I know, I know….you’re locked into a contract. Well, that won’t last forever; and then you have some choices. Of course, you can pick out the latest phone and start another two-year contract. Or you may also want to consider how much you’re paying for that “free” phone. You might want to take a look at your cell phone and consider how you’re using it.

More and more cell phone service providers are offering plans that may allow you to reduce your monthly expense without compromising services offered or quality of the signal. (Quality of signal depends upon the phone and the area in which you spend your time. Check out http://www.cellreception.com/ for comments about the different carriers sorted by zip code.) Maybe you don’t text, spend a lot of time on the phone or surf the web.

Let’s say that you want your child or parent to carry a cell phone for emergencies. You can spend as little as $4.99 for ten minutes of time per month on the Sprint network, the Kajeet service plan, or pay $10 per month and

$.25/minute on the ATT network with H20 service pan. Perhaps you don’t want to limit your voice and texts, and only occasionally send/check emails or surf the internet with your phone. Both MCS & Walmart’s Straight Talk offer unlimited voice and text; and MCS offers unlimited data, but limits the transfer of data at 4G LTE speeds depending upon your choice. MCS is $40-60/month; and Walmart is $45/month.

Beware that the voice coverage is for domestic calls. International calls are extra; however, you can get unlimited coverage for an extra $5 monthly for Mexico only, and for an extra $10 monthly you can get unlimited international calls with MCS.

Perhaps GPS is important to you? MCS offers a package for $5 per month.

Some plans may require the purchase of a compatible phone. There’s a price range of $60 – $299 in the following article, PC Magazine’s The 10 Best Cheap Prepaid Phone Plans You’ve Never Heard Of

http://www.pcmag.com/article2/0,2817,2375644,00.asp. The Walmart phone only requires the purchase of a $14.88 sim card.

The costs begin to add up pretty quickly. Obviously not everyone needs to change her or his cell phone carrier. My goal is to make you aware of your choices, especially the choices that you pay for every month after signing a multi-year contract. Spending less and saving more is about making conscious choices and redefining “need” and “want.” And if the choices you need to make are not obvious to you, or you and your partner, I can help as an independent hourly certified financial planner. If you found this blog post helpful, please let me know.

 

Who is the accidental investor? It’s the tech genius who moves from company to company, participating in 401(K)’s, which they forget once they move on to the next opportunity. Or perhaps it’s the self-employed entrepreneur whose CPA told them to set up a retirement account at year end. Or maybe it’s the working Mom who recently inherited a small next egg she would like to use to fund her kid’s education.

What should they do? Well, if they opened a brokerage account, it would give them a place to consolidate all or most of their investments. They would get account statements, which would provide a listing of all their assets and, most likely, include a breakdown of their holdings by investment category.

So, what is a brokerage account? It’s an account at an institution that is licensed to buy and sell securities for their account holders. It’s not a bank, although many banks may have a relationship with a brokerage firm and may even house a brokerage’s firm employee in the bank’s lobby. Confusing right?

Accidental investor or not, it’s important to know what kind of brokerage firm is right for you.

For example, you could choose a full service brokerage firm. These companies only take custody of your assets but they can make trading decisions with or without your specific permission for every trade. There are also discount brokerage firms, where the person who makes the investment decisions is you.. [Just to make it even more confusing, some discount brokerage firms have begun offering investment management services.].

Which is what and which is better? It depends if you to want hand off the responsibility for your investments, or whether you want to be actively involved. Of course, you pay more for investment management whether it’s at a discount or full service brokerage firm, or through an independent investment advisor.

Let’s say you want to self-manage. What do you need to know to select a brokerage account? Well, at a minimum, you should consider:

• the fee schedule,
• the convenience to make transactions and establish an account,
• the breadth of investment choices, and
• if you have access to an office where you can walk-in.

When you start talking about fees, then you need to know what you’re buying.

Most likely you’re considering mutual funds, index funds or Exchange Traded Funds [ETF’s.]

ETF’s trade like stocks so there is a commission fee for every purchase or sale. It would be nice to know the cost to buy/sell an ETF.

If you’re going to be a mutual fund investor, remember that not all firms carry all families of funds of families, and some discount brokerage firms some charge extra for certain fund families. You might especially pay attention to the selection – or the absence of — no load and no transaction fee funds.

What if you don’t know what you want to invest? Well, a fee-only hourly planner can you develop an investment plan that you can implement. You pay by the hour versus giving a percentage of your returns.

Still there are other factors to consider:

If you want to use your brokerage account as a savings account, is there

• free checking,
• a debit card offered,
• online bill payment?
• FDIC insured options

For investment purposes, you may want to know

• If there are account minimums?
• What is required for tracking cost basis?
• If you can execute trades by phone or a mobile application?
• Is there a cost for brokerage customer support assistance?
• Can you get real time quotes?
• Do you have 24 hours access to account information?
• Do you have instant access to statements and confirmations?
• Are there transfer fees?

I know. It’s a lot to consider. That’s why I did the work for you. I researched the leading discount brokerage firms, getting to answers to the questions I described above, and compiled a report that I will make available to you. Please email me at celeste@financialplanningfocus.com if you’re interested in receiving the free report.

And if you want to better understand your investments and create a low expense, passive portfolio? Then give me a call to set up an initial complimentary appointment to find out if working with an hourly planner is the right first step before you open any brokerage account.

 

What’s better than saving money on a $1,000 purchase? Saving on a $1,000 purchase you make year after year. For me, and most likely, a good portion of our aging population, prescription drugs is just such an expense, so I was especially excited to hear that there are websites that will tell me what local pharmacy has the lowest price for a prescription.

One site, www.GoodRx.com, told me that I could spend as little as $89.00 for my prescription. I had currently been paying $98.36 since I had insurance. (It would be $124.99 without the insurance.) So that was helpful, except that the best price vendor is not a local pharmacy.

The next best price was at the pharmacy I currently use for $93.98, but I had to use a coupon. It seemed worth the effort to save almost $5.00. The coupon would be especially helpful, if I had no health insurance coverage. Possible savings for an uninsured person: $31.01 monthly. Possible savings for me, due to my health insurance coverage savings, $4.38 monthly.

If the best price was an online vendor, why not investigate more online choices. My next step was to visit www.pharmacychecker.com. I discovered what thousands of senior citizens already know. Prescription drugs are cheaper in Canada! The best price available, sold by a Canadian company to a United States citizen, was $26.50 if I purchased three months at a time. Possible savings for an uninsured person: $285.47 for three months and $1,141.88 annually. Possible savings for me, due to my health insurance coverage savings, $205.50 for three months and $822.32 annually.

Well, if having health insurance saves me on my prescriptions and buying the prescriptions through the mail savings me money, I wondered if buy my prescription online through my insurance company if it would the Trifecta of prescription savings! It was a bust. While my insurance company offered to save me time, they offered no dollar savings. What’s my plan going forward? I will do my own ordering online and save time AND money.

While your goal to spend less money may seem impossible, this worthwhile goal could become a little easier when broken down into small steps.

For example — why not take a small step into the bathroom.

One great place to look for potential savings is on items that you ALWAYS have to buy over and over. Items for your personal care and grooming fit into this category, big-time.

Want to start save money in a very painless way? Here are a few tips to get started on all the savings that could be hiding in your medicine cabinet:

Shampoo — I would not recommend you stop shampooing to save money. I would recommend that you look for a lower cost product that might work for you. You could be surprised! I use to think that spending less meant a harsh and drying shampoo. Then I tried Trader Joe’s Refresh shampoo and conditioner.
Savings: Redken’s Fresh Curls Shampoo $!9 on Amazon for 33 oz or $10 for 10 oz.
vs. Trader Joe’s Refresh $2.49 for 16 oz.

More Highlights In Your Hair– Want to bring out the natural highlights in your hair without the high costs of a salon? If you’re a blond, try putting lemon juice on your hair and sitting out in the sun for an hour or two. If you’re a brunette, try vinegar. [If you’re sailor, don’t bother. The salt water will more than do the trick.]
Savings: Salon Highlights cost as much as $100 – $200
vs. the cost of one lemon or one cup of vinegar

More Shine and Less Frizz – I’ve been warned about straightening hair with the harsh chemicals in an expensive Brazilian blowout. You can still enjoy smooth and well conditioned hair using Moroccan Oil, a product that can be purchased for as little as $16.00. It’s a weekly beauty indulgence that leaves my hair in great shape and smelling wonderful.
Savings: Brazilian Blow-Out $200 – $300
vs. Moroccan Oil $16 for .85 oz.

Moisturizers – If you buy department store moisturizers you probably find that the longer you use the product line the more products you have to buy. Why not try replacing eye make-up remover with baby oil? The baby oil works well and it’s a great moisturizer. Be aware that there is a scent in this product. In a pinch, I am not above using olive oil.
Savings: Clarins Eye Make Up Remover $26 for 4.2oz
vs. Johnsons & Joseph Baby Oil $2 for 20 oz.

Remember when you were a kid and used Vaseline petroleum jelly for lip gloss? Well, it still makes a great lip moisturizer you can use at night. Want to look younger? Then moisturize those lips!
Savings: *Philosphy’s Hope in a Tube eye and lip cream $33 for .5 oz.
vs. *Carol’s Daughter Unscented Body Jelly $15 for 16 oz.
vs. Vaseline Petroleum Jelly $2 for 2.5 oz.

* Both products are sold at Sephora.

Not all these ideas will work for everyone. Still, if you start thinking “simple,” there will be more room in your medicine cabinet, and fewer charges on your credit card.

Now that’s beautiful!

Answer: When the burden of debt acts as an anchor to your personal finances

When I heard the concept “education debt relief”, I was all ears.  It’s not just homeowners that are catching a break with loan modifications. New government programs allow students or former students to benefit from programs that do not require that the borrowers negotiate with their lenders.

The federal government is making federal student loan payments more affordable with two programs, the Income Based Repayment (IBR) plans and the Public Service Loan Forgiveness program.

• The goal of the Income Based Repayment plan is to modify your loan so that it approximates 10% of your total income. And if you have not paid off your debt in 25 years, it is forgiven. For a college graduate just starting out, this could be a major advantage.

• Your payments may be even lower under the Public Service Loan Forgiveness program and you only have to wait ten years to have your debt forgiven. This program is for full time, at least 30 hours per week, employees of a governmental entity or a non-profit.

What determines if you qualify?

• The type of debt – needs to be direct and guaranteed by United States government for loans made to the students. Sorry parents — PLUS loans are not included in the program.

• How do I know if I qualify? – The easiest way is to check the IBR calculators at http://www.ibrinfo.org/.

• The factors are: the poverty level for your state, your Adjusted Gross Income, your family size, and the amount of debt.

You apply directly through your lender. So you might need to research who is actually servicing your loan. Go to http://www.nslds.ed.gov/nslds_SA/.

If you’re making less than the poverty level, or may be still looking for that first job while living at home, you may not have to make any payment. The cap is set at 15% of the amount that your AGI exceeds 150% of the poverty level.

If you are already begun working at a non-profit, you will be credited for work after October 1, 2007. And, sorry, these repayment plans are for debt incurred before the program began in July 1, 2009. Future debt will not qualify at this time.

So who is paying the subsidized interest? How does it work? The federal government makes up the difference for the first three years, and then it’s rolled into the loan. If you still owe it after the respective 10/25 years, then it once again is paid by the federal government when the remainder of the loan is forgiven.

What are the tax effects? Right now, the debt forgiven is taxable. There is a bill, US. House of Representatives, H.R. 2492 that will make the debt forgiveness a non-taxable event.

Learn more about Celeste and her services.

I hope one of these plans will be of use to you or a student close to you. If you or your children don’t benefit from these programs, there are still plenty of reasons for us to talk. I can advise you on how to save for education, reposition your portfolio to prepare for paying for your children’s college expenses and the choices around when and who should pick up the expenses. I am available for complimentary initial meetings to see if the services I offer are a good match for the services you need.

Back in the day, when people actually “cashed’ their paychecks, and people paid for their life insurance by giving a weekly quarter to the agent, families budgeted by using the envelope method. They would place the cash available for each spending category in separate envelopes. As our culture became more comfortable with checking accounts, this strategy was mostly used to teach young people about budgeting. I imagine parent conversations went something like this: “Put 50% of your allowance into the envelope marked ‘treats,’ 25% into the envelope marked ‘savings,’ and the last 25% into the envelope marked ‘charity’.”

Today, I use the same technique except that I ask my clients to use bank accounts instead of envelopes:

Together we determine how much they need to place in their bill paying account for their regular, ongoing expenses.

We schedule when and how much they pay for the bills that are fixed and ongoing.

They make a regular payment to a money market account, out of which they will pay their large, infrequent expenses.  This account also includes savings for the unexpected but inevitable bills such as auto service and repair expenses.

Ideally their savings occurs before they even receive their paycheck, to assure that they pay themselves first.

The habit that I want to break is the unconscious habit of transferring money from savings to checking when no thought is given as to why the transfer is necessary.  Since most couples have TWO individuals, each with their own set of beliefs about money, along with TWO different types of spending habits, the improved communication facilitates more amicable relationships, brighter financial futures, and produces better financial planning clients.

You compiled a budget(s) with the best intentions.  And the budget(s) never quite stuck.  You blamed your weak self-discipline and your lack of motivation.  Let me suggest that there were other factors involved.

Most financial advisors do an annual budget yet people pay their bills once or twice a month.  In reality, the amount that they spend each month varies.  There are expenses that are infrequent which are not planned, like new brakes and tires, as well as infrequent expenses that can be planned, like private school tuition or Christmas gifts and travel.  Unfortunately most people don’t plan for those “bumps” in their spending and often times those expenses are the rocket fuel for their credit card balances.  So what to do?

First, be sure to take the extra steps necessary to capture the infrequent spending that tends to fall off your budget radar:

• Start first with a good budget template that prompts you to remember ALL your spending.  Contact me directly if you‘d like to see what I forward to my new clients to complete.
• Go through your credit card and checking accounts statements to look for the months with higher spending.
• Ideally, you will create a schedule by month for infrequent expenses.

Second, you need to get the money that pays for these large and infrequent expenses out of your checking account.  Otherwise it’s “available balance” as in AVAILABLE to spend.  When you’re uncertain whether to make a purchase do you consult your checking account balance?  If so, do you really know what you need for each week of the month by memory?  Probably not.  So I suggest the following:

• Figure out what you need for each period of time that you pay bills, weekly or twice a month.  Write the amount down and keep it accessible and easy to retrieve.
• Calculate what you need each week for the groceries, gas, and lunches etc.
• Begin setting money aside for your infrequent expenses; get that money out of your checking account.  Send it to a money market account dedicated for this purpose.

With the benefit of more detailed spending data, and better saving habits your budget stands a better chance of survival.  I will talk more about budgets and other steps you need to take in my next blog posts.  For today, these recommendations are a great start on making you more financially secure.

I maintain two telephone lines because I don’t want to give up my business telephone number. I also had maintained two phone cards for long distance.  You know, just in case one is full.  And I was getting (4) ongoing bills for just telephone.  I was paying extra for a voice mail box, insurance, in case, the telephone wires in my 50 year old house failed and I did not have call forwarding.

Most of my communication is by email for business so the land line really had a high cost per call.  It also drove me a little nuts that I would miss to many calls when the called rolled to voice mail so quickly.  AT&T had been able to offer any assistance.  What a surprise.

So, let’s summarize:  Paying too much for minimal usage – dissatisfaction with the voice mail – no caller I.D. and expensive long distance – (4) monthly bills.

SOLUTION:  A friend suggested a VOIP (VOICE OVER INTERNET PROTOCOL) phone line which costs only $30.00 per month for unlimited domestic long distance, caller I.D and voice mail.  I get the voice mail messages emailed to my computer as well.

• For those of you not ready to give up a land line it’s a great compromise.
• And for those of you, who do a lot of long distance calling, it’s simple and there are no additional charges for long distance.  And you don’t need to convince anyone why THEY need to start using their computer to call you or receive your calls.

Estimated Monthly Savings:  $30 minimum

As a former licensed agent, in the distant past for a short while, and former lecturer on insurance planning you would have thought that my auto and homeowner’s policies were probably as good as value as you could get.  And still I felt like I was paying more than necessary.  So when an associate, Stafford Jacobs offered to review my coverage I took him up on his offer.

Here are some of the areas that he suggested I consider changing:

Lower Deductible – As a financial planner reducing the deductible is my first suggestion to have my clients change reduce premium.  My recollection was that my agent had said that the premium savings was not sufficient to lower the deductible.  Reconsidering I thought “How crazy is that t I have a $1,000 deductible for my homeowner’s policy that I hope to never sue and a $5,000 deductible for my medical policy that I use every year.”

Savings:  $628 per six months

Decline Collision Coverage - O.K. may be I was in denial here.  I love my car and it is almost ten years old.  I swear it looks like it’s just three years old.  I may drive this  car another five years and that doesn’t mean that it would make sense to repair it rather than replace it.

Savings:  $140 per six months

Premium Option Endorsement – This coverage sounds like a boondoggle to me.  And it wasn’t.  It offers the very important building ordinance upgrade.  Since my home is 50 years old I LIKE this feature.

Retain:  $98 per six months

Medical Payment Coverage – Stafford suggestion that I add coverage that will pay the medical bills for my passengers in case of an accident.  While most of my friends have medical coverage it seemed that I would want my friends who were in the car with me to not have to worry about the deductibles, co-insurance and that may be that might save a friendship.

Add:  $5 per six months

As part of a comprehensive financial plan I will review the adequacy of your insurance coverage, from life and disability to your umbrella policy.  Associates like Stafford are invaluable in that they provide the current market pricing information.  If you just want a policy comparison, to include policy features  and not just premium comparison, contact Stafford directly at (415) 262-1460 #471 or stafford.jacobs@hubinternational.com.

While brainstorming/networking with a group of women business owners I found that what we all paid for health insurance was really across the board:  And I was pretty confident that this was a group of similar age and that we all enjoyed good health.  By across the board, I mean that some of us were paying around $200 per month and others were paying $800 per month.  And the later group could not exactly explain why they were paying so much more.

First, I should let you know that I consider insurance protection for the catastrophic.  I like the high deductible plans that cover my preventive care 100%.   And I do my own cost containment by always starting with my Albany acupuncturist who seems to fix just about any symptom, that’s not structurally related, under the sun.  It’s not covered by health insurance and I typically get out the door for $65 including the Rx.

So while my premium had been $163 in the not too long distant past, it went up to $205 with a rate increase.  And then I knew I would have an increase due to age change I decided t o shop.  Ultimately I decided it was worth the increase cost to lower the deductible and stay with the same company.  I would lose some coverage but overall the plan was a better value.

And I requested a change in policy.  Since it was a lower deductible, the insurance company took it upon themselves to rate the “new” policy now was $274.  At this point, I was annoyed as I did not think the rating was reasonable.  So I had them reinstate the higher deductible and began the process to have the rating reviewed and removed which eventually did happen.  Ultimately I ended up with a “reasonable” premium of $219.

My point is how quickly the premium went up 68%.  And I wondered if most people would have the assistance of a good health insurance agent and nurse practitioner to help them fight the rating and to design a more affordable policy.

My suggestion is that you review health insurance premiums that you pay and ALL your options.  May be being covered as a spouse is not the best value?  May be a good agent can help with plan design to meet your needs?  May be another company will offer a better value for your age or plan design.  Need some referrals or suggestions?

SAVINGS:  $55 per month