TipSheet : Money

There Goes The 401(K)

Newsweek — Sat, 13 Dec 2008 14:15:40 GMT

By Jane Bryant Quinn
December 22, 2008 issue

Illustration: Phil Marden for Newsweek

In October, when the stock market went into free-fall, I did the sensible thing. I panicked. I e-mailed the adviser who manages my retirement money: “OMG, have I been too heavily in stocks? Should we get some of it out, before things get worse? Help!”

I realize that people like me aren’t supposed to send e-mails like that, but I couldn’t stop myself. My brain told me, “Follow your system; history says it works.” My gut cried, “Are you crazy? Save what you can!”

Fear makes you stupid. To be on the other end of unhinged e-mails like this is what advisers are for. Mine reminded me about crises past and how stocks had recovered. Still, under his calm, his gut was screaming, too. “It’s a dangerous time,” he couldn’t stop himself from saying.

Besides my retirement account, I have a taxable account that I manage myself. Both are invested in low-cost, no-load mutual funds, allocated across various types of securities. Both are rebalanced periodically to maintain their original allocations. I should be weathering this shock as I did all previous ones: make regular contributions, rebalance and wait.

But this is the kind of collapse that sends you back to first principles. Were my allocations right in the first place? Stressed financial planners are asking themselves the same thing.

Take the question of safety. Planners traditionally have said, “Keep money safe if you’ll need it within two or three years,” for expenses such as tuition, taxes, buying a house or future daily bills. Money you won’t touch for longer periods can go into riskier investments, for higher returns.

That worked fine in the three market cycles during 1980 to 2000. After stocks dropped, it took less than two years for them to recover their previous peaks.

Then came the 2000–2002 bear market, which took more than six years to recover, followed by the current plunge. In a classic case of barn-door thinking, planners are reworking their definition of “safe.” Many now say that money needed in the next five years should go into bank CDs, bank money-market accounts and short-term bond funds. These investments pay more than you’d get from money funds that buy Treasuries, many of which now cost more in fees than the near-zero interest you earn. Treasury bonds are the only investment bubble left.

My OMG question was whether I had put too much of my retirement account into stocks. The rule of thumb is to subtract your age from 110 and consider that the percentage of your portfolio to put at risk. If you’re 50, you’d go 60 percent into stocks with 40 percent in bonds.

I’ve been a bit more aggressive than the rule of 110 would approve, and so have many planners. You need growth to fund a retirement that could last for 30 years, and CDs won’t cut it. I’ve thought about reducing my stock allocation. But future expected returns are higher when stocks are low, so it seems dumb to do that now. I sold some losers for tax losses, and—having fed my gut Tums—rebalanced (bought stocks) for my own account.

I’m finding that advisers aren’t as pure about rebalancing as they used to be, with mine as exhibit A. He rebalanced the fixed-income portion of his accounts, buying high-yield bond funds and Treasury Inflation-Protected Securities, whose prices are down. But he’s waiting to rebalance his stock accounts. He believes in the formula but says you get whipsawed on price when the credit markets are stressed.

And take fee-only planner William Bengen, author of “Conserving Client Portfolios During Retirement.” When Lehman failed, he became a temporary market timer—switching his clients into cash. That will prove to be the right move only if he rebuys stocks in time, he says.

Analyst Steve Leuthold, of the Leuthold Group in Minneapolis, has no doubts about what to do now. “Just buy,” he says, buy anything. He even recommends index funds, something I never thought I’d hear from a pure stock shop.

Rebalancing worked during crises past for investors who could wait it out and had savings enough to pay their bills. My OMG factor is under control (for now).

Reporter Associate: Temma Ehrenfeld

A Buyer’s Market at Last

Newsweek — Sat, 13 Dec 2008 14:10:29 GMT

By Linda Stern
December 22, 2008 issue

Sunday Open Houses are starting to look a lot more attractive, and it’s not just because the sellers baked brownies and slapped on another coat of paint. Since 2006, the peak of the housing boom, prices have dropped nationally by 18 percent and the rates on 30-year fixed mortgages have fallen from 6.8 percent to 5.5 percent. That means the average monthly mortgage payment has dropped from more than $1,000 to $894. The bottom line? Says Rich Arzaga, an independent financial adviser who teaches real estate investing at University of California, Berkeley, “Money is cheap, the homes are affordable, and sellers are really very desperate.”

That doesn’t mean you should run out and buy a house today; you can take your time to find the perfect home. The market is likely to bump along the bottom for a while, say analysts, and some markets may not hit their absolute rock-bottom prices for weeks or months—or even, in some vulnerable markets, years. But if you’re a first-time home buyer or a preretiree looking to line up your place in the sun (and you’re lucky enough to be able to afford one in this economy), start shopping now. Here’s why.

Good deals for snowbirds. Retirement hot spots like Florida, Nevada and Arizona have been particularly hard hit with falling prices. There are more than 21,000 homes for sale in Vegas; more than 5,000 in Boca Raton, almost 15,000 in Phoenix. That means lots of choice and room to bargain on price. If you’re intending to move to one of those areas, it makes sense to vacation there this winter and start checking out the market. In the three to five years it takes you to relocate, prices and rates are likely to solidify. There are already signs of slowing inventories and firming prices in some spots, like San Diego. But be careful: if you buy into a condo development that has many empty units, you can expect your monthly condo fees to rise significantly, to cover all those no-shows. And don’t count on rental income in those communities-in-crisis.

A bird in the hand. Don’t wait for the government-backed 4.5 percent rate that Treasury Department sources floated recently. It may never materialize, what with opposition from troubled banks and existing homeowners, and skepticism that it is the economic tool most needed now. Current rates are grazing their 45-year lows as it is, says Keith Gumbinger of HSH Associates, a mortgage-research firm. And they are as likely to head back up as they are to fall further.

Free money. First-time home buyers who ink their contracts before July 1, 2009, can claim a $7,500 tax credit to help them muster up a down payment. It’s really a zero-interest loan, repayable over 15 years with your annual income taxes. First-time home buyers can also withdraw money from their Individual Retirement Accounts penalty-free (but not tax-free) to make a down payment. They can also take some tax-free money out of their Roth IRAs to buy a home.

But some serious prep work is in order. As the sick housing market heads into typically slow winter, there’s time to amass a down payment (10 percent is good, 20 percent is much, much better) and get your low credit score up over 680, the new minimum level to qualify for a decent loan now. First-time and second-home buyers should take their time to explore what’s out there, and an extra moment to enjoy the one other advantage they have now. They can buy when they want, without worrying about selling a house in this market.

Fashion: When Your Kids Want to Dress Like TV Stars

Karen Springen — Sat, 13 Sep 2008 15:58:58 GMT

Nice Threads: 'Gossip Girl''s Ed Westwick (left) and Taylor Momsen
James Devaney / Getty Images (left); Soul Brother-Film Magic-Getty Images

Fashion consciousness isn’t new to the schoolyard set. But with more and more TV shows about wealthy teens, like the CW network’s “Gossip Girl” and MTV’s “My Super Sweet 16” on the airwaves, parents may find themselves bombarded with an unprecedented number of requests for $140 Coach bags and $60 Abercrombie jeans. Here’s how to balance the desire to make your kids happy with the need to avoid bankruptcy.

• Ask why kids want designer duds. Usually, the motivation is to fit in or acquire social status. Christine Feiler, whose kids are 6, 9, 12 and 14, says she regularly hears: “Everyone else has it!” One strategy is to talk about alternative ways of accomplishing that same goal, says Dee Shepherd-Look, a clinical psychologist who specializes in children and families. Parents can encourage their kids to more actively call friends and organize gatherings. “Studies on adolescent popularity show that popular kids are the ones who reach out, make things happen, who tend to be complimentary to other kids,” says Shepherd-Look.

• Lay out the financial picture. If a kid begs for pricey apparel, “the parents can smile and say, ‘That would be grand, but we can’t afford it’,” says child psychiatrist Elizabeth Berger, author of “Raising Kids With Character.” Then kids will understand a “no” is “not that the parents are just being mean,” says Brad Sagarin, an associate professor of psychology at Northern Illinois University. Don’t dwell on the electric bill and the mortgage with younger kids. Instead, ask if they would give up a birthday party to buy an Abercrombie shirt.

• Set a budget. Estimate how much you spend a year on your kids’ clothes and then divide it by four (for each season) or 12 (for each month). Younger kids can be in charge of just part of the budget, and older kids can try the whole thing, says Atlanta pediatrician Jennifer Shu, editor of the American Academy of Pediatrics’ “Baby & Child Health.” Richard Ryan, a professor of psychology at the University of Rochester, gave his daughters a clothes budget when they were 10 and 8. The strategy allows kids to complain about Abercrombie’s prices instead of about “how cheap you are,” he says. For splurges, consider chipping in part of the amount and asking your kids to earn the rest.

• Beware the faux Ugg boot. Steer your kids toward affordable stores like Old Navy and H&M, but don’t force them to buy knockoffs. These days, even preschoolers can spot a pair of fake Ugg boots (nicknamed “Fuggs”) and may taunt classmates about them.

• Avoid dissing your kids’ taste. When they want as for expensive brand names, don’t say, “That’s silly,” says psychologist Lisa Medoff, author of “SOS: Stressed Out Students’ Guide to Handling Peer Pressure.” “It is a big deal to them. Don’t write it off.” Instead, say, “It’s really disappointing because it’s so expensive. It’s not in our budget.”

• Talk about TV shows and stars. Discuss how programs like “Gossip Girl,” are not meant to depict real life. “Often kids are watching it, but nobody talks to them about it,” says Northbrook, Ill., psychologist Margot Touris. Also, explain that the celebs they might see in magazines are often given clothes for free as advertising.

• Try DIY (with caution). “You want to fit in, but you want to stand out at the same time, without looking like a freak,” says Ellen Warwick, author of “Everywear” and “In-jean-uity,” which promote creative ways for kids to decorate their clothes for under $10. Among her suggestions: buy jeans at Target and add embellishments to the bottom. “The coolest kids in school are always the ones who aren’t concerned with what everyone else thinks,” says Warwick.

Finally, remember that your kids want your love more than they want fancy clothes. Stanley Goldstein, a psychologist and author of “Troubled Children/Troubled Parents,” says, “Despite what they say, the most important thing in their life is their parents.”

Money: You Make How Much??

Linda Stern — Sat, 13 Sep 2008 15:53:13 GMT

Should you discuss salaries with your co-workers? Sure. When you know the guy in the next cube is raking in an extra $500 every month, you can use that knowledge to try to bump up your own salary.

Younger workers are far more comfortable sharing this info, and many companies have become less restrictive about letting people talk, says Robert Hohman of glassdoor.com, a new Web site that offers company-specific salary details. You have to post your own pay to see the info on the site, which now has at least some salary data on 11,000 companies. You can get more-general information at Web sites like payscale.com and salary.com, and check for salary surveys through your own professional association. Or wait until the boss is on vacation and try the old pass-an-anonymous-memo gambit.

Then what? If you’re making less than your co-workers, don’t run into your supervisor’s office with a demand. Instead, say “I know I’m falling on the low end of this company’s pay scale for the job. What do I have to do to get a higher salary?” Try to come away from that discussion with specific goals and a review in three or six months. And start applying for jobs in competing companies. Nothing gets you bumped up faster than an offer from the outside.

How to Plan Financially for a Divorce

Newsweek — Sat, 26 Jul 2008 17:23:03 GMT

Illustration:Chris Gash for Newsweek
Committing to Separation: Divorce decrees increasingly include ‘disaster scenarios'

By Linda Stern
Aug. 4, 2008 issue

It’s been more than a year since Janette Chamberlin and her husband decided to divorce. To save money on lawyers, they’ve been negotiating their own settlement and are ready to draw up the papers and finalize the deal. She even has a new boyfriend. The catch? The Chamberlins still live together in their house outside Philadelphia. The couple just sold their home, and, as a result, neither has been able to afford to move out.

The economy is taking a toll on marriages, but it is tough on divorces, too. Couples can’t unload their houses for enough cash to pay off their mortgages and home-equity debts, but job losses and tougher mortgage standards make it harder to afford splitting them, too. “I’m seeing many people who lose jobs and just don’t have the money to pay their alimony and child support,” says Jill Brooke of the online community First Wives World (firstwivesworld.com). Here’s how troubled couples can extricate themselves during troubled times.

• Deal with the house. Couples can hang on to a house until the real-estate market improves, but it’s usually not a good idea, says Stacy Francis, a New York financial planner who deals with divorce issues. “You’re binding two people together financially who don’t want to be bound in any way,” and if one stops paying on the mortgage, it can cause housing and credit problems for the other. It’s better to transfer the house to one spouse, if that spouse can qualify for a mortgage on his or her own.

Couples who can’t afford to do that and find themselves “upside down”—owing more on the home than they can sell it for—are negotiating short sales, in which the bank agrees to cut the loan amount to the sale price the couple gets. Richard Zaretsky, a West Palm Beach, Fla., lawyer, says he is negotiating two or three short sales a week for divorcing couples.

• Plan for disasters and windfalls. Newly divorcing partners are more reluctant than ever to agree to long-term alimony arrangements, because they are afraid their jobs won’t last as long as the divorce deal, says Francis. Many are asking that their divorce decrees include “disaster scenarios”—automatic adjustments to their payment schedules if they lose their jobs. But job loss adjustments should be temporary, and spouses who agree to big alimony deals and then opt for income-slashing career changes shouldn’t be let off the hook so easily, she says.

• Mediate for the long haul. Only one in 10 divorces actually end up in court, with more splitting couples negotiating their own financial arrangements. That’s good, as long as you don’t expect one settlement to handle everything forever. Call in a financial pro to make sure the technical details are covered (find experts at divorceandfinance.org), and expect to return to mediation as your separate lives unfold. “The divorce is not just one moment,” says Brooke. “Life goes on and you’ll always have a relationship with this person.” Even if you eventually stop living together.

How to Survive the Bank Crisis

Linda Stern — Sat, 19 Jul 2008 16:40:49 GMT

Illustration: Chris Gash for Newsweek

Last week’s banking news—the federal government stepped in to shore up mortgage-buying giants Freddie Mac and Fannie Mae and to take over the bad-loan dependent IndyMac Bank—left many consumers in a panic. But some experts see the intervention as an opportunity for folks to get their finances in order. “This is all good news for consumers,” says Kathleen Day of the Center for Responsible Lending, a Washington policy group. Here’s what the events mean for you.

• Mortgage shoppers: Last week’s actions may ease the supply of mortgage money, but qualifying for those loans remains a challenge. “The traffic has picked up, but only about half the people coming in are qualifying for a loan and having enough money to do the transaction,” says Marc Savitt, a mortgage broker from Martinsburg, W.Va., and president of the mortgage brokers’ trade group. At issue are higher fees and borrowing standards for anyone with credit scores below 680, a level that used to be high enough during the loan-pushing bubble. You’ll need to prove your salary and have enough cash in the bank to make a down payment as high as 20 percent. Start by checking your credit score at myfico.com, and do what you can to raise your score over 700 so you can get lower rates. Paying down some balances in a hurry or even raising your borrowing limits can sometimes bump up your score. Then cast a wide net for a lender that will give you the deal you like. “There are huge disparities on pricing from one side of town to the other,” reports Keith Gumbinger of research firm HSH Associates. “You can find pricing down in the 6 [percent range] and others up in the 8’s in the same city.” Check rates with a couple of local brokers, a national mortgage bank and at online sites like hsh.com. But don’t wait too long; interest rates are likely to rise.

• Mortgage sufferers: If you’re already in a mortgage that’s causing you problems, this might be a golden opportunity for a refinance. Folks who have been making timely payments on subprime loans for two years or more could qualify for a more stable, lower-cost loan. If you’re in over your head, don’t wait for more trouble. Find a nonprofit housing counselor at the Housing and Urban Development Web site (hud.gov), or find an attorney who specializes in defending against foreclosure at the National Association of Consumer Advocates (naca.net). They may be able to negotiate a revision to your mortgage contract while the bank that holds it is facing its own problems and doesn’t want to foreclose.

• House hunters: First-time home buyers may be sitting pretty. Most housing markets are awash in inventory, interest rates remain low and they can take their own sweet time to shop for the best combination of price and loan. Use that time to build that down payment, and to ask all of those questions about the roof and the heating system that bubble-era buyers never had time to tackle.

• Savers: If you’ve just been minding your own business, making your mortgage payments on time and putting money in the bank for a rainy day, you should take some steps to protect yourself, too. Keep good records of the mortgage payments you’ve been making. Mortgage-servicing firms who get into trouble could get sloppy about recording your checks, and that would be bad.

Bank savers need not panic: the Federal Deposit Insurance Corp. has been bending over backward to reassure depositors that IndyMac was an anomaly. Nonetheless, depositors who had uninsured money at the bank were getting 50 cents on the dollar last week, so it would be foolhardy to leave more than the insured amount in any one bank (all branches of a bank count as the same bank). That means $100,000 in coverage per individual, $250,000 for a retirement account and an additional $100,000 for each individual in a joint account. Cumulatively, that means as much as $450,000 per person in each bank. Any more than that, and you should consider investing it on Wall Street, where analysts say there are deals to be had in mortgage-backed securities and bank stocks. At least until that other shoe goes kerplunk.

Investing: Tips On Retiring During a Recession

Linda Stern — Sat, 19 Jul 2008 16:39:44 GMT

Wall Street’s tumbling stock prices are falling particularly hard on one group of people: folks who were just about to collect their gold watches (or buyouts) and step into retirement. A bear market during the first five years of your retirement can doom the chances of your money lasting until you no longer need it, according to new research from T. Rowe Price. The firm is counselling investors not to retire if that means they have to start drawing down their investments and taking Social Security while the bear continues to grumble.

Every extra year of work and 401(k)-feeding can increase retirement income by 7 percent, according to new research from the firm. Even workers who stay at the job but stop putting away money will increase their retirement income by 4 percent a year. Furthermore, Social Security benefits get roughly 8 percent fatter for every year that you delay starting them. Combining all three: working longer, keeping up those retirement contributions and delaying Social Security can boost the purchasing power of a 62-year-old by as much as 30 percent.

Of course, not everyone that retires does so on their own schedule, but T. Rowe Price has advice for the involuntarily retired, too. Try to find enough part-time work and household savings (yard sales, anyone?) to keep your retirement account withdrawals below the 4 percent-a-year level deemed safe during good economic times. Keep some money invested in stocks and hang on until the market improves before you start seriously cashing in. Then you should really be golden.

Money: Explaining Carbon Offsets

Newsweek — Sat, 19 Jul 2008 16:35:35 GMT

By Paul Tolme

Growing concern about climate change has fueled a boom in sales of carbon offsets, which allow consumers to support clean-energy or reforestation projects that, at least in theory, remove as many greenhouse gases from the atmosphere as the donor contributes. While some cheer this growing market, others question whether consumers get what they pay for. Carbon offsets are unregulated in the United States. “The majority of offset retailers have good intentions, but it’s still a market where you have to do your homework,” says Katherine Hamilton of Ecosystem Marketplace.

Smart shoppers should look for offsets certified and audited by third-party organizations. These include the Gold Standard; Environmental Resources Trust; the Voluntary Carbon Standard, and the Climate, Community and Biodiversity Alliance. Buyers should also consult carbon-offset buyers’ guides published by the Tufts Climate Initiative (tufts.edu/ tie/tci/), Clean Air–Cool Planet (cleanair-coolplanet.org) and the Environmental Defense Fund (edf.org).

Consumers who shop wisely can spur positive change. Maureen Murphy of Santa Monica, Calif., recently gave $50 to carbonfund.org. The group is working with the Trust for Public Land (TPL) to purchase and restore 11,000 acres of degraded woodlands in Louisiana’s Tensas River National Wildlife Refuge. “Offsets made this acquisition possible,” says Don Morrow of TPL. And so did the guilty conscience of donors like Murphy.

Family: Brides Go On a Budget in This Lousy Economy

Newsweek — Sat, 14 Jun 2008 17:26:06 GMT

Illustration: Chris Gash for Newsweek

By Ashley R. Harris

Like so many women, Michelle La Rocca knew from childhood exactly what she wanted her wedding to look and feel like: Cinderella at the ball. But when the big day rolled around last summer, she was hit with a dose of reality. La Rocca’s Prince Charming didn’t have a king’s ransom in the bank, and she didn’t have a fairy godmother with a platinum AmEx. Clearly, paying for her dream wedding was going to require some creativity.

Taking inspiration from Cinderella’s mouse friends who fashioned a ball gown out of scraps, La Rocca began scurrying around for ways to fulfill her dream on the cheap. She sent out handwritten invitations instead of engraved ones. She scavenged the reception hall for leftover vases and candles to make table centerpieces. She and her fiancé bought candy in bulk to hand out as parting gifts and wrapped them with ribbon and a card. And even though she swore she would never skimp on her gown, La Rocca ultimately bought hers at— gasp!—a discount bridal store.

La Rocca is hardly the only budget bride. With the economy in the tank and the cost of the average wedding now a budget-busting $28,000, “people are doing more research and paying more attention to the details,” says Rebecca Dolgin, executive editor of The Knot (theknot.com), a wedding Web site. “The trend has moved away from everything-has-to-be-over-the-top, ” says Alicia Rockmore, CEO of lifestyle consultancy Buttoned Up (getbuttonedup.com), who says more and more couples are saving their money for the things that come after the big day, like houses and children. “The happiest day of your life should not be your wedding,” she says.

Such sentiments are bad news for the $161 billion wedding industry. Especially when you consider how many businesses get a piece of the wedding cake: an average of 43, according to the book “One Perfect Day” by Rebecca Mead, a writer for The New Yorker. So how do you cut back on all those florists and caterers, beauticians and bands? LaMonica Hale, who works at a nonprofit in Dallas, decided to do her own face rather than hire a makeup artist for $250. Jackie Miller, a teacher in New York, ditched the DJ, got an amplifier and speakers from her friends, and plugged in her iPod instead. Her guests didn’t seem to mind. “They danced the night away,” she says.

Some couples are even faking their wedding cakes. Rather than a traditional tower, which can run as high as $5,000, many brides are buying one made mostly of Styrofoam, with the top tier real cake that can be sliced for photos and smeared on faces. The guests are served look-alike sheet cake, which costs about $4 a slice, compared with $10. “Your wedding guests aren’t even going to know the difference,” says Marilyn DeVault, owner of Piece of Cake, a bakery in Portland, Ore.

One obvious way to save is to slash the guest list, since the typical wedding now has upwards of 150 attendees. Or if you want a smaller wedding without offending your step-aunt Maggie, you might try a destination wedding, inviting a small group of friends and family to, say, Cancún, where you can have both a wedding and a honeymoon. It may sound expensive, but usually the guests pay their own way, and the couple gets a discount on the wedding from the hotel because they’ve booked a block of rooms. The average cost of a destination wedding can vary, but it’s usually upwards of $25,000.

Other tips from the wedding experts: consider getting married on a weeknight, when rates are cheaper; do away with those disposable cameras on the table—you’ll never get them developed anyway; pick only flowers that are in season; send out e-vites instead of paper invites. “The rules are definitely being rewritten,” Dolgin says.

And what about that most sacrosanct of purchases: the dress? Dolgin suggests hitting up designers’ sample sales, where you can buy a gown for as much as 80 percent off (the best time to go is April and May). Or consider wearing a secondhand dress: Mara Madden, a bride-to-be in New York, bought hers from the Bridal Garden (bridalgarden.org), which sells “gently used” and overstock dresses donated by past brides and designers like Vera Wang and Amsale (the proceeds go to a children’s charity). She spent less than $1,000, instead of the $5,000 she would have paid at retail. “It didn’t make a difference to me that it was worn, especially in today’s economy,” Madden says.

Do budget brides wind up feeling cheated out of their big day? Not La Rocca. “I don’t regret anything, because we wanted enough left over to buy a house and start our life together,” she says. And in November, the couple purchased a house in New Jersey. Who says dreams don’t come true?

Finance: Cash, On the House

Linda Stern — Sat, 14 Jun 2008 17:22:26 GMT

Want to take cash out of your house but afraid to borrow? A new crop of no-payment home-equity products is coming to market. The catch: you trade away a piece of your home’s future appreciation for cash now. Unlike traditional reverse mortgages, they are not structured like loans, the fees are lower and there’s usually not an age restriction. With a Rex Agreement (rex agreement.com), you can get $71,000 on a $500,000 home if you agree to split future changes in value 50-50 with Rex & Co. You have to stay in your home for at least five years. (If you want out sooner, penalties run as high as 25 cent of the original sum you received). If the value of your home goes up to $600,000, you’ll owe Rex $121,000 when you sell. That’s the original $71,000 plus $50,000 for half the appreciation. If the value falls to $400,000, you’ll pay $21,000; that’s the original amount minus half the depreciation. Other similar new products are EquityKey (equitykey.com) and My Equity Freedom (granderfinancial.com). Closing costs run as high as $4,000, so look before you leap.

Wanted: Leaders To Flip Burgers

Linda Stern — Sat, 24 May 2008 15:04:17 GMT

It’s not too late for job-hunting teens to land a good summer job, despite the overall weak job market—some industries always need help in the summer and may have been slow to staff up. “Employers will be continuing to hire through the entire summer but especially through the month of June,” reports Shawn Boyer, of snagajob.com , an hourly job-listing Web site. He says students should start with the most obvious summer employers—movie theaters and restaurants—but then move on to burgeoning health-care companies and other employers. Amusement parks are another fertile hunting ground; they may actually do better than usual this summer, as folks scale back their travel and spend their vacation dollars on day trips.

To get a good summer job, play up any leadership posts on your résumé. Being a team captain or club leader can help set you apart in a market where most employers think teens have a lousy work ethic. And be willing to work at least a few hours in the fall; companies would like to not lose everyone on Labor Day. Teens willing to travel for more interesting jobs can check coolworks.com , which lists national-park and tourism-related jobs.

Teens with an entrepreneurial bent can forgo the burger-slinging and work for themselves. It’s not that hard to beat that $5.85 hourly minimum wage with a few well-chosen lawn-mowing, kid-tending or computer-consulting gigs.

Try Freeloading Off Friends!

Newsweek — Sat, 17 May 2008 18:52:49 GMT

Baerbel Schmidt/Getty Images
Fill ’er Up: This summer, many families are choosing smaller cars over gas guzzlers or driving shorter distances

May 26, 2008 issue
By Linda Stern

Amy and Adam Geurden of Hollandtown, Wis., had planned a long summer of short, fun getaways with their kids, Eric, 6, Holly, 3, and Jake, 2. In the works were water-park visits, roller-coaster rides, hiking adventures and a whirlwind weekend in Chicago. Then Amy did the math: their Chevy Suburban gets 17 miles to the gallon and, with gas prices topping $4, the family would have spent about $320 on fill-ups alone. They’ve since scrapped their plans in favor of a “staycation” around the backyard swimming pool. “I’m really disappointed,” she says.

So is almost everyone else. Nearly 60 percent of Americans are cutting back their vacation plans because of gas prices, according to a survey by Discover Financial Services. Here’s how to squeeze in a little bit of travel fun without breaking the bank.

GETTING THERE: Budget exactly how much you’ll spend on gas by entering your destination and your car into the calculator at the American Automobile Association Web site (aaafuelcostcalculator.com). A family can save significantly by squeezing into the smaller car, or even renting a fuel-efficient car. (Hertz is offering a free tank of gas with a car rental through the end of June.) Embrace all those fuel-saving behaviors like driving under the speed limit and keeping tires properly inflated. And check gasbuddy.com or your GPS system to find the cheapest prices on gas along your way. Alternatively, leave the car at home. Competitive pricing on long-distance buses and decent train fares are making mass transit a solid choice for the summer of 2008. Companies like BoltBus (boltbus.com) and Megabus (megabus.com) offer some seats as low as a dollar. Plus, it’s an adventure.

LOCATION, LOCATION, LOCATION: Don’t go far. “Everyone has places they’ve always wanted to go in their home state and region,” says Tim Leffel, author of “Make Your Travel Dollars Worth a Fortune” (Travelers’ Tales. $12.95). “This might be the best summer ever to do that.” Draw a circle on the map at 200 miles around your house, and choose a vacation spot within the circle. Alternatively, you can head way out of your circle. Instead of driving to the beach that’s 400 miles away, fly to the Caribbean or Latin America for about the same amount of money. They’ve got off-season rates in the summer and have currencies pegged to the dollar, so they’re not getting expensive, as the euro countries are. Leffel likes the beaches in Honduras, where prices are “cheap, cheap, cheap”: a top hotel room and gourmet dinner for two will come in under $100. For more destinations, see travel.booklocker.com.

CREATIVE LODGING: Travelers swear by the rates at priceline .com and hotwire.com. But before booking online, call the individual hotel directly and ask for its best rate. Pull out everything you’ve got—AAA membership, senior status, company affiliations, job title —to see if they’ve got a discount for you. Or seek unusual lodging: kids love tent camping, and with all the RVs in the garage because of high fuel costs, the campgrounds might be quieter than usual. You can arrange to swap homes with a like-minded family who lives where you want to travel. (Try home-swap.com or intervac usa.com.) Or follow the time-honored tradition of freeloading off friends.

SAVING ALONG THE WAY: It’s the little things that will drain your vacation budget, so control them. Travel with a cooler, some ice, your favorite snacks and drinks. Make lunch, not dinner, your fancy restaurant meal of the day. Bring your own bottle of bourbon (in the trunk, not the front seat) and have a drink in the hotel room before you go to dinner. Use coupons for attractions, and if you’re staying put in a city, buy a book of passes (citypass .com) or restaurant discounts (entertainment.com). Plan museum visits in advance, so you can catch their free or reduced-price days. And skip the souvenirs: nobody really wants those shot glasses and snow globes anyway. It will just make them crankier.

What Goes Up Might Come Down

Newsweek — Sat, 17 May 2008 18:42:02 GMT

May 26, 2008 issue

By Linda Stern

Those plummeting house prices may hold a bit of good news for homeowners who want to cut their property taxes: homes that were assessed during the height of the housing bubble may now qualify for reassessment at a lower level. Typically, property taxes are calculated by multiplying a tax rate against the property’s assessed value. Every local county or district has its own appeal procedures and deadlines, so check your local government’s Web site for the specifics. But the basic order of events is this: check your latest assessment to make sure it accurately lists the dimensions and details of your home. Then find out what your neighbors are paying. Municipalities publish these records; find them at publicrecords.netronline.com, on your local government’s Web site, or by going into the tax assessor’s office and asking to see the records. Review what’s happened to prices in your neighborhood since you were assessed at zillow.com or with a local real-estate agent. If there have been significant declines, you can appeal the assessment the next time you get a tax bill or assessment notice. And now for the not-so-good news: state budget crunches are causing many municipalities to consider raising their property-tax rates, even as they are forced to lower assessments. So even if you get a downward reassessment, you could end up with a bigger tax bill anyway.

Cutting Back Your Hours

Karen Springen — Sat, 03 May 2008 17:20:53 GMT

Illustration: Mark Matcho for Newsweek

Working part time can be good for your life and your checking account. But you need to know how to do it.

Louise Richardson of Parker, Colo., likes to work. But with four teenagers in her house and a firefighter for a husband, she prefers to do it part time. Through a placement service called 10 til 2, she landed a 15-hour-a-week job as an event planner. “It’s given us more financial freedom. My kids don’t see me as the person who cooks and cleans all day. But they also see that my family is my priority,” she says. “It allows you to have that balance between work and family.”

More than 25 million Americans—twice as many women as men—work part time. They’re moms, dads, retirees and people who are sick of the rat race. Employers are making it easier to work fewer hours: 36 percent now give employees the chance to work part time, according to a survey of 90 employers released last week by Hewitt Associates, a human-resources consulting company. The survey also found that 31 percent of employers now offer flextime, 46 percent permit job sharing and 39 percent allow telecommuting. TIP SHEET gives some tips on how to work part time successfully:

Know how to land the job. Make yourself “invaluable,” ideally first as a full-time employee, so your employer will want to keep you, says labor economist Myra Strober, who teaches a work and family course at Stanford University’s business school. Or call a placement service, like 10 til 2 (tentiltwo.com) or Mom Corps (momcorps.com).

Set ground rules up front. Define what “part time” means. If full-time workers typically put in 50-hour weeks, does that mean a half-time schedule requires 25 hours, not just 20? Many part-time jobs require some at-home work. Ask whether your employer will pay for your laptop or DSL connection. If you know you want to work less, or not at all, during your kids’ school vacations, request that schedule before you start the job. Beckye Young, an Atlanta mother of four, told her employer that she can work only from 9 until 2 p.m. so that she can get her kids to school and be waiting when they return.

Be flexible. “The flexibility needs to go both ways,” says Carol Sladek, principal of Hewitt’s work-life practice. Remember that if your employer lets you leave early to care for a sick child, then you should be willing to work a few extra hours.

Get paid fairly. “Work on an hourly basis. Then if the hours creep up, you need to say, ‘You need to pay me more’,” says Allison O’Kelly, founder and CEO of Mom Corps. “They can either decide to pay you more or decide to give you less work. You have more leverage.” Get it out of your head that “ ‘hourly’ means working at fast food,” says O’Kelly. “I have people who make $100 an hour.”

Be realistic. “Often, employers see women who work part time as less committed and less available for promotion,” says Strober. Ask your employer if you could ever get promoted—but don’t be surprised if the answer is no. “Typically you’re trading off pay, some of your benefits and quite often career progression,” says Sladek.

Communicate with family. “I explain to my kids that when they are done with school and they have moved out, I want to be able to continue with my career, and this is how you do it,” says Richardson. “Your whole family has to buy into this.” That’s particularly true for former stay-at-home moms, who may not be able to do as much cooking, cleaning and carpooling. With your family, plan ahead. “What’s going to happen during summer break? What’s going to happen if someone’s sick?” says O’Kelly.

Choose a part-time-friendly career. It’s tricky for tenure-track professors and attorneys to go part time. But it’s easier for nurses, doctors and accountants. “If you’ve got an hours-driven type of job, you can make it work more easily,” says Sladek. Target small, entrepreneurial businesses, which often prefer part-time workers. Remember to include volunteer work on your résumé, advises Jill Ater, cofounder of 10 til 2.

Consider flextime alternatives. Some part-time workers find that they end up working full time for part-time pay. To avoid this trap, Sladek suggests asking whether a full-time job can be made more flexible so you don’t even need to go part time. Will your employer compress your workweek into four 10-hour days, or let you telecommute more often? Dr. Marjorie Greenfield, author of “The Working Woman’s Pregnancy Book,” advises working whole days—but fewer of them. With half days, “the work drags into the afternoon, and you never get out.” she says

For a growing number of Americans, the trade-offs are worth it. Nikki Simon, 51, likes extra time to travel, walk her three dogs and hang out with her husband and her 20- and 22-year-old kids. A 9-to-5 job was out of the question—but so was staying home. “I just couldn’t clean the house every single day, and shopping wasn’t in the cards all the time,” she says. Now she works part time as a bookkeepers’ assistant and as a beginning real-estate agent. With her extra income, she doesn’t feel guilty now if shopping is in the cards some of the time.

Beware Of The Fixed-Rate Fix

Linda Stern — Sat, 19 Apr 2008 14:53:58 GMT

Usually it makes sense for borrowers to lock in fixed rates when interest rates are low, but that may not be the case with the latest crop of credit-card deals. Lenders continue to offer fixed-rate cards, but at rates significantly higher than the variable rates on comparable cards. For example, the Capital One No Hassle Miles Rewards card had been charging 11.4 percent under its variable-rate formula. But new applicants will instead find a fixed rate of 13.9 percent on the card.

A few good fixed-rate offers remain. There’s a 6.5 percent fixed-rate card from Pulaski Bank (pulaskibank.org) and a 7.25 percent card from Simmons First National Bank (simmonsfirst.com). Capital One (capitalone.com) offers a 7.9 percent fixed rate on its “prestige” card for borrowers with the best credit scores. Before signing up, check the contract to see how long the rate is guaranteed, since most issuers reserve the right to change the rate as they see fit.

A better deal might be a variable-rate card with a zero-percent one-year teaser rate. Cardholders who can burn their balances before the teaser rate is done can forget about the whole fixed-versus-variable debate and just start using a nice rewards card—as long as they restrain themselves from building a new balance.