For those of you who celebrate, I hope you have a wonderful, holy and safe Christmas day.
You’ve heard me say “Cash is King” forever in this column, because studies show that people who use cash for discretionary spending spend less. This is because cash is an object that connects you to your hard-earned money, unlike cards, which are not your hard-earned money. They are more of a concept. They only represent money. In addition, studies show that it is difficult to “impulse buy” with cash, but not so much with a card.
That said, cash is the gift that gives the recipient the ultimate in flexibility and ensures that you get a gift that you will be 100% satisfied with and will definitely enjoy. It should be clear to all of us, given return rates, that giving gifts, no matter how well-intentioned, unless you bought something the person specifically requested (model, color, size, etc.), is not always effective, so why not give cash as a gift?
When I was a kid, from my teens onwards, cash was the gift that we received in my family, and we loved it, because now we could buy and get WHATEVER WE WANT. In that spirit, my wife will take our grandson and older great-nieces and nephews out for breakfast or lunch, and then shop for her Christmas or birthday gifts. They receive an envelope of cash and go from store to store, and sometimes back to a store, aware of how much they can spend, wanting to get a good value for their purchases, and never have to return anything.
It is something to consider for your future gift.
On a different note, it’s now becoming clear that inflation is going to be with us for a while, which is why, as we all know, the Federal Reserve Bank plans to raise interest rates, perhaps as much as three times, in 2022. That means a lot of Most of those credit cards, home equity loans, auto loans, student loans, and mortgages will have higher interest rates, though not by much, so if that applies to you in the future, make sure you budget for it.
The other concern I have about inflation is that many providers of goods and services will raise their prices, even though they don’t experience higher costs, simply because we’re all accepting inflation. For example, my excess liability (umbrella) insurance policy premium just went up 5.8%, even though it was the exact same premium for 2019, 2020, and 2021. I find it hard to believe the company suffered much more excess liability losses or higher costs in that area. It is certainly something to think about.
Moving on to another topic, this week I had a conversation with a couple that caught my attention. The topic of conversation was tattoos. They indicated that her granddaughter, who is in musical theater and lives and auditions in New York City, is studying to be a certified tattoo artist. She says it’s a much better side job than being a bartender or waitress. I was then informed of how much some people spend on their biggest tattoos, which could be thousands and thousands of dollars. I have to be honest, I was surprised. I had never thought or read about it.
Here’s something I found with a quick search online: “If you’re planning on getting a cool half-sleeve or full-sleeve tattoo, be prepared to spend a decent amount of money. Obviously, the cost of the cover depends on the skill of the artist, the difficulty of the design, the location of the body, the color scheme, the size and the geographical location, but prices should range from $500 to $3000.” Some college students looking to earn some money to pay for school.
In the last column I promised to expose some of the taxes paid in Europe in relation to the issue of the rich paying their fair share. A recent editorial in the Wall Street Journal presented some of these statistics. The top 10% of US households earn about 33.5% of all employment income, but pay 45.1% of all income taxes, a ratio of 1.35. In France, the ratio is 1.10; in Germany 1.07; and in Sweden a par 1. Furthermore, in 2015, the lowest 90% of earners in the US paid 55% of taxes, but in France they paid 72%; in Germany 69% and in Sweden 73%. Finally, instead of the top 10% paying 45%, in France they only paid 28%; in Germany 31%; and in Sweden 27%.
Please have a safe New Year’s Eve.
John Ninfo is a retired bankruptcy judge and founder of CARE’s National Financial Education Program. He finds his previous weekly columns at http://www.mpnnow.com/search?text=Ninfo.