Archives for 2013

Slower Rise For Health Care Costs For 2014?

I just got my renewal notice for my health insurance policy (my open enrollment happens during the summer). As has happened every year since I began paying for health insurance, my monthly premium is going up.

Thanks to the fact that I have a HSA, my premium is still lower than what it was a few years ago, prior to making the switch. But it's still kind of depressing to see the cost rise each year.

I was interested to see whether or not my premium would increase more than in years past, due to the fact that most of the rest of the provisions under the Patient Protection and Affordable Care Act (PPACA) kick in during 2014.

My premium increase was in line with what it's been the last few years. In fact, rather than increasing by $85 to $90 a month, it's “only” increasing by $80 per month. And that's even with the fact that one of my prescriptions is now completely covered and I pay nothing for it (a huge upgrade from paying a little more than $100 a month for it).

PPACA Results in Slower Rise of Health Care Costs

According to an article on CNN Money, health care costs are projected to rise at a slower pace in 2014 than in 2013. The article points out that double-digit spikes in health care costs were common in the early 2000s. Additionally, the article reports that PwC's Health Research Institute estimates that costs will rise by 6.5% in 2014 — that's lower than the estimated 7.5% increase forecasted for 2013.

There are projections that employer health care costs will increase about 4.5% on average, once the PPACA dust settles. The optimistic version of this is that employers will pass the savings on to their workers in the form of premiums that rise at a slower pace.

Even if the PPACA does slow rising health care costs as projected, the reality is that health care costs are still rising at a faster rate than inflation — and wages certainly can't keep up.

Are Your Health Care Costs Changing?

Of course, averages paint a pretty picture, but how will the PPACA affect you on a more personal level? As always, your individual situation determines how much you will be impacted. In my case, the PPACA hasn't had much of an impact on me at all. I already purchase health insurance on individual basis for my family, and my health care costs remain relatively stable over time, accounting for regular premium increases and inflation related to prescription drug costs.

My health care costs, overall, have gone down, since my most recent premium increase is offset by the fact that I no longer have to pay monthly for a particular prescription. But I know that won't be the case for everyone.

Those who currently don't buy health insurance, and some of those with certain high deductible plans are seeing a big increase as well. Some small businesses might struggle as well, since the tax credits offered to business for offering health care coverage might not completely offset the costs.

How are your health costs changing? Are you in with the average? Or is your individual situation different?

The Best Retirement Might Be…Not Retiring

By Miranda Marquit 5 Comments

Many of us talk about retirement as the reward for decades of hard work. After working so hard for so long, the reward is supposed to be the ability sit around and do nothing — whether it's in the house you've lived in for 20 years or whether it's on a beach somewhere — until you die or a nursing home becomes necessary.

However, the “dream of doing nothing” that Office Space character Peter Gibbons has might not be the ideal retirement after all. Instead, you might be better off working than retreating to your haven and spending the days sitting on your front porch or puttering around in the garden.

According to a recent study by a British think tank, it turns out that you are likely to live longer, and even have a better quality of life, if you keep working in retirement. Without a reason to get in the morning, it seems as though retirement is more of a curse than a blessing. While some of that probably has to do with how much money you need to retire comfortably, it also has to do with the fact that retirement can mean an end to your social life, and even reduce the amount of physical activity you engage in.

working in retirement Quitting might not be the answer if you want a good quality of life during your senior years.

Does That Mean You Have to Stay in a Job You Hate?

Of course, that doesn't mean that you should just stick through with a job that you hate. Other studies indicate that staying in a job you hate is also bad for your health.

Retirement doesn't have to be an all-or-nothing proposition. Instead, consider doing something you love in retirement. You can keep working in retirement, doing something you enjoy.

One of the great things about careful retirement planning is that it gives you the chance to earn enough financial freedom to do the job you want, rather than have to work for survival. If you want good health in retirement, the key is doing something that you enjoy, and that you feel is useful. Do something that will get you out of the house, as well as promote some kind of social interaction and mental challenge.

To me, retirement isn't going to be about suddenly stopping everything and just hanging out. I'll probably write while I'm retired, since this is a career I enjoy. But I'll also (hopefully) have enough saved up that I can enjoy other activities, such as travel and volunteering. Plus, I'll be able to work on writing projects that I'm most interested in, rather than having to take on certain projects just to pay the bills.

Ultimately, working in retirement should be about choice, rather than the need to keep working in order to pay the bills. And no retirement is likely to be a long term success if your quality of life deteriorates soon after you quit your job. Figure out what you will do in retirement, as well as how much money you'll need. A successful retirement involves the emotional and mental aspects, as well as the physical and the financial.

How Do You Figure Your Tips?

By Miranda Marquit 5 Comments

In our society, it's expected that you tip when you receive service from different providers. While it can be difficult sometimes to figure out when to tip (the carpet layers? what about the guy driving the airport shuttle?), it's pretty well accepted that you tip when you visit the salon, and when you eat out.

But how do you figure your tips?

According to CouponCabin.com, the way that people figure their tips is changing.

Original Price vs. Discounted Price

Many of us are much savvier shoppers than we were prior to the financial crisis and recession. We use daily deal sites and clip coupons. Even those who aren't penny pinchers might be willing to take advantage of a good deal on a manicure, or use a two-for-one entree coupon at a restaurant.

But when it comes to tipping, what do you do? Should you leave a tip on the original price of the service? Or tip on the discounted amount. The CouponCabin.com survey says that 26% of adults in the United States leave a tip on the discounted price.

That means that, for the most part, Americans are still mostly tipping on the original price of the service. This is good news, at least in terms of etiquette, since that's what we're supposed to be doing. Even though you are enjoying a discount, the probably-underpaid service provider is still working just as hard.

It's important to remember that — especially when it comes to food service — service providers aren't being paid very much. During college, I worked as a waitress. I made $2.15 an hour. I hustled and smiled and gave the best service I could, since my tips were my livelihood. And sometimes, even when I was awesome, I was still stiffed on the tip. And I always dreaded the coupon, since I'm pretty sure that a large chunk of that percentage of people who tip based on the discounted price live in my state.

What about Tip Jars?

While I do put a little tip in the jar when I see one on the counter, this is something that many people are a little more conflicted about. Most of the people working behind the counter at Twizlberry or the local coffee shop are, in fact, at least making minimum wage. And did they really have to do much on your behalf? They keep the toppings stocked, and make your coffee. They aren't actually coming to your table, bringing you what you need, and seeing to your enjoyment during the meal.

But, I still leave a tip — and so do many other Americans. The CouponCabin.com survey indicates that 59% of adults leave extra change (or even place a real tip) in the jar at least some of the time. At the very least, the lesson businesses can learn is that a tip jar can be a reasonable revenue stream.

What do you think about tipping? Do you think it's a good idea to leave tips? How do you figure how much you will leave?

Life Insurance Ownership Is At 50 Year Lows. Don’t Get Caught Without It!

By Jeff Rose 2 Comments

According to a study by Limra.org, life insurance ownership is at 50 year lows with only 44% of U.S. households having any life insurance coverage. In fact, people have more cars, TV's and smartphones than they do live insurance.

Please don't be one of those statistics.

Children and spouses can be devastated when the bread winner of the family passes away. They can suddenly be plunged into a world of destitution and lose almost everything they own because they no longer have a source of income to pay the bills and prepare for the future.

A sad aspect of life is that everyone must, at some point, pass on from this world and leave those they love behind. There are measures a person can take to help ease the transition for their family by making sure they have a life insurance policy they will provide funds for the family to live on and pay current and future costs. Term life insurance is relatively inexpensive and there are several types of policies available to provide coverage and other benefits.

Guaranteed Level Term Insurance

life insurance ownership at 50 year lows When evaluating all your life insurance options, getting an affordable term policy is the most popular. The policies usually last for a set period of time. The periods usually last for 5, 10, 15, 20 or 30 years. The monthly premium and death benefit are fixed until the policy expires. One should choose carefully the length of time they want coverage. When the term period ends the policy also stops.

In order to extend coverage a person will often have to go through the whole application process again. There are cases where a person’s health has declined and is no longer eligible to obtain a new policy and can no longer get the coverage they might need to protect their family. A basic rule of thumb is to have a policy that lasts long enough for dependents to grow up and become independent.

Non-Medical Policies

Getting life insurance without an exam is becoming much more common place in the insurance market. Basically, this allows you to get a fully underwritten policy without having to take the typical life insurance physical that many are accustomed to. If you need life insurance in a hurry or are deathly afraid of needles, then these type of policies make a lot sense.

If you're not in a rush to get your policy, then sticky to a traditional term policy makes the most sense as these policies will typically cost a bit more. Also, please don't think that these policies will not look over your medical records, because they do. After you complete a short telephone interview, they will be able to verify your information by cross referencing what is on your MIB record.

Return of Premium Policies

These policies will refund the premiums paid if the person being covered lives until the term policy period ends. For instance, if one purchases a 20 year policy and pays $30.00 per month for this coverage, they will have paid $10,800 in premium payments during the lifetime of the policy.

With a return of premium policy at the end of 20 years, this money is returned to the policy holder. This can be an alternative savings vehicle for people. They can have the coverage they need while raising their families, but can receive a lump sum payment later in life to use for other things once that coverage is no longer needed.

Convertible Policies

These policies are useful for young people who want a whole life policy, but really can’t afford the cost right now. They can get a term life policy that will allow them to convert it to a whole life policy regardless of their health conditions, or having to undergo a medical examination, when the term life policy ends. Whole life lasts for the lifetime of a person provided they make their premium payments.

Decreasing Term Life Policies

These policies are usually bought to cover a specific debt or financial obligation that decreases as one pays off the debt. A common reason people purchase these policies is to cover their mortgage. The amount a person owes a lender is decreased each time they make their monthly payment and one will not need as much money to pay off the loan as time passes. These policies are normally more affordable than the other options since the death benefit decreases each year.

Life insurance is designed to protect loved ones after one passes away. There are numerous options available to address most situations where coverage is needed to keep a family financially stable if the unexpected happens.

Are Credit Report Errors Costing You?

By Miranda Marquit Leave a Comment

Recently, my husband and I refinanced our home. During the process, we were rather surprised to find that, on my credit report, our mortgage loan was duplicated.

That's right: It looked as though we had two mortgages, instead of one. When figuring out our debt-to-income ratio, things could have been ugly, since it the credit report made it look like we were spending close to $3,000 a month in mortgage payments. We might not have qualified for the refinance — let alone got the best mortgage rate offered at the time.

Duplicate accounts have long been a problem on my credit report, as well as my husband's. When we first bought our home, my husband's report showed duplicate student loans accounts, and a duplicate credit card account. Once again, only the loan officer's attention to detail and a note to the underwriting department allowed us to qualify for the best possible mortgage rate.
fix errors on your credit report

Could Credit Report Errors Be Costing You?

My husband and I aren't alone with credit reporting errors. About 5% of consumers who check their credit reports have found major errors, according to the Federal Trade Commission. These are major errors that could result in less favorable terms for loans. Other findings from the FTC study include:

25% of consumers have errors that might affect their credit scores.
10% of consumers who had their reports fixed saw changes to their credit scores.

While it is clear that most consumers aren't going to see negative effects from the information in their credit reports, it's still worth paying attention, since your report could be among those affected.

Indeed, the FTC study found that about 1 in 20 consumers had their scores affected by more than 25 points as a result of the errors in their credit reports. It's rarer to find those who see a change of 100 or more points due to credit reporting errors, but about 1 in 250 consumers are affected.

Fix Errors on Your Credit Report

Checking your credit report for errors is an important part of making sure that your finances are kept in tip-top shape. You should use AnnualCreditReport.com to access your credit report for free. You are entitled — by law — to a free report from each bureau every 12 months. You can also look for other ways to access your credit information to keep on top of the situation.

However, you should check each report annually at minimum in order to correct errors. And, even if you have already checked your free report, you should pay for a non-free version if you are getting ready to use a mortgage to purchase a house. It's important that you fix potentially damaging errors before you apply for credit (unless you want to throw yourself on the mercy of the loan officer and the underwriters).

Once you find mistakes, you can dispute them with the credit reporting agency. If there is a real mistake, the agency has to fix the error. Once the error is corrected, your credit report will reflect better on you. And, if the error was serious enough, it might even mean a higher credit score.

Has Your Home Offered You A Solid Return So Far?

By Miranda Marquit 2 Comments

One of the cool tools offered by CNN Money right now is a calculator that lets you see whether or not your home has been a good investment. You enter information on when you bought your home, as well as how much it cost. Then you enter how much it is worth right now. The results display your total return and your annual return. You can also see how your home's value has fared in comparison to investments like stocks and bonds.

I entered my information in the field, and found that my annual return is 1.0% on my home. This isn't surprising, since the appraisal associated with the refinance I completed indicates that our home has increased in value a little bit since we bought in 2007. CNN Money's calculator indicates that the average U.S. home has seen an annual loss of 4.7% in the same period of time.

But how does my home's value compare with the performances of stocks and bonds since September 2007?

Home value solid investment return Well, to tell the truth, I wasn't surprised to see that stocks have returned 3.1% annualized since then. With the recent gains in the market completely erasing the disappointing years just following the financial crisis, it's not hard to understand why stocks have seen better returns than residential real estate. Bond have done even better, offering a 5.6% annualized return, according to the CNN Money calculator.

What the Calculator Doesn't Account For

Of course, the calculator is quite simple, and doesn't account for some of the costs associated with home ownership. Your home is one of those assets that has potential, but can really cost you over the long term. That 1.0% annualized return calculated by CNN Money doesn't take into account the amount of interest I've paid on the home in the last 5 1/2 years. Even after I account for the tax deduction associated with the taxes, that 1.0% annualized return is basically erased. And that doesn't include the cost of property taxes (even with offsetting tax deductions), utilities, landscaping, and maintenance.

Once all of those things are added into the equation, I've been losing money on the house.

The calculator also doesn't take into account the reality of trying to sell a home. Even though the appraisal says one thing, I know that we won't get that much back for it. To sell a home in my neighborhood, where there are for-sale signs everywhere and others are lopping $15,000 to $20,000 off their original buying prices to sell quickly, we're going to be stuck paying to discharge our mortgage when all is said and done (assuming we end up moving in the next 12 months).

Of course, the return on investment on a home isn't all financial. Some of it is emotional. My family has enjoyed living in this house. We have been able to landscape it how we want, and we have been able to arrange matters as we prefer. Additionally, there's something nice about a home that we can't be kicked out of when the lease is up (happened to us once when the owner decided she wanted the house for her grandkids). Being able to call someplace “home” and give our son a secure place to return to has its charms.

So, even though the home hasn't been a solid financial investment, it's been worth it to us in other ways.

What do you think makes a home a good investment?

Main Menu