The best used cars, from Edmunds.com

If you’re in the market to replace a vehicle, check out Edmunds.com’s list of 2012 Used Car Best Bets, which include:

Compact Sedan: 2005-2010 Hyundai Elantra
Midsize Sedan: 2005-2010 Nissan Altima

Large Sedan: 2006-2010 Hyundai Azera
Coupe: 2005-2010 BMW 3 Series
Convertible:
2005-2010 Mazda Miata
Wagon:
2005-2010 Pontiac Vibe
Compact SUV/Crossover:
2005-2010 Honda CR-V
Midsize SUV/Crossover:
2005-2010 Ford Explorer
Large SUV/Crossover:
2005-2010 Chevrolet Tahoe
Minivan/Van:
2005-2010 Honda Odyssey
Compact Truck:
2005-2010 Toyota Tacoma
Large Truck:
2005-2010 Ford F-150
Luxury:
2005-2010 Infiniti G35/G37
Hybrid:
2005-2010 Toyota Prius

Sport Compact: 2005-2010 Subaru Impreza WRX

Edmunds.com editors picked the cars based on reliability, safety, value and availability. The editors considered cars that were two to seven years old, which is pretty much the sweet spot for used car purchases.

Since all cars are used cars as soon as you drive them off the lot, you might as well let someone else take the depreciation hit. You can tens of thousands of dollars over your driving lifetime by buying slightly used cars. Save even more by paying cash and keeping them for 10 years or so.

For more details on Edmunds.com’s list, visit http://www.edmunds.com/car-reviews/best-used-cars.html.

How to get free summer travel

My daughter hasn’t seen her cousins in the Northwest for awhile, so I just finished booking us a late-summer trip to see them. The net cost so far? Less than $30.

Here’s how I did it:

Amtrak roomette. We both love train travel, and the points I earn using my Starwood American Express card transfer directly to my Amtrak Guest Rewards program. Fifteen thousand points buys us a roomette, or double-bunk room, and all our meals for the 30-hour trip. Paying cash would have cost $411. (NerdWallet has a review of the Starwood card here.) I did have to buy a few extra points from Amtrak to make the purchase, since I recently depleted our Starwood points to book a hotel room for five nights in Hawaii. The good news is that Amtrak is offering a 30% bonus when you buy points, so I got 1,300 points for $27.50.

Hotel rooms. I’m a Hilton HHonors member, so I checked online for affordable hotels in Portland. Fortunately, the Hilton chain includes options from inexpensive (Hampton Inn, a great value) to astronomical (Waldorf-Astoria). I could have used 30,000 points to get us a free room, but that wouldn’t have been a great exchange rate, since rooms with two queen beds were available for less than $100 a night at the Doubletree. Here’s the beauty part: I’ll get 15 points per dollar spent for this stay, but it won’t actually cost me anything. That’s because the room is charged to our Capital One Venture card, which reimburses us for travel. We earn two points for every dollar we spend with the card, and we can use those points to offset the cost of travel. We book any flight, hotel or rental car we want, click on a button at the Capital One website to request a travel credit, and the rebate quickly appears on our account. Easy peasy. (CreditCardForum.com has a review of the Capital One Venture cards here.)

Flight home. We didn’t have a lot of flexibility on our return date, and I wanted to fly Alaska Airlines, where I’m (usually) an elite flier. I had enough Alaska miles to do a miles-and-cash deal—20,000 miles and $190 got us our flights home. And once again, Capital One will reimburse us for the cost of the flight.

I’ll still be shelling out for meals and museum admissions; Dear Daughter will pay for her own souvenirs and treats from her allowance and savings. All in all though, it promises to be a pretty cheap getaway.

Travel rewards programs don’t make sense for everyone. If you don’t pay off your credit card balances in full every month, for example, you should look for cards with low interest rates and skip the rewards versions, which tend to have higher rates. But if you spend a fair amount and travel a fair amount, as we do, you can wrest quite a bit of value out of your rewards programs.

 

 

5 things I’m glad we bought in Italy, and three I wish we hadn’t

One of the reasons we travel is to learn, and our latest trip to Italy taught us a lot. We learned about the country’s culture, cuisine and history. We also learned how quickly the euros can fly out of your wallet if you’re not careful (and sometimes even when you are). Here are some of the best purchases we made, along with a few I regret. Let’s start with the expenditures, big and small, that made it a better trip:

A Vivaldi concert in Venice. We heard the opera is pretty wonderful, but we weren’t sure our nine year old was quite up it—and the total ticket cost of over $300 was daunting. We looked for an alternative cultural event, and found it with Intrepreti Venezi, an outstanding string orchestra that gives concerts at Chiesa San Vidal (the lovely San Vidal church). The musicians were amazing, and where better to hear Vivaldi than in his home town? Tickets for the three of us were 75 euros (about $100), and well worth it.

“Paint your own” masks. Venice has a long tradition of mask-making and –wearing. I thought the “paint your own” places were kind of gimmicky, but it turns out they’re a great way for a kid to connect with Venetian history and culture. All three of us had a blast picking out blank masks (each shape has a different meaning and history) and painting up a storm. The masks aren’t cheap—30 to 40 euros each, including an hour of painting time—but they were a great activity for a family and a wonderful souvenir. (A tip: when they’re dry, have the shop wrap them for shipping even if you’re going to bring them home in a suitcase, as we did. They arrived safe and sound.)

A family museum pass. Lines to get into Florence’s most famous museum can be hours long, even in the off season. You can skip the line with reservations if you plan ahead, which we didn’t. So we “bought” our way in by buying a “Friends of the Uffizi” family pass. For 100 euros (about $130), this pass gets two adults and two children into not only the Uffizi but about two dozen other local museums, including the Academy (home of Michaelangelo’s David sculpture) and the Pitti Palace. The pass quickly pays for itself in entrance fees alone, but skipping the awful lines? That’s priceless. You need to bring your passports to an office near entrance #2 of the Uffizi and fill out a short application

A “Get Art Smart” book in Florence. This spiral-bound sticker book for kids turned the Uffizi museum into a scavenger hunt. Each page showed a small portion of a painting one of the galleries. Once our daughter located the painting, she could put the corresponding picture on that page. The book asked her a few questions about its composition that highlighted interesting developments in Florentine art and culture. Actually, this book for kids did a far better job of explaining the transition from Gothic to Renaissance art than any of the placards or other information available to adults. We found the book for less than 5 euros at a small bookstore near the Uffizi’s entrance, but I’m guessing you can find it at other museums in Florence, as well.

Gelato. Even mediocre gelato is pretty darned good, but for the most amazing varieties we learned to look for places slightly off the beaten path that had a line out the door.

What we should have skipped:

The water taxi from the airport. Venice is best approached by water, our guidebook told us. What it didn’t tell us was that the tiny windows in the water taxi wouldn’t allow us to see much…or that the schedule was a bit, shall we say, casual on Sunday nights. Our taxi took off almost an hour after it was scheduled to depart, so we missed the sunset and instead arrived in the dark. Next time, we’ll take the clean, comfortable bus into Venice and then the water taxi from the bus stop. We would have saved about 10 euros, and gotten to our destination a lot faster.

Audioguides at the Doge’s Palace. Audioguides really enhanced our experiences at other museums, both abroad and in the U.S. The best ones provide context for the exhibits and help you understand the time period in which they were created. The audioguides at the Doge didn’t do that—instead they droned on about which doge commissioned which artist to do what. By the third segment, we’d stopped listening, so that was $15 euros down the drain.

The rental car in Florence. On our last day, Hubby wanted to take a drive in the Tuscan countryside, which sounded lovely. Unfortunately, we hadn’t made a car rental reservation and it was a Sunday. Our hotel concierge made the arrangements for us, but the car cost us over $200 for the day—oh, yeah, and the GPS hadn’t been updated to reflect recent changes in the direction of Florence’s many, many one-way streets. The unit repeatedly instructed us to turn the wrong way onto said one-way streets. Getting out of town was nightmarish, to say the least. Getting back was worse, if anything—we could see our hotel, just blocks away, but we couldn’t get there. We finally hailed a cab to lead us home. We learned a few lessons. One: If you’re going to get a rental car, book it from home—it will be a heck of a lot cheaper. Two: Book it from the airport, which will be far from medieval cities’ byzantine streets.

 

Your Social Security questions answered

My column about getting your parents a bigger Social Security check, “More Social Security for mom,”  triggered a boatload of questions from readers–and confirmed what experts had told me, which is that a lot of people seem to be missing out on benefits for which they qualify.

Here are some of the questions that came in via my Facebook page, email and this blog. I’ve edited the questions for clarity and expanded some of my answers. (If you have questions about how Social Security works in general, and its likely future, check out “5 myths about Social Security.”)

Question: I just read your article. My mom and dad lived off his Social Security of approximately $1,600 per month. After he died at age 70 in 1994, my mom, also aged 70, only collected $600 per month from his Social Security. She had been a stay-at-home mom most of her life. Eighteen years later, she is still only receiving a little over $800 a month. How did this happen if she was entitled to his full benefit? Can you suggest help for her?

Answer: You mom definitely should talk with Social Security to see if she’s getting the correct amount. Her survivor benefits would have been reduced if she started them before full retirement age, but that doesn’t appear to be the case here. What might have happened is that they were living on his benefit plus her spousal benefit. When he died, she would have been switched to a survivor benefit that equaled his benefit alone. But it does seem like her benefit would be higher, in that case. She should call Social Security at 1-800-772-1213 and ask them to review her records to make sure she’s getting what she deserves.

Q: If I’m 64 now. If I waited until full retirement age (I’m a housewife with no Social Security benefit for myself) to get half of my husband’s retirement, would it change to his full benefit when he passes? Or will I be stuck with just 1/2 forever?

A: You should be able to step up to 100% of his benefit if he dies after you hit full retirement age (which is 66 for you). I’m not sure if the survivor benefit is affected if you should opt to start your spousal benefit earlier than that. But your spousal benefit would be reduced by up to 30%, so it’s generally worth waiting if you can.

Q: Read your article and enjoyed it but you had nothing for us who unfortunately had to stop work because of our health. I’m 62 and will be drawing my long-term disability till I’m 65 then it will stop. I also draw Social Security disability. How will this effect my Social Security when I reach age 65? Will my Social Security benefit go up? And what is this about drawing my social security but not till I’m 66? My husband is 15 years younger than I, so does that mean I will never be able to draw off of him? Where can I find out all I need to know about all this social security stuff that I just don’t understand? Any information would be greatly appreciated.

A: If you’re 62 now, then your full retirement age is 66, not 65. The full retirement age has gradually been increasing, and it will be 67 for those of us born after 1959. (You can check your full retirement age here.) As far as your Social Security disability benefits, when you hit full retirement age they’ll become your retirement benefits. You won’t need to take any action. You can find more details here.  Spousal benefits won’t be of much use to you, since your husband is so much younger. But starting at age 62, he should qualify for an amount equal to half your benefit if that’s more than his retirement benefit at the time.

Q: I am 60 and work full time. My husband passed 4 years ago at age 59. I thought that I can’t apply for his Social Security until I am 62 because I work.

A: You can get Social Security benefits if you continue to work. However, those benefits may be reduced significantly, or even eliminated, if you apply before your full retirement age. This is because of what’s called the “earnings test.” Basically, you lose $1 in Social Security benefits for every $2 you earn over a certain amount, which in 2012 is $14,680. (You get a break in the year you actually turn your full retirement age: the earnings test reduces your benefit by $1 for every $3 you earn over $38,880.) The earnings test disappears after you reach full retirement age.

If you earn enough money, the earnings test could wipe out any survivor’s benefit. That may be why you were told you should wait. You can apply for reduced survivor’s benefits as early as age 60 (50 if you’re disabled, and there’s no age limit if you have dependent children).

At age 62 you can switch to your own retirement benefit if you want, although your checks will be reduced because you’re getting the money before your full retirement age. Your benefit will be reduced further if you continue to work. That’s why it can make sense to wait until your full retirement age. This area is pretty complex, so it would be worthwhile to talk to an SSA rep.

Q: After my ex died, I applied for Social Security at age 62 1/2. The Social Security specialist I talked to used some formula, adding half of my benefits to half of my deceased husband’s, without giving me an explanation or a choice. I had been a low part-time earner. How can I find out if she acted in my best interest?

A: What I think happened is that the SSA specialist compared your (age-reduced) retirement benefits to the (age-reduced) survivor benefits based on your ex’s record and gave you the larger of the two. But the best way to check may be to call Social Security back and ask if you’re getting the maximum benefit for which you qualify. Also, if you’ve been getting survivor benefits, you may be able to switch to your own benefit at full retirement age, if that’s larger. (It may not be, if you were a low earner and your ex was a higher earner, but it’s worth checking.)

Q: I retired at age 59 on disability. Can I receive full retirement benefits now? I’m 70 now.

A: When you hit full retirement age (which for you would have been 66 years, 10 months), your Social Security disability benefits became retirement benefits. You can read more here, and call Social Security to confirm.

Q: If a person draws a benefit based on a divorced spouse’s earnings record, does the spouse have to be 62 years of age? Or does just the mom have to be 62?

A: Both parties have to be old enough to qualify for at least early retirement benefits, meaning age 62. If the dad in this scenario is old enough to apply for benefits but hasn’t applied, the mom can still do so as long as they’ve been divorced at least two years. Here’s a link to the rules. Remember that applying early permanently reduces your benefit, so it’s often better to wait until your full retirement age if you can.

Q: My sister is 63 and lives in North Carolina. She was on Social Security disability and lost all of her work benefits, including any insurance benefits. She received a small insurance claim for a car accident and the federal government is stating that because she received this settlement and still collected the SS benefit, she now owes them $13,000 and cannot collect another dime until that is all paid off. She lives on a very small amount of money each month, she is a diabetic and cannot get her medicine. Do you have any suggestions? Thanks so much

A: I’m not an expert in disability benefits, but I believe windfalls and earnings can reduce what you get. She may want to talk to a lawyer who specializes in Social Security disability to see what her options are. She can start with North Carolina’s Legal Aid.

Q: Someone I know is retiring after working for most of her life as a public service employee where they didn’t take Social Security out of their paychecks. For the last 15 years, though, she has been working in a retail job and has paid in her 40 hours into Social Security. She is 68 years old, is she eligible for Social security benefits?

A: If she’s got her 40 credits (not hours–you earn credits based on earnings and years worked, and you typically need to work 10 years to qualify for Social Security retirement benefits), then she should be eligible for some kind of check from Social Security. The amount will be based on her 35 highest-earning years, though, so she might have a lot of zero-earning years because she wasn’t covered by Social Security in her previous job. Also, since her previous job didn’t pay into Social Security, she’s probably eligible for some kind of benefit from that which also may reduce her Social Security benefits. She needs to call the SSA and find out what she might be entitled to. Click here to learn more about credits.

Q: My dad died before he started to receive Social Security. He was receiving disability due to cancer. My mom is disabled and receiving disability benefits, but has not yet reach full retirement age. Is it still possible for her to receive my dad’s Social Security benefit?

A: If your mom is disabled, she probably was eligible for reduced survivor benefits as early as age 50. (The age limit is 60 otherwise, if there are no dependent children at home.) Your mom should call Social Security and find out.

Q: My husband has been dead two years the 15th of this month. I work a full time job and make about $39,000 a year. Can I claim the $1,160 monthly benefit he used to get? I will be 64 in August.

A: You can’t get 100% of his full benefit if you claim it before your own full retirement age, but you should be able to get a reduced amount. The monthly benefit you could get depend on your age and the type of benefit you qualify for. You can call start your research here.

Q: My mom is retired and recently widowed, is she entitled to any of my father’s social security? They were married 49 years.

A: She may be able to receive up to 100% of his benefit, depending on her age and other factors. She wouldn’t be entitled to both a survivor’s benefit and her own retirement benefit, however. You can read more about the rules here.

Our credit cards worked in Europe. Mostly.

We just returned from 10 days in Italy, with a plane change in Zurich. After writing about the troubles some U.S. travelers faced using their credit cards overseas, I’m happy to report that we were able to use ours in most places with no problem at all.

Of course, we visited tourist-centric locales (Venice and Florence) where the merchants are used to seeing our old-fashioned magnetic stripe credit cards. Our U.S.-style cards are less secure than the “chip and PIN” model embraced by other countries, but restaurant staffs and shop clerks accepted them without a fuss.

There were a few exceptions:

  • We were out of luck when it came to the automated kiosks at most vaporetto (water bus) stops. As I wrote in my column, such kiosks require the more secure cards. We brought our British Airways card, which is a “chip and signature card,” but that proved useless. Without a PIN, the card wouldn’t work at automated kiosks. (U.S. debit cards wouldn’t work, either.)
  • A few merchants insisted on cash. I ended up withdrawing more money than I expected from ATMs, and ran into a glitch there—turns out the 250 euros I kept trying to withdraw equaled more than my daily limit. Once I got the currency math right, I was able to get cash when I needed it at a decent exchange rate—which was somewhat offset by the $5-a-pop transaction fee.
  • The bad guys in Europe were quick to exploit our less-secure technology. Two days after we returned, somebody used our Capital One card to make three fraudulent charges of $442.58 each in the Netherlands. Fortunately, users aren’t responsible for fraud on their credit cards. For exactly that reason, I wouldn’t use our less-secure debit cards anywhere but an ATM attached to a bank branch. I don’t want to give the scamsters access to my bank account.

For our next trip, I might arrange to get a true chip-and-PIN card, like the one Diners Club now offers its members. Another option is the prepaid Cash Passport card. Or maybe, by then, U.S. issuers will get with the program and make true chip-and-PIN cards available here. I can dream, can’t I?

Which cars retain their value the best?

If you buy cars and then drive them until the wheels practically fall off–as I usually do–then you don’t need to worry much about “retained value.” You can take pride in squeezing all the value out of your vehicle before it’s hauled off to the dump. If you plan to trade in a car at some point, though, it can make sense to pay attention to how well the value of that make and model holds up over time.

Edmunds.com just released its 2012 Best Retained Value Awards, to single out the cars that depreciate less over time. Honda and Acura are the top brands, while Ford had the most model-level awards. You can see the complete list, complete with runners-up, here.

Most investors under 50 plan to work in retirement

A new T. Rowe Price survey shows seven out of 10 investors aged 21 to 50 plan to work at least part time during their retirement years, and most (75%) will do so because they want to stay active. Only 23% expect to work out of necessity, because they won’t have saved enough.

T. Rowe Price has been surveying the investment practices of Generation X (defined as people aged 35 to 50) and Generation Y (ages 21 to 34).  Harris Interactive conducted the poll in December, surveying 860 adults aged 21-50 who have at least one investment account.

Gens X and Y are following in the path of the Baby Boomers, a majority of whom have told pollsters over the years that they plan to continue to work. The percentages who expect to do so by choice vary with economic conditions, but the polls show a new vision of an active retirement has emerged, said Christine Fahlund, CFP®, senior financial planner with T. Rowe Price.

Continuing to work into your 60s, if you can do so, can have hugely positive effects on your finances as well, even if you cut back on saving for retirement.

From T. Rowe Price’s press release:

“We believe that beginning to incorporate more leisure in your 60s, when you’re still likely to be in good health can be a fun way to make the transition from work to retirement easier,” she added.  “By working a little longer and playing, investors can maintain earned income to fund their activities, hold off on tapping their nest eggs earmarked for retirement, and defer taking Social Security payments.  Delaying Social Security, in particular, positions people to have potentially considerably higher guaranteed payments – adjusted annually for inflation – for the rest of their lives.”

If you want to read more about how you can work longer and have fun, too, read “Retire without quitting your job.”

News you can use right now

Here’s a round-up of good recent stories tied to Tax Day (deadline’s tomorrow) and one of my favorite topics, credit scores.

Can’t pay? Amy Feldman’s article “What if you can’t pay your taxes?” for Reuters walks you through what to do if you’re facing a big bill, rather than a refund. Bottom line: don’t ignore the problem.

Tax liens and credit scores. The IRS has many ways to make your life miserable if you don’t pay your taxes. One weapon used by the IRS and other tax authorities is the tax lien, which can trash your credit scores and which is one of the few negative items that can show up on your credit report indefinitely if you fail to pay. Learn more from Tom Quinn’s column “Not paying your taxes can hurt your credit score” on Credit.com.

Plan to buy a car with your refund? If you’re one of the many getting money back from Uncle Sam and considering using it to buy another car, beware. Dealers know you’re coming, and you don’t want to have a big red target on your back. “Dealers are well aware that buyers may suddenly have an influx of cash on hand this time of year, so it’s not uncommon to see promotions and offers tied to tax season,” says Carroll Lachnit, Consumer Advice Editor at Edmunds.com. “And while there are good deals to be had on new cars, we strongly encourage consumers to take advantage of every research tool at their disposal before they plunk down their refunds as down payments.” For more, read Edmunds.com’s “Do your research before spending tax refund dollars at the car dealership.”

Good credit scores and a fat down payment may not be enough. You’ve heard that it’s harder to get mortgage these days, but you might be surprised at how much harder it is. Real estate columnist Kenneth Harney details the average FICO scores, down payments and debt-to-income ratios of those who did and didn’t get a mortgage in February. Most shocking: the group that got turned down had numbers that would have made them great candidates for loans just a few years ago.

Unexpected ways to better your numbers. Speaking of credit scores, Daniel Bortz wrote “6 surprising ways to boost your credit score” for U.S. News. I’m quoted, along with Beverly Herzog of Credit.com, Bill Hardekopf of LowCards.com and Anthony Sprauve of FICO.

 

How I outsource my life (Part III)

The homes in our Los Angeles neighborhood tend to have small back yards. We’ve struggled to make ours liveable for most of the 14 years we’ve been here. We wanted to have space to entertain and relax, as well as room for our dog to run and our daughter to play. What we wound up with was an awkward mash of concrete and brick, overgrown plants and a “grassy” area that was slowly dying, thanks to said dog. In a place with beautiful weather year-round, we rarely ventured into our own back yard to enjoy it.

We liked the concept of expanding our living space with an “outdoor room,” but weren’t quite sure how to pull it off.  My husband’s a skilled artist and designer, while I’m an amateur gardener, but we didn’t really have the skill set to create a functional, attractive space. We’d interviewed a few landscape designers, but their visions collided with my basic frugality. I really couldn’t stomach the idea of spending $40,000 to $50,000 on a few hundred square feet of yard. Ripping out everything that was already there, and replacing it with all-new materials, didn’t seem very environmentally friendly, either.

Enter Karen Miller, CEO and principal designer of Sacred Space Garden Design. She had a $40,000 vision as well, but she didn’t balk at scaling back to fit what we were comfortable spending, which was about $10,000. Even better, she was willing to collaborate. If we didn’t like an idea or wondered about an alternative, she was happy to toss around the possibilities with us.

We wound up expanding the brick to create a bigger entertainment area. Now we have flexible seating around a firepit, and everything’s moveable, so we can create new arrangements. A burbling fountain surrounded by potted plants provides a focal point we can see from the house. Not only is it a nice view, but it draws us outside. Our daughter’s Play-Well swing set stands in a field of rubberized mulch. She uses it daily; part of every playdate with her friends is spent swinging or swooping along the monkey bars.

Karen retained most of the plants we had, but trimmed them back and added new plants to give more color and contrast to the yard. She added succulents as well, and everything is on automated drip lines so I don’t have to worry about watering. We eliminated the grass entirely, and the small stretch between the brick and the playground is planted with elfin thyme, which is supposed to expand and fill the area. It’s still not clear, though, whether the thyme can survive the dog. If not, we may have to switch to a hardier surface.

All in all, we love our new space. We’re actually using our backyard regularly, instead of ignoring it. The money we spent adds some value to our home, but more importantly, it added value to our lives.

This is the third in a series about how I’ve outsourced certain parts of our lives. In Part I, I wrote about how we used a car concierge service to buy a new car. In Part II, I wrote about hiring a wardrobe consultant to help me sift through my closet and find flattering outfits.

Beware your financial planner

Financial planner Allan Roth has a pretty good piece in the latest issue of AARP the Magazine on “The Two Faces of Your Financial Planner” (renamed “How to Choose Your Financial Planner,” a much snoozier headline, in the online version). Although it’s geared for older readers, it should be read by anyone who gets professional advice. The piece discusses the inherit conflicts of interest with every method of compensation, from commissions to assets under management to hourly, and points out that the people you trust with your money may not be worthy of that trust:

My point is this: Bad advice is epidemic in my industry, and it doesn’t come only from villainous fraudsters such as [Bernie] Madoff. It also comes from pleasant, empathetic folks who are merely responding predictably to my industry’s perverse incentives and self-serving ethical standards.

We financial planners are masters at persuading ourselves that what’s in our best interest also happens to be the moral thing to do. By and large, we’re good people, which is why we can be so convincing — and so potentially dangerous to your money.

The conflicts inherent in a commission-based model are pretty apparent. If a planner gets a big payday when you buy a specific investment, but less of a payday or none at all if you buy another, that’s a pretty good incentive to rationalize putting you in the investment that will do the most good for him or her.

There are also conflicts that come with the hourly model (the potential to run up the bill) and the assets-under-management model, although I don’t quite agree with the example Roth uses: “That’s why few of us will ever tell you to pay off your mortgage: Using $100,000 to discharge a loan rather than investing it could cost us $1,000 a year in fees.” Actually, the reason fee-0nly planners typically don’t recommend mortgage prepayment is that most people have much better things to do with their money than pay off a low-rate, tax deductible loan–things like catching up on their retirement savings, paying down every other debt and making sure they’re adequately insured, among others.

The article offers some excellent advice for how to get the best money advice, including checking credentials, refusing to commit to a plan or investment on the first meeting, asking what the penalties are if you want your money back from an investment and requesting the planner to put in writing why he or she thinks an investment is suitable and the total cost you’ll be paying.