Miscellaneous

A: The answer to this question is usually not clear cut or compelling from a financial perspective. Solar panels may be beneficial for the environment, and may also save you money on electricity. The costs vs. benefits must be analyzed on a case-by-case basis and depend on the tax credits offered (state specific), the future price increases in electricity (which are unknown), and whether you lease or buy the panels. Leased solar panels (that are not paid off) are likely to hurt your home’s resale value.  You may also want to consider the aesthetics of solar panels, and the financial stability of the solar panel provider. For more on this topic, read:  Solar Energy:  A Good Investment For Your Home?

A: I would give them a weak recommendation. Here’s why: They are better than nothing, but credit monitoring services do not actually prevent ID theft. They just notify you if ID theft happens, or when someone opens lines of credit or applies for accounts in your name. This can be somewhat helpful, but by the time you get the alert, it may be too late. The more effective and less convenient approach is to freeze your credit, which blocks potential creditors from being able to view or “pull” your credit file. To read more about this topic, see: Credit Monitoring Services – Are They Worth The Cost??

A: The exact formula is a mystery, but here is what we know: Your credit score is broken down into five parts. Approximately 35% of your credit score is based on your payment history, 30% is based on the ratio of current credit debt to total available credit, 15% is determined by the length of your credit history, and about 10% is based on the types of credit you have; i.e., installments (car payments, student loans, or a mortgage), revolving (credit cards or lines of credit), and consumer finance (bank loans and the equivalent). Lastly, 10% is based on recent searches for credit and/or the amount of credit you’ve recently obtained. To read more about your credit score, read: FICO Score – How Is It Determined?

A: Here are the three main options:

• Credit Monitoring – does not prevent ID theft, but it can make you aware of it very quickly when someone opens lines of credit or accounts in your name. This can help minimize the damage.
• Set up a Fraud Alert – which requires a lender to verify verbally that you made an application for a new account. You can only set up a permanent fraud alert if you have been a victim of ID theft. Otherwise, you can only set a fraud alert for 90 days.
• Freeze your Credit – This is the most effective. You have to set up the freeze with each of the three major credit bureaus (Equifax, TransUnion, and Experian) which may cost $5 – $10 each. The freeze prevents new credit accounts from being established until you unfreeze your credit. Keep in mind that the freeze does not protect unauthorized behavior on existing accounts.

For more, read: Identity Theft – How to Protect Your Credit

A: The average age of a car on the road is approximately 11 years. Depreciation (decrease in the value) is the largest expense of owning a vehicle, but it only accounts for approximately 48% of the total cost of ownership. In general, the wealth-maximizing strategy is to buy vehicles based on reliability and fuel efficiency and to drive them as long as possible. For example, the median cost of car ownership drops to $7,800 per year from $9,100 if you just keep your car for eight years instead of five. For more, read: Time for a New Car?

A: Buying a car and driving it until the wheels fall off is the wealth-maximizing strategy. However, leasing requires less out-of-pocket expense in the short-term.  You will never have any equity in your car and will always have a monthly payment if you lease. However, leasing can make sense in certain situations; such as if you are cash poor, you are going to replace your vehicle(s) every 2-3 years, can use the car for business purposes and thereby write off all or part of your lease payment, and drive less than 12,000 miles a year. For more, read: Buy or Lease a Car?

A: Vacation homes can be a great place to make memories with your kids and grandkids, but they can also be a major expense and time commitment. Most buyers will need to come up with a hefty down payment because many banks require 25-35% down on vacation and rental properties, charge higher interest rates, and require a higher credit score. In addition, homeowner’s insurance tends to be more expensive (typically by 20-30%) because these homes are at a greater risk for damage or theft, and are usually in earthquake, hurricane, or flood zones. However, you can make a hefty bit of money back by renting out the property. The average vacation home owner rents out his or her property an average of eighteen weeks a year. For more on this topic, read: Vacation Home – Considerations Before You Purchase.

A: Switzerland, Iceland, and Denmark are good picks if you want to go to the countries where people are the happiest. France or Spain are good picks if you are looking at the most commonly visited countries by Americans. Try the Philippines, Ghana, Ethiopia, or Kenya if you want to go where Americans are the most liked. To read more about the best countries to vacation in, read: The Travel Bucket List.