NEW YORK -- U.S. stocks rallied Thursday after two days of losses, led by sharp gains in biotechnology shares and a rebound in financials following upbeat results from Citigroup.
Equities added to gains late in the session, and eight of the S&P 500 sectors registered gains of more than 1 percent. More than four stocks rose for every one that fell on both the New York Stock Exchange and the Nasdaq.
There's a lot of cash on sidelines, and we did break through to a new high since the August decline.
The S&P 500 health care index jumped 2.2 percent despite a disappointing forecast from HCA Holdings (HCA), which fell 5 percent to $72.21. The Nasdaq biotech index jumped 4.4 percent, rallying sharply before the close.
"There's a lot of cash on sidelines, and we did break through to a new high since the August decline," said Tim Ghriskey, chief investment officer of Solaris Group in Bedford Hills, New York. "Volume picked up as well, which is a strong indicator."
Citigroup (C) rose 4.4 percent to $52.97 after the third-biggest U.S. bank's results beat estimates, while Goldman Sachs (GS) was up 3 percent at $184.96, despite weak results.
The financial sector jumped 2.3 percent, recovering from losses Wednesday when JPMorgan (JPM) results disappointed.
U.S. consumer prices fell the most in eight months as gasoline costs fell in September, but a rise in core CPI, which strips out food and energy costs, suggested inflation was starting to firm. Unemployment benefit claims fell in the last week, pointing to a strong labor market.
The data, following a weak retail sales report, added to uncertainty over the timing of an interest rate increase by the Federal Reserve.
The Dow Jones industrial average (^DJI) rose 217 points, or 1.3 percent, to 17,141.75, the Standard & Poor's 500 index (^GSPC) gained 29.62 points, or 1.5 percent, to 2,023.86 and the Nasdaq composite (^IXIC) added 87.25 points, or 1.8 percent, to 4,870.10.
Winners and Losers
Nike (NKE) rose 2.3 percent to $128.79. The world's largest sportswear maker said it expects revenue growth to be faster over the next five years.
On the downside, Netflix (NFLX) slid 8.3 percent to $101.09. The video-streaming service said U.S. subscriber additions came in below expectations for the third quarter. The stock weighed the most on the S&P.
The S&P 500 posted 11 new 52-week highs and 7 new lows; the Nasdaq recorded 42 new highs and 41 new lows.
About 7.0 billion shares changed hands on U.S. exchanges, below the 7.6 billion daily average for the past 20 trading days, according to Thomson Reuters (TRI) data.
-Abhiram Nandakumar contributed reporting from Bangalore.
What to watch Friday:
The Federal Reserve reports industrial production for September at 9:15 a.m. Eastern time.
At 10 a.m., the University of Michigan releases its initial survey of consumer sentiment for October, and the Labor Department releases its Job Openings and Labor Turnover Survey for August.
The Treasury Department releases its report on international capital flows for August at 4 p.m.
Earnings Season
These selected companies are scheduled to release quarterly financial results:
NEW YORK -- Here's a conundrum: younger U.S. adults want to buy a house, but barriers keep getting in the way of them actually buying a new home.
Data that comScore (SCOR) and Realtor.com shared shows that 64 percent of Americans 21 to 34 years of age visited real estate websites and mobile apps in August. That should be encouraging in a nationwide real estate market that is up 9 percent so far in 2015. And to some extent it is -- and it isn't.
"People who believe that millennials are disinterested in homeownership are grossly mistaken," says Jonathan Smoke, chief economist at Realtor.com. "This generation hit the job market during one of the largest recessions of all time, and they've had to work hard to establish credit and save for a downpayment. With the older segment just beginning to enjoy the life events that drive homeownership -- marriage and children -- now is the most appropriate time for them to consider homeownership, and that's what we're seeing."
Despite the increased role of millennials in the housing market, setbacks still exist and are preventing first timers from making even more of an impact.
Smoke also points to some "top impediments" that "signify significant barriers of entry" for younger homebuyers, although he thinks the younger can set can overcome those challenges.
"Despite the increased role of millennials in the housing market, setbacks still exist and are preventing first timers from making even more of an impact," he says. Among other barriers, Smoke says 37 percent of millennials can't find a home that meets their budget; 28 percent can't come up with a decent downpayment and 40 percent haven't found a home that meets their needs.
Not helping matters are tougher mortgage rules from the U.S. Federal Housing Administration, which will factor in student loan debt when considering home mortgage applicants. With an average student loan balance of $27,000 for Americans 40-and-younger, that's a problem for many millennial homebuyers.
One additional issue confronting younger homebuyers is their apparently strong desire to live in hip, urban areas, where homes are more costly.
"Many first time homebuyers are having issues but there are two categories of these homebuyers," says Ian Serota, a sales representative at Toronto, California-based Right At Home Realty. "The ones who are single are finding it hard to find a place to move to that isn't too small for them in a location where they would like. Most don't have vehicles and the lack of public transit outside of the core of the city makes it impossible for them to be outside the city."
The other category includes couples, Serota says, who are looking to start a family or who have kids. "They want to be in good areas with good schools but in most cases those homes can cost 20 to 40 percent more than the less desirable areas," Serota said. "Therefore many are moving to the east end of Toronto and are sacrificing quality of life with terrible commutes in order to get the home they want. Plus, the price of homes in the major cities keep going up, and many younger people do not wish to move to smaller towns as they are accustomed to the big city lifestyle."
Another school of thought from real estate professionals -- millennials have long-since been taught to view the act of buying a house as an investment, and they tend to turn to family to afford that investment, leading to further debt problems on top of student loans.
"Millennial homebuyers should be wary not to 'jump the gun' before they're ready, as homeownership can be financially taxing for first-timers of any age," says Ray Brousseau, executive vice president at Carrington Mortgage Services in South Hadley, Massachusetts. "Millennials should spend three to six months researching their options and talking to a variety of real estate agents, lenders and other homeowners. Ask these resources about how the home buying process works, and what they'd do differently their 'first time.' "
"Additionally, millennial homebuyers should not feel be afraid to disclose personal financial information to a licensed loan officer," he adds. "This will help you gain an idea of how a lender reviews your information. Find out if you can prequalify for a specific loan amount, it can tell you more about what you can afford long term."
Then there's the issue of wanderlust, where this generation of younger adults seems especially reluctant to lay down some strong roots with a new home purchase. "I'm a millennial who recently purchased a home, but I do see my peers being impeded in buying new home," says Scott Trench, director of operations at BiggerPockets a Denver-based wealth management blog. "For example, transience is a problem. Many of my friends and peers seem to be moving all over the country and to new cities year after year. A home purchase signals a commitment to a particular location, and that seems to be a decision that my generation is not interested in making yet."
A lack of financial literacy might also be holding young homebuyers back, adds Trench. "Paying rent is by far the most expensive way to live in most situations," he says. "It takes at least a basic financial background to understand that paying down a mortgage, benefitting from price appreciation, and the myriad of tax advantages available to the owners of real estate make ownership far more powerful financially than renting. Many of my peers haven't even thought about those things, and thus build no home equity."
This isn't to say that younger Americans don't want to buy a new home -- it's just that the problems they have to overcome to buy that home are formidable, and not going away anytime soon.
Shutterstock
Millennials tend to have a dysfunctional relationship with investing. Many of us were just coming of age when the 2008 Recession hit full force, and this has resulted in a deep distrust of the stock market in many young adults. According to a 2014 study, only 46 percent of millennials have an investment account of any kind (IRA, 401(k), etc.). While a few more are saving some cash for retirement (55 percent), it seems that a combination of stock market mistrust, school loans and other debts, and a general lack of knowledge are keeping millennials from preparing for retirement in a meaningful way.
It's not a good thing, but as a member of this generation, I know there's a lot of time to turn things around. That's what I want to talk about here. And it all starts with education. As soon as you start to understand how investment works, and how it is likely to impact your future, you'll want to to start investing. I know this from personal experience. As a member of this generation, I know what it's like to make these changes and start getting prepared for the future. But you've got to start from the beginning.
Why Invest at All?
Not a stupid question. I'm glad you asked. Money loses value over time. This is due to inflation. If you have $10,000 hidden under your mattress, it's not going to have the same amount of buying power in 40 years when you take it out to pay for your retirement. Inflation is the reason that $1 no longer buys a gallon of gasoline. You've got to do something with your money to make it grow faster than the inflation rate. And that requires you to take a risk.
Risk is inherent in all forms of investment. In the 2008 Recession, and in the fallout of the recent stock market drop in China, a lot of people lost a lot of money. If you look at the stock market from the outside, it might seem like a giant random casino. But if you take a look at history, it's got some important patterns that you can start to recognize. Key Fact: The stock market rises more often than it falls. So, if you invest money in the stock market for decades, you have a very high probability of coming out with a lot more money than you started with. But, you've got to invest it the right way.
Source: ModestMoney.com How Do You Invest in the Stock Market Without Losing Everything?
This is something that's important to address. For people who don't know a lot about the stock market, it'll seem like some people win big while others lose it all, and that there's not much you can do to prevent big setbacks. While there's no risk-proof investment strategy, there are some approaches which are tried and true methods that have worked for millions of people. There are tons of ways to invest, but I'm going to outline a common "conservative" investment strategy that's great for people who have never before invested for retirement.
When people succeed at stock market investment, it's usually because they have diversified wisely. Diversification is built upon the knowledge that investing in just one or several stocks is likely to end in disaster. There are hundreds of factors that go into the value of individual stocks, and if you don't spread out your risk, you're likely to lose everything. Think of it like a bed of nails. You wouldn't lay down on a bed made up of 10 nails. But if you make a bed of 500 or 1,000 nails, this lowers the risk factor considerably.
That's where mutual funds come in. There are lots of different funds, but the ones I typically recommend to new investors are Index Mutual Funds. These funds are made up of lots of little bits of shares, taken from all the best performing stocks in individual markets. As individual stocks fall away, they're replaced by new, better-performing stocks. ETFs are mutual funds traded just like stocks. They're a little cheaper to trade, and they're what I'll recommend later on.
Index mutual funds tend to mirror the patterns of the overall markets they're a part of. So if you started investing in IMFs in 1980, according to the chart above, you can see how many times over your initial investment would have grown. Of course, there are certain situations which don't work out for investors, like people who invested in 2000, then divested themselves in 2009. But generally speaking, if you keep these funds active for decades, you will see big growth.
Plus, there are ways to insulate yourself as you get older. Say you are 24 years old, and you're setting up your first investment account. You'll have to decide how much of your investment money you want to put into stocks and bonds. Bond markets jump around a lot less than stocks, meaning there's less risk and less reward. A strategy for many investors is to change their stock/bond allocation with time, putting more of their money into bonds. Bonds won't provide much growth, but they'll still beat inflation, thus preserving buying power, and they are extremely unlikely to result in a sudden loss of your money just before retirement.
So How Do I Do It?
The best way to get the process going is to take advantage of tax-sheltered investment accounts. If you have a job that offers a 401(k), you'll want to be maxing that out every year, because your contributions are matched by your employer (free money). You should also create a Traditional or Roth IRA with a company such as Vanguard or Betterment (though there are many other options). You can check out the differences between those two accounts on your own time, but both are ways the government allows normal people to save for retirement without having to pay so much in taxes.
A company like Betterment is good for people who want a good range of ETFs picked out and organized for them. Go with Vanguard if you want to do-it-yourself and save a little money. But in either case, you'll be able to easily start the process of meaningful retirement investment, and both sites will give you lots of resources to help you plan out your goals.
What Else Should I Know?
There's no end to what can be learned about investment. But there are some important concepts to understand before you begin.
Compound interest: This is one of the coolest parts of investing. As you invest, you earn interest. That interest can be added to the investment pot and earn its own interest. The longer you do this, the faster your investments grow. It's been called the most powerful force in investing.
'Buy and hold': If you follow investment media, you know that analysts and reporters love to freak out over changes to the stock market. Don't listen to them. If you adopt the strategy I've laid out above, your investment is almost sure to survive the occasional drops that always happen in investing. Just remember that, historically, the market grows more than it declines. It is very likely to continue this trend during your lifetime.
Contributions: Of course, you're not just going to invest a lump sum and let it sit for the next 40 years. You're going to make regular contributions to combine with the interest and dividends you're earning from your initial investment. Tax sheltered investment accounts have yearly maximum contribution amounts.
Predicting the market: Danger! Danger! Lots of writers and thinkers have concluded that economic markets are way too complicated for any one person to comprehend. People will sometimes recommend buying and selling stocks all the time to try to take advantage of high and low points. This isn't recommended and frequently turns sound investment strategy into pure gambling.
Anything Else?
I could talk about beginning investment forever, but this is a good place to start. If you have questions or comments, write them down below and I'll address them in a future post. Generally speaking, retirement investment isn't rocket science. If you're a young adult, you've probably still got plenty of time to get the ball rolling with retirement investment. Start now, do a little research and you'll start to see your future look a whole lot more secure. The strategy I mapped out above is likely to work out over years and decades, so if you do nothing else, I recommend you start investing this way today.
No matter how diligent you are at socking away money into your 401(k), you could still be contributing less than you think, thanks to hidden fees and plan costs. According to a study from AARP, about three in five Americans are unaware of how much they're paying in 401(k) plan fees.
Excessive 401(k) fees can eat away your returns. Let's assume that a worker invests $5,000 every year over a 35-year period in a 401(k) plan with an annual return of 4.9 percent. She would end up with $423,000 at the end of period assuming an annual fee of 0.5 percent of the total balance, and with $345,000 at the end of the period assuming an annual fee of 1.5 percent of the total balance.
To claim back control of your retirement account, here are five 401(k) fees to look out for.
1. 12b-1 Fee
Owing its name to the Securities and Exchange Commission Rule 12b-1, a 12b-1 fee is a charge from a mutual fund to cover marketing, distribution, and administration expenses.
The original intent with this rule was to encourage mutual funds to invest in marketing so that more people would buy into the mutual fund. In theory, the more assets that a mutual fund can buy, the better the economies of scale. Unfortunately, the empirical evidence from the SEC shows that mutual funds with 12b-1 fees have higher expense ratios than those without those fees, and that the services rendered to earn the fees don't enhance the fund's performance.
By law, 12b-1 fees can range between 0.25 and 1 percent of a fund's net assets. Given that these fees have shown no benefit to investors, you should try to choose funds that don't charge 12b-1 fees at all. If all your available investment options charge such a fee, go with the one that charges closest to the minimum 0.25 percent.
2. Redemption Fee
A front-end load is one of many sneaky investment fees to watch out for. Front-end load funds have such a bad rap that many investment firms have started advertising no-load fund options.
However, there can be a catch. While no-load funds won't charge you for loading shares, those funds can charge you a fee for unloading your shares too soon. Known also as an exit fee, back-end load, or contingent deferred sales charge, a redemption fee is applied to an investor that exits a fund too soon. How soon is too soon? The minimum holding period ranges from 30 days to one year, so make sure to check your fund's prospectus.
Here are two useful rules of thumb when evaluating redemption fees:
The average minimum holding period to avoid a redemption fee is 65 days, so avoid funds that require you to hold onto your fund much longer than that. While your nest egg should be a last resort fund, you shouldn't be penalized for accessing your money when in need.
The SEC limits redemption fees to 2 percent. However, some funds may charge as low as 0.01 percent. The lower the redemption fee, the better.
3. Exchange Fee
Diversification is a useful investment strategy to lower your market risk. For example, it's generally better to split your investment into three significantly different assets than to "put all your eggs in one basket." If one of your investments tanks, you still have two to fall back on.
Before you fire up the online dashboard of your 401(k) and transfer money from one fund to another, check for applicable exchange fees within your retirement plan. Even worse, some 401(k) plans may tack on additional load and redemption fees when you exchange between funds.
4. Individual Service Fee
On top of your plan's administrative fee, your 401(k) may incur individual service fees related to features that you opted into. You may incur individual service fees when:
Taking a loan from your 401(k) account;
Executing participant investment directions;
Opting for a clause to terminate a contract with your employer before the contract's expiration date; or
Choosing an investment option that includes an insurance component (e.g. annuity).
There are many other types of individual service fees. Keep in mind that some individual service fees that are paid indirectly from the investment options you have chosen may not be listed in your quarterly 401(k) statement.
5. 'Other' Fee
Along with those other fees, 401(k) plans can have a miscellaneous fee category for listing anything that is neither a sales charge nor an account maintenance charge.
Some examples of other fees are:
Custodial expenses;
Legal expenses;
Recordkeeping expenses;
Furnishing statement expenses;
Toll-free telephone service fees;
Transfer agent expenses; and
Other administrative fees.
Depending on the terms of your plan, another fee may be a percentage of your assets invested in the fund or a flat fee.
The Bottom Line
Do your due diligence before choosing funds within your 401(k) plan. To get a full picture of your investment options, you need to go beyond their average returns. The two key documents that you need in order to find out more about applicable fees are the Summary Plan Description and the Annual Report.
Summary Plan Description
Upon joining the 401(k) plan, you receive a copy of your summary plan description. You will receive an updated copy every five years if there are significant changes or every 10 years if there are no changes.
Annual Report (Form 5500 Series)
Every year you should receive a copy. If not, you can examine a free copy from the Department of Labor.
Do you know what fees your 401(k) is charging you? Are they fair?
Mark Lennihan/APMicrosoft co-founder Bill Gates
How American kids apply to colleges these days is all messed up.
(But don't lose hope. Help is on the way.)
Imagine if every time you went grocery shopping, the store refused to tell you how much anything cost -- until you reached the checkout counter. You'd load your shopping cart with bread and milk, bunches of tomatoes and boxes of Cheerios, take it all to the cashier and cross your fingers hoping the price would be reasonable. That's basically the way the college application process works today.
Speaking Truth to Power
Here's how College of William & Mary economics professor David Feldman describes the process:
Start with the FAFSA application for federal student aid, which all students seeking Pell Grants must fill out. Currently, students must fill out and submit a FAFSA indicating their income and assets, then apply to colleges, and then find out how much financial aid they qualify for. It's absurd to require students to apply to colleges before they know which colleges they can afford.
As Feldman says, that just makes no sense. Whether you're talking groceries or higher education, in any logical world, no consumer should have to decide what to buy before knowing the price of what's being sold.
Fortunately, one company is working to bring sense back to the college application process.
Introducing Raise.me
The company in question, 3-year-old educational start-up Raise.me, has partnered with the Bill and Melinda Gates Foundation, Facebook (FB) and other well-heeled backers to rework the college application process. If they're successful, a student entering high school today will be able to graduate four years from now knowing precisely which colleges she can afford -- to the dollar.
Here's how the system works. A student signing up for "Raise" picks from a list of about 80 colleges and universities that have partnered with the site. These schools have agreed to award varying amounts of "microscholarships" for achievements the student unlocks over the course of four years of high school. For example, earning an A in high school Biology might win a $1,000 scholarship for college. Perfect school-year attendance might yield an additional $600 scholarship. Make the JV basketball team? Collect another $300.
Tally up all of these accomplishments, report them to Raise, and you're guaranteed to receive at least the value of the scholarships you've racked up, from the college of your choice.
Caveats and Provisos
There are, of course, a few quirks to the system. For example, according to the National Center for Education Statistics, there are more than 4,700 two- and four-year colleges operating in the United States. Raise so far has recruited only 83 of these schools as "partners."
Already, though, the list includes such big-name schools as Georgetown, Notre Dame, James Madison University, and Oberlin College. Six other schools are "coming soon," and Raise says it is adding "one new college per week on average."
Rules for participation vary widely. Schools participating in the program see Raise as a way to reach out to students and begin recruiting new college applicants earlier in the high school continuum, while tailoring scholarships to attract the kinds of students they most want -- but not all schools are paying big bucks for this privilege. Indeed, some schools are making just $4,000 in scholarships over four years available for each student. Others, however, are going as high as $80,000. The scholarship size for any given activity also varies from school to school. But as a general rule, Raise says the average student participating in the program earned $20,000 in scholarship commitments last year, and "most" colleges are offering scholarships worth up to half the value of four years' tuition.
Case Studies
How does this work in practice? Last year, one student heading to Penn State reportedly earned $9,000 in Raise scholarships, out of a maximum of $16,000 awardable. Had she earned the maximum, these scholarships would have covered nearly 23.5 percent of the school's $16,992 annual in-state tuition. In fact, her scholarship covered barely 13 percent.
At the other end of the scale, two separate students maxed out the $80,000 in scholarships awardable through Raise partner Stetson University in Florida. Stetson charges more than twice the tuition that Penn State charges. But even so, in each case, the Raise scholarships sufficed to cover 52 percent of tuition costs for the four years.
Raise Your Hand -- or Not?
According to the College Board, the average student attending a four-year public college in America pays a net price just 33 percent of the college's list price -- i.e., tuition is discounted by 67 percent through grants, discounts and other non-repayable financial aid. The average four-year private college student pays much more, but still just 40 percent of list price (a 60 percent discount).
Either way, this suggests that with Raise scholarships maxing out at about 52 percent, the new program may not add a whole lot of extra savings for your average college student -- but it doesn't hurt, either. This is because colleges partnering with Raise commit to paying a student a minimum scholarship based on the accomplishments they tick off during high school. These colleges are still free to offer more financial aid.
More important than the absolute dollar value of a Raise scholarship, though, is its value as a planning tool. Receiving firm, irrevocable commitments for scholarships as early as freshman year of high school, a student knows for certain the absolute most he or she will be required to pay to attend any given college participating in Raise. And in direct contrast to the current system of "apply first, then ask for aid," he or she knows that net cost before sending out the first college application.
That right there is going to save perhaps hundreds of dollars of application fees, and countless hours of time filling out paperwork. Even if this were the only benefit Raise offered, it would already be a step in the right direction. The potential for up to $80,000 in scholarship money is just icing on the high school graduation party cake.
Motley Fool contributor Rich Smith has three kids en route to college and spends a lot of time thinking about how to pay for it. He has no financial interest in Raise.me -- or in any company, organization or school named above. He did, however, graduate from the College of William & Mary, and took a course taught by Professor Feldman, quoted up top.
ShutterstockThink of your lender as a casino that wants your money. You want to win, but odds are you're probably going to lose your shirt.By Geoff Williams
If you've ever been significantly behind on a loan, you've probably been asked by a customer service representative if you'd like to apply for a loan modification. You will then hear that a loan modification will lower your monthly premiums and stop the incessant phone calls demanding that you catch up on your payments. What's not to like?
Indeed, there can be a lot to like, but you may come to loathe a loan modification, too. While it may look like your lender is throwing you a lifesaver, it may actually be an anchor. That doesn't mean you shouldn't take a loan modification. But before you jump at the chance, consider all of the angles.
The lender is going to come out on top. That's almost inevitable. It might be helpful, when you're thinking about a loan modification, to pretend that you're in Vegas. Think of your lender as a casino that wants your money. You want to win, but odds are, if you aren't careful, you're going to lose your shirt.
After all, a loan modification isn't a refinance. You refinance when you want a better interest rate, and you have the good credit to get it.
As a general rule, you tend to modify a loan when your credit is bad enough that you can't refinance the loan -- so your lender changes the terms of how you're borrowing for this current loan, so you can get back on your feet and continue paying off the loan. As Steven Hinrichs, a plumber in Willernie, Minnesota, found out, this almost always means that while your payments may become lower, the length of your loan stretches out much further.
Loan modifications are confusing. Partially because of the abundance of legalese in the paperwork, it's easy to agree to something you don't realize you're agreeing to.
That's what happened to Hinrichs.
"My husband did a loan modification on our home several years ago, before we knew each other. What was interesting is that they modified the terms of the loan, however, rather than forgive $40,000, which he was led to believe was happening. That $40,000 is tacked onto the end of the loan," says Hinrichs' wife, Kristin, who owns the company Best in Learning, which provides training products and services for businesses. "They made the payments affordable, but it was a surprise when trying to refinance that the equity that he thought he had was not there."
If you've been through a loan modification, or know something about the process, it isn't surprising that a bank would shift money owed to the back of a loan rather than forgive it entirely (see previous section; the lender is going to come out on top), but Hinrichs says he received a flurry of documents in the mail and had a short phone conversation with someone from his lender. He doesn't believe he was purposefully misled, but nobody spelled out how the modification would work, either.
"They knew what they were going to do before they did it," says Steven Hinrichs, who modified his loan during the recession and when a loved one was sick; he was buried in medical bills.
"They never explained if I had any options," says Hinrichs, who justifies his reluctance to ask a lot of questions by adding: "When you're losing your house, you have a tendency to look at things a little differently."
Hinrichs concedes that he may have well taken the deal anyway, but he would have appreciated more clarity from his bank.
One reason loan modifications are perplexing is that there isn't one approach to modifying a loan. For instance, just because you modified your student loans, for instance, doesn't mean it will work as easily for your home or car, which have their own quirks. Some federal student loans allow you to skip some payments for a few months or a year -- with no interest added. But other federal student loans don't.
Loan modifications are a hassle. If you're drowning in debt and need that lifesaver, you may feel wasted time isn't a big deal, and that's actually a pretty good barometer for deciding whether a loan modification is worth the hassle, especially with a house. If you don't mind being continually frustrated by the loan modification paperwork, you are probably in bad enough shape that you really do need a loan modification, especially if this is a loan for your house, and you're worried about losing your home.
A loan modification for a home can be a very long, frustrating process.
"A loan modification for a home can be a very long, frustrating process," says Anne-Marie Bowen, a consumer debtor bankruptcy attorney in Orlando, Florida, who has a lot of experience with loan modifications. "So unless a person has a very high interest rate, is behind in payments or has other poor terms like an interest-only loan which is about to come due, then the person would not want to go through the hassle of trying to modify their home loan."
Loan modifications attract rip-off artists. Con artists know that consumers tend to ask for loan modifications when they are struggling, and it doesn't help the situation that as soon as your home goes into foreclosure, it becomes a matter of public record. It's like advertising to shifty third-party companies and criminals that, hey, here's another vulnerable victim.
Maribel Alvarez, 53, a divorced mother of four with three kids still depending on her, is a purchasing assistant in Lodi, New Jersey, and discovered the hard way how susceptible loan modification candidates are to scams.
In 2012, Alvarez lost her job as an office manager and was unemployed for a little over a year. She finally landed a job in early 2014, but one that pays $30,000 less than her previous position. Not surprisingly, she fell behind on her mortgage payments.
Alvarez approached her bank to get help. "They indicated that they couldn't help me and offered a short sale," she says.
But in March of 2014, Alvarez received a phone call from a company that told her that her bank suggested she employ its services to work out a loan modification.
Alvarez was relieved, and the company's website looked reputable. But if Alvarez had done more online sleuthing, she would have noticed the company had an abnormal amount of customer complaints with the Consumer Financial Protection Bureau and has been accused of hurting homeowners with illegal loan servicing and debt-collection practices.
"Don't act out of desperation, and take your time to research the company beforehand," Alvarez now advises. She adds that knowing the laws around loan modification would have helped, too. She would have realized that collecting upfront legal fees for loan modification services, before the services are completed, is illegal.
And then she wouldn't have mailed the company a check for $4,165.
She never got her loan modification.
She also never got her $4,165 back.
Alvarez is currently working with PeopleClaim.com, a free (with some premium services) online dispute resolution service, to try to get her money returned.
As for her house, Alvarez has caught up on her payments. "By the grace of God, I've been able to make my mortgage payments by living frugally and juggling with other bill payments. It's been really stressful to say the least," she says.
Geoff Williams is a regular contributor to U.S. News. He is also the author of several books, including "Washed Away," about the great flood of 1913, "C.C. Pyle's Amazing Foot Race," about the infamous Bunion Derby of 1928 and "Living Well with Bad Credit." You can follow him on Twitter @geoffw.
If someone offered you a few pennies for every dollar you spent online, would you say "no" to the free money?
That would be silly, right? But that's what you're effectively doing every time you buy something online without going through a cash-back portal.
These websites receive a commission from merchants ranging from Amazon (AMZN) to Zales, and the websites pass some of it on to you when you purchase from partner merchants. A few dollars here and there might not sound like much, but it adds up -- especially if you use it wisely by putting it toward an interest-earning investment or toward debt, for example.
You can also increase your return when shopping via a cash-back portal by paying with a cash-back or other type of rewards credit card. (Visit our Solutions Center for help finding a new or better rewards card.)
To take advantage of cash-back portals' offers for free money, choose one (or more) and sign up. All of the portals listed below are free to join.
The next time you make an online purchase, visit the portal's website first and click through to a retailer. (This step is critical to getting your cash back.) Then, make your purchase as you otherwise would.
Once you've accrued a certain amount of cash back, which ranges from $5.01 to $25 for the sites below, you can collect your free money. Some cash-back portals automatically send it at set intervals, and others send it whenever you request it.
All of the following websites offer the option of a check by mail and most offer other payment options.
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What types of cash-back offers do you take advantage of? How do you spend the free money? Share your thoughts in our Forums. It's a place where you can swap questions and answers on money-related matters, life hacks and ingenious ways to save.
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NEW YORK -- General Electric Co. reported a better-than-expected quarterly profit Friday, as its businesses producing jet engines and power turbines offset declines in its oil and gas segment.
The U.S. conglomerate, which is pulling back from financial services, said its third-quarter industrial revenue grew 4 percent, excluding the impact of foreign currency swings and acquisitions.
Orders plummeted 26 percent and revenue was short of some analysts' estimates. GE backed its full-year profit target.
GE (GE) shares, up about 10 percent since activist investor Nelson Peltz unveiled a $2.5 billion stake in the company earlier this month, were little changed at $28 in premarket trading, after earlier slipping nearly 2 percent.
"It's a messy report," said Tim Ghriskey, chief investment officer at Solaris Asset Management, which owns GE shares. Still, Ghriskey said GE's 9 percent rise in organic industrial profit represented "great growth."
Fairfield, Connecticut-based GE has been in the midst of an overhaul since April, when it said it would divest some $200 billion worth of its GE Capital financing assets to focus on industrial manufacturing.
As part of its retreat from financing, GE said Friday it expects to retire as much as 7 percent of its outstanding floated shares by mid-November, as it completes the spin-off of its former retail finance business, Synchrony Financial (SYF). The Federal Reserve earlier this week said Synchrony could function as a standalone company.
GE reported third-quarter net earnings fell 29 percent from a year earlier to $2.51 billion, or 25 cents per share.
Excluding special items, earnings of 29 cents a share exceeded the average estimate of analysts by three cents, according to Thomson Reuters I/B/E/S.
Revenue slipped 1.3 percent to $31.68 billion, with revenue in its oil and gas segment dropping 16 percent amid weakness in crude prices.
Revenue in its aviation segment increased 5 percent, while revenue in its power and water division, its biggest segment, grew 1 percent.
Sanford Bernstein analyst Steven Winoker said GE's industrial revenue came in about $560 million below his estimate.
WASHINGTON -- U.S. industrial production fell for a second straight month in September on renewed weakness in oil and gas drilling, the latest indication that the economy lost momentum in the third quarter.
Industrial output slipped 0.2 percent after a revised 0.1 percent drop in August, the Federal Reserve said Friday.
Economists polled by Reuters had forecast industrial production slipping 0.2 percent last month after a previously reported 0.4 percent decline in August.
Industrial production rose at an annual rate of 1.8 percent in the third quarter.
The industrial sector has been undermined by a slowing global economy and resurgent dollar, which have eroded demand for U.S. manufactured goods. It is also being weighed down by lower energy oil prices that have undercut capital investment in the energy sector, as well as a so-called inventory correction.
The weak industrial production report added to soft trade, retail sales and employment data that have suggested a significant slowdown in growth after the economy expanded at a 3.9 percent annual pace in the second quarter.
Third-quarter growth estimates are currently below a 1.5 percent rate. Slower growth and low inflation have diminished expectations of an interest rate hike from the Fed this year.
Manufacturing output fell 0.1 percent even though robust demand for automobiles lifted motor vehicle and parts production by 0.2 percent. Manufacturing output dropped by a revised 0.4 percent in August, which was previously reported as a 0.5 percent drop.
For the third quarter, manufacturing output increased at a 2.5 percent rate.
There were declines in the production of computer and electronic products, as well as electronic equipment, appliances and components. Primary metals and machinery output increased.
Mining production fell 2 percent as oil and gas well drilling tumbled 4 percent after increasing for two straight months. An almost 60 percent plunge in oil prices since June 2014 has hurt the profits of oil-field companies such as Schlumberger (SLM) and Halliburton (HAL), leading to deep cuts in their capital spending budgets.
Utilities production increased 1.3 percent in September. With output declining, industrial capacity use fell to 77.5 percent from 77.8 percent in August.
Officials at the Fed tend to look at capacity use as a signal of how much "slack" remains in the economy and how much room there is for growth to accelerate before it becomes inflationary.
David Paul Morris/Bloomberg via Getty ImagesElon Musk, chairman and chief executive officer of Tesla Motors, speaks Wednesdayat the company's headquarters in Palo Alto, Calif. Tesla began rolling out the first version of 'autopilot' features to owners of its all-electric Model S sedan Thursday.
There were plenty of winners and losers this week, with the world's top brand in electric vehicles rolling out a compelling new feature and an NFL star taking the world's largest soda distributor and a cereal giant to task.
Shares of the leading premium video service slumped Thursday after it posted uninspiring quarterly results. Revenue and earnings fell just short of analyst expectations, and when your stock has more than doubled this year, you can't afford to not be perfect.
The most surprising nugget in Netflix's report was that it added just 880,000 more domestic streaming subscribers than it lost during the period, making this Netflix's worst showing on that front in more than a year. Netflix blamed part of the slowdown on newly distributed chip credit cards that resulted in folks unable to automatically renew their monthly subscriptions, resulting in a spike in involuntary churn. Some skeptical Wall Street pros aren't buying it.
We are getting closer to a future of self-driving cars. Tesla vehicles received a software update this week that allows the car to kick into Autopilot mode. Similar to the airplane feature bearing the same name, the mode enables drivers on steady-moving freeways to let Tesla's sensor-driven computer take control. It respects the space around it, and a simple tap of the turn signal results in a lane change at the next viable opportunity.
Tesla's Model S has won critical raves for years as a car. It's ironic that a car that is reportedly so fun to drive is also the one leading the way to driving itself. Drivers still need to take control on slow-moving roads and city streets, but Tesla says that the truly autonomous car is now just a couple of years away.
The NFL's leading quarterback is speaking his mind on sugar consumption, and it's not what beverage giant Coca-Cola and cereal star Kellogg want to hear. Tom Brady got a bit animated in an appearance on a Boston sports radio show. He said that Coke was "poison for kids" and that all of the money that Coca-Cola spends on marketing amounts to quackery.
He also took a bite out of Kellogg, blaming Frosted Flakes as one of the many reasons for this country's obesity problem.
Coca-Cola and Kellogg fought back, defending their products. It's true that Brady's reputation may be shaky after his alleged involvement in the Deflategate scandal involving underinflated footballs, but he's still one of the league's biggest stars. When he speaks, folks -- and particularly impressionable children -- listen.
Playboy -- Winner
In a surprising move, Playboy announced that it would no longer publish naked pictures of women in its magazine. Playboy will rely more on its articles than pictorials and centerfolds come next year, and going the PG-13 route does have it benefits.
Playboy realizes that it can't compete with free online porn. Access to titillation is too easy in this digital age, and even an iconic brand like Playboy hasn't been immune.
Cleaning things up will be a gamble, but it's one that will probably result in a broader range of advertisers and possibly even its readership. It's the right call. Playboy had just better hope that it didn't wait too long to do this.
If "pink slips" were a trending hashtag this week, it's probably because Twitter is cutting some of its employees loose. The social media giant dismissed more than 300 of its workers Tuesday. One can argue that layoffs are a natural part of the corporate cycle, but the trimming process has a funny way of drying up morale.
It's not just some employees who are packing their things and moving on. JMP Securities downgraded the stock. Concerns about slowing usage growth -- and not the layoffs -- are at the heart of JMP's lukewarm opinion on Twitter as an investment.
Motley Fool contributor Rick Munarriz owns shares of Netflix. The Motley Fool owns shares of and recommends Netflix, Tesla Motors, and Twitter. The Motley Fool has the following options: long January 2016 $37 calls on Coca-Cola, short January 2016 $43 calls on Coca-Cola and short January 2016 $37 puts on Coca-Cola. The Motley Fool recommends Coca-Cola. Try any of our Foolish newsletter services free for 30 days. Check out The Motley Fool's one great stock to buy for 2015 and beyond.
No matter which sport or teams you're rooting for, going to the big game can mean big costs. Luckily, there are a few ways to go to the stadium without forfeiting your savings.
First, buying food at the game can quickly eat up your cash. Most concession items are overpriced, and believe it or not, some stadiums will actually let you bring your own food. Before you go, be sure to check your team's policy.
Next, if driving to the game is your only option, don't park your car at the stadium. Instead, use the ParkMe app to type in the name of your arena and you'll find a detailed map of all the cheaper parking lots in the area. By drafting a game plan, you'll get to the field without getting ripped off.
Finally, avoid the pricey merchandise from stadium stores at all costs. Chances are you can buy comparable jerseys and memorabilia online or from a local retail store at a fraction of the price.
Before you head to the big game, remember these tips. You'll see that with a little planning, you can score a home run at the game.
Ted S. Warren/APA worker places an item in a box for shipment during a media tour of the new Amazon.com fulfillment center in DuPont, Wash.By ANNE D'INNOCENZIO
BETHELEHEM, Pa. -- Christmas won't come early this year, but the gifts might.
Just in time for the winter holiday shopping season, Amazon (AMZN), Walmart (WMT), Macy's (M) and other retailers are working behind the scenes to make sure they can deliver online orders to shoppers faster.
Retailers are building bigger warehouses -- some the size of 20 football fields -- to handle shipments. They're also sending orders to shoppers directly from their stores and using sophisticated software that tells them the quickest, cheapest way to get orders shipped. And Amazon is cutting the time it takes to process an order from hours to minutes by using robots to pull items for shipment in its warehouses.
It's a race for time by retailers as more people shop online. U.S. online sales are expected to increase 12 percent to $371 billion this year, accounting for 10 percent of overall retail sales, says Forrester Research. But as online shopping grows, so does the impatience of shoppers who want their orders fast.
Traditional brick-and-mortar stores are trying to catch up to Amazon.com, which set the standard for speed with its two-day delivery for members of its Prime loyalty program who pay $99 a year. But even Amazon feels pressure to please customers who have little tolerance for lengthy delivery waits.
"I would like to plan ahead, but I've been able to wait until the last minute to get things done," said Keri Early, a Clyde, Illinois, resident who orders from Amazon frequently.
For many retailers, the goal to meet the demands of shoppers like Early for speedy service is to make two-day delivery standard. That's half the average for standard delivery for the top 40 online retailers, according to data company StellaService. But most are stopping short of guaranteeing customers faster deliveries.
Walmart says it aims to get packages to shoppers who get standard shipping within two days for a majority of the U.S. this holiday season. The retailer now uses 83 of its more than 4,500 U.S. stores to ship to customers.
The world's largest retailer also is spending $1.2 billion to $1.5 billion in online investments this year and $1.1 billion next year. That's up from last year's $1 billion. The investments are squeezing profit: Walmart stock tumbled Wednesday after it warned earnings would be down as much as 12 percent next year in part because of its heavy spending on e-commerce.
Still, Walmart is spending to stay competitive with online rivals. Since last year, the world's largest retailer has opened five warehouses across the country in Bethlehem, Pennsylvania, Fort Worth, Texas, Plainfield, Indiana, and Atlanta to handle online orders. Two more are opening in Florida next year.
The new warehouses each will ship hundreds of thousands of orders daily, four to five times its dozens of existing smaller warehouses. Each new warehouse has about a million items, five times the network of older warehouses. That will enable Walmart to offer more consolidated orders arriving in fewer boxes.
More Efficient, Faster
"This is going to allow us to be more efficient, to do it faster, to do it cheaper and be more accurate with the orders, which is important with the customers," said Greg Foran, CEO of Walmart's U.S. business.
One of Walmart's two Bethlehem, Pennsylvania, warehouses opened in July and is considered the retailer's crown jewel. It has two towers with four stories of the fastest moving items of the season that can be retrieved through a computerized chute. For example, for the holidays, that would include iPads and swimsuits for the summer
"By mid-November, this place will be humming," said Justen Traweek, Walmart's vice president of e-commerce operations and fulfillment.
Other retailers also have built new warehouses to meet demand:
Home Depot (HD) opened its third and largest warehouse in Troy, Ohio, in September to handle online orders. The retailer plans to open two others early next year. Together, these warehouses will allow Home Depot to ship to 90 percent of shoppers within two days.
Macy's new facility, which recently opened in Tulsa, Oklahoma, will enable the retailer to send 90 percent of packages in central western states within two days. By year's end, Macy's says the chain will be able to deliver packages within two days overall, faster than its standard of three to six days.
Target (TGT) opened two new warehouses this year. It also is now shipping products from 462 of its 1,800 stores, up from 150 a year ago. Target said online shoppers are likely to get deliveries within two days if the product is delivered from the store, compared with four days from the warehouse.
Target also launched a program that enables it to let shoppers know a precise delivery date. That's instead of offering a wide delivery window of four to six days, for example.
Nordstrom (JWN) opened a third warehouse in Elizabethtown, Pennsylvania, to handle online orders. That will eventually allow the chain to deliver orders to half of its customers in two days.
"You know our friends in Seattle continue to set the standard," Mike Koppel, Nordstrom's chief financial officer, told investors in September, referring to Amazon. "In order to be an exemplar in that, you're going to have to invest in that because that's what people are going to expect."
For its part, Amazon, which has 50 U.S. warehouses that typically house millions of products, is building a facility in Kent, Washington that will house 20 percent more items.
Amazon also acquired Boston-based robotics company Kiva in 2012 for $775 million. The robots pull shelves of goods out of storage areas and bring them to workers. Amazon now has more than 30,000 robots in 13 warehouses.
"We're using software and algorithms to make decisions rather than people, which we think is more efficient and scales better and will be more accurate," Amazon.com Chief Financial Officer Brian Olsavsky said in July.
It's not enough that they get to surf and drink Mai Tais, people living in Hawaii also lead the nation in financial well-being, according to a study published by Gallup.
Gallup, along with Healthways, looked at state-by-state surveys conducted daily throughout 2014. The surveys questioned people about their ability to afford food and health care, whether they could afford to do what they'd like to do, and about their feelings related to their finances. Based on the responses, the researchers rated financial well-being on a scale from 0 to 100, with 100 being the highest.
The national average for 2014, the first year such a study has been conducted, was 59.7. As noted, Hawaii topped the list with a 66. Alaska was second with a 65.1, and North Dakota third with 64.7.
At the bottom was Mississippi, with a score of 56.1. Other low-scorers were Tennessee at 57.5 and Georgia at 57.8. See a pattern there? It continues: The bottom 10 states were all in the South. Eight of the top 10 were contiguous states in the Mountain West and Midwest, from Wisconsin to Montana, and south as far as Nebraska.
Gallup notes that differences in income, employment and age may account for the regional pattern.
Gallup notes that about half of Americans say they are now feeling better about their finances, an improvement from the 43 percent who said that just two years ago.
Molly Riley/AP
DETROIT -- General Motors Co. (GM) has another ignition switch problem that can cause engines to stall, but this time it was discovered before anyone got hurt.
The automaker is recalling about 3,300 big pickup trucks and SUVs mainly in North America to fix the ignitions, which can get stuck in the "start" position and slip into "accessory" if jostled. That causes engines to shut off and disables power steering, power brakes and possibly the air bags.
The problem is similar to one last year in older GM small cars that cost the company billions and brought an admission that engineers and others knew about the trouble but didn't act to recall the cars for a decade. GM recalled 2.6 million cars worldwide such as the Chevrolet Cobalt to fix the faulty switches, which are responsible for crashes that caused 169 deaths and hundreds of injuries.
This time, an employee who owned one of the trucks had the problem and informed higher-ups through GM's new "Speak Up For Safety" program, which rewards workers for reporting safety issues, spokesman Alan Adler said. The company moved quickly to recall the trucks, keeping the number relatively small, Adler said. GM had five reports of engines shutting off but no crashes or injuries were reported, he said.
The recall covers 2014 Chevrolet Silverado and GMC Sierra light-duty pickups, as well 2015 heavy-duty pickups and the 2015 Chevy Suburban and Tahoe SUVs.
The trucks have ignition lock gears with an outer diameter that is larger than specifications, making them difficult to turn. The keys can get stuck in the "start" position at high interior temperatures, and if driven that way, it could slip into "accessory" if jostled or the cabin temperature cools, GM said in a statement issued Friday.
While the truck problem is similar to the Cobalt, Adler says the cause is different. The Cobalt switches didn't have enough resistance to keep from slipping out of the run position.
Dealers will replace the ignition lock housing, the GM statement said.
NEW YORK -- U.S. stocks ended higher Friday, notching a third week of gains, lifted by a jump in General Electric shares and upbeat consumer sentiment data.
The S&P 500's three weeks of gains marked its longest winning streak since May, extending a rebound from the market's August sell-off.
GE (GE) shares rose 3.4 percent to $29.98, hitting their highest level in seven years, after the company reported better-than-expected earnings. The stock was among the biggest boosts to the S&P 500 and Dow.
Mattel (MAT) jumped 6 percent to $23.89 and was the biggest percentage gainer in the S&P 500, even after its sales missed estimates.
Consumer sentiment data helped. The University of Michigan's preliminary index on consumer sentiment rebounded strongly in early October, suggesting that the economic recovery remained on track.
"We're in a window right now of roughly between 2,000 and 2,050 [for the S&P] that is fairly important for the market. That's the point at which the market broke down in August. If we can hold above 2,000, that would be good thing," said Paul Nolte, portfolio manager at Kingsview Asset Management in Chicago.
Also, he said, "we're in the better part of the year from a seasonal perspective. Certainty with the selloff that we've had in the third quarter, it sets up for potentially a good fourth quarter."
The Dow Jones industrial average (^DJI) rose 74.22 points, or 0.4 percent, to 17,215.97, the Standard & Poor's 500 index (^GSPC) gained 9.25 points, or 0.5 percent, to 2,033.11 and the Nasdaq composite (^IXIC) added 16.59 points, or 0.3 percent, to 4,886.69.
For the week, the Dow rose 0.8 percent, also registering a third week of gains, while the S&P 500 was up 0.9 percent and the Nasdaq gained 1.2 percent.
Third Quarter Earnings
Forecasts for S&P 500 earnings improved slightly as more companies reported results. Third-quarter earnings are now expected to have fallen 3.9 percent, compared with Monday's forecast for a decline of 4.8 percent, according to Thomson Reuters (TRI) data.
On the down side, Honeywell (HON) fell 1.5 percent to $97.03 even though it also beat profit estimates. Industrial tool-maker Grainger (GWW) slumped 6.3 percent to $207.65 after results.
Other domestic data released Friday showed a lackluster industrial production picture, with industrial production shrinking for the second month in a row in September, in line with expectations.
The Federal Reserve, which kept rates at near-zero levels at its September meeting, is waiting for signs of stabilizing inflation and sustained economic recovery before it pulls the trigger on a rate hike.
Twitter (TWTR) rose 4.8 percent to $31.15 after Bloomberg reported that former Microsoft Chief Executive Officer Steve Ballmer owns a 4 percent stake in the company.
Advancing issues outnumbered declining ones on the NYSE by 1,829 to 1,225, for a 1.49-to-1 ratio on the upside; on the Nasdaq, 1,428 issues fell and 1,330 advanced for a 1.07-to-1 ratio favoring decliners.
The S&P 500 posted 21 new 52-week highs and 4 new lows; the Nasdaq recorded 56 new highs and 25 new lows.
About 6.6 billion shares changed hands on U.S. exchanges, compared with the 7.5 billion daily average for the past 20 trading days, according to Thomson Reuters data.
-Abhiram Nandakuma contributed reporting from Bangalore, India.
What to watch Monday:
The National Association of Home Builders releases its housing market index for October at 10 a.m. Eastern time
Earnings Season
These selected companies are scheduled to release quarterly financial results:
Richard Vogel/APIf you decide to hold an open house, make sure to promote it online and with signs to draw in buyers.By Teresa Mears
Despite all the changes technology has made in how houses are bought and sold, one standard feature of the process remains: the Sunday open house.
Shortly after a house goes on the market, the listing agent will set aside a Sunday afternoon to welcome prospective buyers (plus nosy neighbors) to see the house at its best.
It's very, very important you have open houses, especially the first few weeks when [the home is] on the market.
But has the open house gone the way of the landline and outlived its usefulness? It depends whom you ask. Some agents believe modern life has rendered open houses unnecessary, while others believe they are more important than ever.
"It's very, very important you have open houses, especially the first few weeks when [the home is] on the market," says Steven Aaron, head of the Steven Aaron Realtor Group at Keller Williams Beverly Hills. "It makes it convenient for the buyers to come and see the house without an appointment."
Craig McClelland, COO of Better Homes and Gardens Real Estate Metro Brokers in Atlanta, agrees about the importance of open houses.
"I think it's a great way to expose the house to people who are driving around," McClelland says. "People want that instant gratification. ... People want to see it now."
But some agents say that, far from finding open houses convenient, today's buyers want to see homes on their own schedule. Kevin Kudrna, a team leader and broker for Redfin in Colorado Springs, Colorado, says he tells his sellers that the chance of selling a home to someone who attends an open house is so small that it's not worth the trouble.
"In 2015, an open house isn't what it used to be," Kudrna says. More than 90 percent of buyers start their searches online, according to the 2014 National Association of Realtors' Profile of Home Buyers and Sellers, and the photos and videos let them rule out many homes without having to visit. "When the Internet started to bring all the listings online, people didn't have as much of a need to go into the houses."
Kudrna does admit there is an advantage to open houses. "When someone is looking into the neighborhood, it's right there in front of them," he says. But, he adds, "There are so few [open houses] it doesn't provide much opportunity."
There are no reliable statistics on how many home sales occur because of open houses. The 2014 NAR Profile of Home Buyers and Sellers found that 9 percent of buyers found the home they purchased from a yard sign or open house, down from 15 percent in 2001. But the data didn't split out yard sign from open houses.
McClelland's brokerage finds open houses so important that the company organizes a monthly Super Sunday and heavily promotes all the open houses via advertising and social media, even having a drawing for $1,000 for one lucky visitor. The firm also developed an in-house training course on doing an effective open house.
"It's really evolved over the past seven to 10 years," McClelland says. A decade ago, visitors had questions about neighborhoods and schools. Most buyers today have answered those questions with Internet research and are ready to see specific homes.
"Now they come in much further down that sales cycle where they're more ready to draw up a contract," Craig says. "They already know everything about the neighborhood."
Marketing Tool
But Kudrna sees more open house visitors from early in the sales cycle -- people who are looking for homes but haven't narrowed down their options enough to be ready to buy.
"All of the open houses I do, the majority of the people are neighbors," Kudrna says. Not everyone sees that as a negative, since neighbors may share details about the home with friends and family looking to buy or become clients of the agent later -- though that may not help the current sellers. Critics of open houses have long argued that the true beneficiary of an open house is the real estate agent, who can meet new clients.
Kudrna deals with a lot of buyers who are relocating and searching from afar. For those clients, he does personal tours via FaceTime or Skype. Even for local buyers, the photos and virtual tours provided with many listings may take the place of Sunday drives through neighborhoods, he believes.
Redfin lets clients book home tours on its website without making a phone call, though the agent will call back to confirm. "People are wanting that instant access," he says.
"In Denver and a lot of the markets now, houses are going into contract sometimes within hours," Kudrna says. "People want to be able to get into the house now, not to wait for an open house."
Regional Differences
Local custom may also help determine the usefulness of an open house, especially in the sellers' market that is in effect throughout much of the country. In parts of California, for example, agents who are expecting multiple offers on a home may schedule an open house and not make appointments or accept offers until after that date.
"You end up with multiple offers in two weeks," Aaron says. "You have to have the open house to get the people in there."
Even agents who see value in open houses don't believe they're a good fit for all homes. Most agents require lookers to be prequalified before they can see higher-end homes or homes owned by celebrities. Some condos or co-ops ban or set strict limits on open houses.
Keeping the home secure during the open house isn't all that difficult, agents say. "It's not that hard to control it and control what's going on," McClelland says. Valuables should be put away, and Aaron advises his clients to secure prescription medications, money, jewelry and blank checks, not just stash them in a drawer.
For open houses to be effective, they also have to be sufficiently advertised, both online and with yard signs at major intersections as well as in front of the house, so people can follow the signs in from the main road. The home should also to be well-staged, with both the owners and their personal photos out of sight so the prospective buyers can envision themselves living there.
"You want to allow them to dream while they're in the house," McClelland says. "It's all about buying a dream."
Visiting the doctor isn't exactly an enjoyable experience.
But what feels worse? Opening your mail weeks later, only to face a medical bill that you didn't anticipate.
About two-thirds of American adults -- or a whopping 155 million of us -- have been confronted by that unpleasant surprise in the past year, according to a Vitals Index survey.
In many cases, that's because the price tag hadn't even come up. While the majority of survey respondents feel out-of-pocket medical costs impact their budgets "seriously" or "very much," 3 out of 5 don't ask their doctors about the cost of a service they're about to receive.
Think about that for a moment ... Would you buy a smartphone or a sofa without considering the price?
Why approach a medical purchase any differently?
Well, it turns out these cost conversations typically don't happen for one of three reasons: patients believe their insurance will foot the bill; they don't think their doctor knows the cost of the procedure; or they aren't even aware they can ask about the price tag for recommended services.
Besides having a heart-to-heart with your doctor, you can also reduce your chances of an unexpected bill by getting more familiar with your insurance plan.
A good starting point is to confirm the amount of your health insurance deductible (something nearly 25 percent of respondents couldn't cite offhand).
And if you need a health insurance refresher, consult our glossary of 12 need-to-know terms -- and you'll be in better shape to tackle this fall's open enrollment period.
No doubt it's easier to go to the store and buy something than to make it with your own hands. There are a number of reasons to get into the DIY spirit, though. First and foremost, it's possible to save a bundle by doing it yourself. But tackling a project instead of picking up an item off the shelf is also a way save money long term, because you'll always know how to fix it and make another if need be.
Latex mattress. A high-quality mattress made of natural rubber can cost thousands of dollars. If you're willing to do some research and put in the time, it's possible to build your own version of a latex mattress for a third of the price. Renegade Health offers a tutorial using a latex pad, mattress cover and mattress pad. Before taking on this project, take some time to familiarize yourself with quality latex mattresses. Visit stores and test out the real thing to get a sense of what feels comfortable.
Sprinkler system. You don't have to install an expensive in-ground sprinkler system to get a green lawn that's the envy of the neighborhood. According the DIY website Instructables, anyone can rig up a sprinkler system with custom-length garden hoses and sprinkler heads on spikes that can be moved around in the yard as needed -- and taken along should you move.
Speakers. A quality home audio system can bring movies and music to a whole new level of listening enjoyment. It's no secret a good system purchased in store can cost hundreds of dollars. Popular Mechanics recommends that woodworkers (and those who have a drill handy) build their own speakers with wood planks for a quarter of the price of a store-bought version.
Coffee roaster. Few things smell better than the scent of fresh roasted coffee. True coffee connoisseurs know they don't need to spend hundreds on a gourmet coffee machine or a pretty penny every month on already roasted beans. Wired suggests using a cheap popcorn popper as the base for a DIY roaster. (Beware: The process requires skill with a hammer and nails, wood, and a stovetop.)
Headboard. A bed headboard is one of those items that can be so easy to make, it's almost embarrassing to buy one. With DIY options ranging from an old door to a wooden fence, the website DIY & Crafts offers 40 inspirational ideas for making your bed extra dreamy for very few dollars.
Compost bin. Composting is an ideal way to handle the plethora of fall leaves everywhere, as well as reduce your carbon footprint. Instead of buying a bin, be a true recycler by using household items to create a composter. The website TreeHugger suggests using an old garbage can or plastic bin as a composter. Just drill some holes -- and voila.
Pillows and cushions. A gorgeous accent cushion from a store like Restoration Hardware easily tops $60. Instead, spend a fraction of that amount and highlight your home with self-made cushions. The website Apartment Therapy suggests a technique for padding a window seat that employs scissors, staples and plywood sheets, which even the least sewing-minded folk can handle with relative ease.
Tasty candy. Admittedly, a bag of candy doesn't usually cost a fortune. But making your own version of your favorite sweets is also cheap and possibly healthier (because you know what's in them). A recipe for homemade gummy bears from the blog Simply Taralynn uses gelatin, fruit, a bit of sweetener and some juice.
Baby wipes. For anyone with a child, baby wipes are a necessity right up there with toilet paper and soap. Baby wipes range in price, but buying box after box week after week adds up. To save money, make your own (and forget about ever running out) with easy instructions from the blog White House Black Shutters. Paper towels, water, coconut oil, a bit of cleanser and plastic containers are all that's needed.
Makeup. Get glowing without the exorbitant price tags and chemical ingredients that are part and parcel of so many cosmetics. A list of 22 do-it-yourself makeup recipes from the blog You're So Pretty provides an easy, fun alternative. It's even more cost-effective because you can customize the shades. No more buying a color and bringing it home only to see that it looks terrible without department store lighting.
Getty ImagesWhen choosing a new water heater you should consider not only the number of gallons the tank holds, but also the number of gallons the unit can supply an hour.By Teresa Mears
When Grayson Bell moved into a new home in Raleigh, North Carolina, last year, he planned to replace his 27-year-old water heater.
The founder of personal finance blog DebtRoundup.com, Bell thought he could save money by installing a tankless water heater. But after consulting more than a dozen plumbers, he found that with an initial cost of $4,500, it would take more than 18 years for the savings from lower energy costs to equal his initial expenses. That was enough to convince him to buy a traditional 50-gallon electric tank.
"I was dead set on getting a tankless because I heard about how much money you can save," Bell says, but he found that any energy savings would be eaten up by installation costs. He ended up paying $1,200 for a traditional water heater, which included moving the unit, a new stand and a new extended drain. Bell determined a tankless electric installation would save only about $15 a month. "It doesn't really save you that much," he says.
Most people don't do quite that much research, especially if it's an emergency, but it's good to know your options ahead of time and have an idea of how much each will cost in the short term and long term. Gas water heaters last about 10 years and electric about 15 years, on average, so if your water heater is nearing that age, you might want to investigate options now.
There are two major types of water heaters: traditional storage tanks that hold 20 to 80 gallons of water and tankless heaters, which heat water as it passes through the unit. Each type comes with variations that can be used with gas, propane or electricity. You can also buy solar water heaters, with an electric or gas backup.
Most people buy the water heater from the plumber who installs it, though you can buy your own from a hardware store. Discuss options with your plumber and tell him or her about your needs: more hot water, energy savings or other considerations, plus ask for recommendations.
"If your current water heater is meeting your water needs, your best bet is to replace it with the same thing.
The most economical option is typically to replace an existing water heater with the same kind and same fuel source, and for most homeowners that will be a storage water heater. Changing fuel source or type can require expensive retrofitting.
"If your current water heater is meeting your water needs, your best bet is to replace it with the same thing," says Rick Muscoplat, a contributing editor for FamilyHandyman.com.
Even if you replace like with like, you may still find yourself facing added costs for permits, upgrading to meet current codes or accommodating heaters that meet new Environmental Protection Agency standards for energy efficiency that went into effect in April.
"It can almost double the price of what you think it's going to call for," says Mary Kennedy Thompson, a licensed plumber and COO of The Dwyer Group, the parent company of 11 home service franchise brands.
The changes for smaller storage water heaters are minimal, while tankless water heaters already met the new EPA standards. Storage water heaters of 55 gallons or more will have to use new technologies that make them significantly more energy efficient but also larger. Heat-pump technology, which draws heat from the surrounding air to increase efficiency, has been added to electric water heaters, and new gas water heaters use condensing technology to keep warm air from escaping. While these options are more expensive, they save additional energy.
When Thompson recently replaced her water heater in Waco, Texas, she opted to stay with a traditional electric storage heater. "I did not put a tankless in because of the cost," she says. "Clearly a tankless water heater is going to be the more expensive route."
Thompson and Muscoplat say that replacing a storage water heater with a tankless heater only makes sense if your existing water heater isn't meeting your family's needs and, even then, a larger storage heater may be the better option. "Where I think tankless water heaters make sense for retrofitting is if you have a shortage of space and run out of hot water a lot," Thompson says.
Before committing to any water heater, you should know what will be required to install it. A natural gas tankless heater may require a larger gas line, new flue, new water lines and the addition of an electrical line. Installing an electric tankless heater is likely to require additional electrical work because the tankless heaters draw so much current. There are tankless heaters that use propane, but Muscoplat says they are generally not practical for residential use because a large propane tank would be required.
All those extras can bring the cost of adding a tankless water heater to an existing home to $8,000 or more. Plus, he says, tankless heaters should be flushed out twice a year with a descaling agent, at a cost of about $175 each time, and the sensors and electronics make them more expensive to repair.
"Are they saving money? Absolutely not," Muscoplat says. "A tankless water heat in a retrofit costs a fortune to install. Never buy a tankless water heater thinking that you're going to save money."
On the other hand, tankless water heaters are more energy efficient than their storage tank counterparts and they provide almost endless hot water, so they can be a good choice for new construction or if you're doing a major renovation project.
Here are three things to look for when choosing a water heater.
Size. Consider not only the number of gallons the tank holds, but also the "first hour rating," which is the number of gallons the heater can supply an hour. You can find that number on the EnergyGuide label. Remember that a 50-gallon tank will only provide about 35 gallons of water because as you use the hot water it is replaced by cold. If the average eight-minute shower uses 17.2 gallons, that means you can get two showers from a 50-gallon tank with a first hour rating of 35.
Retrofitting. Most municipalities require a permit to install a water heater, plus some newer water heaters take up slightly more space. When choosing a water heater, consider how much you'll need to spend to make it fit or to comply with current building codes. Some newer gas heaters also require the installation of an electric line.
New technologies. The newer types of tank water heaters -- heat pump for electric and condensing for gas -- cost more but use less energy. Do the math to calculate whether they're the right choice for you. Interview multiple plumbers and get at least three bids for any type of water heater you're considering.
Teresa Mears writes about personal finance, real estate and retirement for U.S. News and other publications. She's also written for MSN Money, The Miami Herald, The New York Times and The Boston Globe. She publishes Living on the Cheap and Miami on the Cheap. Follow her on Twitter @TeresaMears.
It might not seem worth it to go to the trouble to eliminate small expenses from your budget. After all, how much of a hit could your bank account really be taking if you spend a few dollars here or there? A big hit, actually.
Just cutting $5 a day from your daily spending could save you $1,825 a year. Then, if you were to set aside those savings each year for 30 years, you'd have more than $180,000, assuming a 7 percent annual return.
Here are 15 ways you could easily save several dollars a day. The actual amount you can save will depend on your spending habits, but these examples show that it is possible to find an extra $5 in your budget daily.
1. Stop Getting Breakfast on the Go
Brown bagging your lunch can help avoid blowing several dollars a day on fast food or restaurant meals. But a growing number of consumers are seeking convenience for the first meal of the day, said Kendal Perez, a money-saving expert with Coupon Sherpa. Visits to restaurants grew 5 percent from June 2014 to June 2015, according The NPD Group, a research company.
Considering that the average cost of a restaurant breakfast is about $5, according to a CBS News report, you'll save by eating at home or creating a stockpile of breakfast items at work. Perez recommended storing low-cost items such as bread, peanut butter, granola bars or even frozen breakfast sandwiches at the office so you won't be tempted to buy a pricey breakfast on your way to work.
2. Adjust Your Tax Withholding
If you usually get a big tax refund, you could easily save more than $5 a day by adjusting your tax withholding. That refund means you're letting Uncle Sam hang onto too much from your paycheck each month.
File a new W-4 form with your employer to claim more allowances -- the more you claim, the less tax that is withheld. IRS.gov has a withholding calculator you can use to figure out how many allowances to claim. If you received the average refund of $2,700, you could get an extra $225 in your paycheck each month -- or about $7 a day -- by adjusting your withholding.
3. Skip Sodas
If you dine out for lunch or dinner, you can lower the cost of those meals by ordering water instead of soda. At a fast-food joint or restaurant, you'll pay $1 to $2 (or more) for a soda. If you order a soft drink at both lunch and dinner, you could easily approach the $5 mark.
Cutting out sodas at home as well -- and opting for water instead -- also could help you save money. A 12-pack of brand-name soda costs about $5. If you currently drink two cans a day and go through five 12-packs a month, you could save another $25 a month by eliminating your soda habit.
4. Use Discounted Gift Cards
You can save money on everyday purchases using discounted gift cards for retailers you frequent. Websites such as CardCash.com, GiftCards.com and Raise.com sell gift cards for hundreds of national retailers for less than face value because they buy them at a discount from consumers who don't want them.
For example, GOBankingRates recently found a CVS gift card with a face value of $40.85 selling for $34.72 at CardCash.com -- an instant savings of more than $6. So, if you stock up on discounted gift cards for drugstores, gas stations, restaurants, supermarkets and other stores, you easily could save $5 a day on your purchases.
5. Take Advantage of Supermarket Sales
One of the best ways to lower your grocery bill is to stock up on items that are nonperishable or can be frozen when they are on sale rather than buying just what you need for the week. "When shoppers buy only their weekly needs, they are forced to pay full price for 50 percent to 80 percent of what goes in their cart," said Teri Gault, founder and CEO of TheGroceryGame.com.
Once you have a stockpile, you can plan weekly meals around what you have and around perishable items that are on sale at the supermarket. Gault said that TheGroceryGame.com members report average savings of $523 a month for a family of four by stockpiling sale items and using coupons. That amounts to about $17 a day in savings.
6. Find Coupons for Retail Purchases
Clipping coupons can help you save at the supermarket. But you can use coupons to save on plenty of other everyday purchases -- and you don't have to clip them. Mobile apps such as CouponSherpa and RetailMeNot make it easy to find coupon codes for a variety of items and services when you're out shopping. Simply search for a retailer, and if it is offering a coupon, you can show the barcode on your mobile device at checkout to get a discount.
Perez said there recently were coupons available on the Coupon Sherpa app for $5 savings at Shoe Carnival, $8 off a full-service oil change from Oil Can Henry's and 20 percent ($8) off a $40 purchase at children's retailer Carter's, for example.
7. Look for Free or Low-Cost Entertainment
You might be surprised at how much you're paying for entertainment. The average household spends $2,482 annually on fees and admission, toys, and other entertainment supplies, according to the most recent figures from the Bureau of Labor Statistics. That's nearly $7 a day.
There are plenty of ways to cut entertainment costs. Take hikes in nearby parks rather than paying to go to an amusement park. Visit museums on free admission nights. Invite friends over to watch a movie rather than going to the theater or take advantage of free lectures at the public library or a nearby university. Look for activities available in your area that appeal to you and your family.
8. Stop Buying Bottled Water
The average cost of one bottle of water is $1.45, according to Statistic Brain Research Institute. If you or your family members drink several bottles a day, you could easily be blowing $5 a day on water that you could get for a fraction of the cost from the tap. In fact, bottled water costs 240 to 10,000 times more a gallon than tap water, according to the Natural Resources Defense Council.
9. Avoid ATM Fees
If you've made it a habit to withdraw cash from the nearest ATM rather than one in your bank's network, you're paying a lot for convenience -- about $4.50 in fees each time, according to CNN Money. To avoid getting charged to access your own money if you're not near your bank's ATM, withdraw cash fee-free during your next grocery store visit, Perez said.
10. Eliminate Cable TV
With so many free and inexpensive ways to watch TV shows and movies, there's no need to pay for pricey cable TV. The average TV bill is $123 a month, according to The NPD Group, so cutting the cord can save you about $4 a day.
You can watch dozens of movies and previously aired TV shows for free on Hulu.com and Crackle.com, which also offer their own original series. The major networks, such as ABC, CBS and NBC also let you watch some of their shows for free on their websites. And you can take advantage of your public library to borrow DVDs for free.
11. Walk More, Drive Less
Being willing to walk or take public transportation can save you some serious cash depending on your driving habits and gas prices where your live, said Stephen Rischall co-founder of 1080 Financial Group. The savings could add up to $5 a day, he said.
Or, you could save even more by ditching your car entirely. According to AAA, the annual cost of owning and operating a vehicle is $8,698 -- nearly $24 a day.
12. Make Coffee at Home
If you buy a 16-ounce cup of coffee at the coffee shop each day for about $2, it might not seem like you're spending a lot. But it costs only about 8 cents to brew the same size cup at home, according to USAToday.com's coffee cost calculator. If you typically buy several cups of Joe or pricier coffee drinks such as cappuccinos or lattes at the coffee shop, then switching to home-brewed coffee could easily save you $5 a day.
13. Cut Credit Card Payments With a Balance Transfer
If you carry a balance on a credit card with a high interest rate, you could lower the amount you pay each month by taking advantage of a 0 percent balance transfer offer. Based on calculations by financial education site MagnifyMoney.com, if you transferred a $10,000 balance from a card with a 20 percent APR to one with a zero percent APR, you would avoid paying nearly $1,900 in interest over the course of a year, or about $5 a day.
You'll need a credit score of at least 680 to qualify for balance-transfer offers, according to MagnifyMoney.com. To see how much you can save, try the CreditCards.com balance transfer calculator.
14. Refinance Your Mortgage
If the value of your home has risen since you bought it and interest rates have dropped since you locked in your mortgage rate, you might be able to lower your monthly mortgage payment by refinancing. Some 3 million homeowners could save at least $200 a month by refinancing their mortgages at today's rates, and about 500,000 could save $500 or more each month, Black Knight Financial Services told the M Report. That averages out to about $7 to $17 a day.
Refinance calculators such as those offered by Mortgage Professor and HSH.com can help you determine whether you can benefit from refinancing.
15. Actually Save $5 a Day
To help her clients save money, certified financial planner Ilene Davis said she tells them to stash $5 a day into an empty soda bottle. This practice guarantees that they're actually saving that amount daily.
If you don't have the discipline to do this on your own, a free service such as Digit can help. You link your checking account to the service, and then it analyzes your income and spending to determine a small amount that it can move every few days into a savings account for you. Whether you're saving actively or passively, the money will add up.
No matter which sport or teams you're rooting for, going to the big game can mean big costs. Luckily, there are a few ways to go to the stadium without forfeiting your savings.
