Dollar extends gains vs. rivals as data adds to Fed uncertainty

© Reuters.  U.S. dollar adds to gains after data deluge

The dollar added to gains against its major rivals on Wednesday, as a flurry of mixed U.S. data failed to offer clues as to how fast the Federal Reserve will raise interest rates next year.

The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was up 0.25% at 98.46 during U.S. morning hours.

The U.S. Commerce Department said that durable goods orders, which include transportation items, were unchanged last month, compared to forecasts for a decline of 0.6%. Core durable goods orders, excluding volatile transportation items, fell by 0.1% in November, disappointing expectations for a gain of 0.1%.

Orders for core capital goods, a key barometer of private-sector business investment, decreased 0.4% last month, worse than expectations for a decline of 0.1%, while shipments of core capital goods, a category used to calculate quarterly economic growth, decreased 0.5% in November, confounding forecasts for a gain of 0.5%.

A separate report showed that personal spending inched up 0.3% last month, meeting forecasts. Personal income, meanwhile, rose 0.3%, above forecasts for a 0.2% gain.

The core PCE price index rose 0.1% last month. On an annualized rate, the core PCE price index increased 1.3%. The Fed uses core PCE as a tool to help determine whether to raise or lower interest rates, with the aim of keeping inflation at a rate of 2% or below.

Trading volumes are expected to remain light as many traders already closed books before the end of the year, reducing liquidity in the market and increasing volatility. U.S. markets close early Thursday, Christmas Eve, and are shut Friday for Christmas Day.

Forex – GBP/USD edges higher despite U.K. GDP data

© Reuters.  Pound inches higher despite U.K. GDP data

The pound edged higher against the U.S. dollar and the euro on Wednesday, even after data showed that the U.K. economy grew less than initially expected in the third quarter.

GBP/USD inched up 0.27% to 1.4861 during European morning trade. Sterling was also higher against the euro, with EUR/GBP shedding 0.52% to 0.7350.

The U.K.’s Office for National Statistics said gross domestic product expanded 0.4% in the three months ended September 30, missing forecasts for 0.5%. Preliminary estimates initially pegged U.K. growth at 0.5%.The U.K.’s economy grew by 0.7% in the preceding quarter.

Year-over-year, U.K. economic growth expanded 2.1% in the third quarter, downwardly revised from a preliminary estimate of 2.3%. The U.K. economy grew at an annualized rate of 2.4% in the second quarter.

Meanwhile, investors looked ahead to key U.S. economic data later in the session for further indications on the strength of the economy. The U.S. is release a string of reports, including data on durable goods orders, new home sales and consumer sentiment.

Data on Tuesday showed that the U.S. economy grew 2.0% in the third quarter, downwardly revised from a preliminary estimate of 2.1%, but above expectations for 1.9%. A separate report said that existing home sales tumbled 10.5% to a 19-month low of 4.76 million units in November from 5.32 million a month earlier.

Trading volumes are expected to remain light as many traders already closed books before the end of the year, reducing liquidity in the market and increasing volatility.

Record highs predicted for bitcoin in 2016 as new supply halves

© Reuters. An illustration photo of Bitcoin (virtual currency) coins are seen at La Maison du Bitcoin in Paris

LONDON (Reuters) – 2016 could prove to be the year that the price of bitcoin surges again. Not because of any dark-web drug-dealing or Russian ponzi scheme, but for an altogether less sensational reason – slower growth in the money supply.

Bitcoin is a web-based “cryptocurrency” used to move money around quickly and anonymously with no need for a central authority. But despite being championed by some as the digital money of the future, it is often dismissed as a currency that is too volatile to invest in.

The reason 2016 looks set to be different is that bitcoin’s price is likely to be driven in large part by similar factors to a traditional fiat currency, following the age-old principles of supply and demand.

Instead of being controlled by a central bank, bitcoin relies on so-called “mining” computers that validate blocks of transactions by competing to solve mathematical puzzles every 10 minutes. In return, the first to solve the puzzle and thereby clear the transactions is currently rewarded with 25 new bitcoins, worth around $11,000 <btc=btsp>.

But when it was invented in 2008 by the mysterious “Satoshi Nakamoto”, who has yet to be identified, the bitcoin program was designed so that the reward would be halved roughly every four years, in order to keep a lid on inflation. The next time that is due to happen is July 2016.

Bitcoin was also designed to emulate a commodity by having a finite supply of 21 million bitcoins, which will be reached in around 125 years, up from around 15 million today. Hence, also, the use of the term “mining”.

Daniel Masters, co-founder of Jersey-based Global Advisors’ multi-million dollar bitcoin hedge fund, started his career as an oil trader at Shell (L:RDSa) in the mid-1980s and spent 30 years trading commodities before crossing over to bitcoin.

Now he reckons the price of bitcoin could test its 2013 highs of above $1,100 next year and then pick up speed to rise to $4,400 by the end of 2017.

That would be due to a number of factors, Masters said, including an increased acceptance of payments in bitcoin by big companies and authorities, rapidly growing interest and investment in the “blockchain” technology that underpins bitcoin transactions, and also more demand from China as its currency weakens and the economy slows.

But taken in isolation, the halving of the mining reward will increase the price of bitcoin by around 50 percent from where it is now, Masters reckons. That is despite the fact that the halving of the reward has always been inevitable – a factor that would already have been accounted for in pretty much every other market.

“If OPEC (Organization of the Petroleum Exporting Countries)came out tomorrow and said, ‘in six months’ time we’re going to halve oil production’, the oil price would instantaneously react. But the bitcoin market is still in its infancy, and I don’t think that factor is discounted into the price fully,” he said.

DECENTRALIZED DIGITAL ASSET

Bitcoin’s price has already almost doubled in the last three months, putting it on track for its best quarter in two years. It hit $500 last month for the first time since August last year, with Chinese demand for a pyramid scheme set up by a Russian fraudster cited as a reason for the price surge.

But Bobby Lee, the chief executive of one of the leading bitcoin exchanges in China, BTCC, reckons there is scope for the cryptocurrency to go much further. He thinks the price could increase by as much as eight times in the time up to the reward halving, taking it as high as $3,500 by next summer.

“Today the worth of bitcoin is $1 per capita in the world (population),” Lee said, referring to the value of all the bitcoins in circulation, around $6.5 billion. “For such an innovative, decentralized digital asset, I say ‘boy, are we undervaluing it’. But it takes a while for people to realize that.”

The mining reward has already been halved once before, in November 2012, from 50 to 25 bitcoins. The stakes were much lower then, with one bitcoin worth around $12, but nevertheless the price increased by about 150 percent in the preceding seven months – roughly the time left before the next halving.

“It (the halving) dampens supply so, all other things being equal, that puts upwards pressure on price,” said Jeremy Millar, partner at London-based financial technology specialists Magister Advisors, who expects demand to continue to increase.

“No one can argue with that fundamental economic principle.”

Dollar edges higher ahead of U.S. durable goods report

© Reuters. U.S. dollar gains ahead of data deluge

The dollar edged higher against its major rivals in pre-holiday trade on Wednesday, as investors awaited the release of U.S. durable goods data due later in the day for further indications on the strength of the economy.

The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was up 0.2% at 98.41 during European morning hours.

The U.S. is to produce data on durable goods orders at 8:30AM ET on Wednesday, amid expectations for a decline of 0.6% in November, following a gain of 2.9% a month earlier, while core orders are forecast to rise 0.1% after increasing 0.5% in October.

In addition, the U.S. is release reports on new home sales, consumer sentiment and crude oil inventories.

Earlier in the day, data showed that U.S. personal spending inched up by a seasonally adjusted 0.3% last month, meeting forecasts. Personal spending for October was revised down to a flat reading from a previously reported gain of 0.1%. Consumer spending is the single biggest source of U.S. economic growth, accounting for as much as two-thirds of economic activity.

The figure, which was to be made public at 8:30AM ET Wednesday along with the agency’s report on personal income, was released early on the Bureau of Economic Analysis’ website.

On Tuesday, data said the U.S. economy grew 2.0% in the third quarter, downwardly revised from a preliminary estimate of 2.1%, but above expectations for 1.9%. A separate report showed that existing home sales tumbled 10.5% to a 19-month low of 4.76 million units in November from 5.32 million a month earlier.

Investors also continued to focus on the crude oil market, as prices ticked higher for the second straight day, boosting global stocks and supporting sentiment.

Trading volumes are expected to remain light as many traders already closed books before the end of the year, reducing liquidity in the market and increasing volatility. U.S. markets close early Thursday, Christmas Eve, and are shut Friday for Christmas Day.

EUR/USD ticks up, as dollar weakens amid soft U.S. GDP data

EUR/USD gained nearly 0.40% on Tuesday to close above 1.09

Investing EUR/USD rose moderately on Tuesday on a thin day of trading, as soft U.S. GDP data weighed heavily on a steadily weakening dollar.

The currency pair traded in a tight range between 1.0902 and 1.0984 before settling at 1.0954, up 0.0039 or 0.36% on the session. The euro is enjoying a modest three-day winning streak versus the dollar and is up by 0.26% against its American counterpart since the Federal Reserve raised short-term interest rates for the first time in nearly a decade last week. More broadly, the euro is up by more than 3.20% against the dollar since the European Central Bank rattled global currency markets by only instituting limited easing measures with comprehensive asset-purchasing program at a closely-watched meeting at the start of the month. The dollar is currently down by nearly 2% against a basket of rivals in December, suffering its worst month since April.

EUR/USD likely gained support at 1.0538, the low from December 3 and was met with resistance at 1.1496, the high from Oct. 15.

The moves by the Fed and the ECB over the last several weeks could portend further divergence between the two major central banks, as the Fed completes the early stages of its first tightening cycle since 2004. Earlier this week, analysts from Charles Schwab(N:SCHW) said 20 central banks, representing roughly one-third of global GDP, hiked interest rates in 2015, marking a sharp divergence from recent monetary policy over the past several years. More importantly, the analysts noted that “volatility may result as the widening divergence contributes to the challenges facing some markets.” Markets throughout the euro zone may be equipped to handle the shifts in monetary policy, according to Schwab, amid signs of improving economic and financial growth.

On Tuesday morning, the U.S. Department of Commerce’s Bureau of Economic Analysis (BEA) said real gross domestic product in the third quarter increased at a rate of 2.0%, down sharply from annual GDP growth of 3.9% in the second quarter of 2015. The BEA’s third estimate released on Tuesday also fell slightly from its second estimate of 2.1% growth issued last month. Real GDP measures the value of the goods and services produced by a nation’s economy minus the goods and services used up in production, adjusted for price changes.

The BEA noted in its statement that the mild increase in real GDP is reflected in positive contributions from personal consumption expenditures (PCE), nonresidential fixed investment, state and local government spending, residential fixed investment, and exports that were partly offset by a negative contribution from private inventory investment.

At the same time, the deceleration in GDP growth on a quarterly basis denoted a downturn in private inventory investment and exports. Inventory growth was downwardly revised by nearly $5 billion to $85.5 billion, as businesses held inventories down amid slumping sales. Nevertheless, quarterly real GDP fell in line with consensus estimates of growth of 2.0%. The GDP Price Index, meanwhile, increased 1.3% on the quarter, remaining unchanged from the previous quarter.

Investors await Wednesday’s monthly release of the PCE index for November for further indications on the gradual path the Fed may take in its first tightening cycle since 2004. Core PCE inflation, which strips out volatile food and energy prices, has remained below the Fed’s targeted goal of 2% for every month over the last three years. In October, core PCE prices were up by 1.3% on a yearly basis, remaining flat from the prior month’s reading.

In updated inflation forecasts released last week, the Fed projected that inflation will not reach its targeted objective until 2018. Last week, the Federal Open Market Committee (FOMC) raised the target range of its benchmark Federal Funds Rate by 25 basis points to 0.25 and 0.50%.

The U.S. Dollar Index, which measures the strength of the greenback versus a basket of six other major currencies, fell more than 0.35% to an intraday low of 98.01, before closing at 98.18. Earlier this month, the index eclipsed 100.00, reaching its highest level on the calendar year.

Dollar remains broadly lower after downbeat U.S. data

© Reuters.  Dollar holds onto losses as U.S. data weighs

Investing The dollar remained broadly lower against the other major currencies on Tuesday, after the release of downbeat U.S. economic reports dampened demand for the greenback.

Trading volumes were expected to remain limited ahead of the Christmas Holiday.

USD/JPY slid 0.33% to 120.79.

The dollar weakened after the U.S. National Association of Realtors said that existing home sales tumbled 10.5% to a 19-month low of 4.76 million units last month from 5.32 million in October. Analysts had expected existing home sales to rise to 5.35 million units in November.

The data came shortly after the U.S. Commerce Department reported that gross domestic product grew at an annual rate of 2.0% in the three months ending September 30, better than expectations for 1.9%.

Preliminary data initially pegged U.S. growth at 2.1% in the third quarter. The U.S. economy grew 3.9% in the second quarter.

EUR/USD gained 0.55% to 1.0976.

The euro’s gains were expected to remain limited however, as inconclusive elections in Spain over the weekend sparked political concerns.

Spanish Prime Minister Mariano Rajoy said on Monday that his centre-right People’s Party (PP) would talk to rivals in a bid to form a government, but the left-wing parties reportedly said they would not want Rajoy to remain in power.

Elsewhere, the dollar was lower against the pound and the Swiss franc, with GBP/USDdown 0.30% at 1.4841 and with USD/CHF declining 0.51% at 0.9871.

Earlier Tuesday, the U.K. Office for National Statistics reported that public sector net borrowing rose to £13.56 billion in November from £6.75 billion in October, whose figure was revised from a previously estimated £7.47 billion.

Analysts had expected public sector net borrowing to rise to £11.00 billion last month.

The Australian and New Zealand dollars were stronger, with AUD/USD up 0.79% at 0.7248 and with NZD/USD advancing 0.85% to 0.6819.

Meanwhile, USD/CAD slipped 0.23% to trade at 1.3925, still close to Friday’s more than 11-year high of 1.4000.

The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was down 0.40% at 98.04.

7 Ways to Cut Down on Holiday Gift-Giving

Family opening Christmas presents togetherAs the holiday gift-giving season approaches, we often are filled with a sense of dread: How will we ever find the perfect gift for everyone on our list, the time to finish our shopping and the money to pay for all the stuff we need to buy?

Some Americans are saving money and sanity by changing their gift-giving traditions and, in some cases, eliminating gift-giving entirely.

“I just gave up altogether,” says Sandy Smith, a human resources professional in New York City who blogs at Yes, I Am Cheap. Several years ago, after realizing she had blown a substantial bonus on gifts people had long forgotten, she told her parents, brother and sister that she was no longer going to buy Christmas gifts for them, and she didn’t want them to buy her anything, either.

Instead, she would take the family out to dinner at her expense. Her brother has since joined her in financing the outing, which the family looks forward to every year.

“We’ve enjoyed going out and hanging out and enjoying different cultures and cuisines,” she says. The first year she took the family to an authentic Chinese restaurant in New York City’s Chinatown. “It was such an exotic experience for my parents, and they loved it,” she says. “We’ve been introducing them to different foods all over the city. They’ve had a good time traveling the world through food.”

Holiday traditions are important to many people, but you may find that your relatives are happy to quit exchanging gifts, especially as the family grows.

“It’s all about time, money and energy,” says Stefanie O’Connell, founder of the personal finance blog The Broke and Beautiful Life. “I think that the gift-giving process is a toll on all three of those things.”

She suggested to her four siblings several years ago that they quit giving each other holiday gifts and concentrate on their parents and older relatives. Not only did she save money, she discovered that she had more time available to spend with her family since she wasn’t out shopping. Her friends draw names for a Secret Santa exchange and they have the added bonus of enjoying the get-together where they exchange the gifts.

Some families find it easy to limit gift-giving among adults but still want to make their children’s holidays magical. But buying fewer things may be better for your children, says Andrea Deckard, a mother of three boys in Cincinnati and author at Savings Lifestyle.

She and her husband decided several years ago that they would buy each of their three boys only four gifts every year: Something they want, something they need, something to wear and something to read. They coordinate with grandparents and other relatives, so that if someone else in the family is buying one of the boys a jacket, the parents will get him socks or underwear, for example.

“We want to make sure they’re not getting too much junk,” Deckard says. How do the kids react to receiving fewer gifts? “It’s not as much of an issue as some people might think it is,” she says, adding that her sons, who are now 8, 11 and 16, have learned from the experience. “Our kids now realize that it’s stuff and we don’t really need all this stuff this time of year.”

Getting off the gift-giving merry-go-round starts with a frank discussion with friends and family.

Smith, whose blog chronicles her journey of paying off $120,000 in debt from student loans and a failed business venture, has been vocal in recent years about her less stuff, more time philosophy. She believes it frees her friends from worrying about whether they need to buy her something because she’s buying them something.

“It turns into this crazy thing where they’re not really giving you a gift because they want to but because it’s a pre-emptive strike,” Smith says. “When you put it out there, it makes things easier for everyone. … I think a lot of people want to go back to simpler things. I don’t think people will protest much.”

Here are seven ways to cut down on holiday gift-giving, while saving you time, money and stress:

Set a realistic budget, and then figure out how to stay within it. Many people buy gifts without calculating their total expenditures and are surprised when the bills arrive. “Getting honest about what those numbers look like is a way to get grounded,” O’Connell says. “You don’t want to be paying your Christmas bills when spring comes.”

Talk to your significant other about alternatives. O’Connell and her boyfriend put the money they would have spent on gifts toward trips they take together. Other couples may prefer a night at the movies or a romantic weekend at home.

Suggest to relatives and friends that you end or limit gift exchanges.Some families may draw names for gift exchange, do a Secret Santa drawing, set dollar limits or end gift-giving entirely. Others, like Smith’s family, may do something together instead of exchanging gifts. “It’s been better for my relationship with my family,” Smith says. “The experiences have been so much better than the gifts that I was giving.”

Coordinate gift-giving for kids with other friends and relatives.Deckard’s family members keep in touch to make an effort to limit the gifts they buy to things the children actually want or need. If your child wants something expensive, all the relatives might go in and buy that one gift, rather than buying individual gifts.

Opt out of office gift exchanges. Bake cookies for co-workers or write each a note about what you appreciate. O’Connell, who works in theater in addition to writing, gave up participating when she noticed how much some co-workers worried over the gift exchange. “The Secret Santa became this financial stressor that people weren’t finding joy in,” she says.

Ask your relatives if they would prefer alternatives to gifts. Many older people don’t want more things. Grandma may have all the sweaters she needs, but she may really want you to come over with dinner one evening or clean her gutters. Or, perhaps all the relatives can go in together and buy a year of housecleaning for the grandparents. Young families may appreciate an evening of babysitting, and teens may really enjoy an outing alone with a relative.

Bring edible gifts to parties. O’Connell comes from a big Ukrainian family where guests are expected to bring gifts. “You don’t come anywhere empty-handed,” O’Connell says. But a $5 bottle of wine is considered gift enough, she says. Wine, chocolate, cookies or other food items don’t cost much and won’t end up on a shelf collecting dust.

Boost Your Credit Score With This Great Little Trick

low Credit report
Consumers can easily boost their credit scores by avoiding some of the fallacies surrounding the extremely convoluted manner in which credit scores are tabulated.

Each of the three credit bureaus uses its own formula and guards its methods closely, but consumers shouldn’t find themselves in a conundrum when they are examining their strategies on paying off credit cards and other bills.

Consumers reap many rewards when they raise their current credit score, because higher scores mean shelling out less money in interest, which can yield thousands of dollars in savings. A high credit score also means consumers receive a lower interest rate for credit cards, auto loans and mortgages, and the benefit extends to lower rates for auto and home insurance premiums.

For a quick gauge of where you stand, here’s a quick rundown: a score of anything below 620 ranks as poor, 620-699 is fair, 700-749 is good and anything over 750 is excellent.

Check out your credit reports from Equifax, Experian and TransUnion at least once a year and examine them for errors. Consumers can access credit reports annually for free at www.annualcreditreport.com.

Paying Your Bills Is 35 percent of a Credit Score …

“If there are any inaccuracies, from an address to an incorrect outstanding balance on a credit card, correct them right away by following the directions on each agency’s website,” said Kevin Gallegos, vice president of the Phoenix operations for Freedom Financial Network, a consumer debt resolution company. “Under the terms of the Fair Credit Reporting Act, the credit bureaus must investigate any disputed items and remove them from the credit report if they cannot be verified.”

Even though you might be pinching pennies and waiting for each paycheck anxiously, make sure your top priority is to pay every single bill on time, every time. Lenders look for borrowers who pay their bills on time. A consumer’s payment history accounts for 35 percent of your credit score, “making it the largest piece of the pie,” said Bruce McClary, spokesman for the National Foundation for Credit Counseling, a Washington, D.C.-based non-profit organization.

“Making timely creditor payments should top the list of healthy habits that help build a better credit score,” he said.

Keep your credit card balances low and minimize the percentage utilization to under 35 percent, said Gallegos. For an individual with a credit card with a limit of $10,000, a balance of $3,500 is already a 35 percent utilization ratio.

“Anything over 35 percent is considered high and can impact credit scores,” he said. “Over 50 percent will have a definite negative impact on a credit score and a maxed-out card will very negatively impact the score.”

Pay off the balance of secondary credit cards that you rarely use, because those balances “just muddy up” your credit report, said Howard Dvorkin, a certified financial planner and chairman of Debt.com, a Plantation, Florida-based financial advice website. Keep your report clean, so limit it to one or two cards.

“Building up a credit score is time consuming, so take baby steps,” he said. “Pay your bills on time. Don’t mess with this step or you’ll fall flat on your face. Your mantra should be: pay on time, pay on time.”

Store Credit Cards Aren’t a Good Option …

Avoid signing up for credit cards offered by retailers. The discounts they offer are tantalizing, but the interest rates they offer are very high, even up to 27 percent. Even worse, some retail credit cards come with an interest rate that is the same for every customer, treating those with exceptional credit scores exactly the same as those who are below average, McClary said.

Sears offers three cards — both the Sears and Sears MasterCard cards offer awhopping APR of 25.24 percent, and the store’s “Home Improvement” account offers 14.40 or 18.40 percent based on creditworthiness.

“It doesn’t appear that lower rates are available for those with excellent credit,” he said.

Offers from your local furniture store to consumers to finance a purchase can often come from a subprime lender, even if your credit score is good. These retailers are simply using subprime lenders or companies that finance loans for consumers with lower credit scores.

Reading the fine print will help you avoid having a subprime lender on your credit report. While doing business with a known subprime lender may not have any impact on your score, it may end up being another item you need to explain when a company like a mortgage lender takes a look at your credit history, McClary said.

If you regret opening a store credit card or find that you rarely shop there, don’t automatically close it. Opening and closing accounts too frequently should be avoided.

“Keeping a credit card for a long period of time helps build a lengthy credit record which ultimately benefits the score,” he said.

Credit Cards Build Your Profile …

Not using credit cards at all is not the solution either, said Gallegos. The credit bureaus can only “rely on past payment history to help determine how borrowers will do in the future,” he said. If you refrain from borrowing and only use your debit card, then potential lenders have no information to base their expectations.

Build your credit report by taking out one credit card such as one with a low limit and pay off the balance each month, said Josh Tschirigi, a financial adviser at Somerset Wealth Strategies in Portland, Oregon.

“Once you get comfortable with this card, it’s a good idea to take out additional cards, because one factor in calculating a credit score is how many credit card accounts you have and how long you have had them,” he said. “The more you have and the longer you have them, the better your credit score is if you avoid debt delinquencies.”

Medical debt is now being treated differently and the changes in credit scoring means the debt will not be weighed “as heavily as credit card or other kinds of debt,” Gallegos said.

“Building a strong credit score comes from people being aware of their overall financial picture and they must learn and understand loans, debt, credit cards, income, cash flow and savings,” said Shawn Gilfedder, CEO of McGraw-Hill Federal Credit Union in East Windsor, New Jersey. “With a better understanding of their personal finances and by setting goals, they will then be able to change habits.”

6 Car Expenses That Are Really Worth the Money

Mechanic changing tire in auto repair shopAs any driver knows, it’s easy to get overwhelmed by the abundance of car-related goods and services, from pricey detailing to third-party warranties to premium fluids. Car owners on a budget must decide when to invest and when to cut corners. Pinching pennies in the wrong places can cost more down the road and raise concerns about safety. consulted auto manufacturers, technicians and maintenance guides to determine what’s worth the money when it comes to your car.

Regular Tire Rotation. If you’ve ever looked at the bottom of your shoe and noticed that one area is more worn than another, you already have an idea about the need to rotate tires regularly. Tire treads wear unevenly through normal driving, a process worsened by incorrect tire pressure and uneven alignment. When tires are rotated properly, they wear more uniformly, resulting in a smoother ride, more balanced handling, increased traction and more effective braking. Plus, rotating tires makes them last much longer and improves gas mileage. Use the opportunity to make sure they are inflated to the appropriate pressure.

Check the owner’s manual to see how frequently tires should be rotated. Manufacturers generally recommend doing so every 6,000 to 8,000 miles. If tires make noise even on smooth roads — typically a loud humming sound — that can be a sign that they need to be rotated. The job takes less than an hour and the average cost ranges between $27 and $35, according to RepairPal. Car owners who purchased tires from Costco, Sam’s Club, Walmart and Sears really have no reason to shirk — this service comes at no charge.

Certification Program. When buying a used car it’s worth spending the extra few hundred or thousand dollars on one that’s “certified pre-owned.” These vehicles often come with an extended manufacturer’s warranty. Plus, if any problems crop up after the warranty expires, the manufacturer may be willing to help out — good luck getting anyone to do that for a vehicle that was purchased without the certification.

Buying a certified pre-owned car also provides assurance that the car is in working order and won’t break down as soon as you drive it off the lot. American Honda, for example, requires a 150-point inspection for a vehicle to earn the certified pre-owned title. Among other things, the inspection looks for aftermarket parts on the car, which Honda (and some experts) contend can affect the vehicle’s safety, reliability and performance. Moreover, using aftermarket parts generally voids the manufacturer’s warranty.

Oil Changes on Schedule. An oil change is one of the least expensive maintenance services and also one of the most critical, so there’s no excuse for neglecting it. Oil keeps a vehicle’s engine clear of sludge and build-up and ensures that all components run together smoothly. Dodging regular oil changes can lead to a host of problems, from worn pistons to all-out engine failure, that require extremely expensive repairs.

Even car owners on a tight budget should stick to the schedule. Having a trusted technician looking at the vehicle on a regular basis is a smart habit because it draws attention to small issues, such as fluid leaks or worn-out parts, before they become unsafe or costly disasters.

Oil changes generally are recommended every 2,500 to 3,000 miles, but check the owner’s manual for the manufacturer’s specific recommendation. It will also indicate the recommended grade of motor oil, which is important because the wrong grade can reduce a car’s gas mileage by 1 or 2 percent, according to theU.S. Department of Energy.

Frequent Washes. It might seem frugal to forgo car washes in order to save money, but this is an outlay that pays off. Bird droppings, for example, can cause permanent damage: When the paint on a vehicle gets hot, it softens and molds itself around the hardened droppings. The result is uneven paintwork that appears scratched, pitted and dull. Getting a fresh clear coat is costly and blemished, unsightly paint reduces a car’s resale value. The longer the droppings remain, the worse the damage, so remove them promptly and in general wash the car frequently.

Periodic Waxing. If a future sale is in the cards, occasional waxing is critical to maintaining the value of the car. Wax does more than just add extra shine — it prevents paint from fading and dulling and preserves the clear coat. Wax protects the car’s exterior from the elements, such as UV rays, salt, exhaust, acid rain, ice, bug splatter, scratches, dirt and so on. When it comes time to sell the vehicle, the better the exterior looks, the higher the asking price can be. Prospective buyers always notice the exterior even if they have no idea what to look for under the hood.

Most experts recommend hand waxing every three months or so or at least every six months. To gauge the need, splash a little water on the car: If it doesn’t bead up, it’s time for fresh wax. A little practice makes this a cheap DIY job. Alternatively, go the professional route; CostHelper users report paying $40 to $90 for a simple wash-and-wax. Splurge for a hand wax. The wax add-on at automated car washes doesn’t offer much real protection.

Brake Pad Replacement. When it comes to brake pads, a little prevention and maintenance go a long way. If worn brake pads are not replaced, the brake rotors will warp and need to be resurfaced or replaced, both of which are costly. It’s easy to get brake pads checked during a standard oil change or tire rotation.

Brake wear depends on several factors, so there’s no hard-and-fast schedule for replacing brake pads — consult a trusted professional technician. However, if you hear a squeaking, screeching or grinding sound or feel pulsing or vibrating when braking, it may be time for new pads. Decreasing brake effectiveness — it takes longer to stop or you must press the pedal harder than usual — is another common sign of brake wear. Replacing brake pads is both a money saver and a crucial safety measure. New brake pads cost cost between $100 and $250 — an expense that’s worth every dime.

9 Times It’s Smart to Be in Debt

Couple paying interior designer with credit cardIt’s never advisable to rush out and take on debt, but there are times when it actually makes sense not to pay off debt.

Debt, it turns out, can be a kind of friend, even if it’s just that flaky friend who can’t really be trusted. You see, all debt is not alike. Some of the worst kinds, such as unsecured credit card debt, can wreck your budget, but even there, you have cases where it won’t and could even work to your advantage. Other kinds of debt might seem imposing with those big red “Past Due” stamps but pose less of a threat to your financial future.

Here’s a guide to handling that debt — rather than bemoaning your inability to pay it all off — either by slowing down the payment process or leveraging or reorganizing what you owe in clever ways. These are the nine instances where it might make sense not pay off debt.

1. Leveraging Zero Percent APR Credit Cards

Many zero percent APR credit cards have hit the market, and the idea behind them is great if you’re part of the credit card industry: Lure customers in with a low-low introductory rate, and then make money off them when that rate expires and a new high interest rate soars into the double digits. While there are many dangers to treating a zero percent card properly — from having new store purchases accrue at a high interest rate to overlooking the balance transfer fees — there’s a way to play this game and win.

Many zero percent offers have 12 months or more of interest-free financing — even 18 months isn’t uncommon. Keep in mind that if you tap the full amount available, you’ll typically have a 3 percent fee to pay ($300 on $10,000). The idea here is to find a safe investment with a rate of return that will far outpace the transfer fee — while taking advantage of the special offer’s time frame. So if you’re lucky enough to find a $10,000 investment with a 10 percent rate of return, and can liquidate the investment after a year, you’ll have $1,000 in your pocket against the $300 you paid in transfer fees, while still paying off your credit card balance.

The only caveat — and it’s a big one — is to make those minimum payments every month so you don’t lose the zero percent perk. Then when the promo rate is finished, cut up the card and go in search of another similar offer. “If you are responsible and do not have a lot of debt, you can use this feature as a short term gap to fund something,” said Bijan Golkar, senior adviser and principal at FPC Investment Advisory in Petaluma, California. The only caveat — and it’s a big one — is to make those minimum payments every month so as not to lose the zero percent perk. Golkar cautions: “If you are not disciplined, do not even think about it.”

2. Negotiating Medical Provider Debts

The decision to pay here depends on several factors including the medical provider, the amount of the debt and whether or not interest charges are applied. In many cases, especially with private practitioners, bills do not accumulate any interest, so it makes no sense to pay them off in full when you may have other high-interest debts sucking at your wallet.

That said, you don’t want collection agencies flagging you down. In March, the three major credit bureaus — Equifax, TransUnion and Experian — also agreed not to report bad medical debts until after a 180-day waiting period. “This provides time for insurance to pay their portion and patients to pay their bills or work out a payment plan to pay them,” says Todd Antonelli, managing director of Berkeley Research Group in Chicago. “When payment plans are devised and agreed to, this debt will not show up on your credit reports preventing one’s ability to take out a loan, get a credit card, buy a car or a home.”

Negotiate directly with the medical provider whenever possible to get a minimum payment schedule set up, and always see whether you can negotiate payment charges on a sliding scale — so that $90 an appointment, for example, is reduced to $70 an appointment. This is common practice in disciplines such as psychology.

3. Fighting the Meter

In America’s cash-strapped cities, a proliferation of red-light cameras and parking meter tickets has created a near epidemic of frustrated, frightened motorists. The sight of a ticket stuck to your window is enough to churn your stomach, but the next time you get one, use your head instead. Dispute every ticket you possibly can, because there’s no telling how many will get thrown out by a judge or lost in the bureaucratic maze.

The Expired Meter website, for example, has become a big hit in Chicago, where motorists are taught how to fight back; many of the strategies here can be used in other cities as well. Every time you fight a ticket, you automatically delay the debt due without accruing a single cent of interest and penalty — and you might just get off the hook.

4. Holding on to Mortgage Debt

Hurry up! Convert that mortgage from a 30-year loan to a 15-year loan! Your mortgage payments will skyrocket. But you’ll pay a lot less in interest charges, and you’ll own your home twice as fast. Sounds smart, right? Not so fast.

Assuming you live in an area where home prices are appreciating rapidly, the opposite strategy is more profitable. If a $300,000 home appreciates to $500,000 in five years, you’ll get a much bigger return on investment a dollar when you actually put less money into paying your mortgage, not more. The uptick in local prices will still create gobs of new equity, and lower mortgage payments will give you breathing room to enjoy your home instead of being a slave to it.

5. Keeping up Low-Interest Car Payments

In recent years, low interest rates on car loans have been a boon to consumers, with some dealerships still offering zero percent promotional financing. If your interest rate is low, most of your payments will go directly into paying off the car as opposed to interest. And in this case, the debt is secured, meaning that the car acts as collateral to the loan money. If it’s a long-term loan with low interest — a five-year loan for example, which has an interest rate as low as 2.49 percent — then please, pay off the car slowly to take advantage of the favorable rate.

6. Declaring Bankruptcy

If you find that bankruptcy is the one option you face due to your mounting debt, there’s little sense trying to make a goal line stand. Virtually all of the 910,000 personal bankruptcies that were filed in 2014 were either Chapter 7 or Chapter 13 bankruptcies, according to the United States Courts website. What’s the difference? With a Chapter 7, the debtor’s nonexempt assets are gathered and sold, with the proceeds used to pay off creditors. Certain possessions are exempt, but this varies widely from state to state. It takes three to four months to complete a Chapter 7 bankruptcy and obtain a discharge.

With a Chapter 13 — also known as a “wage earner’s plan” — individuals with regular income repay all or part of their debts. Under this chapter, debtors propose an installment plan to creditors over three to five years. It also offers individuals an opportunity to save their homes from foreclosure by catching up on delinquent mortgage payments over time. You must make all mortgage payments that come due during the Chapter 13 period on time. But if this bankruptcy succeeds in restructuring your debt for a smaller amount, you could come out paying off less in the end.

7. Using Credit Counseling and Negotiation

If you are looking at $20,000 in credit card debt, for example, making minimum payments at 19.99 percent APR is the equivalent of spinning your wheels: The minimum payment will barely make a dent in the balance due. But nonprofits such as Money Management International can take on such cases and help you negotiate new payment plans with your creditors — and at lower rates.

If you think this is a viable option — especially after having positive conversations with a nonprofit counselor — then you won’t want to keep throwing good money down the drain just to keep up on the high-interest hamster wheel. You may even be able to negotiate a short break period where you take some time before resuming payments. In the short term, you can also try calling credit card companies directly to negotiate a lower interest rate.

8. Borrowing From Parents

Borrowing from your parents can be painful. And for sure, the idea here is not to borrow from your parents and stiff them, for hell hath no fury like the Bank of Mom and Dad when it has been scorned. You might, however, find your parents to be strong allies in your attempt to get rid of debt.

If you owe $5,000 on a high-interest credit card, be proactive. Go to them with a short review of how you accumulated the debt. Tell them that every penny of their $5,000 loan would go to zapping the high-interest card — not even a slice of pizza or a can of beer would be deducted. Then you might try proposing repayment of only half the loan, with the other half taken out in grunt work. Does the house need painting? Can you perform basic home repair tasks or help out with a major family project? The barter system works well in scenarios where cash is short but the ability and willingness to pay back in other forms is not.

9. Letting Moldy Oldie Debts Lie

Some debtors will go after you with all the ferocity of a jet-powered hellhound, but even jet engines run out of fuel after a time. Again, this is not so much a way to game the system, as to start afresh. Federal law requires that credit-reporting companies remove most debts from your credit report after seven years from the time it became delinquent. Since the debt has already done its nefarious deed and put a dent in your credit score, by making a payment you only reaffirm the debt and reset the clock giving the debt collector more time to go after your cash.