Category Archives for Saving Money & Frugal Living
Extravagant Consequences: Lying on Your Health Insurance Application
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The following is a guest post. Enjoy!
WHY LYING MIGHT NOT BE NECESSARY
WHAT WILL HAPPEN IF YOU’RE CAUGHT LYING
- Complete void of contract dated all the way back to its outset;
- All outstanding claims still in processing will be dropped from coverage and the full financial responsibility of these medical bills will be placed at your feet;
- Your insurance company may sue you for claims that they’ve previously paid out, requesting full reimbursement for the amounts paid out;
- Future health insurance providers you attempt to sign with will be able to see this previous falsehood on your record and may choose not to cover you.
How about you all? Have you ever known anyone who placed a small or large lie on their application when they applied for health insurance?
Did anything bad ever happen to them?
Share your experiences by commenting below!
Jacob’s Thoughts – Listed below are my random thoughts as I was reading this article.
- There’s some profound truths to this article above.
- In general, since there is so much money at stake, you can rest assured that insurance companies are VERY smart. They have professionals who spend their entire working lives optimizing the insurance company monetary streams to improve operations. How can normal people think that with a 2 min lie, they are going to get ahead this way? It really just isn’t worth it in the long run!
- With finances, always tell the truth, even if the truth is painful at times!
***Photo courtesy of http://upload.wikimedia.org/wikipedia/commons/f/f0/PinocchioChiostri22.jpg
Five Purchases that ARE Worth Breaking the Bank For
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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 post by MPFJ staff writer, Kevin Mercadante, who is professional personal finance blogger, and the owner of his own personal finance blog, OutOfYourRut.com. He has backgrounds in both accounting and the mortgage industry.
On nearly any personal finance site, frugality is the usual order of the day. We should save money anywhere and everywhere we can. But there are times – with certain purchases – that looking for the lowest price isn’t the best choice. Sometimes it can leave you with an inferior product or service. Other times, the purchase is for something so important to your life that it has to function and do so reliably.
Here are some important purchases that you may want to think long and hard about before you go buying on the cheap.
Computers and Internet service
If you’re looking for service for your kids, or mainly just for email and light surfing for yourself, you might want to go with the least expensive computer and the cheapest Internet service provider you can find. But if you have a more significant purpose for having either, it may be in your best interest to go with a better computer, and a more efficient Internet service.
This is especially true if you use your computer and Internet connection for work or for running your own business. If that is the case, you’ll need a very efficient Internet connection – complete with top-notch customer service – plus a computer that can handle whatever you will throw at it.
A computer that is under capacity, or an Internet service that is interrupted frequently, can cost you clients and money. Think of your computer and Internet as part of your business infrastructure, and spend as much money as you need within reason.
Mattress and box spring
It’s often said – and it’s true – that we spend about one third of our lives in bed. That being the case, you’re better to spend a little bit more for a good mattress and box spring.
Not only do you spend a lot of time in bed, but your bed is also where you recharge for the day ahead. If you’re unable to get a good night’s sleep, because of an adequate mattress or box spring, your days could be filled with fatigue, confusion, and even phantom aches and pains. Enough of that can take a toll on your job and on your productivity, and can cost you more money over the long run.
One more factor to consider is the fact that a bed is usually an item that you expect to last for a long time. It might be better to spend $1,000 on a mattress and box spring that will last you for 10 years, than to spend $600 on a mattress and box spring that will have to be replaced twice in 10 years.
Cars
There are so many expenses associated with car ownership that it can take a flowchart to figure out what the best car for the best price will be for you. Certainly you should consider upfront cost, fuel efficiency and reliability. But unless you plan to buy new car every five years or less, you’re probably better off to pay a little bit more and to buy a car that will last longer.
Some cars are built to last, and others…are more like throwing cars! (That’s the driving force behind planned obsolescence.
Better quality cars not only last longer, buy they also tend to break down less and are generally safer to drive. Since these are all “bankable advantages” – the car will perform better, and cost less over the long run – they’ll be worth spending some extra money on.
If you can’t afford to buy a better quality car brand-new, you may be better off buying one that’s two or three years old, rather than paying less money for a less efficient substitute.
Furniture and appliances
My wife and I bought a refrigerator freezer back in 1996, and we paid well over $1,000 for it. While you can easily pay more than that for refrigerators today, back then, it was on the high end of the range. We just bought a house, and we had a young family, so we broke the bank to buy a better unit, figuring would last us for at least 10 years.
We were wrong. It has lasted for over 17 years and it’s still going. Had we bought a cheaper unit, we probably would not have gotten even 10 years out of it, and we would have had to replace it by now. But we haven’t had to buy a refrigerator in all that time.
Appliances tend to be that way, pay a little extra and they’ll last longer.
Furniture is less certain. The argument for paying more for better quality, is that a good set of furniture can quite literally last lifetime. You can buy it once, and never have to buy furniture for a room again .That’s a REAL investment!
The counter argument however, is that your taste in furniture will change during your lifetime. The living room set you bought when you were in your 20s and first married may not match your tastes when you’re in your 40s. Children also have an effect on furniture. While they’re young and growing, it may be best to buy less expensive, lower quality furniture. The kids will mostly use it for trampolines anyway.
Health insurance
No one ever intentionally opts for cheap health insurance, but cost is a real problem. That can cause you to cut corners on your coverage either by taking very high deductibles, or by refusing certain coverage’s in attempts to keep the premiums to a minimum.
For example, it’s OK to opt out of prescription drug coverage if you are not on any ongoing drug therapies. But if you or your family have several regular prescriptions that you need, refusing this coverage will be a real problem.
Another example are high deductibles. If you are young and single, a $5,000 or $10,000 deductible may work well for you. But if you have a family you may need a much lower deductible, because more people means a much greater likelihood that you’ll actually have to file claims.
This is of course is easier said than done when it comes to health insurance. As a rule, any insurance is better than no insurance, but you should still try to get the best you can based on your circumstances.
How about you all? Can you think of any other products or services where buying on the cheap is probably a bad idea?
Share your experiences by commenting below!
***Photo courtesy of http://www.flickr.com/photos/mikehamm/4799558967/sizes/s/in/photostream/
I’m On My Own and So Are You: Financial Security for Women by Judy Resnick – A Book Review
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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.
Judy Resnick, a financial planner in Los Angeles, seeks to educate all women about their finances and empower them to make their own financial choices rather than relying on a man in her book titled, I’m On My Own and So Are You.
About Judy Resnick
Who Should Read This Book?
Even if a woman is happily married and never faces divorce, she needs to be involved in the family finances and understand how money works. Resnick’s own mother was blissfully ignorant about the family finances. When her husband died unexpectedly, she found out that her husband had much less money than she had always thought. In addition, she had no idea how to handle finances on her own and relied on Resnick to pay her bills and take care of her. Resnick believes that no woman should be in this position, and I agree with her.
For other women who get divorced or are widowed or never marry, learning how to handle their own finances is essential. In her work as a financial planner, Resnick has seen many women who rely on men to support them and take care of them. When one man leaves or dies, these woman are on the hunt for the next man to take care of them, which, not surprisingly, gets more difficult as the woman ages.
Strengths of the Book
Additionally, this book isn’t just a dry financial book. Resnick weaves stories from her own life throughout the book, giving the book a human touch. In fact, her personal story is so compelling that I kept reading just to see what would happen to her next.
Weakness of the Book
If you are a woman or if you’re a married man or father of a daughter, I’m On My Own and So Are You should be recommended reading. Empowering women to be involved in the family finances is Resnick’s goal, and she presents a very interesting read explaining how to do just that.
Do the women or men in your life tend to take more responsibility for the finances, or is it shared?
Share your experiences by commenting below!
Creating Our New Budget Plan
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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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How about you all? Are you continually tweaking your budget method, or have you found one that works for you?
Share your experiences by commenting below!
***Photo courtesy of Image courtesy of Ambro / FreeDigitalPhotos.net
What are Your Options for Tax-Advantaged Non-Retirement Savings and Investments?
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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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A few days ago, I wrote a post describing the various options available on the market today that people can use for tax-advantaged retirement savings/investing.
Tax-advantaged vehicles provide us as normal individuals, a very powerful strategy to try to optimize the taxes that we ultimately have to pay over our lifetime. However, there are two big problems I have encountered over the past few years (and ones that I am guilty of as well) circling in the air around how people utilize tax-advantaged money vehicles:
- Problem 1 with the Way People Use Tax-Advantaged Vehicles – People focus far too much on the advantages, while forgetting to really have the disadvantages sink in.
- Problem 2 with the Way People Use Tax-Advantaged Vehicles – People don’t fully understand all of the various tax-advantaged vehicle options at their disposal (i.e. getting focused solely on one with the exclusion of the others).
In order to address these two problems I have experienced, the purpose of this post will be to review the tax-advantaged savings options on the market today. While doing this, we’ll cover both the advantages and disadvantages of each, but I’ll try to more blatantly call out some of the disadvantages of each vehicle in order to help people know what they are getting in to with the use of red text. I’ll also include my take on how I will or will not incorporate each in to my personal investing/saving strategy at the end of the post.
Let’s get started!
Tax-Advantaged Vehicles – Non-Retirement Accounts
Having covered tax-advantaged retirement vehicles in the post several days ago, we will now continue on with our discussion with several possible options I’ve been investigating recently that are tax-advantaged, but that are not designed so that we are penalized 10% if we want to withdraw our money/earnings prior to 59.5 years old.
As we work through the options, you’ll likely notice that there are some other tax-advantaged investments that I have excluded. Several of these include tax-managed mutual funds/ETFs, Master Limited Partnerships, US Savings Bonds, and REITs. I left these off the list intentionally so I could focus on the vehicles which, in my non-professional opinion, seem to offer the most significant tax-advantages.
Side Note: Before we too deep in to this discussion, I want to point out that these are only options that are tax-advantaged. In other words, if you do not need the tax shelter and are simply looking to aggressively grow your money for long term needs (but you don’t want to be potentially penalized for pulling money out early if needed prior to retirement), a very good option that you can choose is to simply invest in a taxable mutual fund investing account. Any major brokerage offers these. The best offerings in my opinion are with Vanguard and Fidelity due to the low cost nature of their index mutual funds and the fact that you are not charged a trading commission when you purchase their name brand funds. In these taxable accounts, you can invest in pretty much the same equity mutual funds that you can inside an IRA/401k with these same companies. What I’ve realized is that a lot of people forget to consider this option when looking for places to invest their long term savings. Don’t let this happen to you! 🙂
Whole Life Insurance
The first tax-advantaged non-retirement account that I want to discuss is whole life insurance. Lately, I’ve spent between 70-100 hours total analyzing whole life insurance as a potentially good place to save money long term. Since sharing that analysis would be a lengthy discussion, I’ll share that in a separate post – on the way soon!
For the purposes of today’s post, we’ll just skim the surface about what whole life insurance offers:
- You pay a monthly or annual premium, and over time, this builds up a cash value along with securing a certain amount of death benefit for the insured’s whole life, hence the name.
- Each year, your account is guaranteed a certain base interest rate (usually 3.5%), and then you potentially receive dividends based on insurance company performance. The total average annual internal rate of return on your cash value is around 4.5% historically.
- Even though your premiums are made after-tax, your cash value accumulates tax-deferred, and the death benefit is also tax-free in the event that you die.
- Policy loans can be taken against your policy’s cash value balance, and these loans are tax-free.
Despite some very significant benefits, whole life insurance is not without its respective disadvantages.
- It’s complex and headache-producing. In order to find a properly structured policy, you have to REALLY know a lot about what you’re doing because the traditional insurance agent makes more money with a policy that is worse for you. Nice right?! After 100 hours of studying whole life insurance, it’s still not clear to me all of the complexities surrounding it.
- Even though the loans are made tax free, there will often be a spread interest rate that you have to pay on the difference between what the cash value is earning and what the loan rate is.
- Internal cash value rates of return are often decreased in the first 20 years of a policy (even a well-structured one) due to the cost of securing your lifetime death benefit. While this can be viewed in a lot of ways as positive, it must be taken in to consideration.
Tax-Exempt Municipal Bonds and Money Market Accounts (Or Mutual Fund/ETF Versions)
A fairly interesting tax-advantaged investing vehicle that I have only begun to investigate in depth recently is tax-exempt municipal bonds (and the mutual/ETF fund versions therein).
At a high level, municipal bonds (and securities) are issued by local, county, or state government entities to help fund the various projects and improvements they want to take on. These can include building school, highways, sewer systems, or simply funding day-to-day activities.
- They offer a nice tax-advantage for non-retirement investing and savings in the regard that the income/interest/dividend you make from municipal bonds are exempt from federal income taxes.
- This income is generally also exempt from state and local taxes, provided that you pay taxes in the state/municipality in which the bond was issued.
Even though it may not be absolutely the most efficient, I would prefer to hold bond mutual funds or ETFs instead of the actual bonds themselves. More specifically, if I were to invest in municipal bonds, I would likely want something that is very secure, i.e. short-term bonds.
Since I like Vanguard, I would likely invest in the Short-Term Tax Exempt Bond Fund, Ticker Symbol, VWSTX. The chart below shows how $10,000 initially invested in this mutual fund would have grown from 1989 to the present day.
As you can see below, the growth is very steady, with some leveling off during the hard economic times when interest rates went down to get the economy jump started with easier lending, but hardly any decrease in value. The 22 year average annual return was 6.07%. Pretty solid, right?!
In looking at the numbers in detail, I found that the most money you would have lost in any one month during this 20+ year period was $117.13, corresponding to roughly a 0.56% decrease. Not much at all compared to the volatility of the stock market and that you have $10,000 to start off with! If you’re interesting in look at my investigation in more detail, click here for the Google Docs spreadsheet.
Of course, the tax-shielding and stability (with short term) of municipal bonds is not a free lunch (i.e. there are some disadvantages).
- Municipal bonds are not ALWAYS exempt from ALL taxes. For example, the Alternative Minimum Tax still applies, and if any capital gains occur, you still will owe capital gains taxes on those as well. Good articles to read more about the potential taxes on municipal bonds can be found here and here. Because of this, be sure to know how the tax laws apply for your specific situation!
- Because of the tax shielding, municipal bond yields will be significantly lower than their taxable counterparts.
- Even though you can manage the amount of price volatility/risk by maturity matching, there is no absolute guarantee that you won’t lose money, as is the case with life insurance.
Higher Education Savings Plans Where You Maintain Complete Control over the Money
Everyone hopes that their child will get a full scholarship to go to college, but the odds these days do not seem stacked in our favor enough to TOTALLY depend on one of these awards.
By opening a college savings fund through an institution like Vanguard, you can take advantage of tax deferred growth within the account, while still having the luxury to direct the investments the way you want. Just remember that you will want to match the maturity of the investment instrument with the time horizon associated with whenever you child will be going to college in order to maximize returns.
It is also important to remember that although all parents I’m sure would prefer to help their children pay for college, they should only save for their children’s higher education if and only if they are completely satisfied in their progress in saving enough money to secure their own retirement first! None of us will do our children any good if we are depending on them for everything financially for the last 35 years of our lives, right?! Children also have more options in the form of student loans to assist in paying for college, along with having a long time frame that they can use to pay back this form of debt.
Let’s examine some of the specifics of college savings accounts/plans:
- There essentially two main types of college savings plans – 529 accounts and Coverdell ESA’s.
- 529 Accounts –
- With 529 accounts, you as the parent, open and control the account ALWAYS, regardless of the age of the beneficiary. You then designate a beneficiary (who can be any age from newborn to adult) that the money will go to for higher education expenses. One of the cool things about this account is that you, yourself, can be the beneficiary if you plan to go back to school at some point!
- You can contribute a fairly large amount each year, but once the account balance reaches $370,000 (a problem we would all like to have, right!?), you can no longer put in money, but your earnings can keep compounding.
- Essentially, the standard gift tax rules apply with these accounts. In other words, you can contribute $13,000 per year on a regular basis to one beneficiary, or you can make one contribution of up to $65,000, but you cannot make any more contributions for the next 5 years.
- Certain states (like Virginia where I live) allow you to deduct your contributions (up to a maximum amount, $4,000 in Virginia) on your state income taxes (not federal income taxes though).
- Earnings grow tax-deferred, and withdrawals are free from federal income tax if used only to pay for qualified higher education expenses (this means the standard tuition, fees, books, room/board, etc).
- Also, if you invest in a state-sponsored plan in which you earn income, the withdrawals will also be state income tax free as long as they are qualified!
- One good thing is that like Roth IRA’s, you as the account owner, can withdraw your contributions (not earnings) at ANY time for ANY qualified or non-qualified reason without paying any taxes or any penalties.
- Friends and family can also contribute to the beneficiary (future student).
- You can also change the beneficiary to another member of your family if needed.
- The account is considered an asset of the account controller (parents) when taking in to consideration financial aid eligibility. This can improve your child’s chances!
- There are NO income limitations on who can establish/contribute to an account.
- If the beneficiary decides not to go to college or gets a big scholarship, there are a couple of options for how to handle this. A good article explaining these things can found accessed here.
- Coverdell ESA’s –
- In general, Coverdell ESA’s have the majority of the characteristics discussed above with 529’s with two important exceptions:
- 1) You can only contribute $2,000 per year per beneficiary, much less than with a 529 plan.
- 2) Along with using Coverdell money for higher education purposes, Coverdell assets can be used for qualified education expenses at the elementary and secondary education level. Nice! 529 plan assets can only be used for higher education purposes. The qualifying education expenses are much more broadly defined in the case of Coverdell ESA’s as well.
Some negative aspects / disadvantages to keep in mind about higher education savings vehicles:
- Contributions are made on an after-tax basis, so they won’t do anything to reduce your current tax burden, unless your state has special allowances for this.
- Earnings on non-qualified higher education expense withdrawals are taxed as normal income and subject to a 10% penalty, so this is something to watch out for!
- IRS rules dictate that you can only change around the allocation of assets in a 529 plan once per year. While this shouldn’t be that big of a deal because re-balancing happens only about 1x per year, this is something to keep in mind.
- Your investment options inside the 529 account can be limited to certain types of funds. However, seeing as how Vanguard offers 529’s, the options likely aren’t all that bad. Coverdell ESA’s offer many more options.
- With Coverdell ESA’s, you are required to transfer ownership of the assets to the beneficiary by age 30 in order to not incur taxes and the 10% penalty. With 529’s, there is no such requirement.
- You can only contribute fully to a Coverdell ESA account if you make below $95,000 per year.
Well – that about wraps things up for tax-advantaged NON-retirement accounts!
In an upcoming post, I’ll also work through two other tax-advantaged options that I did not have room to cover here – trusts and custodial accounts. Keep an eye out for that – on the way soon!
How about you all? Which of these tax-advantaged non-retirement accounts is your favorite/do you use the most and why?
How much do you have invested in retirement accounts vs. non-retirement accounts at the moment?
Share your experiences by commenting below!
***Photo courtesy of http://upload.wikimedia.org/wikipedia/commons/1/17/Singer_City_Investing_Hudson_Terminal_1909_crop.jpg
Working From Home – Is it a Money Saver or Money Loser?
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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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But there are also the financial considerations. If you’re seriously considering making the switch to working from home, you’ve (hopefully) already thought about the big things like salary differences and how you’ll get health insurance. (If not, stop right here and do those things, immediately.)
But, as someone who juggles a part-time office job and a part-time freelance business, I can tell you that there’s more to the financial balance sheet than that.
Here’s a quick list of the ways you may not have considered that working from home can both save you and cost you in the budget department:
Savings
Commuting costs. If you take public transit to get to and from work, that’s one level of savings. But if you drive? You’ll save in lots of areas: gas, tolls, parking, even the repairs that come as a result of the added wear and tear being put on your car. And if you can get rid of a second car altogether by working from home, you’re also saving on car payments and insurance and registration fees. It can add up quickly!
Food and drinks. How many times do you grab a coffee on the way in to work or go out for lunch because you haven’t had time to make anything at home? How often have you felt pressured to eat out to escape a stressful office or an annoying coworker? And (admit it!) how many times have you guiltily raided the vending machines for a pick-me-up?
When you work from home, you can be more careful about your food spending. You have time to reheat leftovers, make salads and sandwiches from scratch, and keep a pot of Joe warm for whenever you need a lift.
Wardrobe and toiletries. While it’s not recommended that you stay in the same pair of sweats for several days straight, working from home does give you a little more leeway in how you can dress. You’ll still want to have a good outfit or two in the event that you need to do a video conference call or have a face-to-face client meeting—but for the most part, you can wear whatever you want while you’re writing your monthly report, and no one will be any the wiser. So keep a few timeless staples like a suit and a nice button-down shirt with slacks, and you no longer need to worry about continually updating your wardrobe to keep up with the trends. (You’ll also save on dry cleaning costs.)
And ladies? No need to straighten/curl/style your hair and do the full makeup routine every morning, which means you’re spending less on beauty products, too. (It’s up to you if you want to put on a little mascara and lip gloss in case the UPS guy comes to the door, but it’s still minimal compared to your usual routine.)
Child care. If your kids are of the age where they don’t need constant supervision (or you’re a master at getting work done during nap times), you have the potential to save quite a bit on child care costs. If you still need some alone time to concentrate on your work, you might be able to reduce the number of days you pay for child care, only having the kids home some of the time. Even a day or two a week can equal big savings.
Costs
Utilities. Now that you’re home all day, no more setting the thermostat program to kick down 10 degrees when you’re at work. (Unless you enjoy working in fingerless gloves and a hat, which is certainly your prerogative.) You’ll also be using more electricity, water, you name it.
The good news is that if you have a dedicated home office—a room (or even just a desk) used for work and only for work—you can claim a percentage of your utility expenses when you file taxes. (You’d calculate the percent of your home’s square footage made up by your office, then calculate that percent of your year’s utility bills.) Still, on a month-to-month basis, be ready for an up tick in this area of your budget.
Equipment costs. If you’ve already got all the tech gear you need to work from home, you’re golden. However, chances are you’re going to need something extra once you start working from home full-time. You may need to upgrade your PC, buy a multifunction printer, or invest in a mic and web cam for video conferencing.
Again, these upgrades can be claimed as deductions as long as the equipment is used used for business—or, if you’re a remote worker for a company, your company may offer you reimbursement options. But you’re still potentially shelling quite a bit out pocket initially.
Taxes. Speaking of taxes, if you’re working from home as a freelancer, business owner, consultant, or any other work that qualifies as self-employment, get ready for your relationship with Uncle Sam to change drastically.
How about you all? Do you work from home? What other savings/costs have you noticed that a regular employee wouldn’t experience?
Share your experiences by commenting below!
***Photo courtesy of http://farm4.staticflickr.com/3466/3289898604_8301851433.jpg
Types of Vehicles That Affect Car Insurance Rates
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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!
We all know that there are many different factors that play a role in establishing your car insurance rates. From your experience, driving record, your decision to go to driving school and whether or not you decide to test the market and get an insurance quote; there is no shortage of things to think about.
One thing that is often overlooked but plays a large role on the amount of money you pay for your auto insurance is the vehicle that you drive.
Most people are often caught up with the features of the vehicle and seldom think about the impact of their vehicle choice on their insurance rates. But, this is something that more people need to pay attention to if they want to save money on insurance.
The truth is finding out how much insurance you will have to pay for a vehicle is simple and straightforward. All you have to do is take your list of cars that you are thinking about buying and ask your insurance company for a quote. A little work can go a long way to saving you money.
Vehicle Factors That Affect Car Insurance Rates
The type of vehicle you choose to drive plays a large role in your insurance costs. Why? There are a number of vehicle features that insurance companies look at to determine the rates they charge to insure vehicles. Insurance companies factor in the make and model of your vehicle in terms of what the risk factors associated with it might be.
Some important vehicle features to consider include:
- Vehicle type: Whether you drive a car versus driving an SUV, pick-up truck, Crossover, or any other type of vehicle will set a baseline for the amount you can expect to pay.
- Model: The model of car that you drive will impact your rates. Obviously, driving a sports car will cost more money than regular Sedan. This is why you need to put things in perspective when thinking about insurance costs.
- Age: The age of your car plays a large role in not only the price, but also in terms of the type of coverage you need. Since newer and more expensive cars cost more to replace if they are damaged, they are inherently more expensive to insure.
- Safety Rating: The safety and collision rating will impact your rates, so it is a good idea to do some research in this area. Vehicles that have a better safety rating will cost less for coverage.
- Theft rating: Vehicles that regularly appear on the most stolen vehicle list will cost more money because insurance companies view them as being a car that is associated with a higher risk.
If you really want to save money on your insurance rates, you need to be conscious of the type of vehicles that are preferred by insurance companies. Vehicles that are well built are known for requiring minimal repairs and have a great safety rating will cost you less money in the long run.
How about you all? Has the potential cost of car insurance been a significant factor in influencing any of your past car purchases?
Share your experiences by commenting below!
Jacob’s Thoughts – Listed below are my random thoughts as I was reading this article.
- Although I haven’t ever personally compared car insurance costs on different car models, I definitely have heard that the type of car you have makes a difference in your costs.
- For example, I have heard that a fast sports car will likely have a higher insurance cost than say, a Volvo wagon, just because of the nature of how the respective types of cars are generally driven.
- I’m curious to hear everyone else’s experience with this as well!
***Photo courtesy of http://upload.wikimedia.org/wikipedia/commons/e/eb/FEMA_-_38927_-_Cars_at_Cruise_ship_parking_lot_damaged_by_Hurricane_Ike.jpg
How to Save Money in the Kitchen
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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 article is by MPFJ staff writer, Miss T from Prairie Eco-Thrifter. If you want to learn how to live your dream life in a sustainable, healthy, and money savvy way, check out her site here.
These days, money is tight, and many people are constantly looking for ways to save some cash. While it’s hard to find any big savings around the house, I have found that it’s possible to save small amounts in several different areas that add up to a considerable sum.
Here are some ideas to help you save money in the kitchen:
There are numerous areas where you can save money in the kitchen, but in this article we’ll look at energy and water consumption.
Energy and Water Saving Idea # 1 – Reduce Your Usage
Because you pay for what you use in electricity, gas and water, the obvious way to save money is to reduce how much you use. Teach yourself, and other household members, the basics of reducing your everyday energy and water usage in the kitchen. These include turning off the lights when you leave the room, turning appliances off at the wall when not in use to avoid them using power while on stand-by, changing some settings on your appliances, and using the least amount of power and water to cook your food.
Energy and Water Saving Idea # 2 – Utilize Newer, More-Efficient Lighting Technology
The type of lighting you use in the kitchen can help you save electricity costs. Change the old incandescent light bulbs for newer energy-efficient types, such as CFLs, LEDs, and halogens. Manufacturers of these types of light bulbs claim that we can save up to $6 in power costs for every incandescent light bulb we replace. That really appeals to me, and it is so simple to do!
In a kitchen, use a CFL (Compact Fluorescent Lamp) in your central light fitting, to light up the whole room. These use about 70% less power and last up to ten times longer than incandescent bulbs, so you will be saving money right there. According to the EPA, replacing a 60 watt incandescent bulb for a 13 watt CFL (which will give you the same strength of light) will save you $30 in electricity costs for the life of that bulb. That fact alone was enough to send me off to buy CFLs, and I was surprised at how much cheaper they are now.
Halogen bulbs give a direct, spotlight type of bright light and are ideal for placing above a kitchen counter where you do most of your food preparation. This is what I did, having a row of 7 halogens recessed into the ceiling above the main counter top. These are so effective that we rarely use the central light at all. LEDs (Light Emitting Diodes) are also increasingly being used in a similar way to halogens and will also save you money on your electricity costs.
Energy and Water Saving Idea # 3 – Optimize Your Refrigerator
Did you know, appliances account for around 13% of your energy bill? This information comes from the Energy Star organization, so it would be pretty accurate. The major kitchen appliance, the refrigerator, is responsible for 8% of this figure so I thought that this could be an area where I would be able to save money. When I did some research, I found that refrigerators generally use more power than lights, which dented my belief that I could save the most money by controlling how many lights were used in the house.
I also found that most people run their refrigerators too cold for most of the year. The ideal temperature for a refrigerator is between 36 and 40 degrees, but many people keep the temperature lower than this. The EPA says that if your refrigerator is 10 degrees or more below the optimum temperature, it could be increasing your power bill by 25%. This is one easy way to save money in the kitchen – check the temperature inside your refrigerator with a thermometer and adjust it accordingly. Also adjust it in the different seasons as the ambient air temperature can determine how cold you need to set the refrigerator.
Other money saving tips for the refrigerator include:
- Not putting hot food in; cool it first.
- Thaw frozen foods inside the refrigerator to reduce power usage.
- Limit the number of times you open the door.
- Position the appliance away from a heat source such as the oven.
- Have a space around the refrigerator to allow the heat from the motor to escape
- Give the condenser a good clean every six months or so.
- Check the seals are intact and replace them if necessary.
- When it comes time to replace your old refrigerator, choose one with the highest energy rating you can afford.
Energy and Water Saving Idea # 4 – Optimize Your Dish Washer
The dishwasher is probably the next big appliance in the kitchen. Most people know it is more efficient to run the dishwasher when it’s full, but did you also know that you can adjust some of the settings on many models to reduce energy usage?
Check the manual to see if you can lower the temperature your dishwasher heats the water to; 120 degrees is adequate to properly clean the dishes. Turn off the “Rinse Hold” button if the dishes aren’t very dirty. This function alone uses between three and seven gallons of water. If there is an automatic air dry switch on your machine, use it to let the dishes dry naturally. If not, turn the control to ‘off’ after the rinse cycle has completed and open the door slightly to allow the dishes to air dry.
Energy and Water Saving Idea # 5 – Optimize Your Freezer
If you have a separate freezer like we do, there’s also cost-saving strategies you can use with it. Keep the temperature at 5 degrees for effective freezing unless you have a unit especially for long-term storage of food, in which case it needs to be at zero degrees. Freezers work most efficiently when they are full, unlike refrigerators that work most efficiently when not overly packed.
Energy and Water Saving Idea # 6 – Limit Use of Hot Water
Water usage is another big area where you can save money in the kitchen. Limit the number of times you use the hot water faucet, especially when you only need a little water. The water that comes out of the hot faucet is cold at first, but you are using energy to heat the water taken from the water heater, so only use the hot faucet when you need a bigger quantity of hot water. Fix dripping faucets by replacing washers to avoid wasting water. Scrape dishes rather than rinsing them and only use the amount of water needed when hand dishwashing, rather than filling the sink.
Energy and Water Saving Idea # 7 – Check Your Cooking Appliances
Cooking appliances is the final area I considered when looking for ways to save money in the kitchen. With gas cookers, try to buy one with electronic ignition rather than one that needs a pilot light to be constantly burning gas. Check the color of the flame of natural gas appliances – blue is good; yellow means that it is not burning efficiently and may need some adjustment.
Make sure you keep all burners and reflectors on your range clean so they will reflect the heat and use less energy. Always cover kettles, pots and pans when bringing them to the boil as they heat faster and use less energy. Your appliance will work more efficiently if you choose a pan that is the same size as the actual heating element. When cooking small amounts of food, it is more energy-efficient to use a small appliance like a toaster or convection oven or an electric pan than firing up the big stove. These smaller appliances can use up to 50% less power than a large oven.
I hope you can use some of these methods to save money in the kitchen in your home. a great side benefit is that, while you are saving yourself some cash, you are also helping the environment in many cases. That’s a win all round in my book.
How about you all? What changes have you made in your kitchen to help you save money? Have you ever used any of these tips above?
Share your experiences by commenting below!
***Photo courtesy of http://prairieecothrifter.com/wp-content/uploads/2012/09/iStock_000019244916XSmall.jpg
Easy Places to Find Extra Money for Unbudgeted Expenses
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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 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.
Potential Money Sources
Raid the Emergency Fund?
Instead, we decided to find some ways to generate the money. Here’s how we did it:
How to Find Money for Unbudgeted Expenses
Other Places to Look for Extra Cash
How about you all? What are your favorite ways to “find” extra money?
Share your experiences by commenting below!
***Photo courtesy of http://www.flickr.com/photos/73416633@N00/490624619/lightbox/
The Top Online Savings Accounts with the Best APY
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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 post is by MPFJ staff writer, Shondell of Call Me What You Want Even Cheap. At her site, she blogs about her recent car loan, mortgage pay off, and a whole bunch more. Check out her blog right here!
Online banks work on the same premises as traditional banks. Both types of banks accept deposits from customers, lend money to borrowers at high interest rates, and return a small portion of their profit to the depositors as Annual Percentage Rates (APR) or an Annual Percentage Yield (APY).
However, there is a big difference in the way they operate. Online banks exist only on the Internet and, as such, come with their own flexibilities and difficulties.
Because online banks have only a fraction of the overhead that traditional banks have, they are able to give a higher rate of interest and also waive most of the fees. Whereas traditional banks give an APY in the range of 0.25% (at the highest), online banks usually give a bit of a higher rate. This is enough to make online savings accounts highly attractive for most people. You can check your account at any hour of the day and night from the comfort of your home. You can also pay bills and make online transfers instantly.
If you have never opened an online savings account, then it is natural for you to be suspicious about the security of your money. However, there is no reason to be worried as online banks are totally legal entities and have several layers of security features to make your money extremely safe and secure. As long as the bank does not fail (their failure rate is no higher than that of traditional banks), your money will be in safe hands and working to make more money for you. The majority of these online banks are also FDIC insured, just the same as traditional brick and mortar banks (more on this discussed below).
The popularity of online savings account has given rise to many online banks, including Ally Bank, American Express, EmigrantDirect, EverBank and HSBC Online, which are some of the most well-known. Some of them are divisions of traditional brick-and-mortar banks and others work in collaboration with the latter. For example, HSBC Online Savings is a service of HSBC. This is necessary as deposits and withdrawals (of cash) are still done through traditional accounts linked to the online accounts.
When choosing an online bank, you should compare the APY (which varies from day to day and bank to bank), customer service (whether you will be able to talk to a person in times of need), fees and service charges (whether there are any; in theory, there should be very few, if at all), and FDIC insurance (your online savings accounts must be insured by the FDIC). Do not trust any online bank that is not insured by the FDIC.
Here are brief descriptions of some of the top online banks:
Ally Bank:
Ally Bank is a division of the General Motors Acceptance Corporation (GMAC), whose business interests include insurance, commercial finance and direct banking. This popular online bank offers a variable APY of around 0.95% on online savings accounts and doesn’t charge any maintenance fees and service charges apart from overdraft fees. You can open an account with a zero balance and your deposit is insured by the FDIC by up to $250,000.
American Express:
American Express is the largest issuer of credit cards in the world and its online savings account has one of the best interest rates. The American Express High-Yield Savings account offers an APY of around 0.80% on any amount of deposit (no minimum deposit required). There are no maintenance fees and service charges, and your deposit is insured by the FDIC for up to $250,000.
EmigrantDirect:
EmigrantDirect is a division of Emigrant Bank, whose business interests include direct banking, commercial finance and real estate. The bank offers a variable APY of around 0.50% on any amount of deposit and doesn’t charge any fees, service charges and penalties. There is no minimum balance to open an account and your deposit will be insured by the FDIC by up to $250,000.
EverBank Online:
EverBank Online is a division of EverBank, whose business interests include direct banking, retail banking, Forex and commodities. The bank offers one of the best interest rates in the banking industry along with no monthly fees. Its High Yield Online savings account returns a variable APY of 1.25% on your deposit, which is insured by the FDIC for up to $250,000.
However, it’s important to note that unlike some of the other accounts mentioned here, there is a $1,500 minimum account balance to open an account.
HSBC Online Savings:
HSBC Online Savings is a service of HSBC, which is one of the largest banks in the world with presence in over 80 countries around the world. The business interests of the bank include commercial finance, retail banking and global banking. The bank offers a variable APY of around 0.40% on online savings account and your deposit is FDIC-insured for up to $250,000. There is no minimum balance and no maintenance fees and service charges except for overdraft.
How about you all? Who do you bank with for your online savings accounts?
Share your experiences by commenting below!
***Photo courtesy of http://www.callmewhatyouwantevencheap.com/wp-content/uploads/2013/03/online-banking.jpg