Halloween Spending – 2014

October 30th, 2014

Tomorrow is Halloween. It is one of the more affordable holidayshalloween-11101702. It is estimated that 162 million people will celebrate this holiday.  You may see  costumes from Frozen to Super Heroes – the options are numerous.  Many people will purchase a costume, some will make them and others will visit the local Goodwill store to create their costume.  Don’t forget your pets – it is estimated that 23 million pets will be dressing up for 10-31-14.  Costume sales will total 2.8 billion dollars – with 1.7 billion for adult costumes.

The average young adult will spend $87 on Halloween festivities.   If you are planning on visiting the local Haunted House – you are one in 33 million.  Two billion dollars will be spent on decorations for this holiday.*

Let’s not forget the candy, as 2.2 billion dollars will be spent this year. What are you handing out?


*Statistics are from the National Retail Federation.


Good Debt vs. Bad Debt

October 28th, 2014

It makes sense to borrow… but on the other hand, lots of times it doesn’t.  download

As we head into holiday shopping season, remember…

We would all love to live debt-free but there are several types of purchases – like our home, vehicle, or our children’s college education - for which we may incur debt. The key issue is to make sure our debt does not get out of hand.

Experts recommend that total monthly long-term debt payments, including mortgage and credit cards should not exceed 36% of your gross monthly income. This is a tool that mortgage bankers consider when assessing the creditworthiness of a potential borrower.

Credit cards make it easy to pay, but they also make it easy to overspend. The average U.S. household with at least one credit card with a balance carries nearly $8,200 balance according to Experian survey March 2013.

Avoiding debt at any cost may also be a mistake if it means depleting your cash reserves for emergencies. Clearly then, decisions about borrowing require skill.  We all need to learn how to judge which debt makes sense and which does not, and then to wisely managing the money we do borrow.

Good debt includes anything you truly need, but can’t afford to pay for up front without wiping out cash reserves. Even then, debt only makes sense if you can realistically afford the monthly payments.

Bad debt includes debt you’ve taken on for things you don’t need and can’t afford.  Credit-card debt is generally considered the worst form of debt,  since it usually carries the highest interest rates.

Now, as the holiday season approaches, is a good time to stop and think; avoiding bad debt during the holidays will make the new year much happier.



The Shock of Opening the Bill

October 28th, 2014

Bill-shockOne of my southwestern Iowa colleagues shared this situation with me. Her daughter, who was finishing up an internship to complete college and still looking for her first job, had persistent abdominal pain that would not go away. After several hours at home, they went to the local hospital emergency room for tests and learned she needed an emergency appendectomy. The local surgeon was out of town which resulted in an ambulance ride to a larger hospital 45 miles away. The surgery went well and she was released within 24 hours and is now doing well .

Last week, the bills started arriving. First came the ambulance bill for $1,500+, then came the larger hospital bill for $14,000+. The local hospital bill has yet to come. The bills have all been addressed to the daughter so you can imagine the shock and disbelief when a young adult has opened these bills.

Thank goodness the daughter was still carried on her mother’s insurance as a dependent, since she was a full-time college student and under 26 years of age. So the lesson learned was not as much of a shock.

Remember many private insurance companies now have open enrollment as well, and the open enrollment for Health Care.gov will be open from Nov 15 until Feb. 15, 2015. Even a minor surgery can be very costly and my colleague’s story is a terrific illustration of the importance of health care coverage.


Consumer Knowledge, Insurance, Spending plans

Are You Fooling Yourself?

October 24th, 2014

jackolanternThe appearance of Halloween candy on store shelves reminds me that the expensive holiday season is upon us. It’s no coincidence that the holiday season is the most profitable season for many retail segments – they make high profits because consumers do some high-powered spending.

In a past life I worked one-on-one with families on financial issues, and I remember hearing people say things like this: “Everything was fine until the property taxes were due;” or “It was going smoothly up until the holidays.” When that happened a couple times in the same week, it struck me that they were fooling themselves.  They thought everything was fine up until the property taxes (or holidays, or car registration, or….) arose.  But if they weren’t ready for those expenses (which should not have been a surprise) then things were not fine.

Expenses which are predictable, but don’t come every month, are known as “periodic” or “occasional” expenses. Your finances simply cannot be considered “under control” unless you have a plan in place to deal with these expenses.  That includes holiday spending, which many families will experience in the next couple of months, and it also includes back-to-school season and birthdays, as well as bills like 6-month car insurance premiums, annual subscriptions or memberships, and more.

The most systematic way to be prepared is to make a list or chart of the periodic expenses that are due each month throughout the year. Total up your entire annual cost for these expenses, and divide by 12.  The result is a monthly average.  For example, if your periodic expenses for the year total $2400, that equals $200/month.  Saving $200/month toward those expenses is a systematic way to be ready.

The benefits of being prepared when these expenses arrive are many, including: less stress and drama in your life; reduced cost for late fees and interest; greater family stability. If you’re not prepared, that one extra expense has a ripple effect on all your other bills and expenses – you may end up being late (and paying a fee) on other bills, and borrowing money from friends, and putting groceries on a credit card.  In other words, the expense you weren’t prepared for can put you into a hole that can be tough to get out of.

Ask yourself: Am I well prepared for the periodic expenses I’ll face throughout the year?  If not, take steps to become prepared.  You’ll find a chart and spreadsheet for Periodic Expenses, along with other financial management tools, within the free ISU Extension and Outreach web course “Take Control of Your Money,” at www.extension.iastate.edu/humansciences/take-control.


Spending plans , ,

Health Insurance Auto-Pilot?

October 21st, 2014

health costsIf you bought health insurance in the new Marketplace last year, you will automatically be reenrolled for the same coverage if you don’t log in to your account at www.healthcare.gov and make a change.  That may seem like the easiest route, but it could backfire.  Here are some reasons for avoiding the “automatic pilot” option:

  • Insurance policies can and do change from year to year.  Deductibles, co-payments and premiums can change, along with specific coverage details such as the list of preferred medications, the coverage of specific procedures, or whether you must meet the deductible before the plan will pay for particular services.   If you automatically renew, there is a chance that you may be caught by surprise.
  • Your health needs may have changed since last year.  Perhaps you chose a bronze plan last year because you didn’t expect many health expenses, but next year looks different because you may need surgery or some other kind of treatment or care.
  • Your income and family composition may have changed since last year.  If you do not log into your account and make adjustments in your profile, then the amount of your advance premium tax credit may be far off-target, causing financial hardship.

Now is the time to start thinking about your coverage options for next year.  If your current plan sends you information about changes in your policy for next year, be sure to study the changes planned.  In addition, think about your family’s health care needs — do you expect next year to be about the same as this year?

The Health Insurance Marketplace opens November 15.  It will remain open until February 15, 2015, but if you want to make changes or enroll in coverage that will be effective on January 1, you will need to log in and select your plan by December 15.



For Profit Schools

October 16th, 2014

graduation capDuring the past ten years access to higher education has undergone changes to accommodate non-traditional students.  The target group includes individuals who have realized an education could be valuable to them or need an additional degree for career advancement, but who geographically and financially can’t move to a college community to take classes.

This growing audience didn’t escape the attention of individuals looking for an opportunity to create a profit. Growth of for profit schools and the audience they have attracted is evident when you look at enrollment numbers that jumped 490% between 2002-2009. Public schools of higher learning grew by 30% and non-profit private schools had growth of 19% during the same time period. The programs offered by for-profit schools are often online and allow for flexibility of completion dates and class loads.

I’m a fan of life-long learning and have benefited from this new delivery model from a public university.  Data suggests, however, that perhaps  for profit schools should come with a label that states ” buyer beware.” Between 2004 and 2014 27 state attorney’s and 5 federal agencies have brought more than 61 investigations/lawsuits against for-profit higher education schools. The suits are often related to false claims of graduate placement rates or abuse of financial aid.

Smart consumers investigate before purchasing an education, just like any other purchase.  Are you curious about a school you have been considering? Here is a summary from the National Consumer Law Center : “Government Investigations and Lawsuits involving For Profit Schools” .


Consumer Knowledge, Smart shopping

Resale Guide

October 14th, 2014

duck3Our small town now has a busy resale shop!  These shops can be great places to find a bargain. Who doesn’t want to buy a pair of jeans for less than $5.00, especially when the tag is still attached?!

As consumers, when we shop at resale shops we  accept the low price in exchange for some typical consumer rights, including the right to return the item.  Usually if it doesn’t fit or has a flaw we give it a toss or donate it back to the store. Both the seller and the buyer need to know, however, that a product that is banned by law must be removed from the shelves and left out of the donation sack.

The resale challenge of banned or unsafe products is being addressed by the Consumer Product Safety Commission through a new guide book: http://www.cpsc.gov/en/Business–Manufacturing/Business-Education/ResaleThrift-Stores-Information-Center/  I was aware that many cribs, child car seats, and garments with draw strings can’t be resold. Within the last 5 years, laws have also made it illegal to sell items that can contain lead and phthalates. Lead is most likely to occur in paints, children’s jewelry, clothing snaps, studs and zippers. Phthalates are a group of chemicals that are used, among other things, to make vinyl and other plastics soft and flexible. They are likely to be found in bath and pool toys, dolls, and vinyl books.

Before you fill the donation bag, you might want to check out the CPSC site to learn about items that have a recall or can no longer be sold. It applies to you as well as to retailers.


Consumer Knowledge, Smart shopping

Predatory Lenders

October 9th, 2014

I often look at laws and imagine what someone did (and probably more than one someone) to make that law necessary — especially laws  designed to protect us from ourselves or from each other. This week my coworker, Joyce, brought to my attention recent Iowa laws that regulate Payday Lending and Advance Check Cashing.

PD loansOver the years, I have worked with individuals who have had up to five Payday Loans, some of which had been rolled over two and three times in an attempt to hang onto their home.  On Fridays I have observed a number of individuals standing in line at the service desk of my local grocery store waiting to cash their checks.  I cringe thinking of the amount of money they are throwing away on interest and fees.

Joyce shared with me that the changes in Iowa laws now prevent payday loan rollovers, and do not allow you to have more than two loans or advance checks being cashed at any one lender. Other rules in place include: You must be 18 and employed; No more than $500 per loan; For no longer than 31 days; No more than a $15 fee for the first $100 and $10 fee for each additional $100; A maximum APR of approximately 422%.

While I think it’s fine to pass laws that limit costs (sort of – is 422% APR really “limited?”), I worry more about consumers who make decisions without really thinking through the costs versus the benefits.  I’d rather focus on teaching consumers to understand the decisions they’re making and consider other alternatives beyond cash advances, such as:

  • Use a credit card – the APR is a lot lower
  • Sell something you: a) Do not use; b) Do not need; and/or c) Can’t afford
  • Ask for an extension
  • Borrow from family or a friend
  • Visit a food bank and shift grocery money to other needs

What other ideas do you have to make it to payday without seeking help from predatory lenders?



Consumer Knowledge, Credit, Smart shopping ,

SSI for Premies

October 7th, 2014

photoI now know more about Social Security Insurance (SSI) benefits for premature babies, than I ever wanted to know. After 10 days in the hospital, trying NOT to have a baby, my daughter began receiving visits from a Social Worker, informing her of all the services that were available to her, should she deliver her baby, which at that point would be 16 weeks early. My daughter only half listened because she had no intention of delivering for at least a month, and preferably not for another 2 or 3 months.

He arrived (26 weeks gestation) weighing 1# 13 oz and is amazing everyone as he is weaned from oxygen, glucose, insulin, ultraviolet light and more. Daily visits to the hospital to deliver the milk she has pumped and to spend time, skin to skin, with her little son will continue till he goes home on what should have been his due date, Jan. 2, assuming he reaches 4#, along with several other benchmarks.

The Hospital Social Worker paid her another visit…this time with paper work to apply for SSI benefits for her son. He will receive $30 a month which doesn’t sound like a lot, but when you think about the bills that will rack up over the next three months in a NICU, $30 is $30. A child born weighing under two pounds, ten ounces, is automatically entitled to SSI benefits as well as Medicaid coverage. Once dismissed from the hospital, Medicaid and Social Security will end. Should a child be disabled (blind, deaf, etc. for example) the benefits can again be applied for.

The Medicaid Insurance will be applied to bills that are not covered by his parent’s health insurance. Should both parents have health insurance through their employers, the policy that will be considered as primary would be decided by whose birthday comes first in the year.

In my daughter’s case, the hospital’s social worker informed my daughter about the benefits, brought the paperwork to her and assisted her with the applications. Not all hospitals provide that service. In that case, it would be the parent’s responsibility to visit the local Social Security office or go online to fill out the paperwork.

It is important to contact the Social Security Administration immediately after your child is discharged. You will be responsible to repay any benefits received after the discharge and it is not the hospital’s job to notifying the Social Security Administration.

For more information on applying for Social Security benefits for your preemie, the Social Security Administration has a great website with lots of information and tools as well as an office locator.  ~Brenda

Consumer Knowledge, Insurance , ,

Reason for Health Insurance

October 2nd, 2014

Emergency signThis summer, I had a friend who was not feeling well and felt that she needed to go to the convenient care at the local hospital. I drove her to the hospital.  Her situation was resolved after three hour wait.

I waited while she was being treated, and there was much excitement during that time.  Two people were having their blood pressure checked.  One person came in with pink eye and chronic dry cough.  One person had a rash on their face (poison ivy).  A child had fallen on the play equipment.  A two year old was chased by his siblings and encountered the night stand and his nose was bleeding from a gash.  Another person had issues with their vision.  One person had been in a weekend brawl and was not feeling well from it.  A gentleman in a wheelchair was needing some attention.   And more cases I don’t have space to mention.

I don’t know whether the people being served had work-based insurance, marketplace insurance, or if they had to pay the whole bill themselves. But the hours spent there reminded me vividly that  we have insurance to take care of the risks we encounter.  The young mother whose child had a bleeding nose had come from work as her child had been under the care of her mother; even situations that seem safe do involve risks.

Many of the patients were younger adults, who sometimes feel immune to health problems. I hope the ones I saw that day had insurance.

Next open enrollment will be November 15, 2014 – February 15, 2015.  ~Susan


Consumer Knowledge, Insurance, Saving