Year End Insurance Policy Review – Tips for Lowering Rates & Checking Coverage

As a former claims adjuster, I know that insurance can be frustrating.  You feel like you pay all of this money in premiums and some years you never even make a claim.  Then, when you do file a claim, the insurance company hassles you about it.  I completely understand, and that is part of the reason why I got out of the business. 

Most insurance companies do provide a quality product that consumers need and helps protect against catastrophic loss and expenses.  However, the price of homeowner’s, health, and auto insurance has skyrocketed in the past decade.  The fact is that insurance helps us when we need it most but the most frustrating claims can be the small ones, because most insurance companies nit-pick at them. 

In my experience the big claims are where insurance companies usually follow through with their promise to get you back to the place you were before the incident occurred.  And if they don’t, it’s worth it for you to get an attorney to make them do what they are supposed to do.  We spend thousands of dollars on insurance each year.  After our food and shelter (and taxes) it can be the biggest expense we face each year when you add up what you pay for health, life, homeowner’s, and auto insurance. 

Here are some year-end moves you can make with your insurance policies to help lower your rates and make sure you have enough coverage for next year.

Health Insurance

If you’re with an employer sponsored health plan, then go to the informational meeting that they should provide once a year for those with questions about the policy and options.  Re-evaluate your options to make sure you’re with the one that fits your needs best and is the most cost effective. 

If you are in great health and you have some money stashed away for emergencies already, you could consider a high-deductible plan. These tend to be much cheaper than a PPO and HMO, and they provide the same flexibility of care as a PPO. 

If your health improved, such as quitting smoking, make sure you let your health insurance provider know.  This probably won’t matter if you get your insurance from a group plan, but it can if you buy it on your own.  

Life Insurance

There should be an open enrollment period at your work where you have the chance to change, cancel, or add the insurance coverages provided as benefits to you by the employer.  Re-evaluate your life insurance plan, and make sure it’s still the most competitive rate.  

Auto Insurance

Make any updates that could affect your premiums.  If you added any safety features to your car, let your agent know about it.  Also, re-evaluate your coverages, you can always increase your deductible in order to lower your premium. 

Another tip is to consider increasing your liability coverage if it’s below $100k single limit.  Liability coverage is very important if you cause an accident, and it’s relatively cheap to buy.  

Homeowner’s Insurance

Now is a good time to start doing some research to see if there are any companies with a better rate out there.  Homeowner’s insurance is becoming very competitive like auto insurance, so don’t settle for the same premium every year. 

Also, if you made any major improvements to your home over the year such as an addition or a kitchen upgrade, make sure you increase your dwelling coverage.  God forbid your house ever burns down, but if it does, you want to make sure it is insured to the correct replacement value. 

If you made any safety improvements such as installing a security system, fire sprinkler system, or hurricane shutters, then let your agent know about it.  They often give premium credits for these safety features.  

Flexible Spending Account

If you have a flexible spending account with money still in it, make sure you don’t lose it.  If you don’t use that money by the end of December 31st, it may be gone forever.  In 2005 the IRS decided to allow companies to give employees until March 15^th of the following year to spend the pre-tax balance they had set aside.  However, not all companies offer the grace period so check with your benefits department.

You can buy a pair of glasses, get some dental work done, stock up on medical supplies and/or over-the-counter medications.  Spend it on something that qualifies under the FSA rules, but don’t let it slip away.  Some drug stores are now highlighting items on your receipt that may qualify for reimbursement from your FSA.

It’s wise to keep track of what you allocated and what you actually spend from year to year so you have an idea of how much to sign up for during open enrollment next year.

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Year End Investment Do’s and Dont’s

It’s been a tough year for investors. Many of us have seen our retirement accounts dwindle and we’re wondering when this market madness will end. The bad news is no one knows when it will get better, but the good news is that history suggests the market will eventually go back up. As we near the end of the crazy investing year, it’s a good time to re-evaluate where you have your money invested. Here are some Do’s and Dont’s if you’re investing for the long term.

DO NOT:

Take out early distributions from your 401k and IRA. You’ll pay a 10% penalty and the IRS will take a percentage based on your income bracket.

Liquidate all of your taxable investments and stuff it under the mattress. You could think of this as a buying opportunity. You’re losing money on you’re existing investments, but you’re also buying stocks at a big discount. 

DO:

Re-balance your investments. During the year you might have made different money moves due to life circumstances, and now your investments are not following your personal investment goals. Or perhaps you’re had some real winners and some real losers that have skewed your diversification goals.  You may want to sell some of your winners, if you had any this year, and put that money into investments that are more reasonably priced.

Consider your time horizon and risk tolerance. Your time horizon is basically how long you have before you need to cash out or start drawing from your investments. Then, evaluate the level of risk you’re comfortable with taking in order to make a profit. Your risk perception may be a little bit different now than it was a year ago.

The combination of these two can help determine your mix of stocks, bonds, and cash investments. An aggressive investor with 30 years to invest may want to go with a higher percentage of stocks, and fewer bonds and cash. A more conservative investor with a shorter timeframe may want to go with fewer stocks, and a higher percentage of bonds and cash.

Re-evaluate your investments. Look at the winners and look at the losers. What have been their long term trends? What are their prospects for the future?  Don’t necessarily get rid of something just because it had one bad year, most every company has had a bad year.

If you have a financial planner or an advisor that you trust to offer advice on your investments, I would suggest setting up an appointment with them in the next month. Ask them to help you understand your current situation, your future goals, and how to attain those goals. One bad investing habit is to buy something and never think about it again. You shouldn’t micromanage your investments, but you also should not set just them and forget them. The end of the year is a good time to review your investment strategy.

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Small Business Counseling and Services

Business owners and entrepreneurs are submitting their applications for the small business stimulus package!  Some the entries we’ve had so far are:

• photography business
• sewing and crafting supplies shop
• senior citizen assistance service

Thanks to Anita Campbell for announcing the contest on her site, Small Business Trends.

Business Sponsors

We’ve also had some more sponors come forward.  A QuickBooks and Peachtree software trainer is offering a free QuickBooks Pro software consultation or a business plan review for small business owners.  She’s also a SCORE (Service Corp of Retired Executive) counselor, SCORE is a service you should definitely check into if you’re a small business owner.  From their about page:

“SCORE “Counselors to America’s Small Business” is a nonprofit association dedicated to educating entrepreneurs and the formation, growth and success of small business nationwide. SCORE is a resource partner with the U.S. Small Business Administration (SBA).”

Basically, these are experienced business people that are offering their advice and counsel to small business owners free of charge.  I’ve visited our local SCORE resource center several times and also received some assistance from one of their online business counselors.  It’s a great resource for business owners, I’d check it out.  Even if you don’t want to take advantage of the counseling they offer tons of great information.  For example, they teamed up with Visa to offer a free small business financial management course online.

What can you do with $250?

I did have someone email me asking what good only $250 would do a small business owner.  Well for $250, you could get at least an annual subscription to any of the below services:

• Cut the time and money you spend on faxes, sign up for an online email fax service from Myfax
• Start an email marketing newsletter for your small business with Aweber
• Put your business on the internet, sign up for Bluehost small business web hosting at bluehost
• Cut your telephone costs and get a toll free number with Ringcentral online phone service

Free Business Incorporation

MyCorporation is a service that lets you incorporate online and they’ve extended their offering to help you start a business.  It’s their version of a small business stimulus package; they’re offering free incorporations and LLC formations for the rest of the month. 

Click Here to start your business (coupon code MYGIFT)

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Small Business Stimulus Package Accepting Applications

Do you own a small business or have an idea for a business that you’ve been wanting to start?

Today I’m announcing the Small Business Stimulus Package, a contest designed to help small businesses that are struggling or just getting started in these tough economic times.

The Grand Prize

The grand prize winner will receive $250 cash and a business action plan.  Applicants must be willing to discuss parts of their busines in an open forum because the business action plan will be crafted on this website with the collaboration of all the readers.

We’ll take a look at your businesses goals and challenges, brainstorm online using our collective experience, and make suggestions on steps you can take to help your business.

To apply send an email to smallbiz [at] moneysmartlife.com or use the contact form.  You can learn more about the details of the contest on the stimulus package page.

No Bailout for Small Businesses

Who knows what, if any, assistance the government will provide for small businesses and how long it will take to go into effect.  This contest is our small way of taking action to make a difference, to help your bottom line right away, rather than just waiting on the solution Washington comes up with.

Business Service Prizes

There are also prizes for runner-up applicants.  Other small business owners have donated their services as prizes that will be awarded to runner-ups.  Some of the examples of prizes available are:

• Free Logo for Your Business – Oak Ave Productions
• Free Small Business Blog Setup – Your’s Truly
• Free Search Marketing Consultation – Anne Haynes
• Free Website Promotion Service – Write & Promote

How to Apply

Simply email a description of your current business or potential business idea to smallbiz [at] moneysmartlife.com or you can submit it with our contact form.

If you don’t have a small business of your own but know someone that does and who would be interested in participating then send them this way!

Make sure you subscribe for daily updates so you can read about the businesses that apply and help out by offering your input!

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Year End Tax Planning and Tips

Year end tax moves are your last chance to squeeze a little money out of what’s been an expensive year for most of us. With all the upheaval in politics, the economy, financial institutions, and the housing market sometimes it feels like it’s all out of your control. Here are a few things you can still do to lower your tax bill this year.

Extra Mortgage Payments

Making one extra mortgage payment a year can reduce a 30 year mortgage to a 23 year mortgage. That’s seven years wiped away from your mortgage! Also, it’s more mortgage interest that you can deduct on your 1040 return if you itemize your tax deductions.

Most mortgages will give you an option to pay above and beyond your monthly payment. However, to ensure that the extra payment goes towards the principal amount of the mortgage rather than prepaying future mortgage interest, write a check for the current monthly payment, and then write another check for the extra amount you want to pay.

Write on the check, “apply to principal”. The mortgage company might still have to apply some of the money to interest, but the majority will help pay down your principal amount.

If you don’t have the money to make the extra payment, just make it early. Send in your January payment in December you can deduct the interest paid on your 2008 tax bill if you itemize.  

Charitable Contributions

If your motivation to succeed and build wealth during your lifetime is generated by the thought of helping others and giving back to your community, then you will have a good chance of reaching your financial goals.

The reason we should seek to build wealth is to provide for our family and give back to others. This is the beauty of a free market economy. If the government doesn’t get in the way of you becoming wealthy, you will have the chance to give back abundantly to those that need it most. Most self-made millionaires are very generous, and the secondary reward for being generous with your money is a tax advantage.

Every dollar that you give to a qualified charity this holiday season can be deducted on your taxes. Don’t forget to check if your employer offers any type of charity matching program. 

Max Out Your IRA and 401k Contributions

If you have a traditional IRA, company sponsored 401k or 403b retirement account, your contributions for the year will lower the taxable amount of income on your tax return. So, if you have some money left over at the end of the year that you don’t know what to do with, throw it in your retirement account.

Check with a tax professional about this, but usually you can contribute to an IRA up until April 14th to be able to count it on your previous year’s return. if you have a Roth IRA, the contributions are not tax deductible, because the gains are not taxed when you withdraw the money at retirement.

Watch Out for Capital Gain Distributions

Kristine over at Beacon Financial explains this one:

“This is a double whammy to investors because shareholders who hold mutual funds in taxable accounts must pay taxes on those capital gain distributions even if those capital gains were reinvested in the fund.  This may seem unfair when 1) you didn’t receive the money, and 2) your fund suffered a large loss for the year.”

So what can you do?  Here is what Kristine advises:

“If you have a fund that is expected to distribute a large capital gain, and this fund is held in taxable accounts, you can sell before the distribution date to avoid sharing in the capital gain distribution.  You should check with your tax professional to see if this strategy makes sense for you.”

Close On Your Home This Year

If you are close to buying a home, try to speed up the process and close before December 31st. If you do, there could be tax savings for you.

You can deduct any pre-paid interest points that you pay on a mortgage; you can also deduct private mortgage insurance payments if your lender required you to pay it due to a smaller down payment.

If your move is long-distance and due to a job change, you may also be able to deduct your moving expenses.

Tax Deductions vs Tax Credits

Credits are better than deductions. Comparing a $1,000 tax credit to a $1,000 tax deduction, assuming a person earns $60,000 a year and is in the 25% tax bracket, the credit will let you keep $750 more than the deduction.

Tax Credit
If you owe $15,000 in taxes a $1,000 credit will reduce the amount you owe to $14,000.

Tax Deduction
A deduction, on the other hand, only reduces the amount of your income that can be taxed. So a $1,000 deduction reduces your taxable income to $59,000 and you still owe $14,750

Bottom Line
Tax Credit – $14,000 owed
Tax Deduction – $14,750 owed

Tax Disclaimer

These tax tips could help your bottom line this year, but remember, I’m not a CPA so please check with your tax professional before implementing any of these tips.

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Being Frugal at Christmas Time – Lynnae’s Christmas Tips

Saving money over the holidays isn’t easy but it’s certainly possible.  Here are some Christmas savings tips from Lynnae at Being Frugal:

• 50 Frugal Christmas Ideas
• Save Money for Christmas
• Frugal Christmas Breakfast
• Christmas in July

Being Frugal

Being Frugal is obviously all about saving money.  The site is authored by Lynnae, here’s a brief bio from her site:

“I’ve been married for 12 years and have two children, a daughter and a son. I started racking up debt in college, when I applied for my first credit card on campus the first week of school. My husband and I added to my debt after we got married. We’ve finally woken up and decided it’s time to get out of debt for good.”

Lynnae also shares her story about debt, one that many people can probably relate to.  She’s also semi-famous! You can read her interviews with CNN, MSN, and other media on her press page.

You can get regular updates from Being Frugal with her site feed or for the more mobile inclined you can read the mobile version of her site. Enjoy!

Money Site Spotlight

This spotlight on Being Frugal is something I’m going to try out for a while, featuring different personal finance sites that I find valuable.  We’ll see how it goes, let me know what you think. 

Mobile Money

Lynnae’s mobile site reminded me that I setup Money Smart Life mobile a while back and hadn’t mentioned it yet to everyone.  If you commute and have internet service on your mobile device you can read the mobile version of Money Smart Life at http://moneysmartlife.mobi. It’s the same content, just formatted in a way that makes it readable on your cell phone. 

I set it up after running the series on mobile banking and finances a while back and just for fun I created a mobile money site that’s intended just for mobile users.  There’s not much out there right now, I just wanted to learn how to setup a mobile web site.

Money Articles

Here are some of the money topics I found useful from the Money Writers this week:

• Got Laid Off? What To Do When You Lose Your Job @ Digerati Life
• Prepare for an Increase in Mutual Fund Expense Ratios @ Gen X Finance
• Save Big Bucks on Ebay with Microsoft Live Search @ Lazy Man
• How Much Do You Want To Save Money This Holiday Season? @ Brip Blap
• Roth IRA Q & A @ My Dollar Plan
• What Have I Learned from this Bear Market? @ Million Dollar Journey
• Love Them or Hate Them, Make the Most of Gift Cards this Holiday Season @ Frugal Dad
• Use Amazon Subscribe to Save Money @ Suns Financial Diary

Here are some from the Money Blog Network

• 10 Steps To Escaping The Paycheck To Paycheck Cycle @ No Credit Needed
• How to Save Money on a Digital Photo Frame @ Free Money Finance
• Thirteen frugal tips for movie lovers @ Mighty Bargain Hunter
• 10 Essential Steps to Take BEFORE You’re Laid Off @ Get Rich Slowly
• Cash Experiment: Successful, Perhaps @ Consumerism Commentary
• Get 2% Deposited Into Your Schwab Investment Account @ All Financial Matters

Plus a few more articles:

• Obama’s 21st Century New Deal: An Economic Stimulus @ Blueprint for Financial Prosperity
• Dilbert’s One-Page Guide to Everything Financial @ My Money Blog
• How Little Changes Can Add Up To Thousands Of Saved Dollars @ My Two Dollar

Congrats to Trent from the Simple Dollar for publishing his first book, titled 365 Ways to Live Cheap.  With today’s economy, I imagine this one will be a hit! 

Money Carnvials

• Personal Finance
• Frugality
• Financial Goals

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Save Money on Video Games – Video Game Rental to Online Games

Video games are not my area of expertise.  When I was a kid I used to love Castlevania, Tecmo Bowl, and Contra; then I wasted hours in college playing Mario Kart and FIFA Soccer in between classes and just hanging out in the dorms.  I haven’t really played many new video games or computer games since then, I know, I’m getting old.  My college roommate did bring over his Wii a few months back and we got in a few hours of Mario Kart, I started off strong but then my thumbs got sore and he beat me every time : ) 

I know not everyone’s like me and that many people enjoy a daily dose of video games, especially in the cold dark winter months.  So I thought we’d cover some ways you can save money on video games. Fortunately, a reader named Allison was kind enough to send over some tips on ways you can trim your gaming budget:

Rent, don’t buy. If you buy brand-new games at retail, you’re paying top dollar, and you don’t know if you will love it enough to play it all the way through.  Sign up for Gamefly (Netflix for video games) for a low subscription cost. (Click here for a Free Trial – use coupon code TENDAY)

Buy used titles.  Check out the cost of the games on eBay or Craigslist for sometimes half the cost.

Stream titles direct.  Games-on-Demand services offer one of the best bangs for the buck.  Services like GameTap and Verizon Games offer more than a thousand titles, including casual, classic and even some hardcore games.  The cost-per-hour of play on these subscription-based services is extremely low and can serve multiple people.

There is such a thing as free gaming. Several websites offer free-to-play action and casual games. Sega has a new website, Play Sega and GameTap currently lists more than a hundred free games on its website.

Thanks to Allison for the gaming tips!  Any other ideas or suggestions?

These tips on saving money on video games are part of the series on saving money on entertainment.  So far we’ve covered how to save money on your television bill,  save money at the movies, save money eating out, and save money on movie rentals.

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Save Money on Movie Rentals – From Free Movies to Blockbuster Online

Renting a movie to watch curled up on a warm couch is a favorite weekend treat on cold winter evenings. Saving money on movie rentals is a matter of balancing new releases and older movies, title selection, and convenience.

Free Movies

You can rent free movies from most public libraries. In my experience the selection of titles will vary from poor at many smaller, older branches all the way up through pretty decent at newer, larger libraries.

You might not be able to find the latest blockbuster but the library is pretty much guaranteed to have some old classics alongside some newer run DVDs.

The convenience factor of picking up a movie from a library is similar to dropping into a video rental store.  You still have to drive there and sort through the movies, the main difference is selection and how recent the movies are.

Cheap Movies

Next to free movies from the library, renting a movie for a $1 from Redbox is the next cheapest option.  Currently RedBox has over 10,000 locations around the US, you’ve probably seen one out front of a McDonalds or local grocery store in your area.

The movie selection isn’t as in depth at RedBox as it is at a movie rental store and the titles are a little older but the price is looooow.  Some people complain about choosing a movie through the kiosk interface but RedBox does have a website where you can go ahead of time to browse the titles, watch previews, and even reserve a movie online.  They call the process “Pick a Movie, Pick a Redbox, Pick it Up”.

In terms of convenience, you still have to drive somewhere to pick up the movie, just like a library or movie rental store, but if you can combine it with a weekend trip to the grocery store that at least saves you some gas money.

New Movies

If you want to see newer release movies and are willing to pay a little more then you can go with a movie rental store or online movie rental.  Sometimes local video stores can be a little cheaper than a Hollywood Video or Blockbuster it just depends on the store.

In Store Movie Rentals

The most expensive option is to walk into a Blockbuster or Hollywood video and rent the latest release.  The title selection will be pretty good, but the convenience factor is still similar to the library or RedBox, you still have to get in your car and go out to rent the movie.

Online Movie Rentals

Both Blockbuster and Netflix are now both selling set top boxes that allow you to download movies to a digital box in your home.  You have to make a big investment up front to purchase the hardware but then the movie rentals are only a few bucks.

In terms of the convienence factor these new boxes, the Roku Netflix player and Blockbuster MediaPoint, are pretty slick, you don’t have to leave your house to rent a movie.  The movie rental prices seem pretty decent, of course the downside is you have to pay all the money up front to buy the set top box.

Of course, both companies also offer their online DVD rental services where you visit their website, select the movies you want to watch, and they’re delivered to your home.  I’ve used both Blockbuster Total Access and Netflix to rent movies online for pretty cheap.  Both services offer a free trial period to let you test out the service, you can use the links below to get a free trial:

• Blockbuster 2 Week – Free Trial
• Netflix 2 Week – Free Trial

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Save Money at Restaurants – Tips for Spending Less When Eating Out

Saving money on your restaurant bill is simply a matter of doing several small things that can add up to big savings.  I cover most of them last year in how to cut your restaurant bill big time but I’ll cover a few of them here and add in one that I missed.

Main Course & Appetizers

Spending less at a restaurant doesn’t necessarily mean eating less food.  For example, at some restaurants the portion sizes are big enough that you can split a meal with the family member or friend you’re eating with.  This works especially well at establishments that bring out chips and salsa, bread, salad, or some other complimentary food prior to the meal. 

Of course, there are other pre-meal options that aren’t free at all.  Appetizers can be quite expensive for the amount of food you get from them. They can cost half or two thirds the cost of your main dish so avoiding them can save you some money.

Drink Costs

Drinks have a pretty big markup, it’s hard to believe that some places charge $2 for a glass of soda with your meal.  Alcohol is even more expensive, a few drinks can really tack onto your bill.  It may be strange if you’re used to having a Coke with dinner, but ordering water will certainly cut your restaurant bill.

Deal of the Day

Many restaurants offer specials on the weeknights to help bring people in during their slower times. You can save money by always knowing which establishment in town is offering the deal of the day.  Also, don’t forget restaurants that offer free meals on your birthday!

Buy Less, Pay Less

One tip that really made some people mad last time I wrote about restaurant savings was “Spend Less, Tip Less”. This isn’t really a tip as much as it is a reminder.  The idea is that there are costs to eating out that are based on the total cost of your meal.

If you figure the tip as a percentage of the total bill, then the less you spend on food, the less you tip.  If you server does a stellar job and you want to throw in extra for the tip to say thanks, that’s up to you.  Just remember, the same concept applies to sales tax, the smaller your bill, the less tax you pay. 

Use Coupons

One of the tips that I forgot last time that some of the readers pointed out was to use coupons for your meals.  You can often find them in newspapers or coupon mailers, save them in an envolope and use them later when it’s time to eat out.

You can also find some pretty cheap deals on restaurant gift certificates over at Restaurant.com

These money saving tips are part of the series on saving money on entertainment.  So far we’ve covered how to save money on your television bill, and save money at the movies.

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Incorporate Online with MyCorporation – Start Your Business for Free!

MyCorporation is running a promotion where they’re offering free incorporations and LLC formations for a limited time; They will setup your Limited Liability Company or Corporation for free when you use the coupon code of MYFREE, click here to sign up.

Starting a Business

I’ve noticed one of the reasons that people hesitate to start their own company when they have a good business idea is that they’re unsure of all the details involved with things like forming an LLC, getting an EIN, setting up a business bank account, etc. 

While I certainly understand the hesitation I do think it’s a shame that uncertainty can be a barrier to innovation and entrepreneurship.  I felt the same way before I started my eBay Business several years ago but in hindsight, navigating all the legal documents and business setup wasn’t so bad.

Of course, it would have been nice if I could have had my LLC formed for free : )

Free Incorporation Service

The incorporation service with MyCorporation typically runs $149 but they are waiving the fee so you can incorporate online for free for a limited time.  So what’s the catch?  Well here’s the explanation from the General Manager of MyCorporation, Deborah Sweeney:

“We’ve been successful throughout the ups and downs of the economy over the last decade. We know that small businesses are key to driving economic growth, from the creation of jobs, to stimulating commerce. Right now, MyCorporation has the opportunity, and we welcome the responsibility, to give back to the business community and drive our nation back to prosperity.”

Charges for document shipping, state fees, publication fees, and additional product fees will be charged at regular rates but the cost of the incorporation service is waived.

Business Stimulus Package

I think it’s great that MyCorporation is helping entrepreneurs get started and it inspired me to help kick start the entrepreneurial spirit in others as well.  I’m going to be launching something next week to help out small business owners, I’m calling it the Small Business Stimulus Package.

If you have a small business of your own and would like to promote your services, check out how you can participate in the Small Business Stimulus giveaway.  If you want to submit your business in the contest, you can preview the Small Business Stimulus application.

If you have a small business you’ve been waiting to get started, take advantage of the offer to save $149 on the formation of a new corporation or limited liability company. 

• Click Here to Apply (Coupon Code MYFREE)

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