These Hotel Fees Are Making Your Stay More Expensive

Last week I wrote about some of the new and different ways airlines are collecting fees, rendering many base fare comparisons moot. Well, as it turns out, a similar phenomenon has also been affecting a different part of the travel sector for years. I speak, of course, of the hotel industry.

Just as looking on third-party travels sites for flights can sometimes cause you to overlook the true cost, there are a few semi-hidden hotel fees that also increase the cost of your stay significantly. With that, here are just a few of the fees you should watch out for when booking.

Three Hotel Fees That Might Catch You Off Guard

Resort fees

First, what is a resort fee and why are you forced to pay it? Like the question of how many licks it takes to get to the Tootsie Roll center of a Tootsie Pop, the world may never know. And yet these fees are becoming more and more common, leading to a potential pay-up surprise when you arrive for your stay.

All joking aside, the theory of a resort fee is that you’re paying a premium for some of the amenities a property offers. Unfortunately you’ll be forced to pay this additional nightly fee regardless of whether or not you actually make use of these amenities. In that way, many view these resort fees as a way for hotels to lower their at-first-glance rates and appear competitive with other properties when searching on booking aggregators like Expedia, Priceline, or others.

The good news is that you can find information about these fees as long as you know where to look. On Expedia and Priceline, the hotel listings page (the one you reach after you click a hotel name from your search list) will note the required nightly resort fee under the regular room rate. Additionally Expedia includes a fees section where resort fees are disclosed and, speaking to my earlier joke, they also tend to list out what some of these amenities you’re paying for are — including things like pool access, in-room bottled water, and much more. Meanwhile, even on sites like Hotwire that keep the name of the property a secret until you complete your reservation, you can still find resort fee disclosures listed under the “Know Before You Go” section at the bottom of each listing.

In most cases, these resort fees will be collected at the time of check-in even if you prepay for the rest of your stay via one of these travel sites. Therefore you’ll definitely want to be aware of these added costs and factor them into your travel budget.

Parking fees

Plan on driving to your destination or renting a car when you get there? Well, you may want to double check that you won’t be spending an arm and a leg just to park the vehicle on the hotel’s property.

Unlike resort fees, parking fees may not apply to every guest but they can still serve as a way for hotels to keep their rates low while still turning a profit. Also unlike resort fees, parking fees may not be as clear when booking on third-party sites. On Expedia, self-parking and valet parking rates will usually be displayed under the fee section and even let you know if the property offers in and out privileges (some hotels will charge you each time you leave instead of offering a flat day rate). Over on Priceline, you should be able to find parking rate info located in the “Hotel Facilities” section.

As for Hotwire, you may need to do a bit more detective work to know what you’re in for. If parking is free at a given hotel, the site will note as much in their “Complimentary” section. However, if it doesn’t say free parking, assume you will have to pay. Personally I’ve found that using tools like BetterBooking.com to narrow down which properties a listing could potentially be is super helpful as I can then go view listings for those hotels on other travel sites or their official websites to find parking rates. Due to the mystery element of Hotwire and similar sites, you may be taking a bit of a gamble, but I’ve found that parking prices among comparable hotels tend to be similar enough.

WiFi fees

Yes, even in the year 2018, there are still some hotel properties that charge guests for WiFi access. Even more confusingly, some locations will offer free WiFi in public areas but charge you if you want to connect in your actual hotel room. To me, this is all a bit ridiculous, which is why I make every effort to book a hotel with complimentary internet access whenever possible.

Of course, there may be times when your best option is a hotel that does charge for WiFi. In these upsetting instances, there may be a loophole you can look into. For example some chains may waive WiFi fees (or offer upgraded connections) for members of their loyalty programs. What’s more, these programs may be completely free to join — although brace yourself for promotional emails on a regular basis. Hopefully something like this will apply to your stay but, if not, consider other options like nearby coffee shops or even turning your phone into a mobile hotspot as a way to get around these annoying charges.


In an age when travel comparison sites have forced hotels to compete on price while still making money, it’s important that travelers do a little extra digging before booking. From the dreaded resort fees to things like parking and WiFi, these often unexpected fees can severely increase the price of your nightly stay and should be considered when picking the best hotel option for your budget. So stay alert and happy travels!

This article by Kyle Burbank first appeared on Dyer News and was distributed by the Personal Finance Syndication Network.


Your top debt collection questions answered

Debt collection is consistently one of the top
financial issues people have questions about when they visit our website. We’ve
provided short, easy-to-understand answers to some of our most-visited questions
about debt collection. For the full answer, you can view the provided link.
While every situation is unique, these answers may help you better understand
how debt collection works or help you identify steps that you can take to
address your own situation.

What should I do when a debt collector contacts me?

There are different ways to respond
appropriately to debt collectors.

When contacted, find out:

  • The identity of the debt collector,
    including name, address, and phone number
  • The amount of the debt
  • What the debt is for and when the
    debt was incurred
  • The name of the original creditor
  • Information about whether you or
    someone else may owe the debt

We also have sample letters that will help if
you’re experiencing common problems that may come up with debt collection.

How can I verify
whether or not a debt collector is legitimate?

Ask the caller for their name, company,
street address, and telephone number. If your state licenses debt collectors,
you can also ask for a professional license number. You can also refuse to
discuss any debt until you get a written “validation notice.” Do not
give personal or financial information to the caller until you have confirmed
it is a legitimate debt collector.

Keep an eye out for warning
signs that could signal a debt collection scam.

What is the best
way to negotiate a settlement with a debt collector?

To get ready to negotiate a
settlement or repayment agreement with a debt collector, consider this
three-step approach:

  1. Learn about the debt
  2. Plan for making a realistic repayment or settlement
  3. Negotiate a realistic agreement with the debt collector

Be wary of
companies that charge money 
in advance to
settle your debts for you. Some debt settlement companies promise more than
they deliver.

Learn more about negotiating
a repayment agreement 
that’s right for
your situation.

What should I do
if a creditor or debt collector sues me?

If you’re sued by a debt collector, respond to the lawsuit.
You can respond personally or through an attorney, but you must do so by the
date specified in the court papers.

When you respond to, or “answer,” the lawsuit, the debt
collector will have to prove to the court that the debt is valid and that
you owe the debt.

If you ignore a
court action, it’s likely that a judgment will be entered against you for the
amount the creditor or debt collector claims you owe. Often the court also will
impose additional fees against you to cover collections costs, interest, and
attorney fees.

Learn more about
what can happen if you don’t respond to a debt collection lawsuit.

What is a statute
of limitations on a debt?

A statute of limitations is the limited
period of time creditors or debt collectors have to file a lawsuit to
recover a past due debt.

Most statutes of limitations fall in
the three- to six-year range, although in some cases they may vary due to:

  • State
    laws
  • What
    type of debt you have
  • Whether the state law applicable is
    named in your credit agreement

Learn more about statutes of
limitations for debts
you may owe.

Need help
with something else?

If you are having an issue with debt collection, you
can submit a complaint online or
by calling (855)
411-CFPB (2372). We’ll work to get you a response from the company.

This article by was distributed by the Personal Finance Syndication Network.


Which Company Should I Use for a Low Rate Debt Consolidation Loan?

Question:

Dear Steve,

I have a credit card debt of $11,000 and I would like to get a loan to pay off my debt and make one lower payment for the loan

Which company or lender should I use for that loan that offers low rate interest?

Carmen

Answer:

Dear Carmen,

That is kind of a loaded question. There are all sorts of lending sites out there like LendingClub.com“>LendingClub which provide unsecured personal loans you can use to consolidate your debt.

But the most important question here is what your credit score is. A low credit score will get you a higher interest rate. The rate may be higher than what you are paying right now.

You can use free money to pay off your debt by using a balance transfer offer from another credit card and making sure you pay the balance off in full by the end of the introductory period. If you don’t pay the balance off before the regular rate kicks in then you will probably be stuck back on a high-interest rate credit card. You’d be surprised how many people don’t pay the balance off.

In order to find the best loan for you then you are going to have to pay attention to the math. A lower interest rate but a long time to repay the loan can result in high overall interest paid.

The three numbers you want to pay attention to are:

  • Does the loan involve and fees? Even balance transfer offers at no interest will often charge a transfer fee. This just adds to your balance.
  • How long is the term of the loan? As I said, a longer time to repay the loan can result in more interest being paid.
  • What is the interest rate? The interest rate will be dependent on a number of factors. The most important is going to be your credit score. If you have not checked your credit score recently, you can get it for free from sites like CreditKarma.com. They even have a credit score calculator that can show you how to raise your credit score.

Steve Rhode
Get Out of Debt GuyTwitter, G+, Facebook

If you have a credit or debt question you’d like to ask, just click here and ask away.

This article by Steve Rhode first appeared on Get Out of Debt Guy and was distributed by the Personal Finance Syndication Network.

Facebook breach: what to do next

Facebook recently announced the largest breach in the company’s history. The breach affected about 50 million users, allowing hackers to take over their accounts. If you use Facebook, you may be wondering what to do next. Here are a few steps you can take.

First, you probably want to know more about the breach. According to Facebook, the attackers took advantage of a weakness in the “View As” feature, which lets people see what their profile looks like to others. The hackers stole digital keys that keep you logged in to Facebook so you don’t need to re-enter your password every time. Facebook says they’ve fixed the vulnerabilities and reset digital keys on 50 million affected accounts, plus an additional 40 million accounts that used the “View As” function.

To better protect yourself after this breach:

  • Watch out for imposter scams. With access to your Facebook account, hackers can get a lot of information about you. That information could be used to impersonate people you know or companies you do business with. If someone calls you out of the blue, asking for money or personal information, hang up. Then, if you want to know for sure if the person calling you was really your family member or was really from a company you know and trust, call them back at a number you know to be correct before you give any information or money. And remember: anyone who demands that you pay by gift card or by wiring money is scamming you. Always.
     
  • Consider changing your password. Facebook says that it fixed the vulnerability, so there’s no need to change your password. But, to be safe, log in and change your password anyway. If you use the same password other places, change it there, too. Don’t forget to change your security questions, as well – especially if the answers include information that could be found in your Facebook account.

For more information about what to do after a data breach, visit IdentityTheft.gov/databreach and watch the FTC’s video on What to Do After a Data Breach.

If you learn that someone has misused your personal information, go to IdentityTheft.gov to report identity theft and get a personal recovery plan. Because recovering from identity theft – and data breaches – is easier with a plan.

This article by the FTC was distributed by the Personal Finance Syndication Network.

Glossary of common financial terms in Spanish

We are celebrating National Hispanic Heritage Month with the release of our updated Spanish Glossary of Financial Terms . We have prepared this glossary in cooperation with other federal agencies. The glossary provides both financial educators and the industry with an extensive list of financial terms translated into Spanish. Use of the glossary is voluntary.

Of the U.S. population with limited ability to speak, write, or read English—referred to as limited English proficient or LEP consumers—more than 60 percent are individuals who speak only Spanish at home, according to the U.S. Census Bureau’s 2017 American Community Survey One-Year Estimates. People with limited English skills sometimes struggle to reach their financial goals because information they receive about financial products and services is difficult for them to understand.

Why did we create this Spanish glossary?

In an effort to help all consumers move toward financial well-being, the Bureau reported on challenges faced by LEP consumers and those in the financial community who serve them. One common issue highlighted by both groups was the lack of clear and consistent wording of financial information presented to consumers who speak or understand limited English.

Financial education materials created for Latinos are often translated from English to their literal equivalent in Spanish, but may not always be accurate or easy for the reader to understand. Technical terms in the U.S. financial system—such as subprime, overdraft protection, and balloon payment—might not have equivalent terms in some languages. Translating for meaning rather than word-for-word promotes effective communication.

A second report issued by the Bureau included studies by federal agencies and other stakeholders underlining the importance of sharing materials in a consumer’s native language to help increase their knowledge about financial products and services. Also, the report explains that consistent translation of common financial terms across the financial services industry and other organizations benefits limited English proficient consumers.

How can you use this glossary?

Using a glossary of terms is helpful to maintain consistency.

In 2015, the Bureau created a glossary of common financial terms to use when translating consumer education materials from English to Spanish. This year we expanded the glossary and included translated financial terms used by other entities as well, including: the Federal Housing Finance Agency, Department of Housing and Urban Development, Internal Revenue Service, Department of Justice, Federal Deposit Insurance Corporation, Federal Trade Commission, Social Security Administration, Freddie Mac, Fannie Mae, General Services Administration, and the National Association of Hispanic Real Estate Professionals.

We publicly share the Spanish Glossary of Financial Terms  as a resource to help anyone who provides financial information to consumers who have greater language proficiency in Spanish than in English. Financial educators, government agencies, financial service providers, and other organizations serving LEP consumers might find the glossary helpful when translating financial terms to communicate with the people they serve. It is not required or mandated for any stakeholder to use the glossary.

What other resources are available?

We offer a number of other resources for limited English proficient consumers and those who serve them, including:

This article by was distributed by the Personal Finance Syndication Network.


The Increasingly Confusing World of Airline Pricing

Once upon a time it seemed that, no matter which airline you flew or how you made your reservation, you could expect about the same level of amenities and service (save the bonuses that come with business class, first class, etc.). However this is quickly changing as the airline industry continues to experiment with new service models and pricing structures. This is partially due to the prevalence of third-party travel booking sites where customers may only be looking at the fare itself and not other fees — leading some passenger to remain unaware of the fees they may be in for.

Before you book your next flight, here are a few things to watch out for:

Baggage fees (including carry on!)

While checked luggage fees were once unthinkable, today they are commonplace on most major carriers with the notable exception of Southwest (where your first two checked bags are free). Compounding this relatively new pain point a slew of carriers including Delta, American, JetBlue, and others recently increased these fees as well, bumping the price of your first checked bag up to $30. Of course the prices go up for subsequent bags and there are weight limits in place for these items as well.

So think you’ll save money by just carrying on instead? You may be in for a surprise there as well. On budget airlines like Allegiant, Spirit, and the like, you may be subjected to carry-on bag fees, although you might still be able to bring a “personal item” (that can fit under the seat in front of you) for free. As I can tell you from experience, Allegiant also charges different prices for bags depending on whether you pay for them in advance or at the airport. Hint: it’s definitely worth it to pay in advance.

Basic economy

Back in the day, most domestic flights had two classes: first and coach. Meanwhile international flights might add a business class as well for a total of three ticket types. Now, between premium economy classes like Delta’s Comfort+ and “basic economy” fares, it may be unclear just what you’re getting with your ticket.

For example, on American, a basic economy ticket will not only ensure you board the plane near the very end of the process but will also only be assigned a seat when you check-in. However, you may be able to select a seat of your own ahead of time for an additional fee. Speaking of which…

Seat selection and preferred seat fees

Beyond the basic economy fares and budget airlines like Allegiant that will charge you to select an assigned seat ahead of time, there are also airlines that will charge you extra to book “preferred” seats. This is something you might notice on Delta flights where there’s a first class, Delta Comfort+, and then preferred seats near the front of the plane (along with the exit rows) that all come at a premium price. Preferred seat pricing can depend on a few factors including the distance of the flight but will typically cost you upwards of $19. I should note that, if you do manage to work your way up to Silver Medallion status, you’ll then be able to nab these coveted main cabin seats without the extra cost and will also get a bit of a discount on Comfort+ in the event you don’t make the upgrade list.

Early bird check-in

Alas, while Southwest gets a lot of “luv” for its free checked bags, lack of first class, and other touches, the airline does still have some interesting fees of their own such as their early bird check-in. If you weren’t aware, Southwest does not assign seats at all. Instead, passengers are assigned a boarding position based on the time they check-in and some other factors. If you don’t want to spend your day refreshing their site exactly 24 hours before your departure, you can pay to be check-in automatically and be ensured a better boarding position. Like most things, the price of this service has risen in recent years and has now taken on a different structure, with the service currently fetching between $15 to $25 per passenger. In any case, you’ll still have to find your spot in line before boarding, which can certainly be a turn off to some travelers.


With many airlines introducing new classes of service and varying fees for everything from seat selection to carry on luggage, it’s important to know what you’re getting into before booking. While some budget airlines like Southwest and Allegiant only allow booking on their own sites (and not third-party services like Expedia), this is not the case for all airlines with some fee quirks. Because of this, regardless of whether you’re using these third-party sites to book, it’s always a good idea to visit the airline’s site and read up on what fees you’ll encounter on the way to your final destination.

This article by Kyle Burbank first appeared on Dyer News and was distributed by the Personal Finance Syndication Network.


Michael ‘The Situation’ Sorrentino, Marc Sorrentino Sentenced to Federal Prison on Tax Charges

Television personality Michael “The Situation” Sorrentino was sentenced to eight months in prison, and his brother, Marc Sorrentino, was sentenced to 24 months in prison for violating federal tax laws. Principal Deputy Assistant Attorney General Richard E. Zuckerman of the U.S. Department of Justice’s Tax Division, U.S. Attorney Craig Carpenito for District of New Jersey, and IRS Special Agent in Charge John R. Tafur made the announcement.

Tax evasion charges were originally brought against Michael Sorrentino, 37, and his brother, Marc Sorrentino, 39, in September 2014, and a superseding indictment returned in April 2017 added additional charges. Michael previously pleaded guilty before U.S. District Judge Susan D. Wigenton to Count 13 of a superseding indictment, which charged him with tax evasion. Marc pleaded guilty to Count 5, which charged him with aiding in the preparation of a false and fraudulent tax return. Judge Wigenton imposed the sentences today in Newark federal court.

“Lying to and defrauding the federal government is a very serious crime, regardless of a defendant’s celebrity status,” said Principal Deputy Assistant Attorney General Zuckerman. “The Sorrentino brothers chose to use Michael’s fame to benefit themselves at the expense of the American taxpayer, and with the help of our federal partners, they were held accountable.”

“The law requires all Americans to pay our fair share of taxes. These defendants deliberately flouted this requirement, acting as though fame and celebrity status placed them above the law. They are not,” said U.S. Attorney Carpenito. Tax fraud is as serious as any other form of theft from the government, and the sentences imposed today should make that abundantly clear.”

“Tax crimes, plain and simple, are an outright theft from the hardworking American public,” stated John R. Tafur, Special Agent in Charge, IRS Criminal Investigation, Newark Field Office.  “The courts recognize the severity of these crimes and now Michael and Marc Sorrentino are convicted felons with prison sentences to serve for intentionally disregarding their tax obligations to our country.”

According to documents filed in this case and statements made in court, Michael Sorrentino was a reality television personality who gained fame on “The Jersey Shore,” which first appeared on the MTV network. He and his brother, Marc, created businesses, such as MPS Entertainment LLC and Situation Nation Inc., to take advantage of Michael’s celebrity status.

Michael Sorrentino admitted that in tax year 2011, he earned taxable income, including some that was paid in cash, and that he took certain actions to conceal some of his income to avoid paying the full amount of taxes he owed. He made cash deposits into bank accounts in amounts less than $10,000 each so that these deposits would not come to the attention of the IRS.

Marc Sorrentino admitted that during tax years 2010, 2011 and 2012, he earned taxable income and that he assisted his accountants in preparing his personal tax return for those years, willfully providing them with false information. His personal tax returns under-reported his total income and taxable income.

In addition to the terms of imprisonment, Judge Wigenton ordered Michael Sorrentino to serve two years of supervised release and pay $123,913 in restitution and a criminal fine of $10,000. Marc Sorrentino was ordered to serve one year of supervised release and pay a criminal fine of $7,500.

This article by the Department of Justice was distributed by the Personal Finance Syndication Network.

New Credit Law FAQs

You’ve heard about the new law that makes credit freezes free and fraud alerts last one year. If you have questions, you’re not alone. Here are answers to some of the questions we’re hearing most.

Q: I already had a credit freeze in place when the new law took effect on September 21, 2018. Is it still in effect?

A: Yes, your credit freeze is still in effect. The next time you lift or replace the freeze, it will be free.

Q: If I paid for a freeze before September 21, do I get my money back?

A: No, the new law does not provide for that. But the next time you lift or place your freeze, it will be free.

Q: Does my credit score stay the same when a credit freeze is in effect?

A: No, your credit score can still change while a freeze is in effect. A freeze on your credit file does not freeze your credit score. For example, creditors can still report delinquent accounts and that may negatively affect your score. 

Q: Can I still use my credit card when a credit freeze is in place?

A: Yes, you can still use your credit card and other existing credit accounts. The freeze restricts access to your credit file. That makes it harder for identity thieves to open new accounts in your name. That’s because most creditors need to see your credit file before they approve a new account. It also means that, if you’re applying for a mortgage, student loan, new credit card, or other credit account, you’ll need to lift the freeze first.

Q: I already had a fraud alert in place when the law took effect on September 21, 2018. Do I need to request a new fraud alert if I want a year-long alert?

A: Yes, you should request a new fraud alert. You can make the request at one of the three credit bureaus (Equifax, Experian, or TransUnion), and it will alert the other two.

Q: How is placing a fraud alert different from placing a credit freeze?

A: To place a fraud alert, notify any one of the three credit bureaus and they must inform the other two. The fraud alert stays in place for one year. To place a credit freeze, contact each of the three credit bureaus individually. A freeze stays in place until you ask the credit bureau to temporarily lift it, or remove it altogether. If you opt for a temporary lift because you are applying for credit or a job, and you can find out which credit bureau the business will contact for your file, you can save some time by lifting the freeze only at that particular credit bureau. Otherwise, you’d need to ask all three credit bureaus. For more information, read Place a Fraud Alert and Credit Freeze FAQs.

Q: Where can I find the contact information for Equifax, Experian and TransUnion?

A: IdentityTheft.gov/creditbureaucontacts lists all of the URLs and phone numbers that you can use to exercise your rights under the new law.

Q: What can I do if I’m having trouble placing a fraud alert or credit freeze?

A: Call the credit bureaus first to try to straighten things out. Then, if you still think a credit bureau is not placing an alert or freeze properly, report it to the Bureau of Consumer Financial Protection at consumerfinance.gov/complaint or 855-411-2372.

This article by the FTC was distributed by the Personal Finance Syndication Network.

Using ROI at Home

Gary,
I once read about using ROI to determine whether a certain purchase was saving time, energy, or money. Could you write up a story with the ROI formula and how to use it?
Wendy

Wendy has a good idea. Adapting business tools to your home finances often helps take the emotion out of a decision so that you can make a logical choice.

The idea of ROI (Return On Investment) is fairly simple. A business investment should save or make money. The ROI calculation is an attempt to determine how much each dollar invested will return. If a business has limited resources, only the highest ROI projects would be financed.

To calculate the ROI, you take the value of the benefits and divide by the value of the costs. When professionals use these tools, they’ll often use complicated formulas that take into account that having $1 today is worth more than one you won’t get until next year. Fortunately, in most home applications, that’s simply not necessary.

Let’s suppose that a business could make a $500 investment that would produce $700 of extra profits. The benefits are $200 ($700 extra profits minus $500 invested). Divide the benefits by the investment ($200 / $500 = .4) to get an ROI of 40%.

The obvious shortcoming of the model is that you need to make some assumptions as to how much you’ll save. So many businesses also consider how long it will take to recover the initial investment. That’s called the “payback period.”

Let’s see how it works. First, an easy one. You compare the yellow energy efficiency label from your 12-year-old refrigerator to one on a brand-new model. According to the labels, you should save $65 per year in electricity. The new refrigerator costs $449. If you use the new fridge for 12 years, you’ll save $780 ($65 x 12 years). So the ROI is 73%. ($780 – $449 = $331 and $331 / $449 = 73%)

That’s interesting, but should you buy the fridge? You might get a more useful answer by considering the payback period. If you save $65 per year and pay $449 for the refrigerator, it will take 6.9 years before you’ve recovered the cost of the fridge ($449 / $65 = 6.9 years). So unless you plan on using it for more than 7 years, you should pass up the purchase.

Next, let’s look at a case that most homeowners are familiar with. You’ve been in your home a couple of years and mortgage rates have dropped. Should you refinance to take advantage of the lower rates?

To answer the question, let’s consider the payback period. Begin with the cost to refinance. That’s the investment. Next, how much you’ll save each month (AKA: the benefit). Then you can calculate how long it will take to make up the cost. Suppose that refinancing triggers $3,000 in various costs. But, you’d save $125 per month. You could calculate that it would cost you 24 months before you had recovered your investment ($3,000 divided by $125 = 24 months). So if you’ll be in the home more than two years, it’s a good idea to refinance.

One final example. You’d like to replace that old 9-MPG gas guzzler. The new car you like gets 23 MPG. With gas prices so high, doesn’t it make sense to spend $19,000 to trade for the new car?

We’ll begin by figuring out how much we’d save each year. You drive 18,000 miles each year. So the old car uses 2,000 gallons of gas (18,000 / 9 MPG). At $1.50 per gallon, that’s $3,000. The new car would only use 782 gallons or $1,174 per year. So you’d save $1,826 per year ($3,000 – $1,174). Your insurance would also drop by $200 per year. That brings the total savings to $2,026 per year.

So what’s the payback period? Divide the trade-in price of the car ($19,000) by the annual savings ($2,026) and you get 9.3 years. So you can’t justify this car trade based on gas savings.

You’ll notice that in each case you need to think through the process a little. Usually the hardest part is estimating how much you’d save with the new item. Just remember that this isn’t an exact science so do the best you can with any assumptions.

Many spending decisions are hard to analyze. You can use this same process to calculate whether it’s worthwhile buying compact fluorescent bulbs or a new furnace. By breaking a decision down into an ROI or payback type of calculation, you’ll have a framework for making a better decision.

This article by Gary Foreman first appeared on The Dollar Stretcher and was distributed by the Personal Finance Syndication Network.


The Simple Way to Make Money Investing

Investing can be overwhelming and confusing. The truth is that it is neither and this article will show you just how simple investing can be…

“Money can buy many things, but nothing more valuable than your freedom…Stop thinking about what your money can buy. Start thinking about what your money can earn.” – “The Simple Path to Wealth: Your roadmap to financial independence and a rich, free life” by JL Collins

I just finished reading The Simple Path to Wealth by JL Collins after it was recommended by a number of other bloggers such as Mr. Money Mustache, Four Pillar Freedom, The Power of Thrift, and J. Money over at Budgets Are Sexy.

JL Collins (who also just happens to live in New Hampshire!) was first published in 2016 but is one of those books I wish had been published and read ten years ago in the wake of the 2008 financial crisis. The financial crisis brought with it confusion, stress, and heartache to millions of people across America and the World. The Simple Path to Wealth outlines not only a clear outline for investing but also a thorough rationale for this simple approach.

1 First Step…Avoid Debt At All Costs!
2 Second Step…It Is Time To Do Some Investing!
3 But What About International Diversification?
4 Do You Need A Financial Advisor?
5 A Word On Dollar Cost Averaging
6 Final Thoughts

First Step…Avoid Debt At All Costs!

JL has a number of hard-hitting and poignant lines from his book – some of which I will include below for more context. Quite frankly, he gets to the point much clearer and succinctly in the passages below and his book than I ever could!

The first step to investing and growing your wealth is to avoid debt at all costs!

“If you intend to achieve financial freedom, you are going to have to think differently. It starts by recognizing that debt should not be considered normal. It should be recognized as the vicious, pernicious destroyer of wealth-building potential it truly is. It has no place in your financial life.” Being independently wealthy is every bit as much about limiting needs as it is about how much money you have. It has less to do with how much you earn—high-income earners often go broke while low-income earners get there—than what you value.”

Here’s the simple formula: Spend less than you earn—invest the surplus—avoid debt”

Now, some may take issue on this point considering the fact that many people have debt in the form of a mortgage. I am not suggesting that you hold off investing in the stock market until you have your mortgage paid off. Instead, here is where I suggest following the 7 Baby Steps by Dave Ramsey.

Second Step…It Is Time To Do Some Investing!
In the spirit of the book, I will also keep this analysis of the book simple and straightforward. In short, JL Collins advocates investing in one simple broad-based index fund from Vanguard known as VTSAX. VTSAX is the Vanguard Total Stock Market Index Fund Admiral Shares. JL writes…

“Put all your eggs in one basket and forget about it. The great irony of investing is that the more you watch and fiddle with your holdings the less well you are likely to do. Fill your basket, add as much as you can along the way and ignore it the rest of the time. You’ll likely wake up rich. Here’s the basket: VTSAX. No surprise here if you’ve been paying attention so far. This is the Total Stock Market Index Fund that holds virtually every publicly traded company in the U.S. That means you’ll be owning a part of about 3,700 businesses across the country, making it a very big and diverse basket. The fact that it is a low-cost index fund keeps more of your money working for you…Now it may look dumb/scary to “have all your eggs in one basket” here – which was my first concern – but the reality is it isn’t just one stock. It’s one stock ticker, but over 3,600 stocks (ie companies). When you invest in index funds you invest in itty bitty fractions of hundreds/thousands of companies. If any one of them die out at any time, it doesn’t kill your money. But on the flip side, it doesn’t grow your money as fast either like, say, if one of them takes off like Apple. It’s an average person’s game, with better than average results over time (and by “average” I mean compared to most of those day traders and probably your friends)…Put all your eggs into one large and diverse basket, add more whenever you can and forget about it. The more you add the faster you’ll get there. Job done.”

It is worth noting that there are a couple of comparable exchange-traded funds that will perform almost exactly the same way. Here are some of the most common:

VTI – 3654 Holdings .04% expense ratio and $0 minimum to invest

ITOT – 3105 Holdings .03% expense ratio and $0 minimum to invest

SCHB – 2371 Holdings .03% expense ratio and $0 minimum to invest

Depending on where you do you investing each one might make more sense than the other. For example, VTI is a Vanguard Fund, ITOT is a iShares Fund (Ideal for Fidelity customers) and SCHB is a Charles Schwab Fund. So, if for example, you are a Fidelity customer you should probably go with ITOT because it is $0 to trade. One important thing to note is that just because you are a Fidelity customer (using this example) you are still able to purchase VTI and SCHB but Fidelity charges a one-time trading fee which also holds true for both Schwab and Vanguard.

Why One Simple Fund?

It’s fairly simple. Here is JL in his own words…

I wanted to simplify

I wanted to be lazier

I wanted extremely low fees

I wanted to own everything and be completely diversified all at the same time

Said another way:

“Simple is good”

‘Simple is easier”

“Simple is more profitable”

“Avoid the trap of complexity”

And, if you are looking for the slightly expanded rationale…

“Financial crises are just part of the landscape and the best results come from simply riding them out. You can’t predict them and you can’t time them. Over your investing career, you’ll experience many of them. But if you are mentally tough enough you can simply ignore them. So now if we agree that we can “get our minds right,” what shall we choose for riding out the storm? Clearly, we want the best performing asset class we can find. Just as clearly that’s stocks. If you look at all asset classes from bonds to real estate to gold to farmland to art to racehorses to whatever, stocks provide the best performance over time. Nothing else even comes close. Let’s take a moment to review why this is true. Stocks are not just little slips of traded paper. When you own stock you own a piece of a business. Many of these have extensive international operations, allowing you to participate in all the markets across the globe. These are companies filled with people working relentlessly to expand and serve their customer base. They are competing in an unforgiving environment that rewards those who can make it happen and discards those who can’t. It is this intense dynamic that makes stocks and the companies they represent the most powerful and successful investment class in history.”

An important statistic to keep in mind for those that embrace this one simple approach is that it will outperform 82% of actively engaged investors.

But What About International Diversification?
JL points out three important reasons to ignore going into additional international funds.

Added risk brought on by currency risk
Added expense in that internationals funds are – for the most part – twice as expensive as total stock market funds
It’s already covered in that many of the 3,000 plus stocks contained within VTSAX (as well as the other ETF equivalents mentioned above) have operations and/or do business overseas. In fact, the largest 500 companies in the World that are held within the S&P 500. I have previously written about the four top reasons to invest in the S&P 500. One additional important point to make is that the S&P 500 consists of approximately 80% of the total stock market index funds such as VTSAX, VTI, ITOT, and SCHB. As you may have already guessed – the majority of these 500 companies have some level of international exposure.
Do You Need A Financial Advisor?
In short, no! Thanks to technology it is never been easier or cheaper to invest in low cost broadly diversified index funds and exchange-traded funds. JL Writes…

“Be wary of anyone who makes their living making money managing your money. There is far more money in recommending complex investments not simple low cost ones. Advisors are not drawn to the best investments but those that give them the largest commission. You not only lose the money by giving a commission but the future opportunity that money could have compounded to work for you. Avoid annuities and whole life insurance. Advisors are only as good as the investments they recommend. Since those are mostly actively managed funds as opposed to the passive low cost index funds how often do those outperform? Very rarely! About 20% outperform in any given year and looking at a 30 year period that drops to less than 1%. So, you can learn to pick your advisor or learn to pick your investments. The latter is cheaper and will prove to be more beneficial. No one will care more about your money more than you.”

A Word On Dollar Cost Averaging
Dollar cost averaging is just a fancy of way of investing over a period of time in small increments. It’s important to note that if you invest in a 401K or any other pre-tax retirement account each time you are paid you are using dollar cost averaging. The Simple Path To Wealth points out that statistically, the market goes up 77% of the time. Therefore, by engaging in dollar cost averaging outside of traditional individual retirement account investing where you have no other choice but to wait until you have the money and or are paid for your work you would be actively engaging in market timing which is a loser’s game.

Final Thoughts

It can be easy to forget just how lucky we are for even having the opportunity to read this article on a computer, phone or tablet online. One of the sites that is mentioned in The Simple Path To Wealth can be found at the Global Rich List. I recommend taking a few minutes to visit this site by inputting your individual income and wealth levels. You might be surprised to see where you fall!

If you are interested in reading more I encourage you to visit JL Collins website. In particular, the stock series.

This article by Jeff McLean first appeared on FinTech Freedom and was distributed by the Personal Finance Syndication Network.