Adventures in Personal Finance
We can make plans for side-income and income from hobbies all day, but unless we are self-employed full time, our employer is the source of our primary income. Your employer often gives you a lot more than that. Make sure you are taking full advantage.
As many of you know, I bought my first condo just over a year ago. Going from renter to buyer, I learned a lot about insurance. When it is time for you to renew or evaluate your next policy, you should know the basics of what is covered and what is not.
On Saturday afternoon, I went to an art gallery and bought my first very high quality painting. I have graduated from the college days of posters to the grown up days of fine art. A lot went through my head before I handed over my credit card.
Me with my favorite artist, Michael Godard, and my newest purchase
If you hadn’t seen the news, there are several large fires right now in my home state of Colorado. I have seen the smoke up close. I was four miles away when the Treasure Fire started just outside of Leadville and work just over the hill from the Flatiron Fire in Boulder.
Yesterday, I was told a family friend in Colorado Springs lost their home to the Waldo Canyon Fire along with hundreds of their neighbors. My sister’s friend’s family in Woodland Park may have been evacuated this morning along with much of the rest of the town.
This got me thinking. We often avoid anything that has to do with a worst case scenario, but we need to plan for the worst and have an action plan in place in case we get hit with an unexpected tragedy.
If this year’s budget and the continuing series of cuts have got you worried about your personal finances, here are some simple ways to put your own house in order. Taking control of your own finances is the best way to ensure you are not overly affected by changes introduced by the budget or the latest string of spending cuts.
It’s important to keep your financial livelihood in mind when planning for the future. A common way to do so is to ensure that all of your assets are well-insured. Liability automotive insurance and homeowner’s insurance are common measures of precaution, but they aren’t always enough. Some people opt for extra protection with a product called umbrella coverage. Read on to find out what an umbrella policy is, what it covers and whether you should consider buying one.
Even small businesses need insurance protection, but knowing what kind of coverage you need and where to get cheap insurance quotes is not always easy. If you are like most young entrepreneurs, you operate on a fairly lean budget, but good business sense dictates that you protect yourself, your property and your personnel from devastating financial losses. Finding the balance between budget and security will be easier if you know what coverage is available and how it dovetails with your enterprise.
If you read the news today or listen to talk radio, you will most likely hear some mention of unemployment and how bad the economy is. I disagree, the economy is in great shape. You just need to look after yourself to ensure your personal economy stays on top.
Education is the core to most people’s financial success. If you look at top CEOs today, almost every single one has a college degree. Many of them have master’s degrees. Most of them went to business school or have an MBA. This is not a coincidence.
If you want to keep your economy stable, you need an education and a degree that will lead to the future you want. I am thrilled that so many people want to be social workers, but a $60,000 master’s in social work from a private university will likely make you $25,000 per year. Is that warm fuzzy feeling worth it?
The same university offers an MBA for the same cost. That degree will leave you making double what a social work degree will make you.
History degrees, art degrees, English degrees, and other liberal arts do not have a bright future today. Unless you want to be a teacher or go to grad school, these degrees will help you land a job with good benefits at Starbucks. Make sure you know what you are getting into when you pick a major.
If you don’t believe me, this graph from the Department of Labor breaks down the numbers.
It is no secret that I am a huge fan of automation and aggregation. The fewer places you have to look for your financial information, the less time you will use and the less likely you are to mess up. Simplee simplifies and automates your insurance just like Mint or Adaptu does with your finances.
What It Does
Simplee works with your insurance account to make sure you really understand where your money is going and gives you reminders when a bill is due. The site also helps create an understanding of how your healthcare costs are distributed (you vs. insurance) and understanding what your true costs are.
I recently had two major insurance changes, and it reminded me of how important it is to shop around when renewing or finding a new policy.
Since I was 16, I had paid my parents for my part of the car insurance. I was always paying my own way, but I had never shopped around for my own policy. My Dad recently decided to kick me off and force me out on my own.
First, I called the company I was using for my renter’s policy for a car insurance quote. I also called the company that I had been using for a quote. I compared the two and asked for apples to apples policies so I could get a fair judgment on the price. It turned out my original car insurance company was significantly cheaper so I stayed there.
Just a few months later, I was getting ready to buy my new condo and had to shop for insurance again. I called the same two companies I was already working with that had quoted me for the auto policy. Much to my surprise, the company I had my renter’s policy from was cheaper than the company my auto policy was from even with a bundle discount.
This exercise taught me that brand loyalty means little in the insurance industry. Just like when you search online for a plane ticket, you need to shop around for insurance policies with good coverage for a fair price.
In addition to auto and home coverage, it is important for young people to have adequate life insurance coverage too. You can get much better rates on a valuable policy if you sign up when you are young.
I have really good insurance. I work at a great company with great healthcare benefits. My monthly cost is only about $60. Even with that, things are not always as they seem.
A few weeks ago I got sick. Really sick. I had a fever over 101. I was coughing, sweating, freezing, vomiting, had a headache, and just felt like crap. After a couple of days of my symptoms only getting worse, I went to the doctor. I didn’t have a primary care doctor (I know, irresponsible of me), so I went to a local clinic. $107 after my insurance paid its part. The prescription was another $15.
The next evening (a Friday), my temperature was on the rise. When it broke 102, we called the doctor I saw the day before. She said I needed to go to the hospital. $481. There is also a charge of $17 for tests. A follow up doctor visit (I had passed my deductible by this point) cost $8.
It turned out I had a nasty virus. They were not sure what kind. But that virus cost me $628. Good thing I have a good job.
But here is what makes me livid. What did it really cost for me to be sick. I paid $628 and my insurance company paid $3362 (glad I have insurance). So apparently being sick cost a total of $3990.
BUT WAIT! DOES IT REALLY COST $3990?
The doctors and hospital billed my insurance company for $5650. Apparently it costs $1660 more than I cost to be sick? That can’t be right. Can it? Why would it cost an uninsured person $5650 to be sick but only cost me $3990 to be sick? I would like to think I got the ‘good looking person’ discount, but no matter how attractive I am, I know that is not the case.
The fact of the matter is that we take advantage of people who do not have the financial insight or means to take care of themselves. If someone who can’t afford insurance walks in with the same problem as me, they are charged thousands more just because they don’t have insurance. That is disgusting, wrong, and should be illegal.
I don’t know why we allow this sort of atrocity to continue in this country. We are allegedly the most developed and powerful nation in the world, yet we can’t even take care of our own sick people without sending them into bankruptcy unless they are privileged enough to have insurance.
To me, going to the doctor is a human right, not a privilege for the wealthy. I usually try to keep politics to my personal blog, but I know that when I vote in 2012 and every year after, I will always vote for the person that thinks every single American deserves top quality healthcare no matter what.
Photo by lydiashiningbrightly.
Welcome to the 321st edition of the Carnival of Personal finance. I had a lot of fun reading everyone’s submissions and added a few new folks to my reading list. I am excited to host this carnival for my first time. If you are new to Narrow Bridge Finance, be sure to check out some of my best posts and read about why you should listen to me.
This month I dealt with the single most bizarre experience of my life. I became friends with someone, started a company with him, and found out he was not who he claimed to be. It made me think about the millions of people who have been in similar situations. From Bernie Madoff to Frank Abagnale, this week we are going to highlight some people who used finance for a very different purpose than the bloggers of today.
Image from Dreamworks film Catch Me if You Can
To begin, the con artist that makes fraud sound sexy. Frank Abangale Jr. was the subject of the popular film ‘Catch Me If You Can.” Based on the life of Abangle, Leonardo DiCaprio makes fraud look fun as he travels the world as an airline pilot, saves lives as a doctor, and eludes an FBI agent hot on his trail as he cashes fake checks and finds beautiful women.
Editor’s Picks:
Sustainable PF examines ways to make money online over four decades. Starting in the 1980s, SPF used innovative methods to create income streams. Some of them have died off and others are still applicable today.
The Financial Blogger thinks that debt is a good thing. How timely can an article be? As Fannie and Freddie are posting losses, the US Government is struggling with its own debt, and I am looking at buying a home, TFB takes a look at things from the other angle.
Mike, aka Oblivious Investor, reminds us that owning a bunch of mutual funds is not the same as diverse investing. Many mutual funds own the same stocks and some even own other mutual funds. Mike helps you dissect your portfolio to balance your investments.
Lindy at Minting Nickels made a few mistakes when she had her first baby. She shares her non-frugal moments in her post How We Didn’t Save Money with Our Babies.
Squirrelers has five easy steps to increase your savings. Sometimes it is good to get back to basics with personal finance.
Budgeting:
My blogging buddy Well Heeled has seven tips for buying an engagement ring at Costco. These are great tips when you are making such a big and important purchase.
Career:
Adam at Rabbit Funds continues a series on starting a home business. This post focuses on important accounting and marketing tasks that most bloggers and entrepreneurs can learn from.
Clint at Accumulating Money put together a list of different types of jobs for finance professionals. As a finance guy myself, I can attest to how important having a direction can be to your finance career.
Mike at Green Panda Tree House wants to help you make a plan to quit your job.
Control Your Cash reminds you that your time is worth something and you should give it a value. Do not give it away for free.
Bret at Hope to Prosper has the secret to success for working stiffs.
Your Life Their Life looks at George Costanza as a case study for how you can succeed at work.
Image via Wikipedia
Don’t forget the infamous Charles Ponzi. Yes, he is the guy Ponzi schemes are named after. Charles pioneered the genius pyramid marketing scheme that has cost so many people so much money. The Italian immigrant swindled people and governments by engaging in mail fraud and investment fraud.
Credit:
Jake at NerdWallet examines the different benefits of American Express cards. From Clear to Centurion, AmEx has a lot to offer, if you are willing to pay the fee.
Jeff from Good Financial Cents reminds you to avoid store credit cards. It is not worth it.
Janet at Credit, Eh thinks you should use income diversity as a insurance for your credit card payments.
Glen at Free From Broke found the best credit cards for college students.
Philip shares ten tips to stay out of credit card debt at Deliver Away Debt.
Debt:
Jeff at Sustainable Life Blog takes a look at what happened so far this year in his finances.
Cathy at Money Health Central has ideas for what to do after your debts are paid off.
Image from US Department of Justice
Bernie Madoff is a new edition to the list of fraudsters. Madoff admitted to operating the largest Ponzi Scheme in history. It is estimated that he cost investors $18 billion when his Manhattan investment firm went bust. He is currently serving a 150 year prison sentence. Sadly, many non-profits were dramatically impacted when Madoff’s house of cards collapsed.
Economy:
My University Money explains the implications of the rising Loonie compared to the US dollar and gives a brief FOREX lesson discussing why exchange rates vary.
Darwin from Darwin’s Money shares what the media did not regarding the debt ceiling vote.
Money Thinker has his own ideas for fixing the national debt.
Finance:
Money Beagle thinks having health insurance can be hazardous to your health. If you are considering a new addition to your family, this post has great insights.
Crystal shares her retirement checklist at Stupid Cents.
Image from US Department of Justice
Kenneth Lay is responsible for the largest corporate collapse from fraud in history. Lay lied to investors and cooked the books at Enron while being paid over $42 million per year to manage the company. The company with a $60 billion market cap with $100 billion annual revenue was exposed in October 2001 and now does not exist.
Frugality:
Kim at Blogging for Change noticed that her child’s school supplies were far more expensive than they needed to be, but most people just pay for convenience.
Free Money Finance takes a look at extreme couponing and wants to know your take.
Britney at TotallyMoney wonders if cost and expectation go hand in hand.
Hunter at Financially Consumed writes about caffeine addiction and how it impacts you, and your finances.
Glen at Parenting Family Money has 9 inexpensive ways to keep your kids entertained over summer vacation.
Jacob from My Personal Finance Journey has five great ways to reduce your car insurance.
Investing:
The Dividend Growth Investor looks at master limited partnerships and the implications of owning these investments.
The Div-Net takes a deep dive analysis into the high dividend yield of Kinder Morgan.
Intelligent Speculator things that Google might have a chance at social media after all. It is not going to happen automatically, but Google is taking steps in the right direction.
The Dividend Growth Stocks blog is on the never ending quest for the perfect dividend stock.
Matt the Dividend Monk will help you build a $150,000 portfolio by the time you are 30.
John at Stock Market Basics helps you discern the many gold ETFs you can purchase.
Ricky at Qwoter can help you decide on the best company for an IRA depending on your needs.
Growing Money has comments on CNBC’s recent list of 20 stocks about to pop.
Jim at the Retire Happy Blog has found the science of building a diversified investment plan.
John from Wallet Blog discusses the difference between money market funds and money market accounts.
Outlaw Finance gives tips on where to invest your money.
Image from ABC's Lost via Wikipedia
Okay, so this one was not a real guy, but I could not make a list of con artists without including James Ford, more commonly known as Sawyer. Sawyer taught the world about the “long con” on ABC’s series Lost. Sawyer also lived under the alias Jim LaFleur. Of course, Sawyer would not have been such a great con man if he had not learned from the man who stole his parent’s life savings.
Money Management:
Ricky at Qwoter discusses financial priorities. Learn about ideas ranging from the popular emergency fund to less known tips for building your own value.
Jen at Master the Art of Saving is taking an extreme couponing reality check. It is important to remember that behind the trendy “glamour” of feeding your family for twenty cents for four weeks that there are big costs. She also notes that guys (such as myself) may not appreciate your fifty boxes of tampons in the garage.
Anabelle at The Year of Shopping Detox wonders why so many financial experts and mean and yell-y. My personal opinion of Suze Orman is not so good, by the way.
Eric (good name!) at DollarVersity reminds us that bank account bonus offers are not always as good as advertised.
RJ at Gen Y Wealth thinks you do have enough willpower to make a difference in spending decisions. He also has strategies to make it easier on you.
MD at Studeneconomics explains why online banking is more popular than ever.
Canadian Finance Blog thinks it is time to start thinking like a wealthy person.
Jason from One Money Design asks the readers if they can live well on less than $40,000 per year.
Elizabeth reminds us to remain calm despite our volatile economic situation at Modern Gal.
Nicole at Grumpy Rumblings shares her August mortgage update and the broken window hypothesis.
Sarah helps you find out how much your home is really worth at Money Under 30.
Saving:
Chris at Stumble Forward helps you set up a savings account for your child. This is an important step in your child’s financial education and future, so be sure to get them started young.
Mike at Cards Canada examines loyalty programs worth joining.
Ben at Money Smart Life has the best rental car deals for road trips.
Phil at PT Money, our great organizer for the upcoming financial bloggers conference, tells us how to save like a madman.
Other:
Boomer from Boomer & Echo is learning about caring for elderly parents and shares stories from difficult moments.
Junior at Consumer Boomer helps you decide whether funeral insurance is right for you.
Briana at Personal Dividends never travels without travel insurance. She lists of the major benefits of having your trip insured.
No Debt MBA helps you decide if admissions consulting is worth the cost.
Asking About Money interviewed No Debt MBA and had some interesting answers.
Next Week:
Next week the Carnival of Personal Finance will be hosted by Financial Uproar. You can submit your posts by visiting the Carnival of Personal Finance homepage.
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