5 Things You Can Learn from Your Tax Return

taxreturnAfter you file your tax return with the IRS, and before you stick your copy in a box kept in the attic, take the time to look through the results, and learn what you can do to improve your financial situation. Your tax return says a lot about your finances. If you know what to look for, your tax return can help you identify areas where you could do better.

While your tax return offers insight into several aspects of your financial life, I’ve chosen five to focus on:

1. You Might Be Able to Shelter More of Your Investment Income

Look at Line 9 of your Form 1040. Line 9a is for ordinary dividends, and Line 9b is for qualified dividends. Do you have a high income listed there? If so, you might be paying too much in taxes. Think about what you do with your income. On the one hand, if you receive the dividends and spend the money, there might not be a whole lot you can do. On the other hand, if you mostly reinvest the dividends, you might consider moving your dividend portfolio to a tax-advantaged account. You can defer taxes on your dividend income, or watch your portfolio grow tax-free with a Roth account.

2. It Might Be Time to Accelerate Your Mortgage Payment

If you are taking the mortgage interest tax deduction, which is itemized on Schedule A, check to see if you are still getting a big benefit. One of the realities of a mortgage is that you pay more of your interest at the beginning of the loan, so your deduction is higher early on.

However, as you pay down the mortgage, more of your payment goes toward the principal. If your mortgage deduction is dwindling, and you reach the point where it doesn’t help much with itemizing, it might be time to tackle the mortgage (assuming your other debt is paid off) and be done with it.

3. Portfolio Diversity

Take a look at your Schedule B to see where your investment income is coming from. If it is clear that a large portion of your portfolio is in one investment, or if you are dangerously overweighted in one asset class, you might need to diversify your portfolio. Your Schedule B, and other information about your investments, can provide you with portfolio insights.

4. Possible Deductions and Credits for the Coming Year

Really look through your tax return. Look at the deductions and credits that are available. Could you have taken any of these tax breaks if you had known about them? As you look through your tax form, consider what you can do this coming year to reduce your tax liability. Even though tax laws change every year, it’s still possible to get a general idea of the tax breaks that could be available to you this year. Plan out how you will take advantage of these breaks, and keep the documentation in a safe place so you’ll be all set next tax season.

5. You Have Different Types of Income

Many of us think of income in terms of what comes home in the paycheck. However, if you look through your tax return, you realize that your gross income is very different from what you are actually taxed on. The IRS recognizes that you have gross income, adjusted gross income (and modified adjusted gross income from the AMT folks), and taxable income. Your taxable income is often thousands – or even tens of thousands – of dollars less than your gross income. Deductions that lower your income for tax purposes can help you reduce your tax liability. You pay income taxes on a portion of your income, and not the whole amount.

I know there is other information to glean from your tax return. Leave a comment sharing what you have learned from your tax return!


Best Savings Accounts for Youth Sports

Best Savings Accounts Youth Sports

If you’re a parent of a young athlete you know that the costs of playing a competitive sport seem to never end. Saving up money ahead of time to cover the cost of youth sports is important so your kid can keep playing the game they love.

I’ve been keeping an eye on the amount of money we spend on our kids athletics and a few months back I shared a bunch of tips for cutting costs on sports equipment and fees. Today here are some tips for saving and managing the money needed to fund their athletic adventures. Keep these things in mind when figuring out the best bank account to use when saving up for youth sports.

1) Avoid accounts with a minimum balance requirement
The nature of many competitive sports teams is that you pay fees to the team or coach at the start of every season. Your bank account balance will grow as you save over the off-season then suddenly plunge once you write that big check at the start of the next season.

Accounts that charge a minimum balance fee will simply eat into your savings when your total savings dip below that minimum.

2) Find travel friendly accounts
There’s a new term to describe the growth of travel teams and tournaments in the US, it’s being referred to as youth sports tourism. If your team travels to different cities or states to compete in games or tournaments its nice to have a travel friendly bank. Savings accounts that allow you to check your balance on your phone and transfer money to your checking account come in handy when you’re on the road.

A bank with a wide network of ATM’s is nice if you have to travel to games. Although you pay for registration fees ahead of time there are expenses like lodging and food that come out of your account when you’re on a sports trip

3) Avoid monthly fees
You’ve opened this savings account to save up for sports, not to pay fees. So be sure to avoid banks that charge a monthly fee to have the account. Avoiding per account fees is particularly important because you may want to have different accounts for the multiple types of costs associated with youth sports.

Some costs are relatively fixed. For example you may pay the same amount of league fees every season. Other costs are more variable, take the cost of equipment for example. You have the choice of buying the high end, name brand equipment that has a much higher price or the more cost effective brand.

It could be that you want to pay the recurring fees out of one account and the equipment fees out of another.

4) Consider the ease of accessing money
You want to make sure you’re easily able to access the money you’ve saved. Whether you need to write the team manager a check for uniforms or use online bill pay to send money to the coach for training fees be sure its simple to get to your money. If your putting your money into a savings account chances are you’ll first have to transfer some of it into your checking account to make a payment. As long as the bank offers an online interface or mobile app to easily transfer the money it shouldn’t be a big hassle.

Something else to consider. If you’re a team manager or coach, being able to deposit checks into your account using your phone is a really nice feature when you’re handed a stack of checks at practice. If you’re using crowdfunding to raise money for your team you also want to be able to easily move the donations into your checking or savings account.

Professional athletes sometimes get hung up on money as they negotiate contracts but your children aren’t worried about the money. Your kids just want to play the sport they love. Hopefully these tips will help you save and manage the money needed to pay for hours of fun on the field or court next season.


Getting Rewarded for Good Grades

Rewards for GradesWere you ever paid for good grades when you were a kid? I was reminded of my elementary years when I read about the good grades reward program that Discover is offering to students.

When I was a kid I didn’t have many ways to earn money so the $5 an A that my parents paid me definitely motivated me to earn good grades. Our report cards came home four times a year so it was a chance for me to earn $160 over the course of a school year. I worked really hard to make sure I could get all A’s. If I got a B I wasn’t worried about getting in trouble from my parents, I was upset with myself because I didn’t get as much money.

I know there is a big debate about whether you should pay your kids for grades. The main argument is that you want the kids to be motivated to learn by something other than money. As parents we would prefer intrinsic motivation. We want our kids to learn because they want to know more. I think it really comes down to each individual family and kid. It’s up to the parent to decide whether it is a good approach for their family.

Good Grades Cashback Bonus
As I mentioned, my memory was jogged by the program that Discover is offering called the Good Grades $20 Cashback Bonus. It’s a little different than my elementary school experience because you have to be at least 18 to apply for a credit card.

The motivation factor for older students is different than it was for me in elementary school. I was determined to earn reward money for my grades because I didn’t have a lot of ways to bring in money as a kid. When you’re in your late teens and twenties you can go get a job since it’s hard to get approved for a credit card if you don’t have a source of income.

Motivation to Study
In addition, students in college are motivated to get good grades by much bigger goals than simply cash. Serious students know that getting good grades can mean more money in scholarships and eventually more looks from potential employers when they send out their resumes.

Students who qualify for the Good Grades Cashback Bonus aren’t going to be motivated to do well simply because of the reward. However, I remember the days of being a broke college student and how every dollar seemed precious. When you’re counting your pennies, $20 would be a nice little boost.

Earning Rewards
The way the Good Grades Reward works is that every school year if the student has a 3.0 or above GPA they get a $20 credit applied to their Discover credit card account, up to five years max.

I had a credit card when I was in college and it helped me build up a credit history I could use after I graduated. Of course, I paid my credit card balance off each month. It doesn’t make financial sense to use a credit card if you’re going to carry a balance. If I had a kid with a credit card I’d want access to their credit card balance just so I could make sure they were being sensible with the use of their card.

For students who can use a credit card responsibly, the Discover’s Good Grades bonus is a nice perk to consider when deciding which card to use. Discover already offers student cash back cards and this $20 bonus works the same way as Cashback, it’s applied towards the balance of the bill. Here are the details of the new program.

What are your thoughts on rewarding students for good grades with money? Did you get paid for grades as a kid?

This post is published as part of the Discover Preferred Blogger Program.


Why You’ll Never Start an Emergency Fund

emergency fundEmergency funds are like New Year’s resolutions, everyone likes the idea of having them but not enough people actually put in the time and effort to see it through.

If starting an emergency fund is something you want to do but have been putting off, I can’t really say I blame you. It’s not easy to find the money to put away into savings. I bet I can probably list out most of the top 10 reasons you don’t have an emergency fund:

  1. Mortgage or Rent Payment
  2. Vehicle Payment
  3. Heating or Cooling Bills
  4. Insurance Premiums
  5. Groceries
  6. Medical Bills
  7. Child Care
  8. Credit Card or Student Loan Payment
  9. Fuel Prices
  10. Taxes

Your expenses may be in a slightly different order but we all have pressing money needs and it’s not uncommon to barely squeak by or come up short at the end of the month.

Expenses, Expenses, Expenses

If you look at those expenses, they don’t even include disposable spending like clothing, cable, Internet, cell phones, dining out, gifts, travel, movies, sporting events, kid’s activities, etc.

The list also doesn’t include any money that you might save for the future like retirement accounts, a college fund, or a down payment for a house.

It’s possible you spend most or all of your paycheck just paying the necessary bills. Then if you have any left over some probably goes toward disposable purchases and perhaps some is saved for the future. So how much does that leave for your emergency fund?

Paying Your Bills

Like I said, it’s hard to blame you for not building an emergency fund when you have your money committed to so many other things every month. What would happen if you did stop paying some of those top 10 bills?

You might start getting letters and phone calls about turning off your service, canceling your policy, taking away your property, pursuing unpaid taxes – or it could mean less to eat or not being able to visit the doctor when you’re sick. Do you agree those are ‘no-debate’ expenses, ones that you have to pay every month or you find yourself facing some serious consequences?

If you’re nodding yes, then you probably won’t like what I’m about to say. Those top reasons you don’t have an emergency fund are the exact same reasons why life as you know it could someday be saved by your emergency fund, or ruined by the lack of one.

The Emergency Fund Dilemma

The expenses you must pay each month are probably the main reason why you’re not building an emergency fund. Yet, those expenses are the same ones you may desperately need your emergency fund to pay someday.

The nasty thing about emergencies is that they tend to come in groups – the first can create a chain reaction that quickly spawns other disasters and before you know it you’re looking at a stack of bills that you can’t possibly pay.

Your Money Machine

Right now you may have figured out a balance between your income and expenses and tuned it to the point where you can pay your bills and potentially have some left over each month. Think of it like an engine, if you keep adding gas and oil and keep your foot on the pedal then life keeps moving forward.

But what happens when a piece of your money machine has a problem? A typical example is losing your job, the main income-creating part of your system. When that piece breaks down, the pieces that depend on it start to have trouble.

If you have an emergency fund that can replace even a portion of your income for a few months then the whole engine doesn’t come apart leaving you dead in your tracks. You’ll have to slow way down, spending as little as possible and doing everything you can to replace your income – but at least you can keep on rolling along.

Total Systems Failure

On the other hand, if you don’t have an emergency fund and you can’t fill the income gap lost from your lost job then suddenly you can’t pay all your expenses. You might decide to keep paying your mortgage or rent so you have somewhere to live but that might mean you have to stop your car payments.

When they repossess your car, it’s harder for you to get around to look for new work – the best jobs may be on the other side of town and it’s tough for you to scout out work and get to interviews. Not only that, now your credit has suffered because you defaulted on your car loan and you lose the ability to borrow more money, at least at a reasonable interest rate.

If you’re already approved for a credit card you can use it for a while to get by and just make the minimum payments. However, you’ll probably quickly hit your spending limit – not to mention you’re starting a cycle of high-interest debt that you’ll be caught up in for years to come.

Once you’re in the hole financially, it’s tough to climb back out and things could get continually worse.

A total failure of your money system can take you from doing okay to being in big trouble financially in a pretty short period of time.

Will You Ever Start an Emergency Fund?

As bad as this all sounds, it’s just hypothetical. It may never happen to you or might not happen for another 20 years. The whole experience sounds horrible but you probably don’t feel imminent danger and those necessary monthly expenses demand to be paid every 30 days.

So, like I said – with demanding expenses and only a possibility of total financial systems failure at some point in the future – I can see why it’s tough to make yourself start an emergency fund. You tell yourself that you’ll start putting money away as soon as you reach a financial milestone, but then you get there and priorities have changed and your money goes somewhere else instead.

I hope for your sake that you’ll never be in a position where you need to dip into an emergency fund. But knowing the way the world works I’m afraid that can’t be the case for everyone. So I also hope that you’ll keep the image of total systems failure in the back of your head and someday, maybe soon, will figure out a way to start putting away some money every month for your emergency fund.

Are you planning on starting an emergency fund? What’s holding you back? Let us know in the comments section!


12 Life Lessons I Learned in 2015

Can you think back to a year when you learned quite a few life lessons? I’ve had some years where I learned a little about myself and life and then I’ve had some where I’ve learned quite a deal. I don’t know how your 2015 went but I chalk mine up to having learned a lot about life.

Only one of these has to do specifically with money so if you’re looking for money lessons come back another day.

1) Strive to Find Balance

Life puts many demands on you and if you don’t plan balance into your routines then it’s easy to get a lopsided life in terms of your priorities. I doubt you’ll regularly have a perfectly balanced day but if you plan for it you have more chance of balancing your time across things that are important to you over the course of a week or a month.

Some years it’s easy to get out of balance. This often happens when you’re reacting (or over-reacting) to something that happened in your life. Perhaps even something you’re simply afraid might happen in the future.

Poker players call it going “on-tilt”. When things don’t go your way and you over compensate to try and make up for the loss by taking action (maybe reckless or contrary to your typical approach) that you wouldn’t have considered in the past.

Basically your emotions get the best of you and cause you to make interesting decisions.

I think this is probably going to happen to most people at some point in their lives. We’re emotional creatures so chances are you’re probably not immune to knee jerk decision making.

Probably the best thing you can do is to setup safeguards to limit the amount of damage you can do if you go “on tilt”.

2) Know How to Ground Yourself

When things aren’t going well what is your “go to” thing to make you feel better and get you back on track? For me, it’s exercise. The trouble is that when I feel like crap it’s hard to make myself get out and go for a run. However, as soon as I do I’m reminded of how it gives me time to think and reflect and when the endorphins kick in my worries seem more manageable.

On the flip side, when you’re flying high what, or who, can help you remember that there will be rainy days at some point in the future? How will you remember to plan for them and not throw caution to the wind? How will you remember where you came from and that karma matters?

3) Be Grateful

Unfortunately I watched a lot more television this year than I have in a long time. Part of that was due to getting hooked on shows like “The Walking Dead” and “Falling Skies”. Both tell apocalyptic tales of the world being ruined, one by zombies and the other invading aliens. At the heart of both shows is the story of a dad trying to keep his family together and safe amidst the end of the world.

Although they’re just scripts, both stories remind me of how easy it is to take for granted the blessings we have in life. Our modern world isn’t perfect and there are many people suffering around the world but we’re all still people. We’re lucky to wake up every day and have a chance to be with the ones we love and to pursue the things most important to us.

Counting your blessings can help put your daily life into better perspective.

4) Acknowledge your Weaknesses

You probably know your biggest weaknesses, right? I’ve known mine for years but there’s a difference between simply being aware of them and having a plan in place to help mitigate them.

I haven’t done a great job of this and need to improve how I handle my weaknesses. My plan involves a mixture of having people hold me accountable, getting expert help where needed, and finding tools to help me measure tendencies that are holding me back.

5) Find Someone to Keep You Accountable

Some people use a coach, a mastermind group, an online community, and some rely on their spouse or other family member. There are pros and cons to the different approaches that involve factors like cost, expertise, availability, & objectivity.

Whatever works best for your situation, the thing to remember is that over the long term it pays to have someone keeping you accountable. Having someone ask you the hard, uncomfortable questions should help you make better thought out decisions.

6) Health Matters

Everything is worse when you don’t have your health, take care of yourself. Most people don’t gain 100 pounds or develop heart disease in a day. Many modern medical conditions are a result of lifestyle over a period of time. One thing that worked for me is the Give Skinny a Chance challenge.

7) Create an Emergency Fund

Do you feel like you’ve lived the saying “when it rains, it pours”? If so then you understand the value of having an emergency fund. One financial mishap can lead to another. What seem like relatively minor issues on their own can add up and begin to snowball pretty quickly. One of the best ways to combat these snowball effect is to have reserve of money you can tap into when

8) Your Thoughts Matter

It’s amazing the impact the thoughts in your head can have on your personality, your body, your motivation, your productivity, and your overall happiness. Until you’ve experienced how impactful they can be it’s difficult to explain the degree to which your thoughts can make a difference in your life. Two years ago I would have semi-rolled my eyes at a lesson like this but having seen it firsthand I can say that it’s important to work towards a positive mindset.

It might not be easy for you to be positive about everything but I think it’s important to be positive about a few core things in life. Even if several things seem to be going wrong at once if you have at least one core thing to keep you energized and moving forward it can make a big difference.

9) Find a Good Partner

Whether it’s your spouse, business partner, or your team at work having someone who you can count on and work with makes a big difference you when things are rough or when you have tough decisions to make. A great partner would be someone who complements you, who excels in areas where you struggle. This also goes along with finding someone to keep you accountable – having another perspective in your decision making process.

Not only can a partner help you plan for the future but having a person or team you can rely on to pick up the load when you’re swamped can make it a lot easier to get your footing when you stumble.

10) Ask for Help

People are busy with their own lives and probably won’t simply volunteer to help you unless you ask for specific help. They likely won’t be able to solve your problem for you but they can offer fresh ideas or connect you with resources to help you get past the area you’re stuck.

It’s easy to let your pride get in the way and think you can handle everything on your own but if asking for help can save you a lot of time, heartache, or money then its worth reaching out.

11) Create Traditions

The nice thing about traditions is that they can serve as anchors in our busy lives. Without them it’s easy for whole days and weeks to seemingly slip by as we go through our daily routines.

Traditions give you things to look forward to and give you a reason to take a break from the rush of life. They don’t all have to be major traditions that only happen a few times a year like ones we associate with the holidays. You can have a tradition of celebrating your weekly wins on Friday with a lunch or a drink with friends. Simple things like family movie night on a Saturday or Sunday.

Establishing regular events or moments like these can help build relationships & memories if you share them with others or can simply give you something to look forward to if it’s something you do on your own.

12) Be Optimistic

Peter Thiel talks in his book “Zero to One” about ways of categorizing how people and societies think about the future. The optimists believe that the future will be better than today and the pessimists think that things will get worse.

With all the negative things you read, hear, or see in the world today it’s easy to be pulled towards the pessimistic end of the spectrum. However, when I think of our parents, grandparents, and great grandparents they all had tough times in their respective generations. It’s easy to look back now on history and see where things worked out in the end but it definitely wasn’t clear cut when our ancestors were worrying through those times.

Thank goodness they didn’t throw up their hands and declare the world had gone to hell in a handbasket and there was nothing they could do about it. Thank goodness they kept innovating, and caring for others, and working to make a better future for their kids. Some of our challenges are different than theirs were, seemingly more complex. However, we live in a different time. We have information and technology that they didn’t have access to so we’re equipped to handle the challenges of our generation.

Thiel further distinguishes between definite optimists and indefinite optimists. He says those of us that are indefinite optimists believe the world will be better, we just don’t know how. He describes definite optimists as people who have a strong vision and plan for how things will get better. You may not know how you’ll make the future better for yourself, your family, and your community but I think it’s important to look for reasons why you want the future to be better.

Having an optimistic view of the future makes it much easier to get out of bed, be excited for each day, and give your all in the time you spend with the people in your life. So I hope you have an optimistic new year, a hopeful 2016. Maybe some of the lessons I’ve learned (or been reminded of) will help you along the way.

If not, don’t despair. There are many smart, interesting, hopeful people sharing their lessons and stories at this time of the year. Keep connecting with people and you’ll eventually find the lessons you need to make your next year great.


Year-End Health Moves for Better Financial Fitness

As the end of the year approaches, it’s a good idea to evaluate your health situation — especially as it relates to insurance — and make a few moves that can save you money. You might be surprised at your options, and you can improve your financial situation with a little help from some of these moves:

Change Your Health Plan

The end of the year is when many companies go through open enrollment. This means that you have the chance to change your health plan. Don’t just keep things the same because you’re too busy, make sure to review your coverage and how much you’re paying for it.

Do you really still need maternity coverage? Has your emergency fund grown enough that you can afford a higher deductible? Make sure you have adequate coverage, and look for ways to limit premium costs.

If you are in reasonably good health with few health needs, a high deductible health plan can really help you save money. Raise your deductible, and watch your premiums drop. However, you want to make sure that the additional money you pay out of pocket is affordable.

Contribute to a Health Savings Account

If you have a high deductible plan, you are usually eligible to open a Health Savings Account (HSA). You can receive a tax deduction for contributing to a HSA. This is a great way to reduce your taxable income while saving up money for health care costs.

Your money grows tax-free, and as long as you use the money in your account for qualified health care costs, you never have to pay taxes on it. (If you withdraw money otherwise, the rules are the same as a traditional IRA.) The good news is that, like an IRA, some companies let you contribute into the next year.

Check with your benefits department but to see if you have until the middle of April the following year to make contributions.

Use Your Flexible Spending Account Money

Many health insurance plans come with a Flexible Spending Account (FSA). You can put money in these accounts, and receive a tax benefit, and then use it for health care expenses. However, unlike the Health Savings Account, which rolls over year to year and grows, the money in the FSA doesn’t roll over. It’s a use it or lose it situation.

So now is the time to use that money. Make your doctor appointments, or buy needed supplies. Remember, though, that if you want to be able to use FSA money for over the counter medications, you still need a doctor’s prescription.

Start Living Healthier

Make a resolution — and a plan — to start living healthier. Your health costs will be much lower long term if you take care of yourself. Create a plan to exercise more and eat better.

Ben’s getting a head start on his health resolutions by swearing off all sweets for the holidays. While you don’t have to swear off sweets forever, you can adjust some of your habits so that you are living in a healthier manner. Also, remember that relaxation, and stress relief can be great ways to improve health.

Look for ways to make small changes to your lifestyle so that you won’t need to spend as much money on health care. Many chronic — and expensive — conditions and diseases can be controlled or avoided with the help of better health habits.


Open Enrollment 101

Does open enrollment seem to sneak up on you every year?  Your human resources department sends out an email announcing the enrollment period and before you know it you’re scrambling to make your selections on the last day before the open enrollment deadline.

You’re going to be stuck with most of these choices for a whole year – why not take a little extra time to research your options ahead of time so you can understand your potential choices and make the best decision for you?

Health Insurance

As the cost of health insurance goes up, the plans that employers offer are charging higher premiums for lower deductibles.  For some people, it seems like your premiums go up every year.  Of course, one way to lower those insurance premiums is to choose a plan with higher deductibles.

Something that’s time consuming but worth your while is to look back at how much you spent on health care last year (insurance premiums, out of pocket, and co-pays).  Think ahead to the coming year and try to approximate whether you’ll see the doctor less, the same, or more.  I agree, it’s an inexact way of doing things, but it’s better than simply guessing.

One you have a feeling of how much you think you’ll spend you can run scenarios with the premiums/deductibles offered by your health insurance plan to see which will best meet your projected healthcare spending.

If you anticipate few healthcare costs or if your premiums are insanely expensive, one option you might have is a High Deductible Health Plan coupled with a Health Savings Accounts

Health Savings Account vs Flexible Spending Account

The good thing about a Health Savings Account (HSA) is that it lets you save money for health care expenses pre-tax without having to worry about losing the cash you set aside, which could happen with a Flexible Spending Account (FSA).

If you’re not familiar with an FSA, it’s also an account you can contribute to pre-tax for health care expenses. The main downside to an FSA is that any money you contribute but don’t use by the end of the year is forfeit.

So compared to an FSA, an HSA seems like a no-brainer – until you find out that in order to qualify for the HSA you have to enroll in a high deductible health plan (HDHP).  An HDHP can end up saving you a lot of money if your health care expenses are low year after year. These plans usually have pretty low premiums so if you never go to the doctor then all you’re out are the costs of your monthly health insurance rates.

However, the deductibles in a HDHP can be very high, so if you end up with a year full of doctor’s visits then you may be paying many thousands of dollars before your deductibles kick in.  Since an HSA does let you roll your contributions over from year to year, if you’ve been part of an HDHP with an associated HSA, then you may have the money built up to cover those expenses.

Here’s a chart with more of a comparison of the details of a Health Savings Account vs Flexible Spending Account.

Other Insurance

Life Insurance

Buying life insurance through your employer can be an affordable way to get a good policy for a decent price.  Some employers will offer a base amount of life insurance at no charge but then allow you to buy additional insurance for just a few bucks a month. Sometimes for the first or second supplemental level of life insurance they won’t require a medical exam, so it can be a cheap and easy way to add life insurance.

Obviously, one of the main downsides of buying life insurance through your work is that if you lose your job you could risk losing your insurance.  Research the policy to see if you can keep it in the event your leave your employer.  It’s also smart to research the company offering the life insurance; you can go through the rating service from A.M. Best  to see how the insurer stacks up.

Disability Insurance

There are some benefits to buying a separate disability insurance policy outside of your employer’s group policy.  One obvious benefit of going with an individual policy is that you get to keep your same policy and coverage if you get a new job.

Or if you’re currently receiving disability from some other source, such as Social Security Disability Insurance, an individual policy is less likely to reduce your benefits as might happen with a group policy through work.

On the other hand, you will probably pay more for a separate policy so buying short term or long term disability through your employer is likely cheaper.

Prescription Drug Coverage

If you or your family spends a lot on prescriptions, make sure you factor those needs in when evaluating your health insurance. A plan that has a co-pay of $5 to $10 for generic drugs may be tempting but what will be the cost if find yourself needing a brand name medicine?

Many insurance plans offer a tiered pricing system when it comes to pharmaceuticals, be sure you understand the different levels and go with the one that makes the most sense based on your past and projected future medicine needs.  There can also differences in price depending on how you get your medicine, doing mail order through your prescription service vs picking it up at any random pharmacy.  Make sure you understand how the process works so you can plan ahead and save money on recurring prescription needs.


Give Skinny a Chance

Give skinny a chance
Who doesn’t want to be skinny? On January 1st you or someone in your family is probably going to make a New Year’s resolution to lose weight. Your goal may to lose a certain number of pounds but what you’re picturing is a “skinny you”, right?

Sorry to say but I’d be willing to bet that you’re going to weigh more on January 1 than you do right now in the middle of November.

So let me give you a head start on your New Year’s resolution to lose weight. Rather than waiting until January 1st when it’s dark and cold outside and you have a whole holidays worth of meals and desserts pushing against your belt…

Why not Give Skinny a Chance?

Don’t set yourself up to fail on those dreams of a skinny you. Get a head start on all those other suckers who are going to have to roll out of bed early on a cold dark January morning. Picture them 10 or 15 pounds in “fat debt” and trying to make a dent in their weight while recovering from a holiday bingeing hangover.

We know there are going to be thousands of calories shoved at us between now and the end of the year. You also know that at the start of next year you’re going to want to lose weight.

The logical thing to do is to eat fewer calories over the holidays. But just like personal finance, our diet is often driven by emotion rather then logic. So don’t think about it logically. Think about how much it will suck to feel fat and tired at the time of the year when you want to focus on new beginnings. Think how motivated and invigorated you will feel to be slim and trim January 1!

The Cost of Being Unhealthy

What does this have to do with personal finance? Quite a lot actually.

For the last several years the companies I’ve worked for have been taking proactive steps to help their employees improve their health and lower their own health care costs.

It’s to the point now where we can save over $1000 on our insurance premiums if we follow a simple wellness plan.

A big part of the process is a biometric screening whose results reveal whether or not you have metabolic syndrome. If you don’t know what metabolic syndrome is (I didn’t) it’s a combination of high blood pressure, high blood sugar, being overweight, and high cholesterol that can lead to heart disease, stroke, and diabetes.

What’s one thing all those nasty conditions have in common? They’re expensive to treat!

You don’t just wake up one morning with metabolic syndrome. It’s a gradual process of eating too much of the wrong kind of foods & not exercising that gets us into that situation. What it boils down to is that there are things you can do today to avoid the unpleasantness of things like diabetes and heart problems.

Not only will it help you feel better it can potentially lower your insurance premiums and should also lower healthcare costs down the road.

Why Now?

This all started last week while I was out for a run. I was thinking about how much of my kids Halloween candy I’d eaten the night before & the week before that. I felt like I had gained 5 pounds in just two weeks and I knew it wasn’t going to get any better. The days are getting shorter, darker, and colder so its going to be increasingly difficult to get outside to exercise. Plus the holidays are on the way and we all know what that means for waistlines.

So on my run I resolved to get back to something I did two years ago. I didn’t have a name for it back then but now I’ve decided to call it the “give skinny a chance challenge”.

The Challenge

It’s pretty simple. From now through the middle of January I’m not eating any sweets. This means no cake, candy, cookies, ice cream, pie, etc.

It does sounds kind of like a bummer so let me share my personal experience. I did this two years ago and when January rolled around I felt great and had actually lost weight over the holidays. The longer I did it the easier it got. In fact when I hit January I was on such a roll that I just kept going and avoided treats all together for a long time. For whatever reason once I just decided I wasn’t going to eat sweets it was so much easier to say no when they are offered.

Self Control Problems

Then the following winter I decided I was going to enjoy the delicious delectables of December. Almost anytime a sweet was offered I accepted. I remember knowing that I shouldn’t eat so many sweets but going ahead and eating them anyway. More often than not I ate more sweets than I should, like the famous potato chips I couldn’t eat just one.

Maybe you have better self-control than I do but simply swearing off sweets for the holidays was much easier than constantly battling over what I should and shouldn’t eat.

Challenge Police

Another cool side effect is that my kids get really into this challenge as well. They love being the “treat police” & reminding me constantly that I can’t have sweets. I don’t by any measure expect them to skip sweets as kids over the holidays. I know I wouldn’t have at their age. However, I am pretty sure they’ll remember what I’m doing and when they get older and have better self-control (and a slower metabolism) I’m hoping they will remember my example. In a way I am doing it for them so I can be healthy and live longer to see them grow up and have their own families.

So if you have kids, a spouse, or even a friend recruit them to be your challenge police and help you stay honest.

Challenge Rule Adjustment

I am making one small adjustment to the rules this year. One thing I ran into last time around is that people work hard to make you holiday desserts and can be pretty disappointed when you turn them down.

Therefore I’m giving myself one free pass each month to eat a treat. So when we’re with our family on Thanksgiving and Christmas and they pull out the pie or dessert they  worked so hard to make I can say thank you and try a piece of it. Of course it’s not just to be polite, after my fast from sweets I’m sure I will be happy to enjoy a slice of holiday delight.

Get Out of “Fat Debt”

I challenge you to join me in this “Give Skinny a Chance” challenge. I can almost promise you that if you follow along that you will feel much better about yourself mid January than if you don’t.

Just to let you know this is not something that comes easily for me. I love desserts, especially chocolate ones. I’m also an ice cream fanatic. I wish I could eat ice cream for lunch and dinner every day. Even though it might sound hard I can tell you that this will work. I mentioned how last time I was doing so well that I kept going through January and far into the next year. By cutting out sweets and exercising regularly I was able to lose 50 pounds, so it definitely works.

It’s a slow and steady approach. There are times when you really really want a sweet but you are much more likely to lose weight and be healthy if you resolve to do it now rather than waiting until New Year’s resolution time.

So join me and give skinny a chance! If you want to follow along enter your email address below and we can share updates. Put down that candy, cookie, or cake and sign up!







Are Health Sharing Ministries Really Health Insurance?

There is a health insurance alternative available that wasn’t getting much attention in the media prior to the implementation of healthcare reform. But now that the Affordable Care Act (ACA), or better known as Obamacare, has become a law the land, health sharing ministries are rising as viable alternatives to the health insurance exchanges.

What a health sharing ministry is

A health sharing ministry is exactly what the term implies. It’s a group of people, bonded by faith, who participate in a ministry that provides funding for the health care needs of everyone in the group. In theory at least, this is exactly what health insurance is, but that definition is not applied to health sharing ministries in the strict sense – or the legal one.

The reason for their increased popularity – in addition to the fact that the enable someone to get some form of health care coverage other than the exchanges – is that the ministries provide a specific exemption to the penalty that people will have to pay if they do not have health insurance coverage. Health sharing ministries enable people to get a form of health care coverage that is generally significantly less expensive than what is available through traditional health insurance providers.

A health sharing ministry isn’t true health insurance

A health sharing ministry will not necessarily cover all medical expenses. For example, some of the exclusions include:

  • Pre-existing conditions
  • Ongoing prescription therapies
  • Medical treatment arising from use of alcohol or other immoral acts
  • Medical treatment following attempted suicide
  • Behavioral conditions
  • Childbirth occurring outside a marriage

There are also dollar limits on the amount of coverage that would be provided for many individual conditions or injuries. Unlike traditional health insurance, health sharing ministries are not a bottomless pit of coverage. Limits are imposed due to the fact that the amount of coverage available cannot exceed the amount of money available in the sharing ministry’s fund.

But because of the exclusions, and the fact that health sharing ministries are not-for-profit entities, the cost of coverage is substantially below what it is for traditional health insurance. Monthly contributions are typically significantly less than half of what they are for traditional health insurance policies, and different deductible levels are available.

Health sharing ministries aren’t for the general public

In order to participate in a health showing ministry, you have to meet certain criteria that are consistent with the ministry’s core beliefs.

Using Medi-Share as an example, here are the requirements to participate in the ministry:

  • Have a verifiable Christian testimony indicating a personal relationship with the Lord Jesus Christ, and profess the Statement of Faith
  • Attend a fellowship of believers, regularly and actively support that ministry, and live under the discipline of that body Share the conviction that believers are to bear one another’s burdens according to Galatians 6:2
  • Believe the biblical doctrine that their bodies are temples of the Holy Spirit and therefore are to be kept pure
  • Must not engage in sex outside of traditional Christian marriage
  • Cannot use tobacco or illegal drugs in any form, or abuse legal drugs or alcohol
  • Be a U.S citizen (those serving abroad as missionaries may qualify) or a permanent resident with a visa or green card and Social Security number who lives full time in the United States

Though many will find such requirements to be offensive, it has to be remembered that health sharing ministries are faith-based organizations that will not accommodate the general public or the commonly accepted parameters of the secular world. Not only is adherence to faith positions a requirement, but is also believed that living according to biblical standards will lower the cost of healthcare for all members in the group.

If you are a believing Christian, and living a biblically-based lifestyle, health sharing ministries are an option.

Obamacare has increased the significance of health sharing ministries

The Affordable Care Act (ACA) has made health sharing ministries a more viable option. Since the implementation of ACA, the cost of health insurance has only increased, due largely to mandated coverage and procedures. The use of the word affordable in connection with the law is a cruel hoax, since so many people are paying so much more.

Health sharing ministries offer what is, on balance, reduced coverage, but they do so with much more affordable monthly rates. For a Bible-believing Christian, membership in a health sharing ministry could be the difference between having some kind of healthcare coverage, and not having any at all and being forced to pay the penalty for going without health insurance.

They could still become the future of health insurance in America

In some quarters it’s believed that health sharing ministries could be the ultimate solution – or at least an option – to the current traditional health insurance system. Some experts see health sharing ministries becoming the model of workable health car coverage for the general public.

It remains to be seen if the basic concept of health sharing ministries will eventually be adopted in a more secular form, or even if the public is willing to forgo unlimited coverage in favor of more affordable premiums.  But it does represent an option in a health care system in which there seem to be fewer options all the time.


Why Term Life Insurance is Your Best Choice

There’s an ongoing debate as to which is the better choice, whole life insurance or term life insurance? For most people, term life insurance is your best choice. In fact, in most cases, it’s not even close.

Here are the reasons why we think term life insurance is your best choice…

It Costs a Lot Less Than Whole Life or Other Investment-centric Policies

Life insurance agents love to sell whole life policies and other investment-centric insurance products on the investment provision. It provides a double benefit – investment accumulation, plus life insurance. It’s a compelling sales pitch, but it’s a very expensive one.

The difference between whole life insurance and term life insurance on a per thousand basis isn’t minor. A whole life policy can easily cost 10 times as much for the same level of coverage. The cost advantage is overwhelmingly in favor of term life insurance.

You Can Buy a Lot More of It

Because term life insurance costs so much less than whole life, you can buy a lot more of it. This is a major factor, especially for young families with small children.

The need for life insurance is never greater than when you have very young children. Not only are there more years to replace lost income that may result from your death, but you also have to be concerned with providing them with money for a college education.

This is also a time in life when families tend to have maximum levels of debt. They buy a house with a minimum down payment (and a maximum mortgage), they have new cars that are financed, credit card debts, and often student loan debts carried over from their college years.

Covering all of those obligations will usually take several hundred thousand dollars worth of insurance, and even into the millions. Very few young families can afford the premiums for that kind of coverage if it is provided by a whole life policy. By contrast, high face value term life insurance is far more affordable.

It Can Be Tied to Specific Obligations

Term life insurance policies are also more flexible than their whole life cousins. Because they run for specific terms, generally anywhere between five years and 30 years, they can be tied to specific obligations. Once the obligation is gone, the policy can be allowed to lapse.

Perhaps the best example of this is having a term life insurance policy for the specific purpose of paying off your mortgage. If you recently took a 30 year mortgage, you can also take a 30 year term life insurance policy in the same amount as the mortgage. Upon your death, the mortgage could be paid automatically out of the proceeds of the insurance policy, enabling your family to live in their home mortgage-free.

You Can Cut Back When You No Longer Need It

One of the under-appreciated secrets of life insurance is that the amount that you need rises and falls over the course of your life. Earlier I gave an example of a young family with large obligations. That family will need a high level of life insurance coverage. But as the family matures, and the children reach adulthood, the parents will no longer need anything close to that amount of coverage.

An empty nest household may find that their need for life insurance declines by 50% or more. With a term life insurance policy, the reduction in coverage can happen automatically. However if your insurance is provided by whole life policies, the coverage will remain fixed for the rest of your life. That can mean that you’ll be paying for coverage that you really don’t need.

It Leaves You With More Money For Investing

Since term life insurance costs so much less than whole life, you can take the money that you save on premiums and invest it in mutual funds. That will enable you to increase your financial assets as the years go by.

This is important in relation to life insurance. The greatest need for life insurance occurs during times in life when you have the fewest financial assets. As your financial asset base grows, your need for life insurance declines. In a real way, the higher level of financial assets means that you gradually become self-insured.

It is even conceivable that you can reach a level of financial security that you no longer need life insurance at all.

It’s Pure Insurance Because Less of It Goes to Fees

Term life insurance is pure life insurance. That’s true because there is no investment provision – and because less of your premium goes toward fees.

It’s no secret that life insurance agents make more money selling whole life insurance policies, and other investment type life insurance products. This is possible because the investment provisions are packed with fees.

For example, though life insurance agents will sell you heavily on the concept of cash accumulation in your policy, very little cash accumulation takes place in the first few years that you have your policy. The reason that it doesn’t is because much of the premium goes to paying for commissions.

And even after your policy does begin to accumulate cash value, you’re still paying commissions and other fees that are eating up at least a portion of your premium.

It’s probably true that a whole life insurance policy is better than having no insurance and no investment plan at all. But if you can buy term life insurance, and begin putting money into a mutual fund or exchange traded fund based on the S&P 500 index, you’ll almost always come out way ahead of the person who takes an equivalent amount of whole life insurance.

If you’re an advocate for whole life insurance, please feel free to comment below on what cases you think whole life is suited for.



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