7 Ways to Maintain the Value of Your Car

The following is a post by MPFJ staff writer, Kevin Mercadante, who is a freelance professional personal finance blogger for hire, and the owner of his own personal finance blog, OutOfYourRut.com. He has backgrounds in both accounting and the mortgage industry.

Even if you aren’t a car buff, you have a vested financial interest in maintaining the value of your car. At a minimum, you’ll need to either trade it in or sell it to provide at least part of the down payment on the next car that you will buy. You will want to keep the car in top shape, so that it will command its maximum value.

Age, condition, options, and mileage all figure significantly in determining the resale value of your car. You can even check how much impact each will have on your car’s value on websites such as Kelly Blue Book and Edmunds.com. You can run different value scenarios on either site to determine the value of your car, whether for trade-in or for sale to a private party.

With that in mind, here are seven ways to maintain the value of your car.

1. Keep to the Recommended Maintenance Schedule – and Keep Records

Your car owner’s manual should have a maintenance schedule, that will let you know when it’s time to change the oil, change the filters, have the brakes checked, and perform more serious maintenance. You should follow the schedule closely. Not only will it keep your engine running more smoothly, but it will prevent more severe repairs that can result from neglect.

In addition, the better the car runs, the more resale value it will have, particularly if it is more than a few years old. You should also keep a file with all of your maintenance records. A prospective buyer would be interested to know that the car has been well cared for.

2. Fix Whatever Is Broken as Soon as Possible

One of the unfortunate realities of automobile ownership is that problems don’t get better with age. Little problems can become big problems, and big problems can also have a negative effect on other systems in your car.

For that reason, fix whatever is broken as soon as possible. That will prevent the domino effect of car repairs that often causes the owner to sell the vehicle prematurely.

3. A Little Wash and Wax Goes a Long Way – And So Does Periodic Detailing

The appearance of your car will have a major impact on its resale value. All other things being equal, the prettier car will sell faster and for more money.

Much as is the case with buying a home, buying a car is largely an emotional decision. A person might make the choice to buy your car just because it has more curb appeal.

In order to have that curve appeal, it’s important to keep up appearances with your car throughout the time that you own it. Have the car washed and waxed regularly, so that with the paint job will get maximum protection from the elements. And having the car fully detailed at least once or twice per year will help prevent discoloration, wear and tear, and the accumulation of dirt that could make a car look a lot older than it really is.

And here’s another bit of maintenance advice I was given by a mechanic – if you live in a area that gets a lot of snowfall, have the undercarriage of the car washed a couple of times a year. Road salt can corrode the undercarriage in a few short years, causing serious damage.

4. Keep Your Mileage to a Minimum

In some cases, mileage plays a bigger role in the resale value of your car than the age does. For example, a 10-year-old car with 80,000 miles on it may have more market value than a seven-year-old car with 120,000 miles.

This creates a compelling reason to keep your mileage to a minimum. The average driver will drive between 10,000 and 15,000 miles per year. To the degree that your vehicle reflects higher usage, the value will drop according.

Get in the habit of consolidating trips, alternating vehicles, renting a car for long trips, and keeping casual cruising to a minimum. All of these habits can chop a couple thousand miles per year off your odometer. And that will make a big difference when it comes time to sell the car.

5. Drive It Easy

Cars have an uncomfortable habit of reflecting their owner’s driving patterns. Drive a car hard, and it will look the part. Drive it easy, and it will reflect more gentle ownership.

Let’s face it, not only does hard-driving cause parts and systems to wear out more quickly, but it often result in more dents, dings, cracks and scratches too.

Do your best to drive within speed limits, go easy on your brakes, and be careful where you park your car. All can have an impact on how well your car ages. You want to make sure that happens gracefully.

6. Give Your Car Periodic Facelifts

Maybe once a year, take a stroll around your car, and look at it as if you were going to buy it. Are there scratches or dents? Worn carpet or seats? Do the speaker buzz when the radio is on? Are the wheel covers cracked? Are any light bulbs out?

None of these items may bother you as the owner of the car. After all, none affect the driveability of the vehicle. But a buyer will look at each of those, and give them exaggerated importance. As the saying goes you are what you drive, and no one wants to think of themselves as tired and worn out, as reflected by the car they own.

Do this critical inspection once a year, and fix those small items that will likely infuriate a potential buyer. By doing it periodically, you can minimize the cost. But if you wait until just before you’re going to sell the car, it could cost hundreds more.

7. Use Your Garage for it’s Intended Purpose

I don’t have any hard and fast numbers here, nor do I know if a poll has ever been taken on this issue, but I’d be willing to bet that at least 50% of the people who have garages use them for some purpose other than storing their vehicles. Extra storage space is a common usage, as is a play area for children, or even use as a workshop. Some people even convert the garage into extra living space, which real estate agents always advise is a bad move (but that is a topic for another article!).

But if you have a garage, and you still park the car in the driveway or on the street, you are exposing it to the elements. That means scorching sunshine, whipping winds, rain, snow, hail, and even falling branches. At a minimum, that kind of exposure will gradually dull the paint job on the car. Worst-case scenario, it can result in very noticeable damage that will hurt the value of the car.

If you’re fortunate enough to have a garage, by all means, park your car in it. It’s a completely passive way to improve the value of your car.

Maintaining the value of your car is an ongoing activity. Put these strategies into use as early in your car’s life as possible. It will pay off in the end in the form of a higher resale value.

How about you all? Do you have another tip for maintaining the value of your car? What do you do to keep with the upkeep of your car?

Share your experiences by commenting below!

***Photo courtesy https://www.flickr.com/photos/greggjerdingen/14924958287/

7 Ways Keep From Becoming House-Poor

The following is a post by MPFJ staff writer, Kevin Mercadante, who is a freelance professional personal finance blogger for hire, and the owner of his own personal finance blog, OutOfYourRut.com. He has backgrounds in both accounting and the mortgage industry.

Mortgage lenders operate with a litany of guidelines within which they will make loans to homebuyers. But here’s a newsflash: the fact that you qualify for a mortgage under those guidelines won’t protect you from becoming house-poor. It’s important to understand that mortgage lending guidelines aren’t necessarily designed to make sure that you can comfortably afford to own a certain home. No, they’re mostly aimed at stimulating homeownership on a national level. That may not do much good for your own personal finances.

Why should you worry about becoming house-poor? Apart from the very real possibility that it can land you in foreclosure, it’s not a very comfortable way to live.

Picture these scenarios:

• You’ve been faithfully cooking your meals at home for two weeks and would like to go out to dinner on Friday night – but you can’t, because the house payment is due on Monday and you’re already squeezed
• You need to get braces for one of your kids, but you put it off because the house needs a new roof
• You’re about to forgo summer vacation for the third year in a row, because the house payment and utilities are eating up any extra in your budget
• You’re having trouble paying down your credit cards, because there’s simply no fat left in your budget to cut
• Your emergency fund is empty, and has been for months

These are very real situations that can develop when too much of your budget is tied up in your house. For that reason, here are seven ways to keep from becoming house-poor. Most of them involve making a smart purchase decision upfront.

1. Buy a House That’s a Little Beneath Your Means

Forget about the $600,000 McMansions that all of your friends seem to be buying. If you qualify to buy a $300,000 house, buy a $250,000 house – or even a $200,000 house – instead.

Understand that the amount that you pay for your home will set in motion a long list of expenses, many of which will be directly or indirectly tied to the price of the home. Property taxes are a prominent example, but so is homeowners insurance. And since a higher price generally means a larger home, your utilities will be higher as well.

You can avoid the major factors that lead to being house-poor just by being more conservative in your choice of a home purchase. You will only have one opportunity to make that smart choice – don’t let it pass!

2. NEVER Close Broke!

I realize that it is virtually the American Way to break open every last cookie jar in order to buy a house. Unfortunately, if you’re broke when you leave the closing table, it could set a pattern in motion in which you’re perpetually broke thereafter.

The common mortgage lender guideline is that you have two months “reserves” after closing. In mortgage parlance, this means that you should have liquid assets equal to at least two months of your new house payment. But that’s pretty minimal.

A better idea is to go with the consensus on an emergency fund, that you should have at least three months of living expenses – which includes your new house payment – sitting in a very liquid account. And once you are in the house, keep that emergency fund growing – along with other savings vehicles.

3. Keep Your House Payment to Not More than 28% of Your Income

A common mortgage industry guideline is that your house payment should not exceed 28% of your stable monthly income. However, mortgage lenders will often allow you to exceed this percentage for various forms of “good behavior” in other areas of your financial profile (good credit, large down payment, long employment history, etc.).

The best advice however is to view the 28% guideline as the upper limit of your house payment, and not as a limit that you want to exceed. Even at 28%, more than a quarter of your gross monthly income will be going just for your base house payment – and that’s a lot to allocate for a single expense, even housing.

4. Keep Your House Payment Well Below 28% of Your Income

Forget about what a mortgage lender will allow you to do, set your own house payment limit, and make sure that it’s below 28%. Make it 25%, or 20% or even 15%. Always remember that the less of your income that is going into housing, the more you will have available for investing, for paying off debt, and for living the non-housing part of your life.

5. Qualify on Your Base Income Only

This is another area where homebuyers stretch the limits, and where mortgage lenders are perfectly willing to cooperate. They will often include extra income, such as bonuses, occasional commission payments, or a part-time job or business as part of your qualifying income.

The better strategy however is to qualify on your base income only. That will match up best with a fixed monthly payment, since it is almost certainly the most stable and predictable source of your income. That will also free up the extra income sources to handle contingencies and for non housing expenses.

6. Qualify Based on a Single Income

If you’re a couple, and each of you has an income, qualify on one income rather than on both. There are several advantages to this approach:

• In the event that one job is lost, you’ll be able to comfortably survive on one income
• Should a child arrive in your household, one partner would be able to handle the child-rearing responsibilities, without threatening family finances
• If one of you decides that you just need some time off, you can take it without fear that you might lose your home

I’ll admit that this is an unconventional way to qualify for buying a home, but it involves taking a more considerate view of what can or might happen in the future. And it builds flexibility into your finances – which is always well advised.

7. Keep Your Non-Housing Debt to a Minimum

Buying and owning a home is almost always more expensive than renting. Even if the house payment itself isn’t higher than rent, it’s still almost certain that your utilities will be higher, as will maintenance and repair costs, to say nothing of periodic major repairs.

For that reason, your non housing debt needs to be at an absolute minimum when you buy a home. Rest assured that if you are struggling with debt payments before buying a home, it won’t get any better later. And if you end up having to tap credit lines to pay unexpected housing expenses, the debt problem can get progressively more intense.

Payoff as much debt as you can before buying a home, and vow to become debt free, or as close to it as possible while you are a homeowner.

One final thought – it’s much easier to become house-poor than it is to escape it. So take at least some of these strategies and put them into action early in the game. Your future self will deeply appreciated it!

How about you all? Do you have other tips that have helped you or someone you know avoid becoming house-poor? What has or hasn’t worked for you in the past?

Share your experiences by commenting below!

***Photo courtesy https://www.flickr.com/photos/shankaronline/11932005065/sizes/q/

Why Millennials Need To Save For Retirement

The following is a post by MPFJ staff writer, Jeff.  Jeff writes about reducing waste, saving money and building freedom at his website, Sustainable Life Blog.

With incomes stagnating and expenses for larger cities where jobs are easier to come by constantly going up, millennials are getting squeezed financially from both ends, making it difficult to save. Everyday, a decision must be made on what to prioritize and what to cut out or spend less on, and seemingly people in the millennial generation choose to forgo retirement saving, to their great detriment.

Being a millennial myself, I am familiar with the tug of student loans, consumer debt, as well as basic expenses like food and rent that seem to be advancing at a steady clip. With all of those budget pressures and retirement so far off, who has the leftover money to save?

Unfortunately, with that attitude, millennials are giving up their biggest advantage in saving for retirement: Time. A long time horizon (~40 years) can help your money grow and compound beyond what you can imagine now, but if you’re not putting anything away for retirement, you wont get any of that benefit and could find yourself in your mid 40s worrying about whether or not you’ll have enough money, and wanting to go back in time to kick yourself for not saving. With all that extra time, even the smallest bit matters when it comes to retirement.

To give you a quick lesson on how powerful time is, consider this: 1 dollar invested at the year end of 1929 grew to $1,188 dollars in 2010, by year end. That’s a 9.1% return Year Over Year. While that time frame of 80 years is about double the amount of time that you have, I think it perfectly illustrates how powerful time can be.

Build a Solid Foundation to Take Risks

Even early in their careers, millennials are already taking more career risks and moving for jobs with more responsibilities and bigger paychecks at far quicker rates than their parents did. In my 6 years in the workforce, I’ve switched jobs 3 times (stayed in the same industry though), which is about 3x more companies that I’ve been employed by than my dad, and he’s been working almost 8x as long as I have.

If you start saving early (both for retirement and general savings) you can build yourself a solid cash cushion and allow yourself to take more risks in the future. Perhaps switching to a job that you would thoroughly enjoy or get a lot out of that doesn’t pay as well as your current career, or perhaps you’d use that savings to strike out on your own.

Even if you don’t end up doing either of these things, since you’ve got a big cash cushion, you’ll be free to make that decision.

No One Else Will Do It For You

As it stands right now, something will have to change with the social security program for it to continue paying out benefits. At some point in the future (experts think it will be around 2037) social security will start having to pay out 75 cents for every dollar of expected benefit. Of course, that is a ways away and many things can change between now and then (such as taxes being raised or benefits being lowered) but as a millennial, you should not assume that you’ll be able to get a significant portion of your retirement needs met by social security. Sure, things could change, but who knows when and what that will look like.

Even though things are tough with rent, food, student loans and other bills, it’s important to take advantage of the time that you have in front of you before retirement and save some money while you can – even if it’s a small amount.

How about you all? How much are you saving for retirement, and if you’re a millennial, what’s the biggest challenge you’re facing? How are you getting around that challenge?

Share your experiences by commenting below!

***Photo courtesy https://www.flickr.com/photos/68751915@N05/6870886851/

Why I Don’t Want My Daughters to Be Stay-at-Home Moms

The following post is by MPFJ staff writer, Melissa Batai.  Melissa is a freelance writer who covers topics ranging from personal finance to business to organics to food.  She blogs at Mom’s Plans where she shares her family’s journey to healthier living and paying down debt.

We women are often told that we can do it all—have a good marriage, raise children, and maintain a rigorous career. However, many women are finding that is a myth.

More and more women are walking away from the workforce, either permanently or temporarily, while they raise children, but should they?

I was raised in the 1970s and 80s, a time in between two worlds of women—those who always stay at home and those who pursue jobs outside the home.

My mom was raised by a stay-at-home mom. My mom, too, was a stay-at-home mom, though she also worked from home babysitting so she could contribute to the family income. My mom just assumed I would also be a stay-at-home mom.

As luck would have it, I didn’t find Mr. Right and get married until I was 29, and we didn’t have our first child until I was 33. That gave me plenty of time to earn a B.A., a M.A., and to work full-time as a community college teacher. After my first child was born, I really wanted to stay home with him, but we couldn’t make it work until I was 39 and we had three children.

I was solely a stay-at-home mom for 10 months. During that time, I felt a bit at a loss. After 10 years in the workforce, juggling both work responsibilities and childcare, staying home and “only” caring for my children felt a bit strange.

When I got the opportunity to do some freelance work from home, I jumped at the chance.

In the 4.5 years since then, I’ve stayed home with my children, now homeschooling them, but I’ve also maintained a part-time freelance workload.

For me, it’s the best of both worlds. As a writer for Fortune stated, “Work at home moms have similar perks to stay at home moms. They can attend the pre-school holiday parties or pick up a sick child from school and still make it back home for a 1 PM conference call. They’re also able to save money on childcare by working evenings and during nap time. It’s almost like you get to—dare I say—‘have it all.’”

As I watch my young daughters grow, I find myself hoping that if they don’t want to work full-time, that they take a similar path as I have and will work from home part-time while caring for their children. I hope they always spend some time doing work besides caring for their children.

Why I Want My Girls to Always Work

There are four primary reasons why I want my girls to always work, even if they choose to stay home with their children:

Personal Fulfillment

Staying home with kids can be challenging. . .and tremendously rewarding. However, kids won’t be little forever. Kids grow up and spend more time with their friends. Kids go to college and leave the home.

I want my girls to have other interests and pursuits besides just raising their children so that they aren’t lonely when their kids grow up and leave the nest.

I also want them to get pride and satisfaction both from raising their children and doing work that they love. Sometimes, on particularly difficult days, raising kids can be exhausting. Escaping to do work can be a way to recharge and spend some time in the adult world.

In the Event of the Death of Their Spouse

As I mentioned, my mom did work from home babysitting. However, she never went to college, and she married young, at age 20. Before she married, she worked in a factory and hated it; she quit as soon as I was born, 11 months after she was married. While my dad was alive and the primary bread winner, they could make it financially.

However, at the age of 37, my dad was diagnosed with cancer, and just four short months later, right after he turned 38, he died. My mom was a 36 year old widow with two young kids and no work skills.

Life insurance provided her with a year’s worth of income. Then, she started working as a cashier at a grocery store; she struggled to pay the bills on that income.

A few years later, a friend managed to get her a part-time job as a secretary, which eventually turned into a full-time job. She went on to work that job for nearly 20 years before retiring. I often hear her mention how grateful she was to her friend for getting her that job because she never would have gotten the job on her own due to her lack of skills. Instead, she got her foot in the door and learned on the job.

Those years after my father’s death were very difficult for her because she didn’t have any skills or experience to help her survive when she suddenly found herself on her own.

In the Event of Divorce

No one gets married with the idea of divorce, but divorces happen in our country. . .a lot. A woman who continues to work full-time or part-time or freelances from home keeps her skills sharp.

Right now, I only work from home about 10 hours a week. I only provide about 25% of our family income, but if I needed to, I could ramp up that workload, especially if I found myself in a position where I needed to support my family myself.

We had a family friend, Joan, who was a stay-at-home mom for forty years of marriage. Her husband was a hard worker, but he struggled with alcohol abuse. They finally divorced in their early 60s. Joan was like my mom and had no education or skills. After the divorce, she found a minimum wage job, and is still working that job today.

She gets half of her ex-husband’s retirement, but she doesn’t see much of the spousal support she was supposed to receive because he was fired from his job soon after the divorce.

In the Event on Injury

There are a number of ways a stay-at-home mom may lose her husband’s income, and it isn’t always because of death or divorce.

In our community, a woman in her thirties has become the primary breadwinner because her husband, just 40 years old, had a catastrophic stroke that has left him in a nursing home.

Luckily, she had a full-time job, so she was able to financially support herself and her kids.

Sometimes Life Works Out as Planned

Certainly, there are many women who are stay-at-home moms and go on to have good, secure lives. My cousin and his wife married in their late teens and had 7 kids. During that time, he worked full-time at his own business, and she stayed home with the children. Now, all of the children are grown except for the youngest who is a high school senior.

The marriage is intact, they’re both healthy, and their arrangement of him being the breadwinner and her raising the family has worked out wonderfully.

Yet because there are so many times this situation doesn’t work out as well, I will always encourage my daughters to get their educations and to keep their toes in the workforce, whether that means working from home part-time or working outside the home part-time or full-time.

How about you all?  What do you think about these situations? Would you encourage your daughter to continue to work in some capacity even if she wanted to be a stay-at-home mom? Would you discourage her from being a stay-at-home mom?

Share your experiences by commenting below!

***Photo courtesy https://pixabay.com/en/laptop-woman-coffee-breakfast-943559/

3 Simple Tips On Saving Money At The Grocery Store Without Going to Extremes

The following is a guest post by Mark Kirkpatrick.

Money is tight for many people nowadays, whether you’re a starving college student, a struggling young family on a tight budget or seniors who are on fixed incomes. Making ends meet can be challenging and some of us are resorting to new methods of making our dollars stretch even further, especially with rising food costs.

Often we think of clipping coupons, but in the shadow of such practices as “extreme couponing,” many of us don’t have the time or room in their homes for this type of reality. There are some other methods that take much less time, don’t require nearly as much space and can still show significant savings at the grocery store. Here’s three tips on keeping our food budgets in check:

1. The Dollar Store Dilemma

When it comes to getting the biggest bang for our buck, many shoppers are hitting the “dollar stores,” where everything is marked at $1 or less. But buyer beware, some of these bargains can be deceptive and they’re some simple guidelines to consider. Take Halloween for example, you’ll likely find many bags of candy for trick-or-treaters at a buck a bag, but they can come with some hidden costs.

For one thing, often these discounted treats aren’t usually very large in either weight or mass and sometimes their selection doesn’t include many brand name favorites or choices. Most drug store chains and national grocery outlets will offer popular brand name candies on sale before this Autumn holiday arrives that are a better bargain in bigger quantities.

2. Meat Markdowns

Going to the butcher for special cuts of meat, often one of the biggest expenditures on some people’s grocery lists, can add up quickly. But this doesn’t mean that we can’t save significantly on beef, pork and poultry at the market.

Most retail grocers have discount bins, even in the meat department, and in this case, these discounts usually come from food that is at or near the “date code” expiration time. Generally you’ll see these marked down anywhere from 20% to 50% or more. Remember that you’ll need to eat or freeze these purchases immediately so they don’t “go bad.” Also, fish and seafood, again unless you’ll be consuming it on that particular day, should never be refrozen, so make your selections carefully.

3. Brand Name Nemesis

One way that grocery costs can deepen the dip in our wallet is through the purchase of brand name products, which are almost always more expensive than the generic or store brand varieties. But just like the dollar store dilemma, it depends on what you’re purchasing.

For example, you may have seen detergents like Cascade ® or Dawn ® advertising that their soap goes further than the bargain brands and in most cases, this is correct. And for families with small children who like Kraft ® Macaroni and Cheese, if you buy the inexpensive varieties, kids might clam up before consuming the cheaper alternatives. Here the consumer should be patient and just wait until their favorite brands goes on sale and stock up.

There’s many ways to save more money at the grocery store, like signing up for their “club membership” programs online or in store. With a little bit of additional thought and effort on our parts, consumers can cut costs on their food expenses with these few tricks up their sleeve.

How about you all? What are some ways that you save money at the grocery store? What tips would you give to others trying to save money on food?

Share your experiences by commenting below!

***Photo 1 courtesy: http://www.shutterstock.com/pic-293925191/stock-photo-dollar-stretching-stretched-image.html?src=csl_recent_image-1

***Photo 2 courtesy: http://www.shutterstock.com/pic-326166404/stock-photo-butcher-weighing-some-meat.html?src=csl_recent_image-1

Cheap Family Activities To Do In The Fall

The following is a post by MPFJ staff writer, Jeff.  Jeff writes about reducing waste, saving money and building freedom at his website, Sustainable Life Blog.

Recently, I attended the Financial Bloggers Conference in Charlotte, North Carolina, and just a few days after that ended I hopped on a plane to Hong Kong and on to Phnom Penh, Cambodia for a bit of traveling and temple viewing. When I left my home in Wyoming, the weather was still in the mid to high 70s, which is fairly warm. However, after almost 3 weeks on the road, when I got back to Wyoming the leaves had started changing and the temperature was down into the mid 50s! Fall was here, and I am super excited – it’s my favorite season! In honor of my favorite season, I’m going give you a few of my favorite fall activities for families.

Go For A Walk

This is absolutely one of my favorite things to do any time of the year, but I really enjoy it during the fall. You get the nice cool, crisp weather, the leaves are starting to change colors a bit and everything just feels so relaxing. The buzz of summer is gone and you (well I don’t) feel in a hurry to get anything done or rushed in any way. It’s just so relaxing, and to me going on a walk is the ultimate way to relax even further and get some exercise too! Every weekend in the morning, my wife and I relax a little and then wake up, she does yoga and I play with the kid until she’s finished, and then we all go on a family walk to the local park. We live just a few minutes walk away from what I think is the best park in our town, so we take full advantage of it and use it many times a week.

Play Tourist

This is something that I think is really underrated unless you live in a destination city (and even if you do). Many people have lived where they do for years, but don’t take the time to see what the tourists come to their city to see. Since the summer is over, you can grab a jacket and play tourist for a day, and look for anything that sounds interesting to you or is fairly low cost to take the family to. You can use Trip Advisor to check for good and interesting things to do in your area, and might even find something that you didn’t know about at all in there!

Scavenger Hunts

If your kids are old enough, try planning a scavenger hunt around your neighborhood or somewhere in your city. Give them a map and a list of things to find, and see which group of them comes back first. If your kids are not old enough to go out on their own, have mom and dad join each team and provide a set number of hints if necessary (up to 3) if they need it, but other than that they are on their own! You can give them a few places to check out and have them play amateur food critic on the way, with “who has got the best X (pizza, bagel, etc)” and have them report back their thoughts on why.

While all of these will work in the summer, I find they are great fall activities because there are less people and you can do more. You also don’t have to content with the heat for very long, which should let you have more fun.

How about you all? What fun and cheap activities do you during fall? What activities have worked best for you and your family? Share your experiences by commenting below!

***Photo courtesy https://www.flickr.com/photos/dheuts/3804259707/

How To Read A Medical Explanation Of Benefits Statement

The following post is by MPFJ staff writer Travis.  Travis is a customer blogger for Care One Debt Relief Services, and also appears weekly at Enemy of Debt.  Travis candidly shares his personal journey to pay off $109,000 of credit card debt and the tips he’s learned along the way. As a father and husband he provides a unique perspective on balancing debt, finances, and family. Note: Terms used are taken directly from the author’s explanation of benefits statement. Equivalent terms used by other insurance companies may be slightly different. Please refer to the glossary generally included with your explanation of benefits statement for further clarification.

A person flips through the mail, stopping at an envelope from their medical insurance provider. The envelope is ripped open, and after a brief glance it appears the mailing describes the charges for a recent doctor visit. However, the words “THIS IS NOT A BILL,” are plastered across the top of the page. Looking closer, there is no amount due or due date. The information is crumpled up and thrown in the trash in favor of waiting for the actual bill from the medical center.

Does this sound like you, or anybody you know?

The discarded document was an Explanation of Benefits Statement, which supplies patients with detailed information about the charges incurred during a visit to the doctor. In fact, it contains much more detail than the actual bill that will be received from the medical center’s billing department. A bill which likely won’t show up for several more weeks.

It’s important to understand how to read an Explanation of Benefits Statement. They provide us the opportunity to review what charges were incurred, how they were categorized, and how much we will be responsible to pay out of pocket. It can be inspected for errors, and the amount owed can be determined such that a patient can begin to plan financially to pay the bill when it finally does arrive.

Let’s take a look at some of the more important parts of an Explanation Of Benefits Statement:

Basic Information

Your name, policy number, and claim number should be easily located on the form. They should be verified to ensure the information is correct. The date of the medical visit should also be listed.

Description

A very brief description of each service provided. Example descriptions include Lab Tests and Medical Care. Many times there will be several itemized services for a single visit. For example, my explanation of benefits statement listed three several Lab Test services, one for each classification of blood tests that were performed. Additionally, there was another service labeled Medical Care that referred to the actual consultation and exam with the doctor.

Patients should look over each service provided and call their insurance company if they have any questions regarding specific medical services listed. For example, I once saw a sport’s medicine doctor for problems I was having with my feet while running. My explanation of benefits listed a charge labeled as surgery. During the office visit, the doctor taped my arches to try to hold them in place. Because he altered my body in some way, the service was classified as Surgery.

Amount Charged

This is the amount the medical provider charges for the service performed before any insurance benefits are applied. Think of this as the sticker price, or what you would pay for the service if you didn’t have any insurance.

Allowable Charges

This is the amount you are actually charged for the service based upon an agreement between your medical provider and your insurance company. It’s usually a discounted rate given to the insurance company because they bring volume business to the medical provider.

Copay

If your specific insurance plan specifies a set amount you will owe for a service, that will be shown here. This is common for Health Maintenance Organizations (HMOs). For example, if your plan specifies that you pay $15 for each office visit, that copay amount would be listed here. You are responsible to pay this amount.

Coinsurance

If your insurance plan specifies that you pay a percentage of each service, that will be shown here. This is common for Preferred Provider Organizations (PPOs). For example, if your plan specifies you pay 30% of each office visit, that amount would be listed here. You will have to pay this amount.

Applied to Deductible

Medical insurance plans have a deductible amount of varying sizes that patients are responsible for as medical bills accumulate during a calendar year. After that deductible has been fulfilled, generally plans then apply a higher level of coverage. For example, let’s say a plan has a deductible of $3200 for charges in that category. Once the patient has incurred $3200 of out of pocket expenses, the plan may then cover 100% of the charges. You are responsible for any amount listed here.

Amounts Not Covered

This column is reserved for services that are just not covered by your policy. You are responsible to pay this amount.

Amount Paid

Once the insurance benefits have been applied, the insurance company will send funds to the medical provider. This column shows the amount of insurance benefit sent to your medical provider.

How much will I owe?

You can determine your actual medical bill by adding up the liability columns for each service:

• Applied to Deductible
• Copay
• Coinsurance
• Amounts Not Covered

I typically write down the total on the bottom of the explanation of benefits document, and tuck the form away. When I receive the medical bill, I compare how much I owe to what I thought I would owe from the explanation of benefits.

The ability to read an explanation of benefits form is a skill that everyone should have. It allows patients to be informed as to how their medical benefits are being applied, and to review that it has been done correctly. If anything seems incorrect, it’s best to call the insurance company and ask questions as soon as possible.

How about you all? Do you carefully review your explanation of benefits forms, or do you just throw them in the trash and pay the bill when it comes? What are your habits in terms of reviewing benefits forms?

Share your experiences by commenting below.

****Photo courtesy of phasinphoto at FreeDigitalPhotos.net (http://www.freedigitalphotos.net/images/health-insurance-claim-form-photo-p249032)

Saving Money on Kids Clothing

The following is a post by MPFJ staff writer, Jeff.  Jeff writes about reducing waste, saving money and building freedom at his website, Sustainable Life Blog.

Just over a year and a half ago, my wife and I welcomed our first addition – a daughter. Since then, we have really enjoyed having her around and have been looking for ways to cut costs. People say that kids are expensive, and I’m not sure that is true, but the can be very expensive.

Since birth, our daughter has grown about 18″ and added on about 18 lbs, which as you can guess has meant she’s grown pretty fast. It’s a bit cold in Wyoming, so she can’t walk around with just a diaper on and we figured we’d need clothing. I didn’t realize how much we’d need and how soon, so quickly my wife & I came up with some strategies to get clothing for cheaper.

Hand Me Downs

This is the most popular one, and worked well for us. My wife’s sister had a child that’s 14 months older than ours, and she just sent us all of her kids clothing over in boxes as her kid got too small for it. We (my wife) sorted it by size, and we stored it away until we needed it and then put it in the drawer and shipped the old stuff back to my sister in law.

Used Clothing Store

Near us, there’s a store called Once Upon A Child (which I’m pretty sure is a franchise) and they have gently used children’s clothing of all sizes as well. While we don’t frequent this store because we get so much from our sister in law, we have not really needed much. Everything we have gotten from them has been top-notch though. Not only do they have clothing, they have all kinds of different baby and little kid stuff – toys, games, cribs, you name it and it’s all there.

Goodwill/Thrift Store

We occasionally check goodwill when the other two options have been exhausted and we still don’t have quite what we need (this has not happened often though). There’s always something there, and typically if your goodwill is large and fairly active, there will be a good price on it. I typically do a bit of my shopping there when we are there looking for things for our daughter as well. There’s nothing like saving a ton of money and killing two birds with one stone.

I think in about 2 years, we have probably spent less than $50 on new baby clothing, and many of those purchases were things that we didn’t even need to buy – they were more of impulse buys that we thought were really cute. I have also not yet found a future parent that has not been totally inundated with other baby clothes from people whose kids are older and have decided not to have any more kids. They don’t need the clothing, and new parents want it, so it’s made for a perfect exchange for years.

There really is no need to pay – simply ask friends and family who have kids first, then branch out to friends or try Craigslist if you don’t think you’ve got enough. Kids go through clothing typically faster than they can wear it out at this age, so you don’t have to worry about something you get being totally beat up.

How about you all? Do you have kids? If so, how have you saved on baby gear?

Share your experiences by commenting below!

***Photo courtesy https://www.flickr.com/photos/f8dy/93843796/

Automate Your Savings To Save More Money Quickly

The following is a post by MPFJ staff writer, Toi Williams, who is a professional personal finance blogger of Fine Tuned Finances. She has backgrounds in personal finance, sales, and real estate.

According to the U.S. Bureau of Economic Analysis, Americans saved roughly $646.3 billion collectively in June. That figure translates to about 4.8 percent of our disposable income. That savings rate is dismal, even though it was up slightly from May. At its most recent peak in December 2012, the savings rate was about 11 percent.

The picture for adults under the age of 35 is even bleaker. In 2014, adults aged 35 and under had a savings rate of negative 2 percent, according to data compiled by Moody’s Analytics. If you are one of the millions of Americans that are not saving enough for the future, don’t despair.

There are a number of methods you can use to automate your savings and save more money quickly. Automating your savings is important because it allows you to continuously save without having to think about it. It also reduces the chances that you will divert the funds for other spending.

Here are some of the best methods to use to automate your savings:

Automatic Direct Deposits

The easiest way to automate your savings is to have the amount you want to save taken out of your paycheck each pay period. Many of the companies that offer direct deposit for paychecks also allow employees to split their check into several different bank accounts. You can have a specific amount or a set percentage of each check deposited into a savings account with the rest deposited into a checking account for spending.

Automatic Money Transfers

If your employer does not provide direct deposit services, you can still automate your savings by setting up an automatic transfer from your checking account to your savings account. Simply log on to your bank’s online portal, determine the amount that you would like to transfer, choose a monthly transfer date, and confirm your choices. Every month, the amount chosen will be automatically transferred from your checking account to your savings account without you having to take any further action.

Sign Up For A Round-Up Program

Several banks now offer a feature where they round up your account transactions and deposit the difference into your savings account. For example, if your debit card purchase from a grocery store totaled $87.60, the bank would deduct $88 from your checking account and deposit $0.40 into your savings account. As anyone who has every saved their change knows, these small increments can add up to a considerable amount of money over time.

Apps That Automate Your Savings

Acorns – The Acorns app automatically invests your spare change in exchange-traded funds. When you purchase items with your credit or debit card, the app rounds the purchase up to the next dollar and invests the difference in previously chosen investments. The service is free for anyone that is under 24 years of age or that is currently a student.

Betterment – The Betterment app allows users to set up automatic deposits that are then invested according to the users’ age, investment horizon, and risk appetite. Betterment then checks your portfolio daily and will automatically rebalance it through buying or selling securities or using deposited cash to purchase additional securities. The program is fully customizable and the parameters can be changed at any time.

Digit – The Digit app analyzes how you spend your money. When it detects that you have extra cash, it automatically deposits it into an FDIC-insured Digit savings account for you. When the money is in your Digit account, it can only be transferred back into savings. It is an easy way to save a little extra money each month.

Qapital – The Qapital app lets users set up savings targets tied to certain financial parameters, such as spending. When a user spends a certain amount of money in one of those parameters, a predetermined amount of money is transferred to a savings account. There is also a feature that lets freelancers save a set percentage of their income automatically to pay their quarterly taxes.

Simple – The Simple app from BBVA allows users to designate a small amount of money that will be transferred to their savings account from their spending funds in small daily increments. Because the transfers are occurring in small amounts on a daily basis, the user will not even miss the money from their account.

Final Thoughts

Automating your savings will save you a lot of time and effort while ensuring you are putting money away for the future. While these options are generally “set it and forget it,” you should still review these accounts on a regular basis to ensure that you are making progress towards your savings goals.

During your review, you may find that upping your contributions to your savings accounts are in order or you may find that too much money is leaving your checking account. Rebalancing these contributions on a regular basis based on your financial situation can increase your future financial stability.

These saving methods work best when the money is allowed to remain in your savings account for a long period of time. Emergency savings that may be accessed at any time should be kept separate from your long-term savings in an easily accessible account with no withdrawal penalties. Your long-term savings should be stashed in an interest bearing account so that your money can grow over time from interest payments.

How about you all? Have you tried any of these automatic money saving strategies? Do you have other automatic money saving strategies you’ve tried successfully?

Share your experiences by commenting below!

***Photo courtesy https://www.flickr.com/photos/68751915@N05/6355251231

Cash – Your Secret Weapon Against Debt

The following is a post by MPFJ staff writer, Kevin Mercadante, who is a freelance professional personal finance blogger for hire, and the owner of his own personal finance blog, OutOfYourRut.com. He has backgrounds in both accounting and the mortgage industry.

Is there a responsible way to use credit cards? Absolutely! All you have to do is make sure that you pay off your entire balance in full each month – and on time. If you do, you will never incur any interest charges or late fees. And if you have rewards with your credit card, you can even make a little bit extra on your purchases. Good deal? Certainly.

But what if you’re one of the many millions of credit card users who don’t pay off their balance in full each month? And what if you are one of the many billions of credit card users who have accumulated many thousands of dollars in credit card debt?

You’ll need a different strategy. And perhaps the best strategy – as well as the simplest – is to stop using your credit cards and become an all-cash buyer. When we refer to cash, we’re not just talking about the currency in your wallet, but also about using checks and your debit card, since both function effectively as cash.

If you want to get out of debt, going to cash is an outstanding way to do it. Why?

You’ll Never Spend More Than You Have

When you limit yourself to spending only with cash, you can never spend more than the amount of money that you have in your bank account or your wallet. That fact alone will keep you from adding more debt to your current load, and that will hasten the day when you will finally be debt free.

There is one caveat here, and that is overdraft protection. If that in any way, shape or form translates a cash shortage in your bank account into some sort of debt arrangement – such as shifting the shortage over to a credit card account – you’re probably playing with fire. That’s just a backdoor way to spend money using a credit card or some other form of debt.

You Won’t Be Paying For Last Month’s Expenses This Month

One of the biggest reasons why people can’t get out of debt is because they’re always paying for yesterday’s debts. But when you pay by cash, you will put an end to that cycle. If you are already in debt, you have your hands full just paying this month’s expenses – adding last month’s expenses to the list will only put you little bit deeper in the hole.

You’ll Buy Less Because There’s No “Fudge”

One of the inherent problems of spending with credit cards – at least for the undisciplined – is that it is an open invitation to buy more than you can afford. In many cases, people are deep in debt because they have had far too many months in which they spent more money than they had. It’s too easy to add a few extras to the shopping cart, or to trade up on an important purchase, when you know that the extra cost will be covered by your credit card.

No Incentives to Spend

As I mentioned at the beginning, having credit card rewards can be an excellent option to have, but only if you’re paying off your balance each month.

If you aren’t, the rewards are probably functioning as little more than an incentive to spend even more money. This is the entire reason why credit card companies offer rewards programs. They’re betting that you’re going to spend more money on their credit card based on the rewards that they’re providing. In the process, you are far more likely to run up a large balance that will be subject to ongoing interest – which is the life’s blood of all credit card companies.

In short, credit card rewards are a blessing to people who pay their balance off each month, but a curse to people who carry balances.

You Won’t “Pay Extra” For Everything

This gets to the heart of the interest rate issue: when you pay by credit card – and you carry a balance forward – you’re always paying more for everything that you buy because of interest expense. Unless you can pay off your balance in full each month, you will be participating in a financial game that can only work against you, and always will.

As an example, let’s say that you buy a computer for $1,000 and you use your credit card because they are offering 2% cash back. You take the computer, and your cash reward, which means you’ve only paid $980 for the computer. So far, so good.

But if you carry that balance over the next 12 months, and your credit card charges you 15% interest, that will add $147 in interest expense to the cost of your purchase. Instead of paying $980 for the computer, you will actually pay $1,127. And that assumes that you will pay off the credit card balance in one year. If you don’t, you will incur perpetual interest charges on top of your initial purchase.

If you repeat this process many times during the year, you’ll pay more for everything that you bought with your credit card – which is exactly why credit card companies like to offer rewards.

You Won’t Be Increasing Your Debt

No matter what, if you make your purchases in cash, you will not be adding to your existing debt balance. This is critical – if you want to get out of debt, the first step is to stop adding to it. Until you win that battle, any effort that you make to get out of debt will be a losing proposition.

With Cash Your Debt Will Go Away – Eventually

Why is it so important to stop adding to your debt? Apart from the fact that you want to keep your debt from growing, you can eventually get out of debt simply by making your regularly scheduled monthly payments. That can only work if you’re not adding to your existing debt.

Credit card statements typically provide you with information telling you how long it will take pay off your balance using the minimum monthly payment. It may take 10 or 12 years, but if you make those payments and don’t add any fresh debt, you will eventually be debt free.

As those balances decrease, you’ll have room in your budget to make additional principal payments, that will shorten the time that it will take to pay off your balance. But that can only happen if you put a stop to adding new debt. And you can only do that by spending with cash.

If you’re serious about getting out of debt, it’s close to impossible to imagine doing it without becoming a cash buyer.

How about you all? Have you found this to be true? Have you or someone you know been successful in using cash to help you reduce or eliminate your debt?

Share your experiences by commenting below!

***Photo courtesy https://www.flickr.com/photos/stevendepolo/5437288053/sizes/q/