Wouldn't it be nice to have an extra $1,000 in your bank account at this time next year?
You can, with a little planning and some changes in your money habits, CNN Money says. If saving $1,000 seems impossible, break it down and think of it as socking away $84 each month for a year. It seems more doable now, right?
"There are opportunities in most people's budgets and lifestyles to find that type of savings," Dave Abate, a certified financial planner with Strategic Wealth Partners in Ohio, told CNN Money.
So quit dreaming about what you could do with an extra $1,000 and make that dream into a reality in the next 12 months by following these five simple money moves:
Slash your bills: Review your monthly bills to see what exactly you're being charged for. Kelsa Dickey, founder of financial coaching firm Fiscal Fitness, told CNN Money that many people are paying more for services, including phone, Internet, cable and utilities, than they really need. For example, if you're not using anywhere near the data cap on your smartphone plan, you might want to think of downgrading to a lesser plan. If you're only using your landline phone to call your cellphone when you misplace it, canceling your landline could save you big bucks and you probably won't even notice it's gone.
Dine in, not out: This probably comes as no surprise to you, but eating out can be a big drain on your monthly budget. Cutting back on just a few restaurant dinners a month could help you reach your $84 a month savings goals, CNN Money said.
Savvy shopping: "Taking small steps in your shopping habits like using coupons, buying generic and limiting impulse buys can add up to $84 a month, if not more," CNN Money said. Money experts recommend writing a shopping list and sticking to it when you get to the store. It can also pay off to measure the cost of an item against what you earn. For example: "If you are buying $50 shoes and make $10 an hour, ask yourself if they are worth the five hours of work," said Jean Wilczynsk, investment adviser at Exencial Wealth Advisors in Connecticut.
Cash in on employee perks: You could be leaving money on the table by not taking advantage of potential benefits and discounts you could be eligible for through your employer. For instance, some companies subsidize cellphone bills and gym memberships.
Check your insurance needs: Many Americans are overinsured. Afterall, "as your life circumstances change, so do your insurance needs," CNN Money explains. Do your homework and talk with your insurance agent about your car insurance, life insurance and health insurance. You could save yourself some significant cash.
Ah, retirement. That second honeymoon you'll spend lounging around with your main squeeze. Which is who, exactly?
While about 60 percent of men want to hang with their wives during retirement, only 43 percent of wives agree, according to a survey from Fidelity and the Stanford Center on Longevity.
Instead, 70 percent of women cite quality time with grandkids as a big motivator to retire. The survey draws on responses from those ages 55 and up -- and as workers get older, turns out the idea of spending retirement with a spouse loses more of its luster.
Could that be encouraging some employees to stick it out at the office well past 70?
Another thought-provoking survey finding is that about half of Americans plan to stop working on a specific date -- no matter how much they've saved up for retirement.
They've got big plans that involve, well, not really needing to plan anything. Almost 75 percent of respondents expressed that the No. 1 reason for retiring was to have freedom and flexibility, even to simply relax at home.
And if they do take on a side gig or two, 61 percent say it's because they enjoy doing the work and want to feel valued.
Or, just maybe, it's a welcome break from spouse overload. Right, retired wives?
Q. I'm going to rent a car when traveling for Thanksgiving. I understand that my credit card will provide rental car insurance. How does this coverage work? --E.S., Hanover, Pennsylvania.
A. Your own auto insurance policy most likely covers rental car damage and liability, up to the same limits as for your own vehicle, and that insurance kicks in first. But your credit card can fill in the gaps, such as the deductible. The coverage varies by card issuer and requires certain steps.
All Visa, Discover and American Express cards and some MasterCards, provide rental car coverage. To qualify, you must reserve the rental car with the same credit card you use to pay for it. You must also decline the rental company's supplemental insurance and collision damage waiver.
The card company may limit coverage to 15 or 31 days, and it may not cover cars rented in certain countries, according to Card Hub, which provides credit card rates and other information. Most card companies don't cover trucks, and American Express doesn't cover some full-size SUVs, such as Chevy Suburbans and Tahoes, GMC Yukons and Ford Expeditions.
SEATTLE -- Health officials expect the number of people sickened by an E. coli outbreak linked to Chipotle restaurants in Washington state and Oregon to grow while they investigate the cause of the infection.
As of Friday, three people in the Portland area and 19 people in western Washington had become sick from E. coli. Seventeen of them had eaten at a Chipotle restaurant during the past few weeks.
Eight people have been hospitalized but no deaths have been reported.
We actually would expect there might be a jump in cases on Monday.
After people started hearing about the outbreak, more people will probably go to the doctor and join the list of potential cases, said Marisa D'Angeli, medical epidemiologist with the Washington State Department of Health.
"We actually would expect there might be a jump in cases on Monday," she said.
D'Angeli encouraged anyone who has been sick with intestinal symptoms and has eaten at Chipotle since mid-October, to go see their doctor and get tested. She also said anyone with bloody diarrhea should go to the doctor whether they have eaten at Chipotle or not.
"We're very early in the investigation," D'Angeli said. It's possible their investigation will find that the E. coli came from a fresh food product delivered to Chipotle restaurants and other places.
Everyone who comes forward helps in providing extra clues that could help identify the source of the infection, she said.
The investigation started with talking to everyone diagnosed with E. coli and finding out what they ate and where. Test samples from those individuals will go to state labs in Washington and Oregon.
Then samples of food from the restaurants will be tested at a U.S. Food and Drug Administration laboratory to see if bacteria from the food matches the human cases.
Cross-Contamination
The source of the E. coli was most likely a fresh food product, D'Angeli said, because it probably could not be traced to one sick individual or one instance of cross-contamination of food since the cases are connected with so many restaurants.
D'Angeli noted that Chipotle has been cooperative and voluntarily shut down all its restaurants in the two states.
The reopening of the 43 Chipotle restaurants in Oregon and Washington will be dictated by the investigation, said company spokesman Chris Arnold. "Right now, that is the priority," he said.
The company hasn't made plans to close any other restaurants in other states as there is no evidence of a link to other restaurants, Arnold added.
Before U.S. markets opened Monday, shares of Chipotle Mexican Grill (CMG) tumbled more than 5 percent to levels not seen in about three months.
People have reported symptoms of infection in Clackamas and Washington counties in Oregon, and Clark, King, Skagit and Cowlitz counties in Washington.
There are hundreds of E. coli and similar bacteria strains in the intestines of humans. Most are harmless, but a few can cause serious problems.
Symptoms of E. coli infection include diarrhea, abdominal cramps, nausea and vomiting. Health officials say the best defense against the bacterial illness is to thoroughly wash hands with soap and water.
Paul Sakuma/APA Tesla Model S outside the Tesla factory in Fremont, Calif.
From the country's leading video game publisher putting out its latest combat title to a once-promising 3-D printing pioneer posting what should be another quarter of disappointing results, here are some of the things that will help shape the week that lies ahead on Wall Street.
Monday -- Lone Star
Texas Roadhouse (TXRH) kicks off the new trading week with its latest quarterly results. Casual steakhouses were all the rage two decades ago, but most of the players have either gone private, closed down or been acquired as part of larger operators.
Texas Roadhouse is one of the few remaining standalone players. Wall Street sees top- and bottom-line growth in the low double digits.
Tuesday -- The Electric Slide
Tesla Motors (TSLA) checks in with fresh financials Tuesday. The coolest maker of plug-in electric vehicles -- if not the coolest car maker, period -- has seen its stock start to give back some of its heady gains.
The stock has surrendered roughly a quarter of its value since peaking last summer. It didn't help that Consumer Reports -- the magazine that called its Model S the best car it ever tested -- shifted into reverse on its initial recommendation after assessing enough data to gauge the car's reliability.
Tesla should update the market on its Model X crossover SUV and its progress toward autonomous self-driving cars.
Wednesday -- Printing Pressed
3-D printing was all the rage a couple of years ago, but the once high-flying stocks have been taking a dive since last year. The printers are too expensive, slow and limited in mainstream applications. 3D Systems (DDD) is one of the key players -- and it reports Wednesday.
The stock has taken a beating. It has shed two-thirds of its value this year, and that was after losing nearly two-thirds of its value in 2014. As cheap as the stock may seem, Wall Street isn't ringing a dinner bell. JPMorgan (JPM) lowered its price target on the shares just last week.
Thursday -- There's No Free Lunch, But There Is a Free Breakfast
Yum Brands' (YUM) Taco Bell will be giving away free A.M. Crunchwraps all morning after a clever promotion. It teamed up with Major League Baseball during the first game of the World Series. If anyone would steal a base, customers would be able to "steal" a free breakfast wrap.
Stolen bases are common, so it was really just a matter of time before Lorenzo Cain would steal one. The promo will take place Thursday from 7 a.m. to 11 a.m. It should make drive-through lines longer at Taco Bell, but it's ultimately a great way to promote its breakfast offerings.
Friday -- Game On
Activision Blizzard (ATVI) has been busy cranking out video games. The country's largest video game publisher recently released "Guitar Hero Live," breathing new life into a franchise that it had seemingly left for dead five years earlier. On Friday it releases "Call of Duty: Black Ops 3," the latest installment in its best-selling franchise.
Motley Fool contributor Rick Munarriz has no position in any stocks mentioned. The Motley Fool owns shares of and recommends Activision Blizzard and Tesla Motors. The Motley Fool recommends 3D Systems and Texas Roadhouse. Try any of our Foolish newsletter services free for 30 days, and click here to check out our free report for one great stock to buy for 2015 and beyond.
NEW YORK -- Payment processing giant Visa announced plans Monday to buy its sister company, Visa Europe, in a deal that could be worth more than $23 billion and would consolidate all of Visa's operations worldwide.
The deal was long expected and, if approved by regulators, would make the world's largest payment processing company even larger. The two companies have more than 2.9 billion cards issued on its combined network, processing roughly 88 billion individual transactions a year.
"We are very excited about unifying Visa into a single global company with unmatched scale, technology and services," said Charles Scharf, Visa's chief executive officer, in a prepared statement.
Under the terms of the transaction, Visa will pay 11.5 billion euros ($12.66 billion) in cash plus stock valued at about $5.5 billion. Visa Europe investors also could earn an additional payment valued at nearly $5.2 billion if certain revenue targets are met four years after the deal is closed, which is expected in mid-2016.
Visa plans to pay for the transaction through the issuance of $15 billion to $16 billion in new debt.
Visa and Visa Europe operated under one banner for years, but had to separate when Visa started its conversion from a cooperative owned by the banks into a publicly traded company. Visa Europe became independent of Visa in 2004 but Visa always continued to have a hand in the fate of Visa Europe through an option to buy Visa Europe under certain conditions. Visa became a publicly traded company in 2008.
The deal will finally give Visa meaningful exposure to Europe, which was considered a competitive disadvantage to its rival MasterCard, which owns its European operations. But the combined company is likely to face more regulatory scrutiny as the payment processing industry becomes even further consolidated under the banners of Visa, MasterCard and, to a much lesser extent, American Express.
Visa's announcement of a deal came as the company reported its fiscal fourth quarter and full year results that mostly met Wall Street's expectations.
The company reported net income of $1.51 billion for the period ending Sept. 30, up from $1.07 billion in the same period a year ago. On a per-share basis, Visa earned 62 cents per A-class common share, versus 43 cents per A-class common share a year earlier
Global payment volume on Visa's network, a key measure of the company's business, rose 12 percent to $1.265 trillion in the quarter, when adjusted for currency fluctuations. Like MasterCard (MA), Visa takes a small percentage of each debit or credit card transaction processed on its network as a fee. Credit and debit card volume in the U.S., Visa's biggest single market, rose roughly 10 percent from a year earlier.
For the full year, Visa earned $6.33 billion compared with $5.44 billion in the same period a year earlier on $13.88 billion in operating revenue. Per share earnings were $2.58 per share versus $2.16 per share in 2014.
Visa (V) shares fell $1.67, or 2.2 percent, to $75.91 in premarket trading about an hour before the market open.
Getty ImagesLifestyle Creep. It doesn't sound like something you want in your life, but a lot of millennials have it. Unfortunately, it's not something you can buy a cream for. Lifestyle creep is a purely financial phenomenon and it's highly contagious. What's more, it typically flares up when your life is at its best.
Lifestyle creep is a simple idea. People who are used to living a frugal life by necessity often start earning more money as they progress in their careers. In other cases, they earn the same amount, but their regular expenses are reduced. In either case, there's an excess of income and many people aren't prepared for how to deal with it.
So what happens? People start splurging a little bit more. Items and experiences that used to be luxuries gradually become daily necessities. Life starts getting more exciting ... and more expensive. Traditionally, this phenomenon has been seen in older adults who are entering the prime of their career earnings, just a few years before retirement. They start living it up. But because retirement funds are supposed to be sufficient to sustain a lifestyle without other income, lifestyle creep has a way of creating a situation that's far too pricey for retirement.
These days, lifestyle creep isn't limited to oldsters. Millennials are showing all the signs. It all started back in the financial crisis of 2008, just when many millennials were coming of age. Jobs were in short supply, wages were stagnant and many young people thought they would never attain any kind of financial security. The situation hasn't changed for some, but many millennials are finally hitting their financial stride.
And they're spending a lot more in celebration. Millennials buy more clothes than other generations. They also spend more on electronics, cars, travel and other major purchases. This is often in response to newfound financial means. Maybe you can relate. Spending money is fun, but if your lifestyle is increasing faster than your savings and investments, you've got to take a closer look at what is happening.
Living beneath your means is the most important concept for fighting off lifestyle creep. Living beneath your means is all about living well, but not extravagantly. Now that you've gotten to a place in life where you have money for the first time, you've got to create a lifestyle budget that stays the same, no matter how much your income increases. Here are some specific things that you should be doing with extra money:
Max out your IRA and 401(k). If you max out these tax protected investment accounts, you'll be very rich by the time you retire. If you don't, you're leaving money on the table. These investments will have more impact on your future than just about any luxury good you can name. Have a good time, but take full advantage of these opportunities if you possibly can.
Take advantage of automatic savings opportunities. Your bank will be able to auto-draft money from your accounts in creative ways. Cloud-based budgeting solutions also typically offer this. Create ways to effortlessly skim off the top of your earnings. You'll save a lot of money this way, which can be spent on necessities, squirreled away or invested as described above.
Budget, you slackard! If you don't know where your daily income is being spent, it's likely that it's being wasted. There are endless Web resources that facilitate accurate budgeting, but I use a plain ol' spreadsheet. Look at every dollar you bring in, then track where it goes. There will be some surprises if you observe your spending for a month. Figure out what you have available for daily needs, savings and investment -- and stick to it.
Trim the fat. Once a month, take a quick glance at everything you pay regularly: insurance, entertainment, subscriptions, etc. Try to find a cheaper alternative, cancel something you no longer use or try to negotiate a better deal. This way, you'll constantly be finding ways to make your life work for less.
There are lots of other ways I use to keep lifestyle creep from creeping off with my money. Learning to cook my own food, selling my car in favor of a bicycle and buying a house whose mortgage was much lower than I used to spend on rent have all been helpful. These may work for you or they may not. The point is, you've got to be invested in the cost of your lifestyle. Keep an eye out for lifestyle creep, allocate extra money for sensible purposes, and you should be just fine.
WASHINGTON -- U.S. manufacturing activity in October hit a 2½-year low, but a rise in new orders offered hope for a sector buffeted by a strong dollar and relentless spending cuts by energy companies.
Other data released Monday showed construction spending rose in September, indicating the economy remained on firmer ground despite signs of consumer spending cooling.
Given that manufacturing accounts for only 12 percent of the economy, analysts said it was unlikely to influence the U.S. Federal Reserve's decision whether to raise interest rates this year.
We do not expect the manufacturing data will cause the Fed to push the first rate hike back into 2016.
"We are marginally encouraged by a pickup in the new orders, but export orders continue to contract. We do not expect the manufacturing data will cause the Fed to push the first rate hike back into 2016," said John Ryding, chief economist at RDQ Economics in New York.
The Institute for Supply Management said its national manufacturing index slipped to 50.1 this month, the lowest level since May 2013, from a reading of 50.2 in September. The index is barely hanging above the 50 mark, the dividing line between expansion and contraction.
Manufacturers continued to cite the dollar's strength and low oil prices as headwinds. The new orders sub-index rose to 52.9 last month from 50.1 in September, but export orders continued to contract. There were modest improvements in supplier deliveries and backlog orders.
In addition, there was a decrease in the share of customers who believed inventories were too high, and the stock of unsold goods at factories also fell. Efforts by businesses to reduce an inventory overhang have weighed on factory activity.
The employment index contracted in October for the first time in six months, hitting its lowest level since August 2009, suggesting more weakness in factory payrolls.
"Overall, we view the ISM report as consistent with our view that the manufacturing sector is moving past the worst of the slump reported early on this year, but that conditions will likely remain soft as we see continued negative effects from the stronger dollar," said Daniel Silver, an economist at JPMorgan in New York.
That upbeat assessment was evident in a separate report from data firm Markit showing a pickup in factory activity last month.
U.S. stocks rose on the data, while prices of U.S. government debt fell. The dollar slipped against a basket of currencies after two members of the European Central Bank's governing council made remarks that lowered expectations the ECB would increase its bond-purchase program next month.
Dollar Bites
Seven manufacturing industries, including furniture and fabricated metal products, reported growth in October. Nine industries, including apparel, primary metals, petroleum and coal products, electrical equipment, appliances and components, machinery and transportation equipment, reported contraction.
The dollar has gained 16.8 percent against the currencies of the United States' main trading partners since June 2014, squeezing the profits of multinational companies like Procter & Gamble (PG) and 3M (MMM).
At the same time, a plunge in oil prices has pressured revenues for oil field companies like Schlumberger (SLM) and diversified manufacturer Caterpillar (CAT).
In a separate report, the Commerce Department said construction spending advanced 0.6 percent to its highest level since March 2008, after increasing 0.7 percent in August.
Construction spending has increased every month this year.
Data last week suggested consumer spending lost momentum at the end of the third quarter, with consumption in September posting its smallest increase in eight months.
In September, construction spending was boosted by a 0.6 percent rise in private construction spending, which hit its highest level since January 2008.
Spending on private residential construction jumped 1.9 percent in September, also reaching the highest level since January 2008, reflecting gains in home building and renovations.
"These numbers bode well for residential investment in the fourth quarter," said Gregory Daco, head of U.S. macroeconomics at Oxford Economics in New York.
"We expect that gradually firming wage growth, continued employment gains, and very solid consumer confidence will strengthen housing demand and lead to stronger housing activity in the coming months."
Investment on private non-residential construction projects, however, fell 0.7 percent. Public construction outlays gained 0.7 percent, with spending on state and local government projects increasing 0.9 percent. Federal government outlays declined 1 percent.
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Plenty of stocks go up and down in any given week. The gainers inspire us to keep investing. The decliners keep greed in check while reminding us about the risks of the equity markets.
Let's go over some of last week's best and worst performers.
The biggest winner on the New York Stock Exchange was LifeLock, moving higher after announcing solid growth in its latest quarter and a welcome settlement. The identity theft monitoring service provider reached a deal with the Federal Trade Commission and representatives of a class of consumers to settle accusations relating to its past marketing practices.
LifeLock also managed to close with more revenue and a higher subscriber count than it had three months earlier. That stretches the sequential growth streak on both of those metrics to an impressive 42 quarters.
The hair salon operator and franchisor of Supercuts, MasterCuts and other retail brands didn't see its stock get snipped after posting healthy quarterly results. Regis posted better-than-expected bottom-line results, something that it hadn't done in more than a year.
Regis also delivered positive same-store sales during the quarter. That may not seem like such a big deal -- most of us need to get a hair cut -- but Regis actually posted negative comps for all of fiscal 2014 as well as fiscal 2015. It's a step in the right direction.
Another stock moving higher on encouraging financials was LendingTree. The online loan marketplace operator came through with record revenue and earnings. Most of LendingTree's growth came from its non-mortgage products, making LendingTree rely less on the cyclical whims of home loans.
The market's biggest loser last week was Macrocure, a biotech targeting wounds. It got tripped up when its lead candidate failed to meet a late-stage clinical trial. Macrocure had a lot riding on CureXcell as a treatment for diabetic foot ulcers, but the test wasn't successful.
We're not renting furniture, appliances, and other furnishings from Rent-A-Center the way we used to. The rental chain posted another decline in quarterly revenue at its namesake stores. It's faring better with its tech-centric Acceptance Now concept, but the retailer's still struggling.
Renta-A-Center also issued disappointing guidance, suggesting that things aren't going to get any better during the holiday quarter. KeyBanc went on to downgrade the stock.
Another company following the same steps as Rent-A-Center in posting disappointing quarterly results and making matters worse with weak guidance was GrubHub. The restaurant delivery specialist was a hot IPO when it went public at $26 last year, but now it's trading below its initial price tag.
The concern here is that this is becoming a cutthroat niche. A lot of big and small players are starting to spring up, and they're offering great deals to get noticed. It's taking a toll on GrubHub. We know that because operating expenses are growing a lot faster than sales. That's enough to give investors a bout of indigestion.
Richard Drew/APHewlett Packard and New York Stock Exchange officials gather to ring the opening bell Monday, the first day of trading for Hewlett Packard Enterprise following its separation from Hewlett-Packard Co.By Lewis Krauskopf
NEW YORK -- U.S. stocks added to their recent run with gains across all sectors on Monday, led by increases in the beaten-down energy group and the acquisition-driven health care industry.
The gains on the first trading day of the month followed the best monthly performance of the major indexes in four years in October. The Nasdaq 100 closed Monday at its highest level in more than 15 years.
Data on Monday showed U.S. manufacturing activity in October sank to a 2½-year low, but a rise in new orders offered encouragement. Elsewhere, factory activity in Germany beat economist estimates, and manufacturing in Central and Eastern Europe kept up a robust pace in October.
"The fact that we have got sturdy numbers from outside the U.S. accompanied by a relatively decent ... [U.S. manufacturing] report, I think that cocktail was supportive of risk assets getting a boost," said Mark Luschini, chief investment strategist at Janney Montgomery Scott in Philadelphia.
The Dow Jones industrial average (^DJI) rose 165.22 points, or 0.9 percent, to 17,828.76, the Standard & Poor's 500 index (^GSPC) gained 24.69 points, or 1.2 percent, to 2,104.05 and the Nasdaq composite (^IXIC) added 73.40 points, or 1.5 percent, to 5,127.15.
The S&P, which is up nearly 13 percent since hitting its lowest level for the year in August, broke through the 2,100 barrier, bringing it nearer to its all-time closing high of 2,130.82 in May.
"The upward trend that was put in place last week has continued to gain steam," said Michael James, managing director of equity trading at Wedbush Securities in Los Angeles. "I don't necessarily think there's a specific catalyst for it today. Risk appetite has clearly increased."
As the U.S. earnings seasons winds down, investors are looking to economic data, including this Friday's employment report, for clues as to whether the Federal Reserve will raise interest rates when it meets in December.
Movers and Shakers
The S&P energy index rose 2.4 percent. Oil majors Exxon and Chevron were two of the three biggest drivers of positive performance for the Dow after both companies posted better-than-expected results on Friday. Chevron (CVX) gained 4.5 percent to $94.96 and Exxon (XOM) finished up 3.1 percent at $85.28.
The S&P health care index increased 2 percent. Pfizer rose 3.7 percent, and AbbVie (ABBV) jumped 6.4 percent, providing the biggest boost to the sector.
Dyax (DYAX) soared 28.4 percent to $35.35 after British drugmaker Shire said it would buy the company for about $5.9 billion. The Nasdaq biotechnology index closed up 3.8 percent.
U.S.-listed shares of Valeant (VRX) rose 7.1 percent at $100.47 after short-seller Citron Research said it wouldn't be releasing new allegations against the Canadian drugmaker.
The S&P financial sector gained 1.6 percent, led by increases from the big banks. Visa (V) fell 3 percent to $75.22 after offering to buy its former subsidiary Visa Europe for as much as $23.3 billion. The stock was the biggest drag on the Dow and the S&P 500.
Hewlett-Packard started trading after its split. HP (HPQ) jumped 13 percent to $13.83, while Hewlett Packard Enterprise (HPE) slipped 1.6 percent to $14.49.
Advancing issues outnumbered declining ones on the NYSE by 2,525 to 569, for a 4.44-to-1 ratio on the upside; on the Nasdaq, 2,217 issues rose and 628 fell for a 3.53-to-1 ratio favoring advancers.
The S&P 500 posted 25 new 52-week highs and four new lows; the Nasdaq recorded 76 new highs and 44 new lows.
-With additional reporting by Sinead Carew in New York and Abhiram Nandakumar in Bangalore, India.
What to watch Tuesday:
Automakers release vehicle sales for October.
The Commerce Department releases factory orders for September at 10 a.m. Eastern time.
Earnings Season
These selected companies are scheduled to report quarterly financial results:
Getty ImagesIf you're thinking about taking out a second mortgage, here's what you should consider.By Geoff Williams
If you don't know what a second mortgage is, or only have a vague understanding, there's probably a good reason. You likely don't want to know. After all, paying for a first mortgage can be bad enough. Hearing the term "second mortgage" is enough to make anyone's eyes glaze over.
But it's a financial strategy that's helped many a homeowner. So if you've ever wondered what you need to know about a second mortgage, consider this your crash course.
What it is. It's a second mortgage on your existing home. (Yes, theoretically, if someone refers to a second mortgage, they could be talking about another mortgage on house No. 2, like a cottage at the lake. Lucky them.)
If you take out a second mortgage on your home, you're borrowing money using your house's equity as collateral.
There are two types of second mortgages: a home equity loan, which usually lasts 15 to 30 years, just like your first mortgage, and a home equity line of credit, which allows homeowners to use a line of credit based on their home's equity. But those 15- and 30-year second mortgages are becoming very rare.
You'll most likely take out a home equity line of credit, says Heather McRae, a senior loan officer at Chicago Financial Services, a mortgage lender in Chicago.
"Those two terms, 'home equity line of credit' and 'home equity loan,' are used interchangeably," she says. "Obtaining a second mortgage as a fixed-rate, closed-ended loan is difficult to find these days. What I mean by closed-ended is that it functions like an installment loan rather than a credit card."
An auto loan is a good example of a closed-end loan, McRae adds. "If you pay according to the schedule, the car is paid off within a defined period of time," she says. "Home equity loans do not function like this, per se."
"Most home equity loans have a 30-year amortization period but are interest only for the first 10 years, which means the minimum payment required is just the interest," McRae continues. "You can pay extra to pay down the balance, and you can run the balance up again just like a credit card. After 10 years go by, the existing loan balance is amortized over a 20-year period, and it turns into a closed-ended loan. No more running up the balance if you need access to cash."
Why people take on second mortgages. Well, they need money, and they need a lot of it.
"The primary advantage of a second mortgage is that it allows you access to money you may not otherwise be able to obtain," says Arvin Sahakian, a co-founder of BeSmartee.com, a search engine for mortgages.
And it's a loan with a low interest rate.
"The best thing about doing this is the interest rate," says Jennifer Fredericks, a College Station, Texas-based real estate agent for Better Homes and Gardens Real Estate Preferred Living. "It's lower than it is for credit cards, and it's lower than it is for student loans."
"If you are using the money to improve your home or pay off higher interest rate loans, it makes perfect sense to choose this type of financing and improve your overall financial picture," Sahakian says.
There are other reasons homeowners commonly take out a second mortgage -- to pay off major medical bills that insurance wouldn't cover, to pay a kid's college tuition or to start a business. Whether a second mortgage is right for any of these purposes depends on the individual's views on debt and risk, especially when it comes to doing something like starting your own business, which, of course, could work out very well or go very badly.
The dangers. Not only can a business go bust, which is bad news if you're stuck paying off a second mortgage that funded a failed company, any number of things could go wrong that could mean you aren't only struggling to pay off your first mortgage and other bills -- you're now having trouble making payments on your second mortgage.
Even with a stable, reliable income, the danger of a second mortgage is that the interest rate on these loans is usually variable, McRae says.
"Currently, interest rates on these types of loans are alluring, but they will fluctuate with market conditions. Most second mortgage rates are tied to the prime interest rate," she says. "When you hear in the news that the Fed will meet to consider a rate increase, if and when that happens, the interest rate on the second mortgage will increase."
McRae adds that the Fed meets eight times a year to decide whether to change interest rates, "which means the rate on the line of credit could change eight out of 12 months of the year."
It might seem crazy to think about after all these years of low interest rates, but what goes down does sometimes go up, even way up, and you could easily wind up with a loan that has a high interest rate.
There's another potential problem, Fredericks says. "If the market were to change dramatically, and home values were to drop, you might be negative in your house as far as equity goes," she says.
If you're thinking about getting a second mortgage. Fredericks recommends talking to a reputable loan officer and getting his or her opinion. But whatever you do, don't borrow too much, she cautions.
"In California, a few years back, they were letting individuals borrow 125 percent of their loan, but when the market got bad, a lot of homes were foreclosed on," Fredericks says. "One of the reasons that Texas had less foreclosures during this period is because people were only allowed to borrow 80 percent of their equity. So, the moral of the story here is that, even if your state allows you to borrow more than 80 percent, you wouldn't want to go higher than that because you need to have a cushion in your value."
Second mortgages can be great if you use them properly, says Greg Cook, a mortgage originator based in Temecula, California, who runs a website for new homebuyers, FirstTimeHomeBuyersNetwork.com.
"A second mortgage is new debt that has to be repaid," Cook says. "Too often a consumer will use the proceeds to take on new additional debt. For example, a down payment on a car, toy hauler or to fund a dream vacation. Now it's debt upon debt."
So don't do that. Bottom line: You take out a second mortgage if you can solve a financial problem. You don't take one out to create a new one.
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.
AlamyHaving company contributions in your 401(k) account doesn't mean you will get to keep them if you leave the job.By Emily Brandon
The fastest way to increase your retirement savings is to get 401(k) contributions from an employer. Company 401(k) contributions will grow your account balance far faster than you could on your own. But 401(k) contributions vary considerably by employer, and the match can be difficult to get for people who only stay at a company for a year or two. Here's how to tell if your employer is providing a generous 401(k) match.
What percentage is matched? The most obvious way to evaluate a 401(k) match is by the percentage of your contributions the company matches. A 401(k) match worth 50 cents for each dollar you save is a 50 percent return on your investment. A dollar-for-dollar 401(k) match effectively doubles your money. Some employers have more complicated match formulas such as dollar-for-dollar for the first 3 percent of pay and then 50 cents per dollar on the next 2 percent of pay. A few companies even set up their matches to vary by age, job tenure or other variables chosen by the company. Often the employer stops matching your contributions once you save a specific percentage of your pay in the account, such as 6 percent of your salary.
How much do you need to save to get the match? Some employers contribute to 401(k) accounts on behalf of employees without requiring them to save anything at all. Other companies require workers to save a specific amount in order to get the match. Savings requirements can make it difficult for people who can only afford to save a limited amount to take full advantage of the 401(k) match. For example, if your employer matches 50 cents of each dollar saved for retirement up to 6 percent of pay, but you can only afford to save 3 percent of your pay, you will miss out on half of the 401(k) match you could have gotten. Many new employees are automatically enrolled in 401(k) plans, typically at 3 percent of pay. Sticking with the default savings rate could cause you to miss out of part of your employer match.
Is there a match cap? Some employers set a maximum amount of money they will contribute to a 401(k) for a single employee. For example, an employer might stop providing a match once you hit $2,000 in employer matching funds in a single year.
How soon does the match start? Most 401(k) plans begin providing a 401(k) match as soon as you start saving in the plan. However, some companies have waiting periods of up to a year before they will match employee contributions to the 401(k) plan.
When do you get to keep the match? You don't get to keep company contributions to your 401(k)account until you are vested in the plan. Some employers immediately vest workers in the 401(k) plan, while others require a specific number of years of service with the company, such as two or three years, before you get to keep any of the 401(k) match if you leave the job. In this case, people who switch jobs within a year or two won't get to keep any of the 401(k) match. Other employers allow you to keep a percentage of the employer contributions based on your years of service. For example, if you become 20 percent vested in the 401(k) plan for each year of service and you leave the job after two years you will get to keep 40 percent of the company contributions to your 401(k) plan. You always get to keep your own contributions to the retirement account.
Groceries, car payments, the mortgage, clothes for the kids.
If you're like most families in America, that's just a fraction of what you need to take into consideration when mapping out your monthly budget.
And these days, unless you or your spouse is commanding a high salary, the idea of stretching one paycheck to cover an entire family can be daunting.
Still, some folks -- more than you may think -- are finding crafty ways to make it work. Here's just how many more: According to a Pew report, the ranks of stay-at-home moms are on the rise, with some 85 percent making the choice to care for their families. And being a stay-at-home dad is now almost twice as common as it was in the '80s.
To hear firsthand what it's like to make the leap to single-income status, we asked families across the U.S. to share their stories -- and their best money tips.
Courtesy: Sarah Prince'We're a Family of Five Who Live on Less Than $50,000'
Who: Sarah Prince, 29, project manager for a genetics company, Salt Lake City.
"My husband, Trevin, and I met in college, and when we got married 10 years ago, I became the primary income earner while he pursued a career as an artist.
We now have three little boys, ranging from 3 years old to 7 weeks. But even before we welcomed our first child, we felt the best thing was to have a parent at home. Plus, if we opted for day care, it would eat up Trevin's earnings.
Sometimes one of his art shows would do well, and we'd have extra income. And sometimes he wouldn't sell anything.
So we both came to the decision that he'd care for the kids and do art on the side.
Our single salary secrets: I've changed jobs and gotten a few raises, so I now earn about $47,000. Although money has been tighter than we'd like, we've managed to stick to a budget and provide for our family.
Our situation is pretty great. Trevin is incredibly close to all three of our boys -- most kids only see their father for an hour or two at night after work.
Feeding five can be a budget buster, so I buy our most expensive items -- like diapers -- at Costco. We have the executive membership, in which you get 2 percent back, and that always covers the $110 annual fee.
Our go-to supermarket sends me coupons based on our regular purchases, and I use DealsToMeals.com for alerts about which stores have the best prices that day.
When I cook I always make extra, saving the leftovers to take to work instead of buying lunch. And we only eat out for special occasions.
I also shop at thrift stores and use hand-me-downs -- I've never had to buy new clothes for my youngest son.
What I love about our life: I'm lucky to have a flexible work schedule, so I go in really early in the morning and come home at 3 P.M. That means I can still bring my kids to doctors' appointments and take care of things around the house.
Trevin and I also make sure to communicate openly about finances. Each month I put aside $100 for him (sometimes $200 if things are going great), so that we each have our own spending money.
In the future, I'd love to be able to work from home. I have a website, and I do affiliated marketing that brings in a few hundred extra bucks a month. Eventually, I hope it can become a viable source of income.
But, for now, our situation is pretty great. Trevin is incredibly close to all three of our boys -- most kids only see their father for an hour or two at night after work."
Courtesy: Daniel Ruyter'We Pad Our Income With Side Gigs'
Who: Daniel Ruyter, 40, digital marketing manager, Orlando, Florida.
"My wife, Jen, left the workforce two years ago, when our sons were 3 and 11.
Although she has a degree in communications, she'd been working at a restaurant so that we could better juggle out schedules to avoid paying for child care.
But that proved stressful for both of us. She'd wake up early with the kids, and often wouldn't get home until 2 A.M. And I had to rush back from the office so that she could leave for work.
Something needed to change.
Either we'd put our youngest in day care, or we'd see if we could swing it with one income. In 2013 I got a pay increase -- and although it didn't offset the loss of Jen's income, we made the joint decision that she'd quit.
Our single salary secrets: There was definitely an initial learning curve. We hadn't trained ourselves to adjust to one income -- and our budget took a hit. So we sat down with our financial planner and discussed where to cut back.
The dynamic in our relationship was awkward at first -- even though Jen staying home was a mutual decision, it felt a little 'Leave It to Beaver.'
One area was eating out. We were spending $200 to $400 a month on lunch, and another $200 on dinner. Now I pack my lunch, and we have a monthly $50 date night.
We also watch our frivolous spending. I was always an early adopter of gadgets, but I'm no longer the first or even second person to have the latest iPhone. I choose my purchases carefully, and think about the long-term.
For Christmas we realized we'd been shelling out upward of $1,000 on our kids -- some of which has gone unused. So this year we set a limit of $100 per child. We'll put the savings toward a family cruise.
We've also been able to save on home improvement costs, since Jen has tackled some projects during the day, like painting, landscaping and refinishing furniture.
And I've started doing consulting on the side, which has bumped my overall earnings to nearly $100,000.
I do design work or write content for a client after the kids are in bed, early in the morning, and on Saturdays. The income from 20-plus hours of weekly consulting goes toward savings and big-ticket items.
What I love about our life: The dynamic in our relationship was awkward at first -- even though Jen's staying home was a mutual decision, it felt a little 'Leave It to Beaver.'
Her role is to take care of the kids, have dinner ready and clean up afterward. My role is to provide income for the family. But, overall, we're happy with this setup.
Still, I want to work toward increased financial independence so that we can ramp up our savings and take more vacations. With that goal in mind, now that my youngest is in kindergarten, we're looking to build a home-based business for Jen helping people plan weddings on a budget.
Ideally, she'd be able to make money, while also being available to pick up our kids from school, help with homework and take them to playdates. That was my experience growing up, and we'd love for them to have that too."
'We Made a Cost-of-Living-Based Move'
Who: Sarah Gumina, 42, president of Sarah Gumina Public Relations, Conifer, Colorado.
Courtesy: Sarah Gumina
"When I got pregnant with my daughter in 2007, my husband, Joe, and I were living in Southern California.
I was climbing the ladder at a PR agency in the entertainment field, and he was working with special needs kids at a middle school.
We looked into child care options, but the cost was the same as Joe's salary. He always wanted to be a stay-at-home dad, so he jumped at the chance to do so.
Our single salary secrets: Bringing in the income for the whole household has been stressful. For example, if a client was upset, I'd get really nervous about the possibility that they'd jump ship. I never used to let that kind of thing get to me, but there was so much riding on my salary.
I think it has been a great experience -- and sets an example for our kids that women can be breadwinners and dads can change diapers.
In 2011, when I was on maternity leave after my son's birth, a major client left the agency -- and we had layoffs. I lost my job a month after I returned to work. As a family, we were in a really tight financial position.
I started doing freelance work, but it took us two years to recover to the point where we felt stable. Even now, as the owner of my own PR company, my income fluctuates.
So we learned to be very frugal. Our vacations are never farther than a two-hour drive, and we stay in condos that friends let us borrow.
We also signed our kids up for a co-op day care, where parents take turns working once a week to keep costs down.
But the biggest budget game-changer was the fact that we moved to Colorado and bought my childhood house from my parents for less than $300,000. Our mortgage is half of what we spent renting in California, and the cost of living is generally cheaper.
What I love about our life: Despite our efforts, we're still living paycheck to paycheck, and don't have a huge amount in savings. This has occasionally led me to make difficult decisions, like taking on a lackluster client for the money.
Joe always planned to go back to work eventually, and now that our youngest is in kindergarten, he just started as a special ed paraprofessional at our kids' school. His income will go to savings and health insurance.
One of the biggest challenges was dealing with some of Joe's macho guy friends, who would make backhanded jokes about him being Mr. Mom. It didn't affect our relationship, but I got tired of defending him all the time.
Still, I think it has been a great experience -- and sets a terrific example for our kids that women can be breadwinners and dads can change diapers."
Getty Images
I used to think of outlets as a repository of amazing deals on brands I love. But after researching this story and making a trip to an outlet mall, my opinion has changed.
I recently trekked to a Gap outlet store hoping for big savings on their pants. But I was surprised by what I found: jeans that looked noticeably different and of lower quality than the pairs I'd purchased from the mall back home. How could this be?
As it turns out, I wasn't mistaken. According to Consumer Reports, Gap is one of several retailers that manufacture clothing specifically for their outlets, and these items may be different and of lower quality than what is in regular stores. This isn't the only trick retailers pull at their outlet stores, either.
Outlets still offer plenty of great deals that can make the trip worthwhile, but some savings aren't always what they seem.
1. Give outlet goods a closer look. Outlets aren't just for items that didn't sell at the retail store. Some offer seconds or B-grade goods, and many stores stock items that are only made for outlets, sometimes with noticeable differences in quality from what you'd find at the mall.
According to The Dallas Morning News, Saks outlets -- Saks Off 5th -- says only 12 percent of its goods are overstock from Saks Fifth Avenue stores. The rest was made specifically for the outlet location. Gap, Brooks Brothers and Coach admit they manufacture separate lines of goods exclusively for their outlet stores. Only 20 percent of what Nordstrom Rack sells is clearance merchandise from Nordstrom stores and website, according to this report, while the rest is bought expressly for the outlet.
Outlet-only clothing and goods vary in quality, so be sure to take a close look. Does the item feel like it's lighter? Does it look low quality? Some items might say "outlet" or "factory line" right on the tag. Here's a tip from Buzzfeed: "J.Crew Factory (the outlet for J.Crew) puts two diamonds under the "r" on its labels, while the Gap Outlet label uses three dots."
It's possible the outlet version is cheaply made and won't last as long as what you'd buy from the regular store, so factor in quality as well as price. On the other hand, some differences might be insignificant, and the savings may outweigh them.
2. Compare prices beforehand. Retailers know you're looking for savings at outlet stores, and many try to make these discounts seem as deep as possible. You may see signs at the outlet store suggesting prices are 65 percent off, but those only apply to the sorts of things that haven't sold despite repeated markdowns. Consumer Reports says the average savings are closer to 38 percent. You'll often see markdowns off the manufacturer's suggested retail price, but outlet or not, customers rarely pay this suggested price.
If you want to know what you're really saving, check the retailer's website and compare prices. You may be surprised to find outlet discounts aren't as big as they claim.
3. Join online outlet clubs. Premium Outlets and Tanger, two of the largest outlet operators, with 70 and 35 malls respectively, offer exclusive promotions when you become a member of their clubs.
With Premium Outlets' free VIP Club, you'll receive online coupons and notifications of special events.
Tanger charges a one-time $10 fee to join TangerClub, but you'll get a $10 gift card in return along with exclusive member offers and savings.
4. Get the best deals off-season. Shop for your winter clothing in the summer and for summer items in winter to bring outlet prices down even further.
5. Time your shopping trip. Outlets can be very busy, so you'll do best by avoiding both congestion and picked-over shelves by shopping at off-peak times. Experts suggest stopping in on Tuesdays, Wednesdays and Thursdays and shopping early in the day. If you're not a morning person, avoid the early afternoon and wait until dinnertime.
6. Check retail stores before outlets. Try shopping the local mall during sales or with coupons, where you might find the prices to be comparable but the quality better. Don't forget to look at clearance items both in the store and online.
7. Check with outlet centers for coupons and circulars. Coupons and other discounts can make outlet shopping an even better deal. Call or go online to see if any coupons or circulars offer additional savings. Senior and military discounts might also be available.
8. Watch the return policy. Unless you don't mind driving back to the outlet mall, check the return policy before loading up on discounted goods. Many regular stores don't take returns from outlet locations.
9. Ask outlet staff. If you have questions about the quality of outlet items, don't be afraid to ask store staff. Some employees may tell you if it's made for the outlet or offer other valuable information.
10. Don't fall into the daytrip trap. Don't see anything you like? Don't be afraid to leave empty-handed.
Outlet malls are typically placed in far-away locations. Not only is this real estate cheaper, but shoppers may also look at outlet shopping as investing in a full-day trip. With the expenses of gas, time and energy, shoppers may feel they need to justify the sunk costs and end up spending more than they would otherwise.
Ignore the impulse to spend more just to make the trip feel worthwhile. Shelling out more money for unneeded stuff won't make you feel better, no matter how much you spend on gas.
OK, it's early November, and there's plenty of time left on the calendar until year-end, right?
Maybe, and maybe not -- at least when it comes to tidying up your household money matters. You'll need more time than you think to get your financial house in order by Dec. 31, and the clock is ticking. Time constraints with Thanksgiving and Christmas beckoning will surely swallow up some valuable time, as will end of the year (and quarter) workplace deadlines, leaving less time than you think to make financial decisions that could mean big bucks (and less in taxes) to the financial side of your life.
Financial consumers should take end-of-the-year financial deadlines seriously, as tax, retirement savings and other household financial decisions can spell the difference between sizable individual assets, and missed opportunities that curb the size of those assets.
No worries, though, as help is on the way. In the latest edition of Fidelity Investments Viewpoints report, the Boston-based mutual fund behemoth lists its top 10 end-of-the-year "smart financial moves," including a thorough review of your investment portfolio for asset allocation purposes (that's number one on the Fidelity list.)
Turning investment losses into tax gains, choosing a charity to maximize tax gains, using any money left in a flexible spending account and taking required distributions at age 70½ also make the list.
While the Fidelity year-end "to do" list is well worth a look, other financial experts off their best bets for a year-end household financial checklist:
Start with your budget. Your budget is the best place to start your financial goal evaluation, says Katie Ross, education and development manager at American Consumer Credit Counseling. "Paint a clear picture of your financial situation right now," she said. "This budgeting and daily expense worksheet might be a good resource for you to use. Once you know where your money is going, you can identify areas to cut back. That will also help you find more money to apply towards your debts, or add to your savings and get a good head start for the new year."
Pencil in some 'quality time' with your financial adviser. This tip comes from Taylor Schulte, founder of Define Financial in San Diego. "While you are most likely in touch with your financial planner throughout the year, December and January are good times to get a face-to-face meeting on the books, if possible," Schulte says. "Use the time together to ensure he or she is up to speed on all of your 2015 life updates and start discussing your 2016 goals. Do you need to start thinking about your child's college education? Have your insurance needs changed? Have your career ambitions changed? Do you anticipate a significant change in income or expenses?"
Have a thorough list. That's the advice from Stuart Ritter, a financial planner and vice president of T. Rowe Price Investment Services, who provided the following to-do list to MainStreet.
Check your asset allocation; rebalance if necessary.
Review beneficiary designations.
Make sure you are saving 15 percent of income.
If you are saving enough, contribute to a Roth IRA, you can contribute until April 15, but the sooner the better.
Use a donor-advised fund for charitable contributions to avoid capital gains tax.
Consider a 529 plan for your child's college education.
Gift up to $14,000 without gift tax consequences.
Be aware of capital gains distributions.
Maximize your 401(k) contributions. Margaret J. Smith, director of tax and financial planning at Canal Capital Management in Richmond, Virginia, advises topping out on your retirement plan by year-end. "Employees can defer up to $18,000 each year, $24,000 if over 50, resulting in significant tax savings this year," Smith says. "Also, if you expect 2015 to be a large income year, and 2016 may not be the same, consider accelerating deductions such as charitable contributions, your January mortgage payment/interest expense and medical expenses into 2015 to receive a larger tax benefit this year."
Time is on your side right now, with eight weeks or so left until Dec. 31 -- use the time wisely and get your financial life in order for 2016.
LOS ANGELES -- Even people decades away from retirement should pay close attention to how Congress just ended two lucrative ways of taking Social Security benefits, known jointly as the "claim now, claim more later" strategy.
One big lesson: Once claiming methods are seen as benefiting the affluent, they are labeled loopholes, and that puts them on the chopping block.
"They can go away, and they can go away fast," says Michael Kitces, a partner and director of research for Pinnacle Advisor Group in Columbia, Maryland.
Typically, Congress foists big Social Security changes on younger people and phases them in over time, such as when it voted in 1983 to increase over the course of 22 years the age for full retirement benefits to 67 from 65 for people born in 1960 and later.
This time, though, Congress killed the maneuvers quickly. They will be gone in six months since President Barack Obama signed the bill Monday, and the decision affects people close to retirement age.
The outgoing strategies consisted primarily of "file and suspend," which allowed married couples to start a spousal benefit while allowing the primary earner's benefit to continue to grow. That worked in conjunction with "restricted application," which let people collect spousal benefits for a few years and then switch to their own, maxed-out benefits at age 70.
Economist Laurence Kotlikoff, who co-wrote a best-selling book about Social Security claiming strategies, estimated that together, the two strategies could add $50,000 to many couples' payouts.
The Obama Administration criticized such tactics as "aggressive claiming strategies" that allowed high-income households to maximize their benefits, although in reality any dual-income couple could benefit, Kitces said.
How popular the strategies actually were is open to debate. Most people currently file for benefits too early to take advantage of the tactics, which require waiting until full retirement age (currently 66).
But Mary Beth Franklin, a columnist who writes about Social Security for trade publication Investment News, said she is hearing from many people who had planned to use the strategies "and many of them are very upset that they won't get the chance to execute their plan."
No Rush to Benefits
The fear that claiming strategies might go away could tempt some people to think they should "lock in" their benefits by applying as early as they can, but that is the wrong lesson, said Franklin.
People who delay taking Social Security benefits will still come out ahead, even if they won't be as far ahead as they would have hoped using the claim now, claim more later strategy. And lower-earning spouses can still file for up to half of the primary earner's benefit; they just have to wait until the primary earner files.
Putting off filing for as long as possible is still the best way to maximize Social Security checks and protect against the risk of being poor in retirement.
Another lesson to take from the budget deal: Congress can fix Social Security, but it will not be pretty. The budget deal helped Congress avoid a big hike in Medicare premiums and a 20 percent drop in benefits for disabled people. But lawmakers waited until nearly the last minute to deal with the fact that both the Medicare and Social Security Disability Insurance programs were running short of money.
Making Social Security itself solvent will require changes that are much more controversial: cutting benefits, increasing taxes, further raising retirement ages. The longer Congress dithers, the more dramatic those changes will have to be.
The moral of the story is to not rely on any particular claiming or retirement strategy to remain unchanged. But that should not prompt you to make decisions that will leave you worse off.
(The author is a Reuters columnist. The opinions expressed are her own.)
Daniel Acker/Bloomberg via Getty ImagesBy Bernie Woodall
DETROIT -- The U.S. auto industry was on its way Tuesday to reporting another month of booming sales in October, despite concerns about a slowdown in consumer spending and stagnant wages.
"October was a huge month for the industry, smashing expectations and continuing its hot streak," said Bill Fay, Toyota's U.S. general manager.
Truck and SUV sales are expected to show big gains in October as low gasoline prices and low interest rates continue to attract consumers, analysts said.
But U.S. economic data also suggests consumer spending lost momentum at the end of the third quarter, with consumption in September posting its smallest increase in eight months. Personal incomes also barely rose that month.
Analysts have said they expect October sales to be between 8 percent and 12 percent higher than last year, and many expect last month's sales to be the highest since 2001, when automakers offered zero percent financing in the aftermath of the Sept. 11 attacks.
A Reuters poll of 45 economists showed expectations of a seasonally adjusted annualized sales rate of 17.7 million vehicles for October.
Fiat Chrysler Automobiles (FCAU) said the U.S. auto industry's sales for last month will top 18 million on an annualized basis, well above the expectations of industry analysts.
Fiat Chrysler reported its 67th straight month of year-over-year gains, selling 195,545 vehicles in October, up 14.7 percent from a year earlier.
The company's sales were led by a 33 percent increase for its Jeep brand. Fiat Chrysler's car sales fell 3 percent, but its SUV and truck sales rose 20 percent.
Toyota Motor (TM) said it sold more than 200,000 vehicles in October, which would be a double-digit rise from the 180,580 vehicles sold in the same period last year. Toyota didn't give a specific sales figure, and said it would issue one later Tuesday.
Nissan Motor said its U.S. sales rose 12.5 percent to 116,047 vehicles in October, led by its Rogue small SUV, which had a 70 percent increase to nearly 25,000. The company's best-selling car, the Altima sedan, had sales of nearly 21,000, but that was down 11 percent from a year ago.
Mitsubishi Motors reported record October sales in the United States, up 19.8 percent at 7,426 vehicles from last year.
WASHINGTON -- New orders for U.S. factory goods fell for a second straight month in September as the manufacturing sector continues to struggle under the weight of a strong dollar and deep spending cuts by energy companies.
The Commerce Department said Tuesday new orders for manufactured goods declined 1 percent after a downwardly revised 2.1 percent drop in August.
Factory activity, which accounts for about 12 percent of the economy, is also being constrained by efforts by businesses to reduce an inventory overhang and tepid global demand. But the worst could be over for the sector after a report Monday showed new orders rose in October for the first time since July.
Economists polled by Reuters had forecast factory orders falling 0.9 percent in September after a previously reported 1.7 percent decline in August.
The dollar has gained 16.8 percent against the currencies of the United States' main trading partners since June 2014, which has undercut export growth and weighed on the profits of multinationals.
Orders for transportation equipment fell 3.1 percent in September, largely reflecting a drop in aircraft orders. Motor vehicle production remains a bright spot in manufacturing, with orders for automobiles and parts rising 1.5 percent in September.
The Commerce Department also said orders for non-defense capital goods excluding aircraft -- seen as a measure of business confidence and spending plans -- slipped 0.1 percent instead of the 0.3 percent drop reported last month. This also supports the view that the worst of the manufacturing slump might be over.
Shipments of these so-called core capital goods, which are used to calculate business equipment spending in the gross domestic product report, increased 0.5 percent in September as reported last month.
Inventories of factory goods fell 0.4 percent after a similar drop in August, also an encouraging sign for the sector. That left the inventories-to-shipments ratio unchanged at a still lofty 1.35.
Unfilled orders at factories fell for a second straight month.
FREEPORT, Maine -- Outdoors retailer L.L. Bean is going outside the company for the first time in its 103-year history for its new CEO, tapping the chief merchandising and marketing officer of a Chinese e-commerce business, officials said Tuesday.
L.L. Bean Chairman Shawn Gorman made the announcement to workers in a memo, telling them the L.L. Bean family and board unanimously agreed to hire Stephen Smith from Chinese online grocer Yihaodian.
"Hiring a CEO who embodies the values of Bean was a top priority for the family and the Board, and I am confident we have done just that," Gorman told workers Tuesday in the memo provided to The Associated Press.
Alan Boutot/L.L. Bean via APNew L.L. Bean CEO Stephen Smith
Smith will take over his duties in January, replacing Chris McCormick, who has served as CEO for 14 years.
McCormick, who last year announced his plans to step down, was the first person outside the Bean family to serve as president and CEO. However, he'd worked at L.L. Bean for more than a decade before being tapped to lead the company. He took over from L.L. Bean's grandson Leon Gorman, who retained the title "chairman emeritus" when he died in September.
Last year, Gorman said the retailer would look for a successor both inside and outside the company, but he said his preference was to promote someone from within L.L. Bean who's familiar with company culture and "the Bean way of doing things."
But the company was impressed by both Smith's understanding of L.L. Bean's culture as well as his background in multi-channel retailing, having worked for international supermarket owner Delhaize and Walmart International subsidiaries before going to work for Yihaodian in Shanghai. Before that, he worked for the Resort Sports Network and the Hannaford supermarket chain in Maine.
Leon Gorman met Smith before his death and gave his approval, said Shawn Gorman.
"Leon is one of the best judges of character that I know," Gorman said Tuesday. "Coming out of that meeting with Steve, Leon's words were, 'Steve's the real deal.' That carries immensely. It's high praise for someone who is somewhat reluctant with high praise. Leon is a tough guy. So to hear that it's reassuring."
Smith said he believes in the company's customer-first philosophy and brings to the job a requisite love of the outdoors, having grown up fishing, skiing, snowboarding, canoeing and kayaking.
"Trust me, I feel the responsibility of being a great brand steward. I want to continue the legacy. You can't underestimate it. You have to understand that's what you're signing up for," he said.
Smith joins L.L. Bean as the company prepares for the largest number of store openings in its history.
McCormick previously announced plans to triple the number of stores to at least 100 by 2020. The push will include L.L. Bean's first West Coast presence with the opening of stores in the Pacific Northwest.
The Maine-based company was founded in 1912, when Leon Leonwood Bean sold his original Maine Hunting Shoe. The company had $1.6 billion in sales last year and has more than 5,000 workers.
We often use petroleum jelly to relieve cracked skin or chapped lips, but the product has several other handy uses. Here are some unexpected ways you can use petroleum jelly that will help you save big.
First, if you color your hair you can use a little jelly to help keep your skin stain-free. Simply smooth a layer along your hairline before applying the dye and you'll avoid hard-to-remove splatters on your skin.
Petroleum Jelly can also breathe new life into your old shoes. To make your patent-leather footwear shine like new again, simply buff them with petroleum jelly. You can also use this trick to soften other dried leather items: like a baseball glove, or a leather jacket.
Lastly, a little petroleum jelly can go a long way to help around the house. If your key isn't sliding into that rusty lock, spread a very thin layer over the key to get it to slip right in.
Also, to keep ants away from your pet food dishes, spread a thin layer around the outer sides your pup's bowl. Ants won't cross the jelly and your pet can eat or drink in peace.
Give these tips a try, and you'll see that if you use it in unexpected ways, petroleum jelly can lead to big savings.
We often use petroleum jelly to relieve cracked skin or chapped lips, but the product has several other handy uses. Here are some unexpected ways you can use petroleum jelly that will help you save big.
