MONEY Budgeting

Here’s Why More Americans Are Saying ‘I Do’ at City Hall

Couples head toward the Historic Dade City Courthouse to say their marrige vows.
Zuma Press—Alamy Couples head toward the Historic Dade City Courthouse to say their marrige vows.

It may be the best wedding gift of all.

When Scott Oeth was thinking about proposing to his girlfriend, Linda Hardin, he knew the stats. The average wedding costs in 2014, according to popular website The Knot, were a whopping $31,213.

That’s when the Minneapolis financial planner thought, No way.

Lucky for him, his bride-to-be was thinking exactly the same thing. So last year the couple arranged for a courthouse wedding, a celebratory dinner at their favorite steak house, covered as a gift by his new in-laws, and a backyard BBQ reception later in the summer for 100 guests.

Total cost: A paltry $1,250.

Oeth, 43, says he wouldn’t change a thing. “It was all wonderful, and we had such a great time,” he says. “I don’t think that most people who spend tens of thousands on traditional weddings could say the same.”

More newlyweds seem to be thinking like Scott Oeth and Linda Hardin. Courthouse and city hall ceremonies now account for between 3 and 4 percent of marriages, up from 2-3 percent a couple of years ago, according to industry resource The Wedding Report.

Financially speaking, toned-down weddings make a ton of sense. After all, think of all the other places newlyweds could spend that money to get their marriage started on the right financial foot, Oeth says.

Fully funding IRAs for both spouses. Paying off high-interest credit cards. Getting rid of student debt. Starting a 529 college-savings plan for young children. Saving up for a down payment on a first home.

“Expensive weddings are like a subprime mortgage crisis of the heart,” says Laurie Essig, associate professor at Vermont’s Middlebury College and “Love, Inc.” columnist for the magazine Psychology Today.

Noting that most young people have student loans, Essig says, “It just doesn’t make financial sense to be taking out even more debt to have a lavish wedding.”

Those typical expenses, according to The Knot, include $14,006 for venue rental, $2,556 for the photographer, $3,587 for the band, and $555 for the cake.

In many urban centers, costs can be much higher than those national averages. In Manhattan, for instance, the typical wedding bill comes to a wallet-punishing $76,328.

Of course, it is no mystery why people are so willing to pay through the nose for their Big Day. Marriage is seen as a once-in-a-lifetime moment that couples want to memorialize with one spectacular day.

Forgoing Extravagance

When you think of financial alternatives to a fancy wedding, it is hard not to see the logic of forgoing the extravagance.

“Of course, it doesn’t make sense to spend all that money,” says Essig. “But marriage is a magic ritual, and magic will always outweigh more pragmatic stuff, like going down to city hall and filling out forms.”

Many spouses-to-be are afraid to bring up the idea of shaving wedding costs, for fear of appearing like a cheapskate, hurting their partner’s feelings, or angering in-laws at a highly emotional moment.

Get over that reticence and have a money conversation, experts say.

The so-called wedding-industrial complex may not like it, but there is no law against buying a used dress from a thrift store, or getting a vintage ring, or having the ceremony in a park instead of a grand ballroom, Essig suggests.

Even if your wedding is a quick and simple affair, always check local regulations beforehand, advises Christen Moynihan, editorial manager of the website Broke-Ass Bride. There might be waiting periods after acquiring a marriage license, or specific ID requirements for getting all the necessary approvals, and you do not want to be caught off-guard.

A ceremony in front of a justice of the peace might only run a couple of hundred bucks. “There was a time when low-cost weddings and courthouse ‘I Dos’ were scandalized, but in recent years there has been much higher acceptance for weddings to take place in whatever way the couple envisions,” Moynihan says.

Scott Oeth and Linda Hardin redirected some of their wedding savings toward a fabulous honeymoon on Kauai. Since they are cost-conscious, they bought a travel package through Costco and got free first-class flight upgrades because of Scott’s Delta Medallion status.

Total cost for the fairytale honeymoon? Around $3,000.

MONEY

Making a Charitable Donation? 20% of Firms Will Match Your Gift

charity donation boxes
Getty Images

After the Nepal earthquake, Facebook matched $2 million in donations made through its site.

When Nigel Glennie saw the images coming out of Nepal after the earthquake in late April, he just had to do something.

When he heard that his company, Cisco Systems, was offering a dollar-for-dollar match on donations (up to $1 million), he figured his money could do twice as much.

“It’s a multiplier effect,” says the 41-year-old Australian communications executive who lives in San Francisco. “I donated a little more on behalf of my family, because we knew we were getting that extra match.”

Matching programs for charitable donations have proliferated after the Nepal quake. A number of major companies like Cisco announced lavish matches: Facebook matched $2 million of donations made through its site, while Google gave $1 million and another $750,000 in matches for employee contributions.

In fact, 20% of U.S. firms match charitable contributions, a 2014 survey from the Society for Human Resource Management shows. Another 1% planned to do so in the next 12 months.

“Research has found that it does tend to motivate people,” says Holly Hall, features editor at The Chronicle of Philanthropy.

Big names can prompt more action, says Eric Friedman, author of Reinventing Philanthropy. If Facebook has selected a Nepal charity for a match, for instance, then donors assume that Facebook has done its due diligence, and that the charity is an effective one.

Matching programs can make plenty of sense for individual donors: If every $1 you give can be matched by $1, or even $2 or $3, then you have automatically amplified your potential impact.

However, a whopping $3-for-$1 match does not generate any more contributions than a simple dollar-for-dollar match, Hall says.

Nonprofits have discovered that matches can provide a shot of adrenalin. Microfinance site Kiva, for instance, handles a daily average of about $300,000 in loans to small-scale entrepreneurs around the world. But on days when loans are matched, “loan volume can go up to $3 million,” spokesperson Hania Abu-Eid says. “So we are talking about a match day being 9-10 times more than a standard day.”

David Nelson, a former wide receiver for the NFL’s New York Jets, has witnessed the power of matching programs first-hand at the charitable organization he runs, I’m ME, which cares for 10 orphans at a facility in Haiti.

Every time there is a matching promotion, “we’ll see people who were going to donate $50, decide to give $100, making a total of $200,” he says. “It also encourages people who weren’t going to give at all, to give a little, because that gift is being doubled.”

Other observers, however, inject a note of caution about all the charity matching offers that are filling your inbox. Just because your dollar is being doubled, does not necessarily mean that the cash is being used wisely.

“It can be like getting a two-for-one deal on a terrible car,” says Dean Karlan, a Yale University economics professor who has studied the effectiveness of matching programs. “The matching offer isn’t really what donors should be paying attention to. They should be paying attention to whether the charity is doing effective work, and getting evidence of their impact.”

One way to do that: Visiting a site like Charity Navigator, which rates nonprofits based on factors like how much cash is being gobbled up by administration costs. There are sites that narrow down the choices as well, like GiveWell, which spotlights a handful of specialized charities like the Against Malaria Foundation that it deems the most effective.

The latest updates are found on the U.S. Chamber of Commerce Foundation’s site, which compiles corporate aid roundups for everything from the Nepal quake to the Syrian refugee crisis.

As for Cisco’s program, employees have donated about a quarter of the company’s $1 million goal so far, Glennie says. “The images are so tragic. You hear about all these personal stories from family and friends in Nepal, and you have to help.”

MONEY Kids and Money

How to Save on Your Kid’s First Cell Phone

Children are getting phones at younger ages than ever. But the earlier you give in, the longer you'll be paying wireless bills.

When Dallas mom Jan Valecka’s twins hit that contentious tween age, the rite of passage she dreaded most was a relatively new one: when to get them cell phones.

“They were starting to see all their friends get smartphones and iPads,” says Valecka, a financial planner at her own firm. “They started lobbying hard.”

She caved when they started 5th grade and got them basic cell phones. The boy-and-girl twins are now 13 and in 7th grade. Their upgrade to smartphones costs Valecka about $75 a month each.

Valecka is hardly alone in dealing with the emotional and financial consequences of giving kids smartphones. A quarter of U.S. 8-and 9-year-olds now have them, according to the 2015 Parents, Kids & Money survey by Baltimore money managers T. Rowe Price. And a new study from Pew Research Center discovered that only 12% of American teens age 13 to 17 do not have a cell phones of any type.

To make the correct call, though, do the math to be sure you are ready for far-reaching consequences. After all, it’s not just a one-time purchase that parents are agreeing to, but a stiff monthly charge that could last for many years to come.

If you get your 12-year-old a plan that costs, say, $50 a month, that will set you back $4,200 though age 18. And that’s not even including any ancillary costs like equipment and upgrades, repairs and app purchases. Data overages, especially if your kids are heavy video watchers, could inflict significant extra damage.

Indeed, 23% of households report paying much more for their kids’ phone plans than they originally expected, according to a study by the National Consumers League.

That doesn’t have to be the case if you are thoughtful about how your decisions will affect household finances. Here are some suggestions:

1. Start with baby steps

A basic cell with phone and texting capability can be very reasonable indeed; Sprint, for instance, offers a WeGo starter phone for only $9.99 a month.

There are also prepaid plans available, with varying restrictions on minutes and data, and low-cost handsets. T-Mobile, for instance, offers a $40-a-month prepaid plan with unlimited talk, text and data on its own network, and 1 GB of nationwide LTE data. With hard limits in place, parents are essentially saving themselves from any unwanted bill surprises.

Consider it something of a trial period: If your kids prove responsible with their new gadgets, and aren’t constantly calling or texting their buddies late into the night, then you can talk about graduating to more elaborate phones and plans.

When you are all ready, every major carrier offers a version of a family share plan, like Verizon’s More Everything and AT&T’s Mobile Share Value. Additional lines cost less money than standalone packages, but contracts are often involved.

At that point the training wheels are off—and if you are sharing your family data package with your teenager, be prepared to blow through some usage limits.

2. Have the money talk

“The question that must always be discussed is, ‘Who will pay for what?'” says Mark La Spisa, a planner with Vermillion Financial in South Barrington, Illinois. “It’s critical to talk about it in advance of a child receiving their first phone.”

For an 8- or 9-year-old, it is unfair to expect anything beyond a token contribution. But teens who have their own income from part-time or summer work can start chipping in to cover part of the bill.

Also consider who the phone is really benefiting. If it is mainly for the parents’ peace of mind, that’s one thing. But if it is only for their enjoyment, and parents are not deriving any benefit at all, then “then they should be footing the bill,” says personal finance expert Gail Vaz-Oxlade, author of Money Rules.

3. Resist the lure of the constant upgrade

For her own kids, Vaz-Oxlade pays the bills, because she wants to get in touch with them. But she draws the line at hopping on the “hamster wheel” of getting them the latest-and-greatest gadgets on the market. That’s just throwing away money, in her opinion.

As a result she, her son and her daughter are all still using trusty iPhone 4s they got a few years ago.

MONEY Sports

4 Ways to Beat the High Cost of Bicycling

bicycle riders
Gallery Stock

Becoming an avid biker can be good for your health. But between the gear and the outfits, you could find yourself spending an unhealthy amount of money.

If you want to ask Jonathan Cane what he loves most about cycling, you might have some trouble catching up with him.

Chances are, the 51-year-old triathlon coach will be pedaling at 20 miles per hour on his Trek Domane, deep in the forests of New York’s Harriman State Park or alongside the cliffs of the New Jersey Palisades.

“There’s something nice and pure about being on two wheels,” says Cane, a Harlem resident who typically rides around 100 miles a week. “It’s like being a kid and getting on your bike for the first time.”

In fact, for many, cycling is not just a pastime—it’s something of an addiction. And it can be expensive.

Americans spent $2.3 billion on bicycles in 2013, up 4% from the year before, according to the National Sporting Goods Association. Meanwhile, also in 2013, we spent $188 million on helmets, $669 million on apparel, and even $75 million on special bike shoes.

When you separate out enthusiasts who ride an average of 140 miles a month, they spent an average of $1,622 on a new bike in 2014, according to the American Bicyclist Study from consulting firm Gluskin Townley Group.

Even if you subtract the bike itself, top biking buffs still forked out an average of $1,659 on other bicycling-related products.

All those lofty numbers don’t surprise Jonathan Cane at all. “If you see a pack of 50 guys racing around the park, that’s probably a quarter of a million dollars worth of bikes right there,” he says.

Throw in maintenance, other accessories like gloves and gear, along with a few race entries here and there, and you’re very easily looking at over $1,000 a year, he says.

Ben Davidson, an artist from British Columbia, Canada, spent almost $10,000 on his cycling habit in the past year, purchasing two bikes and doing a 1,000-mile charity ride for a children’s hospital.

“I’m not the best person to ask about saving money on bikes,” Davidson says. “It’s the one thing I love to spend money on.”

Thanks to a spike in city living, plus growing amenities for cyclists like bike lanes and European-style rideshare programs, there are more bike aficionados like Cane and Davidson than ever: The number of bike commuters grew by 40% between 2000 and 2010, according to the Sierra Club.

But you don’t have to go broke in the process. Here are a few strategies to cut your cycling costs.

1. Buy used

If you don’t know the first thing about bicycle mechanics, it probably makes sense to buy new, along with the manufacturer warrantees and routine maintenance checks.

If you’re handy, and want to save potentially hundreds or even thousands of dollars, there is no shame in buying a used bike.

In fact, during the recent recession, used-bikes sales exploded, says Gluskin Townley Group co-founder Jay Townley, and now comprise around a quarter of the total market.

Local bike shops often act as exchanges for used bikes, and you can feel more secure about your purchase there, says Townley. For deeper discounts, check out eBay or Craigslist, but buyer beware.

2. Use timing to your advantage

As this epic winter finally recedes and racing season starts up, you can forget about getting amazing deals. Especially since top manufacturers are increasingly insistent on fixed pricing, says Townley.

But the end of the racing season, like October, is when riders typically sell bikes and gear as they plan ahead for next year. That’s when to pounce.

3. Forget top-of-the-line

Yes, you could certainly spend $5,000 on an ultralight racing bike that will have your buddies drooling.

Unless you’re Olympics-bound, take it down a notch and get a perfectly excellent high-performance bike for $2,000 or less. If one pricey bike weighs two pounds less than a cheaper alternative, why not just lose two pounds yourself and save thousands of dollars, asks Cane.

4. Be immune to peer pressure

Some bike stores are rather snobbish, Cane says, and won’t give you the time of day unless you’re a muscled Adonis who’s ready to pay for the most elite gear.

Forget them, and stick to your budget. In fact, if you have a friend who’s an experienced rider, bring him or her along for any shopping excursions. They will know the lingo, what you really need and what you don’t, and won’t let you get bamboozled by salespeople who are just salivating over fat commissions.

MONEY Financial Planning

The Surprising Power of a One-Page Financial Plan

goal list
Getty Images

When it comes to thinking about the future, sometimes less is more.

Gather round, because here is today’s personal-finance lesson inspired by famed Hollywood screenwriter William Goldman: Nobody knows anything.

In other words, no one knows where the market is headed. No one can tell you exactly what financial moves to make. And no one knows where they are going to be 40 years from now.

Here is what you can do: Make your best guess and muddle through life the best you can. That’s the thesis of The One-Page Financial Plan, the new book by New York Times columnist Carl Richards.

Rather than over thinking everything to the point of paralysis, just jot down a few general goals, get started, and don’t beat yourself up over past mistakes. Reuters sat down with Richards to talk about the surprising power of simplicity.

Q: Personal-finance experts usually don’t talk about uncertainty. Why was that important for you?

A: The giant fantasy of financial planning is that we all know exactly where we will be in 40 years, so we just need to sit down and plan for it. That gives people a false sense of precision.

The reality is that most of us don’t even know where we will be six months from now. We don’t know what our utility bills will be in the future, let alone when we are going to retire or when we are going to die. So the natural human reaction is to say, aw, just forget it. But that’s not a good choice either.

Q: So what should people do?

A: Call it what it is—guessing. Give yourself permission to let go of all this anxiety, and just make the best guess you can and be committed to the process of guessing.

Q: Your book is called The One-Page Financial Plan. So what’s on that one page?

A: On my one-page plan, there is a statement at the top of what’s important: For my wife and I, it is to spend time with the family, and to serve in the community. Then there are three goals: To fully fund all retirement accounts, to fully fund our kids’ education accounts, and to put money away for a house.

That’s it.

Q: You have had some financial missteps yourself. How did those experiences inform the book?

A: When you write publicly about this stuff, people think you have everything figured out. But nobody is foolproof, and making financial decisions is hard.

We got caught up in a very basic mistake: Projecting a rapidly growing business, which meant we could afford a big house. It turned out the business didn’t keep doing that, and we were faced with the tough situation of owing far more than the house was worth. So we lost it.

Q: What is one trick people can use to get their finances under control?

A: I use what I call the 72-hour Test. Once I found myself with a stack of unread books on my desk, and I thought: ‘What if I just waited 72 hours between when I thought I had to absolutely have a book, and when I actually purchased it?’

The surprising reality is that after 72 hours, whatever it is, you usually discover you don’t need it anymore.

Q: What about debt—how much is too much?

A: I have yet to meet anyone who has paid down debt and was unhappy about it.

Maybe on a spreadsheet it makes sense to have some mortgage debt, and invest the difference in the stock market, and make a bunch of money. But paying off your home makes people really happy.

Q: We are all so anxious about money. Why is that?

A: Money is not just about math, it’s about emotions. The stuff you dream about, the stuff that keeps you awake at night, your most cherished dreams and your biggest fears. The rubber always meets the road with dollars. That’s a very potent cocktail.

 

MONEY Travel

How to Make the Most of the Strong Dollar on Your Summer Vacation

Rock of Cashel, Cashel County, Tipperary, Ireland
Patrick Swan—age fotostock Rock of Cashel, Cashel County, Tipperary, Ireland

Your money will go further in Europe, Canada—even Japan. Here's how to take full advantage of today's Superdollar.

Jane McManus can hardly believe her luck. The New York-based sportswriter for ESPN.com is planning a summer vacation with her family in Ireland.

Following the strength of the U.S. dollar, McManus upgraded their travel plans, reserving a swankier hotel room in Dublin and booking a couple of days at an actual 13th-century castle. The overall cost will be about 30% less than last summer’s vacation to Italy when the dollar was much weaker, McManus estimates.

“Wow, it’s so different,” she marvels.

With the Superdollar near parity with the euro, airfares to Paris are down 14% from a year ago, according to popular travel site Orbitz. Hotel rates have sunk 10% from last year.

London, Rome, and Barcelona are among other popular locales with cheaper hotels and airfares than last year, according to Orbitz data. Travel expert Brian Kelly, known as The Points Guy, also singles out Japan, thanks to the weak yen; Finland, the only Scandinavian country to use the euro; and South Africa, whose currency has sunk by almost half over the last few years.

You do not have to leave North America to feel the impact. Next-door neighbor Canada’s currency has slumped to around 80¢ on the dollar.

As a result, travel trends are already shifting: International air traffic for U.S. citizens in January was up 7.2% over the previous year, according to the National Travel & Tourism Office.

Of course, it is still only March. Currency markets are famously volatile and could turn at any moment. That is why some travelers are wondering how to lock in these favorable exchange rates, and make sure that they are able to see Europe or Canada or Mexico on the cheap.

Your Best Currency Moves

One easy move is to prepay at current rates—not just buying your flights as soon as possible, but hotel rooms and excursions as well.

“Hotels that used to be $160 a night in U.S. dollars are now $130,” says Carl O’Donnell, 23, a New York-based reporter for Mergermarket who is planning a summer jaunt with his girlfriend to historic French-Canadian Quebec City. He is thinking about locking in some prices now.

O’Donnell is tacking on additional days to their trip, and adding pricey excursions like boat rides through fjords in the Quebec countryside. “It feels great to be getting a big discount,” he says.

You can even hedge your cash needs with a foreign-currency bank account. Florida-based EverBank offers a variety, ranging from the Indian rupee to the Chinese renminbi, that you buy at today’s rates to hold and spend later.

“Usually, most of our clients are investors,” says Chris Gaffney, president of world markets for EverBank. “But recently, with the euro hitting multi-year lows, we have seen more people coming to us to lock in travel-related expenses.”

EverBank’s foreign-currency deposit accounts do not charge monthly fees, but do require a $2,500 minimum. Before you depart, Gaffney suggests buying a bank draft, or having the money wired overseas, so you do not have to convert cash back and forth (and get hit with fees both ways).

Another way to hedge your bets is to secure some traveler’s checks now, or load some money onto a prepaid card like the Travelex Cash Passport. (That does come, though, with a card-purchase fee and foreign ATM withdrawal fees at about $2.50 a pop.)

You can even buy a few euros at your local bank to spend later, although you have no consumer protections if that cash gets lost or stolen.

Superdollar savings can be significant. If you had planned a summer trip to Europe that was going to set you back 7,500 euros, and the euro drops from nearly $1.40 to $1.07 (as it has in the past 12 months), you are talking about more than $2,000 in your pocket.

Do not blow any exchange-rate windfall by using the wrong credit card, though.

With every $100 trinket you buy, you might be getting knocked another $2 or $3 for foreign transaction fees without even realizing it. One card Matt Schulz, senior industry analyst for CreditCards.com., likes: Barclay’s Arrival Plus World Elite MasterCard, which has no foreign transaction fees.

MONEY gambling

6 Ways to Win Your March Madness Office Pool

Aaron Harrison #2 of the Kentucky Wildcats dunks the ball during the game against the Florida Gators at Rupp Arena on March 7, 2015 in Lexington, Kentucky.
Andy Lyons—Getty Images Bet against the undefeated Kentucky Wildcats at your peril.

You can't pick the perfect bracket (ask Warren Buffett). But you might be able to edge out your co-workers with these tips.

You would have to be crazy to think you can master the betting process for the NCAA’s annual college basketball tournament. That’s part of why it’s called March Madness.

The odds of picking all the winners among the 68 teams in this year’s men’s tournament is an insane 1 in 9.2 quintillion, according to a DePaul University math professor. That is roughly equivalent to winning the Mega Millions lottery jackpot twice in a row.

No wonder famed investor Warren Buffett felt so comfortable offering a $1 billion for a perfect bracket in last year’s NCAA tournament. (No one won.)

But to pick up a few bucks winning your own March Madness office pool, which draws an estimated 50 million Americans a year, you do not have to be perfect. You just have to be good enough to beat your friends. What is at stake is some of the $12 billion that will be bet worldwide on this year’s March Madness tournament, according to the website Pregame.com.

And if you actually win a little cash? According to the Internal Revenue Service, all gambling winnings are taxable—although it’s highly unlikely your podunk office pool will be reported to any authorities, and Uncle Sam has never bothered with them in the past.

Here are six tips to help you get an edge when bracket seedings and matchups are announced on Selection Sunday, March 15.

1. Don’t Get Carried Away With Cinderella Stories

While highly entertaining, huge upsets do not happen all that often (although the Mercer Bears did knock off the powerhouse Duke Blue Devils just last year).

“For the most part, you want to stick with the favorites—especially as you get deeper into tournament rounds like the Elite Eights and the Final Four,” says Ken Pomeroy, founder of the stats-analysis site KenPom.com.

This year in particular, there is one runaway favorite: the Kentucky Wildcats and their perfect 30-0 record. Bet against them at your peril.

2. Tailor Your Picks to Your Pool

Your optimal bracket will change depending on the size of the pool, notes Brad Null, founder of the site BracketVoodoo.com. It is basic game theory: You are not just picking winners, you are playing against others.

If a pool is only comprised of three or four people, stick largely with the favorites, Null says. The bigger the pool gets, the more risks you should take in order to win the prize. In a pool of 10 or 20 people, for instance, you might want to forgo heavily favored Kentucky in favor of talented but less-probable teams like Virginia, he advises.

Even more bettors and you might want to vary it up even more, by looking at names like Wisconsin, Villanova, or Gonzaga to go deep into the tournament.

3. Get Expert Help

If you do not have an advanced degree in statistics, good news: Experts are happy to do all the number-crunching for you (sometimes for a fee).

For likelihoods of victory in any given match-up, visit sites like Nate Silver’s FiveThirtyEight.com or TeamRankings.com, advises Doug Drinen, an associate math professor at Tennessee’s Sewanee: The University of the South.

4. Factor in the Scoring System

Every individual pool can feature its own scoring method, and that in turn influences how you should bet. If there is a special bonus awarded for upsets, for instance, pencil in more shockers than you would otherwise.

On the other hand, some pools are heavily weighted toward the eventual victor—awarding only one point for a first-round win, but 32 points for the final game. In that case, go with the heavy favorite, because “it’s almost impossible to win the pool unless you pick the champion,” says Drinen.

5. Avoid Homer Bias

It is only natural to root for your college team. It is not a winning pool strategy.

“If I’m in a pool with a bunch of people who went to college at Stanford, you know half of them are going to pick Stanford to win it all,” says Null. Be a contrarian and go the other way.

6. Think Like a Value Investor

The beauty of March Madness is that you never know who might go on a run—like last year’s champion Connecticut Huskies, who started as humble seven seeds.

“You don’t want to just look at teams who have been successful in the past, but also those who have been down lately,” says Null. “In that way, it’s kind of like picking stocks.”

MONEY Debt

The Hidden Threat to Your Retirement

More older Americans are approaching their golden years with heavy debt loads.

When Wanda Simpson reached retirement a couple of years ago, the Cleveland mom had an unwelcome companion: Around $25,000 in debt.

Despite a longtime job as a municipal administrator, Simpson wrestled with a combination of a second mortgage and credit-card bills that she racked up thanks to health problems and a generous tendency to help out family members.

“I was very worried, and there were a lot of sleepless nights,” remembers Simpson, 68. “I didn’t want to be a burden on my children, or pass away and leave a lot of debt behind.”

New data reveal that Wanda Simpson has company—and plenty of it.

Indeed, the percentage of older Americans carrying debt has increased markedly in the past couple of decades. Among families headed by those 55 or older, 65.4% are still carrying debt loads, according to the Washington, D.C.-based Employee Benefit Research Institute (EBRI). That is up more than 10 percentage points from 1992, when only 53.8% of such families grappled with debt.

“It’s a two-fold story of higher prevalence of debt, and an uptick in those with a very high level of debt,” says Craig Copeland, EBRI’s senior research associate. “Some people are in real trouble.”

To wit, 9.2% of families headed by older Americans are forking over at least 40% of their income to debt payments. That, too, is up, from 8.5% three years earlier.

The only bright spot in the data? The average debt balance of families headed by those over 55 has actually decreased since 2010, according to EBRI, from $80,564 to $73,211 in 2013.

Still sound high? It is especially so for those heading into reduced earning years, or retiring completely.

The primary culprit, according to Copeland: rising home prices and the longer-term mortgages that result, often leaving seniors with a monthly nut well into their golden years.

Seniors are even dealing with lingering student debt: 706,000 senior households grappled with a record $18.2 billion in student loans in 2013, according to the U.S. Government Accountability Office.

It’s not an easy subject to discuss, since older Americans may be ashamed that they are still dealing with debt after so many years in the workforce. They do not want to feel like a burden on their kids or grandkids, and so keep their financial struggles to themselves.

But financial experts stress that not all debt is automatically bad. A reasonable mortgage locked in at current low rates, in a home where you plan to stay for a long period, can be a very intelligent inflation hedge.

“I always suggest clients consolidate it in the form of good debt, like a mortgage on your primary residence,” says Stephen Doucette, a planner with Proctor Financial in Sherborn, Massachusetts. “You are borrowing against an appreciating asset, you don’t have to worry about inflation increasing the payment, and the interest is deductible.

As long as this debt is a small portion of your net worth, it is okay to play a little arbitrage, especially considering stock market risk, where a sudden decline could leave older investors very vulnerable.

“A retiree who has debt and a retirement account with equity exposure may not have the staying power he or she thinks. The debt is a fixed amount; the retirement account is variable,” says David Haraway, a planner with LPL Financial in Colorado Springs, Colo.

It is important not to halt 401(k) contributions, or drain all other sources of funds, just because you desire to be totally debt-free. Planner Scot Hansen of Shoreview, Minn. has witnessed clients do this, and ironically their good intentions end up damaging years of careful planning.

“But this distribution only created more income to be reported, and more taxes to be paid. Plus it depleted their retirement funding source.” he says.

Instead, take a measured approach. That’s what Wanda Simpson did, slowly chipping away at her debt with the help of the firm Consolidated Credit, while living off her Social Security and pension checks.

The result: She just sent off her final payment.

MONEY home prices

The Surprising Thing That Will Boost Your Home’s Value

Starbucks coffee shop, Philadelphia, Pennsylvania.
John Greim—LightRocket via Getty Images

New research finds that a Starbucks opening in the neighborhood helps local property values.

When searching for a new home, buyers usually consider the usual suspects: square footage, number of bedrooms, amount of sunlight.

Vanessa Pappas had another factor in mind as well: coffee shop proximity.

When Pappas and partner C.C. Hirsch recently closed on a three-bedroom property in Windsor Terrace, Brooklyn, it didn’t hurt that her favorite macchiato place was only a half-block away.

“Coffee is important,” says Pappas, 36, global head of audience development for YouTube. “It’s our daily ritual, and we always go to see our friends who work there. It makes us feel like part of the neighborhood.”

It turns out that easy access to quality java has broader implications. Call it the Starbucks Effect: Proximity to a local coffee shop has a very real, and positive, effect on home values, new data shows.

“We looked for certain markers for where homes appreciated faster than others,” says Stan Humphries, chief economist at real estate marketplace Zillow and co-author (with chief executive Spencer Rascoff) of the book The New Rules of Real Estate.

“Coffee houses emerged early on as a big predictor of future home value. Within a quarter mile, close enough to smell the coffee brewing, that ring appreciates faster than rings further out,” Humphries says.

How much faster? Over 17 years tabulated by Zillow, leading up to 2014, homes adjacent to the local Starbucks almost doubled in value, up by 96%. Those further out appreciated by 65% over the same period.

And apparently not all coffee shops are created equal. Zillow researchers compared homes near Starbucks locations to those near Dunkin Donuts.

Dunkin Donuts-adjacent properties also outperformed the wider market, rising 80% over 17 years, but they lagged those in the shadow of Starbucks.

Of course, there is a chicken-or-egg question here: Are coffee shops causing a boost in home values, or are the popular chains merely locating in promising neighborhoods that are already on the upswing?

Humphries’ discovery: Within the first few years of opening, Starbucks locations are actively helping local home values. After that, the outperformance of the broader market tends to diminish.

Whole Foods Effect

The coffee shop is hardly the only symbol of neighborhood gentrification. Researchers have found other amenities can have an even more powerful effect on home values.

Nearby specialty grocers, for instance, can lead to a 17.5% home-price premium, according to Portland, Oregon-based real estate consultancy Johnson Economics. That compares to a more modest 4.5% for coffee shops.

In that sense the Starbucks Effect might be more accurately be termed the Whole Foods Effect, according to the firm’s principal, Jerry Johnson, referring to the natural food supermarket chain.

Also significantly affecting nearby home prices, according to the Johnson Economics study: cinemas, wine shops, and garden stores.

Given Starbucks’ massive resources, it is perhaps not surprising that the Seattle-based chain is adept at picking out promising spots. After all, the company employs entire teams of professionals devoted to pinpointing optimal locations.

“Where we choose to locate our stores is as important as how we design them,” says Michael Malanga, Starbucks’ senior vice president of store development.

For potential homebuyers, it’s like heading into an exam with the answer key. Assuming that significant market research has gone into every store opening, buyers can piggyback on those positive conclusions.

“There are substantial resources spent by Starbucks headquarters to figure this stuff out and find where the best locations are going to be,” says Zillow’s Humphries. “So for homebuyers, you can essentially draft off the work that Starbucks has already done for you.”

As for YouTube’s Pappas, she’s not a fan of Starbucks. She prefers her local Brooklyn spot—Krupa Grocery. But she isn’t surprised that coffee shops turn out to be a reliable predictor of home-price appreciation.

“Especially in New York City, you want to be able to walk to everything,” says Pappas. “Having a coffee shop within eyesight is a big plus.”

MONEY first job

How These 4 Celebrity Chefs Broke Into the Kitchen

In any field, you need to start at the bottom. In the restaurant business, that can mean some dirty work.

If there’s one thing Reuters has learned from a year of asking celebrities about their first gigs ever, it is that you never forget your first job. No matter how famous or powerful they have become, America’s foremost achievers all remember that very first moment of bringing home a paycheck.

This month, to coincide with the monthly jobs report, we talked to the celebrity chefs who have taken over our airwaves. Before they started creating gourmet meals, they began at the bottom just like the rest of us.

  • Bobby Flay

    Bobby Flay works the line at Gato, his new restaurant, rated No. 9 on the New York Times' year-end list of the city's best new restaurants, on June 3, 2014.
    Evan Sung—The New York Times/Redux

    First job: salad chef

    “After getting kicked out of high school once, I finally dropped out as a sophomore. My dad said, ‘If you’re not going to school, you have to get a job.’ He wasn’t asking, he was telling.

    “He was a partner in a Broadway-district restaurant called Joe Allen, and I filled in as a busboy for two weeks. I was literally walking out of the restaurant when the chef said to me, ‘Do you want a job in the kitchen?’ I said ‘OK, sure.’

    “So I put on my cook’s whites and started working at the salad station. One day I woke up and thought, ‘I can’t wait to go to work today.’ I knew something was different.

    “I was paid $190 a week. I remember opening my first paycheck and being shocked at the amount of taxes they took out: $46. It was criminal. But this was around 1981, and with $144, I felt like I could do anything I wanted. I could buy all the beer I could possibly drink.”

  • Thomas Keller

    Chef Thomas Keller arrives at The French Laundry’s 20th Anniversary Celebration, Saturday, July 5, 2014, Yountville, CA.
    Alex Berliner—AP

    First job: dishwasher

    “I started out washing dishes, which turned out to have a huge impact on my life and career. This was at a restaurant in Laurel, Maryland called the Bay & Surf, which was run by my mother. The dishwashing station was next to where they cooked crabs, so sometimes I got to help the chefs.

    “I think my brother and I got paid a little something, but we were far too young to be on the payroll – I was only in 6th or 7th grade.

    “As a dishwasher I may have been considered the lowest person in that restaurant, but I learned that I was just as important as anybody else. If I didn’t do my part, then nobody else could do their jobs.”

  • Emeril Lagasse

    Chef Emeril Lagasse
    QVC

    First job: bakery assistant

    “I worked at the Moonlight bakery on Bedford Street in Fall River, Massachusetts. I used to go there with my parents, and one of the owners took a liking to me and gave me a job a few days a week after school. It was mainly washing pots and pans, and I made a dollar an hour.

    “I was infatuated with baking: the smells, the bins, the flour and sugar and eggs. Not a lot of guys there spoke English; these were hardcore Portuguese bakers. But I guess they liked me, because I started going on deliveries, and eventually they taught me how to bake.

    “By the time I was 14 I would work in that bakery from 11 at night until 7 in the morning, and then go to school all day. I would sleep after school, my parents would wake me up for dinner, and then I’d go back to the bakery to start all over again.”

  • Michael Chiarello

    Chef Michael Chiarello
    Dave Kotinsky—Getty Images for NYCWFF

    First job: dishwasher

    “If you ask chefs of my generation, probably at least half of us started out as dishwashers. I grew up in a small farm town in California’s Central Valley, and there weren’t many restaurants around, but I walked right into one of them when I was 14 and asked for a job.

    “Once the dishes were done, there was nothing to do, so at some point the cook asks you to help out. That was the goal, since I always wanted to be a cook.

    “I made less than minimum wage, and spent the money on fishing and hunting gear, since I was a country boy. Eventually I put myself through chef’s school by raising litters of golden retrievers.

    “Dishwashing is actually one of the most respected positions around. It’s the heart of the kitchen, because as that area goes, so goes the rest of the restaurant.”

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