MONEY car insurance

When it Makes Financial Sense to File an Auto Insurance Claim—and When It Doesn’t

When to file a car insurance claim
Guido Mieth—Getty Images

How to tell if the bump in your premiums will exceed the money you'll get back

Getting into a car accident is bad enough—you’re shaken, your vehicle is damaged, and worst of all, you or someone else may be hurt. Adding insult to injury, auto insurers these days are hiking policyholders’ rates sky-high after just one accident, even when a driver has an otherwise impeccable record.

A single claim boosts the premium by an average of 41% nationwide, according to a recent study by InsuranceQuotes.com. And in some states, the jump can be as much as 76%. (Massachusetts, California, and New Jersey are the worst.)

Considering that the average premium is $815, a fender-bender could cost you an additional $334 to $619 per year.

Even simply calling your insurer to discuss your options can have consequences. “As soon as you start talking about something that just happened, it goes on your record—it’s called an inquiry,” says Amy Danise with Insure.com. “If you build up inquiries, even if you never get a dime from a claim, you can still be viewed as high-risk, and that can affect your rates.”

All this means that you’ve got yet another thing to think about after a crash: whether you should file a claim or pay repair costs out of pocket. This road map can help you make at least that part of the situation easier.

When You’ve Had an Accident and Someone Else is Involved

You’re better off claiming, says Laura Adams, senior analyst for InsuranceQuotes.com.

If you’re at fault, and you hit another person or vehicle, he has the right to make a liability claim against you, and he could potentially sue. With insurance, you’re entitled to a legal defense and coverage of a judgment against you up to a certain amount. “The average liability claim is $15,000,” says Adams. “In those cases, it’s hard to conceive of a situation where you wouldn’t want to make that claim.”

Even if the damage seems minor, and you and the other driver agree that you’ll handle everything yourselves, that approach can backfire. “I’ve heard of cases where the other person called later and said, ‘Send me $3,000,’” says Insure.com’s Danise.

And if you wait too long to loop your insurer in—say, after you’re notified that the other driver has filed suit against you—the insurer could deny your claim entirely.

“You’re better off saying, ‘Here’s my insurer, here’s my policy number,’ and handing it off so the insurer can deal with that person,” says Danise.

150218_FF_CarAccident_ClaimPrice

When You’ve Had an Accident and No One Else Is Involved

Let’s say you back into your garage door or hit a guardrail when you skid in the snow. You’re at fault, but the only car affected is yours.

As long as you’re fairly sure there won’t be any lingering medical issues, you’re better off paying out of pocket if you can afford it.

Of course, the more money it costs to fix, the less you can probably afford it—and the more it will raise your rates.

For property damage claims of under $1,000, rates will go up 18% on average, according to numbers from Insure.com. For claims over $1,000, it’s more like 29%.

Not sure? Check out the “When to Make an Insurance Claim” calculator at InsuranceQuotes.com to see how it looks in your state.

When Your Car was Damaged, but Not in an Accident

If a tree limb falls on your hood or your car gets burglarized, that’s not your fault—and insurance companies generally won’t punish you for it.

Even if you file a comprehensive claim of $2,000 or more, you’re looking at an average rate hike of just 2%, or about $18, according to InsuranceQuotes.com. So if the damage goes above your deductible by more than a few hundred dollars, there’s no harm in claiming it.

…And If You File a Claim For Any Reason and See Your Rates Rise as a Result

Ask your insurer for the surcharge schedule—which should tell you how long it will be before your premiums return to normal levels.

Also, remember that not all insurers give accidents the same weight, so you can always shop around for a cheaper policy.

More from Money.com:

25 Ways to Get Smarter About Money Right Now

How I Plan for the Stock Market Freak-out…I Mean Sell-off

What Women Can Do to Increase their Retirement Confidence

MONEY mortgages

The Case for Refinancing Your Mortgage—Now

houses with the number 7.3 in them
Adam Voorhes If you're one of the 7.3 million homeowners who could benefit from a refinance, now might be your best chance for a while.

After falling through the first weeks of the new year, mortgage rates are starting to tick up.

At its meeting last week, the Fed did as expected and said it would hold interest rates steady in the near term. While the announcement did little to calm skittish markets, the news could spell opportunity for another group: homeowners who might benefit from a mortgage refinance.

As of the end of last week, the average rate for a 30-year fixed mortgage stood at 3.8%, down from 4.39% a year ago and close to the 19-month low set in mid-January. After falling through the first weeks of the new year, rates are starting to tick up. If you are one of the more than 7 million borrowers identified by mortgage analytics firm Black Knight Financial Services—folks paying over 4.5% and with good credit and at least 20% equity—now could be time to refinance.

It’s worth considering if you think you can shave off a half-point or more. Here’s how to get started:

Go local. Start by calling your existing lender, which already has all of your information and may be willing to cut you a deal on fees (expect to pay up to 2% of the principal). But don’t stop there: Compare that offer to same-day quotes from at least two other lenders, including a credit union, says Bankrate’s Greg McBride.

Think big picture. Even if you’ll be in the house long enough to break even on refinancing fees, don’t forget about the total cost of the loan. For instance, say you’re 10 years into a $200,000, 30-year mortgage at 5.7%. Refinancing into another 30-year loan at 3.8% will save you $390 per month, but you’ll essentially break even on the total cost—and you’ve added a another decade of payments. (Try an online refinancing calculator to see how much you might save.)

Shorten up. For the best deal over the long term, trim the length of your loan. The rates for a 15-year fixed dropped to 3.1% in mid-January, so refinancing that same 30-year mortgage into a 15-year fixed loan will have little effect on your monthly payments, but will save you a whopping $69,000 by the end of the term. If you can’t stretch that far, run the numbers for a 20- or 25-year fixed at the new rate. Alternately, refinance for 30 years and use your monthly savings to prepay your mortgage, suggests HSH’s Keith Gumbinger: “That could accomplish what you want, and if things get a little pinched you don’t have to send in the prepayment.”

Read more about mortgages:
How do I get the best rate on a mortgage?
What mortgage is right for me?

MONEY Holidays

Who Can You Get Away With NOT Tipping Around the Holidays?

holiday envelope full of cash
Jamie Grill—Getty Images

The holiday season is tipping time, when you reward all the hard-working people in your life with a little something extra. Or not.

Tipping, fraught as it with misconceptions and confusing “rules,” is an especially stressful prospect around the holidays, when tips are expected to represent a year’s worth of gratitude for the people performing services in our lives. Still, there’s hardly any consensus on how much to give. According to a Care.com survey, 31% of people give no holiday tips whatsoever, while 14% of say they spend less than $50 on holiday tips, 45% spend more than $150, and 17% are heavy tippers that drop more than $300.

What’s more, even though the issue of holiday tipping arises annually, there are still thorny questions that pop up. Sure, you can look up what you’re supposed to tip your hairdresser or pet sitter at a guide like this, but what about instances in which it’s unclear if you should tip, or situations when certain kinds of tips may be inappropriate or send the wrong message.

Here are a few tricky situations—and answers from etiquette experts.

Are there people I should avoid tipping altogether?

Tipping isn’t always appropriate in certain circumstances, depending on someone’s position. “You have to think about who’s receiving it, and what potentially a tip could say in that situation,” says Lizzie Post, author and spokesperson for the Emily Post Institute. “For instance, staff at a nursing home might not be allowed to receive cash gifts because it might look like a bribe.”

Likewise, it’s bad form to tip high-paid professionals with cash or a cash equivalent, such as a gift card. “You don’t tip dentists or doctors or accountants or lawyers,” says Diane Gottsman, national etiquette expert and founder of the Protocol School of Texas. “That’s a commonly asked question that people don’t really understand.” If you really want to give them something, go with homemade holiday treats, a gift basket, or bottle of wine, along with a nice handwritten note.

In other situations, employers may enforce strict guidelines on what workers can receive. United States Postal Service employees, for instance, are not supposed to accept cash or gift cards, and holiday gifts valued at more than $20 are not allowed either. Cash tips might also be limited for delivery drivers, school bus drivers, teachers, and flight attendants. A quick Google search or a call to the employer will generally shed light on the situation. If there’s someone you’d like to tip who cannot accept cash, consider a nice note, a gift card or a small (thoughtful) gift within permitted value limits.

Everyone knows you tip the doorman if you live in a city. Who do you tip if you live in the suburbs?

If someone comes to your house to perform a service regularly, that’s someone you should at least consider tipping. Who these people are will differ depending on your lifestyle and where you live. “In Vermont, one of the biggest people you have to tip is the plow guy,” Post says. For others, the top household service category for tipping might be the landscaping company.

Two people regularly clean my house, but occasionally a third person joins them. Do I tip all three? Equally?

It’s appropriate to tip the third person in relation to her time at your house. “If they accompany the other two cleaners a quarter of the time, for example, you can give them a quarter of what you pay to have your house cleaned,” says Jacqueline Whitmore, an etiquette expert and founding director of the Protocol School of Palm Beach, who recommends a holiday tip amount of roughly the cost of one cleaning.

Do I tip my new nanny/babysitter as much as one who has been with our family for years?

Remember: A holiday tip is a gift. It’s not mandatory, and it greatly depends on your relationship with that person. You probably wouldn’t give a friend you’d just met an extravagant holiday gift, and you’re not obligated to give an extra week’s pay—the fairly standard holiday tip amount for a nanny or sitter—to someone who’s only worked for you for a month or two. “You want to be courteous and generous, but within your budget and within what feels comfortable to you,” Gottsman says. “You might want to give half a week’s salary or a gift card or gift from your child, which might be something you know they need or want.”

Should I tip the personal trainer? The workers who babysit my child at the gym? The school crossing guard?

If you feel these people make a big difference in your life, or that they go above and beyond what’s expected on the job, by all means tip. For personal trainers, a holiday tip is traditionally up to the cost of one session. Daycare workers at the gym will appreciate a small gift, but it’s by no means mandatory. School crossing guards aren’t traditionally tipped, so that one’s up to you. “If there’s someone that you see and you would like to make their season brighter, go for it,” Post says. “You’re looking to say ‘thank you for all you do.’”

Obviously you don’t tip the boss, but is a gift appropriate?

Again, it’s not mandatory, and depending on where you work, it may not be remotely expected. When a gift does seem like a good idea, it’s best to give your boss something from the group of workers as a whole, etiquette gurus say. “If you want, you can bring your boss something special that you know he or she likes, like a package of ground coffee or a box of fruit or something you’ve made from home,” Gottsman says. “But you’re not going to give him or her anything personal, like a sweater or a tie.”

Related:
The Ultimate Guide to Holiday Tipping

MONEY Workplace

3 Ways to Keep Your Workload From Crushing You

lucas zarebinski For salaried employees, the typical workweek now totals 49 hours.

Feeling overwhelmed and overloaded at work? Here's how to take back your time.

So much for 9 to 5. The average full-time salaried employee is now putting in nearly 10 hours a day, according to a recent Gallup poll (up slightly from a weekly average of 47 hours in 2007). Even grimmer: 25% say they’re regularly working a 60-hour week.

Feeling overwhelmed and overloaded? There are some simple tactics that will help you keep your workday in check.

Get your priorities straight. “Do the most important or most difficult task first,” says Mitzi Weinman of professional development firm TimeFinder. Starting with the quick, easy jobs is tempting, but delaying the thornier tasks just increases the odds that you’ll need to stay late to finish.

Plug productivity leaks. Try tracking your activities: Write down everything you do in half-hour increments. You may discover that you’re spending more time, say, browsing social media than you thought. Set a limit for how long you can spend on any time-sucking activity and stick to it.

Manage messages. Email, while necessary, can be a distraction, says Patricia Thompson, a psychologist and career coach. Decide how often you need to check messages, then shut down your email program between checks (mute smartphone alerts as well).

MONEY Tech

3 Smart Ways to Protect Your Smartphone Data

201407_FSA_1
Yasu + Junko

Yikes. One in 10 Americans has had a smartphone stolen, according to a new study by mobile security firm Lookout.

This is a double bummer: Replacing a phone can be expensive, and the personal information we keep on these gadgets is often priceless. Here, tips for keeping your device (and data) safe—and what to do when a thief strikes.

Lock it down. Protect your info by setting a security pin. Only 36% of people do, found a Consumer Reports survey. Avoid serial or repeated numbers (e.g., 1234 or 1111) and pins based on a recent year, says Gary Davis, of security firm McAfee.

Back it up. Use a free cloud service such as Dropbox or iCloud to make copies of your most important data. Get (and remember to turn on!) an app that can locate, lock, and wipe your phone remotely, says CNET.com’s Bridget Carey. Find My iPhone and Android Device Manager are two good options.

Wipe it clean. If your phone is stolen, fire up your anti-theft app right away. Next, call the police, then your carrier. If you don’t recover the device within 30 minutes, erase your data remotely, says Robert Siciliano, personal security consultant. “If you get the phone back, simply restore it.”

MONEY Insurance

5 Things to Know About Umbrella Insurance

Umbrella insurance covers you for liability risks you may not even have been aware of.

Even if you already have insurance for your home and car, you may not be adequately covered. This policy can help.

1. Without it, you could lose everything

If you cause a car accident and the other driver sues, your auto insurance covers you up to your personal-liability limit, which is likely between $100,000 and $300,000. Same goes for your homeowners insurance if the mailman slips on your steps.

An umbrella liability policy pays for settlements and legal fees above your limit. Without this insurance, your wages and assets are at stake (though in some states, retirement funds, pensions, and your home are excluded).

2. Liability risks are everywhere

“More than 80% of umbrella losses are auto-related,” says Ed Charlebois of Travelers Insurance. Even if you’re the safest driver, your teen probably isn’t.

Redoing your kitchen? Your general contractor may not adequately vet subcontractors for workers’ comp or liability.

Host a lot of parties? If a guest gets into a drunken-driving accident, the victim can come after you. Got a pool, hot tub, or boat? Employ a nanny or a housecleaner? Then you have risk factors.

3. You’re insuring against the worst-case scenario

The median jury award for vehicular accident liability cases is $21,000, found Jury Verdict Research. But the average is $306,000 — so some settlements are much, much higher. That’s why many financial planners say an umbrella policy is a must for those with significant net worth.

“Insurance is there to stop an accident from being a life-changing event financially,” says Redondo Beach, Calif., CFP Scott Leonard.

4. A lot of coverage costs very little

A typical homeowner with two cars can get a $1 million policy for $250 to $400 a year, reports the Insurance Information Institute.

“My rule of thumb is for clients to have coverage equal to one to two times their exposed net worth,” says Franklin, Mich., financial planner Bert Whitehead. (By “exposed,” he means assets vulnerable in your state.) That way you are not just shielding your money, but ensuring that the insurer will mount an aggressive defense.

5. You may need to juggle coverage first

Umbrella insurance usually requires specific liability limits on the policies it’s piggybacking — such as $300,000 per person on auto and $300,000 on home. So you may have to boost your coverage. Plus, some carriers extend an umbrella only over policies they have issued, says Jim Kuryak of Niagara National Insurance.

On the upside, bundling with one insurer can offset the added cost; it can shave as much as 20% off home and auto premiums.

MONEY Second Career

$800,000 Saved, Dreams of Breeding Horses

Devin John Tepleski Bui Village, Ghana, 2009

Advice for turning a fantasy into reality.

Growing up in Kentucky, Bobbie Jackson vividly recalls when her family got their first horse. It was an older brother’s 16th birthday, and for his present he chose not a car but a steed.

Ever since then she’s loved all things equine. “Horses are such majestic animals,” she says. “The fact that I can interact with them just thrills me.”

So when she and her husband, Mike, moved in 2007 from St. Louis to a family home he inherited on 150 acres in Tennessee, Bobbie’s first thought was raising horses. Having worked with autistic children in schools and respite centers, she got the idea to offer free therapy rides and to sell horses to families with special-needs kids.

As for Mike, a retired engineer, he’s interested because his wife is: “I’ve got plenty of reasons to get up in the morning already, but it is fun to see Bobbie happy.”

The Jacksons have two mares (one a miniature) they wish to breed, and also want to buy three foals. They expect to need a barn for hay storage and a run-in-shelter for the horses. Plus, they want to update the farmhouse they call home.

With $800,000 in savings and an income of $93,000 from a pension, Social Security, dividends, and interest, the couple are well positioned for a comfortable retirement. But they’re worried about whether they can also execute their horse farm and renovation plans without a hitch.

“I don’t require a certain income from the business,” says Mike, “but I’d like to earn enough to more than offset expenses.”

 

THE REALITY

Making a profit will be tougher than Mike thinks. Starting up will take some investment: The biggest cost will be the hay barn and run-in shelter, which prefab farm structure company Watson Metals in Manchester, Tenn., puts at $15,000 to $25,000.

Related: Banker finds sweeter career: Making ice cream

The kinds of horses Bobbie and Mike are looking for — mixed breeds — are cheap right now, selling for 30% less than they had been before the recession, says Nona Garson, head of the InterContinental Sport Horse Auction. So the couple should be able to pick up foals for less than $500 apiece.

Additionally, to get specialty insurance needed to cover liability risks involved in hosting therapeutic riding, they first need to get certified in equine-assisted therapy, which costs $1,000 per person and can take six months to a year.

Where the Jacksons will really take a hit is in the cost of running the business. They’ll lay out about $2,500 a year per animal for food, vet bills, and hoof care. Farm insurance adds another $2,000 a year — though it includes homeowners coverage, which they already pay.

The Jacksons are currently maintaining two horses, so three foals and insurance premiums will add about $10,000 to their expenses. They can probably find a stud for the horses for about $500, says Rebecca Smith, a breeder in Chagrin Falls, Ohio. But caring for a pregnant mare during its 11-month gestation tacks on another $1,000 to $2,000. Then foals typically require at least nine months of weaning and training before they can be sold.

Since the Jacksons don’t plan to charge for the therapy rides — “How can I not help these children?” says Bobbie — they won’t see revenue for some time. Even then, it won’t be much: A good market for buying horses is a bad market for selling them. And the universe of families looking to own a horse for a special-needs child is probably quite small.

All told, while Mike was aiming for a small profit, he’s more likely looking at tens of thousands in losses each year, for quite a few years.

As for the renovation costs, Bobbie and Mike figure their home upgrades will run $65,000.

 

THE PLAN

“They can still do this — as long as they’re willing to put limits in place,” says Grove City, Ohio, financial planner Jo Anne Paynter (herself a rider). Here’s how:

Fund the business out of income. The Jacksons spend a lot less than they bring in each year. Mike estimates that they have an average surplus of $22,000. Keeping their horse expenses below that would allow the couple to run the business without dipping into savings — which will in turn help them preserve the income they’ll need for the business, says Paynter. Their wiggle room will get smaller as they add animals.

But Mike and Bobbie can decide each year whether to expand based on their anticipated cash flow (which will go up once they start taking required minimum distributions from retirement accounts).

Determine whether it’s a labor of love. The Jacksons should think hard about whether they want to proceed with their dream as is, even if they won’t break even. They might consider whether there’s anything else they’d want to do with the money they’ll spend on horses; they should also create a business plan.

To increase their revenue potential, they could charge a fee for the rides to cover their costs or expand the market for the kid-friendly horses they’ll breed to 4-H and pony clubs and the like.

Pay for renovations out of cash. Assuming they keep the cost of the farm buildings and upgrades to their home to $90,000 or less, the Jacksons can use their savings for those purposes without compromising their income potential, says Paynter. They should draw from the $250,000 they have in bank accounts.

Protect their assets. Besides getting insurance — a must — they should incorporate their business, a legal process that should cost less than $500.

“This would further insulate them from liability,” says New Hope, Pa., financial planner Mark Kelly. If they are sued, for instance, their personal assets wouldn’t be at risk.

So far none of the hurdles have shaken Bobbie; rather; she’s fortified by having a plan. Says Mike: “She’s already laying out cross fencing for me to do!”

More from Live your dream: What you’d do if money were no object:

Our dream: Run a $750,000 hotel in Costa Rica

Couple’s path to $1.3 million eco-friendly dream home

MONEY Second Career

Our Dream: Run a $750,000 Hotel in Costa Rica

Photo: Brian Doben Yessenia Cruz and Roberto Garcia, of Staten Island, N.Y., stash nearly $30,000 of their $202,000 annual income, putting them on track to have $2 million by age 55.

Advice for turning a fantasy into a reality.

Yessenia Cruz has dreamed of returning to Costa Rica ever since visiting there 15 years ago. This time she isn’t looking for R&R. She and her husband, Roberto Garcia, want to relocate there at 55 to open a casita-style hotel by the beach.

Both say they’ll be ready to leave their corporate careers — she’s a project manager; he’s an architect — and the fast pace of the Big Apple. “We love what we do but want a more balanced life,” says Yessenia.

Though Roberto has never been to Costa Rica, he’s just as excited: “I love what the city offers, but I love nature too.”

At the same time they worry about whether packing for paradise will compromise their retirement security or put the college education of their 4-year-old son, Nathaniel, at risk.

THE REALITY

Since they want to be what the industry calls “lifestyle innkeepers” — who open seasonally or settle for lower occupancy so that they can enjoy downtime — they can’t count on much income from the hotel. That means that in the next 15 years they’re going to have to save for a long retirement while also amassing money to buy the business and pay fully for Nathaniel’s tuition at a private college, as they’d like.

On the first goal, at least, Yessenia and Roberto are looking good.

They stash nearly $30,000 of their $202,000 annual income, putting them on track to have $2 million by age 55, says Colorado Springs financial planner Jane Young. Using a 4% withdrawal rate, they can take out $80,000 the first year, and adjust for inflation subsequently, for a very small chance of their money running out. That income will exceed their needs, since Costa Rica’s cost of living is about half that of the U.S.

With plans to live at their inn, Yessenia and Roberto should do very well on $36,000 a year in today’s dollars ($53,000 by the time they retire), says Jason Holland, Costa Rica editor for InternationalLiving.com, a site focused on how to live, work, and retire overseas. They’ll need a nest egg that size should they ever move back to the U.S., plus it gives them a margin of error on the hotel.

Related: Suite dreams — opening a bed and breakfast

A greater challenge will be saving another $1.2 million to use for the hotel (which will cost about $750,000 by the time they retire, Holland says) and Nathaniel’s education ($430,000, according to Young).

They also have a sharp learning curve ahead. As fluent Spanish speakers — Yessenia grew up in Puerto Rico, and Roberto’s family is from the Dominican Republic — they have some advantages over other expat entrepreneurs. But neither has experience in hospitality or running a business.

 

THE PLAN

“If they keep up a steady savings pace, Roberto and Yessenia can make this work,” Young says. Here’s how:

Get cracking on college. They now sock away $800 a month for Nathaniel’s schooling; they’ll need to up it to $1,250.

Young advises putting two-thirds into a 529 college plan and the rest in a mutual fund that’s 70% stocks and 30% bonds to give the couple flexibility to tap some of the money if needed. When Nathaniel turns 13, they should dial back the stock stake.

Start a hotel fund. The couple have $200,000 in cash for emergencies, almost double what they need.

Young advises putting $85,000 of this into a 70% stocks-30% bonds mutual fund as seed money for the inn, adding $270 a month, plus half of Yessenia’s annual bonus (up to 10% of salary). Five years before moving, they should shift the funds to cash and short-term bonds.

Use the house for the balance. Roberto and Yessenia should refinance their 4.5% 30-year mortgage, which has a $240,000 balance, to a 15-year loan to build equity faster, Young says. At a 2.9% rate, their payment would be just $167 more, and if their home appreciates 3% a year, they’ll net $400,000 at 55 to put toward the inn.

Get educated. To improve their odds of success, they should get training in hotel operations and hospitality through a group like the Professional Association of Innkeepers International (paii.org). Also, they can get hands-on practice running an inn by filling in for owners who are on vacation via the Interim Innkeeper program (inncaring.com; $750 per couple).

Start shopping. The family should visit Costa Rica ASAP to ensure that Roberto is really onboard with moving.

Five years out, they should start taking scouting trips to investigate locations and talk to local hotel owners, says Holland. Once they settle on an area, they can hire a broker to find turnkey operations. “Buying an existing hotel with a website, listings in guidebooks, and maybe even guests on the books will give them an easier start,” says Jay Karen, CEO of the PAII.

Plan an exit strategy. “Will you close the inn in five years, or do you want to sell it for a profit?” asks Karen. The answer, he says, will drive how they run the business: To attract buyers, they’ll need to be able to “show consistent occupancy rates and profitability.”

For now, Yessenia and Roberto are focused on the entrance plan. As she says, “This confirms that Costa Rica isn’t just a fantasy.”

More from Live your dream: What you’d do if money were no object:

$800,000 saved, dreams of breeding horses

Couple’s path to $1.3 million eco-friendly dream home

MONEY makeovers

Couple’s Path to $1.3 Million Eco-friendly Dream Home

Devin John Tepleski Bui Village, Ghana, 2009

Advice for turning a fantasy into reality.

In their 20-plus years in the Navy, Victor Lake and Kelly Boardway have moved a combined 24 times and lived on every continent except Antarctica.

The couple anticipate relocating at least twice more in the next six years before they both exit the military, where he’s an officer who pilots ships and she’s a health care administrator.

Though they plan to continue working in the private sector until age 65, Victor and Kelly already know what they want their “retirement” house to look like: A three-bedroom eco-friendly Spanish-style ranch, situated on an acre or two just outside Las Vegas, where they got married.

“We’re tired of cookie-cutter homes,” says Kelly. “And we’ve lived so many places, we want to set down roots for good.”

As for going green, Kelly gained eco-awareness growing up on a farm, and Victor says seeing how people lived around the world taught him that “you can have a fulfilled life without using an abundance of resources.”

The couple would like to build in 10 years, allowing them a few years to test out Vegas as their new home base after they leave the military.

THE REALITY

Their dream home could become a financial nightmare if they’re not careful.

Though Vegas was hit hard in the real estate crash, prices there are now on the rise — up 30% in the past year, says Dave Tina, president of the Greater Las Vegas Association of Realtors. Land northwest of the city, which has the open space Kelly and Victor want, now goes for about $175,000 an acre and could double in price within 10 years.

Building a green home — which includes everything from special insulation in the foundation to energy-efficient appliances — now costs at least $200 a square foot, vs. $100 for a conventional home, says Bart Jones of Merlin Contracting, a builder in the area.

As the materials become more common, that gap will close, but Kelly and Victor are still looking at $250 a square foot in a decade.

All told, a 2,500-square-foot ranch on two acres could top $1.3 million by the time Kelly and Victor are ready to build.

Related: How far will your salary go in another city?

Saving for a down payment on a house that size could be challenging, since their salaries — now $240,000 combined — vary depending on where they are stationed and could drop significantly if they are relocated to a low-cost area. The couple are also leery of taking on a huge mortgage, since they’re not sure what their post-Navy job prospects will be like in Vegas.

 

THE PLAN

“They can make this happen,” says Marc Roland, a financial planner in San Diego. “But they’ll need to cut back on their spending and ratchet up savings while they can count on a $200,000 plus income.” Here’s how:

Cap the debt. Even though the couple will have military pensions, Roland advises them to borrow no more than 50% of the home’s cost.

His aims: to make sure they can afford the payment even if their post-Navy pay doesn’t match their current earnings and to keep their mortgage obligation from squeezing their lifestyle when they retire for real.

Scale back — a bit. To borrow 50% on a $1.3 million home, they’d need a $650,000 down payment. Since that might be a tough amount to accrue by 2023, they could plan for a smaller house on less land; 2,000 square feet on 1.5 acres cuts the cost to about $890,000, which would mean $450,000 down.

Stop overpaying their mortgage. Kelly and Victor bought their current home for $575,000 in 2005, near the peak of the market. At the trough, its value fell below $300,000. They’ve spent the past few years double-paying the mortgage so they aren’t underwater.

With the market rebounding in San Diego, they should be able to eke out about $40,000 when they sell — so no need to keep doubling up, Roland says.

Build a down payment. To get to $450,000, they should set aside, in a short-term bond fund, $45,000 from their $90,000 emergency fund (leaving six months of expenses), plus the extra $2,362-a-month mortgage payment. Finally, they should track their spending to find $600 more a month in savings.

“We don’t have a budget,” says Victor. “We go out to eat when we want and spend weekends at the Four Seasons.”

They’ll have to give up some luxuries, but Kelly says it’s worth making sacrifices “to have a place we can always call home.”

More from Live your dream: What you’d do if money were no object:

$800,000 saved, dreams of breeding horses

Our dream: Run a $750,000 hotel in Costa Rica

MONEY deals

Sell Your Stuff for the Best Price

Photo: Jason HIndley The key to making real money is choosing the right venue.

The key to turning your trash into treasure? Choosing the right sales venue.

As you finish up your spring cleaning, you’ll probably find a few things you’d like to unload, like your old Peaches and Herb LPs or your underused water skis.

Most American homes are stuffed with stuff — so much so, in fact, that about one in 10 households pays for extra storage space, up 65% since 1998, reports the Self Storage Association.

Still, while it’s fun to watch Cash in the Attic from the comfort of the couch, selling your own secondhand stuff can be a first-rate hassle.

How do you make it worth your while?

“You’ll save time and make more money if you choose the appropriate marketplace,” says Suzanne Wells, eBay power seller and author of What to Buy at Thrift Stores to Sell on eBay.

The following venue guide can help.

AUCTION HOUSE

Best for: Items with a particularly high resale value, such as art, jewelry, and antiques. Auction houses focus on buyers willing to pay big bucks for big-ticket items.

Seller’s cut: Up to 25% of final sale price, plus administrative fees, as well as possible charges for item transport, insurance, and photos.

Hassle factor: Medium. The process isn’t a headache — simply send photos of the item to auction houses or have them send someone to you — but it can be lengthy. “They have to wait for the right auction to put your item in,” says Rudy Franchi, a former Antiques Roadshow appraiser and the owner of PosterAppraisal.com.

COLLECTIBLES DEALER

Best for: Objects with a devoted fan base — think stamps or coins — that you want to sell in a hurry.

Seller’s cut: 40% to 60% of value.

Hassle factor: Low. Take your item to a dealer, who will offer you a price, usually around half of what he plans to sell it for. On the upside, you’ll get cash right away. As Franchi says, “It’s like having a tooth extracted: painful but quick.”

CONSIGNMENT SHOPS AND SITES

Best for: Like-new, brand-name clothing and jewelry (though some shops specialize in other things, like instruments or sporting goods).

Seller’s cut: 25% to 75% of final sale price.

Hassle factor: Medium. The shop agrees to display your goods for a period and then return those that don’t sell. You probably won’t get paid for a while — if you do at all.

eBAY

Best for: Collectibles, name-brand clothing, electronics, sports equipment, and household goods; not ideal for awkward-to-ship or one-of-a-kind pieces.

Seller’s cut: 10% of sale price. Plus, upgrade — like fancier listing design — range from 10¢ to $1.50.

Hassle factor: High. Listing takes time, since you’ll want to post multiple photos and a detailed description. To appeal to buyers, you’ll need to accept PayPal. Also, you may face scammers who threaten you with negative seller feedback, Franchi says.

CRAIGSLIST

Best for: Furniture, household goods, and anything that would be challenging to ship and doesn’t have a high secondary-market value.

Seller’s cut: None.

Hassle factor: High. The listing process is a lot like that of eBay’s, but success depends on local demand. You’ll have to navigate around flakes and scammers; plus, you often have to invite buyers to your home to pick up the items.

AMAZON MARKETPLACE

Best for: Electronics, books, and DVDs — categories that people shop for on Amazon.com. It’s not ideal for items too heavy to ship.

Seller’s cut: Referral fee of 8% to 25%, a closing fee of $1.35 for media, plus a per-item fee of 99¢.

Hassle factor: Low. Listing is easy if the item is on Amazon. Just click the “Have one to sell?” link: Amazon provides a description and photos; you provide condition notes.

First, though, you’ll want to look at how others price the item to see what you’ll reap after fees. You may do better donating the item to charity. After all, you’ll get a tax deduction for the full resale value — and more time to watch Antiques Roadshow.

Your browser is out of date. Please update your browser at http://update.microsoft.com