Mom Brands Becomes Just Another Part of a Big Company

February 23, 2015, 10:00 pm

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Filed under: Company News, Earnings, Mergers & Acquisitions, Food & Beverage

Don't look now, but your "shopping list" of choices at the grocery market has gotten a little bit smaller.

Post Holdings (POST) -- the packaged foods conglomerate responsible for such cereal offerings as Grape Nuts, Honeycomb and Honey Bunches of Oats -- expanded its portfolio by one more cereal brand last month. Its $1.15 billion purchase of privately owned cereal maker Mom Brands ended the 95-year history of one of Minnesota's oldest family-owned companies, and one of the rising stars of the natural foods movement.

New World Order (of Food)

Not everyone's thrilled with this development. Last week, a coalition of consumer advocates groups urged the Federal Trade Commission and states' attorneys general to investigate this merger, arguing that if Post is allowed to swallow Mom, "the four largest firms [will sell] nearly 90 percent of all cereal" in the U.S. The situation's even worse than that, though.

Currently, just 10 big food companies (collectively, let's just call them "Big Food") own essentially all the brands of soda, cereal, cookies, crackers, soaps, shampoo, cosmetics and cat food -- really, everything you buy at the grocery store in an ordinary week. Their names:

• Coca-Cola (KO).
• General Mills (GIS).
• Johnson & Johnson (JNJ).
• Kraft (KRFT).
• Kellogg (K).
• Mars.
• Nestle (NSRGF)
• Unilever (UL).
• PepsiCo (PEP).
• Procter & Gamble (PG).

As for Post, even after gobbling up Mom Brands last month -- and Michael Foods (eggs derivatives) last year and Hearthside Foods (organic cereal and granola), Dakota Growers (private-label pasta), Attune Foods (organic cereal) and Premier Nutrition (protein bars and liquid vitamin supplements) the year before that -- it still doesn't make it into the 10 Big Food companies. Post's $3.2 billion in trailing sales are barely a fifth of what Kellogg sells in a year, and less than a fifth of what General Mills grosses (according to data from S&P Capital IQ). Adding Mom to the mix will push Post up to about $4 billion.

Mom Was One Sharp Cookie at the Grocery Store

Despite its small size, "Mom" (which adopted this family-friendly moniker in 2012 -- perhaps realizing that its old name, "Malt-O-Meal" sounded a bit too 1920s), had been a bit of a thorn in the side of Big Food. Mom's claim to fame, you see, was putting out "look-alike" cereals that stole sales from larger cereal makers. For example:

• Kellogg's Frosted Mini-Wheats became Mom's "Sweetened Wheat-fuls."
• General Mills' Cinnamon Toast Crunch met its match in Mom's "Toasted Cinnamon Squares."
• And Kellogg's Froot Loops were beset by Mom's "Tootie Fruities" -- a cereal that Mom's hometown newspaper, the Minneapolis Star Tribune, called a "dead ringer" for the kid favorite.

Worse, by eschewing most advertising and relying on word of mouth to sell its products, Mom kep prices far below the industry average for boxed cereal. At our local Kroger (KR), for example, Mom's cereals could often be found selling for less than $2 a box, and sometimes for less than a dollar!

And adding PR insult to financial injury, every box of cereal sold came with Mom's "Simple Goodness" boast, that it contained "no artificial preservatives, high fructose corn syrup or hydrogenated oil" -- and was produced "using renewable wind energy."

Result: In no time at all, Mom's transformed itself into "the leader in the [cold] cereal value segment" (according to Post's own press release announcing the deal), controlling an 18 percent market share nationwide, selling $760 million worth of cereal a year and bringing in roughly $120 million in earnings before interest, taxes, depreciation and amortization annually. All of which put Mom's squarely in Post Holding's crosshairs.

Wave Goodbye to Mom

Announcing the acquisition last month, Post CEO Rob Vitale highlighted the merger as ending "a century of spirited rivalry between Mom Brands and Post." Henceforth, Post says it will be "combining our strengths" -- but it will also be cutting costs.

Elaborating on the financial details that will follow the merger, Post noted that it hopes to help pay for its $1.15 billion acquisition by squeezing out "$50 million in run-rate cost synergies" from Mom Brands. These could include savings on:

• "Infrastructure rationalization" (closing factories and laying off production workers).
• "Shared administrative services" (laying off office workers).
• "Improved leverage within the combined sales force" (laying off salespeople).

Real moms can only hope that Post will stop there, and not proceed to cutting any "costs" that went into making Mom Brands a quality product in the first place. Post says it will merge Mom Brands into its Post Foods division. But Post did not say if this might entail other cost cutting (doing away with purchases of renewable energy, for example).

What is certain, though, is that Big Food just got a little bit bigger.

Motley Fool contributor Rich Smith is hoarding a last few boxes of pre-Post Mom cereal -- just in case. He has no position in any of the stocks mentioned, however. The Motley Fool recommends Coca-Cola, Johnson & Johnson, PepsiCo, Post Holdings and Procter & Gamble. The Motley Fool owns shares of Johnson & Johnson, PepsiCo and Post Holdings and has the following options: long January 2016 $37 calls on Coca-Cola and short January 2016 $37 puts on Coca-Cola. Try any of our Foolish newsletter services free for 30 days. To read about our favorite high-yielding dividend stocks for any investor, check out our free report.​

 

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Doctors on Demand: Affordable and Getting More Popular

February 23, 2015, 10:00 pm

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Filed under: Health Care, Healthcare Industry, Health Insurance

By Sharon Epperson

Paying for concierge health care -- no longer a just a perk for the super rich -- is growing in popularity. With rising out-of-pocket costs, higher deductibles in their health plans and fewer doctors in provider networks, many consumers want to take more control of their health care. As a result, they are willing to pay a fee for immediate access and longer visits with their primary care physician.

Concierge doctors vary widely in terms of services offered, and several cost a pretty penny. Some high-end practices may charge a retainer fee of $5,000 a year or more for ongoing health management, certain testing and coordination of care with specialists. Other concierge doctors will guarantee timely access for just $60 a month. The majority of concierge physicians charge $135 to $150 per month for basic and preventive care, said Michael Tetreault, editor of Concierge Medicine Today.

There are more than 4,000 concierge doctors in the U.S. today, and 8,000 more are engaged in some type of membership or retainer medicine, where patients pay a fee for specific services, Tetreault said. Concierge Medicine Today allows you to search for doctors currently accepting new patients on its website. You can also find concierge doctors in your area through the American Academy of Private Physicians. There are three ways to figure out if a concierge doctor may be right for you.

1. Seeing a Doctor More Frequently

Financial adviser and physician Carolyn McClanahan says it's critical for people to first determine their "health care personality" before choosing a physician. "Do you want quick access to the doctor? Do you feel like you need to go all the time and that you need specialized services that having a doctor hold your hand constantly will help you with?" she asked. "If that's what you want, then concierge medicine is likely for you," said McClanahan, founder of Life Planning Partners in Jacksonville, Florida.

2. Limitless Access, Longer Visits

With this option, you'll often get more personalized care with a concierge doctor who you can email, text or call at any time. "If you're not feeling well at 8 p.m., you don't have to wait until morning to see me," said Dr. Ken Redcross, an internist in Eastchester, New York, who started a concierge practice in 2007.

Appointments can last longer -- 30 minutes or more on average -- because instead of seeing 3,000 to 4,000 patients, concierge doctors usually limit their practices to a few hundred. "Patients want to get to know their physicians and more important people want their physicians to get to know them," Redcross said. "When you have access and the doctor gives you the time, people feel empowered."

3. High-Deductible Plans

Most concierge physicians accept insurance, but paying a retainer in addition to insurance premiums may seem to some consumers like they're paying twice. However, if you make some changes to your existing insurance plan, you may save money, Tetreault says.

You could have a high-deductible health insurance plan that's paired with a health savings account. With a higher deductible, you'll have lower premiums. You can put the money that you save on premiums in a tax-exempt health savings account. Those funds can be used for any expense that is directly related to a qualified medical service that has been provided -- including some fees paid to the concierge practice.

 

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How I Learned to Be Happy, While Living Beneath My Means

February 23, 2015, 10:00 pm

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Filed under: Personal Finance, Education

I'm a professional finance writer. A lot of my time is spent learning, writing, earning, and thinking about money. In the few years since I've started this career, money has been on my mind quite a bit.

But after awhile, I started to wonder more and more about these questions: Why do I want money? What do I want from it? Now that I've started building wealth in a real way, I have been able to answer these questions for myself. And I've come to a surprising conclusion: Money doesn't buy happiness, but money has taught me to be happy.

To turn my financial life around, I had to make some sacrifices. When I got my degree, I was in debt up to my eyeballs. It wasn't a shocking amount of debt by some standards, but I also wasn't making much money. So I was barely able to cover the minimum payments on my debts, and I didn't have so much as a budget to regulate my general spending. Basically, I was all set to be paying off my debt for decades to come, remaining poor all the while.

I ended up changing all this, but to kill of my debt, I had to change my whole lifestyle. In doing so, I made the surprising realization that I felt happier and less anxious, almost all the time. Here are some ways that learning how to manage my money resulted in more happiness. I think it'll work the same way for you.

Living Beneath My Means Changed My Priorities

​Suddenly, I couldn't spend money on whatever I wanted to. When I made my first budget, my daily life started looking a little different. No more eating out for most meals. No more big bar tabs two or three times a week. No more fancy car that I couldn't afford.

I realized that I spent most of my spare time paying to entertain myself -- to consume. Being a consumer is expensive. We go into debt living the consumer lifestyle, and by endeavoring to live beneath my means I had to change this.

I had to learn how to cook food that I enjoyed (a skill that has paid off for me and my girlfriend many times over). I had to start getting around on a bike, a change that got me a lot fitter (and I believe helped me finally quit smoking). I had to quit the habit of going to see movies whenever I wanted and start finding stuff to do at home. This contributed to a lot of learning in the form of reading -- learning that formed the foundation to my new career.

Living Beneath My Means Gave Me Motivation

So I finally started paying off my school loans and other debts a lot faster. I also started saving too, and I saw what a difference savings made to my general state of mind. Suddenly I had money in case of an emergency. I had funds that were gradually growing, that I could use for important things like buying a house. I quickly saw that simply by earning more money, I could reach these goals even faster.

This is when I started my business, a decision that has changed my life for the better in many ways. Doing so was hard, and I had to spend a lot of time figuring it out. But the time investment kept me from spending money on other things, so as I grew my business my savings grew as well.

For a period of about eight months, I worked about 80 hours a week. During this time, I was able to devote sufficient resources to my loans that I was able to pay them off in less than a year. I never would have dreamed that this was possible before. With my debt paid off, I have been able to initiate several investments that will make a big difference in my life for years to come.

Frugality and Creativity

I'm not telling you about these experiences to brag. I think that a frugal lifestyle is important. It's about pursuing your passions with creative energy, not funding the consumer lifestyle with every dollar you earn.

When I was in my early 20s, I had no sense of my life's direction. But today my personal relationships are solid, and I feel like I know where my life is going. I think that the single most important aspect of personal finance is a change of priority. Living beneath your means, without going crazy from boredom or culture shock, requires you to make important, positive changes in your life.

In conclusion, this path I've chosen isn't about money. Prosperity is a byproduct of living a life I enjoy. You have to look in the mirror, make life adjustments and plan for the future. But I'm here to say it's worth it.

 

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3 in 8 Americans Live on Edge of Financial Disaster

February 24, 2015, 12:34 am

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Filed under: Family Money, Personal Finance, Emergencies, Debt Assistance, Financial Education

Americans feel the most financially secure that they have in four years. But the good feelings stand in contrast to the reality that 37 percent are on the "edge of financial disaster", according to a statement by Bankrate.com Chief Financial Analyst Greg McBride.

A new Bankrate.com-commissioned poll of 1,003 adults with a margin of error of plus or minus 3.7 percentage points showed that when it came to financial basics, 37 percent of Americans had no net resources to deal with an emergency. Twenty-four percent had more credit card debt than they had emergency savings and another 13 percent had no savings. At least the latter had no credit card debt in addition.

Adults between the ages of 30 and 49 were in the worst shape, as 32 percent of them had more credit card debt than savings. Only 21 percent of those under 30 and 14 percent of people 65 and older had more debt than savings. Those same two groups tended to have more savings than debt.

The group most likely to have neither credit card debt nor savings was those with the lowest income. Of those making less than $30,000 a year, more than 20 percent had neither debt nor savings. Only 5 percent of those making at least $75,000 were in a similar situation.

When asked how they felt about the amount of savings they had compared to a year ago, 47 percent said the same, 22 percent said more comfortable, and 28 percent felt less comfortable. Among unemployed workers, a third felt less comfortable, compared to 25 percent of those with jobs. Thirty-seven percent of those making between $30,000 and $49,900 a year felt less comfortable versus 21 percent of those making $75,000 or more.

People Still Feel More Confident

And yet, the savings picture is actually an improvement and part of a more optimistic sense about financial security. Bankrate's financial security index reached, at 104.8, the highest level it has in its four-year history, beating a previous high in January. Any figure above 100 shows a sense of increased financial security over the past 12 months.

Twenty-four percent of respondents felt more secure in their jobs, 63 percent felt the same, and 12 percent felt less secure, with 1 percent either uncertain or refusing to answer. Fifty-two percent felt the same as they did 12 months ago about the amount of debt they had while 29 percent were more comfortable and only 17 percent were less comfortable. So even if savings were a little more negative, improvement in the debt picture apparently more than made up for it.

However, the picture is more strained for those between 50 and 64. As they near retirement age, 25 percent felt less comfortable with their amount of debt. That compares to 12 percent of millennials and 17 percent between 30 and 49.

Also, 28 percent of people said their net worth was higher, 56 percent said it was the same, and 13 percent described it as lower.

 

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12 Staples Every Frugal Woman Should Have in Her Closet

February 24, 2015, 1:00 am

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Filed under: Careers, Shopping, Apparel, Clothing & Accessories, Saving

You don't have to spend a small fortune every year to build a wardrobe that feels trendy and looks good in any situation. Purchase a few timeless, classic staples, and you'll have a closet that will stand the test of time (and save you mucho dinero).

Here are 12 wardrobe staples that will carry you through every season, along with examples to give you an idea how much this super wardrobe will cost you.

1. Well-Tailored Black Pants

A pair of flattering, pressed black pants can be dressed up for work, classed up for drinks or dressed down for weekend shopping. Opt for slim or straight-fit for a look that won't go out of style. $59.98 from macys.com (M).

2. Classic Coat (Trench Coat or Pea Coat)

A timeless trench coat or pea coat can keep you warm from fall through spring, is versatile enough to be worn at the workplace or while hanging out with friends, and fits in whether you're going somewhere dressy or low-key. Choose a neutral color -- such as black or tan -- so you can switch it up with accessories, such as scarves. $99 on Amazon.com (AMZN).

3. Dark Wash Jean

A dark wash jean can be dressy, casual and slimming. Add a blazer and heels for a girls night out or to dress casually for a conference, or sneakers and a cardigan for running errands. Conduct a little research to find a classic fit that flatters your shape, like bootcut or straight, rather than opting for today's super-tight jeggings trend. $24 from Aeropostale (ARO).

4. White Button-Down Shirt

Every professional wardrobe should have a white button-down shirt. You can wear it by itself, under a blazer or cardigan or even layer it under a little black dress for colder weather. Opt for a long-sleeved shirt with sleeves that can be casually rolled up if needed. Double bonus if you can find a "no iron" shirt, like the one in our example. $39.99 at kohls.com (KSS).

5. Comfy (But Stylish) Pair of Sneakers

When you're just kicking around on the weekend, you might want a good pair of sneakers, but don't pick ones that make you look sloppy. Stay away from trendy looks that will be out of style soon, as well as overly athletic-looking sneakers that make you look like you just came from the gym, and stick with a cute but classic pair like the one in our example. They start at $40 on Amazon.

6. Little Black Dress

It's a closet cliche for a reason; the classic LBD never goes out of style and gets a ton of mileage. It's suitable for black tie affairs, cocktail parties, first dates and professional events. Find one in a simple pattern and a style that works for your body -- our example is a fit and flare, which is especially flattering on curvy shapes. $44.99 from gap.com (GPS).

7. Black Pencil Skirt

Flattering for any shape, a black pencil skirt is sleek and professional and can be paired with a ton of different tops. Go for one that hits just above your knee. $31.99 from talbots.com.

8. Cardigan

A cardigan can double your wardrobe options instantly and can be layered over everything from tees to dresses. Buy a couple in neutral colors, like white and black, and one that provides a bright pop of your favorite color, such as pink, blue or red. They're $19.94 each at Old Navy, or $59.82 for three.

9. T-Shirts in Neutral Colors

Another layering essential, simple, one-color tees can be worn by themselves or under other pieces. Like cardigans, get a few that will go with everything, like a white, a gray and a color of your choice. The cut is up to you -- you can do scoop or V-neck, depending on which look you like better. They're $9.99 each at T.J. Maxx (TJX), or $29.97 for three.

10. Well-Structured Blazer

Not just for the office, a well-fitting blazer can instantly make any outfit look polished, even if you throw it on over a T-shirt and jeans for brunch or a casual date. Black, navy blue or dark gray are your best options here in order to create the most possible outfit combinations. Pair it with a wide bracelet for a more youthful, modern look. $34.95 on H&M's website.

11. Comfy Pair of Flats

Look cute and feel comfortable simultaneously with a classic pair of ballet flats. These shoes instantly add style to casual outfits, especially jeans, and pair with everything from jeans to dresses. They're appropriate for working at the office, running errands or even hitting the town. $44.99 at Famous Footwear.

12. A Great Pair of Boots

You can choose from an endless array of boot styles, ranging from dainty stilettos to peep-toe summertime booties. While you can pick whatever type of boot you prefer, we will note that leather or suede riding boots are suitable for a wide array of occasions -- ranging from running errands to hanging out with friends -- and tend to weather the fluctuating trends well. Whatever style you choose, make sure it pairs with everything from jeans to dresses and that it's comfortable enough for daily use. $39.99 on jcpenney.com (JCP).

And the Total Is ...

The grand total for our hypothetical wardrobe comes to $549.67 -- and that's a one-time cost. You can update this wardrobe each season with fresh accessories like jewelry, scarves and handbags, but you've got enough with these pieces to create a variety of looks for a variety of occasions year-round, year after year.

And the best part? You've now got a simple, streamlined closet where everything goes with everything else. No more staring at a ton of less-than-great options every morning wondering what to wear-just mix and match these pieces and you'll always look pulled together in a flash!

Paula Pant ditched her 9-to-5 job in 2008. She's traveled to 32 countries, runs a popular finance blog and is a successful real estate investor. Her blog, Afford Anything, is the groundswell of a rebellion against stodgy, uninspired financial advice. Afford Anything shows you how to crush limits, create wealth and maximize life.

 

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Think Twice Before Returning Items to These 5 Stores

February 24, 2015, 1:00 am

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Filed under: Retail, Consumer Ally, Shopping, Consumer Issues

By Maryalene LaPonsie

How many times have you skipped the dressing room, figuring you can always return what doesn't fit? You might want to rethink that shopping strategy at some stores.

We've told you about the stores with the best return policies, and now it's time to unveil the lemons. Here are five stores that may go so far as to ban you for making too many returns.

1. Amazon (AMZN)

For most items sold by Amazon, the online retailer gives you 30 days to make a return. Miss that window, and your refund could be docked by 20 percent of the purchase price. Take the plastic wrap off DVDs, CDs and games, and your refund drops 50 percent. And don't even think about returning opened software. You won't get anything for that.

All that may be within the realm of the reasonable, compared with other store return policies. What may be more concerning for shoppers is the number of people who say they've been banned from Amazon for what the store deems to be excessive returns. The store doesn't say anything about banning customers in its posted policy, but it apparently closes your account when you hit a certain percentage of returns.

2. Best Buy (BBY)

The electronics giant made it onto Consumer Reports' "Naughty List" for the 2013 holiday shopping season because of its return policy. The store requires a valid ID to make a return or exchange and then tracks that information.

The company warns in its return policy: "Based on return/exchange patterns, some customers will be warned that subsequent returns and exchanges will not be eligible for returns or exchanges for 90 days." Beyond that, Best Buy gives customers a tiny window to make returns, only 15 days for customers who aren't My Best Buy Elite or Elite Plus members.

3. Saks Fifth Avenue

Saks Fifth Avenue has also decided to go with a 30-day window for returns. If you try to make a late return, Saks will only credit you based on the current selling price regardless of how much your receipt says you paid. And like Best Buy, the company includes this little gem in its return policy: "To ensure a positive shopping experience for all our customers, if we identify through electronic analysis an unreasonable return pattern, we may restrict or refuse future transactions from such customers at Saks Fifth Avenue or at saks.com."

4. Lowe's (LOW)

At least Best Buy and Saks get props for being open and honest. Lowe's doesn't come right out and say it will ban customers for too many returns, but you can read between the lines in its return policy.
Lowe's stores use refund and check verification systems. All returns are subject to system approvals.
In fairness to Lowe's, news reports indicate competitor Home Depot (HD) uses the same system, and it's not stated in its posted return policy.

5. Victoria's Secret

Finally, we come to Victoria's Secret. The retailer will take returns within 90 days and issue a full refund. Not bad. Come in after 90 days, and you can expect to get a merchandise credit. Still not bad, but either way, expect to pull out your driver's license. Here's what its return policy says. "In select stores, a government-issued ID is required for all returns and exchanges. Victoria's Secret will electronically scan this ID for the sole purpose of preventing return abuse. Victoria's Secret does not sell the information obtained through this process." The store doesn't say when customers will be prevented from making future returns, but at least one employee says you get up to seven returns in a three-month period before being cut off.

The Retail Equation Connection

These five stores may be just the tip of the iceberg when it comes to tracking customers with the intent of limiting serial returners. The Retail Equation says 11 of the top 50 retailers in the United States use its services to track customer return data.

Of course, The Retail Equation doesn't give out client names, but if your driver's license has ever been swiped when you made a return, there's a good chance your data was going through the company's system. Depending on the arrangement with that particular retailer, The Retail Equation may be tracking any of this information:

• Purchase history.
• Frequency of returns.
• Dollar amount of returns.
• Whether a receipt is used for a return.

However, the company says it doesn't share information between stores. That means, for example, Best Buy won't know about your returns to Lowe's and vice versa. If you want to see what The Retail Equation has on file for you, consumers are welcome to request a copy of their Return Activity Report. You can send your request via email (ReturnActivityReport@TheRetailEquation.com) or snail mail (The Retail Equation, Box 51373, Irvine, CA 92619-1373).

Because the company tracks many people by their driver's license number, you'll need to provide that information. However, as with any sensitive data, you don't want to send that number via email. Instead, send your phone number so a company representative can call you for it.

The bottom line for shoppers is to not take returns for granted. While many businesses offer them as a part of good customer service, there is no legal requirement for a retailer to take back that maroon sweater because you decide chartreuse looks better on you. As with many things in life, it only takes a few bad apples to ruin a good thing. As long as some people continue to take advantage of the system, you can probably expect to see even more stores tightening their policies in the future.

Have you ever had a return rejected? Tell us about it in the comments below or on the Money Talks News Facebook (FB) page.

 

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Dish Breaks Some Dishes in Creating Sling TV

February 24, 2015, 1:00 am

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Filed under: Company News, Netflix, Entertainment Industry, Music & Entertainment

The biggest disruptor of the pay-TV industry may very well be one of the leading pay-TV providers being disrupted. Dish Network (DISH) rolled out Sling TV nationwide on Feb. 9, giving video buffs tiring of inflating cable bills a way out.

The online service offers live streams of several leading cable networks, including sports channels, for just $20 a month. The base package includes ESPN, ESPN2, TNT, TBS, Food Network, HGTV, Travel Channel, Adult Swim, Cartoon Network, Disney Channel, ABC Family, CNN, El Rey and Galavision. AMC Networks (AMCX) will be added to the basic plan soon.

The $5 add-ons include kids (Disney Junior, Disney XD, Boomerang, Baby TV and Duck TV) and news (HLN, Cooking Channel, DIY and Bloomberg TV), with sports coming soon (SEC Network, ESPNU, ESPNEWS, ESPN Buzzer Beater, ESPN Goal Line, ESPN Bases Loaded, Univision Deportes, Universal Sports and beIN Sports). Sling International TV covers Arabic, Bangla, Brazilian, Cantonese, Filipino, Gujarati, Hindi, Malayalam, Mandarin, Punjabi, Taiwanese, Tamil, Telugu, Urdu and Vietnamese.

The Unlikely Revolutionary

It would seem that Dish has more to lose than gain with Sling TV. It has 14 million subscribers, and the average revenue per user during the third quarter clocked in at a whopping $84.39 a month. That's a lot less than the $117.30-a-month average that satellite rival DirecTV (DTV), and Dish doesn't have as many pay-TV subscribers as cable giant Comcast (CMCSK).

Sling TV obviously doesn't offer the entire gamut of channels available through Dish, but is there enough there to get folks to settle for paying less than a quarter of what they're paying now. Thankfully for Dish, most of the subscribers will likely come from the ranks of DirecTV and Comcast subscribers. They are larger. They are, on average, more expensive.

Sling a Song

Sling TV isn't resting on its current catalog. It announced on Feb. 16 that Epix -- the movie channel with more than 2,000 movie and entertainment titles -- would be added.

In other words, it's not just live television and TV shows on demand anymore. Sling TV is taking a page out of the Netflix (NFLX) playbook by blending streaming movies and shows, and that's fitting since Netflix was also a disruptor that chose to disrupt itself before someone else did. Netflix was carving out a cozy living mailing out DVDs when it moved in 2007 to begin offering streaming on PCs.

Dish realizes that it will need more than just a great value proposition. It needs to borrow another page out of the Netflix playbook, making the offering seamlessly accessible across TVs. Netflix struck deals with the makers of video game consoles and set-top boxes, and now Dish is providing financial incentives. It's currently offering free Roku and Fire TV sticks or $50 off more advanced Roku and Fire TV set-top boxes to folks prepaying for three months of Sling TV.

None of its pay-TV peers are doing anything as disruptive as Sling TV, and that's a good thing. Instead of being a laggard in pay TV, it can be a leader in Web-based television. Well played, Dish.

Motley Fool contributor Rick Munarriz owns shares of Netflix. The Motley Fool recommends and owns shares of AMC Networks and Netflix. Try any of our Foolish newsletter services free for 30 days. Want to make 2015 a winning investment year? Check out The Motley Fool's one great stock to buy for 2015 and beyond.

 

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Americans Flunk on Their Knowledge of Tax Basics

February 24, 2015, 1:00 am

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Filed under: Personal Finance, Income Tax, Tax Deductions, Tax Laws, Financial Education

Americans are failing -- and failing badly -- in a test released today of their knowledge of how federal income taxes work. On NerdWallet's 10-question survey of tax basics, respondents scored an average of just 51 percent, a definite "F," even on a generous sliding scale.

"I don't think we were totally surprised by what we found," said Alex McAdams, a personal finance analyst at NerdWallet. "The tax code is pretty complicated, so you can't blame people for not understanding the details." Still, many respondents did not know many basic aspects of the tax code, such as if you're married, can you file separately or do you have to file a joint tax return with your spouse? The answer: yes, you can both file separately.

The survey questions focused on personal finance issues, such as Roth individual retirement account contributions, 529 college savings plans and flexible spending accounts. "The U.S. tax code confuses the average American," according to Shiyan Koh, general manager of NerdWallet's Ask an Adviser service, "and that confusion can be costly."

See How You Do

McAdams says one of the most striking examples of how people are overwhelmed by the complexity of dealing with taxes has to do with withholdings on your paycheck. NerdWallet asked: If your exemptions and withholdings are correct, your tax refund should be:

A) $2,500 or more
B) $1,500 to $2,500
C) $500 to $1,500
D) As close to $0 as possible

Most of the 1,015 adults responding Feb. 4-5 got it correct (you know it's D, right?) -- but most Americans fail to act on that knowledge. According to the Treasury Department, about 75 percent of tax filers received a refund last year and the average refund totaled $2,700. "That's basically money you are giving to the government as a free loan, money you could be investing," said McAdams.

He notes that you can change the withholding on your paycheck at any time. For example, if you have a child, you should adjust your withholding to take advantage of that extra deduction. "Getting to exactly zero can be tough, but when you look at the average refund size, there are adjustments that you can make to come closer to zero," said McAdams. He says the payroll or human resources department at your employer can often help you figure this out. "If you had either a really big refund or a big tax bill, you might need to change your withholding."

And Then What?

The apparent lack of financial education can be costly to taxpayers, but McAdams acknowledges that "taxes are a big beast of a thing" and the average person is not going to learn every nook and cranny of the tax code. However he says it is important to learn the implications of certain basics, such as the different treatment of contributions to Roth IRAs vs. contributions to traditional IRAs or 401(k) plans. The basic answer is that contributions to a Roth IRA are not deducted from taxable salary, while contributions to a traditional IRA or 401(k) are deductible. However, the Roth IRA has a big tax advantage down the road in that when it comes time to withdraw money from your account, that is done tax free, while withdrawals from the other accounts are taxable.

NerdWallet's survey is intended to help raise people's awareness and motivate them to learn more about tax issues, according to McAdams. He says taxes need to be a consideration throughout the year. "Any time I'm making a really big financial decision, it's going to have tax implications," he said, "so seek out advice." Ready to take the NerdWallet quiz?

 

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Important Tax Consequences for First-Time Homebuyers

February 24, 2015, 1:00 am

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Filed under: Taxes, Housing Market, Income Tax, Sales Tax, State Income Tax

By Hal Bundrick

Low interest rates and tax breaks are rational reasons for people to move from renting an apartment to owning a home. Of course, having a place to call your own is often the overriding emotional reason that trumps all. MainStreet asked tax experts to strip away the jargon and give us the plain facts -- and some tax hacks -- for first-time homeowners.

First the bad news: one tax incentive for buying a home is no longer in play. "As a new homeowner, you might know someone who bought a house a few years ago that received the first-time homebuyer tax credit," said Jayson Mullins, CEO of Top Tax Defenders in Houston. "As of July 1, 2010 this credit is no longer available."

Mortgage Interest Deduction

But of course, there are still tax breaks -- with some fine print. The most commonly cited is the mortgage interest deduction. "There are definite advantages and deductions to owning a home -- or a second vacation home for that matter -- but mortgage interest and property tax deductions are not a 100 percent sure deduction," said Vincenzo Villamena, CPA and managing partner of the Online Taxman in New York. "They need to be large enough to be above the standard deduction, which with kids, etc., can be well over $10,000 to $15,000. Bottom line: don't buy a house just to get a deduction. It should be viewed as a long-term investment in one's future, not a tax planning tool."

Gabe Lumby, a CPA in Springfield, Missouri, agrees that "people get all worked up" about the mortgage interest deduction but reminds us that the Internal Revenue Service allows taxpayers to take the higher of the standard deduction or itemized deductions. The standard deduction for 2014 for single taxpayers is $6,200 and for married joint filers $12,400. For some, that can be a high hurdle to clear.

"We own our own home but the mortgage interest, plus our real estate, personal property, and sales taxes, plus our medical expenses never exceed the standard deduction," he said. He also said that itemized deductions are not tax credits -- they reduce your taxable income.

"If you are in the 28 percent tax bracket, a dollar spent on mortgage interest will only save you 28 cents in taxes, not a dollar -- most people don't get this," Lumby said. "Also, if you still end up taking the standard deduction, the mortgage interest paid does not help you at all on your taxes."

The Long Form

If total mortgage interest payments do clear that standard deduction hurdle, a taxpayer may be facing a "long form" tax filing for the first time. Tax expert and enrolled agent Steven J. Weil in Fort Lauderdale, Florida, says that can lead to some additional often-forgotten deductions.

"New homeowners are often itemizing their taxes for the first time," he said. "While they may know that they can deduct mortgage interest and real-estate taxes, they may not realize that they can also deduct the items they donated to charity, such as the appliances they replaced or the furniture they donated. A common mistake is forgetting to get receipts for these items so that they can prove the donation."

A Temporary Break

And recent action by Congress is allowing another tax break for first time homeowners, according Lisa Greene-Lewis, a certified public accountant and TurboTax tax expert. "There is an additional deduction for you thanks to the recent vote by Congress extending temporary tax provisions called tax extenders," she said. "The Mortgage Insurance Premium Deduction is a tax benefit available if your lender required you to buy mortgage insurance in order to secure your loan."

The tax pros also noted that new homeowners can often get tax credits for energy-saving improvements made to a house, such as a new boiler, insulated windows and other energy-efficient upgrades.

And When You Sell

But not all the breaks apply to just income tax. "New homeowners often spend a lot of time and money in furniture and home improvement stores so they should keep track of their sales tax as the actual amount may exceed the amount on the chart," Weil added. "Since homeowners get to deduct sales tax or state income tax, this strategy works best for those in states with low or no income tax."

And, there is also the matter of capital gains taxes; meaning, if you make money on the eventual sale of your home, you may not owe taxes on that profit - a tax break unique to homeownership.

"If you own your own home and stay in it for longer than two years, you do not have to pay any taxes on the potential gain from the sale as long as it does not exceed $250,000 for single taxpayers and $500,000 for married tax payers," Lumby said. "If you live in a part of the country with rapidly fluctuating housing costs, you can make some really good money and never pay tax on it."

And if your new home is the result of a career move, you may be entitled to yet one more tax break. "If the purchase of your new home was related to a new job, you may be able to deduct your moving expenses if your new job is 50 miles farther from your old house than the distance between your old house and old job," Greene-Lewis explained. "You may be able to deduct the cost of packing and shipping your possessions, traveling to your new home, storage of up to 30 days, and even the cost to move your pet."

 

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Hidden Household Uses of Hydrogen Peroxide -- Savings Experiment

February 24, 2015, 2:30 am

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Filed under: Savings Experiment, Home & Garden

Hydrogen peroxide is a medicine cabinet staple, but it also has a lot of surprising, money-saving uses. Here are a few you can try out today.

If you want to remove stubborn perspiration stains on your clothes, hydrogen peroxide can be a great alternative to bleach and other harsh chemicals. Simply combine one part dishwashing liquid and two parts hydrogen peroxide in a bottle and mix. Spray a good amount on the stained area, then let it sit for 30 minutes before rinsing it off with cold water. No stain, no sweat.

Hydrogen peroxide can also tackle the grime you can't see, like the bacteria on your toothbrush. The average toothbrush can be a breeding ground for germs, but with a little hydrogen peroxide you can disinfect them easily. Simply soak your bristles for a few minutes, and then rinse thoroughly with hot water. A cleaner, germ-free brush also means you won't have to buy replacements as often.

Hydrogen peroxide can also work wonders in the kitchen. Did you know spraying just a little bit on your fruits and veggies can help eliminate harmful pesticides and bacteria? Just let it sit for five minutes, then rinse thoroughly in cold water. You can also wipe down your cutting boards and counter tops to sanitize those surfaces, too.

One more thing: When it comes to these applications, it's best to use the standard 3 percent concentration of hydrogen peroxide, which you can find at your local pharmacy. Try these tips out and you might be surprised at how much you can save, one bottle at a time.

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Janet Yellen: Fed Still 'Patient' on Raising Rates

February 24, 2015, 3:45 am

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Filed under: Inflation, Unemployment Rate, Federal Reserve, Interest Rates, Economy

By MARTIN CRUTSINGER

WASHINGTON -- Federal Reserve Chair Janet Yellen said Tuesday that the U.S. economy is making steady progress, but the Fed remains patient in raising interest rates because too many Americans are still unemployed, wage growth remains sluggish and inflation is too low.

In her semiannual economic report to Congress, Yellen sought to explain how the Fed would begin raising rates from lows near zero. Its continuing use of the word "patient" means a rate hike is unlikely for at least the next two meetings, she said.

When the Fed eventually changes its language, Yellen said that won't necessarily translate to an imminent shift in monetary policy. Rather, it will indicate that the Fed can start considering rate hikes on a "meeting-by-meeting basis."

Her remarks come at a delicate time for the Fed. After winning praise for how she handled her first year as head of the central bank, Yellen is facing a tougher challenge this year. She must navigate a transition from record-low interest rates to a period when the Fed will start raising rates while trying to keep financial markets calm and maintain economic growth.

Gaining Momentum

Yellen's testimony supports analysts' view that a rate hike isn't likely before June or even later this year.

As expected, Yellen stuck closely to the views revealed by the minutes of the Fed's Jan. 27-28 meeting, in which Fed officials recognized that the economy was finally gaining momentum nearly six years after the country began to emerge from the worst recession since the 1930s.

But many Republicans have complained that the Fed's cautious approach on raising rates was increasing the risks that inflation could accelerate to worrisome levels in the future, forcing the Fed to push rates up more quickly.

What the [Fed] is thinking and how they are analyzing this very difficult problem set remains a mystery.

Senate Banking Committee Chairman Richard Shelby, R-Alabama, said in his opening remarks that too much delay in raising rates "could lead to a more painful correction down the road."

Shelby was also critical of secrecy at the Fed. He said that the minutes of Fed discussions, released three weeks after each meeting, offer too little guidance about how the Fed plans to unwind its unprecedented level of support to the economy.

"What the [Fed] is thinking and how they are analyzing this very difficult problem set remains a mystery," Shelby told Yellen. "I would argue ... that there is an even greater need now for additional oversight by Congress and further reforms" of the Fed.

Conservative Republicans in both the House and Senate have been pushing for legislation that would expand the ability of Congress to oversee Fed actions, including expanded audits of the institution. Yellen and other Fed officials have opposed this effort, saying it could compromise the independence the Fed needs to conduct interest rate policies.

In her testimony, Yellen said that since she delivered the Fed's last report to Congress in July, the employment situation has shown improvement "along many dimensions." She noted that the unemployment rate is down to 5.7 percent from a high of 10 percent in late 2009, and job growth has accelerated to an average of 280,000 new jobs created each month.

Labor Market Concerns

She said that long-term unemployment has declined substantially and fewer workers are reporting that they can only find part-time work. But balanced against those improvements, Yellen said that "too many Americans remain unemployed or underemployed, wage growth is still sluggish and inflation remains well below our longer-run objective."

One of the Fed's primary goals is stable prices, which it defines as inflation rising at 2 percent annually. But for more than two years, inflation has been rising well below 2 percent and has fallen farther from that target in recent months.

Yellen attributed that development to the big plunge in oil prices and a rising value of the U.S. dollar, which has strengthened as the U.S. economy has outperformed other countries. A stronger dollar holds down inflation by making imports cheaper for Americans.

Yellen noted that foreign economic developments posed risks to the U.S. outlook, although she said the pace of growth overseas had improved slightly in the last half of last year.

She said the foreign challenges included the threat that the Chinese economy, the world's second largest, could slow more than anticipated. She also mentioned on-going threats in Europe including a slow recovery and very low inflation. But she said aggressive efforts by the European Central Bank to boost growth should boost growth in the euro area.

Yellen will follow her appearance Tuesday before the Senate Banking Committee with testimony Wednesday before the House Financial Services Committee.

 

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Qdoba's Simplified Menu (Guacamole Included) Is Hot

February 24, 2015, 3:56 am

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Filed under: Company News, Earnings, Food & Beverage, Restaurants

The biggest gainer in terms of comparable-restaurant sales this earnings season has been Chipotle Mexican Grill (CMG). The cult fave for its cilantro-spiked rice, hefty portions and lightning-quick assembly line experienced a 16.1 percent surge in comps during the holiday quarter. In other words, the typical Chipotle location rang up 16.1 percent more in sales than it did during the prior year's fourth quarter.

The strong performance has cemented Chipotle's place as the market darling in the thriving fast-casual space, but the strong pop isn't really a surprise. Chipotle rolled out its first substantial menu price increase in three years during last year's second quarter, and in an improving economy with loyal fans of the chain not flinching at the higher price points, it kept its registers busy ringing up bigger bills.

The apples-to-apples comparisons will stabilize once we lap the springtime increase, explaining why Chipotle only sees comps climbing in the low-to-mid single digits for all of 2015.

However, another surprising winner on the comps front this earnings season was one of Chipotle's biggest rivals. Qdoba -- owned by the burger-flipping folks at Jack in the Box (JACK) -- posted a blowout quarter last week, possibly giving Chipotle a run for its burrito money.

Jack-of-All-Trades

Jack in the Box's strong quarter was fueled by a 14 percent pop in same-restaurant sales at Qdoba. The chain suggests that its new simplified menu pricing structure was a key driver in the encouraging performance.

Qdoba began charging a single price for its entrees based on the initial protein, letting customers pile on as many extras as they want. Chipotle has been doing things this way for ages, but Qdoba made things interesting by making guacamole -- the one item that Chipotle notoriously charges extra for -- available at no extra cost. Qdoba also offers melted queso, something that isn't on the Chipotle assembly line.

It's working. Qdoba went through double the guacamole that it did before the simplified pricing initiative kicked in, and it experienced a little more than half of its customers adding queso. The new strategy finds Qdoba being able to charge more for an average entree, but there was also an uptick in traffic and a double-digit percentage uptick in catering sales during the holiday quarter.

Qdoba has now pulled off four consecutive quarters of year-over-year comps growing by at least 7 percent. That's not too shabby for a concept that seemed to be going the wrong way two years ago.

Bouncing Back

Jack in the Box announced that it would be closing 67 underperforming company-owned Qdoba restaurants two years ago. There were 647 total locations open at the time, and the retreat proved to be short-lived. Rapid expansion of both franchised and company-owned eateries now finds 641 Qdoba locations in operation.

Qdoba's empire is a little more than a third as large as Chipotle and its 1,783 stores, but investors may want to start paying attention to what's going on at Jack in the Box here. Neither stock is cheap. Chipotle trades at a whopping 39 times this new year's profit forecast, and Jack in the Box isn't much of a bargain at a multiple of 33 times this fiscal year's target. However, both chains are getting it right when it comes to wooing the hungry -- and Qdoba may be the smarter bet in the near future.

Unlike Chipotle, which increased prices, Qdoba simply repositioned its value proposition. It seems to be paying off. Unlike Chipotle, with its uninspiring outlook for 2015, Jack in the Box sees comps at company-owned Qdoba units climbing 7.5 percent to 9.5 percent this year.

Burrito fans have a choice these days, and thankfully, so do investors.

Motley Fool contributor Rick Munarriz has no position in any stocks mentioned. The Motley Fool recommends and owns shares of Chipotle Mexican Grill. Try any of our Foolish newsletter services free for 30 days. To read about our favorite high-yielding dividend stocks for any investor, check out our free report.

 

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Industry Lobbyists Take Aim at Proposed FAA Drone Rules

February 24, 2015, 4:18 am

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Filed under: U.S. Government, Industry News, Aerospace & Defense, Transportation & Logistics, This Built America

By David Morgan and Deepa Seetharaman

WASHINGTON and SAN FRANCISCO -- Businesses hoping to capitalize on the commercial potential of drones are preparing to push back against proposed regulations that would strictly limit how the aircraft can be used.

During a 60-day public comment period on the rules, lobbyists representing a range of industries, from Internet giants Amazon.com (AMZN) and Google (GOOGL) to aerospace firms and the news media, say they will try to convince regulators that cutting-edge technologies make some of the limitations proposed last week by the Federal Aviation Administration unnecessary.

Spending on lobbying by special interests that list drones as an issue surged from $20,000 in 2001 to $35 million in 2011 to more than $186 million in 2014, according to the nonpartisan Center for Responsive Politics, which tracks lobbying activity. And the proposed rules provide a new focus of lobbying efforts.

If approved as written, the new FAA rules would lift the current near-ban on flying drones for commercial purposes, but its restrictions would make many business applications, such as package delivery, unfeasible.

Strict Limits

Among other constraints, the proposed rules would limit commercial drones to an altitude of 500 feet, allow flights only during daytime hours and require operators to keep the aircraft in their sights at all times. Drones couldn't be flown near airports or directly over humans. Officials say these precautions are needed for safety.

But drone makers and other firms with a stake in unmanned aircraft technology say they are already working on features that would allow drones to "sense and avoid" obstacles including other aircraft and prevent link disruptions that could cause a drone to lose contact with ground operations.

For example, Amazon.com is developing autonomous drones that would navigate via GPS and use redundant safety mechanisms and sensor arrays to avoid accidents as part of a "Prime Air" drone delivery service it hopes to launch.

Breakthrough Safety Features

Industry representatives say they will use the 60-day comment period to try to convince regulators that breakthrough safety features could make drone flights safe and dependable.

This is the chance for all the parties who think the FAA got it wrong to come forward and say why.

"This is the chance for all the parties who think the FAA got it wrong to come forward and say why," said Jack Schenendorf, a former House Transportation Committee staff member who now works for law firm Covington & Burling.

The current ban on most commercial drone flights will stay in place until the FAA finalizes its proposed rules -- which could take anywhere from nine months to three years. During that period, companies can continue to apply for exemptions to use drones under strict rules. But the FAA has so far granted only 28 of more than 325 exemption requests, according to government documents.

Amazon, which applied for an exemption to allow outdoor testing at its own U.S. facilities last summer, says it hasn't yet received approval from the agency. It has been testing a number of drone configurations at facilities in Washington state, Britain and Israel. But only in the Britain has the company been able to conduct outdoor tests that it says are vital to its goal of developing a prototype that can be demonstrated to the FAA.

Meanwhile, a coalition of news media companies including NBC (CMCSK), The New York Times (NYT) and Thomson Reuters (TRI) hopes to test news-gathering drones in coming months at an FAA site in Virginia.

Technology Taking Root

Separate forecasts by government and industry officials expect businesses to invest nearly $90 billion in drones worldwide over the next 10 years, as the technology takes root in hundreds of markets that now rely on manned flights or ground operations for activities ranging from pipeline inspections to aerial photography.

The number of companies and groups involved in drone lobbying now exceeds 50. Senate documents show a broad range of parties from high-tech and aerospace manufacturers to electric utilities, realtors, filmmakers, universities, labor unions, state governments and broadcasters.

Business interests have a potentially powerful lever in Congress, which must reauthorize the FAA's funding and regulatory direction by the end of September. That process allows lawmakers to direct regulatory agencies to take specific actions. For example, the last reauthorization in 2012 directed the FAA to pursue rulemaking on drones.

Some influential allies in Congress have already begun questioning the proposed rules. U.S. Senator Charles E. Schumer said last week the FAA's "line of sight" rule appears to be a "concerning limitation on commercial usage, and this proposed rule should be modified."

Regulators may be difficult to convince, however.

"The FAA is going to be very conservative because they don't want an airliner hitting one of these things," said Phil Finnegan, director of corporate analysis at research firm the Teal Group.

 

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Rent Walkouts Point to Strains in U.S. Farm Economy

February 24, 2015, 4:34 am

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Filed under: GDP, Commodities & Futures, Economy, This Built America

By Jo Winterbottom and P.J. Huffstutter

Across the U.S. Midwest, the plunge in grain prices to near four-year lows is pitting landowners determined to sustain rental incomes against farmer tenants worried about making rent payments because their revenues are squeezed.

Some grain farmers already see the burden as too big. They are taking an extreme step, one not widely seen since the 1980s: breaching lease contracts, reducing how much land they will sow this spring and risking years-long legal battles with landlords.

The tensions add to other signs the agricultural boom that the U.S. grain farming sector has enjoyed for a decade is over. On Friday, tractor-maker John Deere (DE) cut its profit forecast citing falling sales caused by lower farm income and grain prices.

Many rent payments -- which vary from a few thousand dollars for a tiny farm to millions for a major operation -- are due on March 1, just weeks after the U.S. Department of Agriculture estimated net farm income, which peaked at $129 billion in 2013, could slide by almost a third this year to $74 billion.

The costs of inputs, such as fertilizer and seeds, are remaining stubbornly high, the strong dollar is souring exports and grain prices are expected to stay low.

How many people are walking away from leases they had committed to is not known. In Iowa, the nation's top corn and soybean producer, one real estate expert says that out of the estimated 100,000 farmland leases in the state, 1,000 or more could be breached by this spring.

The stakes are high because huge swaths of agricultural land are leased: As of 2012, in the majority of counties in the Midwest Corn Belt and the grain-growing Plains, at least 40 percent of farmland was leased or rented out, USDA data shows.

"It's hard to know where the bottom is on this," said David Miller, Iowa Farm Bureau's director of research and commodity services.

Signs of Trouble

Grain production is, however, unlikely to be affected in any major way yet as landowners will rather have someone working their land, even at reduced rates, than let it lie fallow.

But prolonged weakness in the farm economy could send ripples far and wide: as farms consolidate, "there would be fewer machinery dealers, fewer elevators, and so-on through the rural economy," said Craig Dobbins, professor of agricultural economics at Purdue University.

Possibly also fewer new farmers.

Jon Sparks farms about 1,400 acres of family land and rented ground in Indiana. His nephew wants to return to work on the farm but margins are tight and land rents high. Sparks cannot make it work financially.

"We can't grow without overextending ourselves," Sparks said. "I don't know what to do."

As cash rent collections start this spring, I expect to see more farm operators who have had difficulty acquiring adequate financing either let leases go or try and renegotiate terms.

Landowners are reluctant to cut rents. Some are retirees who partly rely on the rental income from the land they once farmed, and the rising number of realty investors want to maintain returns. Landlords have also seen tenants spend on new machinery and buildings during the boom and feel renters should still be able to afford lease payments.

"As cash rent collections start this spring, I expect to see more farm operators who have had difficulty acquiring adequate financing either let leases go or try and renegotiate terms," said Jim Farrell, president of Farmers National Co., which manages about 4,900 farms across 24 states for land-owners.
Take an 80-acre farm in Madison County, Iowa, owned by a client of Peoples Co., a farmland manager. The farmer who rented the land at $375 an acre last year offered $315 for this year, said Steve Bruere, president of the company. The owner turned him down, and rented it to a neighbor for $325 -- plus a hefty bonus if gross income tops $750.

There are growing numbers of other examples. Miller, of the Iowa Farm Bureau, said he learned about a farmer near Marshalltown, in central Iowa, who had walked away from 650 acres of crop ground because he couldn't pay the rent. Just days later, he was told a north-central Iowa farmer breached his lease on 6,500 acres.

Courts or Loans

Concern about broken leases has some landlords reviewing legal options, according to Roger A. McEowen, director of the Iowa State University Center for Agricultural Law and Taxation. His staff began fielding phone calls from nervous landowners last autumn.

One catch is that many landlords never thought to file the paperwork to put a lien on their tenants' assets. That means landowners "can't go grab anything off the farm if the tenant doesn't pay," McEowen said. "It also means that they're going to be behind the bank."

Still, farmers could have a tough time walking away from their leases, said Kelvin Leibold, a farm management specialist at Iowa State University extension.

"People want their money. They want to get paid. I expect we will see some cases going to court over this," he added.

To avoid such a scenario, farmers have begun turning to banks for loans that will help fund operations and conserve their cash. Operating loans for farmers jumped 37 percent in the fourth quarter of 2014 over a year ago to $54 billion, according to survey-based estimates in the Kansas City Federal Reserve bank's latest Agricultural Finance Databook.

Loans with an undefined purpose -- which might be used for rents, according to the bank's assistant vice-president Nathan Kauffman -- nearly doubled in the fourth quarter of 2014 from a year earlier to $25 billion.

Total non-real estate farm loan volumes jumped more than 50 percent for the quarter, to $112 billion.

"It's all about working capital and bankers are stressing working capital," said Sam Miller, managing director of agricultural banking at BMO Harris Bank (BMO). "Liquidity has tightened up considerably in the last year."

 

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U.S. Automakers Improve in Consumer Reports Rankings

February 24, 2015, 5:15 am

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Filed under: Media, Automotive Industry, Car Buying, This Built America

By TOM KRISHER

DETROIT -- Buick is the first U.S.-based automotive brand to crack the top 10 in Consumer Reports magazine's annual brand report cards.

U.S. automakers also placed three vehicles on the magazine's list of "top picks" for vehicles, the first time that's happened in 17 years. The rankings were unveiled Tuesday in the magazine's annual auto issue.

Buick, made by General Motors (GM), placed seventh in the brand rankings. But the brand rankings and top picks still were dominated by Japanese and German manufacturers, with Lexus, Mazda, Toyota (TM), Audi and Subaru taking the top five brand spots.

The magazine calculates each brand's overall score with a composite of its vehicles' road-test scores and reliability scores for each model in its annual survey of subscribers. It's the third year for the brand rankings.

Porsche placed just ahead of Buick at No. 6, while Honda (HMC), Kia and BMW rounded out the top 10 brands. Mercedes-Benz, Acura and Infiniti all suffered precipitous declines in their rankings due to unreliable new models or poor road test scores. Mercedes fell out of the top 10 to 21st, while Acura dropped from No. 2 to 11 with an unimpressive test of the new RLX sedan, the magazine said.

In the model rankings, the top overall finisher was California-based Tesla's (TSLA) Model S electric car, for the second year in a row. The Model S, which cost the magazine $89,650, finished first due to its performance and technical innovations, the magazine said. Buick's Regal midsize car beat the BMW 328i as the top sports sedan, and the Chevrolet Impala was named the top large car.

The model rankings show Consumer Reports' favorite among the 270 vehicles its team has recently tested. The rankings are closely watched in the auto industry, since shoppers consistently cite Consumer Reports as a main source of car-buying advice.

For years domestic automakers built lower-priced and lower-quality alternatives to imports, but those days are behind us.

Other top picks included the Subaru Impreza in the compact car category, Subaru Legacy in midsize cars, Toyota Prius as the best green car, Audi A6 luxury car, Subaru Forester small SUV, Toyota Highlander midsize SUV and the Honda Odyssey minivan.

Japanese vehicles won six of 10 top pick categories, but that was the smallest number in the 19-year history of Consumer Reports top picks.

"For years domestic automakers built lower-priced and lower-quality alternatives to imports, but those days are behind us," said Jake Fisher, the magazine's director of automotive testing.

But other U.S.-based automakers still had problems. Of 28 automotive brands included in the rankings, four of the bottom six finishers came from Detroit. The Chrysler brand finished 23rd, followed by Ford (F), Dodge, Mini, Jeep and Fiat. The bottom brands all had poor reliability and models with low road-test scores. Ford showed modest improvement as its infotainment systems had fewer reliability problems.

Consumer Reports buys vehicles anonymously and performs more than 50 tests on them, including evaluations of braking, handling and comfort. Top picks must be at or near the top of the rankings in performance, reliability and safety, the magazine says.

 

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IRS: Your Chances of Getting Audited Lowest in a Decade

February 24, 2015, 5:43 am

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Filed under: Taxes, Personal Finance, Income Tax, IRS

By STEPHEN OHLEMACHER

WASHINGTON -- Budget cuts forced the IRS to reduce the number of tax audits last year to the lowest level in a decade, IRS Commissioner John Koskinen said Tuesday. And the number of audits could be even lower this year.

The math is pretty simple. There are fewer audits because we have fewer auditors.

"The math is pretty simple," Koskinen said in a speech to the New York State Bar Association. "There are fewer audits because we have fewer auditors."

"Audits fell in virtually every individual category and across income levels," Koskinen said. "This continues a long-term trend that carries serious implications for our tax system and the nation."

Koskinen's speech comes in the middle of tax season, just as millions of Americans are filing their annual returns.

Last year, the IRS audited 1.2 million individual tax returns. That's less than 1 percent of the returns that were filed, the lowest rate since 2004.

Koskinen said the IRS is down more than 2,200 revenue agents since 2010. Last year, a little more than 11,600 revenue agents examined returns, and Koskinen is warning that the number of agents will decline again this year.

Congress has cut the agency's budget by $1.2 billion since 2010. The IRS will receive $10.9 billion for the budget year that ends in September.

Budget Proposal

President Barack Obama has proposed a $12.9 billion budget for the IRS in the coming budget year -- about an 18 percent increase. The proposal, however, wasn't well-received by Republicans who control Congress.

The agency's budget cuts have come as the IRS is starting to play a bigger role in implementing Obama's health care law. For the first time, taxpayers have to report on their tax returns whether they have health insurance.

Millions of taxpayers who are receiving tax credits to help pay insurance premiums have to report them as well.

Some Republicans in Congress have vowed to cut IRS funding as a way to stifle implementation of the health care law.

Koskinen has said it won't work. He said the IRS is required to enforce the law, so other areas will have to be cut, including taxpayer services and enforcement.

The agency projects that about half the people who call the IRS for assistance this filing season won't be able to get through to a person. The agency is also considering shutting down operations for two days later this year -- after tax season -- resulting in unpaid furloughs for employees and service cuts for taxpayers, Koskinen said.

 

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Market Wrap: Dow, S&P Finish at Records on Yellen Comments

February 24, 2015, 8:42 am

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Filed under: Market News, Economic Indicators, Federal Reserve, Interest Rates

By Sinead Carew

NEW YORK -- U.S. stocks closed higher Tuesday, with the Dow and S&P 500 hitting records, as investors attempted to interpret a subtle change in emphasis in testimony by Federal Reserve Chair Janet Yellen.

Yellen told a congressional committee that the Fed is preparing to consider increases "on a meeting-by-meeting basis." While economists have been expecting a hike as soon as June, some investors saw Yellen's comments as an indicator of a later liftoff for the Fed's first rate hike since 2006.

All the news at this point is incrementally good. [But] it's not enough to cause a significant rise at this point.

"All the news at this point is incrementally good," said Rick Meckler, president of LibertyView Capital Management in Jersey City, New Jersey. "It's not enough to cause a significant rise at this point. The only thing that would give us a rise now would be earnings growth. In most industries, we're not really seeing strong top-line growth."

The Dow Jones industrial average (^DJI) rose 92.35 points, or 0.51 percent, to 18,209.19, the Standard & Poor's 500 index (^GSPC) gained 5.82 points, or 0.28 percent, to 2,115.48 and the Nasdaq composite (^IXIC) added 7.15 points, or 0.14 percent, to 4,968.12.

The Nasdaq rose for the 10th straight session, its longest streak since July 2009.

Equity investors didn't react dramatically as they are likely more focused on economic indicators such as jobs data due out in a week, said Jim Paulsen, chief investment officer at Wells Capital Management in Minneapolis.

"There just doesn't seem to be big reaction by the U.S. stock market," said Paulsen. "The market may be more focused on the Fed's boss -- the economy -- than on the Fed itself."

Rising Home Prices

The S&P/Case Shiller composite index of home prices in 20 metropolitan areas gained 4.5 percent in December above the 4.3 percent forecast and 4.3 percent in November.

Other data showed the U.S. services sector expanded in February at its fastest pace since October, according to a preliminary reading from financial-data company Markit (MRKT). But U.S. consumer confidence fell more than expected in February, according to the Conference Board.

Home Depot (HD) shares gained 3.98 percent, boosting the S&P 500 and the Dow. The home improvement retailer reported a better-than-expected quarterly same-store sales and announced an $18 billion share buyback program.

JPMorgan Chase (JPM) climbed 2.5 percent. The bank told investors it aims to save about $1.4 billion in annual expenses. It also forecast about 10 percent core loan growth in 2015.

Toll Brothers (TOL) rose 3.9 percent, helping to lift the PHLX housing index. The largest U.S. luxury homebuilder reported a higher-than-expected quarterly profit and raised the low end of its full-year home delivery forecast.

About 5.9 billion shares changed hands on U.S. exchanges, below the 6.9 billion month-to-date average, according to BATS Global Markets.

Advancers outnumbered decliners on the NYSE by 1,897 to 1,176, for a 1.61-to-1 ratio; on the Nasdaq, 1,576 issues rose and 1,147 fell, a 1.37-to-1 ratio.

The S&P 500 posted 73 new 52-week highs and no new lows; the Nasdaq composite recorded 132 new highs and 26 new lows.

What to watch Wednesday:

• The Commerce Department releases new home sales for January at 10 a.m. Eastern time.

Earnings Season
These selected companies are scheduled to release quarterly financial results:

• Cablevision Systems (CVC)
• Campbell Soup (CPB)
• Chesapeake Energy (CHK)
• Dollar Tree (DLTR)
• Integrys Energy Group (TEG)
• L Brands (LB)
• Liberty Interactive (QVCA) (LVNTA)
• Liberty Media (LMCK) (LMCA)
• Lowe's (LOW)
• Royal Bank of Canada (RY)
• Salesforce.com (CRM)
• Sprouts Farmers Market (SFM)
• Target (TGT)
• TJX Cos. (TJX)
• Transocean (RIG)
• Whiting Petroleum (WLL)

 

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5 Simple, Escalating Steps to Collect a Bad Debt

February 24, 2015, 10:00 pm

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Filed under: Personal Loans, Financing, Debt, Debt Collection, Loans

There are few things more disappointing or infuriating than lending money to someone who doesn't pay you back. Besides the financial setback, you are forced to deal with the emotional wreckage of being taken advantage of by someone you trusted. Also, you are forced to take actions that you'd prefer not to do.

If someone puts you in this uncomfortable position, don't be troubled. There are five steps you can take to significantly increase your chances of getting every dime back from the deadbeat.

1. Remember, It's Just Business

The person you lent money to will try desperately to make this a personal issue. He or she will whine about losing a job, running into unforeseen financial trouble or -- when all else fails -- blaming you.

The person who welched on the debt will continue to make this a personal issue as long as possible. Fiddlesticks. Don't fall for it and don't even participate in any conversation that is personal in nature with respect to this unpaid debt.

Your job is to focus squarely on the business side of this issue and let the personal side of the equation go. Let the borrower know that you are prepared to go to any length to retrieve your money -- even if it includes filing suit and leaving a stain of his or her credit report that can only be removed by paying up.

2. Gather Your Evidence

If you have a written agreement, you are in great shape. But you don't need a signed loan agreement to have an enforceable contract. Some transactions need to be in writing, but as long as you both agreed what you would do (loan money) and what you would receive in exchange (your money back, with or without interest), you have a binding contract.

If you don't have a written agreement, assemble all emails, letters or notes from calls that spell out the agreement. Hopefully you'll find documents that support how and when the other party was supposed to pay you back. If not, you may find it difficult to prove he or she violated the payment terms -- even if you prove the money was a loan and not a gift.

3. Demand Payment in Writing

Regardless of how much or how little documented proof you have, send a registered letter demanding payment. In your letter, recount the terms of the agreement. Spell out when you made the agreement, how much the loan was, how the payments were to be made and when they were to start. And if the other party agreed to pay interest, make sure you detail that information as well.

When closing your letter, make sure to be very clear about what you want and when you want it. My suggestion is that if the borrower breached the contract, you should demand payment in full within 10 days of receipt of your demand letter. Keep your emotions out of it. Stick to the facts and only the facts in your demand letter.

4. Call a Lawyer

If the other party fails to respond within 10 days with your check, have an attorney write another letter. A letter from an attorney makes most people's blood run cold. It might cost a few hundred dollars, but if the loan is substantial, it is well worth having a lawyer send the next letter for shock and awe. In the letter, your attorney may remind your debtor that you can and will sue, turn the debt over to a collection agent and make sure the failure to pay is recorded by the credit bureaus. These thinly veiled threats might just be enough to get your money back.

5. Start Small Claims and Credit Complaints

If after all this, your borrower doesn't cough up, take off the gloves. You do that by suing in small claims, district or superior court. Where you sue depends on how much money is involved and how much you are willing to spend to collect. The solution of choice is small claims court because it is very easy and inexpensive, and you don't need an attorney. However, small claims courts have limits varying by state, from $2,500 to $25,000, with many exceptions.

You may be able to lodge a complaint with a credit bureau without suing, but that's not easy to do. Still, it's nothing to worry about. Once you win your judgment in court, it will be next to impossible for the other person to clean up his or her credit report without paying you first.

 

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How to Make Big Money Shopping at Goodwill, Salvation Army

February 24, 2015, 10:00 pm

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Filed under: Charity, Shopping, Deals, Saving

At a Goodwill in Asheville, North Carolina, a Tennessee man paid 58 cents for an old West Point jacket worn by the legendary Vince Lombardi when he was coaching football at the U.S. Army academy. Over the weekend, the jacket sold at auction for $43,000.

Earlier this month a Phoenix man paid $5.99 at an Arizona Goodwill for a diving watch that he then sold for $35,000 plus a $4,000 watch. And a Michigan man dropped $22 at a Salvation Army story on a bronze bust that was not a bust at all. The value of the sculpture was estimated at up to $900.

You never know what treasures could be hiding at your local Goodwill Industries, Salvation Army and other thrift stores.

There's no formula for wandering into thrift shops and making the big score. And while luck and timing play some role, knowing what to look for and how to do it is the key for success, according to "Garage Sale Millionaire" author Aaron Lapedis, who made $1 million by the time he was 24 reselling items he bought at thrift shops and garage sales.

Lapedis, who owns an art gallery in Colorado, still pokes around thrift stores with the belief he will discover more discarded gems that he can flip for cash. Among his more memorable finds: a speech signed by President Lyndon Johnson (paid $10, got $650), a painting (paid $25, got $2,500) and an antique tin monkey toy (paid $27, got $925).

Lapedis' Tips for Finding Hidden Gems at Thrift Shops

• Be patient and persistent. Inventory in the stores is constantly changing. Going back multiple times, and on different days, is key to being the one to find a piece of value.
• Look all over. Don't just assume that the only jewelry and watches will be junk or already picked over. Look anywhere in the store where you may spot something that has value.
• Develop an expertise. The more you get into the chase, the more you can develop or grow an expertise, whether it's in fine China, artwork or watches, or whatever. That will make you less dependent on doing research on the spot and more confident that you came across something of value.
• Go outside your comfort zone. While you can have more confidence shopping for things you really understand, use your smartphone to support you. Look for identifiable markings, stamps or any other branding that can help you search an item's potential value.
• Understand selling. Is there a market for the item you want to buy? Perhaps you found a rare vase that is potentially worth 10 times the price it's selling for. Is there a dealer nearby who'll buy it or will only a collector participating in a niche auction be interested? Figure out what will be involved in selling it buying it.
• Keep perspective. Not every purchase, even a researched one, will be a winner. And just because you saw a price that someone is asking for a similar item online doesn't mean that's what you'll be paid.

 

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Help! I Filed My Taxes Incorrectly

February 24, 2015, 10:00 pm

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Filed under: Taxes, Income Tax, State Income Tax, Tax Laws

By Gerri Detweiiler

Taxpayers are advised to file their returns as soon as possible, in part to reduce their risk of taxpayer identity theft. But what happens if you file right away, and then discover you've left key information out of your return? A Credit.com reader recently asked, "I already filed my taxes and just got a 1099-C. What do I do?"

Here's what you shouldn't do: panic and just file a new return. Doing so can just muck things up and may delay the processing of your return.

Instead, if you discover you need to correct a return you filed, you typically must file a specific form: IRS Form 1040X. The form allows you to adjust information included in your original return. It is available through most tax preparation programs and on the IRS website as well. The completed form must be returned to the Internal Revenue Service by mail. E-filing is not an option here.)

"Whether you should amend or not depends a few key factors: whether your tax return was accepted or rejected by the IRS and whether you need to amend due to change in your filing status, income, deductions and credits," says Lisa Greene-Lewis, a certified public accountan and TurboTax tax expert. "If your questionable changes are related to a change in filing status, income, deductions and credits, then you should file an amended tax return," she says. But in the case of a rejected return, you can correct and resubmit it.

Maybe You Should Do Nothing

If you're expecting a refund, and realized you omitted some income, you may even be able to sit tight. "It's quite possible that, in the case of a 1099 or other third-party income reporting document that was overlooked, the IRS took note of the amount, thanks to the copy it receives of such documents," says Kay Bell, founder of the Don't Mess With Taxes blog. In those cases, the IRS may automatically adjust the refund. "When the amount of your refund is not what you expected based on your filing, the IRS usually sends you a notice, separate from the check or direct deposit, explaining the difference," she says.

But if you owe the IRS, then additional information from a 1099 or other income may mean you owe more. In that case it's important to file a 1040X as soon as possible and pay the amount due. "You want to stop any interest and possible underpayment penalties from accruing as quickly as possible," says Bell. "No need to pay Uncle Sam more if you can put on the brakes."

In the case of our readers who received a 1099-C after they already filed their returns, one thing to understand is that the amount of income reported on that form may or may not be taxable. (Here's a guide to understanding Form 1099-C.) The IRS will assume it is taxable, however, unless you tell them otherwise. So the first step is to determine whether the new information will change the amount of tax you owe, or the refund you get.

That means following the instructions in IRS Publication 4681 to determine whether you qualify for an exclusion such as the insolvency, bankruptcy, or Mortgage Forgiveness Debt Relief Act exclusion. If you do, you'll use IRS Form 982 to tell the IRS why you aren't including the amount of canceled debt in your taxable income.

1099-C, 104X, 982

If you've already filed, you will need to use IRS Form 1040X to transmit IRS Form 982 to the IRS. You can provide a brief explanation in Part III of the Form 1040X and attach Form 982. By doing this, you should be able to avoid having the IRS notify you in the future that you owe taxes because you failed to report this "income."

If you don't fully qualify for one of these exclusions, you will have to include part or all of the amount of canceled debt reported on the 1099-C as income. In that case, you will report that additional income with your gross income in Box 1 of Form 1040X and adjust your tax liability and amount you owe (or refund).

If all else fails, the IRS will likely let you know you made a mistake. "If you discover a math error or something similar, don't worry about filing an amended return. The IRS' calculators will catch your mistake and correct it for you, for better or worse," says Bell. A 1099 or 1099-C that wasn't accounted for can take longer to catch up to you, though. At Credit.com, we've heard from taxpayers who have just recently learned that they owe taxes as a result of one of these forms filed with the IRS last year or the year before.

On a positive note, though; unless you owe $10,000 or more, tax debt shouldn't affect your credit. Though keep an eye out for any tax liens by checking your credit regularly. You can get your credit reports for free once a year at AnnualCreditReport.com and you can check your credit scores for free every month on Credit.com. Related Links:

 

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