Year: 2021

Recognizing the Abolishment of Slavery and Compensating Law Enforcement, Overseas Federal Employees and Disaster Relief Victims

Recognizing the Abolishment of Slavery and Compensating Law Enforcement, Overseas Federal Employees and Disaster Relief VictimsJuneteenth National Independence Day Act (S 475) – This bill authorizes Juneteenth National Independence Day on June 19 as a legal public holiday. The bill was introduced by Sen. Ed Markey (D-MA) on Feb. 25. It was passed by both the House and the Senate on June 16 and signed into law by the president on June 17.

Protecting America’s First Responders Act (S 937) – This bill was introduced by Sen. Chuck Grassley (R-IA) on April 29. The legislation ensures that certain law enforcement and first responders who have become permanently and totally disabled as a result of personal injuries sustained in the line of duty have prompt access to specific payments and benefits. The bill passed in the Senate on June 10 and is currently under consideration in the House.

HAVANA Act of 2021 (S 1828) – This bill provides financial support and resources for American officials suffering from the so-called Havana Syndrome – a mysterious set of symptoms that first affected federal employees stationed in Cuba in 2016. The bill authorizes disability benefits to American personnel who have experienced qualifying anomalous health incidents while serving in other countries throughout the world. The legislation was introduced by Sen. Susan Collins (R-ME) on May 25 and passed in the Senate on June 8. It is currently under consideration in the House.

Preventing Disaster Revictimization Act (HR 539) – Introduced by Rep. Sam Graves (R-MO) on Jan. 28, this bill would prevent the Federal Emergency Management Agency (FEMA) from taking back disaster assistance funds that it mistakenly awarded to victims who applied for assistance in good faith. Under current law, FEMA can go back weeks, months or even years to seek repayment of funds in cases where the agency subsequently determined it mistakenly granted assistance, but no fraud was committed. This bill would require FEMA to waive that disaster relief debt. The legislation passed in the House on June 15 and is in the Senate for consideration.

United States Innovation and Competition Act of 2021 (S 1260) – This bill establishes a Directorate for Technology and Innovation in the National Science Foundation (NSF) for the purpose of strengthening U.S. leadership in critical technologies. The legislation authorizes investments in research, development and manufacturing in key technology focus areas, such as artificial intelligence, high performance computing and innovation to support national security strategy. The Office of Science and Technology Policy is to develop an annual strategy for the federal government to improve national competitiveness in science and research, and help grow critical industries to generate jobs for the future. The bill was introduced by Sen. Chuck Schumer (D-NY) on April 20 and passed in the Senate on June 8. It is currently under consideration in the House.

Audits in Accounting: Improving Audit Quality with Data Analytics

Audits in Accounting: Improving Audit Quality with Data AnalyticsAuditing is crucial to ensure the accuracy and fairness of financial information. However, one of the biggest threats to audit reputation today is data quality. This is because of the large volumes of data that businesses produce today. To deal with so much data, auditors are now turning to data analytics.

Data Analytics and Audits

Technology has played a major role in business growth as it aids in reducing operational costs and improving customer service. As such, many businesses have adopted enterprise resource planning (ERP) systems. These systems result in huge volumes of data, making it nearly impossible to analyze using the traditional audit process.

Auditors are left with no choice but to also use IT-based solutions; and this led to the development of audit software to support the auditors in data extraction and analysis.

To further enhance the workings of audit software, it’s now being integrated with data analytics. Given that data analytics works with structured data, the systems incorporate machine learning (deep learning) to extract useful data from a host of unstructured data.

Although these developments in the audit profession have not changed the primary role of auditors, they have changed how an audit is done by helping produce high quality audit evidence.

How Data Analytics Improves Audit Quality

Traditional audits involve combing through piles of data, which is time consuming. As a result, auditors prefer workarounds like data sampling, which does not give a true outcome.

With data analytics, an auditor does not have to restrict data to financial reporting systems only. Instead, they can use data from multiple complete data sets, such as sales statistical data and employee and customer master data. This enables an auditor to go beyond traditional audits that target limited data and include different audit relevant data.

Using data analytics tools, auditors look for predefined patterns that help reveal ambiguous relationships between variables that a manual system might not identify. This helps facilitate a more comprehensive decision that includes all data sets.

By integrating data analytics, auditors have access to a powerful tool that helps them better understand a business. As a result, they can easily identify key audit risks, provide deeper insights into a business’ systems and controls, detect fraud, and provide value in a less costly manner.

Apart from simplifying and speeding up the audit process, data analytics also enables auditors to focus on key risks.

The capabilities of data analytics continue to evolve to the point of automating the auditing process through advanced data analytics (ADA). This enables the automation of routine audit processes, allowing the auditors more time for matters that require professional judgment.

Challenges of Audit Data Analytics

Audit data analytics isn’t without a few challenges, one of which is data exchange between a business and an auditor, whether internal or external. This is in relation to different systems used in data collection. To handle this challenge, the AICPA introduced data standards to be used for data requests and to ensure production of standard reports from the ERP systems.

Another challenge is the integrity of data fed into the analytics systems, as this determines the quality of the end results. Systems used should be designed around collecting meaningful data. Auditors must also ensure that the conclusions fed into the systems are accurate and correct.  

Although data analytics reduces the sampling risk, it introduces the challenge of getting numerous exceptions, mostly referred to as outliers, that produce results outside audit expectations. This calls for auditors to investigate the exceptions/outliers to determine if they are errors or misstatements.

Conclusion

Integrating data analytics into the audit process greatly improves audit quality and credibility. With rapid advancements in technology, the capabilities of data analytics will continue to evolve, making auditing work even more efficient while maintaining high quality.

Although the adoption of data analytics is dependent on the size of a business, availability of skilled staff is also crucial. To remain relevant in a fast-changing environment, auditors need to advance their skills to effectively use the data analytics tools.

5 Tips for Going Back to the Office

5 Tips for Going Back to the OfficeSlowly, our world is changing. A percentage of the population has been vaccinated and many employees are headed back to the office. However, this may cause a bit of anxiety – and understandably so. Here are few ways to help take the edge off of returning to the workplace.

Wake up Earlier

For some of you, working from home might have caused you to shift your office hours. Maybe you’re starting later and staying up later. Whatever your routine, it’s safe to say that generally, office hours are 9 a.m. to 5 p.m. A few days, perhaps a week, before you expect to go back, set your alarm earlier. Each day, baby step it back a few minutes to the time you roused yourself before the shutdown began. Though things might never be the same, at least your re-entry into the work world might feel somewhat familiar.

Prepare the Night Before Your First Day

Along with starting your day earlier, think through everything you need to take with you. Do you drink coffee? Make sure you have a thermos with a hot cup of joe ready to go. Do you eat lunch at work? Make your lunch the night before; or if you prefer microwavable meals, be sure you’ve got all your favs ready to pop into your work bag. Ensuring that you will have sustenance at whatever time you lunch will save you a lot of worry.

Review Your Workplace Protocols

Here we’re talking about rules to keep you safe. Do you need a mask if you’ve been vaccinated? What if you haven’t been vaccinated? Do you need to always wear a mask? Will there be hand sanitizer onsite or do you need to bring your own? Email HR or leadership to be fully aware of the policy so you can keep up-to-date with any changes. Staying informed will help calm your nerves.

Manage Your Stress

Make sure you’re being mindful of how you’re feeling emotionally before, during, and after you return to work. If you’re dealing with anxiety when you’re back at work, practice self-care. Take a walk outside during lunch to get some fresh air. If you like to exercise and your gym is open, plan a quick workout. If for some reason you can’t leave the office, try meditation apps like Calm, Headspace or Simple Habit. (These are also great when you get home and before you go to bed – anytime, actually.) You might also call a friend or family member and share how you’re feeling. Letting off some steam and expressing yourself helps alleviate some of the pressure that might be building up.

Communicate with Your Team

Making the transition back to the office can be challenging, if not downright tough. To diffuse any misunderstandings, practice transparency with everyone, no matter what their position. If you’re a manager, lay out your expectations so that everyone is on the same page. If you’re an individual contributor, make sure your manager and peers know what you’re working on, your hours, and any out-of-the-office days you have coming up. Many companies are asking employees, initially, to split their time between the office and home, which means that for some a full transition back to the office is yet to come. Regardless, overcommunicating will ensure you don’t miss out on anything important.

We may never return to the days before the pandemic. However, we’re making strides to get back to a place of normalcy and are here to guide you every step of the way.

Sources

https://blog.execu-search.com/returning-to-work-5-tips/

Wishing on a Star: Investors Pour Billions in to SPACs

Wishing on a Star: Investors Pour Billions in to SPACsA SPAC is a special purpose acquisition company. It is typically sponsored by a venture capitalist or a private equity firm that has expertise in a specific sector or industry, such as green technology. A SPAC launches as an IPO, but it is nothing more than a shell company that raises money from investors. Post-IPO, it has a limited amount of time (one to two years) to merge with an existing company, where the capitol is deployed. Once that happens, the private operating company trades publicly under the SPAC name.

While SPACs have been around for about 30 years, they’ve only become popular in the past year or so. In fact, this year investors have already poured more than $100 billion into these vehicles, and that’s more than the total amount raised since they were first introduced. SPACs offer investors the opportunity to buy into a startup, which might be at early-, middle- or late-stage development when it partners with the SPAC. In 2020 and 2021, industries heavily represented by SPACs include electric vehicles, consumer-oriented technology, communications and retail.

What makes the SPAC particularly interesting is that investors do not know what company they are buying into since the entity has no commercial operations of its own. As such, they are sold largely based on trust in the management sponsor and belief in the growth potential for the industry it represents.

SPACs differ from traditional IPOs in that the IPO price is not based on the valuation of an existing business. Instead, investors typically pay $10 per common share of regular stock at the initial offering. These shares are referred to as units. Each unit also includes a warrant, which offers the right to purchase the company’s stock at a specific price and at a later date. Once a SPAC merges with a private company, the shares and warrants are listed and publicly traded on the stock exchange. Capital raised by the sale of warrants is typically used to compensate the SPAC sponsor.

One of the appeals of the SPAC model is that individual investors have the opportunity to invest in a startup that has been vetted and funded by an experienced private equity partner. This presents less risk as well as a ground-floor opportunity that is usually not feasible for individual investors. Most IPO opportunities require higher capital investments and occur at a later stage of development. SPACs provide the opportunity to commit a smaller investment at an earlier stage in a company’s life cycle, which often offers the potential for higher returns.

Unfortunately, the lack of a longer, established track record also increases risk – which is something the Securities and Exchange Commission (SEC) is currently scrutinizing. For now, the SEC has taken a hands-off approach, hoping the market will regulate itself. However, if SPAC sponsors oversell the entity’s capabilities or investors become disillusioned with the returns on their investment, the SPAC market may be subject to considerable regulation in the future.

As for investment returns, the outcomes are mixed. Initial SPAC IPOs tend to outperform the S&P 500. However, once SPACs merge with their respective private companies, the results tend to be less impressive. Given their recent surge in popularity, there’s no way to gauge their long-term performance success. 

How to Develop a Hybrid Work Policy Post-Pandemic

How to Develop a Hybrid Work Policy Post-PandemicAccording to a Prudential survey, 87 percent of respondents said they would prefer to work remotely at least one day per week. This is compared to 13 percent of respondents preferring to work at the office all the time. The same survey found that one-third of respondents wouldn’t want to work for a business that had a 100 percent on-site work policy.

According to a report from Microsoft titled, “The Next Great Disruption is Hybrid Work – Are We Ready?” 54 percent of employees report “feeling overworked” while 39 percent say they “feel exhausted.” The study attributes these employee feelings to an overload of “digital collaboration” through “remote meetings, emails, chats, and groups working on documents together.” With workers reporting a desire for change in the workplace, how can companies develop their own hybrid work policy?

Crafting an Effective Hybrid Work Policy

By developing the right mix of remote work and office work, employees and employers can find a balance that works well for everyone. Looking to Fujitsu, as Harvard Business Review (HBR) explains, we can study a model of how the pandemic changed everyone’s view – including owners, managers and workers – of working in the office all the time.

Hiroki Hiramatsu, head of the human resources unit at Fujitsu, realized that the 120 minutes people spent traveling to work could be put to better use. There was a better mousetrap to be devised to make both the business and its workers more efficient with a hybrid workplace plan. For businesses that want to create more flexible working arrangements, HBR believes there are four areas of focus:

1. Employee’s Position and Responsibilities

The first task is to examine the employee’s position and list of responsibilities. HBR looks at the job of a strategic planner and hones in on the attribute of focus. They are responsible for creating business plans and obtaining details on their industry. Requiring intense focus, they need time that is not interrupted; hence, this can be performed virtually anywhere.

Looking at the team manager, being able to coordinate things is imperative. Team managers are more efficient and effective in person to provide guidance and job-improving feedback while in the office working on projects.

While there’s no cut-and-dry call on where both of the scenarios could be done, with a hybrid work policy, certain tasks can be done anywhere, while other tasks are more effectively completed at home or at the office. A hybrid work policy merges the benefits for businesses and their employees.

2. Worker Inclinations

HBR explains that it’s imperative to understand individual worker preferences and aid teams to work within such preferences. Using the example of two strategic planners, there are different employees with different work and family lives. One lives far away from the office, has a busy family life with kids in school and prefers a hybrid work approach. The other employee is at an earlier stage in their career, doesn’t have a dedicated home workspace and lives near the office.

This stage is where companies can speak with employees and have them take surveys to see how a hybrid workplace policy can be constructed for optimal employee engagement.

3. Reworking How Work is Done

When it comes to working outside the office, HBR explains that in a hybrid work environment, businesses have to get creative, especially with technology. HBR uses the example of the Norwegian Equinor corporation that is involved in handling gas from North Sea fields. In place of normal operations for plant inspections, robotic devices were supplied to provide real-time visual data for inspection engineers to complete their jobs remotely with the same level of accuracy.

4. Equal Policy Application

Regardless of the hybrid policy that’s developed, it’s important to maintain inclusion and fairness. HBR points out that without applying the policy evenly, it can lead to less productive workers, higher rates of burnout, fewer instances of teamwork, and more turnover. Additionally, with select employees having time- and place-dependent jobs unsuited or not optimized for a hybrid workplace, many felt they were treated unfairly when this approach is taken.

HBR gives the example of how Brit Insurance changed the traditional approach to the uneven application of a hybrid work policy. One out of 10 of its employees were chosen randomly, from all departments and job roles. Over the next six months, these employees were put in six-person groups to work together virtually. After reflecting on their working styles and capabilities, and their coworkers’ and company’s needs, they concluded that by developing ideas based on their experience and sharing them with the CEO, change would occur. The project resulted in the Brit Playbook, documenting novel ideas for employees to work together.

While each business is unique and will have its own tailored hybrid plan, taking the time to learn how to develop it effectively it will help reduce problems in implementing it.

Sources

https://news.prudential.com/presskits/pulse-american-worker-survey-is-this-working.htm

https://www.microsoft.com/en-us/worklab/work-trend-index/hybrid-work

https://hbr.org/2021/05/how-to-do-hybrid-right

Restricted Stock & RSUs: 3 Planning Tips

Restricted Stock & RSUs: 3 Planning TipsEquity compensation is becoming more mainstream and is not just for executives anymore. Grants of restricted stock or restricted stock units (RSUs) are getting to be more common than stock options – and the rules are different, as is the tax planning. Below we will look at some of the particulars of how restricted stock and RSUs operate, how to understand a grant, planning for the tax consequences, and what to do after the shares vest.

How Restricted Stock and RSUs Work

At their core, restricted stock and RSU company shares that vest according to a schedule can be awarded as compensation. The vesting schedule can be tied to length of employment, meeting certain performance criteria, or a combination of both. Upon vesting, the employee owns the shares themselves and can do what they wish with them – from holding, selling, gifting, etc. While this might sound simple, the devil is in the details.

Understanding Your Grant

First, it is important to understand that restricted stock or RSUs are similar to stock options but have important tax and financial planning differences.

There are important facts you need to determine. First, how does the vesting schedule work; what amount of shares vest and when? Is the vesting simply tied to length of service or are there performance or even liquidity event triggers? Second, what are your tax-withholding choices?

From there, you can determine or at least estimate key factors such as how much the award will be worth both pre-tax and post-tax.

Tax Planning – Section 83(b) Election

Taxation can be tricky with restricted stock and RSUs. One strategy is to use a Section 83(b) election for restricted stock.

Typically, a person is taxed when the restricted stock vests regardless of whether the shares are sold. The Section 83(b) election allows the taxpayer to be taxed on the share value at the grant date instead. This election can be made within 30 days from the grant date of the restricted stock and is not an option for RSUs.

Why would you want to consider a Section 83(b) election? Remember that regardless of the election or not, you are taxed as ordinary income for the share value regardless of whether you hold or sell the shares. The advantages are that if you think the stock price will rise between the grant and vesting, then you will pay less ordinary income tax and have lower cash outflows. Second, after the initial taxation of the grant, the change in value after this point is capital gains.

Tax Planning – Withholding

The other issue to consider is not withholding enough taxes. The IRS rules say that your company is required to withhold 22 percent for restricted stock and RSUs (37 percent for income over $1 million during the same year).

The problem is that there is a good chance your margin tax bracket is higher than 22 percent if you are receiving these kinds of equity compensation awards. As a result, you will need to make some estimated payments to cover the difference. Unless you have enough cash from other sources, you may need to consider liquidating some of your shares to cover the tax bill.

The conundrum here is that if you do not see the shares immediately and the price falls, then you will be selling shares at a lower value than what you are being taxed on. It is best to consider your holistic tax scenario and work with your tax advisor to come up with a plan.

Game Plan for After Vesting

Aside from the tax consequences, you need to consider the impact on your overall financial planning. One of the biggest risks taxpayers can face is that they become heavily concentrated in the company stock. You will need to look at your overall portfolio and consider if you need to diversify depending on how much of your net worth is tied up in a single stock now.

Some financial planners recommend looking at the situation this way in an example with your shares worth $150,000 at vesting. If you had $150,000 in cash to invest, pay down debt, etc., would you use all of that to buy the company stock? If the answer is no, then why would you hold it? In other words, do not let tax implications lead your financial planning decisions.

Conclusion

More and more companies are issuing compensation in equity forms such as restricted stock grants or RSUs. Make sure you understand your vesting schedule and conditions so you can plan for the tax implications as well as your overall financial picture.

Addressing Hate Crimes, Banks Serving the Cannabis Industry and Unilateral Power to Restrict Immigration

Addressing Hate Crimes, Banks Serving the Cannibis Industry and Unilateral Power to Restrict ImmigrationComprehensive Debt Collection Improvement Act (HR 2547) – This bill would expand financial protections and restrictions on debt collection activities for consumers, in particular for private student loans and medical debt. The legislation would require lenders to discharge private student loan debt if the borrower dies or becomes permanently disabled. It would prohibit consumer reporting agencies from adding any information related to certain situations, such as debt arising from a medically necessary procedure, and restrict certain debt collection practices.

The bill was introduced by Rep. Maxine Waters (D-CA) on April 15. It was passed by the House on May 13 and is currently under consideration in the Senate.

COVID-19 Hate Crimes Act (S 937) – This bill was introduced by Sen. Mazie Hirono (D-HI) on May 23. The legislation authorizes the designation of a Department of Justice (DOJ) employee to facilitate an expedited review of hate crime reports. The DOJ also must issue guidance for state, local and tribal law enforcement agencies to establish online hate crime reporting processes and issue guidance to raise awareness of hate crimes related to COVID-19. The bill also authorizes funding for states to create state-run hate crime reporting hotlines. This bill was passed by Congress on May 18 and is awaiting signature by the president.

Washington, D.C., Admission Act (HR 51) – This bill provides for the admission of the State of Washington, D.C., into the Union. The legislation was introduced by Rep. Eleanor Norton (D-DC) on Jan. 4 and passed in the House on April 22. It is currently under consideration in the Senate.

SAFE Banking Act of 2021 (HR 1996) – Introduced by Rep. Ed Perlmutter (D-CO) on March 18, this bill would eliminate penalties imposed on a depository institution for providing banking services to a legitimate cannabis-related business. The legislation passed in the House on April 19 and is in the Senate for consideration

DUMP Opioids Act (S 957) – This bill was introduced by Sen. John Kennedy (R-LA) on March 24 and passed in the Senate on April 22. It is currently under consideration in the House. The bill would require the Department of Veterans Affairs (VA) to designate places where any individual can dispose of controlled substance medications at VA medical facilities or law enforcement locations. The bill also directss the VA to advertise the designated disposal times and locations via a public information campaign.

NO BAN Act (HR 1333) – Introduced by Rep. Judy Chu (D-CA) on Feb. 25, this bill passed in the House on April 21 and goes to the Senate next for consideration. The purpose of the legislation is to impose limitations on the president’s authority to suspend or restrict aliens from entering the United States. Furthermore, the bill would prohibit religious discrimination to be used as a basis for immigration-related decisions.

How to Choose the Right Accounting Software for your Business

Choose the Right Accounting SoftwareBusiness accounting activities can be tedious when performed manually and are prone to errors. For these reasons, many businesses have shifted to accounting software that offers numerous benefits, including data accuracy, time savings, easier auditing and on-demand reports.

With so many available options, it’s overwhelming to choose the right fit for a particular business. As more software vendors join the market with different enticing offers, it’s wise to be equipped with the right information.

Making a Decision Between Different Accounting Software

Each business is different and varies with industry. For efficient accounting operations, you cannot afford to choose a one-size-fits-all solution. Here are tips to help ease the selection process.

  • Understand your business requirements
    Whether you are a start-up or already have an existing business, begin by establishing your accounting requirements. This will help in making a list of features that you need in accounting software. Avoid copying other businesses without understanding what your business needs are. Consider your business size, number of users and projected growth (in order to support business scaling).
  • Conduct Research
    Learn more about accounting software options. Some might offer only general accounting features while others provide industry-specific features. By reading online reviews, you can see what users are saying about different accounting software.
  • Get Recommendations From Your Accountant
    Accountants who have already worked with the software have better knowledge about the product and can advise what will work for your business. Get their opinions.
  • Your Budget
    A business budget is a major determining factor in purchasing an accounting program. Note that software vendors have different pricing models. Depending on how much you are willing to spend, you can choose between monthly subscription fees or a pay-per-use model. Ensure that you have checked out any extra or hidden costs as you could end up spending more than initially planned. And pricing aside, avoid choosing the cheapest option just to save on expenses. The wrong software could cost your business more in the long run.
  • Integration with Other Software
    Businesses today use various software applications. It’s crucial that you select one that integrates with your existing business applications. This will help avoid duplication of work, such as manual data entry from one program to another.
  • Online Versus Offline Accounting Software
    You might prefer to have accounting software that you install on your computer, or maybe you’d rather use the online hosted version. Online accounting software is gaining popularity among SMBs due to its affordability. To use this option, you don’t need to install anything – just access it with your credentials. This allows users to access the accounting software from anywhere, even using different devices.
  • Availability of Customer Support
    Check whether the software vendor offers support after you have purchased or subscribed to use the software. What times do they offer support? And for how long will this support be available?
  • Data Security
    Data security is especially important for those who choose to work with online accounting software. Consider security measures offered by the software vendor to safeguard against data breaches and other cybersecurity risks. A good software vendor should have measures in place like automatic data backup, data encryption, and allow granular user roles to be assigned.

Parting Words

Accounting software is crucial for businesses of all sizes as it plays an important role in the accounting process; thus, you can’t afford to choose randomly. Consider all your business needs before making a choice for the best fit for your business. Create a list of preferences, then check for vendors that offer free trials to get a taste of their services before making a final decision.

Remember, choosing the right accounting software will save you from the costly mistake of replacing a wrong one. 

6 Ways to Make Saving Money Fun

6 Ways to Make Saving Money FunLet’s face it. Saving money is a challenge at best – and really hard the rest of the time. But what if you made it a fun game to inspire yourself to save? Here are a few ways to do just that.

Keep the Change Challenge

Anytime you receive or find loose change in your pockets or house, put it in a jar. Don’t touch it for a year, and then see how much you save. But here’s a great plus-up for this habit: download a money-saving app like Acorns and watch your savings grow. Anytime you buy something, Acorns will round up the total and deposit the difference into a diversified investment portfolio. Talk about easy.

Weather Wednesday Challenge

This is great idea. Every Wednesday,look up the highest temperature in your state and deposit the amount into your savings account. For example, if it’s 100 degrees, deposit $100. If it’s 32 degrees, deposit $32. You’ll probably save more during the summer than the winter, but after 52 weeks, you could’ve socked away several thousand dollars. Pretty sweet.

Kick-a-Bad-Habit Challenge

Do you go to Starbucks every day for your Double Chocolatey Chip Crème Frappuccino with extra whip? How about guzzling those sodas every day? Are you a smoker? Whatever it is that you’d like to cut down on or even stop, this challenge has two great benefits: you’ll not only get healthier, but you will also save money.

The No-Spend Challenge

Start with a weekend (or even a week) and make a vow not to spend any money on anything except bills or other necessities. The idea is to save money by not spending it. It might cause you to be more creative. For instance, do you really need a new dress for that special occasion? Dig a little deeper into your closet instead of buying a new frock. Or maybe you decide to drive less and not put gas in the tank. This way, you’ll either bike or walk to your destination (if doable) and do more fun things at home.

The Pantry Challenge

Look inside your refrigerator and pantry. How much food do you have that you haven’t eaten? What about that spaghetti sauce or sesame oil? As long as the food isn’t expired, it’s your chance to get creative and whip up a new dish or revive an old favorite. This challenge is related to the “No-Spend Challenge,” and again, the intention is to save money by not spending it.

The 365-Day Nickel Challenge

Nickels are currency, too! But seriously, if you can remember to do this (set a timer on your phone), you’ll be rewarded handsomely. Here’s how it works: On day one, deposit 5 cents into a jar. The next day, 10 cents. The next day, 15 cents. And so on. By day 365, the total deposit will be $18.40. At the end of the year, you’ll have saved a whopping $3,339.75. Not bad, huh?

While saving money might feel restrictive, you’re actually planning ahead to be very happy. When you’ve been able to stick to a habit, or in some cases give one up, you’ll see that anything is possible if you just put your mind to it. And that’s a great feeling.

Sources

https://money.usnews.com/money/personal-finance/saving-and-budgeting/articles/money-saving-challenges

Real Estate Opportunities in 2021

Real Estate Opportunities in 2021Even before the pandemic began, the U.S. residential real estate market was short on houses, with more people looking to buy than those who were selling. And yet, unlike the 2008 recession, any economic woes related to the pandemic did not undercut housing prices. If anything, real estate had a banner year as home prices continued to rise. In April of this year, the median sale price of existing homes rose by 19.1 percent to a record high of $341,600.

There are several reasons we haven’t seen a repeat of the housing crisis that we experienced during the Great Recession. Today’s market is different from 2007, when the economic decline was launched by a housing bubble that sent many homeowner values underwater – followed by job losses and the inability to pay their mortgage. This time around, the government stepped in to ensure Americans didn’t lose their homes when they lost their jobs. The stimulus-relief packages included a moratorium on foreclosures and evictions. This, too, has contributed to the low inventory of existing homes, which normally would be put up for sale when owners become cash strapped.

The Homebuyers’ Market

However, in addition to the cash-strapped – we now have the cash-rich. Among the gainfully employed, savings rates increased during 2020. This means there are now several types of eager homebuyers: millennials trying to buy their first home; mid-career professionals looking to trade up; and retirees (or near-retirees) looking to make a cash offer for a smaller or second home.

The coronavirus contributed to this fiercely competitive market of buyers. Some are looking to take advantage of the newly mainstreamed remote work model and move to rural areas for a more affordable lifestyle. People who are nearing retirement are rethinking moves to large metropolitan areas or continuum of care retirement communities, where future outbreaks can spread more quickly.

The point is, there are millions of people looking to buy a home right now and not enough housing stock There are 72 million millennials alone, the oldest of who are approaching their 40s, with Generation Z right at their heels. Over the next 10 years, the demand for first-time homebuyers alone will persist regardless of how conditions change in the housing market.

The Home-Sellers’ Market

While the buyers’ market is booming with demand, the sellers’ market is starting to grow as well, just not as fast. Rising real estate values due to low inventory have presented an attractive opportunity to cash-in on home equity. In fact, according to a recent NerdWallet survey, about

17 percent of today’s homeowners say they plan to put their home on the market within the next year and a half.

The seller’s market is boosted by historically low mortgage rates, which when compared to renting make taking out a home loan even more appealing. Sellers also benefit from the near-desperation of buyers, many of whom are willing make offers before seeing the property, for as-is condition and above offer price. Not only can sellers take their pick of multiple offers, but they can often skimp on home repairs and upgrades before putting their house on the market.

In recent months, existing homes have stayed on the market for an average of only 20 days. Sellers also have the luxury of making their buyers wait under contract until the owner can buy another home. But here’s the tricky part: due to low inventory, it can be very difficult to find a replacement. Sellers who become buyers enter the fray of contract wars just like everyone else.

New Home Building

The single-family homebuilding industry recovered from last year’s economic decline quickly. In March of this year, new home starts swelled 15.3 percent to 1.238 million units. But even with the surge, real estate agents say that new builds need to range between 1.5 million and 1.6 million units per month to meet demand.

Unfortunately, one factor that is holding this market back is access to building materials. Low supply of lumber due to increased demand for new homes and renovations has catapulted lumber prices to record highs. According to the National Association of Home Builders, the cost of lumber has driven up the price of the average new single-family home by more than $35,000 within the past year.

While more inventory will come onto market as people emerge from their lockdowns and the economy fully reopens, one thing is certain: demand in the home-buying market is expected to remain high among Millennials and Gen Z for at least another decade. The momentum for high prices is expected to continue through 2021, so it may be a better time to sell than buy.