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SavvyMoney https://blog.savvymoney.com/blog SavvyMoney Tue, 28 Feb 2017 01:15:15 +0000 en-US hourly 1 http://wordpress.org/?v=3.9.2 How To Avoid This Car Insurance Rate Hike https://blog.savvymoney.com/blog/article/how-to-avoid-this-car-insurance-rate-hike/ https://blog.savvymoney.com/blog/article/how-to-avoid-this-car-insurance-rate-hike/#comments Mon, 27 Feb 2017 16:00:10 +0000 http://blog.savvymoney.com/blog/?p=21412

How To Avoid This Car Insurance Rate Hike


What’s one surefire way to turn a bad day into a worse one? A fender-bender that’s — by all standards — not your fault. Say you’re stopped at a red light and get rear-ended, you’re sideswiped while idling in a parking lot or you come back to your parked car and it’s been hit. Yikes. And chances are that might not be the end of the bad news. According to a recent report from the Consumer Federation of America (CFA), your auto insurance premiums are likely headed up.

The organization studied the five largest auto insurers (State Farm, Allstate, Farmers, GEICO and Progressive) and found many insurance companies were raising rates in cases of clearly not-at-fault accidents. This was happening in eight of the 10 cities they studied (Atlanta, Baltimore, Chicago, Jacksonville, Jersey City, Kansas City, Minneapolis and Queens, NY). And in the only two cities the organization studied where this wasn’t happening — Oklahoma City and Los Angeles — state law prohibited it.

So, which insurers were most likely to raid your wallet for accidents you didn’t cause? Progressive led the way, followed by Geico and then Farmer’s — all of which hiked bills in excess of 10 percent. All State raised rates 5 percent on average. Only State Farm (kudos) left customers’ bills alone.

Another key finding? Where you live matters when it comes to this price hike. “Higher-price cities seemed to have higher [increases],” says Bob Hunter, director of insurance at the CFA. In Queens, NY, the average hike for a not-at-fault accident is over $400, whereas it’s $258 in Baltimore and $213 in both Minneapolis and Jacksonville. The increases were around $100 in Kansas City, Jersey City and Chicago. Atlanta came in lower, at $60.

So, by now you’re probably indignant (and resolving to drive — or park — even more defensively to try to avoid these incidents). But what can you do if the not-at-fault rate hike happens to you? Shop around. It’s precisely because car insurance companies that know you aren’t comparing prices that they take the opportunity to jack up your rate, says Hunter. He explains that they figure out how much to increase your rate specifically using an algorithm that factors in how recently you bought insurance from the company, your shopping habits (which come from a variety of sources), your credit and other information. All of this information can tell the company whether or not you’re a “shopper.” It’s beneficial to be one. Hunter mentions an example where a shopper gets a rate of $250 and someone who doesn’t shop around might be stuck with a $300 bill. So, make sure you do compare rates. Then let your company know about it.

Any time your policy comes up for renewal, research others says Jeanne Salvatore, senior vice president and chief communications officer at the Insurance Information Institute. You can use a site like Compare.com where you can get quotes for a few different providers. Or, head to the National Association of Insurance Commissioners (NAIC) website where you’ll find a U.S. map tab. Click on your state and navigate to its buyer’s guide for auto insurance. (Every state’s site is different, but it may be under something like “Consumer Guides,” “Order Publications” or the like.) Some state’s guides to auto insurance include prices and list a few different hypothetical types of consumers, so if possible, choose the one that’s most like you, then use your zip code to narrow down your area. After that, you should be able to find a list of insurance companies and their prices for a policy for someone like you.

The last step before you pull the trigger: Go back to your state’s consumer services site section and look for its auto insurance complaint ranking. Knock out the insurers with the one or two highest complaint ratios — you want a company that will have your back with a claim — and call the other three to confirm quotes. Finally, let your current company know you’re shopping, and ask if they can make you a better offer.

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Up, Up and Away https://blog.savvymoney.com/blog/article/up-up-and-away/ https://blog.savvymoney.com/blog/article/up-up-and-away/#comments Fri, 24 Feb 2017 16:00:40 +0000 http://blog.savvymoney.com/blog/?p=21396

Up, Up and Away


The Federal Reserve might just have a case for raising interest rates this year. The reason? As ABC News reports, in January, U.S. consumer prices increased at their fastest pace in almost four years.

According to the Labor Department’s stats, consumer prices rose 0.6 percent in January, the most since 2013 and more than double the increase experts predicted. The main driver of this jump was gasoline, which jumped by 7.8 percent. Other increases included the cost of dining out (a 0.4 percent bump) and clothing, new cars, auto insurance and airplane tickets, which all rose by 0.8 percent. Overall, consumer prices leaped by 2.5 percent in January compared to January 2016. That’s the most since March 2012.

These numbers all point to inflation gathering momentum, and that could lead the Fed to raise interest rates. A bump in interest rates would impact many areas of your life, from mortgages to credit cards.

In December, the average interest rate on a 30-year mortgage was 4.3 percent. If the Fed raises interest rates, which in turn leads to lenders bumping up mortgage rates, the cost will eventually trickle down to new homeowners. Adding a single percentage point onto that 4.3 percent would mean an additional $138 per month, and overall, about $50,000 more in added interest over the course of the loan. You’ll also see increases in the rates you pay on your variable rate credit cards and home equity lines of credit. The bottom line? Make sure your budget is flexible to account for a year of possible changes.

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Overstuffed https://blog.savvymoney.com/blog/article/overstuffed/ https://blog.savvymoney.com/blog/article/overstuffed/#comments Thu, 23 Feb 2017 16:00:46 +0000 http://blog.savvymoney.com/blog/?p=21384

Overstuffed


Wither the lunch break. According to a study from the market research firm NPD Group, lunchtime visits to fast-food restaurants dropped by two percent in 2016. The reasons for this are many, from changes in work culture to the advent of technology.

One of the biggest factors leading to the decline of lunch restaurant visits is an increase in remote workers. More and more people work from home, which means they can now simply hop over to the kitchen instead of getting in the car and driving to a burger spot. There’s also plenty of lunch options available right on your smartphone. “Consumers no longer have the same definition of convenience that they once had, given the rise in technology, mobile apps and delivery,” Diana Kelter, a food service analyst at market research firm Mintel, told NBC News.

Another factor in the demise of the lunch break meal: It’s just cheaper to eat at home and more people are watching their wallets. A separate NPD survey found that 75 percent of adult workers have started closely monitoring their finances. That’s a good thing. As Time reports, the average office worker eats out three times per week, at about $10 a visit. That adds up to about $1,500 per year on lunch. Those who eat out every week day end up spending about $2,500 per year. Meanwhile, the average cost of making a lunch at home and bringing it to the office is just $3. That’s a huge chunk of change that would be better served in your 401(k) than shelled out on a mediocre fast-food lunch.

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Willing it https://blog.savvymoney.com/blog/article/willing-it/ https://blog.savvymoney.com/blog/article/willing-it/#comments Wed, 22 Feb 2017 16:00:29 +0000 http://blog.savvymoney.com/blog/?p=21373

Willing it


It’s not a pleasant subject, but if you haven’t drawn up a will yet, it’s time to get to it. We say this because a recent study from Caring.com found that just 42 percent of American adults have a will. That’s woefully low, especially considering that creating a will is actually quite easy.

The Caring.com survey found that people aren’t avoiding wills because they makes them uncomfortable, they’re avoiding them because they just haven’t given it much thought. Almost 50 percent of respondents said “I just haven’t gotten around to it,” as their main reason for not having a will. That’s understandable. Most people have busy lives, and thinking about what happens after you die typically isn’t high on the to-do list. Yet a will is vital to making sure that your belongings and money are allocated according to your desires. The alternative is that those decisions are left up to the government. If you die without a will, your assets are distributed according to state law, which varies according to where you live. So the sooner you craft a will, the better.

Despite what you might think, you don’t absolutely need a lawyer to make a will. If you’re single or have modest assets, a do-it-yourself program will suffice. However, as The New York Times reports, if you have kids or complex financial holdings, it might do you some good to seek out a lawyer. As always, shop around for the best deal before deciding on one. If you still want to go the DIY route, try LegalZoom, which charges roughly $70 for drawing up a will. Make sure you are confident you’ve filled out the forms correctly. If you aren’t positive, you can always have a lawyer review the will after it’s completed. When your will is finished, keep a copy at your lawyer’s office or in a safe deposit box.

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How to Make This Season’s Taxes Less Painful https://blog.savvymoney.com/blog/article/how-to-make-this-seasons-taxes-less-painful/ https://blog.savvymoney.com/blog/article/how-to-make-this-seasons-taxes-less-painful/#comments Mon, 20 Feb 2017 16:00:15 +0000 http://blog.savvymoney.com/blog/?p=21354

How to Make This Season's Taxes Less Painless


There’s probably no day of the year that elicits more sighs and groans than April 15, but you can save yourself a lot of headache — and risk — if you take a page out of the early bird’s book this tax season. For one reason, it’ll speed your refund. Last tax season, close to 75 percent of taxpayers received a refund close to $2,800, says Lisa Greene-Lewis, CPA and tax expert for TurboTax. “For some people that’s the biggest paycheck they get all year,” she says, so consider using it to pay down holiday debt in order to avoid expensive interest down the line.

Another compelling motivator? Tax return identity theft — when fraudsters attempt to file under your name and collect your refund. “The quicker you file, the less likely you are to be a victim,” says Cari Weston, director of tax practices and ethics for the American Institute of CPAs. On the flip side, if you owe taxes, it’s better to know as soon as possible, so you have time to get the funds together. Finally, if you end up using a paid preparer, they get busier closer to the deadline, so it’s better to jump right in.

Convinced? As you get ready to file, here are three things to keep in mind.

Make sure you have your documents in order ahead of time.

Collect W-2s from any company you worked for over the course of the tax year. They should come to you in the mail, but if not, ask your employer’s (or prior employer’s) payroll person or HR department. If you’re self-employed, you’re looking for 1099 forms instead. Other documents and information to gather: How much you received in rental income, how much you received in bank account interest (if it’s over $10), your property tax statement and how much you paid in mortgage interest, tuition and student loan interest (you can deduct up to $2,500 on the latter). Finally, you’ll need proof of health insurance coverage.

Know where to file — and “shop around.”

If you’re filing a simple return, using tax software is probably the cheaper option. If you make less than $64,000 a year, you probably qualify for free tax filing, and you can access IRS.gov’s Free File program here. Otherwise, consider preparing on more than one tax site and comparing the results to check yourself (they usually don’t charge you until you actually file and submit). The return amounts displayed on each site should be the same, says Weston. If not, redo it and see where you went wrong. Then, once you’ve isolated the problem, choose to file with the site that offers you the lowest price.

If you’re confused about the process, IRSvideos.gov offers some instructional videos. And if you or someone you know needs extra help, the Volunteer Income Tax Assistance (VITA) program offers free in-person filing help all across the country. You might qualify if you make $54,000 or less, have a disability or speak limited English.

Know your deductions.

Each year, you have a choice between itemizing (noting every deduction separately which means gathering your receipts and other documentation) or taking the standard deduction ($9,300 for heads of households, $6,300 for singles and married people filing separately and $12,600 for married couples filing jointly). It’s all about figuring out which will net you the bigger refund.

So, first — are you a donation enthusiast? Gather up those receipts and annual giving statements. Then, were you on the job hunt this year? If you spent any money searching for a job in your same profession, whether you got it or not, you can deduct job search expenses — that could mean a plane ticket, an interview outfit or a taxi to get to an interview. If you move for a job, you might be able to deduct the moving van/truck and even the cost to move your pet. Next, ask yourself: Did I make any large purchases this year with high state sales tax (car, furniture, etc.)? You can deduct that, so dig up that receipt. Finally, if you’ve got a child, the earned income tax credit is an important one to note. One exemption (for one kid) is worth $4,050, and for families with three or more kids, it’s $6,269, says Greene-Lewis. If you’re using tax software, it will walk you through a series of questions on deductions and credits so that you can figure out if itemizing makes sense for you.

Sleep on it.

Finally, never file on the first try — unless it’s the last possible day to file. Prepare your return, enter it, look at the results, then sleep on it. “At least give yourself 72 hours because it’s very possible you missed something or made a mistake, and you won’t catch it the moment you enter it,” says Weston. “Let it simmer for a little bit before you push the button.” Most paid tax preparers do the same thing.

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The Hiding Problem https://blog.savvymoney.com/blog/article/the-hiding-problem/ https://blog.savvymoney.com/blog/article/the-hiding-problem/#comments Fri, 17 Feb 2017 16:00:21 +0000 http://blog.savvymoney.com/blog/?p=21340

The Hiding Problem


Financial infidelity — hiding bank and/or credit card accounts, money and more from a spouse — is a big issue for many couples. In fact, a new study from CreditCards.com found that about 12 million Americans have committed financial infidelity. That number is likely actually higher, as the study only took into account self-reported couples.

Of the many people who have committed financial infidelity, older Americans are the most likely to do it. The report found that baby boomers are four times as likely to hide money from their spouses as millennials. About 11 percent of baby boomers have hidden a bank or credit card account from their significant other. That’s compared to only five percent of Gen-Xers and just three percent of millennials. Baby boomers were also more likely to not notify their partner when spending $500 or more. This is obviously a problem. As CBS News points out, financial infidelity almost always leads to arguments, and there have been studies that suggest fights over money are a good predictor of divorce.

As with any type of lying, financial infidelity should be taken seriously. What starts out as one spouse hiding $25 here and $50 there, can quickly turn into a situation that ruins not
only a marriage, but credit reports and from there it’s a slippery slope. To prevent this from happening to you, make sure you have and open and honest conversations about money matters with your spouse. When things get tight, or someone acts irresponsibly, avoid blame and shame. Instead, talk about what happened, why it happened, and what you both can do to improve things going forward.

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An Expensive Knot https://blog.savvymoney.com/blog/article/an-expensive-knot/ https://blog.savvymoney.com/blog/article/an-expensive-knot/#comments Thu, 16 Feb 2017 16:00:39 +0000 http://blog.savvymoney.com/blog/?p=21329

An Expensive Knot


f you’re planning a wedding this year, get ready to shell out plenty of cash. According to TheKnot’s annual wedding survey, the national average cost of a wedding is now $35,329, an eight percent jump compared to last year and an all-time high. (A domestic partnership never sounded so good, right? Or, perhaps, an elopement?)

TheKnot’s study took into account more than 13,000 couples who got hitched last year. The main culprit for the high price tag was venue. Couples spent an average of $16,107 on the location of their wedding. Another factor that made weddings expensive was the trend of personalization. Couples have started adding small, unique elements to their weddings — like bourbon carts and GoPros for the bridal party — that bump up the cost. Since 2009, the average spent on custom entertainment items has more than tripled. This trend has kept wedding prices high, even as the number of guests has declined. TheKnot found that the average number of wedding guests has decreased to 141, down from 149 in 2009.

Despite the daunting numbers, keep in mind that this is just the average, and there are plenty of ways to keep the cost of your wedding down. Buy your own booze and ask a family friend to bartend. Consider booking a venue during an off-peak time, as that could save you thousands. Skip the custom cake and use large tables, so you don’t have to purchase a lot of centerpieces. If you put your mind to it, you can have a lovely wedding that won’t leave you — and your family — broke.

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The Coldest, Best Month https://blog.savvymoney.com/blog/article/the-coldest-best-month/ https://blog.savvymoney.com/blog/article/the-coldest-best-month/#comments Wed, 15 Feb 2017 16:00:03 +0000 http://blog.savvymoney.com/blog/?p=21312

The Coldest, Best Month


February can bring the winter blues, but don’t let them get you down — especially if you’re house hunting. One redeeming quality of the final month of winter is that it’s the most affordable month to buy a home.

According to The New York Times, the median price of a home in December was $232,000. That’s a four percent jump compared to last year. If you’re looking to get in at a lower price point than that, February is the time to do it. A report from RealtyTrac.com found that February was the cheapest month of the year to buy a home, with houses selling for about $103 per square foot; a six percent discount over the rest of the year, on average. The runner-up for best month to buy a home was January, with
houses selling for $104 per square foot, which amounts to a 5.6 percent discount. Meanwhile, on the other end, the most expensive months to buy a house are June, July and August.

As you might expect, the reason homes are cheaper right now is because of the weather. Most people simply don’t want to brave the elements, so the demand is low. However, the RealtyTrac.com study also found that February was the cheapest month to buy a home even in places like Florida. The reason? It’s the middle of the school year, which keeps families from going all-in on home hunting. If you’re hoping for the best possible value when buying a home, we suggest you strap on some boots, grab a winter hat and get out there. A six percent discount on a new home is well worth having to trudge through snow and ice.

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Making a Will 101 https://blog.savvymoney.com/blog/article/making-a-will-101/ https://blog.savvymoney.com/blog/article/making-a-will-101/#comments Mon, 13 Feb 2017 16:00:47 +0000 http://blog.savvymoney.com/blog/?p=21300

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High on the list of things people don’t like to think about: bills, taxes, calories and, yes, death. That goes a long way toward explaining why only 42 percent of U.S. adults have a will, according to a new study from Caring.com. The kicker? That number is even lower — 36 percent — for those with kids under age 18. “If [you don’t have a will and] something happens to you, your kids are just out of luck,” says Katie Roper, vice president of Caring.com.

As for the why? Many (47 percent) say they “just haven’t gotten around to it.” If you keep telling yourself you’ll do it later, don’t beat yourself up — just move forward.

Here’s what a will does:

Many people believe a will controls the disposition of everything you own. False, says Jules Martin Haas, probate and estate planning attorney. A will controls assets that are in solely your name, like an individual bank account or a solely-owned house. But a will won’t control things like a joint bank account (which would go to the other owner if something happens to you) or a life insurance policy with a designated beneficiary (the policy would go to the beneficiary). This means that one of the most important things to do when you’re getting started is to think think about 1) what your assets are and 2) how they are owned. That way, you — and the people you love — won’t have to deal with any surprises.

Here’s what could happen if you don’t have one:

A will is the only document that allows you to name guardians for minor children. Without it, state laws outline what happens to your kids, and it could involve a lengthy guardianship proceeding. When it comes to property, if you pass away without a will, you’re considered to have died “intestate” — meaning the state will likely provide a priority list of the people who will receive the assets, says Haas. In New York, a spouse usually receives up to $50,000 plus half of the estate and affairs, and the kids share the other half. If there’s no spouse, that portion will go to the parents, and next in line after that is siblings. If the person isn’t close with family or doesn’t have a lot of family left, determining who the next of kin is can get lengthy and complicated. You can avoid all that hassle by creating an estate document.

Here’s how to make a will:

Before you start, sit down and think about who you’d want your guardians and your beneficiaries to be (discuss with a spouse if you have one) and, if you’ve got time, in what percentages. Then, think about how you’d like to create your will. Online resources like WillMaker ($55 through Nolo.com) or LegalZoom.com (DIY wills starting at $69) are good options. If your financial life is more complicated, consider hiring a lawyer or estate-planning attorney to make one for you, starting at about $500. Another option is to download an online will, then pay an attorney to look it over, says Roper. This probably wouldn’t take more than an hour, so it won’t set you back as much as the bill for creating one. Finally, tee up a conversation with your parents about where their wills are.

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The Robot Uprising https://blog.savvymoney.com/blog/article/the-robot-uprising/ https://blog.savvymoney.com/blog/article/the-robot-uprising/#comments Fri, 10 Feb 2017 16:00:07 +0000 http://blog.savvymoney.com/blog/?p=21263

The Robot Uprising


According to a recent study from Accenture, humans are excited about never having to do anything for themselves again. All kidding aside, the report found that a vast majority of adults are open to using robo-advisors — which are automated, data-driven financial advice platforms — for help with investing.

What’s interesting about Accenture’s survey is that while 70 percent of adults said they’d use robo-advisors, 68 percent said they’d want to speak to a human when they have complaints or other issues. Also, 61 percent said a human is preferable to a robo-advisor when tackling more complex items, like mortgages. The study just might be onto something.

Robo-advisors, like most things in life, have some positives and negatives. On the positive end, they often don’t charge a management fee for small amounts of money invested. This is especially enticing to young people who don’t have a lot to invest; they can use a robo-advisor to build wealth easily. Also, robo-advisors take the stress of managing investments out of your hands. On the negative side, robo-advisors often don’t account for major life changes, like having kids. They also don’t care about your interests, so if you want more input, a human investor is the way to go. And when/if the market crashes and you’re freaking out, robo-advisors are not picking up a phone to talk you off that financial cliff.

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