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.

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

Stephanie:
I was laid off on August 18, 2009 and have yet to find a new job. I was given a severance package from my company and was told I would be eligible for unemployment, but I am unclear as to when I can apply. Any assistance would be great.

Clark:
The rules about when you become eligible vary so much by state.

As a general rule, once the severance payments stop, that's when your eligibility for unemployment begins.

That's why so often people recommend that you take a lump sum at the time of separation rather than having the employer pay you out over multiple pay periods or multiple months, so that you speed up your eligibility for the unemployment insurance.

But again, unemployment compensation is a joint state/federal program. The rules vary by state, so you might find that in your state the rules are such that you can get unemployment compensation even while you're still being paid out your severance.

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 Andy and Debbie Rishmawi of Flushing, Michigan.

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

As I expected, new cars are becoming a deal again. We went through a real dry spell of opportunity for buyers after the “Cash-for-Clunkers” program ended. Dealer lots were pretty thin and the automakers had cut production, but now lots are filling up again. So what do you need to know if you are in the market for a new car?

When buying a new car, most of us think first about the sticker price, the cost of insurance, gas, maintenance, etc., but the real cost is depreciation: how much value the vehicle loses over the first years of ownership.

According to Kelly Blue Book, an average vehicle maintains less than 35-percent of its original value after 5 years. Imagine that! KBB has just published its 2010 list of vehicles that are predicted to best hold their value. Lexus and Toyota topped the list.

Of course, I prefer used cars because someone else has essentially paid for the depreciation. But, if you keep your car for a long time, then it’s fine to reward yourself with a new vehicle. Just make sure you keep it for at least 10 years. That’s how long it usually takes to absorb all the depreciation. Happy hunting!

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

Sarah:
We recently saw on your show a discussion about self directed IRAs and putting real estate in them, which you discouraged. What about forming a LLC inside your IRA? Would you still get the tax credits?

Clark:
No, you wouldn't. The thing is, real estate has so many inherent tax advantages being owned as a traditional taxable investment, and it's unnecessarily reinventing the wheel to try to figure out how to own property inside an IRA. If you're looking for some real estate exposure inside an IRA, the smartest, easiest, lowest-cost way to do it is to buy a real estate mutual fund and abandon the whole idea of an exotic way of holding actual real estate inside an IRA.

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

One of the oddest things going on in the recession right now is something that the author of "Freakonomics" might have written. Do you know that in many big cities, burglaries are going down, not up?

The natural assumption is when you're in a terrible economy, people might be more likely to steal. But that’s not what’s happening. Why? The answer is really more supposition from law enforcement than fact, but it’s quite a riddle.

There are so many more people who can't find work, so they’re at home. They’re essentially providing new eyes and ears for police departments to protect neighbors. So it's like a neighborhood watch program on steroids. 

Now, not everybody has a neighbor next door who's going to be nosey, but technology is providing an answer to consider.  There are now very affordable self-install cameras that you can put in your home. If you get a call that the burglar alarm's gone off, you can use the Web to look and see, real time, what's going on at your property.

One thing I do recommend is that if there's a part of your home where you tend to wander around more informally dressed, or not with a lot of clothes on, that you don't put cameras in that part of your home. You should put them in the public areas of your home and outside.

These used to only be available to commercial properties like stadiums or office buildings. As the cost of the digital technology has steadily declined, it's reached a point now where it's completely affordable for an individual to have. The quality of the video is not something you race to Youtube to watch. It's very, very basic video, but enough that you can certainly see what's going on.

These cameras take the place of the time lost from a burglar alarm going off until a private security person could go by the house and see what's going on. You create an instant ability to protect yourself, for cheap.