My Personal Finance Blog

Urban sprawl never used to be an issue. Even though the latest development might be miles from where you work or the nearest shops, this was never a problem. Most families owned two vehicles. Some three or more. No-one walked. Everyone just jumped in the nearest vehicle and off they went without a second thought until the price of gas rocketed up. Now we have the credit crunch and a recession just bottoming out. Car ownership has become an expensive proposition. Too expensive for some who have been reborn as a one-car family to cut their losses. The first step in crisis management is to find out which of your vehicles is the cheapest make and model to insure. Now balance that against the likely costs of maintenance and repair over the next twelve months. And which will sell for the highest price? When you know which vehicle you are keeping, maximize the number of discounts on the policy, including bundling auto and home together with the same insurer. Except, one vehicle for a busy family may not be practical. What are the options?

Many families talk to their neighbors and work out a carpool. This is reasonably easy to organize for routine journeys. But there is one slight problem. If you are going to carry passengers, you should have insurance to pay their medical costs should they be injured in an accident. It is not safe to drive your neighbors around on the state’s minimum liability cover. Then we come to the always difficult question of sharing the costs of the gas. If the passengers always pay something towards the cost of the journey, many insurers treat this as a business arrangement and require the vehicle owner to take out a commercial policy as a taxi. Needless to say, this turns a friendly social service into an expensive excuse to argue with your neighbors over prices. Of course, you could all agree to lie about the arrangement. But the stories can change rapidly if everyone ends up in a hospital and big bills are presented.

The second option is the new rental plans which site vehicles for rent by the hour in local garages. You book what you want over the internet, travel to the garage for the pick-up and drop it off at the same garage when your time is up. The cost per hour on the standard plans are attractive and, assuming you do not want a vehicle more than an average of one hour every day, you will save money on car ownership. But you do need to look carefully at the insurance offered in the standard plans. Some have poor cover of medical expenses for you as the driver and passengers. Others do not include the loss of use charge if the vehicle is off the road being repaired. Always read the small print. Summing up, finding insurance for a single vehicle means getting multiple car insurance quotes and finding the one that works for you. If you are going to use your car to drive neighbors around, you also need to get car insurance quotes to cover the additional liabilities. If you use one of the new rental plans, consider paying extra for LDW which gives more comprehensive protection against loss.

Well, after all the excitement and the best efforts of the GOP to say “No” loud and long enough to make a difference, the President signed the healthcare reform into law. The partisans are now into the equally exciting game of trying to decide whether this is the greatest victory since Abraham Lincoln, with a little help from General Ulysses S. Grant, won the Civil War or the greatest disaster since Hurricane Katrina reminded us Nature can be devastating. Allowing for the fact this is a complicated piece of legislation, this is a little difficult to predict because so much of it is not designed to take effect for years. Calling for immediate repeal does not seem helpful when no one can say how the future will turn out. As time passes and we dig ourselves out of the recession, it is entirely possible this may turn out to have been a good “thing” on balance. If “things” do not look quite as good, a little tinkering may set matters to right. History has a way of judging “things” rather differently than we expect. This leaves us with the next twelve months during which there are elections and an opportunity for voters to have their say. What is due to happen and will this make the reform look good enough to keep?

1. There will be a payment of $250 to people in Medicare. This is designed to close the Part D donut hole. In 2011, there will be a 50% discount on the branded drugs in the hole with the hole closing by 2020.

2. Starting on January 1, 2011 there will be no co-payments for preventative medical care. This care will also be exempted when calculating the deductible.

3. Starting in three months, there will be a temporary re-insurance program for employers to cover retirees in the age range 55 to 64.

4. Starting in six months, insurers shall not cancel a policy if a claim is made nor discriminate against children with a pre-existing condition. There are also to be new controls to prevent insurers from imposing caps on coverage.

5. Before the reform, the majority of people were insured by their employers. Starting immediately, small businesses can claim, tax credits of 35% of premiums if they decide to buy a health plan. This rises to 50% in 2014. Up to now, small businesses have always claimed they were the victims of discrimination, priced out of the market by the insurance industry. With a government subsidy, this argument looks less real.

Whether this will be enough to sway public opinion is anyone’s guess. Health insurance has provoked some seriously extreme reactions and it will take time for people to take a more calm view of what the reforms offer. The reaction of the insurance companies is also difficult to predict. Some may react to the new controls by increasing their premiums. Insurers are, after all, for-profit organizations and they have never shown themselves slow in coming forward with premium hikes. This makes it even more important to get the maximum possible number of health insurance quotes before deciding on which policy or plan to buy. When midterm elections come in November 2012, 36 seats in the Senate and all the seats in the House are up for grabs. Experts predict the Democrats will lose seats. But, with President Obama in the White House, no repeal will be signed into law.

Looking around the US economy right now. Homes have been foreclosed, bankruptcy looms on private debts and the retirement 401ks have taken a serious hit. Life as we knew it has been turned upside down without anything in place to catch us as we fell. So how did we get into this mess? The economists tell us we have been living beyond our means. Credit was cheap and, with banks and credit card companies raising their borrowing limits, there seemed to be nothing we could not afford. There was no need for savings. Everything could be charged. If the limit was reached, the housing equity could be released as cash. Over a period of about twenty years, we switched from a country that saves to a country that spends on credit. In the period just after World War II, we had “prudence”. People mostly paid cash for what they wanted and, if they did not have enough, they saved. It was a revolution when, suddenly, everything could be paid for in affordable monthly instalments. In one sense, this is the easiest way to get into serious debt without noticing. When you only pay a few hundred dollars every month, it hardly registers the total debt is tens of thousands.

Insurance companies were the last of the hold-outs. For years, they insisted everyone should pay them a lump sum once a year. Then, slowly, there was a cave. First it slipped to every six months, then quarterly. Now almost every company across the nation accepts monthly. What’s the problem for the insurance companies? Well, they estimate the likely total cost of the claims they will have to pay over the next twelve months and divide that amount between all the policy holders as the premium. If the company has done its sums properly and everyone pays once a year, the company always has the cash in the bank to pay out on all the claims. If people pay monthly, they can easily change to another insurer. They can miss one month’s payment when the family budget is under pressure. That means the insurer may not have enough money to pay the claims. So, to encourage all you people with some savings (or some slack on your credit cards), they offer discounts if you agree to pay every six or twelve months. It gives them more security and saves you some money. Paying monthly costs you the most.

That said, paying monthly gives you flexibility. You can use the online search engines to find auto insurance quotes at the lowest price. Then for just one month’s premium, you can be driving. In effect, this becomes a monthly policy. You can keep shopping around for new premium offers from different insurers. If you find a better monthly rate, you can transfer at the end of the month. But if you pay once or twice a year, the insurer will hit you with high cancellation charges to lock you in. Whatever you might save disappears. Worse, if you change the make and model of your vehicle during the longer policy term, it can be too expensive to move the policy to a cheaper company. You end up paying the higher premium until the six or twelve months end. So make a wise decision. Auto insurance is never cheap. Avoid making it too expensive.

Often when you are faced with the question – what gift should I buy for this person or that person? You are thoroughly confused. You don’t wish to gift the same common item every time. In some cases, the opposite person has everything you can think of as a gift. So what would you give in such a situation? Personalized gifts is the answer. You can buy them online or go to some mall or shop where these are available.

A variety of personalized gifts are available. Photographs, names, custom graphic designs, your own text message, etc. can be incorporated in the gift. Coffee mugs are very popular. They don’t cost much. Your chosen photo with text can be printed on it. The print quality is very good. Similarly, you could get a custom T-shirt printed with photo and text. How about key chains with photo tags? Or personalized bag tags? Personalized pens with names are great gifts too.

You can also get a photo book printed with all your favorite photographs together. Or make a personalized greeting card with photos. Tote bags can be personalized with pictures and gifted to girls. They will love it. You can also create a collage with photos and mount it in a good picture frame as a gift. You can also create calendars for the next twelve months with your own pictures making it a totally personalized experience. With digital cameras, people are no longer printing every picture they take. You could pick out thirty-forty of your best pictures together and get them printed. Buy a nice photo album and arrange the pics in the album. Caption the pics if you can by getting them printed polaroid style. Gift it.

There are a number of websites which offer you personalization with gifting options. You can send out a gift sitting right on your desk. Send some out and watch your loved ones squeal with delight.