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    Inside Costco Wholesale Co. Ahead of Earnings Release
    Daniel Acker/Bloomberg via Getty Images
    By Raechel Conover

    There's little doubt that shopping at Costco saves money and it's convenient for stocking up in a single trip. But can budget-conscious consumers feed a family for an entire month without shopping anywhere else? drew up a Costco meal plan with four weeks' worth of breakfast, lunch, dinner and snacks for a family of four (including two young children). The total cost came to $478.12. That's about 15 percent less than the "thrifty" grocery budget of $565.20 prescribed by the U.S. Department of Agriculture (for a two-parent household with two preschool-age children, based on food costs in May 2015). Because the ingredients are sold in bulk, the total was calculated based on unit prices for the food used during the month. Many items are frozen or non-perishable, so any excess provides a foundation for next month.


    The following four breakfast options provide variety for the morning routine. Choices include quick weekday breakfasts, along with a larger meal that's just right for lazy weekends. This meal plan requires only one package of most of the products mentioned, but check the serving sizes against your family's appetite to be sure.

    Breakfast: Bacon & Eggs. Leisurely Saturday and Sunday mornings call for eggs ($7.69 for three dozen) cooked any way you like; bacon ($7.99 for four 1-pound packages); fresh bananas ($1.39 for 3 pounds) or black seedless grapes ($7.49 for 4 pounds); and, of course, coffee ($10.49 for 3 pounds of Colombian coffee sold under Costco's Kirkland Signature label).

    Breakfast: Oatmeal. Quaker Instant Oatmeal, sold in bulk at Costco for $9.79, makes a hearty breakfast and 52 packets go a long way. Make or serve the oatmeal with milk ($2.29 for a gallon of the Kirkland Signature brand) and enjoy a cup of coffee.

    Breakfast: Cereal. Cold cereal is a staple in many households and for good reason -- it's inexpensive, quick and easy. Cheapism priced out two favorites, Kellogg's Mini-Wheats ($8.99 for a 70-ounce box) and Frosted Flakes ($7.45 for 61.9 ounces), but Costco also carries other varieties in the same price range. Again, milk and coffee figure into the cost totals.

    Breakfast: On the Go. If you're in a rush, head out the door with yogurt and a banana. Bulk tubs of Kirkland Signature-brand Greek yogurt ($6.99 for two 32-ounce containers) are more economical than individual cups, so fill a to-go container with one serving and you're ready for the day.


    Sandwiches are the easy way out for lunch. The following four options can be rotated throughout the month. The key to living off a tight grocery budget is avoiding waste, so make good use of leftovers. Divvy up last night's dinner for variety and a break from sandwiches. The lunch menus assume adults drink water and kids get skim milk.

    Lunch: Tuna Salad
    Tuna comes in a dozen 7-ounce cans for $12.99 at Costco. Mix in some Kirkland Signature mayonnaise ($4.99 for 64 ounces), add a few cut-up grapes if on hand and sandwich between two slices of Schwebel's bread ($2.95 for two 22-ounce loaves). Pair the tuna salad sandwich with Snyder's pretzels ($5.99 for 52 ounces) and fruit.

    Lunch: Chicken Salad. This option is intended as an occasional riff on the ubiquitous tuna salad sandwich, using Kirkland Signature canned chicken breast ($11.99 for six 12.5-ounce cans). Add a spot of mayonnaise and fresh grapes (if available) to make chicken salad. Accompany the sandwich with Herr's chips ($3.59 for a 22-ounce bag) and organic Mott's applesauce ($11.79 for 36 3.9-ounce cups).

    Lunch: Ham Sandwich. Canned meats and fish are a cheap way to get some midday protein, but Costco also sells affordable lunch meat in bulk. Pick up some Kirkland Signature extra-lean sliced ham ($9.69 for two 24-ounce packages) and fashion a simple sandwich once or twice a week with the addition of some mayonnaise. Round out this lunch with chips and fresh fruit.

    Lunch: PB&J. No budget grocery list would be complete without ingredients for classic peanut butter and jelly sandwiches. Costco sells 48-ounce jars of Jif creamy peanut butter in packages of two ($9.99) and 42-ounce jars of store-brand strawberry jelly ($6.99). Bonus: The jelly is organic. Pretzels or chips and fruit complete the meal, which should be another lunchtime standby.


    Many people, especially kids, need a snack between lunch and dinner. The snacks that fit the goal of living off Costco for a month on a $500 grocery budget include Greek yogurt, fresh fruit, pretzels and string cheese (48 Frigo Cheese Heads sticks for $7.89).


    With 14 dinner menus, families can repeat each meal just once over the course of four weeks. There are also potential variations on a theme. For example, swap out cheese pizza for pepperoni or dress it up with leftover veggies. Again, the menus assume adults drink water and kids drink milk.

    Dinner: Chicken & Vegetables. For a low-cost dinner, grill frozen chicken breasts (Perdue brand, sold in 10-pound bags for $23.99) and heat up a side of frozen vegetables ($6.49 for a 5.5-pound bag of Kirkland Signature Normandy-Style Vegetable Blend). Season both with spices already on hand. A fruit smoothie made with Greek yogurt, milk and frozen berries (Kirkland Signature Nature's Three Berries, sold in a 4-pound bag for $11.99) is a nutritious after-dinner treat.

    Dinner: Spaghetti. Spaghetti is a budget dinner staple. Noodles and sauce are cheap to begin with, but buying in bulk (eight 1.1-pound bags of Garofalo spaghetti for $8.79 and three 45-ounce cans of Ragu sauce for $6.99) brings the per-serving cost lower still. Serve the pasta with a side of Del Monte canned green beans ($3.29 for 101 ounces). For a healthy finish, stick some fresh grapes in the freezer. This concentrates their sweetness, making them taste almost like candy.

    Dinner: Fish & Chips. In addition to meats such as chicken and beef, Costco stocks a variety of wild-caught seafood. This appealing meal comes entirely from the freezer: Hook 2 pounds of Alaskan cod ($14.99) and match it with Ore-Ida french fries ($6.89 for 5 pounds) and frozen vegetables. Serve frozen grapes as dessert.

    Dinner: Cheese Tortelloni. Leftover sauce used earlier in the week dresses up Kirkland Signature five-cheese tortelloni ($9.99), sold in two 24-ounce packages. One should be sufficient for a family of four with two young children and the second can be used at a later date. Accompany the main dish with frozen vegetables and Del Monte canned fruit cocktail ($5.49 for 106 ounces).

    Dinner: Chicken Pot Pie. Costco carries ready-made frozen meals that are tasty, nutritious and quite affordable when bought in bulk. To take some pressure off meal preparation, different varieties have been incorporated into the dinner rotation. First up is Marie Callender's chicken pot pie, sold in packs of eight for $10.99. For a family of four, this meal easily repeats later in the month. Supplement the pies with canned green beans and finish off with a smoothie.

    Dinner: Pizza. Pizza is always a hit and prices on Costco's house-brand Kirkland Signature pizzas are tantalizingly low. Basic cheese costs $9.99; pepperoni and vegetable pies also are available. The pizza comes in a four-pack of 1-pound pies, so make two now and reserve two for a future dinner. Sticking to the low-maintenance theme, dish out a side of canned fruit cocktail.

    Dinner: Hamburgers. To ensure one night of grilling, the grocery list includes frozen ground beef patties ($21.49 for 6 pounds) and S. Rosen's buns ($2.69 for 16). Kraft Macaroni & Cheese (sold in a 15-box pack for $12.49) and canned green beans go well with the burgers and fresh grapes are a clean finish.

    Dinner: Lasagna. The second week of dinner rotations starts out with hearty frozen lasagna for $13.79. Try the Kirkland Signature beef and sausage variety, which comes in two 3-pound boxes. The portion size seems like so much food that you may not need a side dish. If you decide otherwise, offer fresh fruit.

    Dinner: Salmon. Fish for dinner again -- this time, frozen Morey's marinated wild-caught Alaskan salmon (2.25 pounds for $16.99). Complement this main dish with frozen vegetables, seasoned with spices already in the spice rack. Add a fruit smoothie for a sweet end.

    Dinner: Burritos. This inexpensive dinner, courtesy of Costco, will please any herbivores at the table. The frozen entree of choice is a Cedarlane vegetarian burrito ($9.89 for eight), rounded out with a side of canned fruit cocktail.

    Dinner: Pasta Salad. This easy summer meal takes advantage of Costco's wide selection of inexpensive fresh vegetables. This dish calls for Barilla tri-color pasta (which comes in six 12-ounce boxes of penne and rotini for $6.99), broccoli florets ($4.79 for about a pound and a half), bell pepper (six for $6.99), grape tomatoes ($4.99 for 2 pounds) and Kirkland Signature balsamic vinaigrette dressing ($7.99 for two 24-ounce bottles). Top it off with shredded Parmigiano-Reggiano ($11.49 for 16 ounces of the store brand). A side of canned fruit cocktail accompanies this meal.

    Dinner: Hot Dogs. Hot dogs are another grilling favorite, partly for the low cost ($12.99 for three 1.5-pound packs of Kirkland Signature beef dogs) and partly because they appeal to kids. Add necessary calories with S. Rosen's buns (16 for $2.79) and leftover pasta salad -- the budget allows for a double batch. Add nutrition with some frozen vegetables and offer fresh grapes if anyone is still hungry.

    Dinner: Garlic Chicken Skillet. A frozen Birds Eye garlic chicken meal ($8.89) includes pasta, sauce and vegetables. You should need only half the 3.6-pound bag for dinner; put the rest away for another time. No side dish is necessary, but offer an after-dinner fruit smoothie.

    Dinner: Pulled Pork Sandwiches. For the final dinner in the two-week rotation, mate Kirkland Signature pulled pork (32 ounces for $9.99) from the refrigerated section at Costco with the remaining hamburger buns. Sides include french fries, canned green beans and canned fruit cocktail.


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    Earns Apple
    Mark Lennihan/APShoppers at the Apple store in New York's Grand Central Terminal.
    There were plenty of winners and losers this week, with a pair of movie theater chains receiving analyst upgrades and the iEverything company checking in with a rare dud of a quarter by failing to disclose smartwatch sales.

    Apple (AAPL) -- Loser

    The world's most valuable consumer electronics company got off to a bad start this week when several of its online services suffered an outage Tuesday morning. Many users were unable to access iTunes, App Store and even the recently updated Apple Music platform. Service was restored roughly four hours later.

    However, a bigger outage came later in the day when Apple posted quarterly results, refusing to offer up metrics on Apple Watch sales. One can't argue that there's a competitive advantage to staying silent. It had no problem talking about the number of iPhones and iPads it sold when those products hit the market. The silence will only fuel concerns that Apple Watch popularity has been waning since the initial excitement at launch.

    Movie Theaters -- Winner

    Multiplex operators are having a blowout summer season and Wall Street is paying attention. Benchmark initiated coverage of Cinemark (CNK) with a bullish buy rating this week. MKM Partners followed suit with an upbeat nod for AMC Entertainment (AMC).

    It's easy to see what's going on here. Three of the leading exhibitors -- including AMC -- report next week. Wall Street pros want to get in with bullish notes ahead of reports that should be pretty solid. Analysts have seen this flick before. They know it ends well.

    LifeLock (LOCK) -- Loser

    Shares of LifeLock lost nearly half of their value in a single day when the Federal Trade Commission accused it of continuing to make false claims in its advertising and failing to protect sensitive consumer information. LifeLock is a leading monitor of credit breaches and it was doing pretty well until this point by posting 40 consecutive quarters of sequential growth in subscribers.

    That streak could end if consumers begin considering the allegations. If folks are not getting what they think they're getting and if their personal information isn't being secured in the way that's been promised, the brand could be deep-fried in irony before long.

    SeaWorld Entertainment (SEAS) -- Winner

    The struggling theme park operator has had a bad month, having to suspend an employee who was infiltrating PETA, posing as an activist to be disruptive to the animal protection group's causes. However, this week SeaWorld got the upper hand in a peer-reviewed study that shows that killer whales in captivity don't have shorter life expectancies than those in the wild.

    The Journal of Mammalogy by the Oxford University Press claims that the average life of a killer whale is 41.6 years, in line with the average life of 29 and 42.3 years for Southern and Northern whales in the wild, respectively. The study also shows a dramatic difference in survival rates of young calves through the age of 2 (97 percent at SeaWorld, 80 percent in the wild).

    Life expectancies of captive orcas was a big knock on SeaWorld raised in the Blackfish documentary that has resulted in declining attendance at the marine life parks. SeaWorld is fighting back against the negative publicity, and after back-to-back years of 4 percent attendance declines, it needs to start winning again.

    Twitter (TWTR) -- Loser

    You're limited to just 140 characters on Twitter, but the company itself may want to set limits on some of its own characters. One of the social media giant's departments decided to throw a party on Tuesday. There's nothing wrong with that, except it chose a frat theme.

    We're talking kegs of beer, red Solo cups lined up for beer pong and a "Twitter Frat House" banner hanging from the wall. The problem, of course, is that Twitter has come under fire for the way it treats female employees. Staging a "frat house" party instead of going with a Greek or sorority mixer theme seems awfully misogynistic at the worst possible time for Twitter.

    Motley Fool contributor Rick Munarriz owns shares of LifeLock and SeaWorld Entertainment. The Motley Fool recommends Apple, LifeLock and Twitter. The Motley Fool owns shares of Apple and Twitter. 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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    Anthem Hack
    Michael Conroy/AP
    By Ankur Banerjee and Ransdell Pierson

    Anthem (ANTM) has agreed to buy Cigna for about $54.2 billion, a deal that would create the largest U.S. health insurer by membership and accelerate the consolidation of an industry from five national players to three.

    The proposed acquisition -- the biggest ever in the health insurance industry -- comes three weeks after Aetna (AET) agreed to buy Humana (HUM) for $37 billion.

    Health insurers are finding it tougher to raise prices following the rollout of President Barack Obama's health care law, while grappling with soaring costs for a growing list of innovative new medications such as some new cancer drugs that cost $100,000 annually for patients.

    Strategically and financially it's very attractive, but they will face regulatory scrutiny.

    State insurance regulators and federal antitrust authorities are expected to aggressively scrutinize how both of the proposed health insurer acquisitions will affect competition for Medicare and individual and commercial insurance.

    Under the deal announced Friday, which the companies expect to close in the second half of 2016, Anthem Chief Executive Officer Joseph Swedish would serve as CEO and Chairman of the combined company. Cigna CEO David Cordani would be president and Chief Operating Officer.

    In a joint conference call with industry analysts, Swedish said that Anthem has had no discussions "at all" with regulators ahead of the deal announcement, but was confident it will receive their approval.

    Shares of Cigna (CI) were trading Friday at $147.64, far below their $188 a share value under the announced deal, suggesting significant Wall Street skepticism over whether it will survive antitrust scrutiny.

    "Strategically and financially it's very attractive, but they will face regulatory scrutiny," said Ana Gupte, analyst with Leerink Partners. "They also both possibly face divestitures and may have to make concessions to consumers to make the merger go through."

    The same apparent wariness of approval has been seen with Aetna's planned purchase of Humana. Humana shares are trading in the $183 range, well below the value of Aetna's cash-and-stock offer of $230 a share when it was first announced.

    Both Anthem and Cigna would be liable to pay the other a fee equivalent to 3.8 percent of the deal's value if either of them walk away from the planned merger.

    Bigger Than UnitedHealth

    Anthem and Cigna are two of just four major insurers that administer self-insured plans for major companies. The other two are UnitedHealth Group (UNH) and Aetna. The combined company would have about 53 million members. UnitedHealth had 45.86 million members as of June 30.

    Growing concerns about market concentration came into sharp focus earlier this year when regulatory concerns scuttled Comcast Corp's $45 billion bid for Time Warner Cable Inc.

    Anthem said it will pay $103.40 in cash and 0.5152 of its shares for every Cigna share. The deal is valued at $183.36 a share based on Anthem's Thursday close of $155.21. Anthem said the offer is valued at $188 a share, based on its unaffected share price as of May 28 before media reports surfaced that the two companies were in talks.

    The equity portion of the offer is valued at $49.11 billion, according to Reuters calculations based on 261.2 million Cigna shares outstanding as of March 31.

    Swedish said Anthem's mainstay Blue Cross/Blue Shield insurance coverage requires the company to maintain a concentrated focus on that business, according to Blue Cross rules.

    "We will remain Blue," Swedish said on the conference call, adding that Anthem feels confident that even after acquiring Cigna and its core Medicare Advantage plans, the combined company will satisfy "the Blue rules."

    The company has said the deal will help it reduce costs and allow it to negotiate lower prices with doctors and hospitals.

    [The] spirit of our collaboration going forward is total collaboration," Swedish said, saying his and Cordani's different roles and responsibilities "are perfectly aligned."

    Swedish said he intended to remain CEO of the combined company for two years, and afterward become chairman.

    Anthem's lead financial adviser is UBS Investment Bank. Credit Suisse (CS) also served as financial adviser, and White & Case as legal adviser.

    Morgan Stanley (MS) is Cigna's financial adviser and Cravath, Swaine & Moore its legal adviser.

    -Diane Bartz in Washington, and Caroline Humer and Kylie Gumpert in New York contributed reporting.


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    Inside Diageo North America's Bottling Facility As Company Marks Completion Of Center's Expansion
    Daniel Acker/Bloomberg via Getty Images
    By Martinne Geller

    LONDON -- British spirits-maker Diageo (DEO) is under scrutiny in the United States, where the U.S. Securities and Exchange Commission has asked for information to see whether it shipped excess inventory to U.S. distributors, a practice known as "channel stuffing."

    A spokeswoman for Diageo, the world's biggest spirits company with brands including Smirnoff vodka and Johnnie Walker whisky, confirmed the company received an inquiry from the SEC and was responding to its questions.

    It was unclear if a full-scale investigation will follow.

    Channel stuffing allows a company to book sales ahead of actual orders. U.S. drug company Bristol Myers Squibb paid $150 million in 2004 to settle SEC charges that the company booked $1.5 billion of excess revenue that way.

    "Diageo has received an inquiry from the SEC regarding its distribution in the United States," the spokeswoman said. "Diageo is working to respond fully to the SEC's requests for information in this matter."

    Nomura analyst Ian Shackleton said he understood there to have been no further inquiries to Diageo following a request in March for information on U.S. spirits sales over the past five years.

    "We understand that the SEC often makes requests for information like this, which does not lead to any further action," Shackleton wrote in a note.

    Confirmation of the SEC's action came after The Wall Street Journal reported the move. Diageo's shares fell 1 percent Friday in London. The SEC declined comment.

    Analyst Martin Deboo at brokerage Jefferies said channel stuffing was a serious matter with a high burden of proof, requiring evidence of more than just over-optimistic planning.

    "It rests on a clear deceptive intent and is usually detected on the evidence of internal whistleblowers and/or on the basis of clearly abnormal trading patterns," Deboo wrote in a note.

    Deboo said he expected the probe would focus on years prior to 2014 and would therefore have no effect on current forecasts, but called it "a very unwelcome distraction, at best."

    Diageo has been under pressure lately to more closely align its shipments to distributors with their sales to customers. The latter measure, known in the industry as "depletions," more closely reflects consumer demand and lets the company be more efficient and agile.

    Diageo's North America President Larry Schwartz announced his retirement last month. He is to be replaced by Dierdre Mahlan, chief financial officer.

    -Subrat Patnaik and Nayan Das contributed reporting from Bangalore, India.


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    In this photo taken, June 8, 2015, a sold sign is displayed outside a new home under construction in Mechanicsville, Va. Freddie Mac, the mortgage company, releases weekly mortgage rates on Thursday, July 9, 2015. (AP Photo/Steve Helber)
    Steve Helber/AP
    By Lucia Mutikani

    WASHINGTON -- New U.S. single-family home sales fell in June to their lowest level in seven months and May's sales were revised sharply lower, in what appeared to be a minor setback for the housing market recovery.

    Other data Friday showed manufacturing activity nudged up in July after slowing for three straight months.

    You never want to see the data regress, but we remain optimistic that we're still on a long-term upward trajectory.

    New home sales dropped 6.8 percent to a seasonally adjusted annual rate of 482,000 units, the lowest level since last November, the Commerce Department said. May's sales pace was revised down to 517,000 units from the previously reported 546,000 units.

    "You never want to see the data regress, but we remain optimistic that we're still on a long-term upward trajectory," said Tom Wind, vice president of home lending at EverBank in Jacksonville, Florida.

    Economists had forecast new home sales, which account for 8.1 percent of the market, to be unchanged last month. Sales were up 18.1 percent compared to June of last year.

    Prices for U.S. government debt rose after the data and the dollar pared gains against a basket of currencies. U.S. stock indexes were trading lower.

    Despite two straight months of declines in new home sales, the overall housing market recovery remains intact.

    Housing is being supported by a tightening labor market, which has unleashed demand from young adults. Steps by the government to ease lending conditions for first-time buyers through mortgage finance firms Fannie Mae and Freddie Mac also are helping.

    A report Wednesday showed existing home sales jumped to a more than eight-year high in June. Data last week showed building permits near an eight-year peak in June and housing starts increasing solidly.

    Regional Volatility

    New home sales increased 28 percent in the Northeast after soaring 78.6 percent in May. Sales fell 17 percent in the West and were down 11.1 percent in the Midwest. In the South, sales slipped 4.1 percent.

    The stock of new houses for sale increased 3.4 percent to 215,000 last month, the highest since May 2010. Supply remains less than half of what it was at the height of the housing boom and is not keeping up with rising household formation.

    At June's sales pace it would take 5.4 months to clear the supply of houses on the market, the most since last November. That was up from 4.8 months in May. The median price of a new home fell 1.8 percent from a year ago to $281,800.

    In a separate report, financial data firm Markit said its preliminary U.S. Manufacturing Purchasing Managers' Index rose to 53.8 in July from a reading of 53.6 in June, which was the slowest pace since October 2013.

    A reading above 50 indicates expansion in the sector. Job creation, however, slowed in July with the index at 53.7, its weakest level since April, compared with the final June reading of 55.5, Markit said.

    The index's flash output component rose to 55.4 from the final June reading of 53.9. The June final output level was the lowest since January 2014, according to Markit data.

    -Caroline Valetkevitch contributed reporting from New York.


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    FILE - In this Feb. 14, 2013 file photo, Travelers pass through a corridor at Philadelphia International Airport in Philadelphia. The U.S. government is investigating possible collusion between major airlines to limit available seats, which keeps airfares high, according to a document obtained by The Associated Press. The civil antitrust investigation by the Justice Department appears to focus on whether airlines illegally signaled to each other how quickly they would add new flights, routes and extra seats.(AP Photo/Matt Rourke, File)
    APTravelers at Philadelphia International Airport in Philadelphia.
    By Richard Cowan and Jeffrey Dastin

    WASHINGTON and NEW YORK -- The U.S. Transportation Department is investigating possible price gouging by the five biggest U.S. airlines while train service was disabled between New York and Washington following a deadly Amtrak crash in May, it said Friday.

    The regulator sent letters on Friday asking each carrier to detail average fares along the route before, during and after the crash. It demanded an explanation for price increases, if any, and asked the airlines whether they communicated with each other about those fares, which might signal collusion.

    The review involves Delta Air Lines (DAL), American Airlines Group (AAL), United Continental Holdings (UAL), Southwest Airlines (LUV) and JetBlue Airways (JBLU), all of which said they were cooperating with the probe.

    These airlines have allegedly raised fees beyond what you would ordinarily expect in the Northeast Corridor at a time when the Amtrak line was shut down.

    American and United added they were confident that no wrongdoing would be found, while Delta said it didn't increase prices but instead lowered some of its highest fares by nearly 50 percent following the crash.

    "These airlines have allegedly raised fees beyond what you would ordinarily expect in the Northeast Corridor at a time when the Amtrak line was shut down," Transportation Secretary Anthony Foxx told reporters on Friday.

    The probe comes at a difficult time for U.S. airlines, already the subject of a Justice Department investigation into whether they worked together illegally to keep fares high by signaling plans to limit flights.

    Consumers are also showing signs of dissatisfaction after carriers recently squeezed more seats onto planes and added new ancillary fees, increasing the cost of air travel.

    The new probe will have to account for ticket prices being a computer-automated response to demand, industry consultant Robert Mann said. Reservation systems displayed high fares simply because all the cheaper ones had been purchased.

    "You had a runaway bookings situation because of the unfortunate incident," Mann said.

    Delta and American said they added seats to accommodate more passengers, and Delta allowed previously ticketed Amtrak customers fly for free.

    Eight people were killed and more than 200 injured in the Amtrak derailment in Philadelphia. Amtrak traffic between Washington and New York City was shut down for six days as a result.

    Foxx said the investigation comes after Connecticut Sen. Chris Murphy contacted the Obama administration with concerns over consumer protection.

    The Transportation Department has authority to stop any illegal practice by the airlines, according to Foxx, although it wasn't immediately clear what punishment could result from the investigation.


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    Earns Amazon
    Mark Lennihan/AP

    NEW YORK -- It's official: Amazon is bigger than Walmart.

    Amazon shares surged almost 10 percent on Friday after the e-commerce powerhouse reported a surprise second-quarter profit and a better-than-expected 20 percent jump in revenue.

    The sharp increase in shares brought Amazon's market value to $247.77 billion, more than its biggest rival, Walmart Stores (WMT), signaling a sea change in retailing. Amazon, which just turned 20, is now valued higher than the world's largest retailer.

    Bentonville, Arkansas-based Walmart Stores is valued at about $230.53 billion. The company, with 11,767 stores worldwide, still has much higher sales, $485.65 billion in the year ended Jan. 31, compared with Amazon's $89 billion in annual revenue last year.

    But investors applauded Amazon's ability to keep costs in check while growing its revenue. Amazon credited the profit to continued strength of its cloud-computing business and strong revenue growth both domestically and abroad. That came as it held costs for marketing and package delivery in check.

    A company's market value is calculated by multiplying the number of shares of stock it has in circulation by the current price of one share.

    It was the second usurper in two months to Walmart's value. Last month Facebook (FB) became more highly valued than the world's largest retailer, knocking it out of the top 10 list of the highest-valued companies in the Standard & Poor's 500 index (^GSPC).

    Amazon is firing on all cylinders, analysts said.

    "When it is good, it is great: particularly as the business shifted to higher growth across a matrix of operating segments, product categories, and geographies in the second quarter," said William Blair analyst Mark Miller. He said a variety of Amazon's units boosted results: its $99 annual Prime membership, third-party sellers, and its logistics and delivery capabilities.

    "In view of the sharply higher preopening stock price, the question is whether this is as good as it gets," he added.

    Amazon Web Services, the Seattle company's cloud-computing business, was another standout, with revenue that jumped 81 percent to $1.82 billion.

    "AWS was particularly robust," said Cantor Fitzgerald analyst Youssef Squali. "We believe that Amazon is now starting to move away from the heavy build years for its ecommerce business just as its top line accelerates, yielding the beginnings of the much sought-after margin leverage."

    Amazon shares (AMZN) rose $47.24, or 9.8 percent, to close at $529.42. The stock is up more than 47 percent in the past 12 months.


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    Michael Douglas & Marvel Entertainment Executives to Ring The New York Stock Exchange Closing Bell To Promote
    Getty Images
    By Rodrigo Campos

    NEW YORK -- The S&P 500 and Nasdaq posted their largest weekly drop since March on Friday as slowing global growth dragged commodity-related stocks lower while an earnings-fueled drop in Biogen took down the biotech sector.

    Biogen (BIIB) more than halved its revenue growth forecast for 2015 and its stock lost 22 percent to close just above $300.

    You got underwhelming revenue growth on balance and then you layer on top of that concern over a global economic slowdown, that becomes self-fulfilling.

    Stocks in the energy and materials sectors weighed heavily on the market after weaker-than-expected economic data from China and the eurozone raised concerns about global growth. Oil prices hit their lowest since March.

    "You got underwhelming revenue growth on balance and then you layer on top of that concern over a global economic slowdown, that becomes self-fulfilling," Art Hogan, chief market strategist at Wunderlich Securities in New York, said of the stock market weakness.

    Amazon (AMZN) was the bright spot Friday, rising more than 20 percent at one point and closing up 10 percent at $530.50. The online retailer posted an unexpected quarterly profit and its market cap ballooned to $247 billion, making it the 10th-largest U.S. company by market value.

    However, Amazon's spike highlighted the thinning of leadership in the S&P 500. Gains on the index so far this year can be attributed to Amazon and just three more companies.

    At the close of trading Friday, the Dow Jones industrial average (^DJI) fell 163.39 points, or 0.9 percent, to 17,568.53, the Standard & Poor's 500 index (^GSPC) lost 22.5 points, or 1.1 percent, to 2,079.65 and the Nasdaq composite (^IXIC) dropped 57.78 points, or 1.1 percent, to 5,088.63.

    For the week, the S&P fell 2.2 percent and the Nasdaq slid 2.3 percent in their largest weekly drops since the last week of March. The 2.9 percent fall on the Dow was the largest for any week since January.

    Clinton Tax Proposal

    Selling in stocks accelerated after a report from The Wall Street Journal said Democratic presidential candidate Hillary Clinton will propose nearly doubling the U.S. capital gains tax rate on short-term investments.

    Second-quarter S&P 500 earnings have been mixed, with 74 percent of companies beating analysts' profit expectations but just 52 percent surpassing revenue expectations, according to Thomson Reuters data.

    Adding to the concerns regarding lukewarm earnings, the S&P 500 is relatively expensive, trading at 16.9 times forward 12 months' earnings, above the 10-year median of 14.7 times, according to StarMine data.

    Dow component Visa (V) ended up 4.3 percent at $74.80 after the credit and debit card company's results handily beat expectations.

    Declining issues outnumbered advancing ones on the NYSE by 2,246 to 831, for a 2.70-to-1 ratio on the downside; on the Nasdaq, 2,144 issues fell and 660 advanced for a 3.25-to-1 ratio favoring decliners.

    The benchmark S&P 500 index posted 13 new 52-week highs and 54 new lows; the Nasdaq composite recorded 50 new highs and 200 new lows.

    Some 7.3 billion shares changed hands on U.S. exchanges, above the daily average of 6.6 billion so far this month.

    What to watch Monday:
    • The Commerce Department releases durable goods for June at 8:30 a.m. Eastern time.
    • The Federal Reserve Bank of Dallas releases its survey of manufacturing conditions in Texas for July at 10:30 a.m. Eastern time.
    Earnings Season
    These selected companies are scheduled to release quarterly financial results:
    • Baidu (BIDU)
    • Canon (CAJ)
    • Eastman Chemical (EMN)
    • Hartford Financial Services Group (HIG)
    • Luxottica Group (LUX)
    • Norfolk Southern (NSC)
    • Roper Technologies (ROP)
    • Restaurant Brands International (QSR)
    • Southwestern Energy (SWN)


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    Courtesy: Scarlett ThomasThe Thomases started their journey in 2013 with son Desmond -- and have since added a new traveler to the family, baby Roman.
    Scarlett Thomas, as told to Marianne Hayes

    In our Money Mic series, we hand over the podium to people with controversial views about money. These are their views, not ours, but we welcome your responses.

    Today, one woman shares how living a nomadic, downsized life overseas helped grow her family's business -- and recast their approach to money for the better.

    The year was 2013, and by all outward appearances, my husband, William, and I were living the good life in St. Louis.

    He was finishing up his MBA and had an internship at a well-known consumer-products company that was sure to put him on the corporate fast track -- all while running his own successful tutoring and test-prep business on the side.

    I was juggling getting my Ph.D. in reproductive epidemiology while also being a mom to our pride and joy, Desmond, then 2.

    But during William's last semester in the MBA program, our family took a life-altering trip to Spain as part of his study abroad offering. What was just supposed to be a three-month trip overseas turned into two years ... and counting.

    Since then, we've lived and worked in five different countries, from Hungary to Peru -- and have even added to our brood along the way.

    Our nomadic lifestyle may seem a bit unorthodox to some -- family and friends were shocked when we told them we were selling all of our belongings to pack up and ship out -- but we wouldn't have it any other way.

    The best part? It's done wonders for our finances.

    The Infectious Bite of the Expat Bug

    Truth be told, the career and life paths we'd always envisioned for ourselves weren't quite panning out.

    Despite the fact that most business students would have killed to have William's internship, he was disillusioned by corporate life.

    The monotony of his day-to-day routine coupled with having to work for someone else, just didn't feel natural to him. He wanted something more.

    I was feeling a similar dissatisfaction. I'd been working on my Ph.D. for almost five years, and continuing my research while caring for a little one left me struggling to maintain motivation. I was gradually falling out of love with academia.

    All of this prompted William to pose a question before we embarked for Spain for his study abroad program: What if we didn't come back to the states at semester's end?

    We had a toddler and a mountain of debt -- and couldn't go gallivanting around Europe like carefree college students.

    What if we stayed in Europe for a few more months -- one last hurrah before putting down roots? I thought he was crazy.

    We had a toddler and a mountain of debt -- more than $100,000 in student loans between us, a $25,000 business loan, and about $6,000 of credit card debt. We couldn't go gallivanting around Europe like carefree college students.

    But when I saw he was dead serious, it stirred something in me. I couldn't help but feel like maybe this could be an amazing adventure for our little family.

    So we got out of our lease, moved our stuff into storage, and found an apartment in Barcelona through Airbnb for $1,200 a month -- not supercheap, but still less than the $1,500 we were spending to rent a home in St. Louis.

    Once we settled in Spain, William had yet another crazy idea: What if we never went back and instead built out his tutoring business overseas?

    We had both been employees of the company back when we lived in Salt Lake City, and when the opportunity arose, the entrepreneur in him decided to take out a business loan to buy the company from its previous owners.

    When we moved to St. Louis for his MBA program, William continued to manage the business remotely, hiring two codirectors to oversee the roughly 15 tutors we employed back in Salt Lake City. He drew a salary of about $35,000 -- but being abroad made us realize there was an even greater opportunity to make money.

    William could meet with international schools throughout Europe and pitch them our services, in which one of our tutors would spend a few weeks doing SAT/ACT prep at their schools to help students who wanted to attend college in the U.S.

    I believed in the plan, but the thought of living in -- not just visiting -- so many different countries terrified me. But if we were going to try this, it was now or never.

    So I put my Ph.D. on hold and became our family's chief travel officer.

    5 Countries, $300 Rent, Zero Credit Card Debt

    We stayed in Barcelona for about five months, taking in the culture, loving every minute -- and mapping out our next destinations based on whether there were international schools close by, our interest in the region, and the cost of living.

    Our next, three-month stop was Budapest, Hungary, which was a much cheaper place to live. By avoiding renting in a tourist area, we were able to get a great apartment for just $300 a month.

    It was then that I realized how living abroad could actually be good for our finances because, if we planned well, life could be so much cheaper.

    When the holidays rolled around, we headed back to St. Louis to sell all of our personal belongings and officially leave our U.S. life behind. But, first, we made a pit stop in Rome -- which is when we discovered that our second baby was on the way!

    Giving birth in a safe place where I felt comfortable, was important to me, which is why we chose to live next in Colombia. I was born there and still had family there, so it was comforting to know we'd have some support.

    After finding a fully furnished apartment in Bogota for $900, we headed out there in February 2014 -- and welcomed our second son (named Roman, in a nod to Italy) in the spring.

    We didn't have international health insurance at the time, so we paid out of pocket for the birth, which only added up to $1,800, including all of my prenatal visits. Since then, we've gotten family coverage for just $200 a month.

    In the eight months that we were in Bogota, William took countless meetings, nabbing new contracts and growing the business even more. He gradually increased his salary to about $45,000 a year, and the company helps subsidize such expenses as flights for business meetings, as well as our rent. I also brought in occasional income by doing some freelance research and public-health data analysis on the side.

    While we don't get a tax break from living abroad -- we still have to file U.S. income taxes -- we do get some tax write-offs for any business-travel-related expenses we have to cover.

    "Our nomadic life has taught us that we won't need a big house with a fancy car to be happy. You don't need to a permanent address to feel like you have a home."

    This new life has allowed us to get our $6,000 credit card balance down to zero last year -- and pay off our $25,000 business loan.

    And while chipping away at our student loans will be a slower endeavor, we've been able to contribute to a 529 college savings account for Desmond, open a trust account for Roman, and maintain an emergency savings fund of about $2,000.

    Our next goal will be to resume contributions to a Roth IRA, which we'd put on hold during graduate school.

    Living frugally, of course, helps a lot. For starters, we always opt for cheap housing, even if it means choosing less-prime neighborhoods. Our rent abroad -- including furnishings, WiFi and utilities -- has averaged $1,000, which is about $500 less than what we were paying in St. Louis.

    But, without a doubt, our biggest savings has come from no longer having to pay for gas, insurance and repairs for two cars -- we quickly familiarize ourselves with public transportation in every new city. I also do a lot of cooking at home, using seasonal and local ingredients as much as I can, to save money.

    In cities where the cost of living is higher, we keep stricter tabs on our expenses, so we know when we're close to going beyond our budget. Plus, living out of suitcases means we can't accumulate much stuff -- so no extravagant shopping sprees for us!

    These frugal habits have accompanied us in the five countries we've lived in -- Spain, Hungary, Colombia, Peru and Mexico -- and the dozens of places we've visited. We're currently back in Bogota, but it's off to Japan next to build an East Asian client base.

    The Intangible Perks of Our International Life

    One of my initial concerns with living abroad was how the kids would adjust, but they've taken to the nomadic life with ease.

    Desmond has attended four different preschools, and in just a few short months, we'll enroll him in an all-Japanese kindergarten. Once he gets to first or second grade, we plan to home-school because we know international schools can get very pricey.

    In our opinion, these experiences have helped shape Desmond into an outgoing, fearless kid -- not to mention that he now speaks Spanish fluently!

    People ask how long we plan to keep up our gypsy lifestyle. The honest answer: I'm not sure. There are times when I think I'd love to own a permanent home, but then I look around and realize that we're living most people's once-in-a-lifetimes.

    We've spent the past few years marveling at Machu Picchu, taking overnight train rides through Transylvania, and braving the outdoor markets of Santiago.

    We may not be millionaires, but we also aren't struggling. When we started this journey, the company had one international class. We have 11 classes starting this fall, and even more in the works for the spring semester -- which has more than doubled our profits.

    Over the last few years, my most fulfilling memories have been watching my children play with kids who speak different languages and hold different beliefs. I've also come to realize that the best memories happen when you're willing to surrender a little control and embrace the unexpected.

    At the very least, what our nomadic life has taught us is that when we finally do settle down, we won't need a great, big house with a fancy car to be happy. I've learned that you don't need to have a permanent address to feel like you have a home.


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    Close up of lock and social security card
    By S.Z. Berg

    NEW YORK -- Anxiety that Social Security benefits won't be available in retirement has inspired plenty of fear among American consumers. Amid the gloom, there is cause for slight optimism: the combined asset reserves of the Old-Age and Survivors Insurance and Disability Insurance Trust Funds aren't projected to run out until 2034, gaining a year of solvency over last year's projections, according to the recently released Social Security Board of Trustees annual report on the health of the Social Security Trust Funds.

    Reports like this, combined with media skepticism, have led many Americans to believe that the safety net of Social Security won't be around to catch them when they fall into retirement.

    However, some Social Security experts believe that the federal government won't allow Social Security to become insolvent when so many Americans rely in part or in full on Social Security during their retirement years. Rather, they believe that there may be a reduction in pay out or a hike in taxes.

    "The Social Security system is good shape," says Louis D. Johnston, professor of economics at Saint John's University. "Current taxes are funding current benefits. When current taxes start to dip below the amount needed to pay current retirees, the Social Security Administration will begin selling some of its holdings of U.S. Treasury bonds and use the proceeds to pay retirees."

    At that point, Johnston says it will be necessary to do some combination of increasing taxes slightly, raising or removing the earnings cap on earnings that are subject to Social Security tax or increasing the retirement age.

    "I would say that anyone under the age of 55 should adjust downward their expectations for the retirement benefits they will receive," says Ken Moraif, a certified financial planner and senior adviser at Money Matters in Plano, Texas. "Most likely an increase in the eligibility age and some form of means testing would save the system."

    Considering and understanding Social Security is of the essence for most consumers: Social Security retirement benefits typically replace 40 percent of pre-retirement income, according to the Social Security Administration.

    Whether retirement is around the corner or years down the road, you should know that Social Security decisions are complex, and making a mistake could cost you tens of thousands of dollars. Here are 10 Social Security tips to consider:

    1. You may have to pay tax on your Social Security income. About 40 percent of Americans pay taxes on their Social Security income. If you're married and file a joint return, you'll have to pay taxes if your total income is more than $32,000. If you're single, that number drops down to $25,000.

    2. You may qualify for Social Security even if you're divorced. If you were married for at least 10 years, you're eligible to collect Social Security based on your ex-spouse's record, if you're not married when you become eligible for Social Security. To top it off, your ex-spouse doesn't have to know about it. It won't affect his or her Social Security income. Further, if you signed a divorce decree relinquishing your rights to Social Security on your ex-spouse's record, those clauses won't be enforced. To boot, you may collect a higher rate of Social Security, if your ex-spouse predeceases you.

    3. File and suspend for increased income. Married couples can increase their Social Security retirement income by implementing a little-known strategy. When one spouse turns 66 years old, he or she can file for Social Security retirement income and then immediately suspend it. This allows the second spouse to claim spousal benefits (35 percent of the first spouse's benefits) at age 62, even if the second spouse never worked. By waiting until age 66 years, the second spouse can collect 50 percent of her spouse's benefits. Meanwhile, if the second spouse worked, his or her benefits continue to grow.

    4. How old you are when you start to collect Social Security has a big impact on the amount of your monthly benefit. In general, the older you are when you decide to start collecting Social Security, the larger your check. You can start collecting Social Security as early as age 62, but if you want a bigger check, you must wait until your full retirement age, which is 66 years for individuals born between 1943 and 1954 and 67 years for individuals born in 1960 or later. For those born in between 1955 and 1959, there's a gradual climb in age qualification. Social Security benefits are said to increase 8 percent for each year you delay collecting pay after your full retirement age.

    5. You must work for at least 10 years to qualify for Social Security retirement income. However, they don't have to be consecutive years.

    6. You can increase the amount of your Social Security check. By working longer, you can replace low-income years with higher-income years. This is good news for individuals who were unemployed for a period of time and those who got better jobs or promotions. Further, years with no income won't replace years with income, even if they come closer to retirement.

    7. There is a maximum benefit that you can receive. This year, individuals who have reached full retirement age can collect as much as $3,501 a month.

    8. Teachers and other government workers may not qualify for full Social Security benefits. The Windfall Elimination Provision, or WEP, reduces the amount of Social Security that retired and disabled workers get who receive pensions from employment not covered by Social Security.

    9. You can get an idea of how much Social Security retirement income you'll get by using the Social Security Administration's retirement estimator.

    10. You can view your Social Security information online. If you're 18 years old or older, you can see your earnings record, estimates for how much Social Security income you'll have at retirement and more at


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    How to Avoid Buying a Flood-Damaged Car

    By Hiram Reisner

    The violent storms that have inundated the country's heartland this spring and summer have caused considerable damage to homes, businesses and infrastructure -- and some deaths. Casualties also include many cars and trucks, which pose a threat to unsuspecting buyers down the road when, inevitably, a share of them re-enter the market with cosmetic fixes covering the damage.

    Approximately 10,000 vehicles were seriously damaged or totaled in Texas flooding alone, according to industry experts, NBC News reports.

    "A car that's been in a flood, with the engine [immersed] for any length of time, will never be the same," says Carl Sullivan, a veteran inspector for California-based Alliance Inspection Management, the report said.

    If you learn the signs of flood damage -- some are obvious and some are not at all -- you can avoid being suckered into buying a vehicle that appears fine but is actually at the end of the road.

    In a warning to consumers after one of this year's floods, the National Insurance Crime Bureau, which works with law enforcement agencies, insurance and car rental companies to assess damage, issued this word of warning in a release:

    "Unfortunately, natural disasters bring out dishonest salvage dealers who don't tell you that the vehicles they're selling are heavily water-damaged," said NICB President and CEO Joe Wehrle.

    "Consumers need to know that these vehicles may appear advertised for sale without any indication that they were affected by the flooding. As always, buyers should be careful when considering a used vehicle purchase in the weeks and months following a disaster like this."

    To avoid purchasing a flood-damaged vehicle, the first thing you should do is have it examined by a trusted mechanic. (For tips on that, check out 13 Steps to Finding an Honest Auto Mechanic.)

    The next step is to order a VIN (vehicle identification number) check, according to, a privately owned website not affiliated with any government entity.

    Flood-damaged vehicles are supposed to be reported. If the vehicle you want is deemed flood-damaged, it should appear when you order a Vehicle History Report, also known as a VIN check or VIN report.

    Another step is to check the status of the title, according to the Federal Trade Commission.

    A "salvage title" means the car was declared a total loss by an insurance company because of a serious accident or some other problems. A "flood title" means the car has damage from sitting in water deep enough to fill the engine compartment. The title status is part of a vehicle history report.

    There are also visible warning signs that could indicate the vehicle has been in a flood, says, including:
    • New upholstery in a used vehicle that doesn't match the carpeting.
    • Rust in places like door hinges and trunk latches.
    • Rust under the gas and brake pedals.
    • Silt or mud under the seats or in the glove compartment.
    • Wet floor carpeting.
    • A musty or moldy smell inside the vehicle.
    • Brittle wires underneath the dashboard, which could mean they have been wet and then dried out. Reach down there to make sure the wires are pliable.
    • Malfunctioning electronics or accessories. Turn on the ignition and make sure all dashboard warning and accessories work properly. Test the air conditioning, heater, windshield wipers, radio and turn signals several times.
    • VIN inconsistencies. Make sure the VIN on the dashboard matches the VIN on the doorjamb.
    Finally, if you see something fishy, say something.

    "If a dealer fraudulently tries to sell you a flood-damaged car, they're breaking the law: report them," says Money Talks News founder Stacy Johnson.

    If you suspect a dealer is knowingly selling a storm-damaged car or a salvaged vehicle as a good-condition used car, contact your auto insurance company, local law enforcement agency, or the NICB at 800-835-6422. You'll help someone else avoid a rip-off.

    If you any other ideas on avoiding purchasing a water-soaked clunker, you can post them below or on our Facebook page.

    Like this article? Sign up for our newsletter and we'll send you a regular digest of our newest stories, full of money saving tips and advice, free!


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    Woman grocery shopping
    By John Schmoll

    If you've been to the grocery store lately, you know just how expensive it can be to buy groceries. This fact is only made worse when you have a family to shop for and you like to eat healthy. The Department of Agriculture reported recently that the average family of four spends $563 to nearly $1,300 a month on groceries. While that is a significant range, the fact remains that groceries can be costly.

    Most people know that coupons are a great way to save money on groceries, but they only work when they offer discounts on items you'd already be purchasing. There are other ways to save money on groceries that allow you to eat well without having to cut back significantly. The following ways, either together or on their own, will help you cut $100 out of your monthly grocery bill without too much effort.

    1. Skip the Prepared Items. Life is busy. Convenience lets you to save time for other things you need to get done. Grocery stores and food manufacturers know this and play on that emotion. Pre-made items may save you time, but they cost a pretty penny.

    These items either come in the form of packaged dinners or pre-cut produce. Saving time is great, but it comes at a high premium, especially with the pre-cut produce. It's common to find a simple fruit plate at many grocery stores for as much as $10 or $15 when the given produce only costs several dollars. Instead of opting for that plate of cut pineapple or broccoli, buy the whole fruit or vegetable for a fraction of the cost.

    2. Know What to Buy in Bulk. Shopping at warehouse stores like Costco can be a great way to save money, but not every item is worth buying in bulk. This is especially the case if you end up throwing food away because you couldn't eat it before its expiration date.

    Certain items, like pasta or other non-perishable items, make sense to buy in bulk as they typically have a longer shelf life. There are other items, like meat, that can also be more affordable when purchased in bulk. You'll need a deep freezer for storage, but when done right, it can save money.

    3. Shop Your Pantry. How much food do you throw away each week because it's no longer edible? We all do it and when we do, it's like throwing money in the trash. According to the National Resources Defense Council, we throw away 25 percent of the food we buy each year. That waste equates to nearly $2,300 annually or almost $200 a month.

    With that in mind, try shopping your pantry and freezer at least once a week or month. Go through and find items that are nearing their expiration dates and add them into your meal plan. This approach not only saves you money but also keeps you from needing to shop until the food is gone.

    4. Skip the Meat. Ground beef has seen a drastic increase in price over the past few years. The Bureau of Labor Statistics reports that the average cost of ground beef is $4.13 per pound as of March 2015. The cost can add up quickly if you're eating beef three or four times per week. If you skip the ground beef twice per week, you can instantly shave $30 to $40, if not more, off your grocery bill each month.

    That doesn't mean you can't have meat-based meals, as there are lower cost alternatives. Chicken or ground turkey are typically $1 to $2 cheaper per pound, as well as a healthier option. When you do add red meat in to your meal plans, look for ways to incorporate leftovers to avoid waste.

    5. Know What to Buy in Season. Fruits and vegetables are a great addition to your daily diet, but they can add a significant amount to your grocery bill, especially when you buy items out of season. As produce items go out of season, they become more expensive as the supply isn't as plentiful.

    If your favorite items are getting ready to go out of season, consider buying a little extra and freezing them, if they freeze well, as a way to have them when you want and not spend too much for them. You also try growing your own to accomplish the same thing.

    Shopping for groceries can be an expensive endeavor, but there are ways to stretch your dollar further without hurting your eating habits.

    John Schmoll is the founder of Frugal Rules, a finance blog that regularly discusses investing, budgeting and frugal living. He is a father, husband and veteran of the financial services industry who's passionate about helping people find freedom through frugality.


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  • 07/24/15--22:00: 10 Big Retirement Blunders
  • Filed under: , , , ,

    empty purse
    Getty ImagesIf you use all the funds in your retirement accounts too early, you'll have to scrape by later in retirement.
    By Maryalene LaPonsie

    Today's 65-year-olds can expect to spend about 20 years in retirement should they quit their jobs right now. However, the Social Security Administration reports that one quarter of those who are age 65 today will reach age 90, and 10 percent will make it past age 95.

    Those numbers add up to a lot of time spent living off retirement savings. If you want to be comfortable during those years, finance experts say you should avoid these 10 retirement blunders.

    Blunder No. 1: Not having a plan for retirement money. Retirement planning experts say the biggest blunder workers make is simply not having a plan for their money in retirement.

    Herb White, a certified financial planner and president of Life Certain Wealth Strategies in Denver, says workers need to create a cash flow scenario. That's a plan that looks at expected retirement income from investments, Social Security and pensions and ensures it will comfortably cover all living expenses

    "Less than 30 percent of the people I've worked with in the last 18 years have had that [cash flow scenario]," White says.

    Blunder No. 2: Forgetting about inflation when making a plan. Another mistake people make is forgetting that a dollar today isn't the same as a dollar 20 years from now. Inflation can erode purchasing power and needs to be calculated into a cash flow scenario or retirement plan. At the very least, retirees should make sure their investments are keeping up with the rate of inflation.

    Blunder No. 3: Failing to save enough money for retirement. Of course, the best plan in the world can't compensate for a retirement account with scant money in it.

    "A lot of people think they can't afford to save, but you can't afford not to save," says T. Michelle Jones, a certified financial planner and vice president at Bryn Mawr Trust. Jones says eliminating even seemingly small expenses, like eating out, can free up cash to set aside for retirement years.

    Blunder No. 4: Raiding retirement accounts early. Don Chamberlin, president and CEO of The Chamberlin Group in St. Louis, Missouri, says dipping into retirement accounts early is another serious blunder people make.

    While loans can be taken from 401(k) accounts and IRA money can be withdrawn early for certain needs, like educational expenses, doing so is a mistake. That money needs to stay in those accounts to accumulate compound interest, which has the potential to add tens of thousands of dollars or more to an account balance over the course of a career.

    Blunder No. 5: Getting emotional about investments. Another retirement blunder is poor investment behavior.

    "We live in a timing and selection culture," says Chuck Downs, co-founder and wealth management adviser with Arven Advisors in Miami. "People buy funds based on hot recent performance."

    Then, when the market downturns, they panic and unload the stock. By jumping on hot stocks -- often when prices are highest -- and selling during low periods, investors seem to lock in low rates of return. Poor timing is likely one reason a 2014 study by financial research firm Dalbar found the average investor had only a 3.7 percent annual return over a 30-year period when the S&P 500 index was gaining 11.1 percent a year.

    Blunder No. 6: Being too conservative in investments. Investor returns may also lag behind benchmarks like the S&P 500 because people are too conservative with their money.

    "The old advice was to use age asset allocation, so if you were age 60, you'd have 60 percent of [your money] in fixed income accounts," Jones says. "People are living a lot longer so that rule doesn't apply."

    Instead, even retired investors need enough growth in their funds to keep up with inflation and stretch money over what could potentially be a 30-year retirement.

    Blunder No. 7: Missing an employer's 401(k) match. Financial Engines, an independent investment advisory firm in Sunnyvale, California, estimates American workers miss out on $24 billion a year in matching funds for their 401(k)s. This is money employers would be depositing in retirement accounts if only workers made their own contributions.


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    Earns Microsoft
    Elaine Thompson/APMicrosoft CEO Satya Nadella demonstrates the new features of Windows 10 at the company's headquarters in Redmond, Wash., last January.
    From the leading maker of stun guns expected to deliver some electrifying quarterly results to a few popular eateries seeing costs rise faster than sales, here are some of the things that will help shape the week that lies ahead on Wall Street.

    Monday -- Screen Pass

    This has been a big summer for the motion picture industry, and multiplex operators are getting the break that they've been longing for. Gross box office receipts in this country are 8.5 percent higher so far in 2015 than they were a year earlier. We already have three movies that have topped last year's highest-grossing release, and more blockbusters are likely.

    It's against this welcome backdrop that Carmike Cinemas (CKEC) reports quarterly results come Monday afternoon. Carmike isn't one of the biggest exhibitors: Its empire consists of just 270 theaters projecting on 2,881 screens. However, analysts see big revenue and earnings growth as the film industry is coming through with its strongest summer in years. If you need more confirmation, you can wait for multiplex giants AMC Entertainment (AMC) and Regal Entertainment (RGC) to report later in the week.

    Tuesday -- Check, Please

    A few notable restaurants will be serving up their latest financials Tuesday. Panera Bread (PNRA), Buffalo Wild Wings (BWLD) and Bravo Brio (BBRG) are all on the plate as earnings season hits a frenzy.

    Folks have been eating out, so drumming up customers hasn't been much of a challenge for the industry. The hard part of operating an eatery is controlling the rising food costs at a time when labor costs are also moving higher. We should see that dynamic Tuesday as analysts see all three chains growing sales since the prior year, but only Buffalo Wild Wings is expected to clock in with earnings growth.

    Wednesday -- Windows Shopping

    Microsoft (MSFT) has a lot riding on Windows 10 -- the latest incarnation of its computer operating system -- when it's officially released Wednesday. With PC sales dwindling as consumers flock to mobile computing solutions, a category where Microsoft is a distant third to Android and iOS, Microsoft needs to make this a head-turning update that will get folks back to their desktops and laptops.

    So, yes, there's a lot at stake for Microsoft, and it knows that it's running out of chances. Windows 8 wasn't a game changer, and if anything it infuriated some loyalists who missed the old desktop icons that were replaced with flashier tiles made for touchscreen displays. Windows 10 promises the best of both worlds, but we'll see Wednesday if the public takes to it.

    Thursday -- Don't Tase Me, Bro

    A company to watch Thursday will be Taser Systems (TASR). The leading maker of stun guns has been seeing a spike in orders from police departments as fatal incidents with traditional firearms have turned them to less lethal ways to subdue suspects.

    Taser also makes wearable cameras for police officers, something that has also become more popular given the wave of media reports on disputed confrontations that ended badly. The result is that Taser has been one of the market's hottest stocks, roughly tripling over the past year. That means that expectations will be high for it to justify the past year of heady stock gains when it reports quarterly results Thursday.

    Friday -- Getting Taken to the Cleaners

    Homejoy will shut down for keeps Friday. The provider of home cleaning services seemed to be riding the wave of sites fueling what they call the "gig economy," connecting consumers with local maids that they sent out as contractors. If you're online quite a bit, you may have even seen Homejoy ads, as well as ads for rival cleaning service Handy.

    Handy is sticking around, and it's reportedly offering Homejoy cleaners a $1,000 singing bonus to go with them. Folks with dirty homes holding Homejoy vouchers may not have it as easy, now at the mercy of requesting refunds. Sometimes the gig economy can be a dud economy.

    Motley Fool contributor Rick Munarriz has no position in any stocks mentioned. The Motley Fool recommends and owns shares of Buffalo Wild Wings and Panera Bread. 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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    Retirement nest egg
    Getty Images
    If you're finding it difficult to save for retirement, you aren't alone. It seems most Americans understand the importance of saving money to fund their retirement, but the challenge comes in finding the cash to contribute to their employer's 401(k), personal IRA or private online brokerage account.

    However, you don't need to live in abject poverty to start investing. In fact, some of the ways families try to be frugal are not sustainable in the long run. For example, sacrificing healthy foods for cheap alternatives will likely increase your healthcare costs, skimming on life insurance coverage can leave your family with financial hardship and buying low quality goods can cause you to replace them more often.

    Nonetheless, every family is unnecessarily bleeding cash somewhere -- it's just a matter of finding the right big-ticket items worth the time to research and save on. Then you can decide how to optimally allocate your savings, even it means investing in your 20s with small amounts of money.

    Common Places to Reduce Spending

    Below, you will find five ways to save money that will lead to thousands of dollars in your investment account. These are expenditures almost every American family makes annually.

    1. Large appliances. Large appliances range from several hundred to a few thousand dollars. Buying an appliance during the wrong time of the year (e.g., right before a seasonal sale) could mean significantly overpaying. Instead, research the best time of year to buy anything and time your purchases accordingly. You may even find that high-end brands or products have now dropped into your budget.

    2. Research your car purchase. I can't tell you how many times a friend has gone to the dealership to peruse what's available and ends up buying a vehicle on the spot. Couple the high dollar amount of buying a car with the long-term commitment of an auto loan and this is a perfect example of a consumer walking into a negotiation with no leverage. Research the type of car you want, compare the specific make and models that fit your needs and make multiple trips to the dealership to avoid buyer's remorse.

    3. Telecommunications (cellphone, cable, Internet). According to a recent study by Cowen and Co., the average monthly Verizon wireless bill was $148, followed by Sprint at $144, AT&T at $141, and T-Mobile at $120. Add in the average $50 a month for broadband internet service and the approximately $106 a month cost of a 300-channel cable package, Americans are looking at a combined telecom bill of over $300 a month, or $3,600 a year.

    If you can find ways to lower your bill by as little as $50 a month, you could save $6,000 in the next decade. After all, who needs 300 channels when studies show you're only watching 17 of them?

    4. Compare insurance quotes. Insurance is another big expense American households overlook. While life insurance is an essential tool in estate planning, that doesn't mean you need to rush a decision and buy a policy from the first agent or financial planner who quotes you a decent rate. Furthermore, unless you are a 1 percenter, remember to only buy term life insurance.

    The same is also true for mandatory car insurance coverage. Since auto insurance is an ongoing annual expense, overpaying for coverage can literally cost you tens of thousands of dollars over a lifetime. For this reason, consumers shouldn't just research their state's average premiums, but compare car insurance rates by zip code to get more location-specific data.

    Once you find a good price range, don't be afraid to pay a slight premium for better customer service and faster claims processing from one of the best car insurance companies. An auto accident is stressful enough and you don't need a bad insurer delaying your payments.

    5. Electronics. Electronics as a consumer category may be the most draining for some bank accounts because it includes technology for entertainment purposes. Computers, TVs, gaming platforms, tablets, iPods, smartphones, and surround sound systems can add up very quickly, especially if you're used to buying the latest and greatest.

    To avoid constantly feeling like you need an upgrade because all your equipment is old, space out purchases to take advantage of technology innovations. Buy a performance laptop that will last 5 years, replace your phone every 2, buy a new gaming console every 3 or 4, and get a new TV, iPod, or tablet when there are technological leaps.

    How to Invest Even a Small Amount of Cash

    If you've already paid off high-interest credit card debt and fully funded your tax-advantaged 401(k), then you can start investing with very little money. Here are some of your investment options:

    1. Traditional Mutual Fund Investing

    If you have more than $2,500 to deposit and want to invest in a traditional mutual fund, then your best bet is to compare different online brokerages. Personally, I recommend Vanguard as they offer a better selection of low-cost index funds which can keep investment fees down.

    2. Discount Brokers Online

    This category comprises your Scottrade, TradeKing, TD Ameritrade and similar options. If you're interested in managing your own portfolio and simply want a strong platform, great customer service, and low-cost trades, then the annual rankings from Barron's is your ideal resource.

    3. Alternative Investments

    Relatively new to the investment scene are robo-advisers, which provide an automated style of portfolio management for the masses. These platforms ask you a series of questions and offer investment options based on your personal financial circumstances and tolerance for risk. For robo-advisers or new investment themes, investors may want to consider Motif Investing or Betterment to see if either can offer further diversification.

    Anyone Can Start Investing

    Investing for retirement doesn't have to be a privilege only the upper classes enjoy. Opportunities are plentiful for anyone looking to build their net worth and willing to make wise financial decisions. The above list is just a start and can act as a guide in preparing you to start thinking like an investor and not just a consumer.

    John Schmoll is the founder of Frugal Rules, a finance blog that regularly discusses investing, budgeting, and frugal living. John is a father, husband and veteran of the financial services industry who's passionate about helping people find freedom through frugality. He also writes about growing your wealth about Sprout


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    Retirement forms, IRA, 401K
    Getty ImagesWhich account will come out on top?
    By Maryalene LaPonsie

    Anything from certificates of deposit to money market accounts to an envelope under the mattress can be used for retirement savings, but 401(k)s and IRAs remain two of the most popular options. And with good reason. Both offer incentives that encourage workers to pad their retirement accounts while reducing their tax bill.

    With both accounts offering similar benefits, you may be unsure which is best for your money. U.S. News spoke with three retirement savings experts to get their take on the pros and cons of 401(k)s and IRAs. Find out which account wins in a savings showdown.

    401(k)s: 'Free Money' and Legal Protection in Exchange for Fewer Options

    In 2015, workers can deposit up to $18,000 tax-free into a 401(k) account. If you're age 50 or older you can add another $6,000 to that amount.

    "The advantage of most plans is there is some type of matching contribution," says Michael Woomer, senior vice president of institutional and retirement plan services at Fort Pitt Capital Group in Pittsburgh.

    A matching contribution is money deposited in a 401(k) account by an employer. Retirement experts call this match "free money" or a "guaranteed return" and say it's too good to pass up. It may be offered dollar-for-dollar or on a percentage basis, like 50 cents a dollar. In addition, matching contributions may be capped at a certain percentage of an employee's income. While the details may vary, all matching contributions are the same in that a worker needs to make his or her own deposits into the account to get the match.

    The employer match is a main benefit of 401(k)s, but it's not the only reason to invest in these plans. Government regulations require employers to vet investment options and be transparent about fees. Therefore, "you'll most likely have professional oversight of the plan," says Chad Parks, CEO of Ubiquity Retirement + Savings, a company specializing in 401(k) plans and IRAs for individuals and small businesses.

    In addition, the funds in a 401(k) are protected if you ever find yourself being sued or filing for bankruptcy. "Money in a 401(k) is off-limits to creditors," says Herb White, founder and president of Life Certain Wealth Strategies in Denver.

    The main drawback of 401(k) plans is the lack of choices they offer. Since plans are controlled by your employer, you're limited to investing money in the funds your company chooses to offer.

    IRAs: More Choices but Less Protection and More Contribution Restrictions

    IRAs, otherwise known as individual retirement accounts, also allow people to save money tax-free. However, these plans have a number of restrictions not found with 401(k) plans.

    "With IRAs, there are income limits," Parks says. "If you make too much, you can't deduct [contributions]."

    In 2015, your ability to deduct contributions to a traditional IRA begins to phase out if you earn more than $61,000 as a single tax filer or $98,000 if you're part of a married couple filing jointly. Roth IRAs -- accounts that don't provide a tax deduction for deposits but allow you to withdraw money tax-free in retirement -- have income eligibility limits starting at $116,000 for single taxpayers and $183,000 for married couples filing jointly.

    Those with earnings less than the income limits are eligible to deposit up to $5,500 into an IRA in 2015. Those age 50 and older are able to deposit up to $6,500 in their account for the year.

    One drawback of an IRA is that it doesn't offer the same level of creditor protection as a 401(k) plan. "Some states [protect] up to $2 million, but it doesn't rise to the level of what's offered to employer plans," White says. "Inherited IRAs are totally accessible to creditors."

    Another downside of IRAs is that the onus is on you to vet investment options. "In an IRA marketplace, you might find they are selling you a [higher-priced] commissionable product," Parks says. "A drawback might be that you have a plan that's more expensive than it needs to be."

    Despite that drawback, the wide open market -- with no employer fund restrictions like with a 401(k) -- is one of the biggest benefits of investing in an IRA. "You have more freedom where you want the money to go," Woomer says. "An IRA is also fairly portable. You can always move that money around." It's a relatively easy process to transfer money from one IRA to another at any time, whereas money in a 401(k) can't be rolled over to another plan unless a worker leaves his or her job.

    And the winner is ...

    All three finance experts tap the 401(k) as their first choice for retirement savings.

    "The 401(k) clearly has more advantages than an IRA," Woomer says.

    White recommends his clients invest in a 401(k) at least to the point of mixing out their employer's matching contribution. After that, he says it may make sense to open an IRA to diversify retirement investments.

    As for those who are self-employed and don't have access to an employer-sponsored plan, Parks notes financial companies can set up 401(k) plans for those individuals. However, he says people shouldn't get too hung up on where to put their money. "Try not to let all the jargon and types of accounts get in the way of the act of savings," he says.

    For those who want to have a comfortable cushion in retirement, the winning account may simply be the one that gets a deposit every month.


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    Prices Of Existing Home Sales Rise In June, Signaling Housing Market Recovery Continues
    Justin Sullivan/Getty Images
    The real estate market has been booming in recent years, but the market never heads in a straight line. If you're looking to sell your home or your vacation property, now may be an ideal time to cash out.

    Let's go over a few of the reasons it makes sense to sell your home now.

    1. Mortgage rates are likely heading higher. The Federal Reserve has made it clear that interest rates will be moving higher. Fed chief Janet Yellen recently said that rates will move higher later this year after seven years of central bank easing that helped the battered real estate market bounce back following the subprime lending crisis.

    We're already seeing market sentiment starting to factor in the inevitable hike. After bottoming out at 3.77 percent in April, rates for 30-year mortgages have crept up to 4.26 percent, according to rate monitor Bankrate (RATE).

    This should be alarming if you have a house to sell. It means that potential buyers are getting less bang for their borrowed buck, and that could drive home prices lower to balance things out. With cash buyers peaking last year, the market's now at the mercy of mortgage-seeking buyers. Higher rates won't help.

    2. You may as well get out while the getting is good. Last month was great for sellers. Existing homes sold at the fastest pace since early 2007. The National Association of Realtors is reporting that home sales rose 3.2 percent in June, pushing the seasonally adjusted annual rate to 5.49 million homes changing keys.

    Even the real estate agency is conceding that the strength in turnover is likely tied to fears that rates will move higher in the near future. Median sale prices have risen 6.5 percent over the past year -- to a new record of $236,400 -- but that momentum will be challenged in the new normal of rising mortgage rates.

    3. Locking in today's low rates. A common gripe during the housing boom is that if someone sells a home, they still need to find a new place to live. This could be an ideal time to consider trading down, moving to a more affordable housing market, or possibly even renting. However, if selling now results in buying now, it's probably a good idea to do it sooner rather than later to lock in today's rates.

    Waiting for rates to move higher may result in better prices as a buyer, but is that a chance you want to take? You don't want to be priced out of your next address.

    4. Your home will stand out. There were 2.3 million existing homes on the market at the end of June, according to the National Association of Realtors. Given the recent spike in buying we can divide that by the 5.49 million annual rate of seasonally adjusted sales to see that we have just a five-month supply of homes in the market. That's the lowest that it's been in years, making it easier for your own property to stand out if it's put on the market.

    Home prices have posted year-over-year gains for 40 consecutive months. No streak lasts forever, and the climate is right now to consider moving on if it's something that you were planning on doing anyway.

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


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    businessman pressing credit...
    By Jeremy Greenfield

    NEW YORK -- 850.

    That was the number inexplicably printed on a letter Bank of America sent me along with a notice of approval for a new credit card I wanted. It's the highest score you can get on a metric that banks and other lenders use to determine if you are likely to repay the money you borrow.

    You won't get a mortgage or a credit card without a good score, which, according to Susie Henson, a spokesperson for Experian, one of the three credit bureaus in the U.S. that track your credit score, is meant to answer this question:

    "What is the likelihood that this consumer is going to go delinquent on this debt within the next 24 months?"

    Not only was I credit worthy, according to Experian, the bureau Bank of America used, I had perfect credit.

    It's actually quite simple, and anyone can do it: Don't borrow too much money too often and pay all your bills on time, for a long time.

    There's no trick or secret to perfect credit. You just have to prove to the credit agencies that you're likely to pay your bills when you are loaned money. You prove this by passing a series of tests they have determined are good proxies for whether you will do so.

    Perfect Is Relative

    Your credit score is a lot like your SAT score: it can fall within a range of numbers; the top number is "perfect," and everything below is less than.

    Unlike the SATs, a perfect score won't help you much more than a merely "pretty good" score.

    "No bank has a product or offering that is exclusive to someone with an 850," said John Ulzheimer, president of consumer education at, a website that offers consumers a free credit score. "Most banks will offer someone with a 760 or higher the best published interest rates."

    The perfect score is the score the lender wants to see to give you the credit you are seeking at the rates you are looking for.

    So, your "perfect" credit score may not need to be a pristine 850.

    "The perfect score is the score the lender wants to see to give you the credit you are seeking at the rates you are looking for," said Tom Quinn, vice president of product management at FICO, one of the two firms that develops the credit score algorithms.

    If you have above a 780, or even 760, you should be able to get the loan you need with the terms you want, experts said.

    Your credit score changes all the time, and you could even have two different credit scores at the same time, depending on what "model" was used (there are several), for what purpose (a credit card application or home loan, for instance) and what "scorecard" a bank used within that model and purpose.

    A model is the specifics of the algorithm used to build your score; for instance, how much to consider that mound of student loan debt versus a missed credit card payment.

    VantageScore, which is on its third iteration of its formula, and FICO, which is testing its ninth, are two firms that build and update these algorithms.

    "The weightings are different," said Jeff Richardson, a spokesperson at VantageScore. "As things change, a credit scoring model needs to be updated. That's a reflection of keeping up with the changing credit environment and the product mix that's out there."

    For instance, in the past, student loans weren't as prevalent as they are now, Richardson said, and credit scoring models have changed to reflect that.

    Within these models, VantageScore and FICO create slightly tweaked custom versions for each lender. There are versions for getting a credit card that are slightly different than for getting a car loan. A bank issuing a credit card wants the most accurate information possible on whether a customer will pay his bills -- not whether he will pay his mortgage.

    The lenders stratify customers with a third level of granularity: scorecards. These are further adjustments to the model depending on the kind of borrower. Is it an unemployed 24-year-old woman living in suburb of a small city? Or, like me, is it an employed 33-year-old man living in a large city? There are 12 scorecards, one for each type of borrower, said FICO's Quinn.

    A Bank of America spokesperson confirmed that the bank used the FICO 8 model to determine my credit score but wouldn't tell me whether it used the off-the-shelf version or one geared toward issuing me a credit card. She also wouldn't tell me what kind of scorecard the bank used for me. My score could have come out differently had I gone to a lender that used VantageScore, rather than FICO, and if I had been applying for a car loan rather than a credit card -- or if I was a different kind of person.

    And it actually gets a lot more complicated. Your credit score can change day-to-day, depending on another long list of factors that I'll touch on below.

    But what's really important to remember when thinking about your credit score is that there are many variables beyond your control that can swing it a few points one way or another, and that you shouldn't worry too much about them.

    Here's what you should worry about.

    The Factors

    There are five main factors that go into determining your credit score: payment history, credit indebtedness, time in file, pursuit of new credit and credit use/mix of credit.

    What it all boils down to is this: Lenders trying to figure out whether you'll pay them back in a timely fashion if they lend you money.

    Beyond the specific factors, there are three important things you should know:
    1. Credit agencies only go back seven years into your credit history, so if you missed a payment eight years ago, it won't show up on your report, except...
    2. If you've filed for bankruptcy, this will take ten years to fall off your report.
    3. The other exception to the seven-year rule is student loans. If you become delinquent, it never drops off your credit report. If you wish to have that blight removed, you must pay the loan back in full and then make sure that the collection agency notifies the credit bureaus that you have done so, according to's Ulzheimer.
    Your payment history is obviously the most important indicator and counts for 35 percent of your score. If you always pay all your bills, it's a good indication that you'll pay your future bills. According to Quinn, the model basically asks, "Has this consumer missed payments in the past? If he has, how many, how recent and how severe?"

    Missed payments count against you, but if they were small and a long time ago, then not that much. The easy solution: Pay all your bills on time.

    Credit indebtedness looks at what kind of debts you currently have and how much they are -- and it's worth 30 percent of your score.

    There are two kinds of credit -- installment debt and revolving debt. The former is things like student loans and your mortgage, big lump sums that you borrowed and are slowly paying off. The latter is debt you incur on a regular basis, like when you use your credit card.

    Lenders want to see that you have a manageable amount of debt and that you use it responsibly. If you have a $300,000 mortgage and $40,000 in student loans and a $10,000 credit limit on a credit card with a balance of $7,000, that's a heavy debt load and will result in a lower score.

    "How consumers use their revolving credit is very predictive," said Quinn.

    Keep your debt at manageable levels; if you have a $10,000 limit on your credit card, don't feel like you need to hit it -- stay well below it, ideally not charging more than 30 percent of your limit before paying it off, said experts.

    Some experts say it's good for your credit to carry a balance on your credit card -- that is, not pay the bill off in full every month. That's wrong and it costs you a ton of money in interest charges. The rates credit card companies charge are astronomical -- as much as 79.9 percent -- and those carried balances can add up to huge fees. I've never carried a balance, and I have perfect credit.

    One factor to note is that the time of the month your credit report is pulled can affect your score depending on what type of balance you are carrying. If it's pulled the day before you pay your bill and you are carrying a high balance, your report -- and score -- will look very different than if it's pulled the day after you pay.

    Time in file is how long you've had credit and is worth 15 percent of your score. This is determined by how long you've had credit (when you got your first credit card or loan) and the average age of all your accounts.

    Parents who help their children get a credit card at the earliest possible date are helping them with this category -- but these efforts can backfire if the child (or parent) uses the card in ways that impact the more important first two factors.

    Pursuit of new credit is how often you try to get a new credit card or loan, and it's worth 10 percent of your score. If you go from bank to bank, trying to get new credit cards, that will hurt your score. However, the credit algorithm understands if you are, for instance, shopping for a mortgage; over a short period of time, the small amount of harm you've done to your credit by trying to get a mortgage at a half dozen different banks will go away.

    The remedy here is simple: Don't apply for lots of credit. When you get some, make it last.

    Credit use/mix of credit is a measure of whether you use only installment credit or revolving credit and is worth 10 percent of your score. The higher-scoring borrowers have a mix of credit. In other words, diversify the type of credit you use.

    If you only have a credit card but not any installment credit, your score here will suffer, but it's of such little importance that borrowing more just to increase it is almost certainly a waste of time and money.

    What I Did Right

    So, how did I get my 850 score? I didn't borrow too much money, too often and paid all my bills on time, for a long time.

    I got my first credit card in 2001. That helped me establish a long credit history. While I've never missed a payment, my credit report only lists my month-to-month payments from 2008 through 2015 -- seven years. In 2011, I got another credit card -- I'll admit, for the points -- and made every payment from then until now. In late 2014, I got a credit card at a J. Crew store when buying a suit to collect a huge discount on the purchase. I paid the bill that month and immediately cancelled the card.

    With all three cards, I've never gone above -- or even close to borrowing 30 percent of my limit.

    In 2013, I borrowed $351,000 to buy an apartment. I have since made every monthly mortgage payment on time.

    And that's it, the sum total of my credit history. As you can see, I've not borrowed too much and always paid my bills on time. Simple as that.

    One last piece of advice if you value your credit score: Live within your means.

    I have paid my credit card bills on time by setting up automatic payments from my checking account. The credit card company automatically deducts the full amount from my checking account on the last day I can pay it without carrying a balance and owing interest and penalties. That means that my checking account has to have enough money in it to pay the bill. If I spent more money than I made, I would overdraw my checking account, which can be expensive, depending on your bank.

    This knowledge keeps my spending in line. I highly recommend this arrangement. It requires you to keep track of your spending but still affords you the freedom, benefits and safety net of a credit card.


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    Mortarboard and US dollar banknotes and stack of quarters close up
    Getty ImagesIt could take five years of $500 monthly payments to pay off the average student loan, but there are ways to reduce what you owe and fork over much less.
    By Odysseas Papadimitriou

    America's higher education system is currently embroiled in a period of extreme flux, with budgetary concerns and an online education revolution fueling widespread change and uncertainty throughout the country. Perhaps the biggest issue facing students, institutions and government officials alike is what to do about the overbearing debt emanating from student loans.

    Total student debt now surpasses an astounding $1.2 trillion -- roughly equal to the GDP of Mexico -- and nearly 7 in 10 graduates from the class of 2013 left campus owing money. According to the Institute for College Access & Success, the average indebted graduate of a four-year college has a balance of $28,400, which would take nearly five years of $500 monthly payments to pay off in the absence of interest.

    Given how economically debilitating it is to enter the "real world" drowning in the red, public opinion supports legislative action that would make college more affordable and ease the burden on those currently struggling to repay lenders. According to a Wall Street Journal and CNN poll, 82 percent of the 1,000 respondents nationwide were in favor of "providing access to lower-cost student loans and providing more time to those who are paying off their debt." The initiative was far more popular among respondents than fighting ISIS, reforming the tax code and limiting carbon emissions.

    The 40 million Americans who currently have outstanding student loan debt are no doubt looking for more tangible, immediate support. With that in mind, here are a few tips that will help you reduce what you owe and save a bit of money along the way.

    1. Look Into bank discounts. Wells Fargo and Discover -- which collectively control more than $20 billion in private student loans -- have begun giving borrowers a break in the form of reduced interest rates, extended repayment terms and, in certain circumstances, forgiven balances. Given how private student lenders have come under fire for oppressive, inflexible terms of late, the move is sure to generate a great deal of good will for the two financial institutions -- perhaps prompting competitors to follow suit.

    2. Consider a career in public service. Public service jobs aren't known for being financially rewarding, but if you didn't major in a field conducive to finding a job that allows for the quick repayment of your student loans, committing yourself to the public good has the potential to benefit your bottom line.

    Those who make 120 monthly student loan payments while employed by a federal, state or local organization or a tax-exempt nonprofit are eligible for the complete forgiveness of their remaining debt. The viability of this approach obviously depends on your vocational interests and just how much you'll owe after 10 years, but it's something worth considering if your balance will be significant.

    3. Get paid to move. Just like local governments provide tax incentives to businesses that move to classified development zones, certain municipalities across the country are using financial perks to attract cash-strapped young people who are looking for a place to put down roots.

    Kansas, for instance, has put $15,000 in student loan repayment assistance on the table for folks who move to specified Rural Opportunity Zones. Similarly, Niagara Falls, New York, is giving $7,000 to people who live in particular downtown areas.

    4. Transfer a balance to a credit card. Most people aren't aware of this, but you can transfer most types of debt -- including mortgages and student loans -- to a credit card. This is a particularly attractive option if you have a relatively small balance remaining and have been able to make on-time payments up until this point, thereby accruing an excellent credit score.

    You can get a credit card that offers zero percent interest on transferred balances for 15 months and charges neither an annual fee nor a balance transfer fee. Using such a card with a credit card calculator to ensure you are debt-free by the time regular rates take effect has the potential to save you a significant amount of money in finance charges and help you get out of debt faster.

    5. Financial literacy must start early. This isn't so much a tip for managing existing student loans, but rather a forward-looking statement about mitigating unsustainable debt in the future. Given how financially burdensome higher education has become and the perhaps decreased value of a college degree, financial instruction at young ages is more important than ever.

    Young people must be given the tools needed to make important financial decisions before they are tasked with selecting a college, choosing a major and figuring out how to pay for it all. Making such decisions in the absence of complete information is a recipe for disaster, so incorporating financial literacy education into high school curricula, at the very least, is something schools should give major consideration to moving forward.

    Ultimately, college campuses are supposed to be bastions of free speech and new ideas -- not black holes of debt. If we want the American dream to continue to be alive and well in the years to come, taming our societal student debt problem is a must.

    Odysseas Papadimitriou is CEO of the personal finance websites CardHub and WalletHub. He previously was a senior director at Capital One.


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    A logo sign outside of a facility operated by Teva Pharmaceutical Industries in North Wales, Pennsylvania.

    JERUSALEM -- Israel's Teva Pharmaceutical Industries said Monday it is purchasing Dublin-based Allergan's generic pharmaceuticals business for $40.5 billion, in what Israeli analysts called the largest-ever acquisition by an Israeli company.

    Statements from both companies say the deal will see Allergan receive $33.75 billion in cash and shares of Teva valued Monday at $6.75 billion. In light of the acquisition, Teva said it was withdrawing its $40 billion-plus takeover offer for pharmaceuticals company Mylan.

    Word of the acquisition saw Teva shares shoot up 13 percent in pre-opening trading on the Nasdaq. Trading in Teva (TEVA) shares on the Tel Aviv Stock Exchange halted over the news of the sale.

    The Israeli pharmaceutical giant is the world's largest generic drugmaker. It said in a statement that the acquisition would provide patients with more access to affordable medicines.

    "Through our acquisition of Allergan Generics, we will establish a strong foundation for long-term, sustainable growth, anchored by leading generics capabilities and a world-class late-stage pipeline that will accelerate our ability to build an exceptional portfolio of products - both in generics and specialty as well as the intersection of the two," Erez Vigodman, president and CEO of Teva, said in a statement.

    Brent Saunders, CEO and president of Allergan (AGN), said in a statement the sale would help his company enhance its "global-branded pharmaceutical business and strengthen our financial position."

    Teva's leadership has been saying for months that it believes some of the biggest generic drug companies should combine in order to save money and become more efficient.

    A big deal like this would allow the drugmaker to improve its profitability by cutting jobs and other overlapping costs from the combined businesses. It also would increase its leverage in negotiating drug prices with insurers and other payers, an ever-important piece of leverage in key markets like the United States, where insurers, employers and other payers are pushing to hold down rising costs that have outpaced inflation for years.

    Generic drugs are less expensive than name-brand drugs, but the prices of some generics have soared due to a lack of competition or shortages brought on by manufacturing problems.

    Teva's deal comes as other key health care players also make plans to muscle up their negotiating leverage through acquisitions. U.S. hospital systems are buying doctor practices and consolidating.

    The second-largest U.S. health insurer, the Blue Cross-Blue Shield carrier Anthem (ANTM), buying rival Cigna (CI) for $48 billion in a deal that would make it the nation's biggest insurer by enrollment. Aetna (AET), the nation's third-largest insurer, also plans a $35 billion bid for Humana (HUM).

    Teva is Israel's largest drug company and has long been a source of pride for Israelis. The company dates back to 1901, when its founders launched a small importer of medications. According to the company's website, it began producing drugs in the 1930s.

    Its late CEO, Eli Hurwitz, ran the company from 1976 to 2002 and received Israel's highest award for lifetime achievement. Teva's aggressive expansion included acquisitions around the globe and patent challenges.

    Its takeover of Ivax in 2005 and Barr Pharmaceuticals in 2008 for about $7.4 billion each were the biggest by an Israeli company at the time and cemented Teva's position as the world's largest producer of generic drugs.

    The company also branched out into developing branded drugs, including Copaxone, developed in Israel for the treatment of multiple sclerosis. It also has a patent on Azilect, a treatment for Parkinson's disease.

    Yossi Vardi, one of Israel's most-successful tech investors, said Teva's acquisition could signal a new stage in Israeli business, encouraging companies to make similarly large acquisitions.

    "This becomes something strategic. In Israel ... since it's a very small community, everybody inspires everybody else," Vardi said.

    -AP Business Writer Tom Murphy in Indianapolis contributed to this report.


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