85 Uses for Baking Soda - Including Saving Your Life

June 4, 2015, 10:00 pm

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Filed under: Food & Beverage, How to Save Money, Home & Garden

By Donna Freedman

Baking soda's most recognizable form is in a little orange box. This unimposing product is present even in households where no one ever cooks - frequently stored in the back of the fridge to ward off nasty smells. But its uses are seemingly never-ending, and some are much more remarkable.

An Internet user named Justine swears baking soda can save your life in the backcountry if you bring it instead of toothpaste. Because baking soda has no odor of its own, she wrote in the comments section of The Old Farmer's Almanac, "it does not attract bears." By contrast, the ingredients that make our toothpaste minty-fresh also smell delicious to Ursus americanus. Clean your chompers with sodium bicarbonate while you're out in the wild, and bears will be less likely to track you down.

Baking soda will do a lot of other things, too. First, here's a baking soda cheat sheet:

• For pastes, stir together three parts soda to one part water.
• For solutions, stir four tablespoons of soda into one quart of water until dissolved.
• For sprinkling, store in a jar or bottle with a shaker-type cap. I've seen these in thrift shops and dollar stores.

Cleaning Stuff

1. Backpack hack. Mix a little baking soda in water to wash dishes while camping. Justine swears by it.
2. Shine the stainless. Use a damp sponge and soda to clean stainless steel appliances.
3. Water stains on wood. Somebody forget to use a coaster? Gently rub a baking soda paste on the surface, then wipe off.
4. Banish tarnish. Use a soft cloth or clean sponge to rub paste onto tarnished silver. Rinse well, then dry with a dish towel.
5. Brighten brass. Sprinkle baking soda onto a lemon wedge to clean and shine brass objects.
6. Soften stickers. A baking soda paste will take care of gummy residue left by adhesive labels or stickers.
7. Help for the toaster oven. Bread crumbs that drop to the bottom of this appliance burn and smell bad; drippings from broiling or cooking make the odor worse. Pop open the bottom and scrub it with baking soda.
8. Laundry day, part one. Justine says "just a little water and baking soda in a plastic bag" is a simple way to wash your duds when you're out in the wild.
9. Laundry day, part two. Your clothes will be cleaner and brighter if you add a cup of bicarbonate to the liquid detergent you use.
10. Laundry day, part three. Babies are always doing something damp and disgusting. If you're using a gentle laundry soap, add half cup of soda to the soap.
11. Laundry day, part four. Remove perspiration stains with a soda pretreatment: Rub a paste into the stains, wait one hour and wash with the rest of the laundry.
12. Laundry day, part five. Over time, a clothes hamper can absorb the odors of what's thrown into it. Sprinkle bicarb on the bottom, and maybe on the sniffiest of the clothes and linens, to keep smells at bay until washday.
13. Sanitary playtime. Clean and deodorize baby toys in a baking soda solution. Note: This also works for dog toys that are sticky with slobber and lint.

Removing Stains

14. Clean that cookware. Stains inside your enamel pans? Apply a soda paste and leave on for an hour. Next, fill the pan with water, use a wooden spoon to stir the soda loose and boil the mixture for 20 minutes. Rinse and then wash with dish liquid.
15. Revive your Tupperware. Are your plastic dishes stained from storing minestrone or reheating spaghetti at work? Rub off the red with baking-soda paste.
16. Roasting pan save. Sprinkle a lot of baking soda onto crusted-over or burned baking dishes. Add hot water to 2 inches deep and leave it there for two hours. Alternate method: Boil a couple of inches of water in the burned pan, remove from heat, add half a cup of baking soda and leave it overnight. The next morning you should be able to wash it clean.
17. An ugly mug? Use a wet cloth on the inside of stained coffee mugs, then dip the cloth into bicarb and scrub off the stains. If that doesn't work, fill with a baking soda solution and let sit overnight.
18. Gray gone. Got plates with grayish markings from your knives and forks? Gently rub with baking soda, and they will likely disappear.

Deodorizing Stuff

19. Rehab a pet bed. Over time Fluffy's or Fido's bed cushion will get a little sniffy. Use soda to absorb smell, then vacuum.
20. Or rehab the pet. Soak a bandana in a baking soda solution and allow to dry. Tie it around your pooch's neck. It's a doggy deodorant!
21. Or dry-bathe the dog. Mary Hunt of Everyday Cheapskate suggests a periodic baking soda spritz for dogs. But not with water: Just sprinkle on the soda, rub it into the fur, and brush or comb it back out. Note: This also works on human hair, if you're too rushed to shampoo or you just want to remove excess oil.
22. That old-paper smell. If a book starts smelling musty, sprinkle soda on the pages and let them air. According to Tipnut.com, you can treat mildewed pages by rubbing soda on the spots and putting them out in the sun's bleaching rays.
23. That new-baby smell. Fill a small spray bottle with baking soda solution. The Coupon Sherpa blog says it will neutralize the impact of that ubiquitous spit-up odor. Spray and then blot dry.
24. Wash your hands. Cleaning fish or chopping onions? Take the smell off your fingers by washing them with baking soda and water.
25. Freshen the dishes. Get those same smells off your utensils and plates by mixing a teaspoon of soda into the dishwater.
26. Freshen the dishwasher. You can do this in a couple of ways. First try putting a layer of soda on the bottom of the appliance overnight. The next morning, use a damp sponge to scrub the dry powder into the inside walls and door; wipe off most of it, and then run the dishwasher on empty (and without detergent) to remove the rest. Alternate tactic: Run a rinse cycle in an empty dishwasher with a cup of baking soda.
27. Freshen your water bottle. Plastic H2O container smelling a bit stale? Soak it in a baking-soda solution, then rinse well.
28. Freshen the baby bottle. You know, the mostly empty one that got left in the car overnight. Eeewww.
29. Freshen your lunchbox. If your lunch bag or box smells like the Ghost of Mealtimes Past, add a heavy layer of soda and allow to stand overnight. Wash in hot water with plenty of dish soap.
30. Freshen what's underfoot. If the wall-to-wall carpeting smells bad, sprinkle it with baking soda, wait 15 minutes and then vacuum up the powder. The smell will come with it.
31. Freshen your feet. Sprinkle a little baking powder into smelly shoes. Hey, if it'll freshen your fridge, it'll also do wonders for your footwear.
32. Freshen your sports gear. Smelly equipment can get a new lease on life with a baking soda solution. While you're at it, sprinkle some dry soda into your gym or hockey bag.
33. Freshen the sponges. Kitchen or cleaning sponges tend to develop a stale or mildew smell over time. Soak them in a baking soda solution.
34. Freshen the mattress. Every so often apply a thin layer of baking soda atop the mattress. In a few hours, vacuum it up.
35. Freshen the luggage. Got an old trunk or suitcase that smells suspicious? Bid bon voyage to bad smells by sprinkling in some soda, closing up the luggage, letting it sit for a couple of days and then vacuuming.
36. Freshen the trash can. Put a layer of baking soda in the bottom of the receptacle. Note: This is especially useful for the trash can you use for dirty disposable diapers.
37. Freshen the litter-box. OK, nothing will really freshen a kitty toilet. But you can reduce its impact by covering the bottom of the box with soda before adding the litter. After scooping, sprinkle more soda on top of the remaining litter.
38. Gas problem. Got a mechanic in the family? According to The Old Farmer's Almanac, you should seal gasoline- or oil-fouled clothes in a trash bag with baking soda for a few days. After that, wash as usual.

Cleaning the House

39. Shine surfaces. A little baking soda on a damp sponge lets you clean any stainless kitchen surfaces without damaging them.
40. A box isn't enough. Sure, you keep an open box of soda in the fridge. But every so often, wash the inside of the appliance with a baking soda solution.
41. Sluice the drain. When you change out the box from the fridge, pour it down the sink and flush with very hot water to discourage anything unpleasant that was growing there.
42. Drain the drain. Every so often my partner pours some baking soda down the sink and chases it with vinegar. After a while he'll pour very hot water -- maybe even a kettle full of boiling water - to finish the job. It's more eco-friendly than a harsh drain opener but does a good job of keeping the lines running.
43. De-grease the hood. Use soda to scrub greasy buildup from your range hood with a hot, soapy cloth. Keep washing and rinsing, washing and rinsing, until you've removed as much as possible. Finish with more hot, soapy water. If you can still see grease, go ahead and use a commercial degreaser - hey, you tried your best to be green.
44. Clean the oven. If it's only slightly dirty, scrub with baking soda and a damp sponge. For nastier ovens, apply a baking soda paste and leave it on for a few hours.
45. Un-mar your walls. Crayon marks or scuffs? Use a soda paste to remove them.
46. Deodorize the freezer. Once you've washed it with soapy water, wipe with a soda solution.
47. Clean, don't scratch. Use bicarb as a nonabrasive cleanser on fiberglass tubs, ceramic cooktops and any other item that calls for commercial products like Soft Scrub.
48. Defeat soap scum. Baking soda paste is a good cleaner for bathroom tiles and the shower curtain.
49. De-grime grout. Scrub tile grout with a baking soda paste. Leave it on for a few minutes, then rinse well.
50. Un-crust the microwave. Stir a few teaspoons of soda into a bowl of water and heat it in the microwave for a few minutes (as many as five, if it's a really dirty unit). Afterward let the steam work its magic for a few more minutes before opening the door. A soapy sponge should be enough to remove the baked-on food. Cover items before you cook/heat them, and you won't have to deal with splatters.
51. Sweeten the microwave. Be proactive: Keep a very small dish of baking soda inside it to absorb odors before they have a chance to settle in. Take it out when you use the appliance and put it right back in afterward.

Food-Related Uses

52. Bigger breakfast. According to All You magazine, omelets are fluffier when you add one-half teaspoon of baking soda for every three eggs you crack.
53. Clear, sweet brew. Also from All You comes this tip: A pinch of baking soda per gallon of freshly brewed iced tea will remove any bitterness and keep the mixture from clouding up.
54. The original Beano. Parboiling dried beans? Add one-half teaspoon soda per two cups of soaked beans, and you'll have fewer intestinal woes.
55. Green up the greens. When washing spinach or other greens, add a sprinkle of bicarb to the final rinse water. They'll hold their green color better during cooking, according to Tipnut.
56. Prevent curdling. If you're making scalloped potatoes or cream of tomato soup, the milk sometimes curdles and looks less appetizing. Add one-fourth teaspoon of baking soda for each pint of milk for scalloped dishes and one-eighth teaspoon per cup of soup. Do this before adding the milk.
57. Fruit fixer. Stewing rhubarb? Add one-eighth teaspoon of soda per two cups of chopped rhubarb. Tipnut says this lets you reduce the sugar by one-third.

Other Home Uses

58. Sweeten the vacuum. Turn a mix of bicarb and dried herbs into vacuum bag sachets, wrapped in cheesecloth or sections of old pantyhose. Add the sachets to your vacuum cleaner bag, and the machine will release a pleasant fragrance as you work. This article on Tipnut offers instructions.
59. A hands-on use. Use rubber gloves for cleaning? Sprinkle a little soda inside, both to dry them and to keep stale odors from developing.
60. Clear the air. Create your own air freshener with baking soda, water and lemon juice. The folks at Tipnut will show you how. Or mix baking soda and dried flower buds or herbs and leave bowls of it here and there in your home.
61. Fight fire. When I was a little kid, my dad told me to throw baking soda on a fire in a frying pan or on a stovetop. It works -- I learned from experience. This is only if the fire is relatively small. Otherwise you should dial 911 and head out of the house.
62. Fight ice. Baking soda on slippery steps or icy walkways gives traction but is kinder to surfaces than commercial deicer.
63. Kill bugs dead. When I lived in Philadelphia, I greatly reduced the roach population in my apartment by leaving a few dishes of baking soda and sugar here and there; the sugar attracted them and the bicarb killed them. The Old Farmer's Almanac suggests using soda as a barrier under sink-pipe openings and along basement windows to deter silverfish, roaches and carpenter ants.

Health and First Aid

64. Stop the pain. A baking soda paste helps soothe the discomfort of bee or wasp stings.
65. Canker sores. Tipnut suggests dabbing bicarb (dry or in paste form) onto the sores, or rinsing your mouth with a soda solution.
66. A cooling solution. Add bicarb to the bath if you or someone you love is dealing with sunburn, poison ivy, a lot of mosquito bites or diaper rash. Moisturize afterward, since soda is drying.
67. Kill your sweet tooth. The Old Farmer's Almanac suggests this remedy for a sweets craving: Mix a teaspoon of baking soda in a glass of warm water and rinse your mouth.
68. Oral cleaner. Gargle or rinse with a teaspoon of soda mixed with half a glass of water.
69. Oral appliance cleaner. Dentures, retainers and mouthpieces can be soaked in a baking soda solution.
70. Wash your food. Want to remove pesticides and/or wax from store produce? Put a couple of tablespoons of baking soda into a large bowl of cool water, then soak and gently scrub your fruits and veggies. Rinse and then store as usual.
71. Relieve indigestion. A little soda water has long been a traditional treatment for heartburn, sour stomach or acid indigestion. According to the Mayo Clinic, it may interact with certain medications and might not be indicated if other health issues (e.g., high blood pressure or kidney disease) are present. Talk to your health care provider about whether soda water is a good idea.

Beauty and the Bicarb

72. Cleaner curls, part one. Over time, your curling iron will pick up a coating of hair products and oil. Scrub it with baking soda paste.
73. Cleaner curls, part two. Soak brushes and combs in a baking soda solution to remove residues. Rinse afterward. You can also soak your toothbrush this way.
74. Brighten your look. Add a pinch of baking soda to your regular facial cleanser for the exfoliating effect.
75. Make a mask. If an exfoliant isn't enough for you, maybe a facial mask would do the job. Recipes abound online that call for baking soda plus additives like lemon juice or honey.
76. Elbow grease. Make a paste of bicarb and lemon juice and rub gently onto dry elbows. After 15 minutes, rinse well and moisturize.
77. Deodorant, part one. Some people say that baking soda and cornstarch make a fine and all-natural product. Mother Nature Network suggests a one-to-six ratio. Apply with a powder puff.
78. Deodorant, part two. Prefer a thicker product? Mother Nature Network to the rescue again with a simple recipe of baking soda, cornstarch or arrowroot powder and coconut oil.

Miscellaneous Uses

79. Sweeter seats. Putting away your patio furniture for the year? Sprinkle baking soda under the chair cushions.
80. Remove the melt. Ever set the bread bag too close to the toaster? Here's a fix from the Lifehackery blog. Turn the appliance back on until the hardened plastic softens. Unplug the toaster and carefully rub the spot with a baking soda paste.
81. Wash your car. Reader's Digest offers a recipe for a homemade cleaning solution base -- and one of its three ingredients is baking soda.
82. Weeds begone! Sprinkle bicarb into cracks on walkways and/or driveway to discourage windblown seeds from taking hold.
83. Scrub the shield. After a long drive through bug country your windshield can get pretty spattered. Tipnut suggests washing the glass with a paste of baking soda and dish soap. Rinse very well.
84. Clean the battery. Corrosion can affect the performance and shorten the life expectancy of your car's battery. Autos.com offers step-by-step instructions for fixing this. You don't need to buy a special cleaning solution at the auto parts store.
85. Science project. Homeschooling your kids, or just want a fun project? Build a vinegar-and-baking-soda volcano. The gas created is harmless but can produce an explosive effect in an enclosed container. The Arm & Hammer website pleads with consumers not to do this, saying that it "creates a potentially unsafe condition that could result in injury." Recipes for "bottle bombs" and "soda bombs" abound online, as do YouTube videos. While it does look like fun, I'm with A&H: Don't try this at home.

Can you add to this list of uses for baking soda? Share it with us in comments below or on our Facebook page. Or just share this amazing article on your social network. Admit it -- baking soda is awesome! 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. It doesn't cost a dime, so why wait? Click here to sign up now.

 

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One Couple's Path to Retiring Overseas

June 4, 2015, 10:00 pm

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Filed under: Personal Finance, Travel, Budgeting, Retirement Living

Meet Mark and Linda Majors, a San Francisco Bay Area couple planning to stop working in the next five years. Despite not having employer-backed pensions or huge retirement savings, their goal is to retire and live a life of adventure filled with traveling through different countries, kayaking and scuba diving. While this is a dream many of us share, the couple are taking steps to make it a reality. I recently spent some time with Mark, 57, and Linda, 50, to understand their retirement goals and how they are working to achieve them.

Both of them have worked as independent contractors for nonprofit social welfare organizations over the past 15 years, so they have been responsible for their own retirement savings. They have both contributed to regular brokerage accounts, solo 401(k) and IRA accounts at differing rates over the past 30 years. Occasionally, Mark feels frustrated when he thinks of the colleagues he worked with at Union Oil in the '80s, knowing that their corporate careers have secured most of them a pension of thousands of dollars a month. "Then I wonder: Would I want to give up what I've experienced over the past 20 years for that?" he says. "No, I wouldn't."

Linda adds, "I don't think we'd trade our jobs for that at all. We feel like we've helped make the world a better place."

The couple first started talking about retirement plans and crunching numbers two years ago: "We felt like in spite of what we tried to do, we hadn't done a proper job of saving," says Mark. They had been informed that their investments should generate 75 to 80 percent of their current income each month in retirement.

"That's true if you stay where you are," Mark says, "because lots of things you spend money on now don't go away if you stay put. But we believe that if we can find a way to patch together the assets we have now, the assets we can liquidate, and the eventual Social Security we will collect, we hope we can be fine in another country. It doesn't look that hard on paper."

Living on $3,000 to $5,000 a month

The couple did their homework, reading books and taking part in conference calls for retirees interested in living overseas. After much research, they concluded that their ideal adventurous lifestyle would cost $3,000 to $5,000 a month, including health insurance. "Between the Affordable Care Act and everything else in the U.S., what it costs to have health insurance here is out of control until you're on Medicare," says Mark.

Their main reason for exploring other countries is simply that the cost of living is lower. "This country is huge," Mark says of the States. "There are plenty of interesting things to do here, so many climates, geographies, dialects and local food. The problem is staying here and exploring is crazy expensive."

Another big reason for retiring abroad is love for learning new cultures. Mark points out that it would solve the problem many retirees face: having nothing to do and becoming bored. "If you don't know how to order food in the restaurant, or buy the stuff at the market," he muses, "all those things are challenges, but we'll embrace them because it will make life interesting."

For the first few years of retirement, this couple who loves to hike is planning to keep moving from country to country. Their shortlist of retirement destinations includes Mexico and Panama, but there are many more countries in Europe and Southeast Asia under consideration. The generous couple's criteria for evaluating destinations not only include the local infrastructure and healthcare, but also the opportunities for giving back. As Mark explains, "You can volunteer here or you can volunteer somewhere else, and maybe it's more important somewhere else than it is here."

Does That Go To Panama? If Not, We're Not Buying It

Such a large change of lifestyle requires that Mark and Linda begin making many adjustments now, including downsizing. "We set a goal that volumetrically two wine boxes of stuff would leave the house at least every week," says Mark. Besides donating items they won't need to the less fortunate, Marks admits, "I've been working eBay for two or three years just trying to make things go away!"

"We'll have a big suitcase, a small suitcase, and a backpack. That's it," says Linda, "We're only buying stuff that we think we are going to need in that lifestyle."

Adds Mark, "Our watchword is, 'Does that go to Panama?' If not, we're not buying it." In order to reach the lump sum they need to achieve their retirement goals, Mark and Linda are liquidating their assets, including selling their second house and eventually their own home. High property taxes make California a tough choice for retirees. They estimate their property taxes at $7,000 to $8,000 a year.

Tips for others dreaming of living abroad:

1. Be Sure That It Is What You Really Want

"Know thyself," are Linda's first words of advice. "Many of these countries that we're talking about, where the cost of living is lower, they are not America. The resources are different, the climate is different, the language and the people are different. Are you ready for that?"

Vacationing has also become a research experience for the couple. "Usually we would go diving somewhere, go have beers, eat at a restaurant, drink more beers, and have a good time. Who wouldn't like that? But usually you're only there for a week or two, so you don't get bored with it," says Mark. "We've tried to analyze locations since starting the search for where we might live. We take say a Monday morning at 11 o'clock and imagine we're at this destination, but we're not on vacation. Does it suck or is it okay? We've got both eyes open to the vacation effect."

2. Make Sure Your Partner Is on the Same Page

"We have to agree, otherwise it's not going to work," says Linda, "It's actually a leading cause of divorce in couples who move to other countries -- because one person is good at Spanish and the other person isn't, or they have different ideas about what it's supposed to look like."

"If something is really not working for one of the people, the other person in the couple has to say, presumably, 'It's more important that I maintain my relationship than pursue this,'" Mark adds, "You've got to make a choice."

That would certainly not be an easy choice to make, so be sure to discuss your retirement dreams with your partner sooner rather than later. The couple hopes that their family and friends will visit them no matter where they retire.

I look forward to a postcard from Mark and Linda to learn where they wind up and see how retirement turns out for them.

The Majors are among many retirees and semi-retirees whose journey to financial freedom is featured in the free eBook, "The Definitive Guide to Becoming the Retiree Next Door," published by MoneyTips.com. While most Americans worry that they won't have enough money to retire, this group of successful retirees shows that many fulfilling paths are possible despite the challenges.

 

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5 Reasons Every Boomer Should Stick to a Budget

June 4, 2015, 10:00 pm

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Filed under: Health Care, Personal Finance, Budgeting, Budgeting Tools, Retirement Living

By Kelly Campbell

Americans are notoriously poor savers. According to a 2014 Bankrate survey of about 1,000 U.S. adults, 60 percent of Americans could not afford to pay for most unexpected expenses. If you're in retirement or close to retirement, this could be a big problem. But there is a way boomers can be better prepared: become better at budgeting.

A budget brings your expenses in line with your income. It helps you control your financial future and fund your retirement activities. Fortunately, there are many budgeting tips and tricks to make it easier. For example, in your monthly bank statement, you can see how much came into your account and how much went out. (Hopefully, more came in than went out.) Many of your credit card statements can categorize expenses, so you can easily see what you are spending and where your money is going. You can also sign up for services like Mint.com, which can help you track your financial life online.

Knowing what you spend is important. We've developed a process for our clients called the 24-month checkbook drill. With this exercise, we have our clients look at the last two years of checking statements. From that review, they can determine the average amount of money they are spending each month. Knowing this figure can really help you plan for your retirement.

But with all of these tools, few people ever plan their monthly expenses. Many people likely take a guess and are off by thousands of dollars. Making matters worse, people tend to think they will spend less in retirement, when they will probably spend the same amount or even more. If you're a boomer nearing or in retirement, here are five reasons you should be budgeting.

You can determine how much you are spending. Without a budget, how would you know if you are spending too much or living beyond your means? You can't control taxes, inflation or the market. The only thing you can control is your spending. There are lots of things people do not include in their budget, either because they are seasonal or one-off expenses. For example, most people don't budget for gifts. But if they did, they might rethink how much they are spending on that category. With respect to retirement planning, you need to know what is going out the door each year.

You can set aside money to keep and money to give away. While you want to take care of your family, friends and charities, you also need to make sure you have enough money to do the things you want and need to do. People often try to take care of everyone else, but they forget to take care of themselves first. If you have a budget, you will know exactly what you need to live on, and you will know what you can safely afford to give away.

You can create a beneficial habit. Budgeting is a lifestyle. Once you develop these skills, it is easier to budget without even thinking about it. It's important to have discipline and control, and that discipline is strengthened with repetition. The more you do it, the better you will get at doing it. However, the most difficult part is starting. But rest assured, the longer you do it, the easier it will be for you. It's also beneficial is to start a budget alongside a friend. That way, you can help each other and have an accountability partner.

You can manage ever-increasing expenses. In retirement, things keep getting more and more expensive. Some of the items you buy each day will cost more based on the regular inflation rate. But other things, like health care, long-term care and major household repairs can increase at significantly more than 2 to 3 percent a year. Planning and saving are the best ways to prepare for these expenses.

You can save more for unexpected or discretionary expenses. Rainy days, emergencies and vacations are all parts of everyday life. By setting a budget, you can always add a new item to save for. For example, some people start a holiday gift fund in the summer that allows them to put away a small amount each month to pay for the gifts they will buy later. It also keeps them from having to buy those gifts on credit. Or what if you want to take the whole family to Disney? That will not be an inexpensive vacation, so you may need to save well in advance. Putting it in your budget will help it become a reality.

Kelly Campbell, certified financial planner and accredited investment fiduciary, is the founder of Campbell Wealth Management and a registered investment adviser in Alexandria, Virginia. Campbell is also the author of "Fire Your Broker," a controversial look at the broker industry written as an empathetic response to the trials and tribulations that many investors have faced as the stock market cratered and their advisers abandoned their responsibilities to help them weather the storm.

 

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Why Insurance Deductibles Should Be So High They Hurt

June 4, 2015, 10:00 pm

≫ Next: The Real Reason Americans Struggle to Save

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Filed under: Real Estate, Housing Market, Budgeting Tools, Home Buying, Homeowners Insurance

By Brian O'Connell

NEW YORK -- You can save up to 41 percent in home insurance premiums if you raise your policy's deductible -- but there is risk.

Insurers will charge you less in premiums if you hike your deductible, although the amount you save depends on what state you live in, and often works in their favor by putting more financial burden on the homeowner in the case of such problems as fire or flood.

For example, if a small fire causes $4,500 in damage to your home and your policy has a $5,000 deductible, you're on the hook for the entire cost of repairs.

Since savings vary so much from state to state, consumers need to consider the bottom line before increasing deductibles.

"Since savings vary so much from state to state, consumers need to consider the bottom line before increasing deductibles," says Laura Adams, senior analyst at InsuranceQuotes.com. "While switching from a $500 deductible to a $5,000 deductible sounds appealing because it lowers home insurance premiums by an average of 28 percent, it could be a risky move for consumers who don't maintain that much in savings."

Of course, homeowners can raise their deductibles less. Boosting a policy's deductible to $2,000 from $500 saves a homeowner 16 percent, on average, according to InsuranceQuotes.com.

Some states are more generous on their homeowner insurance rates than others. North Carolina for example, allows homeowners to save 41 percent on their policies by raising out-of-pocket deductibles. Rhode Island (26 percent) and Florida (23 percent) residents can also save big.

On the other end of the spectrum on saving with deductibles are such states as Hawaii (at 4 percent savings) and Texas (6 percent).

Insurance industry experts say the decision is really based on how you view homeowner's insurance.

"If your deductible doesn't hurt, it's not high enough," says Kevin Foley, an insurance broker at PFT&K Insurance Brokers in Milltown, New Jersey. "Why so high? Because insurance is for disasters -- things that make you drop to your knees and thank God you have insurance. It's not for maintenance."

Consequently, you shouldn't use your insurance unless you absolutely have to, Foley adds. "Having a low deductible lures you into wanting to use the insurance when you have minor problems," he says. "What's $250, if the insurance pays the other $1,750?"

"The problem with that is most insurance companies allow you two strikes in three years and then they cancel you," Foley explains. "Replacement insurance is unbelievably expensive, and you're stuck with it for three years before anyone will talk to you. Plus, you can't hide from your losses, because they all share information."

Some homeowners agree that raising insurance deductibles was good for them.

"We significantly increased our home deductible and saved 32 percent on our homeowner's and our auto insurance," says Mark Zoril, founder of PlanVision, a Plymouth, Minnesota-based financial services firm.

Zoril's process was straightforward. "I reached out to six different firms and could have reached out to many more -- Farmers, American Family, Liberty Mutual, Travelers and AAA ... I imaged copies of all of our policies with Allstate and sent them to each office. I told them to just match the coverage and provide a quote.'

Zoril ended up choosing Liberty Mutual and raising his homeowner's policy deductible to $10,000. "We decided to treat our home insurance as coverage for a catastrophic event," he explains. "This reduced our premium a lot. [But] our risk is that our house or roof will suffer severe damage in a storm or weather event."

-Written by Brian O'Connell for MainStreet.com.

 

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The Real Reason Americans Struggle to Save

June 4, 2015, 10:00 pm

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Filed under: Real Estate, Emergencies, Retirement Plans, Saving, Financial Education

By Karla Bowsher

The economy has been slow to recover from the recession that technically ended in 2009. Wages have remained stagnant as housing costs have risen and interest rates for savings accounts have fallen.

But we can't put all the blame for our bleak financial situations on the economy, new studies indicate -- we, too, are at fault.

Twenty percent of Americans spend beyond their means, according to the "Report on the Economic Well-Being of U.S. Households in 2014," which the Federal Reserve released this month. The report is based on the Fed's second annual "Survey of Household Economics and Decisionmaking," which was conducted in October.

A SunTrust Banks (STI) study suggests that one factor -- excessive lifestyle spending -- is primarily responsible for our inability to get ahead financially.

Even among households that earn at least $75,000 a year, the study found, nearly one-third were living paycheck to paycheck at least sometimes, and 44 percent (rising to 71 percent among millennials with the same household income) cited lifestyle spending as the reason they saved less money than they should.

Eating out, for example, was the No. 1 type of lifestyle spending cited by respondents.

One-third of people polled by SunTrust said their lack of financial discipline has held them back from achieving their goals.

Good and Bad News

Perhaps unsurprisingly, the Fed's report reflects as much bad news as good news about how the economy and our own spending habits have impacted our financial well-being over the past 18 months.

The Fed's survey questions are designed to gauge individuals' financial well-being and monitor their recovery from the recession. Topic areas include housing, retirement planning, access to credit and more.

Key findings include the following:

Economic fragility: The good news is that less than one-quarter of respondents said they or a relative they live with had experienced a financial hardship in the prior year. However, the bad news is that 47 percent said they couldn't cover a $400 emergency expense without selling something or borrowing money.

Savings and spending: 63 percent of respondents said they saved some money the prior year, but 20 percent said their spending exceeded their income.

Banking and credit: 56 percent of respondents with at least one credit card said they always paid the bill in full the prior year. About one-third of respondents who had applied for credit in the prior year said they were turned down or given less credit than they requested.

Retirement: This is pretty much all bad news. Among people who had yet to retire:

• 31 percent had no retirement savings or pension.
• 39 percent had given little to no thought to financial retirement planning.
• 45 percent of those who planned to retire expected to continue working in some capacity during retirement.
• More than 50 percent of those with self-directed retirement accounts were "not confident" or "slightly confident" in how they invested the money in those accounts.

If you're among the Americans overspending on your wants and under-investing in your retirement, try "Fun for Less: 19 Ways to Save on Entertainment" and "A Simple Way to Invest Your Retirement Savings."

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!

 

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7 Best Things to Buy in June

June 4, 2015, 10:00 pm

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Filed under: Shopping, How to Save Money, Deals, Coupons, Gift Guides

Welcome to grilling and swimming season, shoppers. June 21 marks the first day of summer, which also happens to be Father's Day this year. This month you'll find deals centered around both Father's Day and summer, as well as wedding season, graduation season and more.

Power Tools

Just in time for Father's Day comes savings on power tools both online and in stores. Keep an eye out for fliers advertising limited-time store specials, as well as markdowns on websites such as Amazon. These deals will occur leading up to Father's Day as retailers try to win your dollar.

Gym Memberships and Fitness Apparel

"Summer is not the best time for gym membership simply because more people would rather be outdoors," explains Natasha M. Campbell, founder and CEO of Lifestyle Success Unlimited, a financial education company. "Apparel, accessories, and shoes for outdoor exercise is typically offered at a discount, discounts can range from 50 percent or more."

Dishes and Silverware

It's wedding and graduation season. As a result, retailers leverage all those newlyweds and fresh grads making homes for themselves via enticing promotions. "I've found that you can usually save around 25 percent off regular price on dishes," notes David Bakke of Money Crashers. Watch for email advertisements, newspaper fliers and social media announcements for markdowns.

Strategic Travel

It's no secret that summer is one of the most popular times to travel, but that doesn't mean there aren't deals to be had. You just have to be strategic about your destination. For example, Bakke says, "A vacation to Florida will usually be cheaper in June. It's hotter, but you will save on lodging, airfare, and some entertainment activities." If you have a specific destination online, sign up for price alerts that notify you of dropped airfare. Finally, Campbell notes that cruises and vacation packages are offered at huge discounts this month, as June is considered the beginning of hurricane season.

Dairy

Did you know that June is National Dairy Month? Yup. To celebrate, dairy manufacturers are pushing their goods big time. This month you'll notice an uptick in sales and coupons on yogurt, cheeses, ice cream and more, says Teri Gault, CEO of The Grocery Game. We suggest stacking your coupons with in-store specials, which means you'll get a discount on already discounted goods. Now may be the time to stock up on dairy items that freeze well.

Restaurants

We all know that Mother's Day is one of the busiest days of the year for restaurants. In an attempt to get families in their doors for Father's Day, many restaurants will offer enticing specials on June 21. For example, look for free entrees or dessert specials and prix fixe menus that give you more bang for your buck. Restaurants that cater more to "dad crowds," such as steak houses, are a great place to start.

Lingerie

For some reason, major lingerie retailers host some of their biggest sales during the month of June. For example, the famous Victoria's Secret Semi Annual sale takes place this month, and Frederick's of Hollywood and Maidenform also have lingerie promotions. "Check out other retailers such as Target, which offered [buy one get one] deals last year on bras," adds Campbell.

 

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Slow Booze? Not Likely. Making Whiskey at Whip Crack Speed

June 4, 2015, 10:00 pm

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Filed under: Company News, Small Business, Advertising & Marketing, Food & Beverage, Entrepreneurs

By MICHELLE LOCKE

Everyone knows the secret to great whiskey is long, slow aging in oak barrels tucked away in cellars and warehouses for a decades-long nap.

Or is it?

Recently, some distillers have been taking shortcuts, using technology to mimic the effects of long aging -- and prompting spirited debate over the merits of the resulting liquors.

All of the marketing has been around how it takes time and how you have to have patience. I just say age is really irrelevant.

"The traditionalists hate us," says Tom Lix, founder and chairman of Cleveland Whiskey Co. "They're all very interested in what's being done, but of course it runs very contrary to not only generations of how it's been processed, but generations of how it's been talked about. All of the marketing has been around how it takes time and how you have to have patience. I just say age is really irrelevant."

It doesn't take rocket science to figure out why new distillers want to speed up their spirits. Starting a new distillery takes a capital investment of tens of thousands of dollars and no banker wants to hear it's going to be years before you start seeing any revenue.

Those who don't want to wait use interventions that speed up the way the whiskey interacts with the oak, a relationship that defines that flavor of whiskey. Some distilleries intensify the wood influence by using smaller barrels or by adding wood chips or staves of oak to the barrels. Both methods increase the surface area of the wood in the oak-to-whiskey ratio.

Others go high-tech, changing the pressure and temperatures in barrels and tanks, and even using sound waves to get the liquor vibrating within them.

There even are at-home options for rapid aging. The Copper Fox Distillery in Sperryville, Virginia, which takes a number of steps to speed aging, including adding toasted apple wood and oak chips to barrels, sells a home kit of a 2-liter charred American white oak barrel along with two 750-milliliter bottles of cask strength spirit and detailed instructions. Another consumer option is www.oakbottle.com, a 750-milliliter oak vessel that resembles a large wine bottle. You fill the vessel with your own wine or spirit to intensify flavors, and the effect can be dramatic.

'Very American'

Using technology to get faster results is "very American," observes Clay Risen, author of "American Whiskey, Bourbon & Rye."

Some distillers are better at the new approach than others, and Risen says he generally finds the smaller barrel approach to be better than the more tech-y versions. But even just using smaller barrels can be risky. It's "like driving a really fast car. You're talking about very rapid aging. A lot of times what you end up with is a whiskey that tastes woody but also very vegetal. You get a lot of unfinished, unprocessed grain notes."

Risen says he has yet to see "anybody who can convincingly and transparently present a technology that works. It simply is a matter of brute biology and organic chemistry that dictates how whiskey goes from being an unaged distillate to an aged whiskey."

Austin Hope, a California winemaker who recently started making Highspire, a whiskey produced in Kentucky from 100 percent rye, sees things differently. He ages his whiskey in just 130 days, putting the distillate into charred used wine barrels from his Austin Hope Winery Estate and adding toasted staves to punch up the wood influence.

'Right Balance'

"Purists and authorities alike think I'm off my rocker for making whiskey this way, but I've never been big on following the rules. Better grain means there is a quicker path to great flavor," says Hope, who uses an heirloom rye varietal grown exclusively for Highspire. "Rapid aging isn't about cutting corners in my book. When you're dealing with heirloom rye, it's about determining just the right balance of flavor between the grain and the wood."

At Cleveland Whiskey, Lix ages his whiskey using a process he calls pressure aging.

Federal regulations require that bourbon be aged in new charred oak barrels, but don't say for how long unless you want to put an age statement on the label. So, Lix puts his raw distillate in the barrels, then promptly pumps it back out and into pressure-capable stainless steel tanks.

The barrels are chopped up, not randomly but with attention paid to weight and moisture content, as well as the shape and the surface area, and measured amounts of the oak then are added to the tank. Large swings in pressure are created that squeeze the wood, forcing the spirit in and out of the pores like squeezing a wet sponge and putting it back in water.

Lix says it takes about 24 hours to produce a bourbon he says has done well in blind tastings against established brands and now is being sold in 12 states.

 

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Job Growth Surges, Wages Push Higher in May

June 5, 2015, 1:35 am

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Filed under: Careers, Labor, Unemployment Rate, Job Market, Economy

By Lucia Mutikani

WASHINGTON -- U.S. job growth accelerated sharply in May and wages picked up, signs of momentum in the economy that bolster prospects for an interest rate hike in September.

Nonfarm payrolls increased 280,000 last month, the largest gain since December, the Labor Department said Friday.

While the unemployment rate rose to 5.5 percent from a near seven-year low of 5.4 percent in April that was because more people, likely new college graduates, entered the labor force, indicating confidence in the jobs market.

This certainly puts more ammunition in the Fed's plan to start lift-off in September.

Payrolls for March and April were revised to show 32,000 more jobs created than previously reported. That together with an eight cent gain in average hourly earnings raises the chances of the Federal Reserve tightening monetary policy this year.

"This certainly puts more ammunition in the Fed's plan to start lift-off in September," said Mark Luschini, chief investment strategist at Janney Montgomery Scott in Philadelphia.

The dollar rallied against a basket of currencies, while prices for U.S. government debt dropped sharply. U.S. stock index futures fell.

Doubts had sprung up in financial markets over whether the U.S. central bank would be able to raise interest rates this year after weak data on consumer spending and industrial production suggested the economy lacked vigor early in the second quarter after slumping at the start of the year.

The Fed has kept overnight rates near zero since December 2008. Officials from the U.S. central bank will meet on June 16-17.

Gaining Momentum

U.S. gross domestic product contracted at a 0.7 percent annual pace in the first quarter, although the drop probably exaggerated the economy's weakness given a mix of temporary factors at play.

The sturdy jobs reports joined May automobile sales and manufacturing data in suggesting that growth was gaining some traction after getting off to a slow start in the second quarter, in part because of the lingering effects of a strong dollar and spending cuts in the energy sector.

Economists polled by Reuters had forecast payrolls rising 225,000 last month and the unemployment rate steady at 5.4 percent. May payroll gains lifted job growth above last year's average of 260,000 jobs a month.

The labor force participation rate, or the share of working-age Americans who are employed or at least looking for a job, increased 0.1 percentage point to 62.9 percent last month.

A broad measure of joblessness that includes people who want to work but have given up searching and those working part-time because they cannot find full-time employment was unchanged at 10.8 percent.

The increase in average hourly earnings took the year-on-year gain to 2.3 percent, the largest rise since August 2013.

Higher Wages

Wages are poised to push higher against the backdrop of firming demand for entry-level workers and a better composition of jobs that are being created. In addition, many states have raised the minimum wage and some large corporations have been increasing pay for workers.

Walmart, the largest private employer in the United States, this week announced it would raise minimum wages for more than 100,000 U.S. workers, its second wage hike this year.

Payroll gains last month were broad-based, though the mining sector purged more jobs as it works through the thousands of cuts announced by oil-field companies.

Manufacturing employment increased 7,000 after adding 1,000 jobs in April. Mining payrolls fell 18,000, logging the fifth straight month of declines.

Schlumberger (SLM) has announced about 20,000 layoffs this year. Baker Hughes (BHI) and Halliburton (HAL) are also cutting thousands of jobs.

Construction employment increased 17,000, reflecting a strengthening housing market. The average workweek was steady at 34.5 hours.

-With additional reporting by Ryan Vlastelica in New York.

 

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Week's Winners and Losers: Apple Ticks On, Disney Ticks Off

June 5, 2015, 2:00 am

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Filed under: Apple, Amazon.com, Walt Disney, Stocks, Investing

There were plenty of winners and losers this week, with the leading consumer tech company finally catching up to hot demand for a new product and a family entertainment behemoth coming under fire for replacing employees with cheaper foreign immigrants on work visas.

Apple (AAPL) -- Winner

Production of Apple Watch devices is finally starting to catch up with demand. Apple announced that the popular smartwatch will be available for purchase in several new countries as well as at stateside Apple Store locations later this month.

There hasn't been any in-store availability since April's launch, but now Apple is saying that all of the orders placed through the end of May outside of a single watch model will be shipped within two weeks.

Apple didn't have a perfect week. There was a recall for one of its Beats speakers on fire hazard concerns. That's not fun, but the Apple Watch news is good enough to land the world's most valuable consumer tech company in the winner's circle.

Pier 1 Imports (PIR) -- Loser

The market isn't a fan of peer pressure -- or Pier pressure. Wedbush analyst Seth Basham downgraded shares of the home furnishings retailer to a ho-hum neutral rating, fearing the implications of the chain resorting to large storewide markdowns in recent weeks.

Pier 1 had said late last year that it wouldn't resort to storewide sales, but here it is doing exactly that. Pier 1's stock has been one of the market's winners since bottoming out at 10 cents six years ago. It made the most of the spike in sales during the housing market's rebound, but it's been struggling lately.

Amazon.com (AMZN) -- Winner

The country's most reputable retailer -- according to brand quality tracker Reputation Institute -- just happens to be the largest online retailer. Amazon took top honors for the third year in a row.

Reputation Institute bases its annual list on tens of thousands of interviews, weighing consumer perception of brands. It does point out that reputation scores in general have been trending higher in recent years, making Amazon's feat of coming out on top for the third consecutive time that much more impressive.

Disney (DIS) -- Loser

The family entertainment giant isn't always "the happiest place on Earth" for its employees. The New York Times ran a scathing article this week about Disney laying off 250 members of its IT team in Orlando, replacing them with cheaper foreign immigrants on temporary work visas.

This is a sliver of the 74,000 people that Disney does employ in Central Florida, but it still looks bad. Turning to these temporary H-1B visas for technology jobs is intended for foreigners with advanced tech skills that can't be found closer to home. However, since these foreign jobs merely replaced existing hires -- and the article points out that some of them were asked to train their replacements -- this doesn't seem to be in the spirit of the federal guidelines.

The layoffs actually happened in January, but The New York Times article is broadcasting the details this week. It's not working wonders for Disney's fairy tale reputation.

Ambarella (AMBA) -- Winner

The company behind the video chips powering HERO wearable cameras and Dropcam security recorders posted blowout quarterly results this week. Ambarella has beaten Wall Street's profit targets by a double-digit percentage margin every quarter since going public three years ago.

Analysts were generally impressed. Topeka Capital Markets boosted its price target to $105 from $75, and Needham upgraded its rating on the stock. Semiconductors can be a cutthroat business, but Ambarella's differentiated solutions continue to gain traction.

Motley Fool contributor Rick Munarriz owns shares of Ambarella and Walt Disney. The Motley Fool recommends and owns shares of Amazon.com, Ambarella, Apple and Walt Disney. 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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Walmart Keeps It All in the Family, Chair Passed to Penner

June 5, 2015, 4:25 am

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Filed under: Company News, Retail, Internet, Wal-Mart, Stores

By ANNE D'INNOCENZIO and CANDICE CHOI

FAYETTEVILLE, Ark. -- Walmart (WMT) is passing the chairmanship of the world's largest retailer from the eldest son of late founder Sam Walton to a third generation.

The company said that board Chairman Rob Walton will step down and be succeeded by Vice Chairman Greg Penner, who is his son-in-law.

The change took effect at the end of the company's annual shareholders' meeting Friday and came despite pressures from labor-backed worker groups to name an independent chairman. The calls for independent leadership mounted in the wake of allegations of bribery in Mexico and other countries Walmart operates in that came to surface in spring 2012.

Walton, son of Walmart founder Sam Walton, has been chairman since 1992. The company says the 70-year-old will continue to serve as a director. Jim Walton, another son of the late founder, also remains on the board.

Penner, whose background is in technology and finance, will be the company's third chairman in the company's 53-year history. Rob Walton took over as chair upon the death of his father in 1992. The announcement comes Walmart is facing challenges on all fronts, from how it runs its operations to how it treats its workers.

Penner, 45, joined Walmart as a management trainee and held a number of positions including senior vice president of finance and strategy for Walmart.com and chief financial officer for the Japan unit. He had been a general partner of Madrone Capital Partners, an investment management firm since 2005. He joined Walmart's board in 2008. Rob Walton noted on stage at the meeting that Penner is married to his daughter.

'Great Mentor'

Penner had been the chairman of the company's technology and e-commerce committee since it was formed in 2011 and has been instrumental in guiding the company on the technology front.

"You've been a great mentor. No one can fill your shoes," said Penner, referring to Walton. Penner joined Walton on stage as well as Doug McMillon, the company's CEO, and former CEO David Glass who served at the helm from 1988 to 2000.

Walton said that Penner "brings an ideal blend of finance, technology, and international business expertise -- as well as a deep knowledge and love of Walmart -- to this role."

The announcement wasn't a surprise after Walton named Penner as vice chairman at last year's annual shareholders' meeting. The Walton family controls about 50 percent of the company's shares.

Keeping with Walmart's practice of showcasing celebrities at the annual event, the meeting was being hosted by actress Reese Witherspoon. Singers Brian McKnight, Rod Stewart and Ricky Martin also performed on stage. Entertainer Carol Burnett was on stage, too, and did her trademark Tarzan call.

"I was born and raised in the South. It's nice to be back in the South," said Witherspoon. "I can get my y'alls out." She said she grew up shopping at Walmart.

The meeting, held at Bud Walton Arena at the University of Arkansas, 30 miles away from the company's headquarters in Bentonville, was packed with 14,000 workers from all over the world.

Economy Woes

Despite all the hoopla, the company is under a microscope. Revenue at U.S. stores open at least a year have risen for three straight quarters, but that came after seven straight declines. And the recent increases have been small.

Like many retailers catering to lower-income shoppers, Walmart has been hurt by an uneven economy that hasn't buoyed its customers financially. Meanwhile, shoppers are increasingly researching and buying online, and the company faces intensifying competition from dollar stores and Amazon.com (AMZN).

To counter that pressure, Walmart is accelerating the rollout of smaller stores and also investing in technology, like online grocery services. It just launched a subscription service for online shoppers with an annual fee of $50.

But the company, which is also under pressure from labor-backed groups to treat its workers better, is also investing in its workers. The company announced earlier this year $1 billion in wage increases and improved training that includes raising the minimum hourly pay for its workers to $9 in April. By next February, Walmart will raise that minimum to $10.

The company is also relaxing the dress code for the 1.2 million workers at its namesake U.S. stores, piping music to its stores and adjusting the temperatures so workers aren't too cold or hot.

The changes haven't quieted labor groups, which say workers are still struggling. They are pushing for wages of $15 an hour. Among the proposals by shareholders was a call for an independent chairman who doesn't serve as an executive at Walmart. The proposal and four other shareholder proposals were voted down by a majority of votes, according to a preliminary tally because of the Walton family's control.

Walmart is expected to file the final tally of proxy votes next week with the Securities and Exchange Commission.

During the meeting, Walmart CEO and President Doug McMillon, who succeeded Mike Duke to the top position in February 2014, called on workers to fight complacency to serve customers better.

'Real Villains'

"We're threatened much more by the things we control than those outside our influence," McMillon said. "Our real villains are things like bureaucracy, complacency, a lack of speed or a lack of passion. Let's fight those villains together."

Venanzi Luna, a worker in the Pico Rivera, California, Walmart store that was closed in April, also addressed shareholders Friday. Company officials said the store had to close temporarily because of plumbing issues. But Luna and other workers said it was because it was the site of political activism and the move was in retaliation against the workers.

"Our managers say our stores closed for 'plumbing problems,' but the real reason is that my store had been speaking out for change at Walmart," she said.

"Our board of directors needs an independent chair committed to the highest standards of integrity."

Marc Goumbri, a spokesman at the United Food and Commercial Workers International Union, said that making Penner chairman further cements the family's power over the board and company.

"Instead of listening to and respecting Walmart worker shareholders who have been calling on Walmart empire to implement a new policy establishing an independent chairperson, Walmart and the Waltons have once again decided to elevate family members to powerful positions," he said.

A government investigation is still ongoing regarding possible violations of the Foreign Corrupt Practices Act, which prohibits companies from bribing foreign officials.

-Choi contributed to this report from New York.

 

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You've Been Hacked ... Do This Right Now

June 5, 2015, 7:51 am

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Filed under: Identity Theft, Personal Finance, Ripoffs & Scams, Internet Fraud, Financial Education

BY BRANDON BAILEY and JOSEPH PISANI

The entire U.S. federal workforce may be at risk after yet another intrusion from what security experts believe were hackers based in China. The Department of Homeland Security says that data from the Office of Personnel Management the human resources department for the federal government and the Interior Department has been infiltrated.

It isn't the first and it follows massive data breaches at health insurance companies, major U.S. banks such as JPMorgan Chase (JPM) and retailers such as Target (TGT) and Home Depot (HD).

Here's what to do if you think you've been compromised.

First Things First

• Notify the credit agencies (Equifax, Experian, TransUnion) and request a 90-day credit alert. (Each reporting agency is supposed to notify the others, but you may want to contact all three yourself.) The alert tells businesses to contact you before opening any new accounts in your name. You can renew the alert every 90 days, or you're entitled to keep it in effect for seven years if you find that your identity is stolen and file a report with police.
• You might consider asking the reporting agencies to place a full freeze on your credit. This blocks any business from checking your credit to open a new account, so it's a stronger measure than a credit alert. But you should weigh that against the hassle of notifying credit agencies to lift the freeze which can take a few days every time you apply for a loan, open a new account or even sign up for utility service.

Be a Detective

• When your credit card bill comes, check closely for any irregularities. And don't overlook small charges. Crooks are known to charge smaller amounts, usually under $10, to see if you notice. If you don't, they may charge larger amounts later.
• Get a free credit report once a year from at least one of the major reporting agencies (Equifax, Experian, TransUnion), and review it for unauthorized accounts. Ignore services that charge a fee for credit reports. You can order them without charge at www.annualcreditreport.com. If you order from each agency once a year, you could effectively check your history every four months.

Do Paid Services Work?

• Some experts say there's not much to be gained from a paid credit monitoring service. But it can't hurt to sign up for any monitoring offered for free by a company or any other entity that may have held your information when it was hacked. Note: These services will tell you if a new account is opened in your name, but they won't prevent it, and many don't check for things like bogus cellphone accounts, fraudulent applications for government benefits or claims for medical benefits. Some do offer limited insurance or help from a staffer trained to work with credit issuers and reporting agencies.

Someone Did Steal My Identity, What Do I Do?

• Contact the credit issuer to dispute fraudulent charges and have the bogus account closed.
• Request your credit report and ask the reporting agencies to remove bogus accounts or any incorrect information from your record. See tip No. 1 on setting up a credit alert and/or freeze.
• Submit a report through the FTC website: www.consumer.ftc.gov. Click the "privacy & identity" tab, which will walk you through creating an affidavit you can show to creditors.
• Keep copies of all reports and correspondence. Use certified mail to get delivery receipts, and keep notes on every phone call.

Avoid Additional Hacks

• After a hack, scammers may try to use the stolen data to trick you into giving up more personal information. They can use that info to steal money in your accounts or open new credit cards.
• Don't click on any links from emails. Bad software could be downloaded to your computer that can steal account passwords.
• You might get letters in the mail saying you won a tablet or vacation and give you a phone number to call. Don't do it. It's likely a ploy to gather more information from you.
• Hang up the phone if you get a call asking for account numbers or other information. Scammers may also send texts, so don't click on any links from numbers you don't know.

One More Resource:

The FTC now has a website www.identitytheft.gov that provides step-by-step advice and more information on what to do if you think you have been the victim of a data breach.

 

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Consumer Borrowing Surges in April, Up $20.5 Billion

June 5, 2015, 8:10 am

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Filed under: Student Loans, Credit Cards, Economic Indicators, GDP, Auto Loans

By MARTIN CRUTSINGER

WASHINGTON -- Consumer borrowing surged again in April, helped by the largest gain in credit card borrowing in a year. Consumer borrowing expanded by $20.5 billion in April, the Federal Reserve reported Friday. That was down only slightly from a gain of $21.3 billion in March which was the biggest increase in eight months. The strong gains pushed consumer credit to a fresh record of $3.38 trillion.

Borrowing in the category that includes credit cards jumped by $8.6 billion, the largest rise in 12 months. Borrowing in the category that covers auto and student loans advanced a solid $11.9 billion, after an even bigger $16.5 billion increase in March.

Economists expect consumers, who have seen strong job gains over the past year, will keep borrowing and spending in coming months, helping to boost overall economic growth.

The overall economy went into reverse during the January-March quarter, reflecting the adverse impacts from a harsh winter, cutbacks in investment by energy companies and a stronger dollar, which hurt U.S. export sales.

Gross domestic product, the economy's total output of goods and services, contracted at an annual rate of 0.7 percent in the first quarter. But economists say it will rebound to growth of around 2 percent to 2.5 percent in the second quarter, helped by stronger consumer spending. The expectation is that consumer spending will be supported in coming months by continued strong growth in employment.

The Fed's monthly consumer credit report doesn't cover mortgages or any other loans secured by real estate such as home equity loans.

The overall category is up 6.6 percent from a year ago. The category that covers credit cards has risen 3.2 percent in the past year while the category that includes auto and student loans is up a much stronger 7.9 percent.

Consumers' use of credit cards to support their spending has lagged in the current recovery. Economists attribute that in part to the heavy job losses during the recession which made households more cautious about building up credit card debt.

 

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Market Wrap: Strong Employment Report Leads Stocks Lower

June 5, 2015, 9:48 am

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Filed under: Market News, European Union, Job Market, Federal Reserve, Bonds

By Caroline Valetkevitch

NEW YORK -- The Dow and S&P 500 fell Friday as increasing expectations the Federal Reserve could raise rates as soon as September offset optimism over a recovery in the U.S. labor market.

Stronger-than-expected jobs data for May and a pickup in wages were the latest signs of better momentum in the economy.

Wall Street's top banks said they expect the Fed to begin raising interest rates in September, followed by another increase before the end of the year, according to a Reuters poll.

I think everyone is just waiting to see what happens when rates do start to rise.

"The market is excited about stronger jobs and higher wages, but before [investors] can pop the cork of the champagne bottle, they start thinking about the hangover, which is higher interest rates," said Eric Kuby, chief investment officer at North Star Investment Management in Chicago.

"I think everyone is just waiting to see what happens when rates do start to rise."

The S&P utilities index, which includes top dividend payers that tend to fall as prospects for higher rates rise, was down 1.3 percent and among the weakest-performing sectors. The U.S. benchmark bond yield hit its highest since October.

S&P financials, which benefit from higher rates, were up 0.6 percent, among the day's best performing sectors, while the S&P energy index added 0.7 percent. Energy shares bounced with oil prices.

The Dow Jones industrial average (^DJI) fell 56.12 points, or 0.3 percent, to 17,849.46, the Standard & Poor's 500 index (^GSPC) lost 3.01 points, or 0.1 percent, to 2,092.83 and the Nasdaq composite (^IXIC) added 9.33 points, or 0.2 percent, to 5,068.46.

Indexes Down on the Week

For the week, the S&P 500 fell 0.7 percent, its second straight week of losses, the Dow was down 0.9 percent and the Nasdaq was down 0.03 percent.

The Fed has kept overnight rates near zero since December 2008 because the economic recovery has been slow. Cheap credit, however, has helped bolster the U.S. stock market.

New York Fed President William Dudley said he was concerned the economy may not be growing fast enough to absorb the slack among workers sidelined by the financial crisis. Still, Dudley said he expects the Fed would be in a position to raise rates later this year.

Boosting the Nasdaq, shares of Regeneron Pharmaceuticals (REGN) rose 4 percent to $539.40 after a preliminary FDA review of an experimental drug it makes with Sanofi (SNY).

Among decliners Friday were gold miners, which dropped along with gold prices. Shares of Newmont Mining (NEM) were down 3.3 percent at $25.91.

Zumiez (ZUMZ) dropped 19.3 percent to $24 as it estimated current-quarter profit and revenue below analyst expectations.

NYSE decliners outnumbered advancers 1,629 to 1,426, for a 1.14-to-1 ratio; on the Nasdaq, 1,782 issues rose and 962 fell, for a 1.85-to-1 ratio favoring advancers.

The S&P 500 posted 16 new 52-week highs and six new lows; the Nasdaq composite recorded 117 new highs and 42 new lows.

About 6.2 billion shares changed hands on U.S. exchanges, slightly below the 6.3 billion daily average for the last five sessions, according to BATS Global Markets.

-With additional reporting by Tanya Agrawal.

What to watch Monday:

• Sears (SHLD) reports quarterly financial results before U.S. markets open.
• H&R Block (HRB) reports quarterly financial results after U.S. markets close.

 

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4 Surprising Retirement Saving Secrets to Success

June 5, 2015, 10:00 pm

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Filed under: Personal Finance, Health Insurance, Marriage, Retirement Living, Social Security

By Hal M. Bundrick

NEW YORK -- Dreams of early retirement are often reserved for Silicon Valley startup nerds, athletic superstars and lottery winners. But run-of-the-mill working stiffs like us? No chance, right? Well, don't count us out yet. More than a quarter (26 percent) of 3,449 currently employed workers who took part in a recent study said they plan to retire before they turn 65. The Allianz LoveFamilyMoney report surveyed 35- to 65-year-old Americans with household incomes of at least $50,000.

So, maybe there is still a chance. The study also revealed four interesting traits shared by the optimistic early retirement hopefuls among us. It's a good chance you haven't heard these tips before: they go well beyond the typical retirement saving advice of "start early," "live below your means" and "earn your 401(k) match."

For example, Tip One: Stay Married.

The survey found workers on-target for an early retirement are more likely to be married -- 76 percent of people on track for an early retirement are married versus 68 percent who never plan to retire. And they're making it stick. More than three-quarters (77 percent) of the respondents are still in their first marriage, compared with 70 percent of those who never plan to retire.

Secondly, they share similar financial habits. The study discovered most of the couples were just naturally "savers" instead of "spenders" and shared a "practical" approach to financial matters compared with those who plan to work forever.

And they talk things out. You've probably heard the stories of couples who hide money from each other, engage in "secret spending" and don't have a full debt disclosure policy. However, these couples -- well on their way to an early retirement -- find it "very easy" or "somewhat easy" to talk with their spouse or significant other about matters of money (90 percent compared with 77 percent of those who plan to be work bound).

And rather than benchmarking their financial success to their neighbors or the S&P 500, the early retirees-to-be compare themselves to their parents' financial status (21 percent compared with 14 percent of those who never plan to retire).

While we're at it, let's bust a retirement myth: Having children isn't a factor in delaying retirement. The study didn't find any difference in expected retirement age based on whether or not respondents have children.

But deciding when to retire also requires a bit of consideration regarding the timing of federal retirement and medical benefits.

"From a Social Security standpoint, you can start getting lower benefits as early as age 62, or you can delay retirement up to age 70 for your maximum monthly benefit amount," says Doug Walker, deputy commissioner of communications at the Social Security Administration, in a blog post. "This is one of the most important and challenging decisions you'll make in your life. When you decide to retire affects not only you, but it could have serious, long-lasting consequences for your family members, too."

For example, retiring at age 62 will trigger Social Security benefits about 25 percent lower than a full benefit payout at age 66. If you delay Social Security until age 70, the monthly amount is 32 percent more than at full retirement age. That kicks your monthly benefits up by $570 -- or $6,840 a year.

And if you retire early without health insurance, you won't qualify for Medicare until you reach age 65 unless you've been on Social Security disability benefits for at least 24 months. That means you'll have to cover insurance premiums with a portion of your retirement income. However, you may qualify for Medicaid or a Special Enrollment Period for coverage through the HealthCare.gov insurance marketplace. And you may also be able to earn a tax credit and lower your out-of-pocket costs.

Retiring early requires a bit of timing, full disclosure, clear communication -- and apparently a strong marriage. All goals worth aspiring to.

 

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Should You Take a Super-Long-Term Car Loan?

June 5, 2015, 10:00 pm

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Filed under: Personal Finance, Automotive Industry, Interest Rates, Car Buying, Auto Loans

Credit bureau Experian issued a surprising report Monday, saying that the average terms for auto loans in the U.S. have reached all-time highs.

In the first quarter of 2015, the average term for a new-vehicle loan was 67 months -- more than five years. The average term for a used-car loan was almost as long, 62 months.

Almost 30 percent of new-vehicle loans in the first quarter were even longer, 73 to 84 months, Experian said. That's six to seven years.

Until recently, such long-term loans for cars were very rare. Are they a good idea? Should you consider one?

Buying More Expensive Cars -- and Borrowing More to Do It

Here's what's driving the trend: People are buying more expensive cars.

On one hand, people are taking on more debt. But on the other hand, "People really are getting more car for the money," says Jessica Caldwell, director of industry analysis for Edmunds.com.

Caldwell notes that while the average new-vehicle loan term rose even further in May, to 67.9 months -- the highest ever -- interest rates also fell. "The average new vehicle loan APR fell to 4.6 percent in May from 4.8 percent in April," she says. That's likely due in part to "zero-percent" financing offers from automakers, which Caldwell says were "abundant" in May.

Longer-term loans and lower interest rates are allowing buyers to spend more on their new cars. Kelley Blue Book said that the average transaction price for a new vehicle in the U.S. in May was $33,363, up 4.3 percent from a year ago. KBB senior analyst Karl Brauer noted that some of the increase is being driven by strong demand for pickups and SUVs, thanks to lower gas prices. SUVs tend to be more expensive than comparable cars.

Not surprisingly, loan amounts are up, too. Experian says that the average new-vehicle loan was $28,711 in the first quarter of 2015, up from $27,612 a year ago.

But do these loans make sense for consumers? Isn't it a bad idea to take on more debt just to have a fancier car?

Isn't a Longer-Term Car Loan a Bad Idea?

The short answer: Not necessarily.

There are two factors that could make a longer-term loan make sense. First, interest rates are very low right now, especially if you score one of those zero-percent financing deals. But even if you don't, rates are still very low, historically speaking -- especially if you have good credit. That means the overall cost of buying the car might be lower than you think, even with a longer-term loan.

Second, you might not mind keeping your car for six or seven years -- or even longer. Lots of people are doing it: The average age of a "light vehicle" (the industry term for cars, pickup trucks, and SUVs) on the road in the U.S. is now a little over 11 years, according to IHS Automotive.

IHS' analysts don't expect that to change any time soon, in part because of the increasing quality of today's cars, trucks and SUVs. The intense competitive pressure to improve quality in the auto business means that today's cars -- from just about any automaker -- have the potential to last a very long time and accumulate very high mileage without needing huge, costly repairs. That's a big change from what was true as recently as a decade ago.

So if a longer-term loan helps you buy a car you're willing to keep for a longer time, it might actually make good sense in the long run.

Longer-Term Car Loans Can Make Sense, for Some

But do these longer loans make financial sense? If you get a good interest rate, they can.

If you're the kind of person who tends to keep new cars for a long time, and the lower monthly payment on a longer-term loan makes it comfortably affordable, longer-term loans can be a useful tool. And keeping a car for a long time nearly always works out better -- financially speaking, at least -- than buying a new one every few years.

The risk with any car loan is that if your financial situation changes and you have to sell the car, you could end up owing more on the loan than your car is worth at that moment. Obviously, the longer the loan, the greater the risk that your financial situation will change before you've paid it off. It's hard to really know what your finances will look like five, six or seven years from now.

But if you're comfortable that you can handle that risk, these longer-term loans can give you a way to get into the ride of your dreams at a price -- or at least a monthly payment -- that's comfortably affordable.

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

 

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The 4 Best Investments for Lazy Investors

June 5, 2015, 10:00 pm

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Filed under: ETFs, Investing Basics, Alternative Investment, Index Funds, Investing

By Julie Rains

Here's good news for time-strapped investors: You can ignore your investments and still get rich.

You don't have to spend endless hours conducting research, developing watch lists, trading shares, monitoring performance and rebalancing your portfolio. Fortunately, there are investments that require minimal upfront work and even less maintenance on an ongoing basis. Here are the four best investments for lazy investors.

Robo-Advisory Portfolios

Portfolios created and managed by robo-advisers require minimal involvement beyond signing up for the service. They are diversified among various asset classes and market segments, such as U.S. stocks, stocks of emerging markets worldwide, U.S. corporate bonds, international bonds, etc. Depending on the adviser's approach, portfolios may be tilted toward small caps and value funds.

Robo-advisory portfolios often contain commission-free ETFs, which tend to be low-cost and tax-efficient. Generally, rebalancing and tax-loss harvesting are included in the services provided to investors (or are available for a nominal fee).

Choose an adviser based on the firm's investment philosophy, account minimums, asset-under-management fees, other investment fees (if any) and unique features, such as Betterment's goal-setting emphasis or Wealthfront's direct indexing service.

To invest your money, respond to prompts regarding your time horizon and risk tolerance. Typically, you'll enter your age or number of years until you reach retirement (or other financial goal), and choose among conservative, moderate, and aggressive portfolios.

Target-Date Funds

Target-date funds, or life-cycle funds, are often "funds of funds" comprised of passively managed (index) and/or actively managed mutual funds. These typically give investors a balanced portfolio that adjusts from riskier, growth-oriented holdings like stocks toward safer, more stable ones such as bonds as you get closer to the target date associated with your financial goal.

Generally, target dates are aligned with the investor's expected year of retirement. For example, if you are 35 years old in 2015, you may consider purchasing a fund with the target date of 2045 -- the year you turn 65.

To choose a fund, consider the target date, investment-related fees (such as sales loads), expense ratio, mix of underlying funds and glide path, which describes the rate at which the portfolio moves from more aggressive to more conservative investments.

Blue Chip Stocks

Blue chip stocks represent well-established, nationally recognized, financially stable, and reliable companies, typically with consistent business performance. Definitions vary, but experts name the 30 stocks in the Dow Jones industrial average (^DJI) as blue chips.

Companies with household names such as Nike (NKE), Johnson & Johnson (JNJ) and Intel (INTC) are part of the Dow. Often, blue chip stocks pay dividends, which can boost overall performance when reinvested.

To build a portfolio of blue chip stocks, accumulate shares of individual stocks through your brokerage firm or purchase a Dow index fund, such as iShares Dow Jones U.S. ETF (IYY).

Alternatively, create a blue chip motif at Motif Investing, where you can buy up to 30 stocks for $9.95. Weight your stock positions according to your preferences, such as market capitalization. Periodically, rebalance using this broker's tools.

Lazy Portfolios

Lazy portfolios typically consist of a few to several handpicked mutual funds or ETFs that represent the broader stock and bond market domestically and worldwide. These portfolios are diversified, low cost, and minimalistic. Their purpose is to deliver reasonably consistent returns in varied market conditions.

Choose among portfolios with as few as two or as many as 10 funds. For example, you might adopt the Coffeehouse portfolio as specified by Bill Schultheis, author of The Coffeehouse Investor. Accumulate shares in these funds to create an investment portfolio that mirrors the percentages indicated by the model portfolio. This particular portfolio contains Vanguard funds that you can purchase free of commissions with a Vanguard account.

Periodically, rebalance by buying more shares of funds that lag percentage-wise in the portfolio.

There are no guarantees that investments for lazy investors (or diligent ones) will deliver positive returns, year after year. But after making initial purchases, you can minimize the time spent on managing your investments and enjoy other pursuits.

The key to building a healthy portfolio is consistency, rather than finesse. On a regular basis, invest your money, avoid withdrawals when you are in a crisis or panic mode, and keep contributing to your investment accounts in all market conditions.

Are you a lazy investor? What investments have you discovered to be easy to manage?

 

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The 10 World's Richest Athletes of All Time

June 5, 2015, 10:00 pm

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With all the hype about Floyd Mayweather Jr.'s enormous (and some say, unearned) payday after his recent bout with Manny Pacquiao, you might think that he is near the top of the list of richest athletes. While Mayweather is nicknamed "Money" for a good reason, he barely makes the top 10 in net worth for athletes and former athletes worldwide.

Who's at the top of the list? Michael Jordan? Guess again: Ion Tiriac, of course. Who?

For those of us in middle age, he will always be remembered for his mustache and his hilarious Miller Lite ad with Bob Uecker, but his wealth has far surpassed his sporting fame -- at least in America.

Read on to find out about Tiriac and the others in the top 10 list, according to each athlete's category of CelebrityNetworth.com. We have edited the list to leave out those who were only coaches, executives or managers -- we believe at least some direct professional-level competition in the sport was necessary for inclusion -- but we will mention those other sporting figures at the end along with their net worth.

1. Ion Tiriac: How many athletes can compete at elite levels in two sports, especially ones as diverse as tennis and ice hockey? Romanian-born Tiriac did just that, starting out as a hockey player on the Romanian Olympic Team in 1964. He switched to professional tennis, winning 22 career doubles tennis titles. Tiriac is now worth approximately $2 billion through his multiple business enterprises in Germany and Eastern Europe.
2. Michael Jordan: The six-time NBA champion and majority owner of the Charlotte Hornets is worth approximately $1 billion. Besides being a sports mogul, Jordan has made millions off commercial endorsements, most famously with Nike and his popular Air Jordan line.
3. Michael Schumacher: The German Formula One driver comes in third with $800 million in net worth. His racing career began in 1991, and his annual income from endorsements has been as high as $50 million. He has kept a very low profile since a near-fatal skiing accident in 2013.
4. Arnold Palmer: The legendary golfer is worth $675 million through his many golf-related industries and endorsements, not to mention prize money from his 62 wins on the PGA Tour during his playing days.
5. Roger Staubach: The former Navy man and Dallas Cowboys quarterback is worth approximately $600 million, mostly through real estate dealings.
6. Tiger Woods: At one time, it was inconceivable that Woods would not top this list someday -- and he may still do so -- but after his infamous family troubles and the subsequent degradation of his golf game, Woods is no longer a sure thing as the eventual richest athlete. He lost many endorsements, but he still has tremendous star power as well as $580 million in net worth.
7. Magic Johnson: The former LA Lakers star and entrepreneur has accumulated $500 million through his basketball earnings, endorsements, and his investments through Magic Johnson Enterprises. MJE is known for attempting to establish goods and services in underserved urban areas.
8. Ayrton Senna: While Senna passed away in a tragic racetrack accident in 1994, his net worth at the time of his death was approximately $400 million. Certainly, the Brazilian racing star would be further up this list had he survived.
9. Floyd Mayweather Jr.: Finally, we get to Money. At the time of this listing, Mayweather's net worth was estimated at $380 million, so it's possible that after the Pacquiao fight payout is finalized he will be closer to sixth or seventh place. Mayweather remains undefeated with 48 wins, and will likely fight one or two more times before calling it a career.
10. David Beckham: The retired soccer star and husband of "Posh Spice," Beckham is worth approximately $350 million.

The sports figures we skipped are Vince McMahon, the wrestling icon ($750 million); the since-deceased owner of the Oakland Raiders, Al Davis ($500 million); Irish Grand Prix racing mogul Eddie Jordan ($475 million); former Brewers owner and baseball commissioner Bud Selig ($400 million); track and field coach Bill Bowerman ($400 million); and he of the "Let's Get Ready to Rumble," boxing ring announcer Michael Buffer ($400 million). Include them in your own list if you want. Who are we to argue?

The next five on the list are Shaquille O'Neal, Roger Federer, Greg Norman, Dale Earnhardt Jr. and Alex Rodriguez of the New York Yankees. Will any of these five, or any other athletes (maybe LeBron?), overtake the current top 10? Only time will tell.

 

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Seeking a Last-Minute Discount on a Cruise? Don't Bank on It

June 5, 2015, 10:00 pm

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Filed under: Family Money, Personal Finance, Travel, Travel Industry, Vacation Planning

By Brian Sozzi

NEW YORK -- Summer is almost here and for many individuals and families, that means it's time to go on a cruise.

Be mindful, though, there are several big industry trends to know before you set set sail.

According to the Cruise Line Industrial Association, a record 23 million passengers are expected to take a cruise this year. Once on-board gargantuan ships from the likes of Royal Caribbean (RCL), Norwegian Cruise Line (NCLH) and Carnival (CCL), chances are the vacation experience may seem different than on last year's water-based vacation.

Most in the industry have vastly improved the speed of their Wi-Fi connections. Dining options have also been enhanced to feature dishes and cocktails inspired by celebrity chefs.

But there are also some broader trends of which to be aware. TheStreet takes a look at three of the biggest.

1. Say goodbye to last-minute discounts. For the last several years, growing access to online booking has led to cutthroat pricing on cruise vacations. The cruise lines essentially trained customers to believe that the best prices could be had if they waited to the last minute, instead of booking months earlier. That philosophy is now being done away with industrywide in order to protect profits.

Having ships booked well in advance of peak vacation season allows a cruise line to better plan their business and articulate financial goals to Wall Street.

The buzzwords being tossed about by execs are "revenue management" and protecting "price integrity."

"We are at roughly 80 million passenger cruise days a year, so $1 a day across our fleet is $80 million and $10 a day is $800 million -- so revenue management is absolutely a prime area of focus as it's the biggest driver we have and small tweaks add up to real dollars," said Carnival CEO Arnold Donald in a March 27 earnings call.

He explained, "So whether it's the actual tools that we use, the management systems that allow us to do more inquiry and change prices at smaller increments faster, or whether it's actual presentation and psychology and packaging on pricing, all of those are areas that we continue to mine."

Royal Caribbean has undertaken two initiatives with the goal of supporting higher-priced vacations.

First, it has begun marketing sailings earlier in the year. Second, in March, Royal Caribbean adopted a new policy that it wouldn't offer any last-minute discounts on bookings in North America. On an April 20 call, Royal Caribbean CEO Richard Fain conceded the decision may cost it some bookings in the short-term, which was reflected in the latest financial guidance it shared with Wall Street.

Norwegian Cruise Line is singing the same tune as its rivals. "I reject the notion that the only way to stimulate demand is by dropping prices, and that the industry can't increase prices over time," said Norwegian Cruise Line CEO Frank Del Rio in a Feb. 25 interview with TheStreet.

2. The crowds at the pool and bar may feel bigger this year. Amid an improving U.S. economy, the cruise industry enjoyed a strong "wave season." The wave season is the winter period in which people book their summer vacations.

"Overall, we have had a good wave period with both booking volumes and pricing exceeding last year's levels," said Royal Caribbean's Fain. He added, "We are seeing consistently strong booking trends for guests from North America, while trends during wave were particularly strong relative to expectations at the same time last year for Caribbean itineraries."

Carnival was even more bullish on the wave season. "We are enjoying a strong wave season, and are particularly pleased with demand for the Caribbean for the remainder of the year," said Donald. According to Carnival, its bookings during this year's wave season were strong, and prices were up "nicely."

As for Norwegian Cruise Line, booking trends during wave season in Europe and Alaska were characterized as strong and the Caribbean was seen as "very good."

3. All of the cool new ships are going to China. Sorry U.S. vacation goers, you may have to settle for riding the waves with just slightly upgraded amenities instead of the absolutely newest and coolest ships.

Cruise line operators want a sliver of the rising affluence of the Chinese, and are positioning their most technologically advanced ships in that country's waters.

Carnival, which is profitable in China, said CEO Arnold Donald in an interview with TheStreet, already has four vessels in China in its Costa and Princess lines and will debut another ship in 2016. The company projects 2.5 million passenger cruise days in China this year, jumping to 4 million or so next year.

As for Royal Caribbean, it positioned its newest, most advanced ship ever, the Quantum of the Seas, in Chinese waters this year.

"As expected, Quantum is commanding significant premiums -- its early success, with over 80 percent of her revenue currently booked for the inaugural China season, provided us with the necessary confidence to place her sister [ship], Ovation of the Seas, into the China market when she debuts in 2016," said Royal Caribbean CFO Jason Liberty on an April 20 earnings call.

China represents about 6 percent of Royal Caribbean's capacity.

Norwegian Cruise Line is the only operator sitting the party out in China, for now. "Well, what appears to be every ship in the world is going to China.. I say that only tongue-in-cheek but it is incredible to see our competitors devoting their newest largest, probably their best performing ships to the Chinese market," said Norwegian's Del Rio on a May 10 earnings call.

Norwegian Cruise Line recently hired an executive with experience launching cruise lines in China to explore its own entrance into the red-hot market.

It's hard to blame execs for betting big on the Chinese market. The number of cruise vacationers in China could top 8 million a year by 2020, accord to CLIA. In 2014, a mere 700,000 out of China's 110 million leisure travelers booked a cruise.

This article is commentary by an independent contributor. At the time of publication, the author held no positions in the stocks mentioned.

 

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5 Easy Ways to Save Money Without Wasting Time

June 7, 2015, 10:00 pm

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Filed under: Shopping, Food & Beverage, Budgeting Tools, How to Save Money, Deals

By Paula Pant

We want to save more money, but let's be honest: The hectic pace of life can make it hard to cut corners. If you're too busy to clip coupons, hunt for deals and make your own laundry detergent to save a few cents, how can you manage to save?

Here are five tips that can help you maximize your savings while also being frugal with your time.

1. Review your budget. A budget can be a great way to keep your spending in check, but it's only effective if it's aligned with your current needs and priorities.

Once a month, set aside a little time (just 15 minutes can help) to make sure your budget categories and real-life spending are where they should be. Look for areas you can trim and ask yourself if any new expenses have cropped up that need to be factored in.

If you notice you regularly overspend in a certain category, ask yourself if you can change your habits or if you can trim another budget category to free up some extra money. Re-evaluating and readjusting your budget on a regular basis helps you make sure your money is working for you.

Programs like Mint.com can help track your spending for you and alert you when you're getting close to exceeding your monthly spending goals.

Want to make things super easy? Try the "anti-budget" -- yank your savings from the top first, and force yourself to live on the rest.

2. Grocery shop smarter. A little preparation ahead of time can save you plenty at the grocery store - and help make cooking easier throughout the week. (And who doesn't want that?)

Sit down over the weekend and come up with a meal plan for the week ahead. Create a list with only the items you'll need for those meals (plus any staples you're running low on, like milk or bread). Keep your shopping trips quick and to the point; make a beeline for the items on your list and don't get distracted by flashy displays or sale signs. Get in, get what you need and then get out.

Want to make things even easier? Cook a large batch of something in a slow cooker on the weekends and then divide it up into meals for the week to come.

3. Cancel unused memberships and services. If it's been several months and you still haven't used that gym membership you keep swearing you're going to use, it's time to face reality. All it's doing is sucking money out of your bank account each month. There are plenty of other ways you can work out, like running, biking or finding free exercise videos on YouTube.

Look for other recurring expenses you're not utilizing, such as magazines you rarely read, pricey cable packages when you only watch a handful of shows and that land line you still have even though the only calls you ever receive on it are from solicitors.

These things are all drains on your budget. Cancel them, and voila! Extra money appears each month.

4. Think ahead. Establish several savings goals for short- and long-term expenses you can expect to face down the road. An emergency savings fund will give you a cushion to help you deal with things like home and car repairs, illness and accidents without blowing your regular budget.

Review your calendar for other expenses coming up in the year ahead: birthdays, weddings, vacations, holidays. Create a budget for these costs and start putting aside a little each month so you won't have to find the cash for them in one fell swoop. When it comes to travel, booking things like flights and hotels far in advance can help you net some great deals you won't find if you wait till the last minute.

5. Sign up for daily deals sites. Sites like Groupon, Amazon Local and Seize the Deal offer great daily bargains on everything from restaurants to entertainment to travel. Sign up for their mailing lists and set up a rule in your inbox so that any messages you receive from them go straight into a separate "deals" subfolder. This way, you can skim all your daily deals at once and they won't clog your regular inbox.

Paula Pant is the founder of Afford Anything, a website that helps you build wealth and maximize life. Afford Anything is an online movement against tired old financial advice that says you should skip lattes and chain yourself to a desk for 40 years. Paula Pant launched the site after she quit her 9-to-5 job, traveled to 32 countries and became a successful entrepreneur and real estate investor.

 

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Wall Street This Week: Apple Speaks, Netflix Meets

June 7, 2015, 10:00 pm

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Filed under: Netflix, Apple, Earnings, Wall Street Watch, Investing

From the world's most valuable technology company courting software developers to the leading premium video service hosting what should be an interesting annual shareholder meeting, here are some of the things that will help shape the week that lies ahead on Wall Street.

Monday -- An Apple a Day

Apple (AAPL) kicks off the new trading week with its annual WWDC expo. The five-day conference for developers will run through Friday, hosting 100 technical sessions with more than 1,000 Apple engineers on hand.

WWDC is geared toward iOS and OS X developers, but it's also full of developments for consumers. Apple is widely expected to introduce its new streaming music service, and there may be other newsworthy moments.

Tuesday -- Splitting Headache

Netflix (NFLX) investors will gather Tuesday afternoon for the leading streaming video service provider's annual shareholder meeting. The stock is rolling these days, so Netflix won't have activists or proxy battles to worry about this year.

This doesn't mean that this will be an uneventful meeting. A big topic will be the likelihood of a stock split announcement. Netflix is asking shareholders for the right to have enough share issuing flexibility to declare a stock split as substantial as a 30-for-1 move. Approval should pass. The only real mystery is how big the stock split will be.

Wednesday -- It's Time to Make the Doughnuts

One of the companies reporting quarterly results Wednesday will be Krispy Kreme (KKD). Analysts see the company behind the decadent doughnuts growing sales at a hearty 12 percent clip over the prior year's period, but it sees essentially flat profitability.

Wall Street's holding out for net income of 22 cents a share, just below the 23 cents a share it posted a year earlier. It's hard for investors to be optimistic on that front. It's been more than a year since Krispy Kreme has beaten analyst profit forecasts.

Thursday -- Don't Be Chicken

Bojangles' (BOJA) went public last month, and posts its first financial results Thursday as a public company. There are more than 600 Bojangles' locations across the country, and the fried chicken chain is on a roll after posting year-over-year growth in comparable restaurant sales for 19 straight quarters.

Consumer-facing companies also tend to see a spike in business when they go public. It's apparently a form of free advertising to get the financial press to talk about you. We'll see Thursday how it all plays out.

Friday -- Orange Is the New Three-peat

"Orange Is the New Black" is arguably Netflix's most popular show after "House of Cards." It returns Friday for a third season. Just as we've seen with nearly all of the original content on the leading premium streaming service, Netflix will make the entire season available on its debut date.

It remains to be seen if the "binge viewing" craze that Netflix inspired by providing instant gratification to serial junkies is the right call, but it's hard to argue with the performance of its stock since "House of Cards" and "Orange Is the New Black" premiered two years ago.

Motley Fool contributor Rick Munarriz owns shares of Netflix. The Motley Fool recommends and owns shares of Apple and Netflix. Try any of our Foolish newsletter services free for 30 days, and check out our free report for one great stock to buy for 2015 and beyond.

 

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