How a lifetime income annuity works

NEW YORK (Money Magazine)

When the topic turns to annuities, people's eyes glaze over, their heads nod and before long they're in a deep slumber.

To avoid that reaction (I hope), I'm going to try a different approach to explaining how annuities provide income income for life -- and why anyone retired or on the verge of retirement might want to consider buying one.

Imagine for a moment that you're 65, retired and you want some of your savings to provide a secure income throughout retirement. And let's further assume that you have a bunch of 65-year-old friends who want the same thing.

So you form a group and agree that each of you will kick in the same amount of money -- $10,000, $100,000, whatever -- to an investment account and share equally in however much that account earns.

To increase your income from the pool, you and the other members also decide to distribute some of the principal each month, taking care to apportion it slowly so the account doesn't run dry too soon.

Finally, you and your compadres agree to one more condition: Whenever someone dies, the earnings and the principal draw that would have gone to the deceased are instead divvied up among the surviving members, providing them with extra income they wouldn't have had without this arrangement.

Related: 3 steps to creating a retirement plan

Well, a lifetime income annuity (or immediate annuity as it's also known) you buy from an insurance company works much the same, with a few important differences.

For one thing, income annuities cover not just a small group of people of the same age investing the same amount of money, but tens of thousands of people of different ages (though they tend to be in their 60s or older) investing a variety of amounts.

Another big difference concerns the monthly payments one receives. In the arrangement above, the payouts can't be fixed in advance. After all, the group doesn't know how much the investment account will earn each month, nor when members will die, providing survivors with that extra income.

Insurance companies, by contrast, will tell you in advance how much an income annuity will pay each month. They can do this because they have actuaries who use mortality statistics to project how many annuity owners will die each year and investment analysts who forecast investment returns. That allows insurers to set in advance a sustainable level of payments.

Related: Why rules of thumb don't always work

But perhaps the biggest difference is that no group of individuals pooling and investing money can guarantee that its members will continue receiving payments regardless of how long they live. There's always the risk that a few group members will make it to such an advanced age that the pool of assets will be exhausted while they're still alive. (Yes, the group could make the payments so tiny that the chances of the money running out are minuscule. But then the income all but the longest-lived members stood to receive wouldn't be very attractive.)

Insurance companies, however, can make that guarantee.

The reason is that state insurance regulators require insurers to set aside reserves to cover any shortfalls in the event insurers' actuaries and investment analysts miss the market with their forecasts.

Is that guarantee absolute? Of course not. There's always the risk that an insurer could fail. But historically that risk has been very small.

And there are ways to protect yourself against even that slim possibility. Specifically, you can spread your money among a few annuities issued by insurers with high financial strength ratings and limit the amount you invest with any single insurer to the maximum coverage offered by the insurance guaranty association in your state.

The bottom line, though, is that an income annuity offers something that no other investment can -- insurance against the risk of outliving your money.

However, since you must give up access to the money you invest in an annuity, you don't want to put all your retirement savings into one. (There are annuities that allow you at least some access to your investment, but you'll receive less income and undermine the benefits of buying an annuity in the first place.)

Related: How to make your retirement savings last

That's why I think most people who want more guaranteed lifetime income than Social Security alone can provide ought to consider combining a lifetime annuity with a traditional portfolio of stock and bond mutual funds.

If you'd like an estimate of how much monthly income you can receive today based on your age, gender and the amount you have to devote to an annuity, you can check out our Income For Life calculator.

The size of annuity payments depends in large part on the level of interest rates. So given today's low rates, annuity payments are skimpier than they've been in the past.

Some people argue that that means you should wait until rates rise before buying an annuity. But trying to time the market for annuities makes no more sense than attempting to time the stock market.

A better move is to invest any money you intend to put in annuities gradually, buying a few over time rather than plunking down all your cash at once. Besides assuring that you don't commit all your dough when rates are at a trough, such a strategy will also give you some time (and experience) to better assess just how much annuity income you really need.

I hope this explanation gives you a better understanding of how annuities work and helps you decide whether one should play a role in your portfolio after you retire. If not, then maybe you at least had a nice snooze.

First Published: March 6, 2013: 6:00 AM ET

04.32 | 0 komentar | Read More

Get your kid to graduate in 4 years

To graduate on time, see that your child takes at least 15 credits per semester.

(Money Magazine)

You should be so lucky.

Most students take five to six years to earn an undergraduate degree, the Department of Education reports. That adds about $35,000 to the sticker price of attending a typical in-state public university and much more to the cost of most private colleges.

These moves will help your child get to the finish line in four years.

Pick a supportive school

Colleges with much-better-than-average graduation rates -- look for 50% and up at public colleges, 70% at private schools -- often have adopted strategies to help students finish in four years, says Tom Sugar of Complete College America, which works to boost the number of Americans with degrees.

Related: Colleges offer four-year graduation guarantees

Among them: capping graduation requirements for most majors at 120 credit hours; making sure students aren't crowded out of required courses; and identifying kids in danger of falling behind early on and assigning advisers to help them.

Still unproved are the graduation "guarantees" that a growing number of schools offer -- essentially, if your kid doesn't earn a degree in four years, the remaining tuition is on us. Be skeptical, Sugar says.

To identify schools with superior track records, search for your target college's four-year grad rate at collegeresults.org. Then hit the "similar colleges" tab to find competitors with better outcomes.

Don't lighten the load

Your student's first college math lesson: Divide the 120 credits typically required for graduation into eight academic semesters, and he'll see that he needs to take at least 15 credits per semester, not the minimum 12 usually allowed.

To make sure Junior has plenty of time for academics, have him limit jobs to 12 hours or less a week.

Related: Guide to college savings plans

Changing majors, which can involve a new set of required courses, may also set a student back. A possible solution: Go with a related major that will accept many of his existing credits.

Get back on track cheaply

If a change of major or overcrowded courses threaten to delay graduation, your child may be able to fulfill requirements by taking summer or community college classes or a growing number of accredited online tests and courses.

Hundreds of colleges give credit for passing grades on the College Board's 33 College Level Examination Program (CLEP) tests or the competing DSST's 38 exams. Cost: $80 per test.

Traditional colleges have been slow to grant credit for online or alternative tests or courses, so students should check with their registrar and department head before committing time or money to an off-campus class.

How the biggest schools stack up

Four-year graduation rates at the nation's largest colleges vary widely. Opting for a school where most students get their degree on time can save thousands.

Largest private colleges for "A" students
	School Name	Four-year grad rate	Annual cost of attendance	% getting grants
	Notre Dame	90.0%	$57,800	61%
	Georgetown	88.9	60,100	51
	U. of Pennsylvania	88.6	59,600	48
	Boston College	87.2	59,000	47
	Harvard	87.1	59,000	70
	Duke	86.8	59,300	54
	Northwestern	86.3	60,840	56
	Cornell	85.9	59,600	55
	Washington U. (St. Louis)	85.9	62,600	48
	Vanderbilt	85.1	61,600	61
	Columbia	84.6	62,600	53
	Emory	82.4	58,200	57
	New York University	79.3	62,900	55
	Stanford	78.4	59,800	60
	U. of Southern California	71.7	60,000	62
Largest private colleges for "B" students
	School name	Four-year grad rate	Annual cost of attendance	% getting grants
	Syracuse	71.6%	$55,600	71%
	Loyola Marymount	71.1	56,900	86
	Quinnipiac	69.9	54,000	84
	Ithaca College	69.5	53,600	88
	Duquesne	63.3	42,800	100
	U. of St. Thomas	61.2	46,600	97
	U. of Dayton	58.1	46,200	98
	U. of San Francisco	55.8	56,600	70
	Texas Christian U.	54.1	48,300	69
	Baylor	50.4	51,200	96
	Howard	47.8	41,500	68
	DePaul	47.6	47,000	88
	The New School	47.4	58,100	97
	Hofstra	43.8	54,000	91
	St. John's (New York)	36.4	55,500	95
Nation's largest public universities
	School name	Four-year grad rate	Annual cost (in-state)	% getting grants
	U. of Ill. Urbana-Champaign	67.4%	$29,000	46%
	Penn. State (main campus)	62.3	28,100	37
	U. of Florida	59.4	20,600	98
	U. of Wash., Seattle	53.9	26,100	33
	U. of Texas, Austin	52.5	24,900	54
	Florida State	50.2	21,000	95
	U. of Wisconsin, Madison	49.7	24,200	55
	Indiana U., Bloomington	49.5	23,100	53
	Ohio State (main campus)	48.6	24,900	70
	Michigan State	48.5	24,700	48
	Texas A&M	46.2	20,900	61
	U. of Minnesota, Twin Cities	45.8	24,700	88
	Perdue (main campus)	38.1	23,500	47
	U. of Central Florida	34.8	20,300	95
	Arizona State	32.3	23,000	83

NOTES: "A" schools reported their students scored an average of at least 1300 on the math and reading SATs (90th percentile and up); "B" schools reported their students scored 1080 to 1200 (61st to 80th percentiles). Costs are for 2012--13 and include tuition, fees, room, board, books, travel, and miscellaneous expenses; percentage getting grants includes scholarships.
SOURCE: Collegeresults.org, Department of Education, individual colleges

First Published: March 6, 2013: 6:03 AM ET

04.32 | 0 komentar | Read More

Microsoft hit with $730 million antitrust fine by EU

LONDON (CNNMoney)

The EU warned the software giant last October that it faced a hefty fine after an antitrust investigation launched in July found Microsoft (MSFT, Fortune 500)had breached a five-year commitment to give European customers a choice about which browser to use.

"Legally binding commitments reached in antitrust decisions play a very important role in our enforcement policy because they allow for rapid solutions to competition problems," said Joaquin Almunia, the European Union's top antitrust official. "A failure to comply is a very serious infringement that must be sanctioned accordingly."

This is the first time the European Commission has imposed sanctions for a breach of a legally-binding commitment made in the context of an antitrust investigation. Almunia said the size of the fine should act as a deterrent to others.

Under the pledge, dating back to 2009, PC users setting up Windows for the first time were supposed to see a "choice screen" offering 11 different browsers, including Microsoft's own Internet Explorer. The prompt disappeared following an update to the Windows 7 operating system in February 2011, depriving 15 million users of a choice.

Related: Microsoft's Surface Pro: More security blanket than tablet

Microsoft has apologized for what it described as a "technical error," which lasted 14 months to July 2012. The company said it fixed the problem as soon as it was made aware of the error.

The U.S. company has a long history of legal battles with the EU. In the last 10 years alone Microsoft has been fined over 1.6 billion euros for abusing its dominant position in the market for PC software.

Microsoft faced similar antitrust lawsuits in the United States in the 1990s and early 2000s over its tactic of using its dominant position with Windows to promote its Internet Explorer browser over rivals like the now-defunct Netscape Navigator.

Since then, Microsoft's share of the browser market has fallen sharply as alternatives such as Google (GOOG, Fortune 500)'s Chrome and Mozilla's Firefox have grown in popularity.

Still, Wednesday's fine could have been significantly larger. The EU has the power to impose fines of up to 10% of annual revenue, or about $7 billion in Microsoft's case.

Microsoft is not alone in facing intense scrutiny by EU antitrust authorities. Google is still waiting for the outcome of a three-year probe into its search business, despite being cleared in January in a similar U.S. investigation.

And EU data protection authorities said last month they would take action against Google unless the company moved to allay concerns about the privacy of user data.

First Published: March 6, 2013: 7:02 AM ET

04.32 | 0 komentar | Read More

Home prices finally returning to normal

NEW YORK (CNNMoney)

The latest forecast from Fiserv (FISV)Case-Shiller predicts home prices will increase by an average of 3.3% annually over the five years ending September, 2017.

Home prices: Biggest winners and losers

These cities will see the biggest swings in home prices through the 12 months ending September 30, according to Fiserv's estimates.

Medford, Ore.	9.7%
Santa Fe	8.1%
Billings, Mont.	5.5%
Syracuse, N.Y.	5%
Yuma, Ariz.	4.8%
Orlando, Fla.	-8.3
Merced, Calif.	-8.5%
Riverside, Calif.	-8.6%
Warren, Mich.	-9%
Miami	-10.7%

Source: Fiserv

"2012 was the first year since 1997 that the housing market has resembled something [close to] normal," said David Stiff, Fiserv's chief economist. "For the past 15 years, home price changes and sales volumes have either been boosted by a bubble mentality or crushed by crash psychology."

From 1998 until the housing bubble peaked in 2006, home prices grew by 5% or more a year. But once the bubble burst, home prices plunged, falling 30.5% through the end of September 2012.

Related: 10 great foreclosure deals

It wasn't until late 2011 that markets started to stabilize, according to Stiff. Between September 2011 and September 2012, average U.S. home prices rose 3.6%. By then, 62% of the 384 metro areas Fiserv tracks reported rising home prices, up from just 12.5% of all markets during the same period a year earlier.

Many of the metro areas hit hardest by the housing bust recorded the biggest price gains during those 12 months. In Phoenix, for example, prices climbed back by nearly 21%; prices in Detroit rose almost 16%; and homes in San Jose, Calif., gained 12.5%.

Values continued to decline on Long Island, N.Y., however, where prices fell 8.1% and where Stiff said the turnaround in median income lagged the rest of the nation by about a year. Brunswick, Ga., also saw declines, down 7.1%, as did Valdosta, Ga, off 6.9%. Both areas saw jumps in foreclosures.

See your local market forecast. 384 markets tracked.

By the end of this year, Fiserv predicts that home prices will be heading higher in almost every metro area it tracks. Medford, Ore., is expected to gain 9.7% in the 12 months through September, the highest of any city. Other big gainers are expected to be Santa Fe, N.M., up 8.1%, Billings, Mont., 5.5% and Syracuse, N.Y., 5%.

Fiserv expects Miami home prices to sustain a 10.7% loss over the same period, the largest drop of any market. Stiff said a steady stream of foreclosures will keep prices soft in the area during that time.

Related: Zombie foreclosures: Debts that won't die

While Stiff said home price gains will be similar to those experienced back in 1997, he noted the similarities stopped there. Currently, millions of homes are either in foreclosure or on the verge of it.

Otherwise, there are many positive trends in today's market, he said. Prices are extremely affordable and mortgage rates are at or near historic lows. Overall, Fiserv Case-Shiller expects stronger demand for housing, and the sector should, once again, have a positive impact on the economy.

First Published: March 5, 2013: 6:29 AM ET

04.32 | 0 komentar | Read More

How to ask a pal or relative to pay you back

(Money Magazine)

The best way to avoid this awkward conversation?

"Don't lend money to friends in the first place," says Peter Post, director of the Emily Post Institute. Of course, that advice isn't going to help if you've already ponied up the cash. Here's what will.

THE GROUND RULES

Talk in person. Don't text, email, or call; faceless communications are too easily misread. Instead, invite your friend or family member to chat over coffee or a beer so the atmosphere is more relaxed, says Randy Cohen, author of Be Good: How to Navigate the Ethics of Everything.

Let the relationship guide you. Decide what's more important: getting your money back or staying on good terms with the borrower. If you care more about the person than the cash and you're in a position to do so, you may be better off forgiving the debt.

YOUR BEST APPROACH

1. Opening gambit. "I was happy to lend you the money when you needed it. That's what friends do."

The strategy: You're gently reminding your pal that you came through when he or she was in trouble.

"Putting it this way shows you sympathize with your friend," says Cohen. "Chances are, the person feels bad about not paying you back. An understanding tone decreases your chances of a hostile response."

2. Be direct. "When do you think you will be able to pay back the $500 I lent you?"

The strategy: Hinting will get you nowhere, says Philip Galanes, author of Social Q's: How to Survive the Quirks, Quandaries, and Quagmires of Today, because the person may misunderstand (perhaps willfully) what you're asking.

Like ripping off a Band-Aid, the process will be less painful if you do it quickly and directly.

Related: How to tackle your spouse's overspending

Start off nicely; getting angry is more likely to result in the borrower pushing back than if you stay calm.

"There's no sense in starting Defcon 3," Galanes says.

3. Add urgency, as needed. "We're going to get hit with some really big tuition bills soon and could really use that money."

The strategy: Of course, you don't need to justify asking for your money back, but it can be helpful to cite a pressing reason -- as long as it's true.

"Evoking a specific thing makes repayment seem more like a necessity than simply an option," says Cohen.

4. Provide a deadline. "I'd really like to get the money back before the end of June."

The strategy: Specifying a schedule for payback is crucial. Otherwise, the loan may hang out there indefinitely, even if the borrower has given lip service to paying you back -- and you'll just have to revisit the conversation at a later date.

5. Offer flexibility. "Would it be easier for you to pay me back over time, say, $100 a month?"

The strategy: If the borrower pushes back or you know he will have a tough time coming up with the cash, etiquette expert Cynthia Lett suggests breaking repayment into smaller chunks or reaching another compromise.

After all, you must really care about this person; otherwise, you would never have lent him the money.

First Published: March 5, 2013: 6:32 AM ET

04.32 | 0 komentar | Read More

Former Madoff employee still out of work

NEW YORK (CNNMoney)

But that trading desk was part of Bernard Madoff Investment Securities. And when Madoff went down in 2008, so did Ward's career.

"I realized that there was a good chance that professionally I was in a really deep hole," Ward said.

After 8 years working as a portfolio manager for the legitimate side of Madoff's business, Ward found himself out of a job -- and with a big stain on his resume.

Ward claims he knew nothing about Madoff's Ponzi scheme. He worked on the 19th floor of the now infamous Lipstick Building in Manhattan with a few dozen other traders. He didn't work directly with private investors, but instead made trades on behalf of the firm.

Bernie's son Mark -- who disclosed the Ponzi scheme to the SEC and later committed suicide -- was Ward's boss.

It was on the 17th floor, which Ward said he visited only a few times, where Bernie Madoff was supposed to be investing customer assets for a fee. Of course, now we know he was simply stealing their money.

Ward says he never saw the statements that Madoff sent clients, which consistently listed double-digit returns. If he had, he says he would have known something was off.

"I could have probably recognized right away that it was erroneous and fraudulent," he said. "But unfortunately, in my position, I was never given access to that type of thing."

Related: Banks fined for Libor rigging

With a crook's name on his resume, Ward found it difficult to land a new job. He says he's looked extensively in the financial industry, applying to over a hundred jobs and going on about 25 interviews in the last few years. He claims to have cast a wide net, exploring positions in retail and at Starbucks -- and even had a short, futile stint in real estate.

But after leaving Madoff, Ward felt an "overwhelming desire to be absolutely honest and straightforward. [And] real estate brokerage is a tricky business."

Ward's not sure if his struggles are due to the Madoff name or the poor economy ... or both.

"Businesspeople like what I brought to the table, but the HR people took a look at it and said, 'You know, there's a lot of qualified candidates out there, why would we take a risk on a guy who worked at Madoff and might go to jail?'," he said.

Related: Wall Street bonuses rise as jobs decline

Four years after Madoff Investment Securities collapsed, Ward is living in a studio apartment in Queens. "There's no such thing as a bad job to me right now," he insists, but also believes he still has a lot to offer the financial industry.

"Maybe I was not as open-minded as I should have been at first," he said. "So if I could do it over again, I certainly would have been much, much more proactive."

For more on Ward's story, watch the full video.

CNN's Zain Asher contributed to this report.

First Published: March 5, 2013: 6:37 AM ET

04.32 | 0 komentar | Read More

Gay community surprisingly optimistic about financial future

Many LGBT investors are optimistic about their financial futures, but there is much confusion about the benefits same-sex couples can and can't receive.

NEW YORK (CNNMoney)

Two-thirds, or 66%, of LGBT investors are optimistic about their financial futures, compared to just half of the overall adult population, according to a Wells Fargo survey of more than 1,000 respondents. Meanwhile, 59% of LGBT investors say they are comfortable financially, compared to 51% of the overall adult population.

"The advancements the LGBT community has made in the last five to six years -- and especially the last couple of years -- have led to a higher degree of optimism," said Kyle Young, a financial advisor and vice president for Wells Fargo Advisors. "But there's a lot of misinformation and uncertainty about what [same-sex] couples can and can't do from a financial planning standpoint."

Related: Same-sex couples denied thousands in Social Security

Because of the Defense of Marriage Act, a 1996 law that defines marriage as solely between a man and a woman, same-sex couples are currently unable to receive more than 1,000 federal benefits. Among the disadvantages: they can't file their taxes jointly, owe more in estate and gift taxes and don't qualify for spousal Social Security benefits.

Yet the survey revealed a lack of awareness concerning the financial repercussions of the law.

Only a little over half of LGBT respondents realized that same-sex couples don't receive spousal Social Security benefits, Wells Fargo found. And just 36% knew that same-sex couples are taxed differently on assets (including real estate, life insurance and retirement savings) transferred upon the death of a spouse or partner. While heterosexual spouses are exempt from estate tax when a spouse dies, surviving same-sex spouses must pay a 45% tax on assets over $5 million.

Related: 'What legalizing gay marriage means for our money'

This confusion is often a result of the false sense of security that state-level marriages, domestic partnerships and civil unions can create for same-sex couples, said Young.

"After years and years of no relationship recognition, the fact that you now have some recognition [with more states legalizing marriages, civil unions and domestic partnerships], some people misunderstand what that really means and think they have the full benefits of marriage," said Young.

Some of the confidence within the LGBT community may therefore be "misguided," and would be lower if there was more understanding and awareness about the different financial issues that arise for same-sex couples due to DOMA, said Young.

But on the other hand, a certain amount of optimism is justified given the growing momentum behind the gay rights movement over the past year -- especially with the Supreme Court's decision to rule on the constitutionality of DOMA for the first time this summer.

Related: Gay marriage case - the financial benefits at stake

In late February, the Obama administration filed a legal brief with the Supreme Court in support of gay marriage, and a group of prominent Republicans even called on the court to overturn DOMA. In addition, dozens of large, national corporations including Apple, Facebook and Morgan Stanley also urged the court to legalize gay marriage.

A high 92% of respondents in Wells Fargo's survey believe that they will be granted the same financial rights as opposite-sex married couples within their lifetime, with 43% believing this will happen in the next three years.

First Published: March 4, 2013: 6:12 AM ET

04.32 | 0 komentar | Read More

More people look for love at Wal-Mart

Wal-Mart is the most popular place for people in 15 states to find love at first sight, according to a Craigslist missed connections study by Psychology Today magazine.

NEW YORK (CNNMoney)

A study of "missed connection" posts on Craigslist, where love-struck hopefuls try to track down and win over a stranger who caught their eye, found that Wal-Mart (WMT, Fortune 500)is the most popular place for people to find love at first sight, according to Psychology Today magazine.

It could be the halo of fluorescent lights, the everyday low prices, or maybe a shared glance in the check-out line. Whatever it is, more people thought they saw their future spouse at a Wal-Mart than anywhere else in 15 states.

Related: Wal-Mart, the $200 billion grocer

The thread ran from West Virginia to Texas in the south and Idaho in the north, based on the magazine's analysis of missed connection posts.

Not all connections happened at Wal-Mart, of course.

In New York, the most frequently cited spot was the subway, and in California, the popular gym chain 24 Hour Fitness.

Related: Be mine, zombie teddy bear

Age also plays a role. The most common place for missed connections for 20-somethings was an ice cream store. At 30, it was a bar, and for people over 40, it was a strip club or adult bookstore.

First Published: March 4, 2013: 6:15 AM ET

04.32 | 0 komentar | Read More

Hotels getting stingier with rewards programs

Hilton, Marriott and Starwood -- which owns luxury chains including the Westin and W hotels -- have all announced changes to their loyalty programs.

NEW YORK (CNNMoney)

Hilton, Marriott (MAR, Fortune 500) and Starwood (HOT, Fortune 500) -- which owns luxury chains including the Westin and W hotels -- have all announced that they will raise the number of points needed to stay at many of their properties.

Hilton will nearly double the points needed to stay at its most popular locations during peak seasons. Marriott, which also operates Ritz Carlton, will increase the points needed to stay at more than 1,000 of its hotels in the United States and abroad after May 15, according to a company document.

Starwood, meanwhile, will change one of its popular programs by hiking the combined points and cash needed to stay at the majority of its hotels by 25%.

When the changes go into effect in coming months, all the points that loyalty program members have racked up through hotel stays and credit card purchases will immediately drop in value.

"Now that it's time to redeem them, consumers are finding it's going to take a lot more than they thought to get that resort hotel," said Brian Kelly, a travel expert who offers consumers advice on hotel and airline rewards on his site Thepointsguy.com.

Related: Beach deals: Cheap fun in the sun

Starting Tuesday, a Starwood member will need to rack up $5,000 worth of points and pay an extra $180 to book a night at the Washington D.C. St. Regis through the chain's "Cash & Points" redemption program, which requires fewer points than the standard program. Before the change, a traveler would have needed to cash in on $4,000 worth of rewards spending and pay an extra $150.

Starwood said in its announcement that the changes to this rewards program will open up international locations and upgraded rooms like suites to more members. Starwood could not be reached for comment.

A night at the Boston Marriott Long Wharf booked after May 15 will require $4,500 worth of regular rewards spending, compared to $4,000 now. The changes are based on hotel popularity and pricing changes in various markets, said Marriott spokeswoman Laurie Goldstein. She added that the company made sure to give rewards members months of advance notice so they could get bookings in under current point levels.

And starting March 28, a night at the Hilton Doubletree Suites in New York City's Times Square will require between $4,666 and $6,333 in rewards spending, up from $3,333.

The jump is most drastic at the chain's most popular hotels during popular travel seasons. On the bright side, Hilton said it would also add a fifth night free for its elite members. Hilton could not be reached for comment about the changes.

Related: Absurd airline fees

As hotel loyalty points become increasingly less valuable, Kelly said that both business travelers and everyday consumers should consider other options, from deep discount sites like Priceline.com to home rental sites like Airbnb.

"I always tell people to do the math," he said. "The whole point of points and loyalty is to save money."

First Published: March 4, 2013: 6:17 AM ET

04.32 | 0 komentar | Read More

Obama signs order triggering spending cuts

NEW YORK (CNNMoney)

Known officially as sequestration, the president's order canceled $85 billion in federal funding over the next seven months.

As required, the White House budget office also sent to Congress a report detailing the magnitude of cuts that federal agencies will have to make.

In aggregate, defense spending must be cut by 13% over the next seven months and nondefense programs must be cut by 9%. Those percentage cuts will apply to all non-exempt programs, projects and activities.

(Related: 4 myths about the cuts)

In dollars, the spending reduction must be split evenly between defense and nondefense -- as a result, each category will lose nearly $43 billion in funding.

Some key areas of spending will be protected from the budget ax -- most notably military personnel, Medicare and Social Security benefits, as well as Medicaid and food stamps.

The funding reductions would come primarily from what's known as discretionary accounts, which make up the smallest part of the overall federal budget, accounting for a little over a third of all spending.

Discretionary spending supports a vast array of federal agencies from the FBI to the FDA to the National Transportation Safety Board, as well as education programs across the country.

The actual dollars cut from these and other areas varies widely since their normal funding levels do as well.

Navy operations and maintenance, for instance, will take a nearly $3.5 billion hit. National Science Foundation research funding will drop $290 million. The Nuclear Regulatory Commission will lose $52 million. And the Affordable Housing Program will see its budget cut by $10 million.

Few would dispute Obama's characterization of the cuts. In fact, it's one of the few things about the so-called sequester that Democrats and Republicans agree on. They failed to agree on how to replace them, however.

Both chambers of Congress passed the sequester as part of the deal that put an end to the ugly fight over the debt ceiling in 2011.

(Related: When the cuts will really bite)

The cuts were designed to be so distasteful that they would spur lawmakers to approve a smarter approach to deficit reduction. But they've failed to do so.

The cuts will result in many if not most federal workers furloughed for some period of time. And federal contracts and grants will be curtailed or not renewed. That, in turn, will create delays in services, travel hassles, less border security, fewer food inspections, interrupted medical research and less disposable income that has buoyed local communities.

Such ramifications will deliver a blow to economic growth, but not a fatal one -- a point the president acknowledged Friday.

"Even with these cuts in place, folks all across this country will work hard to make sure that we keep the recovery going. But Washington sure isn't making it easy," Obama said.

(Impact: IRS furloughs to spare tax season)

Congress will get another chance to forge an agreement over replacing the cuts this month, as lawmakers duke it out over spending levels for the rest of this fiscal year. They have until March 27 to approve a new funding bill. If they don't, the government will shut down, with the exception of essential services.

If they succeed in replacing the cuts by then, the disruption caused by the sequester may be limited, since its ramifications will unfold over several months as opposed to a few weeks.

First Published: March 1, 2013: 8:50 PM ET

04.32 | 0 komentar | Read More