Real Estate, The Economy, and News: Expenses

Showing posts with label Expenses. Show all posts

Friday, May 27, 2016

"365 by Whole Foods" Market Boasts Lower Prices and Higher Efficiency

This week, Whole Foods opened their "365 by Whole Foods Market" in Silver Lake, the first of a set of 13 such stores to be built around the country this year. The supermarket chain's new style of smaller store has already interested many customers in its first couple of days, and the company expects the fad to grow rapidly. In her L.A. Times article, Samantha Masunaga describes the new type of store and some of the ways it differs from the classical Whole Foods supermarket.

365 is Whole Foods' first smaller format store. However, it features many high-tech options and better deals than their regular stores, making it a highly sought-after alternative. People, especially Millennials, go to Whole Foods because they are looking for healthier, organic food options. However, eating healthier is often costly, and most people have pretty inflexible budgets when it comes to groceries. Therefore, when shoppers found out that 365's products were the same, but at a cheaper price, they flocked to the new store.

On Wednesday morning, when the store opened its doors for the first time, the parking lot was full and then some. Interested shoppers circled the lot, having trouble finding a spot to park their cars, but when they finally got into the store, they were amazed by what they found. While the 365 has a smaller selection than a normal Whole Foods, its prices are significantly cheaper, which, too many Millennials with little disposable income, is a worthwhile trade-off. Additionally, the displays of produce feature electronic readers that measure the weight of fruits or vegetables and print stickers based on the measurement. In that way, the check-out process is quick and easy, saving time for both customers and employees.

Besides the reduced variety, the new 365 will also be missing Whole Foods' signature deli counter. However, it still has a large salad bar and a variety of pre-cooked hot food items. Analysts believe that 365 is likely Whole Foods' response to losing their share on the health food market. Other stores like Ralphs and Target have begun to provide organic options for their customers, which means Whole Foods is facing much greater competition in a once-blue ocean. Over the past three quarters, Whole Foods has shown declining sales, but the management hopes that the smaller, less cost-intensive 365 stores will help to turn that around over the coming year.

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Friday, May 13, 2016

Strategies to Saving for a College Education

For most parents, a big priority is trying to make sure that their children succeed in life. Parents want their kids to lead an easier life than they had, and most of them see education, especially a college degree, as the main path to that goal. Unfortunately, families have all kinds of financial demands that often take precedence over college, which can be years down the line. Chris Hiestand, in his L.A. Times article, discusses a few potential strategies to help struggling parents maintain their financial stability while still putting money away for future college costs.

A 529 savings plan is one such method to contribute to future expenses. Most savings plans, including the 529, involve the contribution of after-tax dollars to an account, where the money grows in interest and can be withdrawn, tax-free, to pay for educational expenses. Additionally, $14,000 per year can be given between parties as a tax-free gift. Anything above $14,000 is subject to gift taxes. The best thing about tax-free gifts is that they can be front-loaded up to five years in advance. In other words, a parent can put $70,000 into a 529 account one year, but then won't be able to contribute to the account for the next five years. This can often be better than contributing once per year because it gives the money more time to accrue interest, and since you use after-tax dollars, the contributions can be withdrawn tax-free.

Another option is using a Roth IRA to save for college and retirement at the same time. Once again, Roth IRA contributions are made with after-tax dollars, which means the contributions can be withdrawn without additional taxes or penalties. The Roth IRA is often better than a 529 plan for several reasons. Firstly, the 529 is based on a specific interest rate, while the Roth IRA gives you more flexibility to choose investments and decide how much money is being invested. Additionally, if your child doesn't end up going to college, the money in the Roth IRA fund can still be put toward retirement. Finally, perhaps the greatest advantage, is that the money in a Roth IRA does not count against financial aid while a 529 held by a parent will.

Often, there is no way to pay for college without taking out loans. However, there are smarter ways to get the best bang for your buck in loans. Over 70% of bachelor's degree recipients graduate with debt, and although getting a degree is an investment in the future, the returns on investment can be slow. Some loans allow students and their parents to push off interest and payments until 6 months after graduation, but when the interest finally begins to accrue, it can be at rates of 9% or higher. Many parents decide that it makes more sense refinance their mortgage and use the saved money each month to contribute to schooling. Others tap into their home's equity to pay tuition and fees.

In all, getting a college education is possible. Through a combination of saving, financial aid, and smart loans, a college degree can be affordable to some extent. Smart financial planning can be hard, but in general, getting a college degree is a good investment in yourself or your children, and should pay off in the long run. Financial stress today could be worth it if it means business success in the future.

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Friday, January 22, 2016

New Research Involves Renewing Groundwater Supplies, Not Filling Reservoirs

In a test on a potential new way to reduce the effects of California's recurring drought conditions, researchers are looking not to expand reservoirs, but rather find a way to funnel the excess rainwater from the El Nino winter back into the groundwater, where it can be put to better use during the drier seasons. Currently, the majority of rain runs off into the ocean, simply because a large portion of the land is covered in concrete or asphalt, which doesn't allow rainwater to permeate. Through this ongoing experiment, depicted in Geoffrey Mohan's L.A. Times article, the water is instead redirected to the fields of involved farmers, where the water is able to seep into the soil.

While creating new reservoirs and expanding existing reservoirs could accomplish the same goal, the experiment aims to show that it can be accomplished more naturally and cheaply. Simply by harnessing the power of gravity, storm runoff could be forced into irrigation channels. From the irrigation channels, several fields in succession can be watered before the rest of the runoff can make it to nearby lakes and rivers. Once upon a time, farmers used only surface water and groundwater to tend to their crops. In this day and age, the groundwater levels are so depleted, especially during drought seasons, that there isn't enough water to make that system feasible.

That system could once again become helpful for farmers and common folks alike, once the groundwater levels have been put back to normal. Through a large-scale application of the concepts present throughout the experiment, everything from wells to reservoirs could be filled with the rainwater that would normally be wasted as runoff to the ocean. Unfortunately, not very many people have volunteered to be a part of the study. Some are, quite reasonably, simply unwilling to risk their trees in the event that the experiment ruins them. More often, state or federal agencies control the water in dams and canals and put up a lot of red tape due to their worries that the water may benefit people who aren't paying for it.

The research is risky, but well worth it in the long run. The water might spur fungal disease in the trees, but it also might kill off worms and mites. The test measures whether the concentration of contaminants like nitrogen-based fertilizers increases in the total groundwater and what effects that might have on the ecosystem. In general, the experiment is looking to make sure whether this would be an effective way to store water for use in drier times. From what has been measured so far, the irrigation hasn't ruined the test trees, but it will still be a while before significant results can be found.

According to researchers' approximations, there are about 3.6 million acres of agricultural land in California alone that have the proper characteristics to make them usable in groundwater-refilling projects. The only issue is that everyone would have to work together to make this concept a reality. For the first few years, crop yields will likely decrease due to the plan, which will make many farmers want to drop out. However, if they all stick it out to the end, the groundwater levels would eventually become properly equilibrated, which would extremely dampen the effects of future drought conditions in the area. It would just take a lot of cooperation between individual farmers and governmental agencies, as well as a unified belief that renewing the environment will have far more positive effects, both economically and otherwise, in the long run than making a quick buck today.

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Friday, November 20, 2015

Some Stores Find Black Thursday Not As Profitable in the Long Run

Where several stores have decided to push up their Black Friday sales earlier on Thanksgiving day, many others are doing the opposite, closing their stores for the entire holiday in a show of support for those shoppers and employees who wish to spend time with their families. In her L.A. Times article, Samantha Masunaga investigates some of the deeper reasons behind the closure, as well as the financial implications for the businesses.

Over the past couple of years, Black Friday sales have been starting earlier and earlier. Historically, Black Friday is the day after Thanksgiving and is a time when people can get good deals on new electronics like video game systems, televisions, and handheld devices. Until relatively recently, Black Friday started around midnight on Thursday night (technically Friday morning) and continued throughout the day. As companies began to realize that Black Friday sales brought in a lot of income, they started opening as early as 8 or 9 PM on Thanksgiving itself, enabling the sales to last longer and bring more customers into their stores.

This year, though, some companies are pushing it even earlier, some as early as 5 or 6 PM on Thanksgiving, which cuts family time pretty short for employees. In opposition to this, many slightly smaller companies are choosing to remain closed all of Thursday, with a belief that the few extra hours will not make much of a difference in the long run. Companies like Staples, Gamestop, and H&M have announced that its stores, headquarters, and distribution centers will be closed for the holiday. This decision, while upsetting to some potential shoppers, could potentially lead to greater loyalty among other customers who see that the companies care about enabling their employees to spend time with their families on the holiday.

Furthermore, many of the smaller retailers have come to a realization that opening their stores earlier for Black Friday doesn't have so much potential for profit. Analysts have shown that larger retailers, who can more afford to purchase big-ticket items in bulk for very reduced prices, are helped by a longer Black Friday, but that the smaller stores don't stand a chance trying to compete. So, this year the smaller retailers are concentrating on building goodwill and encouraging customers to shop online, then are opening up on Friday with their Black Friday sales. Statistics even show that those stores that opened early on Thanksgiving had a reduce in sales of about 11% over the rest of the weekend since those people who shopped on Thanksgiving were less likely to come back later.

Large companies may find out eventually that starting Black Friday on Thanksgiving does not positively affect them to the required extent to make a sizable profit. After all, when employees work on Black Friday, especially the portion of Black Friday that falls on Thanksgiving day, they get paid a higher hourly rate. At some point, the stores will reach a point at which sales are maximized while costs are minimized, at which point they will try to open their stores at that sweet spot every year. Because they continue to open ever earlier, it appears that they have not yet found that perfect time. Maybe they will eventually go back to being closed during the entire holiday, whether due to a lesser profit ratio or a surge in public opinion. It's hard to tell, so we will just have to wait and see.

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Friday, November 13, 2015

Roofers and Contractors Overbooked in Preparation for El Nino Winter

After months of drought conditions throughout California, homeowners are rushing to get their houses prepared to withstand the expected onslaught of the upcoming year of El Nino weather. Many of these homeowners are coming to realize that their roofs should be patched up or replaced before the "above-average" rainfall begins. The National Weather Service predicted that the Los Angeles and San Diego areas this winter will have about a 60-69% chance of "above-normal precipitation," which is a huge wake-up call for Californians who have experienced very little rain over the past couple of years. Ronald White, in his L.A. Times article, investigates the current rush to get ready for the winter season and the strain it has been putting on various businesses.

While many people are seeking roofers for long-overdue work on their roofs, other workers, like gutter repairers and tree trimmers, have also reported that 10 times the number of requests for their services have been made this year than the last. while the increased demand is great for business, many have been unable to keep up with demand, leaving property owners disappointed. Many homeowners have even reported difficulty getting an estimate for potential work, let alone getting contractors to their home to get the work done. Many roofing and construction companies have full waiting lists through March, but an appointment that late won't really help a homeowner trying to prepare for the El Nino winter.

Even arborists and tree services have full schedules, booked by homeowners and others worried about whether draught-stressed trees fall in the winter, potentially injuring people and destroying property. Companies like the Your Way Tree Service go out and check trees for health, as many are already dead due to disease, wood rot, or lack of water. The tree service determines whether trees are healthy enough to withstand the winter, and, if not, they fell them safely so that rough winds won't do it later.

Finally, there are those people who plan to use the rainfall later, when El Nino is over. Even they have been having trouble finding experts to install rainwater storage systems on their properties. Not only are some of these specialists booked, many others are unwilling to start work in L.A. until the demand has died down somewhat. However, they still encourage homeowners to keep calling. Eventually, they will be able to get through to a professional who is able to help them. Everyone right now has to turn away business because they simply don't have enough manpower or hours in the week to get work done for everyone.

Steve Lang, of the Roofer Contracting Association, warns homeowners against desperation. He assures them that they will eventually be able to get an appointment with a professional who knows what he/she is doing. His warning is this: hiring an unknown contractor or roofer to do work on your home could end up costing you much more in the long run, usually due to shoddy work by an inexperienced roofer or other kind of worker. He reminds homeowners to look for licensed professionals. Just because someone claims to be a roofer doesn't mean that their work will protect your home from the coming winter's rain. It is far safer and more cost-effective to be patient and wait for someone who knows what they are doing.

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Friday, November 6, 2015

San Francisco's Anti-Airbnb Proposition Narrowly Fails

Short-term home or apartment rentals, usually through online platforms like Airbnb and VRBO, have been steeped with controversy in recent months. Some cities have even tried to ban such rentals while others have embraced them wholeheartedly. Most recently, San Francisco put forth a proposition to limit the ability of landlords to use such websites for renting their property. Tracey Lien, in her L.A. Times article, discusses how Airbnb affects both landlords and tenants, and how this new Proposition F may affect the city.

The controversy behind services like Airbnb is mainly one of a fight between a capitalist economic theory and one in which people deserve fair treatment. On the one side, tenants in San Francisco fear that the increasing prevalence of Airbnb will eventually lead the owners of their rented homes and apartments to evict them in favor of the larger sums paid by short-term renters. It is these tenants who would vote for the proposition since it limits landlords' use of Airbnb and their ability to turn normal rentals into short-term ones quickly. The proposition aims to prevent or at least slow down the conversion of apartment buildings into pseudo-hotels.

Some see it differently. While services like Airbnb could convince landlords to evict tenants in favor of the faster income, the free market could take care of any issues that arise from it. Eventually, if enough landlords raised prices enough to match the rising demand by tourists, ten the average worker would not be able to afford to live in the city. If workers are forced to move out, then business and regular city work will grind to a halt, When the economy halts in such a way, tourists will not want to visit, which will force landlords to lower their prices back to normal rates in order to get tenants. While this situation could probably work itself out, Proposition F aims to avoid it altogether.

Even for some landlords, Airbnb has uncomfortable implications. One Balboa Park resident, who had only ever rented his units out on a long-term basis voted against Proposition F. He worried that his tenants might use Airbnb to rent out his unit for short-term stays, a concept that he wasn't completely comfortable with. However,different from many tenants, he said that he would have voted yes on the proposition if he was in their shoes for that same reason: the ability to rent out the apartment in which one is living while out of town for short periods of time.

Unfortunately for those passionate about the topic, voter turnout for the proposition was extremely low. In-person votes were in the low hundreds, and mail-in votes reached about 9,000. In the end, Airbnb beat the bill, but even while celebrating, the San Francisco-based company expects further assaults in the near future. They believe that the proposition failed mainly due to its highly specific and extreme stance regarding the short-term rentals. Even so, the vote was close, with about 45% of voters supporting the proposition. Airbnb fears, rightfully, that behind the scenes, lawmakers in places like Los Angeles and San Diego may be getting ready to start the fight all over again.

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Friday, September 11, 2015

Rising Insurance Costs in High Fire-Risk Areas

When a home is purchased with a mortgage, using a loan from a bank, the bank will always require the homeowner to get insurance in order to make sure their investment is protected to some extent. Insurance, while a necessity, can be a costly addition to one's monthly or yearly bills. Since an insurance company wants to stay in business, it charges higher rates to provide insurance to individuals in high-risk areas: flood zones, fire zones, earthquake centers, etc, so that it will have the money to pay off claims involving fixing or rebuilding of affected properties. For people like John Stoffan in Samantha Masunaga's L.A. Times article, the costs of fire insurance in drought-parched California make the state almost too costly to bear.

The Stoffan family, whose Northern California home survived various wildfires around Yosemite National Park throughout the years, is finding that their insurance rates may actually be the reason they finally jump ship. The house itself, as well as the county in which it is situated, are considered to be "high-risk" for insurance companies. Even after having installed fire-resistant plants, developed "buffer zones" of areas without any plants surrounding the property, and created holding areas to keep thousands of gallons of water on hand, insurance companies have doubled rated in the past year.

The past four years of dry conditions have made things worse for those living near large forests. The combination of summer temperature and lack of water can turn a forest into a raging wildfire with the merest spark. Because of this risk, home-owners like the Stoffans, no matter how many preventative measures they take, are stuck between a rock and a hard place. They need insurance to have a mortgage to own a home, yet the insurance rates are unaffordable and getting worse. What is their alternative?

While all are hoping for a good winter to break California's dry spell, many are considering moving out of the area altogether. Others have found more creative options to reduce their insurance costs. Some people, like Alpine's Mollie Jacques, have been able to find significant discounts by using insurance companies based in other cities. For Jacques, her choice to switch to an insurance company 100 miles from her home saves her over $700 per year. Some homeowners have even been refused insurance completely and have been forced to use the California Fair Plan Association to have some, albeit limited, coverage.

Communities are coming together in these fire-prone areas to try to make their homes and surrounding land as safe as possible. Since insurance companies determine rates through statistics involving fire department preparedness, water supplies, and availability of emergency communication. With the help of the California Fire Safe Council, a nonprofit organization, such communities are able to purchase wood chippers and other machinery to help clear dry brush and other flammable material. The more prepared a community becomes for a wildfire, the better rates insurance companies will provide. It comes down to economics. Insurance companies will charge a lot of money for taking on a huge financial risk. The more you lower that risk for the insurance company, the less money they will require you to pay.

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