You should always max out your 401(k) and save for your kid's college education in a 529 plan, right? Maybe not. Most experts have long touted a number of practices that may actually be working against you.
These are the top 10 money rules you should break -- and what you should do instead.
Robert Pagliarini is a best-selling author and wealth manager who focuses on sudden wealth recipients. Connect with him on Twitter at @rpagliarini.
Purchasing a vehicle is a big investment, so you want to make sure you do it right. Just as important, you want to make sure you don't do it wrong. To help you save cash on your next car, we've consulted with financial and car-buying experts the find out the most common and expensive auto-buying mistakes.
So, here are eight reasons why you may overpay on your car (unless, of course, you take our advice).
Dmitry Lovetsky/APInvestigators examine a piece of the Malaysia Airlines Flight 17 plane, near the village of Hrabove in eastern Ukraine.By DAVID KOENIG
Families of passengers who were on the Malaysia Airlines plane shot down over Ukraine are starting to sort through the long process of gaining compensation for their loss.
Officials in the Netherlands, where the majority of Flight 17 victims lived, say that Malaysia Airlines has been making $50,000 payments to the families without admitting any wrongdoing in the crash.
Such payments may create goodwill, lawyers say, but they aren't likely to discourage some families from seeking more than the amount promised under an international treaty -- about $174,000.
Since the early days of commercial aviation, international agreements have governed compensation for crash victims. It is a no-fault system -- the airline pays a standard compensation even if is blameless. Under a treaty called the Montreal Convention, families can sue for more if the airline or another party was negligent.
Aviation-accident lawyers say it would be almost impossible to collect damages from Russia or the pro-Russian rebels accused of shooting down the plane with a far-reaching surface-to-air missile. Malaysia Airlines will be left as the prime -- maybe the only -- defendant, and lawsuits are likely to hinge on the plane's planned route from Amsterdam to Kuala Lumpur on July 17.
'Safe Route'
Malaysian officials have said that the route over eastern Ukraine was deemed safe by international aviation authorities as long as the plane flew higher than 32,000 feet -- below that, Ukraine had closed the airspace, presumably because of the threat posed by pro-Russia rebels armed with shoulder-held anti-aircraft guns, which have a limited range. While the U.S. Federal Aviation Administration had prohibited flights over the Crimean Peninsula, the U.S. ban didn't extend to eastern Ukraine until after the shoot-down.
And, Malaysian officials have noted, other airlines continued to fly the same route, even on the day that Flight 17 was shot down.
But some aviation lawyers say that the families could have a strong case by arguing that Malaysia Airlines should have stopped flying over eastern Ukraine after the rebels shot down military jets earlier in July.
"The idea that somebody else was equally as stupid as they were is not that good of an argument," said Jonathan Reiter, a New York personal-injury lawyer who has handled many aviation cases.
Families of those on this year's major air crashes -- Flight 17; Malaysia Airlines Flight 370, which disappeared as it flew from Kuala Lumpur to Beijing; the crash of TransAsia Airways Flight 222 in stormy weather in Taiwan; and the crash of Air Algerie Flight 5017 in Mali -- could be waiting years for compensation from the airlines and their insurers.
Higher Awards
Under the Montreal treaty, lawsuits can be filed in the home country of the victim, the country where the airline is based, where the ticket was bought or where the plane was headed. Americans and Europeans have often received higher awards than families in countries such as Malaysia, where the courts usually stick to the treaty limit, lawyers say.
"You could have two people sitting next to each other who may have the same income. [The family of] one gets multimillions, and the other one gets $75,000," said Justin Green, an aviation attorney whose firm represented families of victims of Pan Am 103, bombed over Scotland in 1988.
For some relatives of those on Flight 17, the pain is still too raw to decide whether to go to court.
In the Netherlands, Kevin Fan is grappling with the job of running two Rotterdam restaurants that were owned by his parents, who, along with his grandmother, died in the crash. Fan's father, who went by Popo, was the chef at Asian Glories; his mother, Jenny, was the hostess.
On a recent day, several bunches of fresh-cut flowers had been left as a memorial outside the small restaurant. The 30-year-old Fan, an acclaimed young chef, was finishing a meeting with two accountants to go over the restaurant's books. He was about to start his next shift in the kitchen.
"It is overwhelming. There is just a lot to arrange," he said, choosing his words carefully. "My family is really stepping in to help."
As for suing the airline, Fan said, "I'm not focused on that right now."
'Blood Money'
Harun Calehr, whose two nephews were on Flight 17, said that even an initial partial payment from Malaysia Airlines was emotionally taxing.
"My mother and my sister were thinking that it is blood money," said Calehr, who was born in the Netherlands and now practices law -- including aviation law -- in Houston. "I told them, 'This is not profiting from the boys' demise. This is your right.' The only accountability you can get from a company is financial compensation, and maybe an apology."
In the months since Malaysia Airlines Flight 370 disappeared, Steve Wang, a Chinese citizen whose mother was on the plane, decided to seek more than the $174,000 limit. It is a form of leverage.
"What I need most is not the compensation," Wang said. "What I really need is [to know] what happened to the plane -- where is it now? So we want to push them to search in a faster way."
After many crashes, lawsuits are filed against the airlines, the aircraft manufacturer, and the makers of aviation systems on the plane. In the Air Algerie case, Spain's Swiftair, which was operating the flight, could be a target.
Pursuing Compensation
Flight 17 is different -- a civilian airliner shot out of the sky -- but if families can't sue Russia or the rebels suspected of firing the missile, there is precedent for finding an airline liable after its plane was shot down.
In 1983, a Soviet fighter jet downed Korean Air Lines Flight 007, a Boeing 747 jumbo jet bound from New York to Seoul via Anchorage, Alaska. The KAL plane with 269 people on board had flown off course and into Soviet airspace. The Soviets never compensated any of the passengers' families. Years later, families in the U.S. won settlements and jury awards against Korean Air that ranged up to $10 million, The Associated Press reported at the time.
Governments can invoke sovereignty, but they have compensated families in rare cases. After an American warship shot down Iran Air Flight 655 in 1988, the U.S. agreed to pay $61.8 million to the families of victims.
Libya agreed to pay $2.7 billion in compensation for the bombing of Pan Am Flight 103 over Lockerbie, Scotland, in exchange for the lifting of U.S. and international trade sanctions imposed after the attack. Unlike Russia, the U.S. government had designated Libya a state sponsor of terrorism.
-Toby Sterling in Amsterdam and Kelvin Chan in Hong Kong contributed to this report.
LOS ANGELES -- Americans are doing a better job of making timely credit card payments, even as many lenders increasingly extend credit to more people with less-than-stellar credit.
The rate of U.S. credit card payments at least 90 days overdue fell to 1.16 percent in the April-June quarter -- the lowest level in at least seven years, credit reporting agency TransUnion said Tuesday.
The second-quarter credit card delinquency rate is down from 1.27 percent in the same period last year and 1.37 percent in the first three months of this year.
The late-payment rate peaked in the first quarter of 2009 at 3.12 percent, TransUnion said. The firm's data set goes back to 2007 and is drawn from information culled from virtually every U.S. consumer who uses credit.
Average card debt per borrower was up slightly in the second quarter, rising about 0.2 percent to $5,234. It rose 1.4 percent from the first quarter of this year.
Americans still have a limited appetite for debt after gorging themselves on sub-prime mortgages and credit cards before recession seized the country in late 2007.
Credit card borrowing started rising again in 2011, but the increases have lagged far behind other types of debt, including auto and student loans.
All told, U.S. credit card debt has increased 1.3 percent over the past year, reaching $873.1 billion in June, according to the Federal Reserve.
Meanwhile, the number of new credit card accounts opened by consumers increased in the first three months of the year.
The data lag by a quarter, so the latest TransUnion figures cover the January-March period. They show that the number of new credit card accounts rose 17.8 percent to about 11.7 million versus the same period a year earlier.
The share of cards issued to borrowers with less-than-perfect credit increased to 31.2 percent, compared with 27.3 percent a year earlier.
That's still well below the roughly 45 percent share of cards going to non-prime borrowers before the recession, however.
In the VantageScore credit rating scale, consumers with a score lower than 700 on a scale of 501-990 are considered non-prime borrowers.
Lenders also are being more generous with the amount of credit they extend to cardholders.
The average credit limit on new bankcard accounts has increased steadily, rising 29.4 percent to $5,230 over the three-year period ended March 31, TransUnion said.
The increase in card credit limits points to lenders feeling they can take on more risk while giving consumers a bigger credit cushion, said Tony Guitart, TransUnion's director of research and consulting.
Spencer Platt/Getty Images
MIAMI -- Burger King struck an $11 billion deal to buy Tim Hortons (THI) that would create the world's third largest fast-food company and could make the Canadian coffee-and-doughnut chain more of a household name around the world.
Executives said the two chains will continue to be run independently, however, meaning Burger King (BKW) customers shouldn't expect to see Tim Hortons coffee or doughnuts popping up on menus.
"There's no plans to mix the products or do co-branding," said Daniel Schwartz, CEO of Burger King and a principal of 3G Capital, which owns a majority stake in the hamburger chain.
The corporate headquarters of the new company will be in Canada. Burger King stressed that the deal wasn't being driven by a desire to take advantage of the country's lower tax rates, but the international growth possibilities of Tim Hortons.
Since 3G Capital acquired Burger King in 2010, the investment firm has been aggressively expanding the chain's presence overseas. It has focused on striking deals with local operators in countries including China and Russia to open more Burger King locations while minimizing its own costs and risks.
In the last year, for example, it accelerated expansion and opened more than 700 Burger King locations. Burger King has nearly 14,000 locations globally, but the company has noted that's still far less than the more than 35,000 McDonald's restaurants around the world.
3G said it will take its expertise in expanding Burger King and apply it to Tim Hortons.
Back in the U.S., the deal also gives 3G a stronger foothold in the fast-growing coffee and breakfast market -- areas where Burger King has lagged leaders including Starbucks (SBUX) and McDonald's (MCD). Tim Hortons CEO Marc Caira noted the chain's recent efforts to become a bigger player in the U.S., including updated store designs that feature couches and fireplaces.
Caira said he felt Tim Hortons could "win much quicker" in the U.S. with the help of Burger King.
Breakfast and coffee have been hot growth areas in the U.S. fast-food industry. Between 2007 and 2012, breakfast grew faster than any other segment in the restaurant industry at about 5 percent a year, according to market researcher Technomic. Winning over customers will nevertheless be a challenge for Tim Hortons, given the intensifying competition in recent years.
Warren Buffett's Berkshire Hathaway (BRK-A) (BRK-B) is helping finance the Tim Hortons deal with $3 billion of preferred equity financing, but won't have a role in managing operations.
After the deal, which is expected to close by early next year, the new company would have about $23 billion in sales and more than 18,000 locations.
3G Capital will own about 51 percent of the new company. The firm, which has offices in Brazil and New York, has been slashing costs at Burger King since buying it in 2010. Last year, 3G teamed up with Berkshire Hathaway to buy ketchup-maker Heinz as well.
Some analysts have suggested that Canada's lower tax rates stand to benefit Burger King over time. But Schwartz said the company doesn't expect to achieve any "meaningful tax savings" as a result of the deal. He said Burger King's blended tax rate in the U.S. is in the mid- to high 20s, comparable to the current effective rates in Canada.
Under the deal, Burger King will pay $65.50 Canadian ($59.74) in cash and 0.8025 common shares of the new company for each Tim Hortons share. This represents total value per Tim Hortons share of $94.05 Canadian ($85.79), based on Burger King's Monday closing stock price. Alternatively, Tim Hortons shareholders may choose either all-cash or all stock in the new company.
Tim Hortons stock was up nearly 9 percent percent in midday trading Tuesday. Burger King's shares fell more than 3 percent.
Jim R. Bounds/Bloomberg via Getty ImagesBy Jerry Kronenberg
BOSTON -- Many Americans assume that homes facing foreclosure sell for deep discounts, but a detailed analysis of some 4 million recent sales shows that certain kinds of distressed properties actually fetch as much as 19 percent above market value on average.
"It's definitely counterintuitive," says Daren Blomquist of market watcher RealtyTrac, which conducted the study.
RealtyTrac looked at what millions of distressed and non-distressed homes sold for during the 12 months ended March 31 and compared that with each property's estimated market value based on location, lot size and other characteristics.
The firm also broke down the distressed-property market into 24 subcategories using such factors as a home's age and how far along it was in the foreclosure process at the time of sale.
RealtyTrac found that while distressed properties in general offer around a 14 percent discount off fair-market value, different subcategories perform very differently.
For instance, abandoned properties scheduled for foreclosure auction, built between 1950 and 1990 and worth less than the homeowner's unpaid mortgage balance average 28 percent below market value.
By contrast, the typical "bank-owned" property -- a home where the lender has already completed the foreclosure process and put the place up for sale -- actually sell for 3 percent above market value.
Two classes of distressed homes do even better than that.
Homes worth less than the seller's unpaid mortgage but not yet officially in foreclosure sell for 19 percent average premiums, while bank-owned homes build before 1951 typically fetch 7 percent above market value.
Blomquist attributes the higher-than-expected prices to competition among house-hunters for the best distressed parcels as the housing sector slowly recovers.
"I think it's a reflection of a market that's become so starved for inventory that some categories of distressed properties are seeing multiple offers and competitive bidding," he says. "That's pushing prices up."
The expert says the lesson for professional investors and home-buying consumers is that not all distressed properties sell for rock-bottom prices any more.
"You really want to narrow down your search to just those subcategories that offer the best discounts," he says.
Market segments that RealtyTrac found offer the best deals include:
Residences that are abandoned, already in foreclosure and built before 1951 (26 percent average discount)
Homes that are in the foreclosure process, but whose current owners owe less than the property's market value (26 percent typical discount)
Properties that are abandoned and scheduled for foreclosure auction (25 percent average discount)
Homes that are bank-owned and vacant -- i.e., the previous owner or tenant has either moved voluntarily or been evicted (18 percent typical discount)
AP/Charles Rex Arbogast
McDonald's (MCD) is still the king -- sorry Burger King (BKW) -- but a lot of competitors are making it's reign uneasy.
The company is losing ground among a key demographic -- people in their 20s and 30s. These young consumers, who often have young children, have long been the foundation of McDonald's empire.
While millennials have not entirely abandoned McDonald's, they're much more willing to try new things -- especially fast-casual restaurants such as Chipotle Mexican Grill (CMG), Panera Bread (PNRA), Five Guys and others.
"Those are the brands that are seeing the greatest amount of growth right now," said Rich Shank, senior consumer research manager at Technomic, a restaurant consulting firm.
At the same time, McDonald's has been stagnating, raising questions about its dominance. A key measure of sales at its more than 14,000 U.S. restaurants has been consistently flat or slightly lower over the past year, compared the numbers from a year earlier. While the Golden Arches has stagnated, its competition has grown in terms of sales and the number of restaurants. Technomic says the number of fast-casual restaurants in the U.S. has more than doubled over the past decade, while the number of McDonald's outlets has increased only slightly.
The latest in a series of brand tracking surveys by Technomic finds that McDonald's has not been growing its base. Shank says millennials have taken advantage of the tremendous growth in restaurant options. A recent Consumer Reports survey found that consumers are also demanding better food quality and healthier options. "A lot of younger diners go out of their way for a tastier meal," according to Tod Marks, senior project manager at Consumer Reports.
The magazine ranked McDonald's last among the 21 burger restaurants on the survey list.
Analysts say that millennials are driving a lot of the consumer ingenuity in food industry, thanks to their willingness to pay up for better quality meals.
But this is hardly the first time McDonald's has faced a serious threat. "Around 2000, they faced a similar slump and they had a fairly successful time before and during the recession," according the Shank, as the company emphasized value. "And in 2004, they were getting beat up with the 'Super-Size Me' phenomenon, but they focused on food quality, launched McCafe, refreshed the brand."
He says the fast food industry needs to recapture some of that excitement and innovation, and he thinks it will. "We're fairly optimistic they'll figure things out, based on past performance."
In fact, McDonald's is working to shed its reputation for serving cheap, unhealthy food, and improve how it's perceived by younger consumers. It recently rolled out chicken and vegetable McWrap sandwiches, as well as egg white substitutes in its breakfast sandwiches.
And earlier this summer, the company opened what the company calls a "learning lab" at a restaurant in California to experiment with various menu items.
"McDonald's gets beat up," said Shank. "People rate their brand lower than others, but they still go there quite often. McDonald's has nostalgia behind it which is quite powerful." Despite its troubles, McDonald's remains one of the most recognizable brands in the world.
"People will go to Panera when they want a salad," according to Shank, "but they'll still go to McDonald's when they want a burger and fries."
He adds that McDonald's has been in this position before and it has the resources to steer the ship in the right direction. "I wouldn't count them out," Shank said.
Bruce Smith/APWorkers assemble a Boeing 787 Dreamliner at Boeing's plant in North Charleston, S.C.By Lucia Mutikani
WASHINGTON -- Orders for long-lasting U.S. manufactured goods posted their biggest gain on record in July on strong international demand for aircraft, but the underlying trend remained consistent with a steady pace of economic growth.
Durable goods orders, items ranging from toasters to aircraft that are meant to last three years or more, jumped 22.6 percent last month after an upwardly revised 2.7 percent increase in June, the Commerce Department said on Tuesday.
Transportation orders rose a record 74.2 percent as bookings for civilian aircraft more than tripled. Boeing (BA) had said earlier it received a record 324 aircraft orders in July.
Many of the orders, including 150 planes by the Dubai-based airline Emirates, were for expensive models, some still under development. It will take at least 10 years for the resulting increase in production to filter through to U.S. gross domestic product.
Outside of transportation, demand was decidedly softer. Still, upward revisions to the data for June as well as rising shipments and orders backlogs showed the factory sector remained on firm ground.
"This report reinforces the message that manufacturing growth is picking up and is likely to support stronger GDP growth in the second half of the year," said John Ryding, chief economist at RDQ Economics in New York.
U.S. stocks traded higher, with the S&P 500 index near an all-time high. Boeing was little changed. Prices for U.S. Treasury debt were up, while the dollar was flat against a basket of currencies.
Separately, the Conference Board said consumer confidence hit its highest level in nearly seven years in August. A gauge of households' perceptions of the labor market touched its best level since July 2008.
That also boosted views that the economy remains on a solid growth path, even though another report showed a deceleration in house price growth in June.
The S&P/Case Shiller's broader house price index rose 6.2 percent in the 12 months to June, the smallest gain since November 2012, compared to a 7 percent rise in May.
Strong Orders for Automobiles
While the outsized order increase from Boeing dominated the surge in durable goods orders last month, orders for autos increased 10.2 percent after declining 1.3 percent in June.
Non-defense capital goods orders excluding aircraft, a closely watched proxy for business spending plans, slipped 0.5 percent in July.
The decline, however, followed an upwardly revised 5.4 percent advance in June. Core capital goods orders were previously reported to have increased 3.3 percent in June.
Core capital goods shipments increased 1.5 percent last month. Shipments of core capital goods are used to calculate equipment spending in the government's GDP measurement.
"That suggests that capital spending ended the second quarter on solid footing, with that positive momentum carrying over to start the third quarter," said Omair Sharif, senior economist at RBS in Stamford, Connecticut.
Other details of the report also favor manufacturing in the months ahead.
Unfilled orders for core capital goods increased 1.1 percent last month after rising 1.7 percent in June, showing a steady pipeline of work that will keep the nation's factories busy for a while.
Durable goods inventories rose 0.5 percent in July, matching the gain in the prior month, suggesting inventory accumulation could add to third-quarter growth after helping to boost output in the second quarter.
Durable goods orders for July were reported Tuesday morning. Regardless of the headlines, this is one of the most volatile readings from month to month. The July reading for durable goods orders is 22.6%, a huge increase from the June reading of 0.7% (which was revised up to 2.7%). If the headline number sounds shocking, there is a reason — this was the highest reading in about 20 years. Still, do not let the headline number fool you.
To prove just how volatile this economic report is, Dow Jones had a target of 7.5% while Bloomberg's estimate was 5.1%. The range given by Bloomberg was -1.0% to 24.5%.
This gain is heavily influenced by aircraft and transportation. After looking beyond the first headline, the ex-transportation durable goods figure was down by 0.8%. June's reading of a 0.8% gain was revised up to a gain of 3.0%. The total durable goods reading was $300.1 billion in July.
The crux of the durable goods is measured by nondefense capital goods ex-aircraft. This is considered the core reading for the rest of the economy, and it came in a drop with a reading of -0.5% in July.
READ ALSO: Yellen's Rate Hike Meatball: Other Fed Presidents vs. Fed Funds Futures
Mike Kane/Bloomberg via Getty ImagesTBy Sam Forgione
NEW YORK -- U.S. single-family home prices fell in June and disappointed expectations, a closely watched survey said Tuesday.
The S&P/Case Shiller composite index of 20 metropolitan areas declined 0.2 percent in June on a seasonally adjusted basis. A Reuters poll of economists had forecast a flat reading.
Non-seasonally adjusted prices rose 1 percent in the 20 cities, in line with expectations.
"Home price gains continue to ease as they have since last fall," David Blitzer, chairman of the index committee at S&P Dow Jones Indices, said in a statement.
"For the first time since February 2008, all cities showed lower annual rates than the previous month. Other housing indicators -- starts, existing home sales and builders' sentiment -- are positive. Taken together, these point to a more normal housing sector."
Prices in the 20 cities rose 8.1 percent year over year, shy of expectations for 8.4 percent.
A broader measure of national housing market activity that Case-Shiller is now releasing on a monthly basis rose at a slower pace year over year, coming in at 6.2 percent. Previously, Case-Shiller had released its national index on a quarterly basis.
The seasonally adjusted 10-city gauge fell 0.1 percent in June versus a 0.2 percent decline in May, while the non-adjusted 10-city index rose 1 percent in June compared to a 1.1 percent rise in May.
Year over year, the 10-city gauge also rose 8.1 percent.
The Conference Board has released its reading on Consumer confidence for the month of August. This is much broader than the recent consumer sentiment reading. Tuesday's headline reading "Improves Again" may be a bit of a severe understatement.
The August Consumer Confidence Index rose to 92.4 from an already strong reading of 90.3 in July. The number was handily above expectations as the Bloomberg consensus was at 89.5. We would note that the cutoff date for the preliminary results was August 14, so there has been 12 days since the last survey was received.
Disclosed in the component readings was that the Present Situation Index rose to 94.6 from 87.9 and the Expectations Index fell to 90.9 from 91.9 in July.
The Conference Board said:
Consumer confidence increased for the fourth consecutive month as improving business conditions and robust job growth helped boost consumers' spirits. Looking ahead, consumers were marginally less optimistic about the short-term outlook compared to July, primarily due to concerns about their earnings. Overall, however, they remain quite positive about the short-term outlooks for the economy and labor market.
READ ALSO: America's Fastest Growing Jobs
Individual notes were as follows:
Those saying business conditions are "good" rose to 23.9% from 23.3%.
Those claiming business conditions are "bad" fell to 21.5% from 22.8%.
Those claiming that jobs are "plentiful" rose to 18.2% from 15.6%.
Those claiming jobs are "hard to get" dropped to 30.6% from 30.9%.
Those expecting business conditions to improve over the next six months held steady at 20.4%.
Those expecting business conditions to worsen fell to 10.2% from 12.1%.
Those anticipating more jobs in the months ahead fell to 17.0% from 18.7%.
Those anticipating fewer jobs also declined to 15.8% from 16.6%.
Those expecting their incomes to grow fell to 15.5% in August, versus 17.7% in July.
Those expecting a drop in their incomes came to 11.9% in August, versus 11.1% in July.
APA Microsoft Windows store at Best Buy.By Sruthi Ramakrishnan
Best Buy, the largest U.S. specialty retailer of consumer electronics, reported lower-than-expected revenue for the third straight quarter, as fewer people bought PCs and electronics, and those who did increasingly bought them online.
Best Buy (BBY), shares of which fell 6.7 percent in early trading, said it expected same-store sales to decline in the low-single digits in the second half of the year.
Same-store sales fell 2.7 percent in the second quarter ended Aug. 2, more than the 2.2 percent decline estimated by analysts polled by research firm Consensus Metrix. U.S. same-store sales slipped 2 percent.
Best Buy also said operating margins were likely to remain under pressure due to higher sales of lower-margin items, overall industry softness and discounting in Canada and China.
"We see the margin guides as conservative," J.P. Morgan (JPM) analyst Christopher Horvers wrote in a note, adding the company could benefit from the anticipated iPhone launch and sales of ultra high-definition 4K televisions.
Apple (AAPL) is expected to launch its latest iPhone next month.
Best Buy said it expected continued softness in mobile phone sales ahead of the "highly-anticipated" release of new models.
The company saw encouraging customer response to 4K televisions, but their impact on sales would be "relatively limited" this year, Chief Executive Officer Hubert Joly said on a conference call.
Best Buy said it plans to invest $40 million-$50 million in the second half to improve operations such as shipping and order fulfillment.
"Industry-wide sales are continuing to decline in many of the consumer electronics categories in which we compete," Chief Financial Officer Sharon McCollam said in a statement Tuesday.
Sales of consumer electronics such as TVs and desktop and notebook computers fell 2.5 percent industrywide in the quarter, the company said, citing NPD Group's Weekly Tracking Service. Such items make up about 65 percent of Best Buy's U.S. revenue.
Amazon.com (AMZN) reported a 27 percent rise in sales of electronics and general merchandise to $13.28 billion in the quarter ended June 24, with North America sales growing nearly 30 percent to $8.37 billion.
Best Buy's revenue fell 4 percent to $8.89 billion in the second quarter. Analysts on average had expected $8.99 billion, according to Thomson Reuters I/B/E/S.
The company reported a quarterly profit that beat estimates, largely helped by cost cuts.
Joly has removed layers of management, eliminated hundreds of jobs, shut down unprofitable stores and boosted Best Buy's cash reserves since 2012 in an effort to make up for declining sales.
Net income attributable to shareholders fell 45 percent to $146 million, or 42 cents a share, from a year earlier. Year-ago profit included a gain of $229 million from legal settlements. Excluding items, the company earned 44 cents a share from continuing operations, while analysts' had estimated 31 cents.
Best Buy's shares were trading down 4.8 percent at $30.46. Up to Monday's close, the stock had fallen 20 percent since the start of the year.
For many of us, outlet stores are a great way to get name-brand products at super-discounted prices, but what kind of quality are you really getting for your money? Here are some tips to keep in mind.
According to a recent study by Consumer Reports, 60-85 percent of the goods in many major retailer outlets are specifically made only for the outlet itself. These products are made with cheaper materials so that they can sell for less than their sturdier retail counterparts.
If you're looking for the same brand quality, you'll have to inspect things a little more closely. For instance, Banana Republic and The Gap both have three dots on the price tags of its outlet-store merchandise, while Brooks Brothers tags will have a "346" on them. Items from Coach will also be marked with an "F" in the style number.
This means if the majority of the items you're browsing are specifically made to be cheaper, then you're not really saving on the "original price." You'll see these sales a lot in outlets, so don't be fooled.
You'll also want to inspect the sewn-in tags on your merchandise. If they're sliced, marked or altered in any way, that item could very well be imperfect and unfit for retail sale. It's good practice to look closely at the stitching, too. Is there less than usual? Is the fabric a lighter weight? Is there any damage to the item? You don't want to find out these things when it's too late.
So, the next time you head to the outlets, keep your eyes peeled to ensure you get deals, not duds.
Eye-Stock/Alamy
More than 6 million power cords that came with two popular notebook computers are being recalled because they could start fires or burn consumers, the Consumer Product Safety Commission said on Tuesday.
Hewlett-Packard (HPQ) is recalling 5.6 million cords sold in the U.S. and another 447,000 in Canada after getting 29 reports of the power cords overheating and either melting or charring. Two consumers reported suffering burns, and the company told the CPSC that it received 13 reports of property damage.
The Chinese-made cords came with HP and Compaq notebook computers and mini notebook computers, as well as with accessories that use an AC adapter, including docking stations. The cords came with devices sold between September 2010 and June 2012.
"HP believes that certain power cords shipped with notebook PC products and AC adapter accessories may pose a risk of a fire and burn hazard to customers," the company said in a statement. "We are taking this action as part of our commitment to provide the highest quality of service to our notebook customers."
Not every cord sold with every device is affected by the recall. The recalled HP power cords are black and have the code LS-15 molded onto the AC adapter end.
If you have one of the cords, you are urged to stop using it and get a free replacement from Hewlett-Packard . You can call HP at (877) 219-6676 between 10 a.m. and 7 p.m. Eastern Time weekdays, or visit the HP recall site.
As a teenager in the 1960s, Lewis Bratcher would devour stories in Life magazine about Alaska and dream of visiting America's last frontier.
By the time he graduated from the University of Tennessee in 1969, he was ready to do more than visit. So he bought a one-way plane ticket to Anchorage, hoping to land a job on the new 1,000-mile pipeline that would transport crude oil from northern Alaska to Valdez in the south.
He stepped off the plane in January 1970 wearing his father's military coat against the cold, with his mother's fruitcake tucked into his luggage. But the pipeline job didn't materialize; legal disputes over land claims delayed the project for several years.
Still hoping to make it in Alaska, Bratcher worked odd jobs around Anchorage until he landed a position as a purchasing agent at a concrete supply company that fall. But a year later, the company filed for bankruptcy and Bratcher was once again out of a job.
Over the next 20 years, Bratcher would shift careers several more times. In the end, the struggles would lead him to found a traditional yet forward-thinking company -- The Great Alaskan Bowl Co.
Chapter 1: Lumber Yard to Wooden Bowls
A year after moving north to Fairbanks for yet another job, Bratcher and a friend partnered to buy a small lumberyard there. Their company pulled in a decent profit over the next decade. Then, the economic recession that had gripped the lower 48 states following the 1970s global oil crisis eventually crept up to Alaska. By 1987, the lumberyard was struggling and Bratcher's partner wanted out of the business.
Bratcher bought out his partner's interest two days after the massive stock market crash on Monday, Oct. 19. Still hoping to keep the business going, he deposited all the company's cash at 4:30 p.m. on Thursday to cover payroll the next day. Thirty minutes later, the FDIC seized the bank and its assets, including Bratcher's money. "It had been a full week," he wryly recalls.
Credit: Micah FairchildThe Alaskan Wooden Bowl Co. founder Lewis Bratcher
Vendors started calling in their debts on Monday. Bratcher refused to declare bankruptcy and instead spent the next year selling his inventory to pay back unsecured creditors. He even convinced some vendors to take payment in lumber. He spent several more years trying to get his money back from the FDIC, and eventually received just cents on the dollar for the deposit he made on that fateful day.
Bratcher wasn't beaten, however. He began to think about a new business, but one that was sustainable through good times and bad.
In passing, an acquaintance had mentioned he'd like to start a wooden bowl company, but Bratcher had dismissed it at the time as impractical. Now he began to reconsider. By the 1980s, wooden bowls were increasingly associated with quality craftsmanship. Alaska was a prime vacation spot, too, and bowls made of native trees could attract tourists as well as locals, Bratcher thought. The wholesale market also might prove lucrative.
In the end, he decided a bowl company would provide him with a niche market. "I wanted to make something the guy down the street couldn't duplicate or buy overseas cheaper," he says.
Wood had once been a common material for bowls; it was cheap, durable and relatively light once dried, a plus when following caribou across Alaska or traversing the Atlantic in search of the New World. As America grew, so did the demand for woodenware and bowl mills sprang up across the country.
Industrialization changed that. Once rare and expensive products like glass and glazed ceramic now became common and cheap due to mass production. Plastic's invention and its use in kitchenware in the very early 20th century made it even harder for bowl companies to compete. By the time Bratcher was thinking about starting a bowl company, there were only a handful of wooden bowl mills still left in the United States.
Chapter 2: Building a Bowl Mill
Bratcher first needed machinery to both carve and sand his wooden bowls. He reached out to many former bowl mill owners, including John Coley in New York, who had sold his own company in the 1970s. Coley loved the idea of a new bowl company, but no longer had any machinery. He did, however, know a man who could make the machines.
Coley sent Bratcher to Ed McCormick in Vermont, an inventor who had built bowl-cutting machinery in the 1950s. McCormick unearthed a set of bowl machine blueprints from a filing cabinet and Bratcher paid him to build it.
In the past, wooden bowls had been milled on the shallow side, but Bratcher wanted his bowls deeper to set them apart. It would take McCormick a full year to finish the specialized cutting machine.
Then Bratcher had to find a way to dry the bowls to keep their shape. Bowl mills typically would lose a significant portion of their carved bowls while air drying them, since wood is notorious for cracking during the drying process. Bratcher thought a kiln might allow him to inexpensively control the drying process and retain most of his dried bowls for finishing.
Credit: Micah Fairchild
While in Georgia for a woodworking conference, he watched a man in a video talk about drying lumber. He tracked the man down and unknowingly made contact with one of the world's foremost experts on wood drying -- Lee Fisk.
Fisk told him no one had ever built a kiln to dry bowls before. But over the next year, he helped Bratcher build a kiln to control air movement, humidity and temperature. They were elated when the carved bowls finally came out round and without cracks.
Now Bratcher could cut and dry the bowls, but he still needed a plentiful source of wood. He carved test bowls from several different trees before deciding on birch, a species native to Alaska that tends to spring up in fire-scorched areas. Dried birch produces a bowl with just the right heft, Bratcher says. And once oiled, it becomes more opalescent over time, unlike other hardwoods that lose their sheen.
"When you pull a bowl out of the oil at the end of our process, that's when you really see the character of the wood show up," he says. The wood's uniqueness is most pronounced in the company's "family tree" bowls, when vibrant color patterns flow through a set of three to five nesting bowls.
Finding the best trees is always risky, says Randy Mickowski, the company's production manager, who still traipses through the woods to find prize birch trees. Birch lives only for about 80 years before it begins to die from the inside out. So you can't tell if a tree is healthy until it's felled, Mickowski says. Sometimes decaying heartwood will clear up after a few feet; other times, it penetrates the whole log.
The company only uses trees from land that's slated to be cleared anyway for roads or farmland. Once logs arrive at the Great Alaskan Bowl Co., they go through a 22-step process of carving, sanding and oiling to become wooden bowls, says cutter and sander Klaus Reeck. "The kind of bowl and how many we get really depends on the tree size and where the heartwood is," he says. Birch's heartwood, which is slightly darker than the surrounding wood, can be off-center, so a carver must work with the log to create the perfect bowl.
At 65, Reeck could retire, but says, "I like taking what nature started and finishing it too much to quit."
Chapter 3: The Giving Tree
Whether a carver can get 100 bowls out of a birch or none, every bit of the log gets used, says Malen Bratcher, who is now the marketing and wholesale manager for his father's company. Lower-quality wood not usable for bowls is instead sold as firewood to local Alaskans who use it to make it through the 40-below-zero winters. Shavings are used for packing material and sawdust is free for mulching and animal bedding. Bowls with minor imperfections become bird feeders.
People have a positive psychological connection to wood that they'll tap into when they pick up a bowl.
"We've never had to 'go green,' because we've always had sustainable policies," Malen says.
Customers like the company's conservationist practices, but the real attraction remains the wood itself, says retail manager Elaine Williams. The best way to educate customers, she says, is to let them handle the bowls. "People have a positive psychological connection to wood that they'll tap into when they pick up a bowl," she says.
The company's biggest solid bowl, aptly named "Mr. Perfect," sits prominently on a top shelf at its retail store in Fairbanks. The bowl was carved from the only 24-inch, fully sound birch tree the Great Alaskan Bowl Co. has ever harvested. The beach ball sized bowl showcases nature's artistry, as wide swaths of rich browns and reds flow across its vast interior, broken up by a single pale blonde streak.
Williams sees people go from "just looking" to spending hours picking through hundreds of bowls, laying them out in rows in their quest to find "the one" that speaks to them. In fact, physical contact with the wood is so important that the company will sometimes ship bowls to prospective wholesale clients in the lower 48 states to help them appreciate their quality.
In the past, the company produced mostly elegant and functional wooden bowls, but to grow the business, the Bratchers have added laser engraving and even painted scenes by Alaskan artists. In July, Bratcher signed an agreement with the U.S. Mint to reproduce the "America the Beautiful" series of coin artwork onto the company's bowls. Vendors in Denali National Park sell the bowls, but Malen plans to offer wholesale agreements to other prominent sites in the lower 48 states, such as Mount Rushmore, the Grand Canyon and Yellowstone National Park.
"We hope to convince folks that we can take the coin images and capture America's history in a new way -- on a wooden canvas," he says.
Marketing the company's product comes naturally to Malen because he loves the bowls, so much that he once hid a set he was oiling from employees and his father. They were so striking he came in early the next day to buy the bowls for his personal use.
"These bowls put food on the table when we were kids," he says, remembering his family's personal set of wooden bowls they used for meals. "Dad fought hard for this company and I don't take it for granted that I get to work here with him. Everything, from how he built the business to how we make the bowls ... I feel like this is what is means to be 'made in America.' "
It was a big round-number day for the stock market.
The Standard & Poor's 500 index closed a hair above 2,000 points Tuesday, 16 years after it closed above 1,000 points for the first time.
The milestone added to the market's gains from the day before and extended the stock index's record-shattering run this year.
The S&P 500 index, a widely followed barometer of the stock market, has closed at a new high 30 times this year. By this time last year, it had done so 25 times. The index briefly rose past 2,000 on Monday, but closed just below that level. It still set a record-high close in the process.
"There's perhaps a small psychological boost when you get over such a significant price level," said Cameron Hinds, regional chief investment officer at Wells Fargo Private Bank.
U.S. stocks, in the midst of a five-year rally, have surged in the final weeks of the summer after dipping earlier this month on concerns about geopolitical tensions in Russia and the Middle East.
The latest string of shattered market benchmarks comes as investors cheered new indications that the economy is strengthening, setting the stage for stronger company earnings.
Major U.S. indexes began in positive territory in premarket trading Tuesday. That trend held as investors began to digest the latest economic reports.
The Conference Board said Tuesday that its consumer confidence index rose this month to the highest point in nearly seven years. A separate report showed that orders of durable manufactured goods surged by a record 22.6 percent in July, thanks to a jump in aircraft sales. A third report showed U.S. home prices rose in June, although at a slower pace.
Stocks opened slightly higher and remained in the green the rest of the day. The S&P crossed above 2,000 points early on, and hovered at or above the mark as it approached the close of regular trading.
Moments before the close it dipped below 2,000, then inched up just above.
The S&P 500 (^GPSC) rose 2.10 points, or 0.1 percent, to end at 2,000.02. Seven of the 10 sectors in the S&P 500 index gained, led by energy stocks. Utilities declined the most.
The Dow Jones industrial average (^DJI) rose 29.83 points, or 0.2 percent, to 17,106.70. The Nasdaq composite (^IXIC) gained 13.29 points, or 0.3 percent, to 4,570.64.
The major U.S. indexes are riding a three-week streak of weekly gains and are up for the year.
The string of record highs this year isn't unusual when a market is recovering from a downturn, said Kate Warne, an investment strategist at Edward Jones.
In the past, once stocks have hit a new high after a downturn, they have continued higher for about two years, on average, she said. The first time the S&P 500 hit a new high after the financial crisis was March 2013. So this year's record run is still within the average range.
"Markets don't climb sharply. They tend to climb slowly, and that's probably good news for a continued climb in the future," Warne said.
The Dow also has put up some big numbers this year, notching 15 new closing highs. That trails the 30 it racked up by this time a year ago.
While the market is setting records, many stock watchers believe equities remain fairly valued, though not cheap.
The S&P 500 is trading around 16 times its forward-operating earnings, or over the next 12 months. The historical average on that measure is about 15 times.
"That says stocks are no longer cheap, but we also don't think they're expensive," Warne said. "Historically, when the price-earnings ratio has been in that range, returns over the next year have been around 7 percent. That's not bad."
Bond prices fell. The yield on the 10-year Treasury note rose to 2.39 percent. U.S. crude for October delivery rose 51 cents to $93.86 a barrel. In metals trading, gold rose $6.30 to $1,285.20 an ounce, silver rose three cents to $19.39 an ounce and copper fell three cents to $3.19 a pound.
Among the stocks making big moves Tuesday:
Amazon (AMZN) rose 2.3 percent after saying that it would buy video streaming company Twitch for $970 million. The stock climbed $7.81 to $341.83.
Best Buy (BBY) fell $2.19, or 6.8 percent, to $29.80 after the electronics retailer reported that its fiscal second-quarter net income plunged 45 percent as sales weakened.
Orbitz (OWW) fell 4.6 percent after American Airlines and US Airways disclosed they are pulling flight listings from the site because they have not been able to reach agreement on a long-term contract with the travel booking website operator. Orbitz shed 39 cents to $8.04.
What to Watch Wednesday:
These major companies are scheduled to release quarterly financial statements:
Whether you're a parent wanting the best for their children or a student hoping to launch a dream career after college, you've likely spent a lot of time thinking about choosing the right college. Even though tuition is getting more and more expensive (consistently exceeding the rate of inflation), a college education still provides the best chance for employment in "the real world." College grads are much more likely to have jobs and earn more money than those without degrees.
Given that, you might expect that the more exclusive and prestigious the college you attend, the better your chances for increased success. But given the enormous and growing burden of student loan debt on recent grads, it's reasonable to ask: Are private colleges really worth their expensive tuition?
What You Pay for at Private Colleges
There are no blanket rules for colleges, but in general, higher-priced private colleges offer benefits that public schools don't provide.
Class sizes are usually smaller, which means students receive more personal attention. This can make a big difference for students who are highly engaged -- and even more so for students who might struggle without enough one-on-one time with professors and advisers.
Instructors at private colleges spend less time on research, which gives them more time for students. Fewer courses are taught by grad students. And the campus community as a whole is often more close-knit, with lots of support for current students, new graduates and alumni.
But all this is not to say these value-added aspects can't be found at public (or less expensive) schools. Parents and students should examine potential universities individually.
What to Consider When Choosing a School
Your degree is a tool you will use after graduation to launch you into a career (hopefully in a field you want), so it's tempting to think that the better the reputation of the university that degree came from, the better your chances are of securing your dream job.
This is not the most important rule. It's much more important that you consider the degree you want and then choose a school that specializes in that field or offers a degree program that's recognized as excellent in that particular industry.
For example, New York University is a private college known for film studies and the performing arts. If you're interested in pursuing a career in one of those areas, NYU might be a wise investment. However, consider the amount of debt you'll have to take on to get a degree from that school. (In 2011, it averaged more than $33,000.) If you want a career in the arts, starting off free of college debt might make it far easier. You'll be able to take a lower paying position in the field you love because you won't have high student loan payments hanging over your head each month. (I learned a lot of valuable skills as a theater major, but I did so at a public university.)
If you want a more general degree -- such as teaching, marketing or English -- it might make more sense for your career -- and your personal finances -- to choose a public university known for having excellent professors in that department.
Digging Down to the Good Stuff: Potential Earnings and ROI
Finding a school that provides a good fit for you and your future career is important -- but we can't ignore the money. Is there any truth in the belief that a private school's prestige and education leads to a better return on investment? In other words, do private schools set up graduates for higher future earnings? Again, much depends on the degree you want. You need to align your college choice with your career goals.
If you want to pursue engineering, for example, the three schools ranked for highest return on investment are all public universities. Payscale.com takes almost 3,000 words to explain its methodology, but the key is this: "The investment is the cost of college as determined by the actual cost of attending college. The return (gain) is the additional expected future income stream received for being a college graduate." While private engineering schools do offer positive ROI, many lag a few percentage behind their public counterparts. The same goes for research schools. Of the top 10 schools that provide the highest ROI, number one and number two were public universities. (The state school ranked with the absolute highest ROI? Georgia Tech.)
On the other hand, private business school and private liberal arts colleges are most likely to provide the highest ROI in their respective specialties. And none of the private schools listed in Payscale's data showed negative returns. The lowest reported was around 3 percent and showed up in the category that collectively had the lowest ROIs: art schools.
If a private university is something you can afford, your future career is unlikely to be hurt by your prestigious education. But it's not the sole determining factor in your earnings potential after graduation.
You Determine the Value of Your Experiences and Education
Students have a lot of say in the value they receive from their education, no matter what school they graduated from. This is good news, because it means you don't have to pony up hundreds of thousands of dollars to succeed after college. But it also means that it's your responsibility as a student to make the most of any college education. You have the power to make decisions to increase the return on your financial investment.
Show up to class ready to learn something that increases your marketable skills and abilities. Volunteer in groups or clubs on campus to broaden your experience. Manage free time wisely, and use some of it to intern or work a paying part-time job in your career.
As a financial planner, I've worked with millennials across the country who are stressed out about their high student loan debts, and who wish they'd gone to less expensive colleges. I have yet to speak to one who said they wished they'd gone to a more expensive college -- regardless of prestige-- and graduated with more student loan debt.
The bottom line: A private, expensive education isn't required for success. What you do with the education you earned -- wherever you earned it from -- is a crucial factor in determining how well you do in life after college.
Sophia Bera is a virtual financial planner for millennials and the founder of Gen Y Planning. She is location independent but calls Minneapolis her home. Do you want to be better with your money than 90% of your friends? Then sign up for the Gen Y Planning newsletter for this awesome guide - FREE!
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Many Americans have traditional Individual Retirement Accounts, where your annual contributions are reduced from your taxable income, yielding a tax deduction now, but your withdrawals are taxed. And many also have Roth IRAs, where the money you invest is taxed normally in the year you deposit it, but the profits grow tax-deferred and can be withdrawn tax-free after you retire.
The two options raise the obvious question: Would you rather pay tax on the seed money now or the crop of money later? This point has been debated for years, but for this post we are going to assume you would rather pay the known tax now vs. an unknown tax later.
Many people with traditional IRAs also open and fund a Roth IRA. But, if you'd like, you can convert a traditional IRA into a Roth account. Taxes are due on any amount you convert. The benefits of conversion:
As great at these benefits are, a conversion may not be for everyone. The longer you have until the money is needed, the better a move conversion can be. Get advice from a professional, input your data into one of the many software programs designed to calculate the costs and benefits, or email me for a free customized analysis.
Partial Conversions Can Be Powerful
Many people don't realize that they can convert just a portion of a traditional IRA. If you combine the partial conversion with certain financial products, your tax burden can be lessened dramatically.
Let's assume you have $400,000 in a traditional IRA and your effective tax rate is 20 percent.
You initiate a partial conversion of $130,841, which would mean you have to pay $26,168 in taxes. This gives you $104,673 for your Roth account and leaves you $269,157 in your traditional IRA.
You could elect to combine the conversion with a rollover into a solid fixed indexed annuity that offered a initial premium bonus. If you roll over your $269,159 traditional IRA into a product that gave you a 7 percent premium bonus and did the same thing with your new Roth account with a balance of $104,673 after taxes, then you would receive a $26,168 bonus that would put your starting balance of your combined IRA accounts back to the original $400,000 before the conversion.
The difference is that now $104,673 is now tax-free and not just tax-deferred. Assuming a modest 5 percent growth rate inside of both accounts, after just 10 years, you would be $43,785 ahead with this strategy than if you just let your traditional IRA stand. In 20 years, you will have over $83,000 more in your combined accounts (even after factoring in the taxes on your traditional IRA) than you would have had without the conversion.
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According to his death certificate, my dad died of myocardial infarction, otherwise known as a heart attack.
His health had been deteriorating for some time, so it wasn't a total surprise. He gained weight and was diagnosed with Type 2 diabetes. He had two bypass surgeries -- one triple, one quadruple. It wasn't hard to understand why he had heart problems. His diet was unhealthy; he didn't get enough exercise; and he was constantly under stress.
We thought there wasn't much any of us could have done. In retrospect, there was one area where I might have been able to help, though at the time I didn't think about it in those terms. His financial health deteriorated more than his physical health, and that was one of the primary sources of stress.
It Wasn't His Heart Alone That Killed Him -- It Was His Debt
My dad racked up credit card debt faster than a NASCAR driver at Daytona, and he never could get his spending habits in check. Just as you can spot the indicators of heart trouble, there were plenty of signs something was wrong with his finances.
He took cash advances on one card to make payments on another. He took out a second mortgage just to make minimum payments on his credit cards, all of which had interest rates in the 20 percent to 30 percent range. He constantly worried about how he would scrape together enough money to pay his bills.
I saw the stress of his debt weighing on him. I have no doubt much of the reason he gained so much weight in the first place was because he was gravitating toward unhealthy comfort food to help him forget the stress, and the emotional drain from constantly worrying about money robbed him of the initiative to exercise.
One of my biggest regrets, which I shared in my book "Soldier of Finance," is that I never had the courage to confront my dad about his debt. I think somehow I believed things would just work themselves out. They didn't.
If you know someone who is struggling with debt, there are signs that you can watch for -- and things you can do. Here are three indications that they are headed for unnecessary and dangerous stress.
1. They're Constantly Fretting About How They Will Pay Bills
You can tell when it has become a problem for someone you know. For one thing, it creeps into their conversation. They begin making comments that allude to their desperation. Watch for other signs. I can remember walking into my dad's house and seeing a list of credit card debts next to his computer. It was clearly on his mind. Worry is difficult to hide.
2. They Use Credit to Pay for Credit
If someone is using one credit card to pay the minimum payment on another, or taking out a cash advance on a card to make a payment, there are multiple problems. First, making minimum payments doesn't usually reduce the balance on a card in any significant way. The lion's share goes to paying interest. By using another card to make the payment, you're only adding to your total debt, making future minimum payments even higher. It's a no-win cycle.
3. They Frequently Borrow Money -- Sometimes From You
When they ask, it always sounds like an opportunity for you to help. The loan will solve their problems and take the pressure off by allowing them to consolidate their bills into one payment, which will allow them to return your money to you. The problem is that it never works out that way.
I once loaned my dad $8,000 to help him pay off some debt. Not only did he run up new debt as fast as he paid off the old, but when he realized that he couldn't pay me back, he took out a life insurance policy with me as the beneficiary. Instead of eliminating debt, he added another monthly payment.
If a close friend or relative exhibits these symptoms, there are things you can do. Here are three suggestions to get you started:
1. Gently Confront Them With Your Concerns
Do your best to keep from sounding judgmental by emphasizing that you are concerned about the stress their financial habits put on your relationship, and more importantly, the danger to their health. It won't be easy, but if you really care about them, be honest with them.
2. Stop Enabling
When my grandmother passed away, both my dad and I inherited some money. True to form, dad wanted to borrow my share to pay off his debts and planned to pay me back in monthly installments. My girlfriend -- who later became my wife -- confronted me the way I should have confronted my dad. "It won't help him, and it won't help you," she said bluntly. She was right, and I knew it. It was the first time I ever told my dad no, and it was the hardest thing I ever had to do, but it had to be done, for his sake and for mine. Learn to say no. Don't even agree to co-sign a loan. You'll only add to the problem.
3. Offer Real Help (Not Loans)
This might be as involved as sitting down with them and helping organize bills, develop a plan for debt reduction and help them stick to it. But at the very least you can introduce them to a financial adviser to help them get things under control. Above all, offer your encouragement and support. Changing lifelong habits is never easy, but it can be done.
I wish I had spoken to my dad early on. I never did, but I believe I have learned from both of our mistakes. I hope you will, too. Don't wait or sit back silently, hoping something will change. Become an agent of change. When you see the warning signs, speak up.
You would think Burger King's decision to buy Tim Hortons (THI) for $11 billion and move its headquarters to Canada would spark national outrage and move the debate over tax inversion deals to the proverbial front burner.
But you would be wrong. So far the deal has been met with a proverbial shrug.
The White House, which has promised robust action to stop inversion deals, has so far had very little to say about the transaction. White House Press Secretary Joshua Earnest wouldn't comment on the Burger King (BKW) deal. Instead he offered the standard boilerplate that Treasury is "considering a range of administrative options that are available to the administration to make those kinds of financial transactions less appealing."
Nothing stirs the hearts of voters like "a range of administrative options."
Earnest also once again called for comprehensive tax reform and, barring that, a one-off legislative fix to somehow bar inversion deals.
There has also been little evident outcry from members of Congress over the Burger King deal. Granted, Congress is out of session (one wonders if this is why the deal was announced now), so there is limited opportunity for members to step to microphones and rip Burger King as a corporate "deserter."
But there could still be a chorus of presidential hopefuls weighing in or press releases flowing out of congressional district offices demanding that the home of the Whopper remain the United States. None of that seems to be happening.
And the deal, which is about more than just lowering Burger King's effective tax rate, also has the blessing of Warren Buffett's Berkshire Hathaway (BRK-A) (BRK-B), which is providing $3 billion in preferred equity financing.
Close Obama Ally
Buffett is generally a close ally of the Obama White House. He has pushed hard for setting a minimum tax rate for millionaires, so much so that the proposal is now known as the "Buffett rule" and is regular feature of Obama's rhetoric on fairness in economic policy.
People close to the administration say the refusal to comment directly on the Burger King deal should not be taken as any indication of backtracking on making inversions a big piece of the fall economic agenda. They say to expect some kind of executive action proposals by October, in time for the November elections, where Democrats view economic patriotism as a winning issue.
An administration official said in a statement Tuesday: "As we have said, we are not privy to the details of individual companies' plans and are not in a position to comment on reported, potential business transactions. But let's be very clear: the president believes that as a general matter, it is not right that some large corporations are able to exploit a loophole in the tax code despite having the bulk of their operations based in the United States."
And that is really the big question on inversions: Is it really a policy issue the White House and Democrats expect to address in the near term or is it just convenient rhetoric they think can isolate Republicans as defenders of corporate tax dodging?
Buffett appears to think it is the latter, though one assumes Berkshire is protected if Congress somehow passes retroactive legislation barring inversion deals or the White House manages to foil them through its wide latitude to make administrative changes through the tax code.
On the question of congressional action before the midterms, expert opinion is generally in lockstep: No chance. There are very few legislative days left before Congress adjourns to campaign full time. And they will be packed with efforts to keep the government funded for the rest of the year and deal with other must-pass legislation.
And while many Republicans support some kind of effort to deal with inversions there is no bipartisan agreement on the way forward. The GOP can line up behind Sen. Orrin Hatch's efforts (which wouldn't be retroactive) and say they want to do something about inversions but Democrats won't listen to reason.
So for now, inversion transactions seem safe from congressional action. That doesn't mean they are safe from Treasury, which could take many moves to try and mitigate or eliminate the tax benefits of inversion deals. But will they?
Keeping Tight-Lipped
The administration is very tight-lipped about where these proposals stand and critics say the heated rhetoric is mainly aimed at discouraging more of these transactions from taking place. If that's the intent, the Burger King deal suggests it's not working.
And any of the fixes the White House comes up with will likely both enrage Republicans and drive up rhetoric that Obama is abusing the powers of his office, helping lift GOP turnout in midterms in which the Democrats' Senate majority is at serious risk. There will likely also be court challenges.
Of course, unilateral action on inversions could also boost listless Democrats eager to see more confrontational action from the president.
There is also the very serious matter of unintended side effects if Treasury tries to punish companies that ship U.S. earnings abroad and load up their domestic units with debt. Would this move impact debt held by companies that haven't inverted? The mechanics of dealing with inversions through executive actions are fraught with potential landmines, making it even harder for Treasury to meet politically expedient deadlines for providing the president with options.
And if Burger King going to Canada doesn't get people more fired up about the issue it's hard to see what will.
Ben White is Politico's chief economic correspondent and a CNBC contributor. He also authors the daily tip sheet Politico Morning Money. Follow him on Twitter @morningmoneyben.
Durable goods orders for July were reported Tuesday morning. Regardless of the headlines, this is one of the most volatile readings from month to month. The July reading for durable goods orders is 22.6%, a huge increase from the June reading of 0.7% (which was revised up to 2.7%). If the headline number sounds shocking, there is a reason — this was the highest reading in about 20 years. Still, do not let the headline number fool you.
The Conference Board has released its reading on Consumer confidence for the month of August. This is much broader than the recent consumer sentiment reading. Tuesday's headline reading "Improves Again" may be a bit of a severe understatement.
For many of us, outlet stores are a great way to get name-brand products at super-discounted prices, but what kind of quality are you really getting for your money? Here are some tips to keep in mind.
As a teenager in the 1960s, Lewis Bratcher would devour stories in Life magazine about Alaska and dream of visiting America's last frontier.
