How to save money on airline fees

• Consumer•Frugality•Travel
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The summer travel season is almost upon us. In the past, finding good airfare deals used to take the most time, while booking the tickets only took a couple of minutes. Now, it goes like this:

  • You spend hours trying to find a good airfare deal and get excited when you find an awesome deal!
  • When you go to the site to book the ticket, you spend another half hour going through screen after screen of disclaimers and add-ons. (Five dollars for a soda, ten dollars for the option to choose a seat, twenty dollars for an aisle seat. If you want to take more than a pair of underwear, tack on extra fees for a carry-on bag.) Fee after fee gets piled onto your “great” ticket price.
  • At the end of the last screen, your great deal is no longer reasonable. You become so frustrated that you start over, or you simply give up and just want to be done with it but you don’t realize you just agreed to add priority boarding. So to top it off, you have to go through the whole ordeal again!

Travelers are getting smarter. Airlines are getting less money in baggage fees than they did two years ago. U.S. airlines collected $3.35 billion from bag fees in 2013, down 4 percent from 2012. It is the biggest decline since 2008 when charging for checking in a bag became mainstream. These days, travelers use an airline credit card or elite frequent flyer status to work around checked baggage fees; however, airlines are not taking this lying down. They make up for the loss by assessing other fees. For example, they collected $2.81 billion in fees for changing a reservation, a 10 percent increase over 2012. The list of items requiring added fees seems to grow by the day. Here are some examples I found:

  1. Check-in baggage fees
  2. Carry-on baggage fees
  3. Phone or in-person reservation fees
  4. Seat-assignment fees
  5. Priority-boarding fees
  6. More-leg-room fees
  7. Priority security line
  8. Priority check-in
  9. Re-banking frequent flyer miles
  10. Change of reservation fees
  11. Blanket/pillow
  12. Food/beverages
  13. Using frequent flyer miles
  14. Flying standby
  15. Charge for airport agent printing boarding passes
  16. Charge for printing boarding passes at kiosk
  17. Award booking fees
  18. Credit card “convenience” fee. (Allegiant Air adds a $14 surcharge to tickets booked through its website, but waives the fee if you buy them in person at one of its ticket offices.)
  19. Using the lavatory or the oxygen mask. (No, this one is a myth — at least for now!)

While airlines need to make money, as a savvy consumer, you should be aware of all the possible fees. Before booking a ticket, remember to add them to any fare you see.

How can you avoid these fees, save money and still have a comfortable flight?

There are different means through which a smart traveler can save money. It does take planning and effort. I follow the guidelines below:

  • Decide what your priorities are — Do you want the lowest fare or a very comfortable flight without spending any time planning for it? If it is the latter, either book your ticket with an airline that has everything included in the price (my favorite is Southwest with Business Select or with Early Bird check-in) or select all the options you want when you book the flight. This way you will know what your final price is going to be. If you want to save money and don’t mind spending some time preparing, read on.
  • Pack smarter to save money — To avoid the check-in baggage fee, people try to squeeze more into their cabin baggage and “personal item.” You don’t have to lug around all the heavy baggage. Shipping to your destination ahead of time might be more economical than checking your luggage, depending, of course, on the distance and weight. If you are shopping specifically for the trip, see if you can directly ship the item to your destination. A lot of hotels will hold the package for your arrival. If you really want to take all the items with you, you can try some smart packing tips — roll instead of fold, pack two to three shirts for each pant and pack smaller items inside larger items like shoes. If you want more packing tips, look at – Real Simple packing tips.
  • Get on board early without paying for it — Having an airline credit card still gets you ahead of the general boarding queue, so does being loyal to the same airline. If neither of those options are right for you and your main priority is to get on board early, try grabbing a seat that will put you in the desired boarding group. Each airline has their own boarding style: United Airlines boards window seats first, then middle and finally aisle; US Airways boards people who checked in online before boarding passengers who checked in at the airport; American boards from rear to front, and so do many others. It pays to know how the airline you are traveling on boards, which allows you, during the seat selection process, to pick one that suits your purpose. Here is a good guide on airline boarding: SeatGuru boarding procedure.
  • Choose the right credit card — Reward credit cards come in three flavors — cash-back cards, co-branded cards (miles or points specific to a hotel or airline) or hybrid cards, which allow transferable points or miles or points redeemable for cash. If you are going to travel on a single airline most of the time, it might be better to get the co-branded airline card as it most likely comes with a lot of perks such as elite status, free checked bags and priority boarding. If you are not loyal to one airline but still want to get free tickets, go for one of the hybrid cards.
  • Rack up points to upgrade — Most airlines will only allow miles flown to count for elite status versus miles accumulated via purchases or doing surveys. That doesn’t mean you should ignore other ways to rack up the miles. Sign up for their credit card when you see a good bonus offer, take their surveys, use the credit card for as many purchases as possible and shop online via the airline’s website. Use these miles to upgrade to business class, which will automatically give early boarding, higher carry-on luggage limits and many other perks.

How do you plan to keep fees in check for your summer travel? What are your tips and tricks?

Managing Your Finances During a Breakup

• Family & Life
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This post comes from Jen Smialek at our partner site Quizzle.com.

We’ve all been there before: You’ve just broken up with your significant other, and you are heartbroken. Regardless of who did the breaking, it’s never easy to muddle through the next weeks/months of confusion and emotion.

When heartbreak strikes, it can be an equally tough time to manage your finances. If you’re currently working through a breakup of your own, here are a few tips to ensure your financial house stays in-tact:

Give Yourself a Break

First of all, realize that you’re going through a tough time and allow yourself to fully process the emotions you’re feeling. Bottling things up will do you no good (and might just make things worse), so take care to afford yourself some grieving time.

During this time, it’s OK to not track your spending for a few days or to splurge on (small!) luxuries such as a few extra meals out with friends or some new running shoes (physical activity is a surefire way to ease the anguish). It’s even OK to table your financial goals in lieu of some self-care and downtime.

Maintain Your Boundaries

While it’s OK to splurge a bit and loosen the purse strings a tad, a breakup is not a free pass to spend how you wish. It’s not OK to blow through your savings, book expensive travel that you can’t afford, disregard your budget for so long that it simply ceases to exist, or to dig yourself into debt.

Yes, breaking up is hard to do. But remember that this too shall pass and you are worth more than material objects and superficial happiness. While you will be able to work through the breakup, you might take years to recover from the debt you racked up if you allow yourself to lose financial control.

Set Small Goals and Celebrate Your Success

To find the balance between relaxing and maintain your goals, consider breaking any large or daunting goals into smaller, more manageable pieces. If that savings goal you set at the beginning of the year seems to be an insurmountable mountain right now, break it down to a smaller sum that you can sock away weekly.

No matter how small the goal is, you will find confidence and motivation in being able to cross it off your list. Celebrate each and every accomplishment and before you know it, you’ll be back on your feet in no time.

More stories from Quizzle:

Fitting self-care into your budget

Could it be better to pay off debt slowly?

How much debt is too much debt in your twenties?

Why cutting the cord might not work

• Consumer•Family & Life•Frugality
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Time was when you had a home phone and you watched TV with a rabbit-ear antenna. Life was cheap then. Well, almost: I remember paying $3.95 a minute to make a phone call from Orange County to New York. Life may have been cheaper then, but not easier: When you and your significant other got separated in a grocery store, you had to find each other the old-fashioned way.

Then cable television and cell phones were invented. Both were expensive at first, making them the status symbols of the era. Remember how cool that squiggly little antenna was on a car’s rear window? Going to the car wash, you had to unscrew it, and the haves kept them visible on their laps while they waited for their cars. (“Yeah, Sparky, eat your heart out, I have one and you don’t!”)

Gradually, prices came down and it became unthinkable not to have both cable TV and a cell phone. Then old-fashioned capitalism set in: The administration which ordered Standard Oil and AT&T to break up (so we could pay less) was replaced with one allowing those big companies to merge back together again, so we could pay more. How were they going to get re-elected if those big companies couldn’t afford their mega-million-dollar lobbyists and campaign contributions?

Now you have two bloating bills each month (cable and cell) and the smaller bill for your plain,  old telephone system line (or POTS line, to use some serious technical jargon).

The recently announced merger between Time Warner Cable and Comcast is the inevitable next step, guaranteed to increase the cost of your communications and entertainment even further. With two recent Supreme Court decisions blessing unlimited corporate campaign contributions, Big Money corporations need more money to pay those increasingly expensive lobbyists to keep politicians happy … and re-elected.

Bad? Its about to get worse.

The head of the Federal Communications Commission (FCC) recently announced planned modifications to “Internet neutrality” which will increase your Internet access cost in one way or another. Net neutrality comes from the legacy POTS system. When you place a call, it doesn’t distinguish who the caller and recipients are. You’re treated the same way as Bill Gates or the homeless person calling from a pay phone. That’s because POTS is considered a common carrier, with strict rules requiring equal access for all.

The Internet is not considered a common carrier, but its providers have been required to abide by net neutrality rules. However, that offers Big Money corporations and their lobbyists no benefit.

They put their heads together (as in Hamilton, Jackson, Washington and Franklin) and set out to fix that. Tom Wheeler is the only person in the world who’s a member of both the wireless and cable industries’ halls of fame for his effective and lucrative lobbying efforts for both industries. Why not get him to head up the FCC? President Obama agreed in November last year.

It took Mr. Wheeler less than three months to serve notice that net neutrality is about to go the way of those squiggly car phone antennas: Big Money Internet providers are about to get some good payback for all those lobbying dollars.

And we all know who pays for that.

WHAT DO YOU DO?

Some have responded to the growing cost of information,  communication and entertainment (or “incomen”) by cutting the cord: cutting out cable or satellite television because you can get your entertainment on the Internet.

But … from whom do you get your Internet? For most, it’s the very cable company you want to cut out. They know what you’re doing, so they’re simply changing their plans in a way that your savings from cutting the cord amount to not much more than $10 to $20 a month. Add your payments to Netflix and Hulu, and you’re back where you started, only with fewer channels.

Your best answer comes from looking at the entire bundle of “incomen” you buy and how you pay for it.

Landline

It’s the cheapest of your three channels. Incoming calls are free (imagine that) and there are numerous long-distance plans outside of your carrier to make your landline by far the cheapest means of communication. Yet, many are advocating ditching it.

Instead, look for ways to move as much of your communication to this channel. By making a few small changes in how and when you call, you can cut your cell minutes and go to a lower pricing tier.

Cell phones

Most plans have two components: paying for the phone and paying for the service. The major carriers (AT&T, Verizon, etc.) have gotten everyone used to paying for the phone as part of the monthly bill. A $600 iPhone (that’s right, it costs more than a cheap laptop nowadays) “disappears” as $25 per month in your cell phone bill, so you think the phone is free.

It isn’t. Subconsciously you know it, which is why you want to upgrade your phone every two years. Why pay for something and not get it?

Wrong question. Better question: Why pay for it at all? In the early days, phone technology advanced rapidly, and by replacing your phone every two years, the technology jump you made was noticeable.

No longer. The iPhone 4 will be four years old next month and it, like most smart (and dumb) phones of that generation, still work perfectly fine. The difference between old and new is getting smaller with each generation. So there’s no need to replace your (expensive) phone every two years anymore.

In the past quarter, T-Mobile gained more subscribers than all carriers combined, by allowing you to buy your phone (unlocked) and only pay for the usage. Keeping your phone longer will reduce your cell phone bill.

It’s the same as buying a car as opposed to leasing one.

Service

Most plans are tiered, i.e. the more minutes you use, the more you pay. By switching more talking to home phones, you can move to a lower pricing tier. If you want to save more, switch to a prepaid plan, where you never waste any minutes.

Data

Are you paying for data on both your home and cell phone bills? I cut my cell data allowance way down by only using it for GPS purposes and the odd emergency. I wait till I get to the office, home or one of the growing number of free WiFi spots.

As for home Internet usage, expect tiered home Internet pricing to become the norm during the Wheeler term as FCC chief. Until then, it makes sense to concentrate your data usage toward the home.

Entertainment

If you’re a sports nut like me, the cable industry (which includes the big satellite providers) have us where they want us. In that case, your biggest potential for savings lies in rethinking your Internet and voice access.

If you’re not that addicted to television, you’re a prime candidate to make cutting the cord stick, but only if your Internet access doesn’t come through the cable.

In summary

Big companies and the government are working to push your cost of access to voice, data and entertainment content ever higher. Rather than just cutting one source, your best bet is to look at the overall picture and and figure out how best to get what you want.

Retirement saving: Size isn’t the only consideration

• Economy•Retirement•Saving & Investing
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I recently read one of those articles debating whether a million dollars was enough to retire on these days. Mostly, the focus of the article was on the fact that a million dollars isn’t as significant as it used to be due to the impact of inflation. That’s a good point, but it also got me thinking that the size of your nest egg is just one side of the retirement equation.

First, to quickly illustrate the inflation issue, consumer prices have roughly doubled over the past 26 years. That means that a million dollars is worth about what $500, 000 was in 1988. To think of this on a forward-looking basis, suppose that inflation continues at a similar rate, which has been pretty moderate compared to longer-term history. If you are around 40 years old today and think you could live on a million in today’s dollars, then you had better count on saving two million because that will have the equivalent purchasing power by the time you reach retirement.

The deceptive thing about the size of a retirement nest egg is that the numbers always sound more lavish than they actually are. Between the erosive effects of inflation and the number of years over which savings have to last, it takes a bigger nest egg than most people intuitively expect to fund a comfortable retirement. But again, as challenging as that is, the size of the nest egg is only one side of the equation.

The other side is the question of how much that nest egg will have to buy, and there are several variables that go into this side of the retirement equation:

  1. Your mortgage. Your home may be your biggest single asset, but it may be offset by a liability in the form of a mortgage. While some people steadily pay down that liability so it will be gone by the time they retire, others continually renew the liability by borrowing against home equity. This makes a big difference in how big a nest egg you will need. If your mortgage is paid off, you will have much lower monthly costs and an asset you can sell at some point. If you still owe on your mortgage, it will probably continue to be your largest monthly expense.
  2. Other debt. It’s important to think of your nest egg on a net basis, where its value is offset by whatever you owe. So, if you have accumulated a significant amount of debt, your nest egg may be smaller than it appears. If it’s credit-card debt, that’s even worse than offsetting because you are probably paying more in credit-card interest than you are earning on your retirement savings.
  3. Where you live. Cost of living varies widely from one part of the country to another, so if you plan to live somewhere expensive, think of this as a form of “instant inflation” that will immediately reduce the purchasing power of your nest egg.
  4. Lifestyle. What kind of retirement do you envision? Is it a quiet one of reading good books and working in the garden? In that case, a million dollars could still go a long way. On the other hand, if you plan to travel extensively and live it up, you could burn through that million long before you die. Retirement planning should include some rudimentary budgeting based on the lifestyle you plan to lead so you know how far your money has to stretch.
  5. Social Security projections. Unless you are one of the ever-shrinking number of employees who still has a defined benefit pension, Social Security may be the only regular income stream you have in retirement. The size of that income stream goes a long way to determining how quickly you will spend down your nest egg. You can get a projection of what your benefits will be from the Social Security Administration, based on how long you worked and how much you earned. Getting these projections for yourself and your spouse will help you know how much of your remaining budget your nest egg will have to cover.
  6. Work prospects. More and more people are augmenting their nest eggs by continuing to work in retirement, but whether or not this is a viable option depends on your health and the marketability of your job skills.

The point is, there is no universal answer to a question like “is a million dollars enough to retire on?” A million dollars may be plenty for some people, and not close to enough for others. It’s not all a question of how rich you want to be, but also of how well you’ve contained the liabilities that are going to offset that million dollars. So, if you want to make sure your retirement savings are sufficient, don’t just go by general benchmarks. You need to do some detailed planning to determine how big a nest egg will meet your specific needs.

The Picasso Effect: A Secret to Career Success?

• Working
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This post comes from Anna Williams at our partner site LearnVest.com.

The secret to climbing the career ladder just might be knitting, taking a ceramics class or refurbishing old cars.

That’s right: According to new research from San Francisco State University, embracing your creative after-work hobbies—even if it’s just trying your hand at a new dessert recipe—could be a major boost to your day job.

The report, which surveyed 350 employees with a mix of hobbies, careers and personalities,  found that those who engaged in a creative outlet after hours were more likely to be better problem-solvers during the day. In fact, study participants who actively took part in creative activities scored as much as 30% higher on performance rankings than those who rarely worked out their right brains.

And in good news for workaholics, the researchers found that you don’t have to totally shut off your work mode to reap the value of a creative jaunt. Read: You can skim work e-mails or brainstorm a new work proposal in between painting that still life in your evening art class.

So just why is flaunting your inner Picasso a smart career move? “Creative activities really can provide you the opportunity to learn something new about yourself, ” study co-author Kevin Eschleman, an assistant professor of psychology at San Francisco State University, told NPR. And of course, it’s also a much-needed retreat from your 9-to-5 stress. “You’re using that time to recharge, ” he added.

More stories from LearnVest:

Friends With (Business) Benefits: 4 Small-Biz Success Stories

Be Career Fearless: 7 Tips From Intrepid Entrepreneurs

7 Things to Consider Before Starting Your Own Business

Wills that leave values, not valuables

• Family & Life•Planning
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You’re accustomed to seeing personal-finance articles on this site, and a quick scan of the archives will reveal every imaginable personal-finance subject.

You’ll find blogs about the best zero-percent-APR credit cards and how to track down the best high-yield savings accounts. You’ll spot posts on financial plans and funding home purchases and college educations. And you’ll see deep dives into estate-planning tools like powers of attorney, living trusts and wills.

But this week, it’s high time FiveCentNickel looked at a different kind of will, one that allows you to pass to your heirs values rather than valuables. I’m talking about a document called the ethical will, sometimes referred to as a legacy letter.

Clearly stating who will receive your financial and personal assets after your death is critical. But as has been said too many times to enumerate, the most lasting things in life often have little or nothing to do with money.

If you’ve prepared well to bequeath your assets to those who will follow, bravo. But take time to pass along something likely to be even more cherished.

While some ethical wills these days take the form of audio or video recordings, they are more typically hand-written documents of no longer than two pages. In them, those crafting their ethical wills bestow upon their recipients statements of love, blessings and crucial lessons learned over their lives.

Ethical wills have become better known among mainstream populations in recent years, but the tradition dates all the way back to the Old Testament, where in Genesis 49:1-33, a dying Jacob gathers his sons to bestow blessings.

Embraced in Jewish tradition for centuries, ethical wills have more recently been cited as indispensable tools in estate planning by the American Bar Association, and as an aid in healthcare and spiritual healing.

In the paragraphs to follow, let’s take a look at what people include in an ethical will, what kinds of folks are recipients of the ethical will and, above all, the benefits likely to flow to both recipient and writer of the document.

Inside the ethical will

According to Celebrations of Life, a St. Paul, Minnesota organization that provides a legacy journey experience to those it serves, an ethical will may seem at first to be a difficult document to prepare. But thinking of it as a love letter to your children, grandchildren and friends is a great way to overcome trepidations.

As the organization’s website proclaims, “ethical wills can include personal and spiritual values, hopes, experience, love and forgiveness.”

Celebrations of Life recommends choosing one of several approaches to your ethical will. One is to write the ethical will over time as thoughts and ideas come to you. Another is to follow a guided writing approach to ethical-will writing, using such aids as The Ethical Wills/Legacy Letters Workbook, or Ethical Wills: Putting Your Values on Paper. Or seek out an ethical will facilitator who can help you prepare your document in person or in classroom sessions with others.

One typical theme in ethical wills is a memory of a person, event or place that was crucial in helping the ethical will preparer absorb a vital life lesson.

So says Edna C. Groves, whose Naperville, Illinois-based firm, Words That Endure, helps people craft their own ethical wills. Perhaps there’s a painful event you lived through early in your life that helped impart a lesson or a person took you aside and offered invaluable guidance you badly needed. Maybe it’s a place that gave you solace and support, and where you came to adopt a life philosophy that comforted and inspired you throughout your years.

Above all, ethical wills should be positive, expressing love, hope and dreams for those who will continue on after you pass away. They can also relate family history concerning personal heirlooms bequeathed to loved ones, ask for forgiveness for some mistake, or suggest ways to be remembered.

Gifts of love, learning

Stories abound of people whose greatest possession is the handwritten legacy letter passed on to them by a beloved parent or favorite grandparent.

There are those who take out such documents from a lock box and read them again on important occasions like the anniversary of the loved one’s death, a holiday or an anniversary of some familial event. “The greatest gift I ever got from her was that letter, ” is a not-uncommon sentiment from a recipient.

However, ethical wills often benefit the preparer of the document as much or more than they do recipients. Many people who after procrastinating for years at last craft an ethical will feel like the weight of the world has been lifted from their shoulders. And according to Groves, if given during one’s lifetime, ethical wills have the power to strengthen bonds and heal family and personal rifts.

I won’t suggest you soft pedal the estate planning process. By all means make sure you dot every “I” and cross every “T” of those documents. But while making sure your estate plan is complete, also give some thought to crafting an ethical will. It may become the inheritance your loved ones value most.

Anatomy of a credit-based insurance score

• Insurance
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If you drive a motor vehicle in the United States, it is compulsory in most states to carry insurance. Auto insurance is one of the “big wins, ” where a little effort provides a big payoff, not just once, but again and again. There are several well-known ways to save on auto insurance ranging from keeping a clean driving record to shopping around. One way that doesn’t get enough attention but has a big influence on how much premium you pay is the credit-based insurance score. Ninety-five percent of auto insurers now use a credit-based insurance score as part of their underwriting process (where permitted by law). Hence, in order to get the best rates, it is essential to know what this score is, how it is used, and how to maintain a good score.

What is a credit-based insurance score and how is it used?

A credit-based insurance score, or simply insurance score, is a snapshot of a consumer’s insurance risk profile at a particular point in time, derived from the information in their credit report. This score, along with driving history, claim history and other information in the application is used to evaluate auto and homeowner insurance policies and determine the premium the consumer will pay to obtain the policy.

How does it differ from my regular credit score?

Credit-based insurance scores are simply a derivative of traditional credit scores. Both are derived from the same credit report but predict different things. The regular credit score is used to determine the how likely you are to repay a loan. A credit-based insurance score, on the other hand, is used to evaluate how you manage your risk exposure.

Why does my insurance company care about my credit? Can’t they just look at my driving history?

Yes, they can look at your driving history and they will; it is a major part of underwriting your policy. Credit-based insurance scores are used in addition to this to adjust your risk up or down, thereby increasing or decreasing your premium. Research has shown that consumers with better insurance scores generally file fewer claims and have lower insurance losses. A Federal Trade Commission (FTC) study of insurance scores released in July 2007 found: “credit-based insurance scores are effective predictors of risk under automobile policies. They are predictive of the number of claims consumers file and the total cost of those claims.” Additionally, the study also concluded that using such scores may “make the process of granting and pricing insurance quicker and cheaper, cost savings that may be passed on to consumers in the form of lower premium.”

How are these scores calculated?

Just like traditional credit scores, credit-based insurance scores take five general areas of information into consideration — length of credit history (15 percent), pursuit of new credit (10 percent), credit mix (5 percent), payment history (40 percent) and outstanding debt (30 percent). Each of these has sub-categories that increase or decrease the score.

In the following section, (-) indicates that high values typically lead to a riskier score, and the converse holds for (+).

Payment history:

  • Late payments/Delinquencies (-)
  • Collections (generally non-medical) (-)
  • Public records (judgments or bankruptcies) (-)

Pursuit of new credit:

  • Inquiries (generally non-insurance, non-medical) (-)
  • New accounts (-)

Outstanding debt:

  • Ratio of outstanding balances to available credit (-)

Credit history length:

  • Age of oldest account (+)
  • Average age of all accounts (+)

Credit mix:

  • Department store trade lines (-)
  • Oil Company trade lines (-)
  • Travel and Entertainment trade lines (-)
  • Share of trade lines that are major bank credit cards or mortgages (+)

What if I am turned down for insurance or my rate increases?

If you think your insurer rejected an insurance policy or increased your rate based on your credit-based score, the federal Fair Credit Reporting Act (FCRA) requires that the insurer tell you, and give you the name of the credit reporting agency that provided the information. In these situations, you are entitled, by law, to receive a free copy of your credit report to review and understand what might have caused the low score. If you see any errors in the report, you can challenge the errors with the credit reporting agency.

Can I opt out of it?

If you think it is unfair of the insurance companies to use your consumer credit (especially if you are in the no-credit camp, so you don’t care about your credit scores) you are not alone. In a survey conducted in 2012, two-thirds of the public thought using a credit score to determine auto insurance rates is unfair. However, 95 percent of auto insurers use it and there is nothing we can do other than maintain a good score to get a preferred rate. No one can opt out. If you have a very low credit score, you can:

(1) Shop around — Each insurance company has different ways of determining their risks and calculating your premium.

(2) Talk to the underwriter — Computers may spit out a risk profile for you but, at the end of the day, it is a person who is underwriting your policy. Call the insurance company and talk to them about the reasons you may have a low credit score. Provide them with extra documentation, if needed, to strengthen your case.

(3) Work on improving your score.

How can I improve my score?

You can improve your score by using credit responsibly. A credit-based insurance score depends a lot on payment history (more than a traditional credit score), with the reasoning that if you are careless with your payments, you are more likely to be careless in your driving habits as well. So make sure you pay all your bills on time. You can also keep balances low on unsecured revolving debt like credit cards. The Fair and Accurate Credit Transaction Act of 2003 (FACT Act) allows consumers to obtain a free credit report once every 12 months from each of the three nationwide consumer credit reporting companies (Equifax,  Experian and TransUnion). Make use of it and get your credit report every four months; review the report and keep it error-free.

Have you given any thought to your credit-based insurance score? Have you done anything specific to improve or maintain your insurance score? Have you ever faced any negative consequences (higher premium, rejection) that you believe were due to your credit history?

The Myth of the Post-Retirement Worker

• Retirement•Saving & Investing
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This post comes from Libby Kane at our partner site LearnVest.com.

By now, you’re probably aware that the average American is woefully underprepared when it comes to saving for retirement.

“That’s okay, ” you might think. “I can always just work for a few more years, or take on a part-time job to cover my expenses.”

That’s a common belief many of us hold. LearnVest research has shown that 40% of Americans plan to work after retiring, and a CareerBuilder survey reports a higher percentage, up to 60%—hence the rise of buzzwords like “recareering” and “semi-retirement.”

A recent New York Times article, however, says that’s not going to be the reality for most of us. It cites an AARP survey that reveals an even higher percentage of those who plan to work, at 72%. In reality, the number who actually do work into their golden years is 18.9%.

The article posits that the gap exists for a variety of reasons: Sometimes a worker leaves the workforce early because he times his retirement with his spouse’s. Or there was a “shock” that took an employee out of the workforce, like having to care for a sick relative or a change of regime in the office. And often when an older worker loses his job, he can’t break back into a competitive workplace still rife with age discrimination.

Or perhaps, working after age 65 is harder than it looks. Today’s jobs may not require as much manual labor as they used to, but they’re hard in a different way: Many of them require good eyesight and the ability to concentrate intensely—which can pose challenges for aging Americans.

Sometimes, though, the reason for the gap is positive. Many people assume they’ll have to work because they won’t have enough retirement money. “People look at their savings and pensions and say, ‘I think it’s going to be O.K., but I don’t know.’ … But then when people reach 61, 62, 63, a lot of them figure out that they can retire, ” author and retirement consultant Helen Dennis, an adjunct professor at the University of Southern California, told the Times.

Since you can’t plan for every bit of uncertainty, it’s critical that you do plan where possible—and avoid these all-too-common retirement mistakes.

More stories from LearnVest:

Friends With (Business) Benefits: 4 Small-Biz Success Stories

Be Career Fearless: 7 Tips From Intrepid Entrepreneurs

7 Things to Consider Before Starting Your Own Business

Have you considered these low-cost healthcare options?

• Family & Life•Insurance•Planning•Self Employment•Taxes
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We have a nephew who lives in Switzerland whose wife recently gave birth to their second son. She stayed in hospital for an entire week and the blessed event cost them … nothing. Contrast that with this report from the New York Times, detailing the high cost of childbirth in the States. Obamacare is an attempt by the Government to “do something” about the problem. Whether you’re a fan or hater of Obamacare, there can be no doubt that the real problem isn’t the political party on either side of the argument — it’s the high cost of healthcare in America. That’s why I started to look beyond Obamacare to find other solutions.

The Problem

Healthcare in America is the most expensive in the world, and it’s not even close. Anyone who doubts that can look at this presentation a year ago by the International Federation of Health Plans comparing healthcare costs in developed countries. Here is an example, showing the cost of a hospital day in various developed countries:

Credit: International Federation of Health Plans

That’s right: A day in an American hospital costs almost ten times as much as in the next-most-expensive country. That’s true for just about every aspect of healthcare. Some may think, “Well, you get what you pay for. Our healthcare has to be the best if it’s so expensive.”

Wrong.

This chart from an OECD study shows the exact opposite. By just about any definition you care to use, the quality of care in America is among the lowest in the civilized world. This Reuters report puts America at the very bottom of that list.

The facts, then, are simple: Healthcare in America is among the most expensive, and worst, in the world. One of the big reasons is the actions of intermediaries who have nothing to do with your or my health and its care.

The Solution

If your job offers you healthcare coverage, this escalation of healthcare costs may not concern you … yet. However, with the new law making it mandatory for those who can’t afford healthcare to get it, more people are looking for options that make sense for them. And so, while the public (and after-dinner) debates have been raging over the problem and the cure currently legislated, millions of people are beginning to discover something the health insurance industry doesn’t want you to know: There is a cheaper alternative, and it’s every bit as good as the current healthcare system.

That’s because it is the current system, only without the bureaucracy.

I discovered it a while ago, when my wife and I were both out of healthcare-paying jobs and were on our own. We have pretty incredible doctors, a husband-and-wife team. When we told them we didn’t have health insurance anymore, he said he’d work with us. In the years that followed, it was amazing to see how much we saved. To be fair, we are blessed with good health, so we were spared the cost of a catastrophe. But, knowing our situation, our doctor charged us $60 per visit and then conveniently “forgot” to charge us a few times. When I had plantar fasciitis, he told me how to simply walk it off — no charge. Unfortunately, when I had to do a colonoscopy, I had to pay “full boat, ” but even that specialist knocked down the bill to a level I suspect is way under what they would have charged an insurer.

A physician friend of ours confirmed that this quiet underworld of cash billing for healthcare has been growing. Doctors hate the insurance bureaucracy and they say most of their escalating expenses are due to billing specialists they need to add to their staff to push the red tape up the hill, to mix metaphors. He recently quit from the practice he was part of to open his own new practice to simply provide healthcare without the red tape — for much less than his old firm had to charge the insurance companies.

You can dismiss these as isolated anecdotes, but they are part of a growing trend. The mainstream media are beginning to pick up on it too, as you can see from these articles in CNN/Money and the New York Times.

Your Options

As with any new movement, the number of options available to someone looking for treatment outside of traditional, insurance-driven healthcare is growing daily. Two blogs focusing on this growing area with news of evolving resources are The Self-Pay Patient and Healthcare For Less. The author of the first blog, Sean Parnell, also published a book called “The Self-Pay Patient, ” and it contains comprehensive lists of resources available to anybody who wants to go this route. (Disclaimer: Not affiliated. I bought the book for full retail.) His blog contains updates to the resources listed in his book, so together they make a must-have resource directory for a space that’s evolving rather rapidly. One example is the growing list of cash-friendly doctors across the country.

An interesting alternative to traditional insurance few of us would have thought of is healthcare-sharing ministries. These are voluntary, nonprofit organizations of people who agree to share each other’s medical bills, which is similar to how insurance operates. Most are based on a certain faith — but one,  Liberty HealthShare, has no limitations regarding religious beliefs. Members of these organizations are exempt from the tax to be imposed on those not carrying mandated Obamacare health insurance.

Other resources worth checking out are short-term health insurance, critical-illness insurance and fixed-benefit insurance. Because these are rapidly growing sub-fields of medicine, your best bet is to Google them as search terms from time to time to get up-to-date information.

Who?

Self-pay medicine is not the most suitable option for everybody, especially for:

  • people with chronic health issues
  • low-income people whose Obamacare premiums would be subsidized
  • people who don’t mind long waits for doctors
  • people who don’t care that their medical records are widely visible to thousands of bureaucrats
  • people who don’t have high-deductible healthcare plans through their workplace

The advent of mandatory health insurance has prompted many to go for high-deductible plans to keep premiums low. Folks on those plans will still have to pay their day-to-day medical expenses at “normal” (i.e. cash) prices. The resources listed here will allow those folks to lower their day-to-day medical care costs.

If you’re stuck in a place where you have no recourse to affordable healthcare, you may want to talk to your doctor to find out if they have options outside of their traditional insurance-driven system. Beyond that, you might want to make use of the resources listed above to find coverage options which offer protection against big-ticket medical expenses.

Chances are we won’t recognize the healthcare landscape in America ten years from now. Rather than wait and be caught unawares, it’s worth checking out this evolving arena. You never know when something might pop up that could make total sense for you and your family.

One Example

We were on my wife’s employer’s health insurance plan; but after she retired, we had to decide how to proceed. We received the full information package from a Christian healthcare-sharing ministry, called CHM (Christian Healthcare Ministries). They offer three participation levels: Bronze, Silver and Gold. They don’t call them plans, and they don’t call what you pay every month a premium. A nonprofit ministry, what they do is create a network where members share their healthcare expenses.

It is a lot less than what we would call traditional health insurance. Their participation levels break down as follows:

  • Bronze – $45 per month per person
  • Silver – $85
  • Gold – $150

They don’t pay healthcare providers; they only reimburse you. The deductible (they don’t call it that, but that is what it amounts to) varies according to your participation level: $5, 000 for Bronze down to $500 for Gold. Reimbursement usually takes around three months or so, so a member needs to have the means to carry their medical costs for that period until reimbursement is made.

Bottom Line

If you have affordable coverage, you’re fortunate. For those who don’t, for instance those who worked hard to retire early, self-pay medicine is a rapidly growing area with the potential for substantial savings over traditional health insurance.

Learning to live with risk

• Retirement
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The stock market has had some rocky sessions lately, but we should be used to that. The 21st century has already dished out two major bear markets in stocks, not to mention what has happened to real estate, oil futures, and gold at various times in the 2000s. We are having to learn to live with risk.

That is not natural for me. I am not a risk-taker by nature. People who study economic decision-making talk in terms of risk-averse and risk-seeking behaviors; my instinct is almost always to come down on the risk-averse side of the decision. And yet, I’ve learned to live with risk. A substantial part of my net worth is in the stock market, meaning that on a typical day I make or lose far more due to the whims of Wall Street than I earn by working that day. For the most part, I am comfortable with that.

What helped was spending over 20 years in the investment-advisory business. Not only did I get to learn from smart, experienced people; but I also got to observe a wide range of behaviors from a large and varied client base. I saw success and failure, angst and cool-headedness. It was like getting to live several investors’ lifetimes in a few short years.

One of the key lessons: No matter what you do with your money, some form of risk is inevitable — so you have to learn to live with it. Here are seven keys to doing so:

  1. Low-ball your assumptions. One reason the 21st century has been so traumatic for investors is that the 1990s really raised expectations. Investing seemed easy and even fun when the stock market was routinely delivering 20- or 30-percent returns. The reality is, returns like that are relatively rare occurrences. The higher the return assumption you build into your retirement planning, the greater the risk that you will be disappointed. Lower assumptions yield less attractive projections, but they also reduce the risk of your coming up short.
  2. Don’t count your chickens. Investors know that the stock market goes up and down, and yet psychologically they tend to treat every high-water mark as if it were permanent. This sets them up to be upset if they give back some of that gain the following year. If you have an unexpectedly high investment return, don’t think of it as money in the bank. Think of some of it as a cushion against the next downturn.
  3. Broaden your view of risk. If the stock market makes you nervous, consider this: $100, 000 invested in the safety of T-Bills would have produced $11, 390 in income back in 1980 but only $60 in income last year. If you had simply kept your money in a fireproof vault, inflation would have cut the value of that money nearly in half over the past 25 years. The point is, there really is no way to avoid financial risk. All you can do, quite frankly, is to choose which form of risk to take. That makes it a little easier to accept the volatility of the stock market.
  4. Keep the time frame in perspective. How many people do you know in their 40s and investing for retirement check the stock market results every day, if not multiple times a day? Obsessing over the short-term doesn’t just create unnecessary anxiety, it also distorts your decision-making. Time tends to smooth out most of the market’s fluctuations, so taking the long view will make you both a calmer and a wiser investor.
  5. Control what you can control. Careful thought should be given to making investment decisions and monitoring your portfolio, but ultimately you cannot control what the market will do tomorrow, next week, or next year. The factors you can control that will have an important impact on your financial success are how much you put aside for retirement and how much spending you build into your lifestyle.
  6. Never make financial decisions in a hurry. Markets move quickly, and this can lure people into a hurry-up offense kind of mentality. That is not conducive to sound, long-term decision-making. Slow down and allow yourself to think things through. You are not trying to capture tomorrow’s market moves; you are trying to make the right decision for the months and years ahead.
  7. Recognize that debt leverages risk. The riskiest thing you can do has nothing to do with your investment moves, but in taking on debt — especially debt that is not backed by a tangible asset like a house or a car. Debt ramps up the riskiness of all your other financial decisions.

Of course, having written that I have learned to live with risk, it seems almost inevitable that something will come along next week to really shake me up. That’s okay. The truth is there are situations that would make any investor nervous; the key is not to act nervous when it comes to making decisions.