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Tag: accounting

  • SEC charges ex–McDonald’s CEO Easterbrook for making false statements relating to his 2019 ouster

    SEC charges ex–McDonald’s CEO Easterbrook for making false statements relating to his 2019 ouster

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    The Securities and Exchange Commission said Monday it has filed charges against Stephen J. Easterbrook, former chief executive of McDonald’s Corp., for making “false and misleading” statements to investors about the circumstances that led to his ouster in November 2019.

    The agency has also filed charges against McDonald’s for “shortcomings” in its public disclosures relating to Easterbrook’s severance agreement.

    McDonald’s
    MCD,
    -0.55%
    fired Easterbrook for exercising poor judgment and violating company policy by engaging in an inappropriate personal relationship with a McDonald’s employee. However, the separation agreement struck with the executive concluded that his termination was without cause, allowing him to retain substantial equity compensation that would have been forfeited in other circumstances.

    “In making this conclusion, McDonald’s exercised discretion that was not disclosed to investors,” the SEC said in a statement.

    In July 2020, McDonald’s discovered in an internal probe that Easterbrook had engaged in other, undisclosed relationships with employees. Those findings were not disclosed prior to Easterbrook’s termination, in the knowledge that they would influence the board’s decision making, according to the SEC.

    “When corporate officers corrupt internal processes to manage their personal reputations or line their own pockets, they breach their fundamental duties to shareholders, who are entitled to transparency and fair dealing from executives,” said Gurbir S. Grewal, the SEC’s director of the division of enforcement. 

    The SEC is charging Easterbrook with violating anti-fraud provisions of the SEC Securities Act of 1933 and the Securities Exchange Act of 1934. Easterbrook has consented to a cease-and-desist order and five-year officer and director bar and a $400,000 civil penalty, without admitting to or denying the charges.

    McDonald’s is charged with violating section 14(a) of the Exchange Act and Exchange Act Rule 14a-3. The fast-food giant has consented to a cease-and-desist order, without admitting to or denying SEC findings. The SEC has opted not to fine the company, as it cooperated with the agency and clawed back compensation after its probe.

    The stock was slightly lower Monday in early trades.

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  • What is Revenue: Definition, How to Calculate It & More

    What is Revenue: Definition, How to Calculate It & More

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    Businesses are primarily successful based on how much money they make or their revenue. But while anyone can roughly grasp revenue, what it means and why it’s essential, revenue as a business figure is a little more complex, especially when you compare it to other metrics like income.

    Below is a breakdown of revenue in detail and how to calculate revenue using a revenue formula.

    Related: Tracking These 6 Metrics Could Boost Your Sales

    Revenue explained

    Revenue is the money a business generates from its normal business operations, things like gross sales of products and other income streams. It is calculated by looking at the average product sales price and multiplying it by the number of units sold.

    For example, a car dealership’s revenue is the combined sales price for all cars it sells in a given timeframe, like a day, week, month or quarter. Total revenue is the “top line” for gross income metric on a balance sheet or company income statement.

    While revenue is an essential metric, it is distinct from other key metrics such as operating income, gross revenue and total profits. The net profit, for example, is the amount of money you get to keep or count as profits based on the sale of goods.

    Types of revenue

    You can calculate and analyze different types of revenue for your business purposes or for calculating other ratios.

    Related: How to Forecast Revenue and Growth

    Generally, corporate revenue is subdivided according to the divisions or products that make that revenue. For instance, if you have a restaurant, you might divide and analyze your revenue by categorizing your offerings as sides, main dishes and alcoholic beverages.

    Alternatively, a company can distinguish revenue by analyzing cash flow from tangible or intangible products or services. Tangible products are products you can feel and physically sell to customers, while intangible products are usually services, such as internet and cloud services.

    You can further divide your revenue into operating revenue and non-operating revenue. Operating revenue is any revenue from a company’s core business. For instance, if you run a restaurant, your operating revenue is from the food and drinks you sell to customers.

    Nonoperating revenue is any revenue from secondary income sources. If you run a restaurant, your nonoperating revenue could be from sales of loyalty program cards, gift cards or restaurant merchandise, like T-shirts and mugs.

    Nonoperating revenue is critical to incorporate because it can be unpredictable and nonrecurring. You might, for instance, get money through a litigation victory or selling an asset.

    In any case, it’s essential to divide your revenue by source and type to understand where most of your money comes from and make smarter business decisions.

    Revenue vs. Income

    Revenue is distinct from income, even though the two concepts are very similar. At its core, the revenue is all the money you make from your products and services.

    But income is the money you “take home” or have left over after subtracting the necessary expenses to make those products and services.

    This includes the cost of goods and other operating expenses, which get taken out of your revenue. In this sense, income is closer to your gross profits than revenue taken by itself.

    Example of revenue

    Here’s an example:

    • Say you create handmade jewelry for your online store or a platform like Etsy.
    • You have to spend $100 on materials for a single set of earrings.
    • When the earrings are complete, you can sell them for $150. Should you sell the pair of earrings, you’ll make a profit of $50.

    In this sense, your revenue is $150, but your income is only $50. Understanding these distinctions can help you grasp your finances more accurately and responsibly.

    Note that even though income is vital to calculate, it needs to consider the time or cost of labor that is not accounted for in salaries.

    Again, say you run your own business and don’t employ anyone. While you can calculate income by subtracting the material expenses you have, you won’t be able to tally up the cost of your labor unless you pay yourself a salary.

    Why and when is revenue important?

    Revenue is essential because it helps a company understand how much money has been brought in over the last quarter, month or timeframe.

    Businesses can’t make wise decisions regarding employee salaries, product purchasing and other expenses without knowing how much money flows into their coffers.

    Revenue is the top-line income metric because it appears first on any corporate income statement. When you hear “top-line growth,” you can translate it in your head to “revenue growth.”

    It’s contrasted with net income, also called the bottom line income metric. Income, as mentioned above, is a company’s revenues minus expenses.

    Contrasting these two numbers can help companies understand how much money they spent to earn their profits. It’s one of the central accounting principles that should guide your business activities.

    While revenue is significant, it cannot and should not be considered in isolation. Instead, you should look at revenue in conjunction with other metrics so you can understand the total financial health of your business relative to other organizations or your business goals.

    For example, if you have high revenue, such as $1 million per quarter, you might think that you are earning a lot of money.

    But when you compare your revenue to your net income, which is just $20,000 per quarter, you’ll notice that you aren’t taking home a lot of money relative to your expenses or the costs of doing business.

    Armed with information about revenue vs. profit, you can then make decisions such as:

    • Decreasing your expenses in some way.
    • Offering new products or changing the way you price your products.

    Revenue, along with profit margin, is an integral part of forecasting, fundraising from investors and accrual accounting, all of which consider a company’s financial health.

    How can companies increase revenue?

    Companies can increase revenue in a variety of ways. For example, a company can try to reduce its operating expenses by laying off employees, finding better supply chain arrangements or streamlining or simplifying the manufacturing process to make producing each business unit cost less.

    Related: Finding New Ways to Generate Revenue

    Alternatively, companies can increase revenue by increasing the cost of each unit sold. They may increase prices by a certain amount to bring in more money.

    This tactic, while risky, can be successful if a company’s target audience members are willing to spend more money on the same products for one reason or another.

    How to calculate revenue

    You need to know how to calculate revenue if you are to analyze it properly.

    Fortunately, you can use a simple revenue calculation formula to get this metric, no matter how many things you have sold or how much money you have made.

    Note that this revenue formula is helpful and generalized, but service companies, production companies, and other corporations may use different formulas.

    An excellent basic revenue formula to use is:

    Net revenue = (quantity sold X unit price) – discounts – allowances – returns

    Here’s a more detailed breakdown of this formula: net revenue is what you are trying to find.

    The discounts are any discounted prices you have to account for, such as when selling products on sale.

    Allowances are other monetary benefits afforded to customers, such as store credit. Returns are subtractions to your revenue because you give back money to a customer.

    To complete this formula, you first multiply the units sold by the unit price for each unit. Say that you are trying to find the revenue for selling a batch of glasses from your business.

    You sell each glass for $50, and you sell 75 glasses in total. You end up with a revenue of $3750.

    However, you need to subtract any discounts, allowances, or returns that may have impacted that revenue number.

    Say that one of your customers returned 10 of the glasses because they ended up needing fewer. You have to subtract $500 from that total, resulting in a new total of $3250. Remember, this is just your revenue, not your income or profits.

    Essentially, you can always calculate revenue by calculating how much money you made, then subtracting any expenses, discounts or other elements that might reduce how much money you take home or put in the bank.

    When should you calculate revenue?

    You or your accountant should calculate revenue at the end of each quarter at the bare minimum. Revenue is a crucial element of any balance sheet, which collects essential metrics and shows you your company’s financial health.

    However, you can calculate revenue whenever you need to understand the relationship between the money you bring in and the money you spend to make that profit.

    Calculate revenue when you want to learn:

    • Whether you need to increase the prices of your services or products.
    • Whether you should decrease or increase your labor salaries or lay people off.
    • Whether you should reduce the prices of your products to drive sales.
    • Whether you need to take other, more drastic measures to improve the profitability of your company.

    If you have an accountant, they may calculate the revenue for you automatically or regularly. However, it may be wise to calculate revenue regularly.

    Since it’s only accurate for a short period, regularly calculating revenue could help you see how your company evolves or see what “good” revenue looks like compared to “bad.”

    Summary

    Revenue is just one part of a company’s overall balance sheet. While important, remember to be careful about calculating revenue in isolation; instead, consider analyzing it in conjunction with other metrics such as income, gross profits and expenses.

    Running a business and understanding your finances is an ever-evolving, ongoing process.

    Looking for more professional finance articles like this one? Explore Entrepreneur’s Money & Finance resources here.

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  • Trump’s tax returns are now public after long fight with Congress

    Trump’s tax returns are now public after long fight with Congress

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    The U.S. House Ways and Means Committee released six years of former President Donald Trump’s tax returns on Friday.

    Experts will be looking closely at large business losses reported by Trump that significantly reduced his tax liability. For instance, he paid no federal taxes in 2020.

    “Trump paid miniscule income taxes in 2015-2020, and almost no income taxes for the prior three decades,” said Steve Rosenthal, a senior fellow at the Tax Policy Center in Washington, in an email.

    “We also have learned that, in the 1990s and 2000s, Trump claimed business losses of tens and sometimes hundreds of millions annually. I studied these a few years ago and found some real, and some fake,” he added.

    “It is still early to determine how much of Trump’s most recent losses were real or fake,” Rosenthal said.

    Read: Trump paid $0 taxes in 2020. He’s not alone

    Analysts are also going to pore over the documents for any details of Trump’s foreign business dealings.

    Some certified public accountants who looked at the documents say the returns show that the U.S. tax system has been written to “incentivize” real estate investing.

    Bottom line: In order to generate these kinds of losses, you need to be super rich. It’s not a poor man’s game,” said Jonathan Medows, managing member of Medows CPA PLLC in New York.

    Read: CPAs have questions about Trump’s tax returns

    David Cay Johnston, a Pulitzer Prize winning author and longtime Trump critic, in a post on his non-profit news organization DC Report, called the former president’s tax returns “a rich environment in which questionable conduct is found throughout the filings and needs only seasoned auditors to uncover fictional expenditures.”

    He said that Trump was warned by two New York state judges in trials about his 1984 taxes not to deduct huge expenses in businesses with no revenue.

    “That Trump persisted in using the same fraudulent technique in six years of recent tax returns is powerful evidence of criminal intent,” Johnston wrote.

    In a statement, Trump said his returns show “how I have been able to use depreciation and various other tax deductions as an incentive for creating thousands of jobs.”

    Key words: Trump on release of his tax returns

    Some experts said they were going to look at the returns for details about Trump’s foreign sources of income. The documents show that Trump had foreign bank accounts while he was president.

    See: What could be learned from Trump’s tax returns

    Democrats on the Ways and Means Committee said they voted to release the Trump tax returns to help improve the tax laws. Republicans warned that the release would set a precedent where political parties routinely release the tax returns of their opponents.

    Another question is why the Internal Revenue Service failed to audit Trump’s tax returns as it routinely does for U.S. presidents.

    See: Trump taxes could rev up fight over IRS funding

    On Jan. 3, Republicans will take control of the House along with the tax-writing committee.

    Rep. Don Beyer, a Democrat from Virginia who is a member of the Ways and Means Committee, said the Trump tax returns “underscore the fact that our tax laws are often inequitable and that enforcement of them is often unjust.”

    Rep. Kevin Brady, the Republican from Texas who was the minority leader of the Ways and Means panel and is leaving Congress in January, said Democrats did not release the Trump tax records for any legislative purpose but wanted to “unleash a dangerous new political weapon” at the former president.

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  • What Is a Balance Sheet and Why Does Your Business Need One?

    What Is a Balance Sheet and Why Does Your Business Need One?

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    When you want to know a company’s financial health, it helps to look at its balance sheet. But if you’ve never seen a balance sheet before or don’t know how to read one, all you’ll see is a collection of impenetrable numbers and strange terms.

    You’ve likely heard about line items and balance-sheet-related terms like working capital, net income, net assets or bonds payable; however, without a cursory understanding of how balance sheets work, these terms can confuse you.

    This article will solve that by breaking down balance sheets in detail, explaining what a balance sheet is, and how it works, as well as showing you some balance sheet examples.

    Related: Balance Sheet – The Entrepreneur Small Business Encyclopedia

    What is a balance sheet?

    A balance sheet is a detailed financial statement that breaks down all of a company’s assets, liabilities, and equity at a specific time, such as the end of a month, the end of a quarter or the end of a year.

    You can also make balance sheets for “random” points in time to see how a company is doing at any given moment. No matter when you make one, a balance sheet allows you to evaluate a business’s capital structure and determine how profitable it is relative to its expenses.

    Think of a balance sheet as a snapshot exploring what a company owns and owes and how much shareholders invest.

    Balance sheets, combined with other financial statements, allow investors and business owners to analyze business performance and make the wisest decisions possible.

    Related: Financial Statement – The Entrepreneur Small Business Encyclopedia

    What are the major components of a balance sheet?

    All balance sheets are comprised of three primary sections — here’s a detailed breakdown of each:

    Assets

    First, you’ll find a breakdown of the company’s assets. The assets are everything that a company owns that has a dollar value. More specifically, a company can turn assets into cash at some point.

    Current assets can impact a company’s financial position and can include the following:

    • Money in business checking accounts.
    • Physical products and equipment, such as inventory.
    • Prepaid expenses.
    • Short-term investments.
    • Money in transit, like money from invoices.
    • Accounts receivable, which is any money owed to a business by its customers.
    • Cash equivalents, like stocks, bonds, marketable securities, and foreign currencies.

    However, this is by no means a comprehensive list of all total assets, which would also include non-current assets (long-term investments) that a company does not expect to liquify within a given fiscal year.

    Additionally, assets can be tangible things, such as business buildings or equipment.

    Intangible assets include things like intellectual property, copyrights and trademarks. Note that tangible assets are usually subject to depreciation, so they lose value over time.

    Assets may be further broken down into both long-term and short-term assets. You can sell short-term assets relatively quickly, typically in less than a year.

    They include the majority of the assets described above. Long-term assets are things like buildings, land, corporate machinery and equipment.

    Liabilities

    Next on a balance sheet should be liabilities. Liabilities are any of the financial debts or obligations that a company has. Liabilities should be listed by the due date, with the debts or liabilities that are due the soonest listed on top.

    Total liabilities can include but are not limited to:

    • Taxes owed, including upcoming tax liabilities.
    • Accounts payable or money owed to suppliers for items purchased on credit.
    • Employee wages for hours already worked.
    • Loans you must pay back within a year.
    • Credit card debt.

    Liabilities can be broken down into current liabilities and non-current liabilities. These are essentially long-term liabilities that don’t have to be paid back or settled within the year and can include the following:

    • Long-term debt or loans.
    • Bonds issued by a company.

    You’ll need to calculate all liabilities to complete balance sheet accounting equations, practice good bookkeeping and complete or calculate other financial ratios using programs like Excel or others.

    Equity

    Equity is the other significant section of a balance sheet. It’s any money currently held by the company. It can be called shareholders’ equity, stockholders’ equity, owner’s equity or similar names. In any case, this balance sheet section should break down what belongs to business owners and the book or monetary value of any investments.

    Equity can include:

    • Capital in the business — this is how much money the owners have invested into the business.
    • Public or private stock.
    • Retained earnings, which can be calculated by adding up all revenue minus expenses and distributions.

    Note that equity may decrease if an owner takes money out of the company to pay themselves. Equity can also decrease if a corporation issues dividends to shareholders.

    All three of these sections combined to tell you what the company owns, what it can turn into cash if it sells those things and what debt obligations it has or the money it owes.

    Major balance sheet equation

    In a broad sense, every balance sheet’s numbers should add up properly according to the following equation:

    Assets = liabilities + shareholders’ equity

    All of the company’s remaining assets are the same as its liabilities, added with the equity from its shareholders. The company has to pay for all these things by borrowing money (i.e., liabilities) or by taking value from investors (i.e., issuing shareholder equity).

    How does a balance sheet work?

    Balance sheets provide clear-cut, mathematically accurate information about a company’s finances for a given moment. For instance, if a potential investor wants to know whether a company is a good investment, they may request a balance sheet.

    The balance sheet can tell them:

    • What the company owns, and what its general profits are.
    • What the company owes in terms of debt or liability, which can tell the investor whether the company is a risky investment.
    • What the equity in the company is, which tells the potential investor whether investing in the company may provide them with profits later down the road.

    Investors can use different ratios and formulas using the numbers on a balance sheet to determine a company’s financial well-being. These include debt-to-equity ratios and acid test ratios.

    Along with an income statement, an earnings report, and a statement of cash flow, an investor has everything they need to determine the state of a company’s finances.

    Related: A Guide to the Top Three Financial Reports for Small Businesses

    Balance sheets should always balance

    Whether you’re an investor or business owner, remember that a balance sheet should always “balance.” This is where balance sheets get their names.

    Put more simply, the company’s assets should equal liabilities and shareholder equity.

    If for whatever reason, the numbers on a balance sheet do not balance, there are problems, which can include:

    • Inaccurate or incorrect data.
    • Misplaced data (such as one number being put in a spot where it should be somewhere else).
    • Errors with inventory or exchange rate.
    • Miscalculations.
    • Deliberate falsifications on the part of shareholders, company owners, or accountants.

    Why are balance sheets important?

    Balance sheets can be essential for every company, regardless of size or operating industry, because of their many benefits.

    In short, balance sheets help investors and business executives determine risk. Because it is a comprehensive financial statement, it explores everything that a company owns and everything that the company owes in terms of debt or liability.

    In this way, someone looking at a balance sheet can easily assess the following:

    • Whether a company has overextended, such as whether it has borrowed too much money.
    • Whether the company has enough liquid assets to pay off its debts in the event of liquidation.
    • If the company has enough cash on hand to meet current debt obligations.

    Related: Use a Balance Sheet to Evaluate the Health of Your Business

    Balance sheets are also important because they are a prime means to secure investment capital. Business owners usually have to provide balance sheets to potential investors, whether individual investors or large corporations like banks and credit unions. No investor is likely to put money into a business unless they look at a balance sheet first.

    In the long term, balance sheets are essential tools that managers can use to determine profitability, liquidity, and other metrics for their company.

    Once they have this information, they can make wise decisions, such as paying down company debts instead of expanding during a costly, risky period of time.

    What might you need beyond balance sheets?

    Balance sheets are excellent financial documents to have and understand, but you can’t just use these to understand the company thoroughly. There are some limitations and drawbacks to balance sheets.

    For example, balance sheets are static, so they have to be updated regularly. Because of this, an out-of-date balance sheet may not give an accurate picture of a company’s financial health. A company might look financially healthy on one day and appear to be heading toward insolvency on another.

    Because of this, it’s a good idea for investors, business owners, and managers to also acquire cash flow statements, income sheets, and other financial documents if they want to determine a company’s holistic, comprehensive health.

    Balance sheet example

    The best way to truly grasp balance sheets is to look at concrete examples. While you can create balance sheets using Microsoft Word and other word processors, you can also check out premade sample balance sheets from Accounting Coach.

    These example balance sheets include fake corporations with real numbers and equations. They also include balance sheets in different forms, such as account form balance sheets and report form balance sheets.

    Check out these example balance sheets to see how these documents should look when correctly filled out. Try filling in a balance sheet template like your company’s balance sheet to get a practice picture of your company’s financial position.

    So, what are the takeaways about balance sheets?

    Balance sheets are relatively easy to scan once you know what to look for.

    More importantly, balance sheets can tell you a lot about the company’s financial health and help you make wise business or investment decisions depending on your goals.

    Running a business means more than just reading your balance sheet accurately, though.

    Interested in learning more about professional finances? Check out Entrepreneur’s other guides and financial resources today.

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  • Here are MarketWatch’s most popular Moneyist advice columns of 2022

    Here are MarketWatch’s most popular Moneyist advice columns of 2022

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    What fresh shenanigans and money dilemmas enthralled readers in 2022?

    Another year of broken promises, dodgy dealings and moving letters about how to get back on one’s feet after divorce, unemployment and even a 15-year abusive relationship. 

    The most widely-read Moneyist of 2022, however, was actually one of the shortest letters from someone called ‘Surprised Sister.” The answer, as is often the case, was not so simple, nor so short.

    Here is the No. 1 Moneyist column of the year: ‘We are surprised and bewildered’: My brother passed away and left his house, cash and possessions to charity. Can his siblings contest his will?

    My response: There are times to contest a will: a parent who was being controlled by a new friend or greedy child, and/or someone who was forced to change their will when they were not of sound mind.

    But her own legal advice notwithstanding, I suggested she should accept your brother’s wishes. Feeling aggrieved that she did not inherit his estate is not enough to break his will. 

    Separate the emotions from the finance, and the answer often reveals itself. But there were others that ran the gamut from romance to stocks. They other most-read columns are an eclectic bunch:

    Here are the 5 runner-ups:

    1. I had a date with a great guy. I didn’t drink, but his wine added $36 to our bill. We split the check evenly. Should I have spoken up?

    It would be nice to offer to take the booze off the check, you were a non-drinker, would you speak up at one drink or two or three, if your date split the entire bill 50/50? 

    The financial intricacies of dating are like an onion that can be peeled ad infinitum. We’ve had plenty to chew over. Paying for one of your date’s drinks is OK, paying for two is pushing it.

    1. My father offered his 3 kids equal monetary gifts. My siblings took cash. I took stock. It’s soared in value — now they’re crying foul

    “The Other Brother” wrote that his father offered three children a choice: stocks or cash. The other two siblings took the cash. He took the cash. The stock soared. Dems are the breaks.

    Her siblings could have chosen stocks over cash, but they wanted immediate gratification. That was their decision, and they are going to have to take ownership of their choice and live with it.

    1. I’m an unmarried stay-at-home mother in a 20-year relationship, but my boyfriend won’t put my name on the deed of our house. Am I unreasonable?

    They have been in a 20-year relationship and have a 10-year-old child. “Not on the Deed” said she and her partner have had several tense “discussions” about adding me to the deed.

    I told her that her contribution to your partnership is valuable, her sense of worth is valuable, and her role as a homemaker and a mother is also valuable. Yes, he should add her.

    1. My friend got us free theater tickets. When I got home, she texted me, ‘Can you get our next meal or activity?’ Am I obliged to treat her?

    Even amidst the fights over inheritances, some breaches of social and financial etiquette seem so bizarre some people might think, ‘That behavior is too outrageous to be believable.” 

    The letter writer received free theater tickets, they split the bill 50/50 even though her friend had a cocktail, and she paid $10 for parking. Is he obliged to take her out again? No-can-do.

    1. My date chose an exclusive L.A. restaurant. After dinner, he accepted my credit card — and we split a $600 bill. Shouldn’t he have paid?

    Another dating story, this time where the guy chose a fancy restaurant and, as the date wore on, things took a turn for the worst, at least in the letter writer’s eyes: She was asked to split the bill.

    What if they didn’t get along? What if he was an abortion-rights supporter and she was anti-abortion? What if he was a Republican and she was a Democrat? Or vice-versa?  Always be prepared to pay.

    Follow Quentin Fottrell on Twitter.

    You can email The Moneyist with any financial and ethical questions related to coronavirus at qfottrell@marketwatch.com.

    Check out the Moneyist private Facebook group, where we look for answers to life’s thorniest money issues. Readers write to me with all sorts of dilemmas. Post your questions, tell me what you want to know more about, or weigh in on the latest Moneyist columns.

    The Moneyist regrets he cannot reply to questions individually.

    More from Quentin Fottrell:

    ‘I’m left with a $100 Bûche de Noël for 10 people — and no place to go’: My friends canceled Christmas dinner. Should I end the 30-year friendship?

    I met my wife in 2019 and we married in 2020. I put her name on the deed of my $998,000 California home. Now I want a divorce. What can I do?

    I want to meet someone rich. Is that so wrong?’ I’m 46, earn $210,000, and own a $700,000 home. I’m tired of dating ‘losers.’

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  • 5 things not to buy in 2023

    5 things not to buy in 2023

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    It’s been a year of contradictions.

    The recession drum beats on, interest rates are rising, and the stock market has taken a tumble, and yet retail sales have risen 6.5% in the last 12 months, trailing a 7.1% increase in the cost of living.

    There are other reasons people should consider cutting back on spending in 2023. The personal saving rate — meaning personal saving as a percentage of disposable income, or the share of income left after paying taxes and spending money — hit 2.4% in the third quarter from 3.4% in the prior quarter, the Bureau of Economic Analysis said.

    “There are signs that people are pulling back on certain expenditures. ”

    That is the lowest level since the Great Recession and the eighth-lowest quarterly rate on record (since 1947). Adjusted for inflation, savings are down 88% from their 2020 peak and 61% lower than before the pandemic, according to government data. The personal saving rate hit 2.4% in November vs. 2.2% in October. 

    Are people buying stocks during a bearish market, and/or have they run out of their pandemic-era savings? Whatever the reasons, more judicious investing and spending decisions seem to be the most prudent approach — especially given the uncertain economic outlook for 2023.

    There are signs that people are already pulling back on certain expenditures. Although retail sales are up on the year, they did decline 0.6% month-on-month in November to mark their biggest decline in almost a year, largely because of weak car sales.

    About those new cars: New-vehicle total sales for 2022 are projected to reach 13,687,000 units, down 8.4% on the year, according to a joint forecast from J.D. Power and LMC Automotive. MarketWatch reporter Philip van Doorn explains all the reasons why you may wish to skip buying a new car in 2023, in addition to their rising prices.

    So what else should you save your money on in 2023? MarketWatch writers give their verdict below.

    SPACs

    During the pandemic, people loved to buy special purpose acquisitions companies, known as SPACs. In 2021, 613 SPACs listed on U.S. stock exchanges through initial public offerings, according to SPAC Insider. The year before, there were 248 SPAC IPOs. There had never been more than 100 of these before in a single year. There were SPACs associated with Donald Trump and Serena Williams. There were so many, that one was called Just Another Acquisition Corp. 

    SPACs exist as a means to take private companies public, and theoretically give these shell companies a faster and less regulatory burdensome means to access public capital. The U.S. Securities and Exchange Commission warned investors last April that so-called advantages of the SPAC process, such as reduced legal liability, may not prove to be so solid if tested in court.

    The SPACs raised money even though they had no commercial operations or business, and tried to use the cash to buy something that did exist. But investors who bought SPACs that merged with private companies since 2015 have suffered losses of 37%, on average, a year after the merger, according to a recent study.  The SPAC and New Issue ETF 
    SPCX,
    +0.37%
    has slipped 12% this year. The frenzy for SPACs has predictably gone bust. But if you see one, just stay away from it.

    — Nathan Vardi

    Crypto 

    There are two main reasons not to invest in cryptocurrency in 2023, and neither has to do with the precipitous drop in value for most of the major coins in the last year, including but not limited to bitcoin
    BTCUSD,
    -1.11%    ,
    ethereum
    ETHE,
    -2.71%
    and tether
    USDTUSD,
    -0.02%    .
    Investors have long been conditioned to buy the dip and find value where others fear to tread, and then make money on the upswing. 

    Crypto is different because there’s no correlation to long-held market theories, and buying it amounts more to speculation than to investing. That might seem semantic, but if you look at financial planning holistically, then you treat investing as an exercise in risk tolerance — and crypto is all risk. 

    Which leads to the other main reason to avoid crypto in the next year: If you do buy it, there’s really no safe way to store it. There’s no federal insurance covering exchange failures and little cyber-theft protection for individuals. That leaves you on your own, which is not a good place to be with your money.

    — Beth Pinsker

    Meta Quest headsets

    On the consumer front, if you’re really into virtual reality, there is nothing wrong with jumping on the new Meta Quest two and Meta Quest Pro headsets that were introduced in 2022 by Meta Platforms Inc. 
    META,
    -0.78%    .

    The problem is that you might feel like you bought a BlackBerry
    BB,
    -3.42%
    phone in early 2007. Apple Inc.
    AAPL,
    -1.40%
    is expected to finally show off what engineers at the Silicon Valley giant have been cooking up in a years-long project to jump into augmented and virtual reality, and consumers are expected to at least get a glimpse at Apple’s attempt this year, if not a chance to buy whatever the company produces. 

    The headsets don’t come cheap: Meta said earlier this year it was raising the price of Meta Quest 2 headsets by $100 to $399.99 (128GB) and $499.99 (256GB). The iPhone’s introduction 15 years ago changed the way people look at smartphones, and Apple’s expected jump into this field in 2023 could leave anyone who spent their money on a Meta Quest headset wishing for a new reality.

    — Jeremy Owens

    Meme stocks 

    Struggling companies with business models that appear to some to be dying and/or struggling do not generally perform well in the stock market. But during the pandemic these companies often had stocks that soared. What drove them was social media sentiment, driven on platforms like Reddit, by a swarm of retail investors. 

    There was video game retailer GameStop
    GME,
    -7.42%    ,
    movie theater chain AMC
    AMC,
    -8.43%    ,
    and smartphone dinosaur Blackberry. AMC recently announced the sale of another $110 million in stock, adding to a total that has already exceeded $2 billion since the theater chain got swept up into meme-stock madness. CEO Adam Aron wrote on Twitter that the move put the company “in a much stronger cash position.”

    GameStop recently reported its seventh consecutive quarterly loss and reiterated its goal of returning to profitability in the near term, but analysts have signaled that many challenges lie ahead. During the company’s recent third-quarter conference call, Chief Executive Officer Matt Furlong said that GameStop would be open to exploring acquisitions of a strategic asset or complimentary business if they were available “in the right price range.”

    Buying meme companies like this worked for some in a booming stock market fueled by ultra-low interest rates. But we are now in a bear market with interest rates that are elevated. Corporate fundamentals are back in vogue. So are quaint investment ideas like cashflow. More likely than not, the days of buying meme stocks are over.

    — Nathan Vardi

    Tesla cars

    In recent years, Tesla Inc.
    TSLA,
    -8.25%
    has stood alone as the best option for electric vehicles, while other manufacturers struggled to get production running. But in 2023, there should be many more types of electric cars available, at prices that are expected to trend downward as the year goes along. Teslas range in price from $46,990 for the Tesla Model 3 to $138,880 for the Tesla Model X Plaid. 

    With major manufacturers such as General Motors Co.
    GM,
    -0.73%    ,
    Ford Motor Co.
    FORD,
    -2.68%    ,
    Toyota Corp. and Volkswagen
    VOW,
    -0.77%
    VLKAF,
    -1.15%
    jumping into the fray, and young Tesla wannabes like Rivian Automotive Inc.
    RIVN,
    -7.11%    ,
    Lucid Group Inc.
    LCID,
    -7.24%
    and FIsker Inc.
    FSR,
    -6.19%
     expected to start producing cars, consumers will have many more options for EVs. 

    Meanwhile, Tesla has done little to update the Model 3 since it was introduced in 2017, and has increased prices at a level that Chief Executive Elon Musk has admitted is “embarrassing” for a company that claimed to have a goal of mass-market pricing for EVs. 

    The average price of a new EV is $64,249, while a new gas car is $48,281, according to​​ Liz Najman, a climate scientist and communications and research manager at Recurrent Auto, an EV research and analytics firm focused on the used-vehicle market. After years of not having much choice beyond Tesla for EVs, 2023 appears to be the year that changes.

    — Jeremy Owens

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  • How To Fill Out a Money Order: Step-by-Step Guide

    How To Fill Out a Money Order: Step-by-Step Guide

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    When you can’t send a check but don’t want to rely on something as insecure as cash, a money order could be just the ticket.

    It’s essential to know how to send and fill out a money order step-by-step in case you ever need to pay a bill, send money to a relative or transfer money discreetly from one place to another.

    What is a money order?

    A money order is very similar to a check. It allows you to send or receive payments securely, unlike cash.

    However, money orders are prepaid. Instead of money leaving your account when someone catches a check, money leaves your account the minute you fill out a money order and deposit it at an appropriate institution.

    When should you use a money order?

    It can be wise to use a money order whenever you need to pay someone securely but can’t use a smartphone app like MoneyGram, online platform, check or cash (or you don’t want to use any of those methods).

    Related: This is How We Can Transfer Money Online Without Hassle

    This form of payment is accepted practically anywhere because they are automatically prepaid, so there’s no risk of the money “bouncing,” which can happen with a check. Furthermore, there’s no identity theft risk, like when you wire money from a checking account.

    You can use a money order when you need to:

    • Send money to a family member or friend.
    • Pay a bill for your business.
    • Receive money from your workplace or someone else.

    However, remember that you can only send $1,000 in a single money order. You can send multiple money orders in the same shipment, though.

    Banks and other financial institutions can offer this personal finance service, just like they can send cashier’s checks and personal checks. Other financial institutions also provide money orders, including credit unions such as Western Union or anywhere you can have a bank account or get a credit card/debit card.

    Related: Business plan, business – Money Order

    How to fill out a money order

    Fortunately, filling out a money order is very straightforward and not at all difficult. You can get a money order from a location that sells them, such as pharmacies (including Walmart and CVS) or, more commonly, any of the 31,300 United States Postal Service retail offices. Conveniently, you can also send money orders from U.S. Postal Service offices.

    Note that purchasing a money order involves a fee. The fee can vary from place to place; for instance, Walmart usually charges one dollar to send a money order, whereas the USPS can charge anywhere from $1.65 to $2.20 depending on how much you need to send.

    You’ll need a few pieces of information to fill out a money order:

    • The payee’s name.
    • The payee or recipient’s address.
    • The payment amount.
    • Your name and current mailing address.
    • The reason or billing account number for the money order.

    You don’t need to list the issuer of the money order or the location of the post office/convenience store from which you send it on the memo line.

    Step 1: Fill in the recipient’s name

    Once you have a money order, write the name of the person to whom you are paying money in the “pay to the order of” or “pay to” fields, depending on which field your money order has. You should include the full name of the recipient or the full name of the business you are paying.

    Step 2: Add your address

    The next step is to add your address to the purchaser’s address field. This is the address of the person purchasing the money order — in this case, you. You’ll also add the payee’s address.

    Step 3: Fill in the “memo” field

    Then you need to fill in the “memo” field. This is a line or field where you can describe what you’ll use the money order for. If you’re using it to pay a bill, you’ll put the billing account number in this field.

    Step 4: Sign your name

    Last, you must sign your name on the front of the money order where it is indicated. When signing the purchaser’s signature, leave the back of the money order blank. That’s where the payee or recipient will endorse it, similar to endorsing a check.

    There you have it — it should only take you a few minutes to fill out a money order from start to finish, provided you have all the necessary information.

    Where and how to deliver a money order

    After you have filled out the money order, detach the receipt. The receipt is vital for your records and allows you to track whether the recipient ever cashed the money order.

    Hand-deliver the money order to the recipient or mail it to your recipient using the postal service of your choice. Only the recipient will be able to cash it.

    Remember that, unlike a check, whatever money you have designated for the money order will be gone from your account before the recipient cashes the money order.

    Can you cancel a money order?

    Yes. To do this, you should immediately contact the person or party that issued the money order (i.e., USPS or Walmart). Ask for a cancellation request form and fill it out.

    You’ll need to have your receipt from the money order and show it to do this. Then you’ll have to pay a fee to cancel the money order. This process is the same if you want to replace the money order or get a cash refund.

    What else do you need to know about filling out money orders?

    Now you know how to fill out a money order step-by-step. Money orders can be critical financial tools from time to time, and they can come in handy if you need to send funds securely and quickly from one place to another.

    Looking for more informational articles like this? Explore Entrepreneur’s Money & Finance articles here

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    Entrepreneur Staff

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  • 14 Tax Deductions Your Small Business Might Be Overlooking

    14 Tax Deductions Your Small Business Might Be Overlooking

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    Opinions expressed by Entrepreneur contributors are their own.

    While there are other benefits, one of the most important reasons you’re in business is to make money. And it stands to reason that if you’re in business, you’d like to keep as much of what you generate as possible. That could be why so many people hate paying taxes.

    But if you’re doing your bookkeeping correctly, you’ll find there are ways to keep some of the value your business generates. All you want to do is pay your fair share. And keep what’s left to run a successful small business or grow that business into something even bigger.

    Above all, remember that you pay taxes on your profit, and your profit is your income minus your ordinary expenses; you report this to the IRS every year on Schedule C. So when you sit down to do your taxes or hand your information over to your tax accountant, you should be sure you’ve tracked every single business expense.

    Related: These Are the Top Tax Filing Mistakes Made by Small Business Owners (and How to Avoid Them)

    What deductions are obvious? Anything you buy that directly affects your business and is used for your business. If you’re in construction, it’s the cost of your equipment and raw materials. If you’re a web designer, it’s the software you use. Look at Schedule C and you’ll see the obvious ones: advertising, office expenses, licenses, utilities and more.

    You need to be careful defining some expenses, especially if you’re running your business out of your home. Yes, you can deduct the part of your home that you use exclusively and regularly for business. But if you work weekdays at your home office and watch football from it on Sunday, it’s not exclusive to your business. If you only do your month-end bookkeeping in it — even if that’s all you do in it — once-a-month office use is not considered regular use.

    But when you’re assembling your receipts or downloading expense data from your small business financial management system to provide to your tax accountant, there are certainly some expenses that you might not have thought to include. There may be other expenses you claim that are not eligible deductions. If filed in error, these mistakes could cost you fines — or worse — if you’ve deducted more than you should have or are permitted to.

    Related: Here’s Why It Pays to Track Every Tiny Business Expense

    Tax deductions you might be missing

    While Schedule C enumerates 21 types of expenses, you still might miss some perfectly legal deductions. For instance:

    1. Repairs or alterations to your home office: If you’re there all the time, then expenses like painting, re-flooring and brighter light fixtures would be deductible. Having a cleaning service for your office would be as well. The desk and file cabinets you use would also be deductible — as would the repair to the wall after your desk chair banged it up.
    2. Education: Any education or training related to what you do to earn money is deductible. Many professionals require professional development courses to keep their licenses current. Others take classes to learn how to improve their business. If it’s relevant, it’s deductible.
    3. Local travel: When you visit a client and pay to park in the lot across the street, that parking fee is deductible. If you take a toll bridge to cross the river to visit your client’s office, that bridge toll is deductible. And so is your mileage, assuming your client doesn’t reimburse you for those costs.
    4. Your website: A website is a must-have to find and connect with new and existing customers. All related costs can be deductible — paying the person who creates it for you, paying for the website to be hosted, paying for its security, paying for the pictures and copy you post to it, etc. It’s all part of advertising, which is more than paying to run a small ad on your local radio or television station.
    5. Startup costs: If this is your first year, the legal and professional fees you pay to complete and file your paperwork are deductible. Fees above the $5,000 first-year limit can be amortized over the succeeding 15 years.
    6. Research and development: If you’re creating a new product, the expenses relevant to bringing that product to market are deductible.
    7. Interest on debts: A loan you take for business purposes is tax-deductible as long as it’s an arms-length transaction. Keep track of the interest costs so you can deduct them at tax time. Your business credit card interest is also deductible.
    8. Industry publication subscriptions: Every trade has a publication that keeps its practitioners current, from Advertising Age to Chain Store Age to Industry Week. Online subscriptions are also deductible.
    9. Retirement savings for self-employed business owners: These include self-employed simplified employee pension (SEP) plans, solo 401(k) plans and Keogh or HR-10 plans.
    10. Business gifts: There’s a limit of $25 per person per year for gifts to clients. But, 100 percent of the cost of employee meals at events such as holiday parties and company picnics is deductible.
    11. Perks for your employees: Coffee in the office? That candy bowl at the front desk? 100 percent deductible. Lunch brought into the office can be fully deductible, while taking the team out for lunch is only 50 percent deductible.
    12. Club or organization membership fees: The organization must be business- or community-related, such as a chamber of commerce, trade association or a professional organization.
    13. Lawn mowing: If you receive clients at your home office, keeping the entrance to your house clean and presentable may be deductible.
    14. Childcare for solo professionals: If you’re a parent and have a home office but you need to meet a client outside the home, childcare is deductible. If you’re leaving the house to go shopping, it’s not.

    Related: 75 Items You May Be Able to Deduct from Your Taxes

    Just remember, you can’t deduct what you aren’t tracking. Prior to the 1980s, you didn’t have many options — record-keeping systems included paper, pencils and file cabinets. The late 20th century made spreadsheets an option, which required ensuring formulas were put into the correct cells as well as remembering where the related backup documentation was saved.

    The modern era has given way to even better ways of tracking information, and distilling years of accounting and bookkeeping know-how into an easy-to-use software platform. Now you can stay on top of all of the purchase orders, invoices and receipts you’ll need as a backup to your accounting records. And, have them all safe in a cloud-based system. Files, images, emails and scanned paper documents can be captured from a mobile device or a computer and stored safely online. You can categorize all transactions easily by account category and relevant tax schedule for subsequent reporting and filing.

    These systems can be accessed from anywhere your business takes you, from home office to factory floor to out-of-state business pitch. You can pull them up when needed (such as for a loan application, a meeting with your accountant or deciding on financing a business improvement).

    Consider financial document management solutions that can also automatically extract data from these documents. Instead of keying these numbers into a spreadsheet or paying your tax accountant to do this manual work, systems like Neat automatically feed financial data to accounting and tax software. These systems can make it easier to account for all of your business expenses — the obvious ones and those that can be often overlooked.

    Related: The Most Forgotten Tax Deductions Business Owners Should Take

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    Jim Conroy

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  • Act Now on Your Year-End Tax Strategy to Save in 2023

    Act Now on Your Year-End Tax Strategy to Save in 2023

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    Opinions expressed by Entrepreneur contributors are their own.

    Come January 3, a new Congress will convene in Washington, DC, setting the stage for potential tax changes that could impact small and medium-sized businesses. With that in mind, it’s important for businesses to engage in certain tax planning strategies and to take advantage of tax credits that will soon expire or be phased out.

    The Employee Retention Credit (ERC) is one such credit. Created in 2020 to provide economic relief during the Covid-19 pandemic, the ERC lets businesses claim thousands of dollars in refundable tax credits to compensate for losses experienced in 2020 and 2021 while they continued to pay employees. Businesses subject to a full or partial shutdown or significant decline in gross receipts can qualify.

    Many small and midsize businesses I know are eligible for two quarters or more of credits, which can range as high as $7,000 per quarter per employee in 2020, with higher per-employee limits in 2021. But the time frame for claiming this credit is shrinking. Start planning now.

    Businesses have just three years from the time they filed their 2020 and 2021 quarterly tax returns to claim the credit. Even if you received funds from the Paycheck Protection Program (PPP) previously you can qualify for the ERC credit, but you’ll need time to gather all the necessary documentation before filing the required amended return.

    Related article: How to Obtain the Employee Retention Tax Credit (ERTC) Under the Second Round of Covid Relief

    Beware of companies advertising huge ERC payouts that are “too good to be true,” as the IRS noted in a special warning. The agency further cautioned that “improperly claiming the ERC could result in taxpayers being required to repay the credit along with penalties and interest.”

    Know how to find someone who can help you if a problem arises. I had a client who signed a contract with a firm that promised an ERC credit twice as large as what we projected along with lifetime audit protection, but the firm was cagey about how to handle a prospective audit and did not list addresses and phone numbers. A red flag for sure, and a reminder that taxpayers should never get too greedy.

    The importance of tax planning

    How many business owners can honestly say their accountants are advising them on tax planning, like the ERC benefit, rather than merely doing their taxes? Is yours building a tax-strategy foundation that generates recurring savings year after year?

    Take the initiative and ask your accountant what plans they have in place to generate savings year in and year out, plus what strategies they’re using to accomplish that.

    Don’t make the mistake of merely asking your accountant how you can save on taxes just before the year’s end. If you do, you may be advised to buy a vehicle for your business because the cost can be fully written off using a bonus depreciation. This is not an example of a great, forward-thinking tax strategy. And that particular deduction, by the way, will lose 20% of its value in each of the next four years, starting in 2023. It’ll be completely phased out by 2027.

    Related article: How to Give Yourself a Tax Cut

    Accountants should have a plethora of strategies to help small and midsize businesses and their owners save on taxes. For example, ask yours about research and development credits, or credits for hiring veterans and disabled individuals and members of other groups that the government has identified as facing employment barriers.

    How to avoid an audit

    It’s more important than ever to use only legal ways to limit your tax liability. Here’s a list of some dos and don’ts:

    • Don’t put your family vacation on your company’s books. If there is a business purpose for a partial business/family trip and that purpose constitutes more than 50% of the trip, document it and proportionally deduct your costs. Include notes about the purpose of the travel, your itinerary, the agendas of meetings and conferences, whom you met with, etc. The IRS has heightened record-keeping requirements for travel deductions.
    • Keep original receipts, not just credit card statements. Taxpayers often assume a credit card statement constitutes a receipt. It does not. Your expense items on a credit card receipt only will likely be denied.
    • Get in a habit of documenting all relevant expenses while you’re incurring them; and consider assigning an employee for that purpose or use technology. You’ve got to document the business reasons for the deductions claimed because there are heightened documentation requirements for business travel and for meals. You probably won’t remember all these necessary details if the IRS audits you two or three years after an event has taken place. If you fail to document actual expenses, you should deduct IRS-published travel per diems by city.
    • Don’t pay personal expenses through your company. Write a check to yourself from the company for a legitimate reason like a salary, wages or distribution. Then pay personal bills for your mortgage and electric bill out of your checkbook, not the company’s.

    Related article: The IRS Hates Telling Entrepreneurs Anything About Taxes.

    The messages are slowly sinking in. Four clients so far have told me they’ve completely revamped their internal processes to take better records. They’re spending the time to do this now because they understand it could be riskier in the future.

    Nobody knows what tax changes, if any, are in store, but there are changes already on the books that business owners should be aware of, including benefits that are slated to disappear. Act now before it’s too late.

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    Bruce Willey

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  • Trump Organization convicted in executive tax dodge scheme

    Trump Organization convicted in executive tax dodge scheme

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    NEW YORK — Donald Trump’s company was convicted of tax fraud on Tuesday in a case brought by the Manhattan District Attorney, a significant repudiation of financial practices at the former president’s business.

    The guilty verdict came on the second day of deliberations following a trial in which the Trump Organization was accused of being complicit in a scheme by top executives to avoid paying personal income taxes on job perks such as rent-free apartments and luxury cars.

    The conviction is a validation for New York prosecutors, who have spent three years investigating the former president and his businesses, though the penalties aren’t expected to be severe enough to jeopardize the future of Trump’s company.

    As punishment, the Trump Organization could be fined up to $1.6 million — a relatively small amount for a company of its size, though the conviction might make some of its future deals more complicated.

    Trump, who recently announced he was running for president again, has said the case against his company was part of a politically motivated “witch hunt” waged against him by vindictive Democrats.

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  • ‘Gaslighters have two signature moves’: Are you being gaslighted at work? Here’s how to recognize the signs.

    ‘Gaslighters have two signature moves’: Are you being gaslighted at work? Here’s how to recognize the signs.

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    Are you less happy at work since you befriended that new recruit? Have they told you stories about how colleagues have constantly undermined them? Or do you have a boss who excludes you from key meetings — and then asks why you did not attend a meeting even though you are pretty sure you were not invited to begin with? If so, you may be working with a gaslighter.

    Gaslighters, as the name suggests, cast themselves in a positive light — friend or confidante who is here to help — but actually operate much more effectively in the shadows. Merriam-Webster named “gaslighting” the word of the year. Searches for the word on merriam-webster.com surged 1,740% in 2022 over the prior year year, despite there not being an event that the publisher — known for its dictionaries — could point to as a cause of the spike.

    It defines gaslighting as “psychological manipulation of a person usually over an extended period of time that causes the victim to question the validity of their own thoughts, perception of reality, or memories and typically leads to confusion, loss of confidence and self-esteem, uncertainty of one’s emotional or mental stability, and a dependency on the perpetrator.”

    Perhaps the reasons were more personal — or professional — than political. My social media feed is now full of thought pieces on how to spot one of these saboteurs. The comments sections read like the show notes of a True Crime podcast — gruesome yet hard to turn away from. 

    The term was coined in a 1938 play, “Gas Light,” a psychological thriller set in Victorian London and written by Patrick Hamilton.

    The term was further popularized after George Cukor’s 1944 film, “Gaslight,” based on the play, in which Gregory (Charles Boyer) tries to convince his wife Paula (Ingrid Bergman) that she has lost her reason. While he turns on the lights in the attic while searching for hidden jewels, the gaslight flickers in the rest of the house. He tells Paula that she is merely imagining the dimming of the lights.

    The workplace is fertile ground for such behavior, given what’s at stake: money, power, status, promotion, rivalry and the intrigue that often comes with office politics. 

    I’m in the business of helping people work out their conflicts at work. None of this surprises me. In fact, I dedicated a whole chapter in my book, “Jerks at Work,” to gaslighters. 

    “‘For gaslighters, slow and steady wins the race, and the best ones make friends with their victims first.’”

    What has surprised me is how wide-ranging the definition of “gaslighting” has become. Everything from “not respecting personal boundaries” to “talking so much shit about me I couldn’t get hired for two years” seems to fall under the umbrella. 

    What I’ve learned from my doom scrolling is that the word “gaslighter” — probably the worst name to bestow on a colleague or boss — seems to refer to anyone who’s done a whole bunch of bad things to us at work, especially things that involve humiliation. 

    So what really is a gaslighter, and why is it important to distinguish one from, say, a demeaning boss with a chip on their shoulder and a penchant for public shaming?

    If we stick to the clinical definition, gaslighters have two signature moves: They lie with the intent of creating a false reality, and they cut off their victims socially. 

    They position themselves as both savior and underminer, creating a negative and fearful atmosphere, spreading gossip and taking credit for other people’s work. They are often jealous and resentful, and aim to undercut others in order to further their own position.

    You may also be an unwitting pawn in the gaslighting of another colleague. The gaslighter might try to convince you that Johnny is trying to steal your leadership role on a project, and encourage you to freeze him out in the cafeteria at lunch time, or simply be extra wary about sharing important information.

    For gaslighters, slow and steady wins the race, and the best ones make friends with their victims first. For this reason, it could also be considered a form of workplace harassment.

    They often flatter them, make them feel special. Others create a fear of speaking up in their victims by making their position at work seem more precarious than it is. And the lies are complex, coming at you in layers. It takes a long time to realize your status as a victim of gaslighting, and social isolation is a necessary part of this process. 

    “‘It takes a long time to realize your status as a victim of gaslighting, and social isolation is a necessary part of this process.’”

    But there’s a difference between an annoying coworker or micromanaging boss, and a gaslighter, who lies and conspires to undermine your position. “The gaslighter doesn’t want you to improve or succeed — they’re out to sabotage you,” according to the careers website Monster.com. “They will accuse you of being confused or mistaken, or that you took something they said the wrong way because you are insecure. They might even manipulate paper trails to “prove” they are right.”

    Examples cited by Monster.com: “You know you turned in a project, but the gaslighter insists you never gave it to them. You can tell someone has been in your space, moving things around, or even on your computer, but you don’t have proof. You are the only one not included in a team email or meeting invite, or intentionally kept out of the loop. Then when you don’t respond or show up, you are reprimanded.”

    Knowing this, what can you do to prevent yourself from becoming a target? First, recognize that gaslighters don’t wear their strategy on their sleeve. Flattery, making you feel like you’re a part of a special club, or questioning your expertise are not things that raise gaslighting alarm bells. 

    Rather than looking out for mean behavior by a boss or coworker, look out for signs of social isolation. A boss who wants to cut you off from coworkers and other leaders should raise red flags, even if the reason is that “you’re better than them.” 

    Second, recognize that lie detection is a precarious — and from a scientific perspective, almost impossible — business. Don’t try to become a lie detector, instead take notes, so you can put your “gaslighter” on notice that you are wise to their tactics. You can also use the notes as evidence if you decide to later raise the situation with Human Resources. 

    Here are some ways to beat the gaslighter: Send emails with “a summary of today’s meeting” so you can document the origin of ideas and make sure they don’t steal credit from you. Furthermore, document things that happened in person, and share it with your would-be gaslighter. And speak up at meetings. Don’t allow yourself to be browbeaten into submission. 

    The more you document, the more difficult it will be to be victimized. But a word of warning: Don’t try to confront gaslighters — instead, go to your social network to build your reality back up. Trying to beat these folks at their own game is a losing strategy. But these small things, done early in a working relationship, can work wonders. 

    Tessa West is a New York University social psychology professor with a particular interest in workplace behavior, and author of “Jerks at Work: Toxic Coworkers and What to Do About Them.“

    Related stories:

    ‘We’re like rats in a cage’: Sick and tired of their jobs, American workers strive to regain their agency, their time — and their sanity‘

    People are seeking a genuine connection with their colleagues’ — one that goes beyond ‘Hollywood Squares’ Zoom meetings. Not all workers are happy with remote work.‘

    The backlash to quiet quitting smacks of another attempt by the ruling class to get workers back under their thumbs:’ Am I wrong?

    We want to hear from readers who have stories to share about the effects of increasing costs and a changing economy. If you’d like to share your experience, write to readerstories@marketwatch.com. Please include your name and the best way to reach you. A reporter may be in touch.

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  • Inflation and credit-card debt are on the rise, despite a strong job market. Tell us how the economy is affecting you.

    Inflation and credit-card debt are on the rise, despite a strong job market. Tell us how the economy is affecting you.

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    We want to hear from readers who have stories to share about the effects of increasing costs and a changing economy. If you’d like to share your experience, write to readerstories@marketwatch.com. Please include your name and the best way to reach you. A reporter may be in touch.

    For many people living in the U.S., these are tough — and confusing — times.

    On Friday, the Labor Department reported 263,000 new jobs in November, while the unemployment rate held steady at 3.7%. Layoffs remain low, despite mass job cuts in the tech sector. Average hourly wages have also risen 5.1% in the past year, but still lag behind inflation for many workers. And there were 10.3 million job openings in October — slightly down from the previous month’s 10.7 million. 

    Some people might see the latest economic data as both challenging and confusing.

    After all, the cost of living rose 7.7% on the year in October. The once red-hot housing market is finally cooling, thanks to mortgage rates that have more than doubled over the last year amid the Federal Reserve’s attempts to rein in inflation, and rents, while moderating, have surged from pre-pandemic levels. Borrowing money to cover increased precarity is becoming more expensive too, with the average credit-card APR at 19.2% as of Nov. 30, according to Bankrate.

    “‘It’s just mind-boggling, the disconnect that we’ve seen.’”

    Given all the conflicting signals, economists say it can be difficult for consumers to know exactly how to feel about the economy right now. “It’s not new, this disparity between the actual facts on the ground about what’s going on in the economy and the sentiment,” said Heidi Shierholz, president of the Economic Policy Institute, a left-leaning think tank. 

    “I remember this summer it was just unambiguously the strongest jobs recovery we’ve had in decades,” she added. “There’s just absolutely zero chance that we were in a recession — not only were we not in a recession, we were in just an extraordinarily fast recovery — and the polling, a huge share of people actually thought we were in a recession. It’s just mind-boggling, the disconnect that we’ve seen.”

    Still, the fact that inflation is eating into people’s savings — and that essential goods like food, energy and housing have spiked in cost — is bound to make many people unhappy. 

    Struggling to pay for rent and food

    “Going into the pandemic, more than seven out of every 10 extremely low-income renters were already spending more than half of their income on rent. And then the pandemic hits; we saw a lot of low-wage workers lose their jobs and see an income decline,” said Andrew Aurand, vice president for research at the National Low Income Housing Coalition. “Then in 2021, we see this huge spike in prices. For a variety of reasons, they’ve struggled for a long time, and since the pandemic, it’s gotten even worse.”

    Moderate-income Americans are struggling too. Maybe you can’t afford your favorite family meals, as the price of grocery store and supermarket purchases has jumped by 12.4% from last year. Or maybe you’re putting off a trip to see family this holiday season thanks to the higher cost of airfare, or you’re worried about losing your job as some business leaders warn of a recession. Perhaps you’re forced to rely on credit cards and personal loans, as credit-card debt is up 15% from a year ago.

    MarketWatch has chronicled many of these changes, detailing renters’ frustrations, families’ tough choices at the grocery store, and the reality faced by would-be home buyers sidelined by higher rates and dwindling affordability. 

    But we would like your help telling an ongoing story about the American economy, centering the experiences of everyday people. Our readers know better than anyone about how today’s economic conditions have impacted their daily lives.

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  • Ringleaders in massive COVID fraud extradited to US

    Ringleaders in massive COVID fraud extradited to US

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    LOS ANGELES — A Los Angeles couple who fled to Europe after being convicted of running a fraud ring that stole $18 million in COVID-19 aid money were returned to the United States to face prison, authorities announced Friday.

    Richard Ayvazyan and his wife, Marietta Terabelian, were extradited from the Balkan country of Montenegro, where they were living in a luxury seaside villa before their arrest in February.

    They arrived in Los Angeles on Thursday, according to the U.S. Department of Justice.

    While they were on the run last year, a court in Los Angeles sentenced Ayvazyan to 17 years in federal prison, and Terabelian to six years.

    Prosecutors said the couple and six accomplices fraudulently applied for about 150 relief loans intended to help businesses and employees struggling during the COVID-19 pandemic and lockdown.

    They applied using fake identities or names belonging to dead or elderly people and foreign exchange students, prosecutors said.

    To back up the applications, they submitted phony tax documents and payroll records for fake businesses to lenders and the U.S. Small Business Administration, prosecutors said.

    The money was used for down payments on luxury homes in the Tarzana area of Los Angeles, suburban Glendale and the Palm Desert and to buy “gold coins, diamonds, jewelry, luxury watches, fine imported furnishings, designer handbags, clothing and a Harley-Davidson motorcycle,” said a statement from the U.S. Department of Justice.

    Ayvazyan and Terabelian were convicted in June 2021 of conspiracy to commit bank fraud and other federal crimes. Two months later, while free on bond, the couple cut off their ankle monitors and fled, leaving behind their three teenage children, authorities said.

    Unemployment fraud was a nationwide problem during the pandemic, as benefit applications overwhelmed state unemployment agencies. Criminals were able to buy stolen identity data on the dark web and use it to file a heap of phony claims.

    The federal Labor Department has said that about $87 billion in pandemic unemployment benefits could have been paid improperly nationwide, with a significant portion attributable to fraud. An Associated Press review in March 2021 found that estimates ranged from $11 billion in fraudulent payments in California to several hundred thousand dollars in states such as Alaska and Wyoming.

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  • ‘There’s definitely an accountant shortage out there’: MBAs have become the go-to degree and companies are struggling to hire enough CPAs

    ‘There’s definitely an accountant shortage out there’: MBAs have become the go-to degree and companies are struggling to hire enough CPAs

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    Securing the next generation of accountants won’t be easy. It may take some grassroots campaigning by mentors and family members to influence their loved ones to go that path, a technology boost, and a “CPA Evolution.”

    “There’s definitely an accountant shortage out there,” says Ben Lansford, an accounting professor and director of the Master of Accounting program at the Jones Graduate School of Business at Rice University. “I hear it from the firms.” And in talking with colleagues at universities nationwide, “we see the declining enrollment in graduate accounting programs,” Lansford says.

    In 2021, there was a 17% drop in employed accountants and auditors from a 2019 peak, according to a Bloomberg Tax analysis. But the number of companies trying to hire accountants hasn’t slowed one bit.

    Between 2021 and 2031, on average, about 136,400 openings for accountants and auditors are projected each year, according to the U.S. Bureau of Labor Statistics’ (BLS) occupational outlook handbook. The openings are due to workers leaving the field for different occupations or retiring.

    “In general, employment growth of accountants and auditors is expected to be closely tied to the health of the overall economy,” BLS states in the handbook.

    The next generation of accountants and auditors is in demand, but Lansford explained why some are hesitant. “Accounting is difficult,” he says. “It’s just a tough subject area, and you need a fifth year of college education to qualify to sit for the CPA exam. It makes a major less appealing to a lot of people.”

    But what needs to be communicated to students and young professionals is the time and energy is worth it, Lansford says. “It’s still a good path,” he says. “A rock-solid foundation.” The Big Four accounting firms are even reaching out to high school students to share that message and creating more flexible work environments, Lansford says.

    But it may take a village to get a student interested in accounting.

    “I find that often those students have an older family member, parent, aunt, or uncle, or friend of the family who took that same path and counseled the student about the benefits of accounting,” Lansford says.

    Over the past three years, Lansford has observed more students in graduate accounting programs choosing consulting jobs because they pay more than being entry-level accountants at a firm, he says. According to the BLS, the median annual wage for accountants and auditors was $77,250 in May 2021.

    ‘CPA Evolution’

    But changes to the CPA are coming—with the hope of attracting tech workers to the profession. “The AICPA is calling it a CPA Evolution, and it’s really an overhaul of the CPA exam,” Lansford explains. Starting in 2024, “everyone will take the same three sections, but for the fourth exam section, you can specialize in financial reporting, auditing, tax, or you can specialize in IT. The goal of the change is to make the tent bigger, so to speak.” That’s an interesting addition, since CFOs are increasingly finding themselves at the center of major IT projects. 

    But one drawback under the new CPA exam model is everyone still gets the same CPA certification, Lansford says. There’s no special designation that you took the IT exam area, he says. “So, we as academics are interested in seeing how things play out,” he says. 

    In recent years MBAs seem to have eclipsed CPAs. But maybe the number crunchers shouldn’t be counted out just yet.

    See you tomorrow.

    Sheryl Estrada
    sheryl.estrada@fortune.com

    Big deal

    An increase in customer expectations for e-commerce is placing “intense pressure” on retailers to rebuild their supply chains. That’s one of the key findings of “Increase your pace in the e-commerce race,” a new study conducted by the CMO Council and Business Performance Innovation Network, in cooperation with Attabotics, a robotics and software company. Executives are acutely aware of the need for supply chain and fulfillment transformation and looking for innovative and economically-sound ways to drive change. But they face significant financial and technological hurdles. Legacy systems (70%) and infrastructure in addition to the cost of replacement (61%), were listed as the top barriers to supply chain transformation. The findings are based on a survey of more than 150 executives and professionals across retail, e-commerce, consumer products, distribution, and consulting firms involved in consumer supply chains.

    Courtesy of the CMO Council

    Going deeper

    “San Francisco died so the Bay Area could thrive: What the 10 fastest-growing metro areas reveal about the world of remote work,” a new Fortune report, delves into the findings of research by the Kenan Institute of Private Enterprise, which points to the metro areas experiencing the most growth as business establishes a new normal after the pandemic.

    Leaderboard

    Deborah Thomas, EVP, and CFO at Hasbro, Inc. (Nasdaq: HAS), a global entertainment company, plans to retire. Hasbro is conducting an internal and external search for a successor. Thomas will remain as CFO until her successor is in place. She joined the company in 1998.

    Michael W. Kalb was named EVP and CFO at CinCor Pharma, Inc., effective Nov. 4. He succeeded Terry Coelho who has retired. Kalb was previously CFO for Amarin Corporation, a cardiovascular-focused pharmaceutical company. Before Amarin, he worked at Taro Pharmaceuticals where he was the CFO and chief accounting officer. His experience also includes a director in the Accounting and Financial Consulting Group of Huron Consulting Group Inc., and over 10 years at Ernst & Young, LLP. 

    Overheard

    “I want to take accountability for these decisions and for how we got here. I know this is tough for everyone, and I’m especially sorry to those impacted.”

    —Meta CEO Mark Zuckerberg wrote a letter to employees on Wednesday announcing the company was reducing its workforce and letting go of more than 11,000 employees, Fortune reported. 

    This is the web version of CFO Daily, a newsletter on the trends and individuals shaping corporate finance. Sign up to get it delivered free to your inbox.

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    Sheryl Estrada

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  • Trump Org. trial off until Thursday after witness gets COVID

    Trump Org. trial off until Thursday after witness gets COVID

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    NEW YORK — A criminal trial involving tax fraud charges against Donald Trump’s company won’t resume until late next week at the earliest as a key witness continues to recover from COVID-19.

    Court spokesperson Lucian Chalfen said the trial, in state court in Manhattan, is slated to resume on Thursday — not Monday, as the judge had previously hoped.

    The Trump Organization trial was abruptly halted Tuesday when longtime company senior vice president and controller Jeffrey McConney tested positive for the virus.

    McConney was on the witness stand for the first two days of testimony, Monday and Tuesday. He coughed off and on as he walked prosecutors through the company’s bookkeeping and payroll practices.

    By Tuesday’s lunch break, McConney’s symptoms had worsened, prompting him to take a COVID test. Chalfen said he was not aware of anyone else involved in the case testing positive.

    If the trial resumes Thursday, it will be the only day the case is in court next week.

    Court is closed Tuesday for Election Day and Friday for Veterans Day. The judge, Juan Manuel Merchan, previously said he would not hold the trial on Wednesdays.

    Merchan has said he expected the trial to take at least four weeks. The prolonged delay could push it into mid-December or beyond.

    The Trump Organization is accused of helping some of its top executives avoid income taxes on lavish company-paid perks, including a Manhattan apartment and luxury cars.

    McConney was granted immunity to testify last year before a grand jury and again to testify at the criminal trial.

    Before Tuesday’s adjournment, McConney told jurors he altered company pay records to reduce one executive’s income tax bill and recounted how the company changed its pay practices and financial arrangements once Trump was elected president in 2016.

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  • Judge says he’ll appoint monitor for Donald Trump’s company

    Judge says he’ll appoint monitor for Donald Trump’s company

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    NEW YORK — A Manhattan judge said Thursday he will appoint an independent monitor for former President Donald Trump’s real estate empire, restricting his company’s ability to freely make deals, sell assets and change its corporate structure.

    Judge Arthur Engoron ordered the outside watchdog for the Trump Organization as he presides over a lawsuit in which New York Attorney General Letitia James alleges Trump and the company routinely misled banks and others about the value of prized assets, including golf courses and hotels bearing his name.

    James’ office says the Trump Organization is continuing to engage in fraud and has taken steps to dodge potential penalties from the lawsuit, such as incorporating a new entity in Delaware named Trump Organization LLC — almost identical to the original company’s name — in September, just before the lawsuit was filed.

    Engoron, in an 11-page order, barred the Trump Organization from selling or transferring any noncash assets without giving the court and James’ office 14 days notice. The to-be-named monitor will be charged with ensuring the company’s compliance and will immediately report any violations to the court and lawyers for both sides.

    The Trump Organization must also grant the monitor access to its financial statements, asset valuations and other disclosures, must provide a full and accurate description of the company’s structure and must give the monitor at least 30 days notice of any potential restructuring, refinancing or asset sales, Engoron said.

    The company must also pay for the monitor, he said.

    Engoron’s decision to appoint a monitor is just the latest ruling he’s made against Trump or his interest. While presiding over disputes over subpoenas issued in James’ investigation, the judge, a Democrat, held Trump in contempt and fined him $110,000 after he was slow to turn over documents, and he forced him to sit for a deposition. In that testimony, Trump invoked his Fifth Amendment protection against self-incrimination more than 400 times.

    James, a Democrat, is seeking $250 million and a permanent ban on Trump, a Republican, doing business in the state. In the interim, she wants an independent monitor to review and sign off on some of the company’s core business decisions, including any asset sales or transfers and potential corporate restructuring.

    “Our goal in doing this is not to impact the day-to-day operations of the Trump Organization,” said James’ senior enforcement counsel, Kevin Wallace. He said the desired oversight would be “limited” and wouldn’t involve intricacies, such as how many rounds of golf or hotel rooms they were booking in a given year.

    “The Trump Organization has a persistent record of not complying with existing court orders,” Wallace said. “It should not be incumbent on the court or the attorney general to spend the next year looking over their shoulder, making sure assets aren’t sold or the company restructured.”

    Trump sued James in Florida on Wednesday, seeking to block her from having any oversight over the family trust that controls his company. Trump’s 35-page complaint rehashed some claims from his previously dismissed lawsuit against James in federal court in New York, including that her investigation of him is a “political witch hunt.”

    Wallace said at Thursday’s hearing that James’ office is seeking to stop “fraudulent activities that are ongoing at the Trump Organization” and wants safeguards in place so that the company can’t just sell off assets, such as Trump Tower and an office building at 40 Wall Street, that could eventually be used to pay a potential lawsuit judgment.

    Trump Organization lawyer Christopher Kise responded that the company has “no intention” to divest those properties, which together he says conservatively have a value of at least $250 million. The “Trump entities are not going anywhere,” he added.

    Kise argued that James’ lawsuit was much ado about common, good-faith disagreements in the real estate industry. If banks that loaned Trump money felt he or the company had acted improperly, they would have spoken up, Kise said.

    “There’s no problem. There’s no case here,” Kise said. “It’s mind-numbing that we’re going to have a receiver insert himself or herself into these complex transactions instead of the owner of this real estate.”

    Engoron took issue with at least one aspect of Kise’s reasoning, asking him if there was really a “good-faith disagreement” when Trump claimed his Trump Tower penthouse was three times its actual size, and $200 million more valuable.

    As for the new Trump entity that drew concern from James’ office, Kise said the company — listed in a New York corporate filing as Trump Organization II — had nothing to do with dodging potential penalties from James’ lawsuit, but rather “consolidation of payroll issues that have arisen in other contexts.”

    Kise didn’t offer additional details. The Trump Organization’s payroll practices are among the issues being raised at the company’s Manhattan criminal fraud trial, which was halted Tuesday and is expected to resume Monday after a witness tested positive for COVID-19.

    ——

    Follow Michael Sisak on Twitter at twitter.com/mikesisak

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  • How the Federal Reserve’s rate hike impacts your holiday spending plans: ‘It’s not the time to overspend’

    How the Federal Reserve’s rate hike impacts your holiday spending plans: ‘It’s not the time to overspend’

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    It is three weeks before Black Friday, but the Federal Reserve is about to make the post-holiday debt hangover a little more intense.

    By the time the latest rate hikes filter through the very rate-sensitive credit card industry and pump up customers’ annual percentage rates a little more, experts say it will be some point in December 2022 or January 2023. Right in time for many holiday gifts and expenses to post on credit cards bills — and there to make the costs of a carried balance a little extra expensive.

    Every year, many people accumulate credit card debt through the holiday season, pay it off in the early part of the following year and then repeat the process.

    What’s different now is the presence of four-decade high inflation, coupled with fast-rising interest rates that the Fed hopes will ultimately cool those rising prices, although without sending the economy to a recessionary thud.

    Wednesday’s rate move is the fourth straight 75-basis-point rate hike to the federal funds rate, taking it to the 3.75% -4% range, when it was near zero last year’s holiday season. By now, Americans are all too acquainted with 2022’s fast-rising interest rates. They just haven’t gone through a Christmas and Hanakkuh with it yet.

    “It’s not the time to overspend and have a problem with paying your bills later. We know the economy is sending mixed messages,” said Michele Raneri, vice president of financial services research and consulting at TransUnion
    TRU,
    -4.31%    ,
    one of the country’s three major credit reporting companies.

    It’s extra important to think through a holiday budget and how much relies on credit, she said. “People need to think about how much they can afford to repay and how long it will take to repay it.”

    Holiday spending could be the same as 2021 for many people — but not everyone

    Last month, third-quarter earnings from major banks like JPMorgan Chase & Co.
    JPM,
    -0.92%    ,
    Wells Fargo
    WFC,
    -0.15%    ,
    Citibank
    C,
    -1.45%
    and Bank of America
    BAC,
    -0.30%
    indicated consumer finances, on the whole, are not yet showing cracks under inflation’s strains. (Other numbers show the strain, like the personal savings rate that’s been dwindling.)

    Now, two forecasts suggest many people ready to spend the same amount for this year’s holiday cheer as they did last year.

    People are planning to spend an average $1,430 on gifts, travel and entertainment this year, which is around the $1,447 spent last year, according to PwC researchers. Three-quarters of people said they were planning to spend the same or more than last year and respondents said credit cards were one of their top ways to pay.

    “ Compared to last year, credit card balances are getting bigger, more people are sitting on balances and debt costs are getting pricier.”

    By another measure, Americans will pay an average $1,455 on holiday-related gifts and experiences, essentially flat from last year, say Deloitte researchers.

    More than one-third of surveyed consumers say their financial outlook is worse than the same point last year. Nearly one-quarter of people were concerned about credit card debt as of late September, Deloitte’s numbers show in an ongoing tracking of consumer mood.

    It’s understandable to see the concern with households amassing a collective $890 billion in credit card debt through the second quarter. Compared to last year, balances are getting bigger, more people are sitting on balances and debt costs are getting pricier because the interest rates applied to those balances are rising.

    When people were carrying a credit card balance month to month, the sum was $5,474 on average, according to Raneri. That’s through the end of September and it’s a nearly 13% rise year over year, she said. The 164 million people carrying a balance is a 5% increase from last year, she noted.

    Credit cards carrying a balance during the third quarter had an average 18.43% APR, Federal Reserve data shows. That’s up from 16.65% in the second quarter and up from 17.13% in 2021’s third quarter.

    How the Fed influences credit card rates

    Credit card issuers typically determine their rates by applying a “prime rate” — typically three percentage points on top of the federal funds rate — and the issuer’s profit margin, said Ted Rossman, senior industry analyst at Bankrate.com.

    By late October, the rate on new card offers was 18.73%, according to Bankrate data. At this point last year, it was 16.31%, Rossman said. In a few weeks, the rates on new offers should beat the all-time record of an average 19% APR, exclusive to new offers, he added.

    While it can take a billing cycle or two for a higher APR to make its way to an existing credit card account, Rossman noted the APRs on new offers could rise in a matter of days.

    Here’s a hypothetical to show how much more expensive credit card debt becomes with every extra hike. Suppose the $5,474 balance is on a credit card with the current 18.73% average. If a person has to resort to minimum payments, Rossman said, they’d be paying $7,118 just in interest to pay off the debt.

    “ In a few weeks, the rates on new credit card offers should beat the all-time record of an average 19% APR.”

    What if the 18.73% APR gets kicked up 75 basis points to 19.48%? If that same borrower has to pay minimums, they are now paying $7,417 in interest to snuff the principal debt of $5,474, Rossman said.

    The example has its limits because people may pay more than the minimum and they may incur more credit card debt as they pay off the old one. But it shows a bigger point: “Unfortunately, anybody dealing with credit card debt is a loser from the series of rate hikes. It was already expensive. It’s getting more so,” Rossman said.

    When do rate hikes stop?

    While decisions during the Fed’s November meeting can have a ripple effect on holiday-time borrowing costs, observers say the real question about Wednesday is the clues Federal Reserve Chairman Jerome Powell drops for what’s next. The central bank’s committee voting on interest rate increases reconvenes in mid-December.

    On Wednesday, the Fed said in a statement it expected further rate increases, but also said it would be watching to see if there were lag effects with its tightening policies, which could slow or limit the total amount of increases.

    “People, when they hear lags, they think about a pause. It’s very premature, in my view, to think about or be talking about pausing our rate hike. We have a ways to  go,” Powell told reporters at a Wednesday afternoon press conference.

    The economy is strong enough to handle higher rates, Powell said. For one thing, households have “strong balance sheets” and “strong spending power,” he noted.

    Stock markets first jumped higher after the latest interest rate announcement. But they gave up the gains — and then some — by the end of the day. The Dow Jones Industrial Average
    DJIA,
    -1.55%
    was down more than 500 points, or 1.6% while the S&P 500
    SPX,
    -2.50%
    was down 2.5% and the Nasdaq Composite
    COMP,
    -3.36%
    closed 3.4% lower.

    Top economists in major North American-based banks forecasted the Fed will keep raising interest rates “until the first quarter of next year before potentially lowering rates through the end of 2023,” Sayee Srinivasan, chief economist at the American Bankers Association, the banking sector’s trade association, said ahead of Wednesday’s latest rate hike.

    “Top economists polled as part of a banking industry panel expect Fed rate increases through at least the first quarter of 2023.”

    The forecast, coming through an ABA advisory committee, is no sure thing. “Everything depends on the ability of the Fed to bring inflation down, so that will remain their clear priority,” said Srinivasan.

    Meanwhile, rising costs may cause more people to put the holiday cheer on plastic, even their decorations. The majority of Christmas tree growers in one poll are expecting wholesale prices to climb 5% to 15% for this season.

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  • ‘He’s not willing to live in my house because it has fewer amenities’: My boyfriend wants me to move in and pay half his monthly costs. Is that fair?

    ‘He’s not willing to live in my house because it has fewer amenities’: My boyfriend wants me to move in and pay half his monthly costs. Is that fair?

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    Dear Quentin,

    My boyfriend owns a house with a 30-year mortgage balance of $150,000 on a 4% interest rate. He has $275,000 in cash and retirement accounts. He is retired.

    My house is paid off. I have $50,000 in cash and retirement accounts. I would like to retire within one to two years.

    We wish to cohabitate but have not been able to agree on a fair “rent” to pay. He is not willing to live in my house because it has fewer amenities. 

    “‘He believes I should pay half of his monthly cost at his nicer, more expensive house. He could pay off his mortgage and save $600 a month, but he likes to have cash. ‘”

    He believes I should pay half of his monthly cost at his nicer, more expensive house. He could pay off his mortgage and save $600 a month, but he likes to have cash. 

    I have forgone that luxury and paid off my mortgage. I am now working on building my savings. I don’t feel it is fair for me to pay half of the mortgage interest expense. 

    I don’t know what repair and maintenance costs should be expected from me, if I have no equity in his house. There are many points of view, none of which feels fair.

    These are the options he set forth:

    · I live in his house and thus get to rent mine out. Pay him half of what I net from that rental.

    · Pay half of the actual costs of living expenses and upkeep on his house while I live there.

    · Pay him what I pay to live in my current home for taxes, insurance, and utilities: $800/month.

    What say you, Moneyist?

    House Owner & Girlfriend 

    Dear House Owner,

    I’m sure your house is just as nice. And just because he believes you should pay half his costs, does not make it so. If you are paying no mortgage on your own home, I don’t believe you should pay one red cent more to live in his home. 

    That is to say, you should not come out of this arrangement paying more, just because (a) he would like you to live in his home and (b) he would like you to help him pay off his mortgage, or his tax and maintenance.

    You both made different choices: Yours was to have a home that’s free-and-clear of a mortgage, so you can spend this time building up your savings for retirement and/or a rainy day. 

    You have worked hard to pay off your mortgage, and you have $50,000 in savings, less than 20% of your boyfriend’s savings. He has $150,000 left on his mortgage, and that’s his choice.

    “If his aim is to find help to pay off half of his mortgage, he can find a tenant to do that for him. ”

    You are not the answer to his long-term financial plans, you are his partner in life. If his aim is to find help to pay off half of his mortgage, he can find a tenant to do that for him. What do you expect of you? Forget what he expects.

    By the way he is approaching this arrangement, it seems like he wants the equivalent of a detergent and a fabric softener — a girlfriend and a tenant in one handy bottle to keep his financial plans smooth and clean.

    Bottom line: You should not compromise any plans to build your nest egg. The lady’s not for turning. Only acquiesce to his plan if — with the help of an actual tenant in your home — it helps you too. 

    In other words, the desired outcome for you is more important than the suggestions he has put forward. He could save $600 a month! That’s his business. Not yours. What do you want to have in your pocket every month?

    Figure out what you want, and then work your way backwards based on that goal. For instance, if you can pay him $800 a month, charge $1,600 rent for your home, and put $800 towards your savings, do that.

    You’ve come a long way. Don’t let these negotiations scupper that.

    Check out the Moneyist private Facebook group, where we look for answers to life’s thorniest money issues. Readers write in to me with all sorts of dilemmas. Post your questions, tell me what you want to know more about, or weigh in on the latest Moneyist columns.

    The Moneyist regrets he cannot reply to questions individually.

    By emailing your questions, you agree to having them published anonymously on MarketWatch. By submitting your story to Dow Jones & Co., the publisher of MarketWatch, you understand and agree that we may use your story, or versions of it, in all media and platforms, including via third parties.

    Also read:

    I built a property portfolio with 23 units while we were dating. How much should I give to my fiancé in our prenup?

    ‘We will not outlive our money’: How can we give $10,000 to our nieces and nephews without offending the rest of the family?

    ‘S‘I hate to be cheap’: Is it still acceptable to arrive at a friend’s house for dinner with just one bottle of wine?

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  • IRS releases new federal tax brackets and standard deductions. Here’s how they affect your family’s tax bill.

    IRS releases new federal tax brackets and standard deductions. Here’s how they affect your family’s tax bill.

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    America’s high inflation rate will produce a 7% increase in the size of the standard deduction when workers file their taxes on their 2023 income, according to new inflation adjustments from the Internal Revenue Service.

    It’s also going to pump up tax brackets by 7% as well, according to the annual inflation adjustments the IRS announced this week.

    Many tax code provisions — but not all — are indexed for inflation, so the announcements are a recurring event. But when inflation is persistently clinging to four-decade highs, these annual adjustments carry extra significance.

    “When inflation is persistently clinging to four-decade highs, these annual adjustments of approximately 7% for the standard deduction carry extra significance.”

    Start with the standard deduction, which is what most people use instead of itemizing deductions.

    The standard deduction for individuals and married people filing separately will be $13,850 for the 2023 tax year. That’s a $900 increase from the $12,950 standard deduction for the upcoming tax season.

    For married couples filing jointly, the payout climbs to $27,700 for the 2023 tax year. That’s a $1,800 increase from the $25,900 standard deduction set for the upcoming tax year.

    The increases in the marginal tax rates reflect the same 7% rise. For example, the 22% tax bracket for this year is over $41,775 for single filers and over $83,550 for married couples filing jointly. Next year, the same 22% bracket applies to incomes over $44,725 and over $89,450 for married couples filing jointly.

    MarketWatch/IRS

    “The changes seem to be much larger than previous years because inflation is running much higher than it has in previous decades,” said Alex Durante, economist at the Tax Foundation, a right-leaning tax think tank.

    The IRS arrives at its inflation adjustments by averaging a slightly different inflation gauge, the so-called “chained Consumer Price Index” instead of the widely-watched Consumer Price Index, Durante noted. That’s an outcome of the Trump-era Tax Cuts and Jobs Act of 2017, he added.

    “The reason they do this is because the regular CPI is thought to overstate inflation because it doesn’t take into account the substitution that shoppers can make as cost rise,” Durante said. Shoppers substitute when they swap a more expensive item for cheaper one, and research shows many Americans are using the tactic.

    The IRS inflation adjustments come after September CPI data last week showed inflation of 8.2% year-over-year, slightly off from 8.3% in August. Also last week, the Social Security Administration said next year’s payments would include an 8.7% cost of living adjustment.

    “The payout on the earned income tax credit — geared at low- and moderate-income working families who have been hit hard by red-hot inflation — is also increasing. ”

    The payout on the earned income tax credit is also increasing. The maximum payout for a qualifying taxpayer with at least three qualifying children climbs to $7,430, up from $6,935 for this tax year. The longstanding credit is geared at low- and moderate-income working families who have been hit hard by red-hot inflation.

    More than 60 provisions are slated for an increase inline with inflation, but many portions of the tax code are not indexed for inflation. Depending on the circumstances, the taxes or the tax breaks kick in sooner.

    Capital gains tax rules one example. The IRS lets a taxpayer use capital losses to offset capital gains taxes. If losses exceed gains, the IRS allows a taxpayer to deduct up to $3,000 in excess loses. They can then carry the remainder of the capital loses to future tax years. It’s been more than four decades since lawmakers last set the limit, according to Durante.

    “While more than 60 provisions are slated for an increase inline with inflation, many portions of the tax code are not indexed for inflation. They include capital gains tax. ”

    Given the stock market’s rocky downward slide this year, many investors might welcome a fast-approaching tax break — even if it only enables a $3,000 deduction.

    At the same time, a married couple selling their home can exclude the first $500,000 of the sale from capital gains taxation, and it’s $250,000 for a single filer. It’s been that way since the exclusion’s 1997 establishment.

    The once white-hot housing market may be cooling, but many sellers may still be facing the point when taxes kick in. The median home listing was over $367,000 as of early October, according to Redfin
    RDFN,
    +2.29%    .

    The child tax credit is another example. After the payout to parents last year jumped to $3,600 for children under age 6 and $3,000 per child age 6 to 17, it’s back to a maximum $2,000. The credit’s refundable portion climbs from $1,500 to $1,600 during tax year 2023, the IRS notes.

    Proponents of the boosted payouts and some Congressional Democrats want to revive the larger payments in negotiations tied to corporate taxes. The high costs of living are a strong reason to bring back the boosted credit, they say.

    Related:

    What smart strategies can lower your tax bill as year-end approaches? Read this before making any tax moves.

    Three things the best 401(k)s offer that can help you save a lot more

    Enhanced child tax credit helped reduce poverty for families before it ended last year. But there’s one way Republicans and Democrats could agree on reinstating it.

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  • IBM stock rallies on third-quarter results, upbeat forecast

    IBM stock rallies on third-quarter results, upbeat forecast

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    Shares of International Business Machines Corp. rallied in extended trading Wednesday, after the tech software, consulting and infrastructure giant reported third-quarter results that beat expectations and offered up a more upbeat full-year sales forecast.

    IBM
    IBM,
    -0.35%
    reported earnings as Wall Street tries to gauge the impact of a tough foreign-exchange environment, and the state of business spending on tech services amid worries over a downturn. But the company saw gains in hybrid cloud services, products like open-source software platform Red Hat, its consulting services and its zSystems servers and software.

    “Globally, clients view technology as an opportunity to enhance their business, which is evident in the results across our portfolio,” Chief Executive Arvind Krishna said in a statement. He added that he now expects full-year sales growth “above our mid-single-digit model.”

    That’s a bit more optimistic than the forecast he gave over the summer, when IBM reported second-quarter results. Krishna, at that time, said he continued “to expect full-year revenue growth at the high end of our mid-single-digit model.”

    Wall Street expects IBM’s full-year sales to come in at $59.667 billion, according to FactSet. Analysts expect 2022 earnings per share of $9.28. IBM also said it continued to expect around $10 billion in consolidated free cash flow for the year.

    For the third quarter, the company reported a net loss of $3.2 billion, or $3.54 per share, compared with a $1.1 billion profit, or $1.25 per share, in the year-earlier period. On an adjusted basis, IBM earned $1.81 per share.

    Sales came in at $14.1 billion, compared with $13.3 billion a year ago.

    Analysts polled by FactSet expected adjusted earnings per share of $1.79, on revenue of $13.517 billion.

    Revenue in the company’s software segment grew 7.5%. Consulting revenue rose 5.4%, while the company’s infrastructure segment jumped 14.8%.

    Shares gained 4.8% after hours on Wednesday.

    Prior to the results, analysts had zeroed in on the impact of the strong dollar and what Morgan Stanley, in a recent note, described as “continued wage pressure in consulting.” IBM has also been trying to lean more into cloud and AI technology, unloading some businesses in an effort to narrow its focus.

    Last year, in a move toward that goal, IBM spun off its infrastructure services business into Kyndryl Holdings
    KD,
    -2.85%    .
    But afterward, some analysts raised questions about IBM’s ability to grow sales and compete in the cloud-services industry. Francisco Partners, an investment firm, this year also acquired health-care data and analytics assets that were part of IBM’s Watson Health segment.

    In January, IBM declined to provide an earnings-per-share forecast. The company also changed how it organizes its business segments at the beginning of this year.

    But during the spring, Krishna said he saw “demand staying strong” even if economic growth flattens or enters into a brief recession, with the decision to halt business in Russia, following its invasion of Ukraine, the only drag on results.

    IBM stock is down 8% year to date. By comparison, the S&P 500 Index
    SPX,
    -0.67%
    is down 22%.

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