Ryan Byrd’s Ramblings

As any of your with wives or CompUSA addictions know, “Black Friday is the day after Thanksgiving and is the beginning of the traditional Christmas shopping season in the United States. … Many retailers open very early (typically 5 A.M.) and offer doorbuster deals and loss leaders to draw people to their stores. “Black Friday” was originally so named because of the heavy traffic on that day, although most contemporary uses of the term refer instead to it as the beginning of the period in which retailers are in the black (i.e., turning a profit).” [wikipedia]

I think that instead of joining the rapid, pre-dawn fray, we might consider other entertainment options this Black Friday. Let me explain.

I’m all for commerce, and in full disclosure, I have historically possessed no sense of thrift or fiscal responsibility, but, as the saying goes, alcoholics know the signs of alcoholism better than anyone.

So, with that disclaimer, let’s talk savings. It has been widely reported that Americans are saving less and less money. In fact, we recently crossed the black line. The number crunchers call this a negative savings rate. It might be good for retailers, but it’s a risky proposition for consumers. This news broke two years ago, when the U.S. Commerce Department’s Bureau of Economic Analysis first announced a national negative savings rate of 0.5 percent for the year. That’s the first time that’s happened since the Great Depression. Of course, if your savings rate is in the red, that doesn’t necessarily mean *you* are; it just means you’re spending more than you earn, so you’re dipping into your savings or you’re borrowing to pay for purchases. This is a relative new trend, back in 1985 the average savings rate was 11.1 percent (of our disposable income.) [bankrate.com] One reason for the low savings rate is the lure of credit cards. “Credit is more readily available, and younger people are targeted,” says Stacey Lannoye, a financial educator in Tacoma, Wash. “They don’t get how credit works, and there’s so much to buy.” I personally get several credit card offers in the mail each week. “But the biggest reason for our poor savings rate is that people have been borrowing against assets — mainly their homes — to get their hands on spending money. The median price of a home rose 24.5% from 2001 through 2004. The real boom period was 2005: The median home price — half cost more, half cost less — soared to $206,600 from $184,100 in 2004. Homeowners have been using home equity — the difference between the value of their home and their mortgage — at an astonishing rate. Fully 80% of mortgage refinancings last year were “cash out.” That means borrowers refinanced to a larger loan balance to get their hands on some cash to spend. ” [USA Today] “Our sense is that people don’t have enough put away for a rainy day,” says Jack Gillis of the Consumer Federation of America. A CFA study last year showed that young women were particularly poor savers: 55% of women ages 25 to 34 had less than $500 in an emergency fund. And 42% of all women said they had no emergency fund at all. ” [USA Today]”There is, of course, one way out: to live more simply. “You can live off your income if you lived the way people did in the 1950s,” Wyss says. That means one car in a family, a small home and fewer gadgets.” [USA Today]

“Go back to basics. Save 10 percent of gross income every single year. For some reason we’ve gotten away from feeling that saving is our responsibility. We have to save for ourselves,” says Tony Proctor, certified financial planner.

Ben Franklin even had some advice for us when he wrote, “If you would be wealthy, think of saving as well as getting.”

So, I’ve begun saving. Rather than use a standard 1-2% savings account, I opened an ING Direct account. ING Direct is the largest online bank in the United States. They are very conservative/old-fashioned with how they lend money. As an illustration, in this era of massive write-offs from sub-prime lending, ING has had only 11 foreclosures total. That’s impressive. As a bonus, ING Direct will even pay you to open an savings account. Send me an email and I’ll reply with a ING direct invitation. If you click the link and deposit $250.00, ING will give you $25 and me $10 (assuming you keep the money in the account for 30 days). That’s 10% ROI immediately. Did I mention that ING savings accounts earn 4.8% interest?!?

srcs: http://www.usatoday.com/money/perfi/general/2006-03-01-savings-cover-usat_x.htm http://www.bankrate.com/brm/news/sav/20060308a1.asp http://www.cbsnews.com/stories/2006/02/07/business/main1293943.shtml http://www.msnbc.msn.com/id/11098797/