Top Personal Finance Blogs
Tuesday September 26th 2017

Strategies for Saving Money on Health Insurance

With overall health care costs on the rise, finding affordable medical insurance is a priority for most people. Even those who are young and healthy have a difficult time when it comes to buying insurance. The good news is that there are many ways to receive a discount and save money on health coverage. Here are some strategies that will help you get lower rates:

Use the Web

Using the free resources available on the Internet is an excellent way to get health insurance quotes and compare offers from industry-leading companies. The best is that you only need to complete a brief form in order to receive quotes from different insurers. The whole process takes a few minutes, so you will save time and money when shopping for health insurance.

Choose a Family Policy

Married people are more likely to find a reasonably-priced policy than those who are singles. Insurance providers usually offer discounts for buying two or more policies with the same company. Switching to your spouse’s plan may help you save hundreds of dollars a year. However, it is necessary that you do proper research before buying double coverage. In some states, it may be more affordable to get separate plans for you and your spouse. Rates may also differ from one insurance provider to another.

Consider Catastrophic Coverage

Another way to save money on health insurance is to opt for catastrophic coverage. A catastrophic insurance policy is suitable for healthy individuals who don’t need medical care on a constant basis. This type of coverage comes with a very high deductible that can reach $2,500. Unlike indemnity health insurance or managed health care plans, catastrophic coverage does not cover routine check ups, immunizations or maternity care. As the name suggests, this policy only offers protection against a catastrophe.

Use Available Tax Breaks

Individuals who are self-employed can deduct 100% of their health insurance premiums. However, medical expenses have to exceed 7.5% of your adjusted gross income so that you receive tax benefits. If you are permanently disabled, you may apply for federal or state-subsidized insurance plans. There are many programs specifically designed for those with a low income or extremely high medical expenses. Most states have a high-risk pool offering health coverage to low-income individuals. You may also cut costs by going to subsidized local clinics for medications and vaccinations.

There are many other ways to lower health insurance costs. Individuals who pay a year’s health insurance premium in advance qualify for substantial discounts. Joining various groups and organizations can help you save money. You may also consider a Health Savings Account (HSA) in order to spend less money on medical coverage.

Before you start shopping for medical insurance, take the time to evaluate your needs. As long as you know your options, you will be able to find a plan that fits your budget. Try to determine how long will you need health insurance and how much can you afford to pay every month. If you have pre-existing conditions, then you will get higher rates. Be sure to research your options in order to make an informed decision.


Three Best Place to Retire on the Cheap

Finding the perfect spot to retire is on the mind of many people these days. With the volatility of the stock market and other investments, retirees evaluating practical retirement options are looking for affordable options that suit their lifestyle. Three cities have been named in the media lately as the best places to retire an they are not as far away as you might think.

St. Augustine, Florida

There is a reason we all think about Florida as a retirement capital. In Smart Money’s March, 2011 issue, the city of St. Augustine, Florida was selected as the second most attractive retirement spot for retirees. With an average home price of $115,400, it is hard to beat this quaint old beach town for affordability. To sweeten the picture even more, Floridians do not have to pay state tax.

The St. Augustine beaches are second to none, stretching out over miles of pristine Atlantic white beaches. Located about forty five minues south of Jacksonville Beach, and a major airport, and tugged into the northeast section of Florida, St. Augustine offers moderate temperatures and a summer ocean breeze to cool hot summer days. With a small population of about 13,000, St. Augustine graces retirees with a small town vibe, free from the stress of larger cities.

As the oldest US city, discovered in 1513, St. Augustine’s historic downtown is quaint and memorable with brick streets and Spanish architecture. There is no shortage of shopping and restaurant venues. With Flagler college in the heart of the city, this small college town has a diverse population, filled with tourists, college kids and retirees.

Lexington, Kentucky

While some retirees want the beach, others favor rolling hills and the four distinct seasons offered by a city like Lexington, Kentucky. Boasting an intellectual population, with almost 40% of the residents having a college degree, Lexington promotes the idea of lifetime learning. Citizenas over 65 can audit classes for free, filling any empty seats they find at the University of Kentucky.

Median home prices are an affordable $144,200, as printed in CNN Money.com’s article “25 Best Places to Retire”. With 29% of the population over 50, there is plenty of company for outings to great restaurants and equestrian events, or to take in a basketball game.

Bellingham, Washington

For retirees looking west, Bellingham, Washington is a city that should not be overlooked. The average price of a home is $$258,450, which is a real bargain for the west coast. The fact that there is not state income tax makes this city even more attractive. Located geographically close to both Seattle and Vancouver, this community is home to an international airport and a picturesque downtown harbor.

A state college and nationally acclaimed hospital also call Bellingham home. A farmers market located in the downtown area hosts local vendors offering a quaint shopping experience. The beneficiary of moderate temperatures, Bellingham offers residents a break from the heat, and the extreme cold weather that many other parts of the country claim.


Seven Retirement Basics

Everyone wants to retire, and everyone wants to have enough money to live comfortably when they finally leave the corporate world behind. How do you know if you’ve saved enough? How do you save more? Here are seven retirement basics to help you plan.

First, you need to know how much money you will need. For this you need a plan. How do you intend to live in retirement? Do you want to retire to a simple existence in your current home? Do you want to move to the beach? Don’t forget to factor in your expected health care costs and lifespan. All of these will determine how much money you will need.

Secondly, determine how much income you will receive from social security and any pensions you may have coming. The difference will have to be covered out of your retirement savings.

Third, set up a 401(k) or an IRA if you haven’t already done so. Both of these are excellent vehicles to help you save for retirement. Both have significant tax advantages. In a 401(k) or traditional IRA, taxes are deferred on contributions. You will not pay taxes until the money is taken out. In addition, many employers match workers contributions into a 401(k), up to a certain amount. IRAs offer more options for tax-free withdrawals.

Fourth, decide how to invest the money in your accounts. Most advisors recommend you keep the majority in stocks if you are 20 or more years from retirement, and then gradually shift most of your money into bonds as you near retirement age. Keeping all of your money in one kind of investment also has it risks, however, so the best plan is to keep your portfolio at least somewhat diversified.
Fifth, don’t keep all of your savings in your retirement accounts. If all of your money is tied up in your 401(k) or IRA this increases the likelihood that you will have to break into the account –thus paying taxes and penalties –should there be an emergency in your life, such as a job loss or a major medical bill.

Sixth, eliminate as much debt as possible before you retire. This will allow you to live on less income and use your income for other things, like that long delayed trip to Jamaica.
Finally, consider other ways to boot your income or reduce your expenses when you hit retirement. Consider moving to a less-expensive area or taking on a part-time job.

Finally, consider other ways to boot your income or reduce your expenses when you hit retirement. Consider moving to a less-expensive area or taking on a part-time job.


Three Core Principles for Smart Money Management

A good money management plan will keep you solvent even in the most difficult financial times. Taking care of your money is something you have to do on a daily basis. Just like dieting, it requires a little bit of discipline and planning to get it right. But a good financial plan can become a normal part of your life, the same way a healthy diet and exercise can become regular parts of your days. Begin with these three core principles and you’ll find that good money management is easier than it sounds.

Live Within Your Means

It sounds simple, but this can be the toughest part of money management. It all boils down to only spending as much money as you make. Credit cards and monthly payment plans are the fastest way to get in over your head with interest rates and revolving balances. Credit cards are good ways to increase your credit rating, and they are good for emergencies, but they have to be used carefully. Never charge an item that you wouldn’t be able to pay off completely within a month, and then really do pay them off when the bill comes in.

Some interest rates are unavoidable. Mortgages and car payments are large enough that can rarely be paid off all at once. You can be careful to shop around for the lowest interest rates and the shortest loans that you can afford. Buying your own home is not always a sound investment depending on where you live. Look into all of your options before you jump into a 30 year mortgage.

Keep Your Money Working for You

Having a savings account is an excellent beginning toward financial stability. Every bank offers a different interest rate for their different types of savings accounts. Find the account that will give you the best return on your investment. Over time, the difference between a 1% return and a 1.5% return can become substantial.

It is also possible to earn money as you spend it. Many credit cards today offer cash back programs that will give you money each time you use the cards. As long as you remember to keep the credit card spending within your budget, you can build a nice stash of money by taking advantage of these reward programs. If you don’t find a program that offers cash back, you may be able to find one that gives you points toward travel or other purchases that will save you money in the long run.

Be Ready for Anything

Life isn’t always predictable. Keeping an emergency fund available for those unexpected expenses will save you a great deal of money and heartburn. Most economists recommend that you keep an emergency fund that is equal to your salary for three months of work. That way if you lose your job or are unable to work for some reason, you will still be able to make all of your payments on time until you get things all sorted out.


What is a Thrift Savings Plan?

A thrift savings plan is part of the retirement package offered to federal government employees. The plan is offered by the Federal Retirement Thrift Investment Board, and is basically a federal version of the 401(k) plans that private businesses offer their employees. The contributions that employees make toward a thrift savings plan can be applied before taxes, and taxes are deferred on the payouts from the plan if they are paid out after retirement age. Anyone who is eligible for the Federal Employees Retirement System or the Civil Service Retirement System can take advantage of a thrift savings plan.

Additional Savings Option

The thrift savings plan is a retirement plan option that is separate from the package already offered through the Federal Employees Retirement System or the Civil Service Retirement System. The contributions that employees put toward a thrift savings plan are not considered as a normal part of their annuity contributions toward the Federal Employees Retirement System or the Civil Service Retirement System. Federal employees are allowed to contribute up to 11% of their salary toward the thrift savings plan, and they are eligible to begin saving as soon as they begin employment.

Required for Some, Supplemental for Others

Employees who are using the Civil Service Retirement System are not required to participate in the thrift savings plan program. They can use a thrift savings plan as a supplement to their regular retirement plan. Those who use the Federal Employees Retirement System are required to utilize the thrift savings plan option as part of their standard retirement package, along with the basic annuity and social security plans. Both types of plan participants can enjoy the privilege of immediate contributions toward retirement, without any waiting periods or deferment of payments.

Contributions Drive the Savings

The way the thrift savings plan works is that the amount of money saved toward retirement is based entirely on the amount of money that the employee contributes to the plan. Employers may also contribute to the plans with matching funds or other savings program options. Earnings accumulate as employees continue to contribute during their standard working years. Federal Employees Retirement System members also enjoy agency matching contributions and immediate vesting in the contribution as soon as they begin employment. Civil Service Retirement System members are allowed to contribute up to 6% of their salary toward a thrift savings plan, but they are not eligible for any matching contributions or immediate vestment plans.

Range of Investment Opportunities

The federal government offers five different investment funds for federal employees to choose from for the thrift savings plans. The Government Securities Investment Fund, Common Stock Index Investment Fund, Fixed Income Index Investment Fund, International Stock Index Investment Fund, and Small Capitalization Stock Index Investment Fund are all solidly performing funds that provide reasonable returns on investments. Thrift savings plan members are offered high quality investment opportunities with low administrative and investment costs. Before tax savings and tax-deferred earnings also provide a better return on a federal employee’s retirement earnings.


Dividend Investing versus High-Yield Savings

Dividend investing is one of the easiest ways to build long-term wealth. When companies pay out dividends, they are essentially sharing the profits they have earned with shareholders. Investors, especially those who are interested in income investing, tend to favor companies that pay high dividends. But stocks can be risky and some prefer to put their money into High-Yield Savings. Which is right for you?

What is Dividend Investing?

Dividend investing is the process of taking the dividend payments received from the company you own shares of and using them to buy more shares of the company’s stock. One way of automating this process is to enroll in a Dividend Reinvestment Plan (DRIP). A Dividend Reinvestment Plan is a plan in which shareholders have cash dividends automatically reinvested into additional shares of the firm’s common stock.

What is High-Yield Savings?

As the economy struggles through a recession, more people are looking to place their money in savings accounts. A high-yield savings account is an account opened at a bank or credit union that yields a higher than average rate of interest.

As the name suggest, these accounts have a higher Annual Percentage Yield (APY) than regular savings accounts. The advantages of having a high-yield savings account is that your money is highly liquid, it is FDIC insured, and you can get started with a low minimum balance in most cases. Depending on the bank, some accounts may come with other perks.

Rates of Return

The rate of return on dividend investing varies depending on the stock. It is common for dividend investors to only invest in a company’s stock that has a dividend yield of at least 4%. The yield of 4% gives investors the assurance that they will earn more than the average rate of inflation. Investors want to make sure they maintain purchasing power.

The Federal Reserve is keeping target interest rates low, which means that the yield on savings accounts are relatively low as well. Currently, there are some community banks that are offering interest rates as high as 5%. Investors that earn rates this high will be able to accumulate great wealth over the long-term. This yield is not very common. Most banks are offering interest rates of 1.5% to 3% on high-yield savings accounts.

Risks

There are also unique risks associated with dividend investing. A dividend stock still has some of the same risk as non-dividend stocks. Companies can experience periods where they are not earning profits, and therefore are not paying dividends.

High-yield savings accounts are FDIC insured, which means that they have zero principle risk. However, there is an inflation risk that is associated with high-yield savings accounts. When the inflation rate, which is usually around 3%, is higher than the yield you are receiving from the savings account, you lose purchasing power. Dividend investing also has inflation risk. The dividend return can be less than the inflation rate as well.

Tax Implications

There are specific tax implications related to dividend investing. Dividend payments are taxed as capital gains and not ordinary income. The current capital gain tax rate is 15% for those in the 25% of higher tax bracket. It is 0% for individuals who are in a lower tax bracket than 25%.

When considering taxes, dividend investing has an advantage over high-yield savings accounts. The interest earned from high-yield savings accounts are treated as ordinary income and taxed at your ordinary federal income tax rate.

Dividend investing and high-yield savings accounts both have their advantages and disadvantages. As with all investments, it is important to research them thoroughly. Investors typically choose investments that offer them the highest possible returns for their risk preferences


Women: Is Your Financial Planner Giving You the Right Advice?

Many women are finding themselves solely in control of their financial planning after a divorce or after the death of a spouse. Unfortunately, the majority of financial planners are used to dealing with men. Research shows that most women have investment accounts that are only two-thirds the size of a typical man’s account.

Add to that the longer average lifespan of women and you have many ill prepared for retirement. If you are a woman who needs to handle her own investments through a financial planner, there are some things you should keep in mind about the service you receive.

Sexual Discrimination Problems

The fact that men have been the traditional financial agents for most marriages means that investment planning has become very male-oriented. Most of the financial planners are men who are used to working with other men. It is very easy for a male financial planner to slip into the habit of doing what they believe is best for their female clients without regard to what the client really wants or needs. Investors tend to guide women toward more narrow investment plans because they feel that women are not prepared to handle riskier options. Some planners can be outright disrespectful of female clients because they do not believe women understand the intricacies of investments.

Life Expectancy and Income Differences

The problem with this unfair treatment of women in the financial world is that women are more likely to need to handle their own investments sooner or later. Most women in the United States will outlive men by an average of 10 to 20 years. Since women tend to earn lower incomes than men, it is much more important for women to invest their money wisely so that they will be able to live comfortably once their spouses have passed. When a financial planner gives a woman bad advice, it can have a serious detrimental impact on her future.

Communication Challenges

Sometimes the perceived discrimination is really a problem in communication. Since the financial world has always been primarily male, it can be challenging for a financial planner to deal effectively with a female client. Men process their thoughts and plans differently than women do.

Many veteran financial advisers are used to working in a fast-paced environment with men who want to cut to the bottom line quickly. Women tend to want their advisers to explain all of their options in more detail and discuss what would be the best choice. It can be difficult for an adviser to change his communication style to accommodate a female client.

Cookie Cutter Investment Plans

Another problem for women in the investment world is that the most commonly used investment plans were created with male investors in mind. Women have different financial needs because of several factors, which means that a male-oriented plan may not be the best option.

Financial planners need to break free from the investment models they are comfortable with in order to offer more effective options for their female clients. If you are a woman receiving financial advice through an established financial planner, you need to take an active part in making sure that your portfolio is unique to your specific situation. If you aren’t getting the answers you need, or if you don’t fully understand your portfolio and investment strategy, it’s time for a different financial planner.