Think you missed out on big holiday savings? The post-holiday clearance rush may be getting long in tooth, but some purchases are better left until now -- after the New Year's Day holiday.
Despite those enticing pitches -- "We're clearing out!" "Our biggest sale of the year!" "Didn't get what you want? We can fix that!" -- experts say sales aren't yet at their best for many items. Waiting for 2014 could mean better deals on purchases as varied as Caribbean cruises and winter coats.
"Everything, if you can wait, will be priced better in January," said Michelle Madhok, chief executive of sale-tracking site SheFinds.com. "Because people have access to a wider variety of items and are able to shop smarter, we're seeing more frequent price reductions."
Some are short-term savings, while others are part of a longer-term downward trend:
For automakers, 2013 was a banner sales year -- which could make 2014 even more competitive. "The pressure is on car companies to keep up the good news," said Lincoln Merrihew, vice president of transportation for market research firm Millward Brown Digital. Drivers are likely to see more money on the table as automakers fight for sales and market share. Truck deals in particular could be excellent, with launches such as the GMC Canyon and Chevrolet Colorado fueling competition in a market segment where supply already outweighs demand, he said.
On the used-car side, prices also have been dropping. According to Edmunds.com, the average used car sold for $15,617 during the third quarter of 2013, down 2.8 percent from the previous quarter. Deals are likely to get even better in 2014 as more cars come off their three-year leases, flooding the market, said Merrihew.
If you're in the market for outerwear, there's a short window in January when coats and jackets are at their cheapest, said Madhok. Nordstrom (JWN) and Eddie Bauer are among the brands whose discounts have already reached as much as 60 percent off. Don't wait too long -- by February, selection is minimal, if stores haven't already shipped the few pieces left out to outlets, she said.
In March 2013, a Supreme Court ruling upheld consumers' right to resell products they have purchased. At the heart of the case: a student who bought less-expensive international editions of textbooks, which he later resold on eBay (EBAY). %VIRTUAL-article-sponsoredlinks%Shoppers are likely to see more of these inexpensive texts on the market in 2014, both from international sellers hawking new versions and students reselling used copies. Savings can be impressive. On Amazon.com (AMZN), a new U.S. copy of the 12th edition of "Principles of Risk Management and Insurance" runs $212; a like-new global edition is as little as $126.
But international textbooks aren't always a good buy. "They're usually printed on very flimsy paper that's incredibly thin," said Mark Kantrowitz, senior vice president for Edvisors Network. The book might fall apart mid-semester. Page numbering may also differ from U.S. edition. "So if the professor says read pages 33 to 53 for tomorrow, you have to figure out what that really means," he said. Renting a textbook or buying a used U.S. edition might be a better value.
Missed the $200 Black Friday TV doorbusters? Don't worry -- in January, "we're probably going to see even better deals than on Black Friday," said Brent Shelton, a spokesman for deal site FatWallet.com. Manufacturers often introduce new models during the International Consumer Electronics Show next week, prompting price drops on the soon-to-be old models. Then pre-Super Bowl sales kick in. The resulting discounts are often as deep as those on Black Friday, but encompass a wider range of brands and models, Shelton said.
Last-minute cruise deals for January have already dropped below $60 per night in some cases, which represents discounts of more than 50 percent. Expect Caribbean cruises to stay cheap in 2014, as lines launch new routes and bring new ships, such as Carnival (CCL) Splendor and Norwegian (NCLH) Getaway. "They have a lot more berths to fill," said Stephanie Serino, a luxury cruise consultant with Tzell Travel Group in New York.
Airfare is likely to get cheaper, too. JetBlue (JBLU) recently announced it would expand service to the Caribbean, adding five new routes to two new destinations, Port-au-Prince in Haiti and Port of Spain in Trinidad and Tobago. "They come into the market and they take over the market," said Serino. That forces legacy carriers to compete with better-priced fares.
Nearly one in four people say they don't have money to contribute to retirement after all the bills are paid. It might feel that way sometimes, but if we can find the $50 to go out to dinner every Tuesday night, we can find $200 a month to put in a retirement account. Make this happen, even if you have to do it one dollar at a time over the course of the month.
And if you think putting away $50 a week won't make a difference, consider this: Contribute just $200 a month for thirty years, and if your money grows on average 8% a year, your total contributions of $72,000 will grow to almost $300,000 if put away for 30 years. When you think about it that way, skipping that regular Tuesday dinner doesn't seem so bad, does it?
This is one of the most seductive retirement lies. For a good long while, it is true that retirement is a ways off. (Even if you're 55, it's still at least ten years away.) But the longer you put off saving for retirement, the less interest you'll earn and the more difficult it will be for you to save.
An example: Alex and Jordan both put just over $90,000 in their retirement accounts over the years, but Alex began saving ($2,000 per year) at age 22, while Jordan began saving (about $3,500 per year) 20 years later at age 42. Even though they both put in the same total amount, Alex will have over twice as much money at retirement as Jordan will when they reach age sixty-seven (assumes a 6% annual rate of return). That's because her money had more time to grow, so it was able to make more off of itself than Jordan's.*
Seriously, you have two people who put the same dollar amount into their retirement funds. The one who started twenty years later contributed the same amount, but ended up with less than half as much.
As someone who cares about making my money work for me, this speaks volumes. It turns out that one of the smartest things you can do is simply to get time on your side. This is how you shortcut the hard work-by taking advantage of the power of compounding interest and the fact that you will only have an increasing number of financial obligations pulling at your purse strings as the years go by. So, this is not something you can keep putting off. This is something to tackle today. The time is now.
* Note: This is illustrative and is not reflective of guaranteed profits over time. Actual results may fluctuate based on market conditions.
I bet all the married people reading this are having a good laugh right now. Marriage does not automatically make your financial life easier. The effect of marriage on your finances depends on a host of factors: Do you both work? Do you both make enough to support yourselves? If one or both of you got laid off, could you still afford your rent or mortgage? Are you honest with each other about your spending? Do you agree on your financial goals? Will you have children? If so, do you make enough that one of you can stay home with them? Bottom line: This is an outrageous excuse, and now I am drinking wine.
Maybe today's retirees can say this. But the future of Social Security is uncertain. Anyone retiring in the coming years should not rely on this as a be-all and end-all. If the system doesn't go bankrupt and you get to plan B? I don't know about you, but that's a risk I won't take.
I hear you. But saving for retirement versus enjoying life now is not an either/or proposition. You can do both. Also, let me put it this way: Yes, you deserve to enjoy
your money now, but you also deserve not to count pennies when you're old.
This is a case of counting chickens before they hatch. You never know what could happen to the inheritance (it could be devoured by medical bills, it could dwindle away in a financial crisis, or you may need it to pay off debts or taxes of the estate). Sure, it would be nice to inherit a windfall and be able to put it toward your retirement, but counting on doing so is not a plan-it's a gamble at best. It's far safer to plan to fund your own retirement and then enjoy your inheritance as a bonus if you do indeed receive one.
Yes, the market is unreliable from year to year, and yes, the value of your investments will dip in a down market. But downswings don't last forever, and historically, over long periods of time, the market has shown solid returns. While past performance doesn't reveal future returns, the S&P 500, for example, has averaged 9.28% annual returns over the last 25 years.
Alternatively, let's say you leave your money under your mattress or even in a savings account bearing 1% interest: You're going to lose the purchasing power of those dollars due to inflation (which is estimated at 3%). Yes, with the market, you're opening yourself up to some risk -- but with risk comes reward.
No one can predict the market. No one. So while it's true that you cannot time your investments perfectly so that they only ever go up, history has shown that if you invest regularly over decades, your investments should experience more ups than downs. So invest for the long haul, and don't fret over minor dips now. If you do, you'll be missing out on an opportunity to amass money later.
Sure, selling your home will free up lots of cash ... but then where will you live? And what if the market is down when you want to sell that home? Remember the housing crisis a few years ago? The one where tens of thousands of near retirees were left without nest eggs after the values of their homes plummeted? This is not your smartest game plan.
Yes, college is a big expense, and you should definitely save for it-that is, once your own retirement needs are taken care of. If you're a parent, it's a natural instinct to put your children's futures before your own. But think about it this way: If you don't save the full amount for your children's college education, you can always fall back on financial aid, grants, scholarships and student loans to help pay your children's way. When it comes to your retirement, however, there are no loans. Let me repeat: There are no loans. All you'll have to live on is what you've saved. For that reason, saving for retirement should be your top financial priority-always. I get that you don't want to saddle your kids or future kids with loans- what parent would?
But remember that if you pay for your children's college and then cannot afford your retirement, you will end up burdening your children all the same. They will feel obligated to help you out-at a time when their own families need them financially.
You may love your work, and it may be the kind of work you can even imagine yourself doing well into your seventies or eighties. But while that's easy to say now, what if you can't find work at that point in your life, or what if you have health problems or family obligations that prevent you from working? While there is nothing wrong with hoping for a best-case scenario, it isn't wise to plan around one. Sock away some money now so you're ready for whatever may come your way. The last thing I ever want you to deal with is a health issue and money concerns at the same time.
Reprinted from the book "Financially Fearless: The LearnVest Program for Taking Control of Your Money" by Alexa von Tobel, CFP®. Copyright 2013 by Alexa von Tobel. Published by Crown Business, an imprint of the Crown Publishing Group, a division of Random House LLC, a Penguin Random House Company.