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March 2010 - Posts

  • Some Ideas For A “Budget Friendly” Family Summer Vacation

    How to have fun while remaining budget-conscious and financially responsible ...

    If you are like many Americans, the past few years of economic turmoil have taken their toll on budgets and bank accounts. Chances are, your family – especially your kids – are looking forward to a break from school and some fun times … Here are some ideas to help make planning summer fun more enjoyable, less stressful and less of a strain on the budget!

    Even if your available budget is a concern when planning your summer vacation … you can still have a great time! There are many things you can do while remaining on a budget - and you can still have fun while being financially responsible.

    First, take a look at your budget and savings. Decide how much you can afford to spend on family activities with your family. Ask your family for ideas. This will help you narrow down your choices as to activities. Turn it into a fun, brainstorming activity – pay attention to all suggestions - the kids may suggest going swimming or fishing to the zoo. Some of the ideas that are suggested may surprise you – and some of them may not cost very much!
    • Based on suggestions made during the brainstorming session, ask your friends for ideas on where to go. Use the Internet to research ways to make some of the ideas a reality. Look for options close to home if possible to save on travel costs.
    • Consider combining your vacation with close friends or extended family members. This can bring down the cost of accommodations as well, as you can negotiate for lower hotel rates.
    • Check out internet sites like PriceLine.com to search for low-cost deals.
    • If you've chosen a pricey destination, consider reducing the number of days that you spend at your destination. Instead of a full week, consider a four-day weekend or a three day stay.
    • Visit family or friends. This can help you save on the cost of accommodations at your chosen destination.
    • Look for activities at home. Sometimes there are well kept secrets nearby – just waiting to be explored. Find out if your home town or city has a zoo, check into a summer membership at a local pool or visit those tourist sites nearby that usually get overlooked in favor of more exotic (and expensive) destinations.
    • Check with your local Chamber of Commerce, local schools or the tourist board for a list of summer activities.
    • Free is a really good price. Check out the newspaper, local radio station and the internet for a list of free events in your area.
    • Stay at home, but go on vacation mode. Plan for a "camping" weekend - put up a tent in the backyard and grill outdoors. Play games  on the lawn. Roast marshmallows at night over a campfire. Your kids will love it!
    • Plan pizza and movie nights.
    Not every vacation idea has to cost an arm and a leg. You can have a fun vacation even without blowing the budget. Be creative – sometimes the best ideas are the ones that generate great memories of time spent together, regardless of the price tag.
    Posted Mar 31 2010, 10:07 PM by moneycoach with no comments
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  • Unemployment Benefits Set To Run Out April 5th

    On April 5th, extended jobless benefits will run out for at least 212,000 out-of-work Americans

    Republican efforts in the U.S. Senate to shut down or delay passage of health care related bills and ratification of Federal judge appointments in the wake of the passage of President Obama's health care initiative have resulted in at least one unintended casualty – on April 5th, extended jobless benefits will run out for at least 212,000 Americans who remain out of work because the Senate shut down for a two week vacation Friday afternoon without a deal to extend unemployment filing deadlines.

    The House of Representatives passed a bill extending the filing deadline for  federal unemployment benefits, but the legislation remained stalled in the Senate when Democrat and Republican members failed to agree before the spring break. This means that in less than ten days, those who are currently receiving state jobless benefits will not be able to apply for additional (federally paid) unemployment insurance, and anyone already receiving those checks could have their payments ended.

    Senators played the “blame game” on Friday – with senators from both parties blaming each other for leaving Washington without a deal.

    "We have a crisis here, this is an emergency," said Sen. Jack Reed, D-R.I. "We routinely vote to aid flood-stricken areas across the country, and here we are with a disaster that's causing thousands of people in my home state and others to be unable to provide for their families." Republicans such as Oklahoma's Tom Coburn maintain that the government should not extend benefits without finding the  money to offset the spending. The cost of extending benefits is approximately $10 billion a month. "If we're going to take the immoral choice and spend money that we don't have, and not eliminate programs that are not effective, I feel obliged to stand in the way of it," Coburn said.

    According to estimates, about 11.5 million people currently depend on jobless benefits. Nearly one in 10 Americans are out of work and a record 41.2% of those have been unemployed for at least six months. Currently, the average unemployment period lasts a record 30.2 weeks.
    Posted Mar 30 2010, 07:33 AM by moneycoach with no comments
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  • Health Insurance Reform … Finally!

    Health Insurance Reform signed into law by Obama … what does the new law mean in the short term?

    Many headlines have been written about the health insurance reform bill signed into law by President Obama this week, but there is still a lot of confusion about exactly what the bill does to improve access to insurance … some of the short-term benefits from health care reform are outlined below:

    Benefits starting right away …
    • Increases funding for Community Health Centers to allow for nearly a doubling of the number of patients seen by the centers over the next 5 years.
    • Provides a $250 rebate to Medicare beneficiaries who hit the donut hole in 2010.
    • Provides aid to states in establishing offices of health insurance consumer assistance in order to help individuals with the filing of complaints and appeals.
    • Provides new investment in training programs to increase the number of primary care doctors, nurses, and public health professionals.
    • Offers tax credits to small businesses to make employee coverage more affordable. Tax credits of up to 35 percent of premiums will be immediately available to firms that choose to offer coverage.
    Benefits starting soon …
    (in 3 – 6 months)
    • Provides immediate access to insurance for Americans who are uninsured because of a pre-existing condition - through a temporary high-risk pool.
    • Bans health plans from dropping people from coverage when they get sick. Effective 6 months after enactment.
    • Prohibits health plans from denying coverage to children with pre-existing conditions.
    • Prohibits health plans from placing lifetime caps on coverage.
    • Restricts new insurance plans' use of annual limits to ensure access to needed care. These tight restrictions will be defined by the Department of Health and Human Services. Annual limits will be prohibited entirely for all plans after 2014.
    • Requires new private plans to cover preventive services with no co-payments and with preventive services being exempt from deductibles.
    • Requires health plans to allow young people up to their 26th birthday to remain on their parents' insurance policy, at the parents' choice.
    • Prohibits new group health plans from establishing any eligibility rules for health care coverage that have the effect of discriminating in favor of higher wage employees.
    • Requires health plans to allow young people up to their 26th birthday to remain on their parents' insurance policy, at the parents' choice.
    • Prohibits new group health plans from establishing any eligibility rules for health care coverage that have the effect of discriminating in favor of higher wage employees.
    • Requires health plans to allow young people up to their 26th birthday to remain on their parents' insurance policy, at the parents' choice.
    • Prohibits new group health plans from establishing any eligibility rules for health care coverage that have the effect of discriminating in favor of higher wage employees.
    Benefits starting next year ...
    • Eliminates co-payments for preventive services and exempts preventive services from deductibles under the Medicare program.
    • Requires plans in the individual and small group market to spend 80 percent of premium dollars on medical services, and plans in the large group market to spend 85 percent. Insurers that do not meet these thresholds must provide rebates to policyholders.
    • Creates a long-term care insurance program to be financed by voluntary payroll deductions to provide benefits to adults who become functionally disabled.
    Posted Mar 28 2010, 05:40 AM by moneycoach with no comments
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  • Buying A Used Car: 2 Stories …

    Two Tales of buying a used car ...

    As my family was in need of replacing our 2001 Windstar with something a bit more reliable, and also in need of a second vehicle, we determined to spend several thousand dollars this month buying two used cars – one for her (she wanted something reliable, yet fun and sporty – not a MINIVAN) and one for me (preferably a Subaru – I learned to drive on my parents' Subaru – owned one way back in the 90's and have always wanted another!).

    Our budget – we allocated between of $5,500 for the purchase of two cars - $4,000 for hers and we hoped to find something old and cheap for me to drive as a second car – we budgeted $1,500 for my “new” car!

    Used car purchase #1 – We spent several days touring around used car dealerships, looking for a vehicle that she fit her criteria – and one that she liked, which proved to be the more difficult task of the two! Finally, on search day #4, we just happened to be at a dealership that had seven cars arriving later that afternoon – the salesman told us that he “didn't know what was coming,” and to be back by four o'clock to have the first choice. We arrived on the lot at 4:10 and she immediately spotted “HER” car – a 2005 Suzuki XL-7, which was in perfect shape – we test drove it and she was hooked! The only obvious issue that we found were that the air conditioning needed a recharge, which the dealer had fixed immediately. We made an offer, which was accepted, and drove away in her new car an hour later! The price for her new ride: $4,999 … a little over budget, but not too bad.

    Her car runs great – no problems (except a minor key issue – the door key needs to be replaced – the dealer is working on that for us). She is very happy with her “NEW” car!

    Used car purchase#2 – I hunted the Internet for 2 weeks, searching primarily on Craigslist for the keyword “subaru” in our home city as well as locations within 300 miles over three states! I was surprised and excited when I came across a posting for a 1988 Subaru “Justy” in Tampa, FL for only $1,000 – I once owned a Justy – back in 1991 – and lost it in a collision with a Ford F-250 (neither car survived, both drivers were fine). I loved that car … and immediately dialed the number listed on the ad. It was still available!! I told my wife and she was predictably skeptical … until the seller emailed me pictures. She agreed it was a “cute” car, and with only 188K on it, might be a good deal – although we would probably have to put some work into it …

    We drove the Suzuki to Tampa, test drove the Justy – and it seemed to drive OK, so we bought the car. As a precaution before driving the 304 miles home, I dropped it off at the local Subaru dealership for an inspection and to fix any major issues …

    The service technician at the dealership did not have good news … the total estimate of needed repairs was over three thousand dollars! Ouch! After a lengthy discussion, it was determined that the car would be safe to drive home for about half of that – the other repairs could wait until we got the car home.

    After two extra days in Tampa – and a long drive home - we now have two “NEW” cars sitting in our driveway. The Suzuki was a little bit over budget … but the Subaru has (so far) cost $2,477 (not counting the cost of the trip to Tampa) … The end result: we both love our new, more expensive than we had planned, cars – but in hindsight, we should definitely have had the Subaru checked by a mechanic FIRST, before buying it …
    Posted Mar 27 2010, 07:11 AM by moneycoach with no comments
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  • Western States to Create Carbon Market

    Faced with declining prospects of a national bill, 2 western U.S. states and 3 Canadian provinces are set  to establish a market for carbon credits by 2012.

    As U.S. prospects for a national climate change bill fade, five U.S. states and Canadian provinces are on track to start a cap-and-trade market for carbon dioxide in 2012. California, with the eighth-largest economy in the world plans to join New Mexico as well as the Canadian provinces of Ontario, British Columbia and Quebec in establishing a market-based system meant to combat climate change and boost the economies of both regions. The plan follows the already working cap-and-trade system in the Northeast U.S., although the western market would be approximately four times bigger in geographic size when fully implemented.

    Cap-and-trade systems put limits on pollution -- in this case, gases that suck up heat and warm the planet -- which are decreased year by year. Polluters must acquire emissions credits, which can be bought and sold. If a factory can make changes to cut pollution for less than the price of a credit, it is likely to do so, then sell unneeded credits at a profit.

    Advocates of climate change cap-and-trade systems would have preferred that more states join the effort – or even better, a national market be created – but so far, such initiatives have failed. As it is, the 11-member Western Climate Initiative had originally planned a larger effort that would have covered most of the Western U.S. as well as 4 of the 10 Canadian provinces, but Arizona says it won't join cap-and-trade, and states like Washington and Montana have not obtained legislative approval.

    If the current five members stay on track, emissions from power plants and other sources will begin trading in 2012, with transportation industries included in 2015. The western cap-and-trade market would be roughly equal in size to tenth of total U.S. emissions.
    Posted Mar 16 2010, 04:07 AM by moneycoach with no comments
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  • Social Security in Trouble

    More warnings issued – the SSA collects less than it pays!

    For many years now,  pundits and politicians have issued dire warnings about the impending crisis in Social Security. Just as with global warming, the forecasts of disaster and increasing evidence of growing problems meet, in many cases, with excuses, rationalizations and often, outright denial. So it has been with our nation's finances.

    For more than two decades, the Social Security Administration (SSA) has collected more money in payroll taxes than it has paid out in benefits each year.

    It seems that the time has come for payback … literally!

    This year, for the first time since the Congressional reforms of the 1980s, the federal retirement program is projected to pay out more in benefits than it collects in taxes – in fact, nearly $29 billion more. Unfortunately, the government has  already spent that money over the years on other programs. Instead, the Treasury Department issued a stack of IOUs - in the form of Treasury bonds. The agency has issued a total of approximately $2.5 trillion in bonds.

    In order to maintain he current level of payments to Social Security recipients, the government will have to borrow money in order to start paying back the IOUs, just as the annual deficit is projected to be a record $1.5 trillion this year, followed by trillion dollar deficits for years to come.

    Currently, more than 52 million people receive old age or disability benefits from the government's Social Security programs. The average benefit for retirees is slightly under $1,200 a month. Disabled workers get an average of $1,100 a month.

    Unless Congress enacts reforms, Social Security's current annual budget shortfall will not affect the current level of benefits paid out. Its a clear warning sign - Social Security is projected to drain its trust funds by 2037 unless Congress acts, and there is a real possibility that the crisis will lead to reduced benefits.

    Social Security's financial problems have been looming for years as the nation's 78 million baby boomers approached retirement age. The oldest are already there. As that huge group of people starts collecting benefits — and stops paying payroll taxes — Social Security's trust funds will shrink, running out of money by 2037, according to the latest projection from the trustees who oversee the program. In the short term, the nonpartisan Congressional Budget Office projects that Social Security will continue to pay out more in benefits than it collects in taxes for the next three years. It is projected to post small surpluses of $6 billion each in 2014 and 2015, before returning to indefinite deficits in 2016.

    For the budget year that ends in September, Social Security is projected to collect $677 million in taxes and spend $706 million on benefits and expenses.

    The national debt — the amount of money the government owes its creditors — is estimated at $12.5 trillion, or nearly $42,000 for every man, woman and child in the country.
    Posted Mar 16 2010, 04:02 AM by moneycoach with no comments
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  • The Profitability Hurdle

    One measure of small business success: how long does it take to “break even” - and reach profitability?

    The biggest hurdle that one faces when starting a small business is the profitability hurdle: the time it takes between opening for business and the day that the operation “breaks even.”

    Typically, one spends (invests) money on inventory, marketing and advertising, rent and building utilities, and sometimes the salaries of employees before the business starts generating enough cash flow to cover those expenses. In a retail operation, one must cover the cost of purchasing, installing or constructing the walls, shelving, display area, etc., that make the store look the way it is supposed to look. Sometimes, reaching the “break even” point can take months or even years – depending on the type of business and the amount of investment it takes on a weekly basis to keep the operation going.

    The “break-even” point is big milestone.

    We have opened a retail store. As the accountant of our small business adventure, I had a number in mind – a goal – of exactly what sales target to aim for so that would know when the store reached that magic goal – self sufficiency. I hoped that it would not take more than a few months, as getting everything ready took most of the money that we had set aside from the tax refund.

    The small town where the shop is located specializes in antique stores – it is a browser's paradise! When the weather is nice, there are often crowds of people wandering in and out of the unique and eclectic stores that line the main street of the town. Friendly people, warm country folk … and tourists: our target customers were potentially plentiful.

    The week we opened was slow – every other business owner that we knew in town let us know that it was much slower than usual for the time of year – things would get better. Customers came into the store in a trickle – but we seemed to do OK. The weekend was sunny, but cold for this time of year – there were more customers than during the week, but not as many as I expected …

    I ran the reports – and added up our sales for the first week …

    We exceeded our break even number by $14.57 in the very first week!

    The second week was even better … and still other business owners are telling us it is abnormally slow due to the weather …

    Definitely a positive sign – the operation is paying its bills from the start. Next goal – reaching positive cash flow ...
    Posted Mar 15 2010, 07:49 AM by moneycoach with no comments
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  • Gas prices On The Rise … Again

    Average gasoline price (3/10/2010) = $2.77

    Once again, Americans are faced with gas prices that seem to be rising almost constantly … the average price of a gallon of gas hit $2.70 this past Thursday, according to a statement released by AAA. At the station I usually go to, gas was $2.67 when I filled up my car last week – it was $2.49 a few weeks earlier, and the price was listed at $2.79 when I passed the station yesterday!

    What is going on?

    According to CNN, heavy snows and frigid temperatures across the United States over the past month have reduced gasoline demand, as people are driving less. Even so, the frigid temperatures have driven up the demand and therefore the price) for other types of fuel, especially the crude oil that is refined into heating oil. The rising demand for heating oil has caused the price of crude oil to spike sharply upward over the first three months of the year. Prices have been rising steadily ever since, with light, sweet crude oil rising past $80 a barrel in January and remaining high ever since. Oil prices have remained high ever since, and currently stand at $81.45 a barrel.

    For consumers, the price of a gallon of gas at the pump doesn't seem to follow any predictable pattern.
    A recent report from the government's Energy Information Administration revealed that, overall supplies of crude oil and gasoline in storage are growing faster than current demand.

    But with “spring break” season approaching, its easy to chalk up rising prices to "manipulative" oil companies “anticipation” of greater demand due to increased travel. Consumer anger toward the oil companies may not be entirely misplaced. Where in most industries the price of a commodity lags behind changes in supply and demand, the oil industry seems to have perfected the art of raising and sometimes lowering prices in anticipation of changes in demand. Predictably, oil company executives are much more willing to raise prices than lower them – leading to record profits, even as most other sectors of the economy struggle to recover.
    Posted Mar 10 2010, 05:39 AM by moneycoach with no comments
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  • Americans' Not Ready For Retirement, Survey Says ...

    It is apparently getting harder and harder for the American worker to plan for, and be ready for retirement. According to a survey released today by the Employee Benefit Research Institute (EBRI: http://www.ebri.org/).

    Overall, the survey revealed that American's confidence in their ability to retire appears to be stabilizing, and fears related to the recession and housing crises have diminished. When asked about their preparations for retirement however, survey respondents painted a bleak picture.

    • Only 16% of U.S. workers stated that they are “very confident” about having enough money for  a comfortable retirement. This is the the second lowest rating of retirement confidence in the 20-year history of the survey.
    • Only 29% of respondents say they are very confident about having enough money to pay for basic expenses when they retire.
    • 54% of workers surveyed said that they have less than $25,000 in savings (not counting the value of homes and “defined-benefit” pension plans). In fact, 27% percent stated they have less than $1,000 in savings.
    • A growing number of Americans are planning to defer retirement, which is bad news for the economy overall, as unemployment rates continue to be high – as older workers choose to remain in the workforce, fewer existing positions will open up. According to the EBRI survey, 24% of workers said they postponed their planned retirement age in the past year.
    • Many workers continue to be clueless about just how much money they need to save for retirement. Less than half (46%) reported that they have even tried to calculate how much money they will need to have saved by the time they retire.

    Many Americans deal with the subject of retirement, and retirement savings by just avoiding it altogether. "People just don't want to think about this," said Jack VanDerhei, EBRI's research director and co-author of the survey, in a press statement. "Everybody thinks they're too young to think about it, until suddenly they're too old to do anything about it."

    In general, financial planners say that retirement savings, including Social Security benefits and pension, should be large enough to provide about 80% of pre-retirement income. This means saving a minimum of 6 – 10% of your salary each year, starting in your 20s – and higher percentages if you start saving for retirement when you are older.
    Posted Mar 09 2010, 06:14 AM by moneycoach with no comments
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