How To Get Independent Health Insurance

Hospital Vitals MonitorThree years ago my wife, then my girlfriend, quit her job in New Jersey and moved down to Maryland. In doing so, she also gave up her employer sponsored health insurance, which was a big deal.

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ING Direct CD Rollover Bonus

I recently read that ING Direct was offering an 18-month Certificate of Deposit with a 4.50% APY (courtesy of Bank Deals) so I logged into my account to see how my CDs were configured. I have our emergency fund fully laddered into CDs at ING Direct so I knew that the 18-month CD was going to be outside the range, but I was curious how things were anyway.

Here’s a screenshot of my ING account:
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 Your Take 

Your Take: Trust A Financial Planner With Bad Finances?

A few years ago I met with a financial planner who was probably the same age, or a few years older, as me. We chatted a little, discussed some of my future plans, and basically he tried to sell me on some products. It was all in all not exactly a valuable meeting but part of that was my fault, I didn’t really have future plans. I had just graduated college, started getting my first few paychecks, and I had no plans for anything. I was just living life as best I could now that I had some real money. If I met with a financial planner now, it’d probably work out a little differently.

This guy lost $6M overnight. David Shorr had been a long time employee of Lehman and amassed quite a little collection of shares, all of which were rendered worthless on Monday. David Shorr works as a “wealth adviser,” a senior VP, at Morgan Stanley now and it made me wonder if I’d actually want the guy being my adviser (not that I’d be able to afford him!).

What if you found out that your financial planner was bad about his or her own finances? Or a financial advisor or broker whose investment portfolio was a mess? Would that change your perception of his or her advice? Would you drop them if you discovered they were bad?

I probably would.

I agree with the argument that being a good financial planner has nothing to do with executing a financial plan. A good financial planner needs strong organizational skills, good analytical skills, and a whole host of other skills that have nothing to do with sticking with a plan. A good planner can establish a savings plan that can set you up nicely to meet your future needs, given some assumptions, but it’s ultimately up to you to save. The financial planner with bad finances could simply be bad at that last part, the saving part. I agree with all that.

But would you hire a landscaper if his front yard looked like it hadn’t even been mowed in a year?

 Frugal Living 

MSN’s $100 / Week Food Bill Challenge

Supermarket Grocer Produce StandMelinda Fulmer and her family of four went from a $250/wk grocery bill down to a $105.03 bill when they tried to spend only $100 a week on food. They had some really good lessons learned from their little test, as well some advice if you’re looking to do the same, but there were a few thoughts I had after reading the article that they didn’t mention.

Here are some lessons I learned from her challenge:

  • It doesn’t hurt to try. $100 a week for four amounts to $1.19 per meal per person. Anyone with an elementary grasp of math knows that $1.19 is not a lot and you might be tempted to give up right there. For Melinda and her family, that was less than half of what they normally spent. They were able to do it, why can’t you?
  • They saved $150 that week. She was able to get within spitting distance of $100 a week but it was clear that wasn’t sustainable week after week, given her ground rules. If you were to take those away, perhaps she could’ve by growing some of her own vegetables and shopping at bulk discount stores. However, she saved $150 that week and that’s something she could do every month – that’s a savings of $1,800 a year. Granted, it does simply shift some expenses from a $100/wk to a $250/wk, but you still would save a large percentage of that $1,800 a year.
  • $100/wk is too restricting, a rolling monthly limit makes more sense. In this experiment, they went with an artificial $100/week limit when food often lasts longer than that. If you truly wanted to save money, using a rolling four week limit of $400 is probably more realistic than a weekly limit. They made mention of this in the later parts of the article when discussing stockpiling.
  • Use canned goods when the entree isn’t a single piece of something. I wasn’t sure how to title this lesson but it refers to the idea of using canned fish or chicken if the fish or chicken isn’t the headline entree, as in a casserole. It’d be tough to use canned chicken or tuna if you just wanted to prepare a piece of the stuff, but if you are integrating it into a dish then it’s not a bad idea.

If you’re seriously considering doing this, The Hill Billy Housewife has two menus that can provide much needed inspiration. The first is her $45 menu, which is a weekly menu of Breakfast, Lunch, Dinner, and Snacks that will cost you $45 a week. The list includes a scheduled menu, along with nutritional information, as well as a full shopping list. The menu doesn’t assume you have something already, which makes it great, and the nutritional information is a great touch. There is also a $70 version.

The menu doesn’t strike me as something you can eat every since week for a year, but it can be a good source of inspiration if you’re looking to trim from your food budget. Also, the prices were gathered in Feb 2006 so it’s likely a little pricer than $45 or $70 week now.

(Photo: benjaminkrause)

 Personal Finance 

Six Money Lessons from Entourage

Entourage CastEntourage is a hit HBO television series about Vince Chase, a Hollywood superstar, and his band of merry men that includes his older brother Johnny “Drama,” his manager Eric “E” Murphy, and the butt of all jokes, Turtle. It’s loosely based on Mark Wahlberg’s experiences as an up and coming actor and he’s one of the show’s executive producers.

I started watching the series after friends told me it was a lot of fun to watch. I’ve made it through the first few seasons (they started shooting Season 5 last spring) and I have to say it’s a really entertaining show. There are a ton of celebrity cameos and seeing the lifestyle, however fictionalized, makes for a good half hour escape. It’s not surprising that it’s a popular show.

So, what does it have to do with personal finance? Well, money management is interwoven into our lives and it’s no different for a fictitious actor. With his rise to stardom comes fame and fortunate and many of the episodes touch on how they deal with the money. I wanted to just pull out a few of those lessons to share with you all.

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2009 Federal Income Tax Brackets (Official IRS Tax Rates)

9/16/09: The inflation data for 2009 have been released, so you can find the 2010 income tax brackets.

2/26/09: These IRS tax brackets are official.

The Labor Department released inflation data yesterday and the Wall Street Journal had three tax experts estimate how all the inflation-pegged tax figures would change based on those numbers. Many tax numbers, like the brackets, exemptions, standard deductions, etc., are pegged to inflation so knowing the Labor Department figures can give you huge insight into how those numbers will move. The three experts are George Jones, senior federal tax analyst at CCH; William Massey, senior tax analyst for the tax & accounting business of Thomson Reuters; and Prof. James C. Young, professor of accountancy at Northern Illinois University. The Wall Street Journal does this every year and, for as long as I can remember, they’re often it pretty spot on. Based on their calculations, a bunch of inflation-pegged tax numbers are going up.

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What Happens If My Insurance Company Fails?

AIG Insurance BuildingEveryone’s been focused on brokerage failures and bank failures lately, wondering what happens and who backs them in the event of a failure… that is until we learned that AIG (American International Group) was in serious trouble. This begs the question very few have asked before, what happens if my insurance company fails? The quick answer is that most states have a guaranty that will back the fund up to a certain dollar amount.

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I Just Day-Traded AIG, It’s Dangerous & Addicting

I did something very bad today.

I just day-traded shares of AIG.

I instant-messaged SVB earlier this afternoon and asked her to convince me not to buy shares of AIG (she didn’t). AIG is an insurer that had been getting pummeled lately because of, you guessed it, liquidity concerns. They needed to get a loan to help with short term liquidity but their fundamentals were pretty sound. The downgrades made it necessary for them to get additional collateral but the consensus was that they’d be OK if they got a loan.

My belief was that the Federal Reserve would be willing to lend them money because it would be in the best interests of the financial system. This wasn’t a bailout, it was simply a large loan, so that made it more palpable. The big catch was that Treasury Secretary Paulson said that they wouldn’t loan it any money… I didn’t believe them.

So I bought some AIG at $3.42. I watched as it fluctuated wildly in the low $3 but when it broke through the $2.90 mark (an artificial measure) I sold it. It eventually sold for $2.99. That’s when I repurchased shares at $2.85 and watched activity bringing it as high as $3.90. I put in a sell order at around $3.65 (as it went back down from $3.90) and it executed at $3.36.

All told, I actually earned a profit on the two trades of $226 after commissions.

A few minutes later, there were reports that the Fed is considering a loan package for AIG (this was information that was reflected in the share price prior to the Bloomberg report). Shares are now trading in the $4’s (at one point breaking $5 a share) as I hit publish.

I’m such a fool.

After-Hours Update: AIG dropped to $1.79, a fall of -$1.97, or -52.39%, from the close on news that instead of a loan, the Feds are considering conservatorship!

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