Invest Financial Planning

This Week In Your Wallet: Fighting Hidden Fees, And Choosing ‘Good Enough’

Jean Chatzky  |  June 4, 2019

In the last year, nearly 3,500 Americans wrote to Consumer Reports angry about hidden fees they’d found on various bills.  A high number, yes, but perhaps not as high as it could have been considering that CR reports a whopping 85% of us have encountered an unexpected or hidden fee over the last two years.  As you might imagine, the vast majority of us — 96% — are annoyed. But you know who’s not? Airlines. They raked in $7.6 billion in revenue from fees charged for baggage and changes to reservations. Also banks. They landed $11.5 billion in overdraft charges last year. And hotels — that industry is currently luxuriating on a pile of  $2.9 billion in resort fees collected in 2018, which sounds only slightly more comfortable than 400-thread count Egyptian cotton sheets.

In other words, these industries won’t likely be changing their habits anytime soon. So, what’s a savvy consumer to do? First and foremost, know that some fees are immovable — like the additional charge for that checked bag that weighed 78 pounds, or that exorbitant room service delivery fee. (Though, if you order room service only to get real milk for your coffee might I suggest stashing some in the minibar and using the everpresent coffee maker to make your own.  You’re welcome.) Living with those fees is one thing, but in the case of other surprising upcharges, like unexpected additions to a cable or phone bill, or certain “convenience” fees you weren’t warned about, you do have recourse. In the Consumer Reports survey, 35% of people either called or emailed to try and get hidden fees taken off their bills, and the majority (64%) were successful in doing so. In other words, it’s okay — recommended, even — to fight back. Of course you should always read the fine print so you know what you’re getting into in the first place, but if you’re not happy with a charge, call and ask to be refunded, and don’t hesitate ready to report shady practices to the Better Business Bureau.

Good Enough

How do you feel about your recent financial choices? Is your portfolio properly optimized? And how, exactly, should you be saving for your child’s college education? Unfortunately, when we spend too much time agonizing over the “right” decision for our financial lives, we can get paralyzed with inaction, which is the worst possible outcome, writes Gregory Karp in this week’s Daily Herald. Instead of focusing on what’s “perfect” (hint: there’s no such thing) we should channel our energies to prioritize what’s “good enough.” In many cases, our financial futures will greatly benefit when we simply make a decision sooner rather than later — (hello, compound interest!) “Make a decision based on the best information you can reasonably gather at the time, and then get on with your life,” Karp writes, also citing our own Jean Chatzky, who wrote in her book, Make Money, Not Excuses: “The truly great thing about ‘good enough’ — and the reason it is so powerful — is that it allows you to get to the starting line in a way that waiting for the ultimate, best possible result does not.” So make it your goal to get to that starting line as soon as you can, and know that in many cases, there’s still time to revisit your decisions after the fact (think refinanced mortgages, reshuffled portfolios, etc.) And if there’s something you’re really agonizing over,  it’s probably time to seek the advice of a financial planner.

Vacation, All I Ever Wanted?

If you’re planning to stay put this summer because a vacation simply isn’t in the budget, you’re in good company. Just over half of Americans — 52% — will be taking a vacation this summer, according to a new survey from Bankrate. With the average cost of a summer vacation weighing in at $1,979, it’s no wonder that 60% of us cite affordability as the number one reason we’re hanging at home. Specifically, the financial constraints  include day-to-day bills and paying down debt, both completely understandable and essential priorities. But if you’re thinking you might be able to eke out a getaway with a little help, you might want to check out these five budget travel ideas (including house swapping and work/trade arrangements) and take a closer look at your credit card rewards — if it’s been awhile since you thought about cashing them in, you might be surprised what you can score in terms of flights and hotels.

The Graduate’s Checklist

The graduates in your life are likely very busy with summer socializing, summer jobs, and perhaps (we hope) writing thank-you notes for their graduation gifts, but the next time they have a spare moment, take them aside for a chat about their financial checklist — the one they probably don’t know they have, but need to get, in short order. That’s the advice this week from Ron Lieber in the New York Times, who offers an excellent guide on the myriad life and money lessons your graduate should be pursuing — whether they’ve just emerged from high school or from college and headed to work, more school or the military. A few highlights: they all need a budget. Takeout is very tempting, but thankfully there are countless budgeting apps that make things easier than ever. If they’re getting their first bank account, they may think they need overdraft protection hedge against those first mistakes (that we ALL inevitably make.)  Wrong! It’s way too costly. (See: Bank fees, above.) Turn on low balance alerts instead. And know that once they get turned down at the checkout counter the first time (horrors!) they won’t likely do it again. Also, they’re all going to be on Venmo, the money sharing app, and to stay safe there, they’ll need a multifactor authentication and a PIN number. They’ve got to watch out for identity theft (a credit freeze with all three bureaus is an excellent idea) and once they secure that first apartment, a quick primer in the benefits of renter’s insurance never hurt anyone. Mom, Dad and other grownups, please do your thing to make this happen.

Have a great week,

Jean


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