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DailyFinance.com

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    Where is my money
    Getty Images

    There is now $1.2 trillion of student loan debt in America, and that number just continues growing. The Class of 2014 was the most indebted class ever, with average debt of $33,000. Over the next few weeks, the Class of 2015 will likely have even more debt.

    There are many reasons we are drowning in debt. Budget cuts for state universities have resulted in dramatically higher tuition. Private universities have engaged in a destructive spending war, driving up the cost of tuition much more than inflation. If you have visited a private university in the last decade, you would likely be greeted by cranes and construction as universities begin to resemble resorts. In addition to state-of-the-art rock climbing walls and beautiful residential facilities being constructed, the number of academic administrators has doubled in the last 25 years. Students want the best education. For some reason, many students equate the best education with the most expensive education. So colleges are meeting that demand by building, growing, expanding and charging as much as they can. And the federal government is funding that increasing cost with ever-increasing student loan debt.

    Most high school students don't receive financial literacy education in high school. And very few students complete a cost benefit analysis before making their college decision. That is unfortunate, because there is an abundance of publicly available data. If you want to become a doctor, engineer, teacher or social worker you can make a good estimate of your earning potential. Students should be thinking about their lifetime earning potential when deciding how much debt they are willing to take. And colleges need to start feeling the pressure. Higher costs don't mean higher quality. And just because the federal government is willing to lend you the money, doesn't mean you should spend it.

    We are already starting to see very clear warning signs that the system is broken. I will deal with the three biggest alerts.

    1. Defaults Are Soaring

    Student loan defaults are soaring. 11.3 percent of student loans are now 90 days or more delinquent. And that number will only continue to increase, as more students have to start making payments. If you have $30,000 of student loan debt and have an income of $30,000 it will be very difficult to make the payments on time.

    If the federal government had to build loan loss reserves in the same way as private banks, the student loan portfolio would not look nearly as profitable as it does. I have no doubt that this is a credit bubble waiting to explode, and that taxpayers will feel the full brunt of the pain over the next 10 years.

    But as bad as this is for taxpayers in general, it is worse for the graduates with the debt. Student loan debt will prevent them from buying cars and homes or saving for retirement. We should just call a student loan what it is: a new form of taxation. The interest on federal student loan debt goes to the federal government. And it is a regressive form of taxation: the less money you make, the heavier the burden. If that isn't a tax, what is?

    2. Messy Political Responses Are Being Created

    With so many students defaulting on student loan debt, political solutions are inevitable. In the last few years, we have seen some programs introduced that will offer significant relief to borrowers with federal student loan debt. There are now income-based repayment programs that will cap your monthly payment to 10 to 15 percent of your income. After 20 to 25 years, the federal government could even forgive the remaining principal balance.

    This is a great opportunity for borrowers with federal student loan debt to take back their lives. And I encourage them to take advantage of this program.

    But this policy also has long-term dangers. Colleges and universities will have no incentive to cut costs. They will continue to increase tuition and encourage students to take out debt. And if I were a high school student completing a cost-benefit analysis, I wouldn't feel the pressure of choosing a less expensive school. Why should I? If I take out federal loans, I won't have to pay it all back. I will only have to pay 10 percent of my monthly income, and the remaining balance is forgiven.

    The cost to the taxpayer could be significant. The biggest beneficiaries will be the universities, who will not feel the pressure of finding more cost-effective ways to provide an education.

    3. The Best Borrowers Will Leave the Federal Program

    The private sector is starting to get active. Start-ups, credit unions and even some commercial banks are recognizing that the interest rates on student loan debt are just too high. So they have created programs that enable people with the best jobs, best income and best credit scores to refinance. At MagnifyMoney (my website), we have found 19 (and counting) lenders willing to refinance student loan debt, with interest rates starting as low as 1.9 percent.

    This is a great deal for borrowers, and if you qualify you should definitely consider refinancing. The lifetime savings can be dramatic. Just be careful before refinancing a federal student loan with a private lender, because you will be giving up the ability to take advantage of income-based repayment programs. If you have a private student loan, it is an obvious solution.

    But this is yet another risk for taxpayers. The private sector will be very good at identifying the best credit risk profiles and offering them much better interest rates than the government. That means the government portfolio of loans will be left with the riskiest borrowers. Default rates on the federal portfolio will increase, because the performing loans will move to the private sector. Revenue will plunge.

    The Perfect Storm

    Student loan debt continues to grow, and a credit bubble is forming. Defaults will continue to increase. Politically motivated programs will continue to offer more forgiveness. Private lenders will continue to steal the best credit risk profiles. And, at the end, taxpayers will be forced to pay for the mess, but only after graduates find themselves drowning in debt.

    This seems like a very complicated and dangerous way to fund college education. Colleges need to feel competitive cost pressure, like any other private organization. High school students need to do the math before they make a college choice, and recognize that their dream school may not be worth the money. And our lawmakers need to re-think how the entire system is funded, and recognize that every bit of incremental meddling create even more unintended consequences.

    Nick Clements is the co-founder of MagnifyMoney, a price comparison and financial education website. He spent his career in banking, and used to run the largest consumer credit card business in England. You can follow him on Twitter @npclements.

     

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    How to Save 50 Percent on Your Cell Bill

    By Karla Bowsher

    Before the decade is out, 5G wireless technology is expected to become available, CNNMoney reports.

    It's also expected to be up to 40 times faster than 4G, allowing a 3-D movie to be downloaded in six seconds instead of six minutes.

    There's just one problem: Getting all that data so fast is bound to cost you when your cellphone bill arrives. For example, CNNMoney reports:

    A typical standard-definition streaming video that you watch on your phone uses up to 0.7 gigabytes of data per hour, according to Netflix ... 3-D video uses up 4.7 gigabytes, and 4K video uses 7 gigabytes of data. That's more than three times the average monthly data plan, gone in a single hour.

    Meanwhile, USA Today recently reported on how to reduce cellphone plan data usage regardless of your connection speed. The tips suggest that just because you can do something on a phone doesn't mean that you should.

    To cut back on data usage:
    1. Postpone data-draining activities. Wait to stream videos until you can access a Wi-Fi network or a computer. Just be careful not to transmit sensitive information over a public Wi-Fi connection. (See "Public Wi-Fi: Are You Getting a Side of Identity Theft With Your Latte?")
    2. Properly close apps when you're done using them. Otherwise, they could continue running in the background, draining your data or battery. USA Today reports that iPhone apps can be closed by double-tapping the Home button and swiping apps up. With Android apps, press and hold the Home button and swipe apps to the right or, for newer models, tap the lower-left icon.
    3. Limit use of apps that regularly push new content. This includes stock quotes, weather updates and sports scores. "The more apps you have that look for online updates, the more data you'll consume," USA Today states.
    4. Adjust push or sync settings. Do you really need the phone to beep the moment you receive an email, or that a "friend" posts on your Facebook wall? If not, adjust the push or sync settings on email and social media apps accordingly.
    5. Change your email app's options or settings to "view only." This will save you data compared to downloading attachments.

     

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    Citi Still Stressed
    Mark Lennihan/AP
    Has Citi (C) got a deal for you!

    No, seriously. Has Citi got a deal for you? Because they certainly think they do, and it comes in the form of a pitch that's certain to grab eyeballs -- and maybe more than a few new credit card customers.

    As described in the company's recent press release, co-authored by partner AT&T (T), if applicants for Citi's new AT&T Access More credit card purchase a new iPhone 6 (or other smartphone) by putting it on their card, after using the card for a few months they'll get a credit from Citi for the cost of the iPhone 6.

    Abracadabra -- a free iPhone 6!

    Terms and Conditions May Apply
    But mind the fine print. As described on its website, Citi's "new phone offer" works like this:
    • Step 1: Apply for and receive an AT&T Access More Card issued by Citi.
    • Step 2: Buy a new smartphone from AT&T's website via a provided link, "at full price and with no annual contract." You can put your new phone on your card as your very first purchase, or you can wait to buy it later.
    • Step 2.1: Activate your new phone through AT&T and keep your account active for at least 15 days. (You'll have to pay all the usual service fees and taxes for phone service.)
    • Step 3: Use your new card to keep shopping until you've racked up $2,000 in purchases. Make sure to hit this limit within three months of opening your account.
    • Step 4: Once you've hit that $2,000 limit, you're golden. Citi will credit your card account for the cost of the phone -- up to $650.
    "Um ... I'm Not Reading 'iPhone 6' Here Anywhere ..."

    Don't worry about that. On AT&T's ordinary webpage for buying no-contract smartphones, there's no iPhone 6 listed (they top out at iPhone 5s, plus some nice Samsungs), but I've confirmed with AT&T by email that, yes indeed, Virginia, you can use the Access More card offer to get a new iPhone 6 as well. And according to Apple's (AAPL) website, the no-contract retail price of an iPhone 6 is $649, giving you one whole dollar of breathing room between the price AT&T will charge and the $650 that Citi will reimburse you through this offer.

    Sounds Like a Good Deal. Is It?

    If you're in the market for a new phone, and don't want the hassle of a contract, it is. Compare Citi's new phone offer to, for example, the most recent "bonus points" offer that's showing up on Slickdeals.net as of this writing. This is for the Chase Ink Cash Card from JPMorgan Chase (JPM).

    Like the Access More deal, Chase requires you to spend a certain amount of money within a certain amount of time in order to earn a bonus. Unlike Citi's offer, however, Chase is requiring you to charge $3,000 within three months in order to earn a $300 cashback bonus. Put another way, Chase requires that you spend 50 percent more to get less than half the reward Citi offers.

    True, not all card issuers are as stingy with bonuses as Chase is with this offer. (Not even Chase. They routinely post offers worth as much as $500 cash back, for example, on various cards.) But $650 in value for $2,000 in purchases? That's a 32.5 percent profit in just three months or less -- a very nice return on your investment. (Certainly more than you could earn by putting $2,000 in a Citi or Chase bank account.)

    Mind the fine print

    To make the most of Citi's offer, however, it's important to keep track of the details. For example: Don't get greedy. Citi says you can't apply for the $650 phone credit if you've opened or closed an Access More account in the past 18 months. Read between the lines, and this means you can use this offer to pick up a free iPhone 6 every 18 months. (Albeit, in 18 months, we may be up to an iPhone 8 -- and this offer might have expired.) Do make sure you wait the entire 18 months, though. Else you could find yourself stuck with an extra card you don't need -- but no extra phone to go with it.

    Note, too, that the Access More card charges a $95 annual fee (with which come benefits such as three "ThankYou Points" earned for every $1 you spend on certain purchases). Arguably, this reduces the value of the "free" phone offer to $555 from $650.

    This is in contrast to a similar Citi card, dubbed simply "Access," which charges no fee, and credits you at most two points for every $1 you put on the card. Importantly, though, the fee-less "Access" card isn't part of the free phone offer. To get the free phone, you need to sign up for the marquee product.

    Or put another way, if you want a "free" phone, you'll need to both "Access More" -- and pay a bit more as well.

    Motley Fool contributor Rich Smith has never owned an iPhone -- but now he's tempted to. He has no position in any stocks mentioned, but The Motley Fool recommends Apple, and owns shares of Apple, Citigroup, and JPMorgan Chase. Click here to check out our free report for one great stock to buy for 2015 and beyond.

     

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    Consumer Prices
    Lynne Sladky/AP
    By Lucia Mutikani

    WASHINGTON -- Rising shelter and medical care costs boosted underlying U.S. inflation pressures in April, a welcome sign for the Federal Reserve as it contemplates raising interest rates this year.

    The Labor Department said Friday its Consumer Price Index, excluding food and energy, increased 0.3 percent last month. It was the largest rise in the so-called core CPI since January 2013 and followed a 0.2 percent gain in March.

    Economists who had expected core inflation to increase 0.2 percent last month said the increase, which also reflected gains in the prices of household furnishings and new and used motor vehicles, should keep the U.S. central bank on track to hike rates before the end of 2015.

    It will give the Fed greater confidence that inflation will indeed make it to its target in the next couple of years, it increases the odds of faster Fed action.

    "It will give the Fed greater confidence that inflation will indeed make it to its target in the next couple of years, it increases the odds of faster Fed action," said Chris Rupkey, chief financial economist at MUFG Union Bank in New York.

    In a speech in Providence, Rhode Island, Fed Chair Janet Yellen said she expected rates to rise this year, adding that the lift-off hinged on a firmer jobs market and signs that inflation was moving toward the Fed's target.

    "I will need to see continued improvement in labor market conditions, and I will need to be reasonably confident that inflation will move back to 2 percent over the medium-term," Yellen said.

    The dollar was trading higher against a basket of currencies on the inflation data and Yellen's comments. Prices for U.S. government bonds fell, while U.S. stocks were little changed.

    Although slower economic growth in the first half of the year has diminished the chances of a mid-year rate hike, a tightening labor market and rising demand for housing suggest core inflation could continue to push higher this year even if medical costs subside.

    Minutes of the Fed's April meeting released Wednesday said "many" policymakers didn't believe that the data by June "would provide sufficient confirmation that the conditions" for raising the key short-term interest rate had been meet.

    A recent batch of weak data, including April industrial production and retail sales, has left many economists even doubting the Fed will raise rates in September.

    The central bank has kept overnight interest rates near zero since December 2008. It tracks a price measure that is running below core CPI.

    In the 12 months through April, core CPI advanced 1.8 percent after a similar gain in March.

    "September is still the most likely lift-off date, but July is not out of the question, particularly not if we get another couple of robust rises in core consumer prices in May and June," said Paul Ashworth, chief economist at Capital Economics in Toronto.

    Fading Dollar Rally

    A fading dollar rally also was seen keeping core inflation on an upward trend. The dollar surged about 15 percent against the currencies of the United States' main trading partners between June last year and mid-March. It has handed back some of those gains and is now up only 10 percent.

    "If sustained, that should help weakness in core goods prices continue to moderate," said Ted Wieseman, an economist at Morgan Stanley (MS) in New York.

    The overall CPI edged up 0.1 percent last month after increasing 0.2 percent in March. It was held back by a 1.7 percent drop in gasoline prices and no change in food prices. Gasoline prices, however, have since risen.

    In the 12 months through April, the CPI fell 0.2 percent, the largest decline since October 2009, after slipping 0.1 percent in March.

    Core inflation was lifted by a 0.3 percent increase in shelter costs, which followed a similar gain in March. Shelter inflation is being driven by rising household formation, which is boosting demand for rental accommodation.

    The medical care index rose 0.7 percent, the largest rise since January 2007. Household furnishings posted their largest gain since September 2008.

    Prices for new and used cars and trucks rose for a third straight month. Airline fares, however, fell, as did apparel prices, which recorded their first drop since December.

     

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    Source: Ford Motor Co.The roomy and opulent backseat in Ford's Lincoln Continental Concept is intended -- at least in part -- to give the production version of the new Continental a leg up in the huge Chinese market.
    Not long ago, automakers designed their cars for regional markets. The Ford (F) Focus sold in the U.S. last decade was a different car than the Focus sold in Europe, because Ford believed that customers in Europe wanted different things in a small car than its American customers did.

    Lots of automakers took a similar approach. But that has changed. Ford's current Focus -- along with most of the rest of its lineup -- is sold all over the world, with just minimal changes to meet the needs and legal requirements of each region.

    It's the same story at most other automakers, because developing one model for the whole world results in better, more competitive cars. And that means that American tastes and preferences are sometimes taking a backseat to those of other regions -- especially China, which is now the world's largest new-car market.

    So what does that mean for our new cars?

    Backseats Are Getting Roomier

    For the most part, it doesn't mean anything bad, because Chinese car buyers value the same things that Americans do. But there are some differences.

    Consider this: If you've been in the backseat of a new Honda (HMC) Accord or the latest version of General Motors' (GM) Chevy Malibu, you may have noticed that cars seem to be getting roomier backseats lately. There's nothing wrong with that. But if you step back and think about it, that might be a little surprising: In America, we mostly put kids in the backseat. Why would automakers invest in extra legroom for kids?

    The answer is that it's a different story in China, where both vehicle models (and many others that are familiar to Americans) are also sold nowadays. In China, it's not just kids that ride in back. Elder family members often do, too. That has made a roomy and comfortable backseat a strong selling point in that market.

    It's even more important with upscale or luxury models: Often, well-paid professional folks who work in China's big cities will hire drivers so that they don't have to deal with urban China's notorious traffic jams. That means the owner rides in back -- and that makes the backseat especially important on such models.

    Ford recently showed off a "concept" version of the new Lincoln Continental that will roll out next year. The concept will differ from the production version in its details, but one detail that isn't expected to change is the backseat: It's huge, almost limousine-like, with reclining seat backs and a whole host of amenities.

    That's expected to be a big selling point in China, where the new Continental will be a key part of Ford's strategy to boost the Lincoln brand's presence in that huge and crowded market. And Ford figures Americans won't mind having the extra space -- particularly if the new Continental ends up gaining popularity as an airport or business limo.

    Effects on New Models and Styling

    But Chinese tastes are affecting automakers' global models in more ways than just the backseat. Over the last several years, GM's Cadillac brand has drawn attention (and generally, admiration) in the U.S. for its edgy, sharp-edged "Art & Science" styling.

    But the styling of the brand's most recent models is softer, toned-down. That's partly because the hard-edged look wasn't playing well in China, where smoother, rounder Audis are the luxury-market leaders. Cadillac's latest efforts aren't copies of Audis, but newer models like the CTS and XTS are more subdued, less edgy than their predecessors. That's because Cadillac's designers have to consider Chinese tastes as well as Americans' now.

    It's also affecting the models that automakers choose to introduce. From an American perspective, Mercedes-Benz's small CLA sedan seems like an odd product. The CLA is a small front-wheel-drive sedan that starts at just over $30,000: Won't that cheapen the august Mercedes brand?

    Not necessarily in China, where the German luxury brands have tremendous appeal -- and Japanese brands like Toyota (TM) and Honda haven't been able to get much traction in the last few years. That has given the German brands an opportunity to bring younger and less-affluent Chinese buyers into their folds with products like the CLA.

    Sometimes, though, it's the American influence that Chinese (and other overseas) buyers want.

    When American Cars Stay American

    For years, Ford's Mustang was only sold in North America and a few select overseas markets. That has changed, and the current model, new for 2015, is being rolled out all over the world.

    But it hasn't been tweaked for Chinese (or European tastes): It's better-built and more refined, but it's still the Mustang that Americans have known and loved for decades. That was a deliberate choice, former CEO Alan Mulally told me in an interview when the new Mustang was launched. Ford's research showed that buyers in China and Europe wanted the Mustang in its all-American form, rowdy V8 engines and all -- not a product tailored to their markets, he said.

    Long story short: For the most part, Chinese car-buyers want the same things that Americans do: a safe, reliable, fun-to-drive car in a good-looking package at a reasonable price. But automakers now need to take Chinese buyers' needs and tastes into consideration when designing new models -- and even if the influence is subtle, that is already changing the cars we can buy here in America.

    Motley Fool contributor John Rosevear owns shares of Ford and General Motors. The Motley Fool recommends Ford and General Motors. The Motley Fool owns shares of Ford. Try any of our Foolish newsletter services free for 30 days, and click here to check out our free report for one great stock to buy for 2015 and beyond.

     

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    Hispanic couple outside home with sold sign
    Getty Images
    By Donna Fuscaldo

    Should I invest in real estate? With property values rising once again in many parts of the country, that's a question many investors might be asking.

    The short answer is that real estate can play an important role in an investment portfolio. As an asset class, it typically does not move in the same direction and at the same time as stocks and bonds, so it can provide valuable diversification.

    However, it's important to understand its risks. Purchasing an investment property is a cash-intensive and time-consuming commitment, while investing in real estate equities puts you at the mercy of outside forces, like rising interest rates.

    For most investors, putting between 5 and 6 percent of their portfolio in real estate assets, such as REITs, might be the most practical way to gain exposure to and diversification from real estate as an asset class.

    If we've learned anything from the last real estate boom-and-bust cycle, however, as the real estate market heats up, offers to invest in property in one form or another become more frequent. Tempting as it may be to redirect a part of your nest egg to a "big opportunity," investors should refrain from doing so without knowing all the risks and costs involved.

    Direct Real Estate Ownership

    One of the allures of real estate is that it's tangible, unlike stocks and bonds. For investors who like the idea of being able to see their investment and those who prefer to be hands-on, direct real estate ownership might be an option to consider.

    Direct real estate ownership comes in many flavors, from buying a rental property to purchasing a residential home with the goal of fixing and selling for a higher price. Both scenarios require substantial holdings costs.

    Risks: This type of investment typically requires cash flow, and the returns do not happen overnight. The mortgage and taxes on a house do not disappear if you fail to rent it out for a period of time, or if it languishes on the market. "Most people think real estate goes up in value and you get rich," says Leonard Baron, who has been involved in the real estate business as a landlord, property manager and investor, for more than two decades. "The reality is, many people subsidize real estate for years and years."

    Private Real Estate Deals

    A private real estate deal entails investing in someone else's property, whether it's an undeveloped piece of land, a rental property, or financing a fix-and-flip operation. This might be appealing to those who like the tangible nature of real estate, but would prefer not to carry all the risk of sole ownership.

    With this type of investment, the investor shares in the profit; if they are acting as a lender, they receive an interest payment for a set period of time and a balloon payment when the investment term ends. Such investment deals are typically more readily available to people who work in the real estate business, or simply run in those circles. The risks, however, can be substantial.

    Risks: You are at the mercy of the savviness of the property developer or owner, Baron says. Before jumping in, make sure you know the person and his or her investment history well, as well as all the details of the deal. Do a deep dive on the developer or landowner's track record, finances, and credit before investing, and consider using the services of a real estate attorney to draw up contracts and any other necessary paperwork.

    REITs

    For investors who don't want the headaches and risks that come with owning investment properties, real estate investment trusts, or REITs, offer a hands-off approach.

    A REIT is a publicly traded company that invests in real estate either through purchasing properties, or by buying pools of residential or commercial mortgages. Unlike most publicly traded companies, REITs are required to distribute 90 percent of their earnings to their shareholders, making them highly attractive to income-seeking investors. In a recent analysis of more than 350,000 investor portfolios, San Francisco investment firm SigFig found that investors over the age of 55 are nearly three times more likely to own REITs than investors age 35 or younger.

    Risks: In a rising interest rate environment, the net asset value of a REIT could decline as its costs of borrowing rise, says Kathy Kristof, author of Investing 101. Investors should also be aware of the costs and tax implications typically associated with REITs.

    Donna Fuscaldo is a contributing writer at SigFig. Nearly a million people use SigFig to track, improve and manage over $300 billion in investments.

     

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    A Lumber Liquidators Holdings Inc. Store Ahead Of Earnings Figures 551744945
    David Paul Morris/Bloomberg via Getty Images
    There were plenty of winners and losers this week, with a new e-commerce company soaring by better than 50 percent on its first day of trading and one of this year's biggest losers getting slammed again after the abrupt resignation of its CEO.

    Take-Two Interactive (TTWO) -- Winner

    We've seen some video game companies and most mobile gaming specialists falter lately, but Take-Two Interactive was playing to win with its latest quarterly report. The company behind "Grand Theft Auto" and "Bioshock" had a blowout quarter where adjusted revenue soared 83 percent since the prior year's period. A new game and the success of "Grand Theft Auto V" on PC helped fuel the surge in revenue.

    Take-Two's bigger surprise came on the bottom line. It came through with an adjusted profit of 49 cents a share. Analysts were settling for just 27 cents a share in earnings.

    Lumber Liquidators (LL) -- Loser

    Things just keep getting worse for the hardwood flooring retailer. Shares of Lumber Liquidators hit a new 52-week low after its CEO stepped down. It seemed as if the chain was starting to get back on its feet after announcing that it would no longer sell China-sourced laminates earlier this month.

    Lumber Liquidators has been reeling since a "60 Minutes" report in March claimed that some of the retailer's laminates from China contained harmful levels of formaldehyde. It's not the first time that Lumber Liquidators has drawn attention for the wrong reasons, but having its CEO unexpectedly step down now is not going to inspire the confidence of investors.

    Salesforce.com (CRM) -- Winner

    Salesforce.com was the subject of buyout chatter earlier in the month, and if someone still wants to snap up the fast-growing provider of cloud-based enterprise software solutions, it's going to have to pay up.

    Salesforce.com posted better-than-expected quarterly results Wednesday, boosting its guidance along the way. At least seven different analysts boosted their price targets on the stock following the report. Salesforce.com is feeling pretty confident, even bragging about some of the customers it's been winning over from rival platforms during Wednesday night's earnings call.

    Carl Icahn -- Loser

    It's hard to call Icahn a "loser" without realizing that he is a winner in life. The activist trader is a billionaire, largely on savvy trades and activist positions that he has taken over his nearly eight decades of life.

    However, Icahn did get caught in a rare stumble this week. He kicked off the week by publishing an open letter to Apple (AAPL) CEO Tim Cook on why the stock will hit $240. It's an ambitious target for the world's most valuable consumer tech company, assuming that it will nearly double in value. He's entitled to his opinion, and he's already made a huge paper profit on the investment. However, part of his valuation argument is that Apple will be rolling out full-blown high-def televisions next year. The open letter was released just as a Wall Street Journal story was pointing out that Apple had quietly abandoned plans to enter the HDTV market.

    Shopify (SHOP) -- Winner

    The IPO pipeline is still gushing. Shopify went public Thursday. The e-commerce provider priced its offering at $17, and it wasn't enough. The stock closed 51 percent higher on its first day of trading.

    A whopping 165,000 small and medium-size businesses rely on Shopify's cloud-based platform to help them design, set up, and manage their stores across multiple sales channels. Shopify isn't profitable, but revenue more than doubled last year. Investors will forgive red ink if it's being sacrificed for the sake of strong growth.

    Motley Fool contributor Rick Munarriz has no position in any stocks mentioned. The Motley Fool recommends Apple, Lumber Liquidators, Salesforce.com and Take-Two Interactive. The Motley Fool owns shares of Apple and Lumber Liquidators. Try any of our Foolish newsletter services free for 30 days. Looking for a winner for your portfolio? Check out The Motley Fool's one great stock to buy for 2015 and beyond.

     

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    Financial Stability Oversight Council
    Andrew Harnik/APFederal Reserve Chair Janet Yellen
    By Jonathan Spicer and Michael Flaherty

    PROVIDENCE, R.I. -- Federal Reserve Chair Janet Yellen was clearer than ever Friday that the central bank was poised to raise interest rates this year, as the U.S. economy was set to bounce back from an early-year slump and as headwinds at home and abroad waned.

    Yellen spoke amid growing concern at the Fed about volatility in financial markets once it begins to raise rates, and a desire to begin coaxing skeptical investors towards accepting the inevitable: that a 6½-year stretch of near-zero interest rates would soon end.

    In a speech to a business group in Providence, Rhode Island, Yellen said she expected the world's largest economy to strengthen after a slowdown due to "transitory factors" in recent months, and noted that some of the weakness might be due to "statistical noise."

    The confident tone suggested the Fed wants to set the stage as early as possible for its first rate rise in nearly a decade, with Yellen stressing that monetary policy must get out ahead of an economy whose future looks bright.

    [I]f the economy continues to improve as I expect, I think it will be appropriate at some point this year to take the initial step to raise the federal funds rate target.

    While cautioning that such forecasting is always highly uncertain, and citing room for improvement in the labor market, the Fed chief said delaying a policy tightening until employment and inflation hit the central bank's targets risked overheating the economy.

    "For this reason, if the economy continues to improve as I expect, I think it will be appropriate at some point this year to take the initial step to raise the federal funds rate target," and begin normalizing monetary policy, Yellen told the Providence Chamber of Commerce.

    In a speech in March, Yellen said only that a rate hike "may well be warranted later this year," though the Fed was at the time giving "serious consideration" to making the move.

    Investors globally are attempting to predict when the Fed will modestly tighten policy. Most economists point to September, while traders in futures markets held firm on December.

    Ahead of a three-day U.S. holiday weekend, Treasury yields hit session highs after Yellen spoke on Friday, and short-term interest rate futures extended losses, hitting session lows. U.S. stocks were largely flat.

    "This is probably the most telegraphed Fed lift-off in some time," said Bruce Zaro, chief technical strategist at Bolton Global Asset Management. "I think they're concerned about the market's reaction - they don't want to have a period of volatility that causes the market to react in a crash-type form."

    Yellen, however, struck some familiar dovish chords, noting that the "generally disappointing pace of wage growth ... suggests that the labor market has not fully healed."

    She said less progress had been made on lifting inflation, though she said the Fed believes it will rise to the central bank's medium-term 2 percent goal as oil prices rebound and other temporary factors dissipate.

    "With the waning of the headwinds ... the U.S. economy seems well-positioned for growth," Yellen said, predicting "moderate" employment and output growth this year and beyond.

    She also reinforced the notion that rate hikes will depend on incoming economic data and that the tightening process, once it begins, is likely to be gradual.

    "Yellen believes the economy is improving and that the Fed will raise rates this year," said Wayne Kaufman, chief market analyst at Phoenix Financial Services. "It is just waiting for the right data to do that."

    -With additional reporting by Howard Schneider in Washington and the New York markets team.

     

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    Key Speakers At 2014 The DreamForce Conference
    Noah Berger/Bloomberg via Getty Images
    By David Faber

    Microsoft (MSFT) and Salesforce.com (CRM) had significant talks earlier this spring about a purchase of Salesforce by Microsoft, according to a number of people familiar with the situation. While the two sides failed to reach a deal and haven't re-engaged, the talks advanced to a level of detail that indicates they were serious.

    Ultimately, the two companies remained far apart on a price, with Microsoft said to be willing to offer roughly $55 billion for the company, while its founder and CEO Marc Benioff is said to have kept raising his expectations to as high as $70 billion.

    The deal envisioned Microsoft using a significant portion of its $95 billion cash pile to pay for Salesforce, but there was discussion of allowing Benioff to roll his 5.7 percent stake in Salesforce into Microsoft stock, while other shareholders would have gotten paid in cash. Benioff would have had a management role at Microsoft under the deal, according to people close to the talks.

    Salesforce was engulfed in takeover rumors late last month when Bloomberg reported on an approach of an unnamed suitor that wasn't Microsoft, for the company. Bloomberg also reported earlier this month that Microsoft was evaluating a bid for Salesforce, but said no talks between the two companies were taking place. Both reports sent shares of Salesforce sharply higher.

    The talks that did in fact take place between the two companies concluded by early May and aren't expected to re-emerge anytime soon. In addition to a disparity in price expectations, Microsoft's CEO Satya Nadella, who has been in the job for only 18 months, was said to be somewhat reluctant to pull the trigger on a deal of such size and consequence for his company.

    Still, a number of people close to the talks believed they had the momentum to have reached a deal, until price became a defining road block.

    Read MoreSalesforce shares climb on earnings beat
    Salesforce, which has a leading position in customer relationship management software and cloud computing is thought to be a good fit for Microsoft, which is focused on gaining scale in those businesses.

    A Microsoft spokesman declined to comment and a Salesforce spokesperson didn't return phone calls.

     

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    Financial Markets Wall Street
    Richard Drew/AP
    By Noel Randewich

    NEW YORK -- U.S. stocks ended weaker Friday after Federal Reserve Chair Janet Yellen indicated that the central bank was poised to raise interest rates this year, in line with Wall Street's expectations.

    Lackadaisical trading volume during the session ended a week of slow activity that has left many investors unconvinced that recent record-high levels are likely to last.

    In a speech, Yellen said a rate hike would be warranted this year if the economy keeps improving as expected. She also said it would take several years to return to normal interest rates.

    Investors have enjoyed an extended period of low volatility and steady gains, but with the Fed on track to raise rates this year and major indexes near records, the market could get a bit choppier in coming weeks.

    I think this is probably the most telegraphed Fed liftoff in some time.

    "I think what Janet Yellen and all of the Fed officials have been doing is very carefully choreographing their move. I think this is probably the most telegraphed Fed liftoff in some time," said Bruce Zaro, chief technical strategist at Bolton Global Asset Management.

    "They're concerned about the markets' reaction."

    The Dow Jones industrial average (^DJI) fell 53.72 points, or 0.3 percent, to end at 18,232.02 points.

    After trading near flat for most of Friday, the Standard & Poor's 500 index (^GSPC) lost 4.76 points, or 0.2 percent, to close the week at 2,126.06. The Nasdaq composite (^IXIC) dropped 1.43 points, or less than 0.1 percent, to 5,089.36.

    Both the Dow and the S&P hit new records this week but Friday's drop left the Dow in the red. For the week, the Dow ended 0.2 percent lower and the S&P rose 0.2 percent.

    The Nasdaq added 0.8 percent for the week.

    Volume on U.S. stock markets has been below the month-to-date average for several sessions. Ahead of the Memorial Day long weekend, about 4.9 billion shares changed hands on U.S. exchanges Friday, below the 6.2 billion average this month, according to BATS Global Markets.

    All of the 10 major S&P 500 sectors ended lower, led by a 0.8 percent drop in the telecommunication services index.

    Stocks In the News

    Shares of Microsoft (MSFT) lost 1.1 percent after CNBC reported the company held significant talks to buy cloud software heavyweight Salesforce.com (CRM) but failed to agree on price. Salesforce rose 2.88 percent.

    Boeing (BA) shares fell 1.72 percent to $144.81 after The Wall Street Journal reported that Bombardier was considering a third model of its CSeries jetliner.

    Consumer prices moderated last month, data showed, but the so-called core consumer price index, which strips out food and energy costs, posted its largest gain since January 2013.

    The dollar rose to a 3½-week high against the euro and U.S. bond yields rose after the stronger-than-expected rise in core consumer prices.

    NYSE declining issues outnumbered advancing ones 1,922 to 1,085, for a 1.77-to-1 ratio; on the Nasdaq, 1,566 issues fell and 1,177 advanced, for a 1.33-to-1 ratio favoring decliners.

    The S&P 500 posted 27 new 52-week highs and 3 new lows; the Nasdaq composite recorded 71 new highs and 36 new lows.

    -With additional reporting by Lucia Mutikani, Tanya Agrawal and Ryan Vlastelica.

    What to watch Monday:
    • U.S. stock and bond markets are closed for Memorial Day.

     

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    BCATY5 Blurred view of a car speeding down a country road
    Alamy
    By Robert McGarvey

    Rental car giant Hertz has admitted it has cameras installed in about 1 in 8 of its cars in the United States. But those cameras -- built into Hertz's NeverLost dashboard assistant that offers routing help and local city guides -- have never been turned on, Hertz has said, loudly and repeatedly. NeverLost 6 was launched by Hertz in early 2014 and only now is it causing a flap, probably because more renters began noticing a creepy camera pointed at them.

    There are excellent reasons to worry about car rental companies spying on drivers but, very probably, NeverLost 6 is not one of them. Hertz had said it lacked the bandwidth to use the cameras anyway but it has been scorched so severely in the media flap of the past weeks that industry experts indicated that Hertz now would be just about the last company to spy on customers. But many others do.

    History Isn't On Your Side

    Fact: most rental cars are equipped with navigation and GPS systems. Are they used against drivers? Well, yes and no. The yes part is that, starting around a dozen years ago, media outlets were filled with sad stories of rental car customers "fined" hundreds -- sometimes thousands -- of dollars for violating the terms of their contracts. How? In one celebrated case, Acme Rent-a-Car of New Haven, Connecticut, fined a customer $450 ($150 per incident) for exceeding posted speed limits. The customer had not received traffic citations. And the customer sued. The judge ruled against Acme. He did not dispute the right to track. But he said there was insufficient "notification" to make the fines justified.

    In another famous case, a Payless customer expected a bill for $259.51. He was instead slapped with a bill for $3,405.05, which was reached by adding a $1 per mile to each of the 2,874 miles he had driven, because he had crossed the California state line into Nevada and later drove into Arizona. That triggered the fines, because the contract prohibited leaving the state.

    In many more cases, numerous Florida car rental companies are notorious for literally shutting off engines of cars that cross state lines. The cars may be restarted upon agreement to pay new fees.

    Is this legal? Neil Abrams, a car rental consultant in Purchase, New York, said, "It is legal as long as it disclosed." As the Acme case illustrated, however, disclosure has to be loud and in a renter's face. Fine print footnotes may not be good enough for many courts.

    What the Big Firms Say

    What's more, Abrams said that from his seat, use of tracking was much more prevalent a few years ago, perhaps because companies were exploring the limits of new technologies. "It's much less frequent now." As customer anger grew -- and negative stories multiplied -- the big, national companies cut way back on use of tracking tools.

    Case in point: Enterprise Rent-a-Car, in response to a reporter's question, issued a flat denial: "We do not install cameras in our vehicles. Enterprise Rent-a-Car, National Car Rental and Alamo Rent a Car passenger vehicles come equipped with only standard technology, as provided by automobile manufacturers. For example, some of our GM vehicles are equipped with OnStar technology -- however, we can't access the technology without an official police report (to document that a vehicle is lost or missing)."

    Other big players have similar policies. But driver tracking still happens at small, independent companies, Abrams said.

    From Smaller Firms and on the Border

    A primary reason: those companies, said industry experts, are very concerned about stolen cars, and, honestly, it is not that hard to walk up to a car rental counter, present a decent counterfeit driver's license and a stolen credit card and drive off in a $30,000 Toyota Camry that can be sold for cash at the nearest chop shop. Rental companies in Arizona, Texas, New Mexico and California have the added problem of the Mexican border.

    Small companies also are very concerned about vehicle abuse -- hard driving off-road, for instance, or significant speeding. Built-in monitoring technology gives them an early warning that bad things are happening to their asset and they may be able to cut their losses.

    The upshot: many companies use tracking devices that are programmed to send alerts only upon occurrence of particular trigger events such as crossing a state line or an international border, said experts. The technology, insisted Abrams, "is not used to track where people go," which is to say, it involves no obvious privacy concerns. "It's there to keep people from going where they shouldn't."

    But that's at the national chains. At the mom and pop independents, apparently anything goes. Renter beware. Word of advice: when renting at an independent, always ask at the counter how and what they track. Pay close attention. Those few seconds can spare you big agony later.

     

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    Daughter helping senior father with computer
    Alamy
    By Kimberly Palmer

    Shortly after Terrie Hull's mother got in a car accident in 2011 that caused brain damage, her mother married a man Hull didn't trust. Soon, Hull learned her instincts had been right: Her mom, under her new husband's guidance, accused Hull of stealing money from her. Hull and her husband Jon, who live in Portland, Oregon, had to go to court to defend themselves and make sure her mother's money would last as long as she lived.

    It was -- and continues to be, since she no longer speaks to her mother -- a nightmare that the Hulls want to prevent from happening to other people. They wrote their new book, "A Legacy Undone," as part of that goal. "We want people to know that no matter how close a family is, something this tragic can happen when there's a new influence involved," she says.

    One of the most powerful steps that families can take to protect the finances of aging family members is to have a written plan in place that specifies how their money should be managed as they get older, the Hulls say. "Families are just not talking about it soon enough. We need to discuss this while we're all lucid, before age 50," Jon Hull says. Families who have been talking openly about money all along have a big advantage, he says, because if children and parents have never previously discussed estate planning, then it can feel uncomfortable and even greedy when kids bring up the subject.

    "We're trying to help the well-intentioned but clueless people." - Naomi Karp

    "We know there are many millions of Americans who cannot manage their own money due to cognitive impairments and other disabilities," says Naomi Karp, senior policy analyst at the Consumer Financial Protection Bureau's Office for Older Americans. Karp says 5.3 million Americans have Alzheimer's disease, and that's just one type of dementia. Some 22 percent of Americans over age 70 have mild cognitive impairment, she adds, which can make it difficult for them to manage their day-to-day finances. People with mental illness or disabilities also have others manage their money for them; she says that there are at least 25 million people in the U.S. with the legal authority to manage someone else's money.

    That's why the bureau published a series of guides in 2013, "Managing Someone Else's Money," which can be downloaded for free on the agency's website. Since most people managing money for friends and family members are not financial professionals, they often don't understand their legal and ethical obligations, Karp says. Even caregivers who mean well make common mistakes, such as adding their own name to a joint bank account or borrowing money with the intent to pay it back later. "We're trying to help the well-intentioned but clueless people. Some mistakes people make are pretty bad," Karp says. To avoid falling into that category, consider these tips:

    Develop, Write Down Plans When Everyone Is Healthy

    The Hulls suggest "putting one's affairs in order," including writing a will and creating power of attorney documents (as well as a health care proxy), well before you think you'll need one. "If a person becomes incapacitated, even for the short-term, you want to make sure your wishes are known," Jon Hull says. The couple also suggests specifying your wishes for any digital assets, such as the rights to domain names and social media accounts, as well as writing out an overview of all assets, accounts, insurance policies, storage units and other information. "These conversations are only difficult if you wait too long to have them," Jon Hull says.

    Ease Your Parents' Fear of Losing Control

    "When someone is older, they are losing control over all different aspects of their lives. Their health care situation becomes precarious at times, you're losing so many things, so an older person will grab ahold of everything they can control. When a family member or friends tries to help them, they sometimes shut down," says Kathleen Hastings, a portfolio manager at FBB Capital Partners in Bethesda, Maryland, who has expertise on financial issues facing seniors.

    To help ease those fears, Hastings suggests explaining your offer to help them in a way that makes it clear you are not trying to take over their finances, but merely serving as support for them. When Hastings noticed her mother struggling with some financial tasks, she said to her, "Would you like me to be your administrative assistant? I'll be your helper." Parents, Hastings adds, still need to feel they have control over their lives.

    Involve Other Family Members

    When one sibling starts managing parents' money it can create tension among other siblings or family members. Hastings suggests holding a family meeting to designate the point person who will make health care and financial decisions, then making sure everyone is in agreement. To help protect yourself from being accused of mismanagement, Hastings suggests inviting a witness whenever you visit a safety deposit box or handle money. People with dementia can become fearful that others are stealing from them and can even falsely accuse their children of such actions.

    "Make sure you have copies of everything to protect yourself from being accused," Hastings says. In other words, keep a paper trail of all financial activity. "People act differently when it comes to money, and all sorts of issues can raise their ugly heads," she adds.

    Don't Add Your Name to a Parent's Bank Account

    It might seem like the simplest way to manage an account, but putting your name on an account to give you joint ownership can create a range of problems: It could trigger the gift tax or mean that all the money goes to you if your parent dies, when in fact the parent did not intend for that to be the case. It also makes you vulnerable to any creditors or debts carried by your parent and vice versa. "It's better to have a single account owner with an authorized signer or a power of attorney on the account," Hastings explains.

    Protect Money Against Thieves

    The "Managing Someone Else's Money" guides contain information on avoiding financial scams, which are often targeted toward older Americans. Adding an alert for any account activity to a bank account or credit card, for example, can help notify you of potential problems.

    Learn, Follow the Rules -- Including State-Specific Ones

    If your parent receives government benefits, such as a Veterans Affairs pension or Social Security payments, then that government agency will need to give you authority to oversee those benefit checks. But you would need a separate power of attorney document for the authority to handle the rest of your parent's assets. "There's a lot of confusion about that," Karp says. To help sort it out, the CFPB will soon release state-specific guidelines on managing others' money to augment its national guide.

    In the Hulls' case, a trust and will that had been put in place before Terrie's father's death enabled Terrie to go to court to protect her mother's remaining money. "Having that legal right given by the parent is key," Jon says. It's a big responsibility: When you become the fiduciary for someone else's money, you are responsible for acting in their best interest and managing their money responsibly, which includes keeping it separate from your own money.

    Terrie and Jon Hull now travel around the country giving workshops on preventing the kind of family tragedy they encountered. Terrie says workshop participants often share their own tales of strangers and acquaintances preying on the money of their aging loved ones. "Everyone has a story," she says.

    Kimberly Palmer is a senior editor for U.S. News Money. She is the author of the new book, "The Economy of You." You can follow her on Twitter @alphaconsumer, circle her on Google Plus or email her at kpalmer@usnews.com.

     

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    Mom and businesswoman working with laptop computer at home and playing with her baby girl.
    Alamy
    By Cameron Huddleston

    Being a stay-at-home parent is a full-time job. Unfortunately, it doesn't come with a full-time paycheck. As a result, it can be hard for some families relying on just one income to make ends meet or build savings.

    However, there are ways for stay-at-home moms and dads to earn a bit of extra cash to supplement the family budget without leaving the house or sacrificing time with the kids. In fact, here are 10 money-making opportunities that can be pursued when your children are at school or asleep, or possibly even when they are awake and demanding your attention. The earnings potential is modest, and not every opportunity will be right for you, but over the course of a year you could pocket hundreds -- and possibly even thousands -- of dollars.

    1. Get Paid for Your Opinions

    Taking surveys online can be a relatively quick way to earn enough to afford a few extras. Harris Poll Online, for example, awards points for the completion of online surveys, which can take between five and 25 minutes to fill out. Survey takers accumulate points and can redeem them for gift cards from retailers such as Amazon and Starbucks. Harris Poll Online also runs sweepstakes for survey participants that pay out cash rewards to winners. The top prize is $10,000. Other online outfits that will pay you to take surveys include SurveyClub, Global Test Market and Swagbucks. There's no cost to sign up.

    2. Evaluate Websites

    Another way to make extra cash in a short amount time -- $10 for about 20 minutes of work -- is to sign on with UserTesting and evaluate Web sites. You need a computer with a microphone and Internet connection, and you'll have to fill out a one-page demographic profile. You'll receive work if your profile matches that of the target audience of sites being tested. Then it's just a matter of using UserTesting's screen recorder, which you'll need to download to your computer, to record your verbal comments and on-screen movements as you click through a site. Site owners typically are looking for feedback about whether the Web site is confusing to navigate.

    3. Serve as an Online Juror

    Some attorneys use large panels of online mock jurors to get feedback on their cases before they go to trial. However, the mock jurors must live in the county or federal district where the case will be tried. You can sign up at a couple of sites and receive e-mail notifications if a case is posted in your area. EJury.com pays $5 to $10 per case via the online payment system PayPal. You can't be an attorney, paralegal or legal assistant -- or even related to an attorney -- to participate. EJury says you're likely to have better luck getting picked if you live in a large metropolitan area, where more cases are tried, rather than a rural area. The average case takes about 35 minutes to review. At OnlineVerdict.com, where cases typically take between 20 minutes and one hour to review, fees range from $20 to $60. Payment is made by check.

    4. Run Virtual Errands

    If you have a computer with Internet connection and are good at searching the Web and communicating with others, you can become a virtual personal assistant with Fancy Hands. The service hires assistants, who set their own hours, to help its users tackle tasks such as making calls to service providers, scheduling appointments, and finding the best prices for services and products. You get paid per task, starting at between $2.50 and $7.

    5. Tutor Students

    If you have an academic specialty and can squeeze in a couple of hours during the week while Junior is taking a nap or Janie is at gymnastics, share your knowledge with struggling students. Find students looking to improve their grades on your own through your kids' schools -- check a site such as Craigslist.org to gauge hourly rates in your area -- or sign on with an online tutoring company, such as Tutor.com. You must be available to tutor at least five hours a week and have a college degree to tutor certain subjects for Tutor.com. Tutoring is done virtually from home via a computer, not in person. Tutor.com tutors are paid an hourly rate based on the subject.

    6. Be a Mommy (or Daddy) Blogger

    If you haven't used your free time between changing diapers, washing clothes and shuttling kids around to hop on the blog bandwagon, it's worth considering this potential source of income. And just because you're a parent doesn't mean you have to write about parenting issues. In fact, given that there already are so many blogs about life as a mom (or dad), consider writing about another topic about which you are passionate. The more original, entertaining and informative you are, the more likely you'll gain followers -- and you need an online following to make money.

    You can create your blog using a free platform from WordPress.org, but you'll need to pay a small amount - as little as $4 per month -- to have your blog hosted. Try GoDaddy.com, which can provide a domain name for your site, email addresses, database storage and other Web hosting services. To make money, you can use the free Google AdSense service to display advertisements on your site. The amount you're paid varies by ad and usually depends on how many people see it. There's also what's called affiliate marketing, in which you earn a commission (usually less than 10 percent) whenever someone clicks on an ad on your site and purchases a product. The Amazon Associates affiliate program allows you to advertise the retailer's products on your site, or try affiliate networks such as CJ Affiliate or ShareASale that work with thousands of companies. Depending on how much time you put into your blog and how many people visit it, you could be making a few hundred dollars each month within a year.

    7. Get Freelance Editorial Work

    Maybe you don't want the commitment of a blog but like to write or express your creativity. You're in luck because plenty of media, corporate and nonprofit Web sites are looking for freelancers to write, edit or produce content. Some pay by word, some by the hour and some pay per project. For example, if you register for free with Textbroker.com and submit a writing sample, you'll receive a rating based on your content quality. Then you can choose which projects you want based on your quality rating and earn 0.7 cent to 5 cents per word, or more. FreelanceWriting.com provides a long list of freelance writing opportunities culled from several top sites. Many of the recent listings offered hourly rates of $25 or more. For $21 a month, you can join Mediabistro's freelance marketplace to post your qualifications for review by media managers seeking writers.

    8. Profit From Your Photos

    If you're skilled with a camera, you can turn your photos into cash by selling them to stock image sites, such as Shutterstock.com. If the photos you submit are accepted, they can be downloaded by Shutterstock's subscribers and you can earn anywhere from 25 cents to $120 per image download. Other sites that accept photos from contributors include iStock, Dreamstime and Sqeeqee.

    9. Sell Baked Goods

    Working parents might not have the time to whip up a birthday cake or cupcakes for school parties. That's where you come in if you can create tasty baked goods. A friend of mine who is a single mom started making cupcakes as a way to keep herself occupied while staying with her dad when he was undergoing chemotherapy. She posted a picture of her cupcakes on Facebook and instantly received several orders from friends. Now she makes about $200 a month making cupcakes for others who hear about her through word of mouth or see pictures of her cupcakes on her Facebook page.

    10. Watch Other Kids Along With Your Own

    There's a good chance your friends who work outside of their homes would be thrilled to have an experienced parent watch their children while they are at the office. It can be manageable if your friend in need has only one or two kids. Plus, the new playmates will help keep your children occupied for a few hours. Pay varies widely based on where you live and the ages and number of kids you'll be watching, but babysitters and nannies typically can make up to $10 an hour in small cities and much more -- even double that hourly rate -- in larger cities.

     

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    'Paris, France - April 27, 2012: Cafe Le Bonaparte in Paris. After World War II, St-Germain-des-Pres became synonymous with inte
    Getty Images
    By Marla Walters

    In 2001, as we deplaned on Maui, my husband was handed a survey from the Hawaii Tourism Authority. It sought our assistance in tracking daily vacation spending. As a certified public accountant, he took to it like a duck to water, and as we went from activity to luau, he tracked every last cent we spent.

    Scrutinizing the cost of the activities and meals so closely made us spend less money than we may have been inclined to on that trip, but it also altered our spending habits on all vacations thereafter. After finding the best deals on tickets and lodging, we tackled daily food costs. Below are our tips for saving money on those.

    A caveat, though: Dining in great restaurants and trying out new foods are often part of your travel adventure. If you find yourself eating a PB&J in your hotel room in Chicago instead of a street-vendor hot dog or a deep-dish pizza, I think you are missing out. Better to save a larger travel fund than to miss out on a fun part of the experience.

    1. Choose an Apartment Instead of a Hotel

    This tip is at the top of my list, because it is so much cheaper to eat in than rely on restaurants. However, if you don't like to cook, and part of vacation means a break from the kitchen, this suggestion is not for you. If you do like to cook, though, look for condo advertisement comments where people have mentioned well-stocked kitchens. This is usually code for decent knives, pots and pans, cooking oils and seasonings. Also, look for condos that have outdoor grills. Grilling adds to that vacation-y feeling and shares the cooking workload.

    I usually make a shopping list on the plane or in the car, hit a grocery store when we arrive at our destination, and then go unpack. I wouldn't suggest that you eat every single meal at a condo, lest you miss out on local restaurants and foods, but this will give you a big savings over needing to frequent restaurants three times a day.

    2. Look for Hotels With Refrigerators and Microwaves

    If you can't do the above, let's hope your hotel has a small refrigerator. If so, you can at least store some milk for cereal, juice, yogurt, etc. for in-room breakfasts. Many hotels also have microwaves, which is another bonus.

    3. Stock Your Own Alcohol

    We live in a cruise ship port town. Guess where a lot of folks head during shore excursions? To Walmart, to buy booze. Cruise or resort bar prices are going to be considerably higher than what you'll pay if you pick it up yourself. While it's nice to have the occasional drink out for the vacation ambiance, it will also add up quickly if you spend a lot of time in bars.

    4. Camp

    Not everyone loves to camp, but if you do, it's a really inexpensive way to go. And what's better than bacon and fresh trout with coffee in the morning? If you like just a little more luxury in the great outdoors, consider a KOA Deluxe Cabin -- which has a kitchen -- or an RV rental. Camping food is, by its very nature, cheap. Think about hot dogs, pork and beans, pancakes and of course -- s'mores.

    5. Eat Lunch in Restaurants, Instead of Dinner

    My husband and I rarely go out for dinner, but we frequently go out to lunch because it is considerably cheaper. Although the menu choices or portions aren't as large, we never feel limited. Often, we find that the same menus are featured for both lunch and dinner -- the former is just much lower-priced.

    6. Picnic

    My mother was a champion picnicker and made terrific salads, fried chicken, snacks, and soups in thermoses. We'd just pick a pretty spot and pull the station wagon over. It also gives everyone time to stretch their legs, take some pictures, and relax (while saving money). It's also fun to pack a lunch and head to an area park. Many even have barbecues available.

    7. Take Advantage of the Continental Breakfast

    Many hotels now offer free breakfast as part of the deal, so you might as well take advantage of it. While cereal and muffins may be the only fare at some, higher-end places have eggs to order and trays of bacon. I usually grab a few pieces of fruit to snack on later, too.

    8. Eat Local Foods

    Food grown locally will be the most inexpensive, and usually at its best. This doesn't just mean produce, though -- think of the inexpensive, ubiquitous street food -- musubi in Hawaii, tacos in Southern California or gyros in New York. Keep the travel adventure going by trying new (and often inexpensive) foods.

    9. Check Out the Appetizer Menu

    Want to try a restaurant, but are frightened off by the dinner prices? Check out the appetizer menu. The prices are lower, the portions often generous, and you'll still enjoy the restaurant ambiance.

    10. Look for Deals

    Try Groupon, LivingSocial, or check a coupon book for restaurant deals. Or, try giving the restaurant a call to see if it offers an "early bird" or "kids eat free" special.

    11. Ask a Local

    Don't be bashful! Somebody who lives where you are traveling is probably your best bet for finding cheap, great eats.

    12. Read Up on Restaurants

    Do some homework before you go. Check the area's daily newspaper, blogs, TripAdvisor and Yelp.

    13. Patronize Food Trucks

    Want great food in a casual atmosphere? Find a food truck. Take it to go, or find a spot to picnic. Roaming Hunger will help you find the trucks.

    14. Buy in Bulk

    Even when traveling, if we're staying in a place with a kitchen, we seek out a nearby Costco or a Sam's Club. There are items we know we'll want (such as eggs, beer and bagels) every day.

     

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    Durable Goods
    John Raoux/APDon't fall for the sale signs on grills, patio furniture and summer clothing -- you'll find lower prices after Memorial Day.
    By Courtney Jespersen

    You might read a lot in the coming days about what you should and shouldn't buy this Memorial Day weekend, but here's a tip: Getting the best deal during the holiday weekend is about more than just which department to shop in. To save big, check out our top do's and don'ts of Memorial Day shopping.

    Do: Research

    It pays to be prepared. Don't walk into a store (or visit a store's website) blindly this Memorial Day weekend. Do your sale-searching homework before you fire up the grill or attend your local parade.

    Before you settle on where to shop, cross-compare retailers to see which is offering the best deal (lowest price, least expensive shipping, best freebies, etc.). Consider registering for the email mailing lists of your favorite stores well before Memorial Day so you'll know about the deals as soon as they're announced.

    Don't: Forget the Basics

    Just because many major retailers will be hosting big sales doesn't mean you should ease up on your regular savvy shopping habits. Here are a few that can prove especially helpful:
    • When shopping online, look for (and don't neglect to enter) any qualifying discount promo codes at checkout.
    • When shopping in-store, bring a physical copy of coupons and ads with you, so you can guarantee yourself the advertised deal.
    • No matter where you shop, always read the fine print of offers for full details about possible exclusions, limited product quantities and ending dates of sales.
    Do: Buy Appliances

    One category of products to keep an especially close eye on is appliances.

    In past years, Memorial Day has been a prime opportunity to grab a great discount on major appliances like refrigerators. Expect similar sales from big-name retailers again this year. And while you're shopping for your home, check out the mattress section. Memorial Day sales are an ideal time to get an appealing deal there, too.

    Don't: Buy Summer Essentials

    Memorial Day may be synonymous with summer, but that doesn't mean Memorial Day sales should be synonymous with summer products.

    If you're looking to buy at the best price possible, don't purchase summer essentials now. You won't find the lowest prices on a number of warm-weather products, including outdoor furniture, grills and swimwear.

    The reason for this is something you can keep in mind well beyond Memorial Day: As a general rule, the best time to buy any particular product is directly after its peak season (or sometime during its offseason). That's when retailers are trying to clear out inventory and are more likely to slash prices. It works for holiday decorations after Christmas, and it works for patio gear once summer ends.

    Do: Find Free Shipping

    Now that you know what you should and shouldn't be buying, what about how you'll be buying? If you plan on shopping online from the comfort of home (or backyard) this year, make sure to look for free shipping offers.

    Search for stores that offer free standard shipping on all online orders. Or, if a retailer is offering free shipping on orders above a certain amount, try to reach this minimum. Don't forget to input any coupon codes at checkout that may be required to take advantage of such promotions, so you won't end up paying for shipping when you don't have to.

    Don't: Get Scammed

    Finally, in the midst of shopping madness, don't allow yourself to get scammed by too-good-to-be-true sales and deals. It's especially important to follow safe shopping practices during popular sales periods such as Memorial Day.

    In past years, the Better Business Bureau has warned consumers to watch out for Memorial Day-related tricks. Previously discovered scams have included phony deals promised to military personnel and veterans and enticingly low prices on deceptively subpar cars. The BBB also warns against wire-transferring money to strangers or clicking on suspicious links in emails.

    No matter what you're shopping for this Memorial Day, be sure to make purchases only from retailers you trust.

    Courtney Jespersen is a staff writer at NerdWallet, which saves consumers cash and compares everything from shopping deals to credit cards.

     

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    Estate Planning Documents You Need Right Now

    By Marilyn Lewis

    Do you want to be remembered fondly by loved ones? Then tackle your estate-planning tasks. Your heirs will bless you for not leaving a mess for them to clean up.

    Many of us want to get going but don't know where to start. Following is information about eight documents that can help you get your affairs in order. If that sounds like a lot of paperwork, don't worry: You probably won't need every document.

    1. Last Will and Testament

    Making a will gives you the power to decide what is in the best interest of your children and pets after you're gone. It also can help you determine what is to become of possessions of financial and sentimental value. Finally, you can include any funeral provisions and instructions.

    With no will, your assets will be dispersed by a probate court. Probate proceedings are public record. If you're married, each spouse should have a separate will, AARP says.

    Update your will as big changes occur -- marriage, divorce, inheritance, purchase of real estate or the birth of a child. If you have moved to a new state, have your will reviewed by an attorney in the new state. You can add to or change a will in either of two ways: Make a new will or add a codicil, a supplement.

    Get an attorney's help if you have substantial assets or a legally complex personal or financial situation. Use your will to name guardians for those under your care, including children and pets. Designate any assets you are leaving for their care. Remember to keep private information out of your will, as it could become a public document.

    2. Revocable Living Trust

    A living trust is another tool for passing assets to heirs while avoiding potentially expensive and time-consuming probate. It's "revocable" because you can change it as long as you're mentally competent.

    You name a trustee, perhaps a spouse, family member or attorney, to manage your property. Unlike a will, a trust can be used to distribute property now or after your death. If you have substantial property or wealth, a trust can provide tax savings.

    ElderLawAnswers explains differences between trusts and wills. Creating a trust is not a do-it-yourself project. Get an attorney's help.

    3. Beneficiary Designations

    When you purchase life insurance or open a retirement plan or bank account, you're asked to name a beneficiary who will inherit the proceeds. These designations are powerful; they take precedence over instructions in a will.

    Keep beneficiary designation papers with your estate-planning documents. Review and update them as your life changes, and you want to name new beneficiaries.

    4. Durable Power of Attorney

    Choose someone to act on your behalf, financially and legally, in case you can't make decisions. Don't put off this chore. You must be legally competent to assign power of attorney. Older people, worried about relinquishing control, sometimes put off the task until they are no longer legally competent to do it.

    The durable power of attorney is the most important estate-planning instrument available.

    If you have not designated someone as your power of attorney, your family's hands are tied if you become incapacitated, something that can happen to young people as well as the elderly. "For most people, the durable power of attorney is the most important estate-planning instrument available -- even more useful than a will," says ElderLawAnswers.

    Some financial institutions won't accept a general power of attorney document, so ask your banking and financial institutions if they have a separate power of attorney form you must use.

    ElderLawAnswers adds: "If you do not have someone you trust to appoint, it may be more appropriate to have the probate court looking over the shoulder of the person who is handling your affairs through a guardianship or conservatorship. In that case, you may execute a limited durable power of attorney simply nominating the person you want to serve as your conservator or guardian."

    5. Health Care Power of Attorney and Living Will

    With a health care power of attorney -- also called durable health care power of attorney -- you name someone to make medical decisions for you if you're incapacitated. This is different from the durable power of attorney for financial and legal affairs.

    A living will lets you explain in advance what types of care you do and do not want, in case you can't communicate in the future. "You can use your living will to say as much or as little as you wish about the kind of health care you want to receive," says legal site Nolo. In some states, the living will and health care power of attorney forms are combined in one "advance directive" form.

    These decisions require discussion and weighing of values and wishes. The American Bar Association has a free toolkit of 10 tools to help with making plans and decisions. States differ in their requirements. To obtain a form and instructions that are valid in your state, ask at a local hospital. Here are more resources from the American Bar Association, including a sample form.

    6. Provision for Digital Assets

    Decide what to do with your digital information, including your computer hard drive, digital photo collection, information stored in the cloud, and online accounts, like Facebook, Yahoo, Google and Twitter. Be sure to include a list of your passwords. "What Happens to Your Data When You Die" explains how to make these decisions.

    7. Letter of Intent

    For instructions, requests and important personal or financial information that don't belong in your will, write a letter. Use it to convey your wishes for things you hope, but don't require, to be done. For example, you may have detailed instructions about how you want your funeral or memorial service performed. No attorney is needed. The letter won't carry the legal weight of a will.

    8. List of Important Documents

    Make certain your family knows where to find everything you've prepared. Make a list of documents, including where each is stored. Include papers for:

    • Life insurance policies.
    • Annuities.
    • Pension or retirement accounts.
    • Bank accounts.
    • Family records.
    • Divorce records.
    • Birth and adoption certificates.
    • Real estate deeds.
    • Stocks, bonds and mutual funds.
    Another item helpful for your heirs is a list of bills and accounts, including contact information and account numbers for each, so your representative can close and settle these accounts. AARP suggests using a safe at your home or business for storage. Your lawyer's office may be another possibility. It adds: "Before you decide to store the will in a bank safe deposit box, consider state and local probate law. Many laws require that a bank safe deposit box be automatically sealed upon your death. This can result in messy complications."

    Think this is an important story? Share it with your friends on Facebook. 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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    Operations Inside A Time Warner Cable Location Ahead of Earnings Figures
    Michael Nagle/Bloomberg via Getty ImagesA bill payment machine at a Time Warner Cable store in New York.
    How many times have you started a new cellphone or cable service after being wooed by discounts and promotions? Unfortunately getting those discounts isn't always as easy as promised by the person signing you up.

    It's not uncommon for those discounts, freebies and pricing cuts to be left off your first bill. Here are a few tips to help you get the savings you were promised.

    1. Document Your Offer

    Make sure you record what the rep agreed to when you signed up for the service. Waivers of installation and activation fees, free or discounted equipment and special pricing are all things that sometimes are promised but then aren't reflected in that first bill you receive.

    It's likely not intentional but when you're dealing with a big company that has lots of discount codes and departments those promotions may not get applied to your account properly or at all. So be sure to note the name of the person signing you up and the date and time they were helping you.

    Record the discounts and pricing you were promised. If you're doing it over the phone, take notes as you go. Take pictures of your notes and store them in Evernote or Google Drive. If you're online just copy and paste the details and email them to yourself.

    For example, when I signed up for Google Fiber earlier this month I didn't want to pay an early termination fee for my Comcast contract. I documented the name of the rep who assured me I could place my Google Fiber installation on hold until my Comcast contract expired. I emailed myself a copy of the chat for future reference.

    2. Check Your Bill

    This sounds obvious but it's not as simple as it sounds. Unfortunately the majority of bills aren't simple to read on a normal month. When you add in line-items for buying equipment, changing plans and prorated service, the debits and offsetting credits it makes you feel like you need an accounting degree just to read your bill.

    This is why the first step of documenting your offer is important, so you can remember the discounts you were supposed to get when your bill shows up 3-4 weeks later. Comb through the line items and make sure the discounts you expected are included.

    3. Be Persistent

    The last time my cable promotion expired and I had to adjust my plan the first bill I received was about $200 higher than it should have been. I got on the phone and went through the line items until the customer service rep figured out what was wrong and credited my account.

    Don't get off the phone until they've addressed every charge in question. Unfortunately this can take a while. Often times the rep will put you on hold while they research or talk to their supervisor. If you hate being on the phone that long many providers now allow you to chat online with a customer service rep.

    It is frustrating that you have to waste so much of your time correcting the company's mistake. Being on a chat session takes away some of that frustration for me because I waste much less time. These type of conversations usually consist of you asking a question and then waiting a while for the rep to figure it out. When you're chatting online you can check email, pay bills or spend time on work projects while you're waiting for the customer service rep to figure out how the company messed up and how to fix it.

    Chatting online also takes away the frustration of phone menus and trying to decipher the accent of a service rep who's native language is different than yours.

    4. Pay Only What You Owe

    Once the customer service person corrects the billing mistakes they'll update your account and tell you it will be reflected on your next bill. Of course the problem now is that you want to pay what you owe to avoid a late fee but you definitely don't want to pay the extra $50 or $100 you were over billed. So be sure to find out from the company rep what's the minimum amount you can pay in the current bill cycle until your adjusted bill arrives.

    5. Beware Appeasement Upsells

    When your bill is bungled and you have to spend your time getting it fixed you probably get frustrated. Sometimes compensate for the inconvenience the phone rep might be authorized to give you something to appease you.

    Something that I ran across not too long ago was an upsell disguised as an appeasement. After finally getting my billing issue fixed the customer service man told me that he would upgrade me to a faster Internet speed at no charge. I thought it was a nice gesture so thanked him and accepted the upgrade.

    What he didn't mention was that the upgrade was only free for a few months and then I started getting billed for it. So if you're offered an upgrade as an apology, be sure to clarify whether that upgrade will eventually cost you something.

    It's always best to ask for a statement credit when you can get it. However, you'll have to follow up to make sure you actually get the credit that's promised. On several occasions the phone rep told me they were crediting my account, but it never actually showed up on my bill and I had to call back in to make sure they finally took care of it.

    Like I said, it's frustrating that you have to waste your time fixing the mistakes of your provider. But when you're dealing with a big company it's easy for your interests to fall through the cracks and you have to be your own advocate. Hopefully, these tips will help you get the deal that you were promised.

     

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    401k
    Getty ImagesThis coming year could bring higher fees and fewer investment options for participants.
    By Emily Brandon

    Many employers are tweaking their 401(k) investment options, typically reducing the number of funds available and adding low-cost index fund options. They're also increasingly looking for ways to convince workers to save more and make more appropriate investment decisions. Here is how companies expect to adjust their 401(k) plans in the coming year.

    Fewer investment options. Many 401(k) plan sponsors are planning to reduce the number of investments offered to participants. The proportion of plans offering 20 or more investment options has declined from 31 percent in 2010 to 26 percent in 2014, according to a Towers Watson survey of 457 large and midsize U.S. companies that sponsor 401(k) plans or similar types of retirement accounts. About two-thirds of plans now offer between 10 and 19 investment options. And 19 percent of companies plan to remove or replace investment options in the next 12 months. "If you have fewer funds, the company can do a better job monitoring them and make sure that they picked the best funds," says Robyn Credico, defined contribution practice leader at Towers Watson. "Too many options confused employees." Only 6 percent of companies are preparing to offer a wider array of investment choices.

    Adding index funds. There's an increasing amount of interest in adding index fund offerings to 401(k) plans. Some 22 percent of companies offer a tier of index fund options, up from 18 percent in 2014, and another 40 percent of employers say they are very or moderately likely to change some or their investment options from actively managed to index funds, according to an Aon Hewitt survey of 248 companies that sponsor 401(k) plans. "We've seen a number of plan sponsors use more of an index investment lineup or shift a higher percentage of their investment options to a passive or indexed approach," says Steve Anderson, head of retirement plan services at Charles Schwab. This switch to index funds might be motivated by reducing costs for participants because index funds tend to have lower expense ratios. The proportion of companies that have changed their fund lineups to cut costs grew from 27 percent in 2014 to 34 percent in 2015, and 34 percent of companies say they are very likely to select more inexpensive investment options in the coming year.

    Higher fees for participants. Employers are planning to pass more of the costs of administering the 401(k) plan along to participants. The proportion of companies requiring employees to pay recordkeeping fees has jumped from 33 percent in 2009 to 58 in 2014, Towers Watson reports. Less than a quarter (23 percent) of employers absorb the cost of the recordkeeping fees, down from 58 percent in 2009. Some companies also split the costs with employees.

    Automatic features. Most companies (68 percent) automatically enroll all or newly hired employees in the 401(k) plan, up from 57 percent in 2010, Towers Watson found. And 54 percent of companies provide an automatic escalation feature that increases employee saving rates over time until they reach a target savings rate selected by the plan. Another 21 percent of companies are considering adding automatic escalation to their 401(k) plans in 2015 or 2016. "We're seeing a lot more employers adopt contribution escalation, which will have their savings rate move up automatically over time," says Rob Austin, director of retirement research at Aon Hewitt. "The time when it gets turned off is getting higher and higher. For a long time, it was 6 percent, but we are seeing more employers go up to 10 percent or 15 percent."

    Adding a Roth option. A Roth 401(k) doesn't get you a tax deduction in the year you make the contribution, but withdrawals in retirement are often tax-free. More than half (54 percent) of employers already offer a Roth option, and another 18 percent of firms are planning to add Roth features to their 401(k) plan by 2016, Towers Watson found. However, the Roth option isn't particularly popular among workers, with only around 11 percent of employees using the Roth 401(k) feature.

    More communication with participants. A majority of employers (84 percent) say they plan to increase efforts over the next two or three years to educate employees about saving and investing, Towers Watson reports. Much of this increased communication is likely to occur online rather than in person. Aon Hewitt's survey found that the proportion of employers offering online investment guidance increased from 56 percent in 2014 to 69 percent in 2015, and 18 percent of the remaining employers say they are likely to add this service within 12 months.

    Emily Brandon is the senior editor for Retirement at U.S. News. You can contact her on Twitter @aiming2retire, circle her on Google Plus or email her at ebrandon@usnews.com.

     

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    Tiffany & Co in Downtown Manhattan, New York City
    Alamy
    From a few high-end brands providing a snapshot of how the upper crust lives to the DVR pioneer checking in with quarterly results, here are some of the things that will help shape the week that lies ahead on Wall Street.

    Monday -- Travel to China

    The market is closed Monday in observance of Memorial Day. This doesn't mean that the rest of the international markets will also be taking a breather. In fact, folks hungry for market news on an otherwise slow news day can turn their attention to China, where Tuniu (TOUR) reports quarterly results.

    Tuniu is a leading online leisure travel company. The stock has more than doubled since going public at $9 a year ago.

    Tuesday -- Searching for DVR Relevance

    TiVo (TIVO) is one of the handful of companies reporting financial results when the stateside markets resume trading on Tuesday. The DVR pioneer's breakthrough product may not seem as important these days. We live in an era of on-demand and streaming, making it less necessary to record one's favorite shows. However, TiVo has been able to cash in on its patent-rich portfolio, striking licensing deals worldwide with cable providers that want to offer DVR-like services.

    Wednesday -- In the Lap of Luxury

    A few high-end names will be reporting quarterly results Wednesday. Handbag maker Michael Kors (KORS), upscale jeweler Tiffany's (TIF) and luxury homebuilder Toll Brothers (TOL) will all be updating the market on their latest results.

    Don't assume that all of the luxury names will be moving in lockstep. Analysts see year-over-year growth at Kors, declines at Tiffany's, and flat results at Toll.

    Thursday -- Developers, Developers, Developers

    This will be a busy week for Google (GOOG)(GOOGL). On Tuesday it welcomes a new CFO -- Morgan Stanley's Ruth Porat -- but the real newsworthy moments will come later in the week when it welcomes developers to Google I/O on Thursday and Friday in San Francisco.

    The annual conference for developers is a treasure trove of Android news. Android has become the global leader in mobile operating systems, fueled largely by Google's decision to make it freely available as open-source.

    Friday -- At the Movies

    The abridged trading week closes out quietly, but the same can't be said at the local multiplex, where new movies will be premiering. "San Andreas" and "Aloha" are the two big movies opening Friday, joining an already busy slate of potential summer blockbusters. Movie theaters have struggled to grow attendance, but some pretty heavy hitters are coming out this summer.

    Motley Fool contributor Rick Munarriz has no position in any stocks mentioned. The Motley Fool recommends and owns shares of Google (A and C shares) and Michael Kors Holdings. Try any of our Foolish newsletter services free for 30 days. Is your portfolio ready for what this year has to offer? Click here to check out our free report for one great stock to buy for 2015 and beyond.

     

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    Woman working out finances
    AlamyOne expert says young adults are skeptical toward the financial industry -- mainly because of the Great Recession -- but they still want to manage their money.
    By Kimberly Palmer

    More than one-third of 18- to 29-year-olds have never had a credit card, according to a survey of 1,000 adults released last month by CreditCards.com. Thanks to the 2009 Card Act, which put strict limits on how credit cards are marketed and issued to young people, as well as the Great Recession, which seems to have made young adults more hesitant to take on debt, credit cards are no longer a wallet staple.

    "For college students, it's a whole lot harder to get a credit card than it used to be," says Matt Schulz, senior industry analyst for CreditCards.com and U.S. News Money blogger. When he was in college 25 years ago, he recalls credit card offers all over campus. "There were tables offering Frisbees and T-shirts for signing up, and that just isn't happening anymore because of the Credit Card Act," he says. Now, he adds, college students stick with debit or prepaid cards instead.

    Millennials are skeptical toward the financial industry. They lived through the Great Recession and are distrustful of Wall Street, but at the same time, they are engaged in their finances and want to manage their money.

    Those shifting credit card habits are just the beginning of what makes millennials different when it comes to money. Financial experts who work with millennials also say they're looking for a different type of relationships with financial advisers, including more virtual communication via Skype calls or even social media. They also want to understand their investments and make sure they're keeping fees to a minimum, which differs from the more hands-off approach favored by their parents' generation.

    "Millennials are skeptical toward the financial industry. They lived through the Great Recession and are distrustful of Wall Street, but at the same time, they are engaged in their finances and want to manage their money," says Silviya Simeonova, a senior analyst at Corporate Insight, a consulting and research firm.

    According to a Corporate Insight survey earlier this year of 500 financial advisers and over 1,200 investors, millennials tend to conduct more research before picking a financial adviser and prefer to make investment decisions alongside financial professionals, as opposed to handing off decision-making power to an expert. "The role of a financial adviser is not so much to take all of the responsibility away from the young investor, but to collaboratively work with those investors to help them build their financial future," Simeonova says.

    Millennials also prefer using text messaging, video conferencing, email, websites and social media to communicate with advisers about their money as opposed to sticking with in-person meetings only. By using social media tools such as Facebook and Twitter to share information, Simeonova says, millennials feel "more connected" to their advisers.

    Ben Wacek, a financial planner and founding member of the XY Planning Network, an organization of fee-only advisers serving Generation X and Generation Y clients, says he has noticed that his younger clients also like using software or online tools to help them manage their money. "They're more versed in using that type of technology," he says. And as a millennial himself at age 30, he is, too.

    Wacek also uses a public Facebook page for his firm, Wacek Financial Planning, which he uses to share interesting and useful articles and blog posts that he writes. Using social media in that way also helps him clarify his thoughts around financial planning topics, he says. "It gives me the opportunity to really present those ideas to clients or millennials at large," he says.

    Millennial clients are also eager to use relatively simple financial products that they can easily understand, Wacek says. Instead of complicated products like annuities, they tend to gravitate toward simpler tools such as a Roth IRA or term life insurance versus whole life insurance. "They just want more transparency," he says.

    Because of the Great Recession, millennials are also sometimes skittish about investing in the stock market, especially if they've seen their parents lose money. "We are more wary of putting money in the stock market, even though we hear it's the right thing to do," says Brooklyn-based millennial Pamela Capalad, ​a financial planner at Brunch & Budget, which she founded in 2013. That means advisers to young clients often have to spend time talking through the benefits and risks of investing in the market.

    Here are five more strategies millennial financial advisers are using to appeal to their peers:

    1. Don't make retirement the primary goal. For millennials, retirement is still some 30 to 40 years off, so advisers shouldn't lead with that, says Matt Becker, ​financial planner and founder of Mom and Dad Money, a financial planning practice. "Retirement is too far away to be a truly meaningful goal, so instead the focus is on creating a life that is fulfilling and enjoyable today while at the same time planning responsibly for the future," he says. Instead of retirement, he focuses his conversations with clients around financial independence. "It's a much more flexible goal that encourages people to think more proactively about what they want from life now," he says.

    2. Stick with virtual meetups. "I meet all of my clients virtually, usually using Google Hangouts or Skype. It allows me to work with clients all over the country and to fit our meetings within their busy schedules. We'll meet early in the morning, late at night or even on the weekend if it fits their schedules," Becker says. Online scheduling tools that allow clients and advisers to skip back-and-forths over their calendars are another popular approach among younger advisers.

    3. Ask what they want. Financial and professional goals tend to vary widely by person, which means advisers need to first ask about millennials' goals, as opposed to walking them through a standard checklist, says Eric Roberge, ​financial planner and founder of the firm Beyond Your Hammock. "We first focus on designing a life they love. The purpose is to visualize their goals to provide them with the motivation they need to take the appropriate actions. From there, we focus on cash-flow planning," he says.

    4. Offer transparency with fees. Millennials are wary of feeling like they are being "sold a bill of goods," says Andrew Mohrmann, ​ financial adviser and founder of Modern Dollar Planning. "They want to understand how the professionals they work with are being compensated and understand any conflicts of interest." That's why fee-only models make sense, so advisers aren't being compensated for products they are selling, he says. "Millennials are educated consumers and can spot a sales pitch from a mile away."

    5. Foster a relationship that lasts. Millennials want to see their adviser as an equal as opposed to an older, wiser person they entrust all their money to, and they want that relationship to feel authentic, says Brandon Marcott, financial planner and founder of Edify Financial Planning. "In order to really connect with the millennial generation, you are going to need to put yourself out there in a way you never had to do before ... Millennials will respect you for it," he says. "They want someone who is genuinely interested in them."

    For millennials, Marcott adds, the relationship with a financial adviser isn't just about financial planning, but about life planning.

    Kimberly Palmer is a senior editor for U.S. News Money. She is the author of the new book, "The Economy of You." You can follow her on Twitter @alphaconsumer, circle her on Google Plus or email her at kpalmer@usnews.com.

     

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