July's Personal Finance Best of the Web

| August 01, 2017
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Welcome to First National Corporation's new email newsletter. Along with revamping our website, you will also experience enhanced communications from us throughout the month. Here is what you can expect:

1) at the beginning of the month, we will send out our "Best of the Web" series, a compilation of the articles we enjoyed the most in the previous month relating to your personal finances.

2) Shortly thereafter, you will receive a video with market commentary discussing the previous month's activity in the economy and stock market. 

3) Halfway through the month will be another video revolving around a personal finance topic.

4) Toward the end of the month, you will see us write at length on a relevant personal finance topic we have recently seen with our clients.

Here are a few articles we were reading this month that we wanted to pass along to you. Enjoy!

The Complex Motivations Of Money And Retirement As The Freedom To Pursue Non-Monetary Work Rewards

This article discusses a few key examples showing that money does not motivate everything we do- in fact, it might cause less motivation! There is also an important conclusion, which alludes to 60-year-olds remaining at work not because they need the money, but because the job gives them purpose and social interaction. A very important concept for anyone approaching retirement and counting down the days to "freedom" - it may not be as rosy as you think! Instead, you may decide to continue working and enjoy your life as is.

Want to Be Happy? Buy More Takeout and Hire a Maid, Study Suggests

Most people are willing to spend a little time to try and save some money, but recent research shows that spending money to save time is the path more likely to boost our happiness. In a study from the Proceedings of the National Academy of Sciences, researchers Ashley Whillans, Elizabeth Dunn, and colleagues found that spending money to save time may reduce stress about the limited time in the day, and thereby improve happiness.

Conspicuous Consumption Is Over. It's All About Intangibles Now.

In the modern era, luxury goods are arguably more accessible than ever, yet ironically the rising availability of everything from fancy TVs to nice handbags and SUVs is making them less useful as a means to display status. For the superrich, this has simply led to even more overt signifiers of social position, from yachts to Bentleys and gated mansions, but for the educated upper middle class – what Currid-Halkett calls the “aspirational class” in her new book “The Sum Of Small Things: A Theory Of The Aspirational Class” – preferences are shifting to a more “inconspicuous consumption” tied to services, education, and human-capital investments. As a result, the country’s top 1% (people earning more than $300,000/year) are actually spending significantly less on material goods than 10 years ago (while middle-income households are roughly flat), and more in “inconspicuous” areas like education (with spending on education up 3.5X since 1996, compared to flat again for middle-income groups).

Americans Are Going Deeper Into Debt To Buy Cars

On the heels of that article comes a data point from Edmunds.com, stating that the average car loan stretched out to 69.3 months in June, the longest loan term ever recorded. The article goes on to discuss "the $40,000 Toyota Camry," where consumers have gotten into the habit of re-buying vehicles before their loan terms are up, essentially refinancing the loan for a more expensive, feature filled vehicle. The article also discusses the latest trend to buy more expensive "crossover SUVs." Thus, despite the vast improvement for what a $20,000 car could get you as compared to a decade ago, low interest rates have enticed consumers to increase their budget for what they consider "affordable." Use this as a gut check and evaluate whether your automobile truly fits your needs and your financial plan.

Lessons Learned After Retiring At Age 40

While retirement itself is a major transition for anyone, it can be especially challenging to navigate for those who retire “extremely” early. In this Reddit AMA, an ultra-early age-40 retiree shares his perspective on the first year of retirement (having retired with a nest egg of $1.8M). Key points include: home life is vastly improved as stress levels decrease; there is more time to exercise (but it is especially critical to do so to stay healthy given the age and stage of life!); as a very-early retiree, kids are often still in the home (having not gone to college yet), which provides more time for bonding family time (but also led to a shift to seeking out more “unstructured” family time to connect); household duties can shift dramatically (as the early-retiree husband who didn’t cook in the past now does the bulk of the household cooking); and many more. Check out his story and the subsequent questions/answers among the Reddit commenters. 

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