I really didn’t want to write about the NBA lockout. But I had to look deeper into the issue for my own reasons. It’s sort of emotional for me honestly. I look forward to the fall because I know the NBA season will be my pastime for the season, even though I work about 60 hours a week. Despite my personal feelings about it, I am now wondering how the NBA lockout affects the US economy. Or is the NBA being affected by the recession? Let’s investigate….
1). The NBA reported $3.8 billion in revenue during the 2010-2011 season and 57% of this figure amount to player compensation ($2.1 billion). The average salary for an NBA player was roughly $5 million dollars.
2). The NBA lost $650 million over the last two seasons. But its overall operating income (revenue minus players’ salaries, etc.) was $183 million dollars according to Forbes.
3).The owners want a 50-50 split of revenue. The players do not.
4).During an 82- game season, approximately 1.4 million spectators attend NBA games.
1). The City of Memphis is projected to lose $10.8 million dollars if a season-long lockout occurs. This will cause the city to default on its loan payments for the FedEx Forum. The revenue from the franchise covers these payments. The Grizzlies generate $233 million annually.
2). Being that the season is now fragmented, the $4.2 billion revenue that was expected to be generated will not occur. On a per game basis, the league could have earned $1.7 million each game. Each spectator represents $2,987 in revenue for the NBA.
3). The Oklahoma City Thunder generates $100 million annually for the newly establish market. The Spurs generates $95 million and the NBA All-Star Weekend in Orlando, FL was expected to generate $100 million.
4). Players will feel the effects of the lockout in November 2011 when their paychecks are nonexistent.
5). Related business sectors will experience a sharp decrease in revenues: restaurants, transportation, retail stores, hotels, etc. This will ultimately result in layoffs, and people working in these sectors will join the 14 million people already unemployed.
6). NBA fans who purchased special cable packages like NBA Season Ticket will not get their money’s worth.
Needless to say, I didn’t want to get really deep in the issues of the NBA lockout. I just wanted to see the overall economic picture. And it appears to be rather fuzzy. During an era where banks are being bailed out, corporations are closing their doors for good, and foreclosures are skyrocketing, the NBA is still attracting consumer dollars. It is as though the US as not been in a recession for nearly 3 years. The NBA’s revenue has increased steadily and would have increased another 5% if the first tip-off was not cancelled.
I seriously doubt the players and owners are discussing the economic loyalty of the fans. I understand the players have a collective bargaining agreement, and that the owners want a higher rate of return. But I wonder if the negotiations would be necessary if season ticket holders demanded a written contract that guaranteed a minimum number of games to be played? If the NBA fans staged a boycott, would the players and the owners try to reach an agreement with us?
My solution is the owners should have taken the 46%. The player’s associated offered a revenue split of 54-46 instead of the current 57-43 split. The owners should have accepted it. The split could have been renegotiated in a couple of years or so. It is highly likely this issue will resurface again. I truly believe the owners want an even split to offset to their recent losses. In my opinion, the NBA owners were supposed to lose money during this time: it’s called a recession for a reason. The entire U.S. has been experiencing losses for a while now, every industry in U.S. is supposed to feel the effects in some fashion. For some reason, both sides are missing the point that some revenue is far better than no revenue.
And to think, I won’t get to watch basketball on Thanksgiving or Christmas because of someone’s bad business decisions.
How do you feel?
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Now that I have found a safe haven for my extra cash, I feel much better. However, I am asking myself: “What am I keeping the ‘leftover’ money for exactly?” My emergency fund was depleted a year ago. I have to start replenishing right away. The rule of thumb is to save 3 to 6 months of your minimum bill payments. I will also like to add my deductibles for my auto and renter’s insurance to this amount. So that brings my total to a whopping $5,500. Also, I am planning for two major vacations and one mini-vacation. That another $2500! Where I am going to get the money for all of this?!?!
Recently, I posted an article on Facebook called Save—or Earn--$1,000 by the Holidays. With Christmas is less than 90 days away, I would not be able to make this happen. I am on track to have 2 credit cards paid off by the end of this year. However, I can possibly make this happen by January, when my first trip is planned for. And I need to build up some fun money. So maybe some of the tips in the article will help? I will apply some of them to see if I can scare up some extra cash.
Let’s start with the savings tips:
1). Adjust my tax withholding? - At the beginning of the year, I estimated to have income tax liabilities of $5,160 (federal) and $3,408 (state). So I have a fixed amount of $357 in taxes from the wages from my first job each pay period no matter how much I earn in gross pay. I only felt comfortable doing this because my earnings usually do not fluctuate throughout the year. So is there extra money to be found? According to the withholder calculator at IRS.gov, I have would have an over payment of $637 when I file in 2012. So if I change my withholding and put the funds in my new Orange Savings I could save a total of $656 ($637 plus 1.1% interest for 3 months). But I will more than likely wait until December to see if I am fully paid up before capitalizing on the extra funds.
2). Ditch cable? - I would love to stream through Hulu.com or Netflix. But I made the dumb decision of signing a two-year contract. I called my cable company to see if I could downgrade at least. I swore I heard the service agent snicker when she said no. It would have cost me nearly three months’ worth of digital cable service to end the contract ($350). Seriously. Lesson learned: never make a long-term commitment to service provider: cell, cable, internet, etc. I also loved when the conversation was wrapping up, the agent tried to sell me more services! I had the last laugh in that situation.
3). Increase my deductible on my auto insurance? - The savings are not even worth it in my case. I recently just switched both my auto and renter’s insurance from Progressive to Geico. Geico offered me lower monthly rates and my deductibles were cut in half. I currently pay less than $100 for my auto and renter’s insurance combined. If I doubled my deductibles today, I would save $52.60 over a 6-month period, which is $8.77 each month. This does not even offset the additional $750 that would have to be added to my emergency fund goal… Next!
4). Eliminate Bank Fees? - I actually do not believe in paying for my own money. Therefore, I do not use ATMs that charge fees or engage in debit card transactions that cost money. Furthermore, I do not hold accounts with any financial institution that charges monthly fees. Why should have to help them make extra money? They certainly do not help me earn any of my wages. I do business with local banks and credit unions, as their interest rates are better and service fees are typically less expensive. Also, most of my banking is done online…no paper + no person-to-person contact= low or no banking fees. No extra funds to be found here.
Now, can I earn any addition income based on the article?
1). Sell precious metal possessions? - I do not have pieces of silver flatware or dinnerware. Nor do I have gold jewelry. But I do have sterling silver jewelry I don’t wear. According to a scrap gold calculator, I could make an extra $23 for 5 ounces of silver. But I would want an appraisal in person. I don’t trust mail-in offers.
2). Get paid for my opinion? - The article claims you can earn up to $200 per focus group with Delve. Before you sign up, there is a disclosure page for consumer members. Everything appeared to be standard. However, there are some points that stood out. Delve states “Members of our database have agreed to let us contact them from time to time at their primary e-mail address or call them at home, to ask their opinions about various products and services. Some email communications are sent to request responses via email to pre-screening questions to determine qualification for market research studies. Other emails contain links to web-based pre-screening surveys for qualification for market research studies. We also ask permission to call you at WORK or on your CELL phone. By entering your WORK and/or CELL PHONE number you are giving us that permission…. The research studies at our office might involve a group discussion and/or an interview regarding your opinions on such things as advertising, packaging, or perhaps new product ideas. At other times you might be asked to test a product or take a product home and use it for a specified period of time. Those who participate by visiting our offices usually receive a monetary incentive after completion of the research study.” Basically, there is no guarantee for receiving money for your opinion. I will pass.
3). Sell my stuff? - I attempted to have a rummage sale in July. I had decent items for sale, and I generally take care of my belongings. I sent text messages to about 30 people, only 3 people showed up. I made $55 dollars. I had at least $400 worth of items to sell. I put some of the stuff on craigslist. No takers. I can research consignment shops. I found 7 shops in the Milwaukee Area. I would go to only 2, but the cost of driving to investigate and my time will probably offset any proceeds I will receive. Consignment shops generally have commission rates between 20% and 45%.
In conclusion I have the opportunity to save $637 and earn maybe $23, a total of $660. I can start my emergency savings with this or pay for one of my mini vacations. I have decided to start my emergency savings in December 2011. I already allocated funds each payday for vacation expenses.
But one thing I noticed that the article did not mention was creating multiple sources of income. I have seen this piece of advice repeatedly in various personal finance articles. I believe that it is crucial to use your natural talents and skills to your own advantage. If you don’t, somebody else will, while undervaluing your attributes. For instance, I have a knack for checking facts and figures. So, I found a part-time job in 2010 involving data entry 15 hours a week. That’s an extra $400 each month that goes toward commuting costs to the second job, savings, and some minor expenses. Also, I love writing business plans, and helping small businesses grow and start. I’ve been doing it since 2004 and I haven’t charged high service fees over the years to do it. This is why Éclat Enterprises was started. But I have to wait for a return on my investment before it becomes a stable source of income. Time for a PSA: Support small businesses!!!
Please ask a question or post a comment.
I am a firm believer in online banking. I don’t write checks, and I rarely visit the bank. I just cannot stand the line, even if there are only two people had of me. My time is scarce and I don’t waste it. So, found myself in a conundrum when finishing my blog post “More money, more problems….I guess.” How would I transfer the extra funds to avoid overspending? After all I have recouped most of what lost during my last spending tirade, and I am determined to keep it. I have to find a way that I can transfer money quickly online. So I did some research and narrowed it down to three options.
Option 1- Open savings account with ING
-$0 to open. Minimum balance =0
-Interest 1.00% APY
-6 monthly withdrawals before fees
-Electronically links to your current checking account. Transfers take two business days.
Option 2- Establish a goal with Smarty Pig
-$25 to start goal. Minimum deposit $10
-Interest 1.10% APY
-1 withdrawal per month
-Electronically links to your current checking account. Transfers take two business days.
Option 3- Continue to use my savings accounts with Landmark Credit Union
-$5 needed to open account. Minimum balance=$ 5
-Interest-earning on balances of $5 and over at .15%
-24-hour availability: online banking, telephone banking, and unlimited ATM access
-Christmas Club balances transfer October 1; Vacation Club balances transfer June 1
I am intrigued by the online banks for various reasons. One, they do not require my physical presence to make deposits or withdrawals. Two, my money is “out of sight, out of mind” with an online bank. I would not have easy access to it, thus severely reducing my chances of spending. The third reason, my money will earn 10 times more interest with an online bank versus a brick-and-mortar bank. Finally, I can make deposits from my checking account to my savings automatic.
Even though I am intrigued by SmartyPig, it doesn’t fit my “dump the leftovers” strategy. Smarty pig functions on basis on regular contributions. I just want to be able to schedule a transfer to move excess funds, which is subject to change. Also, I have a pre-existing relationship with ING through ShareBuilder. I have not had any problems since I signed up in 2008. I opened my new Orange Savings account today and it only took five minutes.
I believe I’m off to a great start in changing my money habits. However, I may have to experiment with SmartyPig to see how it works.
Tax season is less than three months away! I’m jumping for joy!! I know some of you aren’t. I used to feel your pain, but there are some steps you can implemented on a quarterly basis, or even half way through the year, to take the edge off. Here are my suggested steps preparing for next tax season:
1). Organize all important papers you received throughout the year into one stack, and shred anything that is not. Sort these documents by type and use paper clips, post-its, etc. to help distinguish each document type. Store the docs in a safe place, but that it accessible enough for you to add more when needed. Important papers are documents that support taxable income or anticipated deductions and, or credits. The IRS recommends that these items are kept in your files for 3 years. I would just say eternity, to be on the safe side! These documents include, but not are limited to, the following:
a. Credit card and Bank Statements (including cancelled checks)
b. Medical bills
c. Tuition receipts/statements and receipts related to educational expenses.
d. Mortgage/Home equity loan statements
e. Investment account statements (IRA, 401k, etc.)
f. Rental property schedules listing income and related expenses
g. Any documents to support small business transactions/purchases.
2. Check your exemptions for this year’s current withholding. This is the perfect time to check and see if you are “paid up” on your federal, state and local taxes. Some people don’t adjust their number of exemptions at the beginning of the year. I usually say people are too tired from the holidays to think about it. Here’s my annual tax mantra: “My life changes every year, my tax withholding should too”.
Use these nifty calculators to see if you are on the right track with your taxes. You will need your most recent paycheck stub and prior year’s tax return.
Federal Income Tax Calculator
State Income Tax Calculator
Another way to gauge your tax withholding is to compare your adjusted gross income to this year’s year-to-date gross. If your current wages are roughly 75% of last year’s wage, you are on track for the same tax liability/refund. If the If you under paid, decrease your exemptions by at least one to mitigate any damages. If over paid, increase your by at least one to create some extra cash flow for the rest of the year. But if you are fine with giving the government an-interest free loan of your net pay, leave everything as it is.
3). Create a monthly budget, and stick to it! After you’ve figured out what your net pay should be, the next step is creating a budget based on your tax liability. There are various ways to create a budget, depending upon your financial goals. Below are two budget plans that are easy to digest.
The 50-30-20 budget allocates your net monthly income based on predetermined categories. The budget’s formula states that your net income should be spent as follows: 50% needs, 30% wants, and 20% savings. Use the calculator provided by MSN.com here .
Another budget mechanism is projecting all of your expenses for an entire year and dividing the amount by the number of time you get paid in one year. By doing this year, you can designated a dollar amount for bills and savings. Also, it is possible you can find surpluses of cash throughout the year. This is my own personal budget formula that I use. I use this method because I feel as though I have a more control over my spending habits and my cash flow. Plus, it suits my financial personality because I am a firm believer in direct deposit, e-banking, and automatic payments .Another useful link is Kiplinger’s Budget Worksheet. This can help with the yearly projections.
If the budgets mentioned above do not suit you, contact me and I can help find one that fits you.
Happy Paper Trails!!
"Putting My Money Where My Mouth Is" is a journal about real life experiences and concerns of Jéneen R. Perkins. The purpose of the blog is to exhibit the real life challenges and answer the tough questions posed by the concepts of business, entrepreneurship and money.