We Got Our Insurance Deductible Back

Happy!

Some years ago we got into a car accident.

Fortunately I called the police and had the officer file a car accident report.  As a result, a full report of the accident was on file for my insurance company to use in their case against the person who hit us.  If we didn’t have a report on what caused the accident, the other driver, then we would have been responsible for the deductible.

Not calling the police would have cost us $1000!

How is that possible?  The other driver rear ended us putting the fault of the accident on him.  Without that police report stating what happened, and that the other driver got a summons for driving too close, then we would have shared the blame in the accident.  That would have meant we’d have to pay our $1,000 deductible.

A little while after we repaired the car from the accident we got a check in the mail from the car insurance company for $1,000.

Whew!  Everything worked as it was supposed to and we got our insurance deductible back.

Our insurance company paid for all of the repairs but we had to pay $1,000 of the repairs out of pocket.  I was afraid everything would drag out and it would take even longer to get the deductible back.  Or even worse, something would happen and we wouldn’t get it back.  In fact the collision company that fixed our car stressed that we should firmly follow up with our insurance since some companies keep the deductible.  You always hear about some paperwork SNAFU that causes you to not get your insurance money.  Thankfully our insurance was great and they paid us back without any problems.

So you understand, our insurance takes all of the information about the accident and basically sues the other driver’s insurance company for the damages.  The success of the case determined whether we got our deductible back.  If our insurance couldn’t win it back then we wouldn’t get it back either.  Fortunately that wasn’t the case.  A big part of that was having a police report saying the other driver rear-ended us.

Some of you might wonder why our deductible was so high?

I set it up that way with my insurance so I would have lower payments.  Since we had the $1,000 socked away we could afford to have a high deductible.  A higher insurance deductible is a great way to save on your car insurance.

This is a great example of why it’s important to have adequate savings! If I couldn’t back up the deductible I’d be paying higher insurance OR I might have to find the money somewhere else such as a credit card.  That would not have been good.

If you are going the higher deductible route to save on your car insurance make sure you have that deductible handy in savings.

So to recap: Make sure you have the police at a car accident.  And raise your car insurance deductible as much as you can afford in order to get lower car insurance payments.  Also have enough savings to cover your deductible should you ever need to pay it.

Creative Commons License photo credit: curly_exp( l)osure

Personal Finance In One Simple Equation

We’ve heard it all before haven’t we?

The simple way to build wealth is to spend less than you earn.  Let me demonstrate this as a simple equation:

Spending < Earnings = Savings

That’s it in a nutshell.

Take what you earn.  Now look at what you spend.  If what you spend is less than what you earn then what is left over is savings.  Let that grow and invest it properly and you will build wealth.   You only need two numbers to figure out that math!

Let’s use dollar figures.  You earn $3000 a month.  If you spend $2999 you have a dollar left over for savings.  What’s a dollar you ask?  In today’s economic climate one dollar of savings will put you in better shape than corporate giants like Lehman Brothers, which is declaring bankruptcy, Enron, Worldcom, or Merrill Lynch, which was bought by Bank of America.  And that dollar will have friends joining it every month as long as your spending is less than your earnings.

Now imagine if you could increase that savings amount either by spending less or earning more?  The savings will build up faster!

Let’s change the equation slightly now:

Spending > Earnings = Debt

Spend more than you earn and you are in debt.  You have to be.  Where else could the money come from unless it’s borrowed?

Back to the numbers…  You still earn $3000 a month but now you spend $3001.  You’re in debt.  Where do you get that extra dollar to get out of debt?  Maybe you borrow it from a friend?  Maybe you put it on a credit card (another name for debt)?   Either way it won’t materialize from out of nowhere.

And what happens the next month? 

Either you lower your spending by a dollar (assuming no interest) or you increase your earnings so you can pay back the debt.  If you don’t then your debt increases!  Just like our savings example that debt will keep growing until you find a way to pay it off.  If you let it grow too long then you get to be in the same boat as some financial institutions as you either have to declare bankruptcy or find someone to bail you out (and really if someone bails you out you will probably still be in some sort of debt).

As complex as personal finance can be sometimes it still boils down to a simple equation.  Plug in your spending and earnings. 

Too often we over-complicate the ideas that make up personal finance.  In reality the concepts are pretty simple, aren’t they.  Sure, you can go nuts poring over the different ways you can invest your money but the simple concept is clear — spend less than you earn and you can save.  That savings can help you build wealth.

Are you saving or in debt?

Our Vacation To Virginia Beach And Such

We got back a few days ago from our trip to Virginia Beach. According to Google Maps this was around 380 miles and should take about 7 and 1/2 hours to get there (more on that later).  We drove down on Sunday morning and came back Friday evening.

I was originally going to call this our “staycation” but it seems that staycation really means that you stay home and go to local attractions.  Still, this was our first driving vacation.  In previous years we would fly to our destinations.  Since we just bought a new mini-van we figured it would be a great time to drive and save money on plane fare too!  Virginia Beach seemed close enough to drive to from NYC and we heard a lot of great things about it.

So we packed up our stuff and put the kids in the car and left Sunday morning.  Many, many hours and rest stops later we finally made it to Virginia Beach (we had a major delay at one point but more on that later).  It was basically an all day drive for us, what with stops and all.  One exciting about the drive was going over the Chesapeake Bay Bridge-Tunnel which spans 20 miles (on the way back we saw what might have been a a Navy Destroyer passing through the channel section).  It was also interesting to see all of the different towns and landscapes in the different states (four total: New Jersey, Delaware, Maryland, and Virginia).

Virginia Beach is beautiful! Our hotel really was just two quick blocks to the beach!  There was a beautiful boardwalk on the beach to walk along with a separate trail for bikes (we wanted to rent a bike for all of us but we didn’t get a chance).  Within two from the beach are places to eat (the four main  food sources seem to be seafood, ice cream, waffle/pancakes, and pizza), shops, a fun house, a haunted house, lots of ice cream shops, outdoor performance areas, miniature golf, and more!  It was really fun to walk around at night and take in the scenery.  In fact one of the performances we saw was the Edgar Winter Group at a bandstand right off the beach (we caught Frankenstein and Free Ride)!

An interesting thing we discovered was that Virginia Beach is close to a Naval base.  As a result there are military jets flying routes overhead all day.  Living near two airports in Queens, NY I’m used to hearing planes overhead but seeing military jets is different.  The last time I saw a military jet flying was on September 11th over the Empire State Building so it brought back some somber memories.  Once I got used to that though it was pretty awesome seeing the jets flying.  At times we would see three together flying in close formation.  If we ever go back we’ll have to tour the Naval base!

Funny story…One day my daughter wanted to go to the pool rather than go to the beach.  She couldn’t quite grasp that we didn’t drive 400 miles to go to a small hotel pool!  Well the beach won out.  As I was playing with her, jumping waves I saw a fin a little ways off.  I noticed it was a curved fin.  I told I thought I saw a dolphon but wasn’t sure.  She got worried thinking it could be a shark!  A few minutes later I saw for sure two dolphins swim to the surface.  Other people noticed it too.  In all there were about four dolphins swimming around and playing a little ways off from us.  We saw a couple jump out of the water and twist.  We must have watched them swim around on and off for the next hour!  At one point, holding my daughter up to see the dolphins, I asked her if she would have rather stayed at the pool.  Begrudgingly she said no, that it was much more fun at the beach.  Ha!  On a similar note, I had seen dolphin watching boat rides advertised for about $20 a person.  We saved a bundle by just going to the beach instead!

As well as the beach and the local scenery we also went to the Virginia Beach Aquarium and spent a day in Colonial Williamsburg.  The little princess loved seeing all of the old time building and costumes.

Remember how I said Google Maps said the trip should be 7-8 hours?  I’ve discovered that with two kids we have to add at least 30% to the time listed!  Coming home took much longer with stops and traffic entering NYC.

The trip was a lot of fun and I would definitely consider going back to Virginia Beach but it seems for us every silver cloud has a lead lining.  While driving down there we got into a car accident.  We got rear ended on the highway.  Our brand new car now has a dent in the front and a smashed in rear door.  No one was hurt and the car runs but it really hurts to have a new car get beat up like that.  The accident was the other person’s fault and insurance should cover the repairs but it did put an ill feeling over the trip.  We even considered going back home after the accident but we’re glad we went through with the trip.

In all I think we saved money by not flying off someplace.  We certainly spent money but it was less than we would have flying to a Caribbean locale.

Accident aside, we had fun and I think we have more driving trips in our future. As you can see from the Frugal Things To Do series there’s so much to see and do in this country!  Even a couple of days before the big trip we went out to Sesame Place and a couple of weeks earlier we went to the Bronx Zoo.

Sprint SERO Meet Everything Plus

sprint-everything-plus

It was just a little while back that I updated you on my Sprint SERO plan.  Now it seems the Sprint SERO plan is no more.  To recap, the Sprint SERO plan was an employee referral plan that offered great rates and included unlimited data (read internet) and unlimited texts.  For $30/month you got 500 minutes and unlimited data and texts.  All you needed to sign up was an employee’s email address and those were all over the internet!  As I noted in my follow up we are saving at least $10-$20 over our last Verizon plan and the Verizon plan didn’t include data or texts (my wife and I both have a plan).

Sprint SERO meet your successor the Sprint Everything Plus plan.  The new plan is now $59.99 for 500 minutes and $79.99 for 1000 minutes.  For more minutes there’s the Simply Everything plan that’s widely advertised.  So basically the 500 minute plan doubles in price!  This may still be a bargain compared to other plans out there but not nearly the knockout punch it used to be.  The new plans add GPS navigation and Blackberry Internet Services.  The Blackberry inclusion could also still make the plan economical since some carriers charge extra for it.

But wait, there’s more!  Or less really. Even if you think the new plans are still a steal they are much harder to sign up for now.  Rather than just any employees email address you now need an employee’s email AND the last three digits of their employee ID (CID).  So you may actually have to know someone to get into the program.

Don’t sweat it if you were fortunate enough to already be on the Sprint SERO plan.  Existing SERO customers are grandfathered in on the old rates.  Whew!

As I mentioned the plan may still be worth it to you but you really need to check out other plans as well.  Look at all of the features and options and see what works best.

It’s sad to see the SERO plan go but I can understand why.  They really did give a great package at an insanely low rate.  The new Sprint Everything Plus plan puts the prices more inline with their Everything plan.  I’m happy I was able to get in while I could!

A CD Ladder Plan For Beginning Savers

a ladderAre you just starting off building up your savings? I’ve mentioned before that a great way to save is by putting money in a high yield savings account such as Capital One 360 Savings.  A way to make a little more interest is to open a Certificate of Deposit, or CD for short.

What is a CD?

Here’s an excerpt from Wikipedia:

A certificate of deposit or CD is a time deposit, a financial product commonly offered to consumers by banks, thrift institutions, and credit unions.

CDs are similar to savings accounts in that they are insured and thus virtually risk-free; they are “money in the bank” (CDs are insured by the FDIC for banks or by the NCUA for credit unions). They are different from savings accounts in that the CD has a specific, fixed term (often three months, six months, or one to five years), and, usually, a fixed interest rate. It is intended that the CD be held until maturity, at which time the money may be withdrawn together with the accrued interest.

So if you are investing/buying a  CD you want to make sure you don’t need that money for the length of it’s term (otherwise you will have to pay a penalty to cash it in).

Here’s a great way a beginning saver can get started with CD’s:

  • Figure out a monthly amount of money you know you won’t need for 12 months.  Don’t be scared now.  It can be a small amount like $10.
  • Log into your ING account and go to their products page.  Click on CD’s and proceed to open up a $10 CD for a 12-month term.  (If you can afford more by all means do so.  Remember this is money you won’t touch for a year.)
  • Now every month do the same thing for a total of 12 months.
  • At the end of a year you will have 12 CDs worth more than $120 (imagine if you put more in each month?).  If you can, re-invest the CDs as they mature.  See if you can add to the amounts, again even if it’s only a few dollars.

“What have we done?  Anyone can buy CDs!”, you may ask?  Remember this is for a beginner who is starting to build up their savings.  Here is what the beginning saver has accomplished:

  • This builds up a habit of saving.  By putting the money in a CD we’re limiting the ability to take the money out (without a penalty at least).  Once this habit is in place a beginning saver may have the discipline to expand their savings.
  • It creates a great sense of self-esteem for the saver.  You get to see your CDs growing every month.  How great is it to see a year’s worth of savings?  Once a person realizes that saving is an achievable goal they will be more likely to continue!
  • You’re earning interest.  Not only have you saved but you’re savings are growing too!  You’re taking advantage of laddering.

Savings aren’t usually built overnight.  But by saving bit by bit you will see your savings blossom over time!

photo credit: naama

New York State Empire Passport – Summer Saving

Beach Chair

Summer’s here!  How are you going to spend your time? Will you go to the beach?  Maybe a pool or a lake is more your speed?  Maybe go to the park for a picnic?  How about camping?  Perhaps you’ll go for a bike ride or maybe a nice hike through the woods on a historic trail?

If you live in or near New York State then you have access to all of these activities and more in New York’s State Parks!

A great way to take advantage of all that NY State Parks have to offer is to purchase the NYS Empire Passport. For $65 you get access to most of NY State’s parks and facilities.  Consider this: parking is easily $8 for Jones beach.  That means the pass pays for itself with about 7 visits to the beach!  But what’s great is the pass can be used for so much more.  In fact it’s good from April 1st until March 30th of next year.  Using it 7 times over the year is easy!

My wife has the summer off as she works in education.  This gives her all summer to go to beaches such as Jones Beach or Robert Moses State Park.  We worked it out a couple of years ago and the Empire Passport easily saves us money!  You can also use the passport to pay for parking for concerts at the Jones Beach Theater (park in an adjacent lot and walk over, it will also be easier to leave after the concert)

Outside of summer beaches we’ve also gone to Harriman State Park, Bear Mountain State Park, Fahnestock State Park, and Valley Stream State Park.  Harriman and Bear Mountain aren’t too far from the Woodbury Commons shopping center where you can find some frugal deals.

I’ve gotta say, in putting this article together I’m seeing how much we can do and what we’ve been missing out on!  I can’t wait to get out with the family again!

You can order an Empire Passport online.  The site says it could arrive in 3-4 weeks but we got ours in a week.  You can also visit a state park office and buy it direct.  Check online to see which parks sell the pass directly.  The quicker you get yous the sooner you can enjoy all that NYS Parks have to offer!

How will you use your NYS Empire Passport?

This article is #14 of the Summer Savings Series from the Money Life Network. Check out the article on the MLN site to see how you can participate in the Summer Savings Series and possibly win a $100 Amazon gift certificate! You can see tip #13 at My Investing Blog. Article #10 will be at Milk Your Money tomorrow!

 

15 Things To Do With Your Economic Stimulus Check

The government Stimulus checks started going out on April 28th. If you are expecting one you should start looking for it in May (here’s a post listing the dates).

So what are you going to do with the extra money? Here are a list of ideas for using your stimulus check:

  • Pay off credit cards – If you have any credit card debt the stimulus check will be a great way knock some of that out! Paying off the debt gives you an instant return in savings of whatever you would have paid in interest fees. Psychologically, you will help in getting the debt monkey off your back.
  • Contribute to a Roth IRA – You can take your money and put it into your Roth IRA. For 2008 the contribution limit is $5000.
  • Start an emergency fund – If you don’t already have some sort of emergency fund (three to six months expenses seems to be the conventional wisdom) then your stimulus check is a good way to start one. Even if you have one you can use the money to increase your fund. A great place to start one is with ING Direct (you can even get a $25 bonus by opening your account with $250).
  • Contribute to a 529 college savings plan – You can use the money to help save for your kid’s education by putting the money in a 529 plan. Not only do you help save for college but you might get a tax break as well depending on your home state’s plan.
  • Pre-pay your mortgage – Take the money and make additional payments to your mortgage. By making additional payments you will own your home faster and pay less in interest. Just make sure the payments go towards the loan principle and not next month’s payment (also check that your lender will accept pre-payments without fees or penalties).
  • Go on vacation – You may have been planning to do this anyway so here is a good way to fund the vacation. Go and do something that will be a great experience for the family that you will all remember.
  • Improve the house – If there’s something you’ve needed to improve on your home, such as a furnace, you can use your stimulus check to pay for it (or at least help). Other options could be new paint job, carpet, furniture, appliances, etc…
  • Car maintenance – Have you been putting off a car repair? Need new brakes? New tires? Your stimulus money can fund it. If your car is about to go kaput your stimulus check could help pay for a new car (or a good new used car).
  • Learn to invest – Do some research and take the money and start investing. Companies such as Sharebuilder and Zecco offer low-fee investing. You have to do your homework with this option but it might be just enough money to start investing but not so much that you will be crazy worrying if you lose it. If you invest through Sharebuilder you can buy partial shares of Berkshire Hathaway B class shares. I hear that Warren Buffett is pretty good at investing.
  • Pay off student loans – If you have high interest student loans then your stimulus check can be a great way to help pay your student loans off. Just like with credit cards paying off your high interest student loans give you the instant return in savings of what you would have paid in interest.
  • Have a nice evening out – Take your spouse out to a really great meal. Get babysitting and go to that great restaurant you wanted to try. Go see that new show that everyone’s talking about. Make an experience you will always remember.
  • Get physically fit – The stimulus check should be enough to pay for a year’s gym membership (or more than a year). Use the stimulus check as a catalyst to get in shape and make your life healthier. Not sure about a gym? Find a class such as yoga or martial arts to join. Not into that? Buy a new bike and go riding. Or get yourself some good running sneakers and running attire. Join your local running club and enter a few small races. You never know, you may one day run a marathon.
  • Go to school – Use your stimulus check to enroll in a college course or two. This can be toward a degree or just continuing education. Hey, you can take a personal finance course. Maybe learn a second language?
  • Do nothing – This is the easiest of them all. Put the money in your savings account and forget about it. You don’t have to spend it or find any particular purpose for it. It doesn’t have to burn a hole in your pocket. One day you might find a good use for it but for now it adds to your savings.

Personally, we’re closer to the Do Nothing suggestion. Our stimulus check will come via direct deposit right into our ING account. We have no specific plans for the money so it will be added into our savings. Our check may pay parts of many of the suggestions or for none of them. Either way it will earn interest until it finds a home somewhere else.

Do you have any other ideas for using the economic stimulus check?

photo by Argenberg
Free Newsletter to Keep you Free From Broke!Name: Email: We respect your email privacyPowered by AWeber email marketing