Thursday, March 19, 2020
Countdown to Financial Fitness: New Thoughts on Recycling
Countdown to Financial Fitness: New Thoughts on Recycling: The spread of the coronavirus has forced us to change the way we live and the way we think about what’s economical or good for the environ...
New Thoughts on Recycling
The spread of the coronavirus has
forced us to change the way we live and the way we think about what’s
economical or good for the environment.
I’ve always been in favor of “recycle,
repurpose, reuse.” Try not to waste anything. Avoiding waste saves money;
saving money is the first step to building wealth.
Only weeks ago, there was a movement
to eliminate single-use plastic items: straws, water bottles, utensils. Bring
your own bag to the grocery store. But now, in these times of extreme caution
to avoid contamination, how smart is it to wash and refill a water bottle? Or
to keep dragging around and handling that cloth grocery bag? I’d even think
twice about picking up a gently-used paper napkin to wipe up a spill instead of
cracking open a fresh roll of paper towels.
I’m the person who will return a stray
shopping cart from the parking lot on my way into a store. In the past, my aim was to prevent said shopping cart from dinging someone’s vehicle.
Yesterday, I did this at Costco and then realized with horror that I might have
exposed myself to the coronavirus. There were no wipes at the entrance; the
staff advised customers they’d already wiped down carts prior to giving them out.
But because I had picked up my cart from the parking lot, I’d skipped the
sanitation process. Luckily, my husband had some hand sanitizer in his pocket.
Being an avid reader, I love and
support libraries. The other day, I mentioned to a friend that I had to rush to
the library to pick up a book before municipal and county buildings went on
lockdown for the rest of the month. “I wouldn’t touch a library book,” my friend said. “If I want to read a book, I buy it new from Amazon.” She wrinkled her
nose, cringing at the thought of handling such filth.
Yes, library books have been touched
by many other people. So have new items on the shelves of stores, unless they’re
kept behind a glass case. Am I getting paranoid now?
Probably the filthiest item in our
lives these days is cash. Think about how many hands have touched that bill or
coin in your wallet right now. We’ve been progressing toward a cashless society
for a while; will the coronavirus pandemic push us closer?
It’s a new reality, and it’s hard to balance
saving money, saving the environment, and saving lives.
How have your habits changed as a
result of the pandemic? I’d love to hear your comments.
Tuesday, March 10, 2020
A New Car Rental Scam
I'm convinced that employees at car rental agencies must earn a commission on selling supplemental
insurance. They work too hard to trick customers into accepting it.
For example, there's the assumptive
technique. Last month, we rented a car in Albuquerque and the agent asked us,
"Will you be taking the full coverage, or just the basic?" She became
less friendly when I told her, "No coverage, thank you." Especially
after I'd just declined her upgrade offer. "It's supposed to snow today,
and we're almost out of four-wheel-drive vehicles. But you're in luck; I still
have one available. Or will you be comfortable with the all-wheel-drive?"
Both, we discovered, came with a hefty surcharge, almost doubling the price of the standard rental we had reserved.
On another trip, we had to reroute to
Baltimore at the last minute and didn't have time to shop for a rental car in
advance. The quote we received from the agent at the desk did not provide a
breakdown of charges. When I looked at my paperwork, I saw that all the
supplementary insurance coverages had been added to the basic rental fee. No
wonder the total seemed so expensive! The agent had just handed me my contract
without asking me to initial anything, or even sign my name. When I went back to
the desk and questioned him, he told me, "The airline discount rate you're
using requires you to accept full coverage." I didn't remember any such
requirement but had no way to check at the time.
When we got home, I checked. Employees
had been advised to decline the supplemental insurance since the
American Express card we're supposed to use provides the coverage. I wrote to
National and explained the situation; they refunded all my excess charges.
Last weekend, we rented a car in San
Diego and faced a new challenge to resisting the extra insurance. When the
agent asked us, "Will you be taking the full coverage, or just the
basic?" and I replied, "No coverage," he said, "Then I'll
need proof of your auto insurance. What's your policy number?"
My policy number? My insurance card
was in the glove box of my personal car, parked at the airport in Atlanta.
"I'm sorry," he said.
"Unless you can provide me with your policy number and deductibles, I'll
have to charge you for full coverage." The CDW provided by my credit card company
didn't count, he told me, because "it's just secondary."
After googling our insurance company,
calling the toll-free number for the national office (where we were told we'd
have to contact our local agent to get our policy number), we finally got
connected to our local agent, who was just walking out the door on a Friday
afternoon. Fortunately, he was able to find our policy number and reluctantly,
the rental car agent allowed us to decline the supplemental coverage.
Now I keep a copy of my insurance card
in my wallet.
What experiences do you have with car
rental surcharges? I'd love to hear your comments.
Monday, March 2, 2020
Countdown to Financial Fitness: Coronavirus and Your Money
Countdown to Financial Fitness: Coronavirus and Your Money: According to the media, we’re on the verge of a global pandemic. Last week, the stock market returned its worst week in over a decade. Is ...
Coronavirus and Your Money
According to the media, we’re on the
verge of a global pandemic. Last week, the stock market returned its worst week
in over a decade. Is it time to get out before the inevitable collapse of the
world’s financial markets?
When it comes to investing, I’m a bit
of a contrarian. I look at a market downturn as a buying opportunity.
On Monday, my brokerage account was
flush with cash as several of my positions had been called away on Friday. So,
I went bargain shopping and quickly sold slightly-out-of-the-money covered
calls on those new holdings.
I’d have paid less for those new
stocks had I waited until Tuesday. And I’d have found even better prices if I’d
waited until the end of the week.
Some investors might bail out and cut
their losses. But I’m holding on.
If those stocks don’t hit my strike
prices by expiration Friday, I’ll still own them and try to sell more calls for
next month.
All the companies I invested in just
released stellar earnings reports. They’ve been paying dividends consistently
for years. They’re solid businesses. At this time, I believe their stock prices
will recover.
When President Trump took office, the
Dow Jones Industrial Average (the main gauge we use for the stock market) had
not yet reached 20,000. Before the coronavirus hysteria, it was approaching
30,000. On Friday, it closed at 25,409, still much higher than it was four
years ago.
Market corrections (a decline of at
least 10%) are normal and healthy. If your 401k, IRA, or pension is invested in
mutual funds, chances are you’re participating in the stock market (over 50% of
America’s households are) whether you realize it or not. If the dividends are
being reinvested in additional shares of the mutual fund, a correction allows
you to buy more shares of the fund with each distribution. This is one of the
benefits of “dollar-cost averaging.”
The stock market was due for a
correction and the coronavirus provided an excuse.
Even though I advise against panic
selling, I think a large market downturn or correction should serve as a
reminder to review your portfolio. Is your asset allocation on track for your
age and risk tolerance? Are your investments diversified enough?
If there’s a stock you’ve been eyeing
but it’s been too expensive, now might be the time to buy. But first, do some
research. Are the fundamentals still good? How will the coronavirus affect its
business going forward? If it looks like the price will continue to fall, maybe
you should wait.
If you’re overweight in a stock that could
be adversely affected, you might want to set a stop loss or limit order to
sell. Any losses will help to offset gains elsewhere when tax time comes
around.
Before you leap into the market and
start snapping up bargain-priced stocks, remember this caveat: Don’t play with
money you’ll need in the short term. Historically, stocks have increased in
value faster than any other asset class, so they’re appropriate for the long-term
investor. Even so, it’s a roller-coaster, so don’t invest if you’re prone to
panic.
What are your thoughts on the market’s
reaction to coronavirus? I’d love to hear your comments.
Monday, February 10, 2020
Countdown to Financial Fitness: What to do with a Windfall?
Countdown to Financial Fitness: What to do with a Windfall?: My husband’s company gives out bonuses on Valentine’s Day if the previous year was profitable. Since 2019 was one of those years, we’re lo...
What to do with a Windfall?
My husband’s company gives out bonuses on Valentine’s Day if the
previous year was profitable. Since 2019 was one of those years, we’re looking
forward to the windfall.
Employees have the option of diverting some of their
profit-sharing funds to their 401k accounts and/or their health savings
accounts (HSAs). Or they can take the whole payout in cash—minus taxes.
This year, the company provided a calculator on their website so
employees could estimate how much they’d be receiving and make their elections
accordingly. It was interesting to watch how the numbers changed depending upon
how much was allocated to the 401k and HSA. Although the amount of the final
check decreased, so did the taxes. The more we pledged to put to work in
tax-deferred accounts, the larger our piece of the pie.
My husband will eventually have to pay taxes when he withdraws the
money from his 401k, but hopefully, the additional earnings from having more
invested will make up for it. And as long as we use the HSA funds for
medical, dental, or vision care expenses, they will never be taxed.
A lot of people can expect windfalls this time of year. Whether
it’s an annual bonus or profit-sharing check from your employer, or a large tax
refund from the IRS, it’s nice to see some extra cash. Instead of blowing it,
look for ways you can maximize the opportunity to get ahead.
If you can’t put the money into your 401k or HSA, what about
funding an IRA (Individual Retirement Arrangement)? Or, if you have children,
think about putting something into their college funds or 529 accounts.
Could you retire some debt or shore up your emergency fund? If
you’re debt-free and have plenty of reserves, why not invest? (But be sure to
research potential investments first rather than just handing your surplus cash
to a broker.)
Maybe you’ll want to use the money for a well-deserved vacation.
You can pay for it up front rather than charge everything and accumulate more
debt.
Or perhaps you need a new car, and the windfall check can be used
for a down payment. Maybe you can finally tackle those home repairs you’ve been
putting off, or purchase a needed appliance or piece of furniture.
Whatever you decide to do with the money, have a plan. Before you
start spending, think about how best it can improve your life.
What would you do with a windfall? I’d love to hear your comments.
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