Will Americans Really Win From a Falling Euro?

March 13, 2015, 2:45 am

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Filed under: Currency, Exchange Rates, Global Economy, European Union, Economy

fifty dollar bill to fifty euro ... — **Shutterstock**

The U.S. has a stronger economy than just about any other country in the world right now, and as a result, the U.S. dollar has risen in value to levels not seen in years. With the European economy struggling to grow and threats from weaker eurozone economies like Greece that could endanger the entire monetary union, the euro recently fell to its lowest level in more than a decade against the dollar.

That's great news if you're planning to travel to Europe in the near future, as you'll be able to get more euros for however many dollars you budget for spending on your trip. But if you're not part of the foreign jet-setter crowd, will you see any real benefit from the strong dollar? Thanks to the global economy, U.S. consumers should start to see some bargains close to home when they shop for imported goods, but a lot depends on exactly what you're looking to buy.

Why a Strong Dollar Should Make Things Cheaper for Americans

Any economics student will tell you that when foreign exchange rates fluctuate, they have an impact on the prices of foreign goods. When the dollar falls, it should make imported goods more expensive for Americans, because it takes more dollars to equal the same amount of foreign currency. Conversely, a strong dollar should make foreign goods cheaper for U.S. shoppers, as it takes fewer dollars to translate into a fixed price in foreign currency.

You can see this effect the most when you're dealing with mass-produced commodity goods. For instance, the U.S. dollar has also climbed dramatically against the Japanese yen, and that has helped bring prices of consumer electronics and other mass-market items down. Similarly, clothing costs have fallen in U.S. dollar terms, and that could help bring prices down for clothes-shoppers in the near future.

Where Theory and Reality Diverge

The problem, though, is that economic theory doesn't always hold true for every type of good from every market. If manufacturers of foreign products have pricing power, they can hold the line or even increase their prices in the U.S. despite the dollar's strength, taking the opportunity to get a big profit boost.

We've already seen that phenomenon happen with many luxury goods. For instance, many foreign winemakers have simply boosted their markup in the U.S. market, taking all the foreign-currency gains for themselves rather than passing them through to U.S. consumers. Similarly, high-end foreign automakers like Porsche have boosted their suggested retail prices on certain vehicles even in the aftermath of a falling euro, looking to maximize their profit margins and trade on their reputation rather than seeking to boost demand by lowering prices.

Moreover, many products that people associate with Europe, Japan and other foreign countries aren't necessarily manufactured there. Several foreign automakers, including Volkswagen (VLKAY), Honda (HMC), and Nissan (NSANY), have manufacturing plants here in the U.S., and because they pay U.S. workers in U.S. dollars, they don't necessarily reap cost savings from a strong dollar.

Could Dollar Strength Actually Hurt Investors?

Meanwhile, the same economic factors that help foreign companies in the U.S. hurt U.S. companies in foreign markets. To maintain their profit levels in U.S. dollars, multinational corporations have to raise their prices in foreign-currency terms. Those price increases make U.S. products less attractive to foreign buyers, hurting revenue at U.S. manufacturing companies and often sending their share prices downward. So far, the strength in the U.S. economy has largely offset weakness abroad, but many major companies have seen their profits take a big hit from the strong dollar.

Similarly, businesses that rely on the tourist trade in the U.S. could take a hit. Foreign travelers coming to the U.S. get fewer dollars when they exchange their foreign currency, and that in turn could rein in their spending plans. Those businesses could also suffer from a greater number of U.S. tourists deciding to travel abroad if they can afford to do so rather than staying close to home.

In the end, currency markets tend to fluctuate back and forth over the years, making long-term cycles that cancel each other out in the long run. Still, as markets adjust to rapidly changing conditions in foreign exchange, consumers should be on the lookout to see if the imported goods they like will finally go on a long-awaited sale.

Motley Fool contributor Dan Caplinger had his first trip to Europe planned long before the euro started falling. You can follow him on Twitter @DanCaplinger or on Google Plus. Check out our free report on one great stock to buy for 2015 and beyond.

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Why You Can't Afford to Buy a Home Where You Want to Live

March 13, 2015, 7:36 am

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Filed under: Mortgages, Real Estate, Personal Finance, Housing Market, Home Buying

SAN FRANCISCO, CA - FEBRUARY 18: People stop to look at San Francisco's famed Painted Ladies victorian houses on February 18, 2014 in San Francisco, California. According to a report by mortgage resource site HSH.com, an annual salary of $115,510 is needed to purchase a house in San Francisco where the median home price is $682,410. The report included 25 of the nations largest metropolitan cities with Cleveland, Ohio being the cheapest with a needed salary of $19,435 to purchase a home. (Photo by Justin Sullivan/Getty Images) — **Justin Sullivan/Getty Images**Tourists stop to look at the famed "painted ladies" Victorian houses in San Francisco, the nation's "least-affordable" housing market.

By Robert McGarvey

NEW YORK -- The statistics keep rolling in. The housing market is on the mend, prices are definitely up from the bottom although, nationally, they remain maybe 15 percent off the 2006 peak, according to housing numbers crunchers at Case-Shiller. That means there remain good buys out there.

But then there now new questions about affordability. And the headline news is that nationally housing affordability is strong -- although dropping, according to the latest numbers from the National Association of Realtors. Danielle Hale, NAR director of housing statistics, elaborated that affordability is declining, slightly, as prices nudge up faster than incomes.

But housing affordability varies astronomically from town to town. That's according to the latest data from HSH.com, a mortgage research company. The real question is: can you afford to live where you want to?

The answer is if your heart is set on one of the nation's most desirable big cities, come with pockets stashed with cash, or at least come resigned to be a renter. Maybe forever.

Here's the bad news. In San Francisco, according to HSH.com, household income has to be $142,448 to be able to afford the median home. The National Association of Home Builders calls the broad San Francisco-San Mateo-Redwood City metropolitan area "the nation's least affordable." It claims that just 11.1 percent of households earn enough to afford the median home.

By contrast, in Pittsburgh HSH.com said a household income of $31,716 will qualify to buy a median home. Minimum wage in Pennsylvania is $7.25. Do the math on a hypothetical couple earning minimum wage and logging 40 hour work weeks. They earn $30,160. That tells you how affordable a really affordable town is.

But you don't want to live there? Second on the HSH.com list of cities where a household needs the most income to buy is San Diego at $95,433. In third place is Los Angeles, where it takes $89,665 to qualify for the median home.

"The biggest run up in prices has been predominantly in the West," said NAR's Hale. "Affordability in the West has been hampered, primarily in California." In addition, Seattle and Denver also had growing affordability issues.

For fourth place, HSH.com jumps cross-country to New York City, where a would be buyer needs $87,536. Note: that means a house in the metropolitan area and that includes the Bronx, Jersey City and Newark. Dream on about buying a home in Manhattan. (Realtor Douglas Elliman pegged the 2014 average selling price for a Manhattan apartment at $1.68 million and, using the NAR guideline that buyers can qualify for a home that is four times their income, that puts needed household income over $400,000.)

Fifth place: Boston, at $80,050.

Why are coastal cities so pricey? Case-Shiller spokesperson Craig Lazzara mused that land availability is minimal and building restrictions are often daunting in towns like San Francisco and Manhattan. To boot, well-heeled foreigners -- often from China and Russia -- are seeking safe harbors for their money, and they have shown a strong preference for a handful of coastal towns with good international flight connections.

Per HSH.com, the only cheap coastal town is Miami at $58,431.

Don't give into despair. Look inland instead, where HSH.com said $40,658 qualifies a household for the median Phoenix home. In Houston, $49,983 is enough. Even in Atlanta, a household making $35,580 has enough to afford the median-priced home. Most inland big cities are comfortably under $50,000.

Or look off-beat. The National Association of Home Builders has crowned its most affordable metro as Syracuse, New York, where it said 92.8 percent of all homes that sold in the fourth quarter of 2014 were affordable to families who earned the region's median income of $67,700.

The numbers often tantalizing possibilities. If you are a telecommuter for a West Coast technology firm, "you could live like a king in Pittsburgh," said HSH.com executive Keith Gumbiner. Real state website Zillow.com (Z) puts the Pittsburgh median price at $125,400. Bunk in Pittsburgh for a few years and, you know what, you just might save enough to buy that San Francisco home (median sale price: $951,000, according to real estate website Trulia).

Although, by the way, around one-third of San Francisco homes sell in all cash deals. Which is a blunt reminder of just how unaffordable the most desirable cities are becoming.

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El Pollo Loco's Crazy Freshman Year as a Public Company

March 13, 2015, 9:00 am

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Filed under: Company News, Earnings, Restaurants, IPOs

An El Pollo Loco Restaurant in Upland California USA — **John Crowe/Alamy**

One of the more volatile initial public offerings over the past year just keeps on clucking. Shares of El Pollo Loco (LOCO) moved sharply higher on Friday morning after posting better-than-expected quarterly results.

Revenue clocked in at $90 million, 18 percent ahead of the prior year's fourth quarter. There was an extra week this time around, naturally juicing up the top line. Sales would have moved just 12 percent higher on a comparable basis, but that's still pretty encouraging. El Pollo Loco's pro forma profit rose 61 percent to $0.14 a share. Analysts were only holding out for 12 cents a share in earnings on $87.5 million in revenue. It's the first time in its first three quarters as a public company that it has landed ahead of Wall Street profit targets.

The chain of 415 quick-service restaurants specializing in grilled citrus-marinated chicken is in a good groove. Comparable-restaurant sales climbed 6.4 percent during the holiday quarter, fueled by a 3.1 percent uptick in traffic and a 3.3 percent increase in what the average guest was spending. Franchised locations -- and 243 of the restaurants are owned by franchisees -- grew even faster.

Fowl Play

Investors got their first taste of El Pollo Loco when it went public at $15 last summer. It wasn't the first time that the chain attempted to go public. It tried to give it a go in 2006 when it had 347 locations, but the offering was withdrawn given the market's lukewarm reception.

The market was far more excited this time around. The stock opened at $19 on its first trading day in July, and by the end of its second day of trading the shares had soared to close at $34.48. El Pollo Loco's stock would go on to peak at $41.70, but it was all downhill from there. The stock went on to shed more than half of its value, falling to the high teens by the end of the year.

A lofty valuation and merely meeting expectations likely led to the gradual decline through the final five months of 2014, after the stock skyrocketed through its first week of trading. It also didn't help that other recent fast-casual dining chains were imploding. Pasta tosser Noodles & Co. (NDLS) and sandwich baker Potbelly (PBPB) were some of 2013's hottest debutantes, but the stocks plunged 27 percent and 47 percent, respectively, through 2014.

Playing Chicken

Unlike Noodles & Co. and Potbelly, El Pollo Loco's store-level popularity has held up pretty well. Comps rose 5.8 percent last year, and that was on top of a 5.3 percent climb through 2013.

Its outlook for the year ahead is encouraging. It expects to open 16 restaurant, with franchisees expanding their reach by another 11 locations. El Pollo Loco sees comparable-restaurant sales climbing between 3 percent and 5 percent, and adjusted earnings per share should clock in between 67 cents and 71 cents. The midpoint of that range is just ahead of where analysts were parked, and the combination of expansion and positive comps should result in slightly better growth than the 8 percent ascent that Wall Street's forecasting.

It won't be easy. The stock still trades at a hefty premium to the market. However, as one of the fast-casual chains where the fundamentals continue to improve, it's not a surprise that El Pollo Loco's stock was already beating the market in 2015 before Thursday afternoon's well-received report. We've experienced the quick rise of El Pollo Loco and the gradual yet sharp fall that followed. The right ingredients are in place for this to be a slow yet gradual rise in 2015, but El Pollo Loco will need to keep getting things right.

Motley Fool contributor Rick Munarriz has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. Check out our free report on one great stock to buy for 2015 and beyond.

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Market Wrap: Cheaper Oil, Stronger Dollar Hurt Wall Street

March 13, 2015, 9:40 am

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Filed under: Market News

Petroleum Energy — **Gerald Herbert/AP**

By Ken Sweet

The stock market was hit hard Friday, capping a third week of declines, as investors reacted to a steep drop in oil prices and a jump in the value of the dollar. Utilities, major exporters and companies that make basic materials like steel had the biggest declines.

The sell-off came at the end of a volatile week and sets the stage for a Federal Reserve policy meeting next week. Investors will be watching closely for clues about the central bank's views on the economy and interest rates. "This week has really been about investors' outlooks adjusting in the face of higher interest rates later this year," said Gabriela Santos, a global market strategist at JPMorgan Funds.

The Dow Jones industrial average (^DJI) fell 145.91 points, or 0.8 percent, to 17,749.31. The Standard & Poor's 500 index (^GSPC) lost 12.55 points, or 0.6 percent, to 2,053.40 and the Nasdaq composite lost (^IXIC) 21.53 points, or 0.4 percent, to 4,871.76.

Oil dropped sharply after the International Energy Agency said prices had further to fall because supplies were continuing to rise. Benchmark U.S. crude fell $2.21 to close at $44.84 a barrel in New York. Oil is now within 40 cents of its low for the year, and its lowest level in six years, after a drop of 10 percent this week. Brent crude, a benchmark for international oils used by many U.S. refineries, fell $2.41 to close at $54.67 a barrel in London. Several energy stocks followed the price of oil lower. Transocean (RIG), an offshore oil rig company, fell 67 cents, or 4.7 percent, to $13.60 and Denbury Resources (DNR) fell 29 cents, or 3.8 percent, to $7.31.

The Cost of a Stronger Dollar

The U.S. dollar continued its advance against other major currencies. The euro declined 1.3 percent to $1.0486. The U.S. dollar index, which measures the dollar against a group of other currencies, increased 0.8 percent Friday and is up 6.4 percent over the past month.

The dollar's advance can be tied to two factors, strategists say. The U.S. economy is getting better, as seen by the strong jobs report last week, and the Federal Reserve is poised to raise interest rates sooner rather than later. In comparison, the European Central Bank is trying to drive down interest rates by buying government bonds, a tactic the Fed used until last fall. The ECB's program has been driving down the value of the euro.

A higher dollar makes U.S. exports more expensive abroad. General Electric, Caterpillar and Deere fell more than the rest of the market. U.S. Steel, whose products competes with cheap foreign imports, fell nearly 4 percent after the company announced it would idle of its operations and lay off workers. U.S. Steel lost 83 cents to $21.80. "A rise in the dollar over a long period of time is fine, but this very rapid appreciation can directly impact companies' profits," Santos said.

Stocks that pay higher dividends, such as utilities, also had big losses. The Dow Jones utility index fell 1 percent. That index is down 7.4 percent so far this year.

Higher Interest Rates in June?

A growing number of investors believe the Federal Reserve will raise its benchmark interest rate as early as June. Higher rates are typically bad for high-dividend stocks because it diminishes their appeal to investors seeking income.

In the bond market, U.S. government bond prices didn't move much. The yield on the 10-year Treasury note was unchanged at 2.12 percent.

In other commodity markets, precious and industrial metals futures closed little changed on the day. Gold edged up 50 cents to $1,152.40 an ounce, silver fell two cents to $15.49 an ounce and copper was flat at $2.66 a pound. In other energy trading, wholesale gasoline fell 4.8 cents to close at $1.762 a gallon, heating oil fell 6.6 cents to close at $1.713 a gallon and natural gas fell 0.7 cents to close at $2.727 per 1,000 cubic feet.

What to watch Monday:

The Federal Reserve releases industrial production for February at 9:15 a.m. Eastern time.
The National Association of Home Builders releases its housing market index for March at 10 a.m.

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Stadium Names: The Costly, the Abandoned and the Weird

March 13, 2015, 11:00 pm

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Filed under: Company News, Sports, College, Sports & Recreation

AT&T Stadium the home of the Dallas Cowboys in Arlington Texas USA — **Tim Dahl/Alamy**

MoneyTips

To those of us of a certain age, naming rights just don't matter. The football stadium in Denver will always be Mile High Stadium. The iconic former baseball field in San Francisco will always be Candlestick Park. The baseball stadium in Boston will always be Fenway Park.

Unfortunately, naming rights are essential in today's market. Franchises in the four major sports (NFL, NBA, MLB and NHL) are racking up multi-million dollar naming rights deals, and NASCAR has always thrived on sponsorships. Even college sports arenas are joining the trend. Consider these interesting facts about naming rights.

MLB holdouts. Currently, only nine of the 30 baseball stadiums have not sold naming rights: Dodger Stadium, Yankee Stadium, Fenway Park, Marlins Park, Nationals Park, Wrigley Field, Oriole Park at Camden Yards, Angel Stadium of Anaheim and Kauffman Stadium (Kansas City).
Most expensive naming rights. The current champion may be the soccer juggernaut Real Madrid. The UAE's International Petroleum Investment Co. has signed a deal for naming rights to the soon-to-be renovated and renamed Santiago Bernabeu Stadium for €500 million (around $570 million). The naming rights to the Dallas Cowboys football stadium went for an estimated $400-$600 million in the transfer to AT&T Stadium, while it cost $400 million each for MetLife Stadium (the New Jersey home of football's New York Jets and Giants) and Citi Field (home of the baseball New York Mets).
Unfortunate names. Remembers Enron Field in Houston, which underwent a quick change to Minute Maid Park after the Enron scandal? Citi Field in New York is not far behind. It opened during the Great Recession when Citigroup's name was not held in high regard -- nor were the Mets. Football is not spared, either. By the time the Rams moved to their new stadium in St. Louis, the Trans World Dome, TWA had just gone through bankruptcy proceedings.
Strange naming rights. For a time, the Miami Marlins played in Land Shark Stadium. The Corpus Christi Hooks (AA affiliate of the Houston Astros) play in Whataburger Field. The University of Louisville basketball teams play in the KFC Yum Center. Fresno State plays in the Save Mart Center. How about the Smoothie King Center, where the NBA's New Orleans Pelicans play (and for that matter, how about Pelicans as a name)? Our all-time favorite is from English soccer: the short-lived Bargain Booze Stadium in Northwich, England. If that is your stadium name, you had better be prepared to live up to it.
Whoops, try that again. Mizzou Arena on the campus of the University of Missouri was originally slated to be named Paige Arena after the daughter of major contributors Bill and Nancy Laurie. Unfortunately, Paige was found to have falsely claimed a degree she never earned, and the resulting uproar caused Mizzou to withdraw the request. Another scuttled deal involved Florida Atlantic University. The naming rights to the FAU stadium were sold to the GEO group. The football team's play-by-play announcer inadvertently blew the deal by combining GEO's core business (operation of private prisons) with the team's mascot (the Owls) to coin the new stadium "Owlcatraz."
College football bowl games. We are fortunate to live in times that bring us the Beef O'Brady's Bowl, the Kraft Fight Hunger Bowl, the Little Caesar's Pizza Bowl, and the Duck Commander Independence Bowl. Older bowl game names were equally bizarre. The independence Bowl is a great example of how lesser tier bowls struggle to maintain corporate sponsorship and survive. It went from Poulan Weedeater to Sanford, Mainstay, PetroSun and Advocare before settling in with the Duck Commander last year. Maybe now that relations are being renewed with Cuba, the Bacardi Bowl will be revived. The last one was held in 1946 with Southern Mississippi beating Havana University 55-0.

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How to Keep Your Estate Planning a Tax-Free Proposition

March 13, 2015, 11:00 pm

≫ Next: Fun for Less: 19 Strategies for Saving on Entertainment

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Filed under: Taxes, Estate Planning, Estate Tax, Income Tax

Senior Hispanic woman shaking hands with businesswoman — **Blend Images/Alamy**

By Jason Notte

While considering your estate planning for future generations, forget this year's tax levy and think of the one your beneficiaries will pay years from now.

Taxes can turn an inheritance into a burden for beneficiaries. The federal estate tax exemption sits at $5.43 million for individuals and $10.86 million for couples, placing those paying estate taxes firmly in the upper echelons of the 1 percent. But what Uncle Sam doesn't look for, 16 states and the District of Columbia certainly will. Connecticut, Delaware, D.C., Hawaii, Illinois, Maine, Maryland, Massachusetts, Minnesota, New Jersey, New York, Oregon, Pennsylvania, Rhode Island, Tennessee, Vermont and Washington all impose state estate taxes of up to 20 percent for those worth more than a specified amount. That ceiling is as high as the fed-matching $5.4 million in Hawaii, but dips as low as $675,000 in New Jersey.

That's just what gets taxed before filing time. If an heir happens to have the distinction of living in Iowa, Kentucky, Maryland, Nebraska, New Jersey or Pennsylvania, there's an extra inheritance tax tacked on once the inheritance is received. Wives of heirs are exempt from all of these taxes, as are life insurance payouts, but that's about as kind as each of these plans gets. Descendants are taxed anywhere from 10 percent to 26 percent after coming into some money or property. Domestic partners in all of the above states excluding New Jersey are on the hook for inheritance taxes at those rates as well.

Because of the high exemption amounts for state and federal estate taxes, financial advisers suggest focusing on other tax implications with the help of comprehensive advisors who can also function as attorneys and accountants. While Roth IRAs or trusts are sure ways to keep your beneficiaries from losing a bit of their inheritance to taxes, the following are similarly efficient ways to transfer wealth without worrying about estate or income taxes:

1. Life Insurance

This is an absolute must, whether you're just trying to reduce the tax hit on your estate or just transfer your money tax free.

"If a large life insurance policy is held by a trust that is structured to be outside of your estate, the death benefit will not be included in your gross estate for estate tax purposes and life insurance proceeds are generally always tax free to the beneficiaries," says Anthony D. Criscuolo, certified financial planner with Palisades Hudson Financial Group in Fort Lauderdale, Florida. "In this case, the beneficiary of the life insurance is the trust, and your loved ones are the beneficiaries of the trust. This also allows you to have some level of control over how trust distributions will be handled based on how you draft the trust document and what discretion you give to the trustee."

Even if an inherited property or business pushes beneficiaries beyond the estate tax threshold (or even into more minor inheritance tax territory), life insurance can come in handy. "A policy for the amount of the estate taxes makes it possible for beneficiaries to retain assets rather than selling them in order to pay an inheritance tax," says Jason Smolen, co-founding principal and estate attorney at SmolenPlevy in Vienna, Virginia.

2. Gifting

No need to wait until you're gone to shelter portions of your estate from the Internal Revenue Service. Gifts to heirs and loved ones before death reduce the size of an estate and can help it limbo beneath estate or inheritance taxes. A person can gift to anyone up to $14,000 (or $28,000 with a spouse) each year without incurring a gift tax.

"However, there's a tax credit that allows giving up to $5.43 million in a lifetime, though you are consuming your lifetime estate credit," Smolen says. "Among the benefits of giving is an appreciating asset that has been given away grows outside of your estate."

Depending on what that gift is paying for, there's a chance you can give even more. If the gift is used to pay for higher education or medical expenses, there is no limit on the amount that can be given tax free. This is where we caution Connecticut residents about their state's gift tax, though -- the only one of its kind that remains. That lifetime gift tax credit doesn't apply to you, as your state's gift tax threshold halts you at less than 50 percent of that total.

3. Real Estate Transfers

This is where things get costly in a hurry. Real estate can represent a huge chunk of assets, especially if there is more than one property involved.

To avoid that hit, Smolen suggests using limited partnerships to transfer real estate and limit the tax value of those assets. Beneficiaries can then be given shares in that limited partnership either directly or in trust. That can discount the value of that real estate and, since there is a lack of control and a minority discount applied in many cases, it reduces the amount of the gift tax exemption excluded.

In fact, Smolen suggests that the secret to avoiding more taxes on that real estate for beneficiaries later is to keep paying them now even if the property is already in the partnership. If that donor is willing to pay the income taxes due on the trust, the payment of such taxes isn't considered a further gift. By paying the tax bill, a donor can reduce his or her estate, all without consuming the estate/gift tax credit.

"Any gift that would work a hardship on the family should be scrutinized," Smolen says. "There's a joke that, 'You should always fly first class -- because if you don't, your children will.' "

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Fun for Less: 19 Strategies for Saving on Entertainment

March 13, 2015, 11:00 pm

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Filed under: Fantastic Freebies, How to Save Money, Music & Entertainment, Saving

By Marilyn Lewis

When you're on a budget, whittling spending on non-essentials matters. But so does the quality of your life. To get a gauge of your own spending, consider that American households (of all sizes) spent an average of $2,625 on food outside home in 2013, according to the latest numbers in the U.S. Bureau of Labor Statistics' Consumer Expenditure Survey. We also dropped $2,482, on average, on entertainment.

1. Dine Out Strategically

Enjoy restaurant meals while saving serious money by eating lightly. It's easy to overeat at restaurants anyway, and ordering less is widely accepted today as a means of maintaining health.

Here's how to care for yourself and your budget:

Take the edge off your appetite by having a healthy snack before leaving home.
Share an entree, halving the cost of the most-expensive part of the meal.
Order appetizers and dessert and skip the main course. Or enjoy just a drink and appetizers.
Try pricier restaurants at lunchtime, rather than dinner. Often they offer much the same menu but with smaller portions and lower prices.
Planning helps you avoid ordering on impulse: Read a restaurant's menu online before leaving home. Many have menus on their websites, or check UrbanSpoon or AllMenus.

2. Embrace the Happy Hour

Happy hour, when bars and taverns offer discounted drinks and cheap or free food in the late afternoon, is enjoying a resurgence in many cities. Search online for the name of your town and "best happy hour" for reviews of the best local spots. Happy hour prices are offered during limited hours so order moderately and keep an eye on the clock. Popular Mechanics reviews five apps for locating happy hours near you.

3. Explore Culinary School Restaurants

You will find culinary academies and community colleges in many cities with restaurants that are open to the public. These allow student chefs a chance to train in a professional atmosphere. Prices can be low and the quality high. For instance, the restaurant L'Ecole is a training ground for would-be chefs attending the International Culinary Center in New York City. According to Fodor's Travel, graduates include famed chefs Jose Andres, Jacques Pepin, Emily Luchetti, Dan Barber and Wylie Dufresne.

4. Check Restaurant Websites

A restaurant's site is a great place to learn about dinner deals, happy hour specials, coupons and promotions. Sign up for restaurants' emails for special offers and notices of events. For more ideas, read 15 Ways to Cut Your Fine Dining Bill in Half.

5. Use Entertainment Books

Many cities and local charities sell books with discounted coupons for restaurant meals. Or buy The Entertainment Book for two-for-one coupons and half-off discounts at restaurants and entertainment spots. If you eat out often, you're likely to get your money's worth and then some.

6. Purchase Dining Certificates

At Restaurant.com you can purchase certificates that can significantly reduce the cost of dining out. Pay $4 for a certificate worth $10, for example. However, read the fine print carefully. There may be catches, including a minimum purchase may be required. Get additional dining discounts by subscribing to Restaurant.com's newsletter. Here are 6 More Tips to Save at Restaurant.com. Also, watch local newspaper ads for restaurant coupons.

7. Order to Go

Buying a restaurant's entrees to go can save you half or more on the cost of restaurant food by eliminating the cost of the tip, drinks, appetizers and dessert. Take the food home and build around the entrees to make a meal. Or pack up your food and visit a park or museum on free-entrance days (check their websites to learn when admission is free).

8. Rethink Spending on Live Sports

If you are on a budget, professional sporting events may be out of your league. Judge for yourself: Forbes contributor Maury Brown used Team Marketing Report's 2014 Fan Cost Index to get these average per-game prices for tickets, refreshments, caps and programs for a family of four:

Major League Baseball: $212.46.
National Basketball Association: $326.60.
National Hockey League: $359.17.
National Football League: $459.65.

Having trouble coughing up $200 to $450 for a single outing? Save big by watching professional games at home or at a sports bar. Or become a fan of local professional, collegiate and high school teams.

9. Try Tribute Bands

"There's something magical about being there live when it happens," writes Forbes' Maury Brown of music concerts. However, as he points out, "concerts have become something that many have to pick and choose to go see, as opposed to a time when many went to each and every show that came through town." Brown's solution for those who love live music: Explore the world of tribute bands. "Many tribute concerts see reasonable prices at around an average price of $10-$15 per show, and there are lots of them to choose from of high quality," music promoter Jason Fellman tells Brown.

10. Attend Matinees

Likewise, nothing can replace an electric performance by professional actors in a resident theater company (See the League of Resident Theaters member companies by city. But the price of live theater can be steep. Depending on the company, the seats and the performance, ticket prices can range from less than $20 to more than $100. You can enjoy live theater for less by attending cheaper weekday matinees.

11. Embrace Local Theater

Another way to enjoy live theater on a budget is to experiment attending local amateur and student theater performances. Keep an eye on local newspapers and magazines for reviews tipping you off to the best performances.

12. Don't Pay Full Price for Broadway Shows

Visiting New York City? "Broadway shows often have a dip in the price of tickets for their Wednesday matinee shows," according to NYTix.com. Find same-day box-office discounts from the Theater Development Fund. And read New York Magazine's Broadway Ticket FAQs to find the best deals.

13. Revel in HD Streaming at Local Movie Theaters

Some of the world's best plays, dance performances and opera are available in your town thanks to HD streaming in local movie theaters. You'll find, for example, works broadcast live or taped from the Stratford Shakespeare Festival, the Bolshoi Ballet, the New York City Ballet and London's National Theater Live.

One example: The Metropolitan Opera streams live HD performances that can be seen at participating U.S. movie theaters. Ticket prices vary by location but are a fraction of the cost of a live performance. Sophisticated camera work and upgraded sound and video give HD viewers a better vantage of the stage than even attendees at the live performances enjoy. Check local newspaper and magazine entertainment sections and websites to find performances near you. Streaming HD performances have critics. The pros and cons are discussed online at WBUR, NPR's Boston station.

14. Find Cheap Movies

So much free quality entertainment is available online (read "Where to Watch Free Movies and TV Online") that you hardly need to leave the house. But sitting around in your sweats eating homemade popcorn gets old. You can enjoy a movie house without the pain of high-priced tickets by patronizing matinees (find ticket prices on your theater's website). And many cities have "dollar theaters" that play second-run films at bargain prices. Check local newspaper and entertainment websites or search online for your city and "cheap movie theaters."

15. Volunteer

Volunteering at local events gets you into the concerts, festivals and plays you want to see free of charge. Offer your services to the sponsoring organization as an usher, ticket-seller, coat checker, program distributor or to do whatever else is needed. "In exchange, volunteers not only get to see performances for free but also may acquire backstage access," says AARP, in an article on cutting the cost of entertainment.

16. Check Out the Library

Local libraries are a rich source ;of free reading, listening and viewing. Well, not entirely free: Our taxes support them, so getting your money's worth is another reason to use the library. In fact, you may even be eligible for membership in two libraries, ones run by your city and county. Among the many money-saving perks:

Ask a library to borrow from another library books not in the local catalog.
Find sales of cheap used books and sources of free books and periodicals at library fundraisers and free book bins.
Library bulletin boards post free and low-cost local events.
Download electronic books and music.
Electronic database subscriptions let card-holders read popular and obscure newspapers, periodicals and journals online.

17. Find Free Ebooks and Audio Downloads

The volunteer Project Gutenberg offers free downloads of around 46,000 ebooks. These are free because the books' copyrights have expired and volunteers have digitized and proofread them. No fee or registration is required, but a small voluntary donation is asked to keep the gift going. Also, the project needs volunteers to help digitize books or read them aloud for recordings. Affiliated projects around the globe offer tens of thousands more books, including audio books, in many languages.

18. Try a Coupon Site

Groupon, Living Social and other daily deal sites -- Kiplinger reviews 15 -- sell coupons for discounted prices at restaurants and for entertainment and recreational experiences. You've got to use discipline to save money on these sites, though. It's scarily easy to buy, buy, buy, telling yourself you're getting great deals.

19. Get a (Cheap) Hobby

Find the right hobby, and you'll have hours and hours of entertainment at your fingertips. The trick is finding one that doesn't eat your budget alive. For ideas:

Lifehacker lists 10 inexpensive hobbies, such as hiking, blogging, ballroom dancing and making music.
MainStreet's list of cheap hobbies includes herb gardening, knitting, woodcarving, baking, puzzles, yoga and bird watching and more.
Some people turn hobbies into businesses. Blogging, eBay, freelance writing, performing and some crafts have potential.

Planning some spring or summer travel? Click here for "17 Proven Ways to Save on Vacation"

Like this article? Sign up for our newsletter and we'll send you a regular digest of our newest stories, full of money saving tips and advice, free! We'll also email you a PDF of Stacy Johnson's "205 Ways to Save Money" as soon as you've subscribed. It's full of great tips that'll help you save a ton of extra cash.

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Your Next Big Mac Order May Be on Your Smartphone

March 16, 2015, 3:35 am

≫ Next: Don't Want NSA to Spy on Your Email? 5 Things You Can Do

≪ Previous: Fun for Less: 19 Strategies for Saving on Entertainment

Filed under: Company News, Technology, McDonald's, Restaurants, Mobile Technology

McDonald's (MCD) is ready to take a big bite out of small screens. The world's largest burger chain is standing behind its plan to roll out a major mobile initiative later this year, even after a test last year of an app that offered mobile ordering and a payment platform served up mixed reviews.

"We are a little late to the game," McDonald's chief administrative officer Pete Bensen said earlier this month during a presentation at the UBS Global Consumer Conference. "We have dedicated significant resources to get ahead of the pack."

What could one do with a McDonald's app? Well, one doesn't have to guess. The chain is promoting the app on its website, even offering a free sandwich in exchange for the download.

There's a catch: Unless you happen to be living in the select markets within New Mexico or North Carolina, the app won't do you any good. It's just a regional test, and hopefully a national rollout will follow soon.

You Deserve a Break Today

It makes perfect sense for fast-food chains to embrace mobile. The larger operators have plenty of nearby outlets, making it useful to find the nearest location on GPS-enabled smartphones. Chains can also promote menu additions, and rival burger flippers are outdoing even what McDonald's is merely testing out.

Burger King's (BKW) app offers coupons that are routinely refreshed, and unlike the regional McDonald's application, BK's offering went national last year. Fast-growing cult fave Five Guys has allowed mobile ordering for years, and Wendy's (WEN) lets hungry diners pay for their meals right through the app.

It's not just the burger chains raising the bar: Yum Brands (YUM) pie twirler Pizza Hut recently announced that it's working on a way for drivers in Web-tethered vehicles to order pizzas from their car dashboards.

Phoning It In

Everyone seems to be doing something with their apps, and McDonald's is falling behind by its own admission. It can certainly use the push. Comparable-restaurant sales fell 4 percent last month relative to February of last year. The chain is closing in on what should be its sixth consecutive quarter of negative comps.

One can always argue that things like mobile ordering don't make sense for chains that pride themselves on speedy service. Why preorder on a phone when a drive-through window can do the trick? It also remains to be seen if the inevitability of mobile ordering at McDonald's will result in new additions to the layout of the existing restaurants like dedicated pickup windows or reserved parking spaces for curbside delivery.

However, it's easy to see why things like push notifications of customized deals based on the time of day and smartphone owner preferences could really start to drive traffic from folks who weren't planning on making McDonald's part of their day. There's a lot of power in connectivity, and McDonald's has just failed to harness it.

Things should change this year. A new CEO took over at McDonald's this month, and he has a strong marketing background. With many of its key competitors already declaring that mobile is a battlefront worth attacking, it's only right for the top dog to pounce. The time is ticking at a time when the registers are not.

Motley Fool contributor Rick Munarriz has no position in any stocks mentioned. The Motley Fool recommends McDonald's. 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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Don't Want NSA to Spy on Your Email? 5 Things You Can Do

March 16, 2015, 3:41 am

≫ Next: Anticipated Huge Deals on Tablets Help You, Hurt Makers

≪ Previous: Your Next Big Mac Order May Be on Your Smartphone

Filed under: Identity Theft, U.S. Government, Computer Industry, Consumer Protection, Internet Fraud

NSA Surveillance — **Patrick Semansky/AP**

By MICHAEL LIEDTKE

SAN FRANCISCO -- More than half of Americans are worried about the U.S. government's digital spies prying into their emails, texts, search requests and other online information, but few are trying to thwart the surveillance.

That's according to a survey from Pew Research Center, released Monday. A main reason for the inertia? Pew researchers found that a majority of those surveyed don't know about online shields that could help boost privacy or believe it would be too difficult to avoid the government's espionage.

The poll questioned 475 adults from Nov. 26 to Jan. 3 -- about a year-and-a-half after confidential documents leaked by former National Security Agency contractor Edward Snowden revealed the U.S. government has been monitoring a broad range of online communications for years as part of its efforts to diffuse terrorist threats.

"It all boils down to people sort of feeling like they have lost control over their data and their personal information," Mary Madden, a senior researcher for Pew, told The Associated Press. "But at the same time, when we asked them if they would like to do more, folks expressed that as an aspirational goal."

Here are five steps you can take to be more private online.

Stealthy Searching

Don't want a digital dossier of your personal interests to be stored and analyzed? Wean yourself from the most popular search engines -- Google (GOOGL), Bing (MSFT) and Yahoo (YHOO). All of them collect and dissect your queries to learn what kinds of products and services might appeal to you so they can sell advertising targeted to your interests. Just because that trove of data is meant to be used for commercial purposes doesn't mean snoopers such as the NSA couldn't vacuum up the information, too, to find out more about you. A small search engine called DuckDuckGo has been gaining more fans with its pledge to never collect personal information or track people entering queries on its site.

Just 10 percent of those participating in Pew's survey said they use a search engine that doesn't track their searching history.

Scramble Your Email

Encryption programs such as Pretty Good Privacy, or PGP, can make your email appear indecipherable to anyone without the digital key to translate the gibberish. This can help prevent highly sensitive financial and business information from getting swept up by hackers, as well as a government dragnet. Yet only 2 percent of the people surveyed by Pew used PGP or other email encryption programs.

Cloak Your Browser

A privacy tool called Blur, made by Abine, enables its users to surf the Web without their activities being tracked. It also masks passwords and credit card information entered on computers and mobile devices so they can't be lifted from the databases of the websites that collect them. Blur charges $39 annually for this level of protection. Privacy Badger from the Electronic Frontier Foundation, a digital rights group, offers a free way to block tracking of browsing activity.

Only 5 percent of the Pew respondents used these kinds of tools.

Cut Out the Internet

It might sound old-school, but if you want to share something really sensitive, meet face to face. The Pew poll found 14 percent of respondents are choosing to speak in person more frequently rather than text, email or talk on the phone because of the Snowden revelations.

Get Smarter

If you're looking to become more literate about the ins and outs of digital privacy, two of the most comprehensive guides can be found through the Electronic Frontier Foundation's Surveillance Self-Defense site.

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Anticipated Huge Deals on Tablets Help You, Hurt Makers

March 16, 2015, 3:54 am

≫ Next: Why the Fed Is Losing 'Patience' in Raising Interest Rates

≪ Previous: Don't Want NSA to Spy on Your Email? 5 Things You Can Do

Filed under: Company News, Apple, Earnings, Computer Industry, Mobile Technology

Coding For Kindergarteners — **Stephan Savoia/AP**

"Apple's holiday quarter was one for the record books. Despite strong competition from its rivals, [Apple] managed to grow its iPhone unit sales to an all-time high. ... The only dent in Apple's otherwise perfect earnings report was the iPad. Sales of Apple's tablet dropped from 26.04 million units in Q1 of 2014 to 21.4 million units in Q1 2015."

That's how Internet shopping advisory website DealNews.com described Apple's (AAPL) first quarter of the new year. (For our own detailed take on Apple's earnings, click here.) And yet, according to DealNews, Apple's pain could be your gain -- if you play it smart.

Citing challenges that range from the "rise of the phablet" for media consumers, to tablets' unsuitability for most office tasks, to the simple explosion of options for anyone who wants to own a tablet computer -- whatever the reason for iPad's recent sales weakness, DealNews predicts Apple will have to cave on pricing if it wants to sell more iPads this year.

In fact, DealNews is so certain that discounts are coming, that it's declared 2015 "the year of the iPad deal" for tablet shoppers.

Good, Better, Better-er

Fact is, 2014 was already a pretty good year for iPad shoppers. According to DealNews, "2014 saw a 40 percent increase in iPad deals" available to consumers from outlets such as Fry's, Target (TGT) and eBay (EBAY). Instances of "rare or all-time low prices" spotlighted by DealNews jumped 125 pecent compared to 2013.

Crucially, DealNews notes that even post-holiday season, iPad prices continued to fall, with new iPad Air 2's -- a model that's only been out for about six months -- being sold for as little as $390. The website now predicts that this "incredible bargain" price (then) will be even easier to find in 2015.

So What's the "Bad" News?

All of this is certainly good news for anyone in the market for a brand-new (or used) iPad. The news will be less good, however, for Apple shareholders -- and potentially much, much worse for Apple's competitors.

Consider: The latest "teardown" analysis of Apple's iPad Air 2 suggests Apple is reaping lower gross margins on the product than it received from the preceding iPad model -- potentially four points' worth of gross margin less, at somewhere between 45 percent and 57 percent. (Gross margin is basically the price Apple charges for a device, minus the cost of its components and manufacturing, divided by the price. Tech research firm IHS iSuppli routinely publishes reports on these estimated gross margins by "tearing down" new models and estimating their component and manufacturing costs.) Notably, the iPad Air 2 is the same device that DealNews says has been selling for "incredible bargain prices" lately.

Meanwhile, Samsung's closest-competing product, the Galaxy Tab S 10.5, is priced "very similarly" to iPad Air 2 (according to UK tech firm PC Advisor ). It's also believed to generate similar profit margins for Samsung. (iSupply pegged the last model, the Galaxy Note 10.1, at about a 46 percent gross margin.) Other, lower-end Samsung tablets, in contrast, are believed to be generating "very little profit margin."

Other rivals could be in even worse shape -- even losing money. AppleInsider.com reports that Microsoft (MSFT) has flooded the market with Surface tablets but is losing money on the business. In a single quarter in 2013, the company wrote off nearly $1 billion in inventory when units, shipped to retailers, had difficulty selling.

Meanwhile, Amazon (AMZN) is widely understood to be selling its media consumption devices, such as the Kindle Fire line of tablets, at break-even profit margins. It's even been known to sell them for less than the cost of their component parts, in hopes of making up the difference, and earning a profit, through sales of content and merchandise via the Kindles. Google (GOOG) (GOOGL) is similarly believed to be selling its Nexus tablets at essentially breakeven prices.

What This Means for Investors ... and Shoppers

If DealNews is right, there's a price war brewing in tech land this year, with all parties involved likely to suffer as they attempt to undercut one another on pricing. That's going to be bad news for anyone invested in Apple stock -- and worse news for people investing in the manufacturers of lower-profit margin tablets, who may end up selling their devices at a loss.

But for the rest of us? DealNews is right: If a price war breaks out, this will be a shopping season to remember -- whether you're in the market for an iPad or really, for any tablet at all.

Motley Fool contributor Rich Smith has no position in any stocks mentioned. And lucky him, he just bought his first iPad ... before the price war broke out. The Motley Fool recommends and owns shares of Amazon.com, Apple, eBay and Google (A and C shares). Try any of our Foolish newsletter services free for 30 days. Check out our free report on one great stock to buy for 2015 and beyond.

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Why the Fed Is Losing 'Patience' in Raising Interest Rates

March 16, 2015, 5:50 am

≫ Next: Market Wrap: Stocks Rise as Dollar Drops, Fed Worries Ease

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

By MARTIN CRUTSINGER

WASHINGTON -- For the Federal Reserve, patience may no longer be a virtue.

Surrounding the Fed's policy meeting this week is the widespread expectation that it will no longer use the word "patient" to describe its stance on raising interest rates from record lows.

The big question is: What will that mean?

Many economists say the dropping of "patience" would signal that the Fed plans to start raising rates in June to reflect a steadily strengthening U.S. job market. Others foresee no rate hike before September. And a few predict no increase before year's end at the earliest.

Complicating the decision is a surging U.S. dollar, which is keeping inflation far below the Fed's target rate and posing a threat to U.S. corporate profits and possibly to the economy. A rate increase could send the dollar even higher.

In a statement it will issue when its meeting ends Wednesday and in a news conference Chair Janet Yellen will hold afterward, the Fed isn't likely to telegraph its timetable. Yellen has said that any decision to raise rates will reflect the latest economic data and that the Fed must remain flexible.

Still, nervous investors have been selling stocks out of concern that a rate increase -- which could slow borrowing and spending and weigh on the economy -- is coming soon.

"I think the odds are better than 50-50 that the Fed ... will drop the word 'patient' at the March meeting, and that would put an initial rate hike in play, perhaps as early as the June meeting," said David Jones, author of several books about the Fed.

Historically, the Fed raises rates as the economy strengthens in order to control growth and prevent inflation from overheating. Over the past 12 months, U.S. employers have added a solid 200,000-plus jobs every month. And unemployment has reached a seven-year low of 5.5 percent, the top of the range the Fed has said is consistent with a healthy economy.

Where's Inflation?

The trouble is that the Fed isn't meeting its other major policy goal -- achieving stable inflation, which it defines as annual price increases of around 2 percent. According to the Fed's preferred inflation gauge, prices rose just 0.2 percent over the past 12 months. In part, excessively low U.S. inflation reflects sinking energy prices and the dollar's rising value, which lowers the prices of goods imported to the United States.

It isn't just inflation that remains below optimal levels. Though the job market has been strong, the overall economy has yet to regain full health. The economy slowed to a tepid 2.2 percent annual rate in the October-December quarter, and economists generally think the current quarter might be even weaker. Manufacturers are struggling with falling exports, partly because of the strong dollar, and consumers -- the drivers of the economy -- have seemed reluctant to spend their windfall savings from cheaper energy.

The last thing the Fed wants to do right now is spook the markets and the economy into an even slower growth trajectory.

What's more, pay for many workers remains stagnant, and there are 6.6 million part-timers who can't find full-time jobs -- nearly 50 percent more than in 2007, before the recession began.

For those reasons, some analysts think it would be premature to raise rates soon.

"The last thing the Fed wants to do right now is spook the markets and the economy into an even slower growth trajectory," said Brian Bethune, an economics professor at Tufts University.

After it met in December, the Fed said for the first time that it would be "patient' about raising rates. Yellen said that meant there would be no increase at the Fed's next two meetings. And in testimony to Congress last month, she cautioned that even when "patient" is dropped, it won't necessarily signal an imminent rate hike -- only that the Fed will think the economy has improved enough for it to consider a rate increase on a "meeting-by-meeting basis."

'Glacial' Process

Some economists say the Fed may tweak its policy statement this week to signal that a higher inflation outlook would be needed before any rate hike. And they expect the Fed to go further in coming months to ready investors for the inevitable.

"The process is going to be glacial," said Diane Swonk, chief economist at Mesirow Financial in Chicago. "They want to prepare the markets for change, but they don't want to scare them."

Though Swonk thinks the Fed will drop "patient" from its statement this week, she doesn't expect a rate hike before September. Even then, she foresees only small increases in its benchmark rate.

Sung Won Sohn, an economics professor at the Martin Smith School of Business at California State University, suggested that the Fed's strategy in beginning to raise rates won't be to slow the economy. Rather, he thinks the goal will be to manage the expectations of investors, some of whom weren't even in business in 2004, the last time the Fed began raising rates.

"The Fed is just trying to send a message that the world is about to enter a new age after a long period of low interest rates to a period of rising rates," Sohn said.

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Market Wrap: Stocks Rise as Dollar Drops, Fed Worries Ease

March 16, 2015, 9:39 am

≫ Next: Audit Red Flags: How to Avoid an IRS Examination

≪ Previous: Why the Fed Is Losing 'Patience' in Raising Interest Rates

Filed under: Currency, Market News, Federal Reserve, Oil & Gas Industry, Interest Rates

Financial Markets Wall Street — **Richard Drew/AP**

By Caroline Valetkevitch

U.S. stocks rallied Monday as the U.S. dollar eased back from its recent peak and worries eased about the timing of a Federal Reserve interest rate hike.

Recent dollar strength has increased expectations the Fed could be more cautious about raising rates this year.

The day's gains gave the S&P 500 its biggest percentage gain since Feb. 3, with the S&P utilities, which tend to do well in a low interest rate environment, among the day's best-performing sectors. The utilities sector rose 1.7 percent.

It seems to me that interest rate expectations are driving the market right now.

The S&P health care sector led gains in the S&P 500. It jumped 2.2 percent, helped by a 5.7 percent price increase in shares of Amgen (AMGN) to $163.03, following promising data in studies of a new class of cholesterol-reducing drugs.

All eyes will be on the Fed's statement Wednesday, when investors hope the central bank will give a clearer signal on the timing of its first interest rate hike in almost a decade.

"It seems to me that interest rate expectations are driving the market right now," said Uri Landesman, president at Platinum Partners in New York. "Every day when they think it's going to start, they get nervous and sell them off. And every day they think it may be slower or not begin, then they take them up."

The day's decline in the dollar helped ease some worries over how a robust greenback might erode the earnings of multinationals.

The Dow Jones industrial average (^DJI) rose 228.11 points, or 1.29 percent, to 17,977.42, the Standard & Poor's 500 index (^GSPC) gained 27.79 points, or 1.35 percent, to 2,081.19 and the Nasdaq composite (^IXIC) added 57.75 points, or 1.19 percent, to 4,929.51.

The Dow and S&P 500 had registered their third week of losses last week.

Stocks Making News

Energy shares also bounced, adding to gains late in the session despite further losses in oil prices. The S&P energy index was up 1.4 percent, while U.S. crude oil settled down 96 cents at $43.88 a barrel and earlier hit its lowest since March 2009.

Shares of Exxon Mobil (XOM) were up 1.1 percent at $84.76.

Salix Pharmaceuticals (SLXP) shares rose 2 percent to $172.75 after it agreed to an increased $173 per share offer from Valeant Pharmaceuticals. Valeant (VRX) shares were up 2.5 percent at $202.34.

The biggest percentage decliner in the S&P 500 was Avon Products (AVP), which was down 5.7 percent at $7.28 after S&P Dow Jones Indices announced late Friday the stock would be moved out of the S&P 500 this month.

About 6.2 billion shares changed hands on U.S. exchanges, below the 6.6 billion average for the month to date, according to BATS Global Markets.

Advancing issues outnumbered declining ones on the NYSE by 1,980 to 1,083, for a 1.83-to-1 ratio; on the Nasdaq, 1,549 issues rose and 1,202 fell, for a 1.29-to-1 ratio favoring advancers.

The S&P 500 posted 56 new 52-week highs and 10 new lows; the Nasdaq composite recorded 168 new highs and 64 new lows.

-With additional reporting by Sinead Carew.

What to watch Tuesday:

Federal Reserve policymakers begin a two-day meeting to set interest rates.
The Commerce Department releases housing starts for February at 8:30 a.m. Eastern time.

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

Adobe Systems (ADBE)
Burlington Stores (BURL)
DSW (DSW)
Oracle (ORCL)

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Audit Red Flags: How to Avoid an IRS Examination

March 16, 2015, 11:00 pm

≫ Next: Etsy's Going Public: Here's What You Should Know

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Filed under: Taxes, U.S. Government, Audits, Income Tax

What two words cause the most panic to Americans? There are probably a hundred funny responses running through your mind right now, but we were thinking of a less humorous response: "IRS audit."

Your odds of avoiding an audit are usually pretty good. The Internal Revenue Service reviewed 1.4 million tax returns in 2013. With 146 million returns filed, that is less than a 1 percent audit rate.

However, there are some red flags that are likely to increase your odds of being audited. Some of these cannot be avoided, but others are essentially errors in judgment.

You are wealthy. The IRS disproportionately audits wealthier Americans. Why? As the famous bank robber Willie Sutton allegedly said, "Because that's where the money is." Think of it as a return on investment of IRS time. While there may be an element of return on investment involved, there are also more benign reasons. Wealthier Americans have more potential deductions and tax shelters to claim and more complicated tax forms in general, thus it is reasonable that their forms receive more scrutiny. Taxpayers with incomes over $10 million had an almost 30 percent chance of being audited; $5 million draws a 20.75 percent chance of an audit (using 2011 statistics). You are least likely to be audited if your adjusted gross income is between $25,000 and $50,000 (0.73 percent).
Low or no reported income. So much for the Willie Sutton theory. Low incomes receive more scrutiny to verify that the Earned Income Tax Credit is not being falsely claimed and that income isn't being underreported.
Mismatching income. Discrepancies between W-2/1099 forms and your reported income are easily picked up by the IRS computers. Make sure that all of your taxable income is reported and matches your forms.
Disproportionate charitable contribution. Expect an audit if you made contributions that are out of line with your average income range, failed to file a Form 8283 with your larger donations, or made a one-off large contribution such as a donation of property to a charity.
Home office deductions. The definition of a "home office" is stretched often enough that it tends to receive a closer examination. Make sure you meet the "exclusive and regular" business use requirement and be prepared to prove it.
Calling a hobby a business. Continually unprofitable home businesses are likely to be considered as hobbies by the IRS (and really should be, if the business is truly unprofitable). The general rule is that the venture must earn a profit in three out of the five previous years to be truly considered a business.
Holding foreign bank accounts. Thanks to the Foreign Account Tax Compliance Act, overseas accounts require notifications to the Treasury Department and other paperwork depending on the size and nature of the accounts. Make sure all necessary paperwork is filed in a timely fashion -- and even then, expect an audit if your account resides in a known tax haven.
Excessive business deductions. IRS agents are quite adept at spotting sketchy business deductions where lines are blurred between personal and business expenses or the amounts seem excessive. Be prepared to defend all the business deductions you claim.
Multiple deduction claims for children. Divorced couples do not always agree on who should claim their children as dependents, and only one can do so. If the same child's Social Security number ends up on two different returns, guess what will happen?

To any IRS agents who may be reading this article, we actually appreciate your service ... and we were just kidding about the Willie Sutton remarks. Please don't audit us.

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Etsy's Going Public: Here's What You Should Know

March 16, 2015, 11:00 pm

≫ Next: 5 Ways to Join the 1,826 People in the Billionaires' Club

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Filed under: Company News, Technology, Retail, Consumer Goods, IPOs

Etsy, the online marketplace where craft mavens offer everything from bohemian wedding dresses to coffee tables built from 200-year-old reclaimed Douglas fir, filed its registration statement on March 4 for an initial public offering. Estimates place the amount to be raised at between $100 million and $300 million. Let's look behind those numbers.

Based in Brooklyn, New York, Etsy plays an increasingly visible role in the freelance economy, which has grown significantly since the recession of 2008-2009. Etsy allows legions of independent craft entrepreneurs to access a global marketplace. In the company's IPO filing, it points out that its platform now claims sellers, buyers or both in nearly every country in the world.

How Etsy Makes Its Money

The heart of Etsy's business model isn't too far removed from that of online commerce pioneer eBay (EBAY). Etsy gets just over half of its revenue from the 3.5 percent transaction fee it charges sellers on each completed transaction, as well as a 2-cent listing fee for each item presented in an Etsy store.

Most of the company's remaining revenue comes from services aimed at increasing merchants' sales. Sellers can pay for favored placement in Etsy's search results. For a fee, they can also simplify the sales process using Etsy's Direct Checkout and/or shipping services.

Management is quick to point out that Etsy's fortunes are tied to those of its merchants. Helping active sellers succeed expands the company's overall transaction base, which it refers to as "gross merchandise sales," or GMS.

So while Etsy certainly profits from its menu of upsells to shop owners, the services are designed to promote sellers' businesses, which in turn help expand Etsy's GMS. And that GMS is no small pie: Etsy facilitated almost $2 billion in transactions last year.

Given this model, what does Etsy's bottom line look like? In 2014 the company incurred a loss of $15.2 million on $195.6 million in revenue. Management points out that adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) was positive in 2014, at $23.1 million.

Etsy's recent profit and loss statements reflect a young company trying to exploit a unique market niche and expand swiftly. The craft transaction house more than doubled marketing expenses last year to $39.6 million. It also poured money into technology, increasing product development expenditures by a third, to $36.6 million. So far, the company's losses appear to be manageable, and somewhat balanced by positive cash flow. Etsy generated $12 million in cash from operations in 2014.

A Business Risk: Selling More, or Selling Out?

Here's a simple problem to consider when evaluating Etsy's growth prospects: If the company is designed to attract buyers of handmade goods, what happens when popular sellers max out their production capacity? After all, handmade crafts are inherently time-consuming to produce.

The company's solution so far has been to help sellers partner with small-scale manufacturers. Etsy acknowledges that by allowing sellers to expand in this fashion, even when teaming up with "responsible manufacturers," it may be chipping away at the handmade philosophy that's driven its success.

But Etsy maintains that it can preserve the "spirit of craftsmanship" even as vendors turn to "small batch manufacturers." This formula may alienate typical Etsy buyers, whom management describes as not solely price-driven, but valuing "craftsmanship, artistry, uniqueness, authenticity and sustainability."

On the other hand, the company could conceivably use some of its IPO proceeds to further refine its vision of local, short-run manufacturing. Providing assistance to fledgling manufacturing collectives while proving the positive economic impact of this developing ecosystem would probably resonate with Etsy's socially conscious buyers.

Positioned for Growth on Several Fronts

Etsy's IPO filing reflects thoughtful attention to finding new avenues for expansion. Take the recently launched "Etsy Wholesale" business, which matches corporate buyers with approved vendors to supply both boutiques and large retailers with curated, non mass-manufactured goods. Whole Foods Market (WFM) and Nordstrom (JWN) are two high-profile names among the initial participants in Etsy Wholesale.

Over a longer period of time, Etsy seems well placed to take advantage of major technology-centered and economic trends. Of the $2 billion in 2014 transaction volume mentioned earlier, 36 percent of purchases were made on a mobile phone, and 31 percent were completed outside the U.S.

Perhaps the most powerful trend in Etsy's favor is the rise of female entrepreneurs in both developed nations and emerging economies. According to the World Bank, at least 30 percent of women worldwide in the informal sector (home-based or small-scale businesses) are self-employed. In the U.S., women-owned business are growing at double the rate of all other companies. Etsy swims in the middle of this opportunity: In surveying its own member base using a U.S. sample, the company found that 86 percent are women, and 95 percent run their businesses out of their homes.

Statistics would indicate that many more markets worldwide are ripe for Etsy's model. For example, in Mexico alone, 30 percent of businesses run by females are operated out of the home, providing a massive base of potential future Etsy sellers.

This company of just 685 employees certainly claims an intriguing space in the evolving global economy. Consider adding the "ETSY" symbol to your portfolio watchlist after its debut this spring. There may be promise yet in putting some investment dollars behind handmade goods.

Motley Fool contributor Asit Sharma has no position in any stocks mentioned, but he is itching to pull the trigger on a writing desk he found on Etsy while researching this article. The Motley Fool recommends eBay, Nordstrom and Whole Foods Market. The Motley Fool owns shares of eBay and Whole Foods Market. John Mackey, co-CEO of Whole Foods Market, is a member of The Motley Fool's board of directors. Try any of our Foolish newsletter services free for 30 days. Check out our free report on one great stock to buy for 2015 and beyond.

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5 Ways to Join the 1,826 People in the Billionaires' Club

March 16, 2015, 11:00 pm

≫ Next: Don't Go Broke From Those Medical Bills - Negotiate

≪ Previous: Etsy's Going Public: Here's What You Should Know

Filed under: Personal Finance, Celebrities, Warren Buffett, Entrepreneurs, Financial Education

By Maryalene LaPonsie

The Forbes annual list of billionaires hit the web earlier this month, highlighting the 1,826 people who have so much money I can't even begin to imagine what they do with it. Maybe you're feeling a little jealous and wishing you could join their ranks. Well, here are five ways to do just that.

1. Have Super-Rich Relatives

The vast majority of the world's billionaires made their own money, but a couple hundred can thank a relative for their spot on the list of wealthiest humans in the world. In 2015, Forbes reports 230 inherited their wealth, while another 405 inherited part of their wealth. Here are a couple of examples:

Laurene Powell Jobs: Coming in at No. 45 on the list, the widow of Apple's Steve Jobs has a $19.4 billion net worth.
Carrie Perrodo: Farther down the list, in the No. 149 spot, is Carrie Perrodo. The widow of entrepreneur Hubert Perrodo, a French oil mogul, polo player and art collector. She is worth $8.8 billion.
Jorn, Finn and Kirsten Rausing: The Rausing siblings share in the fortune created by their grandfather's Tetra Pak invention, but somehow Jorn has come out ahead. He landed at No. 271 on the Forbes list with a net worth of $5.5 billion, while his siblings share the No. 301 spot and each have a net worth of $5.1 billion. (Family get-togethers must be awkward).

Perhaps money isn't coming down the pipeline from mom and dad, or maybe you're not feeling confident in your ability to marry rich (hello, eligible bachelors of Silicon Valley). Not to worry. There are still plenty of other ways to get on the Forbes list.

2. Get In On the Ground Floor of a Hot, New Trend

You could figure out what the kids want to do next and be first in line to give them what they want. That's how lots of the young billionaires on the Forbes list made their money.

Mark Zuckerberg: So young! So rich! The 30-year-old became the 16th richest person in the world and accumulated a $33.4 billion net worth by creating Facebook. Mark Zuckerberg knew we would want to share everything about our life with the world before we knew we wanted to share everything about our life with the world.
Evan Spiegel and Bobby Murphy: At age 24 and 26 respectively, Evan Spiegel and Bobby Murphy are the youngest people on the Forbes list, worth $1.5 billion each and sharing the No. 1,250 spot. They founded SnapChat, an app that lets users send photos that disappear after being viewed, perfect for sexting teens who don't want to get caught.
Travis Kalanick: Ranked No. 283 and worth $5.3 billion, 38-year-old Travis Kalanick founded Uber, the service that lets just about anyone turn their car into a taxi.

Your guess is as good as ours as to what trend could turn you into a billionaire, but might we suggest that the Internet of Things offers potential?

3. Invent Something Spectacular

If you're up to the challenge, you might want to try creating an invention that revolutionizes the world. Play your cards right, and it could make you a billionaire. At least, that strategy worked for these folks.

Bill Gates: Yes, Bill Gates, richest man in the world for 16 of the last 21 years, is not an inventor in the Thomas Edison sense of the world. He didn't invent the computer or microprocessors, but he did invent new ways of using them and made personal computers a staple in every home. For that, he's worth $79.2 billion today.
Sara Blakely: Fifteen years ago, Sara Blakely invented the body-slimming lingerie Spanx. As her reward, Blakely is now worth $1 billion and is No. 1,741 on the list of world billionaires.
James Dyson: You may have seen billionaire No. 318 on television commercials, extolling the virtues of his Dyson vacuum cleaners. So many people apparently agree they're the greatest thing since sliced bread that Dyson is now worth $4.9 billion.

Have your own billion dollar innovation in mind? Then read our article on how to make money with your big idea.

4. Play Your Investments Right

Of course, starting a business and marketing your product is a lot of hard work. Wouldn't it be easier to simply make money off the companies that already exist? Why yes it would, some billionaires might say, such as these men who made a fortune off their investments:

Warren Buffett: Of course we have to include Warren Buffett here. He became the third richest man in the world, with a net worth of $72.7 billion, thanks to the smart investments he made as CEO of Berkshire Hathaway.
Carl Icahn: Only 30 people in the world are richer than Carl Icahn, who is ranked No. 31 thanks to his Icahn Capital Management firm. According to Forbes, Apple and Herbalife contribute to the investor's $23.5 billion net worth.
Prince Alwaleed bin Talal Alsaud: Over in Saudi Arabia, Prince Alwaleed can thank his stake in the Kingdom Holding Co. for much of his $22.8 billion net worth. Forbes ranks him No. 34 on the billionaires list.

While we can't promise you'll land on the billionaire list, you could use these tips to start investing even if you don't have much money.

5. Leverage the Biggest Economy in the World

Finally, there seems to be a new breed of billionaires, one that is making money off the purchasing power of 1.4 billion Chinese citizens. Of course, these billionaires may have started in China, but they aren't necessarily content to only do business there. Here are a few of the names making a splash, thanks to the China economy; ones you are sure to hear about in the years to come.

Jack Ma: Some say the founder of the e-commerce site Alibaba is poised to give Amazon a run for its money. How that will play out is up for debate, but there is no denying Jack Ma is the 33rd richest person in the world, with a net worth of $22.7 billion in 2015.
Lei Jun: Xiaomi sold 61 million smartphones last year and is what some call the Apple of China. It also made co-founder Lei Jun No. 87 on the Forbes list, worth $13.3 billion.
Wei Jianjun: Don't assume Americans are the only ones with a love of sport utility vehicles. Great Wall Motors makes them in China, and the company has helped propel its chairman, Wei Jianjun, to a net worth of $8.9 billion and a ranking of No. 147.

What's your take on the super rich? Which one would you want to be if you had the chance? Share in the comments section below, or on our Facebook page. Like this article? Sign up for our newsletter and we'll send you a regular digest of our newest stories, full of money saving tips and advice, free! We'll also email you a PDF of Stacy Johnson's "205 Ways to Save Money" as soon as you've subscribed. It's full of great tips that'll help you save a ton of extra cash.

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Don't Go Broke From Those Medical Bills - Negotiate

March 16, 2015, 11:00 pm

≫ Next: Autopay, Sadly, Can't Be Just 'Set It and Forget It'

≪ Previous: 5 Ways to Join the 1,826 People in the Billionaires' Club

Filed under: Health Care, Debt

a wallet full of cash being... — **Joe Belanger/Shutterstock**

By Nicholas Pell

Medical bills are the No. 1 cause for personal bankruptcy in the United States. Even with Obamacare, some people just can't pay them. This is because medical bills are, after a house, potentially one of the biggest expenses you can encounter in a lifetime.

But it's possible to negotiate oppressive medical debt down, freeing up money that should be going toward personal savings and other daily expenses. Here's how.

Realize You Can Negotiate

"I used to work on the other side, denying people's claims," says Adria Goldman Gross, a medical bill advocate with MedWise Insurance Advocacy. These days, however, she's in the business of helping people lower their medical bills, which Gross believes are often unreasonable or even predatory. "It really makes me angry," she says.

One of her cases involved a family of six, with one wage earner making $60,000 a year. A hospital forgot to take down the person's insurance information during a medical crisis, adding $23,000 in bills atop the $27,000 paid by the insurance company. "How can you expect them to pay this?" Gross asks. After some hard horse trading -- the kind Gross does every day in her new role - the company finally settled for a face-saving additional $600.

Gross believes the easiest cases to settle are ones you just can't pay. "If I can prove they can't afford it, that's the easiest," she says of her clients.

There's a simple question when considering the massive expense many people incur just by setting foot into a hospital: Can you actually afford to pay the bill? Don't be too proud to say "no." Then negotiate from that perspective.

Get On It Sooner, Rather Than Later

Mike Sullivan, director of education with nonprofit credit counseling service Take Charge America, says companies' medical billing has changed a lot in the past few years. "They used to be very easy to negotiate with, but times have changed."

Sullivan used to tell people to just not pay medical bills when times were tough and to concentrate on other areas of their finances. Not so anymore. These days, he believes it's important to get out in front of medical bills and contact a health provider as soon as you think you might have a problem paying.

"Before they send it off, they're usually willing to negotiate," he says of the companies -- something that is especially true if patients negotiate before getting a procedure.

Even afterward, though, a company knows how much it costs to put an account into collections and would rather reach an agreement than pay a collection agency to go after it, Sullivan says.

Negotiate Payments Rather Than the Full Amount

Because of attractive financing terms, you might want to negotiate down your payments rather than the total bill. Leslie Tayne of the Tayne Law Group, who represents lots of clients with their medical providers, says it's important to negotiate both in terms of the total and the monthly payment -- another area where an inability to pay is an asset.

"There are times when you just can't get blood from a stone," she says, stressing like Sullivan that it's far easier to negotiate the earlier in the process you are.

While you might feel your health providers are crooks that charge too much, Sullivan urges you not to say so. Instead, make sure they see you kindly, and as a person rather than as a customer. "Make it personal," he says. "Tell them you're experiencing hardships."

It's also good to research typical prices for a procedure so you go into the process armed with knowledge. Knowing the "reasonable customary charge" can give you a very strong pair of legs to stand on when you negotiate -- even if you're still on crutches.

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Autopay, Sadly, Can't Be Just 'Set It and Forget It'

March 16, 2015, 11:00 pm

≫ Next: Where Restaurants, Car Dealers, Salons Really Make Money

≪ Previous: Don't Go Broke From Those Medical Bills - Negotiate

Filed under: Banking, Family Money, Personal Finance, Public Utilities, Consumer Issues

Frustrated woman paying bills. — **Getty Images**

By Mitch Lipka

Autopaying bills is a no-brainer. You are never late with a payment, and you do not have to spend all that time going through stacks of bills, filling out checks and then stuffing and stamping envelopes.

But Brent Cumberford learned the hard way that automatic bill paying is not as simple as setting it up and walking away. Last year, his natural gas was turned off because expected automated payments weren't made, a canceled subscription kept getting paid and another canceled service automatically renewed itself.

Cumberford, 32, who runs the personal finance site Vosa and splits his time between San Diego and Calgary, Alberta, resolved the natural gas situation without figuring out what exactly went wrong -- the bank and the utility blamed each other -- and got the automatic renewal credited back. But he is still dealing with the subscription. "The lesson I learned was that it's important to still track automated payments."

Most Americans Use Autopay

About 61 percent of Americans have set at least one bill to pay automatically, says Eric Leiserson, a senior research analyst for financial technology services company Fiserv (FISV). The main reason consumers use autopay is to make sure bills are paid on time. That is vital to their credit scores when it comes to debts like car loans, credit card balances and mortgages, but most other on-time payments aren't recorded.

A recent study by credit reporting firm Experian, however, suggests that including positive utility payment histories, which isn't commonly done, could help elevate the credit scores of millions of Americans. The report also says people with thin credit histories would benefit from having a richer record of payments made.

As much as automation can be a positive, there are plenty of catches to be watch out for:

Changing accounts. If you decide to pay from a different account, be sure all the changes are in place. Marketing consultant Peter Brooks, 56, of Vallejo, California, says it was a big hassle to re-enter all the payment information after he changed checking accounts.
Being short of funds when bills are paid. Not having enough money in the bank is a main reason not to automate bill paying. If you have a bill set up to pay automatically and you lack money to pay it, this could affect your credit history as much as forgetting to mail in the check. Being on time 99 percent of the time doesn't help you much, but missing one payment could hurt your credit score for years.
Continued withdrawals even if you stop using the service. Monthly recurring charges for services can keep occurring even if you asked for them to stop. A gym membership or subscription set to be paid automatically every month could lag a request to cancel. So it is vital to keep an eye out to see if withdrawals persist after you have canceled a service, experts say.
Inadvertently disengaging the automated payments by making one manually. Bob Girolamo, 41, of Chicago, who runs the startup data and statistics organizer Sorc'd, learned that the hard way. He says he made a manual payment for his health insurance that disengaged the autopay. He didn't notice the missed payments until he received the cancellation notice.
Errant payments. Monitoring transactions is key to fixing errors. Greg McBride, chief financial analyst for Bankrate.com, says putting payment dates in an online calendar is one way to stay on top of what payments should be going out. "With 24/7 online and mobile account access, keeping tabs on your account is easier than ever," he says. "Taking a matter of seconds each day is all it takes."

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Where Restaurants, Car Dealers, Salons Really Make Money

March 16, 2015, 11:00 pm

≫ Next: Bad Weather Wallops Housing Starts, Rebound Expected

≪ Previous: Autopay, Sadly, Can't Be Just 'Set It and Forget It'

Filed under: Automotive Industry, Restaurants, Car Buying, Beauty, Investing

hairdresser cutting client's... — **Shutterstock**

By Susan Johnston

When you pull out your wallet to pay for a meal or a mani-pedi, you might assume the most expensive part of your bill was that steak or the trendy designs on your toenails. But insiders will tell you that the real money-makers are the wine you ordered with dinner or the extra products you bought at the salon after getting pampered. U.S. News looked at three industries where the biggest profit drivers may surprise you.

Restaurants

On a typical day, total restaurant industry sales across the U.S. reach $1.9 billion, according to the National Restaurant Association. "The most profitable place in a restaurant is the bar," says Greg Wank, a partner at the accounting firm Anchin, Block & Anchin who specializes in the food and beverage industry. "The margins on beer, soda, wine and spirits is very high, so it's always beneficial if they're very crowded, and people have to wait at the bar for their tables."

In fact, Wank says a restaurant's gross margin at the bar is typically around 70 to 75 percent (pricey bottles of wine might have an even higher margin, but often their purpose on the menu is to make more moderate-priced vintages seem affordable). Meanwhile, food might be closer to 60 percent. No surprise then that your server will immediately offer you something to drink once you're seated. "[Restaurants] used to have the dinner specials, and now they have cocktail specials," Wank says. "There's definitely encouragement to sample something new or different."

With mixed drinks, the biggest variable is the size of the bartender's pour. "A big cost monitor for a restaurant owner is to really train their bartenders on how much they're supposed to pour in a mixed drink because that's going to dramatically impact the margins," Wank says.

When it comes to food, profit margins vary depending on the type of restaurant. Mexican restaurants with a heavy focus on beans and rice might have better margins than, say, a steak or seafood restaurant. The steakhouse or seafood joint might charge more for each item, but the costs of ingredients are likely higher than the Mexican restaurant's. Of course, restaurant owners sometimes try to steer patrons toward certain menu items through rotating specials. "Dinner specials every night are typically going to be profitable items," Wank says. "Ask the waiter what's good tonight, and they're going to be pushing a more profitable dish."

Salons

The salon and spa industry draws more than $40 billion in annual sales, according to a 2012 report from the Professional Beauty Association. While services such as hair coloring, waxing and manicuring may be the reason customers book appointments, salons often make more money from the shampoos, lotions and other extras customers buy in the salon.

Rowena Yeager, owner of Studio Wish Salon in Twinsburg, Ohio, and a Professional Beauty Association member, notes that over time beauty product packages have shrunk, similar to what's happened with food packages. "There's a specific product line that has gone down in their sizes but kept their prices the same," she says.

Cost-conscious consumers may want to consider the price per ounce, but with greater consumer awareness about the ingredients in the beauty products, that may not be the most important factor for everyone. "The consumer is very concerned about what's in the bottle more than the shape of the bottle," Yeager says. "The quality of what's inside is the most important thing."

Car Dealerships

In 2013, total revenue at new car dealerships reached $730 billion, according to the National Automobile Dealers Association. The average dealership had sales of $41 million, with gross profits around $5.5 million. Surely the sale of flashy, new cars must make up the bulk of those millions? Not quite.

"New car dealers don't make the majority of their profits on new cars themselves," says Mike Rabkin, owner of From Car to Finish, a national new car negotiating service. Nearly half of a dealership's profits come from the service and parts departments, he says.

"Finance and insurance products, while a small portion of the dealer's total revenue, make up a disproportionate [amount] of the dealer's profit," Rabkin explains. "These include items such as vehicle financing, extended service contracts and other types of insurance coverage, and physical items and treatments added to the vehicle at the dealership." For instance, when you buy a car, your bill might include items such as floor mats and mud guards as part of an "appearance package" that you may be able to remove or get for free during the negotiation process.

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Bad Weather Wallops Housing Starts, Rebound Expected

March 17, 2015, 1:35 am

≫ Next: Improper Federal Spending Reaches Record $125 Billion

≪ Previous: Where Restaurants, Car Dealers, Salons Really Make Money

Filed under: Real Estate, Housing Market, Materials & Construction, Home Buying, Economy

Apartment Construction Ahead Of U.S. Housing Starts Figures — **Luke Sharrett/Bloomberg via Getty Images**

By Lucia Mutikani

WASHINGTON -- U.S. housing starts plunged to their lowest level in a year in February likely as harsh weather kept building crews at home, in the latest indication that the economy hit a soft patch in the first quarter.

Groundbreaking tumbled 17 percent to a seasonally adjusted annual pace of 897,000 units, the lowest level since January 2014, the Commerce Department said Tuesday.

January's starts were revised up to a 1.08 million-unit pace from the previously reported 1.07 million-unit rate. February's decline was likely a temporary setback for housing as permits for future construction rose 3 percent last month.

A weak first quarter is now a virtual guarantee as yet another cold winter is dampening activity.

Permits have been above a 1 million-unit pace since July.

"A weak first quarter is now a virtual guarantee as yet another cold winter is dampening activity," said Dan Greenhaus, chief strategist at BTIG in New York.

Bad weather, a strong dollar, weaker overseas growth and a now-settled labor dispute at the West Coast ports have put a damper on economic activity in recent months, casting doubts on an anticipated June interest rate hike from the Federal Reserve.

Still, Fed officials, who were due to start a two-day policy meeting Tuesday, are expected to drop the phrase "patient" from their so-called forward guidance on interest rates.

Last week, economists cut their first-quarter GDP growth estimates to as low as a 1.2 percent annualized pace in the wake of a weak February retail sales report. The economy grew at a 2.2 percent rate in the fourth quarter.

U.S. Treasury debt prices extended gains on the housing starts data, while the dollar trimmed losses against the euro and the yen.

Gripped by Snow, Cold

February's decline pulled starts below the one million-unit threshold for the first time since last August. Economists had forecast groundbreaking at a 1.05 million-unit pace in February.

Snowy and cold weather conditions gripped much of the country in the second half of February. Housing starts were down 3.3 percent compared to February last year.

"We saw broad-based weakness across the country with the biggest declines in the Northeast and Midwest, suggesting that harsh winter weather in these regions slowed new residential construction significantly," said Derek Lindsey, an analyst at BNP Paribas in New York.

"Despite the disappointing print in starts, building permits rose and remain on an upward trend, suggesting this soft patch in construction is likely to be temporary."

Groundbreaking plunged 56.5 percent in the Northeast to the lowest level since January 2009. Starts in the Midwest dropped 37 percent to a year low.

In the West, groundbreaking activity fell 18.2 percent. Starts in the South, where most of the home building takes place, slipped 2.5 percent.

Short-Lived Setback

But the step back in housing starts is likely to be short-lived. A rapidly tightening labor market is expected to push up wage growth and encourage more young adults to move out of their parents' basements and set up their own homes.

Already in the fourth quarter, household formation was accelerating, breaking above the one-million mark that usually is associated with a fairly healthy housing market.

While much of the gain in households will go into rentals, that will still be a boost to housing starts this year.

Last month, single-family homes groundbreaking, the largest part of the market, declined 14.9 percent to its lowest level since last June.

Groundbreaking for the multifamily homes segment dived 20.8 percent. Improving household formation and the lowest rental vacancies in more than two decades should boost multifamily starts this year.

Single-family permits fell 6.2 percent last month to a nine-month low. Multifamily permits surged 18.3 percent.

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Improper Federal Spending Reaches Record $125 Billion

March 17, 2015, 2:10 am

≫ Next: Tips to Save on a Spring Trip -- Savings Experiment

≪ Previous: Bad Weather Wallops Housing Starts, Rebound Expected

Filed under: Health Care, U.S. Government, Government Spending, IRS, Tax Laws

By STEPHEN OHLEMACHER

WASHINGTON -- Federal agencies set a new record for improper payments last year, shelling out $125 billion in questionable benefits after years of declines.

The payments included tax credits for families that didn't qualify, Medicare payments for treatments that might not have been necessary, and unemployment benefits for people who were actually working.

Improper payments increased by $19 billion over the previous year, according to a report by the Government Accountability Office, the investigative arm of Congress. In addition to fraud, the errors included overpayments and underpayments, as well as payments made without proper documentation.

This taxpayer money was not spent securing our borders, it was not spent on national defense, and it was not spent contributing to a safety net for those in need.

While the errors were spread among 22 federal agencies, three programs stood out: Medicare, Medicaid and the Earned Income Tax Credit. Together, the three programs accounted for more than $93 billion in improper payments.

"This taxpayer money was not spent securing our borders, it was not spent on national defense, and it was not spent contributing to a safety net for those in need," said Sen. Ron Johnson, R-Wis., chairman of the Senate Committee on Homeland Security and Governmental Affairs. "This is a problem that is going to get worse year after year if we do not get a handle on it now."

Johnson's committee held a hearing Monday on reducing improper payments.

Federal agencies are required to estimate the amount of improper payments each year as part of a government-wide effort to tackle the issue.

The increase in improper payments comes after three years of steady declines. The level previously peaked at $121 billion in 2010 before dropping to $106 billion for the 2013 budget year.

Reducing Improper Payments

The Obama administration says reducing improper payments is a priority.

"While progress has been made over the years, the time has come for a more aggressive strategy to reduce the levels of improper payments we currently are seeing," said David Mader, the controller at President Barack Obama's budget office.

Mader outlined several proposals in Obama's proposed budget for next year. They include programs to reduce fraud and abuse in Medicare and Medicaid, as well as budget increases at the IRS to combat tax fraud.

Medicare's payments to doctors and hospitals had the most improper payments, at $46 billion. The report said many were caused by insufficient documentation for home health claims and errors on medical necessity forms for hospital patients.

The Earned Income Tax Credit provides payments to low-income families through the tax code. The program had nearly $18 billion in improper payments, for an error rate of more than 27 percent. The report cited problems verifying incomes before the payments were issued.

"If we're going to get a better handle on our debt and deficit -- and, frankly, improve Americans' impression of how we take care of their money -- we need to sharpen our pencils and stop making the kind of expensive, avoidable mistakes that lead to wasteful spending and make our agencies and programs vulnerable to fraud and abuse," said Sen. Tom Carper, D-Del.

Other programs with improper payments:

Medicaid, the health insurance program for the poor: $17.5 billion.
Medicare Advantage, which allows older Americans to get their Medicare benefits through private health plans: $12.2 billion.
Unemployment insurance: $5.6 billion.
Supplemental Security Income, a disability program for the poor: $5 billion.
Social Security: $3 billion.

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