TIME laptops

This Is the Best Budget Laptop You Can Buy

Lenovo

Can you buy a great laptop for under $600? Yes, yes you can

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This post is in partnership with The Wire Cutter. Read the article below originally published at TheWireCutter.com.

If I had to buy a Windows laptop for $600 or less, I’d get the ~$580 configuration of the Lenovo IdeaPad Flex 2 14 or something very similar. But first I’d think long and hard about whether I needed a full-sized Windows laptop at all.

Last Updated: July 8, 2014

The original version of this piece referred to the Lenovo Flex 14. Lenovo has replaced that model with the Flex 2 14. A Lenovo rep confirmed to us that the only difference between our original recommendation and this new Flex 2 14 is that the Flex 2 14 has a newer, better Intel Core i5-4210U processor and a hybrid hard drive and can be upgraded to a 1920×1080 touchscreen. The i5 processor and hybrid drive make the Flex 2 14 a better deal than the original; the high-res touchscreen is not an essential upgrade for the price. We also updated details regarding our step-up pick, the Lenovo IdeaPad U430 Touch, which Lenovo is now making with a slightly different processor (the same as our main pick) and twice the RAM (8 GB) as before.

Who should(n’t) buy this?

If you have regular access to a full Windows or Mac computer and want a secondary machine for web browsing, email, and basic document editing (i.e. something more than a tablet but less than a full-sized Windows computer), don’t buy a $600 Windows laptop as your secondary machine. Consider a $300 Chromebook or a $400 Windows convertible tablet instead. Neither can do quite as much as a full Windows laptop, but they often give a better experience in the things they do than a more expensive general-use machine.

But if you do need a real computer—if this is your primary, do-everything computer—and you need the best all-around thing you can get for under $600, you should get something like the Lenovo IdeaPad Flex 2 14.

Our pick

We like the $580 configuration of the Lenovo IdeaPad Flex 2 14 (listed on Lenovo’s site as the “Flex 2 14-59422146“). It’s not perfect, but for its price it hits “pretty good” levels in a lot of important areas while managing to avoid deal-breaking flaws. It is powerful enough for day-to-day tasks, portable enough to bring with you without breaking your back, and has enough battery power to last all day. It also has a hinge that bends back around 300 degrees, just in case you wanted to use it like that.

For your $580 you get a dual-core Haswell Intel Core i5-4210U processor, 4 GB of DDR3 RAM, and a 500 GB hybrid hard drive with 8 GB of cache, which is enough for most tasks that don’t involve heavy photo or video editing or gaming. The cache will make it feel a little speedier than a regular hard drive, but not as fast as an SSD. The Flex 2 14 also has a 14-inch multitouch panel with a resolution of 1366×768, 7.5 hours of battery life, a decent keyboard and trackpad, and a full array of ports: HDMI, Ethernet, USB 3.0, two USB 2.0 ports, a card reader, and an audio jack. At 0.8 inches thick and 4.4 pounds, it’s lighter and slimmer than most laptops in its price range. Its matte-black plastic exterior and fake-brushed-aluminum palmrest aren’t gonna win many beauty contests (especially compared to most ultrabooks) but it’s not something you’ll be ashamed to break out at a coffee shop. (Unless you don’t buy anything. Then you’re a freeloader and you should feel bad.)

Unlike many expensive ultrabooks, the Flex 2 14 has a removable battery and upgradable RAM and drives. This means you can buy the configuration you can afford now and later squeeze more life out by swapping in a higher-capacity RAM stick and trading the hard drive for a solid-state drive.The Flex 14 in "stand" mode.

The original version of this piece referred to the Lenovo Flex 14. Lenovo has replaced that model with the Flex 2 14. A Lenovo rep confirmed to us that the only difference between our original recommendation and this new Flex 2 14 is that the Flex 2 14 has a newer, better Intel Core i5-4210U processor and a hybrid hard drive and can be upgraded to a 1920×1080 touchscreen. The i5 processor and hybrid drive make the Flex 2 14 a better deal than the original; the high-res touchscreen is not an essential upgrade for the price. The following reviews are for the original version of the laptop.

Reviews for the Flex 14 stay mostly in the range of 3 to 3.5 stars, but this is because the original review units Lenovo sent out came with a Core i5-4200U processor, 8 GB of RAM, an 128 GB SSD, and a suggested price of $1,000, which is madness. At that price, you can get an ultrabook that’s half the thickness and weight with triple the screen resolution and double the SSD space, so it’s no wonder the Flex 14 didn’t review well at $1,000. The $580 version, though, is much more sanely priced, which is why we’ve chosen it for our pick.

CNET’s Dan Ackerman gave it 3.5 stars out of five under the premise that, if you keep the configuration under $800, it’s a good laptop. Once you get above $800 there are lots of better options, particularly when it comes to the display and build quality, echoing what we wrote above.

Laptop Mag’s Sherri Smith said, “If you’re looking for a solid midrange touch-screen notebook that can handle most computing and multimedia tasks, the Flex 14′s $569 Core i3 or $669 Core i5 configurations with standard hard drives are pretty good choices.”

We called in the original Flex 14 alongside a $580 Acer Aspire E1 and $650 Dell Inspiron 14R, using each as a daily machine for a few days. Of the three, I like the Flex 14 best, but it’s not stealing my heart in the way that, say, our favorite Ultrabook does. Then again, it’s cheaper than half the price and has more than half the power of that machine.

For the rest of the review, please go to The Wire Cutter.com.

TIME Saving & Spending

Credit Card Companies Really Hope You Don’t Notice This

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Steven Puetzer—Getty Images

If you have decent credit and you actually read your junk mail, you’ll notice that credit card companies will do almost anything to turn you into a customer. The points or miles value of initial sign-up bonuses has climbed steadily and is at its highest ever with an average of 13,265, according to new data from CardHub.com. And on the cash back side, we’ve seen issuers roll out sign-up bonuses as high as $400 this year.

Sounds great, but the catch — you knew there’d be a catch, right? — is that once they’ve “wined and dined” you and you fill out that application, the honeymoon’s over. CardHub finds that the average earning rate for cash back rewards has fallen to an all-time low since it began tracking this data four years ago.

On the points and miles side, things look rosier. The base earning rate is still on an upward trajectory, although it’s lost a bit of steam over the past couple of quarters. There’s another variable here, though, which makes the idea that you’re getting more rewards for your spending a little misleading: Several of the major frequent-flier programs these cards are affiliated with have cut how much their points are worth by requiring a bigger cache of points to earn a free ticket.

It’s a change that has business travelers fuming, but the impact could be hitting your wallet, too. Even though it might look like you’re able to earn those points or miles faster, “It most likely might be making them less valuable overall,” says Odysseas Papadimitriou, CardHub’s founder and CEO. The trend towards less-valuable rewards that’s on display with cash back cards gives you a glimpse of card companies’ true intentions, Papadimitriou says. “Those offers have been deteriorating in value rather than appreciating,” he says.

On one hand, issuers are wooing people with fat sign-up rewards, while they cut the value of the regular rewards with the other. “It’s really so hard for them to get someone with excellent credit to change their credit card, so the initial bonuses are geared towards that,” Papadimitriou says.

The card companies count on the fact that we’re basically lazy and probably won’t go through the hassle of switching any automatic payments, finding a new card and canceling the one we have once we realize the regular rewards aren’t so hot. For cardholders who revolve a balance, this is a double-whammy, since reward cards almost always have higher APRs than cards that don’t offer rewards.

Once America finally wakes up and catches on to what’s happening, they’re not going to be happy, Papadimitriou predicts. Thanks to the Consumer Financial Protection Bureau, people today have a new venue to take their gripes about credit cards. CardHub’s research indicates that many are already doing so, finding that the volume of complaints about rewards skyrocketed by 45% in the second quarter of the year.

“Credit card companies really need to be careful with the devaluation game they’re playing. This strategy is going to backfire,” he says. “The last time they played that game, they got the CARD Act.”

TIME Saving & Spending

Do Not Leave Home Without These Credit Cards

Although credit card perks vary widely, the overwhelming majority of rewards credit cards give the user travel insurance coverage. Among rewards cards from major issuers, nearly all offer travel accident insurance and almost 80% offer luggage insurance, according to the website CardHub.com, and all of the major networks — Visa, MasterCard, American Express and Discover — provide coverage for rental cars, with Visa, AmEx and Discover offering at least some form of coverage on all their cards.

Insurance is a good perk, but coverage isn’t equal from issuer to issuer or card to card. There also are other caveats, like high APRs or annual fees, that can detract from the benefits.

And watch the fine print, says Credit.com credit card expert Jason Steele. “For example, American Express cards offer good coverage as a standard benefit, but exclude many luxury vehicles and pickup trucks,” he points out.

You should also consider how you’re going to use the card and your travel habits. “If you never fly anywhere, you probably don’t need to worry about having baggage insurance,” says Matt Schulz, senior industry analyst at CreditCards.com.

Here are some cards CardHub.com, CreditCards.com and other credit card experts like for travelers this summer.

The Chase Sapphire and Chase Sapphire Preferred cards were the top two, respectively, on CardHub’s list for travel accident and luggage insurance. The Sapphire clocked in a perfect score for the breadth of its coverage.

Other experts like the Sapphire, too. “Even the no-annual-fee version offers great insurance benefits,” Schulz says. “You can get reimbursed up to $5,000 per trip for travel expenses such as airfares and hotels if you have to cancel your trip or cut it short due to sickness, severe weather and various other situations,” he says.

Schulz and CardHub also like the Discover It card, which comes in third on CardHub’s ranking and tops the list for lost and delayed baggage coverage. It also gets high rankings for its eligibility and extra coverage offerings. Discover also came in second (behind American Express) in last year’s JD Powers card satisfaction survey, says John Ulzheimer, president of consumer education at CreditSesame.com.

“The PenFed Premium Travel Rewards American Express card has been listed over the years as being one of the best in the country,” says Curtis Arnold, founder of CardRatings.com. It offers coverage to help get an unescorted child home or a close relative to visit the injured traveler at an overseas hospital in the event of an accident. It also has no annual fee.

Ulzheimer suggests two no-annual-fee cards, the USAA American Express and USAA World MasterCard, because the issuer is tops in customer service, he says. “USAA ranks first in customer satisfaction for insurance and has for at least three years in a row. They’re always at or near the top.” American Express has also topped the JD Powers satisfaction survey for seven years running, he notes.

Schulz calls the Barclaycard Arrival Plus World Elite MasterCard “noteworthy” because it includes coverage for accidents, trip cancellations, lost and delayed baggage — plus one huge perk for cardholders who travel to Europe. “[It] is one of the few chip-and-PIN cards widely available to U.S. consumers,” Schulz says.

Some card issuers in the U.S. are moving towards chip cards in the wake of the Target data breach fiasco, but they’re still not on board with chip-and-PIN cards that are the norm in many countries overseas. Since payment devices like unmanned ticket kiosks in Europe often require the use of a card secured with both a chip and a PIN, “Having a PIN card will likely save you some headaches,” Schulz says.

 

TIME Retirement

Americans Are Totally Unprepared for This Shock

Sad piggy bank
Simon Critchley—Ikon Images/Getty Images

Never mind saving for retirement: Americans today face the bleak prospect of poverty in their golden years because they have no idea how much nursing homes cost and they wildly underestimate how much they’ll need.

In a new survey by MoneyRates.com, 40% of respondents say they’ve set aside nothing — zilch — towards paying for the care they’ll most likely need in their final years.

“Over two-thirds of individuals who reach age 65 will need long-term care services during their lifetime,” the Centers for Disease Control and Prevention warns.

Two-thirds of survey respondents have less than $75,000 saved. More than half think $75,000 is more than they’ll need for a year in a nursing home, but they could be in for a rude awakening: The average cost for a semi-private room in a nursing home is more than $81,000 a year, and that can soar to nearly $142,000 in pricey locations like New York City.

“It’s scary how quickly nursing care can run through your savings,” says Richard Barrington, senior financial analyst for MoneyRates.com. Barrington says even people who think they’re being diligent about saving for their retirement years can be led astray by the assumption that they’ll be able to live on less money after they exit the workforce.

“You may have a fair amount of discretion in the early years of your retirement, but then your financial needs may accelerate sharply,” he says. “People need to plan their savings and conserve their resources accordingly.”

A new brief from Boston College’s Center for Retirement Research illustrates what happens when people fail to plan for this possibility. It finds that even high-income retirees run out of money and need to use Medicaid to cover nursing home care.

“Medicaid… serves not just the poor, but also relatively well- off retirees impoverished by costly medical expenses,” the brief says, an outcome that has serious implications not just for these people, but for their heirs.

The eligibility rules for Medicaid are strict, with a cap of only $2,000 on what are termed “countable assets” and a five-year lookback period that essentially forces people to burn through the wealth they’ve accumulated. The government says about half of people who enter nursing homes start off paying for it themselves, but many of them spend down their assets — leaving little or nothing for their heirs — and end up on Medicaid.

The Boston College researchers looked at single seniors by income group as they aged and tracked who was covered by Medicaid. While Medicare covers all Americans once they hit the age of 65, the coverage doesn’t cover long-term care like nursing homes. For people without enough savings or who didn’t plan ahead and take out a long-term care insurance policy, the high cost of nursing homes can force even well-off seniors into poverty, at which point they’re eligible for Medicaid, which does cover nursing home care.

Although the percentage of high-income elderly who get Medicaid assistance starts out at zero when they’re 60 years old, it climbs steadily as they age, and around 20% of this population needs and qualifies for Medicaid by the time they hit their late 90s. “Higher income retirees… tend to live longer and face higher medical needs in very old age, which can result in them ending up on Medicaid,” the brief says.

Granted, many don’t live that long, but Americans are experiencing longer retirements and life spans. The CDC says the number of people 85 and older will rise from about 6 million in 2015 to almost 18 million by 2050.

“Medicaid is a safety net and it’s great that it’s there, but… you have to understand it’s likely to limit your options,” Barrington says. “If you want to leave behind any kind of legacy to your heirs or to charity, if you end up going on Medicaid, you can essentially forget about it.
A 2012 study by the Employee Benefit Research Institute found that people who lived in a nursing home for six months or more had median household wealth of only about $5,500. “For nursing home entrants, median housing wealth falls to zero within six years after the initial nursing home entry,” the study says.

“That safety net does come with strings attached,” Barrington cautions. “It’s going to sharply limit what you’re able to pass on.”

TIME Retirement

The 4 Words Terrifying Americans Right Now

Photo: Travis Rathbone

This post is in partnership with The Fiscal Times. The article below was originally published on The Fiscal Times.

Americans are freaking out about their personal savings – and for good reason. A recent Gallup poll found that 59 percent of those surveyed were very or moderately worried they won’t have enough money for retirement – by far their biggest concern.

Many people once counted on a triad of support for retirement – Social Security, personal savings, and employer-sponsored pensions. Yet in the wake of the Great Recession and a long stretch of high unemployment and stagnant wages, the once-dependable foundation has been crumbling.

Related: Rubio’s Retirement Savings Solution: Work Longer

Employers have phased out generous defined benefit pension programs in favor of 401(k)s and other workplace-based retirement accounts. Personal savings have taken a dive as many people have tapped retirement savings to pay the rent or help make ends meet. And many young people seriously question whether the Social Security trust fund will be able to pay them anything by the time they retire.

The latest National Retirement Risk Index from the Center for Retirement Research (CRR) at Boston College says that more than half (53 percent) of households risk falling more than 10 percent short of the retirement income they’ll need to maintain their standard of living. More than 40 percent of retirees are also at risk of running out of money for daily needs, out-of-pocket spending on health care or long-term care, according to the Employee Benefit Research Institute (EBRI).

Even more alarming, the National Bureau of Economic Research recently concluded that nearly one-quarter of Americans could not come up with $2,000 in 30 days if necessary, and another 20 percent would have to pawn or sell possessions to do so. That would mean nearly half of all Americans are financially stressed.

“The graying of Americans, a growing retirement population, rapid changes in the private employer pension programs, projected insolvency in public pension funds, fiscal pressures at both the federal and state level – all this and more requires policymakers to renew their focus on ensuring existing programs support individuals and families in their twilight years,” said Bill Hoagland, a senior vice president of the Bipartisan Policy Center.

Related: Retirement Savings: Men and Women Do it Differently

The mounting crisis over retirement savings and investment underscores a key facet of the evolving national debate over income inequality: While many households are well prepared for retirement, only 17 percent of people in the lowest income quartile will have sufficient resources to avoid running short of money by the end of their lives, according to EBRI’s 2014 metric.

The Bipartisan Policy Center on Monday is launching a “personal savings initiative” to begin formulating a series of innovative proposals to try to increase national savings, improve income security in retirement, and guard against the potential costs of long-term care. While Congress is unlikely to take up any meaningful tax or financial services legislation before November, a new commission chaired by former senator Kent Conrad (D-ND) and former Social Security Administration official James B. Lockhart III hopes to outline an action agenda for the coming year.

The group will look for ways to beef up the defined contribution retirement system by increasing personal savings for retirement and improving the effectiveness of tax-advantaged savings vehicles, according to a sum of the initiative.

Related: Robust Stock Market Boosts Retirement Savings

The commission will also examine the impact of federal policies on private savings, the finances and operation of Social Security Disability Insurance, the interaction of Social Security with personal savings, the impact of long-term care needs on retirement security, and the role of homeownership and student debt.

The reasons for shortfalls in retirement savings are complicated, but three stand out, says the BPC:

  • A Sea Change in Workplace Retirement Plans

Over the past two decades, the workplace retirement landscape has dramatically shifted to defined contribution plans, in which a worker and in some cases the employer contribute to an account managed by the employee. These have largely replaced defined benefit plans, which specify a benefit – often a percentage of the average salary during the last few years of employment – once the worker retires.

Since 1998, the number of companies offering any sort of defined benefit plan plummeted from 71 to 30 – and an increasing number of those are hybrid plans, where workers accumulate an account balance rather than an annuity. When 401(k)s were created in 1978, they were meant to be a supplement to traditional defined benefit pensions, not a stand-alone retirement account. But over time, they have evolved to serve that purpose – although they typically provide far less in long-term benefits than the old plans.

  • Dismal Personal Savings

The reasons for the long decline in personal savings are difficult to pinpoint, but they likely include stagnant real incomes for many workers, rising standards of living and higher consumption, and a weaker dollar than in the past. The savings rate is the percentage of money that one deducts from his or her personal disposable income for retirement.

Related: The 401(k) Loan: America’s Pricey New Piggy Bank

America’s savings rate fell steadily from the early 1980s through the mid-2000s, ticking up only during or after recessions, according to a Washington Post analysis. It topped 11 percent during President Ronald Reagan’s first term. From 2005-2007, the annual rate averaged 3 percent. The savings rate essentially doubled during the Great Recession, and stayed there, averaging nearly 6 percent from 2009-2012. By early 2013, the rate had dipped to 2.6 percent, before rising again to 4 percent by mid-2014.

A Capital One ShareBuilder survey this year found that 72 percent of Americans are saving – while many more than that know they should be – and only one-fifth of them are saving 10 percent or more. On average, people are saving only 6.4 percent of their annual income, the survey found.

  • Taking the Money Out

For those with defined contribution retirement accounts, carefully managing withdrawals is part of the challenge. Many people are shocked to discover that their account balances, when they need them, are smaller than they anticipated because of cash-outs during job changes, hardship withdrawals, or expensive 401(k) loans. Moreover, those who do not use their savings to purchase lifetime annuities face the risk of outliving their savings.

Individuals without long-term care insurance face impoverishment, having to spend almost all of their financial assets and income on care before they can qualify for long-term support benefits through Medicaid, the federal-state safety net program.

Read more from The Fiscal Times:

Your Tax Dollars Pay for Walmart Execs’ Bonuses

10 Affordable Housing Markets—On the Beach!

How Hookers and Drug Dealers Could Boost US GDP

TIME Saving & Spending

Here Are the Absolute Best Father’s Day Deals and Discounts

Stock image of a dress shirt and tie on hanger
Getty Images

Please don’t get Dad another tie this year, or one of those desktop toy thingies.

And even though spending data shows that we shell out less for Father’s Day than Mother’s Day shows, don’t believe him when he says, “I don’t need anything.” But dads also don’t want you to waste your money — oh, and they’d also like you to keep things “simple” and “thoughtful.”

Sound like a tall order? Relax, we’ve got you covered. Here are a slew of Father’s Day deals in all sorts of categories. (Many of these deals are available through other discount apps or sites, too, if you’re loyal to one particular deal aggregator.)

Outdoor and Sports

PromotionalCodes.com highlights a $10 discount of a $100 purchase at Gander Mountain — get it with the coupon code GMTN10.

CouponSherpa.com flags a free shipping deal at Cabela’s if you spend $99 or more and use the coupon code 4DADSDAY.

At Sports Authority, get $10 off a purchase of $50 with this coupon from CouponSherpa. Customers also have the option of presenting the coupon digitally by downloading the CouponSherpa app.

Quality Time

DealNews.com has a round-up of discounts for zoos, water parks and museums in cities like Boston, San Francisco and Seattle. It also has a listing of vacation deals at golf resorts, if you’re feeling splurge-y.

Good Eats

Get a BOGO deal on ribs meals from Boston Market (valid on Father’s Day only).

RestaurantNews.com has a listing of restaurants around the country offering discounts or special menus for Father’s Day (click the link above).

Get free shipping if you spend $49 at Harry & David with coupon code FATHER through Father’s Day. If you’re a slacker and forget to get Dad a gift on Father’s Day, the code SHIP4FREE has you covered through the end of the month.

Get $3 off any cake that costs $15 or more at Baskin Robbins with this coupon.

Clothing and Accessories

Go to CouponSherpa (via the links below) for printable coupons for 25% off most regularly-priced merchandise and 10% off men’s fragrance and skin care items at Lord & Taylor, or for $10 off a $30 purchase of men’s apparel, accessories and luggage at Kohl’s.

Tools and Tech

Sears is offering a Father’s Day coupon that gives you $15 off $50 in tool purchases.

DealNews points out a $5 coupon code off a $35 purchase at BestBuy.com if you choose in-store pickup.

If you’re willing to jump through a couple of hoops and join rewards site Ebates.com, shoppers can get up to 60% off on electronics purchases from Panasonic, plus 10% cash back and free shipping. (Purchases must be made from the Ebates.com site.) Ebates also has a slew of other cashback deals at online retailers in other categories, but it’s important to note that the cash back comes as a quarterly check — but hey, Dad probably told you good things come to those who wait, right?

 

 

TIME Saving & Spending

The Credit Card Bomb Just Waiting to Go Off

Last quarter, Americans collectively paid down $32.5 billion worth of credit card debt—but don’t pat yourself on the back just yet: That’s actually way less than we paid down at the end of the recession five years ago, and we’re on track to end this year with almost $42 billion more credit card debt than last year, which one credit expert warns could backfire big time.

CardHub.com‘s new quarterly credit card debt study shows a worrying return to pre-recession carelessness about debt, says Odysseas Papadimitriou, the site’s CEO. “Unfortunately, we’re a little bit worse than we were last year and significantly worse than we were in 2009 and 2010,” he says.

Americans historically pay off the most debt in the first quarter of each year, as we pay down our holiday spending and take advantage of early tax refunds to chip away at those debts — an average of $6,628 per household, according to CardHub. But in the years following the recession, we’ve been paying down less and less. This year, we paid down 28% less debt than we did in the first quarter of 2009.

In the period during and immediately after the recession, we were essentially scared straight and dumped our debt as fast as possible. We appear to have gotten over our fear, and that’s not necessarily a great thing, Papadimitriou says.

Right now, the default rate is around 3.3%, not bad by historical standards, but Papadimitriou points out that it’s coming off years of higher rates — during the last two quarters of 2009, it shot up above 10%. There’s less delinquent debt to go into default, following a period when credit card companies dumped those customers, charged off the losses and sold them to collection agencies for pennies on the dollar.

But that’s starting to change, as card issuers begin loosening credit restrictions and lending to people with blemished credit once again. We’re borrowing more as banks loosen the purse strings — CardHub predicts we’ll end this year with 8% more total credit card debt than last year, 14% more than just two years ago.

It’s not just credit card debt, either. Data earlier this year from the Federal Reserve Bank of New York found that overall consumer debt stands at a whopping $11.52 trillion, the highest it’s been since 2011, although it’s still below pre-recession figures. (Student loan debt — which can’t be discharged in bankruptcy the way credit card debt can — is a big culprit.)

This kind of trajectory puts us on a worrying cycle of accumulating more debt, year over year, which means any kind of financial hiccup — job loss, medical bills, illness — that hits makes us extremely vulnerable to falling behind on our debts. Papadimitriou urges Americans to build up an emergency fund so if the unexpected does happen, they won’t fall behind on their debts and be stuck paying penalty interest rates when they can least afford it.

“It seems like we need to get reminded on a constant basis of the risks of this behavior,” he says.

 

TIME Saving & Spending

The Surprising Reason You’re Paying So Much for Car Insurance

Understanding why you pay what you do for car insurance can be a bit of a mystery. Insurers throw all sorts of variables in the mix, from your age to where you live to what kind of car you drive. Often, they also factor in your credit — and it’s way more important than you probably think.

A new study conducted by WalletHub.com finds that have excellent credit versus no credit history creates, on average, a 65% variation in the cost of premiums when all other factors are the same.

In some cases, the discrepancy can be even greater. “Allstate appears to be the company that relies on credit data the most, with the WalletHub Scenario revealing a 116% fluctuation in premiums,” the study says. By comparison, State Farm showed the least amount of variation, although there still was a 45% difference.
Geography matters, too. In Vermont, credit only makes a 18% difference in premium prices, but it accounts for a whopping 126% fluctuation in Washington, D.C.

In Massachusetts, California and Hawaii, there’s no difference; these three states have laws that prohibit insurers from using credit information in car insurance pricing.

WalletHub looked at Allstate, State Farm, Geico, Progressive and Farmer’s Insurance for its study. The site got quotes for two hypothetical customers whose information was identical except for their credit information: One was assigned excellent credit and the other was given no credit history.

One thing that can be frustrating for drivers is that it’s not always easy to figure out how much your credit factors into the quote you get from an insurance company. WalletHub looked at the websites of the 10 biggest car insurance companies to see how easy it is for people to find out if the company is using their credit data and which credit reporting agency they’re getting the information from.

It found wide variations in how and how much companies disclose about the way they use customers’ credit data. Progressive came out on top in this analysis with a perfect score of 10, followed by Farmer’s Insurance and American Family Mutual with scores of 9 and 8, respectively. Liberty Mutual was the least transparent with a score of 4.5.

Consumer advocates say it’s important for drivers to know their rights when it comes to the way insurers use their credit information. “The federal Fair Credit Reporting Act (FCRA) Adverse Action Notification…. requires any user of a credit report to notify the consumer if the use of that report resulted in an adverse action, which, in the case of insurance, would be denial of coverage or a higher premium than a consumer with an average or higher insurance credit score,” says watchdog group United Policyholders.

TIME Saving & Spending

Here’s How to Get Free Donuts Today

Donut
Getty Images

National Doughnut Day is a 76-year-old tradition that was first launched by the Salvation Army to commemorate World War I volunteers and is now held on the first Friday in June. While the spelling debate continues—doughnut vs. donut—the price is clear: free. Here's where to get your sweet on

Friday is National Doughnut Day, a 76-year-old tradition launched by the Salvation Army to commemorate World War I volunteers. Held the first Friday in June, National Doughnut Day is a day to scarf free baked goodies and debate the proper spelling: donut or doughnut? Take your pick, but on Friday, there’s another way to spell it: f-r-e-e. Here’s a roundup of where to get your sweet on.

At participating Dunkin’ Donuts restaurants, customers can get a free donut with any beverage purchase (while supplies last).

At Krispy Kreme, customers can get a free donut of any variety. No purchase is necessary, but Connecticut and Puerto Rico are excluded from the promo.

American outlets of Canadian donut chain Tim Horton’s are offering a free donut with any purchase. Customers have to say, “Happy National Donut Day” to collect their freebie.

Shipley Do-Nuts, a chain with more than 250 stores in six Southern states, is offering a free glazed “do-nut” and a small coffee from 5 a.m. until midnight at participating locations (limit one freebie per customer).

Midwestern chain LaMar’s Donuts is giving away a free donut (any variety with a hole) — no purchase necessary.

 

 

TIME Retirement

Workers to Bosses: Take Twice as Much of My Pay

Here's the savings crisis in a nutshell: workers want to save twice as much but won't do it for themselves.

The retirement savings crisis in America can be reduced to one statistic: workers say they would like the default contribution rate in 401(k) plans with automatic enrollment to be doubled.

That is telling new research from the nonprofit Transamerica Center for Retirement Studies and global asset manager Aegon. It suggests the typical worker wants someone else to make the tough decisions for them. After all, these workers could double their contribution rate quite on their own by filling out a little paperwork at the office.

What stops them? Inertia plays a big role. The easiest thing to do is nothing. But too many workers also do not appreciate the extent of their personal savings crisis and that, through compound growth, a little more saved today would make a big difference tomorrow. They also may suffer from a chilling lack of confidence in their ability to make the right financial choices.

This isn’t just a U.S. phenomenon. Globally, workers say the appropriate default rate for contributions to a 401(k) plan with automatic enrollment should be 6% of pay. The desired figure is 7% in the U.S., where the typical default rate is 3%, Transamerica found. Perhaps the biggest problem with that low default rate is that workers may assume it is sufficient, when it clearly is not.

Most financial planners advise setting aside 10% to 15% of pay for retirement. A worker who believes their employer has set the right savings rate for them, and then does nothing more, will be sorely disappointed. Unfortunately, such workers are legion. The average 50-year-old American has saved just $44,000.

Some workers are taking action. Since 2009, seven in 10 401(k) plan participants have increased their contributions by an average of 14%, reports Principal Financial Group. With the help of a bull market account balances have roughly doubled in that span. But that just gets savers back to where they were before the recession. It’s not nearly enough to close the savings gap.

Most workers seem to understand the need to save more. Yet they continue to do little or nothing about it, which is why automatic enrollment and higher default contribution rates are so important. Globally, 63% of workers favor automatic enrollment, Transamerica found. The share is 69% in the U.S. So automatic features, which have been found to be highly effective in boosting participation rates, have broad appeal.

Retirement experts look at auto enrollment and escalating contribution rates like motherhood and apple pie. Who can argue against it? But we need to expand the features to ensure that more employees defer more of their pay—which they would do on their own if not for inertia and failing confidence.

The Principal recommends auto enrollment with a 6% employee deferral rate, and raising the deferral one percentage point each year until it reaches 10% of income. It further recommends that companies sweep all existing employees into the automatic plan—not just new hires. They could opt out, but most wouldn’t. That’s inertia working for them, not against them.

This is the approach we are left with, and there is nothing wrong with it. Given our low levels of financial understanding and the lackluster national effort to raise our financial I.Q., it is unlikely that most workers will choose to save a great deal more. That’s a shame because even a 6% deferral rate gets you only about halfway home to retirement security. At some point individuals must step up to the retirement savings challenge on their own.

 

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