The Greater Good

Thanksgiving always makes me philosophical.  With much to be thankful for, one of my instincts is to ask myself “Am I using my resources for good?”

For those of us who have enough income to more than meet our needs, Thanksgiving is a great time to consider whether we are using our money not just in the ways that will be good for ourselves, but also in ways that will be good for the world, or for our community, or for others. Some people like to think of themselves as stewards: people who have temporary custody of resources with the goal of using them for the greater good over the long term.

If you seek to be a good steward with the resources you manage, you might do it in several ways:

  • You might work to conserve the earth’s resources by choosing reusable products more often than disposable products;
  • You might choose to shop at local merchants even at times when a product might be cheaper elsewhere, in order to keep your community vital;
  • You might support causes you believe in by volunteering and/or giving money to organizations that focus on those causes;
  • You might share with those who do not have enough, by giving money to charitable organizations locally or worldwide.

This time of year many charities and non-profit groups seek donations. If you are considering making donations, be sure the group is a good steward of the resources they receive. You can check out most national groups at www.give.org or www.charitynavigator.org.  Note: smaller local organizations may not be listed. This does not mean that they are untrustworthy; it simply means that you will need to consult with local sources to find out if they use their resources effectively.

Barb Wollan

Barb Wollan

Barb Wollan's goal as a Family Finance program specialist with Iowa State University Extension and Outreach is to help people use their money according to THEIR priorities. She provides information and tools, and then encourages folks to focus on what they control: their own decisions about what to do with the money they have.

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Red Flags

My work in family finance has taught me to never give my social security number or the security number on the back of my credit card if the call wasn’t initiated by me. That practice has served me well on two recent occasions.

The first situation occurred after the purchase of a vehicle. The caller identified himself as an employer of the lender; he was verifying insurance coverage. I’ve received mail from lenders in the past asking that proper insurance coverage verification be sent, but never a call. The big red flag for me was when I was asked to give my social security number.  “The insurance issue was taken care of at the time of purchase,” I stated and hung up.

This weekend the call was from an individual that identified themselves as representing my satellite provider. The caller stated, “We’ve recently updated to a new satellite service and your receiver will not continue to function with the new service. Please turn on your TV and press menu twice. On the the screen please read the receiver ID number.”  (This all seemed accurate and a reasonable request.)

“Yes, your equipment will not continue to work properly, we’ll need to send you a new receiver,” he said. (More details about my service that were accurate.) Directions were given for how the exchange would occur. I stated the equipment had only been replaced a year or two ago and wondered how it could be out of date. “Your receiver is like a computer, he said, “over time the technology has to be replaced.”

The next item of business was the charge. The caller explained that I would be charged for the new equipment, but would receive a monthly credit for 24 months that would be twice the initial up front fee.  Then he confirmed my address, phone number and proceeded to read off my credit card number. It was my first red flag. I didn’t think I had ever shared my credit card with this provider. The number given was correct, but the expiration date was wrong. I immediately gave the correct one and then he read the security code. Pause, RED FLAG, RED FLAG, RED FLAG!  I didn’t give the right one. The caller seemed annoyed, “Are you absolutely sure that is the correct number?”  ” Yes”, I lied.  I was given a call back number, name and code number for the caller. My order would be shipped in one or two days.

I called the satellite provider next to verify and learned it was a fraud. I was directed to their fraud department for additional assistance. The next call was to the credit card company, even though they didn’t get the code they needed, there was too much information out there on that account. It’s been canceled.

I hung up on the call that came the next day!  Thinking back over the situation, it is very easy to be caught off guard. What saved me was a resolve to never share my social security number or the verification/security number on the back of credit cards unless I make the call.  Callers are clever, I’m adding the practice of saying, “In this case, I’ll call your company directly. Good Bye.”

Joyce

 

 

Joyce Lash

Joyce Lash

Joyce Lash is a Human Sciences Specialist in Family Finance who wants to keep you ahead of the curve on financial information.

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Virtual Doctors

I LOVE cutting edge, creative solutions and out of the box thinking. Yesterday was one of those red-letter-days that surprised me with the-next-best-idea of how to do things better…or at least differently.

I was sitting at an inservice provided by a local employer. Before we got into the meat of the training, staff was updated on the good news and opportunities that would be available as their employer’s benefits enrollment periods was about to open. The good news, for them, was their employer provided health insurance was going to increase only 3% for next year. The new service offering was….access to a “Virtual Doctor”.

The scenario presented was…“Most of you have a $6350 deductible. At $120 per office visit, you would have to have 53 earaches, sore throats, renewed acne prescription, etc., before your deductible would be met so your insurance could kick in. OR…you could skype or FaceTime with a doctor for $49 per virtual office call and get an answer to your question or a prescription filled using a “virtual doctor” service. AND, the $49 fee goes toward your deductible.”

Checking them out online I learned that the online service is available to individuals with OR without insurance. What a convenience this would be to people in rural areas and small towns without doctors.  I was then reminded of the weekend or late night runs to the emergency room because urgent care wasn’t available, and I KNEW it was strep because half the family was already being treated for it.

There is an app that is easy to use; you see the doctors within minutes of logging on and you do not have to sit in a waiting room full of sick people. If the virtual doctor determines you need lab work, the doctor can order the test and direct you to a nearby lab.

How do you feel about non-in-person doctor appointments? You can interact eye-to-eye but does that qualify as providing a personal touch?

Brenda Schmitt

Brenda Schmitt

A Iowa State University Extension and Outreach Family Finance Field Specialist helping North Central Iowans make the most of their money.

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Confused about health insurance?

Today, November 1, is the beginning of open enrollment for those who buy health insurance on the individual market. Over the last several months there has been a lot of confusing news about health insurance, so we want to help clear up some of the confusion.

Enrollment Process

  • www.healthcare.gov is still the place where Iowans can find health insurance plans where eligible consumers can use premium tax credits to help them pay their health insurance premiums. To enroll over the phone, the phone number is still 800-318-2596.
  • This year, the open enrollment period has been shortened: it goes from November 1 – December 15, 2017. During that time anyone can purchase a health insurance policy for 2018.
  • The enrollment site will be closed for maintenance for 12 hours (midnight till noon) every Sunday during the enrollment period, with the exception of the last Sunday, December 10.
  • To find local help with enrolling, do a zip code search at Get Covered America.

Plans and Costs

  • There has been a lot of news about premiums rising, and it is true. However, if you are eligible for a premium tax credit to help pay your premium, the higher premiums are not a major concern.
    Why? With the premium tax credit, you only pay a certain percentage of your income; the tax credit pays the rest of the premium.  That means your premium costs for 2018 will be similar to 2017 if your income is similar.
  • Find out if you are eligible for a premium tax credit at https://www.healthcare.gov/lower-costs/save-on-monthly-premiums/. Income guidelines vary by family size: for a single individual, the maximum 2018 income is $48,240; for a family of 4, it is $98,400.
  • For most of Iowa, there is only one insurance company offering plans through healthcare.gov. Be sure to find out if your medical providers are participating in the plan before signing up. You will be able to find that information during the enrollment process before you enroll. The network appears to be quite broad, but it is still important to know if the company’s provider network will meet your needs; no one wants to be caught by surprise after they have enrolled.
  • If you are not eligible for a premium tax credit, you can still use healthcare.gov to purchase health insurance, but you will need to pay the full premium. Before making a decision, it would be wise to compare other options, perhaps through one or more local insurance agents. Health insurance purchased elsewhere may provide reduced coverage, and may be a challenge for people with pre-existing conditions, but it is always wise to check multiple options before making a decision.
  • If you are under 30, you may be eligible to purchase a lower-cost, very-high-deductible catastrophic plan.  An earlier blog post describes these plans.
Barb Wollan

Barb Wollan

Barb Wollan's goal as a Family Finance program specialist with Iowa State University Extension and Outreach is to help people use their money according to THEIR priorities. She provides information and tools, and then encourages folks to focus on what they control: their own decisions about what to do with the money they have.

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Halloween Spending Statistics, Facts and Trends

Halloween is not just for kids. Whether it’s ancient-looking drapes, candelabras, fake coffins, or creepy-crawly things, you can use the Halloween theme to redecorate your house. It may cost you around $87 to buy some basic Halloween costumes,  decor like a Halloween lantern, a light-up tombstone and a skeleton.

People still buy a lot of candy for the neighborhood. It costs around $22 to buy 5 pounds of candy.

For 2017, projections suggest that Americans will spend around $9.1 billion on Halloween celebrations. These expenses include the following costs:

  • $3.4 billion on costumes (the funny thing is that more money is spent for the adult costumes and not for the children costumes)
  • $330 million for pet costumes.
  • $2.7 billion on decorations
  • $2.7 billion on candy

Approximately 171 million Americans celebrate Halloween. One reason so many get involved may be that Halloween can be a very affordable holiday. It does not cost as much as Christmas or Thanksgiving and can still be lots of fun. Shoppers are willing to spend money on something if it provides a lot of value to them. It’s clear that for many Americans, Halloween does just that. Happy Trick or Treating!

 

 

Susan Taylor

Susan Taylor

Resources are important whether you are looking to rent your first apartment, pay your bills, buy your first home or send your child to college. There are many ways to save money to reach your goals, and hopefully ISU Money Tip$ will be one of them. I enjoy traveling, needlework and am a novice gardener.

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Flex Plan vs. Itemizing: Does it matter?

If I offer you an easy and guaranteed way to reduce your income tax bill, are you going to turn me down? Not likely! Surprisingly, though, lots of people do exactly that when they opt out of their employer’s “flex plan” for health care expenses.

With most employers opening up their benefits enrollment period in the weeks ahead, now is the time to consider flex plan enrollment for next year. The first step is to estimate how much you will likely spend on qualified health care expenses during the year. I’ll use myself as an example: I know that I spend a fixed amount each month on routine prescriptions; I also know that there’s a co-pay for my annual health exam and for the lab work that goes with it; in addition, I know I’m due for a new pair of glasses next year. When I add all that up, I can be pretty sure I will have at least $600 in medical expenses for 2018. Your situation will be different, of course: you’ll need to consider predictable health expenses for all members of your family.

With my $600 prediction in mind, I’m going to have $50/month taken out of my paycheck (tax-free) and placed in a flex account. Then when I have medical expenses, I’ll be reimbursed from that account. Why go to that trouble? Because I’m guaranteed to avoid income taxes on that $600 of my income. That will save me at least $120 on federal and state income taxes (most middle income folks can expect to pay 10-15% federal and 5-8% Iowa tax rates). Note: a few years ago, when my children were still part of my tax picture, my flex amount and tax savings was noticeably larger!

Some people may say “Oh, that’s too much trouble — I’ll just itemize my tax deductions, and that will give the same benefit.” I hate to break it to you, but the truth is it probably won’t work out that way. Why? Two reasons:

  • Many Americans don’t have enough deductions to make it worth itemizing. They’re better off with the standard deduction.
  • Even those who do itemize deductions probably don’t have enough medical expenses to itemize them. In general, medical expenses are only deductible above an amount equal to 10% of your income; if income is $50,000/year, the first $5,000 of medical expenses cannot be deducted. Even even if that person had $5,100 in medical expenses, she could only deduct $100. By contrast, using a flex account guarantees the set-aside amount will be tax-exempt.

That’s the case for me: I itemize deductions, but I have never had high enough medical bills to itemize them — not even the year I broke my ankle. Using my flex plan is my only reliable way of getting tax benefits for some of my health expenses. Of course, most years something unexpected occurs, and I spend more than the amount I set aside in my flex account. But I’m glad to save the $120 I’ll be saving. How much could you save?

Barb Wollan

Barb Wollan

Barb Wollan's goal as a Family Finance program specialist with Iowa State University Extension and Outreach is to help people use their money according to THEIR priorities. She provides information and tools, and then encourages folks to focus on what they control: their own decisions about what to do with the money they have.

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Time to Re-balance Your Portfolio

Third quarter reports for retirement investments are beginning to arrive. Stock portions of portfolio’s are showing strong gains. Financial professionals are sounding uncomfortable, pointing out the climb can’t continue.

Management of investments is a habit that most individuals don’t practice. We don’t re-balance by taking a profit from the portion of our portfolio that has shown gains and buy into less expensive assets.

An analogy to the increase in stock values is to have the accelerator stick on your car and instead of 55 mph you are going 70 on a two lane road.  Your 55% allocation to stocks has grown to 70%. The growth is nice to see, but since your original plan was to invest 55% of your portfolio in stocks, it also means:

  • higher risk than originally planned, and
  • Potential for loss when market adjustments take place.

Re-balancing means fees for the sale and purchase of new assets. I’ve found some articles that recommend re-balancing only when there has been a 5% change. If you allocate 55% of your account to stocks and it grows to over 60%, then you’d want to consider reducing your risk back down to a comfortable level.

An option for individuals who don’t feel comfortable dealing with the allocations in their retirement funds is selecting a target date fund. It is designed to follow a glide path to a target retirement date that moves assets to more conservative funds when recovery time from adjustments is limited.

Joyce Lash

Joyce Lash

Joyce Lash is a Human Sciences Specialist in Family Finance who wants to keep you ahead of the curve on financial information.

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What do you want to DO?

The topic of college debt came up during a recent conversation with my brother. He likes to ask young adults about their college plans as a way to ease the tension as they wait for the Novocain to kick in before he removes their wisdom teeth. He was a bit shocked by the frequent desire for kids to take general studies as a way to “find themselves”. There was also the frequently frustrated parent that watches their child drop out of college with 1 or 2 years of debt and no degree; added to the fact they have lost 1 to 2 years of income.

He himself has a child that has taken the scenic route on a path toward a very difficult career. By not applying himself, he not only wasted a lot of money, but also found it was easier to create a grade point deficit than to dig himself out of that hole.

Some careers are glamorized by tv shows like CSI or Dr. Pol. My brother shared how some have grand ideas of being a Veterinarian and helping animals, and then become disillusioned half way through school when they learn that 5 to 7 times a week they have to put an animal down.

Another relative of mine thought he wanted to be a farmer because his observation when he spent weekends at the farm with his dad as a child, was that you sat in the house all day and played with your kids. Now that he lives and works at the farm, he found he is not so crazy about the very physical labor and long hours…7 days a week.

Through our conversation, we began to wonder if career counseling in high school would be more effective than trying to help kids figure out how to get into and pay for college. Asking “What do you like to DO?” rather than “What do you want to BE?” Internships and volunteering at a job (like cleaning pens at an animal shelter) could help kids know what they DON’T want to do as much as help them decide what they are good at.  Maybe encouraging kids to find summer or after school jobs in the field they think they want to do the rest of their lives would improve the chances a child will get the most out of a very expensive college education.

Brenda Schmitt

Brenda Schmitt

A Iowa State University Extension and Outreach Family Finance Field Specialist helping North Central Iowans make the most of their money.

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Are You Protecting Your Personal Information?

Following the recent identity data breach, are you in the 19% who have checked to see if Equifax has compromised their personal information?  Or are you in the 81% who have not done anything as of mid-September?

Of the people who took action, 36% said they have placed a fraud alert on their credit.  Another 28% enrolled in a free credit-monitoring service offered by Equifax.  Twenty per-cent purchased another credit-monitoring service and 21% have frozen their credit.

What this breach means to you the consumer: it exposes names, addresses, Social Security numbers, birth dates, and driver’s license numbers. All the items needed to open new credit.

Unfortunately, you the consumer need to do the heavy lifting when it comes to protecting your identity.  Even though Equifax is offering free credit-monitoring service – you the consumer need to go to their site to check to see if you are affected, and then go through their multi-step enrollment process.

I found some interesting data about who is most concerned about the Equifax breach.   Are you 45 and older? Among this group, 72% were concerned.   Among younger adults, 57% were concerned.  Women were more concerned (70%) than men (62%).

There are still many unanswered questions – why did the breach happen, how did it happen, why did it take so long for Equifax to alert the public?

About three in ten Americans have faced some form of identity theft in the past.  There are more incidents in higher annual incomes.  If you have not checked – do it!

Susan Taylor

Susan Taylor

Resources are important whether you are looking to rent your first apartment, pay your bills, buy your first home or send your child to college. There are many ways to save money to reach your goals, and hopefully ISU Money Tip$ will be one of them. I enjoy traveling, needlework and am a novice gardener.

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After The Disasters, Do You Have Renters Insurance?

 My sister lives in Houston Texas. It was stressful watching from afar the water damage in her city.  She was lucky with no water but there were many who experienced severe damage to their homes and apartments and possessions. Since that storm, we have also watched the water and wind invade Florida.

If a disaster strikes the property that you rent are you protected?  It could be a fire, tornado, or severe storm – whatever the threat, your rental apartment or house could be at risk. Where will you go if your home is unsafe to live in?  What if your furniture and other personal items are destroyed?

If you thought it was the responsibility of the landlord – think again.

The landlord has hazard insurance on the property, covering the building but not the personal contents. It will pay for repairs but not for damaged contents.  Nor will it pay rent for a displaced tenant who needs to find another place to live while the repairs occur.

Renters insurance protects tenants and covers costs for replacing furniture, clothes, and other property damaged by the disaster.  This insurance may include temporary housing while the unit is repaired.

While attending college a friend’s son lived in an apartment where there was a fire in a unit next to his apartment.  Because he had renters insurance, the insurance paid for any damage done to his belongings and provided housing while the repair occurred.

According to National Association of Insurance Commissioners, the average cost of renters insurance in Iowa is about $15/month.  Fifteen dollars a month is two meals at a fast food restaurant, a small price compared to what it would cost if you needed to replace everything you own after a fire or storm.  There are additional protection (riders) you can add if you have tools, electronics, and jewelry.

Susan Taylor

Susan Taylor

Resources are important whether you are looking to rent your first apartment, pay your bills, buy your first home or send your child to college. There are many ways to save money to reach your goals, and hopefully ISU Money Tip$ will be one of them. I enjoy traveling, needlework and am a novice gardener.

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