A client of mine who works outside the home only one day a week told me about a credit card feature that I have never heard about before: Price rewind. She has it on a Mastercard through Citibank, where she gets a 1% reward on purchase, another 1% on payment, and, if she can find an item she purchased for a lower price and uploads a picture of the lower priced item to the site, they refund her the difference between what she paid and what she COULD have paid elsewhere. It has been quite lucrative for her, although it does take time. I don't have the time to do anything like this, but I thought I would mention it for any of you who do have the time and haven't heard of this feature. If you google, you will find articles about this idea by NerdWallet and other frugal living bloggers.
Archive for February, 2018
I've been taking the insurance course for my CFP recently and thinking a lot about insurance.
One area of potential risk to many that is often underinsured is disability. Personally, I am aware of this because back in 2000, I spent 7 weeks in the hospital and another several months recuperating, having a second minor related surgery, and recuperating from that.
But I, like most people, assumed that the disability insurance I had through work would be sufficient. Back then, I was ok, since the period when I was out of work covered the summer, when, as a teacher (my former career), I would not be working, and just one semester, when I was sufficiently recovered to be enrolled in a program for temporary substitute teachers. It was just a very short time of not working, which I was covered for by my assets at the time.
The typical employer-provided long-term disability policy insures up to 60% of your income. Since this insurance is provided at no cost to you by your employer, it is taxable income when received. Would you be able to survive on 60% of your base salary? I know that I would find it a challenge!
When I first changed careers and started to learn more about this issue, I worked for an employer that did not provide any disability insurance, so I joined an industry association and bought a plan through them.
My current employer does provide long-term disability, so I've canceled the group policy, but I found that another industry group I belong to provides the opportunity to purchase true individual insurance for either $1,000 or $2,000 a month above what my employer benefits would provide. I'll be completing that application this week, If I chose the $1,000 additional income per month, that would be nontaxable (because I'm paying the premiums myself, any income that results is free from tax, unlike employer provided insurance) and would give me over 80% of my current income. Since there are bound to be more expenses when one is disabled, this feels more reasonable to me "just in case."
I have three friends who have been going through breast cancer treatment this year, another one who is off on disability for a rare disorder. Until I am at the point where I feel financially independent, this insurance is important. After financial independence, it's a luxury, but beforehand, it's a must. After all, one's ability to earn income is the biggest asset that most of us have--especially the young!
I found an online calculator at www.whatsmypdq.org that allows you to calculate your personal probability of being out on disability before retirement. Mine is 13% for being out for 3 months or longer, with a 46% chance that if I were disabled that it would last 5 years or longer, and an average length of long-term disability of 85 months--over 7 years, which would get me very close to retirement age.
Insurance is meant for low-probability, high-cost situations. Disability is definitely an area where many people are underinsured--and by the time they start to think they might need it, they no longer qualify!
So--what's your PDQ and do you have disability insurance through your employer or anything purchased on your own?
My January 31 paycheck used the updated withholding tables, so I compared the Federal withholding on that check with the withholding on January 15 and found more than a $60 difference. I played around with the calculation in 1% (of gross salary) increments and figured that I could increase my retirement contributions by about $45 per pay period and still have an extra $15 per paycheck in my take-home pay, so I arranged for that change to occur starting this month. Over the course of the rest of the year, that's nearly an extra $2,000 in retirement savings, a $2,000 decrease in federally taxable income (which at the marginal 22% bracket means $435 less tax due next April, and an extra $330 in my pocket to spend. Win/win all around!
I also posted a blog post about this on our company's website at http://www.joycepaynepartners.com/client-insights/the-new-tax-law.
So I set myself up at the beginning of the year with half a dozen goals plus a few projects. I made progress in some categories, but on the daily exercise and CFP exam studying, I need a goal reset for February.
Here are the details by goal.
1. Job performance: Improve timeliness of advance preparation for client meetings. Complete the basic CFP coursework. I am tracking my meeting preps and got the last one done six days in advance. The year really started out with a bang, with a whole month's worth of meetings to prepare for in the first 18 days of the month. February looks more reasonably spaced. But I've made no progress yet on the CFP studying.
2. Take care of myself. Eat healthily (this includes an emphasis on whole foods and preparing my meals in advance), exercise consistently, sleep enough, and make time to de-stress with a daily meditation session (or two). I started a Whole30 but didn't adhere to it consistently, as I ended up eating out several times while feeling busy & stressed. Still, I did eat more "Whole30ish," limiting grains, dairy, etc. I lost weight while I was being strict about it but after I relapsed and particularly once I allowed myself to fall prey to the candy in the office, I ended the month weighing the same as I started. Also, I got very little exercise, but I did get fairly good sleep and I meditated 24 days out of 31.
3. Create a peaceful and inviting home environment. Teeny tiny progress so far. I'll do better when I'm less stressed and less cold.
4. Increase my Net Worth by 15%.
Assets up $7,245. Debts down $5,427. Total increase: $12,672, or 2.37% (28.46% annualized rate).
I have started tracking my spending--not daily, but a few times a week, using the Simpleplanning Budget planner, a nice straightforward Excel-based spreadsheet that I find much easier to work with than the current version of YNAB. I liked YNAB when it was Excel-based, but there are now too many bells and whistles and I find it confusing to get started with.
While I was successful at regular tracking, I was not successful at keeping my expenses under budget. I spent 10% more than planned. Food is my biggest area of concern, both groceries and eating out. I also spend too much on books. I already have social restaurant plans in place for the weekend, but starting Monday, I'm going to try to make the rest of February a "gas & groceries" month, in terms of spending on "variable" as opposed to fixed expenses--with the exception of (knock on wood) medical if needed for myself or the kitties, or any home or car repair emergencies that might arise.
For groceries, I'm going to limit myself to the cheaper chains this month: Aldi, PriceRite, and Giant, and avoid my favorite Wegmans, which isn't really that much more expensive on a per item basis for the basics, but it has better quality and more variety, so that the items that end up in my cart are that much more pricey. I only shopped at Wegmans once in January and I could really see the difference. Also, last month I bought some dehydrated vegetables plus some bulk teas I like on Amazon, so for those items, I still have a lot of food left over.
Even though I was over *budget*, my take-home pay for the month was $2,917 and my expenses were $2,613, so that is $304 to the good.
5. Maintain and expand my social life. January was a maintenance month--went out 3 times, once with one friend and twice with another, which is good for a month as busy as it was.
6. Take more and/or more frequent time off/vacations. Nothing concrete planned yet.
Projects: I'm not listing the ones I haven't started yet, but one project was to write at least 3 blog posts for work. I've now written 4, of which two have been published so far, a third will be published tomorrow, and one the week after that.