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DailyFinance.com

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    us financial landmark  front...
    Shutterstock
    The market seems to be going nowhere this year. There have been plenty of ups and downs, but the Standard & Poor's 500 index (^GSPC) is trading 3 percent lower than where it was when the year began. That doesn't mean that all stocks have been merely marching in place.

    Let's go over a few of the stocks that have more than doubled in 2015 as of Tuesday's market close.

    Anacor Pharmaceuticals (ANAC) -- Up 233 percent

    There are only a handful of companies that have more than doubled this year, and Anacor is one of the few in that already elite lot to more than triple. Anacor took off after Crisaborole -- a promising skin cream for the treatment of atopic dermatitis -- delivered positive late-stage clinical trial results.

    Crisaborole won't hit the market until 2017 at the earliest, and that's if it clears regulatory approval. However, at least one market projection has the treatment generating nearly $2 billion in annual revenue in five years.

    Coca-Cola Bottling (COKE) -- Up 144 percent

    Carbonated beverages in general and Coca-Cola (KO) in particular may not be doing so hot, but the same can't be said about the soda giant's largest independent bottler. Shares of Coca-Cola Bottling have been fizzing all year, but it got even more effervescent last month when it announced it that would be purchasing Coca-Cola's manufacturing plants in Virginia, Ohio, Indiana and Maryland. The move dramatically expands the reach of the bottler.

    Consolidation helps the players left standing, even if Coca-Cola itself isn't telegraphing a very upbeat portrait of the bottling industry by diversifying into new product categories.

    Netflix (NFLX) -- Up 125 percent

    Just one of the 500 stocks making up the S&P 500 has doubled this year and it just happens to be the same stock that was the biggest gainer of the popular index two years ago. Netflix has been on fire this year, armed with 65.55 million global subscribers as of the end of the second quarter.

    It's running away with the premium video streaming market, and with most of its growth these days stemming from international growth, it's fair to say that the rest of the world is just as smitten with Netflix and binge viewing as the U.S. is.

    LGI Homes (LGIH) -- Up 111 percent

    Homebuilders have been thriving in this climate with low mortgage rates and an improving economy. LGI Homes went public two years ago, and the stock has gone on to nearly triple in that time.

    LGI Homes is posting double-digit sales growth, and earnings have been growing even faster. It has sold 2,458 homes so far this year, 44 percent ahead of where it was after the first nine months of 2014.

    Builders FirstSource (BLDR) -- Up 101 percent

    Most of this year's gains at Builders FirstSource came after a single acquisitive event. Shares of the building materials supplier took off after it announced that it would snap up ProBuild. Acquiring a rival in a $1.63 billion deal would create a company that would combine for $6.1 billion in trailing revenue last year. The news sent the shares 90 percent higher in a single week.

    The market doesn't typically bid up an acquirer, but this move made perfect sense. It also only helped that Builders FirstSource revealed that it was targeting as much as $200 million in annual cost savings for the combined building materials giant.

    Motley Fool contributor Rick Munarriz owns shares of Netflix. The Motley Fool owns shares of and recommends Netflix. The Motley Fool has the following options: long January 2016 $37 calls on Coca-Cola, short January 2016 $43 calls on Coca-Cola and short January 2016 $37 puts on Coca-Cola. The Motley Fool recommends Coca-Cola. Try any of our Foolish newsletter services free for 30 days. Check out our free report on one great stock to buy for 2015 and beyond.

     

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    Federal Reserve Chair Janet Yellen Lecture On Inflation Dynamics And Monetary Policy
    Scott Eisen/Bloomberg via Getty Images Federal Reserve Chair Janet Yellen
    By CHRISTOPHER S. RUGABER

    WASHINGTON -- The Federal Reserve says steady consumer spending and an improving housing market spurred modest U.S. economic growth in the late summer, though factory output was sluggish in part because of the strong dollar.

    The Fed said Wednesday in its latest snapshot of the economy that nine of its 12 regional banks reported that growth was moderate or modest from mid-August through the beginning of October. Two banks said economic activity increased while the Kansas City Fed said the economy slowed slightly.

    The Fed's report echoes other recent data that suggests the U.S. economy, while still expanding, has run into headwinds from overseas and lost some momentum. Most analysts forecast that growth will fall sharply in the July-September quarter to an annual pace of about 1.5 percent from 3.9 percent in April-June.

    The report, known as the beige book, will be used by Fed policymakers as a basis for discussing the economy's health when they meet next on Oct. 27-28. The beige book is released eight times a year and consists of anecdotal reports from businesses in each of the 12 districts.

    Fed Chair Janet Yellen has said the Fed may raise short-term interest rates before the end of the year should the economy continue to expand. Yet most analysts expect that if an increase does occur this year, it will happen in December rather than this month.

    Americans generally boosted their spending, likely because of solid hiring in the past year that has put 2.8 million people to work. Auto sales were even stronger, particularly in the Richmond, Atlanta, Chicago and Dallas districts.

    Hiring rose at a modest to moderate pace in nine of the 12 bank districts, the beige book said. The Boston Fed said that advertising and consulting firms were planning to add jobs, while manufacturers were laying off workers.

    Yet even as job gains were steady, wage growth "remained subdued" in most regions, the Fed's report said. Eight districts said that only slight to modest pay gains occurred from mid-August through early October.

    Steep drops in oil and gas prices in the past year continued to weigh on many energy producers, which are still cutting jobs in Texas, the Dallas Fed said. Oil and gas drillers are also ordering less steel pipe and other equipment, dragging down factory output, according to many districts.

    Manufacturers are also struggling because of the strong dollar, which has increased about 13 percent in value against a basket of other currencies in the past 12 months. That makes U.S. goods more expensive overseas and lowers the price of foreign goods in the United States, cutting into U.S. exports.

    The stronger dollar has also discouraged many overseas tourists from visiting the United States by raising the cost of hotel rooms and other goods and services. The New York, Minneapolis and Dallas districts reported that tourism was restrained by the strong dollar.

     

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    Financial Markets Wall Street
    Richard Drew/AP
    By Caroline Valetkevitch

    NEW YORK -- U.S. stocks fell Wednesday as Walmart skidded after issuing a weak profit forecast, dragging down other big retailers, and as JPMorgan (JPM) slipped after disappointing results.

    The news added to worries about the outlook for U.S. earnings, with S&P 500 profits forecast to have dropped more than 4 percent in the third quarter compared with a year ago, according to Thomson Reuters data.

    Following the market close, shares of Netflix (NFLX) sank 8.7 percent to $100.61 after the company reported U.S. subscriber additions below its own forecast.

    Separately, CNBC said supermarket operator Albertsons' initial public offering was likely to price at $20 or less as bidders are concerned about the Walmart forecast, while First Data's IPO is likely to price at $16. Earlier this month, Albertsons said it expected its IPO to price between $23 and $26 a share, and First Data estimated its would price between $18 and $20 a share.

    During the regular session, Walmart (WMT) sank 10 percent to $60.03 in its biggest one-day percentage decline in years and heaviest trading day since January 2009, after it forecast a drop of up to 12 percent in earnings per share in fiscal 2017. The day's decline erased more than $20 billion off the retailer's market value, and the stock was among the biggest drag on both the Dow and S&P 500.

    Also weighing on retailers, data showed retail sales in the United States barely rose in September.

    Rival big-box retailer Target (TGT) was down 3.5 percent at $76.20, and Sears (SHLD) fell 3 percent to $24.41. The S&P 500 retail index dropped 1.2 percent.

    JPMorgan (JPM) shares fell 2.5 percent to $59.99 after the bank reported disappointing third-quarter results late Tuesday.

    "In these next three weeks in the earnings season, we're going to get some clear guidance not just on earnings for the third quarter but guidance for the fourth quarter and for next year. That's going to be crucial," said John Canally, investment strategist and economist for LPL Financial in Boston.

    ​The Dow Jones industrial average (^DJI) fell 157.14 points, or 0.9 percent, to 16,924.75, the Standard & Poor's 500 index (^GSPC) lost 9.45 points, or 0.5 percent, to 1,994.24 and the Nasdaq composite (^IXIC) dropped 13.76 points, or 0.3 percent, to 4,782.85.

    Wells Fargo (WFC) fell 0.7 percent to $51.50, while Bank of America (BAC) rose 0.8 percent to $15.64 also following their results.

    Among other big decliners, shares of Boeing (BA) dropped 4.3 percent to $134.22.

    Shares of Delta Air Lines (DAL) rose 1.8 percent to $48.59 after it said it will put the brakes on its expansion of flight capacity in 2016, in a move to fill up more planes and sell more seats at higher fares.

    Declining issues outnumbered advancing ones on the NYSE by 1,809 to 1,241, for a 1.46-to-1 ratio on the downside; on the Nasdaq, 1,759 issues fell and 1,005 advanced for a 1.75-to-1 ratio favoring decliners.

    The S&P 500 posted 7 new 52-week highs and 5 new lows; the Nasdaq recorded 21 new highs and 57 new lows.

    What to watch Thursday:
    • At 8:30 a.m. Eastern time, the Commerce Department releases the Consumer Price Index for September; the Labor Department reports weekly jobless claims; and the Federal Reserve Bank of New York releases its survey of manufacturing conditions in New York state for October.
    • ​Freddie Mac releases weekly mortgage rates, 10 a.m.​
    • The Treasury Department releases its budget report for September at 11 a.m.
    Earnings Season
    These selected companies are scheduled to report quarterly financial results.
    • Citigroup (C)
    • Goldman Sachs Group (GS)
    • Philip Morris International (PM)
    • UnitedHealth Group (UNH)

     

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    Theme parks tout their contributions to scientific research
    Joe Burbank, Orlando Sentinel/TNS via Getty ImagesGuests check out a mural at the animal science center at Disney's Animal Kingdom.
    Disney (DIS) is no stranger to price hikes at its theme parks. It's been raising the cost of its one-day tickets to Disney World on an annual basis since 1989, and more often than not that means eventually boosting the price for its annual passes.

    Some are arguing that Disney may have gone too far with its latest move, jacking up the price for a full year of access to Disneyland by as much as 35 percent. The increases at Disney World weren't as severe, but all comparable annual passes have gone up in the double digits.

    It's not just annual pass holders feeling the pain: Your car is going to be paying more the next time it wants to visit one of Disney's six domestic theme parks. Disneyland parking prices increased by a buck, with Disney World's parking lots rolling out a steep $3 hike.

    Use the Force, Luke

    The increases are substantial, and they might seem to be coming at the most unlikely time. Disney's boldest expansion project -- the 14-acre Star Wars Land that will spice things up at both Disney's Hollywood Studios in Florida and Disneyland in California -- is still several years away.

    Some of Disney's parks are woefully incomplete, for now. Animal Kingdom in Florida is closing at 6 p.m. or 6:30 p.m. most days this month. That will change when a nighttime Rivers of Light show debuts in a few months, along with an Avatar-themed expansion that will follow a year later. Disney's Hollywood Studios is even more barren. It has gone from Disney's third most visited park to its fourth most visited park after gutting several attractions over the past two years. Most of the additions up to this point have been petty, replacing former attractions with temporary "Frozen"-themed shows or the saddest lounge you will ever see.

    However, making this move when the parks are in an inspirational lull is a smarter move than you might think. For starters, keep in mind that annual pass holders don't pay the new rates until their current passes expire. That could be as far as a year away, when Disney's parks should offer more than they do right now. Between Epcot's "Frozen" ride and "Star Wars" Launch Bay pavilions opening in a few months, the parks will already be on the upswing before the hike kicks in.

    Patrons also play lower renewal rates on these passes, creating an incentive to renew now rather than pay even more for a pass once the new attractions go live. From Star Wars Land on both coasts to the arrival of Pixar Land at Disney's Hollywood Studios, the parks will be a lot more magnetic in the future. Disney's just asking investors to make an investment now.

    New pricing tiers also find Disney offering value passes with blackout dates. The cheaper annual passes don't include summer and/or key travel holidays. That may be a deal breaker for out-of-town regulars, but for locals it's one way to save money while also pushing them through the turnstiles on quieter non-peak days. That's part of Disney's master plan to alleviate the heavy crowds that converge on both resorts in late December and during the spring break holiday.

    A New Perk That's Sheer Genius on Disney's Part

    One thing that Disney's doing to ease the sting of higher prices is including free PhotoPass access to all guests at the higher annual pass tiers. PhotoPass is the cloud-based storage solution whereby guests have all of their snapshots taken on rides and by roaming staff photographers. Disney's making digital downloads available to many pass holders at no additional charge.

    That's a pretty big deal for folks who take a lot of pictures, but one can also suggest that annual pass holders aren't the type to be posing with park photographers outside of Cinderella's castle. They are regulars, and that makes them less likely to value a pro snapshot the way that an infrequent visitor would.

    However, that's also what makes this brilliant for Disney. It will get annual pass holders to collect more digital downloads of their in-park photographs and in this day of social media, it likely means sharing them on Instagram and Facebook (FB).

    Even annual pass holders who don't normally spring for photos of crazy Splash Mountain poses will be tempted to see the perceived value in the perk. It doesn't cost Disney a thing, beyond possibly hiring more staff photographers to account for the spike in snapshot requests.

    So, sure, higher-price annual passes aren't fun, but between new attractions on the way and a new clever perk, Disney's got you just where it wants you.

    Motley Fool contributor Rick Munarriz owns shares of Walt Disney. The Motley Fool owns shares of and recommends Facebook and Walt Disney. 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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    halloween lantern head pumpkins ...
    Getty Images
    By Raechel Conover

    Every year Halloween creeps up and scares thousands into last-minute, costly costume choices. But just a little planning can lead to a timely and cheap Halloween costume for 2015. Here's the easy way to do it: Identify pop culture, movie, and TV icons from the past year. Then narrow the list to celebrities, real or imagined, who can be easily and cheaply replicated.

    Zombies. Even after years of zombie madness, the march of the undead doesn't seem to be abating. "The Walking Dead" has spawned a prequel, "Fear The Walking Dead," making this a good year to resurrect an old zombie costume -- or ask someone who once dressed as a zombie to loan you a severed limb or two. Alternatively, make a costume with old clothing and ghastly makeup.

    Minions. Spinning off from the "Despicable Me" franchise, the Minions took to the screen for their own movie this year. This is an easy costume to put together: Pick up some overalls and a yellow hooded sweatshirt. Add sprouts of brown pipe-cleaner hair on the hood of the sweatshirt and wear goggles or oversize glasses.

    Donald Trump. All you need to dress as the Republican presidential candidate is a suit and a cheap comb-over wig (or a comb-over of your own hair). Walmart is selling the wigs for $15.95 and already sold out at least once -- perhaps an indication of the costume's popularity this year.

    Hillary Clinton. A Hillary Clinton costume is also easy to pull off. Simply wear a women's pant or skirt suit and style hair or a wig in a blonde bob parted to the side. Of course there are Hillary Clinton masks ($17 on Amazon), but save the money by sporting a name tag that reads, "Hillary Clinton, 2016 Democratic Presidential Candidate."

    Hillary and Bill. Hillary and Bill Clinton is a cheap couples costume that's sure to be a hit. The formula is the same for Bill as for Hillary: a suit and a mask ($12.25 on Amazon). Or, forgo the mask and use baby powder to turn hair white.

    The Dress. Remember the dress that took social media by storm this year because no one could agree if it was white and gold or blue and black? can be approached two ways: Go with a friend and each wear a different version of the dress, or fly solo and wear a dress that's half gold and white, half blue and black. Either way, find a white dress secondhand and use spray paint or fabric paint to make the stripes.

    Katy Perry's Left Shark. Remember Katy Perry's Super Bowl halftime show, and the costumed dancer who just couldn't keep up? He became a sensation -- and now a clever Halloween costume. Start with a blue hoodie and white, black and light blue sheets of foam paper. Use the foam paper to create eyes, teeth (around the opening of the hood), gills, and a fin for the back. Attach to the hoodie with a hot glue gun.

    Sadness from 'Inside Out.' This movie-inspired costume falls on the extreme cheap side to recreate: Wear blue leggings, a light blue sweater, blue face paint, blue latex gloves, blue socks and slippers, a blue wig or hair color, and large, dark-rimmed glasses. Many closets hold these items already, and they can be found at low price.

    Deflategate. One of the biggest sports scandals of the year, in which the New England Patriots and popular quarterback Tom Brady allegedly tampered with footballs before the AFC Championship Game, makes for an easy costume. All it takes is a Patriots jersey or T-shirt and a deflated football. These items can be found secondhand or borrowed from a friend who's a Patriots fan.

    Ariana Grande. Oh, Ariana. The little pop princess (er, diva) was famously accused of (and caught on camera) licking a doughnut in a shop. Replicate her look on the video with a light-colored, plain hooded sweatshirt; hair piled high into a ponytail; dark, winged eye makeup; and knee-high, black stiletto boots. Carry around a tray of doughnuts.

     

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    US dollart banknotes
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    It's too easy to come up with excuses for not saving enough money and getting ahead financially. You don't earn enough. Your student loan debt is suffocating. You need new clothes. Your furniture is old. Your kids are expensive. And the list goes on. But unless you're going to inherit millions of dollars, it's probably best that you start making financial choices today that will bring you the financial security you deserve.

    Here are eight common excuses that are keeping you from financial success. If these sound familiar, it's time to make a change.

    1. I Can't Afford to Save

    It's not uncommon for people to believe that they don't make enough money to put a portion into savings. Even some workers at generous income levels feel this way.

    "The culprit behind this excuse is usually lifestyle inflation," said David Melnyk, a financial planner with Verus Wealth Management. "As someone earns more, they often feel they are able to spend more. Spending money on things that make your life fulfilling is totally necessary and important to do but make sure you aren't cashing out your dreams and goals in the process."

    To combat the slow creep of living expenses, craft a budget that will help you to save and stay on track.

    2. I Can Always Save Later

    It's easier and more appealing to live for today and not worry about tomorrow. And it's one of the biggest reasons many people fail to take action and save.

    Jason Hull, a certified financial planner who blogs on myFinancial Answers, offered a powerful antidote for that line of thinking. "Imagine your future self as if you were watching a movie. Think about the potential negative outcomes like having to retire early because of a disability and watch the movie of your future self based on what you're doing now. This will help (you) think of that future self as a family member and make (you) want to do something about it. We need to convince (our present selves) that our future selves are both important and fallible."

    3. It's Too Complicated

    "If you are not sure how to begin, start by investing a small amount from each paycheck into the target date fund that corresponds with your future retirement date in your company's 401(k) plan," said Lawrence Solomon, director of investments and financial planning at OptiFour Integrated Wealth Management.

    "If you want to invest on your own outside of a 401(k), start with a simple broad stock index fund that tracks the Standard & Poor's 500 (^GSPC). Index funds have very low costs, are extremely tax-efficient and can be purchased with low minimum initial investments. With investing, simpler is usually better," he said.

    Two of the most important tenets of successful investing are also the most simple: Set aside savings consistently and get started. There's no need to be paralyzed by indecision. Low-cost index funds that track market performance consistently perform well over the long term, Solomon said. Warren Buffett also advises investors to hit up these funds.

    Of course, there are no guarantees and past performance isn't indicative of future success.

    4. I Just Need to Get This Out of the Way

    Whatever "this" is -- graduate school, a wedding or something else -- it's keeping you from a sound financial future.

    To put the brakes on this kind of procrastination, Trevor Ewen of PearoftheWeek.com, a personal finance and investing blog, urged individuals to "put together a financial projection of the cost and personal investment" of whatever the excuse or event is. "Then use this exercise as a stepping stone to other financial action."

    In other words, use the urgency of an immediate financial goal and take that same enthusiasm and determination to longer-term financial goals. This will help you plan and save beyond the needs of a looming deadline.

    5. I'm Waiting for Less Market Volatility

    Would-be investors eyeing the stock market these days may be using the recent volatility as an excuse to stay on the sidelines. Or some may say they don't want to invest right now because the market is too high, or it hasn't hit bottom yet or they want to wait until it goes back up to get in.

    Solomon has a name for this behavioral pattern: "I call this the timing excuse. There is no such thing as market timing, only market mistiming. We have met with several people who are 100 percent in cash and have been using this excuse since the Great Recession to avoid getting into the market. In the process, they have missed out on more than 200 percent of gains in the U.S. indexes over the last six years and their portfolios will likely never be able to recover from those missed opportunities during their lifetimes."

    Solomon said that inflation will eat up people's purchasing power in time if they're not invested in the market properly. "The returns on cash and other ultra-conservative investments have never historically kept pace with inflation. So if you are in cash or Treasury bills, you are not preserving your capital in real terms because the price of everything you will need in the future is going up and your purchasing power is shrinking over time."

    6. It's Impossible to Get Ahead

    You are in charge of how you spend, how much you earn, how you invest and other financial decisions. By claiming that life is unfair or the game is rigged, you ultimately end up shirking your responsibility to instigate positive change. Be accountable for your money-related decisions and watch how empowered you will feel.

    7. I'm Afraid to Face My Financial Fears

    People who stockpile their student loan bills or credit card statements under the bed -- unopened -- are probably familiar with this fear. Confronting their financial reality is a first step toward gaining security.

    "People don't want to fail," said Josh Nelson, CEO of Keystone Financial Services. "They are afraid that they have procrastinated too long and it's too late for them. The truth is that it is never too late to do the right thing. People can make up for lost ground quickly if they are committed enough."

    Go ahead and face your financial situation head on. See where you stand today so you can start making a plan that will help you move toward the future you desire. Track your spending and earnings. Include your monthly bills and short-term and long-term savings goals. Make the adjustments necessary to bring your financial life back into balance.

    8. I'm Too Busy

    "Probably the most common excuse that we hear is 'I don't have time right now,'" said financial consultant Trent Huston. "[What] they are actually saying is 'I won't make time right now.' The statement undermines their efforts to improve because they have prioritized improving their finances below other things that they do have time for."

    A sound financial future should be your goal and a priority. But time slips away and financial plans get deferred again and again. To break the cycle, investment adviser Steve Lewit of United Advisors said, "Ask yourself, if I keep doing what I'm doing and I don't change, will I get all stressed out or worried. If the answer is yes, then an action needs to be taken to relieve the stress."

    Bring urgency to your financial goals. Resolve to stop making excuses. Realize the connection between your financial actions today and achieving your desired future.

    This story, 8 Excuses That Are Keeping You From Financial Success, originally appeared on GOBankingRates.com.

     

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  • 10/14/15--22:00: How to Sell an Ugly House
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    interior of a pink bedroom in...
    Getty ImagesIf your house is something of an eyesore, you can still sell it.
    By Geoff Williams

    Sometimes you can't sell the house you want to sell. You have to sell the house you have.

    Perhaps you're broke or rushed, and you don't have the time or money to make home improvements, like finishing the basement or painting the house. Maybe even hiring a cleaning crew to scrub down your home seems like a financial reach. You simply need to sell your not-so-awesome house.

    What do you do?

    Money talks. If your house is something of an eyesore, you can still sell it. But you'll almost certainly have to sell it for less than you could have otherwise.

    "Price solves all problems," says Bruce Ailion, a real estate agent and attorney in Atlanta. In addition to selling homes, Ailion manages a hedge fund that buys and rehabs properties to rent or flip. So he has purchased a few dumps in his day.

    "I've sold all sorts of difficult homes, cracked foundations, a side ripped off by strong winds, mold," Alison says. He adds that he was able to sell another home, which had a resident who was something of a dog hoarder. "The pet stains had pet stains, and the smell opening the door was overpowering," he says.

    So as bad as your home may seem, it's probably not unsellable. But you will have to lower the price.

    By how much? Bill Golden, a real estate agent in Atlanta for almost 30 years, has a simple formula. If you have repairs, and you can calculate what it would cost to repair your roof or paint the walls, "simply subtract the cost of the repairs from what the value of the home would be if the repairs were not needed," he says.

    Even there, it isn't quite that simple. Golden adds that buyers will still want enough of a discount to cover what he calls "the hassle factor." Those buyers, after all, are going to have to spend time finding the right painter or flooring company or roofer or whatever contractor they need, and the buyer doesn't know if there will be additional, unexpected costs related to the repairs.

    "The fine line to walk in pricing is to list it low enough that those repairs are taken into account, but with enough wiggle room to offer a further discount so the buyer will feel that it's worth taking on the project," Golden says.

    Don't assume the worst. You may feel like you would never buy your home in its current state, and therefore, nobody else would either. But your real estate agent may not see this as a big deal. For instance, Kella McCaskill, a real estate agent with Keller Williams Tampa Central, in Tampa, Florida, lists some minor issues that may feel major to you:
    1. Your house is outdated.
    2. Your flooring isn't very good.
    3. You have no air-conditioning.
    4. The exterior of the house looks shabby.
    5. There's junk everywhere.
    6. You have minor mold and mildew issues.
    Of course, you may wonder what a major issue would be, and McCaskell cites a few items like structural damage, water damage and drywall problems. So if the house isn't falling apart, you're probably going to get a decent price relative to the area -- just not top dollar.

    Focus on the best. So your house looks shabby in some areas. Work on making the best parts of your home even better.

    McCaskell says she once sold a home with interior fire damage.

    "The only thing that remained intact was the exterior ... the entire inside was destroyed," she says.

    So what did she do?

    "We made sure the grass was cut. The outside was at its best. I wanted anyone interested in buying this home to see the possibilities. I would encourage a seller to do the same. Make the home great in the areas you can make an impact," she says.

    Be transparent. If you're giving your buyer a tour, don't deny the obvious.

    "Never attempt to pretend the horrible smell is not there. Yes, everyone can smell it. They can also see the trash piled to the sky in the backyard," says Chantay Bridges, a real estate agent in Los Angeles.

    Trying to downplay it makes you look shifty, and now you have two problems. Who wants to buy a house that smells or is trashy from a dishonest homebuyer?

    But you can turn a negative into a positive, Bridges says. "Be creative," she suggests. "Say something like, 'It's great that there's a little bit of a mess. It gives you negotiation room, and you can get a great deal because of it.'"

    Clean. OK, maybe you can't hire a professional cleaner, but you can push up your sleeves and try to clean it yourself.

    Here's a checklist of things to buy and tackle, according to Bridges:

    Buy some bleach. "Get rid of smells and odors," she advises; you can add bleach to cups and set them in each room to neutralize smells.

    Bridges also recommends going all out with your cleaning. "Shampoo the carpets," she says. "Wash the walls. Ajax. Windex. Do everything you can to present the home in the best condition possible."

    Buy some garbage bags. "Get rid of clutter, trash, excess of any kind," Bridges says. "Buyers want to imagine themselves living in the home, which is tough to do with mountains of garbage everywhere."

    Go outside. Everything you can do to make the yard look better, do. "Trim trees and landscaping yourself," Bridges says. "Spruce up the yard, mow the grass, pick up dead leaves, sweep, wash down [the house]. Straighten out the exterior. Clean up the garage."

    Check the cabinets and organize the drawers. "Wipe down cabinets, spruce up closets, fold up towels," Bridges says. And why bother? "Buyers open cabinets and look through drawers," she says.

    Remove a lot of furniture. It may improve how everything looks, according to Brad Chandler, CEO of Express Homebuyers, a real estate investment company in Springfield, Virginia.

    "I'd advise the homeowner to get rid of all the clutter, knickknacks and excess," he says. "Leave only the essential pieces of furniture in each room. Then clean and scrub everything from top to bottom. Even if the place isn't in great condition, if it's at least spotlessly clean, it will be more attractive to a buyer."

    Mike Minihan agrees. Minihan, managing broker of Terrace 24 Realty in Atlanta, says, "Dumpy houses are usually filled with dumpy furniture and decorations, so it's best to move everything out. This runs counter to advice an agent would give to most sellers, because a staged house usually shows much better than an empty house."

    Minihan says staged homes usually work better because buyers don't have much imagination, and an empty room forces buyers to work hard to imagine their furniture and belongings in the room.

    "But with the dumpy house, you are in search of a buyer with imagination, and that couch from 1981 with cigarette burns all over it is probably going impede this visionary buyer's creative process more than it will help it," he says.

    And try to be confident. Almost any house, as long as it's safe to live in, is likely to be sold.

    "The worst home I was able to sell had dogs living in the bedrooms, with mushrooms coming through the floors and odors that you could smell a mile away," Bridges says. She was still able to sell it, to investors who planned to renovate it -- and they paid for the house in cash.

     

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    Why Smart People Fall For Dumb Scams

    By Marilyn Lewis

    Researchers are coming to new conclusions as they dig into the question of what makes some people and not others fall victim to fraud and online scams.

    Victims often hate to admit they've been conned, so research is difficult. Even so, experts estimate that $40 billion to $50 billion a year is lost to consumer fraud, says a study by the Financial Fraud Research Center at Stanford University's Center on Longevity.

    The Victims Aren't Who You'd Think

    Some 30 million Americans are sucked into some type of financial fraud each year, says the American Psychological Association. Fraud comes in all shapes and sizes, from online dating-site deception, debt-collection scams, fake rental ads and worthless or nonexistent product sales to work-at-home schemes. (This Financial Fraud Research Center diagram gives a detailed breakdown.)

    Victims include older people, yes, but also younger ones. Educated and undereducated. White-collar and blue-collar. Dumb people and smart ones. The Stanford study says:

    An emerging conclusion in profiling research is that there is no generalized profile of a "typical" victim. Profiling studies that analyze victims by type of scam, however, have yielded a clearer picture of scam-specific profiles. In other words, while everyone is vulnerable, some people may be more vulnerable to particular scams than others.

    AARP's 2014 report, Caught in the Scammer's Net, lists risk factors that make adults more likely to become victims of certain types of fraud. You're likely to be targeted if you are:

    1. A white man. The typical victim of investment fraud is a man. He's middle-aged, educated, financially literate and white, and he's under financial pressure, psychologist Laura Carstensen, founding director of the Stanford Center on Longevity tells The American Psychological Association.

    This makes sense, when you think about it. People who don't ordinarily buy investments aren't likely to fall for an investment scheme, or even to be offered it. In a phone interview with Money Talks News, Marti DeLiema, postdoctoral research fellow at the Financial Fraud Research Center, said:

    Fraud victimization is really associated with exposure. The more you engage in the marketplace the more likely you are to be vulnerable. You have to be in the market for a product to get hooked.

    2. Older. Elders do get hit hard by scammers and they're more likely to lose a significant amount of money to fraud, but generally that's largely because scammers pick on them more.

    Some susceptibility does come with age-related decline. Researchers have found that older people can have a harder time spotting liars, probably because of a decline in "emotional recognition," or the ability to read others' emotions accurately, the fraud researchers at the Stanford center said. But elders' long experience in life also helps them spot fraud. On balance, they aren't more susceptible than anyone else. DeLiema says:

    We have found that older adults are disproportionately targeted, but once they are targeted they are not more likely to be victims. Most PSAs (public service announcements) are targeted at the elderly. Perhaps those messages are working, and maybe experience can outweigh cognitive decline.

    Some services are marketed as useful to helping keep elders safe from fraud.

    3. Younger. Contrary to popular wisdom, younger adults actually are more vulnerable than older people, according to research by Judy Van Wyk of the University of Rhode Island and Karen A. Mason of Washington State University in the Journal of Contemporary Criminal Justice. People 18 to 25 stood a 77 percent chance of becoming victims compared to people 65 to 75, who had a 44 percent chance, according to the study.

    Scam artists alter their tactics depending on the unique vulnerability of their targets, says DeLiema. A young woman might not fall for a 'grandparents scam' (in which con artists pose as a grandchild in trouble) but she might fall for a weight loss scheme or a juice cleanse or an anti-aging cream because she feels insecure about aging.

    4. Living in Florida. Florida is the top state for consumer fraud complaints, with about 1,000 complaints per 100,000 residents, according to a report by 24/7 Wall St. based on Federal Trade Commission data.

    Florida's dubious distinction may be because of its larger population of seniors, who are frequent targets of fraudsters. Other states with high rates of fraud include: Texas, New Jersey, Arizona, California, Maryland, Delaware, Michigan, Nevada and Georgia.

    5. Lonely The AARP's 2014 report says that 66 percent of victims say that they "often or sometimes feel isolated."

    Dating sites are prime territory for fraud, partly because online encounters blur the lines between real and Internet relationships, says another AARP article. Loneliness can make people vulnerable to believing that their prayers have been answered, even when a "dream partner" met online is too good to be true.

    The article tells how Enitan, a former scammer, worked:

    Using stolen credit card numbers, the scammer would flood dating sites with fake profiles. Victims can be found anywhere -- scammers also forage for connections on social media -- but dating services provide the most fertile territory. Profile photos are pirated from social media or other dating sites. To snare women, he'd pose as older men, financially secure and often in the military or in engineering professions. For male victims, he just needed a photo of an alluring younger woman: "Guys are easier to convince -- they're a bit desperate for beautiful girls." The common thread between them: loneliness. All his victims, Enitan says, described themselves as divorced or widowed. "The lonely heart is a vulnerable heart."

    RomanceScams.org, devoted to fighting online dating fraud, tells how to recognize a dating scam and how to proceed if you are a victim.

    6. On the Internet. To many people, telemarketers are linked to fraud, and for good reason: People who listen to telemarketers are more likely to get hooked, DeLiema says.

    However, "the Internet has consistently been the most frequently reported method of contact for fraud victimization in recent years," according to a Financial Fraud Research Center paper, Scams, Schemes and Swindles.

    7. Interested and open. Financial con artists don't get far with people who are introverted or careful. Victims are more likely to be open, agreeable and extroverted. Research by FINRA's Investor Education Foundation (FINRA is the Financial Institution Regulatory Authority) finds that:
    • Victims of affinity fraud (scams among members of close-knit groups) more often are people who are a bit neurotic and open to new experience.
    • Those hit by investment fraud often are extroverted, conscientious and open to new experience. Openness especially is linked to larger financial losses.
    An inclination to take risks is, understandably, another trait associated with fraud victims, DeLiema says.

    In other words, victims are people you'd like to know. Or maybe someone like you.

    8. In debt. Being in debt makes you vulnerable to scam artists who prey on people looking for a way out of a difficult situation. Scam artists can be hard to identify because they pose as legitimate businesses. Be particularly wary of businesses offering debt consolidation and help negotiating with creditors. Scammers also often insert themselves into the businesses of mortgage refinancing and foreclosure counseling.

    9. Desperate. People in desperate situations grasp at straws. Con artists know this and show up for immigrants who need help with their legal status, for example, or for victims of natural disasters who are willing to pay for help filing a claim, finding a home or getting home repairs. One rule of thumb: Never engage a contractor who shows up uninvited to your home.

    10. Human. Most of us are a bit vulnerable, in one way or another. Scams are so prevalent today that almost anyone can get stung. A few of the AARP survey's list of traits shared by vulnerable victims:
    • Job loss
    • Ignorance of bank procedures
    • Downloading apps
    • Clicking on pop-ups
    • Impulsiveness
    How to protect yourself. Here are five tips on staying safe:
    • Get inoculated: In "The 10 Golden Rules of Scam Prevention" Money Talks News founder Stacy Johnson outlines tip-offs to cons and scams.
    • AARP's Fraud Watch Network is a good source for people of all ages to learn about new scams and find out how to spot them and to stay safe.
    • The Fraud Watch state map links to law enforcement alerts and notices about scams in your state.
    • Report fraud to the AARP Foundation Fraud Watch Helpline: 877-908-3360.
    • Trust your gut: Back away and get time to think when you feel pressure to buy or invest, or even just simply if your radar goes off and you don't know why. Offering something "only for a limited time" is often a tip-off to a con.
    • Watch your emotions: If you see yourself getting emotionally worked up -- scared, excited or suspicious -- that's a good time to take a break. Scammers stir up emotions to reel in victims.
    What scams have you avoided or fallen prey to? Share with us in comments 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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    Consumer Price Index
    Danny Johnston/AP
    By Lucia Mutikani

    WASHINGTON -- U.S. consumer prices recorded their biggest drop in eight months in September as the cost of gasoline fell, but a steady pick-up in the prices of other goods and services suggested inflation was poised to rise.

    There was good news on the labor market, with other data Thursday showing new applications for unemployment aid fell back to a 42-year low last week. The very low level of layoffs and gradually firming underlying inflation could keep the door open to an interest rate increase from the Federal Reserve this year.

    "Today's reports strengthen our view that the U.S. economy remains on the right track and should help to bolster the Fed's confidence that it is getting ever closer to meeting both of its mandates. We expect the first rate hike in December," said Harm Bandholz, chief economist at UniCredit Research in New York.

    The Labor Department said its Consumer Price Index fell 0.2 percent last month after slipping 0.1 percent in August. In the 12 months through September, the CPI was unchanged for the first time in four months. It rose 0.2 percent in August.

    Stripping out food and energy costs, prices rose last month. The so-called core CPI gained 0.2 percent after ticking up 0.1 percent in August. In the 12 months through September, the core CPI increased 1.9 percent, the largest gain since July 2014, after advancing 1.8 percent in August.

    The Fed tracks the personal consumption expenditures price index, excluding food and energy, which is lower than the core CPI. Low inflation, which has persistently run below the U.S. central bank's 2 percent target, is a major hurdle to an interest rate hike this year.

    Stocks on Wall Street rose on the data, snapping a two-day losing streak. Prices for U.S. government debt fell, while the dollar rose against a basket of currencies.

    Divided Fed

    Top Fed officials are divided on whether to tighten monetary policy, with governors Lael Brainard and Daniel Tarullo this week urging against raising interest rates. In contrast, Fed Chair Janet Yellen and Vice Chair Stanley Fischer have recently said they support raising rates this year.

    Expectations of a lift-off in the U.S. central bank's short-term interest rate have been dealt a blow by an abrupt slowdown in job growth in the last two months and softening economic activity because of a strong dollar, lower oil prices and a weakening global economy.

    The stumble in job growth, however, is at odds with the very low levels of layoffs. In a second report, the Labor Department said initial claims for state unemployment benefits fell 7,000 to a seasonally adjusted 255,000 for the week ended Oct. 10.

    Claims were last at this level in July, which was the lowest since November 1973. Nonfarm payrolls growth in August and September averaged 139,000, the weakest two-month rise since January last year.

    The slowdown is puzzling given job openings are at record highs. Some economists say the step-down in hiring is because employers cannot find qualified workers for the open jobs.

    "Claims continue to show no sign of an uptrend, reinforcing our view that the sudden slowing in payrolls in the last two months mainly reflects volatility rather than a fundamental change in the trend," said Jim O'Sullivan, chief U.S. economist at High Frequency Economics in Valhalla, New York.

    The four-week moving average of claims, considered a better measure of labor market trends as it irons out week-to-week volatility, fell to the lowest level since December 1973.

    The inflation report showed gasoline prices fell 9 percent, the biggest drop since January, after declining 4.1 percent in August.

    Food prices increased 0.4 percent, the largest increase since May 2014, and rents increased 0.4 percent. Expensive food and accommodation could hurt consumer spending, even with cheaper gasoline.

    The cost of medical care, household furnishings and personal care products increased last month. However, apparel prices fell as did the cost of new vehicles and used cars and trucks. Airline fares also declined.

    While the inflation and jobless claims data allayed some of the concerns about the economy, manufacturing remains a weak spot. Separate reports showed factory activity in New York state and the mid-Atlantic region contracted further in October.

    "We did not anticipate manufacturing to be a driver of growth in 2015, given the strengthening in the dollar, and turmoil in emerging markets may be adding to weakness," said John Ryding, chief economist at RDQ Economics in New York.

     

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    Close-up on hands raised throwing and catching money in air
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    What would financial success look like for you? Certainly, everyone has a different definition. For me, it's not about having more money than I know what to do with. It's about making wise decisions with the money that I have.

    It's not all about pinching pennies, although, there is a place for managing expenses and keeping them to a minimum. It definitely involves entrepreneurship and generating multiple streams of income. Not so that I can be rich, but that I can give more, provide for my loved ones, and create more freedom and time to do the things that interest me the most.

    If that definition of financial success relates to you, consider these 12 things you can bet financially successful people are doing differently than the average Joe.

    1. Have an eye for entrepreneurship. Financially successful people don't just think about how to manage expenses are cut them back when times are tough. They think about ways to increase their income. They are constantly on the look out for new ideas that will allow them to leverage their skills and abilities to generate additional income.

    For them, there are two parts of a budget. Expenses and income.

    People often just focus on spending and expenses when there is a world of opportunity out there to increase the income side to not only meet expenses, but support their long-term goals and plans. You don't have to think big in this area or come up with the next product on "Shark Tank."

    Instead, think about ways you could generate an extra $500 a month. How about a $1,000? You get the idea.

    2. Assemble a team of experts. I constantly hear about how successful people surround themselves with the right people to support them in what they are doing. Personal finance is no different. Who said it had to all be personal, anyway?

    Successful people have identified where they are experts and where they aren't. Most people will find that at some point in their lifetime they need a good family or business lawyer, accountant, financial counselor (short-term decisions, budgeting, debt management, etc.) and financial adviser (long-term decisions, retirement planning, etc.) to help them along the way.

    Seek out these people now so you don't have to hunt for them later. Aside from the lawyer, the other three subject matter experts are people you'll want to meet with several times a year.

    3. Minimize taxes. Financially successful people look to minimize their tax burden in order for them to get the most out of their money and investments.

    How do they do this? As I mentioned above, they have a certified public accountant on their team so they don't miss applicable deductions when it's time to file their taxes.

    They also invest pre-tax dollars in tools such as a company 401(k) up to the employer match. They also invest after tax dollars in a Roth IRA to avoid paying taxes on their earnings in the future.

    It's always better to pay taxes on today's dollar versus tomorrow's! At the end of the day, taxes are every American's responsibility, but there is nothing wrong with taking advantage of tax benefits to the degree the law allows.

    4. Never stop educating themselves. Walk into the house of the financially successful and you'll perhaps find the latest issue of Money magazine, Entrepreneur and some financial staples, such as Dave Ramsey's "Total Money Makeover," anchoring down their book library.

    That's not to say that they spend all their time reading, rather they stay informed on the latest tips and ideas and seek to be inspired by others in the financial and business industries.

    Even the most financially successful know that there is plenty to be learned from others and life's journey always demands new strategies and ideas.

    5. Build wealth. Building wealth is a top priority in their plans and it's done with steady plodding over time, not overnight. The financially successful seek to maximize retirement investments via their 401(k)'s (up to employer matching) and Roth IRA's, but go further in creating assets that appreciate in value.

    Such assets come in the form of businesses or real estate that can eventually be sold or can generate monthly income to support them later in life, or even replace the need of working for another employer in a full-time capacity. Time is extremely valuable and the investment in assets, which may require work upfront, creates free time once it grows in value and produces passive income.

    6. Don't deprive themselves. While making wise business and financial decisions is core to their nature, they don't deprive themselves of having fun. Doing so would only create more of a tendency to spend money later in life. That's why they make the most of the journey, budgeting for family vacations, date nights and time with their family.

    While these seem like expenses on the surface, they can also be viewed as investments targeted toward their most valued relationships. They also know that it's important to celebrate accomplishments along the way so they can be recharged to accomplish their next business or financial goals.

    7. Set goals. And speaking of goals, the financially successful have them. Who needs goals? You do if you have dreams and aspirations you want to accomplish in life. Interested in replacing your day job with a small business or generate passive income while you sleep?

    Doing so requires a plan and setting SMART goals (specific, measurable, achievable, realistic and time-bound) to keep you moving. Otherwise, you'll squander time and just tell yourself you'll get to it tomorrow.

    Setting SMART goals works for their personal finance goals too. Such financial goals help with saving more money and managing spending month to month.

    8. Reinvent themselves. The financially successful know that things change with time and you can't always stick to yesterday's goals and plans. New opportunities arise all the time whether it be in business or in the tools used to manage their finances.

    The last few years have seen a big movement in Cloud technology and how people can now manage their finances online with applications such as Mint, Ready for Zero, Betterment, Credit Karma (for credit scores) and many more.

    There is information at our fingertips and the ability to access it anywhere, anytime. From a business standpoint, social media is here today, but what will it look like tomorrow and what business opportunities will the financially successful capitalize on in the future?

    9. Help others. Financial success isn't always about looking in the mirror. It's about knowing what's within and the most successful know that acquiring money can't be the top priority in life. Putting money first tears apart relationships and the race to acquire more can never be won.

    The financially successful keep money in it's proper place by giving it away. Yes, they make giving their top priority. They give to their house of worship or favorite charity, as well as look to help others.

    10. Avoid personal debt. Debt is the number one thing that robs people from time and freedom. Why? It requires time to work to generate income and make the payments. Sometimes that requires overtime work!

    Brearin Land, financial adviser and CEO of Irvine Wealth Management adds, "Being weighed down by debt puts a damper on a families ability to meet their retirement goals down the road. Don't pass the buck to yourself. Staying out of debt allows you to buy life's most important asset when you need it most -- time."

    Without debt, you have a lot more flexibility and most importantly, get back the time to invest in wealth building activities such as starting a business or in creating products and services to sell. The financially successful know that personal debt is a hindrance and they do everything they can to avoid it.

    11. You Down with OPM. While personal debt might be hindrance, the right kind of debt could give your business the edge it needs. Jude Wilson, financial strategist and founder of Wilson Group Financial, says:

    "Many financially successful clients I work with view the use of debt very strategically. Their focus is, "how can I use "other people's money" to enhance my business opportunities. This is in stark contrast to the way many see debt, as a way to satisfy more immediate desires, like that next grand vacation or a means to purchasing that dream mac-mansion."

    Financially successful people see debt as a tool to purchase or own a greater percentage of an investment -- that if successful, could result in earning far more than the interest on the loan. Of course there are those of us who use debt irresponsibly and others who view debt as something to be avoided at all costs, but the financially savvy relish the chance to leverage debt to maximize returns.

    12. They have persistence. Finally, you will never be successful unless you have persistence. This characteristic is never been more important when striving to attain financial goals, overcome obstacles and certainly, in growing a business into the black.

    The financial successful are persistent and don't give up when the little voice inside says to do so, or when naysayers try to hold them back. Persistence pays off debt, increases retirement savings one percent at a time and continues to create and market products when you don't think anyone is listening.

    There you have it. 12 things financially successful people do differently. They sound simple on the surface, but how many people in your life do you consider to be financially successful?

    Not everyone has the discipline and persistence required. Think about the people in your life you'd like to model after and consider how they live out these 12 things.

    Invite them to coffee or dinner and talk about their success, these 11 characteristics and perhaps learn more things you can add to the list.

     

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    Social Security COLA
    Brett Carlsen/APCarol Mead decorates her home for Halloween, in Montrose, Pa. Mead, 67, is retired and her husband, 70, must work at a local rock quarry to close the gap from her Social Security.
    By STEPHEN OHLEMACHER

    WASHINGTON -- Older Americans got a double dose of bad news Thursday: There will be no cost-of-living increase in Social Security benefits next year, and Medicare bills are set to soar for many.

    It's just the third time in 40 years that Social Security payments will remain flat. All three times have come since 2010.

    The annual cost-of-living adjustment, or COLA, by law is based on a government measure of inflation that was released Thursday. Low gas prices -- a boon to all Americans -- are driving down consumer prices. Currently the average price of a gallon of regular gasoline is $2.30, about 90 cents less than it was a year ago, according to AAA.

    Regardless of inflation, the lack of a COLA isn't sitting well with many seniors, especially those on a fixed income.

    "The price of food has gone up. [The] price of where you live has gone up unless you live in a government-assisted place. Where are you going to get the money to live on?" said Susan Bradshaw, who lives in a retirement community in Atlanta.

    The COLA announcement did bring some good tax-related news for high-income workers.

    Social Security is financed by a 12.4 percent tax on wages up to $118,500, with half paid by workers and the other half paid by employers. The amount of wages subject to Social Security taxes usually goes up each year. But because there is no COLA, it will remain at $118,500.

    But as far as benefits are concerned, the lack of a COLA will affect more than 70 million people, over one-fifth of the nation's population. Almost 60 million retirees, disabled workers, spouses and children get Social Security benefits. The average monthly payment is $1,224.

    It will also trigger a spike in Medicare deductibles and premiums, though dozens of advocacy groups are lobbying Congress to prevent that.

    Most Social Security recipients have their Medicare Part B premiums for outpatient care deducted directly from their Social Security payments, and the annual cost-of-living increase is usually enough to cover any rise in premiums. When that doesn't happen, a long-standing federal "hold harmless" law protects the majority of beneficiaries from having their Social Security payments reduced.

    But that leaves about 30 percent of Medicare beneficiaries on the hook for a premium increase that otherwise would be spread among all. Those who would pay the higher premiums include 2.8 million new beneficiaries, 1.6 million whose premiums aren't deducted from their Social Security payments, and 3.1 million people with higher incomes.

    social security cola inflation cost of living adjustment
    Their premiums could jump by about $54 a month, to $159. Those with higher incomes could get bigger increases.

    States also would feel a budget impact because they pay part of the Medicare premium for about 10 million low-income beneficiaries.

    Also, all Medicare beneficiaries will see their Part B annual deductible for outpatient care jump by $76, to an estimated $223. The deductible is the annual amount patients pay before Medicare kicks in.

    Senate Democrats, led by Sen. Ron Wyden of Oregon, have introduced legislation that would freeze Medicare's Part B premium and deductible for 2016, but its prospects are uncertain.

    The White House, meanwhile, has said administration officials are exploring options to mitigate the increase in Medicare costs.

    "The COLA announcement not only fails to reflect the actual health care and other expenditures of Social Security beneficiaries, but will actually contribute to a large increase in out-of-pocket health care costs for millions of Medicare enrollees," Nancy LeaMond, AARP's executive vice president, said in a letter to lawmakers.

    The COLA also affects benefits for about 4 million disabled veterans, 2.5 million federal retirees and their survivors, and more than 8 million people who get Supplemental Security Income, the disability program for the poor. Many people who get SSI also receive Social Security.

    Congress enacted automatic cost-of-living increases for Social Security beneficiaries in 1975, when inflation was high and there was a lot of pressure to regularly raise benefits. Since then, increases have averaged 4 percent a year.

    But in the past decade, the COLA has been that big only once.

    Little Inflation

    The cost-of-living adjustment is based on the Consumer Price Index for Urban Wage Earners and Clerical Workers, or CPI-W, a broad measure of consumer prices generated by the Bureau of Labor Statistics.

    It is calculated by comparing consumer prices in July, August and September each year with prices in the same three months from the previous year. If prices go up, benefits go up. If prices drop or stay flat, benefits stay the same.

    The CPI-W numbers for September were released Thursday. The numbers show that gasoline prices are down by 30 percent from last year. Airfares have fallen by 5.9 percent and clothing prices are down by 1.3 percent.

    But other prices are up. For example, medical care has risen by 2.4 percent, housing costs climbed by 3.2 percent and food prices were 1.6 percent higher.

    Advocates say the government's measure of inflation doesn't accurately reflect price increases in the goods and services that older people use.

    "The CPI-W reflects the purchasing patterns of workers, many of whom are younger and healthier than most Social Security recipients," LeaMond said in her letter.

    -Associated Press writers Ricardo Alonso-Zaldivar and Christopher S. Rugaber, and AP video journalist Johnny Clark in Atlanta contributed to this report.

     

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    Financial Markets Wall Street
    Richard Drew/AP
    By Caroline Valetkevitch

    NEW YORK -- U.S. stocks rallied Thursday after two days of losses, led by sharp gains in biotechnology shares and a rebound in financials following upbeat results from Citigroup.

    Equities added to gains late in the session, and eight of the S&P 500 sectors registered gains of more than 1 percent. More than four stocks rose for every one that fell on both the New York Stock Exchange and the Nasdaq.

    There's a lot of cash on sidelines, and we did break through to a new high since the August decline.

    The S&P 500 health care index jumped 2.2 percent despite a disappointing forecast from HCA Holdings (HCA), which fell 5 percent to $72.21. The Nasdaq biotech index jumped 4.4 percent, rallying sharply before the close.

    "There's a lot of cash on sidelines, and we did break through to a new high since the August decline," said Tim Ghriskey, chief investment officer of Solaris Group in Bedford Hills, New York. "Volume picked up as well, which is a strong indicator."

    Citigroup (C) rose 4.4 percent to $52.97 after the third-biggest U.S. bank's results beat estimates, while Goldman Sachs (GS) was up 3 percent at $184.96, despite weak results.

    The financial sector jumped 2.3 percent, recovering from losses Wednesday when JPMorgan (JPM) results disappointed.

    U.S. consumer prices fell the most in eight months as gasoline costs fell in September, but a rise in core CPI, which strips out food and energy costs, suggested inflation was starting to firm. Unemployment benefit claims fell in the last week, pointing to a strong labor market.

    The data, following a weak retail sales report, added to uncertainty over the timing of an interest rate increase by the Federal Reserve.

    The Dow Jones industrial average (^DJI) rose 217 points, or 1.3 percent, to 17,141.75, the Standard & Poor's 500 index (^GSPC) gained 29.62 points, or 1.5 percent, to 2,023.86 and the Nasdaq composite (^IXIC) added 87.25 points, or 1.8 percent, to 4,870.10.

    Winners and Losers

    Nike (NKE) rose 2.3 percent to $128.79. The world's largest sportswear maker said it expects revenue growth to be faster over the next five years.

    On the downside, Netflix (NFLX) slid 8.3 percent to $101.09. The video-streaming service said U.S. subscriber additions came in below expectations for the third quarter. The stock weighed the most on the S&P.

    The S&P 500 posted 11 new 52-week highs and 7 new lows; the Nasdaq recorded 42 new highs and 41 new lows.

    About 7.0 billion shares changed hands on U.S. exchanges, below the 7.6 billion daily average for the past 20 trading days, according to Thomson Reuters (TRI) data.

    -Abhiram Nandakumar contributed reporting from Bangalore.

    What to watch Friday:
    • The Federal Reserve reports industrial production for September at 9:15 a.m. Eastern time.
    • At 10 a.m., the University of Michigan releases its initial survey of consumer sentiment for October, and the Labor Department releases its Job Openings and Labor Turnover Survey for August.
    • The Treasury Department releases its report on international capital flows for August at 4 p.m.
    Earnings Season
    These selected companies are scheduled to release quarterly financial results:
    • General Electric (GE)
    • Honeywell International (HON)
    • Progressive (PGR)
    • SunTrust Banks (STI)
    • Synchrony Financial (SYF)

     

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    Boyfriend watching frustrated girlfriend on sofa
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    By Brian O'Connell

    NEW YORK -- Here's a conundrum: younger U.S. adults want to buy a house, but barriers keep getting in the way of them actually buying a new home.

    Data that comScore (SCOR) and Realtor.com shared shows that 64 percent of Americans 21 to 34 years of age visited real estate websites and mobile apps in August. That should be encouraging in a nationwide real estate market that is up 9 percent so far in 2015. And to some extent it is -- and it isn't.

    "People who believe that millennials are disinterested in homeownership are grossly mistaken," says Jonathan Smoke, chief economist at Realtor.com. "This generation hit the job market during one of the largest recessions of all time, and they've had to work hard to establish credit and save for a downpayment. With the older segment just beginning to enjoy the life events that drive homeownership -- marriage and children -- now is the most appropriate time for them to consider homeownership, and that's what we're seeing."

    Despite the increased role of millennials in the housing market, setbacks still exist and are preventing first timers from making even more of an impact.

    Smoke also points to some "top impediments" that "signify significant barriers of entry" for younger homebuyers, although he thinks the younger can set can overcome those challenges.

    "Despite the increased role of millennials in the housing market, setbacks still exist and are preventing first timers from making even more of an impact," he says. Among other barriers, Smoke says 37 percent of millennials can't find a home that meets their budget; 28 percent can't come up with a decent downpayment and 40 percent haven't found a home that meets their needs.

    Not helping matters are tougher mortgage rules from the U.S. Federal Housing Administration, which will factor in student loan debt when considering home mortgage applicants. With an average student loan balance of $27,000 for Americans 40-and-younger, that's a problem for many millennial homebuyers.

    One additional issue confronting younger homebuyers is their apparently strong desire to live in hip, urban areas, where homes are more costly.

    "Many first time homebuyers are having issues but there are two categories of these homebuyers," says Ian Serota, a sales representative at Toronto, California-based Right At Home Realty. "The ones who are single are finding it hard to find a place to move to that isn't too small for them in a location where they would like. Most don't have vehicles and the lack of public transit outside of the core of the city makes it impossible for them to be outside the city."

    The other category includes couples, Serota says, who are looking to start a family or who have kids. "They want to be in good areas with good schools but in most cases those homes can cost 20 to 40 percent more than the less desirable areas," Serota said. "Therefore many are moving to the east end of Toronto and are sacrificing quality of life with terrible commutes in order to get the home they want. Plus, the price of homes in the major cities keep going up, and many younger people do not wish to move to smaller towns as they are accustomed to the big city lifestyle."

    Another school of thought from real estate professionals -- millennials have long-since been taught to view the act of buying a house as an investment, and they tend to turn to family to afford that investment, leading to further debt problems on top of student loans.

    "Millennial homebuyers should be wary not to 'jump the gun' before they're ready, as homeownership can be financially taxing for first-timers of any age," says Ray Brousseau, executive vice president at Carrington Mortgage Services in South Hadley, Massachusetts. "Millennials should spend three to six months researching their options and talking to a variety of real estate agents, lenders and other homeowners. Ask these resources about how the home buying process works, and what they'd do differently their 'first time.' "

    "Additionally, millennial homebuyers should not feel be afraid to disclose personal financial information to a licensed loan officer," he adds. "This will help you gain an idea of how a lender reviews your information. Find out if you can prequalify for a specific loan amount, it can tell you more about what you can afford long term."

    Then there's the issue of wanderlust, where this generation of younger adults seems especially reluctant to lay down some strong roots with a new home purchase. "I'm a millennial who recently purchased a home, but I do see my peers being impeded in buying new home," says Scott Trench, director of operations at BiggerPockets a Denver-based wealth management blog. "For example, transience is a problem. Many of my friends and peers seem to be moving all over the country and to new cities year after year. A home purchase signals a commitment to a particular location, and that seems to be a decision that my generation is not interested in making yet."

    A lack of financial literacy might also be holding young homebuyers back, adds Trench. "Paying rent is by far the most expensive way to live in most situations," he says. "It takes at least a basic financial background to understand that paying down a mortgage, benefitting from price appreciation, and the myriad of tax advantages available to the owners of real estate make ownership far more powerful financially than renting. Many of my peers haven't even thought about those things, and thus build no home equity."

    This isn't to say that younger Americans don't want to buy a new home -- it's just that the problems they have to overcome to buy that home are formidable, and not going away anytime soon.


    Are Millennials Scared to Own Property?

     

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    happy beautiful woman shaking...
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    Millennials tend to have a dysfunctional relationship with investing. Many of us were just coming of age when the 2008 Recession hit full force, and this has resulted in a deep distrust of the stock market in many young adults. According to a 2014 study, only 46 percent of millennials have an investment account of any kind (IRA, 401(k), etc.). While a few more are saving some cash for retirement (55 percent), it seems that a combination of stock market mistrust, school loans and other debts, and a general lack of knowledge are keeping millennials from preparing for retirement in a meaningful way.

    It's not a good thing, but as a member of this generation, I know there's a lot of time to turn things around. That's what I want to talk about here. And it all starts with education. As soon as you start to understand how investment works, and how it is likely to impact your future, you'll want to to start investing. I know this from personal experience. As a member of this generation, I know what it's like to make these changes and start getting prepared for the future. But you've got to start from the beginning.

    Why Invest at All?

    Not a stupid question. I'm glad you asked. Money loses value over time. This is due to inflation. If you have $10,000 hidden under your mattress, it's not going to have the same amount of buying power in 40 years when you take it out to pay for your retirement. Inflation is the reason that $1 no longer buys a gallon of gasoline. You've got to do something with your money to make it grow faster than the inflation rate. And that requires you to take a risk.

    Risk is inherent in all forms of investment. In the 2008 Recession, and in the fallout of the recent stock market drop in China, a lot of people lost a lot of money. If you look at the stock market from the outside, it might seem like a giant random casino. But if you take a look at history, it's got some important patterns that you can start to recognize. Key Fact: The stock market rises more often than it falls. So, if you invest money in the stock market for decades, you have a very high probability of coming out with a lot more money than you started with. But, you've got to invest it the right way.

    Source: ModestMoney.com

    How Do You Invest in the Stock Market Without Losing Everything?

    This is something that's important to address. For people who don't know a lot about the stock market, it'll seem like some people win big while others lose it all, and that there's not much you can do to prevent big setbacks. While there's no risk-proof investment strategy, there are some approaches which are tried and true methods that have worked for millions of people. There are tons of ways to invest, but I'm going to outline a common "conservative" investment strategy that's great for people who have never before invested for retirement.

    When people succeed at stock market investment, it's usually because they have diversified wisely. Diversification is built upon the knowledge that investing in just one or several stocks is likely to end in disaster. There are hundreds of factors that go into the value of individual stocks, and if you don't spread out your risk, you're likely to lose everything. Think of it like a bed of nails. You wouldn't lay down on a bed made up of 10 nails. But if you make a bed of 500 or 1,000 nails, this lowers the risk factor considerably.

    That's where mutual funds come in. There are lots of different funds, but the ones I typically recommend to new investors are Index Mutual Funds. These funds are made up of lots of little bits of shares, taken from all the best performing stocks in individual markets. As individual stocks fall away, they're replaced by new, better-performing stocks. ETFs are mutual funds traded just like stocks. They're a little cheaper to trade, and they're what I'll recommend later on.

    Index mutual funds tend to mirror the patterns of the overall markets they're a part of. So if you started investing in IMFs in 1980, according to the chart above, you can see how many times over your initial investment would have grown. Of course, there are certain situations which don't work out for investors, like people who invested in 2000, then divested themselves in 2009. But generally speaking, if you keep these funds active for decades, you will see big growth.

    Plus, there are ways to insulate yourself as you get older. Say you are 24 years old, and you're setting up your first investment account. You'll have to decide how much of your investment money you want to put into stocks and bonds. Bond markets jump around a lot less than stocks, meaning there's less risk and less reward. A strategy for many investors is to change their stock/bond allocation with time, putting more of their money into bonds. Bonds won't provide much growth, but they'll still beat inflation, thus preserving buying power, and they are extremely unlikely to result in a sudden loss of your money just before retirement.

    So How Do I Do It?

    The best way to get the process going is to take advantage of tax-sheltered investment accounts. If you have a job that offers a 401(k), you'll want to be maxing that out every year, because your contributions are matched by your employer (free money). You should also create a Traditional or Roth IRA with a company such as Vanguard or Betterment (though there are many other options). You can check out the differences between those two accounts on your own time, but both are ways the government allows normal people to save for retirement without having to pay so much in taxes.

    A company like Betterment is good for people who want a good range of ETFs picked out and organized for them. Go with Vanguard if you want to do-it-yourself and save a little money. But in either case, you'll be able to easily start the process of meaningful retirement investment, and both sites will give you lots of resources to help you plan out your goals.

    What Else Should I Know?

    There's no end to what can be learned about investment. But there are some important concepts to understand before you begin.
    • Compound interest: This is one of the coolest parts of investing. As you invest, you earn interest. That interest can be added to the investment pot and earn its own interest. The longer you do this, the faster your investments grow. It's been called the most powerful force in investing.
    • 'Buy and hold': If you follow investment media, you know that analysts and reporters love to freak out over changes to the stock market. Don't listen to them. If you adopt the strategy I've laid out above, your investment is almost sure to survive the occasional drops that always happen in investing. Just remember that, historically, the market grows more than it declines. It is very likely to continue this trend during your lifetime.
    • Contributions: Of course, you're not just going to invest a lump sum and let it sit for the next 40 years. You're going to make regular contributions to combine with the interest and dividends you're earning from your initial investment. Tax sheltered investment accounts have yearly maximum contribution amounts.
    • Predicting the market: Danger! Danger! Lots of writers and thinkers have concluded that economic markets are way too complicated for any one person to comprehend. People will sometimes recommend buying and selling stocks all the time to try to take advantage of high and low points. This isn't recommended and frequently turns sound investment strategy into pure gambling.
    Anything Else?

    I could talk about beginning investment forever, but this is a good place to start. If you have questions or comments, write them down below and I'll address them in a future post. Generally speaking, retirement investment isn't rocket science. If you're a young adult, you've probably still got plenty of time to get the ball rolling with retirement investment. Start now, do a little research and you'll start to see your future look a whole lot more secure. The strategy I mapped out above is likely to work out over years and decades, so if you do nothing else, I recommend you start investing this way today.

     

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    Money down the Drain
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    By Damian Davila

    No matter how diligent you are at socking away money into your 401(k), you could still be contributing less than you think, thanks to hidden fees and plan costs. According to a study from AARP, about three in five Americans are unaware of how much they're paying in 401(k) plan fees.

    Excessive 401(k) fees can eat away your returns. Let's assume that a worker invests $5,000 every year over a 35-year period in a 401(k) plan with an annual return of 4.9 percent. She would end up with $423,000 at the end of period assuming an annual fee of 0.5 percent of the total balance, and with $345,000 at the end of the period assuming an annual fee of 1.5 percent of the total balance.

    To claim back control of your retirement account, here are five 401(k) fees to look out for.

    1. 12b-1 Fee

    Owing its name to the Securities and Exchange Commission Rule 12b-1, a 12b-1 fee is a charge from a mutual fund to cover marketing, distribution, and administration expenses.

    The original intent with this rule was to encourage mutual funds to invest in marketing so that more people would buy into the mutual fund. In theory, the more assets that a mutual fund can buy, the better the economies of scale. Unfortunately, the empirical evidence from the SEC shows that mutual funds with 12b-1 fees have higher expense ratios than those without those fees, and that the services rendered to earn the fees don't enhance the fund's performance.

    By law, 12b-1 fees can range between 0.25 and 1 percent of a fund's net assets. Given that these fees have shown no benefit to investors, you should try to choose funds that don't charge 12b-1 fees at all. If all your available investment options charge such a fee, go with the one that charges closest to the minimum 0.25 percent.

    2. Redemption Fee

    A front-end load is one of many sneaky investment fees to watch out for. Front-end load funds have such a bad rap that many investment firms have started advertising no-load fund options.

    However, there can be a catch. While no-load funds won't charge you for loading shares, those funds can charge you a fee for unloading your shares too soon. Known also as an exit fee, back-end load, or contingent deferred sales charge, a redemption fee is applied to an investor that exits a fund too soon. How soon is too soon? The minimum holding period ranges from 30 days to one year, so make sure to check your fund's prospectus.

    Here are two useful rules of thumb when evaluating redemption fees:
    • The average minimum holding period to avoid a redemption fee is 65 days, so avoid funds that require you to hold onto your fund much longer than that. While your nest egg should be a last resort fund, you shouldn't be penalized for accessing your money when in need.
    • The SEC limits redemption fees to 2 percent. However, some funds may charge as low as 0.01 percent. The lower the redemption fee, the better.
    3. Exchange Fee

    Diversification is a useful investment strategy to lower your market risk. For example, it's generally better to split your investment into three significantly different assets than to "put all your eggs in one basket." If one of your investments tanks, you still have two to fall back on.

    Before you fire up the online dashboard of your 401(k) and transfer money from one fund to another, check for applicable exchange fees within your retirement plan. Even worse, some 401(k) plans may tack on additional load and redemption fees when you exchange between funds.

    4. Individual Service Fee

    On top of your plan's administrative fee, your 401(k) may incur individual service fees related to features that you opted into. You may incur individual service fees when:
    • Taking a loan from your 401(k) account;
    • Executing participant investment directions;
    • Opting for a clause to terminate a contract with your employer before the contract's expiration date; or
    • Choosing an investment option that includes an insurance component (e.g. annuity).
    There are many other types of individual service fees. Keep in mind that some individual service fees that are paid indirectly from the investment options you have chosen may not be listed in your quarterly 401(k) statement.

    5. 'Other' Fee

    Along with those other fees, 401(k) plans can have a miscellaneous fee category for listing anything that is neither a sales charge nor an account maintenance charge.

    Some examples of other fees are:
    • Custodial expenses;
    • Legal expenses;
    • Recordkeeping expenses;
    • Furnishing statement expenses;
    • Toll-free telephone service fees;
    • Transfer agent expenses; and
    • Other administrative fees.
    Depending on the terms of your plan, another fee may be a percentage of your assets invested in the fund or a flat fee.

    The Bottom Line

    Do your due diligence before choosing funds within your 401(k) plan. To get a full picture of your investment options, you need to go beyond their average returns. The two key documents that you need in order to find out more about applicable fees are the Summary Plan Description and the Annual Report.

    Summary Plan Description

    Upon joining the 401(k) plan, you receive a copy of your summary plan description. You will receive an updated copy every five years if there are significant changes or every 10 years if there are no changes.

    Annual Report (Form 5500 Series)

    Every year you should receive a copy. If not, you can examine a free copy from the Department of Labor.

    Do you know what fees your 401(k) is charging you? Are they fair?

     

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    Clinton Global Initiative
    Mark Lennihan/APMicrosoft co-founder Bill Gates
    How American kids apply to colleges these days is all messed up.

    (But don't lose hope. Help is on the way.)

    Imagine if every time you went grocery shopping, the store refused to tell you how much anything cost -- until you reached the checkout counter. You'd load your shopping cart with bread and milk, bunches of tomatoes and boxes of Cheerios, take it all to the cashier and cross your fingers hoping the price would be reasonable. That's basically the way the college application process works today.

    Speaking Truth to Power

    Here's how College of William & Mary economics professor David Feldman describes the process:

    Start with the FAFSA application for federal student aid, which all students seeking Pell Grants must fill out. Currently, students must fill out and submit a FAFSA indicating their income and assets, then apply to colleges, and then find out how much financial aid they qualify for. It's absurd to require students to apply to colleges before they know which colleges they can afford.

    As Feldman says, that just makes no sense. Whether you're talking groceries or higher education, in any logical world, no consumer should have to decide what to buy before knowing the price of what's being sold.

    Fortunately, one company is working to bring sense back to the college application process.

    Introducing Raise.me

    The company in question, 3-year-old educational start-up Raise.me, has partnered with the Bill and Melinda Gates Foundation, Facebook (FB) and other well-heeled backers to rework the college application process. If they're successful, a student entering high school today will be able to graduate four years from now knowing precisely which colleges she can afford -- to the dollar.

    Here's how the system works. A student signing up for "Raise" picks from a list of about 80 colleges and universities that have partnered with the site. These schools have agreed to award varying amounts of "microscholarships" for achievements the student unlocks over the course of four years of high school. For example, earning an A in high school Biology might win a $1,000 scholarship for college. Perfect school-year attendance might yield an additional $600 scholarship. Make the JV basketball team? Collect another $300.

    Tally up all of these accomplishments, report them to Raise, and you're guaranteed to receive at least the value of the scholarships you've racked up, from the college of your choice.

    Caveats and Provisos

    There are, of course, a few quirks to the system. For example, according to the National Center for Education Statistics, there are more than 4,700 two- and four-year colleges operating in the United States. Raise so far has recruited only 83 of these schools as "partners."

    Already, though, the list includes such big-name schools as Georgetown, Notre Dame, James Madison University, and Oberlin College. Six other schools are "coming soon," and Raise says it is adding "one new college per week on average."

    Rules for participation vary widely. Schools participating in the program see Raise as a way to reach out to students and begin recruiting new college applicants earlier in the high school continuum, while tailoring scholarships to attract the kinds of students they most want -- but not all schools are paying big bucks for this privilege. Indeed, some schools are making just $4,000 in scholarships over four years available for each student. Others, however, are going as high as $80,000. The scholarship size for any given activity also varies from school to school. But as a general rule, Raise says the average student participating in the program earned $20,000 in scholarship commitments last year, and "most" colleges are offering scholarships worth up to half the value of four years' tuition.

    Case Studies

    How does this work in practice? Last year, one student heading to Penn State reportedly earned $9,000 in Raise scholarships, out of a maximum of $16,000 awardable. Had she earned the maximum, these scholarships would have covered nearly 23.5 percent of the school's $16,992 annual in-state tuition. In fact, her scholarship covered barely 13 percent.

    At the other end of the scale, two separate students maxed out the $80,000 in scholarships awardable through Raise partner Stetson University in Florida. Stetson charges more than twice the tuition that Penn State charges. But even so, in each case, the Raise scholarships sufficed to cover 52 percent of tuition costs for the four years.

    Raise Your Hand -- or Not?

    According to the College Board, the average student attending a four-year public college in America pays a net price just 33 percent of the college's list price -- i.e., tuition is discounted by 67 percent through grants, discounts and other non-repayable financial aid. The average four-year private college student pays much more, but still just 40 percent of list price (a 60 percent discount).

    Either way, this suggests that with Raise scholarships maxing out at about 52 percent, the new program may not add a whole lot of extra savings for your average college student -- but it doesn't hurt, either. This is because colleges partnering with Raise commit to paying a student a minimum scholarship based on the accomplishments they tick off during high school. These colleges are still free to offer more financial aid.

    More important than the absolute dollar value of a Raise scholarship, though, is its value as a planning tool. Receiving firm, irrevocable commitments for scholarships as early as freshman year of high school, a student knows for certain the absolute most he or she will be required to pay to attend any given college participating in Raise. And in direct contrast to the current system of "apply first, then ask for aid," he or she knows that net cost before sending out the first college application.

    That right there is going to save perhaps hundreds of dollars of application fees, and countless hours of time filling out paperwork. Even if this were the only benefit Raise offered, it would already be a step in the right direction. The potential for up to $80,000 in scholarship money is just icing on the high school graduation party cake.

    Motley Fool contributor Rich Smith has three kids en route to college and spends a lot of time thinking about how to pay for it. He has no financial interest in Raise.me -- or in any company, organization or school named above. He did, however, graduate from the College of William & Mary, and took a course taught by Professor Feldman, quoted up top.

    The Motley Fool owns shares of and recommends Facebook. 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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    loan modification sign with...
    ShutterstockThink of your lender as a casino that wants your money. You want to win, but odds are you're probably going to lose your shirt.
    By Geoff Williams

    If you've ever been significantly behind on a loan, you've probably been asked by a customer service representative if you'd like to apply for a loan modification. You will then hear that a loan modification will lower your monthly premiums and stop the incessant phone calls demanding that you catch up on your payments. What's not to like?

    Indeed, there can be a lot to like, but you may come to loathe a loan modification, too. While it may look like your lender is throwing you a lifesaver, it may actually be an anchor. That doesn't mean you shouldn't take a loan modification. But before you jump at the chance, consider all of the angles.

    The lender is going to come out on top. That's almost inevitable. It might be helpful, when you're thinking about a loan modification, to pretend that you're in Vegas. Think of your lender as a casino that wants your money. You want to win, but odds are, if you aren't careful, you're going to lose your shirt.

    After all, a loan modification isn't a refinance. You refinance when you want a better interest rate, and you have the good credit to get it.

    As a general rule, you tend to modify a loan when your credit is bad enough that you can't refinance the loan -- so your lender changes the terms of how you're borrowing for this current loan, so you can get back on your feet and continue paying off the loan. As Steven Hinrichs, a plumber in Willernie, Minnesota, found out, this almost always means that while your payments may become lower, the length of your loan stretches out much further.

    Loan modifications are confusing. Partially because of the abundance of legalese in the paperwork, it's easy to agree to something you don't realize you're agreeing to.

    That's what happened to Hinrichs.

    "My husband did a loan modification on our home several years ago, before we knew each other. What was interesting is that they modified the terms of the loan, however, rather than forgive $40,000, which he was led to believe was happening. That $40,000 is tacked onto the end of the loan," says Hinrichs' wife, Kristin, who owns the company Best in Learning, which provides training products and services for businesses. "They made the payments affordable, but it was a surprise when trying to refinance that the equity that he thought he had was not there."

    If you've been through a loan modification, or know something about the process, it isn't surprising that a bank would shift money owed to the back of a loan rather than forgive it entirely (see previous section; the lender is going to come out on top), but Hinrichs says he received a flurry of documents in the mail and had a short phone conversation with someone from his lender. He doesn't believe he was purposefully misled, but nobody spelled out how the modification would work, either.

    "They knew what they were going to do before they did it," says Steven Hinrichs, who modified his loan during the recession and when a loved one was sick; he was buried in medical bills.

    "They never explained if I had any options," says Hinrichs, who justifies his reluctance to ask a lot of questions by adding: "When you're losing your house, you have a tendency to look at things a little differently."

    Hinrichs concedes that he may have well taken the deal anyway, but he would have appreciated more clarity from his bank.

    One reason loan modifications are perplexing is that there isn't one approach to modifying a loan. For instance, just because you modified your student loans, for instance, doesn't mean it will work as easily for your home or car, which have their own quirks. Some federal student loans allow you to skip some payments for a few months or a year -- with no interest added. But other federal student loans don't.

    Loan modifications are a hassle. If you're drowning in debt and need that lifesaver, you may feel wasted time isn't a big deal, and that's actually a pretty good barometer for deciding whether a loan modification is worth the hassle, especially with a house. If you don't mind being continually frustrated by the loan modification paperwork, you are probably in bad enough shape that you really do need a loan modification, especially if this is a loan for your house, and you're worried about losing your home.

    A loan modification for a home can be a very long, frustrating process.

    "A loan modification for a home can be a very long, frustrating process," says Anne-Marie Bowen, a consumer debtor bankruptcy attorney in Orlando, Florida, who has a lot of experience with loan modifications. "So unless a person has a very high interest rate, is behind in payments or has other poor terms like an interest-only loan which is about to come due, then the person would not want to go through the hassle of trying to modify their home loan."

    Loan modifications attract rip-off artists. Con artists know that consumers tend to ask for loan modifications when they are struggling, and it doesn't help the situation that as soon as your home goes into foreclosure, it becomes a matter of public record. It's like advertising to shifty third-party companies and criminals that, hey, here's another vulnerable victim.

    Maribel Alvarez, 53, a divorced mother of four with three kids still depending on her, is a purchasing assistant in Lodi, New Jersey, and discovered the hard way how susceptible loan modification candidates are to scams.

    In 2012, Alvarez lost her job as an office manager and was unemployed for a little over a year. She finally landed a job in early 2014, but one that pays $30,000 less than her previous position. Not surprisingly, she fell behind on her mortgage payments.

    Alvarez approached her bank to get help. "They indicated that they couldn't help me and offered a short sale," she says.

    But in March of 2014, Alvarez received a phone call from a company that told her that her bank suggested she employ its services to work out a loan modification.

    Alvarez was relieved, and the company's website looked reputable. But if Alvarez had done more online sleuthing, she would have noticed the company had an abnormal amount of customer complaints with the Consumer Financial Protection Bureau and has been accused of hurting homeowners with illegal loan servicing and debt-collection practices.

    "Don't act out of desperation, and take your time to research the company beforehand," Alvarez now advises. She adds that knowing the laws around loan modification would have helped, too. She would have realized that collecting upfront legal fees for loan modification services, before the services are completed, is illegal.

    And then she wouldn't have mailed the company a check for $4,165.

    She never got her loan modification.

    She also never got her $4,165 back.

    Alvarez is currently working with PeopleClaim.com, a free (with some premium services) online dispute resolution service, to try to get her money returned.

    As for her house, Alvarez has caught up on her payments. "By the grace of God, I've been able to make my mortgage payments by living frugally and juggling with other bill payments. It's been really stressful to say the least," she says.

    Geoff Williams is a regular contributor to U.S. News. He is also the author of several books, including "Washed Away," about the great flood of 1913, "C.C. Pyle's Amazing Foot Race," about the infamous Bunion Derby of 1928 and "Living Well with Bad Credit." You can follow him on Twitter @geoffw.

     

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    Man in living room using laptop and holding credit card smiling
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    By Karla Bowsher

    If someone offered you a few pennies for every dollar you spent online, would you say "no" to the free money?

    That would be silly, right? But that's what you're effectively doing every time you buy something online without going through a cash-back portal.

    These websites receive a commission from merchants ranging from Amazon (AMZN) to Zales, and the websites pass some of it on to you when you purchase from partner merchants. A few dollars here and there might not sound like much, but it adds up -- especially if you use it wisely by putting it toward an interest-earning investment or toward debt, for example.

    You can also increase your return when shopping via a cash-back portal by paying with a cash-back or other type of rewards credit card. (Visit our Solutions Center for help finding a new or better rewards card.)

    To take advantage of cash-back portals' offers for free money, choose one (or more) and sign up. All of the portals listed below are free to join.

    The next time you make an online purchase, visit the portal's website first and click through to a retailer. (This step is critical to getting your cash back.) Then, make your purchase as you otherwise would.

    Once you've accrued a certain amount of cash back, which ranges from $5.01 to $25 for the sites below, you can collect your free money. Some cash-back portals automatically send it at set intervals, and others send it whenever you request it.

    All of the following websites offer the option of a check by mail and most offer other payment options.

    The following websites also partner with more than 1,000 merchants, have been around for at least several years and have an A+ rating from the nonprofit Better Business Bureau.

    BeFrugal
    • Partner merchants: More than 4,000
    • Payment frequency: Upon your request
    • Payment minimum: $25
    • Payment types: Check, PayPal, gift card
    Coupon Cactus
    • Partner merchants: About 4,000
    • Payment frequency: Four times a year (Feb. 15, May 15, Aug. 15, Nov. 15)
    • Payment minimum: $10
    • Payment types: Check, PayPal
    Ebates
    • Partner merchants: More than 1,800
    • Payment frequency: Four times a year (Feb. 15, May 15, Aug. 15, Nov. 15)
    • Payment minimum: $5.01
    • Payment types: Check, PayPal, third party (charity, organization or family member)
    Mr. Rebates
    • Partner merchants: More than 2,000
    • Payment frequency: Upon your request
    • Payment minimum: $10
    • Payment types: Check, PayPal
    ShopAtHome
    • Participating merchants: Nearly 3,000
    • Payment schedule: Monthly (see schedule for dates)
    • Payment minimum: $20
    • Payment types: Check

    What types of cash-back offers do you take advantage of? How do you spend the free money? Share your thoughts in our Forums. It's a place where you can swap questions and answers on money-related matters, life hacks and ingenious ways to save.

    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!


    Pop Quiz: Credit Cards

     

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    general electric earnings industrial financial services
    Thibault Camus/AP
    By Lewis Krauskopf

    NEW YORK -- General Electric Co. reported a better-than-expected quarterly profit Friday, helped by cost cuts and higher sales of its jet engines business that offset struggles in its oil and gas segment.

    The U.S. conglomerate, which is pulling back from financial services, also said third-quarter industrial revenue grew 4 percent, excluding the impact of foreign currency swings and acquisitions.

    The company maintained its profit forecast for its core industrials segment of $1.13 to $1.20 a share for the full year.

    Connecticut-based GE's orders dropped 26 percent, with a big decline in oil-related orders, but Edward Jones analyst Jeff Windau said GE "had some big orders last year so the comparison was pretty tough."

    GE (GE) shares, up about 10 percent since activist investor Nelson Peltz unveiled a $2.5 billion stake in the company earlier this month, rose 1.5 percent to $28.46 in morning trading. It was the biggest percentage gainer on the Dow Jones industrial average (^DJI).

    On another positive note for shareholders, GE said it expects to retire as much as 7 percent of its outstanding floated shares by mid-November, as it completes the spinoff of its former retail finance business, Synchrony Financial (SYF). The Federal Reserve earlier this week said Synchrony could function as a standalone company.

    The Synchrony split is part of GE's massive retreat from financial services, which began in earnest in April when it said it would divest some $200 billion worth of its GE Capital financing assets to focus on industrial manufacturing.

    Including the Synchrony split, GE said Friday it expects to return about $30 billion in cash to shareholders this year through GE Capital divestitures.

    For the quarter, net earnings fell 29 percent from a year earlier to $2.51 billion, or 25 cents a share.

    Excluding items, earnings of 29 cents a share exceeded the average estimate of analysts by 3 cents, according to Thomson Reuters I/B/E/S.

    Revenue slipped 1.3 percent to $31.68 billion, with revenue in its oil and gas segment dropping 16 percent amid weakness in crude prices.

    Aviation revenue increased 5 percent, while revenue in its power and water division, its biggest segment, grew 1 percent.

    GE Chief Executive Officer Jeffrey Immelt expressed confidence its $3.3 billion sale of its appliances unit to Sweden's Electrolux would close this quarter, despite a challenge from U.S. regulators.

    Profit may come in at the higher end of the 2015 industrial forecast if the appliances sale closes during this quarter, as it expects, GE said.

     

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    industrial production manufacturing gdp economy
    Carlos Osorio/AP
    By Lucia Mutikani

    WASHINGTON -- U.S. consumer sentiment rebounded strongly in early October, suggesting that the economic recovery remained on track despite headwinds from a strong dollar and weak global demand that have weighed on the industrial sector, particularly manufacturing.

    The snapback in sentiment reported Friday underscored robust domestic demand and offered hope that consumer spending would remain solid enough to support economic growth, which has slowed significantly in recent months.

    The University of Michigan said its consumer sentiment index rose to 92.1 in early October from a reading of 87.2 September. The survey's current conditions sub-index shot up to 106.7 this month from 101.2 in September.

    This suggests that U.S. household sentiment has turned an important corner...

    The index at current levels has historically been consistent with roughly a 4 percent annualized rate of consumer spending growth, according to economists.

    "This suggests that U.S. household sentiment has turned an important corner, and is a hopeful sign on the outlook for consumer spending activity going forward, given signs of weakness in other parts of the economy," said Millan Mulraine, deputy chief economist at TD Securities in New York.

    The rise in sentiment, which likely reflected cheaper gasoline prices, suggested limited impact from recent stock market volatility. Consumers were the most optimistic about their personal financial expectations since 2007.

    Their views toward purchases of long-lasting manufactured goods were equally bullish.

    Consumer spending accounts for more than two-thirds of U.S. economic activity and has been the bright spot in the economy as the industrial sector wobbles under the onslaught of slowing global growth and the resurgent dollar, which have eroded demand for U.S. manufactured goods.

    It is also being weighed down by lower energy oil prices that have undercut capital investment in the energy sector, as well as an effort by businesses to whittle down their inventories.

    U.S. stocks were trading higher Friday, while prices were U.S. Treasuries were mostly weaker. The U.S. dollar rose against a basket of currencies.

    Weak Industrial Production

    In a separate report, the Federal Reserve said industrial output slipped 0.2 percent on renewed weakness in oil and gas drilling after slipping 0.1 percent in August. Industrial production rose at an annual rate of 1.8 percent in the third quarter.

    "We do not expect the recent slowing to lead to a broader pullback in aggregate growth, as service sector activity remains solid," said Jesse Hurwitz, an economist at Barclays in New York.

    Manufacturing accounts for about 12 percent of the U.S. economy. Still, the weak industrial production report added to soft trade, retail sales and employment data that have pointed to a significant slowdown in growth after the economy expanded at a 3.9 percent annual pace in the second quarter.

    Third-quarter growth estimates are currently around a 1.5 percent rate. Slower growth and low inflation have diminished expectations of an interest rate hike from the Fed this year.

    Manufacturing output fell 0.1 percent in September even though robust demand for automobiles lifted motor vehicle and parts production by 0.2 percent. Manufacturing output dropped by 0.4 percent in August. For the third quarter, manufacturing output increased at a rate of 2.5 percent.

    There were declines in the production of computer and electronic products, as well as electronic equipment, appliances and components. Primary metals and machinery output increased.

    Mining production fell 2 percent as oil and gas well drilling tumbled 4 percent after increasing for two straight months. An almost 60 percent plunge in oil prices since June 2014 has hurt the profits of oil-field companies such as Schlumberger (SLM) and Halliburton (HAL), leading to deep cuts in their capital spending budgets.

    Utilities production increased 1.3 percent in September. With output declining, industrial capacity use fell to 77.5 percent from 77.8 percent in August.

    Officials at the Fed tend to look at capacity use as a signal of how much "slack" remains in the economy and how much room there is for growth to accelerate before it becomes inflationary.

    The lackluster industrial production picture was reflected in a swathe of manufacturers' results Friday, with General Electric (GE) and Honeywell International (HON) reporting drops in revenue along with profits that were better than forecast.

     

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