TIME Saving & Spending

6 Ways Coupons Actually Cost You Money

200383283-002
Michelle Pedone—Getty Images

Turns out, frugal living can have some pretty serious pitfalls

September is National Coupon Month and you’re ready. You have your mobile apps updated, your favorite sites bookmarked, your filing system ready to go — and you should really just stop. Put down the circular for a minute. Yes, coupons can save you money, but if you just assume they’ll always give you the best deal, think again.

Frugal-living bloggers know a thing or two about coupons, so we asked some to identify situations where a quote-unquote great deal can end up taking money out of your wallet. Here’s why and how they say even avid couponers can get tripped up.

You ignore generics. “If an item is available in the bulk section or as a generic store version, it’s usually less expensive than the coupon-discounted price on name brands,” says Sara Tetreault, who blogs at GoGingham.com. For example, she says she recently passed over a coupon for fluoride rinse because even with two bucks off, the price was still more than the house brand. The same holds true for dollar stores. Yes, there’s some stuff you probably don’t want to buy there, but some items will cost less there than at a grocery or big-box store, even with a coupon.

Your deals expire. “I once bought several duplicate coupons for deodorant, thinking I would stock up for several years,” says Julia Scott, founder of BargainBabe.com. She got them from a coupon website, planning to combine them with an in-store sale nearby — but by the time she got those coupons, the sale that would have made the purchase worthwhile had ended. (Scott points out that it’s technically illegal to sell coupons, so sites charge processing fees instead.)
You buy too much. “Another time I stocked up on so much shampoo but ended moving a few months later and it wasn’t worth it to drag the bottles, which cause a huge mess if they open, across the country,” Scott says. Likewise, if you’re buying coupons, some sites will make you buy a certain number to get the deal. “So you often end up buying extra coupons to make the minimum,” she says.
You do construction. “One thing that’s struck me when I’ve watched Extreme Couponing is that the people profiled always have shelf after shelf of products in their basements, and shelves aren’t free,” says Katy Wolk-Stanley, who blogs as The Non-Consumer Advocate. If you have so much stuff that you have to buy other stuff just to keep it corralled, you’re probably not netting the big savings you think you are.
You stockpile, then forget. “I have stocked up on items — plastic wrap, water pitcher filters — and stored them in our basement only to buy them again because I forgot we had them,” Tetreault says. That stockpile is only saving you money if you remember what’s in it — and could you find a better use for that space in your basement where you’re storing giant bricks of paper towels an an army of salad-dressing bottles? “After getting burned by this a few times by this, I stopped buying items that had to be stored outside of the kitchen or pantry and only purchase items we need,” Tetreault says.

You drive out of your way. This is Couponing 101, but it’s still something you can forget in the excitement of a huge sale: If you have to make a separate trip to score your bounty, you’re spending money on gas and wear and tear on your car.

MONEY Investing

35 Smart Things to Do With $1,000 Now

Andrew B. Myers

These moves can make you smarter, healthier, happier—and richer.

1. Buy 1 share of Priceline Group THE PRICELINE GROUP INC. PCLN 0.8511%
The fast-growing travel biz has just 4% global market share, leaving plenty of room to expand.

2. Buy 10 shares of Apple APPLE INC. AAPL 0.7805%
The Mac daddy has a dividend yield of 1.9% and a cheap price/earnings ratio of 14.1.

3. Buy 50 shares of Ford FORD MOTOR CO. F 1.0913%
The automaker has a P/E of 10.5, a 2.8% dividend yield, and a record (5%) market share in China.

4. Grab the last of the great TVs
While they’re considered superior to LCDs—for having deeper blacks and any-angle viewing—plasma TVs haven’t been profitable enough for manufacturers, so most are curbing production. LG is one of the last in the game, and its ­60-inch 60PB6900 smart TV (around $1,000) has apps to stream digital content and 3-D performance besting its peers. Get the extended warranty, since a service company would have to replace the TV if parts are no longer available.

5. Kick tension to the curb with yoga…
Half of workers say they’re less productive due to stress, the American Psychological Association found; worse, research from the nonprofit Health Enhancement Research Organization found that health care expenses are 46% higher for stressed-out employees. Regularly practicing yoga can help modulate stress responses, according to a report from Harvard Medical School. Classes cost about $15 to $20 a pop, which means that $1,000 will keep you doing downward dog twice a week for about half a year.

6. …Or acupuncture
A recent article in the Journal of Endocrinology found a connection between acupuncture and stress relief. Your insurer may cover treatment, but if not, sessions run $60 to $120 a piece. So you can treat yourself to around 10 to 15 with $1,000.

7. …Or biking
Research suggests that 30 minutes a day of moderate exercise can lower levels of the stress hormone cortisol. So take a bike ride after work. The ­Giant Defy 2 ($1,075) is one of the best-value performance bikes out there, Ben Delaney of BikeRadar.com says.

8. Give your kids ­a jump on retirement
Assuming your kids earn at least a grand this year from a summer job or other employment, you can teach them the importance of saving for retirement by depositing $1,000 (or, if they earn more and you’re able, up to $5,500) into Roth IRAs in their names. Do so when the child is 17, and it’ll grow to over $18,400 by the time he’s 67 with a hypothetical 6% annual return, says Eau Claire, Wis., financial planner Kevin McKinley.

9. Get over your midlife crisis
Would getting behind the wheel of your dream vehicle make you feel a teensy bit better about reporting to a 30-year-old boss? Then sow your oats—for 24 hours. Both Hertz and Enterprise offer luxury rentals; you can find local outfits by searching for “exotic car rental” and your city. Gotham Dream Cars’ Boston-area location rents an Aston Martin Vantage Roadster for $895 a day.

 

Andrew B. Myers

10. Iron out your wrinkles
For a safer and cheaper alternative to going under the knife, try an injectable dermal filler. Dr. Michael Edwards, president of the American Society for Aesthetic Plastic Surgery, recommends Juvéderm Voluma XC, which consists of natural hyalu­ronic acid that helps smooth out deep lines and adds volume to cheeks and the jaw area. It lasts up to two years and costs near $1,000 per injection.

11. Live out a dream
Play in a fantasy world with these adult camps, which cost in the neighborhood of $1,000 with airfare: the four-day Adult Space Academy in Huntsville, Ala. ($650); the Culinary Institute of America’s two-day Wine Lovers Boot Camp in St. Helena, Calif. ($895); or the one-day World Poker Tournament camp in Vegas ($895).

12. Hire someone to fight with your folks
Is your parents’ home bursting at the seams with decades of clutter … er, memories? Save your breath—and sanity—by hiring a profes­sional organizer (find one at napo.net) for them. Mom and Dad may listen more to an impartial party when it comes to deciding what to toss, says Austin organizer Yvette Clay. Focus on pile-up zones, like the basement, garage, and living room (together, $500 to $1,500).

13. Launch you.com
A professional website will help you stand out to employers, says Jodi Glickman, author of Great on the Job. Buy the URL of your name for about $20 a year from GoDaddy and find a designer via Elance​.com or Guru.com; $1,000 should get you a nice-looking site with a bio, blog, photos, and portfolio of your work.

14. Become a techie—or just learn to talk to one
Technical knowledge isn’t just for IT folks anymore. “Digital literacy is becoming a required skill,” says Paul McDonald, a senior executive director of staffing agency Robert Half International. Get up to speed with one of these strategies. Understanding how websites, videogames, and apps are built is useful to almost any job dealing in big data or search algorithms, says McDonald. Take a course in programming for nonprogrammers at ­generalassemb.ly ($550), then get a year’s subscription to Lynda.com ($375) for more advanced online tutorials.

15. Get tweet smarts
Take a class to give you expertise—and confidence— in using social media and analyzing metrics. MediaBistro’s social media boot camp includes five live webcast sessions for $511, and you can add four weeks of classroom workshops with pros for $449. #olddognewtricks

16. Buy the Silicon Valley gear
Need a new laptop now that you’re a tech whiz? To best play the part, go with Apple’s MacBook Air ($999) or its big brother the MacBook Pro ($1,099). With a long battery life and powerful processors, the Air and Pro are the preferred picks for developers, coders, and designers, says PCmag.com’s Brian Westover.

David Kilpatrick—Alamy

17. Save your cellphone camera for selfies
Your most important memories shouldn’t be grainy. Get a digital SLR camera featuring a through-the-lens optical viewfinder, “which is still essential for shooting action,” says Lori Grunin of CNET. Her pick, Nikon’s D5300 ($1,050). Its 18–140mm lens produces sharp images shot quickly enough for most personal photography.

18. Class up your castle
Interior decorating can cost a fortune—insanely priced furnishings, plus a 30% commission. Homepolish.com, launched in 2012 and now in eight metro areas, upends the model. The site’s decorators charge hourly ($130 or less) and suggest affordable furnishings.

19-21. Hire a good manager
With only 10 C-notes, your mutual fund choices are limited by minimum investment requirements. Besides simply letting you in the door, these actively managed funds have relatively low fees and beat more than half their peers over three, five, and 10 years:
Oakmark Select large blend; 1.01% expenses
Schwab Dividend Equity large value, 0.89% expenses
Nicholas large growth, 0.73% expenses

22. Primp the powder room
Get a new sink and vanity for a refresh of your guest bathroom without a reno. You can find a combined vanity and sink set for under $650; figure another $100 to $200 each for faucet and labor.

23. Replace light fixtures
Subbing in new lighting in the dining room, the front hall, and possibly the kitchen can take 20 years off your house, suggests Pasadena realtor Curt Schultz. You’re likely to pay $100 to $400 per fixture, plus $50 to $100 for installation.

24. Swap out the front door
It’s the first impression guests and buyers have of your home. Look for a factory-finished door—possibly fiberglass if it’s a sunny southern or western ­exposure without an overhang. You could pay $1,000 for the door and the installation.

25. Catch up on retirement.
If you’re 50 or older, you can put in $1,000 more in an IRA (above the $5,500 normal limit) each year. Do so from 50 to 65, and you’ll have $27,000 more in retirement assuming you get a 6% annual return, per T. Rowe Price.

Ingolfur Bjargmundsson—Getty

26. Fly solo to see the Northern Lights
As more companies package deals to Iceland, prices are dropping, says Christie McConnell of Travelzoo.com. You could recently find four-night packages with airfare, hotel, and tours for $800 a person. Go in late fall to see the Northern Lights.

27. Hit the beach in Hawaii
The islands are still working through the overbuilding of hotels that began before the recession, says Anne Banas of Smartertravel.com. Three-night packages for fall with hotel and airfare start around $500 a person from the West Coast.

28. Give your car a makeover
You can’t get a new set of wheels for 1,000 smackers, but you can make your old car feel new(ish) again with this slew of maintenance fixes: A new set of tires ($600), a full car detail ($100), new wiper blades ($50), a wheel alignment ($150), and a synthetic oil change ($100). You’ve likely been putting these off until something breaks, but there’s good reason to do them all at once. Besides giving your car a smoother ride, “this preventative maintenance will help you nurse your car longer, while also saving some gas,” says Bill Visnic, senior editor at Edmunds.com. New car smell not included.

29. Make like (early) Gordon Gekko
Wall Street buyout firms KKR and Carlyle are inviting Main Street investors into private equity funds for $10,000 and $50,000, respectively. Want to play the game with less scratch? Invest $1,000 in Blackstone GroupBLACKSTONE GROUP LP, THE BX -0.1789% . Shares of the private equity giant have a 5.1% yield and a cheap P/E of 8.5, plus Blackstone is a top-notch alternative-asset firm, says Morningstar’s Stephen Ellis.

30-32. Put your donations to work where they’ll do the most good
Groups that focus on improving healthcare in the developing world have some of the best measurable outcomes of all charities, says Charlie Bresler, CEO of The Life You Can Save. Many of the supplies used to improve and save lives, like vaccines or mosquito nets, cost pennies to produce, he says, and surgeries that cost tens of thousands in the U.S. can be performed for a few hundred bucks overseas. Three great organizations working in those areas: SEVA Foundation, which works to prevent blindness; Deworm the World, which seeks to eradicate worms and other parasitic bacterial disease; Fistula foundation, which provides surgical services to women with childbirth injuries.

33. Defend the fort
An alarm system can pare as much as 20% from a homeowner’s policy, and the latest ones have neat bells and whistles. Honeywell’s LYNX Touch 7000 (starting at $500, plus $25 to $60 a month) links to four cameras that stream live video. It randomly switches on lights to make an empty home look occupied—and can detect a flood and shut down water.

34. Enjoy a buffet of entertainment
The average cable bill is expected to hit $123 a month in 2015—or $1476 a year—according to the NPD group. What if we told you you could cut the cord, redeploy $1,000 of that to getting two years worth of the following digital libraries, and still bank about 500 bucks? Yeah, we thought so.
For old movies and TV shows…get Netflix ($7.99-$8.99/month). Analysts estimate the company’s library is much larger than that of Amazon Prime.
For current TV shows…watch via Hulu ($7.99/month), which offers episodes from more than 600 shows that are currently on air.
For music…stream with Spotify Premium ($9.99/month). The premium version lets you skip commercials and listen to millions of songs even offline.
For books…read via Kindle Unlimited ($9.99/month). You can access the company’s library of more than 600,000 ebooks and audiobooks with one of its free reading apps, which work Apple, Android or Windows Phone devices.

35. Protect your heirs.
For about $1,000 you can have a will, durable power of attorney, and health care directive written up. Find an estate planner at naepc.org.

Related: 24 Things to Do With $10,000 Now
Tell Us: What Would You Do With $1,000?

MONEY College

4 Best Credit Cards for College Students

Mom helping her daughter move in to college dorm
Make sure she's packed one of these cards. Blend Images—Alamy

Send your kid off with one of these options this fall, and you'll sleep better at night.

You’ve no doubt heard harrowing stories of college students applying for their first credit cards, then racking up thousands of dollars in debt. It’s the stuff of parents’ worst nightmares.

The CARD Act of 2009 lessened the potential trouble students could get themselves into. The law mandated that, in order to qualify for a card, applicants must be over 21, get an adult to co-sign or prove they earn enough money to make payments.

But it’s left many parents of underclassmen with a tricky decision. Do you sign on the dotted line for your kid—thus putting your own credit score on the hook if your kid doesn’t pay the bill?

Shielding Junior from having his own credit card may seem sensible, but it’s penny-wise and pound-foolish. Length of credit history accounts for 15% of one’s FICO score. So by protecting your son or daughter from plastic, you are inadvertently hurting his or her creditworthiness. You also miss out on the opportunity to handhold him or her through an important financial lesson.

Of course, striking a proper balance between the value of credit and the dangers of its excess is paramount. Revolving debt hurts a credit score, too, and can be very costly to a kid living on a ramen budget—with APRs averaging 15% and as high as 23%.

Three options for you to consider, depending upon how much risk you think your newly emancipated child can handle:

The Training Wheels: A secured card or a low-rate, low-limit unsecured card.

If you are worried that terms like “credit limit” and “due date” will be lost on your child, you might want to sign him up for a secured card, which uses cash as the credit limit collateral.

The benefit is that Junior won’t be able to spend beyond the cap, so it’s a good way to give him practice using a card of his own without doing a lot of damage to your finances or your credit score. The downsides: You’ll have to front the cash. And unless you set a large credit limit, he may use a high percentage of his available credit, which is bad for his credit score (ideally he should use no more than 20%).

Alternately, if you don’t want to put up your cash as collateral—or your kid has enough income to qualify on his own—you might start him off with an unsecured card that has a low rate and a low credit limit. This also pens him in until he demonstrates reliability.

Once he proves himself able to handle either of these cards, have him shift to one of the advanced cards in the next category.

The picks: MONEY’s Best Credit Cards winners Digital Credit Union Visa Platinum Secured or Northwest Federal Credit Union FirstCard Visa Platinum.

The APR on Digital Credit Union’s Visa starts at a low 11.5%. To apply for this secured card, you do have to be a member of the credit union, but that be accomplished with a $10 donation to Reach Out for Schools.

The FirstCard’s rate is even lower—a fixed 10% APR (most cards today are variable rate). This card, which has no annual fee, is designed for people who don’t have a credit history: It requires applicants to take a 10 question quiz on credit knowledge and has a credit limit of just $1,000.

The 10 Speed: A rewards card

Cards that offer rewards typically have higher APRs than those that don’t. So if you child revolves debt on one of these cards, he’ll likely erase the perks earned.

Thus, rewards cards are best reserved for those students who’ve already proven themselves capable of paying off a secured or low-limit card in full and on time for a year or so. These are also good choices for those students who are over 21.

The picks: Capital One Journey Student Rewards Card and Discover It for Students.

The no-fee Journey gets your kid 1% cash back on everything, but the reward is bumped up by 25% every month he pays his bill on time. “This is a good card for incentivizing students to have the right behavior,” says NerdWallet.com’s Kevin Yuann. There’s no foreign transaction fee (a plus for those studying abroad), but a late payment fee of up to $35 and a steep 19.8% APR should scare away parents who aren’t sure about their child’s bill-paying vigilance.

The It, which also has no annual fee and no foreign transaction costs, gets your kid 2% cash back on the first $1,000 at gas stations and restaurants each quarter, and 1% for everything else. Because of the extra rewards for gas, the It is a good card for commuters, says Yuann. Cardholders also receive a free FICO score, derived from TransUnion data, on monthly statements.

While there is no fee on the first late payment, your child will pay up to $35 after that; and after a six-month no-interest window, the APR ranges from 13% to 22%.

Whichever card you end up co-signing for your child, definitely make sure you ask to get account access—and sign up for balance alerts so that you know when you need to swoop in for a teaching moment.

RELATED:
Best Credit Cards of 2013
Money 101: How Do I Pick a Credit Card?

 

MONEY The Consumer Economy

The Real Reason You’re Not Shopping at Walmart

Female shopper in Wal-Mart store aisle
Patrick T. Fallon—Bloomberg via Getty Images

Despite the improving job market, workers still don’t have that much walking around cash, which means they have less to spend at retailers.

The summer has not been kind to some of America’s largest retailers.

Traffic at Wal-Mart’s U.S. locations, for instance, was down, while sales at stores that had been open for at least a year failed to grow. Macy’s lowered its full-year sales growth projection, and sales at Kohl’s dropped 1.3% in the last three months. Nordstrom’s earnings per share were basically flat.

If you’re noticing a trend, that’s because there is one: Merchants are struggling.

The Commerce Department recently announced that retail sales decelerated in July for the fourth consecutive month, despite the fact that more workers are finding jobs, and the unemployment rate is hovering around 6%. So what’s going on?

Well, one potential answer is that you, the consumer, just don’t have that money to spend. Yes, employers have added more than 200,000 workers a month to their payrolls since February. And yes, the unemployment rate has dropped to 6.2%—about the same as in September 2008. But workers really haven’t seen the benefits of job growth in their bottom lines.

For instance, take a look at real disposable income for U.S. workers. The year-over-year change in disposable income is only 3.9%, below pre-recession levels. “While stronger job growth has played a role in sustaining consumer spending, the slower income growth has served to keep a lid on real spending activity over the past several quarters,” per a recent Wells Fargo Securities economic report.

disposable income

 

Another way to gauge the plight of workers is a metric called the Employment Cost Index (ECI), which is published by the Bureau of Labor Statistics. The ECI measures what it costs businesses to actually employ their workers—so, wages, salaries and fringe benefits like medical care. Before the Great Recession struck in 2007, the ECI gained nearly 3.5% over the prior 12 months. Since the economic recovery, however, employee costs have not risen above 2%.

wages
BLS

Rising wages are a lagging indicator; people only see raises after the jobs picture improves. Which is happening now. Fewer people are filing unemployment claims, and the number of job openings continues to nudge higher. (And traditionally, job openings have an inverse relationship with wage gains.)

So, hopefully, sometime soon demand will pick up, businesses will start giving their workers substantial raises, and those workers will go out and spend their newfound dollars. (After all, my spending is your income.)

What’s good for the economy is sometimes what’s good for Wal-Mart.

MONEY Saving

WATCH: How You Can Save More Money

Financial planning experts share easy ways you can trick yourself into saving more money.

TIME Spending & Saving

Why You Have to Start Paying Down Your Credit Cards Right Now

140601_EM_CreditCard_LeadImage_1
Steven Puetzer—Getty Images

Federal Reserve meetings aren’t high on most people’s list of interesting things, but if you have a credit card and carry a balance, you should probably start paying attention to what America’s top money policymakers are talking about, because it’s going to affect your monthly bill.

During last week’s Federal Open Markets Committee meeting, analysts were listening closely to tease out a sense of when the central bank will raise interest rates — always an endeavor that’s one part math, one part reading tea leaves.

A rate hike might not come right away: CNN points out that Fed chair Janet Yellen wants to see higher wages along with lower unemployment. Although unemployment is ticking down, wages are stuck in a rut.

“There are no such signs evident yet, but we expect that to be the big story in the second half of this year,” Capital Economics chief U.S. economist Paul Ashworth tells CNN.

But a hike might come sooner than expected, CNBC argues, if either the labor market gets better faster or if Fed members get spooked about inflation. “I think pressure is really growing to do something in January,” Peter Boockvar, chief market analyst at the Lindsey Group, tells CNBC. .

Bottom line: It’ll probably happen sometime next year. This means you have, at maximum, maybe a year and a half before your credit card bills jump.

The reason why is because most of us these days have variable credit card interest rates, with our APRs tied to the prime rate. The prime rate is the Federal Funds rate plus 3%, and today, prime is a mere 3.25%. Then the card issuers tack on a percentage they determine, and we swipe away.

Banks dropped fixed interest rates en masse in advance of the CARD Act kicking in a few years ago because the law prohibits them from hiking fixed rates on existing balances except with a few exceptions. Banks wanted to be able to raise what they charge us when interest rates rise, so they switched over to variable rates.

After the Fed makes its move, rate increases will happen quickly. “Within a few months after the prime rate eventually starts going up, card holders will also likely see their APRs going up,” says John Ulzheimer, president of consumer education at CreditSesame.com.

Ulzheimer says it’s most likely issuers will adopt a straight pass-through of any hike in the prime rate; in other words, if the rate goes up by 0.5%, your APR will, too. And credit card companies aren’t required by law to give you a 45-day heads-up that a jump in your interest rate is coming.

Obviously, the bigger your balance, the more this will affect your monthly payment, so it’s a good idea to start chipping away at that debt now.

MONEY First-Time Dad

Why New Parents Deserve to Splurge on Themselves Sometimes

Illustration of parents eating at elevated table above baby toys
Leif Parsons

Living in an apartment stuffed with all kinds of toys for his son, this reporter found that spending $350 to create an oasis for himself and his wife was totally worth it.

Part of the joy of raising an infant is accumulating his toys and books and play mats and teethers and clothes and pacifiers and chairs and bottles and strollers and carriers and … well, you get the idea. Clutter is a part of life, and the fact that Luke, our 6-month-old son, is gathering enough junk to take over our apartment means he’s becoming a person. I own, therefore I am.

Still, there is one tiny section of our tiny Brooklyn home that’s off-limits to Luke’s stuff. It’s an alcove just big enough to hold a circular marble table and two tall cushioned chairs. If the rest of our home is a Gymboree, this patch of paradise is the Four Seasons.

We carved out this island of adulthood a few weeks ago, buying the $200 marble table secondhand and plucking the marked-down chairs off the Internet for $150.

Spending $350 on ourselves might not sound like a big deal, but Luke’s goodies aren’t cheap, so most of our discretionary spending is earmarked for the little guy. My wife is a teacher and I’m a journalist. We’re in the early stages of our careers and must make rent while still chipping away at our student loans. In our world of limited sleep and vanishing funds, a vacation, dinner out, or even a night at the movies is a rare treat.

Yes, we could have used the dining set we already owned. But our old furniture felt as though it belonged to cohabitating grad students, not a married couple. My wife and I tied the knot a few months before Luke’s birth, so our friends and family look at us more as new parents than as newlyweds. That’s usually the way we see ourselves too. Marriage, though, requires as much attention and devotion as parenting. You can easily get lost in the wonder of watching your son explore the world around him and forget that less than a year ago you stood in front of the people you love and pledged to be with each other forever.

Now, after Luke falls asleep, Ali and I sit down in our new cream-colored chairs. We rest our glasses of wine on the table and talk about our day. And for a moment, it’s only us.

Taylor Tepper is a reporter at Money. His column on being a new dad, a millennial, and (pretty) broke appears weekly. More First-Time Dad:

MONEY Careers

Make Sure a Friend’s Unemployment Doesn’t Ruin Your Friendship

140725_FF_FriendshipEmploy_1
Melissa Ross—Getty Images/Flickr Open

Millennials and new college grads still face a tough job market, and that can create strains in your social circle. Follow this script to keep everyone happy.

You and your best friend graduated from the same college and moved to the same city at the same time. But while you landed a promising entry-level position, your friend’s been out of work for months. Even though you know that shouldn’t affect your relationship, you’re starting to feel that the two of you are drifting apart. Or maybe you’re simply sick of hearing yourself repeat the same chirpy platitudes (“I’m sure something will come up!”).

As millennials and new grads enter the job market together, one friend’s unemployment can easily become a point of tension. Landing a position is an uphill battle for some young job seekers. The unemployment rate for 20- to 24-year-olds stood at 10.5% in June. Although that number has been on the decline, it’s still higher than the overall unemployment rate of 6.1%

“This mirrors a lot of other life-stage issues, whether it’s getting married or getting pregnant. One person is moving forward, and the other one is stuck,” says Ken Clark, a certified financial planner and psychotherapist.

The good news? You can take steps to ensure that your relationship doesn’t crumble as your friend scrambles for a job. No matter how long this stretch of unemployment lasts, here’s what you can say (or not say) to preserve your friendship.

YOU SAY: “A couple of people are coming to my place for happy hour this week—want to join?”

While your friend looks for work he or she may pull away from you or your group of friends. It’s normal—many people are embarrassed and reluctant to spend money on socializing when they’re unemployed. But if you notice your friend hasn’t been around much, try to draw him or her back into your social circle.

“A sensitive friend should take a leadership role among their circle of friends,” says Clark.

If your group of friends tends to spend a lot of money at bars or eating out, subtly push for a change. Invite a close group over for drinks at your place, or suggest a half-price movie or a free concert you can all attend. If spending time together doesn’t mean spending money, your unemployed friend may find it easier to join in.

“People have a tendency to self-isolate when they’re trying to be careful with their money,” says Amanda Clayman, a financial therapist and author of financial behavior blog The Good, the Bad and the Money. “Go above and beyond in terms of making offers to your friend.”

YOU DON’T SAY: “How’s the job hunt going this week?”

Avoid the impulse to dig for details on the job search. Trust that you’ll hear when a major development comes up.

“Stuff doesn’t change that much in a week,” says Clark. “If you’re asking more than once a month, it’s too much.”

That said, don’t stop checking in. Retreating from your friend could cause him or her to become even more isolated.

“Your presence and availability is huge for someone who’s hurting,” says Maggie Baker, a psychologist specializing in money and relationships. “The worst thing you can do is pull away.”

YOU SAY: “I could really use a running partner tomorrow.”

Be aware that unemployment can quickly give way to depression. Exercise is an easy, natural way to shake the blues. Invite your friend out for a brisk walk or run with you. It’ll give you two time to talk one-on-one and help your friend re-energize.

“Physical exercise outside is both beneficial and free,” says Clark. “You’re helping elevate her mood, decreasing anxiety, and building your relationship.”

YOU DON’T SAY: “I can give you feedback on your résumé if you’d like.”

You might want to offer to help edit your friend’s résumé or forward job listings that seem relevant. Tread lightly. Your offers could backfire if they come off as condescending.

“Just having a job doesn’t make you an expert on résumés,” says Clayman. “Don’t presume that you have the solution.”

Instead, make a gentle, broad offer to help in any way you can. Beyond that, let your friend’s reaction guide you.

“Usually if people are scrambling to find whatever work they can, they put off a very strong signal. If you aren’t seeing them ask for help, better safe than sorry.”

Read more Face to Face columns:

 

 

MONEY Spending

Even Kanye Thinks ‘Luxury’ Has Become Code For ‘Rip-Off’

Kim Kardashian and Kanye West
Kim Kardashian (L) and Kanye West attend the "Charles James: Beyond Fashion" Costume Institute Gala at the Metropolitan Museum of Art on May 5, 2014 in New York City. Mike Coppola—Getty Images

There's a revolt against 'luxury' items, and it's coming from an unexpected place: the rich.

“Fancy” may be the song of the summer, but there’s a revolt brewing against brands that seem to offer more form than function.

Consumers fighting back against high-priced products wouldn’t be very surprising on its own. The economy is recovering, yes, but many Americans are still unemployed or are stuck doing low-paying or part-time work.

But this time around, it’s not just average Joes balking at the high price of a Gucci handbag. (Let’s face it, they weren’t the ones buying that kind of gear anyway.) Instead, criticism is coming from an unexpected corner of the market: the rich, the taste makers, and even the Louis Vuitton Don himself, Kanye West.

In June, the outspoken rapper appeared at the Cannes film festival and essentially declared war on so-called premium products.

“My goal in lifestyle, in everyday life—to change the idea of what luxury is,” said West. “Because time is the only luxury. It’s not all these brands that we just drove by that are somehow selling our esteem back to us through association.”

Kanye made the same point more explicitly earlier this month to an audience in London—this time with the aid of auto-tune. “It’s like they want to steal you from you, and sell you back to you after they stole it,” declared West in what would become a 15-minute rant against everyone from Nike and Gucci to the media and marketers. “They want to make you feel like you less than who you really are.”

It’s hard to tell whether Yeezy has actually turned on high end items or if this is another episode in his love-hate relationship with an industry that often spurns his increasingly desperate advances. Despite the recent outbursts, he’s still selling a Kanye branded plain white t-shirt for $90 a pop.

But if West’s criticism rings hollow, he’s not the only aesthetic icon slamming the ‘luxury’ label. On Friday, British designer Jasper Morrison, known for his utilitarian “super normal” style, let loose against anything marketed as upscale. “The most common mistake people make is believing the term “luxury,” Morrison told the Wall Street Journal. “It’s become an excuse for a lack of common sense, and invariably stands for overpriced, poorly considered product, whether it’s a hotel, an apartment block, a handbag or a holiday.”

It’s not just the creative class who have tired of paying $500 for a particular pattern. High-end consumers across the board are sick of it too. The Journal reports that growth in the luxury market has slowed, with sales rising 7% last year, down from 11% from 2010 to 2012. The reason? Sky high prices and a decreasing perception of quality.

While the cost of most goods has remained mostly stagnant during the recession, the price of luxury items has skyrocketed. The average price of luxury goods jumped 13% in 2013 while the consumer-price index rose only 1.5%. A Chanel quilted handbag is now $4,900, a full 70% more expensive than the same item five years ago.

Why are ritzy items getting more unattainable? The answer seems to boil down to two main factors. As the middle class shrinks, wealthy customers have been driving an ever larger percentage of retail sales. While many middle-market and low-end brands suffered in the wake of the financial crisis, businesses with a focus on high earners actually reaped a hefty profit. As a result, companies like Saks have been focusing more and more on the high-end. In the same vein, traditional top-tier brands seem to be raising prices to differentiate themselves from entry-level luxury products.

Another issue is the perceived quality of these so-called luxury items. According to the most recent Survey of Affluence and Wealth, published by YouGov and Time Inc., America’s richest consumers say companies don’t make the top-shelf like they used to. Seventy-eight percent of the affluent and wealthy report that many luxury goods are not compelling to them, and 71% of those surveyed claimed that most new products marketed as “luxury” are not what they consider to be luxury at all.

The result has been a developing consensus that many of these items are no longer worth the asking price. The Wirecutter, a website devoted to finding the “best” products in every tech category, is characteristic of this type of luxury backlash. In May, the site posted an article specifically devoted to convincing readers not to buy Beats, a premium brand of headphones marketed by celebrities like Jay-Z and Dr. Dre.

“Beats have positioned themselves as a luxury brand. And once you have a “high-end label mentality” at work, prices often go up higher than they should or need to be,” writes Lauren Dragan, the Wirecutter’s resident headphone expert. “While we’re happy to pay more to get higher quality, we aren’t willing to pay more simply for the name slapped on the side.”

MONEY First-Time Dad

What Millennials Want That Their Boomer Parents Hate

Luke Tepper
Luke looks around for the inflation that has yet to come Taylor Tepper

It is nine letters long, (not legal weed), and causes investors' blood to boil.

Inflation. We really want some inflation. Now, if possible.

Macroeconomic forces are not top of my mind all the time. A couple of weekends ago, for instance, my wife and I played poker and drank beer on our friend’s rooftop patio. Our son Luke, clad in his new miniature gondolier outfit, crawled between our legs as one person after another told us how cute he was. That night Luke held onto one of my fingers while I gave him his midnight feeding. Later my wife and I slipped into his room for a few moments to watch him sleep.

I can tell you that at no point during our perfect summer day did the word inflation pop into our heads. We went to sleep thinking just how lucky we were to have such a beautiful son, rather than dwelling on the fact that we face an inflationary climate that is hostile to the economics of our new family.

We aren’t strangers to what economists call “headwinds.” Mrs. Tepper and I graduated from the same really expensive private college in 2008, just as the nation was mired in the worst recession in 80 years. We attended college (and later graduate school) as state governments across the country drastically cut higher education spending, which meant higher costs, which meant that we incurred a combined six-figures student loan marker. And entering the job market in the teeth of negative economic growth means we’ll be playing catch-up for years and years.

Given all that we (and Americans, generally) have endured since 2008, it might seem strange that I would ask for higher inflation. When the prices of goods rise quickly, the Federal Reserve is apt to raise interest rates. Higher interest rates make it more expensive to purchase a house, or borrow for anything. Don’t I want to own a house? What’s wrong with me?

For a little bit of context, let’s back up and look at where inflation has been over the past six years. If you look at the core price index for personal consumption expenditures (or core PCE), inflation is rising at an annual rate of 1.5%. In fact ever since Lehman Brothers declared bankruptcy it has barely budged over 2%.

inflation...

Even if you look at a broader inflation metric, like the consumer price index, prices have risen at 2.1% or lower for almost two years.

What does this mean?

For one thing, wage growth has stagnated at around 2% since we left school, and job growth, while picking up lately, has been relatively slow. Weak job creation and small pay increases means that people have less money to spend, which means fewer jobs and the cycle goes round and round.

So more economic growth (spurred on by more borrowing and spending) would help alleviate low wage growth, and help us ramp up our weekly paychecks. But it would also do something else. It would help us pay down our student loan debts.

Super low inflation is bad for people who have debt. Right now Americans owe more than $1.1 trillion in student loan debt. That means people our age are receiving raises that aren’t that high and have to confront a record level of debt before their careers really get going. With so much of our take-home pay earmarked for debt service, no wonder housing isn’t a priority, or affordable, for millennials (or the Teppers).

Of course, this kind of talk scares our parents (and rich people), who own bonds and other assets designed to preserve wealth instead of create it. Having already endured years of low interest rates, they really don’t want their bond portfolio to be hit by an inflation jump.

To which I say, tough. Many boomers entered the job market as the economy was expanding and college was affordable. Their children did not.

Luke has this one toy that he loves. It’s a sort-of picture book for infants consisting of a crinkly material, and he loves nothing more than smashing the thing between his hands and feet. In 17 years, he’ll want a car—and then four years of college.

I realize that the costs of these things will rise—prices always rise. It would just be nice if our salaries rose enough to pay for them.

Taylor Tepper is a reporter at Money. His column on being a new dad, a millennial, and (pretty) broke appears weekly. More First-Time Dad:

 

Your browser, Internet Explorer 8 or below, is out of date. It has known security flaws and may not display all features of this and other websites.

Learn how to update your browser
Follow

Get every new post delivered to your Inbox.

Join 46,525 other followers