The Clark Howard Podcast: Protecting Financial Accounts & Navigating Rising Airfares
Episode: February 24, 2025

Hosted by Clark Howard

Introduction

In this episode of The Clark Howard Podcast, host Clark Howard addresses two primary topics: safeguarding financial accounts, especially for the aging population, and strategies for managing the recent surge in airfares. Throughout the show, Clark provides actionable advice, answers listener questions, and shares insights to help listeners make informed financial decisions.

Protecting Financial Accounts: Safeguarding Against Cognitive Decline

Timestamp: 00:52 - 06:40

Clark begins by emphasizing the importance of protecting financial accounts from potential exploitation, particularly as individuals age and may experience cognitive decline. He highlights the vulnerability of seniors whose decision-making abilities might deteriorate over time, making them susceptible to financial scams and poor financial choices.

Key Points:

• Cognitive Decline and Financial Vulnerability: With an aging population, many seniors are at risk of having their finances mismanaged or stolen due to decreased mental faculties.

• Trusted Contacts: Clark urges listeners to designate trusted contacts with their financial institutions. These contacts can receive alerts about unusual account activities, providing an early warning system to prevent financial disasters.

• Procedures Across Financial Institutions: Modern financial organizations offer procedures where, upon detecting suspicious activities, they notify the trusted contact. This proactive approach helps in mitigating potential financial losses before they occur.

• Difference from Power of Attorney: Unlike a power of attorney, which only grants authority after the account holder's capacity declines, having a trusted contact provides immediate alerts without granting control over the accounts.

Notable Quote:

"What I'm asking you to do is today, when everything's fine, think about who is that trusted individual or who are those trusted individuals and contact the financial organization."
— Clark Howard [00:52]

Actionable Advice:

1. Identify Trusted Individuals: Choose family members or close friends who can act as guardians for your financial interests.
2. Contact Financial Institutions: Inform your banks, brokerage firms, and other financial entities about your trusted contacts.
3. Regularly Review Account Statements: Stay vigilant by regularly monitoring your financial statements for any irregularities.

Listener Questions and Expert Responses

1. Removing Private Mortgage Insurance (PMI)

Timestamp: 06:40 - 08:34

Listener: Tina from [Location]
Question: How do I get rid of PMI on my mortgage?

Response:

Clark explains that as home values have increased in many areas, homeowners may now have sufficient equity to eliminate PMI. He advises reviewing the loan documents for specific procedures and considering obtaining an appraisal to demonstrate increased home value. Removing PMI can result in significant monthly savings.

Notable Quote:

"The cost of that appraisal is worth it because the amount of money you're no longer throwing away on private mortgage insurance."
— Clark Howard [07:26]

Action Steps:

• Review Loan Agreements: Understand the terms and conditions regarding PMI removal.
• Obtain a Professional Appraisal: Secure an appraisal to prove increased equity.
• Contact Your Lender: Initiate the process to remove PMI based on your loan's specific requirements.

2. Nonprofit Organization Tax Issues

Timestamp: 08:34 - 10:50

Listener: Tim from Idaho
Question: How can our nonprofit organization resolve unpaid payroll taxes and penalties accrued during COVID-19?

Response:

Clark advises seeking assistance from a CPA who may be willing to volunteer their services to negotiate with the IRS. Engaging an experienced CPA or an enrolled agent can help in setting up settlements that waive penalties in exchange for paying the owed taxes, thereby preserving the nonprofit's operations.

Notable Quote:

"What you're looking for in a situation like this is someone who can negotiate a settlement with the IRS that waives penalties in return for payment of the tax."
— Clark Howard [09:15]

Recommendations:

• Engage a CPA or Enrolled Agent: Leverage professional expertise to negotiate with the IRS.
• Explore IRS Programs: Look into IRS offerings that assist nonprofits in resolving tax liabilities.
• Educate Board Members: Ensure all board members are aware of financial protocols to prevent future issues.

3. 529 Plans and Financial Aid

Timestamp: 10:50 - 13:20

Listener: Barry from Pennsylvania
Question: Should I transfer my 529 plan from my name to my parents' to avoid it being reported on FAFSA?

Response:

Clark clarifies that altering the ownership of a 529 plan is not a viable solution. Instead, he explains the "grandparent exception," which allows 529 plans owned by grandparents to no longer negatively impact a child's financial aid eligibility. However, private institutions may still inquire about such accounts, potentially affecting aid packages.

Notable Quote:

"Under the prior tax rules, a 529 account owned by a grandparent for the benefit of a grandchild, the kids were discriminated against in financial aid analyses because the money came from a grandparents' 529, not a parent's 529. That rule was changed with this grandparent exception."
— Clark Howard [11:14]

Advice:

• Understand 529 Plan Rules: Familiarize yourself with current regulations regarding 529 plans and financial aid.
• Maintain Proper Ownership: Avoid unnecessary changes to account ownership that could complicate financial aid assessments.
• Consult Financial Aid Experts: When in doubt, seek guidance from financial advisors or educational financial aid specialists.

Navigating Rising Airfares: Strategies to Save on Travel

Timestamp: 15:38 - 23:36

As airfares have been on the rise due to increasing demand and dynamic pricing strategies by airlines, Clark offers several tips to help listeners mitigate these costs:

Key Strategies:

1. Flexible Travel Plans: Being open to adjusting travel dates, departure times, and even destinations can lead to significant savings.

2. Use Multi-Airline Search Engines: Tools like Google Flights and Hopper provide comprehensive search results across various airlines, helping identify cheaper options that individual airline websites might not display.

3. Leverage Frequent Flyer Points: Clark suggests utilizing frequent flyer miles for flights to new or less popular destinations, where redemption rates can be more favorable.

4. Monitor Introductory Routes: When airlines launch new routes, introductory fares are often lower. Booking early on these routes can result in substantial discounts.

5. Shipping Around Dynamic Pricing: Understanding that airfares fluctuate based on supply and demand allows for better timing when purchasing tickets.

6. Cruise Sailing Times: Similar to airlines, cruise prices vary based on booking times and seasonality. Websites like CruiseCritic.com can help find deals by identifying weeks with lower demand.

Notable Quote:

"The more flexible you can be about day of departure, time of the day and airline you fly, you will push back the price increases the airlines are pushing right now."
— Clark Howard [20:34]

Example:

Clark shares a personal anecdote where he discovered a significantly cheaper nonstop American Airlines flight via Google Flights compared to other airlines, illustrating the benefits of using broad search tools.

Actionable Steps:

• Start with Broad Searches: Use multi-airline platforms to explore all available options.
• Be Flexible: Adjust your travel plans to take advantage of lower fares.
• Stay Informed: Keep an eye on new route launches and book early to secure the best prices.
• Utilize Points Wisely: Redeem frequent flyer miles for flights that offer the most value.

Listener Interactions and Additional Tips

Cruise Line Gratuities

Timestamp: 20:27 - 23:36

Listener: Krista from Arkansas
Question: Why do some cruise lines charge gratuities that don't directly benefit the staff?

Response:

Clark explains that while cruise lines often include gratuities as part of the fare, passengers can opt to decline automatic charges and instead provide tips directly to the staff members who provided exceptional service. This ensures that the gratuities genuinely reward the individuals who served you.

Notable Quote:

"When you arrive on the ship, you can go to guest services and refuse them, charging them to you on the cruise. And you need to do this early in the cruise because they'll start."
— Clark Howard [21:09]

Advice:

• Decline Automatic Gratuities: Opt out during check-in and distribute tips personally.
• Provide Cash Tips: Allocate tips to specific staff members to ensure they receive them directly.
• Research Cruise Policies: Utilize resources like CruiseCritic.com to understand gratuity practices of different cruise lines.

Valet Parking Risks

Timestamp: 23:36 - 25:59

Listener: Jason from Michigan
Question: What risks are associated with using valet parking services at airports?

Response:

Clark outlines potential risks such as unexpected vehicle damage or unauthorized use. He recommends documenting your vehicle's condition before handing it over by taking a timestamped video. Additionally, understanding the valet service's liability policies can mitigate potential issues.

Notable Quote:

"With a rental car, you shoot a video walking around your vehicle of it. And that way you have proof of the condition of the vehicle before you turned it over to the valet parking service."
— Clark Howard [24:42]

Recommendations:

• Document Your Vehicle: Record the car’s condition before valet service.
• Understand Liability: Clarify with the valet service what liabilities they cover.
• Choose Reputable Services: Opt for established valet companies with positive reviews.

Closing Remarks

Clark concludes the episode by encouraging listeners to stay informed through various channels such as the podcast, YouTube, radio, and the Clark websites. He reiterates the mission to empower consumers to save more, spend less, and avoid financial pitfalls.

Final Quote:

"The idea is to be wherever you want, that you receive information whatever way you prefer. That empowers you so that you can save more, spend less and avoid getting ripped off."
— Clark Howard [26:14]

Resources Mentioned

• Trusted Contact Setup: Contact your financial institutions to establish trusted contacts.
• Appraisal Services: Engage certified appraisers for home equity evaluations.
• Tax Assistance for Nonprofits: Seek CPAs or enrolled agents for IRS negotiations.
• Financial Aid and 529 Plans: Consult with financial advisors regarding 529 plan ownership.
• Travel Booking Tools: Utilize Google Flights, Hopper, and CruiseCritic.com for finding travel deals.
• Trip Insurance: Explore options on insuremytrip.com for vacation rental cancellations.

By addressing these critical topics, Clark Howard equips listeners with the knowledge and tools necessary to protect their finances and navigate the complexities of modern travel pricing. Whether you're safeguarding your financial accounts or planning your next vacation, the insights provided in this episode aim to enhance your financial well-being and decision-making.