Clark Behind The Headlines
From HLN's Money Expert Clark Howard

There are so many web sites right now to buy deals on. And the Wall Street Journal just did a comparison of the big three general merchandise sites: amazon.com, walmart.com and ebay.com.

In their testing, the best overall experience for shoppers - not necessarily always the lowest price - was amazon.com. The second best was eBay. EBay’s pricing was cheaper, especially if you were willing to take used or reconditioned goods. And then way back, trailing the pack according to the Wall Street Journal, was walmart.com. The shopping experience was really a bust, according to the story.

But Wal-Mart is a company that you never count out. Because they just stay at something with real determination and eventually, if the Wall street Journal is right, a year from now they won't trail the pack by so much.

Now I buy stuff on eBay infrequently, but several times a year. And my key criteria for who I buy from is - especially with their new tougher system of rating sellers - I don't even consider someone who has an approval rating below 99%. In the eBay world of feedback, the only thing you can really go by is what your peers have said. And if you stay above 99%, the chance you're going to have a problem is really almost none

Now I had an experience recently where I ordered a charger for a new cell phone. And I thought I was ordering the right one. Including shipping it was $4, which is funny considering how much you'd pay in a cell phone store. And they come in the mail and I had gotten the wrong one. It was my fault.

Well, the seller has a policy that they want everybody to be happy and even if you made the mistake, they replace it for free with the right stuff. I just couldn't do it. I could not take advantage of the seller because it was my fault. So I just lost $4. I could not turn around and take advantage of somebody who had such a generous policy in how they treat customers.

But that shows you how high the stakes are right now in the world of making sure that people have a good buying experience online.

HELP ME CLARK!
From HLN's Money Expert Clark Howard

Tara:
Please explain the difference between annuities and variable annuities. My financial advisor is trying to get me to invest part of my 401K in a variable annuity. It sounds good, but what am I missing?

Clark:
Well, first, an annuity is an insurance contract.

They come in many different flavors such as immediate annuity, variable annuity, fixed annuity and indexed annuity. The annuity market is an extremely complicated one.

Variable annuities have massive commissions to them and you would never, ever put 401k money in a variable annuity. Because with a variable annuity, you're paying big fees and commissions to have it in a tax-sheltered account.

But a 401k already is a tax-sheltered account. So it would be completely inappropriate to have a variable annuity, which is a deferred plan, invested in mutual funds when a 401k is already a deferred plan with access to mutual funds.

Money Coach with HLN’s Money Expert Clark Howard

Having trouble managing money? Do your money goals seem impossible? Clark Howard wants to help you!

We’re looking for individuals or families who are willing to be profiled on HLN.

Those chosen will get money advice and information from Clark Howard.

This week’s question comes from Ginny Wilkey of Reno, Nevada.

Clark Behind The Headlines
From HLN's Money Expert Clark Howard

I read some bad news recently. There was a story on extended warranties and extended service contracts, and the shocker is, their sales are up this year by about 10%. I thought the word was getting out there about what a bad deal extended warranties are.

Close to half of people buy extended warranties on computers. I’m having trouble thinking of a product that would be worse to buy an extended warranty on than a computer. It’s a really bad financial decision. Let’s say you bought a computer three years ago and that computer croaks. You had an extended warranty that covered three years. The manufacturer takes the first 90 days to one year and then the extended warranty picks up the rest. What is its value in the marketplace after all that time? Well, if I were to buy a doorstop, it would cost me a dollar. I’m not sure your computer is worth that. Based on Moore’s Law, which is not a real law, a computer essentially becomes worthless to a used computer buyer after about 18 months.

If you were buying a flat screen television two or three years ago, you absolutely had to buy an extended warranty because they were going to break. Think about how much money you put into them. The truth is, that TV that somebody bought three years ago has zero value now. Well, maybe on Craigslist you can get $25 for it. The capabilities of the ones now are so much greater and they cost a fraction of what they cost three years ago.

I’m neutral on car warranties. If you’re not someone who’s sitting on a few thousand dollars in the bank when your transmission breaks, you’ve got a problem. Think about what you are insuring versus the market value of replacing it.

Why is it that the sales people push extended warranties so hard? Because that’s where the profit is. Consumer Reports says don’t buy them. Most electronics are built and priced to be replaced every couple of years. Never insure rapidly depreciating assets. No category depreciates faster than electronics and computers. The next time someone at an electronics store twists your arm, remember my words…never buy an extended warranty!

HELP ME CLARK!
From HLN's Money Expert Clark Howard

Phil:
Should I purchase one of the identity theft protection programs? Are they legit and are they actually needed? I'm 66 and working full time. I see the ads and obviously worry about my funds.

Clark:
The identity theft protection plans that you see offered that tend to be $10 to $15 a month are legit but unnecessary. In fact, in my book they're a waste of money.

If you're really worried about someone stealing your identity, there's an ironclad, solid way for you to protect yourself, and it's known as credit freeze.

That's where you get a secret code that locks down your credit with each credit bureau. Even if somebody gets your social security number, they know your former and current addresses, they know your mother's maiden name, they know your date of birth - everything about you that would normally be used to steal your identity - they can't do anything with it because they don't know your secret code.

You want to know more about credit freeze? Go to cnn.com/clarkhoward and you can see how to freeze your credit. Depending on your state and circumstance, it costs from zero dollars up to a maximum of $10 per credit bureau.

Clark Behind The Headlines
From HLN's Money Expert Clark Howard

When you buy a computer, you choose how you’re going to access the internet. If you’ve got a laptop and you go somewhere that has free wi-fi, you pop it open, go on their network and you surf the web. At home, you would choose whatever internet service you were going to use and you would pay them. If you’re not happy, you fire them and go to somebody else. You are a free agent. When you’re on that computer, you can visit any website you want and use whatever email service you want.

Now, I want you to think this way for a second about how messed up the cell phone system is. Cell phone companies sell you the phone, require you to sign a contract, and control what that phone can do. You’re basically their slave for a two-year period.

Enter Google, who is about to drop a nuclear bomb on the cell phone industry. Google is getting ready to launch Nexus One, which is a whole new way of thinking about data, calling, the web, e-mail, texting, and functions yet to even be dreamt of. With Nexus One, you will have a communicator that you will be able to use as you wish on any network you wish to go on. The cell phone industry in the United States hates this idea. They hate losing control of the customer.

Although Google is taking this next step, the real credit goes to Apple. The iPhone opened up people’s minds to the fact that you should be able to control what a device does.

With Nexus One, you buy the device that will be multi-platform. You will have a phone number that follows you anywhere around the globe. You’ll be able to use that device and number and not have to pay a fortune to make or receive calls on it. It’s revolutionary!

But the most important thing is no matter what; don’t sign a contract with a cell phone company right now. It’s important that if your contract is up, you stay a free agent. More than half of the people that signed up for cell service over the last several months have signed up on non-contract plans. You’re going to be much happier if you don’t have a contract than if you’re handcuffed to one.

HELP ME CLARK!
From HLN's Money Expert Clark Howard

Kathy:

I have recently inherited enough money to pay off my mortgage ($130,000) and still have a lot left over ($100,000.) I also have $12,000 in savings for emergencies. I am single, 62 years old and give 10% to charity each year. Should I pay off my mortgage?

Clark:

Generally, the answer to that question depends on what your interest rate is. If the interest rate on your mortgage is 5.5% or higher, then it would be a no-brainer to pay that mortgage off. If your mortgage interest rate is below 4.5%, it's really a lifestyle choice if you want to pay off the mortgage just so you have the peace of mind that you no longer have that obligation. But I'll tell you, if you have a mortgage rate that is 4.875% or less, forget the piece of mind. Keep the money and pay the mortgage off as agreed for the entire length of the loan. So you've got a three-parter here. One, your interest rate is higher than 5.5%, pay it off. Your interest rate is between 5% and 5.5%, it's a tossup. If your interest rate is below 5%, no way you should rush to pay it off.

HELP ME CLARK!
From HLN's Money Expert Clark Howard

Urain:

My brother has been deceased since 2002, and yet I received a collection letter in his name at my address recently. If a credit report was pulled it would show my brother as being deceased and after seven years, from my understanding, it should have been written off. Correct?

Clark:

There are several things here. First, if your brother was still living, statute of limitations is how long somebody can sue you against the debt. Seven years is how long it can stay on your credit report. But the collection agency is looking for any last known address for your late brother. They don't care that he's deceased. They have no heart. But the reality is, you have no obligation for that debt, nor does any other family member. Best thing to do with that is put it in the circular file. That's right. You throw it in the trash or recycle it.

Clark Behind The Headlines
From HLN's Money Expert Clark Howard

I recently dug in and researched all the college savings plans available around the country so I could update the guide on my web site. And did that take a lot of time! But did I find a pleasant surprise. The plans known as 529 plans have gotten much better. Not all of them are better, but a lot of them around the country have improved.

If you're familiar with 529 plans, you know that you can put money into them and if it's used later for eligible college expenses, then all the earnings accumulated through the years are yours tax-free.

529 plans were growing like crazy earlier this decade. And then when the bottom fell out of the economy and the stock market, 529 plans just froze, essentially. They stopped growing and people stopped contributing to them. Because when you're at a point in your life where you're just trying to put food on the table, putting money aside in a college savings plan goes by the wayside, as it should.

My 529 guide went from the #1 most-visited section of my web site, to way down the list. There's some sense that people are feeling a little more confident now, because more people are going to my 529 guide.

I said a lot of plans were getting better. So, what makes a 529 plan better?

Each plan has an annual fee for the manager of the money for your kids' college. And those management fees have declined a lot since I revised my guide last year. It is now much easier for you to find a good plan.

The way Congress wrote the law is that states have to sponsor 529 plans. So, each state can sponsor one or more plans. In most situations, your money can go into any state's plan. But if the state where you live has a good plan, you should put your money there because you may - if your state has an income tax - have a tax benefit for putting money into your state's 529 plan. And remember, at the time you spend the money, it's tax-free if it's used for college expenses.

A single state may have several plans. But all of them could be junk. So in my 529 guide, I have links for you to the best plan available in each state. The only plans I recommend are commission-free plans.

If your state is not on my list, you should go with one of the Dean's List with High Honors plans. The three best plans in America are sponsored by the states of Utah, Iowa and New York. Utah is my favorite of all the 529 plans in America. But again, if you live in a state that's on my Honor Roll, go into your state plan. For the complete list, click here.

Clark Behind The Headlines
From HLN's Money Expert Clark Howard

It’s possible for you to have a car with great fuel economy and still have fun driving it.  You can find proof at the L.A. Auto Show where revamped and muscular 4-cylinder engine vehicles were the star attraction.  And one of them, a diesel, won green car of the year!  Now think about that.  A green diesel!  People old enough recall the last big wave of diesels in the United States will remember cars that belched black smoke, went 0-60 in a day and a half, and were often subject to mechanical breakdown.  It pretty much soured an entire generation of Americans against diesel.

Diesels in the modern era are a different thing.  In the United States now, we have adopted a clean diesel fuel.  The engines are very clean burning engines, and the fuel they burn is an ultra clean type of diesel fuel.  The Audi that won green car of the year is the A3 TDI (Turbo Direct Injection) station wagon.  It’s a substantial size vehicle that has get-up-and-go, and gets 30MPG in the city, 42MPG on the highway.  These are real numbers.  The base sticker price is $29, 950.

All of the European automakers have a great deal of experience making these vehicles with diesel engines, and the fuel economy they get can be exceptional. Volkswagen used to sell a 4-door diesel car that could get 100MPG on the highway.  No hybrid gets anywhere near a 100MPG.  So as you’re looking for a fuel efficient car this holiday season, remember, it doesn’t have to come wrapped in a hybrid bow.  It could be a diesel and who knows what else is coming.