March 29, 2023

Bucks Blog: Tuesday Reading: Women May Suffer More From Pain

January 24

Tuesday Reading: Women May Suffer More From Pain

Adoptees use DNA testing to find family ties, a dearth of disclosure about expired airline tickets, women appear to suffer more from pain and other consumer-focused news from The New York Times

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On the Road: A Dearth of Disclosure About Expired Tickets

Because I didn’t need to rebook that trip, I had forgotten about the ticket. Under standard fare rules, it lost all value in December, a year after purchase.

So that unused ticket added $285.80 to the total $174.7 billion in revenue that airlines in the United States raised in 2010. But in the end, I saved money by not rebooking. Under rules for these cheaper, so-called nonrefundable fares, rebooking would have cost an extra $150 to cover the penalty fee for changing a reservation, as well as any difference between the original fare and the one that the airline was later charging.

Ever wonder how much money the airlines keep each year from tickets like mine that are bought and then not used?

Ralph Nader does. Last month, Mr. Nader wrote to the major airlines asking them to “reveal how much you have kept from these unused, nonrefundable tickets” in recent years.

Mr. Nader accused the airlines of practicing “money confiscation.” Somewhat less harshly, he suggested that disclosing the totals would “have an added benefit to nudge your customers into being more time-sensitive” about ticket expiration dates.

Now, if it were possible to hear people rolling their eyes on the telephone, I would say that was the typical reaction I got from the industry to this suggestion. No one I spoke to offered even a quotable guess about how much money was left on the table each year by customers who let nonrefundable tickets expire unused.

Mr. Nader didn’t have an estimate either. He also told me that the airlines were “obviously going to stonewall me” on the matter, and he was right. In a reply last Friday to Mr. Nader, David A. Berg, the general counsel for Airlines for America, the industry trade group, said that Mr. Nader was unreasonable in asking airlines to publicly disclose “confidential and commercially sensitive information.”

Mr. Berg said that after government-required fare controls disappeared with airline deregulation in 1978, consumers gained a wide range of price options with the increase in competition. He noted that average fares had risen only about 40 percent since 1980, while “the Consumer Price Index grew 165 percent over the same time period.”

Airline refund policies, Mr. Berg told Mr. Nader, “were very similar to other retail shopping outlets, from clothes to computers, and are neither deceptive nor unfair.”

By the way, the Transportation Department is proposing a rule, also opposed by the industry, requiring airlines to report revenue from fees in greater detail, over and above the current requirements for disclosing quarterly revenue from checked bag and reservation change fees. Still, there has been no move to seek disclosure of revenue from expired nonrefundable tickets.

Reservation change fees for those tickets alone added an extra $2.3 billion to domestic airline revenue in 2010, according to the Transportation Department’s Bureau of Transportation Statistics. For the first three quarters of 2011, that revenue was $1.8 billion, up from $1.7 billion in the same period in 2010. By comparison, in 2007, the year before airlines began assiduously charging extra fees for checked bags and other services, that revenue was just $915.2 million.

Until around 2000, few business travelers used nonrefundable fares. That’s because the airlines, in trying to dissuade business travelers from buying the far cheaper nonrefundable fares, required a Saturday night stay for those tickets. But as the Internet made fare comparison easier, airlines began dropping the Saturday night rule, and business travelers overwhelmingly switched from expensive fully refundable fares.

Incidentally, Southwest Airlines, which last week announced its 39th consecutive year of profitability, does not charge penalty fees for changing a reservation. Instead, Southwest puts the money from a canceled ticket into a customer’s account, where it can be used within a year toward a new ticket.

Mr. Nader said he now did most of his domestic flying on Southwest and didn’t miss the hassle of keeping track of unused tickets. “You know, you’d change schedules and throw it in a drawer, and pretty soon, bingo, the year is up and the ticket is worthless,” he said.

Still, Mr. Nader said he was worried that Southwest’s fare structure could become more complicated as the airline continued to grow and looked for other revenue sources.

“I’m keeping an eye on Southwest so they don’t start mimicking the others,” he said.


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Bucks: LearnVest: A Money-Management Site for Women


Evaluating new financial products and services.

Alexa von Tobel wants to change the way women handle their money.

When she was an undergrad at Harvard, she realized there was a dearth of resources for women who wanted to take control of their finances. After a stint as an analyst at Morgan Stanley, she went back to Harvard — this time for business school — but left after her first semester to create, a personal finance Web site tailored for women. The site launched at the end of 2009.

Last week, LearnVest raised the curtain on an entirely revamped site, which is cleanly designed and features a new set of robust tools. “We don’t just want to be a pretty site with information,” said the 27-year-old Ms. von Tobel. “We want to change behaviors.”

In fact, she said that she liked to describe LearnVest as a financial fitness center for women. You can get a day pass or buy year-round access. You can sign up for financial boot camp. And it also offers the equivalent of a personal trainer, if you have certain questions or specific goals.

But one of LearnVest’s main goals is to help women get started in the first place. After gathering feedback from users on their attitudes toward money, a recurring theme emerged: “It’s very specifically, ‘I don’t know where to start,’” Ms. von Tobel said.

So LearnVest has fashioned the site to help women begin. The centerpiece of the Web site, which previously featured a daily e-mail with helpful financial tips and other content, is the “My Money Center.” This is powered by a free tool called the financial inbox, which aggregates all of your financial transactions. Then, it allows you to organize them and set up a simple budget using the site’s automated filing system, which neatly tucks each of your transactions into a specific folder.

The fact that you can color-code your personal folders is about as girly-girl as the site gets. Unlike other ventures and books targeting women, LearnVest’s Web site lacks the syrupy-sweet prose and frilly packaging; the team appears to understand that financial matters don’t need to be feminized. It just needs to be written in plain English, and LearnVest does a good job of that.

The site also added premium services for a fee, which allows you to send questions to a certified financial planner or take one of LearnVest’s financial courses. But there’s still plenty to peruse that’s free, too.

“I deeply in my heart believe that financial planning should not be a luxury,” Ms. von Tobel said.

Here’s a closer look at each of the features:

FINANCIAL INBOX.  Like and its money-tracking brethren, this tool (pictured above) automatically aggregates all of your financial transactions — from checking and savings accounts, credit cards, investment accounts, you name it — and pours them into one giant check register of sorts. The financial inbox is designed to look just like your e-mail inbox, with a list of colorful folders running down the left-hand side of the screen. Whenever you go to Trader Joe’s and pay by credit or debit, your bill will then be automatically transferred into your “groceries” folder, or whatever you choose to call it.

Because this tool is powered by Yodlee, which works with many large financial institutions, it will automatically categorize most of your recurring transactions with some degree of intelligence. It appropriately categorized “HopHap,” my go-to Thai takeout place, as “Restaurants and Bars.”

But other categories were slightly off, or not as specific as I would’ve liked. But you can override or correct their categories with those of your own choosing. Just drag any transaction into a folder, and it will forever label similar transactions and file them into the appropriate folder. You only have to do this once for each transaction.

Subfolders are also being developed. That will allow you to create a master “food” folder, for instance, but then include subcategories that will help you break out how much you spend on, say, groceries, restaurants and take-out. Eventually, you will also be able to split your transactions up with different labels. For instance, that $100 you pulled out of the A.T.M. can be categorized as restaurants ($75) and dry cleaning ($25).

Connecting your accounts to LearnVest is pretty easy, as long as all of your credit cards and other financial accounts are already set up online. That’s because you need to enter your user names and passwords for each of your accounts into LearnVest’s system, which then allows it to aggregate your financial data. I linked two credit cards to the tool, and it took only about 5 minutes. (Ideally, you want to link all of your accounts to see your entire financial picture.)

Given all of the various security breaches of late, you may be reluctant to simply hand over the keys to your precious financial data. But LearnVest said it doesn’t store any password or other personal data on its site, with the obvious exception of your financial transactions. That personal data travels from Yodlee to LearnVest with bank-level encryption. Even if hackers managed to break into LearnVest’s site, they would not be able to move or steal your money because your passwords aren’t stored on its site. That information is encrypted and stored in Yodlee’s data centers.

BUDGETING. Once you’ve set up your financial inbox, you can then set up a budget within minutes. The budgeting tool asks you to plug in your take-home pay, your necessary expenses and your savings goals; then, you can allocate any leftover money into the folders.

Alternatively, you can set up an entire budget based on your customized folder system by allocating a certain amount to, say, your groceries, utilities and entertainment. And if you spend more than your budget allows, your folder will turn red. I think it’s easier to ignore the fixed expense section and instead work entirely out of your folders, but that’s just my personal preference. If you use LearnVest’s list of customizable fixed expenses, all of those items will go into a folder called “Bills.”

Once your budget is set up, you can see how much you’ve already spent in the current month for each category. Your budget resets on the 1st of each month.

Unlike, the site doesn’t let you keep track of goals, say, saving for a car or a down payment on a home. But Ms. von Tobel says they have several more sophisticated features in the works: a mobile app, customized alerts for going over budget, keeping track of savings goals, budgeting for annual expenses and other more in-depth trend and analytical tools. The company just received $19 million as part of a a Series B round of funding, so that should help pay for some of this.

BOOTCAMP. Financial bootcamps allow women to tackle a specific challenge or life stage. There are four versions of bootcamp, all free: Take Control, Personal Finance Basics, Cut Your Costs and Get out of Debt. Specific instructions are delivered to your e-mail inbox five days a week. “It’s a program to really change something,” she added. They are “action-packed, full of financial to-do’s.”

LearnVest plans on adding more bootcamps in coming months, which will hit on topics like building your career, philanthropy, having a baby and buying a home.


ASK AN EXPERT While the tools mentioned above are free, you need to pay a fee to access LearnVest’s financial experts and their growing list of financial courses. If you just have a quick question, you can buy a day pass for $4.99, which gives you access for 36 hours. Or, if you’d like a lifeline to an expert for a longer period of time, you can buy a three-month ($39.99) or one-year package ($129.99).

That will allow you to e-mail questions to LearnVest’s certified financial planners. (They have some on staff, while others have been hired as consultants.) Want to know if you should set up a Roth IRA? You can expect a response within the same day, as long as it’s not too late in the day.

Users that subscribe to the three-month and annual packages can also expect to receive follow-ups from the planners to make sure those customers are on track. “We treat each member and case individually and thoroughly,” Ms. von Tobel said. “For example, if you have questions about buying renter’s insurance, we’ll check within 30 days that you got it. If you have questions about creating a five-year financial plan, that would require a more thorough interaction.”

COURSES You also get access to LearnVest’s financial curriculum, which was developed and reviewed by financial planners. As such, the courses are designed to touch on the topics you would be likely to discuss with a professional to get you started on building a financial plan.

LearnVest has three levels of courses, each of which includes a few course modules lasting 15 to 30 minutes. The first level focuses on the basics of budgeting, while the second discusses investing, insurance, and money and relationships. The third level delves into more detail about low-cost investing and retirement. The next course on tap is more advanced and will talk about how investment income and capital gains are taxed.

But if you don’t want to payfor the courses, there is plenty of content on the site that is free. Their check lists, for instance, will help guide you through specific tasks and life stages, from “I Lost My Job” and “I’m Ready to Tackle My Debt” to “I Want to Budget for a Party.”

I worked my way through the “I Want to Build a Portfolio” check list, which covered the basics. But one of the last steps suggests moving onto another checklist called,“I’m Ready to Buy My First Stock.” I wish it would’ve said “How to Buy My First Index Fund,” which is indisputably a much better idea. But Ms. von Tobel said they’re updating the lists to make them better reflect LearnVest’s investing philosophy, which advocates index investing.

The site makes its money through advertising and subscription fees, and Ms. von Tobel said that LearnVest receives no money in exchange for recommending financial institutions.

If you want to check all of this out for yourself, LearnVest provided us with a special coupon code — nyt2011 — that provides Bucks readers with a free “day pass” through Aug. 16th. Just plug the code in when upgrading your membership.

Let us know what you think of LearnVest’s new tools in the comment section below. Can they provide this kind of personalized advice for so little money?

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