MinnEcon Category Archive: Saving & spending

Retailers report solid finale to holidays

Posted at 8:08 AM on January 5, 2012 by MPR News Staff (0 Comments)
Filed under: Saving & spending

By ANNE D'INNOCENZIO, AP Retail Writer

NEW YORK (AP) -- Many retailers are reporting solid sales gains for December, capping a decent holiday season, but shoppers bent on discounts exacted a high price.

Merchants had to mark down coats and other gifts to get shoppers to buy in a challenging economy. That resulted in a string of retailers, including Target Corp. The Children's Place Retail Stores Inc. and Destination Maternity, reducing their earnings outlooks.

The heavy discounting is also raising concern about what it will take to get shoppers to spend again in coming months.

As retailers reported their results Thursday, Limited Brands Inc., Macy's Inc. and Nordstrom Inc. posted strong revenue gains that beat analysts' estimates. Among the notable laggards was Target Corp., which cut its earnings outlook after a slim sales gain that was below expectations.

The revenue figures are based on revenue at stores open at least a year. That is considered a key indicator of a retailer's health because it excludes results from stores recently opened or closed.

"Sales were decent, but not great," said Ken Perkins, president of RetailMetrics, "It was a highly promotional environment. There were clear winners and losers in the holiday season. It just tells you how difficult it was to drive traffic against a backdrop of a soft economy."

December's results offer an important benchmark for retailers and economists. During the holiday shopping season, merchants can make up to 40 percent of their annual revenue. The period that runs from November through December also gives valuable insights into what it takes to get Americans to spend in the weak economy.

Clearly, it took a lot of "50 percent off" signs to win over shoppers. For the official start of the holiday shopping season, stores opened as early as Thanksgiving Day, plying shoppers with discounts that resulted in record sales.

But shoppers took a longer-than-usual breather after that. Some stores had to discount more than they had planned in the final days before Christmas to attract shoppers. Post-Christmas bargains were even better. Express stores, for example, promoted an "End of Season" sale, with merchandise prices reduced by up to 70 percent.

Costco Wholesale Corp.'s revenue at stores open at least a year rose 7 percent in December, narrowly missing Wall Street's expectations. Analysts surveyed by Thomson Reuters predicted that the figure would climb 7.6 percent.

Target, posted a 1.6 percent gain in December as consumers waited until the last minute to shop and electronics sales were weak. The company lowered its fourth-quarter guidance, and its stock tumbled in premarket trading.

Among department stores, Macy's posted a 6.2 percent increase in December, beating Wall Street's estimate of 5 percent. For November and December combined, revenue at stores opened for a year rose 5.7 percent. The department store chain raised its earnings outlook.

"Our ongoing success reflects our exceptionally talented organization, which has implemented our key strategies at a very high level in spite of weak macroeconomic conditions," Terry J. Lundgren, chairman, president and CEO of Macy's, said in a statement.

Limited, the parent of Victoria's Secret and Bath and Body Works, said Thursday that revenue at stores open at least a year rose 7 percent in December. The results beat expectations and the company raised its fourth-quarter guidance. Analysts expected a smaller 5.7 percent rise, according to Thomson Reuters.

Nordstrom had a 8.7 percent increase in revenue at stores opened at least a year. That was above the 5.1 percent forecast.

Analysts expected a smaller 5.7 percent rise, according to Thomson Reuters.

The Children's Place Retail Stores Inc. lowered its earnings guidance for its fiscal fourth quarter on Thursday, saying that higher costs and unseasonably warm weather hurt its performance as it sharply marked down prices to move winter clothing.

(Copyright 2012 by The Associated Press. All Rights Reserved.)

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How do you talk to your parents about their finances?

Posted at 1:25 PM on January 28, 2011 by Paul Tosto (1 Comments)
Filed under: Saving & spending

Chris Farrell always make me think in new, practical ways about the economy. Today he shared a New York Times post about debt and parents that should have many of us wringing our hands and asking: How do you talk frankly with your elderly parents about their finances and solvency?

Talk about awkward.

Your parents are supposed to be the well spring of wisdom on all things financial. They had the money, they taught you how important it was to save, work hard and invest. Why would you even need to talk to them about their finances into their 70s and 80s?

Turns out that's pretty naive.

The Times piece features a story of a woman who thought her 86-year-old father was financially secure only to discover he'd run up a $15,000 credit card debt.

It offers links to reports showing a jump in the numbers of senior citizens filing for bankruptcy and that seniors are spending 43 percent to 53 percent of their monthly income paying credit card debt.

We've written some on MinnEcon about how to ask for help in this recession -- something many of our friends and neighbors have had to deal with for the first time.

We've also tried to explore the question of navigating that awkward moment when your friends realize your broke or unemployed.

But your parents? How do you have that discussion? MinnEcon's all about using the expertise of our audience to try and help us all better understand the economy.

If anyone's done it or tried, please post something below or contact us directly at MinnEcon.

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10,000 in Twin Cities cut pay TV cord

Posted at 3:28 PM on November 30, 2010 by Paul Tosto (5 Comments)
Filed under: Saving & spending

Not sure if this is a sign of the economic times we're living in or a reaction to the growing amount of free TV stuff to be found online, or both. But it's intriguing that more than 10,000 Twin Cities homes recently gave up on their pay TV subscriptions.

The down tick from 1,487,892 subscribers to 1,477,576 between the first and second quarters of 2010 amounts to less than a 1 percent decrease. But ours was one of the few top markets to see a decline.

Here's a chart from the Wall Street Journal blog:

The journal writes, "For the first time since the dawn of cable TV, the number of U.S. households paying for TV subscriptions is falling, marking a potential turning point in the TV business."

I've never paid for TV service. I'm too cheap and don't need the battle with the kids over watching Cartoon Network. So I'm in no position to understand why people are cutting the pay TV cord. But it seems like there's a shift under way.

Throughout the Great Recession, sources in MPR's Public Insight Network have told us repeatedly they are moving away from spending and using any extra money to pay down debt or save. Even as the economy improves for many, we're still getting the message from Minnesotans: we're not buying.

National data show the personal savings rate of Americans continues to climb.

Here's a chart by the Federal Reserve Bank of St. Louis showing personal saving as a percentage of disposable personal income since 1970 (click on the chart for a larger view).

You can see savings took a dive in the 2000s but has been rebounding out of the recession. We're squirreling our money away.

SNL Kagan, the company that did the research that spawned the Journal post, recently wrote:

SNL Kagan estimates U.S. cable operators lost 741,000 basic video customers in third-quarter 2010, marking the single largest quarterly dip for cable since SNL Kagan began compiling data for the segment in 1980.

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Recession etiquette?

Posted at 10:21 AM on September 8, 2010 by Paul Tosto (2 Comments)
Filed under: Saving & spending

I've been trying for weeks to start a discussion about how to navigate awkward conversations over money and jobs in this recession.

I'm not having much luck.

That makes sense. Talking about money or jobs in good times is tough enough and can be excruciating in times like these, especially in a place like Minnesota, where... we ... just ... don't ... discuss these things.

The problem is the advice that's out there is pretty lame: be nice, do this, don't do that.

We really learn through story telling here at MinnEcon and like to think of our site as a digital campfire. So sit down and share a story.

You know your buddy's unemployed. You're out for dinner and you know he really can't afford it. But he doesn't want anyone feeling sorry for him. Make a big deal about trying to pay and you may make him feel worse. How'd you get through that?

Maybe you lost your home to foreclosure or a short sale. Friends and relatives don't know what to say. How do you make it so you can talk about it?

Tell us one story about an awkward money conversation with friends or family and how you worked through it.

Share your story and you might be able to help someone else figure out what to say. The stories we share make us all smarter.

If you've had to navigate recession etiquette, tell us how you did it.

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Credit card debt: What Minnesota and Wisconsin owe

Posted at 12:30 PM on August 25, 2010 by Paul Tosto (1 Comments)
Filed under: Saving & spending

We were intrigued this morning by new data from the credit reporting company TransUnion showing U.S. credit card balances at their lowest levels in eight years and delinquencies continuing to decline.

It listed our neighbors as having the nation's lowest average credit card debt in the second quarter of 2010 -- Iowa at $3,792 and North Dakota at $4,097 -- but didn't mention Minnesota or Wisconsin.

David Blumberg of TransUnion just sent us that data. Here are the facts:

DEBT
Minnesota has the 11th lowest credit card debt in the nation at $4,586. That's down 10 percent from the second quarter of 2009.

Wisconsin has the fifth lowest credit card debt in the nation at $4,160, down 12 percent since the second quarter of 2009.

DELINQUENCY
Minnesota has a 90-day credit card delinquency rate of 0.7 percent, eighth lowest in the nation and down 27 percent from last year (the fourth largest decline in the country)

Wisconsin has a 90-day credit card delinquency rate of 0.7 percent (an additional decimal place puts the Badger State eleventh lowest in the nation), with a 16 percent decline from last year.

Nationally, credit card balances averaged $4,951 in the second quarter of 2010, the first period since the first quarter of 2002 that average credit card debt fell below $5,000.

We've been convinced since last fall that a permanent shift toward savings and away from spending and debt is underway.

Minnesotans weren't the worst in the country when it came to leverage, but it certainly seems like the lessons of our grandparents are sinking in.

Here's the most recent Federal Reserve Bank of St. Louis chart showing household debt payments as a percentage of disposable income. That debt burden continues to plummet, even during this "recovery." (Click on the chart for a larger view.)

The tricky question: Is all this responsibility good for the economy?

In the short term, at least, saving money and paying down consumer debt means people aren't spending. If people aren't spending, businesses won't be hiring.

If businesses don't hire...well, you get the picture.

Tell us what your household's doing re: debt, savings and credit cards.

Post something below or contact us directly. We'll put up any responses we get in a future MinnEcon entry.

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Our credit scores, ourselves? A story and some advice.

Posted at 12:50 PM on July 29, 2010 by Paul Tosto (0 Comments)
Filed under: Saving & spending

We looked at data last week showing consumer credit scores drifting lower in the recession. We're trying to crank up the conversation about the scores and what people have experienced.

Bonnie Creason was the first to help.

A source in MPR's Public Insight Network, told us last year her score fell for reasons she didn't understand.

"Nothing with me has changed and I actually make significantly more than I did a year ago. I'm baffled and angry that my score has dropped 40-100 points," she told us then, adding that she'd been calling the reporting agencies to find out why.

We caught up with her in emails this week to find out what happened. The good news: The Minneapolis woman told us her score bounced back. But she says she still doesn't know what happened and couldn't get a straight answer from the reporting agencies.

She told us:

Yes, within a year my credit rating mysteriously returned to it's previous rating. I can't really offer any insight on that either. Is this frustrating or what!

The good offers that came in were things like a Firestone card that offered discounted services, 6 mo free financing on $250 or more purchases, no fees and 5% cash back on all purchases...Citibank offered me a 0% balance transfer, which was not available before.

So you see, I pretty much have no idea what happened or why. But in the end, it paid off to be a good customer.

Your credit score is important because it directly effects what kind of credit you can get (credit cards, mortgages, home equity loans) and how much you'll pay. Consumer advocates and the scoring company say the best way to keep your credit score healthy is to pay your bills on time, pay off debt rather than moving it between cards and apply for new cards only when you need them.

Staying current on bills, of course, is tough when you are out of a job. The Great Recession has put lots of people out of work.

Here's FICO's chart showing scores and the percentage of Americans in each category

Looking back, Creason says the reporting agencies were no help in trying to understand why her score fell and why it came back. "The good thing is I had no detrimental information on my credit history, which is why this was all a mystery to me."

I would just recommend to others to a) ask for what they want, and talk to a manager if the person on the line can't help; and b) don't be afraid to tell them you're taking your business elsewhere. It's pretty much the only thing they'll listen to and the only power we have as consumers. I feel it pays to vocalize discontent and suggest everyone else do it too.

I find it disheartening that the good customers suffer because of the bad customers. There should be more done to reward our responsible behavior, instead of using us to bail out the others. This isn't insurance, credit should not work this way.

She threw in one final good bit of advice. Get yourfree credit report every year. "One never knows when you'll need it," she said, "and you need it for everything nowadays."

More voices will help on this issue. Please drop a line and tell us your story about credit scores and life. Post something below or contact us directly.

***************************
FICO has a pretty easy to read page on scores, how to improve them and how to fix errors.

What determines your credit score? Here's a primer from FICO and the Consumer Federation of America.

1. Your payment history - about 35% of a FICO score
Have you paid your credit accounts on time? Late payments, bankruptcies, and other negative items can hurt your credit score. But a solid record of on-time payments helps your score.

2. How much you owe - about 30% of a FICO score
FICO scores look at the amounts you owe on all your accounts, the number of accounts with balances, and how much of your available credit you are using. The more you owe compared to your credit limit, the lower your score will be.

3. Length of your credit history - about 15% of a FICO score
A longer credit history will increase your score. However, you can get a high score with a short credit history if the rest of your credit report shows responsible credit management.

4. New credit - about 10% of a FICO score
If you have recently applied for or opened new credit accounts, your credit score will weigh this fact against the rest of your credit history. FICO scores distinguish between a search for a single loan and a search for many new credit lines, in part by the length of time over which inquiries occur. If you need a loan, do your rate shopping within a focused period of time, such as 30 days, to avoid lowering your FICO score.

5. Other factors - about 10% of a FICO score
Several minor factors also can influence your score. For example, having a mix of credit types on your credit report - credit cards, installment loans such as a mortgage or auto loan, and personal lines of credit - is normal for people with longer credit histories and can add slightly to their scores.

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Our credit scores, ourselves?

Posted at 12:40 PM on July 21, 2010 by Paul Tosto (0 Comments)
Filed under: Saving & spending

The Great Recession's done a lot of damage to a lot of formerly credit worthy people. With no job and no home equity, it's going to be tough to get credit.

FICO -- the Minnesota-based company that created the score that basically determines our credit worthiness -- reported recently that consumers scores have been drifting lower in the recession.

We wanted to try to get beyond that fact and open a broader discussion about the scores and what you've experienced.

Tell us a real-world story about trying to get credit and trying to understand your FICO score.

We'll share some of those stories in upcoming posts. But we need to hear from you.

Most of the stuff we've heard about credit scores revolves around the confusion of trying to find your score compounded by the frustration of trying to figure out why the number was falling.

Bonnie Creason of Minneapolis, a source in MPR's Public Insight Network, told us last year her score fell for reasons she didn't understand.

"Nothing with me has changed and I actually make significantly more than I did a year ago. I'm baffled and angry that my score has dropped 40-100 points," she told us, adding that she'd been calling the reporting agencies to find out why. We'll be following up with her and will post any updates.

Here's FICO's chart showing scores and the percentage of Americans in each category

We didn't really know what to make of it but found a great analysis at Creditbloggers.com

John Ulzheimer, president of consumer education for Credit.com wrote the score changes are the most significant in nearly two decades with more people scoring below 650 than ever before.

1. There are two reasons why scores would have migrated toward the lower end of the scoring scale; negative information hitting a credit report or a run up of credit card debt. This means that more and more consumers are feeling the hit because of credit card defaults, mortgage defaults and repossessions. And those who have lost their jobs are depending more heavily on credit cards to make ends meet. This is bad news because it's clearly not sustainable.

2. The news is actually worse for those who now score below 650 than those who score below 600. The percentage of people who score below 600 shouldn't be a focal point because those folks aren't even close to being approved for loans in today's credit world. 650 is a more realistic focal point and the percentage of people who now score below that score mark is 35%, which means that more than one-third of the U.S population is not credit-worthy for anything other than a subprime credit card or a subprime loan. This is a big deal.

3. What this means is fewer people will apply for new loans because they either won't be able to afford the payments, won't get approved or won't want to pay higher rates.

4. It also means more people will pay more for homeowner's and auto insurance because insurance companies generally use credit scores to help them set premiums.

5. More bad news: Scores this low (<650) are generally not actionable, meaning they take a very long time to improve because the negative info that's causing the lower score stays on file for 7 years. So, if we're expecting these 35% who have FICO <650 to participate in any sort of large scale economic recovery - good luck.

One of the more worrisome aspects is whether people in credit trouble are spending money to find or fix their credit history.

Two good resources are the Federal Trade Commission's web page on consumer credit and credit scoring and its page on how to obtain your free credit report.

Annualcreditreport.com is the only official place to obtain a free credit report. The other place, freecreditreport.com does the funny singing guy ads but may also try to sell you stuff.

I almost made the same mistake.

So help make us all a little smarter. Share your credit score story and what you've learned.

These guys sing about credit reports too, but they're authorized by the Federal Trade Commission!

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Does recycling come down to dollars and cents?

Posted at 8:47 PM on July 16, 2010 by Michael Caputo (0 Comments)
Filed under: Saving & spending

On MPR's website for discussion of issues, Insight Now, I admitted how lousy I am at recycling. It just seems to be a low priority for me.

Michael Caputo | MPR News

So we asked the community at Insight Now just how people ought to be encouraged to be better recyclers. By government intervention? Neighborly peer pressure? I figured many would talk about the need to stir one's environmental conscience.

Instead commenters said that we seem to have maxed out on what environmental peer pressure can do. Instead, we need to look at making the economic arguments stronger.

Mary Warner of Little Falls wrote that businesses have to be more involved in recycling:

"...(A)nd that's only going to happen if the economics of the situation work. It's either got to save them big bucks or make them big bucks."

But when the recycling free market flounders, as it did in 2008 then business has far less incentive to get in the game.

Someone else in the discussion thread aimed more at the consumer, saying that if you recycle but don't buy recycled goods, you are only doing half of your part. But some goods made from recycled products are more expensive. And then you are appealing to something more than what makes sense as a shopper.

The thought here must be, the more you buy, the more demand you create. And that will bring down prices.

Demand also seems to be the economic argument made by the Recycle More Minnesota program. This time, however, the organization wants you to add more to the recycling stream to boost employment. The program, a collaboration between the Recycling Association of Minnesota and the state Pollution Control Agency, says 20,000 jobs are supported by recycling.

You would think that might get a laggard like me to sort those bottles, cans and newspapers more.

Insight Now just posted a number of other perspectives on how to increase recycling in Minnesota. Have a look and join the conversation.

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Your Minnesota economy: Looking better for June?

Posted at 11:36 AM on May 26, 2010 by Paul Tosto (1 Comments)
Filed under: MinnEcon Indicator, Saving & spending

Maybe it's the weather. The sunshine and warmer temps around Minnesota always make us a little more hopeful no matter our economic circumstances.

Or maybe some of us are finally starting to feel the recovery.

Some recent, relatively upbeat economic signs in Minnesota -- including a downtick in the unemployment rate are matching up with what we're hearing from sources in MPR's Public Insight Network

We asked them to give us their personal economic forecast for June. Will you be saving or spending? What non-essentials will you buy? (You can add your voice here.)

The couple dozen responses we've received so far have been more upbeat than when we asked these kinds of questions last fall.

"Things are improving, drastically. April and May have been the best months I've seen in two years," said Jason Rysavy, owner / founder of Catalyst Studios, an interactive ad agency based in Minneapolis.

Rysavy's given us perspectives before on life as a small business owner in the recession. So we paid attention when he told us things were looking better.

"Work is looking up so we're making a few major purchases that we've been holding off on for a couple years. Business picked up dramatically which allows us to have a bit more flexibility with cash."

It's also prompted him to spend some spend some money on his home, including new living furniture -- music to the ears of retailers.

Tim Eiler, a consultant from St. Bonifacius, also sees his economic situation improving in June. But he's still wary of the economic and political problems in Europe and Asia and how that will affect the U.S.

So he's still in saving mode. "Putting off deciding whether to send daughter to private school. Also putting off purchase of motorcycle."

Cinda Yager expects June to be a better month. But that doesn't mean she's not worried. She'll start a temp job as an administrative assistant. Growth in temporary jobs are often a good early sign of economic recovery.

Still, she's not planning to buy only essentials next month and is putting off buying shoes, clothes and a new humidifier.

Will she able to kick into savings mode? Not yet.

"I have not been saving money since I've been living off savings," she told us. "I expect that to turn around by the end of the year (I hope).

*************************************************
How's June looking for you? Tell us what you're seeing in your own economic forecast.

We'll pull together responses and highlight them in upcoming MinnEcon posts. You can also share some thoughts below.

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Bank bailouts and taxes

Posted at 1:50 PM on May 10, 2010 by Chris Farrell (1 Comments)
Filed under: Saving & spending

From chief economics correspondent Chris Farrell

Narayana Kocherlakota, the newly appointed head of the Federal Reserve Bank of Minneapolis, gave a fascinating talk at the Economic Club of Minnesota on May 10th. The topic: Future bank bailouts. It's worth reading.

At first blush his overall perspective seems depressing.

The Congress of the United States is currently considering legislation to restructure financial regulation. However, no matter how well-written or how well-intentioned the legislation may be, no law can completely eliminate the kinds of collective investor and regulator mistakes that lead to financial crises. These mistakes have taken place periodically for centuries. They will certainly do so again. And once these crises happen, there are strong economic forces that lead policymakers--for the best of reasons--to bail out financial firms. In other words, no legislation can completely eliminate bailouts. Any new financial regulatory structure must keep this reality in mind.

But as Kocherlakota quickly adds, this is a cause for despair. It's simply realistic.

Booms and busts are in the nature of a capitalist business cycle. There is nothing smooth about innovation. The speed of financial transactions is quicksilver. We're flooded with information, as well as gossip, rumor, data, analysis, judgment, knowledge, and noise. The global economy keeps getting larger. The human population was about 1.5 billion in 1900 and it is now numbers 7 billion. The world is an increasingly crowded and complex place. Simply put, the number of people who need financial products and financial services has grown exponentially, especially now that the wealth that was largely confined to a handful of advanced industrial nations is now spreading throughout emerging markets.

The late Peter Bernstein, the dean of finance economists, once wrote:

In any case, the animal spirits of enterprise, risk-taking, and innovation will always breed booms rather than sleepy and stable environments. Without a punchbowl to enjoy, there will be no innovation, no technological change, no rise in living standards, no dreams of a brighter future--which include a home of one's own.

Or, Orson Welles, playing Harry Lime in the movie The Third Man, put it:

In Italy for thirty years under the Borgias they had warfare, terror, murder, bloodshed--but they produced Michelangelo, Leonardo da Vinci, and the Renaissance. In Switzerland they had brotherly love, 500 years of democracy and peace, and what did that produce? The cuckoo clock.

Okay, back to Kocherlakota. His solution is tap into a long economic literature of using taxes to pay for an "externality," in this case the risk of big financial bets gone bad.

My theme today is that, although bailouts are inevitable, their magnitude can be limited by taxes on financial institutions. I arrive at this conclusion about the usefulness of taxes by thinking through an analogy that I'll develop at some length. I will argue that, knowing bailouts are inevitable, financial institutions fail to internalize all the risks that their investment decisions impose on society. Economists would say that bailouts thereby create a risk "externality." There is nearly a century of economic thought about how to deal with externalities of various sorts--and the usual answer is through taxation. I will suggest that the logic that argues for taxation to deal with other externalities is exactly applicable in this case as well.

It's definitely intriguing. Its using taxes not as punishment for profligacy or revenge for bad decisions, but to have the money when it's needed.

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Tell us your awkward money conversation

Posted at 11:35 AM on April 20, 2010 by Paul Tosto (0 Comments)
Filed under: Saving & spending

We know we're not supposed to talk about money, politics or religion with friends. The subjects can create some awkward and unpleasant moments if you and your pals aren't on the same page.

When it comes to money, though, the recession may be forcing our hand.

You know your buddy's unemployed. You're out for dinner and you know he really can't afford it. But he doesn't want anyone feeling sorry for him. Make a big deal about trying to pay and you may make him feel worse.

So how's it done? How do you navigate that tricky terrain?

A few weeks ago, we asked "Who buys the beers in the recession?" We got a few good responses. But I think people saw the "beers" headline and didn't look deeper into what we were asking.

So here's another chance to weigh in. Tell us about an awkward money conversation with friends and how you work through it.

We'll highlight the responses in an upcoming post. We'll also be tapping MPR's Public Insight Network for stories.

Mark Pringle, a bookkeeper from Chilton, WI, told us he and his friends do the math and split the tab evenly when they go out.

His advice: "Avoid money conversations by minding your own business. If you can't afford to do your part, don't go out.

"A better alternative if you are pinched is to cook something at home. I frequently have friends over for Sunday breakfast buffet because it's cheap and everybody likes breakfast. For less than the cost of one plate you get more real conversation and comfort."

Like many folks in Minnesota and the Upper Midwest, "I was raised with the idea that one does not discuss personal money matters with friends," says Kathleen Monico, a semi-retired pharmacist from Park Rapids.

"If someone does bring it up I try to be understanding, but not offer much in advice, nor make comparisons to my own situation. If it is a very, very close friend who needs help, I may offer, but only if they ask and only if I can afford to help."

Going out with friends, it's assumed that each will pay their own way unless someone's invited to a celebration, like a birthday, she adds. "Or we take turns if it is just one other person. This has not changed much in my circles."

Share your story and you might be able to help someone else figure out what to say. Post something below or tell us here.

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Shoot us your personal finance question -- on video

Posted at 4:00 PM on April 12, 2010 by Paul Tosto (0 Comments)
Filed under: Saving & spending

Here's a way to have a little fun -- and maybe get an answer to that personal finance question you've been dying to ask.

Our friends at the PBS show Nightly Business Report have been inviting viewers to send in brief videos with a personal finance question.

Now they're extending that invitation to MinnEcon readers.

Interested? Here's what to do.

1.) Shoot a brief video of yourself -- alone or with friends and family -- asking a personal finance question. It can be about anything from student loans to mortgages, car leases to interest rates.

2.) Post the video on line. YouTube, Facebook or Vimeo would be great.

3.) Click here and tell us where to find the video.

We'll take it from there.

We'll send the videos to Nightly Business Report. They'll choose some questions and seek expert answers. The ones that are answered will appear on MinnEcon and on NBR's Riding Out the Storm site.

Check out the NBR Widget we hope will feature MinnEcon questions and answers.

Of course, we can't promise they'll all get answered. But be creative and give it a try! You may get a response and make us all a little smarter about our money.

By the way, Chris Farrell of Minnesota Public Radio News and Marketplace is one of the folks answering questions. Here's his answer to the question: "Are Student Loans Smart?"

Need more info? Contact me directly.

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Did you leave $500 from the IRS on the table?

Posted at 11:57 AM on April 9, 2010 by Paul Tosto (0 Comments)
Filed under: Saving & spending

Here's the good news: If you worked in 2006 but didn't earn enough that you were required to file a tax return, the IRS may have money for you. Nearly 19,000 Minnesotans may be in that boat and owed a total of $16 million.

The bad news? You're out of luck if you don't try to get it by Thursday.

April 15 is more than just a deadline for your 2009 returns. It's your last chance to file to get money owed you from 2006. According to the IRS:

Some people may not have filed because they had too little income to require filing a tax return even though they had taxes withheld from their wages or made quarterly estimated payments. In cases where a return was not filed, the law provides most taxpayers with a three-year window of opportunity for claiming a refund.

If no return is filed to claim the refund within three years, the money becomes property of the U.S. Treasury.

Besides a refund for taxes paid, the IRS also notes most cell phone users qualify for a one-time telephone excise tax refund from the 2006 return:

This special payment applies to long-distance excise taxes paid on phone service billed from March 2003 through July 2006. The government offers a standard refund amount of $30 to $60...

So how do you know if you left money on the tax table in 2006?

Unfortunately, there's no big list you can check like the "undeliverable funds" list the IRS does in the fall.

You'll need to review your W2 and other forms to see if you had tax withheld that you didn't claim because you didn't file a return, or figure out if you qualified for the Earned Income Tax Credit but didn't file a claim says regional IRS spokeswoman Carrie Resch.

Here's a link to the 2006 1040 form you'll need to fill out. It may be a pain but in the Great Recession it's hard to walk away from $500. Time's running out.

Worth noting: We learned about the unclaimed refund deadline by following the Twitter feed of Carrie Resch, the regional spokeswoman for the IRS for Minnesota and the Dakotas.

It's a great place to find IRS info and you don't need to be a reporter to follow it.

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Who buys the beers in the recession?

Posted at 11:39 AM on March 19, 2010 by Paul Tosto (0 Comments)
Filed under: Saving & spending

We've talked a bunch about awkward money conversations with family in this recession. But what about your friends?

You know your buddy's unemployed. You're out for some beers and you know he really can't afford them. He's broke. But he doesn't want anyone feeling sorry for him. If you make a big deal about trying to pay you may make him feel worse.

If you've been there during the recession, share a story with some advice.

We'd also love to hear from Minnesotans who are jobless or otherwise short on cash. If you could honestly level with your friends about going out and spending money, what would you tell them?

We're thinking a bit about this today as the University of Minnesota men's basketball team plays in the NCAA tournament.

It's a great time of year if you love sports and going out. But we know from the most recent state jobless data there's still a lot of pain out there.

Minnesotans in MPR's Public Insight Network have shared great stories and advice about asking colleges, mortgage companies and other institutions for help.

So tell us how you navigate that ground with your friends.

It doesn't have to be about beer and food. Share any story of talking to your friends about money or job challenges. How do you help or ask for help? How do you work it out in a way that doesn't damage the friendship?

Post something below or contact us directly. We'll share some of your stories and advice in future MinnEcon posts and maybe on the radio.

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Tax shock, delivered

Posted at 12:00 PM on March 18, 2010 by Paul Tosto (0 Comments)
Filed under: Saving & spending

MinnEcon is all about sharing our experiences in this economy, so I thought I'd share one about something I highlighted a few weeks ago that's now biting me.

In February, I posted: For some, stimulus delivers a tax shock. I detailed the experience of Ken Vail, a Blooming Prairie man who after years of receiving modest tax refunds or paying small amounts was floored to discover he owed $1,700 after finishing his 2009 federal taxes.

Frustrated, Vail tracked back the problem to last year's federal stimulus. The bill tweaked the tax tables so employers withheld less and people got more take home pay up front.

It was basically a cash advance to help stimulate the economy to be settled up at tax time with the "Making Work Pay" credit ($400 per person, $800 for those filing jointly). But millions of taxpayers unknowingly got more money up front than they were entitled.

Maybe you see where this is headed.

Yes, Ms. MinnEcon, who does our family taxes, told me last night that we will owe several hundred dollars on our 2009 taxes. Tracking back the problem, she was surprised to find how little her employer withheld in 2009. It had to be an error.

Nope. It was the stimulus bill.

The Treasury Department figures more than 15 million people are in a similar boat.

Why? The changes to the withholding tables didn't take into account situations like single taxpayers with more than one job or married couples where both spouses work (hello).

So if you got the maximum "cash advance" from each job, you likely got more than you were supposed to and you may owe money.

Here's the fix: Go to your employer and get more withheld. This will be an issue for 2010 taxes.

Ms. MinnEcon and I typically take more withholding than required and get a refund at tax time. I'm not sure if we did anything to stimulate the economy with the cash advance we didn't realize we had. But now that we'll be paying, we're in hunker-down mode.

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Are you doing your 2009 taxes and dealing with issues tied to the Making Work Pay credit? Or did you have this figured out way in advance?

Post below or contact me directly and share your story.

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A primer on the new credit card rules

Posted at 11:00 AM on February 22, 2010 by Paul Tosto (2 Comments)
Filed under: Saving & spending

We wrote a bunch of stuff a few months ago on the federal overhaul of credit card rules. Today, those changes take hold.

We've been looking around this morning for the best summary and found a good one at the Federal Reserve site.

Basically, the companies have to detail when they plan to raise rates or fees with a 45 day heads-ups before they make any changes. There also new rules on fees and costs.

From the Fed site: "No interest rate increases for the first year. Your credit card company cannot increase your rate for the first 12 months after you open an account."

Exceptions include if there's an introductory rate it must be in place for at least six months but "after that your rate can revert to the 'go-to' rate the company disclosed when you got the card."

We tapped into a lot of frustration when the changes were announced and the credit card companies started jacking up rates and altering terms before the new rules took effect. You can read some of those responses on the map below.

We're still looking for stories of credit card terms and changes. We're also interested in whether anyone thinks the law ultimately is a good thing or not for consumers and how it might change how you use credit cards.

Post something below.

You can also use this handy form or contact me directly.

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For some, stimulus delivers a tax shock

Posted at 3:00 PM on February 17, 2010 by Paul Tosto (2 Comments)
Filed under: Saving & spending

After years of receiving modest tax refunds or paying small amounts, Ken Vail was floored recently when he finished his 2009 federal taxes and found he owed some $1,700.

Tracking back the problem, he found a surprising culprit -- last year's federal stimulus.

The bill tweaked the tax tables so employers withheld less and people got more take home pay up front. It was basically a cash advance to help stimulate the economy to be settled up at tax time with the "Making Work Pay" credit.

But millions of taxpayers unknowingly got more money up front than they were entitled to receive and, like Vail, are about to discover the Making Work Pay credit doesn't cover the cash advance. (The credit's worth up to $400 for single filers and $800 for those filing jointly.)

Here's why. According to a U.S Treasury audit, the changes to the withholding tables didn't take into consideration situations like single taxpayers with more than one job or married couples where both spouses work.

So if you got the maximum "cash advance" from each job, you likely got more than you were supposed to and you may owe money.

Are you affected? Here's an easy-to-read page, put together by a Pennsylvania congressman, with many of the likely scenarios.

The easy way to fix all this would have been to go to your employer and request more withholding. But how many of us knew to do that?

The Treasury audit in November estimated, "15.4 million taxpayers could unexpectedly owe taxes for Tax Year 2009 as a result of the Making Work Pay Credit."

Vail, a Blooming Prairie man who's part of MPR's Public Insight Network, told us his employer took about two-thirds less in withholding. It didn't raise any red flags until he did his taxes.

"I feel like I've been duped," he wrote in a letter to his congressional representatives. "At this point I do not know how I'm going to be able to pay this."

He told us:

The MWP credit is reduced (to $300 for us) if you received stimulus credit last year which both my wife and I did because she was on Social Security disability and I am a disabled veteran.

The other complicating factor was the Social Security payments my wife received last year. In previous years that was her only income and the benefit was not taxed but she started back to work and that bumped our income which in turn required us to pay taxes on half the disability income. That represented $685 of our tax bill.

IF we could take the entire $800 MWP credit and subtract the $685 taxes on the SS income we still would owe nearly $500. Had the normal amount of taxes been taken out throughout the year we would have owed very little. I still feel that the withholding reduction was a bad idea and should have been optional.

I've been talking to some of my other co-workers and finding that I'm not alone. One employee only had $45 taken out last year (she did claim more exemptions); a retiree who works part-time and receives social security (as does her husband) owes $5000; one person's tax preparer said they have seen many more owing money this year.

Normally, about 75 to 80 percent of taxpayers receive a refund each year and the average refund is more than $2000, said Carrie Resch, spokeswoman for the IRS in Minnesota and the Dakotas.

"We are getting some questions here and there on the (Making Work Pay) topic, but not a huge volume by any means," she said after checking with the local walk-in IRS help center in Minneapolis.

"The vast majority of workers had enough taxes taken out of the paychecks during 2009 and can still expect a refund. But every situation is different, of course, so if taxpayers in some circumstances (those where both spouses work, people with more than one job, dependents, etc.) didn't adjust their withholding last year, they may find themselves owing tax instead."

There is some relief for individuals who owe and are assessed a penalty, she noted. The penalty can be waived if it is related to the MWP credit.

Vail figures that relief would be worth only about $40 in his case. At any rate, he says, "I've now adjusted my withholding so that we won't get caught like this again."

We'd love to hear from Minnesotans about the Making Work Pay credit and its effect on your 2009 taxes. This will also be an issue for 2010 taxes.

Post below or contact me directly.

BONUS INFO: Resch says the Minneapolis Internal Revenue Service will open its offices at 250 Marquette Ave. on Saturday, Feb. 20. fom 9 a.m. until 2 p.m.

Staff will be there to help answer tax questions. Those with incomes of $49,000 or less can get free tax preparation and electronic filing help.

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The state has a shortfall, but is it local government that feels the pain?

Posted at 8:47 AM on December 8, 2009 by Michael Caputo (0 Comments)
Filed under: Greater Minnesota, MinnEcon maps, Saving & spending

The state's $1.2 billion budget deficit likely means cuts are coming, and that has county, city and other municipal officials worried about how much of the state's loss they will be forced to absorb.

Last year, when state government cut aid to municipalities, Aitkin County let workers go in the sheriff's department and in the health and human services division, according to Gord Prickett, chairman of the county's planning commission. Waseca County Commissioner Rick Morris said his county escaped 2009 without layoffs by not filling vacancies.

"It looks like we'll have to add other alternatives to our list of options," said Morris.

He and Prickett are sources in MPR's Public Insight Network who responded to questions about the effects of the state budget deficit on government programs and services.

An MPR analysis of job numbers gave a more nuanced picture of what's happening. State Department of Employment and Economic Development (DEED) job figures from 2001 to 2009 show the local municipal workforce fell by 2,200 jobs or about 1 percent. Meantime, state government jobs increased 10,100 or 11.5 percent.

At first blush, the numbers suggest the state workers have been less affected by budget cuts than those employed by local government. But there are mitigating factors to consider, said Steve Hine, labor market analyst at DEED. State numbers include figures from the University of Minnesota and the Minnesota State Colleges and University system. In 2009, about 59,100 out of the 97,900 state jobs were in higher education. And higher education jobs rose by 15 percent from 2001 to 2009. The rest of the state workforce grew at 6.4 percent.

On the local level, Hine says 6,000 jobs were lost in the health and human services sector due, in large measure, to reclassification of jobs at the Hennepin County Medical Center. That's because in late 2006 the hospital went from county-owned to a county subsidiary run by a non profit. The job numbers were taken out of the local government numbers, but the jobs were not lost.

"You can dig into these numbers and see deeper reasons for jumps and dips," Hine said.

Even so, government officials in the Public Insight Network said they will have to look beyond job cuts and consider raising revenue if the state pulls back on local government assistance to balance its budget.

In Aitkin County, Prickett says, the planning and zoning department already has raised permit fees "two and three times," to cover department expenses.

I looked at revenue data from the state's office of Management and Budget and, after adjusting for inflation, found that county, city and townships saw a 14 percent cut in state aid from 2001 to 2008. During the same time period, they increased property taxes 11 percent and other taxes and fees 13.5 percent.

But it's also interesting to note that during the same time period, state aid to local school districts rose 33 percent, when inflation is factored in. Meanwhile property tax revenue raised by local schools dropped 17 percent.

Finally, some counties have to delay or scrap projects to save money. Brent Olson, a Big Stone County commissioner, says they'll scrutinize economic development and road projects, "simply because those are the sort of things that can be delayed."

To see the full range of comments on this topic, click on the map icons below to read what public employees and officials in Minnesota said about budget cuts... then share your story.

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OK shopping season, but OK seems good enough

Posted at 1:00 PM on November 30, 2009 by Paul Tosto (0 Comments)
Filed under: Saving & spending

Chris Farrell, MPR's excellent chief economics correspondent, shares his insights on the Minnesota and national economies each Monday on MPR's Morning Edition show. I've been posting links to the interviews on Twitter the past few weeks but, starting today, I'll also feature them on MinnEcon.

Click on the play button below and listen to his thoughts this morning.

"The bottom line is the American consumer went out, they were smart, if there was a real deal they took it. But they didn't open their wallets and spend a whole lot of money."

Today's "Cyber Monday" online shopping push should also help, though consumers are being warned to watch out for scams.

Farrell's keeping an eye on the November national unemployment rate, which will be released Friday.

In Minnesota, he's keeping watch on the December 17 release of the state's November unemployment rate, particularly the demand for temporary labor, which made up a big piece of the October job growth.

Farrell says he keeps expecting manufacturing employment to improve but that hasn't happened so far. Still, with inventories low, the holiday shopping season could trigger demand for orders, which should help manufacturers ultimately.

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Fed targets gift card fees, expiration dates

Posted at 9:18 PM on November 16, 2009 by Paul Tosto (0 Comments)
Filed under: Saving & spending

What's with the Federal Reserve? It's going all consumer protection on us lately.

Last week they laid down new protections on some overdraft fees. On Monday, they proposed rules restricting fees and expiration dates on gift cards. The plan would stop many "non-use" and service fees on the cards.

Companies could charge fees on a card inactive for a year or more (if the conditions were made clear to consumers upfront) but couldn't charge more than one fee per month. Expiration dates would have to be set at least five years after the card was issued.

Gift cards have become the present this decade because they're convenient, easy to buy and send -- and we're able to avoid that really awkward moment of disappointment when people get you something you hate!

In its 2009 holiday shopping survey, the consulting firm Deloitte LLP found:

Gift cards hold their first-place position for the sixth year in a row, with 64 percent of consumers planning to buy them as presents. While the number of gift cards they plan to purchase remains nearly flat (5.4 from 5.3 last year), consumers' planned spending per card is $35, which is up from $28 last year and nearly back to the pre-recession average of $36 in 2007.

Minnesota in 2007 stopped businesses from selling a gift card carrying an expiration date or a service fee of any kind, including for "non-use."

By the way, the Fed was directed by Congress to take action on gift card charges as part of the Credit Card Accountability Responsibility and Disclosure Act of 2009.

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Will you spend the $35 per card average Deloitte's predicting? What kind of spending plans do you have for the holiday season? Click here and share your story.

Click on the map icons below to read what sources in MPR's Public Insight Network have been telling us about their spending and saving in this economy. Share your story.

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What's the state of buy local?

Posted at 9:00 PM on November 17, 2009 by Paul Tosto (0 Comments)
Filed under: Saving & spending

Two ends of Minnesota's retail spectrum are drawing our attention this week: Target and Peapods.

Target, the giant Minneapolis-based retailer, turned in a solid third quarter but acknowledged being cautious about the holiday season.

Peapods, the locally owned St. Paul toy store, will host an event on Thursday intended to get people to buy local. It'll include the Metro Independent Business Alliance and the group MN2020, which will release its study on the economic impact of buying local.

I don't have anything smart to say about Target. But the Thursday event has me wondering how local merchants and the buy-local effort will do this year in the recession.

That'll depend on you. How important is it for you to buy local from a small business? What are the pros and cons? Contact me directly and let me know if it makes a difference who owns the store where you shop.

I'll post responses and we'll get a conversation going.

Earlier this year we highlighted an effort led by Northfield fourth- and fifth-graders to get people to buy from the downtown stores after learning a couple were closing. The result was the "Northfield First" pledge.

"We had over 400 people sign the pledge," Michelle Martin, the Northfield teacher whose discussion with her kids about the economy helped spark the "Northfield First" effort, told us recently.

"Some merchants told me there was a lot of buzz about it, whether or not it translated to more sales would be impossible for me to say," said Martin, a source in MPR's Public Insight Network. "It definitely shifted the understanding of my students and many of their families."

Drop a line and let us know your take. If shopping local is not a big deal for you, tell us why. Peapods and Target could benefit from the perspective.

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What will consumers do with new overdraft options?

Posted at 8:00 AM on November 16, 2009 by Paul Tosto (0 Comments)
Filed under: Saving & spending

The Federal Reserve's move to make it harder for banks to to charge ATM, debit card overdraft fees has been widely applauded by consumer groups. Even the American Bankers Association didn't really balk.

But the Fed decision's got me wondering how it will really play out.

Starting in July, financial institutions won't be able to automatically enroll people in ATM or debt-card overdrafts services. Consumers will have to opt in to the service, one where banks often charge $10, $20 or more for ATM or debit-card overdrafts (check overdrafts aren't part of the new rule).

So instead of being automatically enrolled, you get information and if you don't opt in to the service you can't be charged overdraft fees on ATM and one-time debit card transactions.

Sounds good. The downside, of course, is that the bank will simply deny the transaction, potentially leaving you without cash when you need it.

Marshall MacKay, chief executive of the Independent Community Bankers of Minnesota, also notes that processing costs tied to the overdrafts will still need to be covered.

So in effect the new ruling implies that any expense incurred by processing those exception items should be paid not by the person who incurs the expense (overdraft), but by all the customers including the vast majority who do not use the service.

There is not a business around that does not ultimately pass it's expenses on to its customers. so it seems very unfair to the majority of bank customers to pay for the poor record keeping of a few.

Overdrafts are a multi-billion dollar money maker for banks. The FDIC in a report last year found automated overdraft usage fees assessed by banks ranged from $10 to $38.

Consumers Union and other groups say there are cheaper options for bank customers, including linked accounts, where money can be moved from savings to checking to cover an overdraft.

But, practically, what will consumers do? Will they seek out the cheaper alternatives? Will they keep the costly overdraft protection on ATM and debit-card transactions? Or will they just roll the dice?

Contact me directly and let me know what you'd do. What's your experience with overdraft services? What better options are there (besides not overdrawing your account)? What does your bank charge?

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Click on the map icons below to read what sources in MPR's Public Insight Network have been telling us about their spending and saving in this economy. Share your story.

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Credit card changes: when a deal isn't a deal

Posted at 4:00 PM on November 2, 2009 by Paul Tosto (0 Comments)
Filed under: MinnEcon maps, Saving & spending

We like to think when we do business with a company, there's a give-and-take relationship mutually beneficial to both. But when it comes to credit cards, consumers are not feeling the love.

Sources in MPR's Public Insight Network told us recently about their credit cards terms, how the companies are changing them and the pros and cons of life on credit. We also asked them to tell us the highest and lowest interest rates they were paying on a card.

We tapped into a lot of frustration. We all live with "terms subject to change." But even folks who pay off their balances each month were ticked to be told by their credit card company that rates were going up and credit lines dropping. Of the 50-plus responses we got, nearly every one said their card terms were changing -- and not for the better.

Click on the map icons below to read stories of how people are dealing with credit and credit card issues and what happened when some called to complain.

Click the little box on the upper right hand corner of the map to see it in full screen.

My MPR colleague Mike Caputo got at these issues in a recent MinnEcon post.

What's coming down the pike for credit card lenders are new regulations by the federal government as part of the Credit Card Reform Act. The measure passed by Congress last spring is designed to curb fee increases and curb abusive billing practices. The measures were set to take affect next February, but Congress is working on legislation to accelerate the timetable to December 1.

That was a response to what congressional leaders saw as an attempt by credit card lenders to raise fees and interest rates in advance of the law taking affect. Now Sen. Chris Dodd is calling for congressional action to freeze credit card rates until the new law takes affect.

Many of our Network sources were blindsided by the changes and their cascading effects.

"Almost all of my cards have increased their APR by a minimum of 2%. They have also reduced the level of credit available to just above my balance on the card," Sandy Unger of Eagan told us.

That has reduced my credit ability, increased my debt ratios and thereby reduced my credit scores. I am trying to pay down debt as quickly as possible and refraining from using my cards wherever possible.

I pointed out that their problems had nothing to do with me and that I would pay the entire account balance and asked to cancel my card. A 'supervisor' came on the line and apologized and offered to continue at the old rate. "

Mark Yatckoske of St. Louis Park told us he reduced his credit card use as much as he can and is trying mostly to use cash. "All my credit cards jacked rates on existing balances even though I have been meeting the terms....If they want to raise rates on future purchases, they have that right, but a deal is a deal."

11/3 UPDATE: Check out Caputo's credit card Q&A on All Things Considered.

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Credit card company changed the terms of the deal on you? Share your story here or post below and help keep the conversation going.

We'd also love to hear from people who are in banking. Post below or contact me directly.

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Suddenly changing rates, terms whack credit card holders

Posted at 5:55 AM on October 29, 2009 by Michael Caputo (0 Comments)
Filed under: Saving & spending

Dale Petrie always thought his card company wouldn't mess with his terms or interest rate as long as he paid his bill on time.

"I thought it would be based on behavior," said the 38-year-old St. Paul man. "You don't expect an arbitrary change of 75 percent."

Instead, interest on his cards jumped from 12 percent to 19 percent over the last few months.On one card, an American Express, a $33,000 line of credit was reduced in May to $3,800. And that's a problem for Petrie because he's been out of work for the last nine months. The accountant lost his job when the business he worked for shut down. He's needed to carry balances on credit cards to make ends meet.

"I've got to use what I've got to use," he said. "What am I going to do, not pay the mortgage, not pay the bills?"

Petrie said the standard line from credit card companies has been that these changes have come because of "changing business conditions." Others in MPR's Public Insight Network who have seen the rise in credit card rates or a cut in credit lines have said they were told the move was due to "business decisions" or "due to the cost of doing business."

What's coming down the pike for credit card lenders are new regulations by the federal government as part of the Credit Card Reform Act. The measure passed by Congress last spring is designed to curb fee increases and curb abusive billing practices. The measures were set to take affect next February, but Congress is working on legislation to accelerate the timetable to December 1.

That was a response to what congressional leaders saw as an attempt by credit card lenders to raise fees and interest rates in advance of the law taking affect. Now Sen. Chris Dodd is calling for congressional action to freeze credit card rates until the new law takes affect.

A study just released by the Pew Charitable Trusts says that median advertised interest rates on bank credit cards have risen between 13 and 23 percent from December 2008 to July 2009. That's not taking into consideration that last few months. Also, none of the bank issued cards would meet requirements under the Credit Card Refom Act.

Petrie says he has no choice but to accept the increased rates. Others, however, are cancelling the cards. But some of those folks, like Stacie Peacock of Minneapolis, say there have been ramifications for shutting down the credit card account.

"Every time I closed an account or a balance was reduced, my credit rating dropped. My credit score went from 725 to 630 during this process. It has since begun to climb and is now up to 676. I was denied a mileage perk credit card because of this. I was also denied a decrease in my Credit Union Home Equity Loan because my score had dropped below 700."

This is the reality of the situation for consumers, says Michael Corbin, an attorney who specializes in bankruptcy, foreclosure and credit counseling. Closing an account diminishes your available credit, which is a criteria used by credit rating agencies when determining credit score.

"The only way out of it you either have to pay it all off or they have to file a bankruptcy," said Corbin. "It really is a perverse, backward system."

Fair Isaac Co. or FICO, based in Minneapolis, wrote in an August newsletter that their FICO score is based not on a consumer's available credit amount, but instead on a ratio of credit owed to the credit available. FICO says that method lessens the drop in a credit score if a credit line is cut or a card is canceled.

Andrea Eaton, a financial planner with Cornerstone Wealth Advisors of Edina, says that if rate increases are onerous, she would close the account even if it means a "slight decrease on my credit score."

Of course, there were those who weren't in a precarious financial position who talked about increases in their credit card rates. For them, this was more a source of confusion, even anger.

"(Twenty seven) years of credit buildup and 27 years of a 'relationship' just squashed in the mindless rush to make one more dollar before the Feds bring order to Dodge City," said David Grams of Appleton, who canceled his credit card after an increase. "Just makes me sick."

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The savings shift: Will it last?

Posted at 12:15 PM on October 28, 2009 by Paul Tosto (0 Comments)
Filed under: Saving & spending

Saving and spending are big issues for us at MinnEcon. The responses we've received from MPR's Public Insight Network have been consistent for months: People reluctant to spend on big ticket items, channeling spare cash into paying down debt.

The lingering question: How long will it last? Will Minnesotans and other Americans who leveraged up during the early part of the decade and paid for it in the past year return to their old ways as the economy recovers? Polls, data and anecdotal evidence continue to suggest no.

"Consumers have indeed learned from their mistakes and have already adopted significant financial behavioral changes," a new survey by insurance giant MetLife finds.

Click on the graphic and you'll see data from the Federal Reserve Bank of St. Louis showing a dramatic drop in household debt relative to income in this recession. It's revealing that in the tech-bust downturn at the start of the decade, debt continued to rise. Not so, now.

Of course, lots of people haven't learned. One in five surveyed by MetLife said they are more disciplined and conservative in their finances. You could put an "only" in front of that and wonder if anything's really changed.

But 20 percent seems like a big shift. People who are taking action are building up rainy day funds and cutting debt, MetLife finds.

We caught up with some of our Network sources who shared their personal economic forecasts in October last year and asked how things were going now.

Abigail Karels, a Network source from Minneapolis, told us cable TV and lunches out were among the spending she gave up in the past year and doesn't miss. Looking forward, she plans to continue saving for a new car and putting money away for retirement.

Ellie Graves of Minneapolis told us last October she was focused on paying down debt. This month she said she's held true to that.

I vowed to pay off a lot of debt and I've been very steady at paying things off. Because stores are holding such great sales, I've spent some as well, but I've reduced my overall debt by 70% and really plan to pay off my credit cards and remain debt free.

Nicolas Bosquez of Champlin told us last October he was still spending. "We are currently updating our home and we really haven't changed our lives in any way and don't plan to."

He told us recently he's succeeding at the rarest of feats in this recession -- saving and spending. "Even while buying items to update our home we have been able to pay off a large portion of our debt," he said. "Our savings is growing even though we are spending more money ..."

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Are you trying to live differently in this economy? Are you changing your spending and saving? Got any tips? Drop me a line or post below.

Check out the map below to read what others in our network are saying about spending and saving, then share your own story.

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Easy credit, hard lessons

Posted at 3:12 PM on August 19, 2009 by Paul Tosto (0 Comments)
Filed under: Saving & spending

A post from MPR Public Insight Editor Andrew Haeg on the consequences of easy credit.

On Thursday, Congress will enact new legislation that protects consumers from a range of common lending practices, such as raising rates with little or no notice. In advance, credit card rates are going up, and so are bankruptcy filings.

For Paul Sander, the two were closely connected. In December 2008, he filed for Chapter 7 bankruptcy after years of struggling against a rising tide of credit card debt and interest payments.

When his car broke down, Sander got a new one -- and a new loan on top of the old one. He used credit cards to pay for basic things like food and medicine for the kids. He took money from his 401k to fill in the holes. Credit card companies seemed to smell trouble. They eagerly pursued him, and he willingly took on yet more debt.

Sander's experience is emblematic of a debt-soaked era that's only now coming to terms with the consequences of easy credit. Bankruptcy filings are on track to hit 1.4 million this year. Filings are already up more than a third over last year. In Minnesota, they've jumped from around 14,000 to more than 19,000 (Minnesota ranks a middling 28th in the number of bankruptcy filings per capita, but 18th in the number of Chapter 7 bankruptcies).

"Chapter 7 wasn't that bad," Sander says. At least not as bad as he'd thought it would be. He didn't have a lot of land, nor was he filing for divorce, so it was pretty straightforward. You might expect Sander to be bitter. But the way he sees it, at least in the U.S. you can file for bankruptcy instead of having your house and property repossessed by the government. "We are really blessed to live in a country where there are laws in place for this kind of financial trouble," he says.

Yet he's less sanguine about the credit card companies. His last post-bankruptcy meeting ended at 11:10 a.m. on Saturday morning. Not more than five minutes later the phone rang. Another credit card offer. And since then, "We've been getting calls left and right," Sander says. This time he's learned his lesson.

But have the credit card companies? Some big credit card issuers like Bank of America and Citibank are increasing the number of credit card solicitations, after cutting way back on them over the last few years. If Paul Sander is at all typical, they may find a less than receptive audience.

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Canoeing and haggling: An early look at the summer 2009 tourism economy

Posted at 2:51 PM on August 25, 2009 by Paul Tosto (0 Comments)
Filed under: Greater Minnesota, Jobs & unemployment, Saving & spending

Public Insight Editor Andrew Haeg files a post on the trip that has been this summer vacation season.

Just like everyone, we here at MinnEcon are loathe to admit that the summer's coming to a close. But, when State Fair chatter ramps up you can no longer deny it.

So we thought it a good time to see how the state's vacation economy has been faring over the summer. The prediction back in April from Explore Minnesota Tourism and from MinnEcon's (now vacationing) Paul Tosto was that area businesses could benefit as more Minnesotans stuck around and took resort or canoe trips in their home state.

We just got a note from Public Insight Network member Belle Scott of Minneapolis telling us business is booming at her daughter's resort on the Canadian border, and that she'd just returned from Door County where things were likewise bustling.

Scott's anecdotal take is rosier than the emerging picture of the state's summer tourism economy, which is mixed at best. "You show me one area of the state that's doing well and I'll show you one that's not," says John Edman, director of Explore Minnesota Tourism.

Results of their formal member survey are due out mid-next week. Edman says he's hearing that campsites, festivals and county fairs are doing well this year. "You're seeing a lot of people discover things in their own backyards and neighborhoods," he says. What's not doing well are big resorts, Twin Cities hotels and facilities that depend on conventions or big groups. He's heard many reports of families making rare last-minute resort reservations, and even talk of widespread haggling (e.g. "Come on, you can do better than that!"), which he says almost never happens.

In general, Edman says cheap, simple and close-to-home are the themes of this summer. One of the beneficiaries of this confluence of trends is Public Insight Network source Sue Ahrendt, who (along with her husband) runs Tuscarora Canoe, a Boundary Waters-area outfitter based in Grand Marais. She's also behind a new project called Becoming a Boundary Waters Family, which is designed to bring more young families to the Boundary Waters. She's not sure whether to credit the strong summer to that initiative, to the recession encouraging more families to take cheaper, simpler vacations, or to the increasing awareness of "nature-deficit disorder" as highlighted in the popular book "Last Child in the Woods." All Ahrendt knows is that she's never seen so many young families paddling into the wilderness.

Ahrendt charges a family of four anywhere from $300 to $800 for a three-day canoe trip (depending on how much gear they need). It's easier and cheaper than heading to Lake Wallenpaupack or enduring 1,500 miles of squabbling, DVDs and road games to get to Disney World.

That, at least, is the notion that gets families excited when Ahrendt pitches at sports shows. But, Ahrendt says, something even better happens in the woods. One family of four emerged after a rain-soaked, buggy weekend spent mainly in their tent. Ahrendt feared they'd had a rough time of it. The kids went off and got some ice cream and, when they came back, looked up at their father and said, "Daddy, we never knew you could laugh so hard."

We'd love to hear your stories about how the summer vacation went. Did you haggle? Were crowds bigger or smaller than normal? Did you discover something new in your own backyard?

Tell us here.

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Desperate retailer, meet the penny-pinching consumer

Posted at 10:58 AM on October 19, 2009 by Michael Caputo (0 Comments)
Filed under: Saving & spending, Twin Cities metro

We've hit the bottom of the spending decline, say hopeful Minnesota retailers. But even the most upbeat merchants know it'll be a slow road back.

The worst recession in decades is driving people to save and not spend. The latest Federal Reserve data show big drops in consumer debt during the summer and over the past year. It's unclear if it's a permanent shift. But it will still be hard this holiday season to convince consumers to spend like the recession's over.

That includes Anne Holmboe, a source in MPR's Public Insight Network, who told us recently, "Our current goal is to get our debt paid off by the end of the year so we can start to save again next year."

Holmboe, lives in Minneapolis with her husband and feels as though they are just getting by. Holmboe works as a nanny, but has taken a part-time job to supplement her income. Her husband has done the same. The extra money is going for one thing: Paying off the credit card bills.

Greg Boettner of Scandia says he's stopped impulse buying and researches everything now online before buying. He, too, has paid down a considerable credit card debt.

Losses in the stock market ate into Boettner's retirement savings. So the 59-year-old is working on one thing -- preparing for retirement.

"My new motto is to save first and spend only when I have to, only on items I need," Boettner, a network source, said.

This more frugal approach is the reality facing retailers, says Bruce "Buzz" Anderson, president of the Minnesota Retailers Association.

"Both you and I have never gone through a downturn this steep," Anderson says. "And so people are still really hanging on to their dollars right now. For how long? We just don't know that."

Minnesota retailers, he adds, are seeing consumers "break loose a little bit" and spend some money. And stores are getting aggressive to lure shoppers in with sales and with marketing.

Anderson also thinks people like Holmboe and Boettner -- the ones who are saving and paying down on debt -- will be good for retailers in the long run. The eventual gain in financial security will eventually translate into a desire to spend again.

"It's just going to have to take some time," he said.

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Kids lead a buy local effort in Northfield

Posted at 1:54 PM on March 24, 2009 by Paul Tosto (0 Comments)
Filed under: Greater Minnesota, Saving & spending

Teacher Michelle Martin started talking to her fourth- and fifth-graders at Prairie Creek Community School in Northfield, MN, about the tough economy. That talk has turned quickly to action.

When the kids learned two local stores in Northfield were closing, "they became very concerned about the local economy. When another student's mother lost her job at a downtown store and they learned that Tiny's (our beloved hot dog joint) was struggling, they decided they had to do something"

That something was the "Northfield First"pledge. Martin, part of our Public Insight Network, told us:

"They've created a pledge they've called which people sign if they will look in "stores unique to Northfield" before they buy things elsewhere. They made posters for local stores and organized a rally on our town square. So far, over 150 people have signed the pledge."

Northfield is an interesting place -- small town Minnesota that's home to Carleton College and St. Olaf College. It's long had a vibrant, local downtown and the colleges have kept it somewhat insulated from recessionary swings over the years.

Besides the important economic lesson -- the kids see how economic decisions affect a community's health -- the Northfield First effort appears to be changing behavior. Martin on Monday wrote us:

"A parent from another class came to me just today to share a conversation she had overheard at Kids on Division (a local kids' clothing store.) The store employee was chatting with another customer and shared that things had been more busy recently. She then shared that about seven people had come in and commented that the Northfield First project was what prompted them to shop locally and think about where they were buying things."

Tell us a story about what's happening in your local economy.

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Moving back home in this economy?

Posted at 1:53 PM on March 24, 2009 by Paul Tosto (0 Comments)
Filed under: Jobs & unemployment, Saving & spending

We always think we'll never move back to our parents' house. Graduate from school, find work, support ourselves and live independently. That's how it's supposed to work.

Of course, it never works perfectly for everyone. That's true especially in this economy.

We've been asking people in our Public Insight Network for months now about how their households are faring. Every few weeks, we hear from an adult who lost his job and contemplates moving home. We've heard from parents, too, about making room for their young adult children.

Mary Piontek of Stillwater told us this week her daughter and son, both college graduates, are home. The story's complicated, too, because Mary says she'll be losing her job by the end of the year as her company moves work overseas. She writes:

Our 24-year-old son who provided computer support for a small company lost his job two weeks ago. Our 22-year-old daugher works part time at a tanning salon making $7/hr....she completed her degree in marketing communications at UWRF but cannot find a job. The few openings she finds want 3-5 years of experience... After years of conservative living and aggressive savings, my husband hoped to retire at 56 ... now he is planning on working longer.

A recent AARP survey reveals the struggles some have in this economy.

Most adults 18 and older told AARP that it was still unlikely they'd need to move in with a family or friend. But among those who said it was possible, a third of those blamed an income drop and about 20 percent said it would be due to a change in their jobs or health.

There are upsides. Having extra time with your kids or parents that you didn't expect or that wouldn't have happened without the lousy economy can be a good thing. But it's also hard at any age to see your kids struggle.

Are you in a similar situation? Drop me a line or post below and tell us. It may lead to a story on Minnesota Public Radio News.

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Things we're not buying

Posted at 1:52 PM on March 25, 2009 by Paul Tosto (0 Comments)
Filed under: Saving & spending

We're told that if we don't start spending and stop saving soon, we'll make the economy even worse. But is anyone really buying that (pun intended)?

Talk to your friends and neighbors these days and you'll likely find them putting off big purchases. That was the refrain from about 100 Minnesotans in our Public Insight Network who responded the past few weeks to our query on their personal economic forecast. (You can fill one out, too).

The citizen voices that help shape our coverage at Minnesota Public Radio News offered up a detailed picture of things they aren't buying. That includes vacations, new cars and furniture. A few other that struck me:

"Putting plans to move out of the state to be with long-time boyfriend on hold. Before the economic downturn it seemed reasonable to move before finding a job, but now it seems irresponsible to both of us for me to move before I have a job nailed down." -- Jessica Bailey, Minneapolis

"Travel. Even our 30th wedding anniversary next month will be much lower key than planned." -- Jim McLean, Duluth

"My car doesn't really have a reverse gear. I'm selective in my parking."-- David Schlenk, Brooklyn Park

"All I can buy is food with NO extras at all. No entertainment, eating out, NOTHING." -- Curt Lee, St. Cloud

Their perspectives match up with what the Minneapolis Fed is seeing across the upper Midwest. Minnesota state economist Tom Stinson described it as the paradox of thrift when he delivered his bummer of a forecast earlier this month, "What's good for individuals is not necessarily good for the national economy."

There are definitely signs the economy may be bottoming out, but the upturn part may still be a ways away. You can help us understand the Minnesota economy but telling us your economic forecast.

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Will the recession nick summer camps?

Posted at 1:49 PM on March 30, 2009 by Paul Tosto (0 Comments)
Filed under: Saving & spending

Kids going to camp is one of those classic rites of summer. But could it be one of the casualties of the recession?

One of our Public Insight Network folks told us recently that he just got laid off and described his economic outlook as worrisome. Among the spending decisions he was putting off: "Summer plans, camps, etc for the kids. If I'm out of work, it doesn't make sense to spend money on something I could do myself."

Summer camp is often considered recession proof. Nationally, there's evidence that camps are meeting enrollment goals for this summer despite the crappy economy. But we haven't seen this kind of recession in nearly 30 years.

When Minnesota Parent magazine asked its readers recently if the economy would take a bite out of summer camp, most of those responding said they'd find a way to keep camp in the family budget.

The American Camping Association is concerned enough that they've written talking points about summer camps in a recession. The obvious message: It's OK to spend money on camp!

I'd love to hear from people who've made decisions this year about summer camp for their kids or from people who run camps -- how's the market? Drop me a line or post a thought below.

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We won't be spending that refund

Posted at 1:44 PM on April 6, 2009 by Paul Tosto (0 Comments)
Filed under: Saving & spending

Saving, spending and the right thing to do. That's a continuing theme here at MinnEcon. We're being told constantly, it seems, how it's our duty to spend to help the economy. Now comes more evidence that the nation is not in a spending mood.

A recent survey by ING shows 7 of 10 people who expect to get a tax refund this year say they'll be saving it, not spending it.

Of course, the survey comes from ING, which has been marketing itself as the place to put your savings. But the results do match up with what we're hearing from folks in our Public Insight Network. They don't want to spend. They want to pay off debt and save.

In normal economic circumstances, we'd be applauding this. But the idea of people saving their cash suddenly has economic leaders wringing their hands.

Are you in spending or saving mode these days? What will you do with that refund? You can help us at MPR News report on the economy by taking your own economic pulse.

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More evidence that you don't want to spend

Posted at 10:09 PM on April 13, 2009 by Paul Tosto (0 Comments)
Filed under: Saving & spending

In this economy, we are all saving as much as we can, paying down debt and becoming more frugal. That's a theme we hear regularly as we talk about the economy in Minnesota. As economic watchers wait and worry about Tuesday's retail sales report, here's more evidence that Americans are rethinking the way they do business.

According to an Associated Press-GfK poll:

38 percent of those expecting a tax refund say they intend to spend some of it, but mostly on basic needs.

54 percent getting a refund say they planned to pay off credit card, utility, housing and other bills, up from 35 percent a year ago, according to an AP story on the poll.

Citizens from our Public Insight Network are telling us regularly that they are pulling back on purchases, are saving what they can and otherwise wary about extending themselves with any kind of spending.

In most circumstances this is a good thing. But experts keep telling us that we'll mess up the economy even more if we don't start spending our dough. What's the right thing to do?

You can add your voice and help MPR News get a better perspective on what's what happening by taking your own economic pulse.

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Retail sales slip and gasoline sales plummet, latest data show

Posted at 10:08 PM on April 14, 2009 by Paul Tosto (0 Comments)
Filed under: Saving & spending

Not only are we not buying stuff, we are not driving.

Retail sales took a step back in March, slipping 1.1 percent from February after a couple months of gains. The market had expected a slight increase.

Overall, the data released today showed a nearly 11 percent drop in sales from last year.

Maybe most surprising is how steeply gasoline sales have fallen. According to the Commerce Department, gasoline stations sales were down 34 percent from March 2008 and motor vehicle and parts dealers sales were down 23.5 percent from last year.

One month is not a crisis and the fact that that the prior two months showed gains remains a good sign. But it certainly seems like more evidence of a shift -- Americans and Minnesotans are spending less and saving more.

A few months ago we took a look at gasoline consumption in Minnesota and found big drops in monthly gasoline use in 2008 compared to 2007. It looked initially like it was simply a reaction to the high price of gasoline but it became clear it was it was more than price, that maybe it was a shift.

As we've said before, in most circumstances this is a good thing. But experts keep telling us that we'll mess up the economy even more if we don't start spending our dough. What's the right thing to do?

You can add your voice and help MPR News get a better perspective on what's what happening by taking your own economic pulse.

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Taxes, taxes, taxes and something beige

Posted at 10:05 PM on April 15, 2009 by Paul Tosto (0 Comments)
Filed under: Saving & spending

Down to about 25 hours in Minnesota to get your 2008 taxes in the mail, unless you're in one of the counties affected by Red River flooding, in which case you have another 30 days and 25 hours.

Not sure what to say about taxes. I did find some interesting rankings of Minnesota's tax burden at the Minnesota Revenue Department. In 2006, the most recent data available, here's how Minnesota ranked among states:

21st in total state and local taxes as a percent of personal income

8th in total state taxes as a percent of personal income

Why the difference? The revenue department explains it's because Minnesota raised 77 percent of its state and local revenue at the state level, compared to the national average of 59 percent.

If you look at the trends in that data, Minnesota was 8th in 2000 and down to 21st in 2006. I don't know if that has more to do with a jump in personal income or a drop in taxes. Anyone with any thoughts on that? Please post something below.

Besides taxes, we'll also get a good look Wednesday at regional economic conditions when the Federal Reserve releases its latest Beige Book report. These are round-ups of economic conditions from each of the Federal Reserve Banks. Check out last month's report from the Minneapolis Fed.

I like the Beige Book because it's not just numbers. It relies also on anecdotes and interviews, which appeals to the reporter in me.

Share a story with us about the economy around you. We'll share them and map them on this site.

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What's your take on the tax season?

Posted at 10:04 PM on April 15, 2009 by Paul Tosto (0 Comments)
Filed under: Saving & spending

Too long. Too complicated. Too much money. Those are the comments we typically hear today, April 15.

So tell us what was different this year about doing your taxes. If you could wave the magic wand and make it easier, what would you do? Post below or click here and tell MPR News

Or if you just have a good insight to share about the economy around you, click here and shoot it to us.

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Retirement confidence hits the skids

Posted at 10:02 PM on April 15, 2009 by Paul Tosto (0 Comments)
Filed under: Saving & spending

Can't retire now.

It's an uneasy refrain we've heard from many in our Public Insight Network since the markets took a dive last fall: Minnesotans conceding they simply can't afford to leave the job market and, in some cases, retirees who've told us they now need to find work.

One of our network folks, a retired veterinarian, told us last fall he expected his stock portfolio to provide him "splurge" money and savings, then noted wryly, "Our generous Uncle Dow Jones has inexplicably quit sending us checks in the mail."

Those uneasy feelings come through clearly in a new national survey that shows the public's retirement confidence at record lows in the country. The Employment Benefit Research Institute data show:

13 percent of workers say they're very confident about having enough money to retire comfortably, the lowest level since the survey began in 1993 and down from a peak of 27 percent two years ago.

28 percent of workers say they've changed their expected retirement age over the past year, with most saying it's because of their financial security.

If there's an upside, it's that people appear to be getting the message about saving money. They survey found 75 percent of workers saying they or their spouses have save money for retirement.

If you see anything else interesting in the survey, please post below.

What's the economy like around you? Send us your stories. We'll share them and map them on this site.

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Prized possesions for sale in stressed economy

Posted at 10:00 PM on April 15, 2009 by Paul Tosto (0 Comments)
Filed under: Saving & spending

My MPR News colleague Mike Caputo spent the last couple weeks asking people in our Public Insight Network about having to sell the things they love in this economy to pay the bills. He got back some great, heartfelt stories.

Mike was on All Things Considered talking about it this afternoon. You can hear it here. It'll give you a great sense of the challenges many Minnesotans face and the decisions they have to make.

He talked to Jonathan Stimes of Burnsville, who lost his job as a radio sales executive six months ago and needed money to pay the mortgage. Mike writes that Stimes turned to some gold coins given to him as a gift from his father for working on the family farm years ago.

"I was not prepared for the sense and the feeling of my dad saying, 'I'm here for you still,'" Stimes said, choking up. "He was an exemplary father and I'm appreciating him more and more each day. There is still a few more coins down there that my mom says I can come and get, if I want. I'll do everything humanly possible to keep those."

Mike also found folks who were happy for the chance to unload stuff they no longer needed. Collectively, it offers a look at Minnesota's economy from a different vantage point.

We're trying to a lot more at MPR News to tell the story of Minnesota's economy through your stories.

You can help. Tell us a story about what the economy is like around you these days. We'll map them here at MinnEcon. Check out some of the responses we've mapped so far:

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Trading services in Minnesota

Posted at 10:23 PM on April 22, 2009 by Paul Tosto (0 Comments)
Filed under: Saving & spending

My colleagues Mike Caputo and Julia Schrenkler did a nice job Tuesday reporting on the growing use of business barter in this economy and nurturing a discussion.

One of our Public Insight Network sources, Allison Schmitt of St. Paul, also wanted us to know about a local person-to-person service exchange program called Hour Dollars that's based in St. Paul and been around for 10-plus years.

She told us she'd had her kitchen cabinets installed for free in exchange for yard work, kitchen help, computer tutoring and other services. She writes:

I got involved with Hour Dollars about nine or 10 years ago after seeing an article for it in the East Side Review. I attended an orientation, at which I got acquainted with the coordinator at the time as well as a few other members. I also attended a member picnic and "showcase" events where I met other members. This made it easier to contact other members for services - but yes, it is still a little awkward to call and ask help of someone you've never met!

Participation was completely free until about four or five years ago, when the board instituted an optional membership fee. (I think it was $12, not $20, upon further reflection.) The fee provided funding for mailing out the Hour Dollars newsletter and member directory. The board has since upgraded the website to provide these materials online, as well.

One of the things I like best about Hour Dollars is its egalitarian nature. All services are traded on an equal basis. One hour of lawn mowing is equivalent to one hour of legal advice, for example.

Allison adds that she's not affiliated with the management or ownership of Hour Dollars, just happy with her experience.

If anyone else has tried barter or service exchange this way, post below or click here and share a story.

And not to throw a damper on the idea but, remember, there are tax implications!

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Changing household roles in this economy

Posted at 10:21 PM on April 22, 2009 by Paul Tosto (0 Comments)
Filed under: Jobs & unemployment, Saving & spending

The recession is changing how we spend and where we work. In some cases, it's also reshaping the roles of spouses and families.

Susan Haugen of Edina opened a window on that in a recent post she sent us -- intriguingly headlined: "The spousal balance of fortune."

Haugen, a source in our Public Insight Network, wrote:

My husband was laid off 4 weeks ago -- he worked at an engineering firm and the lack of work led to a lack of employees. It was nice that the firm tried to reduce everyone's hours before they resorted to layoffs.

On the other side of the coin, my job is getting much bigger. I work for a company who had to form a Bank Holding Company in order to qualify for TARP funds. There is an incredible amount of regulation over Bank Holding Companies, so we are busier than ever. (This seems ironic somehow.)

I am paid hourly, so this downturn is affecting me positively. As my hours increase we are very glad that Mr Mom is home to pick up the slack.

It's an interesting twist. The recession creating problems and opportunities in the same family. So what are the trade offs? Here are some of Haugen's pros and cons:

pro - if both spouses have jobs and one spouse's job gets more intense it takes a toll on the family. more stress but also more outsourcing (takeout, convenience foods, lunches and dinners out, lawn mowing service, internet shipping charges). I have noticed lately how easy it is to outsource anything that you don't want to try to learn (securely hooking up your wireless internet for instance).

pro - we are trying to be a little more careful with discretionary spending. I think that shopping has become such a past time and that marketing is so sophisticated that sometimes it's too easy to spend on things you don't need. I try to stick to the list when I go to Target and I'm happier for it when I get home.

Tosto notes: This is right in line with the overwhelming sentiment we hear from Public Insight Network sources that people may be fundamentally changing their spending habits. Back to Haugen.

pro - one spouse can spend more time with the kids (who would otherwise be in daycare). This is hypothetical because we haven't actually taken them out of school yet. We think it's good for them and the at home spouse wants to catch up on projects

con - more expensive health insurance and the annoying paperwork that comes with changing your benefits again.

con - the imbalance created when one spouse thinks she's working really hard and expects the at-home spouse to be really productive when he's home all day.

We've been caught up in a lot of numbers in our reporting on the recession but Haugen's post really offers some great insight on how an economic slide often compels people to change habits and adapt.

Got a story about how the economy is affecting your household structure? Tell us. And check out the map below to read what other people are telling us about money issues.

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Spending money to help people?

Posted at 10:19 PM on April 23, 2009 by Paul Tosto (0 Comments)
Filed under: Saving & spending

Most of us are not spending cash these days unless we have to. So Ron Hall of St. Paul, one of our Public Insight Network sources, caught our attention recently when he told us despite tight times, he was spending money for the greater, local good. He wrote:

We have the ability to stimulate the economy, so we do so in ways that make sense to us. We eat out at a reasonable restaurant near by, so they stay open.

I saw that a woman has opened a tailor shop on the skyway, and I can tell it could close soon if she doesn't do well. I'm going to take her a half dozen pants for hemming, even though I've always felt that $10 or $14 dollars for that service is too much. It's not if it helps keep her open.

We tip very well there and anywhere else we eat. We go to yard sales all the time, but we're talking about buying things we don't need at certain sales and just taking them to a thrift shop. We aren't going out for entertainment, so we are willing to spend money we wouldn't have on things that keep us home.

In all, this economy hasn't been so hard on us, and we're willing to spend our money in such a way that it circulates among those most likely to spend it.

Hall's perspective runs counter to much of the sentiment we've heard. But we are seeing it -- most recently in a buy-local effort led by kids in Northfield, Minn.

If you've been doing the same thing -- spending money purposely to help the local small business owner -- please post below or drop us a story.

Also check out on the map below what other people are telling us about money issues.

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Where would you set your credit card limit?

Posted at 10:12 PM on April 28, 2009 by Paul Tosto (0 Comments)
Filed under: Saving & spending

Those Capitol One commercials are funny. But, really, how does it help me that I can slap a picture of my cat on my credit card?

How about if I could set my own credit limit that couldn't be exceeded? Then the credit card companies wouldn't be able to charge me over the limit fees.

That's one of the intriguing provisions in a bill moving now through Congress. It could potentially cost the industry hundreds of millions of dollars according to the Congressional Budget Office.

So, if you could establish your own credit card limit, what would you do? Double it? Triple it? Cut it in half? Leave it where it is? How would it change your personal spending habits?

And remember, if you went this route and you were, say, trying to buy a plane ticket out of Turkmenistan when you hit your credit limit, you may have a problem.

Tell MPR News your ideal credit card limit. Post something below or click here and share a story about over-the-limit fees.

And check out the map below to see stories about spending and saving sent in from our Public Insight Network.

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Credit card rights?

Posted at 9:59 PM on May 4, 2009 by Paul Tosto (0 Comments)
Filed under: Saving & spending

Credit cards and consumer protections are the topics this morning on Minnesota Public Radio News. The Midmorning program features a discussion on a bill that passed the U.S. House that would end practices that some claim are unfair to consumers.

The banking industry says it could end up hurting access to consumer credit.

In February we asked people in our Public Insight Network to tell us what kinds of changes they'd seen in their credit card rates and card limits. We got a bunch of great responses with Minnesotans telling us how their rates had been jacked up suddenly.

Got a credit or any other story about the economy to share? Tell us here. We'll take your response and put it with others on our Economic Lookouts mapping project.

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Are you throwing away less garbage in this recession?

Posted at 9:42 PM on May 11, 2009 by Paul Tosto (0 Comments)
Filed under: Saving & spending

We're always on the lookout for unusual economic indicators. So Jeane Nelson of Monticello got me thinking when she wrote in to tell us that she and her husband were planning to get rid of their trash pickup, in part, to save money in this economy.

Made sense to me. My in-laws, bless them, are in their late 70s/early 80s. With frugal natures born in the Great Depression, they produce so little garbage they can easily pass a bag to a visiting child to throw in their pail.

But could it be a trend in this economy? Do we dispose of less garbage in a recession?

Nelson, who's part of our Public Insight Network, wrote that she and husband are down to a trash bag a week, a quarter of what they'd been throwing out. Part of the drop was because they're empty-nesters again. Nelson, 53, added:

We've decided we can save $30 monthly by canceling our garbage service. We noticed we can recycle almost everything we have been putting in the garbage, and can throw one bag of garbage a week away at my husband's place of employment. Sorry, garbage man.

I haven't taken notice of any other people's recycling habits. But I believe people in my age group are keenly aware of what we are doing to the environment and are very happy it is getting the presidents attention.

We should compost, but don't. Yet! We talked about maybe starting a neighborhood compost pile, but would need to educate ourselves better on that...Our garbage now is mostly things that go "bad" in the fridge, or things like egg shells, veggie scraps, also wrappings, like bread bags.

Composting is a great idea. MPR News Reporter Stephanie Hemphill did a terrific story in February on food composting efforts in Minnesota.

I'm trying to scrounge up some household waste data in Minnesota to see if there are any trends here tied to the recession. I'll definitely post on it once I get data.

But, coincidentally, National Public Radio did a piece a couple weeks ago with facts and perspective showing, yes, the amount of stuff we throw out drops dramatically in bad economic times.

Some of it has to do with us buying a lot less stuff because it's a recession and we don't have the money to buy stuff. Some of it has to do with making due with the stuff we have. Overall, we are throwing away a lot less stuff than in the go-go economy days.

Never thought I'd write this but: I'd love to hear from folks about their garbage use!

Post something below or click here and share a story.

Tell me if you're cutting back to save money or help the environment or both. If you're looking for tips to cut your waste, check out this site from the Minnesota Pollution Control Agency.

Below, check out some recent posts we've mapped of Minnesotans talking about money issues.

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Should Congress tighten down on credit card companies?

Posted at 9:38 PM on May 13, 2009 by Paul Tosto (0 Comments)
Filed under: Saving & spending

Minnesotans in our Public Insight Network were more than willing to sound off when we asked about their credit cards. Most felt like the companies were kicking them in the shins on rates and credit lines.

But that was a couple months ago and, really, would anything change?

Maybe.

The grumbling over cards and rates is shifting from kitchen tables to Senate desks. A bill rolled out a couple weeks ago that looked mostly like grandstanding is picking up steam in the Senate. The American Bankers Association is sounding the alarm that the bill could end up hurting consumers and small businesses.

We'd love to hear from folks -- bankers, consumers, anyone -- about what's going on with credit cards and whether you think Congress needs to step in.

Post below or send us a story about your credit card. Check out other responses on our map below.

Many of them were like Abigail Duly of New London, Minn. She wrote:

I just received this in the mail yesterday... I will go from a 9.9% to a 17.35% by May. Give me a break! I have been with the company for 8 years, and apparently, they aren't making enough money off of me. It makes me angry that, if I do as my mother always told me to do: pay it off and keep balances low, I am still being "punished." I have good credit... What I don't have is a credit card that practices common sense...

Also, check out a recent conversation on MPR's Midmorning program about the issue.

Got a credit or any other story about the economy to share? Tell us here. We'll take your response and put it with others on our Economic Lookouts mapping project.

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Leveling with your kids about tough economic times: How's it done?

Posted at 9:35 PM on May 14, 2009 by Paul Tosto (0 Comments)
Filed under: Saving & spending

My dad lost his job for several weeks when I was little. I found this out years later. Didn't strike me then that anything was wrong. Dad was just home. My parents didn't talk about the financial hit they faced.

Hiding hardship these days is nearly impossible for some families in this economy. At some point you have have to say something to the kids.

Suzanne Stiff of St. Francis, Minn., got me thinking about that when she told us her economic outlook. It wasn't great, with worries about her husband losing his construction job and her family unable to make it only on her paycheck. Any extra money in June will go to replace clothes the kids outgrew last summer and on driver training for her three teens.

We sacrifice for our kids. We don't want them to worry. But at what point do you level with them about hard times? Stiff, a source in our Public Insight Network who's also dealt with the strain of two kids with cancer, put it this way:

We have always been honest with our kids about our financial situation. But let's face it; the stress in our house is overwhelming at times. They know when things are tight when the cupboards are bare. Still, we have tried to provide a "normal" life for our kids and to keep the stress of wondering how we will pay for groceries and household bills on the shoulders of us, the parents.

This was easier when the kids were younger. A five dollar toy or a trip to Como Zoo was a great reward our kiddos back then. Now they are teenagers and they desire cell phones, ipods, video games and laptop computers just like their friends. They want to open the fridge and see their favorite drinks and snacks - and they want to share them with the neighborhood!

Interestingly, their acceptance of our financial reality differs with age. Our 19 year-old who has taken a semester off from community college to save money and our 18 year-old college bound son, worry about the world they are heading into. They "get it" when I tell them what we can pay for and when. They want jobs of their own but are also competing with a huge applicant pool which includes retirees who have returned to the workforce.

On the other hand, our 14 and 12 year-old are in the "it's all about me" years and are so easily influenced by peer pressure. When I told our daughter we could not afford a cell phone for her personal use, she whined, "But everyone has one!" When I firmly told her it was not in our budget she said, "It's not MY fault we're poor!"

On the positive side, one of my kids commented to me about how we seem to have more home cooked meals when we are short on money. This month we are planning our huge family garden. Our 10 year-old has even staked out a plot all for himself.

Sometimes I think if we have an attitude of "we're all in this together" it makes it easier to get through the tough times.

The professional advice mirrors Stiff's approach. The American Academy of Pediatrics says parents need to keep calm and keep the communication open. Kids depend on adults to help them feel secure and they pick up quickly on your anxiety.

Choose words carefully. Hyperbole, even when you're trying to break the tension -- "Hey kids, we're probably heading for debtor's prison!" -- can make the situation worse.

The National Association of School Psychologists has tips for students on how to manage the stress at home and school.

There are few decent columns online with advice along these lines. But none better than what Stiff sent.

What are you telling your kids about the economy? Have you had to call on your kids to sacrifice because of the recession? Share a story with MPR News.

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Slower economy, less garbage? Looks like it

Posted at 9:34 PM on May 14, 2009 by Paul Tosto (0 Comments)
Filed under: Saving & spending

I posted a story recently from a Public Insight Network source who told us she and her husband were planning to get rid of their trash pickup, in part, to save money in this economy.

The question surfaced: Do we chuck less garbage in a recession? At that point, I was armed only with a recent National Public Radio story showing the amount of stuff we throw out drops dramatically in bad economic times.

Got a little Minnesota data now, courtesy of the Minnesota Pollution Control Agency. The most recent report uses 2007 data but still useful. Says:

During the robust years of 1994 to 1998, Minnesota saw a 4.62 percent increase in MSW (municipal solid waste) generation and a 3.4 percent increase in per capita generation.

In 1999, those rates began to slow during a downturn in the economy. In 2006, MSW generation growth slowed to an all-time low--increasing just 0.3 percent. In 2007, MSW generation growth is up slightly by just 0.8 percent. Per capita generation of MSW remained roughly the same (1.166 tons in 2006 and 1.167 tons in 2007).

It's hard to scientifically prove that waste generation strongly correlates to the economy, but over the last few years waste generation per capita has leveled out to basically a 0% increase, adds Colleen Hetzell with the Minnesota Pollution Control Agency. Overall, though, Minnesota's still producing more waste.

"I wouldn't advise getting rid of your trash service entirely because there are items that are generated that can't be avoided, " Hetzell adds. "In that case, after you have exhausted your options to reduce, reuse, recycle, and compost, you would need to properly dispose of the items in the trash.

Tell me if you're cutting back to save money or help the environment or both. If you're looking for tips to cut your waste, check out this site from the Minnesota PCA.

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MinnEcon Indicator: Tough economy boosts child support cases

Posted at 9:30 PM on May 27, 2009 by Paul Tosto (0 Comments)
Filed under: Jobs & unemployment, MinnEcon Indicator, Saving & spending

Employment, personal income, consumer confidence. Those are our common gauges of economic health. But how about child support cases?

You might not have thought of that one. My MPR colleague Sasha Aslanian produced a story recently showing how the tough economy has sent the number of child support cases skyrocketing in Minnesota.

It's an issue folks from our Public Insight Network have raised: We've heard from a divorced parent, struggling in this economy, trying to come up with the money for child support. We've also heard from a parent trying to get an ex-spouse to pay it.

Rural Minnesota papers in Chisago and Wadena counties are reporting similar trends. Nationally, a recent poll of divorce lawyers found a jump in the number of requests to modify child support arrangements.

What do you do if you're a divorced parent and the money is not there? Share some thoughts below or click here and tell us a story.

I'm also using this post to kick off our search for unusual or offbeat Minnesota economic trends. What are you seeing on the economy that's a little different that's telling you things are improving or worsening?

Click here, shoot us a note and tell us what you're seeing, then type "MinnEcon Indicator" in the headline box and send it.

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Are you spending less and saving more? National data say yes

Posted at 12:50 AM on June 1, 2009 by Paul Tosto (0 Comments)
Filed under: Saving & spending

Save or spend? It's one of our favorite issues here at MinnEcon. I believe this recession is shifting American saving and spending patterns permanently away from consumption and toward savings.

The latest evidence? Numbers released today from the Commerce Department.

Highlights:

Personal saving as a percentage of disposable personal income was 5.7 percent in April, compared with 4.5 percent in March.

Disposable income rose 1.1 percent in April over March, thanks largely to the federal bailout, which lowered current taxes and increased government social benefit payments, the department said.

Personal consumption spending slipped 0.1 percent.

The excellent economic blog Calculated Risk today notes personal saving as a percentage of disposable personal income was the highest in 14 years (see graph below).

So after two-plus decades of hearing about how U.S. citizens spend too much and save too little compared to other nations, is the worst recession in more than 25 years compelling Americans to change their savings and spending habits? I think so.

We've seen evidence in surveys earlier this year. And citizens from our Public Insight Network have been telling us through the winter and spring they were pulling back on purchases, are saving what they can and otherwise wary about extending themselves with any kind of spending.

I understand that consumer spending is crucial to the economy, but I think it's a good thing for us as Americans. Our rising debt drove our consumption and, as we're witnessing, that's unsustainable.

Yeah, it's possible this is a short term change and that we'll be back to our spending/consumption/debt days when the economy recovers completely. I also know experts keep telling us that we'll mess up the economy even more if we don't start spending our dough.

What's the right thing to do? I don't expect people to stop buying stuff. But who can argue that's it would be a bad thing for the pendulum to swing back toward lower debt-to-income ratios and greater personal thrift?

You can add your voice and help MPR News get a better perspective on what's what happening by taking your own economic pulse.

Below are some recent responses from our audience on money issues. Send us a story and we'll add it to the map.

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MinnEcon Indicator: Minnesotans boast high credit scores for car loans

Posted at 12:41 AM on June 10, 2009 by Paul Tosto (0 Comments)
Filed under: MinnEcon Indicator, Saving & spending

Minnesota's economy may be on the skids, but, hey, we're looking good if we want to buy a car.

Minnesota, Connecticut, Wisconsin, Iowa and Massachusetts topped the list of states with the highest average credit score for new vehicle loans in the first three months of 2009, according to Experian Automotive, part of the Experian credit scoring company,

Minnesota, North Dakota and Wisconsin were among the top five for highest scores on used vehicle loan.

Whether anyone can afford cars is another issue. Nationally, the survey notes that the lousy economy and tougher lending criteria are driving up auto loans for used cars, which accounted for more than two-thirds of the loans made in the first quarter of the year.

Drop us a line and let us know if you're spending money (or planning to) on a new or used car and what the experience has been like. Below you can find what others in our Public Insight Network have told us recently about how they're spending money, or not.

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Reaching for the kids' savings?

Posted at 12:35 AM on June 11, 2009 by Paul Tosto (0 Comments)
Filed under: Saving & spending

We've all reached into the kids' piggy bank on occasion for some quick change. But in this economy are people having to seriously tap their children's accounts?

Please click here and help us understand the practical issues of cutting contributions or tapping funds meant for your children.

Also, check out the map below for some recent responses on money issues from the network.

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How will Gov. Pawlenty's budget cut plans afffect you?

Posted at 12:31 AM on June 15, 2009 by Paul Tosto (0 Comments)
Filed under: Saving & spending

UPDATE: You can listen to Pawlenty's 2pm press conference here or join an online discussion at MPR's political blog.

We'll get the list on Tuesday of all the cuts Gov. Tim Pawlenty plans to make to Minnesota's two-year budget, my Minnesota Public Radio News colleagues are reporting tonight.

It won't be fun. According to our MPR report:

Pawlenty has said his cuts will include aid to local governments, health and human services programs and higher education. Pawlenty declined to offer specifics after his speech on Saturday, but said there wouldn't be any major surprises.

"There isn't any real mystery as to what's boxed off because the federal government won't allow us to touch it," said Pawlenty. "And we've committed to try to only defer, and not permanently reduce, school payments, and that leaves the other categories."

You can help us report the news on Tuesday. The list is expected mid-afternoon. It should be posted either at the state finance department web site or linked from the governor's Web page.

Check it out and if you see anything that will affect you directly, click here and tell us. Or post something below. It'll really help us in the newsroom understand the impact quickly and will make the coverage better.

The Minnesota Budget Project, a research effort of the Minnesota Council of Nonprofits that analyzes Minnesota spending and budgeting, has a good quick summary of expected areas to be cut. Read it here.

Higher education and health and human services are likely to take some of the biggest hits as Pawlenty uses his "unallotment" power to close a projected two-year, $2.7 billion budget.

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Gov. Pawlenty's MN budget cuts -- the detail

Posted at 12:29 AM on June 16, 2009 by Paul Tosto (0 Comments)
Filed under: Saving & spending

Here's the short version of Gov. Pawlenty's plan to close a $2.7 billion budget gap over the next two years. Here's the longer version.

MPR's done a ton of stuff already this afternoon. Here are some highlights:

MPR's Bob Collins blogs on the kinds of jobs and people who might be most affected by the cuts.

Polinaut, MPR's terrific political blog, has lots of good stuff and reaction, including live blogging during Pawlenty's press conferenc

MPR's news story with a quick look at the numbers

Twitter has lots of traffic from news and commentary sites on the Pawlenty cuts and their potential effects. If you're searching, use #mncuts.

I've already received some really good responses from our Public Insight Network on the cuts and their potential. I'll post on them tonight and/or Wednesday morning.

You can really help us report in depth by looking through the big list and letting us know if you see anything that will affect you directly.

If you some insight on the cuts, click here and tell us. Or post something below.

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Dipping into the kids' savings to pay bills

Posted at 12:18 AM on June 22, 2009 by Paul Tosto (0 Comments)
Filed under: Saving & spending

I posed the question recently: Are you reaching into the kids' savings to pay bills? Now, I've scrounged up some reasonably reliable data -- a recent national survey by financial services giant ING showing:

34 percent have reduced the contributions they make to their children's savings

18 percent of parents who have savings set aside for their children have taken money from their children's savings to cover bills or pay off debt.

So, yeah, many of us are tapping those funds or pulling back on what we hoped to save for the kids.

Check out a recent Minnesota Public Radio story on the struggle of saving for college in this economy (featuring several of our Public Insight sources) and a Gather conversation along those same lines.

We got some good responses from our Network on the issue. Here's a sampling of what people around Minnesota told us:

We have reduced our contributions to our own adult savings accounts but not to the kids' accounts. The kids have no way of making up the difference but we adults can always reduce our spending. --Cynthia Jacobson, Maple Plain

I've avoided even starting a family, partly because I lack the economic security to raise any potential children through to adulthood. -- Joe Schaedler, Minneapolis

I'm a married parent of 2 kids. After mortgage balance, our own college loans and car loans, our family net worth is well under zero. So "savings" is sort of a dubious term. As a family we keep a single pot, and hopefully we can provide a small nest egg of liquid cash for the kids in another 10 years when they're getting ready for college, but we'll likely still be paying our own college loans then. -- Paul Bramscher, Circle Pines

Advice-wise, the experts all say starting early on the kids' savings is the smartest move. Liz Wiczer of St. Paul told us her son just turned one:

Any money he receives as a gift goes directly into his savings account, held in his name by us. Every month we are able to save money (usually 10 out of 12 months), we put 10% of the total saved amount into his account. We haven't designated a particular purpose for the money yet, but it will most likely go towards college expenses, setting up a home of his own, a down payment on a first house, a wedding, or other similar one-time large expense.

I'm still interested in hearing from people on the issue. If you have a story to tell about managing -- or needing -- your kids' savings tell it here.

And check out an earlier post asking if college is still worth the money?

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Recession Etiquette? I'm supposed to be nice in this lousy economy?

Posted at 12:05 AM on June 25, 2009 by Paul Tosto (0 Comments)
Filed under: Saving & spending

I've defied all my mother's efforts over the years to civilize me. I still roll my eyes like a grumpy teen whenever etiquette comes up as a topic (don't ask me about fork placement or present buying. My birthday card to you will arrive several days after your birthday.)

So it wasn't a real shock that I pretty much failed a CBS News quiz on "recession etiquette."

It did, however, get me thinking about how we navigate those uncomfortable conversations about job loss ("Hey, Steve, How's the unemployment going!?), coming up short in paying for college or telling your pals you won't be able to take that ski trip with them this year.

How hard is that?

We've talked on MinnEcon about having the recession conversation with your kids. But what about our discussions with colleagues and casual friends?

Do we all end up pretending in those conversations that we're all doing OK? Do we admit to people outside our family that things aren't going great? What do you say when you're on the receiving end of that comment?

I'd love to hear how people deal with all this. Post something below or click here and tell us a story about how you succeeded -- or failed -- in your recession etiquette. We'll post the best ones we get. Be nice!

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How do you talk about your struggles in this recession?

Posted at 12:04 AM on June 26, 2009 by Paul Tosto (0 Comments)
Filed under: Saving & spending

"None of my family knows my situation right now..."

That sentence from Annie Baxter's MPR piece today chilled me. The woman her husband, and four daughters are homeless and struggling but keeping it secret from their families.

Yesterday, I half-jokingly talked about recession etiquette. But it's a serious question here. How do you ask for help when you're that far down? Do we end up pretending in our conversations that we're all doing OK? Do we admit to people that getting laid off didn't just make life difficult, it put me and my family on the street?

Leslie Frost, a Public Insight Network source who runs a small family shelter in Minneapolis gave us a look recently at the hardships she witnesses daily and the increasing numbers seeking help. (Frost was featured in Baxter's piece.)

Frost told us the shelter was getting 300 calls a month now compared to about 50 two years ago:

The same reasons apply now: lost job, ran out of money, couch-hopped for awhile, wore out our welcome at all those places, finally ran out of options, called for shelter. But now, there are new reasons: landlord ran out of money, quit paying the water bill, couch-hopped, applied to new landlord, got turned down because current landlord isn't answering his phone to provide a rental reference.

Things may be OK for the woman in Baxter's piece. "It looks like the bus company will take her back as a driver this summer, and after a tough search, she found an affordable place to live." For a lot of people and children, it won't be OK and may likely get tougher.

How do you talk about when, financially, you're in serious trouble. Have you ever had to have that conversation? Share a story with us.

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Churches struggling in this recession?

Posted at 4:06 PM on July 17, 2009 by Paul Tosto (0 Comments)
Filed under: Saving & spending

Worried about having enough cash to pay the bills, a Minnesota pastor told me recently his church negotiated a bank line of credit.It was the first time in 30-plus years of ministry, he said, that his church needed a short term loan.

The church hadn't tapped the credit line yet but might need to by summer's end.

It's a sensitive topic and he asked me not to use his name. But his point was clear. The recession is taking a toll on some religious institutions.

We've asked ministers in our Public Insight Network about how their congregations are faring. They tell us their churches are holding their own for the most part.

Evelyn Weston, a Public Insight source who's a minister in southwest Minnesota, told us today:

From what I've heard from leaders in our parish, our churches are doing about the same as usual financially. There always is a slump in giving during the summer.

Nationally, data show some tough times.

Nearly a third of the churches responding to a survey earlier this year by the National Association of Church Business Administration said they were struggling financially, up from 14 percent last August.

Another 25 percent said they were seeing slower times but weren't sure if it was simply a normal cycle and not the recession. Nearly half said they had frozen or cut staff benefits, up from 18 percent last August.

The surveys didn't ask church leaders how they were faring. But in many cases, being a minister means moving every few years and that can take its own toll.

Says Weston:

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A temporary tax break too good to pass up

Posted at 3:40 PM on July 30, 2009 by Paul Tosto (0 Comments)
Filed under: Saving & spending

For savers who stashed money away tax free for decades in an IRA or a 401(k), it can be a little grating when the IRS starts telling you to start spending it or else. But the feds are offering a break this year on Required Minimum Distributions.

It's a break I didn't know about until Charles Turpin of Minneapolis, a source in our Public Insight Network, told me how important it is to him this year. He wrote:

If you are over 72, as I am, the elimination of RMD for this year has almost eliminated my income tax obligation...reduced my taxable income enough to eliminate the tax on my social security payments. (This one was a stunner. I recalculated my estimated taxes three times before I believed the results)

Without the RMD, my gross taxable income is low enough so that my (Social Security) is not taxable. It's also low enough that my dividend and capital gains income is not taxable. All that leaves is my pension income, which is low enough to generate a negligible income tax.

With Required Minimum Distributions, the IRS basically requires most people with tax deferred savings accounts to make annual withdraws, starting at age 70.5. (The rules don't apply to Roth IRAs while the owner is alive.)

The AARP has a useful page that helps calculate required minimum distribution. AARP also notes the suspending RMDs this year:

...helps to offset the large share of retirement funds that older individuals had to take in 2008 because of the way that RMD is calculated. Required withdrawals were high for 2008 because they were based on account totals as of December 31, 2007, when account values were up after years of stock market gains.

As a result, people who waited until the end of 2008 had to take high distributions out of greatly diminished retirement accounts.

Without the break, the penalty for not withdrawing the required minimum is pretty stiff -- a 50 percent penalty on the amount not withdrawn. So if you came up $4,000 short on your required withdrawal you'd be assessed a $2,000 tax the next year.

Says Turpin:

The IRS is firm about the penalty for non withdrawal of RMD, but not impossible.

My wife provided volunteer tax assistance to seniors for many years. For seniors of the past generation, it was common for the wife to know nothing about the family finances. When the husband died there was an awful mess, and things like RMDs and estimated taxes could easily be overlooked.

We found that a well written letter to the IRS outlining what happened and the circumstances involved could lead to forgiveness of the penalty.

The break ends December 31 unless it's extended. So, tax-wise, it'll be business as usual in 2010.

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Is our love of leverage coming to an end?

Posted at 3:18 PM on August 10, 2009 by Paul Tosto (0 Comments)
Filed under: Saving & spending

The worst recession in decades ended the illusion that Americans were managing debt wisely. IOUs worked fine when people had jobs. Not so much now.

So is our love of high leverage over? We don't know that yet, but it's pretty clear we're pulling back.

New data from Federal Reserve data show a big drop in consumer credit starting at the end of 2008 and continuing through the first half of this year. Looks even more dramatic if you chart it from 1999:

The debt pullback lines up with what sources in MPR's Public Insight Network tell us about their spending habits. They continue to hold back on the big ticket purchases. Some recent responses:

Nancy Kafka, a network source from Red Wing, told us she's putting off home improvements (porch roof, interior bookshelves) "and even a painting project that I could do myself. Basically am not buying any non essentials at this point."

Jane Wilson of Bloomington told us she needs to buy a bed, "but that's an essential. Putting off buying sports equipment and making cabin improvements. My property taxes have been going through the roof, so I have to save at least $500 per month for the property taxman. AARGGH!

Heidi Christian of Eagan told us she plans to buy a vacuum but, "I am putting off buying a new washer, even though mine is broken and I have to beat on it to get it to start, it still works, so I won't replace it until I absolutely need it."

All that dovetails with recent data showing rising savings rates among Americans.

Cash for clunkers is drawing some of us back into the new car market. But at this point we're saving more and much less willing to sign our names to the "easy" long-term payment plan.

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What are your spending habits like these days? Use this form and tell us a story about what you're doing with your money. Check out the map below for what others in our Network are saying about money issues.

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Americans and spending: a view from the antiques business

Posted at 3:00 PM on August 31, 2009 by Paul Tosto (0 Comments)
Filed under: Greater Minnesota, Saving & spending

We talked recently about signs the region's antiques business might be improving and asked if that signaled anything about the economy's health. Local dealers were looking for clues from two big August antiques shows, including Gold Rush Days in Oronoco.

Now, one of our Public Insight Network sources, Duluth antiques dealer Richard Lee, tells us he saw positive signs at Oronoco, though there's still plenty of uncertainty. He also gave us some great insights on the shift in American spending habits, a topic dear to us.

Here's what Lee heard from other dealers:

At most shows (antiques and collectibles) are impulse purchases. It used to be in the '90's that one could count on the average impulse purchase to be in the $35 to $45 range. After 9/11 that dropped to $20 to $25. Customers now still want to spend money, just not a lot of money...This show/market the average sale was $5 to $8--it takes a lot of $5 sales to pay your expenses.

Furniture items are not selling due to the uncertainty in the housing market. Many purchased more house than they could afford in the '90's, and then they couldn't afford to furnish them anyway. Now people are just having trouble holding on to their houses.

Dealer to dealer sales are down, "and that is what hurts sales the most." Among the reasons: "No one knows what to buy, because customers have not followed any trends; prices are stabilizing after wild escalation, hence many are selling items for less than what they paid for them. No one wants to get burned.

Lee also reports the business is struggling to position itself for the future.

Items offered by dealers appeal to a generation that is attracted to items they remember their parents or grandparents valued. That generation is not buying, and the generation that is buying is looking for "retro", or items from the 70's and 80's.

"Real" antiques are too old for the new buyers to know anything about and most of those are already in collections and won't become available again until the estate sales start happening.

Most dealers have difficulty purchasing or identifying with items that they or their kids purchased new a mere 30 years or so ago, hence they aren't able to offer the public what they want.

Many dealers are are leaving, he adds, although, "Overall I'd say that Oronoco was a success and it does seem to suggest that the future is going to be brighter for those who stay in the business."

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Got another take on the antiques business, as a buyer or a merchant? Drop me a line and let me know. Otherwise tell us what the economy's like around you these days.

Check out the map below for what others in our Network are saying about money issues.

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Home economics: Token parenting

Posted at 9:23 PM on September 4, 2009 by Paul Tosto (0 Comments)
Filed under: Saving & spending

My MPR colleague Andrew Haeg talked recently with a parent in our Public Insight Network about using incentives to encourage good behavior and savings among her children. She has some unique challenges. Here's Andrew's report:

The challenge of raising four young boys combined with a massive recession can call forth from parents unexpected reserves of creativity.

Take Trista Matascastillo, a St. Paul mother and source in our Public Insight Network. She has hit on a strategy for saving money and encouraging good behavior. When kids act particularly well, give them a token they can exchange for candy, food or something else they value.

Matascastillo has four kids, ages 1, 7, 10 and 12. The 10-year-old is severely autistic, and is prone to screaming or hitting himself. He attends a school for special needs kids in St. Paul. Last year his teacher, John Hartshorn, implemented the token economy to encourage his kids to control their behavior.

For Hartshorn's class, the results have been remarkable. At the beginning of the year, the class was "a little wild," and he had trouble getting the kids in their seats. Now after starting the token system (with an exchange rate of one token to one Skittle or cracker) they'll stay put and attentive for 25 to 30 minutes.

Trista Matascastillo liked the system so much, she started using it at home. To her surprise, her 12- and 7-year-olds showed interest in the system, so she started giving them tokens for behavior "above and beyond" what was normally expected.

What constitutes token-worthy behavior depends on the child.

For the 12-year-old, it might be helping his younger brother learn how to skateboard. For the 7-year-old, it's consistently saying "please" and "thank you."

Even the 1-year-old is starting to get it--for him blowing a kiss is enough for a token. Matascastillo has set on a fairly stable exchange rate: each token is worth 10 minutes of free time, or 50 cents. When they wanted to see the movie "The Transformers" with their dad, they had to save up a week's worth of tokens.

The system is teaching them better behavior, along with the rudiments of economics, negotiations, and exchange rates. A bowl of ice cream might suddenly take on far greater value if the child wants it badly enough, so they'll have to negotiate out a token exchange that both child and parent can accept.

"It's really them comprehending what it's worth and how we get to an agreement," Matascastillo says. The neighbor kids have taken a shine to the system, and she now uses tokens to reward them for good behavior.

And lest you think this just for kids, there are plenty of adult versions of token systems. Frequent-flyer miles, hotel points, and other reward systems are token economies which encourage more buying and consumer loyalty. Psychologists (including the renowned B.F. Skinner, who was the chair of the University of Minnesota's psychology department) call this sort of behavior management "operant conditioning."

At the Matascastillo house, there have been a few cases of attempted hoodwinking (the 7-year-old once "lost" a bunch tokens he never had) and suspect token behavior (i.e. gratuitous sweetness: "Mom, I love you" plus lots of hugs and kisses). But Matascastillo can see through their ruses, and the kids know it.

And as certain positive behavior becomes normal, she can raise the bar whenever she wants, and in the process encourage even better behavior. All the while, she and her husband are spending far less than they would with allowances -- in this recession "we don't have money to give away," she says.

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Matascastillo was also featured in a recent MPR Commentary on the need to help female veterans.

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Bright spots in an iffy Minnesota tourism season

Posted at 8:59 PM on September 17, 2009 by Paul Tosto (0 Comments)
Filed under: Greater Minnesota, Saving & spending

Minnesota's summer tourism season was mixed at best. But if your business was in outfitting, resorts or camping, the data we're seeing and stories we're hearing indicate you had a solid year.

The best news seems to be coming near the Canadian border. Recent reports from sources in MPR's Public Insight Network jibe with what folks were telling us in August: lower cost family vacations would do well while big resorts, Twin Cities hotels and facilities relying on conventions or big groups would have it tougher.

Jennifer Gelo and her husband Gordon own Sandy Point Lodge and Resort in Kabetogama, MN, on the edge of Voyaguer's National Park. She wrote us recently about a banner season:

Our Kabetogama resort saw record business this year with increases in lodging and our restaurant use. The last three years have been our best in the 15 years we have owned Sandy Point Lodge. This year was our best ever.

While she doesn't have an absolute answer why, Gelo notes that their repeat business rate is going very well and that the location is a great draw for walleye fishing. They're also reinvesting profits back into the resort, "which is a source of positive guest feedback."

Gelo's observations match up with what we heard a few weeks ago from Steve Piragis, another Network source who runs an outfitting business in Ely. He wrote:

Ely has been busting at the seams in July and August...This season represents the largest percentage of growth in outfitting we have ever experienced in 30 years. It's families, fishermen, young and old all finding some reason to experience or re experience the virtues of wilderness canoeing this season.

The state's tourism group, Explore Minnesota, says half the 300 business responding to its end-of-the-summer survey reported occupancy and revenue were down this summer. One in four reported business was up.

Campgrounds fared well as did fishing, hiking, festivals and other low-cost activities and state parks saw an increase in visitors, the agency said, adding that large resorts saw a downturn in bookings by corporate groups and conferences and occupancy and revenue fell at most hotels, especially in the Twin Cities.

Overall, the state's leisure and hospitality business is still struggling in the recession. Unemployment data released today showed the sector down 5,300 jobs over the past year.

Gelo writes:

While our business seems to be going well, we do not plan to rest and expect this good fortune to continue on its own.

We have decided this year to take a percentage of our proceeds and give back to some non-profits in our community. We hope this will help spread our good fortune to others and strengthen the community.

Meanwhile, she adds, "there's that bathroom remodel job, the roofing plans, the garden expansion, and new rental boat and motor -- you get the idea!"

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Have a view on Minnesota's tourism business? Please post below or click here and tell us what you're seeing.

Also, check out the map below to read what others in our Network are telling us about spending and saving in this economy.

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