring

When a Diamond Isn’t Forever

While student loans are a painful, long-term expense, they are also an investment in one’s career and earnings prospects. But what does lavish spending on a wedding provide?

It can lead to divorce, according to a study by Emory University researchers Andrew Francis and Hugo Mialon. More interesting, they suggest that the stress that comes with wedding debt might be the underlying cause for the unhappy outcomes.

Weddings, which peak in early summer and surge again in the fall, have become more elaborate over the years. Engagement rings usually have diamonds – that wasn’t always the case. The average expense for a wedding and reception in this country is now $30,000.

But the researchers found that women who spend more than $20,000 on a wedding were nearly four times more likely to become divorced than women who spend under $10,000. In the case of men, buying a more expensive engagement ring was linked to a higher divorce rate.

They based these findings on data from their own random survey asking 3,151 adults about their wedding costs and current marital status.They controlled for education, household income, whether the person was employed and other things that play a role in whether a couple stays married.

Stress may be the undercurrent that explains their findings: couples who spend more money are also more likely to report being “stressed about wedding-related debt,” the researchers found.

The links between marriage and money are a perennial topic in academic literature. Other studies have shown that divorce creates financial problems, particularly for people closing in on retirement. It just might be that excessive spending on a wedding – usually a couple’s first major expenditure – gets a marriage off to a bad start.Learn More

Going Abroad? Is Currency a Work of Art?

As Squared Away readers scatter to the winds this summer, those going overseas should take a close look at the currencies in their travel destinations.

There are some gorgeous currencies out in the world, in places like Sao Tome & Principe off of the coast of Gabon in West Africa. June begins peak season for the island country, which The Lonely Planet says has a relaxed “leve leve” vibe to go with its miles of beaches, “swaths of emerald rainforest, soaring volcanic peaks and mellow fishing villages.”

Sao Tomean Dobra

Currency as art is a refreshing contrast to U.S. currencies, with their button-down images of presidents and buildings.  Try the red-billed kingfisher bird on Sao Tome & Principe’s 50,000 dobra – or the curved bow of the boat on Norway’s 100 kroner note.

These were among the currencies selected by the coupon website,, for its recent spotlight on the world’s “10 most beautiful banknotes.”  To see the others, click here. …Learn More

Housing, Health Are 1/2 of Elderly’s Costs

How will your spending change once you retire? Will you be able to afford your needs? Will healthcare drain your budget?

The U.S. Bureau of Labor Statistics (BLS) provides some clues in its data on the spending patterns of older Americans. The pie charts below show the percentage of total household budgets in 2014 that went to everything from housing to entertainment for two older age groups.

The two age groups selected highlight how spending changes between one’s final years in the labor force (ages 55-64) and retirement (the over-75 group). (Note: a household’s age is determined by the age of the individual who responded to the survey.)


The pie charts tell part of the story. Here’s what the BLS report adds to our understanding of spending among older Americans:

  • Housing. Nearly 70 percent of elderly homeowners over age 75 have paid off their mortgages, while only a third in the 55-64 group have. But there are other costs associated with homeownership, such as maintenance. And a large minority of older people are renters. The upshot: housing gobbles up about one-third of older households’ yearly budgets, regardless of their age.
  • Healthcare. The share of the 75-plus elderly population’s total spending that goes toward health care (15.6 percent) is nearly double that of the younger group (8.8 percent). … 

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