Posted: April 5th, 2012 | Author: Joe | Filed under: Lifestyle | Tags: Frugal Lifestyle, Insurance, Investing, Saving Money, spending, Tips | 5 Comments »
A recent stay at a “Boutique Country Hotel” got me thinking about the meaning of minimalism vs. simplicity and how they relate to personal finance.
It all began with our hotel room. It was a renovated riverside hotel from the 1800′s, with a curious mix of old and modern. The floor boards were the wide, plank floor boards common in 19th century construction, while the bathroom featured a state of the art Jacuzzi.
This is what our shower looked like, only ours had no shower head.
The decor was sparse, yet modern too. There was a flat panel television and one piece of post-modern art on the wall that consisted of one-quarter of an old tire, a piece of chicken wire mesh, and various other castaway everyday items all fused together in a loosely triangular shape and painted black.
But what really made an impression was the shower.
It was a standing rectangle large enough for a single person and was comprised of an Italian marble wall on two sides, and glass on the remaining two sides. It was, quite simply, a beautiful shower and elegant in its minimalism. Until I tried to use it, that is.
Once I stepped inside I realized just how minimal the design truly was. There was no shelf for holding soap or shampoo, and the faucet control only turned one way, from lukewarm to hot. There was also no showerhead. The water simply fell from a perforated plate in the ceiling. I had no place to stand out of the way of the water to lather with soap or shampoo.
It was at this point that I thought, minimalism is one thing, but what good is it if it’s not useful too?
This is when I realized I really favor simplicity over minimalism. Our modern lives have become so clutter and full or noise and distraction that there truly is a psychological benefit from simplify our lives. There’s also a financial benefit too.
Here are a few financial benefits to simplifying your life.
- One retirement account means less fees and less time spent managing various options. It also means that all your available funds are better focused, which magnifies the effect of compounding interest and dividends.
- Fewer retirement funds in a single retirement account means even less time managing the account, less fees and more focused returned.
- Fewer savings and checking accounts means less overhead and time in managing them and keeping track of your money. It also means your money is more focused and earning even more compound interest.
- Rolling all your insurance needs into one provider makes tracking your policies easier, and usually gives you a multi-policy discount on the premiums.
Are you sensing a theme here?
Generally speaking, simplifying your life makes you more efficient and frees up more time to do what you love.
Many people seem to be focusing on minimizing their lifestyle, standard of living, etc.. but that may be missing the point. I think it’s far better to streamline and simplify your life – make it easier to do the things you really want – than it is to simply downgrade your life.
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Posted: March 21st, 2012 | Author: Joe | Filed under: Insurance | Tags: How To, Insurance, pet care, pet insurance, save money, Tips | No Comments »
As discussed in previous posts, the availability of pet insurance provides pet owners with options that were previously reserved for only humans, but such options can come at significant cost.
If you’re like me, and think a pet is a wonderful thing but you prefer to not live a life of debt for him, here are some tips for limiting the vet bill while skipping the insurance.
Seek out low-cost vet clinics for routine shots. Many vets offer them once or twice per year. You can also call your local chapter of the The Humane Society of the United States. You may even get information from your local animal control department.
Get a second opinion for non-emergency conditions. You might even want to check out the Merck Veterinary Manual online for detail about your pet’s condition and treatment possibilities.
When it comes to medication, shop around and ask for samples. Many vets have small, sample size packs of medication that may suit your pet’s need, or at least cut down on the total bill. Also check around on the Internet at sites like Discount Pet Medicines.
Don’t ignore long-term factors either. Cutting costs today on cheap pet food can mean big bills down the road. I had a cat when I was younger who went into full blown kidney failure on a Friday. It being a weekend, our regular vet was closed which meant going to an animal hospital. (read “big money!”)
Anyway, it turns out that the cheap food we had been giving him for years was loaded with “fillers”, like clay. Over the years this led to kidney and urinary tract problems. All told, my parents spent close to 4 figures on that incident and the cat lived for another 8 years or so but we all could have saved a lot of time and money had we known to skip the cheap food.
Also, research breeds and pets before you decide. Dogs make twice as many trips to the vet as cats, and there are a host of chronic problems and hereditary diseases that plague specific breeds. At the very least, you should know what you’re getting into.
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Posted: March 13th, 2012 | Author: Joe | Filed under: Insurance, spending | Tags: Health insurance, Insurance, pet insurance, spending, Tips | 3 Comments »
I brought my cat in to see the vet a week ago, and since it was a new vet I had to fill out a form with relevant information regarding my pet. One thing that caught my eye was a space for pet insurance policy information. I had never considered it before, but this got me wondering:
Is pet insurance a good idea?
Treatments and diagnostic routines that were previously only available to humans are now available for pets. Conditions that were once fatal are now possible to treat, albeit at costs that run into the 1,000s.
The cost of Pet Insurance can be as high as $6,000 over the life of your pet, but chances are that you would never claim that much in reimbursement costs.
A few years back, my wife and I experienced our 1st financial tipping point which was triggered by a trip to the veterinary hospital for our cat. While that experience prompted us to take a long, hard look at our finances and eventually started us down the road of financial overhaul and debt-free living, we never once thought that health insurance for our pet was a solution.
After careful consideration of pet insurance this time around, we’re taking a pass on it but there may be cases where it makes financial sense. Here’s why it might make sense, and why it’s probably not worth the money.
When Pet Health Insurance Might be Worth it.
If your pet is at high risk to suffer from expensive diseases and the thought of having insurance gives you peace of mind, then you may sleep better at night knowing that you would be covered in such an event.
If that’s you, then you want to be absolutely sure you understand the terms and conditions of the policy and be positive you are getting the coverage you need.
Why Pet Health Insurance is Typically Not Worth the Cost.
Pet insurance is typically not the money saving proposition it seems once you factor in deductibles, co-pays and reimbursement caps. Pre-existing conditions and hereditary conditions are typically excluded from coverage. Some insurers do cover such things, but expect to pay a higher premium due to the increased likelihood of payout. Coverage for older pets carry higher premiums or are sometimes not available. Some insurers simply refuse to cover pets older than 9 years.
Read this cautionary tale from Wise Bread to see one case when pet health insurance is not really worth it.
If your pet is not a purebred, and not subject to an increased risk of serious and costly disease, then you are probably better off skipping the insurance, and saving the amount you would be putting toward a premium. Take that money and automatically save it every month in a savings account (such as the ING Direct savings account ). It will be like paying the premium but you get to keep any interest from the bank and in the very likely case that you wouldn’t file a claim, you get to keep the money too… perhaps for your next pet. Think long term. 
Bottom Line: Is Pet Insurance Right For You?
The choice of whether to purchase pet health insurance is a personal one. You have to determine just how far you are willing to go for your pet. If you’re the type of person who would “do anything” to save Fluffy – no matter what the cost – then you may seriously consider health insurance for your pet. This is especially true if the alternative is going into debt.
However, if you’re a more pragmatic sort of person who is willing to provide good, basic care for your pet but find yourself thinking, “it’s only a cat/dog, and he’s had a good life” when faced with the prospect of a 4 figure vet bill, then you’re best off by taking a pass on the pet insurance.
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Posted: February 21st, 2012 | Author: Joe | Filed under: Insurance, Tips | Tags: Auto Insurance, Insurance, Life Insurance, PMI, Private Mortgage Insurance, Tips | 3 Comments »
Fear sells, and nothing is more fearful than the future. Insurance agents have known this for ages, and the most unscrupulous of them will play up the fear factor to the hilt. That’s not to say that all insurance is unnecessary or that all agents are fear mongers. Insurance has a definite purpose – to protect you from the financial risk of some future event that, while unlikely to happen would be financially devastating if it were to happen.
Many insurance policies sold today are simply unnecessary in most cases. Knowing which policies are needed and which aren’t will go along way toward arming yourself with the knowledge needed to protect yourself from less honest agents.
1. Private Mortgage Insurance (PMI).
First up on the hit parade is the onerous PMI. Many homeowners only become aware of this after they buy a home an see their monthly mortgage payment has this extra fee included. PMI has nothing to do with protecting you or your home. It’s insurance for the bank to insure against the possibility that you default on your mortgage.
You didn’t expect the bank to pay for its insurance, did you?
Private Mortgage Insurance is required for loans with less than 20% equity – either a refinance for more than 80% of the value of the home, or a mortgage with less than a 20% down payment.
PMI can only be avoided in the initial opening process of the loan, after you’ve got the loan you have to wait until you have at least 20% equity in the home. This can be due to appreciation in the home’s value, which is unlikely in the current housing market, or by paying down the loan. Homeowners can accelerate this process by making extra payments – just make sure they are principal only payments.
(check out Why A Mortgage Loan Without PMI Is A Bad Idea.)
2. Extended Warranties.
An extended warranty is basically insuring against a breakdown of the product outside what’s covered by the basic warranty. That may mean a breakdown after the basic warranty has expired, or a breakdown of something not covered by the basic warranty.
Unless you’re purchasing a high-ticket item, the warranty is likely to cost almost as much as a total replacement. I paid $115 for my first lawnmower. At the time of check out, the sale clerk tried to upsell me on a 3 year extended warranty. I would “only” cost me 30 bucks a year. That would have been $90 in total – for a $115 lawnmower!
The dirty little secret on most warranties is that they only cover the things that rarely go wrong to begin with. So in most cases, you’re better off playing the odds that it won’t break. This is especially true if you save up the entire purchase price of the item before buying, and don’t buy on credit. Also, waiting for prices to come down helps too. I might be tempted to get the extra warranty on a $5,000 new flat screen television, but a $700 one? Not so much.
But then, the thought of spending so much on a “want” makes my frugal self revolt. 
3. Automobile Collision Insurance.
Collision insurance is meant to cover the cost of repairs if your vehicle is involved in an accident. This isn’t necessarily useless. It depends on your financial situation and your car. I drive old cars that I can either pay for entirely or pay for mostly, leaving me with a lower loan amount.
Banks typically require you to carry collision insurance, so if you have a loan you will likely get stuck with this bill. But after the loan is paid off, the car is likely worth less that the insurance premiums you’re paying (are darn close)! In which case, you’d be better off putting that money into a savings account for car repairs (should they arise) or a new(er) car.
4. Rental Car Insurance.
People buy this?
Apparently they do, but they probably shouldn’t. Most people rarely need a rental car while their car is in for repairs, and if they do the cost is far cheaper than what they would pay in premiums. Personally, the few times my car has been in the shop long enough to need alternative transportation, the shop has provided either a loaner car or paid for the rental car.
5. Flight Insurance.
I’m not sure what this is meant to cover. I gather it’s meant pay your survivors should you die in a plane crash, but your life insurance would do that anyway.
6. Water Line Coverage.
Ah, now we’re getting to the really fringe insurance types.
This policy would cover the repair costs of the water line that runs from the street to your house. The likelihood that this would ever become a problem is slim – especially in new neighborhoods and given the relatively short distance covered in most suburban neighborhoods.
7. Life Insurance for Children
Life insurance is meant to cover the income of the insured in the event that they die prematurely. Children don’t have dependents to worry about. Some agents try to sell this kind of insurance as an investment for the child’s future. This gets to the Term Life Insurance vs. Whole (or Universal) Life Insurance debate. (see Life Insurance: What kind should I buy?) The same is true in this case – skip the whole life policy and invest the money that would go toward a premium in a Roth IRA for the child. (See Secret # 2. Make Your Grandchild a TAX-FREE Millionaire!) It will perform better with less fees and he’ll have access to the contribution amounts for his first home, while the rest will continue to snowball toward retirement.
This is meant to cover your expenses if someone steals your card or makes fraudulent purchases. It’s a complete waste because you’re only liable up to $50 by law, and most credit card companies wave that for good customers.
9. Mortgage Life Insurance.
Mortgage life insurance pays off your house in the event of your death. This is useless, since it’s the purpose of Life insurance to begin with , only life insurance will pay off the mortgage, and your children’s college expense and anything else you need.
10. Unemployment Insurance.
With government unemployment benefits lasting over a year, you’re far better off building an emergency savings account and using that to supplement the unemployment checks. If you can make Unemployment Insurance premium payments, you can make contributions to an emergency fund.
Check out the inspiration for this article and 5 more unnecessary Insurance Policies.
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