Monday, October 31, 2016

Zillow Zestimate vs. Reality: How Much Is My House Worth?

Almost everyone these days begins their search for a new home inside their old home. That is, if you’re looking to buy (or sell) a house, you’re very likely lying on the couch with your phone or a laptop, looking at some online real estate websites like Zillow, Redfin or Trulia – or entering your home’s information on the sites.

And while you’re poring over pictures of homes and examining numbers such as how many bedrooms or square feet a home has, the one number you’ll pay the most attention to is the price. That makes sense. If you’re selling your home, you obviously want to have an idea of what your home might fetch on the market before you list it or get too far along in your own home search – after all, why fall in love with a house that’s way out of your price range?

But many real estate experts say you shouldn’t pay too much attention to the home value estimates that real estate websites offer. In fact, even their very own executives have admitted that their online value estimates should be taken with a grain of salt.

Zillow, for instance, has said that its Zestimate tool has a median error rate of 8%. Of course, that sounds pretty good – a 92% success rate? But when homes cost hundreds of thousands of dollars, 8% matters: No one wants to overpay by $24,000 — or 8% on a $300,000 home. Plus, this is the median we’re talking about. In some parts of the country, the error rate will be even less and in others, quite a bit higher.

So when you use those home estimation evaluation calculators, remember three things:

1. These home value calculators rely on a formula.

The formulas are generally based on a set of factors, such as square footage and prior sales of other homes in the neighborhood. That said, homes are generally imperfect, as you know if you live in a home that’s been beat up over the years by you, your kids, and your pets.

That’s why many real estate agents have come to dislike real estate websites’ home evaluation calculators.

“There is no human interaction involved in coming up with these estimates. They’re based solely on an algorithm, with no one to determine the validity of them,” says Bill Golden, an Atlanta-based independent real estate agent with RE/Max Metro Atlanta Countryside.

Golden is also unimpressed with the numbers used in the algorithm. “The sites use a formula based on location and square footage, as reported by tax rolls, which are notoriously incorrect,” he says.

2. Online estimates miss the details of a home.

As noted, these tools can’t tell if your house is extremely lived in. They don’t know if a house or condo is covered in 1950s wallpaper, or if it was once a meth lab, or has 80-year-old wiring.

On the flip side, if you’ve recently renovated your kitchen and bathroom or added a $25,000 deck in your backyard, all of those improvement would bump up your home’s value — but the online estimators have no idea.

“The price that’s listed does not include upgrades, amenities, the current condition, or neighborhood irregularities. All of these are items that will reflect what buyers are willing to pay,” says Chantay Bridges, a real estate agent in Los Angeles.

And even if a house has three or four bedrooms, you don’t know if all of them are comfortable bedrooms that you’d want to sleep in — or if they more closely resemble a closet.

3. These calculators are a guideline, and that’s all.

This is common sense, and easy to tell yourself, but not always easy to remember if you’re getting dollar signs in your eyes believing your net worth is climbing or your home will sell for much more than you initially thought.

“Use the internet to do homework and help you learn about types of properties in which you may be interested and areas that intrigue you, but don’t get married to the values presented or even to specific listings,” Golden advises.

So… How Much Is My House Worth?

What should you do, then, if you’re selling your house and aren’t sure of its value? Golden naturally puts in a good word for his profession: He recommends you consult a real estate agent familiar with the area who can tell you the actual value of your home. But he also says you could bring in an appraiser.

Bridges is even more harsh in her assessment of online calculators that tell you what your home is worth. “The estimates… give consumers false hope… It’s a fantasy without any real substance,” she says.

She advises thinking of such home value estimates the way you would if you were looking for a potential Mr. or Ms. Right.

“You’re taking your chances just as if you were engaging in online dating,” Bridges says. “Just because the profile makes them look like a good catch, doesn’t necessarily mean they are.”

Related Articles

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Questions About Rechargeable Batteries, Child Guardians, Socks, Benjamin Franklin, and More!

What’s inside? Here are the questions answered in today’s reader mailbag, boiled down to summaries of five or fewer words. Click on the number to jump straight down to the question.
1. AAA alternatives?
2. Roth IRA for younger investor
3. Using Disney rewards credit card
4. Automated percentage savings
5. Switching to rechargeable batteries
6. Reality of quilting business?
7. Rustproofing recommendations
8. When to throw out socks?
9. Ben Franklin and success
10. Choosing guardians for my children
11. Finding new tax preparer
12. Productivity or time management books?

The most frustrating aspect of my life is that there is no such thing as a routine week. A week doesn’t go by without something incredibly disruptive to the ordinary flow of a day.

One day, I’m pulled out of bed in the middle of the night by a puking child. There have been four different visits to the doctor’s office. I have to spend two days going to another state on an emergency trip. Family members visit and stay for parts of four days, disrupting every normal household routine. That’s just in one single six day period.

There are times when I find it practically impossible to establish new routines and habits because my life is tossed so many curveballs and twists and turns all the time.

I haven’t yet found a magic solution for any of it, but I do know it’s frustrating to feel like you’re constantly juggling your work routines and life routines to fit the needs of everyone else. It’s a frustration I’ve felt almost constantly for the last four months or so.

Q1: AAA alternatives?

I hope you’ll mention alternative road service providers, such as The Better World Club. AAA spends a lot of members’ money on anti-environmental and/or pro auto industry lobbying that few people are aware of and many might disagree with. Even the Car Talk guys recommend looking elsewhere for this reason. While AAA has saved my bacon on more than one occasion, I also had an extremely bad experience with them, which, combined with the aforementioned misallocation of resources, prompted me to quit. In the Internet age, some of their ancillary services, like free maps, tour books, and tour guide services, are a lot less valuable than they once were. Initially I worried about losing discounts on hotels, Amtrak, and other services, but in the decade or so I’ve been away, I’ve only missed these perks maybe half a dozen times. Amtrak, ironically, offers no comparable non-AAA discounts that I’m aware of, but many hotels and such do.
– Nathan

I get many such emails criticizing specific groups and companies and I rarely include them in the mailbag because they’re usually hard to verify, but with this one, I was able to track down the surprising amount of lobbying that AAA does.

They’ve lobbied Congress in the past to raise the gas tax to build more highways but not raise gas taxes to improve conservation efforts. They also opposed the Clean Air Act, among many other stances.

They seem to spend a lot of money and effort on quiet political activism, which is something I didn’t know about the AAA before this. Regardless of your feelings on the stances they’ve taken, it’s worthwhile to note that they do spend significant money on political activism and not on features of AAA membership like roadside assistance or other consumer assistance programs.

Q2: Roth IRA for younger investor

I am a youngling just about to turn 25. My company provides a 3% match in a Vanguard SIMPLE IRA which I have taken for 2 years thus far. I am planning on paying off my debt next year and would like to begin building up retirement savings. I also have some funds with Betterment in regular investing. I have been told that while I am in a lower bracket, it is best to invest in Roth IRA’s which is what I plan to do.

Do you suggest I go with Vanguard, Betterment, or other? And if I do Vanguard, how do you suggest I invest my funds in both the SIMPLE and Roth? (Roth allows ETFs?)

My current Vanguard setup is with 3 funds, but $25/fund are eaten up by fees. I only have about $4,500 so far, but will have closer to $7,500 next summer after I receive my employer match (sadly on an annual basis rather than monthly). Would you suggest a better setup, i.e. fewer funds? I’m currently mixed up with a 2055 retirement fund, Total Stock Market Fund, and International Stock Market Fund. Roughly a 40/50/10 % allocation, respectively. 95% stock 5% Bond.

Any guidance would be appreciated and considered. I am an accountant, but I don’t know much about retirement planning aside from the general advice that we hear all the time – fewer eggs in one basket, lower fees, etc. And it would seem that advice with Funds would be slightly different than advice with individual stocks.
– Stephen

I’ve been a happy Vanguard customer for many years and I think their funds are a great value, so Vanguard is going to get my recommendation when it comes to an investment house. I have my own Roth IRA with them, with all of the money in that IRA invested in a Target Retirement Fund.

Here’s a summary of the fees that Vanguard charges with tips on how to avoid them. If you sign up for electronic delivery of statements and migrate your holdings to a single fund (like a Target Retirement Fund) for now, you’ll wipe out most of those fees, and the remaining ones will go away once your balance reaches $50,000. You can re-diversify once your balance is higher.

I think that if you’re wanting to handle your own diversification across multiple funds, you’re better off not having a Target Retirement Fund involved in the mix. The point of a Target Retirement fund is that it balances itself toward the retirement date you select; if you don’t like how it’s balanced, then you’re involved enough that you should be selecting the funds yourself. Honestly, if I were you, this far out, I’d have all of it in the stock funds evenly split between them (or something close) and then move some of it into bond funds much further down the road. I don’t see what benefit having that third Target Retirement fund in there is giving you at this point, since you desire your own balancing.

Q3: Using Disney rewards credit card

I am a newcomer to using credit cards for rewards and I am looking for a way to lessen the expense to disney world for my family of 5. I have already booked our trip as a package to stay on site at disney world but I have not paid for it in full. If I get the Barclay travel card or another travel card and pay for the trip with that card will the card let me use its rewards as a statement credit toward my account?
– Lana

There are many different rewards cards out there with different strategies for redemption. The Disney Visa card from Chase, for example, pays out rewards in the form of a gift card that you can use on site when you get there – here’s the details on that.

If you get a travel card that’s intended to help with the cost of the stay, you’re going to need to make sure you can actually apply it to the trip. I’m not sure whether or not you’ll be able to apply any points or rewards you earn at this point.

I think your best bet for helping with your trip – the one I’m sure will help at this point – is the Chase Disney card above, as you can redeem those rewards for gift cards that work on-site at Disney World.

Q4: Automated percentage savings

I run a small business and would love a way to automatically save (from my business revenues) X PERCENTAGE (not DOLLAR amount) AUTOMATICALLY to a separate savings account. ie:

$1,000 comes in via revenues/customer purchases
$100 goes out to this external online savings account that is harder to touch/withdraw from (use it for a savings goal like House purchase deposit, etc)
$900 goes off to the normal biz checking account

I cannot find any way to do as I mention above automatically and % based, only dollar amount. So as a small biz owner with monies fluctuating each month, rather than me just put a dollar amount of my paycheck aside each month, I want to take a % off the top each month before I see/get antsy to spend it, and set it aside.

Thanks for letting me know if you know such a way!
– Carlos

There isn’t an easy way to do this that I’m aware of, though it seems like a feature that an online bank could implement pretty easily. I looked through the information I had on a bunch of online banks and none of them seemed to have a feature anywhere close to this.

My income is somewhat variable as well. My strategy for automated savings is to do it on an automated basis based on a very low end estimate of my income, then I occasionally go in and manually move some more over to savings. Without some kind of percentage-based system, I don’t really trust any other method.

Q5: Switching to rechargeable batteries

Is it better to switch all of the batteries in the house to rechargeable batteries all at once or to do it slowly? I have some Amazon credit and realized how much we spend on batteries so I was thinking of using the credit to buy a charger and a bunch of AA and AAA batteries. Brand recommendations while I’m at it?
– Adrian

It’s better to switch everything all at once, but that does not mean going through your house and pulling perfectly good batteries out of devices. Instead, buy enough batteries to cover all of your needs and as the current ones die out, replace them with rechargeables.

If you have some extra unused non-rechargeable batteries in drawers, you may want to use them first before switching to the rechargeables. Leaving the non-rechargeables in a drawer means that they’ll eventually lose charge and go bad; use them now while they still have maximum value.

Aside from that, I’m completely on board the rechargeable battery train. I recommend using eneloop rechargeable batteries, made by Sanyo.

Q6: Reality of quilting business?

My grandmother has made quilts her entire life and owns a huge longarm quilting machine. I am the only grandchild who has been interested in her quilting and so recently she told me she was no longer going to make quilts because of her declining vision and offered to give me the machine. She says she will help me learn how to use it and walk me through some simple patterns.

While I wouldn’t mind being able to make a few quilts for friends and family, the quilting machine is going to take up a lot of room in my apartment. I live in a one room studio and the quilting machine and other materials would probably take up a quarter of the space.

So now I’m trying to assess the reality of doing this as a business. I don’t want to fill a quarter of my apartment with something that just sits there and making quilts for the sake of making quilts is expensive.

You can sell quilts for a lot on etsy but they’re really good quilts made with a skill level and an eye for design that I don’t yet have if I ever will.

Just hoping for some insights or food for thought here.
– Violet

More than anything, I think the question comes down to you. Does this quilting business seem like something you personally want to do and would enjoy, or is it something you’re doing because it feels like “tradition” or because you’re pleasing your grandmother?

In other words, without the presence of your grandmother, would you be considering starting a quilting business if an appropriate quilting machine dropped on your lap? Is it something you personally get a lot of enjoyment from?

If it is, then dive in. You’ll make some money from it and you’ll get a lot of personal enjoyment along the way. If it’s not something you love, then you might not want to do this.

Q7: Rustproofing recommendations

Is rustproofing a worthwhile investment in a car? Does it matter based on how far north you live? Recommendations?
– Charles

I think it depends on a lot of different factors, including your climate. The further north you live, the more exposure your car is going to have to the salts and other materials that are put on roads to make them passable in the winter months, which means a greater chance of rust. On the other hand, newer cars already come with pretty good corrosion protection built into them so that they won’t rust very easily – they certainly can rust, but it just takes a lot longer than with older cars.

My sense, after doing some reading on the subject, is that if you live in an area where there are only one or two (or fewer) winter storms a year, it’s probably not worth your money. If you live further north where winter storms are a regular occurrence, then rustproofing is probably worthwhile if you plan on owning the car for more than a couple of years.

My recommendation is to have someone local and trusted apply it and choose the drip oil spray option. Then, park the car in a place where dripping oil won’t be a problem for a couple of days.

Q8: When to throw out socks?

Hubby keeps wearing socks until they’re embarrassing. I throw them out when I get the chance but he gets mad if he finds them gone. When should socks be thrown away?
– Jenny

I don’t think there’s a hard and fast time to throw socks away. Different people will have different feelings on the subject and there’s nothing right or wrong about it.

Wearing a sock with a hole in it around the house isn’t a major disaster, in my opinion. I do it sometimes, as does my wife. I keep a few pairs with just a hole or two around for “house socks” to wear when I don’t plan to leave the property.

I do tend to avoid socks with holes in them when I leave home, though.

Q9: Ben Franklin and success

Found this article from The Atlantic: How America Lost Track of Benjamin Franklin’s Definition of Success. Thought you and your readers might enjoy it!
– Daniel

Basically, Benjamin Franklin retired early, at age 42, from his printing business. He had used the proceeds of that business to invest in many different things, so he was actually financially independent at that point and could spend the rest of his life doing whatever he wished. It is during that later period that he did virtually everything he was famous for – his experiments with electricity and his work as a statesman all occurred during his early retirement.

It’s a really good article and it brings up the powerful question of why relatively few people follow Ben’s example today. What changed?

I think the biggest thing that changed is that people have a much, much higher expectation of standard of living today than they had in Ben Franklin’s day. The idea of a utility bill didn’t exist back then. Neither did most loans, at least in the modern sense, as banking as we think of it today didn’t really exist. Most people lived in very humble homes with dirt floors and heated them with wood they chopped themselves.

It was a different life, one that didn’t involve a constant outflow of money and one that didn’t involve debt approaching six figures to have a craftsman’s job.

Wonderful article, well worth reading.

Q10: Choosing guardians for my children

I am a 26 year old single mother of three. Their father died of an undiagnosed heart condition two years ago. Thankfully we had life insurance and I have a good job so we are actually really financially stable.

I am struggling with guardianship issues. When I initially revised my will after my husband’s death, I instinctively put my parents down as guardians for my children. Since then, my father has begun to show early signs of ALS so I do not want to have that burden on their shoulders.

I have two older siblings. One is married with one child of their own, but they do not have much money and they seem to struggle with staying employed. The other is single with a very successful career. Both have said that they will happily take on guardianship.

How do I decide which one is the right choice?
– Anna

This is a decision that Sarah and I struggled with for a long time and, after having listed several different people as guardians, we did finally settle on her sister as our final choice.

I think, for you, your only concern would be which situation would be best for your children. If you get a “yes” response from someone, then your only consideration should be whether that household is the best option. You know the temperament of your siblings and you probably have a good grasp on what kind of parenting style they would each have. Which is the one you would approve of the most? Which one would provide the most nurturing environment?

In the end, you should follow what is in the best interest of your children, period. I do not believe that financial success is a strong indication of that, either. It has a lot more to do with the character of the potential guardians.

Q11: Finding new tax preparer

My long time tax preparer is retiring at the end of the year. How do I find a new tax preparer that I can trust? Don’t want to go to the big firms.
– Chuck

Ask your retiring tax preparer for a recommendation. That’s absolutely where I would start.

My guess is that you’ll have some interaction with this preparer in the next month or two as you gather materials to move on to another preparer. Ask your old preparer at that time. If there isn’t such an opportunity, just pick up the phone and make a call.

It’s likely that your old preparer knows quite a few other preparers in the area and can make a good recommendation for you. Unless there are mitigating reasons not to do so, I’d just follow that advice.

Q12: Productivity or time management books?

What books do you suggest reading on productivity or time management? I need to get more organized in terms of how I use my time.
– Dill

I read a lot of books in this vein. I find them interesting and inspiring and they almost always offer me some tweaks for what I’m doing.

The first book I’d recommend is David Allen’s Getting Things Done, which I’ve written about extensively in the past. It’s absolutely the best book I’ve ever read on setting up a sensible time management system.

I think a morning routine is invaluable, so I’d also point at The 5 AM Miracle by Jeff Sanders. When I can maintain a good morning routine, my life feels exponentially more productive, and this book is a home run when it comes to building a good morning routine as the foundation of your day.

A final book I’d point at is Essentialism by Greg McKeown. This book focuses more on finding ways to cut out less-essential tasks so that you have more time to focus on the things you personally find the most important in your life.

Got any questions? The best way to ask is to follow me on Facebook and ask questions directly there. I’ll attempt to answer them in a future mailbag (which, by way of full disclosure, may also get re-posted on other websites that pick up my blog). However, I do receive many, many questions per week, so I may not necessarily be able to answer yours.

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Sunday, October 30, 2016

Road Outrage: Low-Income Drivers Are Charged More for Car Insurance, Even With a Clean Record

There’s an unfortunate reality when it comes to auto insurance that many drivers may not be fully aware of: Low-income drivers who have a perfect driving record are charged more for auto insurance than high-income drivers with a spotty driving record.

That’s according to a new study from the Consumer Federation of America (CFA). Released at the end of September, the study found that auto insurance prices across the country are often more closely tied to a person’s economic characteristics than to their accident or ticket history.

“With the exception of the state of California, people who have a perfect driving record, but have social or economic characteristics that are more indicative of lower wealth, will pay more for auto insurance then someone with a higher income, even if that higher income person has driving violations such as speeding, DUI, or an accident,” says CFA’s Doug Heller. “It’s a really surprising and disturbing result, because most people believe that if you drive safely and follow the rules of the road, you’ll pay less for auto insurance than someone who has points on their record.”

The study used two drivers with different socioeconomic characteristics (such as home ownership, education level, and job title), and different driving records, to test premiums offered by the nation’s five largest insurers in 10 U.S. cities. In all, CFA made 600 requests for coverage and was provided 464 premium quotes.

Some of the takeaways of the CFA study include:

Upper-income drivers with DUIs often pay less than good drivers of modest means with no accidents or tickets on their record. In 21 of 30 tests (70%) in which a comparison was possible, a moderate-income driver with a perfect driving record was charged more for basic liability insurance than a high-income applicant who had a recent DUI conviction.

In Atlanta, for instance, Progressive’s premium quote for a moderate-income driver with a perfect record was $1,688, but for an upper-income driver with a DUI it was $958.

Moderate-income drivers with perfect records often pay more than upper-income drivers who caused an accident in which someone was injured. In 20 of 38 tests (53%), moderate-income drivers with clean records were charged more than high-income customers who recently caused an accident resulting in bodily injury.

In Baltimore, Geico’s quote for a moderate-income individual with a clean driving record was $2,612, but for the upper-income applicant with a record of causing an accident in which someone was injured, the cost was $1,886.

Progressive and GEICO consistently offer lower premiums to upper-income bad drivers than to moderate-income good drivers. About 78% of the time, the premium for a basic auto insurance policy from these two companies cost more for a good driver with a moderate income than for a higher-income driver with a recent accident and/or violation.

Of the 100 quotes CFA obtained from the two companies for higher-income drivers who had caused accidents or were convicted of moving violations, in only 22 instances was the driver with the worse record asked to pay more for car insurance than the good driver of modest economic means, states the report.

“Insurance premiums should be based on how we drive, not who we are,” says Heller.

So what can low-income drivers do to combat such practices when it comes to obtaining affordable car insurance? Here are some tips from Heller and also from the New York-based Insurance Information Institute, which was created to improve public understanding of insurance.

Shop Around

One of the biggest mistakes a consumer can make is to select an insurance company simply because you like their advertising.

“Don’t believe the advertising, you have to do some homework. Some companies that promise savings won’t necessarily deliver them,” says Heller. “Shopping around will save just about everybody money. It’s worth it for any consumer who cares about their pocketbook to spend an hour comparing premiums.”

And when making inquiries (and you should obtain quotes from at least three companies), pay attention to the questions insurance companies are asking, Heller adds.

“One thing is for sure – if an insurance company asks you about your occupation or education level or whether you own a home, they’re asking to use that information against you,” says Heller. “They’re generally asking that question because they include that data in their pricing.”

Take a Defensive Driving Course

The common misconception is that defensive driving courses are just for new drivers or people with blemishes on their driving record. But that’s not the case, says Michael Barry, of the Insurance Information Institute.

“I don’t think there’s wide public awareness of the savings you get when you complete a defensive driving course,” says Barry. “Taking a defensive driving course is one way to reduce your insurance cost.”

The amount of savings the course will earn you depends on the insurance company, says Barry, but you’ll definitely see a difference in your premiums.

Ask for Low-Mileage Discounts

For those who may not drive to work or only drive a limited number of miles, insurance companies typically offer low-mileage discounts. Make sure to ask about this option.

“Generally the auto insurer is working on the assumption that you’re driving about 12,000 miles a year,” says Barry. “So if you’re only going 7,000 or 7,500 miles a year, you may be able to save money.”

Bundle Policies

Insuring both your home and car with the same company will often earn you a discount on both policies.

“Some people have their auto and home insurance with different companies, and there may be good reason for that, but at a minimum you should explore what kind of discount you would get by insuring both with the same company,” says Barry.

However, for those who rent, as opposed to own a home, this is approach doesn’t typically translate into as much savings (because a renter’s insurance policy is far less expensive then a homeowners policy.)

Don’t Ignore State-Run, Low-Income Car Insurance Programs

Some of the most substantial savings for low-income drivers can be found via state-run, low-income car insurance programs. The downside here, however, is that only a handful of states offer them.

Both Barry and Heller point to California as a good example of one such program. Established in 1999, California’s Low-Cost Auto Insurance Program is designed specifically to provide income eligible individuals with affordable liability insurance. (The current income eligibility standards include an annual income of $29,700 for an individual, $50,400 for a family of three, and $60,750 for a family of four.)

Barry says only about 12,000 California state residents were taking advantage of the program the last time he looked into it. Some other states with insurance programs for low-income residents include New Jersey and Hawaii.

A Final Word

The cost of auto insurance is continually on the rise. The average auto insurance expenditure in the U.S. rose 3.3% in 2012, from $815 to $841, according to a 2016 report from the National Association of Insurance Commissioners. In 2013 (the latest data available), the average cost was highest in New Jersey ($1,254), followed by the District of Columbia ($1,187), and New York ($1,182). Among the least expensive states, meanwhile, are North Carolina, Nebraska, and Wyoming, with average policies costing around $630.

Short of moving, Heller says your best bet is to shop wisely.

“It’s tough. Shopping around will get us a little bit of the way. But we need regulators and lawmakers to take this seriously,” says Heller. “Insurance is one of the very few products that you’re required by the government to buy, and yet in most states, the government isn’t protecting us from bad pricing practices.”

Related Articles:

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Saturday, October 29, 2016

Why Podcasts Are the Best Entertainment Bargain on the Internet – And 30 Great Ones to Enjoy

Whenever I’m sitting at my desk working, I’m almost always listening to a podcast. Whenever I’m in the car, I’m almost always listening to a podcast. Whenever I’m falling asleep when I happen to be alone (like when I occasionally travel), I’m listening to a podcast.

Podcasts are easily my main source of entertainment and information. They make me laugh, they make me think, they even occasionally make me cry. A string of carefully selected podcasts is a lot like having your own radio station, programmed exactly the way you want it and, if you have a smartphone, accessible pretty much anywhere you happen to be – in your car, on the bus, at home, in bed, anywhere.

Let’s start off with the basics.

What’s a Podcast?

A podcast is simply an audio recording that you can download from the internet. Typically, these audio recordings are of people discussing some topic or another in a manner akin to a talk radio station. Usually, podcasts are released in series, with a new episode coming out every week or two. Podcasts are absolutely free. Many podcasters do it for the love of doing it, or support the podcast a little with an ad or two.

There are podcasts out there on virtually any topic you can imagine and there are usually dozens of podcasts on that topic. Current events. Board games. Music. Fantasy football. Knitting. Prayer. If you can think of a topic, there’s probably someone out there recording and releasing a podcast on that topic.

Most podcasts are done by amateurs or by small-scale entrepreneurs, not by big media companies. While you might occasionally hear an ad or two on podcasts, they’re rarely ad-laden and they’re usually done by people who are just purely passionate about the topic.

How Can I Listen?

There are many programs out there that allow you to listen to podcasts at your convenience. They let you “subscribe” to those podcasts, so that new episodes are automatically downloaded, they help you to discover new podcasts, and they also let you search for podcasts by name so that you can easily find one and subscribe to it to see if you like it.

On the desktop, I have yet to find a better free program than iTunes. iTunes simply does a great job of helping you find podcasts, automatically downloads new episodes, and makes listening easy to boot. It’s just my default recommendation for a desktop podcast organizer and player.

If you have an Android device, I recommend Stitcher as the absolute best free option for podcast subscribing and listening. It’s solidly designed, makes it easy to add and find new podcasts, and plays them perfectly.

For iOS, the default Podcast app works perfectly well, but I’ve fallen in love with another app: Overcast. It does several little things that I love, namely how it balances out the volume between podcasts so that you don’t move from a quiet podcast to a loud one. My only minor quibble is that I can’t sync my played podcasts with my desktop program, so I actually have a few “road” podcasts that are different than my “home” ones so I don’t have to worry about it.

So, let’s hear about some good podcasts!

18 Great Personal Finance, Growth, and Productivity Podcasts

Most of the podcasts I listen to are related to personal finance, personal growth, or productivity topics. Here are eighteen that I highly recommend because I’m a long-time subscriber to all of them.

Money Girl’s Quick and Dirty Tips is a short podcast that focuses on practical financial strategies. This one gets right to the point, so I actually find it’s pretty good for binge listening as you can listen to a bunch of episodes in just an hour or two. The delivery is light in tone, but sticks to the facts; there’s not a lot of “character” here, but that’s a good thing for what they’re bringing to the plate. (subscribe in iTunes)

The 5 AM Miracle is a podcast focused on various aspects of productivity. Unsurprisingly, one major aspect of this is morning routines: what do people do right when they get up in the morning? The host has a great radio voice; the episodes often alternate between interviews and surprisingly good monologue episodes. In most podcasts, I tend to prefer the banter between people, but Jeff Sanders (the host) does a really good job with his solo shows. (subscribe in iTunes)

The Productive Woman is a personal productivity podcast that does have a mild focus on women’s issues and how they intersect with productivity, but I actually find that almost everything discussed on the podcast is applicable to me as an involved spouse and father. This one has actually spawned some great discussions with my wife when we’ve both listened while on the road together. (subscribe in iTunes)

Listen, Money Matters is an “uncensored” personal finance podcast where two guys talk frankly and humorously about financial matters. While the tone is definitely light and funny, they do get down to some great financial advice along with the entertainment. (subscribe in iTunes)

Cortex is a show where two creative professionals (Myke Hurley and CGP Grey) discuss the tools and strategies they use to enhance creativity and productivity. The focus is really on the particular issues that creative workers – particularly those who are self-employed or entrepreneurial – face when needing to be productive. (subscribe in iTunes)

This Is Your Life with Michael Hyatt is a podcast focused on intentional leadership. The idea of “intentional leadership” actually covers a lot of ground, including things like work-life balance, good communication with coworkers, accountability, character, and many other such things. The show manages to maintain a very practical feel when talking about these things, which is something I really like. (subscribe in iTunes)

Radical Personal Finance is probably the best all around personal finance podcast that isn’t a rebroadcast of a syndicated radio show. The host, Joshua Sheats, manages to achieve that tricky balance of talking about personal finance in a way that’s useful without being preachy and brings lots of facts without falling into a boring litany of details. (subscribe in iTunes)

The Tim Ferriss Show covers lifestyle experimentation in a lot of different dimensions. This means that the podcast goes in a ton of different directions, hitting everything from workout routines to trying different foods to life extension practices to speed learning. It’s all covered here in a fast-paced and entertaining show. (subscribe in iTunes)

Your Money Matters is a podcast produced by the Wall Street Journal that focuses on tying personal finance issues to larger global affairs. The show really succeeds when they go deep into potential law changes and how they’ll affect your finances. The hosts are factual but manage to avoid ever making it boring. (subscribe in iTunes)

Entrepreneur on Fire is a great podcast focused on entrepreneurship. The host, John Lee Dumas, usually interviews an entrepreneur about how they launched their business, what tools they use, what mindset they have, and so on. The show comes out daily (!) and features all kinds of guests, ideas, and angles. (subscribe in iTunes)

The Dave Ramsey Show is a rebroadcast of much of Dave’s syndicated talk radio show where he discusses personal finance issues with his “tough coach” attitude that’s threaded with Christian inspiration. Ramsey’s simply good at bringing the advice, taking a tough tone and a matter-of-fact tone where it’s warranted while always being entertaining. (subscribe in iTunes)

You Are Not So Smart is a wonderful podcast dedicated to cognitive biases both good and bad (but mostly bad). The show really explores the various ways that our mind fools itself and the passion for this topic brought by the host, David McRaney, is infectious. (subscribe in iTunes)

Achieve Your Goals with Hal Elrod is a wonderful personal development podcast with a heavy focus on personal goal-setting. Most episodes feature an interview with someone who offers thoughtful insight on goal setting or steps for achieving common goals, and Elrod’s tone and quick pace make the whole package enjoyable. (subscribe in iTunes)

Couple Money Podcast is a wonderful personal finance podcast that focuses on many of the issues that couples have to deal with when it comes to finances. This is a great one to listen to at the same time as your significant other as not only will you be entertained, you’ll often be left with some food for thought and for deep conversation. (subscribe in iTunes)

Planet Money is a podcast produced by NPR that looks at finance from a bunch of different angles with a bunch of different contributors. Many episodes have a personal finance angle, while some will look at broader economic issues. Regardless of the exact angle, it’s always insightful and thought provoking. (subscribe in iTunes)

Beyond the To-Do List is a personal productivity podcast that succeeds because it brings so many different perspectives to the table. Every single episode is centered around an in-depth interview with someone who has a different angle on personal productivity that stands out from the many other perspectives presented on the show. The sheer variety keeps me listening. (subscribe in iTunes)

The Clark Howard Show, much like Dave Ramsey’s show, is a rebroadcast of a nationally syndicated radio program. Howard tends to focus on a mix of financial and consumer issues, often bringing up current issues like product recalls and how to buy certain items. (subscribe in iTunes)

Marketplace is a rebroadcast of a show that often appears on NPR stations that offers a great weekday mix of financial news and current events. The light touch of the show and the occasional links to personal finance make this my “high finance” show of choice. (subscribe in iTunes)

12 Great Additional Podcasts on Other Topics

I listen to a lot of different podcasts on a rotating basis. What I often do is listen to dozens of episodes of a podcast – perhaps the last year’s worth of archives – and then move on to another one. The best ones see me coming back time and time again.

What gets me to come back? Passion is probably the biggest thing. Passion means that the person is obviously passionate about the subject, no matter how esoteric or strange. I love passion, and passion can often engage me in a topic that I might not otherwise enjoy all that much. Some podcasts are hosted by people with great radio voices, but their heart isn’t in it; I’d far rather listen to an amateurish recording by someone who is really passionate.

These twelve podcasts are ones that I come back to time and time again. Although the subjects are … all over the place … it’s the passion of the people on those podcasts that keeps me coming back.

Serial, in my eyes, is the best demonstration of how great a podcast can be. The show is released in seasons, and each season (so far) has focused on a single story. The first season investigated a strange murder case in Baltimore, and the second season looked more closely at the story of Private Bowe Bergdahl who was a POW in Afghanistan under unusual circumstances. The host of the podcast, Sarah Koenig, is absolutely amazing in terms of her tone and approach to both seasons. Listen to all of this, from the beginning. (subscribe in iTunes)

The Moth is a series of live recordings of people telling stories about their lives. The windows into different lives provided by these stories is what makes the show so addictive. Some stories are merely okay, but then you’ll hear one that drives you to peals of laughter or brings a flood of tears to your eyes. (subscribe in iTunes)

The Pen Addict is a podcast about pens and paper, seriously. It’s basically a stationery, notebook, and pens podcast. It’s the sheer passion and enthusiasm brought to the table by the hosts, particularly Brad Dowdy, that make this one such an enjoyable listen (and has pulled me more into appreciating pens and paper than I would have ever expected). (subscribe in iTunes)

The Dice Tower is a podcast about board games “and the people who play them,” as goes the show’s slogan. While the hosts definitely dig into the nuance of modern board games, it’s the accessibility and enthusiasm of the show that really keeps me coming back for more. (subscribe in iTunes)

The Sword and Laser is a podcast about science fiction and fantasy books. The episodes release weekly and there’s an ongoing “book club” where the hosts read a novel each month and then discuss it throughout the month (saving the spoilers for the last episode of the month). Many episodes include interviews with fantasy and science fiction authors. (subscribe in iTunes)

D&D Is for Nerds is basically a recording of some very inventive and skilled improvisational roleplayers playing a tabletop role playing game. They get deeply into their characters and keep the action moving and lively, making it an unpredictable and sometimes humorous ongoing fantasy story. (subscribe in iTunes)

Science Fiction Film Podcast is pretty much exactly what you would expect. It’s a group of science fiction film buffs reviewing films in detail – mostly sci-fi films but sometimes treading into films in other categories. Their insights and attitude keep me coming back for more (and keep me going to the library to rent more DVDs). (subscribe in iTunes)

The Fantasy Footballers is an incredibly well done podcast on fantasy football, mixing analysis, humor, and conversation in an almost perfect blend. I am far from an avid fantasty football player, but this podcast is so enjoyable to listen to and so well executed that I can’t help but enjoy every listen. (subscribe in iTunes)

This American Life is a long-running public radio program that can best be described as a journalistic variety show. Each episode has a theme and there are several segments on the theme, most of which can be described as some form of journalism. In most episodes, you’ll laugh, you’ll learn something, and something will tug hard on your heartstrings. (subscribe in iTunes)

Lore investigates the reality behind folklore. The host, Aaron Mahnke, has a deep love for folklore and for figuring out what it’s really based on, and often it’s based on something utterly fascinating. Each episode is incredibly fun to listen to, coming across as a mix of a campfire story and investigative journalism. (subscribe in iTunes)

The Partially Examined Life is a wonderful podcast about philosophy and how it can be used to reflect on one’s life and, ideally, improve it. This podcast will leave you thinking about the world and about yourself, each and every time, and that’s why it’s such an essential listen for me. (subscribe in iTunes)

99% Invisible is a podcast about design, but more than that, it’s about the “invisible” things in life – things that we rely on or take for granted but are actually the result of a lot of careful thought and analysis. For me, this show is almost meditative at times in how it takes things that scarcely merit a second thought most of the time and show how thoughtful that thing actually is, like the arrangement of windows on the front of a house, for example. Every episode is surprising and enjoyable. (subscribe in iTunes)

Now get out there and listen to some podcasts!

The post Why Podcasts Are the Best Entertainment Bargain on the Internet – And 30 Great Ones to Enjoy appeared first on The Simple Dollar.

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Four Ways to Get a Faster Tax Refund in 2017

When it comes to getting your tax return as quickly as possible, there are two or three key pieces of advice that professionals typically offer year after year.

And then there’s the new ins and outs for the 2017 tax season.

For instance, few taxpayers realize that this year for the first time, no matter what you do or how you file, the IRS will be holding refunds that include the Earned Income Tax Credit or Additional Child Tax Credit until Feb 15.

The delay is tied to a 2015 law known as the Protecting Americans from Tax Hikes Act, which made several changes to the tax law and mandates that no credit or refund be made before Feb. 15 if the taxpayer claimed Earned Income Tax Credit or Additional Child Tax Credit on the return.

Yes, that’s a mouthful. But boiled down the takeaway here is that the change is aimed at giving the IRS additional time to review returns in order to prevent revenue loss tied to identity theft and refund fraud (which is often based on fabricated wages and withholdings).

While Feb. 15 may be long before some of us even think about filing, for others, who routinely get their returns in early, this may come as a bit of a surprise.

“People claiming the Earned Income Tax credit or Advanced Child Tax Credit are typically the population that files first and they tend to look for that refund within three to five days,” says Nina Tross, executive director of the National Society of Tax Professionals. “They would fully expect to have their refund by the end of January, but that’s not going to happen this year.”

One other development taxpayers should keep in mind this year is that the IRS is on heightened alert across the board for refund fraud, says Tross, which means there will be increased security protocols tied to filing and accessing previous returns.

“Refund fraud is the number one priority,” continues Tross. “It’s getting a lot of attention, so they are going to be looking at returns more closely.”

For the general public, the heightened security will involve such things as being required to provide a cell phone number in order to access tax returns from prior years, ensuring that you’re able to receive a text message and answer security questions.

“Fraud has become global, coming from Russia, Bulgaria, Romania… places where we have no presence,” Tross explains. “All we can do is stop it here and that effort involves having to provide additional identity verification.”

The takeaway for this one is to be prepared when filing and have all your key information available.

Here’s a handful of additional advice for streamlining the tax return process and getting your refund as quickly as possible.

File Early

This may seem like a no-brainer, but the professionals say many people still don’t realize the impact early filing can have.

“The reason behind this is that there are less returns being processed, so the earlier you get the return in, the quicker you get it back,” says Tracie Miller-Nobles, a CPA and member of the AICPA Financial Literacy Commission.

Make Sure All Information is Correct

Yes, this is another seemingly basic step, but it too can be cause for countless delayed refunds.

Take the time to review such things as your name, Social Security number, and bank routing number carefully. If you got married or divorced in the last year, double check that your name is updated, particularly if you’re e-filing.

“If you’re using tax preparation software, the software defaults to whatever the taxpayer’s last name is. So for people who have recently changed or blended names and are not paying attention that can cause an error. Make sure to correct for that,” says Tross. “In terms of the bank routing information, people seem to have the feeling that the bank verifies this stuff and that’s not the case.”

File Electronically

There are numerous ways available to file electronically these days. Those whose adjusted gross income is $62,000 or less annually may want to use the Free File software options provided by the IRS. There are many well known companies and software options available through this program, including TaxSlayer, Jackson Hewitt, and H&R Block’s Free File.

In addition, for a fee, there are countless commercial online tax preparation services and software.

Why is filing electronically a key part of getting that tax refund quick? The answer is it expedites the entire process.

“Electronic filing really helps in processing the returns,” continues Miller-Nobles. “Most certified public accountants are now required to e-file returns for clients. It speeds up the process of getting the return faster.”

Opt for Direct Deposit of Your Refund

This option may not be for everyone, particularly those who don’t have a bank account, but it’s one of the best ways to speed things up and get a fast tax refund.

“There’s a lot of reasons why this is beneficial,” says Miller-Nobles. “It gets the money into your account faster and you don’t have to worry about the post office losing the check.”

Taxpayers without a bank account may want to look into establishing an Individual Development Account. A valuable tool for low-income families, IDAs are savings accounts that in many cases are able receive a direct deposit.

If none of those options are available, Miller-Nobles has one last piece of advice.

“If the taxpayer doesn’t have a bank account and direct deposit isn’t available, then we really urge them to file early in that situation, and make sure that the refund checks are sent to a secure location,” she says.

Related Articles

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Friday, October 28, 2016

How Popular Television Shows Subtly Encourage Bad Spending Habits

Like it or not, we’re all influenced by the things we see and do and hear. Sometimes, we’re conscious of and aware of those influences, like when we’re talking to a friend and really listening to their advice. Often, we’re not conscious of or aware of those influences at all, like when we’re barely paying attention to the radio and it blares out a few advertisements.

Likewise, some of the things we see and do and hear are obvious attempts at convincing us to buy stuff. Blatant magazine ads, television commercials, internet ads, and radio commercials are clear attempts to get us to be aware of a particular product or a particular retailer. That’s the point of advertisements, after all. They’re designed to make us aware of – and to make us desire – certain products.

However, marketing doesn’t stop there. It often seeps directly into the programming itself, hoping to be an “influence” that we don’t notice as much.

It’s easiest to see this tactic at work on television, which combines both audio and video and offers a nearly infinite variety of programming. Television marketing is incredibly sophisticated; it’s loaded with things that sit right on the edge of our awareness and subtly increase our interest and desire for a wide variety of products.

Here are five tactics that you might see on your favorite television programs. Keep an eye out for them – you’ll be surprised how often they show up. And, as they used to say on one of my favorite cartoons as a child, knowing is half the battle.

Product Placement

In the above clip, you’ll see a ton of examples from popular television programs where products are blatantly placed into the programming itself. The camera will focus in on a particular product for several seconds and, sometimes, the characters will specifically mention the product. On occasion, it’s played off as a joke (like the clip at the very end of the video), but at other times it’s taken completely in stride.

This, honestly, is little more than a commercial embedded in your show. The characters use almost all of the same strategies that normal commercials use to convince you that the product is desirable – it’s sexy, it’s sophisticated, it’s funny, it’s “macho,” it encourages uninhibited behavior. The only difference is that the characters themselves become the product sellers.

Do things like this directly encourage sales? Maybe, maybe not, but their main purpose is to increase brand awareness. If placements like these increase your familiarity with a cell phone model or a particular brand of car, you’re more likely to choose that cell phone or car when you have a purchasing decision because that brand is familiar to you, thanks to that product placement.

Inexplicable Name Brand Usage

This is something of a variation on the normal type of product placement. I happened to notice it while watching the Netflix series Luke Cage, which depicts a former convict who is living a very down-on-his-luck lifestyle. During one scene that really stood out at me, he was shown cleaning up his very run-down apartment during a period where he had almost no income. Inexplicably, he was using a bunch of name brand cleaning supplies to do it. (I’d love to find a video clip of this that I could share, but after much searching, I came up empty handed.)

Now, stop and think about this for a second. This guy barely has enough money to feed himself and keep a roof over his head and he’s going to the store and spending a bunch of extra money to buy name brand supplies instead of the very similar store brand cleaning supplies? If this were a real situation, this guy would be using store brands and dollar store cleaning supplies, not name brand stuff.

There’s nothing inherently out of place about using a name brand cleaning agent, but showing people in financially challenging situations using them as though that’s a normal choice sends a really bad signal. There’s almost no reason for anyone to use name brand cleaning supplies over the store brand versions, especially if they’re in a financially challenging situation like Luke Cage was in that scene. It creates a sense that this is a normal expense even when times are tight. It isn’t.

Unrealistic Lifestyle Based on Career Choice

The above clip comes from the television show Friends, which shows off the giant New York City apartments that the characters live in. As you can see, the apartments are spacious with open floor plans and gorgeous furnishings.

Here’s the problem. According to best estimates, the rent on the somewhat larger apartment would come in around $5,000 a month. $5,000. At best, you would see three characters actively living in that apartment together; often, it was two characters together. This apartment was theoretically in Greenwich Village.

Now, within the show, they mentioned a time or two that this was a “rent controlled” apartment and it was rented out for $200 a month, which makes it realistic within that reality. Remember, the characters had jobs such as being a librarian, a barista, a mostly-out-of-work actor, and so on.

The problem is that it gives people the impression that two or three of them could go to New York and rent a big apartment together in the middle of the city for a reasonable price. I’ve known many people who have just believed that they could easily pick up and move to New York or San Francisco and afford a nice apartment there with a similar job to what they have now. While reality is likely to quickly change that, this type of unrealistic lifestyle choice that’s commonly depicted on television constantly convinces people to rent or buy homes and apartments they can’t afford, cars they can’t afford, and so on.

1% Lifestyles

On the flip side of that comes programs like Real Housewives of Orange County that blatantly depict the lives of ostentatiously wealthy people.

This type of show takes a different approach than the ones above. Rather than showing a realistic lifestyle that people can relate to, it instead shows an over-the-top lifestyle that few can afford. It’s intended to look amazing and glamorous and chock full of things that are simply outside of the spending limits of most of the viewing audience.

So, what does that have to do with convincing people to buy?

Many such shows are vehicles for getting people familiar with high-end brands. These shows tend to be laden with product placement, but here many of the products are high-end products. They’re smaller items that people could buy if they stretched their budget and, in doing so, can link their lives to the type of “millionaire” lifestyle shown on the show. Doing so, of course, is financially disastrous for most people, but that doesn’t prevent it from happening.

It’s also a vehicle for some of the stars to create a “personal brand,” from which they can sell products and do various kinds of endorsements and product placements. This strategy is spelled out really clearly in this profile of Kim Kardashian, where she discusses her “life as a brand” and lists some of the multitude of products that she endorses and promotes using her reality show fame and extensive social media following built from that television show. She may be the most successful at doing this, but she’s far from the only person doing it.

“News” Programming

The final category that I want to mention is “news” programming, by which I mean segments in the middle of news programs that are seemingly only meant to tell you about and sell you on a product of some kind. Apple products are a common beneficiary of this type of “news.” For example:

This is basically a 90 second advertisement for the iPhone 7 that’s aired as “news” content on CNN. It’s not “news.” It’s an advertisement.

This happens constantly, with a wide variety of products. They do the same thing with many Samsung products and many car brands, too.

Just because it says that it’s news programming doesn’t mean that it’s not an ad for a product, whether or not the company involved paid for that ad or not.

What Can You Do?

So, what can you do? If so much of television programming is geared toward selling you products and raising your recognition of different store brands, how can you avoid those things?

The first thing you can do is simply cut down on your television viewing. Do other things. Go on a walk. Read a book. Make an interesting meal for supper. If you’re tired, go to bed instead of watching television in a daze. Just turn it off.

The next thing you can do is be selective in what you watch. If you happen to notice these tactics in the programs you’re watching, consider watching other things. I’ve found that lower budget independent movies and documentaries are largely devoid of these tactics.

Finally, just be aware of these things and constantly question them. If you’re watching a news story, ask yourself if this is actually news or just an ad for the product. If you see the camera focusing in on a product when you’re watching a drama, be conscious of what they’re doing there.

In the end, the best thing you can do is be more aware of how you think and what’s influencing your thinking, and watching television with a critical eye is very worthwhile in that regard. The same holds true for magazines, newspapers, websites, and pretty much every other form of media.

Good luck!

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Is Borrowing Against Life Insurance a Good Idea?

In addition to providing money for your beneficiaries when you die, permanent life insurance policies build cash value that you can borrow against while you’re alive.

Borrowing against cash value policies offers advantages over traditional loans, says Matthew Carbray, a certified financial planner based in Avon, Conn.

“Borrowing from a life insurance policy can be a favorable way to get access to quick capital,” he explains. “Depending on the policy structure and underlying insurance vehicle, most policies will allow for a policy loan upwards of 90% of the current cash value.”

You can borrow against your life insurance policy for any reason, says Erick G. Colon, a financial advisor with Concord Wealth Management in Massachusetts.

“The loan can be used for any purpose, whether it’s for education, purchasing a home or car, or as a source of funds in the event of loss of income,” he says.

How Life Insurance Policies Build Cash Value

While term life insurance policies remain in effect for fixed periods, permanent or cash value insurance covers you for your entire life.

These policies typically cost more than term life, but a portion of the premiums is invested. Money earned from the investment creates a cash value that can be borrowed against.

When you borrow against a cash value policy, “you’re basically borrowing your own money,” says Emory J. Smith, founder of EJS Financial Management in Phoenix.

Benefits of Borrowing Against Life Insurance

There are a variety of reasons to consider borrowing against your cash value life insurance policy. They include:

Greater flexibility. These loans give borrowers many options. Your policy’s cash value becomes the collateral for the loan, so you can decide how to use the money. Investopedia notes that insurance companies typically require no explanation.

Reduced interest rates. The interest rates on cash value loans often are lower than the rates you’ll receive from credit cards and personal loans. Personal loans typically have high interest rates. The average rate for a 24-month personal loan was 9.65% in August 2016, according to the Federal Reserve.

No credit check required. One of the advantages of a cash-value loan is you don’t have to have your credit checked, says Aron S. Brodt, a financial services professional based in Brooklyn, N.Y. If you have cash value in your life insurance policy, you can borrow against it, even if you have bad credit otherwise. You can’t be turned down because of a lack of creditworthiness.

Repay it whenever you like. You can set your own timetable for repaying the loan. However, if your policy lapses before the loan is retired, you may owe tax on some or all of the portion that hasn’t been repaid, says Smith.

Drawbacks of Borrowing Against Life Insurance

While borrowing against your cash value life insurance has benefits, there also are potential drawbacks:

You’ll decrease your assets. It’s important to make sure the loan is truly necessary. Once you take out a loan against your life insurance policy there will be fewer assets to borrow against in the future.

Your policy may be at risk. Remember that the interest on this type of loan typically is subtracted from your permanent life policy’s cash value. Once the loan and interest exceed the value of the policy, it can lapse. If that happens, “there is the possibility of a taxable event,” says Carbray.

Your death benefit may decline. If your dependents are counting on your life policy for support, be aware that an outstanding loan at the time of your death typically will reduce the benefit, says Smith.

Cash value builds slowly. Before you can borrow against a permanent life insurance policy, it must build value. In the early years of your policy, there may be little value for you to borrow against.

Will You Benefit from Borrowing Against Life Insurance?

This type of loan may be a good alternative for people who face unexpected debts and don’t want to take out more costly personal loans or increase their credit card balances.

Before you take out the loan, though, consider consulting a financial advisor who can help you decide if this is your best option for raising the money you need.

Don’t forget that the original purpose of your life insurance was to provide a death benefit. If you die before you repay the loan, your insurance company will repay the debt by reducing the payout to your beneficiaries.

“In general, a policy owner should only borrow against their policy if they intend to repay the loan or they are certain the policy will not lapse prior to their death,” Smith says.

Related Articles:

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Thursday, October 27, 2016

31 Days to Financial Independence (Day 11): Trimming Your Spending – Food

“31 Days to Financial Independence” is an ongoing series that appears every Thursday on The Simple Dollar. You might want to start this series from the beginning!

Last time, we started looking at the average American family budget, going through each category and examining how one could trim the cost of typical expenses in that category. Here’s the “average American family budget” that we’re looking at, along with links back to the earlier entries on those specific areas:

Housing – $10,080
Transportation – $9,004
Taxes – $7,432
Utilities – $7,068
Food – $6,602
Insurance (including things like pensions) – $5,528
Debt Payments – $5,252
Healthcare – $3,631
Entertainment – $2,564
Cash Contributions – $1,834
Apparel and Services – $1,604
Education – $1,138
Vices – $775
Miscellaneous – $664
Personal Care – $608
TOTAL – $63,784

Today, we’re going to take a look at food spending. As you can see from the budget above, the average American family spends $6,602 per year on food. That averages out to $550 per month. Remember, however, that this “average American family” includes single adults, married couples without children, and families with children, too. In other words, a single person is probably coming in below that, whereas a large family (like ours) is probably coming in above that.

The thing is, food is a budgetary area that’s extremely easy to cut back on without reducing the quantity of calories consumed or the quality of food. There are many, many things you can do to trim the cost of food.

Exercise #11 – Trim Your Food Spending

The rest of this article consists of a long list of specific tactics that you can use to trim your food costs. As with the other savings articles in this series, it’s important to remember that everyone lives a somewhat different life and thus some of these tactics are going to seem useful and sensible to you, while others will seem like a stretch to you, and still others won’t apply at all. That’s okay. Ignore the ones that don’t apply. Make an effort to adopt the most sensible ones. Then, give the others a trial run and see if it’s something that can work for you. Commit to some of the challenging ones for thirty days and see if they work, or apply them during the relatively rare situations when those costs come up.

Remember, your overall goal is to cut back hard on the areas of life that are less important to you – the shallows – so that you can afford the “deep” areas of your life both today and tomorrow. Keep that in mind as you read each tip. Is this tip cutting back on something that’s really important to me, that amounts to a core life value? If not, why not cut it so that I can afford those things that really matter?

Let’s dig in.

Make weekly meal plans based on the grocery store flyer before you go to the store. Just sit down with a piece of paper or a whiteboard or a blank document on your computer or phone and list out all of the meals you and your family will eat in the next seven days, then start filling in the blanks. You know that your family is going to have to eat supper next Monday – what will that be? What will everyone have for breakfast next Wednesday? With the aid of your calendar and the knowledge of how a typical week goes, you can start making those decisions now.

It’s a very good idea to go through this process with the aid of the weekly grocery store flyer from your preferred grocer (more on that in a bit). Use the ingredients on that flyer to plan your meals. That way, you know that when you buy the ingredients for that meal, you’re naturally going to be buying ingredients that are on sale at the store.

This saves money in a number of ways. For starters, it allows you to think in advance about your meal plans so that you’re not stuck making last-minute decisions about your meals. Last-minute decisions almost always wind up being expensive decisions. Second, you’re taking advantage of sales by incorporating the grocery store flyer. Third, by planning ahead, you’re more likely to choose meals made at home, which are substantially less expensive than meals eaten out.

Make a grocery list based on those meal plans and your actual needs at home. Once you have that meal plan, turn it into a grocery list. Look around your home for the elements of that meal plan that you already have and only add things to your list that you don’t have – ideally, just fresh ingredients and whatever perishable items you’re running low on.

This process of going through the items you have on hand to figure out which ones you actually need almost always results in a shorter grocery list than you might have expected. Occasionally, it might result in a minor change to your meal plan – “oh, hey, look, I have some instant oats in the cupboard, so I’ll just have that for breakfast on Wednesday” – that also causes your grocery list to be shorter.

The shorter your grocery list, the better. A short grocery list means an emptier cart at the store and a smaller bill at the checkout aisle, which means more money stays in your checking account.

Shop for groceries based on that trusted list. The next step is to head out to the grocery store with that list in hand and buy all of the ingredients you need. Since you planned that list based on a meal plan that was itself based on the grocery flyer, many of the things on your list are going to be on sale already. Couple that with the fact that you filtered the list based on what you have on hand and that list should be tight – it’ll have just things that you need and many will be on sale. That’s a list that’s going to save you money.

Not only that, having a list in your hand in the grocery store means that there’s no need to wander the aisles at all. You know what you need, so you just walk from item to item on the list, putting them in your cart and moving on as efficiently as possible. When you’re focused on that list, you’re much less likely to have your attention wander, and when your attention wanders in a grocery store, you wind up with unintended purchases in your cart.

A tightly focused grocery list gets you in and out of the grocery store as fast as possible with a minimum number of items in the cart. Not only will that save you a lot of money on your food purchases, it also recovers the time invested in preparing the meal plan and grocery list.

Settle on a regular discount grocery store that you trust. Of course, even the best grocery list strategy won’t save you a lot of money if you’re paying a premium price for everything in the store. The best approach to take when it comes to grocery shopping is to make a discount grocer your primary grocery store.

What’s a “discount grocer”? It’s simply a grocery store where the focus is on low prices on the shelves. Usually, such stores are organized and arranged very simply without a lot of extra amenities. Some examples of this include Fareway (my grocery store chain of choice), Aldi, and Trader Joe’s.

The advantage of using a store where the prices are normally quite low is that, no matter what’s on your list, you’re going to be paying less than you would at a typical grocery store. It’s almost like going to a normal grocery store only to find that literally everything is on sale.

Eat out less. Naturally, the idea behind such a focused grocery store strategy is that you’re going to be eating lots of meals at home. In truth, that’s the core of saving money on food – eating at home.

No matter how you slice it, eating out or getting food delivered or picking up ready-made meals is going to be far more expensive than making comparable meals at home. That’s because you’re paying those restaurants for the labor of actually preparing your food and delivering it to you. If you cook at home, you save that cost.

Isn’t eating out more convenient, though? Even if you’re eating at a fast food drive-thru, you’re still waiting in line, ordering food, waiting for the food to be prepared, and paying for it, which does add up. Eating out isn’t instantaneous and often has a similar time commitment to a fairly quick meal at home. That leads us to the next strategy…

Learn how to prepare a number of well-loved meals quickly and efficiently. If you have a repertoire of ten or so meals that you like and that your family likes, particularly when those meals can easily be varied to provide different flavors and textures, and you can prepare those meals quickly and with minimal effort and cleanup, you have little reason to eat out very often.

The trick, of course, is reaching the point where you can prepare meals you enjoy quickly and with minimal effort and cleanup. That only comes with practice. The more you prepare your favorite meals, the more efficient you become at every aspect of the preparation (and you also improve your efficiency at other meals).

This takes time, but it’s an investment of time that really pays off. Your first meals will be slow and messy and perhaps not perfect, but you will improve with each attempt until the process becomes second nature. At that point, preparing meals at home often seems like the most sensible choice.

Rely on low cost staple foods as much as possible. Some recipes are simply more expensive to prepare than others because of the cost of the core ingredients in that recipe. A meal that’s centered around a perfect steak, for example, is going to have a premium cost.

One great strategy for keeping average meal costs low is to fill most of your meal plan with meals that are centered around low cost staple foods. Dry beans, dry rice, chicken, peanut butter, eggs, cottage cheese – all of those things are inexpensive staples around which you can center a lot of different meals.

Make those low cost staples the centerpiece of a lot of meals and you’ll save a lot of money. You can buy the dry ingredients, like beans and rice, in bulk because they become even cheaper and they’ll last forever.

Use a slow cooker. A slow cooker is an amazing device. You can simply put a handful of ingredients in the slow cooker in the morning, hit a button or two, and then walk in the door after work to a delicious home-cooked meal that’s ready to put directly on the table. It’s absolutely perfect for busy families like ours; in fact, we use ours two or three times a week to allow for homecooked meals in situations where time constraints might force us to pick up food or get takeout.

Slow cookers excel at things like soups, stews, and casseroles – things that work really well when cooked slowly over several hours. Most of those meals, particularly soups, amount to literally adding ingredients to the cooker in the morning, turning on the heat, and enjoying it in the evening. It’s about as easy as can be.

Another great use for a slow cooker is for making broth or stock. Just save your bones and other scraps from meats and any vegetable scraps you might have and boil them together. A pot full of chicken bones and vegetable scraps, filled up with water and left to slow cook all day, turns into a wonderful broth that can be strained and saved for future soups and other meals.

Prepare multiple batches of meals and freeze them. If you’re already making a casserole or soup or stew for dinner, why not make two or three batches of the same thing and freeze the extra batches for later use? Doing so adds only a little work if you’re already preparing a meal.

Another strategy is to prepare a full second batch, cook it at the same time, and then divide it into individual meals for reheating. A pan of lasagna, for example, can be split into twelve individual pieces which, when placed in individual freezer containers, can provide many lunches going forward. A well-stocked freezer provides lots of meals that are ready to be pulled out and thawed in the refrigerator. These meals can then easily be heated at your convenience in the next few days.

The big advantage here is that it allows you to buy ingredients in bulk when it might not otherwise make sense to do so. If you’re making lasagna because the ingredients are on sale, for example, you can make a “cheap” pan by buying double the ingredients. Similarly, if you can get a much cheaper price per noodle on a jumbo box of lasagna noodles, making multiple pans at once can be a real money saving proposition.

Drink water instead of soda or other beverages. Water is an extremely inexpensive beverage, and it serves its key purpose incredibly effectively. It quenches your thirst. It hydrates you. It has zero calories. It’s also incredibly convenient and pretty much free.

Virtually every other beverage out there fails in at least one of those areas. Almost everything is more expensive than a cup of water, the cost of which is substantially less than a penny if poured from your tap. Many beverages fail to hydrate you. Many beverages are loaded with calories. Many beverages actually don’t quench your thirst at all.

Make water your main beverage. Not only will you feel better, you’ll also save yourself quite a bit of money along the way.

Buy nonperishable foods in bulk when they’re on sale. I touched on this idea above a few times, but it really deserves to be said on its own. If there are nonperishable foods that you use regularly in your meals, buy them in enormous bulk. Fill up your cupboards with rice if you use rice in a lot of meals. Fill up your cupboards with dry beans if you use dry beans all the time.

When you buy nonperishables in large bulk, you drive the price per pound down as low as you possibly can. Buying a twenty pound bag of dried beans, for instance, often reduces the price per pound for beans to about 60% of the cost of buying a pound by itself. If you’re going to use those beans, that’s a tremendous bargain – basically, the first twelve pounds cost you the same per pound as the one-pound bags, but the next eight pounds are free.

Look at the nonperishable foods you use all the time in the kitchen and then look into the possibility of buying those items in large bulk through warehouse clubs or other opportunities. You’ll likely end up saving a whole lot of money.

Buy dried beans and rice and prepare them in advance when it’s convenient. One reason that people rely on the convenience of precooked canned beans or on instant rice is because of the time involved in preparing dried rice and dried beans. When you’re trying to prepare a meal with beans in it, for example, waiting for beans to cook can just stretch out meal preparation too far.

The solution is surprisingly simple: just cook the rice or beans a day or two earlier and store them in the refrigerator. Let’s say you need some cooked beans for a chili soup in the next few days. Cook the beans now when you have some time. Bring them to a boil on the stovetop and let them sit in the hot water for an hour or two, then drain the beans and put them in the fridge. Boom – it’s actually easier at that point than using canned beans!

Every time you can take an element of a meal and prepare it earlier, do so. This makes the actual meal preparation even easier, and when meal preparation is easy, you’re more likely to do it instead of going out and spending more money on food.

Next time, we’ll take a look at how to save money on insurance.

The post 31 Days to Financial Independence (Day 11): Trimming Your Spending – Food appeared first on The Simple Dollar.

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Five Signs You Need a Career Change

Contrary to what you might have heard, no one is really sure how many careers the average person has in the course of a lifetime – in part, because many career changes are hard to define. If you start out your career as a Registered Nurse, become a Nurse Manager, and then later go on to work in hospital administration, have you had one career, or three?

Regardless of how you define them, careers are fluid, and most of us will have at least a few. The more important thing to know is when it’s time to consider moving on to the next phase of your working life.

These are all good signs that it’s time to start thinking about what comes next:

1. Your industry is dying.

The Bureau of Labor Statistics’ Occupational Outlook Handbook tracks occupations’ median pay, educational requirements, and growth rate. If you’re trying to figure out if your job will still exist in a few years, it’s a good place to start.

For example, if you’re Statistician or a Wind Turbine Service Technician, good news – both occupations are projected to grow at 30% or faster between 2014 and 2024. On the other hand, if you’re a Broadcast News Analyst or Medical Transcriptionist, it might be time to retrain, as both occupations are expected to decline.

2. You’re chronically burnt out.

When we think of job burnout, we often picture the behavioral evidence that someone is about to reach their breaking point – snapping at coworkers, for example, or becoming critical of the job. But burnout can manifest as physical symptoms as well, appearing as everything from insomnia to getting sick more often.

If you’re feeling not quite right, and your doctor can’t find anything wrong with you, the issue might be career-related. Engage in some self-care now, while you figure out what you want to do next. Your coworkers will thank you, and you’ll be able to embark on your next phase with a clear conscience.

3. You don’t want your boss’s job.

There’s no rule that says that you have to climb straight up the ladder, but in many professions, if you don’t want your boss’s job someday, there’s really nowhere else for you to go. If you don’t love what your manager does all day, and there’s no other path forward or way to earn more money as your experience grows, you might want to consider whether it’s time to look into another career.

You don’t have to be a manager to be a success. But you do have to plan carefully to achieve a non-management track career that meets your emotional and financial needs.

4. You have the ‘Sunday Night Blues’ …all week long.

No matter how much you love your job, you’re going to have the occasional day where you’d rather be on the beach or the golf course instead of heading into yet another meeting. That’s perfectly normal. What’s not normal is dreading every day like it’s your annual review and you haven’t met your goals.

If you’re always dragging your feet as you head out the door, it might be time for a change. Consider the famous quote by late Apple founder Steve Jobs: “For the past 33 years, I have looked in the mirror every morning and asked myself: ‘If today were the last day of my life, would I want to do what I am about to do today?’ And whenever the answer has been ‘No’ for too many days in a row, I know I need to change something.”

If the issue is what you do – as opposed to a problem with your boss or your employer – you might want to think about changing careers, and not just looking for a new job.

5. You’re not excited about your work anymore.

Sometimes, it’s not that you hate what you do for a living, but that it just doesn’t excite you. This isn’t to say that work needs to fulfill all our needs; many people earn a living doing one thing and feed their soul doing something else. But if you used to feel passion for your work and now you’re feeling ho-hum, it might be time to consider whether a change in scenery would reignite your excitement.

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