TIME Crime

This Woman Blamed Obama When She Was Arrested Trying to Spend Counterfeit Bills

Pamela Downs is no master forger

A 45-year-old Tennessee woman had a novel excuse when she was arrested on Sunday for trying to use crude, counterfeit dollar bills at a local grocery store — blaming her actions on U.S. President Barack Obama.

Pamela Downs, of Kingsport, Tenn., was detained by police after two bills printed in black and white on regular copy paper were recovered from her person along with a receipt for a new printer and said copy paper. She claimed that a new law passed by Obama permitted her to print her own money since she was on a fixed income, reports the Kingsport Times News.

The police were first alerted after she tried to pay a local grocer with a homemade $5 bill. After searching Downs’ purse, police recovered a second $100 bill printed on computer paper with the two sides stuck together with glue (though one upside down).

During her police interview, Downs reportedly said, “I don’t give a ****, all these other bitches get to print money so I can too.” She also told officers that she read about the new law on the Internet.

The Times News reports that counterfeit bills totaling between $30,000 and $50,000 plus paper, scissors, glue and a printer were seized after her apartment was searched.

Downs was charged with criminal simulation and counterfeiting.

[Times News]

MONEY Budgeting

6 Ways You’re Cheating on Your Budget

83907146
Jeffrey Coolidge—Getty Images

#4: You're keeping your money too accessible.

If your budget always seems to fall short, you might tell yourself it just doesn’t work or that you’re plain better off without one. However, the problem might not be the budget, but rather the person who created the budget — you.

A spending plan isn’t going to follow itself, so if you get into a pattern of cheating on your budget and making excuses, you might never stop overspending. An honest examination of your budget and spending behaviors might reveal clues such as these as to why your budgets haven’t worked in the past.

1. Overstating Your Income

Overstating your income doesn’t work when creating a budget. Obviously, you need to include all your income when budgeting, but only if the income is regular or consistent.

Some people make the mistake of including overtime income in their budgets. But since overtime income can fluctuate from paycheck to paycheck, adding this income to your budget can make it appear like you have more money than you actually do.

If you base a budget on money you don’t have, you could end up overspending throughout the month, and you might have to use a credit card to get by.

2. Denial About How Much You Actually Spend

Not only are some people in fantasyland about how much they earn, they’re also in fantasyland about how much they spend. Guesstimating monthly expenses isn’t going to work. You need to be as realistic and accurate as possible.

“A budget should always include actual numbers, such as the actual income received that month and actual expenses,” says Michelle Schroeder-Gardner, author behind the personal finance blog Making Sense of Cents. “Too many people use numbers that they estimate or numbers they wish they were at, which is a big mistake because an estimate doesn’t help you grasp the real picture of your finances.”

To illustrate, if you normally spend $120 a month on fuel for your car, don’t under account for this expense and only budget $80 a month, unless you plan on adjusting how much you commute. Take a look at bank statements or monitor your spending for an entire month to get an accurate picture of your expenses.

3. Never Reviewing Your Budget

A budget isn’t a Crock-Pot, so you shouldn’t expect to set it and forget it. In the beginning, your budget won’t be perfect, and you’ll need to make tweaks here and there until you get it right. Also, some unexpected expenses might result in extra spending, so you have to monitor your budget regularly to make sure everything stays on track. And if you spend money unexpectedly outside the budget, be ready to adjust or reduce how much you spend in other categories to avoid overspending or having to use a credit card.

4. Keeping Your Money Too Accessible

A budget is the perfect tool if you’re always in the hole. But a budget doesn’t magically cure a spending problem. You still have to recognize your weaknesses and limitations, and work in harmony with your budget. If you have a problem controlling spending, yet you walk around with extra cash and credit cards in your wallet, there’s a pretty good chance that you’ll cheat and blow your budget. Don’t make it too easy to spend money. Only carry the cash you’ll need for the day and keep your credit cards at home.

5. Forgetting to Budget for Splurges

You need to include a little splurge money in your budget so it doesn’t feel like you’re depriving yourself. Giving yourself spending cash might seem a step in the wrong direction if you’re trying to save money. However, depriving yourself almost always guarantees that your budget will fail.

“No budget on earth will work long-term if you don’t allow for some fun stuff, even if it’s as small as a chocolate bar once a week,” says Avery Breyer, best-selling author of Smart Money Blueprint: How to Stop Living Paycheck to Paycheck.

6. Stealing Money From Other Spending Categories

This is your budget, so you have to decide a reasonable amount to spend in your various spending categories. If you want to eliminate a category in order to put additional cash in another area, this is entirely up to you, but you shouldn’t start a practice of stealing money from essential categories to satisfy a need for fun.

If it’s the 20th of the month and you’ve already blown through your entertainment budget for the month, don’t steal $100 from your housing budget in order to have a good time with friends this weekend. Spending the money you need for essential expenses can put you in the hole. And again — what’s the point of budgeting if you don’t stick to it? Be honest with yourself, and your money will thank you.

More From Wise Bread:

 

MONEY Savings

Here’s How Much Cash You Need in Retirement

Q: I am in my eighth year of retirement. A few years in, I found myself spending a considerable amount on repairs and upkeep on my old house. I also had to replace my car. Luckily, I was able to build up a reserve fund to cover costs so I didn’t have to dip into my investments for these “life happens” events. What is your advice on how much cash a retiree should have on hand to feel secure? – Karen Hendershot

A: Of course, everyone should have a cash cushion to handle unexpected expenses, but retirees need a larger cash reserve than people who are still working, says Richard Paul, president of Richard W. Paul and Associates in Novi, Mich. “The stakes are higher for retirees,” Paul says. “When you’re no longer earning an income, the money you have saved isn’t easily replaced.”

If you need to tap your investments for emergencies, you risk spending down your portfolio too quickly. And if you have to sell securities in a down market, you’ll need to take a bigger chunk to get the amount you need.

Relying on your investments for unexpected expenses could also trigger some nasty tax consequences. If you liquidate money from a taxable account, the income could bump you into a higher tax bracket and cost you even more.

So, how much do you need? While the standard recommendation is to have six to 12 months of money set aside to cover emergencies, retirees should have at least 12 to 18 months of cash, says Paul. That should be enough to cover daily expenses as well as any emergencies that might crop up. “This creates a safety valve, so you’re not at the whims of the market,” he says. Use an interactive worksheet like this one from Vanguard to tally up your monthly expenses.

Exactly how much you will need depends on your individual circumstances. If you have guaranteed cash flow, say from a pension and Social Security, that covers your daily expenses, you won’t need to have as much set aside as someone who is already withdrawing money from a portfolio to cover living costs. You can’t foresee emergencies but you can plan for them. If you have an older home, for example, you can anticipate needed repairs or upgrades like a new roof. If you have any medical issues, you’ll want to keep a larger stash for medical costs. “Medicare doesn’t cover everything,” Paul notes.

Since people tend to enter retirement with most of their money tied up in investments, such as 401(k)s and IRAs, Paul recommends that you start building up an emergency fund before you retire. While you’re still earning, start funneling money into a savings account and move a portion of an IRA into a short-term bond fund.

On the flip side, you don’t want to keep too much of your savings in cash. You won’t earn much interest in a money market fund or basic savings account, so balance that cash cushion with investments that can keep up with inflation. “You still need your money to grow,” Paul says.

MONEY Travel

5 Things American Travelers Should Know If They’re Visiting Greece

Supporters of the NO vote in the upcoming referendum, gather during a rally at Syntagma square in Athens on Monday, June 29, 2015. Anxious Greek pensioners swarmed closed bank branches and long lines snaked outside ATMs as Greeks endured the first day of serious controls on their daily economic lives ahead of a July 5 referendum that could determine whether the country has to ditch the euro currency and return to the drachma.
Petros Karadjias—AP Supporters of the NO vote in the upcoming referendum, gather during a rally at Syntagma square in Athens on Monday, June 29, 2015.

Greece-bound tourists could be in for some hassles—or worse.

The crisis in Greece has caused the closure of local banks and brought about the worst day of the year in the U.S. stock market. Concerns are also being raised that the situation could ruin the vacations of tourists dreaming of exploring the culture, history, and warmth of Greece during the height of the summer season.

Here’s what travelers should keep in mind if they’re heading for Greece anytime soon.

Arrive with ample cash. Starting on Monday, banks in Greece were closed, and ATM withdrawals were being limited to €60 (around $67) for cards issued by Greek banks. Withdrawal restrictions don’t apply to foreign cards, but many ATMs have reportedly already been emptied and have no cash to dispense.

“Automated-teller machines are running dry and many businesses are no longer accepting credit cards,” the Wall Street Journal reported.

The bottom line is that the situation is fairly chaotic and very much in flux. Greece-bound tourists from Germany, the UK, Canada, Australia, and elsewhere have officially been given some variation of the warning to arrive with “sufficient euros in cash to cover the duration of your stay, emergencies, unforeseen circumstances, and any unexpected delays.” Ideally, bring cash in lots of smaller denominations, as it may be difficult for taxi drivers, restaurants, and other local businesses to provide change for big bills.

The advice of the U.S. Embassy in Greece is that Americans should have plenty of cash, and should certainly not rely on any single form of payment: “U.S. citizens are encouraged to carry more than one means of payment (cash, debit cards, credit cards), and make sure to have enough cash on hand to cover emergencies and any unexpected delays.”

Be extra vigilant. “The State Department recommends you maintain a high level of security awareness and avoid political rallies and demonstrations as instances of unrest can occur,” the U.S. Embassy states. “Exercise caution and common sense: Avoid the areas of demonstrations, and if you find yourself too close to a demonstration, move in the opposite direction and seek shelter.”

What’s more, pickpockets and thieves will surely be aware that tourists have been advised of the necessity of having plentiful cash on hand. So there will be extra reason for tourists to be targeted for theft. It goes without saying you shouldn’t stroll around casually with all of your cash in your purse or back pocket. Stash the bulk of it in the hotel safe, and divide walking-around cash among your party—ideally, safely kept in a money belt or neck wallet—perhaps with some emergency bills in the sole of your shoe. Don’t make it easy for pickpockets to rip you off.

Expect long lines and possible delays. There have already been huge lines at ATMs and supermarkets, with worried shoppers stocking up on essentials in the same way that Americans hoard milk and bread when a big snowstorm is in the forecast. There has also been plenty of speculation that strikes, demonstrations, and a squeeze on fuel could cause travel disruptions within Greece. So far, this has only amounted to speculation, and ferries, gas stations, and such have not been affected.

Tour operators are reporting (mostly) business as usual. “We were in touch with our hotel and our tour director earlier today, and both report that daily life is going on normally,” Tim Armstrong, a spokesman for the Tauck tour company, which had a group on a cruise just finishing up a three-night stay in Athens, said on Monday, according to the (Canada) Globe and Mail.

Likewise, Greek tourism officials maintain that the current events will have no impact on foreign visitors. “The tourists who are already here and those who are planning to come, will not be affected in any way by the events and will continue to enjoy their holiday in Greece with absolutely no problem,” said Elena Kountoura, Greece’s minister for tourism, according to the Independent. “It should be also noted that there is ample availability of both fuel and all products and services that ensure a smooth and fun stay for the visitors in every city, region and the islands.”

At least some of this seems like overstatement, considering that tourists and locals alike have already been affected by long lines. Credit and debit cards are still being accepted by most hotels and other businesses, but the fact that some are only accepting cash as payment is obviously another way that travelers are being affected.

Travel insurance probably won’t cover you if you cancel. If you’ve booked a vacation to Greece and purchased travel insurance for the trip, it may be time to look at the fine print. Most policies will reimburse a cancelled trip if there’s been a death in the immediate family, or if there’s been a natural disaster, terrorist attack, or large-scale civil unrest. But nothing that’s happening in Greece right now qualifies as a standard reimbursable situation.

“If you do cancel your trip it will be subject to the terms of the deal, and you stand to lose money,” one UK travel agent explained to the Guardian. Unless you’ve paid extra for a “cancel for any reason” upgrade to the insurance policy, in all likelihood your travel insurance would not cover you if you decide to cancel a trip to Greece right now.

Read next: What the Turmoil in Greece Means for Your Money

MONEY retirement planning

This Is the Best Way to Protect Your Retirement Savings

multicolored padlocks arranged to make a dollar sign
John Kuczala—Getty Images

Tip one: Don't let market pundits scare you.

When investors feel especially anxious, they may be tempted to move all their wealth into cash, bonds, gold, or some other “conservative” investment. But over the long run, the best way to protect your life savings is through diversification, not concentration. Every asset class—even cash—has its own vulnerabilities, and could be risky under certain conditions. Fixating on a single version of the future, and holding your wealth in a single investment, generally reduces your financial security.

Here is why: The biggest threat to your portfolio is an unexpected crisis. The crisis you already anticipate—the one some pundit is warning against, and the one that has you looking for safety—probably won’t matter much in investment terms. Remember the Y2K bug? Computer programs contained an error in date handling as we approached the millennium 15 years ago. Some observers predicted widespread catastrophe, with computerized systems failing in unison. But governments, companies, and markets had ample warning. The bug was fixed. Investors who went overboard preparing for the worst, wasted time and money.

As for those unexpected market eruptions, history tells us that investments generally bounce back. If you avoid panic, you can prosper anyway. I retired at 50, because I held on to investments through the late 1990’s dot-com bust and the 2008-2009 Great Recession. It didn’t matter that my financial path had steep ups and downs: It still led me to the summit.

And this is where where owning a diverse set of assets really helps you out: It keeps you from panicking, since you’ll likely have some assets doing well or at least holding up while others are falling.

Another problem with building your portfolio around the possibility of a crisis is that you may ignore other less dramatic, but far more likely, risks. Among them:

You could pay too much in taxes. We all lose a portion of our assets to the government regularly, via the tax system. The essence of legally avoiding taxation is to reduce your taxable income. The best approach while still working is to maximize tax-sheltered savings plans and associated employer matching. And, since nobody can predict the future tax environment, tax diversification — holding a mix of taxable, Traditional retirement, and Roth accounts — is a wise strategy. Once retired, you can live frugally in a low tax bracket, and enjoy a zero percent long-term capital gains tax rate.

You could take a hit to your income. Recessions are an inevitable part of the business cycle. The best preparation is to have plenty of cash on hand, and live frugally. An emergency fund gives you flexibility and protection during any kind of economic hardship. Fixed income from bonds or annuities provides cash flow and peace of mind. Avoiding debt is always advisable, and can be critical to your financial survival during a recession: Loss of job or income can threaten your ability to make payments.

Inflation could erode the value of your cash. Inflation of some sort is “baked in” to the modern monetary system. Policymakers target about 2% annually. That means the playing field for cash, which most investors assume is “safe,” is tilted against you. Many argue that higher future inflation will be the only way to dispose of our massive public debt. But, for all the fear and loathing it inspires, many forms of inflation are relatively easy to defend against. By definition, almost any asset other than cash or fixed income will increase in value with inflation: stocks, real estate, commodities, Treasury Inflation-Protected Securities (TIPS). Owning low-cost stock-based index funds and maximizing Social Security are the best inflation hedges available to most of us.

Financial security means surviving and prospering under any scenario. Proven behaviors will help: live frugally, exercise patience, maintain liquidity, and remain flexible. But one principle trumps them all: Diversification is your single most powerful tool against widespread risk.

Darrow Kirkpatrick is a software engineer and author who lived frugally, invested successfully, and retired in 2011 at age 50. He writes regularly about saving, investing and retiring on his blog CanIRetireYet.com.

MONEY credit cards

Can You Buy Marijuana With a Credit Card?

Conte's Clone Bar & Dispensary in Denver, Colorado
Craig F. Walker—Denver Post via Getty Images Conte's Clone Bar & Dispensary in Denver, Colorado

Despite legal uncertainties, some pot dispensaries accept plastic.

It’s been more than a year since legal recreational pot sales started in Colorado, and as much as dispensary owners enjoy the booming business, they’re sick of swimming in cash. Though the Department of Justice released regulations last year allowing banks to accept money from legal dispensaries, it’s still a federal crime — the announcement that the DOJ won’t pursue institutions that process legal pot money hasn’t been enough to make everyone comfortable.

It seems some Colorado business owners have run out of patience waiting for the banking industry to get on board with legal cannabis sales. According to a poll of 78 state-licensed dispensaries in the Denver area conducted by FOX31, 27 (or 47%) of them would be “willing to accept Visa or MasterCard as payment.”

Some of them may be working with financial institutions that have decided to accept money from legal cannabis sales, despite federal laws, but they’re probably trying to downplay or conceal the nature of the business, FOX31’s investigation suggests. Credit card transactions conducted at legal dispensaries produced receipts with company names like “AJS Holdings LLC” and “Indoor Garden Products.” Even though the federal government has said it will stand by and let legal dispensaries use the banking system and the credit card transactions it enables, that hasn’t erased the concerns over Drug Enforcement Agency audits for money laundering.

Given that credit card processing at marijuana dispensaries remains risky, it’s interesting that nearly half of the companies polled by FOX31 said they’d accept credit cards. (It was unclear from the story if the dispensaries polled actually have the ability to process such payments or if they’d merely like to.)

If it’s becoming more common for dispensaries to accept credit card payments, that’s both good and bad for consumers. The good thing is the ability to pay as you prefer and allow you to walk into a dispensary without a bunch of cash in your wallet. On the other hand, using a credit card may lead consumers to spend more than they can afford, potentially accumulating credit card debt. Then again, all consumer goods pose that threat — the important thing is to spend within your means, whether you’re buying indoor gardening products or “Indoor Gardening Products.” What you put on your credit card doesn’t matter to your financial and credit stability, but how much you charge and how you manage that balance does.

More from Credit.com

This article originally appeared on Credit.com.

MONEY stocks

The Hidden Danger in Apple Stock

150409_INV_AppleDanger
China Stringer Network—Reuters

Apple's mountain of cash—which is generally considered a safety net—actually comes with risks.

Investing in Apple APPLE INC. AAPL -3.54% today seems like a smart bet by many measures.

The company broke records for the most profits for any business in a single quarter—ever—earlier this year. With nearly $180 billion in cash, management has plenty of cushion against setbacks—like, say, if the new Apple Watch doesn’t sell as well as projected. And while Apple has been criticized for not sharing that cash with shareholders as much as peers like Microsoft do, recent signals from company leaders suggest they may announce a hefty dividend hike as early as this month.

Certainly, there’s plenty of cause for investors to favor cash-rich companies like Apple, says Thomas McConville, co-portfolio manager of the Becker Value Equity fund, which holds Apple stock.

“A company having lots of cash is like a person having lots of savings,” McConville says. “If a person loses a job, savings help to weather the storm. Cash helps a company protect itself from shocks and keep investing in value-creating activities.”

But, he says, the devil is in the details of how exactly a company invests in activities—and whether those enterprises actually add value.

New projects and products can make or break a company, and it can be especially risky for a business to step out of its wheelhouse. Apple’s wheelhouse is making the best-looking and best-functioning advanced consumer tech products, says McConville.

That’s at least partly why some critics are skeptical about whether the rumored Apple car is the right new venture for the company.

“As an investor, I want to see that any product extension they announce fits under their umbrella,” McConville says. “If they get into vehicles, creating onboard technology and displays is a good fit, since visual appeal and functionality are top concerns. But if they were going to try to design seat brackets? Well, that’s probably not the perfect fit.”

That makes sense. Then again, traditional automakers already seem enthusiastic to team up with Apple—and with all that cash, the tech giant could easily just buy a company with more experience creating car parts like seat brackets. So what could go wrong?

Well, cash-rich companies have lots of buying power, says Don Wordell, portfolio manager of the RidgeWorth Mid Cap Value fund. And, as the saying goes, with power comes responsibility.

“Companies that are simply too big to grow organically can grow inorganically by buying others,” he says. “But that creates risk. Cash can be as much of a liability as an asset.”

So, for example, it worked out well when Disney bought Pixar for $7.4 billion nine years ago. That acquisition led to a spate of successful movies, a stronger brand, and happy investors who have seen total returns of more than 300% since 2006.

But when Quaker bought Snapple for $1.7 billion in 1994, it bungled the brand’s marketing campaigns and relationships with distributors; after just 27 months, Quaker sold Snapple to a holding company for about $300 million—less than a fifth of its purchase price. The whole affair left Quaker with a damaged credit rating and dragged its stock price flat during a period when the rest of the market was on fire.

Hindsight is, of course, 20/20. But a key quality investors should watch for is how patient and thoughtful a company’s leaders seem to be before deploying resources.

“Too much cash can burn a hole in management’s pocket and cause them to make a bad acquisition,” says McConville.

Apple’s record of acquisitions and product launches is not without flops. Among other failed products, there was Apple’s 2007 Bluetooth headset, which was discontinued after two years because it couldn’t compete with third-party devices. And although the company has invested millions over the years in acquiring mapping companies, like Placebase and Poly 9, Apple has still not succeeded in creating a mapping application that competes with the likes of Google Maps.

Of course, Apple’s top executives have made plenty of successful moves on behalf of the company in recent years, and sales of core products like the iPhone are still breaking records. But strong is not invincible, and if its new wristwatch doesn’t take off, Apple will soon be looking to throw cash at developing its next big product.

Investors would be wise to keep an eye on how, exactly, that cash is spent.

 

MONEY cash

You Could Get $1 Million for Busting Software Pirates

CDs labeled in Sharpie marker
Jan Miks—Alamy

If you happen to know a software thief, you could earn some serious money for turning them in.

When you were a kid, you may have heard that nobody likes a tattletale. That isn’t true. BSA The Software Alliance loves tattletales.

If you report software piracy to BSA and your information directly results in a legal settlement between the alliance and the offending party, you can get a significant cut of that settlement. BSA advocates for the software industry, and some of its members include tech giants like Adobe, Apple and Microsoft. It encourages people to report companies using unlicensed versions of software, incentivizing these reports with the possibility of getting thousands of dollars in return.

No Piracy, the BSA initiative to compel reports of unlicensed software use, markets the program as a way for people to get extra cash and even pay off debt. A No Piracy post to Facebook on March 3 reads, “Looking to pay off your credit card debt? If you know a company using unlicensed business software, file a report today to be eligible for a cash reward.” In fact, most of the No Piracy Facebook posts from the past few months appeal to consumers’ need for “extra cash,” whether it be for holiday gifts, a vacation or spending money.

BSA receives about 2,500 reports in the U.S. each year, said Roger Correa, BSA’s director of program coordination for the Americas. Only about 40% of informants request a reward. Last year, BSA awarded about $250,000 total, the smallest award being about $500 and the largest about $22,000.

A report has to meet certain terms and conditions in order to be eligible for a reward. BSA defines piracy as when a company or organization “installs unlicensed software on computers that it owns or leases for its employees to use in their work.”

Because payment is contingent on BSA reaching a settlement with the company, it may take several months to receive a reward, and there’s no guarantee you’ll get anything:

“The decision to pay a reward based on your report and the amount of that award shall be within BSA’s sole discretion. A reward may be payable only if BSA pursues an investigation and, as a direct result of the information provided by you, receives a monetary settlement from the reported organization,” the No Piracy terms and conditions read. Correa said BSA needs to get at least $10,000 in settlement revenue to be able to give a reward, and it takes an average of 6 months from report to payout in the U.S.

“It’s not fast cash,” he said. “These are very thorough investigations.”

While reporting piracy may not be your ticket out of debt, it’s a strategy you can consider if you happen to know about a company using unlicensed software. The online report form says all complainant information is kept confidential.

Should your anti-piracy fight not result in a windfall (the commission is determined on a sliding scale up to $1 million, depending on the settlement amount), you’ll have to figure out how to face your debt somehow. There are many strategies, but the most important thing is to start tackling the debt as soon as possible, avoid adding to it and keep it from growing.

The lifetime cost of debt is staggering, especially if you have bad credit. You can see where your credit scores stand for free on Credit.com.

More from Credit.com

This article originally appeared on Credit.com.

MONEY Gas

Here’s What Americans Are Doing With the Gas Money They’re Saving

Gas nozzle and money
Tim McCaig—Getty Images

The government's Energy Information Administration estimates the average household will spend $750 less on gas this year. So where's that money going?

Americans are enjoying a nice raise at the moment, in the form of dramatically lower gas prices. The government’s Energy Information Administration estimates that the average household will spend $750 less on gas this year, which is like getting a roughly $1,000 raise, since the savings aren’t taxed. For a little perspective, the 2008 economic stimulus package passed by Congress designed to save America from the worst of the recession sent a maximum of $600 to American households.

The gas price drop means even more to struggling lower-income earners: the bottom fifth of earners spend 13% of their income on gas.

That’s the good news. The bad news? Retailers aren’t seeing much, if any, of that money.

Americans spent $6.7 billion less on gas in January than November, but retail spending actually fell slightly during that span. That means lower gas prices are not acting as a surprise stimulus plan for the economy.

So where is the money going? To the bank.

The Federal Reserve Bank of St. Louis recently reported that Americans’ notoriously low personal savings rate spiked in December, to 4.9%, from 4.3% the previous month. The cash that’s not going into the gas tank is going into savings and checking accounts instead.

Few Americans save enough money, and many have insufficient rainy-day funds. With the recession fresh in their minds, many Americans appear to be more concerned with restoring their severely damaged net worth than buying stuff.

But Logan Mohtashami, a market observer and mortgage analyst, suspects something else might be at play.

“People don’t think the gas price (drop) is a long-term reality,” Mohtashami said. Despite government predictions to the contrary, he says, consumers aren’t adjusting their spending to a new normal, and instead they’re holding onto their cash for the next rise in prices.

Again, that kind of pessimism is sensible, and it’s good for personal bank accounts, but it’s not so good for growing the economy.

How much are you saving thanks to lower gas prices? What are you doing with the “raise?” saving or paying down debt? Planning a better vacation? Driving a gas-guzzler more often? Let me know in the comments, or email me at bob@credit.com.

More from Credit.com

This article originally appeared on Credit.com.

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