Talking about your finances with your family is already hard. But telling them you can't afford to go home for the holidays is the conversation you're absolutely dreading. But you aren't alone. According to a recent Wallethub survey, 33 million Americans don't have the funds for holiday travel this year.
"U.S. consumers will be shelling out billions of dollars in extra charges they otherwise could be spending on other things such as travel," Mark A. Bonn, director of the resort and vacation rental management program at Florida State University, tells TravelPulse. "This makes it difficult to travel now, let alone after the holiday spending has ended."
If traveling home isn't an option this Christmas, it's time to talk about it with the fam. It isn't always easy, but it might just be a chance to open a larger conversation that will deepen your relationship.
"Talking about finances with family can be awkward," Laura J. Pilz, a Merrill Lynch financial advisor tells US News and World Report, "but the holidays present a perfect opportunity to have a short discussion with family members on tough topics like this." So how do you break the news to the folks? Here's a handy guide.
It may be tempting to have as little human interaction as possible, but when it comes to a topic that's as emotionally triggering as not coming home for the holidays, a phone conversation is essential. Email and text can be easily misinterpreted as either hostile or insensitive. So do everyone a favor and set up a time for a good-natured talk.
"Call at a time when you are available to have a full conversation, not in the five minutes between meetings," suggests Susan Fales-Hill, etiquette columnist for Town and Country Magazine. "You want to give your loved ones the time to express what they feel, not make the announcement to them and hang up, like that lover who dumped you via text message."
Explain Your Financial Situation Now...and Your Plans For 2019
The next step is to have an open and honest conversation about your finances. Show that you've done your research: know the cost of a roundtrip ticket and added expenses, and what it means with respect to your debt or limited cash flow. Be open about how this trip isn't responsible for you to take this year, and then shift the conversation into how you're making changes so that next year you can make the journey. Whether it's taking proactive measures in your job search or saving up enough to meet financial goals for the following year, it's crucial to ease your family's concerns about your current status.
Prepare For Hard Questions
No matter what you say, you're bound to raise some concerns. Remember: it's not judgment, it's love. Don't be defensive, be informative. Write down a few responses to questions you're expecting ahead of time, in order to further ease their worries rather than fuel them.
If you're currently out of work, present your plans to change your current situation before the question, "when are you getting a job" even comes up. "I might preempt it," Jodi R.R. Smith, founder of the etiquette consultancy Mannersmith, tells AOL. "I can say, 'I'm doing great, I'm working on some temporary assignments that might turn into work.'"
If you're one of the 57 million freelancers in America right now, chances are your income isn't as steady as if you were working one full-time corporate gig. "My biggest stress with family around the holidays is being judged," freelancer journalist and publicist Wanda Felicita Ortiz tells Refinery29. "I try to stress that my work is just as valid as that of people who work one job full-time — it's not that people freelance because they're 'lazy.'" Take some time to explain how your business works, how you're hustling now and what the returns will mean in the long-term.
Give the Conversation a Positive Spin
If this is the first time you're being truly open about your finances, lean into that narrative. Tell your folks you want to be able to talk to them about this topic moving forward and even glean their advice now and in the future.
"Talking about money openly and honestly throughout the year helps to make it less taboo to have those discussions around the holidays," financial coach Emily Shutt tells Chimebank. "If it's treated as a normal dialogue, it will become just that."
Be there in Spirit
Just because you can't make it home this year, that doesn't mean you can't spread the love.
"Spending the holidays away from your family doesn't mean ignoring your folks, and it isn't an excuse to be inconsiderate," explains Slate's June Thomas. "If you exchange gifts, select them with the same attention you would if you were going to be present at the unwrapping, mail them to arrive in time for the holidays, and be sure to call home to wish everyone a Merry Christmas—at a designated time if you want to speak with as many family members as possible."
Don't Beat Yourself Up
Remember, you're not a bad person. You're doing the best you can under financial constraints that make it impossible to be everything to everyone. You don't have to apologize for your absence, but you can offer some consolation ideas that let your family know you love their company. Offer to host them for the holiday if they're willing to travel, or if that's not an option, make a tentative plan to visit for a belated celebration in the new year. Just make sure to end the conversation with three simple words: I love you.
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The Federal Reserve sets the guardrails for the federal funds rate, and through that helps control the money supply for the nation.
When you take out a loan for a car, charge something to your credit card, or get a personal line of credit, there is going to be an interest rate that applies to your loan.
A lot of different factors go into what you will be charged, including your own personal credit score. But even those with flawless credit still see a minimum charge that they can't get around. That all goes back to the Federal Funds Rate.
One thing consumers rarely realize is that all of our banks are lending money to each other every night. Banks are legally required to maintain a certain percentage of their deposits in non-interest-bearing accounts at the Federal Reserve to ensure they have enough money to cover any withdrawals that may unexpectedly come up. However, deposits can fluctuate and it's very common for some banks to exceed the requirement on certain days while some fall short. In cases like this, banks actually lend each other money to ensure they meet the minimum balance. It's a bit hard to imagine these multibillion-dollar financial institutions needing to borrow money to tide them over for a bit, but it happens every single night at the Federal Reserve. It's also a nice deal for those with balances above the reserve balance requirement to earn a bit of money with cash that would normally just be sitting there.
The exact interest rate the banks will charge each other is a matter of negotiation between them, but the Federal Open Market Committee (FOMC) (the arm of the Federal Reserve that sets monetary policy) meets eight times a year to set a target rate. They evaluate a multitude of economic indicators including unemployment, inflation, and consumer confidence to decide the best rate to keep the country in business. The weighted average of all interest rates across these interbank loans is the effective federal funds rate.
This rate has a huge impact on the economy overall as well as your personal finances. The federal funds rate is essentially the cheapest money available to a bank and that feeds into all of the other loans they make. Banks will add a slight upcharge to the rate set by the Fed to determine what is the lowest interest that they will announce for their most creditworthy customers, also known as the prime rate. If you have a variable interest rate loan (very common with credit cards and some student loans), it's likely that the interest rate you pay is a set percentage on top of that prime rate that your lender is paying. That's why in times of low interest rates (it was set at 0% during the Great Recession), a lot of borrowers should go for fixed interest rate loans that won't increase. However, if the federal funds rate was relatively high (it went up to 20% in the early 1980's), a variable interest rate loan may be a better decision as you would be charged less interest should the rate drop without the need to refinance.
The federal funds rate also has a major impact on your investment portfolio. The stock market reacts very strongly to any changes in interest rates from the Federal Reserve, as a lower rate makes it cheaper for companies to borrow and reinvest while a higher rate may restrict capital and slow short-term growth. If you have a significant portion of your investments in equities, a small change in the federal funds rate can have a large impact on your net worth.
Whether you're leaving a job involuntarily, departing for something new, or just want to prepare for the unknown, it is smart to understand all your options regarding your 401k.
diy gifts
Frugal gifting often gets a bad reputation. However, this shopping method does not make you cheap — it makes you practical. Frugal gifts often avoid waste and overspending and can be just as meaningful (if not more so) as any other present.
With the National Retail Federation predicting each consumer this holiday season to spend upwards of $1,000 on holiday gifts amidst an economic recession —this year might be the perfect time to reconsider your spending budget. We've formulated the ultimate list of frugal gift-giving ideas to get you started.
