MONEY buying a home

How to Beat Newly Hot Real Estate Markets

Buying in a hot market can be tough. These tips can help beat the competition.

How much house will $2 million get you in the United States these days?

You could buy 25 pretty nice four-bedroom, two-bath homes in Cleveland, Ohio. Or, you could get just one modest ranch house in Los Altos, California, the most expensive real estate market in the country, according to a new survey by Coldwell Banker.

But, then again, you would probably get beat out by an all-cash buyer offering a higher bid.

Competition is fierce in today’s emerging hot real estate markets because the inventory of available properties is still extremely low. In areas like Silicon Valley, though, the economy is humming and buyers have plenty of money.

Los Altos is in the middle of the action, surrounded by the corporate headquarters for Google, Facebook and dozens of other major tech companies, as are other California cities: Newport Beach, Saratoga, Redwood City and Los Gatos, the rest of the top five on Coldwell’s list.

As other markets heat up around the country, buyers can learn a few things from what’s happening in some of the hottest places.

NEW MATH

If there is one thing Silicon Valley’s techies know, it’s algorithms. You’re going to need one in today’s top markets to figure out how far above asking you need to bid.

Sumi Kim Hachmann, a 32-year-old researcher at Quora.com, snagged her three-bedroom, one-bath house in Menlo Park last year after six months of trying. Each time she found a house she liked, she crunched the square footage and comparable sales to figure out how much to bid, refining her math each time she lost out.

She liked a fixer-upper listed at $1.1 million, and was willing to bid $100,000 over asking. Her agent told her to double that, at least. She did, but the sellers countered. The house sold for $1.4 million to somebody else

“That was definitely discouraging,” Hachman says. “But it was a learning experience.”

Next time, she went in with a strong offer that amounted to $1,000 per square foot, and won. Now, a year later, she’s incredulous that houses in the neighborhood are going for double that.

While price is largely controlled by location and size, you need to add a premium to your offer if you need a mortgage, says Joe Brown, managing broker of a Coldwell branch in Los Altos. Bids being equal, sellers prefer all-cash because there is less risk. Price will still prevail, though, so a higher bid from a qualified buyer with a mortgage should win.

Another caveat: Keep contigencies out of the purchase agreement. Doing this is difficult for mortgage-seekers because banks typically require that the purchase price match the appraised value of the house. With prices going so far above asking, that can get tricky.

“You either ask them to put a lot more down or have them sign something that they will waive the appraisal contingency,” says Ducky Grabill, a founding agent of Sereno Group realty, who is based in Los Gatos.

Grabill also suggests having the lender call the listing agent and let them know they will guarantee the financing.

LOWER EXPECTATIONS

Another strategy is to buy below your price point, says Brown. If you have the resources for a $2 million house but cannot compete with stronger buyers, then aim for $1.5 million and turn it into the house you want.

This is a modification of the old “buy the worst house in the best neighborhood” adage. But you cannot just sit on this kind of property and hope it will appreciate; you’ve got to renovate.

That’s what Amy Bohutinsky, chief marketing officer of real estate site Zillow.com, did with her own purchase of a fixer-upper in the Seattle area two years ago.

“If you buy it with the intent of fixing it up, it can be an easier way” into a house than engaging in a bidding war, Bohutinsky says.

She also recommends expanding the boundaries of your search: considering for-sale-by-owner properties, preview listings like Zillow’s “Make Me Move” section and “coming attractions” on listing sites.

BE READY

It is not enough anymore to show up at an open house pre-qualified for a mortgage and with a letter that sells yourself. You may need to have an engineer or other inspector come along, says Sereno Group’s Grabill.

She had a client recently clinch a $2 million all-cash deal after his first viewing, but only because he was able to do his due diligence on the foundation issues immediately.

This buyer was one of those bidding down on a property. He was really in the market for more like $2.5 million, and will put the remainder of his budget into fixing it up.

“They are throwing so much more money at properties to get it. It’s a little crazy,” Grabill says.

MONEY homeowners insurance

Why You Soon May Have to Pick Up More Home Repair Costs

measuring tape with money
Bart Sadowski—Getty Images

Insurers are moving from flat deductibles to higher ones based on the value of your home. Here's what you need to know about this change.

Two years after Superstorm Sandy, State Farm agent Jen Dunn is busy explaining new insurance math to her customers in upstate New York. Instead of the dollar-amount deductibles they have been used to for years, she is now writing their policies based on percentages.

For many, it means turning the typical $500 deductible into 1% of the insured value—for a $250,000 house, that means a gasp-producing $2,500.

“My clients who have been offered this initially say, ‘I don’t like this,’” Dunn says. But then she explains that the higher amount is usually offset by a lower annual premium. If they go years without a claim, they can save in the meantime.

Jason Corbett, 39, who lives in central Georgia, is using a 1% deductible. Because Corbett’s rural home is valued at slightly less than $200,000, it was a better deal than a flat $1,000 deductible. The difference between the two deductibles was only a couple of hundred dollars. However, he saved money by lowering his premium, so over time the difference in his out-of-pocket costs will be negligible.

If he had a $300,000 home and the deductible was double what he pays now, “that would be a different decision,” says Corbett, who writes a personal finance blog.

State Farm, the largest U.S. property and casualty insurance company by market share, says a “significant” number of its policies now have percentage deductibles. Other carriers, like Allstate Corp, USAA, and Nationwide, also offer the option to consumers in certain states, but the prevalence is not yet tracked nationwide. The practice is near-universal in Texas at this point, according to that state’s insurance office.

With a percentage deductible policy, things are a little different than the old-fashioned flat rate. Here are seven things you need to know:

1. Do not be afraid of high deductibles

You might be used to $500, but a higher deductible could actually be better for you.

“It’s a very smart move to buy high deductibles if you can afford it,” advises J. Robert Hunter, director of insurance for the Consumer Federation of America.

The main reason? Every claim you make against your homeowners insurance can raise your rates. One claim pushes it up an average of 9% and two claims will raise it by 20%, according to a recent study by insuranceQuotes.com. So you want to pay out of pocket for small claims anyway.

2. The 1% deductible is not a percentage of your loss

The new terminology makes people think of health insurance, but homeowner claims do not work that way, says Jim Gavin, director of insurance information services for the Independent Insurance Agents of Texas trade group.

Rather, the out-of-pocket deductible you have to pay before the company will cover any claims is based on a percentage of the insured value of your home—which is not the market value or the appraised value, but the cost of replacing your home should it burn to the ground and need to be rebuilt.

For example: If a kitchen fire damaged your $250,000 home with a 1% deductible, and it cost $5,000 to repair the damage, you would receive a check from the insurance company for $2,500 after paying the other half yourself.

3. Your out-of-pocket costs will regularly increase

Your $500 deductible stays flat forever, but a percentage deductible will go up incrementally over time as the insured value of your home rises.

Some homeowners may not even notice this, like Will Harvey, 34, of Tyler, Texas, who is five years into a 1% policy on his home. “If it went up, it wasn’t enough for me to remember it,” he says.

4. You will still have other deductibles on top of the basic rate

Many homeowners have add-on clauses like a 5% hurricane deductible that is common in coastal areas, or 2% for wind and hail damage. Many states require separate coverage for earthquakes and floods.

Those all still apply on top of the basic coverage for fire and theft, says Amy Danise, editorial director of Insure.com. So if you have any damage that is caused by a specified risk, you will have to pay out of pocket first for that.

5. Your might be able to pay down your percentile

If 1% is too much for you, you may have the option to accept a higher premium to lower out-of-pocket costs—going from 1% to half a percent or some other fraction. The value to you depends on how much your house is worth and how much you can afford to pay out of your savings if something goes wrong, says State Farm’s Dunn.

6. You can still shop around

Even in Texas, where almost every company offers a deductible of at least 1%, or sometimes up to 1.5% or 2%, some carriers still do things the traditional way. Texas insurance agent Criss Sudduth says the customers who might benefit more from a flat-fee policy are those whose premiums do not actually go down despite the percentage policy—either because the weather risks are too high or because their personal credit is bad.

7. You should still figure out your dollar amount

After years of hearing complaints from consumers who are confused, the Texas legislature passed a bill recently requiring carriers to explain what the percentage deductible translates into, in dollars.

In other states, if your carrier does not do this, you should find out the information yourself and write it on your declarations page, says Deeia Beck, public counsel and executive director of the Texas Office of Public Insurance Counsel.

MONEY Travel

3 Top Retirement Trips That Won’t Break Your Budget

Bartolome Island, The Galapagos.
Bartolome Island, The Galapagos. Ray Hems—Getty Images

That retirement dream trip may carry a harsh real-world price tag. Here's how save on costs and still travel comfortably.

Where is retirement going to take you? If you’re like most people, you’re dreaming of grand European tours, African safaris, maybe even Antarctica.

But even if you think you’ve budgeted generously for trips, you might get a harsh dose of reality when you see the actual price tag. A couple that puts aside $10,000 a year for travel may only be able to pull off one major trip per year, with maybe some left over for smaller jaunts.

What Patrick O’Brien, 71, and his wife Bobbie, 68, found out is that you can’t get too far on that. So what the O’Briens have done is a combination of lowering their expectations and raising their budget. They nixed Australia from their list, but over the years have done about 10 group tours, including two weeks in Alaska this year.

Here’s what three of the most popular trips for retirees will cost you:

GRAND EUROPEAN TOUR

How popular is the big European trip for retirees? Consider this: Viking River Cruises, one of the largest riverboat cruise operators, will carry more than 250,000 passengers in 2014 with a median age of 55, and 75% of them will do one of their European riverboat tours. The majority of those will sail from Amsterdam to Budapest, or some portion thereof.

Cost: A mid-tier balcony stateroom for an eight-day Rhine cruise in the spring will run about $8,000 for a couple, not including airfare, which can cost $600 a ticket from New York. Excursions and food are included, but not tips.

Budget tip: Off-season cruises are always cheaper, but on this route, Viking marketing executive Richard Marnell says the late-fall Christmas market specials are a big draw. “It has a feel and a vibe – they are an artisans’ heaven,” Marnell says.

GREAT WALL IN CHINA

Thelma Tiambeng-Bright’s dream retirement trip was to go to China, a feat she accomplished last year on a tour with YMT Vacations. The 70-year-old retired teacher, who lives in Duncanville, Texas, flew to California to join the group, which then flew to Beijing. From there, she saw the Terracotta Army, cruised the Yangtze River, saw the Great Wall and then Shanghai.

Cost: Tiambent-Bright’s 12-day trip cost about $4,000, including airfare. The current discount rate for a couple is $2,400, with $1,500 for airfare from a destination like Dallas.

Budget Tip: Travel with a buddy or significant other, if you can. Tiambent-Bright says she pays $600 to $800 extra on any trip she goes solo.

GALAPAGOS ISLANDS

For Patrick and Bobbie O’Brien, their dream retirement trip was to see the extraordinary wildlife of the Galapagos Islands, off Ecuador. They took an 11-day journey with Road Scholar, which was previously known as Elderhostel, a popular nonprofit group that plans educational trips for seniors.

One important feature for their budget was that the trip was all-inclusive. “We want to know how much money we will spend, and the nicest part is that there are no extra costs—you don’t have to worry about tipping or side trips,” says Bobbie O’Brien.

Cost: $8,000 for a couple, not including airfare to Quito, which will add $1,700.

Budget tip: When you want to go on the big trip, set it and forget it, suggests Peg Walter, a 70-year-old retiree from New York. “I cringe when I see the amount, because you pay for the whole thing in one lump sum,” Walter says. But then by the time she goes on the trip, she’s able to just enjoy herself because there are no extras involved on most of her tours.

“I call them ‘SKI’ trips —Spend the Kids’ Inheritance,” Walter jokes. “We’re not rich by any means, but we say, let’s try to use wisely what we have so we have memories.”

MONEY 401(k)s

5 Ways to Get Help With Your 401(k)

Most 401(k) plans now offer financial advice, often for free. Workers who take advantage of these programs tend to earn higher returns.

UPDATED: OCT. 7

When Chris Costello wanted to test his new online 401(k) advice service called blooom, he asked his sister if she would let him peek under the hood of her account.

What Costello found was typical of workers who do not pay much attention to their accounts—it was allocated badly, leaving her behind on her retirement goals.

In his sister’s case, she had put her funds in a money market account when the recession hit in 2008 and never moved them back into the market.

“It’s been like four or five years of recovery, and she had made like $10,” says Costello, who is co-founder and chief executive of blooom.

Overall, workers have more than $4.3 trillion invested in 401(k) plans, according to the Investment Company Institute. Yet many of the 52 million workers who participate in 401(k) are not good at making their own investment choices, experts say.

Studies show that workers who get investment advice from any source do better than those who receive no advice.

The difference can be more than 3% a year on returns or up to 80% over 25 years, according to a recent study by benefits consultant Aon Hewitt and 401(k) advice service Financial Engines.

“Left to their own devices, people either do nothing at all or pick poorly,” says Christopher Jones, chief investment officer at Financial Engines, the largest provider in the advice sector as ranked by assets under management.

So where can employees turn for guidance?

1. Start with your human resources department

You might already have access to advice, says Grant Easterbrook, an analyst who tracks online financial services for New York-based consulting firm Corporate Insight. He says even his own colleagues do not know they have access to free financial advice as an add-on benefit.

If you work at a big company, you might be one of the 600 clients of Financial Engines. Their free services include allocation advice and performance data. Other companies may employ consultants to give advice during open-enrollment periods or give access to calculators and other advice through the website of the 401(k) provider.

Employees at smaller companies might have to venture further to get help. “Three out of four participants don’t have access to an employer-based advisory tool,” says John Eaton, general manager of 401K GPS. “But there are a lot of DIY solutions out there.”

2. Get free advice on the Web

The Web offers a lot more these days than standard retirement calculators. You can obtain detailed advice on allocating funds in your specific retirement plan from several providers.

At FutureAdvisor and Kivalia, to name two, all you have to do is type in the name of your company and the system will generate a sample portfolio. You will then have to take that allocation advice and implement it on your own.

3. Pick managed funds or target-date funds

If you do not want to get too involved in the process—even to just pick a simple selection of index funds—your company will typically offer some kind of managed fund or target-date fund, a diversified fund linked to a future retirement date that gradually gets more conservative as you age, in their mix of choices.

When you allocate your money into these types of funds, you are buying the management expertise that comes with them, timed for a retirement date in the future. Sometimes that comes with stiff fees, so be sure to check the fine print, says Easterbrook.

“Absent engagement, it’s a reasonable approach to take,” adds Shane Bartling, a senior retirement consultant for benefit provider Towers Watson & Co.

4. Pay to have somebody manage it for you

Financial Engines has 800,000 subscribers who pay a percentage of their assets under management to monitor their 401(k) accounts and make changes accordingly. Others are GuidedChoice, which offers its services through providers such as ADP, Schwab, and Morningstar, which reaches 99,000 different plans.

Start-ups are emerging as well, either charging a flat fee such as $10 a month or a fee based on how much money you have.

401K GPS, which launched in 2011, operates primarily through investment advisers and small employers. There is also blooom, MyPlanIQ, Co-Piloted and Smart401k.

5. Do not opt out of auto-enrollment

The majority of people will still do nothing, but that may be a savvy option. Financial Engine’s Jones says some companies are making workers re-enroll in 401(k) plans and defaulting them into managed accounts to get them to diversify.

“When we do that, about 60% of population will stay in these programs,” says Jones. About 15% of active investors will opt out because they are already getting advice.

UPDATE: In the auto-enrollment section, the default allocation was corrected.

MONEY Health Care

The Real Reason You’re Spending More on Health Care

Getty Images
Getty Images

A new survey finds that health insurance premiums are rising at a modest rate. But workers are facing far higher out-of-pocket costs.

U.S. health insurance premiums are going up only 3% this year, to an average of $16,834 for a family. Workers will pay about 20% of that cost, or $4,823, according to a study released today.

The Kaiser Family Foundation’s 2014 Employer Health Benefits report says that rate increases are slowing from recession highs that ran far above inflation rates. In the past 10 years, healthcare premiums rose a cumulative total of 69%.

However, the big leap in deductibles offsets the good news for consumers.

“If you told the average working person that healthcare costs were at record-low increases, they’d look at you like you were a little bit crazy,” says Kaiser chief executive officer Drew Altman. “Out-of-pocket costs are way up, while their wages are relatively flat.”

While insurers and employers kept premiums in check over the past few years, deductibles are up 47% since 2009. The average deductible now stands at $1,217—at least $1,000 for 41% of workers and $2,000 or more for 18%.

The shift to high deductibles is even starker at companies with fewer than 200 employees. Some 61% of these workers have deductibles of at least $1,000.

“This has a big impact on working people,” says Altman. “It can be a real disincentive to get care.”

Kaiser surveyed 2,052 employers from January through May.

During open enrollment season, when employees choose their healthcare plans for the following calendar year, most do not pay close attention to their choices. A recent study by insurer Aflac shows that 41% of workers spent less than 15 minutes researching their benefits in 2013, and 90% keep the same benefits year after year.

Some companies only offer limited choices or even just one option. Even so, employees need to make other decisions during open enrollment and need the information supplied at that time to make crucial budgeting plans, says Kathryn Paez, principal researcher for the American Institutes for Research.

Among her suggestions:

  • Compare the summary of benefits and coverage for each available plan.
  • Come up with a rough estimate of how many doctor visits you typically have in a year and what medication costs will be.
  • If you foresee any major costs, like for the birth of a child or root canal surgery, consider contributing to a flexible spending account or health savings account for this purpose. For 2015, workers can put up to $2,500 in a flexible spending account and $3,350 in a health savings account for an individual and $6,550 for a family.

 

MONEY Benefits

The Best Company Benefit That You’re Ignoring

Roll of medical gauze unrolling
Gregor Schuster—Getty Images

New rules let you carry over unused funds in your healthcare flexible spending account, and more employers are adding that option. So that's one less excuse for why you're not signing up for this valuable perk at work.

The U.S. Treasury Department changed a rule last October to allow employees to roll over $500 of unspent flexible spending account money, ending years of a use-it-or-lose it policy, but most workers have yet to reap its benefits.

Only 8% of U.S. companies adopted the FSA program this year, according to data from Alegeus Technologies, the largest provider of benefit administration services.

But that figure could jump to as much as 50% in 2015, predicts Alegeus executive chairman Bob Natt.

FSAs allow workers to set aside pretax money for healthcare expenses.

Employees will likely find out if their company is taking part in the rollover program when they get their open enrollment benefit information this fall.

Those offered the new option will be able to place up to $2,500, pretax, in their FSAs, and roll over as much as $500 of unspent money at the end of the year. Those who continue in traditional FSA plans will have to use all their funds by year-end, or when a grace period stipulated by their companies ends.

But the program’s participation rate is meager. About 33 million Americans contribute to an FSA each year. That number includes only a quarter of the workers eligible for it at large corporations, according to benefit consultant Mercer.

That enrollment could be boosted by the new rollover benefit, Alegeus’ Natt says, allowing both employees and employers to benefit from not paying tax on those contributions.

Indeed, there’s already some evidence of the new rule’s pulling power.

PrimePay, a third-party benefit administrator, which heavily promoted the rollover option to clients last year, saw a 30% adoption rate. The companies that participated saw a 17% increase in participants and contribution dollars.

“I was a little disappointed at first,” says Steve Jackson, PrimePay’s senior vice president for strategic development and channel sales. “But then as I saw what Alegeus was finding nationwide, it seemed better.”

FSAs can still be a hard sell to employees.

Rod Leveque, 39, who works in communications in Claremont, Calif., contributed to his FSA for the first time last year, after four years at a company that offered the option. Leveque says his decision was spurred by an impending LASIK eye surgery, for which he expected expenses.

Next year? “I doubt I will continue to participate,” he says. “I don’t think the $500 rollover would sway me, either,” he adds, because his typical medical expenses do not make it worthwhile.

If your company does adopt a rollover model, Natt’s advice is to put at least $500 in, because you are at no risk of losing it. If you leave the company and still have a balance on the books, however, you’ll need to spend that balance down.

Related: How to Pick a Health Plan That’s Right for You

Do you have a personal finance question for our experts? Write to AskTheExpert@moneymail.com.

MONEY Health Care

What It Really Means When Your Doctor Says He Doesn’t Take Insurance

A denial may not be as straightforward as it seems. Here's what your doctor's policy could be—and what that could mean for your medical bills.

Some doctors really mean it when they say they do not take health insurance. For others, it is more of a nuanced statement.

Consumers trying to decipher the difference have to ask a lot of questions to figure out how to manage their bills.

Here are the three key scenarios facing consumers:

1. “I do not take your insurance, but I will work with you on the price.”

A growing number of doctors simply are not taking contracts with insurance companies, although the concentration varies by region and by specialty. That leaves patients to pay the market rate the doctor charges, and then submit a receipt to get reimbursement for out-of-network coverage, if they have it.

In some cases, the pickings can be slim for in-network docs. For example, 45% of psychiatrists do not participate in insurance networks, according to JAMA Psychiatry.

“The burden of getting the forms right and getting all the paperwork is placed on the physician,” says Dinah Miller, a psychiatrist who practices in Baltimore and co-authors a blog called Shrink Rap. “If you’re seeing eight or nine patients a day, and several bounce, it’s a lot of uncompensated time.”

Primary care physicians are opting out, too. Some are moving to a concierge model, in which patients pay a subscription fee like $150 a month to see their doctor.

Membership in the Association of American Physicians and Surgeons, a conservative-libertarian group of private-pay doctors, increases by about 10% a year, says Jane Orient, executive director of the organization, which has 5,000 members.

Many doctors who say they don’t take insurance will make deals with patients on an individual basis. One key negotiating tip is to know what your in-network rate would be, typically a discount of about 40%, suggests Joe Mondy, a spokesman for insurer Cigna.

You can get this information through your provider’s online tools or by calling the customer service line. But Mondy says to be aware that the private provider is not bound to accept that price.

2. “I will submit the receipt for you, see what I get from the insurance company and work with you on the difference.”

This process is typically referred to as balance billing. It is largely frowned upon for in-network charges, and even restricted in some states. But it still goes on in the private-pay world, and often results in a confusing morass of paperwork.

Even insurance executives find themselves negotiating the fray. Chris Reidl, director of product for national accounts at insurer Aetna, paid an up-front fee to one doctor and then submitted the bill to the insurance company. When the insurance company reimbursed the doctor for the visit, the office refunded the fee she had paid.

Consumers need to be on top of this process and pour over their benefits statements to track the various payments. They also need to keep after their doctors’ offices to get their money back.

3. “I will try to negotiate a better rate with your insurance company.”

Some providers have back-channel communications with insurance companies, trying to get a better reimbursement so their patients end up paying less out of pocket.

Amy Gordon, a lawyer focusing on benefits issues at McDermott, Will & Emery in Chicago, facilitates some of these discussions, trying to get everyone on the same page.

Gordon gives the example of a chiropractor who has a number of patients on one employer’s plan. The going rate for a visit is $200, and the out-of-network reimbursement offered is $50. The provider has to choose whether to charge the patients the remainder or discount it.

“Being out $150 for one person is bad, but being out that much for 10 people is worse,” she says. So the provider tries to get more from the insurance company, and the insurance company tries to get the provider to join its network. The insurer and the doctor may end up settling on an $80 reimbursement, and the patients only have to pay the equivalent of a $20 co-pay.

“A lot of this can be avoided with planning, and finding if there is an acceptable in-network provider,” Gordon says. “If you still want to go out of network, you can ask the insurance company to give you an estimate of what they would pay, and then you can at least make a more informed decision.”

MONEY Kids and Money

Would You Spend $60 for Your Kid’s Lunch Box?

Laptop Lunches Bento Set with Sandwich and Yogurt.
PB& J in a Spiderman lunch box, or a Laptop Lunches bento set with carrots and yogurt? Laptop Lunches

In search of toxin-free, reusable, leftover-friendly lunch gear for their children, some parents are willing to pay a premium.

When it comes to kids’ lunches, we’ve come a long way from PB&J, an apple, and a cookie in a brown paper bag.

Beau Coffron, of Fremont, Calif., packs his daughter’s school lunches in stainless steel containers that cost at least $20 a pop. He apportions all of her food into little compartments, making cartoon characters like Charlie Brown and animal shapes such as tigers and llamas out of the ingredients. Her sports water bottles cost about $10, and the sack to carry it all came with the lunch kits but would retail separately for about $25.

Everything is toxin-free and reusable, naturally.

What started as simply a creative way to pack lunches has become a movement in the U.S. to reduce waste from individual packaging, save money by buying in bulk, make use of leftovers, and have toxin-free food containers—and share it all on social media.

Coffron, who posts pictures of these lunches on his blog, is part of this wave of moms and dads who are willing to pay much more than the cost of a box of plastic baggies at the dollar store for these benefits.

Parents who are investing in fancy lunch gear say it’s worth the upfront costs because it lasts longer than disposable items. The annual savings from reusable items amount to an average of $216 a year, according to a study by U-Konserve, whose lunch kit runs $39.95.

While popular in Japan, Bento-style lunch gear, where a variety of food is packed in small containers or compartments in a specialized, lidded tray, is still a very small portion of $1.4 billion food storage industry, according to research firm Euromonitor International. However, the small companies that sell these products report phenomenal U.S. growth during the last several years as the trend has exploded.

Laptop Lunches, one of the oldest and biggest of these companies, launched in 2002 and now sells more than 500,000 units a year, according to the company. On the smaller end of the spectrum is PlanetBox, which sells under 100,000 units a year. Launched five years ago, PlanetBox says sales are up 150% the last two years.

Products vary from all-in-one solutions like PlanetBox, which has a $59.99 Bento lunch kit with a bag and stainless steel lunch tray, to multi-piece solutions like Laptop Lunches’ $32.99 kit. A simple Goodbyn tray with three compartments runs $8.99.

That’s a lot of cash for something that is likely to end up lost within the first week of school, which is why more manufacturers are offering customization. For example, PlanetBoxes offers magnets to put on cases and Goodbyns come with stickers so that the items are easily recognizable in the lost-and-found bin. The heft of these products makes children realize they need to take care of them, too.

Mix and Match

Investing in one expensive lunch kit might not be enough, which is why there’s some mixing and matching that goes on, parents say.

Venia Conte, based in Las Vegas, has two PlanetBox lunch kits, in case one gets misplaced or is dirty, plus a couple of LunchBots lunch kits, which run $20 for the stainless steel containers. She also uses stainless steel food thermoses, which cost around $25 each, plus $1.50 re-usable napkins from Etsy.com and various water bottles.

“When you look at their shoes, which they grow out of in six months, $50 for a lunch box doesn’t seem so bad,” says Conte, who blogs about her lunches to keep herself engaged for 180 days a year.

While the bento lunch fad has been ongoing in Japan for years, most of the companies selling these products in the U.S. emerged after the recession in 2008.

“When I started the business, parents were like: $25 for a lunch box, that’s like way too expensive. But parents are factoring that equation differently,” says Sandra Harris, founder of ECOlunchbox, whose three-compartment stainless steel kid’s tray runs $12. “Now, BPA-free is a household word,” she says, referring to the Bisphenol, a chemical that is found in polycarbonate plastics.

For Tammy Pelstring, who started Laptop Lunches, the biggest surprise has been the community that has sprung up around these lunch kits, fueled by social media. Her company started before Pinterest and Instagram, so the first thing she noticed was people posting photos on Flickr of lunches packed in her lunch boxes—thousands upon thousands of them.

“We completely hit on something,” Pelstring says. “There’s this joy that people get when you create a beautiful lunch. It feels really good.”

MONEY Estate Planning

Want Less Stress? Get Your Estate Plan In Order

Preparing the right paperwork will help ensure that your wishes are followed and may save your heirs a bundle of money.

After helping a girlfriend through the messy, tangled finances left in the wake of a parent’s death, John Kerecz had a message for his own mom and dad: Get your paperwork in order.

A few years later, Kerecz’s father passed away unexpectedly. The 52-year-old environmental engineer from Harrisburg, Pennsylvania went to the house and looked where his father and mother used to keep their important documents, but nothing was there. It was pure luck that he went to the computer to look up a phone number and saw a folder on the desktop labeled “DEATH.”

“Sure enough, everything was there in that folder,” Kerecz says.

Armed with a copy of the will, lists of the financial accounts and insurance policies and other paperwork, Kerecz was quickly able to settle his father’s estate and use the funds to take care of his ailing mother, making him extremely grateful.

The difference between having your files organized or not is about more than just stress; leave behind a mess and it can delay inheritors’ access to funds and cost a bundle in legal fees.

“It could be six months or longer if you don’t have the paperwork in order, and … your family is in the dark, not knowing things, jumping through hoops. It’s not a fun existence,” says Howard Krooks, president of the National Academy of Elder Law Attorneys.

Taking care of the necessary documents is a hallmark of good parenting, he adds, rather bluntly: “More than any kind of monetary legacy, if you really love them, you’d do this.”

HOW TO GET IT DONE

Compile a list of the financial information your heirs will need upon your death: wills, trust information, investment accounts, legal contacts, etc. You can keep this information in an electronic file – in one master document or several attachments – to serve as a road map to find all the physical paperwork.

Or, you can do what some of elder law attorney David Cutner’s clients do, and just pull out a cardboard box and start piling up the papers.

You have to do more than just gather the information, though, cautions Cutner, co-founder of the Lamson & Cutner Elder Law firm in New York. You have to tell your loved ones you have done it and tell them where to find it. You can either hand over the file immediately or keep it in a safe place (away from the prying eyes of caregivers and potential scammers).

A safe deposit box, by the way, is not a good place to keep these papers, says Cutner, because it’s too hard to access when needed.

THE WILL

Top of the list is a copy of your will, hopefully the most recent version, plus contact details for the attorney who drew it up and any executor named. Also important are trust documents, if they exist, estate experts say.

While power of attorney and living will documents are crucial should you become incapacitated, they will not be useful after your death, says Krooks—your heirs will then be using a death certificate to obtain access to accounts.

The real power in assembling all these items is that it forces you to go through the process of specifying your wishes. Without them, your family would have to put your estate into probate, which is when the state determines the distribution of your assets. This can take up to a year and eat up about 5% of the estate, says John Sweeney, an executive vice president responsible for Fidelity’s planning and advisory services business.

FINANCIAL ACCOUNTS

Your heirs will need to know all of your account information, down to your utility bills and your tax returns. You can either create a list or include copies of statements in the file, or just directions to where to find them. Also useful is a list of relatives to contact.

Knowing passwords for online accounts is not as important as naming another person on key accounts ahead of time, says Sweeney. This way, if the family needs to make mortgage payments or pay any medical bills, they do not have to wait until the estate is settled.

“Children are often dipping into their own assets to pay for taxes and mortgages when the last surviving parent has passed away,” says Sweeney.

In that same vein, make sure to sign another person up for a key to any safe deposit boxes or home safes, says Krooks. Include clear directions on how to access any other valuables that may be stashed elsewhere, so that it’s not mistakenly thrown out.

SURVIVOR BENEFITS

Pensions and insurance plans have many different payout rules, so you need to leave behind detailed information about policies. Insurance information should extend beyond life insurance to car, home and boat insurance, says Sweeney. It is also critical to include your Social Security benefit information, he adds.

The job of assembling all of this information can be massive, but most people appreciate it in the end.

“At first they curse us out because it’s so much to gather and put in one place. But by the time they come into the office, they’re really glad they did this exercise,” Krooks says.

MONEY Financial Planning

What Would You Do With $100,000?

Stack of Money
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Deciding how to spend a large inheritance isn't as easy as you might think. Heirs who have received big bequests, along with financial planners, share lessons learned.

What would you do if you suddenly got $100,000, no strings attached?

It’s a hypothetical question for most of us. But for Peter Brooks, it was reality a few years ago.

After the untimely death of an old friend from pancreatic cancer, a lawyer called Brooks and told him there was a check waiting for $107,000, taxes paid.

With $30 trillion set to change hands from one generation to the next over the next 30 years, many others will find themselves in a similar position, according to Accenture .

While some may receive a few trinkets and others millions of dollars, the median inheritance will be between $50,000 and $100,000, according to a survey by Interest.com.

Handling new and unexpected wealth may sound wonderful, but can be a financial challenge. We asked financial experts to assess the decisions of three different beneficiaries:

WELCOME BOOST

For Brooks, a 55-year-old marketing consultant from the San Francisco area, the money significantly improved his quality of life.

At first, he deposited the check into a managed portfolio that his bank recommended. This was just before the market crash in 2008. Frustrated when the portfolio didn’t budge, Brooks rolled the money into a certificate of deposit, which turned out to be fortuitous.

“When the market crashed, I thought, wow, I must have a guardian angel,” he says.

Brooks decided that real estate was the biggest risk he could stomach, and he found an old Victorian house to buy for himself in nearby Vallejo for $97,000.

Indeed, buying a house is one of the most common financial moves people make with new money, according to Susan Bradley, a financial planner and founder of the Sudden Money Institute, based in Palm Beach Gardens, Fla., who specializes in helping people manage newfound wealth.

“If your inheritance increases your sense of home and safety, that’s a really lovely thing to do with it,” Bradley says.

Her caveat is that this works only if you’re able to handle the upkeep on the house, which Brooks has been able to do just fine.

A SPLURGE (OR TWO)

By contrast, John Kerecz, a 52-year-old environmental engineer in Harrisburg, Pa., went on a spending spree after he inherited about $160,000, plus a broken-down house, when his father died two years ago.

Because his father had his paperwork in order, Kerecz was able to quickly access the cash. He hired a lawyer based on the recommendation of a family friend, got the death certificate, and had a payout from the insurance company within a couple of weeks.

Then he embarked on a series of trips to Europe, Nashville, and New Orleans with his mother, who was in declining health, and eventually spent about $100,000.

What remained went toward a new home for Kerecz and his mother, who now suffers from dementia. He is trying to sell his parents’ original home and intends to invest the proceeds from that sale.

“I feel bad that I kind of blew it, but I wanted my mother to enjoy life while she could,” he says.

It may seem irresponsible, but using an inheritance to make memories has intrinsic value, says Bradley.

“Sometimes you can meet that purpose without spending $100,000,” notes Bradley, who says she would have coached him to take a little more time to figure out how to build those memories with just $60,000.

IN OVER YOUR HEAD

Many inheritors get in even further over their heads, especially if the money comes when they are young.

Richard Rogers, a financial consultant with Stephens Private Client group in Little Rock, Ark., had a client who inherited a significant sum at 25 and insisted on buying an $80,000 car.

“I tried to tell him that if you compound this money for a few years, you can buy a lot nicer car. But you can’t tell somebody what to do,” Rogers says.

CarmenBelcher could have used that advice, too, when, at 22, she inherited $300,000 out of the blue from her estranged father.

The money came quickly because her name was on his bank accounts and she was listed as the beneficiary of his veteran’s benefits.

Belcher responsibly paid off her college loans, then moved from Missouri to New York for a graduate program in journalism. She used what was left to support herself.

Now, eight years later, the money is gone.

She blames that partly on not being savvy about spending in New York, and partly on the money not being invested optimally by a bank adviser in Missouri who first helped her.

“It’s unfortunate, when people haven’t thought through it and, before you know it, [the money is] gone,” says Bill Benjamin, chief executive officer of U.S. Bancorp Investment.

The ideal thing to do is to draw up a financial plan before you start dipping into an inheritance, he says.

While Belcher thinks she is better off than before — she is building a career as a fashion editor in New York — overall, the experience was negative.

“I couldn’t appreciate the amount of money,” she says. “If this would have happened at an older age, I would have had more knowledge.”

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