The "Dear John" letter from Comcast explaining the new usage fees for home consumers.

The “Dear John” letter from Comcast explaining the new usage fees for home consumers.

Get ready for your home Internet to feel like your smartphone — bound by data caps, a large overage fee waiting to happen.  Comcast gave some users the bad news Thursday — not surprisingly before a long weekend. Consumers who exceed 300 GB in a month will have to pay for overages at $10 per 50 GB tier.

Not surprisingly, they have the option to pay an extra $30 to get the service they have currently, without caps.

Internet service providers like Comcast have been chomping at the bit to change their business model and charge consumers by the bit the way wireless providers do.  Comcast’s initial allowance seems generous — some notes sent to users say it’s unlikely they will hit the cap based on their prior usage — but it’s easy to imagine that’s temporary. The Internet keeps birthing high-bandwidth applications like streaming HD video.  Users will ultimately run into these caps. And there’s nothing to prevent Comcast from lowering the limit going forward.

“An important update about your XFINITY Internet service,” the email reads. “We’re writing to let you know that we will be trialing a new XFINITY Internet data plan in your area. Starting October 1, 2015, your monthly data plan will include 300 GB. We will also trial a new “Unlimited Data” option that will give you the choice to purchase unlimited data for $30 per month in addition to your monthly Internet service fee.”

The news comes with some “courtesy” concessions from Comcast.

“We’re … implementing a three-month courtesy program. That means you will not be billed for the first three times you exceed the 300 GB included in the monthly data plan,” the email says. “If you are on the 300 GB plan, we will send you a courtesy “in-browser” notice and an email letting you know when you reach 90%, 100%, 110%, and 125% of your monthly data usage plan amount.”

If you haven’t seen one of these emails, you can learn more about the data usage trials at Comcast’s website.

On its frequently asked questions page about the new usage fee, Comcast describes it as a trial, and says it impacts consumers in the following areas: Huntsville and Mobile, Alabama; Tucson, Arizona; Fort Lauderdale, the Keys and Miami, Florida; Atlanta, Augusta and Savannah, Georgia; Central Kentucky; Maine; Jackson and Tupelo, Mississippi; Knoxville, Memphis and Nashville, Tennessee; and Charleston, South Carolina.

Want to see if you are part of the experiment? Here’s a page listing all the unlucky zip codes.

If you are in the unlucky zone, please let me know. I’ll be curious if Comcast users in these areas have competitive options like Verizon’s FiOS.

For some time, Comcast has been including usage statistics on consumers’ monthly bills, which hinted at this move.

Tolled home usage is bad news for consumers who end up being forced to download streaming video they don’t want, like auto-play videos from sites like ESPN.com.  That data, which already eats into consumers’ mobile data limits, will now eat into the limits they face at home.  (I’ve complained about this before; it’s something the FCC really needs to examine.  When consumers paid for cell phone minutes, telemarketing calls to cell phones were banned.. This situation is identical.)

Here’s what Comcast spokesman Charlie Douglas said to me about the change:

“These trials are based on principles of fairness and flexibility. With ten percent of our customers consuming half the data that runs over our network, we think it’s fair that those who use more data pay more and that those who use less data also have a chance to save some money . For light data users on our Economy Plus tier, the can opt in to a program that gives them a $5/month discount if they use less than 5 GB of data per month.

“And these trials are flexible too, so customers who want to consume more data than the 300 GB included in the plan now have two options. They can purchase as many 50 GB buckets of data that they wish for $10 each. Or, they can opt for the peace of mind of locking in a predictable, flat rate of $30 per month for unlimited data use (as long as that use remains consistent with our Acceptable Use Policy.)

“And to put this all in perspective, our national median customer data use is 40 GB per month and 92 percent of our customers don’t consume more than 300 GB of data in a month.”

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The pot of gold isn't money, it's affordable housing.

The pot of gold isn’t money, it’s affordable housing.

Jim has a two-month old baby. He’s working at 10 p.m. when I meet him, and the baby — his wife stopped in to say hi.  It unclear when she will go back to work. You’d think Jim is sleep-deprived from working long hours or a second job.  But he’s not restless at all, except for the occasional 2 a.m. feeding.

Jim lives in Missoula, Montana.  He’s a bartender.  He earns enough in the service business to afford rent on a two-bedroom apartment with a garage about a mile from town — $900 a month — and to support his wife and child. Jim (not his real name) is a realist.  He grew up in California, and he knows all about the $5,000-a-month shoebox mortgages people pay there. How folks earning $100,000 or more are living with roommates just to scrape by.  How they are perpetually restless, the subject of my Restless Project.

Jim’s happy, and in Missoula, he’s got a future. It’s actually an advantage that he works nights — and regular service hours — because his wife will be able to take a daytime job and they can take child-care shifts.

Regular readers of my column know I have  a soft spot for Missoula, which is a perfect little mountain city just an easy day’s drive east of Seattle.  It’s got a comfortable lifestyle, incredible vistas and a surprisingly thriving music scene.  Most of all, it fits the profile of a “sane circle” I wrote about earlier this year. There are places where regular people with regular jobs can afford regular homes in America. But they aren’t on the coasts, and they aren’t where most regular people live.

Nightly light shows  are free here.

Nightly light shows are free here.

In a place like Missoula, anyone who can figure out how to bring home about $500 a week can find a decent living. Take home more than that, and you are working your way towards home ownership.  That’s just not the story in New York, or San Francisco, or Seattle…or even Denver, now.  I’m not saying everyone should live in Missoula.  In fact, I think the people of Missoula would be quite angry at me if I did say that. And Missoula’s hardly perfect — like most towns out here, there’s a big meth problem. But I do think it’s incredibly important to trave, because it reminds you that not everyone lives the way you do. There are other ways.  And to stay great, America’s greatest cities need to figure out how to be a little more like Missoula.

The next time you are traveling, perhaps stop by one of these “sane circles.” Click for the full interactive map, and more details on what makes a “sane circle.”

BobSullivan.net / RealtyTrac

BobSullivan.net / RealtyTrac

 

https://bobsullivan.net/restless/sane-places-to-live-in-america-this-one-map-will-show-you/

 

 

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Steve and Jennie

Steve and Jennie

Steve and Jennie Silha ended up in debt the way a lot of young couples do: They had children.

Steve, 44, is a realist, and says the problem was pretty simple.

“It really came down to the fact that we decided that my wife would be a stay-at-home mom, but we spent like we had two incomes,” he said.

And after 15 years of raising two children, the Chicago-area couple found themselves with $47,000 of unsecured debt – most of it credit card debt — last year. That’s when they made a commitment to make a change.

(This story first appeared on Credit.com. Read it there.)

“I’ll say that it came down to irresponsibility on the surface. We just made very poor decisions over the past 10 years,” Steve said. “We have decided to ‘grow up’ and take the debt on.”

That was the first step. Step two involved Steve taking a new job with a higher salary. That helped a bit. Step three involved changes to the way the family spends money.

“We cook at home more and haven’t taken a vacation like we usually do,” Steve said.

But the biggest step of all was Jennie, 43, deciding to return to the workforce. With a 15-year-old son and 11-year-old daughter, the timing was right. She began this month.

The couple has pledged that 100% of the income from her job in home health care will go toward reducing their debt.

So far, they have paid off about $7,000.

The new austerity measures haven’t left the family wanting more fun. Instead, their renewed commitment to paying off debt is a challenge that’s been good for their relationship, Steve said.

“Since June, we have drastically changed our lives — in many ways. Getting our financial life in order is one big way we are changing everything. It feels great. Paying off the first (credit) card was amazing,” he said.

The turning point came when the couple discussed declaring bankruptcy last year, Steve said. They had tried another debt reduction plan four years ago, but didn’t stick to it because they “hadn’t hit rock bottom” yet, he said.

“I think that was where we said, man, we are either going to destroy our personal financial life or we are going to fix this once and for all,” he said.

The key to success this time will be both increasing their income and lowering their spending, he said.   Doing only one or the other “is like trying to lose weight without lowering your intake of calories and working out to burn more,” he said. In addition to their new jobs, both Steve and Jennie have side jobs where they earn a little extra income. All that will go toward paying debt, too.

Steve hopes the positive changes will help teach his children about spending wisely and investing for the future.

“I talk to my kids every week — if not every day — about the dangers of personal debt,” he said. “While I hope they listen, I know the most powerful thing will be them watching Jennie and me pull ourselves out of this pit.”

There’s a long road ahead. Right now, Steve and his wife hope her income boost will make them debt-free within two years. But that will require sticking with the plan. Steve says he’s ready.

“I believe that so much of doing this … and anything else … is having the right attitude,” he said. “We finally decided that we had enough and are going to attack this debt with passion … we are both doing this as a team … this has brought us closer together. No doubt.”

Carrying a high percentage of credit card debt relative to your credit limits can have a negative impact on your credit scores. The poorer your credit, the more you tend to pay on interest rates which can cost you a lot more money over time. As you pay down your debt and build your credit, it can be helpful to track your progress. You can do that by getting your free credit scores – which you can do every 30 days on Credit.com.

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Simpler is better.

Simpler is better.

The next time you buy a cellphone, things will probably be very different. And better, for the most part. Cellphone contracts look to be going the way of the flip phone, replaced by what are essentially no-interest phone loans. Here’s why that matters.

Comparison shopping is the consumer’s best tactic, and most big companies’ biggest headache. So for years, consumers have had to contend with complicated phone subsidies, early termination fees, family plans and data overage charges.

Now, half those headaches are on the verge of extinction. When Verizon announced earlier this month that it was doing away with phone subsidies and two-year contracts, it marked the fatal blow to what has been the most confusing part of cellphone shopping. Until now, the best phone deals often required iron-clad two-year contracts with a carrier that came with hefty separation penalties — $350 early termination fees, for example. The business model was confusing: carriers subsidized the price of phones to draw in customers who would pay high monthly bills. It wasn’t all bad — some people got nice new phones on the cheap – but it had the unhealthy market effect of blurring the real price of handsets.

(This story first appeared on Credit.com. Read it there. )

Now, carriers are offering a different set of choices — buy your own phone, finance the phone or lease the phone. The good news is that the price of phones should be clearer — a Galaxy S6 Edge might cost $768 or 24 payments of $32, for example. Even better: This new model should also make consumers take a new look at bring-your-own discount plans offered by off-brands like Total Wireless (operated by TracFone Wireless, though it likely runs on the Verizon network based on its coverage map).

But don’t think you are getting away that easy. While annual contracts are gone, and with them early termination fees, other terms and conditions have taken their place. Many consumers will end up with a new “monthly device payment” instead. Leaving a carrier before two years have passed will be a little less painful, but not painless. Consumers will have to pay off the phone loan somehow, by either paying the remaining balance, or paying part of it and returning the gadget, or both. Thanks to Sprint, there’s an option to “lease” phones, which is a little cheaper, but as you might expect from the name, requires consumers to return the gadget after two years.

And the saddest news of all: the bottom line from the big four carriers is that, no matter how they stack their fees on top of each other, all four end up charging consumers about the same for a newish smartphone with a good-enough data plan. Your individual needs might vary, and you might get a little better family plan here or a little newer phone there, but in the end, the prices are strikingly similar.

When I priced them this week, here’s what I found. (These calculations exclude activation fees and taxes).

  • At Verizon, a Galaxy S6 Edge costs $32 a month for 24 months. Then, 3 GBs of data costs $45 a month. Then, users must pay a $20 monthly accesscharge for each phone. Total cost/month = $97
  • At Sprint, that phone costs $30 a month to lease or $33 a month to own for 24 months, plus $60 for “unlimited” monthly data, with strings attached. Total cost/month = $93
  • At T-Mobile, the Galaxy costs $32.50 a month for 24 months, plus $60 for 3 GBs.Total cost/month = $92.
  • At AT&T Wireless, a Galaxy 6 Edge costs $24 for 30 months – (see how that works there? Cheaper — but not, because of the longer term). Then 2 GBs a month cost $55. Total cost/month = $79, but with longer payment terms.

One very positive thing to note about these changes: All these firms are essentially lending you money for free to finance your new cellphone. Nothing wrong with free financing, as long as you understand the commitment you are making. Paying off a phone loan balance can be a fair way to deal with a cellphone divorce than an arbitrary early termination fee.

What Does it Mean for You?

Here’s how to compare phones: calculate the true two-year cost of your gadget, all add-on fees considered. That means total phone cost plus 24 monthly bills (if that’s your commitment) plus the value of what you’ll have at the end (a working smartphone? A phone you can’t wait to ditch? You’ll have to decide).

If you are the type to want the latest gadget at all times, (there are many of you — Recon Analytics says that 49% of Americans replace their device every year now), this new structure adds more flexibility. For example, Sprint is offering a “new iPhone for life” plan, which lets customers trade up to the newest iPhone once every year if they are on a leasing plan and turn in their old, working iPhone.

The phone loan programs should make Americans more aware of their gadget costs, and the fact that they usually own them after two years. Hopefully, that will make off-brand providers like Straight Talk ($45 a month for 5 GBs) worth a second look. And don’t forget, the traditional carriers all have their own sub-brands that offer cheaper, bring-your-own phone plans.

But note that all these changes come with a very important caveat. Now that cellphone companies are acting like lenders, they will….act like lenders. Many of these deals will only be available to consumers with good or excellent credit (here’s a guide to what’s considered a good credit score). So add “before I shop for a cellphone” to the list of times when it’s important to get a copy of your credit report and credit score. You can get a summary of your credit report for free every month at Credit.com.



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Used car lot in Miami (Creative Commons. Click for original)

Used car lot in Miami (Creative Commons. Click for original)

Used cars have always appealed to the budget-conscious shoppers because of their low prices, but there’s always been a drawback — used car loans. Until recently, bank loans for used cars were tricky to get, and were much more expensive than new car loans.

But that’s changing.

With car dealers successfully edging banks out of many new car loans, banks have turned their attention to the used car market. Today, more than half of used car purchases are financed, and used car loan volume keeps setting records, according to Experian. For the quarter ending in June, the average used car loan term was 62 months, and 16% of used car loans were even longer — both records, Experian said. In 2014, the average used car loan balance passed $18,000, also a record.

This story first appeared on Credit.com. Read it there. 

Naturally, rates can vary a lot, based on how old the car is, how long the loan term is, and the buyer’s credit. According to Experian, average rates for used car loans are roughly double than those for new cars. The average interest rate for new vehicles was 4.71% in Q1 2015, up from 4.54% in Q1 2014; the average interest rate for used vehicles increased from 9.01% in Q1 2014 to 9.17% in Q1 2015.

Rates are rising in part because used car loans have become more popular, as have stretched-out loan terms. They can help keep monthly costs down, but they come with a caveat — the upside-down loan.

While longer term loans are growing, they do not necessarily represent an ominous sign for the market,” said Melinda Zabritski, Experian’s senior director of automotive finance. “Most longer-term loans help consumers keep monthly payments manageable, while allowing them to purchase the vehicles they need without having to break the bank. However, it is critical for consumers to understand that if they take a long-term loan, they need to keep the car longer or could face negative equity should they choose to trade it in after only a few years.”

While it can be easier to get financing for a used car purchased at a dealership, it’s possible to get an auto loan for private party used car sales, too. Many banks and credit unions offer them, for a price. For example, Wells Fargo recently offered used car loan rates as low as 3.57% for purchases from a dealer, but the lowest available private party rate was 5.71%. But shopping around is worth it. SunTrust, through a subsidiary named Lightstream, says it offers used car dealer loans at 1.99% and private sale loans at 2.79%. And don’t neglect a phone call to your local bank or credit union, which might match any rate you can find to keep your business.

Used car loans come with all of the potential gotchas as new car loans. Perhaps the biggest: If you finance through a dealer, you are more likely to get talked into paying for extras you don’t want or need, like undercoating. When you finance through a dealer, the dealer knows exactly how much loan you can afford, giving them a bit of an upper hand in the negotiations. It’s better to settle financing before you head to the used car lot, and to pay with a pre-authorized car loan check you get from your bank. And be ready to say “no,” to a lot of tack-on offers.

For poor-credit consumers, car buying can be even more risky. Among the latest trends in the low-credit end of the spectrum is “buy here, pay here” lots. Buyers at these lots consent to restrictive terms, such as agreeing to pay the monthly bill in person, and can pay rates as high as 30%. Repossession of “buy here, pay here” is common, as are prices that might be double or triple Kelley Blue Book value. Used car loan consumers with poor credit should know their rights when they shop around for and take out a loan. Often, the dealer is acting directly as the lender in loans like these, which means the dealer must comply with all Truth in Lending requirements, such as accurate disclosures.

 

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'As low as' is often a term to be feared.

‘As low as’ is often a term to be feared.

A new computer, for as low as $24 a month! That might sound like a steal, but — as with any type of financing — make sure you do the math, and research your options.

It may be tempting to buy a new PC in August, particularly with back-to-school sales. Even if you don’t need a new laptop for the college classroom, there’s the new version of Windows 10 to consider, along with a host of thinner, faster and more powerful machines.

(This story first appeared on Credit.com. Read it there.)

The latest technology can cost you, however. Maybe you don’t have $1,000-$2,500 to plunk down on a tricked-out machine. But you probably won’t be surprised that many PC sellers will front the money so you can get the gadget of your dreams.

Borrowing money for a new computer can be a challenging, however. There are literally dozens of options, but if you aren’t careful, you could end up paying two or three times the value of the machine by the time you’re done with payments — and you might be making those payments long after your new machine becomes old and out of date. So here’s a look at some laptop financing offers, and how much they can cost you over time.

Crunching the Numbers

At Dell, all purchases come with an offer for Dell financing. Here’s one example: An $800 desktop comes with the option “or as low as $24 a month.” Take a closer look, using Dell’s payment chart, and you’ll see that $24 monthly payments mean that $800 PC will take nine years to pay off and ultimately cost $2,170. Why? The interest rate is 29.99%. In another example, a $3,000 PC, with a $90 monthly payment, would take 30 years to pay off and cost $14,734. Pay a little extra each month — just $50 more — and that $3,000 PC will cost $4,886 and be paid off in five years. The mathematics of a minimum payment can be eye-opening.

Apple Macbook buyers have two financing options, each with their own drawbacks and benefits. A shopper who picks a $1,200 Macbook Air will also see the message, “From only $57.57 for 24 months.” Getting that deal involves applying for PayPal Credit, which comes with a 12.99% interest rate. (Note that if you use PayPal Credit for any other purchases, the rate is 19.99%.) Buyers can pay $57.57 per month for a total of $1,381. Or $210 a month for a total of $1,257. Those terms aren’t bad at all, but remember, you’ll now have a PayPal Credit account you may or may not want.

Apple’s other offer involves opening a Visa credit card offered by Barclays. The benefits are obvious. There’s a deferred interest option — you’d have 18 months to pay off the purchase and pay no interest. And you also earn points that can be used toward Apple product purchases. But this offer has a few potential “gotchas.” Like most credit cards, the interest rate can range from 13.99% to 26.99% — consumers won’t know which rate they’ll get until they apply. And if you fail to pay the entire balance within the promotional period, or make a single late payment, all that interest will be applied to your account. In other words, a no-interest deal could quickly cost you $100 or $200 in interest if you don’t follow the rules. (I did a much longer exploration of Apple Rewards recently. Read that here.)

Retailers like Best Buy have their own credit deals you can use to fund laptop purchases. Amazon.com offers its own deferred interest plan — 12 months long, if your purchase exceeds $599. The rate on Amazon’s card was 25.99% at the end of July.

Finally, you can rent computers, too, or rent to buy them. Rent-A-Center offers many makes and models, and here’s how they pencil out. A Toshiba 2-in-1 laptop that’s for sale at Best Buy for $249 cost $26 per week (not per month) at Rent-A-Center when I checked. Renters have the option of buying the gadget for a total of 65 payments — $1,689 — or $844 if purchased within 90 days.

How to Decide

Bottom line: As with all credit, it is possible to use funding from Dell, Apple or other sellers and get a decent deal, as long as you pay the loan off early and make much more than the minimum payment. Some people use deferred interest responsibly and it works for them. But know that one payment misstep can cost you a whole lot of money.

A personal loan is another option, but do your research and make sure you understand the terms and can meet the obligation. The same goes for low-interest credit cards. Or, you may be better off using your own credit card if you don’t have the cash to buy a computer, and you really need a new one, but the same rules apply there, too. Carry a balance for two or three months? No big deal. Make a habit out of it, and the costs can add up. Keep in mind that these options will require a credit check, and may not be available if you have no or bad credit. You can get a free credit report summary on Credit.com to see where you stand before you apply.



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The Super 8 hotel in Liberal, Kansas (Bob Sullivan)

The Super 8 hotel in Liberal, Kansas (Bob Sullivan)

(A note to loyal readers.  Perhaps you’ve noticed that I’ve been away for a while — two weeks, to be exact.  Well, I’ve proudly managed to take my own advice from The Restless Project and took a break. Thanks for your patience!)  

For years now, getting a good price on a hotel room has become quite the cat-and mouse game. The Internet made comparison shopping incredibly easy, putting price pressure on hotels. They responded by inventing tack-on surcharges like “resort fees” to obscure the bargain-hunting process. Then they beefed up hotel rewards programs in an effort to steer users away from comparison sites. And all the while, dynamic pricing and other digital-age tricks have made getting a good hotel price a lot more like hitting a moving target.

1. Go Opaque

For starters, most of the really great deals are on the so-called opaque sites that sell “distressed” room inventory, says travel expert Chris Elliott of Elliott.org. Hotels pay to keep the lights on whether a room is used on not, so they will often find ways to sell rooms very cheap on sites like Priceline or Expedia. Otherwise, when buying from the hotels themselves, pricing is actually a lot more consistent than you’d think.

(This story first appeared on Credit.com. Read it there.)

“Unlike airfares, hotel rates are fairly stable and not subject to the wild swings like airfares,” he says. You will rarely see a hotel room offered for $200 on Thursday morning but $300 on Thursday afternoon, as can happen with a plane ticket. You do, however, see hotels sell out, so timely booking can be a good idea.

2. Go Last-Minute

On the other hand, Expedia says there are often bargains to be had as the clock ticks closer to your vacation stay.

“Last-minute bookings tend to show lower (average daily rates), as hoteliers aim to fill as many rooms as possible,” said Expedia spokeswoman Lindsay Cameron.

See other stories in the “How to Buy Anything” series.

3. Play the ‘Free Cancellation’ Game

Expedia also suggests taking advantage of hotel free cancellation penalties to book early and ensure you’ve got a room, but then re-check the price as the cancellation date approaches, in case a better deal has come along.

4. Know the Market

Travelers can also benefit from knowing high and low season, Expedia says. Obviously, expect to pay more if you head to Florida during the winter. But remember, busy times can vary from week to week or even day to day. Travel to South Dakota during the Sturgis motorcycle rally and you might pay double what you’d pay a week later. Pricing out your hotel rooms nice and early — even if you aren’t ready to book — is one easy way to make sure your travel plans don’t collide with the American Widget Makers Annual Convention in Boise.

5. Go Direct

Many hotel chains have finally come around to the idea that they’d better offer consumers real value if they want them booking directly through their own websites, rather than through an aggregator like Expedia. That means offering lower prices or rewards points, or both. Use a site like Expedia to find the best price across various brands, but when you settle on a specific property, always check the direct booking price. Sometimes, a hotel’s website price is more, sometimes it’s less, but it’s always worth looking.

6. Double-Check the ‘Best Available Rate’

With all this clicking around, don’t forget to apply and re-apply for your deserved discounts, like AAA or AARP. Some hotel chains will offer you a drop-down choice that says “best available rate,” but you might see that the AARP rate is actually better than the “best available rate.” No kidding.

7. Fees, Fees & More Fees

Don’t immediately trust the price you get on a website – do your research. Your ultimate, out-the-door price could be much higher if a property socks you with one of the fees listed below. Always check a hotel’s fee policies, and consider them when comparison shopping. It’s common that the lowest price you see online ends up not being the lowest price after all the fees are paid. Here are some examples:

Internet Fees – The more expensive the hotel, the more likely you will be charged a hefty WiFi fee of $10-$15 per day. The new trick I’ve seen lately is for hotels to offer “free” WiFi in the lobby, but charge for access in the room. (That means be skeptical of free WiFi offers now!) Best way to avoid that fee? Before you leave, make sure you know how to use your smartphone for broadband access.

Resort Fees – As the name suggests, this fee is most prevalent in resort-y places like Las Vegas. But resort fees can pop up anywhere. Or they can come with other names, such as…

Housekeeping Fees – Hotels like charging to clean your room now, as if that’s not included in the price. The worst part of the housekeeping fee: Often, housekeepers don’t get any of the money.

Pet Fees – Traveling with Fido (or Rusty)? The good news: More hotels are embracing travelers with pets. The bad news? They are doing it because it’s good business. Hotels charge anywhere from $10 to $100 for allowing a pet in your room. If you use a site like Expedia to sort through pet-friendly hotels, make sure you manually check the fee. Not all pet-friendly hotels are created equal.

Safe Fees – This one bugs me. Some hotels put a safe fee on your bill, even if you never use the safe. You can ask that it be removed. Same for the newspaper fee.

Cancellation Fees – Gone are the days when hotels could be canceled by 6 p.m. on the night of a reservation for a full refund. Cancellation policies are all over the map now, and can even vary based on how the reservation was initially made. Never book a hotel without knowing what the cost of a breakup would be. Travel always involves adventure, which involves unpredictability, which means plans change. Make sure you plan for that.

8. Outright Scams

Finally, your hotel fee could end up much more expensive than you initially believed through no fault of the property if you end up falling for a lodging-related scam. There are plenty. The Better Business Bureau recently issued a warning about websites that appear to be hotel aggregators, but are really scams that purchase search engine placement and intercept web surfers trying to pay for legitimate hotel stays.

“It may have a URL similar to the real hotel website or established third-party booking site, such as Hotels.com or Expedia.com. The website may also use the same logo, colors and/or design of the legitimate site,” the BBB of Louisiana wrote in June. “The website might look okay, but it’s a fraud.” Directly typing the hotel’s website into your browser’s address field is your best bet.

Other scams include fake pizza delivery, used by thieves to get you to open your hotel room door; the “late night desk clerk call,” which can be an ID theft trick (“Sorry, sir, your credit card didn’t work. Could you share another one with me?”); and data hijacking through free hotel WiFi. Don’t answer the phone or the door if you don’t expect anyone; and don’t trust hotel WiFi with sensitive surfing like online banking.

Read other stories in the “How to Buy Anything” series.



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Levittown, on New York's Long Island, new starter homes were plentiful in the late 40s and 50s. Click to visit the Instant House blog, a tribute to manufactured homes.

Levittown, on New York’s Long Island, new starter homes were plentiful in the late 40s and 50s. Click to visit the Instant House blog, a tribute to manufactured homes.

I had a depressing conversation recently with someone who does big housing construction deals for a big bank. There’s only two types of deals that work, he said.  1) Building pricey, premium granite countertop homes for well-off folks or 2) Building affordable housing with government subsidies. Roughly speaking: construction for the rich or the poor. Nothing in between.

Most important, nothing for that apartment-dwelling couple with a toddler and a baby on the way.  That’s the lament I hear from all my urban friends around the country. Where can I start my family? Where is my starter home?

It’s gone. Builders and banks just can’t make money off humble homebuilding, or at least they think they can’t.

If he’s right, my banking friend solved a riddle that has been at the heart of The Restless Project: why do middle class folks feel so lost, even if they have decent jobs?

I set about trying to confirm my friend’s sentiment, and it was harder than I thought.  There’s little agreement on what a starter home is.  He blamed demanding millennials, who refuse to live in a house without granite.  While that’s partly true, I think the problem is much deeper.

In fact, you could argue (and I will) that starter homes are basically disappearing.  They aren’t being built and those that exist are either falling into functional disrepair (they are old), or more likely, being snapped up by investors to rent to young families.

First, a little housing lesson. Back in the post-War boom, America’s housing industry was on fire. Single-family housing starts jumped an incredibly 400 percent during the decade.  According to this great housing history, in 1950, the average price was $11,000. For perspective, median income, in real dollars, was about $3,300.

But here’s the number to watch: the average home was 963 square feet. A majority of homes had two bedrooms and one bathroom.

By 1972, prices had jumped to $30,000 while family income was nearly $10,000.  Homes, which typically had three bedrooms and at least a bath and a half, now averaged 1,600 square feet. That kind of house can pretty comfortably shelter a family with 2.3 children.

Today, families are smaller — from 1970 to 2014, family size shrunk by about half a person.   What’s the average square footage of a home? About 2,500.  More space, fewer people.

That’s progress, of course. Now homes have central air and finished basements and man caves and spa tubs and yes, granite countertops.  But all those things are useless to young families who have no idea where to find the $500,000 they have to pay to live in a place with decent schools that’s within 50 miles of their workplace.

A healthy housing market would provide a wide spectrum of housing – the $200,000 tiny place, the $400,00 step-up home, the $700,000 dream home. I promise you that plenty of my apartment-dwelling friends would love a two-bedroom starter home on a cozy lot. But they don’t seem to exist. Why?

This BuilderOnline.com story, “Are new starter homes history,” offers a tidy explanation.  For now, let’s peg $200,000 as a starter home price.  (For a fun fact, $30,000 in 1970 has the spending power of $185,000 today. But I’m going with round numbers). It begins with a tale I’ve told in other places — if a builder can construct homes that cost 2.5 times median household income in a neighborhood, the homes will sell like hotcakes. Two-and-a-half times?  Median household income is roughly $50,000 in America today.  See a lot of $125,000 homes sprouting up?

No. You don’t even see $200,000 homes sprouting up. In fact, only 46,000 new sub-$200,000 new homes were sold in 2014. Anywhere.

And here’s why, according to BuilderOnline.

Making a $200,000 home work as a home builder is junior-high–level arithmetic. Solving for profit—say, 20%—land and building direct costs can not exceed $160,000. Problem is, a 20% margin on a sub-$200,000 house has become frighteningly elusive in the past decade.

The lowest build cost is around a $50 a foot,” says David Goldberg, a home building and building products manufacturers analyst for UBS, New York. “If you do a 2,000-square-foot house, which is what you’d have to do to compete with existing stock, that leaves you with $100,000 of sticks-and-bricks cost. The maximum cost on the land would be $60,000.”

The catch to all this is that it’s not just one problem. No single culprit is killing the new starter home. A stream of factors—land, operational risk, labor, material costs, entitlement fees—converge at a single, all-too-real vanishing point where affordability becomes unaffordability.

Even if land can be secured at a reasonable cost, cash-thirsty localities heap fees upon fees that weigh more and more heavily on final home price tags. Chris Cates, co-owner of Fayetteville, N.C.–based Caviness & Cates Communities, estimates that regulations that stipulate he has to convert stormwater ponds to permanent ponds and bond items such as street lights, sidewalks, landscaping, and retention ponds have doubled his development costs.

So the numbers just don’t work. But left unsaid in another obvious factor, typical in all industries — every business strives to sell premium, high-margin goods.  Your coffee shop wants to sell you pour-over brews at twice the price.  You bar wants you to buy microbrews.  Your car dealer wants you to buy an Ford Escalade, not a Ford Focus. The low end of the market is for suckers, or Walmart. At least until demand becomes overwhelming in that segment. But even then…housing isn’t like hamburgers.  Even if builders today decided America needed 5 million new mid-range affordable homes, it would take years for projects to take shape, get approvals, get financing, etc.  Housing is very slow to react to demand.

But that’s why there’s “used” homes, right?  Young families are supposed to buy a needs-TLC place in their 20s, fix it up, and trade up to their dream home later.

The problem is cheaper, older starter homes are nearly as hard to find. Here’s one piece of evidence: The folks at RealtyTrac ran the numbers for me, and it turns out that year-to-date sales of sub-$200,000 homes is down this year compared to the last three years. That’s strange, given that sales above $200,000 are up. For example, two years ago, there were 395,000 sub $200,000 homes sold from January to May. This year, there were only 343,000.  Rising prices can’t account for more than a fraction of that drop.

Worse yet, families who would buy cheaper homes are being edged out by investors who buy the homes and rent them out. Non-occupant buyers of single-family homes hit a record last quarter, according to RealtyTrac.

Worst of all — that’s even more true in hot, affordable communities where families are fleeing to avoid NYC and San Francisco prices.

Among metropolitan statistical areas with a population of at least 500,000, Memphis, Tennessee posted the highest share of institutional investor purchases of single family homes in the first quarter of 2015 — 14.1 percent — followed by Charlotte, North Carolina (12.1 percent), Atlanta, Georgia (9.6 percent), Jacksonville, Florida (8.5 percent) and Oklahoma City, Oklahoma (7.6 percent).

Of course investors are buying in those places. At a time when it’s very hard to make money by saving, and the stock market appears fragile, renting to stable families is a great way to make return on investment.

Housing expert and loan officer Logan Mohtashami talks about the “cracked equilibrium” that has led to this state of affairs. Dual income parents with decent jobs shut out of the housing market because there’s just nothing but luxury homes to buy, trying to stick it out in their one-bedroom apartment.  I keep saying that average people with average jobs can’t afford average homes in America, and that’s the source of untold strife.

There’s no law of nature that says buying a home is superior to renting one.  There are plenty of logical reasons that young folks might choose to rent instead of buy, and more power to them. It’s been good for America to shed the idea that housing is a guaranteed investment / retirement plan.  But Mohtashami warns about the potential long-lasting social consequences of an all-renter / landlord society.

“Are we at the beginning of a sociological movement away from middle class home ownership and towards a cultural split between the investment property landlords and their renters both of whom may have less personal investment in neighborhood security, local schools and shared public facilities compared to primary homeowners?”

Buying has one huge advantage over renting — fixed monthly payments.  In all but the most unusual situation, that means housing really becomes cheaper as time passes, thanks to inflation. That is not true of renting, and certainly not now.  Rents are rising at record rates around the country.

That puts families who want a place to live between a rock and….no place, really.



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Gary Horcher Facebook page.

Gary Horcher Facebook page.

Two recent stories about America’s underpaid workers and the effort to give them a break remind me just how much more we need to talk about class warfare, and propaganda, and economics…but most of all, what’s going on at dinner tables around the country.  (That’s the point of The Restless Project.)

A quick review:

1) A bartender was left a “Why I don’t tip in Seattle”   note after a dinner by a patron railing against that city’s new $15 minimum wage law.

2) A Seattle company CEO decided to pay all his employees at least $70,000 after learning the true cost of housing nearby.  Then, The New York Times reported the company, which processes credit card transactions, was struggling. Some cheered the news as new evidence that workers need incentives to perform well.

America has a very real and very serious economic problem. Wages have essentially been stagnant for years….decades…arguably, since a man first walked on the Moon. Really.  Young people can’t afford homes and they aren’t buying them, instead choosing to live with their parents well into their 30s. Really. In an economy that’s two-thirds consumer spending, this is a ticking time bomb. People need more money.  There’s only three ways to get them that money — the government can give it to them, or they can work for it, or we can lower prices on everything.  I’m sure we all agree that No. 2 is better than No. 1, and it’s a whole lot better than No. 3.

The problem is it’s going to be very hard to get people higher wages in an environment that has become so toxic to the idea.

Just to put the numbers out there for anyone who hasn’t done the math (and don’t feel bad if you haven’t. During a recent discussion with a smart friend of mine who makes about $60,000 a year, s/he said $15 / hour was more than she made. It’s not. Not even close).

Assuming a minimum wage worker scores 40 hours at a job, that’s $600 a week — $2,400 for four weeks. Pre-tax.  Guess what the AVERAGE rent is in Seattle? $1,500 for a one bedroom.

Remember, this is for the new wage that Seattle workers must be paid…by 2021 (for smaller businesses that allow tipping).  So that fellow who left that note instead of a tip? He failed to tip a worker who hadn’t actually gotten a law-required raise yet.

Hold that thought for a moment (I promise a happy ending) as we move to the sad story of Seattle payments firm Gravity and CEO Dan Price, who decided to create his own internal minimum wage at $70,000 annually. The raises are to be phased in during the next three years — a web developer who earned $41,000 was bumped up to $50,000, for example.  Sounds like a good employee retention plan to me.

But The New York Times found a couple of 20-somethings who seemed to vaguely think there was something wrong about this, and you have an Internet sensation of a story.  Three months after the announcement, Gravity is in trouble.  And as you might imagine, folks who seem to dislike higher wages jumped at the Internet chum.

“Note to all CEOs everywhere: Don’t make a move like Price’s without first consulting Hayek, Von Mises, or Friedman,” said Investors.com smugly.  I’m sure your Facebook news feed is full of even more glib comments about why paying workers more makes them lazy.

Price’s poorly-executed publicity stunt no doubt ruffled feathers. Mind you, it also got him a few hundred more clients, which seems to be lost in all the glibness. His real problem, however, is his brother, who is a part-owner. He hates the wage idea, and is now suing.  So what’s the important lesson here: Don’t pay workers more, or don’t change your entire compensation structure without getting buy-in from ownership?

If you really believe that “simple economics” crushed a company within three months because it announced it would lift wages within three years, I have some gold coins to sell you.

My concern is that Gravity’s story, however it ends, will now be used as a bludgeon against anyone who talks about higher wages for workers.  Listen carefully to those who are so violently opposed to the idea, and think about why.

Back to the tip jar for a moment, and that happy ending I promised.  After the bartender’s story went viral, the anonymous notecard leaver apparently had a change of heart.  On Wednesday, KIRO News reported that the man behind the card sent a letter to the station to be delivered to the bartender. In it was a sizable tip, a valuable gold coin and a thoughtful note.

“Thank you for your part in opening a dialogue regarding the subject.  For that you have earned my gratitude and for that reason please accept this gold coin as payment for that service,” it read.

This is what I find so typical: Somebody rages against a vague idea placed in their head (socialism!), but when faced with a real-life human being in real-world consequences, the sloganeering and shallow understanding of the issues melts away. I really do find most Americans are generous, and kind, and – yikes! – agreeable when dealing with people. The problem is the yelling at the moon chatter and echo chamber than dominates our noisy airwaves. I know plenty of people, for example, who will say the most awful, even racist, things about immigrants…but when they discover the immigrants in their midst, the reaction is always, “Well, I don’t mean ‘her.’ ” I know we all want to yell HYPOCRITE when we see this in action, but I think it could actually be a starting point for understanding and dialog. 

It’s one thing to yell SOCIALISM. It’s another to encounter a person who is wildly underpaid and try to use an economic theory to explain to that person why they should just be OK with that.  There are lots of problems with the American economy right now — as I’ve written elsewhere, people with average salaries can’t afford average-priced homes or apartments, and that’s dire. There are plenty of ways to try to solve them.  Let’s talk about them. I for one am not crazy about the $15 minimum wage laws sweeping the nation because I think it’s the wrong fight to pick. It doesn’t help nearly enough people, and it’s not nearly enough to really help. Declaring victory over a $5-or-so dollar-an-hour raise that arrives in 3-5 years is far too much patting-ourselves on the back.  And it doesn’t address the real problem. Wages across the board are terrible. Families can’t buy starter homes because they don’t exist any more (more on that soon).

But knee-jerk reactions against efforts to give workers a break poison the discussion. Is there a better way for a very successful start-up to lift wages so its workers can afford to live somewhere near its office?  Perhaps. Let’s figure that out.  Let’s not babble on about the need for worker incentives and such. Those who do sound like little more than protagonists in a Karl Marx novel.



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Progressive's Snapshot device gathers data about your driving, but your credit score matters much more.

Progressive’s Snapshot device gathers data about your driving, but your credit score matters much more.

Is your less-than-perfect credit score costing you a bundle on auto insurance? A new study suggests this hidden fee might be costing drivers hundreds of dollars each year.

Most consumers know that low credit scores can cause all sorts of collateral damage, such as higher interest rates. However, in most states, it can also lead to higher auto insurance rates. Exactly how much damage remains a mystery, however, because insurance companies and other firms do not have to reveal how much the “low credit score” penalty fee is, thanks to a Supreme Court ruling back in 2007.

A new study by Consumer Reports claims the penalty could be costlier than you think. In fact, the study claims, having a low score can raise your rates even more than having a conviction for driving under the influence on your record. And even drivers with merely “good” credit instead of excellent credit pay a penalty, Consumer Reports found.

By pricing eight hypothetical single drivers of varying ages, the organization found that drivers who had merely “good” scores paid $68 to $526 more than similar drivers with the best credit scores, depending on their home state.

“In one example, Consumer Reports found that its single drivers in New York with a good credit score and clean driving record would pay an average of $255 more in annual premiums than if they had an excellent credit score. In another example, in Florida, CR’s group of adult single drivers with a clean driving record and poor credit paid $1,552 more on average than if the exact same drivers had excellent credit and a drunk driving conviction,” the organization said in a press release announcing that the issue was the subject of its upcoming August issue. It is also launching an advocacy site called Fix Car Insurance.

(This story first appeared on Credit.com.  Read it there.)

“Consumers have a right to expect that their car insurance premiums are based on meaningful behavior such as their driving record, and not on such factors as how they shop, pay their bills or how likely they are to tolerate that their rates have been hiked up,” said Consumer Reports Editor in Chief Diane Salvatore.

This is the second study by a consumer organization in recent days to criticize the complex way that auto insurers calculate premiums. The Consumer Federation of America released a study this week claiming that some insurance firms charge widows more than married women – roughly 14% more.

“The ‘widow penalty’ and other pricing related to marital status provides still another reason for state insurance departments to examine insurer pricing more carefully,” said J. Robert Hunter, CFA’s Director of Insurance and former Texas Insurance Commissioner. “Auto insurers are increasingly using non-driving factors in this pricing, and it appears that much of this pricing is unrelated to insurer risk.”

“It is not enough to base insurance rates on a driver’s record alone because the records are often incomplete, inaccurate or out of date…. A key thing to know is that this issue and discussion on the use of credit scores for insurance has been going on for decades. It’s not new, and it’s not secret,” said Loretta Worters, vice president of communications for the Insurance Information Institute. “Actuarial studies have repeatedly shown that how a person manages his or her financial affairs is a good predictor of insurance claims.”

Auto insurance rates can be the product of dozens, if not hundreds, of variables that look far beyond simple age and driving record. Innovations — like Progressive’s “Snapshot” tool, for example — even examine highly specific data such as frequent “hard braking.”

The exact formulas are a mystery to drivers, which makes it harder for them to shop around and compare providers, critics say. The formulas are shared with state insurance regulators; Consumer Reports says it used those formulas to compare pricing for its test-case drivers.

Those formulas include credit scores, but not necessarily the traditional FICO score that consumers can purchase. Most firms calculate their own credit scores using proprietary formulas, which are then weighted into rate calculations.

“Credit score is a really, really good predictor – better than a driving record,” Worters said.

In California, Hawaii and Massachusetts, state law prohibits use of credit scores in setting auto insurance rates, but elsewhere the practice is common.

“Consumer Reports found that most car insurance companies cherry-pick about 30 of the almost 130 elements in a credit report to create their own score for each policyholder that’s very different than a FICO score—and secret. If a car insurance company calculates that a consumer’s credit score isn’t up to its highest standard, it often charges a higher premium—even if the customer had never had an accident,” the organization said.

When credit scores are used to deny a consumer credit, lenders must inform applicants by sending what’s called a “Notice of Adverse Action.” (You can read more about what to do when you’re rejected for credit here.) But firms that use credit scores for other purposes, such as setting auto insurance rates, don’t have the same obligations. About 10 years ago, Geico and Safeco were sued over this practice, and lower courts ruled that insurers should have to tell consumers when they face a credit score premium penalty. But in 2007, the U.S. Supreme Court overturned a lower court ruling, partly because it feared a new flood of adverse action notices would be ignored by consumers.

The Consumer Reports study also claims that discounts, which are the heavy focus of insurance advertising, are often trivial.

“Bundling home and car insurance would save a typical policyholder just $97 a year; adding anti-theft equipment would save just $2 annually, when looking at national averages,” it said.

Given the complex way that auto insurance rates are set, there’s only one way consumers can make sure they aren’t being overcharged: by shopping around. It’s vital that consumers get rate quotes from numerous firms at least once every other year, and more frequently when there are significant life changes, such as a move or a change in marital status. It’s also important for consumers to know where they stand, credit-wise. They can do that by checking their credit reports and credit scores regularly. Consumers can get their free annual credit reports on AnnualCreditReport.com, and there are many ways to get free credit scores, including through Credit.com.



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