Monday, September 11, 2017

Countdown to Financial Fitness: Don't Let Fake Charities Take Advantage of Your Co...

Countdown to Financial Fitness: Don't Let Fake Charities Take Advantage of Your Co...: My heart goes out to the victims of Hurricane Harvey. I lived in Houston for 10 years, and I recognize a lot of the locations that flooded....

Don't Let Fake Charities Take Advantage of Your Compassion

My heart goes out to the victims of Hurricane Harvey. I lived in Houston for 10 years, and I recognize a lot of the locations that flooded. Many people lost everything they own.

And as I write this post, Hurricane Irma is wreaking havoc.

Fortunately whenever disaster strikes, others jump in to help. We open our checkbooks and donate to the organizations on the ground providing relief. Some of us even volunteer our labor. There are many wonderful organizations that offer life-saving assistance to people and animals affected by a disaster, and they could not do their good work without the generosity of donors and volunteers.

But just as the looters crawl out of their holes to take advantage of fellow human beings and businesses when they're down, fake charities and "disaster funds" pop up to part sympathetic donors from their money, with no intention of giving it to the intended recipients. Disasters seem to bring out the best, and unfortunately, the worst in people.

You want to help. But how do you ensure your hard-earned dollars and goods really go to the people who need them?

First of all, choose organizations you are familiar with, or research the charity on sites such as Guidestar, Charity Navigator, or the Better Business Bureau. Google the name of the organization for reported scams and complaints. Verify on the IRS website that your donation is tax deductible.

Many fake charities will come up with names that sound like real, respected charitable organizations. Be suspicious if the person asking for money uses high pressure tactics, dodges your questions, or refuses a site visit. Legitimate charities are happy to provide you with all the information you request.

When you do your research, pay attention to what percentage of contributions collected goes to fundraising, salaries, and administrative costs. If you're solicited by a paid fundraiser, ask how much of your donation that person, or the agency employing the fundraiser, will receive. I resent making a "donation" that pads the salary of someone who earns more than I do.

Avoid making a donation in cash, and never send a wire transfer. For tax and record-keeping purposes, it's best to write a check made out to the charitable organization (not to an individual!) or pay by credit card through the charity's secure website.

People who have lost everything need clothing, linens, diapers, toiletries, bottled water, food, pet supplies, etc., so you may choose to donate goods instead of money. Just make sure your donation is really wanted by checking the organization's website for its wish list. If you're far away from the disaster site, unless there's a clear infrastructure for transporting and distributing donations-in-kind to the victims, it might be more effective for you to make a monetary donation. Then the charity can purchase the needed items locally from a vendor who can use the business. I'm still haunted by photos showing trash piles of goods donated to disaster victims in Haiti, going to waste while the Haitians continued to suffer.

You may be tempted to rush to the devastated location and volunteer your services. Again, check with the relief organization coordinating the response to see what skills are needed and wait to be deployed. Having too many inexperienced volunteers descend on a disaster site can strain resources and divert first responders from tending to the original victims.

During a high-profile event like 9/11 or a major hurricane, even the legitimate charities may receive more donations than they need to handle that particular disaster. When this happens, the excess contributions may be funneled to other programs or placed in reserve to help with future disasters. So be aware that your donation may not be used exactly how you thought it would be. But if you've sent it to a legitimate, efficient charity, you can rest assured it will go to aid someone in need.

What charities do you believe do the best job with disaster response? I'd love to hear your comments.

Tuesday, August 22, 2017

Countdown to Financial Fitness: Local Transportation

Countdown to Financial Fitness: Local Transportation: Most cruise lines do not usually provide a lot of information for passengers to get around on their own in the ports of call. The shore exc...

Local Transportation

Most cruise lines do not usually provide a lot of information for passengers to get around on their own in the ports of call. The shore excursion business is too lucrative.

Sometimes you can research options in advance. Sometimes you'll discover them by accident.

For example, we just returned from a Baltic cruise, where we had a stop in Copenhagen. The last time we were there (over 15 years ago), the cruise ship docked within walking distance of many attractions. Now there is a new cruise port out in the middle of nowhere. For those not booked on a high-priced excursion, the cruise line was charging $18 for a shuttle from the port to the downtown area.

Standing on the upper deck, surveying our surroundings, trying to decide what to do for the day, we noticed what looked like a public bus stop just outside the cruise port. A city bus pulled up; people got off and on.

When we disembarked the ship, we walked past the solicitous taxi drivers, Hop On Hop Off bus sales people, and the now-loading ship's shuttle to visit a small Tourist Information office, where we asked about the local bus service. The agent gave us a free map that showed where the various bus lines went. He advised us a two-hour ticket cost 20 DKK, slightly over three U.S. dollars. He was able to sell us the tickets and accepted credit cards, USD, or Euros as well as Danish kroner. So we took the public bus right into the center of town, for a fraction of what the cruise line's shuttle bus would have cost us.

We had a similar experience in Stockholm, where we'd embarked on the cruise two weeks earlier. At the airport, we discovered Flygbussarna, the airport bus that takes you directly to the Central Station for 110 SEK (about $15 USD). We found out you can buy tickets online for 99 SEK (just over $12 USD), so we took advantage of that savings.

At the Central Station, we learned we could catch the Number 1 bus (a couple other lines go there as well) to the Frihamnen cruise port. Tickets are sold in a magazine store inside the railway station, kind of like a tabac in France. A single ride costs 30 SEK (reduced to 20 SEK for over age 65 or under age 20). Since our cruise ship had an overnight stay in Stockholm before we set sail, we opted for the 24-hour ticket (120 SEK regular, 80 SEK reduced--around $10 each). This enabled us to check in, stow our baggage, and then go back out to explore the city. We even went out again the next morning, took a tour of Parliament, and got back on a bus headed for the cruise port before our tickets turned into pumpkins.

It's about a 10-minute walk from the Frihamnen bus stop to the cruise port check-in area, so if you're mobility-challenged or have a lot of luggage, changing buses and schlepping your bags that far might not appeal to you. If there are several people in your party, the cost of a taxi might be less prohibitive (about $100-150 from the international airport to the cruise port; most likely a lot less from Central Station).

But for able-bodied budget travelers like us, the bus adventure suited us just fine. We can find lots better ways to spend our savings.

What money-saving travel tips can you share? I'd love to hear your comments.

Monday, July 10, 2017

Countdown to Financial Fitness: Know Your Tolerance for Risk

Countdown to Financial Fitness: Know Your Tolerance for Risk: You've paid down debt, built an emergency fund, and now you've finally saved up some money to invest. But before you hand your hard...

Know Your Tolerance for Risk

You've paid down debt, built an emergency fund, and now you've finally saved up some money to invest. But before you hand your hard-earned dollars to a broker, determine your tolerance for risk.

You can find sample "risk tolerance" questionnaires on the internet. It's almost like a personality test. If you work with a financial planner or investment counselor, he or she will most likely have you take such a quiz, or at least ask you similar questions before setting you up with a suitable investment plan.

Besides your age, income, assets, expenses, and plans for your money, you will be asked questions like, "What percentage of your investment are you prepared to lose?" and "How important is it for you to keep up with inflation?" "Can you stomach putting some, or all, of your principal at risk?" Some quizzes ask you what synonym for "risk" comes to mind. Danger? Opportunity? Thrill? You might be given scenarios to choose from: an investment that would never go down more than 10% but would only gain a maximum of 5% versus an investment with the potential of returning 30% but could lose 30% or more. Or you might see a question like, would you prefer Door Number 1—$1000 as a sure thing—or Door Number 2, with a 25% chance to win $10,000?

It's important to understand how you react to risk before choosing an investment. If an investment constantly keeps you awake at night, it might not be appropriate for your portfolio. If you have to check your account balance hourly and rush to sell your stock the first time its price goes down, investing in the stock market might not be the right choice for you. The stock market goes up and down, and if you get euphoric and buy when it's up and panic-sell when it's down, you will lose money.

The younger you are, the more risk you can handle with long-term investments, such as a retirement fund, provided you have the courage to stay invested despite market fluctuations. Historically, the stock market has yielded better returns than bonds or cash equivalents. Downturns actually provide opportunity to grow your wealth by purchasing more shares of stock or a mutual fund at a discount—if you stick to a plan of investing regularly. (You can do this automatically by reinvesting dividends and capital gains, i.e., dollar-cost averaging.)

What some risk-averse investors don't realize is that, by not investing in stocks or more aggressive mutual funds, by keeping all their money in cash accounts where the principal is secure but growth is almost non-existent, their nest egg may not keep up with inflation. And despite their cautious approach, they still won't have enough money to live on in retirement. So they are accepting risk whether they like it or not.

The closer you get to retirement, to the time when you will begin living off your assets, the more conservative you'll want to become with your investment allocation. Like with your emergency fund, you'll no longer have time to weather a major downturn, and if you have to start withdrawing the money, you'll be locking in losses.

Risk and reward go hand in hand. Aggressive investors are willing to risk losing a chunk of money in exchange for the prospect of greater reward. Conservative investors prefer to preserve their principal, but in exchange for that security, they must accept more modest returns.

What kind of investor are you, and have your views changed over time? I'd love to hear your comments. 

Monday, June 12, 2017