Airlines have charged extra for oversized or overweight bags for a long time now. Citing rising operating expenses, mainly from the high cost of fuel, many carriers have started to reduce or eliminate their free checked baggage allowances.

I heard that the airlines had started doing this, so I checked with United before a recent trip. The airline’s new policy is that each passenger can check one bag for free. Each additional bag is $25. The problem with that policy for me was that I was traveling with my daughter. Since she was an infant in arms, as opposed to a ticketed passenger, she was not allowed any checked luggage. In addition to her clothing and supplies, we needed to bring a stroller and car seat as well. While the United rep on the phone said that these items should be allowed, the gate agent had a different interpretation of the rules. I was told that I could carry or gate-check the items for free, but to check them through to my destination would cost $25 each. The problem with such a policy is that it contradicts what they claim it is trying to accomplish. If I can get the items on the airplane for free, the fact that I’m not allowed to check them really means that United was more concerned about making my life difficult than the drag my additional items would have on their fuel efficiency.

On May 21st, American Airlines, which had already adopted a $25 per additional item after the first policy similar to United, took the fees one step further. They now plan to charge $15 for the first checked item. Other carriers, many of whom adopted the United $25 policy, may soon follow suit. So my luggage for a round trip with a baby (two suitcases, a stroller, and car seat) that used to cost me nothing will now cost me $150 on United and $80 on American. (American still allows car seats and strollers to be checked for free, unlike United.)

Security concerns over items brought onboard the aircraft did a great deal to reduce crowding in overhead bins. These latest policies will force people to once again cram as much as possible into the already crowded passenger areas. It is nearing the point where shipping luggage will be more economical than taking it with you, which may be the goal of the airlines.

We are all feeling the impact of rising fuel prices even if we cut back on our own consumption. Everyone from the airlines to food producers are raising their prices and fees to try to compensate for their higher costs. At least in the area of air travel, planning ahead may allow you to minimize the impact of these new charges.

When you are facing foreclosure on your home, you may look for any help you can get. The Better Business Bureau warns that a growing number of foreclosure rescue services are more interested in scamming you out of money than helping you to keep your home.

The growth of this scam is directly tied to the increasing number of homes facing foreclosure as a result of the sub-prime lending crisis. The Better Business Bureau reports that "as many as 1.7 million homeowners could lose their home to foreclosure in the next couple of years."

The scam works as follows: Homeowners facing foreclosure are solicited by a rescue company that promises to renegotiate the terms of their mortgage and stop foreclosure for a fee. The fee can be in excess of $1,000. Paying so much might seem risky, so the rescue firms offer a money back guarantee if they can’t do as promised. Many of the complaints filed with the Better Business Bureau claim that not only was little or no work done to renegotiate their mortgage or avoid foreclosure, but getting their money back has been all but impossible.

The BBB offers the following advice for homeowners facing mortgage foreclosure:

• Contact your BBB or go to www.us.bbb.org to request a free Reliability Report before paying any "rescue" company. You can also check with your state Attorney General and state Real Estate Commission.
• Beware of the personal approach. Some less-than-ethical businesses will stuff a handwritten note in your front door or mailbox that implies that "help" is available from someone who has your best interests in mind.
• Talk to your lender. The first thing you should do is talk to your mortgage company about how to restructure your loan payment or refinance.
• Never sign a contract under pressure, and never sign away ownership of your property. Ask a trusted family member, your attorney or a financial professional to review any paperwork you may be asked to sign.
• If you feel you have been taken advantage of by an unethical mortgage foreclosure "rescue" company, file a complaint with your BBB at www.us.bbb.org.

Homeowners facing foreclosure may feel desperate, but paying to be "rescued" from their situation can be dangerous. Losing money to a scam at a time when you need money the most is particularly damaging. Follow the tips above for foreclosure rescue services and use common sense before considering any service that costs money to help save you money.

"When companies fail, should they give millions of dollars to their senior executives?"
- Rep. Henry Waxman.

This week two high profile CEOs have been either forced to resign, or into lesser roles within their companies (WAMU and Wachovia). They join a growing list of canned CEOs in the wake of the subprime meltdown.

So, now that many of these guys are getting canned, should we expect to see them at our local soup kitchen? Unlikely. Looking at their past compensation and severance packages, it’s a safe bet to say these guys are going to be fine.

Even now as they've gotten the boot, many have huge "golden parachutes" ensuring no matter how horrible they've performed, they will land in a pile of cash. In April, former Bearn Stearns CEO James Cayne bought a $25.8 million penthouse in NYC.

Apparently, sometimes underperformance really does pay.

1. Washington Mutual - Kerry Killinger

Status: Canned As Chairman. Still acting CEO.

2007 Total Compensation: $14,364,883
Stock Performance (trailing 12 months): -80.25%

Kerry Killinger was just recently removed as chairman of the troubled retail bank. He still remains CEO. Should WAMU pull a Countrywide or Bear Stearns, Killinger has a severance worth more than $22 million if he is terminated before a change in control.¹

2. Merrill Lynch – Stanley O'Neal

Status: Canned in October 2007.

2007 Total Compensation: $28,286,332
Stock Performance (trailing 12 months): -55.1%

Canned in the fall of last year, Mr. O'Neal took in a huge severance package that was built up during his tenure as Merrill Lynch CEO, valued at $161 million.²

3. Wachovia Corp. - Ken Thompson

Status: Canned in June 2008

2007 Total Compensation: $15,795,984
Stock Performance (trailing 12 months): -59.79%

Two months ago Ken Thompson lost the chairman job at Wachovia. This week he was forced to retire from the nation's fourth-largest bank. He will be receiving a severance of $1.45 million as well as accelerated vesting of $7.25 million in company stock.

4. Bear Stearns – James Cayne

Status: Resigned in January 2008

2006 Total Compensation: $40,004,315
Stock Performance (trailing 12 months): -93.87%

The day after JP Morgan raised its bid for Bear from $2 to $10, Mr. Cayne unloaded his entire holdings in the company, for a $61.3 million profit.³ While a very profitable company, Bear took huge risks in the subprime market which ultimately led to its near implosion.

What do you think?

How much should a CEO be paid? Should CEO pay be tied to stock performance? Earning? Revenue? Risk?

I previously covered the importance of total cost versus monthly payments as it relates to buying a car. It seems that the practice of selling the monthly cost is prevalent in other industries as well, including home mortgages.

I am currently a few years into a 15-year mortgage and well on my way towards paying it off early. By choosing a home that I could afford, I am easily able to make my monthly payments. Paying extra each month is allowing me to reduce the total cost of my loan even more. Yet I recently received a letter from a mortgage lender urging me to refinance into a 40-year mortgage.

As homes have become more expensive and other non-traditional loans have been making negative headlines, the 40-year loan has been gaining in popularity. It makes monthly payments more affordable, but obviously makes the cost of borrowing money even more expensive. While there isn’t anything inherently wrong with using a 40-year mortgage to keep payments down, if you can only afford a home by using such terms, you are probably looking at homes somewhat beyond your means. It’s true that 30-year mortgages are arbitrarily used as a “standard” mortgage, but as a result a lot of home affordability calculators and rules of thumb are based on the 30-year standard.

The real problem I have with the 40-year mortgage is the way it was marketed in the mailing I received. It highlighted that 40-year mortgages offer “one of the lowest monthly payments available” and allow you to ”get the extra cash you need to do the things you want.” This is the same old sales pitch we heard from the car salesman. It basically tells you to forget about the total cost of the loan and only focus on what it will cost you each month. To me, this is exactly the type of deceptive marketing that has gotten a lot of mortgage lenders into trouble lately. The fact that they are now touting 40-year mortgages instead of interest-only loans or adjustable rate mortgages is a step in the right direction, but they are still pushing people to buy more than they can really afford.

The total cost of a mortgage, like any other financing, is really the important point. While we may want to trade current benefits for a future cost by extending the term of our mortgage, in the end doing so will cost us more. Waiting until you can afford a home with a more traditional mortgage may not be the most popular course of action, but will certainly serve your finances well.

Having good financial habits can be hard work. Occasionally rewarding yourself helps to make the effort seem worthwhile and gives you motivation to continue your frugal ways. Even though you could save more money by not rewarding yourself, if a small indulgence allows you to keep up your good habits, it might save you more in the long run.

Living frugally doesn't mean that you aren't allowed to spend any money. In fact, being thrifty with money allows you to afford things that would otherwise be out of your reach without borrowing money. There's nothing wrong with financing purchases, particularly if you use an affordable option like a peer-to-peer loan, but making smaller purchases with cash that you've saved is also very satisfying.

Here's an example of how to reward your good behavior:

Eating meals out can really put a drain on your budget. By refraining from eating out regularly, you not only save money, but also make the times when you do eat out more enjoyable. I always find that having a rare night out at a nice restaurant is much more satisfying than eating out more often at a casual place. You don't need to go to a fancy place to have a good time, but if you have good habits, you can choose to eat wherever you like. Fancy doesn't have to mean expensive. Many restaurants offer specials on certain nights. Getting a deal while rewarding your good behavior serves its purpose while relieving you of spender's guilt.

Seeing friends and family spending beyond their means and doing things that you choose not to can be a frustrating experience. Telling yourself that you will be much better off in the long run, while true, only gets you so far. An occasional reward for your good behavior won't throw off your long-term plan and may be just what you need to persevere.