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Save Thousands on Medical Care by Visiting Top-Notch Foreign Doctors

By Peter Greenberg

It is perhaps the fastest-growing segment in travel and tourism, and the purpose might surprise you — cheaper medical care.

More than 200,000 Americans traveled abroad for healthcare in 2008, a number that is expected to double in 2010, according to one expert estimate. Some published reports put that number much higher: An estimated 1.6 million Americans will travel abroad for medical procedures by 2012, according to the Deloitte Center for Health.

As insurance rates skyrocket and hospital costs balloon, medical tourism may be a natural solution. Even when you factor in the cost of airfare, accommodations and recuperation, the overall cost of care abroad can be fraction of what you would pay here in the United States. Heart bypass

surgery that might cost $125,000 here costs just $38,000 at an accredited hospital in New Zealand. Add in airfare of about $5,000 and an extended post-recovery stay in New Zealand for another $5,000, and that’s still a bargain.

And when you’re talking about lower-risk proce-dures that have a high success rate, the value of going abroad becomes apparent. Many seek

INSIDE . . .

Continued on page 4

Dr. Franklin’s Mailbag ...........2

Retire Rich the Easy Way ......8

Check Out Your Broker ........9

Hidden 401(k) Fees .............10

Great Free Software ............11

Business Tax Tips Now .......12

Slash Your Auto Insurance ..13

Be a ‘Mileage Millionaire’ ...14

Cut Homeowner Taxes ........16

Is that Remodel Worth It? ...17

Franklin on Influencing .......18

Ask Dr. Franklin ..................20

April 2010 / Vol. 2, No. 4

Franklin Prosperity Report asked Peter Greenberg, one of America’s most recognized, honored, and respected frontline

travel journalists, to scour the globe in search of the best opportunities for high-quality medical and dental care. An Emmy Award-winning investigative reporter, Peter is well-known as Travel Editor for CBS News, as a frequent contributor to national magazines, and as host of the nationally syndicated Peter Greenberg Worldwide radio show.

2 • The Franklin Prosperity Report

Every month, we ask readers for their best tips on making and saving money. The amounts don’t matter; it’s about little changes anyone can make to keep more cash in their pockets to save, invest, or spend better elsewhere.

If you use dryer sheets, the sheets leave a film over the mesh on the lint filter which can burn out your cleaning unit and can be a fire hazard. Always clean your lint filter with soap and water and an old tooth brush every six months. Not only will you save money on your electric bill, it adds life to your dryer and most of all protects your home and family.

— Jackie T., Salem, Mass.

Instead of throwing out your old shoes, be sure to get them re-heeled instead. Plus, when you first buy shoes take them to the shoe repair guy and have him put a special plastic brace on the front of your shoe to keep it from wearing out. These little plastic guards are cheap and they wear out first instead of your shoe.

— Darla S., Wichita, Kan.

The urge to buy something is sometimes overwhelming. So, every time I am eyeing some new tech toy or item of clothing I immediately block it from my mind for a whole month. I pick a date 30 days away and promise myself I will not think about it, shop for it, or even try to budget my way toward rationalizing the expense. If after 30 days I am still convinced that the purchase is necessary and important, I buy without guilt. More often than not, by then I realize how little I need that thing and I completely forget about buying it at all.

— Jan D., Tempe, Ariz.

I fill up my gas tank when I’m at a quarter-tank. This allows me to choose which gas station has the best price without worrying if I can make it to the next one.

— Jimmy B., Charlottesville, Va.

Use shades, blinds, and drapes to regulate your home temperature. Keep them open in the winter to let in light and drawn in the summer to block the sun’s rays. We bought car tint and applied it to our house windows, which cut our electricity bill by several dollars and as an added benefit gave us additional privacy.

— Thom R., Los Angeles, Calif.

For big tax savings, donate appreciated assets rather than cash; you avoid having to pay taxes on the appreciation and get to write off the current high value as a tax deduction.

– Allan K., Owings Mills, Md.

I’ve found this to be a very inexpensive and extremely effective method for eliminating pimples. Instead of having to buy an over-the-counter medica-tion to clear up a pimple, I simply apply a dab of any type of toothpaste

Dr. Franklin’s Mailbag

The Franklin Prosperity Report • 3

to the pimple before going to bed. In the morning the pimple will be gone! The toothpaste apparently has a drying effect on pimples and clears them up completely. It’s such an effective, inexpensive, and quick solution for a pimple that seems to erupt when we least want it to.

— Betty A., Corbett, Ore.

I cut the fronts off of my favorite Christmas cards. I then use them as coordinating gift cards on my Christmas gifts the next year. I save the wintry scenes to use in an envelope as a note card all winter long. I can reuse favorite birthday card fronts the same way. It amazes my friends, who want to know where I get the special and unique cards. These cards, with envelopes, can be taken to nursing homes, already stamped, so that those with not much money can send cards to their loved ones.

– Karen P., Charlevoix, Mich.

Save the bubble envelopes that you get packages shipped to you in. With postal rates it is cheaper to mail in a bubble envelope than in a box. If you open them carefully you can certainly reuse the envelopes. Also, when the holidays come, have a bin handy for all the bows and wrapping paper. Children tend to rip open their gifts but adults open their presents care-fully and that paper, gift bags and bows can often be reused next year if you are prepared to store them efficiently.

– Michele L., Stacy, Minn.

We finally just cut our traditional phone service completely. We have every-one in the family on a family plan cellular contract anyway, and reception inside our house is just fine. We considered dropping down to the cheapest landline plan, but even that was a waste of money when you consider the taxes and fixed fees. Ask around among your friends, I’d bet most of them have done the same in the last few months.

— Don L., Louisville, Ky.

We never give Christmas gifts among the adults in our family. By agreement, all gifts go to our respective children — that is, we give to their kids and they give to ours. Also, we try to agree to dollar limits regardless of family size, say, $100 across the board. We just don’t need any more stuff, and our in-laws agreed.

— Linda L., Wheeling, W. Va.

We reviewed our cable bill and realized we were in a package that was much less used than we had guessed when signing up, with extra movie channels and a sports package it turns out we barely follow. With a phone call we slashed our cable bill down to the bone and the cable company even offered us a break on our Internet connection for switching from DSL that saved us another $200 over a few months. It never hurts to ask about these things.

— Sharon J., Albany, N.H.

SHARE YOUR MONEY SMARTS AND GET $50! If you have a money-saving (or money-making) idea, send it to [email protected] or by regular mail to Franklin Tips, P.O. Box 20989, West Palm Beach, FL 33416. If we publish your idea, we’ll send you a $50 Walmart gift card.


procedures that their health insurance at home wouldn’t cover — namely, elective and cosmetic surgery, plus extraordinarily inexpensive, high-quality dental care.

Going to foreign shores for care has become a $20 billion-a-year global market. Travelers are taking journeys of a lifetime — in many cases with a distinct purpose of maintaining, preserving, enhancing, or extending their lives.

Where is everyone going? To any one of 20 countries for treatments, opera-tions, and services ranging from quick hops to Mexico for dramatically cheaper and quicker dental work to lengthy stays in leading Asian hospi-tals for complex surgical work and rehab. India reports more than 500,000 medical tourists. An additional 410,000 visited Singapore for healthcare. Thailand’s market has grown exponentially in the past five years — a grow-ing number of them Americans. It now sees more than 1.2 million medical tourists a year.

The numbers behind this shift are staggering in their own way: More than 47 million Americans have no health insurance, but 120 million more — most probably you — are underinsured.

Because of a tough economy, the limits of medical insurance, and the rising cost of medical treatment at home, medical tourism has evolved into a legitimate, accredited option for thousands of Americans who can’t — or, in some cases, simply won’t — pay for astronomically priced surgeries, whether it’s a face-lift, dental work, laser eye surgery, or a hip transplant.

Rather than dealing with the tangled system of medical insurance in this country, hundreds of thousands of patients are opting to have their proce-dures done in a foreign country for a fraction of the price.

And where are most of these foreign doctors trained? The United States!

Medical Tourism’s Long HistoryMedical tourism isn’t new. Centuries ago, the ancient Greeks made pilgrim-ages to thermal springs for their healing powers. The Japanese gather at springs, known as onsen, that contain minerals such as sulfur, sodium chlo-ride, and iron. Hungary has long been known for its healing mineral waters, where even today travelers come from far and wide to sit in hot “medicinal baths” thought to cure arthritis, orthopedic problems, and skin disorders.

But today it’s not just about an emotional lift of cosmetic treatments. We’re talking about state-of-the-art, cutting-edge, sophisticated surger-ies, such as heart bypass, organ transplants, prostate surgery, and recon-structive work.

Consider an American in the western United States. It’s just a 12-hour nonstop flight from California to New Zealand, and let’s not forget the

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country’s desirability as a travel destination, with extraordinary tourism opportunities — often thrown in by tour operators — such as winery excur-sions, golf, and fly fishing.

Medically, the most popular procedures for visitors in New Zealand are total hip-joint replacement, knee replacement, and robotic prostatectomy, the removal of the prostate to combat cancer.

Plus, of course, the basic nip-and-tuck. Many Americans traveling overseas for serious surgery have embraced the one-stop-shopping concept by throwing in a nose job while in Argentina, face-lifts in Brazil, or a tummy tuck in Bangkok, perhaps while getting medically needed, more serious surgery at the same time.

(Another common elective surgery performed overseas is “gender reassign-ment.” Last year, more than 4,000 foreigners headed to Thailand for sex changes.)

It’s not always a matter of jetting to a distant shore. Just south of the U.S.-Mexico border is the tiny town of Los Algodones. Seven miles west of Yuma, Ariz., Los Algodones has more than 350 practicing dentists who charge up to 70 percent less than dentists in the United States.

Literally, all you have to do is park your car at a $3 lot in Yuma, walk over the border, and enter one of the hundreds of dental offices that line the streets there. Many of these dentists were trained in the United States, and most have English-speaking staff to help you navigate the process. As many as 33,000 Americans a day walk into Los Algodones in high season.

With exceedingly few exceptions, there’s no waiting weeks for some labora-tory to make impressions or molds. No return visits needed, either. Nearly all of the Mexican dentists have their own labs on premises. After your initial examination, you’re encouraged to go out for about two hours and have lunch. And when you return, the work is done, you’re treated, and you can be back across the border in time for dinner.

Where Do Medical Tourists Go?At the moment, some of the top countries in the world for medical tourism are Thailand, India, Singapore, Costa Rica, and Mexico. Newcomers to the market include South Korea, Brazil, and Malaysia.

In general, it’s not necessarily a wise choice to travel abroad for bypass surgery just to circumvent insurance hassles. The risk of flying is enough to deter most people. Patrick Marsek, co-founder of the medical tourism agency MedRetreat (www.medretreat.com) and author of The Complete Idiot’s Guide to Medical Tourism, coined the “$6,000 rule.” By that measure, trav-eling abroad for healthcare makes sense when the procedure would cost more than $6,000 at home, Marsek says.

But is it safe? We’ve all heard horror stories of unscrupulous surgeons performing dangerous cosmetic procedures. Even the highly respected


Singapore National Eye Center recently had to suspend Lasik eye surgery procedures after 17 patients developed the treatable inflammatory condi-tion called diffuse lamellar keratitis. (As the volume of these procedures has risen, cases are becoming common in the United States, too.)

The center has performed more than 32,000 successful laser eye surgeries since the early 1990s and resumed the procedure a few weeks later. But still, that kind of scenario — in a foreign land, facing medical complica-tions — is nerve-wracking, and it’s not unreasonable to be concerned.

Since medical tourism has become big business, though, the industry has created more stringent standards. There is no one set of rules, but there are a few internationally recognized accreditation programs for hospitals and clinics. That accreditation takes a lot of the guesswork out of the equation and essentially confirms that a facility is of a specific quality, has been assessed thoroughly, and undergoes regular reassessment.

The most common accreditation program we’re seeing now is by Joint Commission International (JCI). As many as 240 facilities outside of the United States have passed its multi-step accreditation process. The more people associate quality care with JCI, the more we’re going to see hospitals seeking this particular accreditation.

But other accreditation programs are just as recognized and respected, namely the Canadian Council on Health Services Accreditation, Australian Council on Healthcare Standards, and the U.K.’s Trent Accreditation Scheme.

How to Spot a Quality FacilityAnother benchmark for good quality is to look for facilities that are affiliated with respected hospitals in the United States. For example, the prestigious Johns Hopkins Medicine International is affiliated with facil-ities such as Tawam Hospital in the United Arab Emirates, King Khaled Eye Specialist Hospital in Saudi Arabia, Singapore Medical Centre, and Hospital Punta Pacífica in Panama. What that type of affiliation usually means is that the foreign hospital provides management services, education, and consulting, and specialized medical services.

Even without affiliation, certain hospitals in foreign countries are never-theless models of high-quality care. For example, Bangkok’s Bumrungrad International Hospital is considered among the top facilities in the world, with cutting-edge technology and highly trained staff.

Inside the lobby you’ll find a Starbucks and a McDonald’s (not exactly para-gons of great health, but you get the point). Rooms are so well-appointed that you’d think you were at the Four Seasons. I am not exaggerating. From my own personal experience, I recommend it — both of my American godsons were born there.

Even insurance companies are seeing the benefits of sending patients out of country for treatments. In 2007, health insurer Blue Cross and Blue


Shield of South Carolina launched a subsidiary, Companion Global Healthcare (www.companionglobalhealthcare.com), which works with a network of 18 JCI-accredited hospitals and facilities in 10 different countries. Health benefit provider WellPoint launched a program called the Global Health Care Partnership, which, for example, allows employees of a Wisconsin printing company to get certain elective procedures at select facilities in India.

The American Medical Association, too, has released a set of guide-lines for employers and insurance companies that encourage and facilitate sending people abroad for treatment, noting that the facility must be accredited by an internationally recognized body and must arrange local follow-up care.

If you’re intrigued enough to consider medical tourism, now is the time to start thinking about what specifics to look for before committing:

• Follow-up care is the No. 1 factor. Even if you’re going for something a simple as liposuction or collagen, it’s important to know all of the post-operative risks.

• Talk to specialists in the United States to find out the normal proce-dure and follow-up care timeline. Say you’re looking to shed excess skin after losing weight. That might require multiple procedures, which could in turn affect your decision to go abroad.

• If a facility tells you that you can come in for a procedure and fly home the next day, run — don’t walk — and don’t look back. Remember, after any surgical procedure, it’s not a good idea to hop on a long flight that forces your body to deal with altitude, pressure, and oxygen changes.

• Find out first how long patients are expected to remain in the country to recuperate. Does the facility have a list of accommodations that are close by? Is the hotel staff accustomed to medical tourists? Will there be scheduled follow-up appointments and assessments? Do you have a way to contact your doctor?

• The general rule is that you most likely will need quality recovery time in-country. Give yourself anywhere from 10 days to three weeks at a quiet resort to recover adequately.

• Make sure your own doctor in the United States has access — at mini-mum by phone and e-mail — to the treating physician in-country. Another essential: no language barriers. Your in-country doctor must be fluent in English. Find out if nurses and clinic staff speak your language.

Resources to Get StartedTo get your trip planning under way, see medicalnomad.com for detailed infor-mation about foreign hospitals. I also recommend patientswithoutborders.us for similarly unbiased advice.


Investing

Best Low-Cost, High-Octane Nest-Egg Builder Wall Street Won’t Tell You AboutThere is a way to invest directly in individual stocks — including many of America’s most respected blue-chip companies — and never deal with a broker or mutual fund company or pay a single dime in fees or commissions.

You can start with just a few hundred dollars, invest more money any time you like, and do it automatically, again with no fee and in amounts as little as $25. And you have more than 1,200 dividend-paying U.S. companies to choose from.

What is this money miracle? It’s called a dividend reinvestment plan (DRIP), and it’s the low-cost nest-egg builder Wall Street doesn’t want to tell you about because brokerage firms and mutual funds that live off fees and commissions can’t make money on them. But DRIPs have been around for decades and are tried-and-true ways to build a stock portfolio slowly and steadily, directly with the company whose stock you own, without any financial firms nicking your nest egg for fees along the way.

“DRIPs are great for small investors,” says Vita Nelson, a dividend rein-vestment specialist who runs directinvesting.com, a Web site that special-izes in DRIP information. “You can invest as little as $25 to $50 . . . and get as many shares or fractions of shares as that amount of money buys, based on the market price of the stock on the company investment date.” Whenever the company pays a dividend (usually four times a year), the cash is reinvested automatically in additional shares — again with no fee.

Scores of major companies offer DRIPs directly. Procter & Gamble, for example, calls its plan the P&G Shareholder Investment Program. It’s both a dividend reinvestment plan and direct stock purchase plan. It is open to not only current P&G shareholders but also to new investors who want to make their first stock purchase directly with the company. The minimum to start there is $250. Subsequent investments must be at least $50. (No need to worry about maximum amounts — at P&G, that’s $6 million.)

Unlike buying stocks through a broker, you don’t set a specific price. Rather, the company purchases shares for plan holders weekly, based on an average price for that week. That’s actually an advantage for small inves-tors because it dollar-cost-averages your purchases, a practice which in the long run produces superior returns.

There are different types of DRIPS. Direct-purchase plans let you open an account and buy your very first share directly with the company. Some plans, however, require that you already own at least one share in order to participate, so you’ll have to make your initial purchase through a


broker. In addition, a growing number of foreign companies now offer DRIP plans to U.S. investors through American Depositary Receipt (ADR) direct-purchase plans. ADRs are simply bundles of a foreign stock in dollar denom-inations that trade on U.S. exchanges.

Here are some tips for getting started on DRIP investing:

• You easily can find listings of dividend-reinvestment and direct-purchase plans online. American Stock Transfer & Trust Co. (investpower.com), Bank of New York Mellon’s InvestDirect Search service (www.mellon.com/mis), and directinvesting.com are among the best of them. The American Association of Individual Investors (www.aaii.com) also publishes an annual direc-tory of DRIPs, free to members. Membership cost is $29 a year.

• Most plans are super flexible. You can transfer your shares elsewhere anytime you like or sell them directly through the plan. Selling, however, might involve a small fee. P&G charges $15 (or $7.50 if requested online), plus $0.12 a share.

• Investing via automatic transfers from your bank account is the most cost-effective way to take part. Plans will accept checks or money orders. Some might charge a small fee, while automatic investments are usually free. P&G, for example, charges $2.50 if you invest by check.

• DRIPs are dynamite for maximizing your dividend dollars. Instead of letting dividend payments languish in low-paying (or worse, no-paying) cash accounts, these plans put your dividends to work quickly buying more shares of the company — which in turn causes your next dividend payout to rise. Some brokerage accounts, such as through Fidelity Investments (fidelity.com), also reinvest dividends at no charge and will buy fractions of shares, using every penny of your dividend to buy more.

• Because share purchase prices are averaged, you are guaranteed to avoid buying at the top. And, with no fee, every dollar builds your portfolio.

• A potential drawback of DRIPs is keeping track of the cost basis on your shares, which can get complicated if you make a lot of small investments at different prices. But the companies supply regular statements, so it’s easy to keep good records. DripWizard is software that helps track DRIPs. Visit www.dripwizard.com for information.

How to Check a Broker’s BackgroundHere’s what brokers never tell you: They are not required by law to act in your best interest. That shocks most investors, who believe that brokers are required to do so, according to a Rand Corporation study. (People clas-sified as “investment advisers” are legally bound by fiduciary duty to put your interests first.)

It’s a subtle but critical difference that has drawn fire from the Securities and Exchange Commission and spawned new efforts by Congress to crack down


on some practices that fleece investors while lining the brokerage firm’s pockets. The Rand study of investor perception found widespread confusion: “Investors have difficulty distinguishing among industry professionals and perceiving the web of relationships among service providers.” In short, it’s a mess.

What you can do: Check out any broker or investment firm with whom you plan to do business. The financial industry’s self-regulatory organization, the Financial Industry Regulatory Authority (FINRA), is making more informa-tion about broker misconduct publicly available online for free. To check up on a broker — even former brokers hiding out in other financial services sectors — go to the “Investors” section at www.finra.org and click on the “BrokerCheck” box.

BrokerCheck is a free tool to help investors research the professional backgrounds of current and former FINRA-registered brokerage firms and brokers, more than 850,000 current and former brokers, and 17,000 firms. “It should be the first resource investors turn to when choosing whether to do business or continue to do business with a particular broker or broker-age firm,” says Rick Ketchun, CEO of FINRA.

See Your Hidden 401(k) FeesNow, for the first time, there’s a way for you to see exactly what’s happen-ing behind the scenes with your work retirement plan and where it stacks up in a universe of 30,000 other plans in the United States.

“More than 60 million Americans may not be able to retire as early as they thought because they misunderstood how much they needed to invest in their 401(k), didn’t understand the risks they were taking, and paid more fees than they thought,” says Mike Alfred, CEO of BrightScope (www.brightscope.com), a new research firm that rates 401(k) plans on a scale of 0 to 100 (higher is better).

BrightScope now offers a free Personal 401(k) Fee Report. It calculates exactly how much you are paying in fees in a couple of minutes. It’s the first and only way for 401(k) participants to see what they are paying others to run their plan, Alfred says.

If your 401(k) earns low marks from BrightScope, you’ll want to continue contributing at least enough to take full advantage of a company match. Depending on your income, you might consider a Roth IRA. Make your Roth self-directed for maximum control over how your funds are invested.

“Never leave that till tomorrow which you can do today.”

Ben’s Good Cents


Free Sites and Software That Can Make and Save You MoneyThere’s a wealth of small business tools that are free and can save you a lot of headaches when running your own shop.

Here’s a selection of the best:

• Home office software: For many home computer users, the $279 Microsoft Office suite is overkill. As a free yet powerful alternative, try openoffice.org from Sun Microsystems. You can download it for free, and the suite comes with word processing, spreadsheets, a drawing program, plus database and presentation software. You can save any document for use with Microsoft products (or in OpenDocument format), and import them too. OpenOffice can make Adobe PDF files at no cost as well.

• Share large files easily: Sending large computer files can be a pain and an expense if you jam your e-mail or pay for special devices and services to help out. Drop.io is a better way — a private file-sharing solution that’s free, easy, and just downright awesome. Use drop.io (that’s the Web address, with “io” at the end) to share your files privately and collaborate in real time by Web, e-mail, and mobile. Create each “drop” in two clicks and share what you want, how you want, and with whom you want. Yousendit.com also sends big files easily and it’s free, too.

• Free invoicing: Online invoicing tool billingboss.com is designed for small business owners and freelancers to create, send, and track invoices. It’s easy to use, and you can create your first invoice within minutes of signing up. If you’ve been getting by with spreadsheets or use complicated accounting software just for an invoicing tool, Billing Boss might be for you. Unlike some free services, there’s no limit on the number of invoices you can create or send with Billing Boss. You can set it up so customers can pay you online through the site. There’s also comfort in knowing this service is run by one of the world’s leading business software companies, Sage, and that your information is encrypted and securely stored.

• A virtual office online: Microsoft Office Live (officelive.com) is a free, password-protected online workspace where you can store and share files and access your work from anywhere, even from other computers. Its companion site Office Live Small Business is a terrific, affordable place to build a professional-looking online presence, and you get a free Web site and marketing help as well.

• Custom software and tools: Google Pack (pack.google.com) is new from the global search giant. It lets you customize and download your own set of free software and Web tools that includes

Small Business


everything you need to work more effectively both online and off.

• Manage customers: A couple of sites offer free customer relationship management software, including Free CRM (freecrm.com), Zoho CRM (www.zoho.com/crm), and Doorbell (www.getdoorbell.com). These are great tools for small business contact and lead tracking, sales and contact management, sales forecasting, customer service, and business management.

Small Business Tax Tips for Changes AheadA bad economy combined with changes in tax laws and trends are creating new tax pitfalls — and new opportunities to save.

Here are top tips from five small-business tax experts:

• Tap the new rules for business losses: Small business owners need to plan for their net operating losses (NOLs), says CPA Stacey Dell, a tax partner with Mohler, Nixon & Williams in Campbell, Calif. An election must be made at the time a tax return is filed to carry the current year NOL either back or forward. “Check your tax rates and income levels from the prior years,” Dell says. “If income is expected to increase in the future, it may be better to carry the loss forward.”

• Beware of out-of-state surprises: Joel Rothenberg, CPA, a tax partner at Boston-based DiCicco Gulman and Co. says that small business owners should review their state filing requirements for income tax, personal property, or sales and use tax. “State tax authorities are being super aggressive in enforcing their laws and business owners must know the rules in their home state and also determine if their activities in other states trigger a filing requirement,” he explains.

• Take advantage of depressed asset values: “In light of the current econ-omy, which has driven down market values of businesses, entrepreneurs should consider transferring stock in their companies to family members as part of their total estate plan,” recommends Vincent Paolucci, a tax partner with Grassi & Co. in Jericho, N.Y.

• Bank on a C-corporation comeback: The prospect of increased future tax rates means business owners should consider the most appropriate form of business operation, says John Smolke, a CPA with Seattle-based Peterson Sullivan. “C-corporations may make a comeback if individual tax rates are increased to 39.6 percent; if a surtax of 5.4 percent is imposed on high AGI taxpayers; or if additional Medicare taxes are imposed on high-income taxpayers. Paying taxes at C-corp rates may make the most sense, especially during the years when the business needs to build up its equity.”

• Expect more extensions: As 1099 reporting is allowed to move closer and closer to a tax deadlines, more small business owners can expect their business and individual returns to be extended, says Kimberly Lawrence, with Joseph Decosimo & Co. in Chattanooga, Tenn.


Spending

The Right Way to Cut Your Auto Insurance Costs In an all-out effort to trim expenses, some people cut auto insurance coverage in ways that can come back to haunt them. Yes, many of us overspend on auto insurance and could be saving money, but there are smart ways to save, and some not so smart. The difference can be huge for your wallet, both now and the day you need to file a claim.

“Deciding on the right type and amount of auto insurance coverage is crucial,” says Jeanne Salvatore, senior vice president with the Insurance Information Institute (www.iii.org), one of the nation’s leading insurance authorities. “If you are shopping for new insurance, or haven’t changed or updated your policy in the past year or two, you might be surprised by some of the available discounts you’ve been missing.”

Here are six of Salvatore’s best ways to save on auto insurance coverage:

• Cover what counts the most: Even if your car is totaled in an accident, the cost of a car is nothing compared with the liability legal costs you could face for damage you do to others, including bodily injury and prop-erty damage. “That’s why liability coverage is not only mandatory, but crucial,” Salvatore says. Other coverages are flexible, but make sure your liability component is rock solid.

• Slash coverage on aging vehicles: Many Americans are holding onto their cars longer. But as the value of your vehicle drops you might be overpaying for insurance. Consider dropping collision and comprehensive coverage on older cars, Salvatore says. It may not be cost-effective to continue to insure a car worth much less than the amount you pay for coverage every year.

• Maintain a good credit record: This is a shocker to most people who don’t know. Most insurance companies now consider credit information when setting your premium. To them it’s simple math: Research shows that people with good credit make fewer claims. So keep an eye on your credit record and correct any mistakes quickly.

• Bundle your insurance: Many insurers will give you a discount if you buy two or more types of insurance from them, Salvatore says. Also, you may get a reduction if you have more than one vehicle insured with the same company. But beware: If you have been with your insurance company a long time you might already get a long-time customer discount that could make it worthwhile to stay where you are.

• Calculate your deductible “breaking point”: Insurance companies hate to pay out small claims because the filing process itself is expensive. As a result, they jack up rates on policies with low deductibles — the


amount you pay out of pocket before your policy kicks in. Keep in mind this statistic: The average driver submits a claim only once every 11 or 12 years. But by requesting a higher deductible, you can lower your annual premium cost dramatically, Salvatore says. For example, increasing your deductible from $250 to $1,000 could reduce your collision and comprehen-sive coverage cost by 30 percent, depending on the car you drive.

• Go for more discounts: Special breaks can save you hundreds or even thousands of dollars on your premiums. Ask your current insurance provider and any you are considering for a list of available discounts. Some to look for, according to Salvatore:

✓ Discounts to policyholders who have not had any accidents or moving violations for a number of years

✓ A reduction if you recently have taken a defensive driving course

✓ Discounts to motorists who drive a lower-than-average number of miles per year (especially important for a second or third vehicle you might have)

✓ Low-mileage discounts that apply to drivers who carpool to work

✓ Good student discounts for young people who take a driver’s education course or just get good grades in school

Secrets of Becoming a ‘Mileage Millionaire’Frequent-flier miles can put money in your pocket, but there’s a big difference between program points and real cash. Points expire if you don’t accumulate enough to qualify for a free trip before the expiration date arrives. Of course, you also can simply fail to cash them in.

“Earning miles is like anything else; you can just do it, or you can excel at it,” says travel industry veteran Tim Winship, founder of frequentflier.com, a Web site dedicated to educating points collectors.

Winship cautions that your goal is not the miles themselves. Those are just digital “points” in an account. The payoff comes in the form of tangible benefits that those miles can be exchanged for — if you do it right.

Here are six of Winship’s “insider secrets” to maximizing your gains:

• Focus your flying points: Spreading points over a bunch of different programs gets you nothing. Earn 100,000 points in one program and you will be treated like royalty and can cash in for free travel. But earn 10,000 points in each of 10 different programs and you basically have nothing. “Choose one frequent-flier program and concentrate your mileage earning in that program,” Winship says.

• Be a news hound: Most frequent-flier programs send members a regular


e-mail newsletter with program updates and information. Each issue usually has a “bonus box” of some kind listing promotions that can help you rack up even more miles.

• Beware of expiring points: “Once you’ve earned the miles, be sure to redeem them before they expire,” Winship cautions. “Since award tickets are typically valid for a year, make the award ticket request before the miles disappear, even if it’s for a fictitious travel date. You can always have the date changed when plans firm up.”

• Be proactive: Becoming a “mileage millionaire” requires you to step up and make it happen. Once you’ve selected your primary airline program, use all opportunities to channel points from the plan’s partners into your account, including other airlines (especially foreign carriers), affinity credit cards, rental cars, hotels, and a growing list of others that can include mutual funds, phone companies, and even florists.

• Get credit for missing miles: “Airline and other program partners sometimes drop the ball when it comes to reporting your hard-earned miles,” Winship says. So check your statements carefully (online is easiest) for missing miles. Keep boarding passes and receipts to make the task easier.

• Monitor point-earning possibilities: Airlines constantly offer ways to earn points, but these special deals come and go quickly. A great way to keep up is to sign up to receive notices of special promotions. For example, both American Airlines and United Airlines recently offered limited-time double elite-qualifying miles and extra elite awards, the gold standard among frequent-flier plans.

Low-Cost College Loan Money — for Parents!A little-known alternative to student debt is a PLUS Loan. It is avail-able through two sources: the Federal Family Education Loan Program (FFELP) and the William D. Ford Federal Direct Loan Program.

Parents can borrow the full amount of what it costs for a child to attend college (including tuition, fees, room and board, and other school charges) minus any aid the student gets from other sources. Parents can begin repaying the loan as soon as 60 days after the money is disbursed or wait to start payments until six months after the student either grad-uates or no longer is enrolled. You can see full details of the program at the Federal Student Aid Web site (studentaid.ed.gov). Click “Federal Student Aid Programs” on the left side of the page.

Ben’s Good Cents“Work as if you were to live one hundred years; pray as if you were to die tomorrow.”


Secrets to Successfully Challenging Your Property Tax Assessment If the value of your home has dropped, it could mean you’ll receive a property tax bill this year that’s higher than it should be — possibly by hundreds or even thousands of dollars.

The “assessed value” of your home is the key to saving money. That’s what the taxing authorities say your home is worth. These days, odds are high that they are wrong. Overall, the National Taxpayers Union (NTU), a nonprofit advocacy group, estimates that a whopping 60 percent of U.S. homes are worth less than their assessed values on property tax books. Although there’s nothing you can do about the property tax rate in your area, you can challenge your home’s assessed value — and that will cut your taxes.

Don’t expect the tax authorities, usually the county assessor’s office, to come to your rescue. Property tax assessors don’t reassess values each year; when they do, downward revisions are rare. Cash-strapped local governments are resisting the homeowner revolt by trying to keep assessments from drop-ping, thus lowering the taxes they can collect. Reductions are especially painful to them — and profitable to you — because the savings repeat year after year, adding up to huge dollars over time.

Try this five-step tax-lowering approach:

• Don’t wait for your bill to show up: The sooner you can get a jump on challenging a property tax assessment, the better. You have about a 1-in-3 chance, on average, of lowering you assessment, if you’ve taken all of the proper steps in the appeals process dictated by your local tax office, says Pete Sepp, a vice president with NTU. In most cases, you can file an appeal at any time, although you might need to hit a deadline to have any changes be effective on your next bill.

• Learn the process: Local assessment offices are mini bureaucracies. There are established rules and procedures for challenging a property assess-ment and you will have to know them and follow them. The quickest way is to locate the rules on the tax assessor’s Web site. Call the office to get the Web address.

• Build your case: Check for errors the assessors might have made. Chances are good they never even looked at your house, or did a simple “drive-by” assessment. Errors are common when transferring written data into computer files. Assessors often misread building permits as well. Compare your prop-erty assessment with similar homes in your area. This information is often available on the assessor’s office Web site. If yours is way out of line, you may have an instant case. “Even if you don’t find errors, it’s still possible your entire neighborhood has been over-assessed,” says Richard

Your Home


“Little strokes fell great oaks.”

Ben’s Good Cents

Roll, president of the American Homeowners Association (AHA).

• Decide whether your case is winnable, or worth winning: Once you’ve gath-ered pricing information, you could find that the assessment isn’t far off after all. Real estate values are highly localized, and because values are down 10 percent to 20 percent in one area doesn’t make it true for others.

• Consider help, but be careful: The rash of property tax challenges has spawned a cottage industry of professionals who will handle your chal-lenge for a fee. But the costs can take a big bite out of your savings, or worse, end up costing you money if the appeal fails. Don’t rush to hire an appraiser: Some tax offices won’t even look at outside appraisals while others consider them of marginal value or require the appraiser to appear in person (another expense for you). AHA offers a helpful Property Tax Reduction Kit (www.ahahome.com) that takes you step-by-step through the process. It’s free to AHA members (you can sign up for a free 30-day member-ship and get the kit), or $29.95 to nonmembers.

Know Your Home Remodel ROIWhen a business invests money in a new project or product, it wants to know what the “return on investment,” or ROI will be. You should do the same when choosing a home improvement project. According to home remodeling experts at the National Association of Realtors (NAR), here are the seven home improvement projects that will get you the most bang for your buck if you sell your home:

• Minor kitchen remodel: Average cost $17,900; 85.2 percent recouped

• Window replacement (wood): Average cost $11,000; 85.3 percent recouped

• Bathroom remodel: Average cost $12,900; 84.9 percent recouped

• Window replacement (vinyl): Average cost $10,200; 83.7 percent recouped

• Two-story addition: Average cost $105,300; 83.2 percent recouped

• Major kitchen remodel: Average cost $54,200; 80.4 percent recouped

• Attic bedroom remodel: Average cost $44,100; 79.9 percent recouped

If you’re looking to sell your home soon, however, focus your efforts on exterior projects, says Kermit Baker of Harvard University’s Joint Center for Housing Studies. Homes are harder to sell these days, and anything that adds “curb appeal” gives you an advantage. Remember, paint (and painting it yourself) is cheap.


“You can always employ your time better than in polemics.” — Ben Franklin

Dale Carnegie’s most famous book, published in 1936, is titled, How to Win Friends and Influence People. One of Carnegie’s philosophical mentors was none other than Ben Franklin, who knew and practiced the secrets of social interaction and successful diplomacy. In fact, Carnegie drew many lessons from Franklin. He wrote, “Benjamin Franklin, tactless in his youth, became so diplomatic, so adroit at handling people, that he was made American Ambassador to France.”

Franklin was considered the most affable of the founders. John Adams was known to be cantankerous and argumentative, while Thomas Jefferson and George Washington were aloof. When the public was polled, “Which founder would you like to have a beer with?” Franklin won handily. Though consid-ered a genius, the Philadelphia diplomat could spend his evenings equally at ease with a top scientist or a lowly cobbler. He once remarked, “I find I love company, a chat, a laugh, a glass, and even a song, and relish the grave observations and wise sentences of old men’s conversations.” And he was famous for his way with the ladies, too.

The French were so endeared by Franklin’s diplomatic ways that he practi-cally bankrupted the king’s treasury to finance the American Revolution. While George Washington won the war at home with his military prowess, Franklin won the war abroad with his savoir-faire.

But it’s important to note that Franklin’s social skills did not come naturally. He learned in the school of hard knocks how to win friends and influence people. Earlier in his career, he would get into arguments with his friends, always trying to prove how much smarter he was. Doing that, he lost friends and alienated people. When it came to arguing, Franklin quickly learned this lesson: “If you argue and rankle and contradict, you may achieve a victory sometimes; but it will be an empty victory because you will never get your opponent’s good will.”

So he decided to take a different tack. “I will speak ill of no man, and speak all the good I know of everybody.”

He gave an example in his Autobiography of how he befriended an enemy, a gentleman of fortune and education who opposed Franklin in the Pennsylvania

Franklin Matters

On Winning Friends and Influencing PeopleBy Mark Skousen


Legislature. He wrote, “I did not, however, aim at gaining his favor by paying any servile respect to him, but, after some time, took this other method. Having heard that he had in his library a certain very scarce and curious book, I wrote a note to him, expressing my desire of perusing that book, and requesting he would do me the favor of lending it to me for a few days. He sent it immediately, and I returned it in about a week with another note, expressing strongly my sense of the favor.”

When they next met in the House, Franklin reported that the man approached him and for the first time expressed great civility. “He ever after manifested a readiness to serve me on all occasions, so that we became great friends, and our friendship continued to his death. This is another instance of the truth of an old maxim I had learned, which says, ‘He that has once done you a kind-ness will be more ready to do you another, than he whom you yourself have obliged.’ And it shows how much more profitable it is prudently to remove, than to resent, return, and continue inimical proceedings.”

In another part of the Autobiography, Franklin explained his new social philosophy, honed in his business networking group, the Junto: “I made it a rule to forbear all direct contradiction to the sentiments of others, and all positive assertion of my own. I even forbid myself, agreeably to the old laws of our Junto, the use of every word or expression in the language that imported a fixed opinion, such as certainly, undoubtedly . . . And to this habit (after my character of integrity) I think it principally owing that I had early so much weight with my fellow-citizens when I proposed new institutions, or alterations in the old, and so much influence in public councils when I became a member; for I was but a bad speaker, never eloquent, subject to much hesitation in my choice of words, hardly correct in language, and yet I generally carried my points.”

Franklin didn’t always live up to his social strategy. He still had his share of enemies, including the Pennsylvania proprietor Thomas Penn, fellow commissioner Arthur Lee, and even fellow founder John Adams. But, when he died, more than 20,000 people came to his funeral.

Mark Skousen, Ph.D., is a sixth-generation grandson of Benjamin Franklin. Dr. Skousen is an economist and holds the Benjamin Franklin Chair of Management at Grantham University. He is the author of The Compleated Autobiography by Benjamin Franklin.

Be free,

“Franklin’s social skills

did not come naturally. He

learned to win friends.”


The Franklin Prosperity Report is a publication of Newsmax Media, Inc., and Newsmax.com. It is published monthly for $49 per year and is offered online and in print through Newsmax.com and Moneynews.com.

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Ask Franklin

I plan to replace at least one appliance in my home this year. Which one gives me the biggest break on my electric bill?

— Josephine S., Chandler, Ariz.

Refrigerators are typically the most energy-hungry appliances in the home, so the more efficient your refrigerator is, the more money you will save. Older refrigerator are typically two to three times more costly to run than newer models, the energy stan-dards for which became effective in 1992. If your refrigerator is more than 10 years old, you definitely should consider replacing it. For more information, see The American Council for an Energy-Efficient Economy (www.aceee.org), which has energy ratings of various models of refrigerators.

What’s a better money saver: Washing the dishes in the machine or by hand? I actually like hand-washing, it relaxes my mind, but I wonder if the machine is more efficient?

— Rex B., Plano, Texas

The answer depends on several factors: How much water the dishwasher uses (energy effi-cient models use 4 gallons per cycle while older ones use 6 gallons or more); how many dishes you are washing; and your water-use habits while you are washing them. Assuming you have a full load of dishes to clean and your dishwasher is energy efficient, the machine wins. However, washing less than a full load and being stingy with water could make hand-washing the more efficient choice. Also, since you find hand-washing so relax-ing, doing dishes by hand may save you the cost of a therapist, so you’ll have to factor in that benefit as well.

SEND A QUESTION TO DR. FRANKLIN! If you have a vexing money question, send it to [email protected] or by regular mail to Ask Dr. Franklin, P.O. Box 20989, West Palm Beach, FL 33416. We’ll find an expert who can respond with the inside scoop.

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