My Personal Finance Journey

All posts by Jacob A Irwin

Business Law 101 for New Start-ups

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Welcome to My Personal Finance Journey! If you are new here, please read the “About” or “First-Time Visitor” pages to find out more about us. If you would like to receive free updates on articles like this by email, then sign up here or you can subscribe to the RSS feed. Also, check us out on Twitter or Facebook. Thanks for visiting! Keep on learning!
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The following is a guest post by Jeremy. Enjoy! 

Business Law 101 for New Start-ups

Most new business owners are excited to launch their own start-ups. With so much information on the Internet for entrepreneurs, it can be hard to know what steps you should take when starting a new business.

Legal Business Structure

Keep in mind that understanding business law will be absolutely essential to your success. Depending on the type of business you are starting, you may wish to contact a lawyer to assist you with paperwork or state and federal filings. The United States Small Business Administration provides a wealth of resources for new business owners. Take time to familiarize yourself with the agency’s website.

Many new business owners hire a lawyer or contract with an experienced entrepreneur to gain guidance. While this is a great option, you may be eager to do as much as you can on your own. A variety of easy-to-use legal documents are available for small business owners. One of the first things that you should consider when launching your enterprise is what type of business you will be. Will you run a sole proprietorship? Are you going to have a partner, or do you prefer to adopt a corporate structure? Whatever structure you end up choosing, you will need to file papers in your state so that your business can operate.

Considerations for Partnerships

If you are starting a partnership, you’ll want to be sure that you have a solid contract between partners. This should detail what will happen if there are any substantial changes in the business. Clarify how profits will be shared and what duties each partner is responsible for. While you probably have a great relationship with your business partner, it’s important to be prepared for the future. Be sure that you have a clear plan outlined for how profits will be divided should you decide to take your company public.

Employment Laws

Every new business owner should also take time to familiarize himself or herself with employment laws and regulations. If you plan on having employees, you will need to follow both state and federal laws. If you fail to comply with such laws, you can face heavy legal fines and may lose your business license. Attending an employment law seminar is a great way to familiarize yourself with the applicable laws in your state.

Tax Laws

You should also be sure to understand the tax laws that are applicable to your type of business. While you can find plenty of information on the Internal Revenue Service website, you may wish to speak with an experienced business accountant. Keeping your business records in good order is essential. Familiarize yourself with record keeping guidelines and laws. Remember that every business has different legal needs. Time spent investigating particular legal concerns in your industry will be time well-spent.

How about you all? What type of business structure do you have in place for your business – sole proprietorship, partnership, corporation, S-corp., or an LLC? Why did you chose the format that you did? Would you do it differently if you could go back in time and start all over?

Do you hire a lawyer and/or accountant to help you with the tax and other legal issues surrounding your business, or do you handle everything yourself? Why?


Share your experiences by commenting below!

    ***Photo courtesy of http://www.flickr.com/photos/walkn/3314689121/sizes/l/in/photostream/

    Long Term Life Insurance

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    Welcome to My Personal Finance Journey! If you are new here, please read the “About” or “First-Time Visitor” pages to find out more about us. If you would like to receive free updates on articles like this by email, then sign up here or you can subscribe to the RSS feed. Also, check us out on Twitter or Facebook. Thanks for visiting! Keep on learning!
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    The following is a guest post.

    Long Term Life Insurance
    Term life insurance is available in a variety of terms to suit the needs of different individuals. Some terms may be as short as 3 months, while others are more than 30 years. Although long term life insurance policies are temporary, they can cover the time when most individuals have the greatest need for life insurance, which is when children are dependent on parents’ income. A parent’s 20 or 30 year term life policy will provide financial protection for children from infancy to adulthood.
     

    Long Term Life Insurance Policy Rates

     
    Because term life insurance rates are largely based on the insured person’s age over the term of the policy, long term policies have higher rates than short term policies. A 20 year old will be 50 when a 30 year policy expires. 50 year olds pay higher life insurance rates than 20 year olds and the rates over the term of the policy are averaged to take this into account. During shorter policy terms, policyholders age less so the rates are lower.
     

    Long Term Life Insurance vs. Permanent Life Insurance

     
    Permanent life insurance policies, like whole and universal life, do not expire and guarantee payment of the death benefit, but the rates are substantially more than long term life insurance rates. If the insured person outlives the term of his or her policy, no benefits are paid, and the company keeps all the premiums. Since not every policyholder will collect benefits under his or her policy, it is possible to keep term life rates low while providing the same coverage as permanent life insurance, but for only a limited time.
     

    Return of Premium (ROP) Term Life Insurance

     
    Those who would like the cash value feature of whole or universal life insurance but find the premiums too high can consider a return of premium long term life insurance policy. If the insured person outlives the term of the policy, the company refunds all of the premiums plus interest in a lump sum. While this differs from cash value since the insured cannot take money from the policy while it is still in force, ROP long term coverage can be used in financial planning like whole or universal life.
     

    Why Choose Long Term Life Insurance?

     
    Life insurance rates are based on the age of the insured person over the term of the policy, and the older the policyholder is when the policy is purchased, the higher the rates will be. The cost of 3 – ten year term life policies will actually be more than the cost of a single 30 year term life policy. Once a long term life policy is issued, the rates are locked in for the entire term even if the cost of administering policies increases. If the need for life insurance protection is long term, then a long term policy offers the best value.
     

    Term Life Insurance Companies

     

     

     
    Virtually all life insurance companies offer term life insurance policies, but some companies specialize in term life. Term life insurance is temporary life coverage that expires at the end of a pre-agreed term. If the insured person does not die during the term, the policy expires, no benefits are paid and the term life insurance company keeps the premiums. There are two types of term life insurance companies, privately held and mutual companies.
     

    Mutual Life Insurance Companies

     
    Mutual term life insurance companies are owned by the policyholders. Management of these companies answers directly to their customers, because every customer is also an owner. Daily operations of mutual companies do not differ significantly from those of privately held companies, but profits made by the company are used to lower premiums or pay dividends to policyholders, not stock owners. Good management in mutual companies benefits the policyholders directly.
     

    Privately Held Term Life Insurance Companies

     
    Privately held life insurance companies issue stock which is purchased by investors. The investors may not have a life insurance policy with the company, but they own a percentage of the company through stock ownership. Privately held term life insurance companies have the advantage of being able to raise more cash from investors for acquisitions and growth than mutual companies. Management of privately held companies must answer to their stockholders and policyholders are customers for their product.
     

    Which Type of Life Insurance Company Is Better?

     
    From the standpoint of customer service and price, there is little difference between mutual and privately held companies. The daily operations of their service departments are identical and the real differences are only apparent on the upper management level. Privately held companies must hold stockholders meetings and investors vote on major management decisions. In mutual companies, policyholders may be notified of impending changes in the company structure.
     

    How To Get Information On A Company’s Reputation

     
    Since many term life insurance policies are long term contracts, smart consumers get information about insurance companies before making the purchase. Four major consumer agencies offer rankings for term life insurance companies including AM Best and JD Powers. To check the financial stability of a company, potential policyholders can ask for a copy of the company’s financial prospectus. The state department of insurance or Better Business Bureau can advise consumers of any customer complaints or litigation against a company.
     
    Most term life insurance companies are well established firms that offer a quality product. Whether an individual chooses a mutual or privately held company is a matter of personal preference since both types of companies offer excellent service and affordable prices. Consumers should check the reputation of any life insurance company before entering into a contract since it is important to choose a provider that will be there if a family needs them.
     

    Life Insurance Quotes

     
    Consumers can compare the rates of long term life insurance policies by requesting life insurance quotes online. The individual submits basic rating information like age, gender and occupation and chooses the type of life insurance and death benefit amount. The site provides long term life quotes from multiple top ranked insurance companies so consumers can compare costs and find the best policy at the best possible price.

    How about you all? Do you prefer term, whole, or universal life insurance plans? Why?


    Share your experiences by commenting below!

    Google Gmail and Calendar vs. Microsoft Outlook – Which Is Better For Productivity?

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    Welcome to My Personal Finance Journey! If you are new here, please read the “About” or “First-Time Visitor” pages to find out more about us. If you would like to receive free updates on articles like this by email, then sign up here or you can subscribe to the RSS feed. Also, check us out on Twitter or Facebook. Thanks for visiting! Keep on learning!
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    It’s pretty amazing to me to think about how much the world’s usage of technology and telecommunication has changed in such a short time since the year 2000. When I graduated high school in 2004, almost nothing related to school was accessed online. The teachers didn’t communicate with students via email, BlackBoard, Collab,  or other online document/course management systems. In fact, I think the only reason I ever used a computer back then was either a) to chat with my friends using AOL Instant Messenger or b) type up reports whenever it was absolutely required! In fact, AOL seemed like it was one of the only popular Internet and email providers.

    Now, it’s hard to find people with an AOL email address (I still have one, but all that it receives is about 20 messages of SPAM per day). Furthermore, the AOL service is now free, instead of paying $30 per month like we used to.

    My my how times have changed. When I graduated from college in 2008 from the University of Arkansas, I had four email accounts – 1 from college, a Gmail account, a Yahoo account, and my old AOL account. The professors communicated everything via email and online course management systems – from class notes to exam grades and coordinating meetings. I even had started and run an eBay selling business! However, at this time, I still was only checking my email maybe once or twice a day. Why? Because I didn’t seem to receive that many emails.

    After college in 2008, I started my first job as an engineer with a large publicly traded pharmaceutical company. It was then that the use of email become very widespread for me, with me having the temptation to constantly check it during the day. In fact, I found myself at times purposely ONLY checking it 2 times during a day in order to maximize productivity (see Getting Things Done by David Allen and The Hamster Revolution for more details on this)

    During this time, my eyes were opened to (a new tool for me at least) the Microsoft Outlook email/calendar/task management software. At the company I worked for, nearly everything was managed through Outlook: there was a handy dandy directory in Outlook that told you everyone’s contact info as well as their physical work addresses and supervisors, it was used to reserve rooms for meetings, and was used to manage email.

    Since my exposure to Microsoft Outlook 4 years ago now, I have been able to compare Google’s Gmail and Calendar features to Microsoft Outlook head-to-head. As such, the purpose of today’s post is to share some of my thoughts about these two products so that you can determine whether Gmail or Outlook is better for you. 

    Comparison of Calendar Capability – Google vs. Outlook

    In my opinion, Google’s calendar and Outlook’s calendar are fairly similar – probably because Google modeled their calendar after the features that were tried and testing in Outlook. Below is a summary of the similarities and differences:

    Similarities

    • Both allow you to create and schedule events (either one time or recurring), invite attendees, and program reminders as pop-ups on your screen. 
    • Both allow you to share calendars with others. 
    • Both allow you to view your calendar in multiple formats – daily, weekly, etc. 
    Differences
    • Google calendar allows you to program email reminders. Also, you can program reminders beyond the maximum 2 weeks allowed in Outlook. 
    • Google calendar also features a “search” capability, making you able to search all of your events.
    • Outlooks allows you to work “offline” more easily than Google does, in my opinion. However, Google does have offline browser apps for Gmail and Calendar now. 
    • Outlook allows you to drag and drop EMAILS directly from your mail to your calendar. This is very handy for me since it is easy to see what the email chain contained when an event pops up on my calendar. 
    • Next, Outlook’s Calendar content is stored on your computer, not online like Google is. This can be either a plus or minus, depending on how you look at it. 


    Verdict – In my opinion, both Google and Outlook’s calendars are good, so I recommend using both. 
    However, because I really like the Outlook drag and drop feature, I choose to mainly operate, add, and manage events through Outlook. But, you can easily take advantage of the features of Google’s Calendar by simply using the handy Sync function developed by Google to automatically copy all events between the two programs. 

    Comparison of Email Capability – Google vs. Outlook

    Overall, I think most would agree that Gmail and Outlook have a very different ‘feel’ when it comes to how each program handles email. On one hand, Gmail is very rapid, and allows for you to shoot off many emails within a minute, while Outlook requires a few more clicks with multiple reply screens needing to pop up, and then you have to click the Send/Receive button to send the email right away. Listed below are some of the similarities and differences between the two programs:

    Similarities

    • Of course, both enable the user to send and receive emails, mark the emails as read or unread, and create folders in which to place emails. 
    • Both seem to have good SPAM/Phishing controls, which prevents the automatic downloading of external new content that could potentially harm your computer. 
    • Both allow email notifications on your desktop, if you desire. However, I personally don’t recommend this because it can distract you from the current task you are working on in favor of checking your email. 
    • Both allow you to have a signature below every email you write. However, there are some differences here. See the Outlook section below.
    • Both have Out of Office Notification capability. 
    • Both allow you to send mail using other email addresses that you own/control.
    • Both are ‘searchable,’ meaning that you can search folders for specific words or email addresses. However, as you can imagine, Google is a little better/quicker at this search feature than Outlook I think.  

    Differences – Email Features Provided by Gmail

    • Has the Gchat feature, which is good for people wanting to communicate quickly with other people online. Webcam conferencing is also possible with Gmail, as well as calling people on the phone. 
    • Has the “Conversation View” feature, which appends conversations of the same topic within the same window. 
      • Personally, I hate this feature. I am never able to find WHERE in the window the newest email letter is, unless I search for it for about 3 minutes. 
      • The other option to this is to turn off the Conversation View, which is not any better because it doesn’t place old emails in the same chain within the same window, making you unable to view the progression. 
    • Gmail has an auto-forwarding feature, which allows you to automatically have any new messages sent to your account to another account. This is great for enabling you to maintain multiple email accounts, but only having to actually log in to one every day. 
    • With Gmail, all emails are backed up online, away from your local computer. This is a good thing for safety. You also have 10 GB of free storage space, in addition to your Google Document/Drive folder. 

    Differences – Email Features Provided by Outlook

    • Unlike Gmail, when you click “reply” on Outlook, it simply copies the text from your current email chain below the new message you are writing. There are no tricks to finding out what order the emails were sent. 
    • Signatures. 
      • Simply put – I love the signatures feature in Outlook. Not only do I have my contact information in my signature, but I also have about 15 common email responses pre-typed in these email signatures that save me loads of time/pain each week. 
      • Gmail does have a somewhat new “Canned Responses” feature that is similar to this in Outlook. However, when I tried it, the canned responses had to be entire previous emails, not just a specific copy/pasted text like in Outlook. I think that Google will eventually improve this, but for now, I found Outlook to be better for this purpose. 
    • Folders.
      • The folder capability in Outlook is extremely flexible and truly maximizes my organization abilities. 
      • First, you can create as many folders as you want, and unlike Gmail (where they are “hidden” and you have to click ‘view more’ through in indiscernably organized list), the folders are very easy to view on the sidebar of the screen. You can view an example of the folders I have set up in the picture below:
       
      • In addition, in each Outlook folder, you can either specify that you’d like to display the total number of items or the total number of unread items. This ‘total number of items’ display feature is especially useful for actionable folders (like the ones with the @ sign shown above) because even though I have already read all of these emails, they still need a response/follow up, so I don’t want to lose sight of them. 
      • Lastly, with Outlook folders, you can drag and drop emails from your inbox in to the proper folders. With Gmail, you have to click a drop down menu and select the destination folder from a somewhat long list. This takes up more time than is necessary in my opinion. 
    • Outlook can connect and download email from web-based email services, such as Gmail and Yahoo, using POP and/or IMAP protocols. 
    • Control How Often You Send/receive Email and Go Offline.
      • Another thing I like about Outlook is that you can specify how often (if ever) that your emails are automatically downloaded. This can be as much as every 30 seconds to every 30 minutes, or never, if you set Outlook as offline. 
      • For me, I only like to read my email several times throughout the day so that I don’t get distracted from being strategic about the order that I tackle things to do. 
      • So, what I do is set Outlook to stay “offline” and just manually send/receive my email when I am ready by pressing the F9 button.  
    • Change Arrangement of Screen Elements.
      • With Outlook, it is very easy to change the orientation of the email reading pane and folders. 
      • For example, I like to have my reading pane on the right side of the screen. However, you can also have it on the left or on the top. 
    • Mark Comments in An Email.
      • Another cool feature of Outlook is that it allows you to (if you desire) automatically mark comments in a previous email in a different color text. This is particularly useful if you are reviewing someone’s proposal or responding to a list of questions posed in a previous email.  

    Verdict – In my opinion, for maximizing productivity for folks that receive 50-200 emails per day (not uncommon in today’s working world), Microsoft Outlook is head and shoulders above Gmail because of the customization options available. In particular, the capability that Outlook provides with folders, signatures, and logically appending past email text is much better for people that are short on time.


    On the other hand, Google’s Gmail is slightly ‘quicker’ at sending individual emails, and as such, is well suited for people that receive only a couple emails every day and do not need all of the hierarchy of organization with folders, etc. 


    In fact, in order to have the benefits of both Gmail and Outlook (email and calendar), I would actually recommend doing what I do and have a Gmail email account/address, but operating all of your email and calendar activities on a day-to-day basis through Outlook. This is very easy to set up using the POP/IMAP downloading and Calendar Sync features discussed in the previous sections. By doing this, you can have the Gchat, auto-forwarding, and online backup of all emails (even ones sent through Outlook) while keeping the organization of Outlook.

    How about you all? Do you use Gmail (or another online email provider) or Outlook to manage your email and calendar on a day-to-day basis? Which do you think is better and why? 


    Share your experiences by commenting below!

      ***Photo courtesy of http://www.public-domain-image.com/cache/objects-public-domain-images-pictures/electronics-devices-public-domain-images-pictures/computer-components-pictures/black-computer-keyboard_w725_h483.jpg

      Saving Money on Your Health Insurance

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      Welcome to My Personal Finance Journey! If you are new here, please read the “About” or “First-Time Visitor” pages to find out more about us. If you would like to receive free updates on articles like this by email, then sign up here or you can subscribe to the RSS feed. Also, check us out on Twitter or Facebook. Thanks for visiting! Keep on learning!
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      The following is a guest post. Enjoy!

      Saving Money on Your Health Insurance
       
      Healthcare is an understandably divisive issue at the moment, with healthcare reform still causing controversy at the government level and the current financial crisis making it more and more difficult for people to afford their policies. One thing people can do regardless of their political affiliations or financial situation is find ways to save on the cost of healthcare, and here we take a look at a few ways to cut costs.
       

      Get Expert Advice

       
      Firstly, speak to an insurance agent. They understand the market and know what’s available and should be able to find you a policy that matches your needs. They occasionally will have access to certain plans from insurance companies which aren’t freely available, so they could save you money if it’s a good match.
       
      They can also discuss add-ons that many people neglect to consider, such as dental or vision cover and seeking out sites who can give you the best information on the different levels of cover such as basic, standard and comprehensive. While these won’t be necessary for everyone, they can be beneficial in the long run and could save you money in the future.
       

      Getting the Right Policy for Your Circumstances

       
      Choosing the right plan is vital if you’re looking to make substantial savings. The cheaper of the two main policies available in the USA is an HMO (Health Maintenance Organisation) policy, however if you’re looking to use a doctor that’s not in the insurers preferred treatment network, the costs can mount up. If the network provides quality facilities close to your home, then this is the type of plan you should consider, however if they’re not suitable or you’d prefer to see a certain doctor, then it might be worth looking at a PPO (Preferred Provider Organisation) plan.
       
      A PPO is a bit more expensive than an HMO, but it can be more cost effective if you insist on visiting an out-of-network facility. Customers who opt for this type of plan are also entitled to open a Health Savings Account, which can be used to save money tax-free to put towards any medical expenses which they may incur. Many people save a substantial amount of money each year using these accounts.
       
      The internet is a massive help when trying to source policies, with many sites now offering a comparison service to help compare the benefits and the price of various plans. While it may be tempting to go for the cheapest policy that the comparison engine highlights, it’s important to consider what’s covered and if the policy could end up being more expensive over time.
       

      Making the Most of Your Policy

       
      Once the policy is in place, it’s worth contacting the treatment providers in your network to get prices for various treatments. Hospitals will often compete on price, and if they are aware that a consumer is shopping around, they may be willing to be more flexible. Having the information on-hand will help save a lot of time and expense in the event you become unwell.
       
      The same is true of pharmacies, with many charging different prices for prescription medication. Some will encourage pill-splitting as a way of saving money on prescription costs, and although it’s not applicable to every kind of medication, it’s something worth enquiring about.
       

      Check Your Bills

       
      After you’ve received treatment at a medical facility, it’s important to check your invoice to ensure you were billed correctly. Human nature means mistakes will be made from time to time, so always double check bills from both the insurance company and the hospital to ensure they are correct.
       
      Of course ,the main way to save of medical bills is to stay as fit and healthy as possible by eating well and getting regular exercise. Taking preventative measures will mean fewer visits to the doctor, which in turn reduces the amount of medical bills you receive. If you can get healthy and stay healthy you’ll find you save a small fortune on medical bills every year. 
       

      How about you all? What techniques do you use to save money on health insurance other medical-related expenses?

      Share your experiences by commenting below!

      ***Photo courtesy of http://www.public-domain-image.com/cache/science-public-domain-images-pictures/medical-science-public-domain-images-pictures/medical-staff-working_w725_h482.jpg

      What is the Highest Expense Ratio You Pay On the Mutual Funds You Own? Plus a Comparison With the National Average

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      Welcome to My Personal Finance Journey! If you are new here, please read the “About” or “First-Time Visitor” pages to find out more about us. If you would like to receive free updates on articles like this by email, then sign up here or you can subscribe to the RSS feed. Also, check us out on Twitter or Facebook. Thanks for visiting! Keep on learning!
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      Click here to enter my free $76.18 giveaway for a chance to win 5% of My Personal Finance Journey blog income and give another 5% to a charity of your choosing! Deadline to enter is May 31st, 2012.

      Several months ago, I posted the following poll on the top left of the sidebar on My Personal Finance Journey for readers to respond to:

      What is the highest mutual fund expense fee/ratio you pay on the funds you own?


      There was a great response to this question, and it was very interesting to learn about you all’s fund-buying tendencies. Shown on the pie chart below is a break-down of the responses that were received broken down in to 7 expense ratio fee categories.

      Overall, it was great to see that the expense ratio category that received the largest number of responses was the 0.1% or less category. This is great news! This means that most of you all, like me, have chosen to resist active mutual fund management and instead invest the smart way (passive investing) by using index mutual funds or ETFs! In fact, almost 1/2 of all of the votes received indicated that people paid less than 0.5% as the highest expense ratio for their mutual funds. Wonderful!

      Comparison with the Rest of the United States – Average Mutual Fund Expense Ratios


      As I always like to do when I analyze the result of polls here on My Personal Finance Journey, I figured it would be interesting to see how the responses compare to the current mutual fund expense ratio averages seen in the United States. 
      According to the Investment Company Institute in a study published on April 23, 2012, the average mutual fund expense ratio paid by US investors in 2011 was 0.79%, or 79 basis points. 
      Taking this in to consideration, the pie chart below shows how the MPFJ reader responses compare to this 0.79% average. As you can see, 62% of the readers on MPFJ pay less than the national average. Again, this is great news! 

      However, there was 38% of the reader responses that indicated paying over this national average. What this indicates is that there is still a very significant opportunity for people to save money by selecting different mutual funds in order to minimize their costs.

      But, Isn’t Paying a Higher Mutual Fund Expense Ratio (Above 0.79%) Worth it if the Fund Has Outperformed the Market for the Last X Number of Years?

      In short, the answer to this question is unfortunately ‘no.’ 

      Higher expense ratios or front-end/back-end sales loads are often rationalized by actively managed mutual funds as being ‘worth it’ because the fund has outperformed the market in the last X number of years by X%.   Examples of this include the American Growth Mutual Fund and the CGM Focus Fund.

      While this train of logic sounds good (after all, in most other professions, if someone has performed well in the past, you’d expect good performance going forward), it has been proven time and time again in nearly every investing book I have read that this logic simply doesn’t work in the investing world because there are too many external variables that the fund manager cannot control.

      For more reading on this, I’d recommend reading A Random Walk Down Wall Street, What Wall Street Doesn’t Want You to Know, or Stocks for the Long Run by Burton Malkiel, Larry Swedroe, and Jeremy Siegel, respectively.

      But, the good news is that there is a simple way to avoid paying these high costs for mutual funds – using passively managed index mutual funds or ETFs. For example, the average expense ratio of all Vanguard mutual funds is only 0.20%, with Vanguard index funds having an average expense ratio of only 0.16%. By selecting any of these types of funds, you can save yourself and your family big money and allow your long-term savings to compound more quickly.

      How about you all? What is the highest mutual fund expense ratio you pay on the funds you own? Is it above or below the national US average expense ratio of 0.79%?


      Do you typically employ active management or passive management in your mutual fund selection? Why do you choose one or the other? 


      Share your experiences by commenting below!

      What is Long Term Care Insurance?

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      Welcome to My Personal Finance Journey! If you are new here, please read the “About” or “First-Time Visitor” pages to find out more about us. If you would like to receive free updates on articles like this by email, then sign up here or you can subscribe to the RSS feed. Also, check us out on Twitter or Facebook. Thanks for visiting! Keep on learning!
      ————————————————————————————————————————

      Click here to enter my free $76.18 giveaway for a chance to win 5% of My Personal Finance Journey blog income and give another 5% to a charity of your choosing! Deadline to enter is May 31st, 2012.

      The following is a guest post. Enjoy!

      What is Long Term Care Insurance?
      If you’ve listened to any of the popular television financial advisors, the topic of long term care insurance has been mentioned numerous times.  Usually, it is brought up when individuals and families are looking at estate planning, or children are worried about their parents getting older.  The reason is long term care insurance covers things that are generally not covered by regular health insurance, Medicare, or Medicaid.  Instead, long term care insurance focuses on providing care when you’re not sick, but may not be able to perform the basics of everyday life, or need some type of assisted living care.

      What Long Term Care Insurance Covers

      Long term care insurance is designed to help cover the costs of providing long term care: such as dressing, bathing, eating, walking, or more.  This type of care can be provided in a variety of ways, such as through home care, assisted living facilities, adult day care centers, hospice care, nursing homes, or Alzheimer’s care facilities. 
      Long term care insurance usually also provides for a care-giver (either visiting or live-in), companion, therapist, nurse, or possibly a housekeeper.  Depending on the policy maximum, care can be anywhere from visiting at a pre-determined interval to 24 hour care.

      Why Long Term Care Insurance Can Help

      Many individuals look for long term care insurance because it is currently estimated that about 60 percent of individuals over the age of 65 will require at least some type of long term care during their lifetime.  Furthermore, once long term care is actually needed, it may be difficult to get long term care insurance.  That is why many people seek it out while they are young.
      Also, many individuals may not want to rely on their children or family for support, or they may feel like they are burdening them.  As such, long term care insurance can help cover the out-of-pocket expenses associated with getting long term care. Without long term care insurance, the cost of having these services may quickly deplete the savings of the individual, and they could end up a ward of the state or dependent on their children or family after all.  

      How about you all? Have you ever thought about getting or know anyone that has long term care insurance? Do you think this type of insurance is worth the money? 


      Share your experiences by commenting below!

        ***Photo courtesy of http://s0.geograph.org.uk/photos/24/68/246875_2523ec81.jpg

        CarMax’s MaxCare Extended Service Plan Dissected and Other First-Hand Account CarMax Car-Buying Experiences

        About a month or so ago, I went along with my girlfriend to help her purchase a car at our local CarMax.

        While I could probably spend an entire post talking about the reasons for and against choosing CarMax to purchase a used car, overall, I have to say that the buying experience at CarMax was a rather positive one.

        In particular, my girlfriend liked the ‘no-haggle’ pricing structure they have going on there and the fact that their cars are high-quality/not going to be ‘lemons.’ Perhaps the only drawback to buying a car from CarMax is that it is very difficult to find cars below $10,000 there. This is due in part to the fact that their cars are high quality, but in my opinion, also to the fact that because of their dependable reputation, CarMax knows people are going to be willing to pay a slight premium for cars purchased there.

        Apart from the CarMax buying experience being overall very positive, there were two things that were mildly “pushed” on us to buy that I thought would be interesting to share with you all (described below):

        • A 9.0% APR interest rate car loan.
        • CarMax’s MaxCare Extended Service Plan for only $1,000.
         

        CarMax’s Attempt to Push Car Loan Financing On Us

        Because of some prior research I had done on the subject of car buying, I knew that while NEW car dealers were offering very low-interest rate loans in order to sell NEW cars, USED car dealers made a significant amount of money off of selling loans/financing options for used cars.

        And, it turned out that the situation with CarMax was no different. My girlfriend was able to secure a loan from Bank of America for a pretty good rate of ~3.8% APR, while CarMax was willing to give her the same loan but at a 9% APR interest rate. Talk about some good mark up here! As you can imagine (since my girlfriend and I are still going out and have not broken up – haha), she ultimately chose the lower interest rate loan from Bank of America.

        However, the strategy that the car salesman tried to entice us in to going with the CarMax in-house financing was rather interesting. What had happened was that the letter guaranteeing the loan from Bank of America needed to be confirmed over the phone by CarMax, but they were unable to make the call since the bank was closed for the weekend (and we needed to wait until Monday). When CarMax heard about this, they gave us an OFFER. They wanted us to walk out of the dealership with the car that night by simply using CarMax’s financing. Since CarMax is apparently nothing but our friend, they even were going to give us the option of coming back within 1 week and canceling the loan (if we decided to go with the Bank of America loan) with no fees or interest involved.

        To us, this sounded like a whole lot of complication in exchange for simply getting the car 1.5 days earlier. So, we ultimately decided to simply stick with the Bank of America financing and wait until the bank opened on Monday to go back to finish the car purchase.

        However, I was quite fascinated with CarMax’s willingness to swap us in and out of their financing with no fees or interest. It made me wonder if 1) are they just being nice? or 2) do they know from experience that X% of people that walk out with their financing won’t take the trouble to come back and change back to financing that they had secured from the bank?

         

        CarMax’s Attempt to Push the MaxCare Extended Service Plan On Us

        So, even though it took me a couple hundred words to explain what transpired with our refusal to take the CarMax in-house financing option for my girlfriend’s used car purchase, it really wasn’t too big of an issue at all. We simply said, “no,” to the nice salesman, and moved on with the paper(/electronic)work.

        However, the CarMax MaxCare Extended Service Plan was pressured on us slightly more aggressively.

        As a general rule of thumb, I operate on the belief that insurance and extended service add-ons to purchases (large or small) are generally NOT worth the money and are a better deal for the people selling the plan to you than for you the buyer. So, my girlfriend and I had done our homework on this MaxCare Extended Service Plan pumped by CarMax, and we were convinced that it was unnecessary.

        Because we had done our homework about the extended service plan, we figured that when we sat down with the salesman at CarMax, it would be fairly simple to ‘just say no.’ Alas, this was not the case. During my girlfriend’s various initial talks with the salesman and subsequent discussions while we were finalizing the paperwork, I would say that the CarMax Extended Service Plan was mentioned no less than 5 times. By the end of it, I felt like we were almost made to seem like we would be IDIOTS for not taking the plan and that ALMOST EVERYONE who buys a car from CarMax gets the service plan. The salesman even threw in a story about one of his friends that is happily using the extended service plan when his car broke down! It was a nice touch! Was it true? Maybe.

        When we finally got to the last screen where he could sign us up for the extended service plan and we still said ‘no,’ he actually asked us WHY we didn’t want to take advantage of such a great deal. In reply, I simply said, “NAME OF SALESMAN, let’s just proceed with the sale of the car,” because I didn’t want to give him the chance to bring up some doubts, regardless of how good his intentions were. And, he respectfully followed our wishes. So, overall, despite knowing that the MaxCare Extended Service Plan was not necessary for us, my girlfriend and I still felt very pressured in to buying it, and she felt rather guilty for not doing so at the end of the episode.

        Now, this is not to say that CarMax is evil by any means. As I mentioned above, the overall result was quite positive, and I know it’s just part of the game of buying a car. But, it was interesting since I had never gone through the used car-buying process before.

         

        Details of the MaxCare Extended Service Plan from CarMax

        During the car buying process at CarMax, the Extended Service plan emerges as a very appealing option. On one hand, the initial cost of the plan is tacked on to the amount you are financing, making it so that you don’t necessarily consider the full cost since you will be paying it off over time. Second, many people coming to CarMax are looking for relief from an unreliable car that they had to make a lot of costly repairs on, so the Extended Service Plan very much catches their eye.

        Especially in these slightly elevated pressure buying situations, it’s particularly good to know the facts about what you’re buying in to. So, I wanted to spend a little bit of time in this post discussing what exactly the CarMax MaxCare Extended Service Plan entails, and what it does not!

        How Much Does the MaxCare Extended Service Plan Cost? 

        At a high level, the CarMax Extended Service Plan is a smaller, specialized insurance policy in a car service plan wrapper. The costs of the service plan are summarized below:

        • You pay $1,000 at the time of purchase of the plan/your new car.
        • Then, each time you need to bring in your car for a repair, you pay a pre-selected deductible, ranging from $100-$500 per visit.
        However, the thing that surprised me was that the specific details about the price of the plan and what is and is not covered is somewhat difficult to discern, especially during the car buying process where decisions are being made very quickly.

        How the MaxCare Extended Service Plan is Presented and What is and is Not Covered by the Plan

        Essentially, what happens is that you are handed over this wonderfully crafted brochure “describing” all of the details of the plan. But, instead of this brochure listing the specific details that I expected such as price of the plan and different deductible levels, etc, it basically seems to be designed to overwhelm the car buyer in to thinking that it covers EVERY POSSIBLE REPAIR THAT COULD EVER HAPPEN WITH THE CAR. This is done by listing out about a thousand or more parts of a car that are covered by the plan, as shown in the picture below:
        broch

        The catch is that if you read through the listing of parts covered by the plan and then compare it to the back side of the brochure where the plan exclusions are shown, it quickly becomes clear that 90% of the repairs that you will most likely incur on a reliable used car are NOT covered by the service plan (i.e. – they are all listed in the exclusions section).

        I’ve highlighted several things not covered by the service plan below:

        • Regular maintenance services described in your car’s manufacturer manual. This includes major 30k and 60k mile services and other major component replacements described in your owner’s manual.
        • Engine spark plugs and ignition wires.
        • Batteries, air conditioner refrigerant, engine coolant, drive belts.
        • Brake pads and shoes.
        • Suspension work, tires, wheels, catalytic converter, manual transmission work.
        • Painting, bumpers, alignment of body parts.
        • Repairs made to meet government emission standards.

        I don’t know about you all, but looking at the list above on what is EXCLUDED from the plan pretty much encompasses every single costly repair I’ve ever had on my 2004 Honda Accord in the 8 years I have driven the vehicle.

        You can view complete details about what is covered by the plan by clicking here and what is NOT covered in the plan by clicking here.

        Conclusions

        Because of the large amount of exclusions from the MaxCare Extended Warranty Plan, we ultimately decided that it was not the best move for us. And, by sticking to our guns, we were able to resist the pressure from CarMax to buy the service plan and their higher-interest rate in-house financing. And in the end, my girlfriend walked out of CarMax an altogether satisfied customer and is happy in her new, dependable car.

        How about you all? Have you ever purchased a used car? If so, did you ever consider CarMax? 

        Did CarMax or the other used car dealer try to pressure you in to obtaining their financing options or their extended warranty/service plans? Do you think these extended service plans are a good deal?

        Share your experiences by commenting below!

        ***Photo courtesy of https://upload.wikimedia.org/wikipedia/commons/thumb/b/bd/CarMax_Logo.svg/1000px-CarMax_Logo.svg.png

        Best of Money Carnival #156 – May 21st, 2012 Edition

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        Welcome to My Personal Finance Journey! If you are new here, please read the “About” or “First-Time Visitor” pages to find out more about us. If you would like to receive free updates on articles like this by email, then sign up here or you can subscribe to the RSS feed. Also, check us out on Twitter or Facebook. Thanks for visiting! Keep on learning!
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        Click here to enter my free $76.18 giveaway for a chance to win 5% of My Personal Finance Journey blog income and give another 5% to a charity of your choosing! Deadline to enter is May 31st, 2012.


        Welcome to the Best of Money Carnival (a weekly listing of the top 10 personal finance posts) – May 21st, 2012 Edition!  

        I hope you enjoy all of the posts I’ve selected for this week’s edition – and then come back to visit My Personal Finance Journey on my non-carnival days too.

        For this edition, we had ~70 articles submitted. Below are my choices for the Top 10 Personal Finance posts of the last couple of weeks (that were submitted properly of course) in order from 1 to 10.  A big congrats to all of this week’s winners!

        1, Roshawn Watson presents 4 Ways To Reshape Your Views Regarding Money posted at Watson Inc. Perhaps one of the biggest ways to effect change financially speaking is to alter your belief system. Here are four ways to reshape your views regarding money.

        2. FMF presents The Difference between Needs and Wants: Getting Spending Under Control posted at Free Money Finance. Achieving financial security is greatly dependent on our ability to make wise choices when it comes to spending money. Spending, not earning, is the key to financial security (though both are important, of course). And yet we live in a society where over-spending is almost the norm. The result for many people is a pile of debt and all the nasty struggles associated with it. It’s certainly not the pathway to financial security.

        3. Harri Pierce presents Lessons from living below the line posted at TotallyMoney. A one week experiment to see how difficult it was to eat for less than £1 per day and how it can affect the rest of your life


        4. Jason presents Should You Buy a Car Through CarMax? posted at Work Save Live, saying “Rust buckets, over-sized purses, methods of transportation, and a means of showing worth and status. Maybe it’s needless to say, but there isn’t a topic I detest more. When I hear the word ‘car’ all I can think about are over-priced machines that have gone from performing a function to being status symbols.” 

        5. Roger the Amateur Financier presents Advice for Students: What to Do With Your Summer posted at The Amateur Financier. A discussion directed towards students in high school and college, covering what they can spend their time doing in the summer in order to improve their finances and be in better shape economically.

        6. Khaleef Crumbley presents 4 Reasons Why I Will Not File For Bankruptcy posted at Faithful With A Few. To file for bankruptcy is not an easy decision. Even though it has become more common, here are 4 reasons why KNS will never do it!

        7. Ashley presents The Envelope System Works: Even on a 10 Year Old posted at Money Talks Coaching, saying “I’ve talked quite a bit about my frustration with my daughter and her lack of concern when it comes to money. She wouldn’t save money to save her life.” 

        8. Suba presents Should you buy Supplemental Unemployment Insurance posted at Broke Professionals. Unemployment is one of life’s setbacks that can seriously damage a person’s financial security. It can happen to anyone, even you.

        9. YFS presents 10 Common Characteristics of Millionaires You Can Follow posted at Your Finances Simplified. Back in 2007, Forbes Magazine reported that all over the world there are a total of 946 billionaires, and according to Capegemini, a financial consultancy firm, in 2011 there are about 10 million millionaires. All of us probably have this dream of becoming millionaires ourselves, and sometimes we’re left wondering how these once ordinary people manage to make it big.

        10. Hank presents How A Little Preparation And One Question Saved Me Over $1,000 posted at Money Q&A, saying “I hate buying a new car, but a little preparation and one simple question he me save money buying a new car this time with a little preparation.” 

        Well, that concludes this week’s Best of Money Edition. To all participants – it was a pleasure reading your articles this week!

        Please submit your posts to the next edition of the Best of Money Carnival using the carnival submission form. The next carnival (#157) will be hosted by 20’s Finances and is scheduled for May 28th, 2012. 

        Also, If you’d like to host a future carnival, contact FMF asking for a slot.

        $76.18 Giveaway – Community and Charity 10% Monthly Blog Income Give Back # 8 – May 2012 Edition

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        Welcome to My Personal Finance Journey! If you are new here, please read the “About” or “First-Time Visitor” pages to find out more about us. If you would like to receive free updates on articles like this by email, then sign up here or you can subscribe to the RSS feed. Also, check us out on Twitter or Facebook. Thanks for visiting! Keep on learning!
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        The 10% give back giveaway fun rolls on for the month of May! 

        In case you missed the first seven editions of the 10% Blog Income Give Back, after doing some thinking at the beginning of October 2011 about what direction I want this blog to grow and evolve towards in the future, I decided that any income made from this blog would have more significance to me at a personal life values level if I knew that a portion were being given back to the following places:

        • 1) The readers – Obviously, without you here to read my articles and interact with my ideas, there would be no blog in the first place (let alone blog income). As such, it is only fitting that you receive a portion of any blog income.
        • 2) Charitable organizations – If you’ve read my blog before, you know that I’m a big believer in donating a portion of my money to charity. Each year, I donate between 5-10% of my income to the National Multiple Sclerosis Society as part of the Bike for MS fundraiser that I do. Beyond the good that is done by donating your money, getting used to contributing to charity is also a good practice to emulate the actions of affluent individuals (T. Harv Eker discusses this in his book, Secrets of the Millionaire Mind, which I would definitely recommend reading if you have a few hours).

        Because of these considerations, I’ve decided that each month going forward, I’m going to give away 10% of my net (after-tax) blogging income/profit to My Personal Finance Journey readers (5%) and to charity (5%). Listed below is how the process will work:

        • After each calendar month passes, I’ll tally up my net blog income and determine what Dollar value correlates to 10%.
        • I’ll post the giveaway (similar to this post you’re reading now), and you’ll have approximately 2-3 weeks to enter.
        • Once the giveaway is over, a grand prize winner will be announced, and then I’ll donate another 5% of my blog income to a charity. Once the giveaway entry window ends, I’ll send out the money to the blog reader winner(s) and personally drop off the charity donation.  
        • So far, I’ve been very happy with the success of the first 6 editions of the 10% income give back. Read on below for some of the details:
          • In October, $205 total was given away, with $100 being donated to the charity, GreenPeace.
          • In November, $201.40 total was given away, with $100 being donated to the charity, The Blue Ridge Area Food Bank. If you’re interested, you can view the details of me going to drop off the check at the Food Bank by clicking here.
          • In December, $74.52 total was given away, with $38 given to Big Brothers Big Sisters of Central Blue Ridge. You can view the details of the donation drop by clicking here.
          • In January, $196 total was given away, with $96 given to the Sexual Assault Resource Agency. You can view the details of the donation drop by clicking here.
          • In February, $141.20 total was given away, with $70 given to the Blue Ridge Chapter of the National Multiple Sclerosis Society.
          • In March, $64.51 total was given away, with $30 given to the Blue Ridge Chapter of the National Multiple Sclerosis Society.
          • In April, $46.95 total was given away, with $25 given to the Blue Ridge Chapter of the National Multiple Sclerosis Society.

        So, that’s the overall flow of things and a brief recap of what’s happened so far with the give back initiative. Now, let’s get in to the specific details for this month’s (May 2012) giveaway.

        Details of May 2012 10% Blog Income Giveaway
        • $76.18 total blog income to give away – $38.18 to a My Personal Finance Journey reader and $38 to the National Multiple Sclerosis Society – Blue Ridge Chapter.
          • $38.18 in the form of one prize available to one reader as follows – 
            • 1) Grand Prize = $38.18 Amazon Gift Card or $38.18 cash via PayPal.
          • It’s been very fulfilling developing a relationship with the local chapter of the National Multiple Sclerosis Society through the MS150 fundraising bike ride I do each year. Click here to see the details for the 2012 edition of the ride I’ll be doing! I look forward to continuing to raise money for their efforts. 

        How to Enter the Giveaway – Deadline to Enter is Midnight, May 31st, 2012


        Like last month, I’ve decided to use the RaffleCopter giveaway management tool to handle sign-up facilitation for the April giveaway, so simply go through the steps listed in the widget below to enter the running for the prize and accumulate entry points.

        There is no limit to the amount of points you can earn. If you refer 10 subscribers – your name will have accumulated 170 entry points! Or, if you link to the giveaway more than once, you can accumulate those 7 entry points multiple times. You can also retweet the giveaway and/or share other My Personal Finance Journey articles via social media sites once per day. In the event of a tie, I will be using a random number generator to select the winner.

        Important instructions: After you complete an entry method, make sure to click and fill out the “I Did This” or “Enter” button in the widget so that I have a record of your points. 


        a Rafflecopter giveaway



        Remember, the deadline for entries will end at midnight on May 31st, 2012 (about 2 weeks from today – the start of the give back). Good luck to you all! Please contact me if you have any questions. After the deadline for entries passes, the winner (one with the most points accumulated) will be contacted via email to receive their prize.

        How We Saved Big Bucks on Our Home Remodeling Project (And You Can Too!)

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        Welcome to My Personal Finance Journey! If you are new here, please read the “About” or “First-Time Visitor” pages to find out more about us. If you would like to receive free updates on articles like this by email, then sign up here or you can subscribe to the RSS feed. Also, check us out on Twitter or Facebook. Thanks for visiting! Keep on learning!
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        The following is a guest post by fellow Yakezie participant, Kyle Taylor. Kyle is the editor of The Penny Hoarder, a daily blog with hundreds of weird and wacky tips on how to make/save extra money. Enjoy the post and make sure to stop by Kyle’s site for more posts like this! – Jacob

        How We Saved Big Bucks on Our Home Remodeling Project 

        (And You Can Too!)

        There’s a timeless adage that reads: “If you want something done right, do it yourself.” While I find that’s an adage that doesn’t usually fail me, I was pretty sure we were in over our heads with this one.

        You see, my significant other and I recently started buying small homes to rent out. We live in a part of Florida where the rental market is fairly strong, but the housing prices are still severely depressed. All of the homes we’ve bought have needed various levels of work, so to save money on maintenance and remodeling costs, we decided to take on some of the projects ourselves.

        We had both done some small home repairs, but the thought of doing things like tiling and installing new kitchen cabinets seemed like an impossible mission. Still, the lure of saving thousands of dollars was all I needed to give it a try.

        The process was trying, to say the least, but after blowing through our material budget the first day, engaging in a few shouting matches, and indulging in a quick cry after I hit my thumb with the hammer, we had finished. I’m not sure the shouting matches were entirely avoidable (it was stressful after all), but the exploding budget was something I wasn’t prepared to let happen again.

        For the long-term homeowner or a new investment property owner, keeping your material costs in check can be one of the hardest and most lucrative steps you take. So, when project #2 started, I decided to get smart about it. Here are a few of the things that I did to save more than 40% on my material costs…

        Craigslist is Your Best Friend

        Craigslist is a net-based treasure trove smorgasbord abounding with do-it-yourself construction materials. Think of Craigslist as a modern-day version of yesteryear’s newspaper classifieds section. When starting out on the site, search in specific terms. If shiny-chrome plumbing fixtures are on your mind, search for items of that verbiage exactly.

        For significant building material savings, keep an open mind with what you find. For example, look hard at adjusting your design expectations if you find a deal that’s almost too good to be true.

        The savvy Craigslist shopper can find plenty of deals on refurbished or used items, such as cabinetry, as well. If you find something on Craigslist that doesn’t fit the dimension or decor of your remodel, consider refurbishing it for a different use. An example would be this filing cabinet turned outdoor planter. Another is a claw-foot tub turned couch. Be creative!

        (A word to the wise: be a safe Craigslist shopper. Bring along a partner when you head out to inspect and possibly buy a particular remodel item or construction material.)

        Blowout and Going-Out-Of-Business Deals

        The economy is still tough. Construction-related industries are struggling and prices are continually slashed. Many of the Big-Box home retailers feature blowout sales and coupon savings on building products that have sat too long on warehouse shelves. For example, by doing a quick search online, you can easily find a 

        free shipping coupon code for Home Depot.

        To find the best deals, contact and visit warehouses dealing in specific areas of home construction — for instance, carpet warehouses, tile and flooring depots, plumbing warehouses, etc. Also, “Going out of Business” sales are a surefire way of finding great deals in a sour economy. 

        If you find a Deal, Purchase Extra!

        If you find a deal on a building product that is truly too good to be true, make sure to stock up on enough quantity to allow for future repairs. For example, if you need exactly 100 square feet of floor tile, or 15 gallons of an unusual paint color, purchase 10% extra (110 square feet of tile; 16.5 gallons of paint).

        As a do-it-yourselfer, you will most certainly make mistakes and you’ll be glad that you had the extras.
        Do-it-yourself projects can be stressful, but by taking a few steps to keep the costs down, you’ll be surprised just how much you can save, not to mention how good it feels to have done it yourself. Just keep humming Frank Sinatra’s “I Did it My Way,” and you’ll have all the motivation you need to finish your project.

        So, have you recently tackled any do-it-yourself projects? How’d it go? How much money do you predict you saved by doing it yourself vs hiring someone?

        Share your experiences by commenting below!

          ***Photo courtesy of http://www.flickr.com/photos/nomadic_lass/5955527527/sizes/l/in/photostream/

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