Jeremy Fulton, Financial Wellness Coach

Category: Budgeting

  • Is my landlord responsible for covering my stuff?

    Is my landlord responsible for covering my stuff?

    The smoke detector goes off, awaking you from sleep.  You grab your spouse, children, and pet and rush outside through the smoke.  As you stand on the front lawn, you watch your home disappear in a mix of flame and smoke.  Family heirlooms, photos, your clothes, furniture, and everything is gone in an instant, but you and your family are safe.

    Next comes the recovery.  After finding a new place to live, you call your old landlord expecting him to send you the check to cover your belongings.  Then the other shoe falls; he is not only not liable for your things, but isn’t legally allowed to cover them with his insurance.  What now?

    Fire 2We all know someone or of someone who has lost their home to a fire, flood, or other natural disaster.  We come alongside them and offer them our support, prayers, and hugs.  We wonder why this happened to them.

    Had this family had renter’s insurance, their possessions would have been covered, and they probably would have received money to help them while they found a new home.

    You might be thinking, “Last thing I need now is another insurance payment while I’m working on [insert goal here]!”  What if I told you that the average renter’s insurance premium was only $15-20 a month!

    For the cost of a pizza, you can get $30,000 of coverage!

    So, what are you still doing here, reading?  Get a quote from your auto insurance company (bundling can save $$) now!

    After you buy a policy, please share below what it cost, what city/state you live in, and if it’s an apartment, single- or multi-family house.  Let’s see just how inexpensive it is!

    And as always, if you have any questions on what you need for coverage, let’s talk!

  • How to get more money in your paycheck without working more!

    How to get more money in your paycheck without working more!

    All of us would like to bring home more money for the work we do.  I discovered an easy, legal and simple way to boost your paycheck, without taking more overtime!  If you want to learn what I learned, keep reading.

    Back before I learned this method, I was missing out on several hundred dollars every month!  I look back now and wonder how much more I could have invested, how much faster I could have paid down my debt, how much more I could have saved for trips and ‘toys.’

    What I found out was that I was loaning the Federal Government hundreds of dollars a month at 0% interest!  I bet that you are doing the same thing.  How do I know?

    Almost everyone that I’ve talked to over the years gets a hefty tax refund this time of year.  They look forward to it.  They are happy that they get a huge check.

    What they don’t realize is that it’s not free money, but money that they overpaid to the IRS!  And like I used to do, they tend to blow most, if not all, of it on spontaneous unplanned spending.

    Wouldn’t you rather be able to use that money as you earned it?  Or at least put it in a savings account to earn some interest?  What financial goals are you working towards now, that having this additional income would help you achieve?

    Now for the action part.  There are many W-4 calculators online, including the official IRS one; you can even ask your HR department or CPA for assistance.  Once you have calculated your new withholding amount, fill out a new W-4 and submit it to your HR department.

    The goal is to have as small a refund as possible ($100-200) without owing anything.

    So, how much more will you get out of your next paycheck?  Encourage others with your results!

  • How to Understand Health Insurance

    How to Understand Health Insurance

    HSA, FSA, Co-pay, high deductible, Obamacare, lifetime limits, in-network, out-of-network, and so on.  Its enough to drive one crazy trying to understand all the jargon.  And then to be expected to make an “informed decision” on what is best for you and your family? Forget about it!

    Maybe you just got a new job, lost your job, or are in “open enrollment”, or just want to know how to navigate the labyrinth known as health insurance.  Let me break it down for you, in a way you can understand.

    “The art of medicine consists of amusing the patient while nature cures the disease.”
    ― Voltaire

    I can’t cover everything here, but I will attempt to break down the most common terms, concepts, and offer my advice on selecting a plan.

    I can remember starting a new job back in college, and being given the tri-fold pamphlet showing me the health insurance options.  It was full of acronyms, 5-dollar words, and jargon that I didn’t understand.  My new boss wasn’t much help; all he could tell me was, “I picked that one, ’cause its cheaper.”

    As time has gone by, insurance has become more complex.  I didn’t really understand it well until about 7 years ago, when I left the Navy and no longer had 100% coverage for anything & everything.

    So, here is a list of the most common terms/concepts you will come across, an explanation in layman’s terms, and what I think about it as a choice (if it’s something you can choose):

    • HSA – Health Savings Account; a benefit accompanying some High Deductible plans that allows you to save for specified medical expenses with pre-tax dollars.  You can have part of your paycheck automatically deposited in this account where it will stay until you use it.  It can act like a savings account for large medical expenses or used to get more bang-for-your-buck with routine expenses.  If you have a High Deductible plan, I highly recommend this.
    • FSA – Flexible Savings Account; similar to an HSA, but any money left in at the end of the year is lost.  As in gone forever and not yours anymore.  If this is offered, you need to plan out how much you think you will spend in a year and only put that amount in.  Like the HSA, it is pre-tax, so you can save money by using it, but if you don’t spend it, you will loose it.  I only recommend this if you can predict reasonably well your annual medical expenses.
    • Deductible – the portion of the medical expense that you have to pay before the insurance company starts to pay.  For a High Deductible plan, it could be several thousand dollars.
    • High Deductible Plan – A health insurance plan that has a high initial deductible (compared with other plans), usually starting at $2,600 for families.  After you meet the deductible, medical costs are split between the insured (20%) and the insurance company (80%), until a “max out of pocket” amount has been reached.  At that point, the insurance company picks up all remaining expenses.  Some plans have a lifetime maximum that is covered, so look at your plan and see if it has one.  An HSA usually goes along with this type of plan, and it is usually much less expensive than a PPO or HMO plan.  I highly recommend a High Deductible plan for two types of families: you are very healthy (i.e. you rarely visit the Dr. so don’t have to worry about paying for lots of office/hospital visits) or you are very sick (you will quickly reach the max out of pocket amount, which could be less than what you would pay with a PPO/HMO plan).
    • HMO – Health Maintenance Organization: A type of insurance where the insurance company gets certain providers (Drs., pharmacies, specialists, etc) to accept a lower rate for service.  This is the “network of providers” and you pay a co-pay with each visit and/or pre-arranged fees.  To visit a provider who is “out of network” means paying a LOT more.  Your favorite Dr. may not be part of the network.  Premiums (what you pay each month) are higher than with a High Deductible plan, but your per-visit costs are lower.  I recommend this for families that know they will make many visits to the Dr and/or hospital.
    • PPO – Preferred Provider Organization : similar to an HMO with a couple differences: you don’t need to designate a primary care doctor, nor do you need a referral to see a specialist.
    • Cost Sharing Network/Ministry – This is not insurance, actually, but a group of people who decide to share the medical costs of the group across the group’s members.  Depending on the specific organization’s set up, members either send a monthly payment into a large pot from which expenses are paid from, or members write checks directly to other members.  In a Cost Sharing Network/Ministry, money is paid directly to the members who then pay their bills themselves.  While this is not insurance, it does meet the “insurance” mandate of Obamacare. In contrast to insurance, the organization is not legally liable to pay out for claims, but the good ones will uphold the stated policies.  Most of these do not ‘cover’ routine medical expenses, such as physicals, but will cover for sickness, injury, and/or maternity costs.  If you are self employed and/or not eligible for a group insurance plan, this type of ‘coverage’ could be the most cost effective.  I currently use and strongly recommend Christian Healthcare Ministries.
    • Co-Pay – Under a PPO or HMO plan, this is the portion of the cost that is your responsibility.  For example, you might have to pay $20 each time you visit your doctor, or $500 for the emergency room.
    • Network of Providers – Under a PPO or HMO plan, this is a group of service providers that have agreed to charge lower rates to members of a particular insurance plan.  If you decide to use a provider outside of the ‘network’ you will pay much more in either co-pay or have a higher deductible.

    There are many, many more words & terms that I could describe, but I think I covered the most important and common terms that you will run across.  If there is one (or more) that I missed, please post it in the comments and I will address it.

    Feel free to bookmark this post for future reference and share it with your friends and family!  If you need help deciding on what what is best for your family, give me a call and I’ll help you navigate your specific situation!

    860-469-2274
    jeremy.fulton@me.com

  • How to save money every day the way I do

    How to save money every day the way I do

    Here at the Fulton’s we are always looking for legitimate ways to save money.  Especially when it comes to every day expenses.  Some of these you probably already do, others will seem extreme, and the rest you will want to start doing today!

    Everything I’m about to talk about is something we currently do, use, buy, own, or have previously done, used, bought, or owned.

    • Ting mobile phone service.  Ting is a pay-per-use service, so you can control your bill!  Our bill, for two smart phones, went from about $150 on Verizon to about $35 with Ting!  Ting uses the Sprint network, so it’s reliable.  They will even credit you up to $75 to get out of your current contract!  Click here to see how much you can save.
    • Menu Planning.  My wife plans out two weeks of meals at a time, then generates the shopping list based off of this.  Between having a plan for what to cook/eat and shopping with a list, we cut our grocery bill by 25%!!!  My wife uses this App/service; it’s not perfect, but works for us (let me know what you use)
    • GasBuddy.com.  If you want to compare gas prices before you head out the door, this site is great!  Prices are reported by users of the site and app (yes, there is an app that you can use!).  Don’t waste your time/fuel driving around to find the best deal!
    • Lower the thermostat.  In the winter, we keep the thermostat pretty low (55F!) and wear warm clothes inside, and blankets while sitting on the couch.  We both work in the same room/office, so we use a small oil-filled space heater to keep that room at a reasonable temp.  In the summer we use fans, except when it’s too hot for that.
    • TV.  I cut the cord years ago, “giving up” traditional satellite TV service.  We will check out movies (and TV series) from the local library (they can get movies from other libraries if it’s one not in stock),  or use Redbox.com for a new release (pro tip: reserve online or w/ the app to ensure the movie you want is at the kiosk closest to you).  Also, now there is the option of streaming content from the internet; devices such as a Roku, AppleTV, ChromeCast, or Fire TV allow you to stream free content or inexpensive subscription programs such as NetFlix, Amazon Prime, or Hulu+.
    • Cloth napkins.  And no paper towels.  Not only do cloth napkins add some ‘class’ to your meals, they don’t cost anything to re-use (they will fit in your normal laundry load)!  We use old hand-towels instead of paper towels.  Again, they don’t add measurably to the laundry (and are tougher/more absorbent than paper, anyway!).
    • Cloth diapers.  With Baby-J on the way, we wanted to find out how to keep costs as low as possible.  We calculate that we will save several thousand dollars over the course of two children; this includes the cost of buying quality diapers, extra laundry loads, and our time.
    • Amazon Wish List.  This may seem counter intuitive, but hear me out.  I’m a spender.  So I’ll put stuff I want or think I need on the list instead of buying it right away (even if it’s in budget).  I’ll take some time to price shop and to just let it sit.  Many times I’ve removed something from the list, either because I realized I didn’t really want it that bad, or I found a better option.
    • Buy used.  Craigslist, eBay, etc are all great  places to find used, quality goods (80% of my furniture, and my last 4 cars were found on Craigslist).
    • Buy quality.  When it counts.  Some things, like baby clothes, don’t matter, but with many things, buying it once, for a little more, if better than buying it many times.  Or the usability factor can make it worth while to buy the better model.
    • Cash Flow Planning.  This is the single BEST way to reduce your spending and save money.  It forces you to be intentional about your spending.  It is how we ensure we only spend on what is important to us.  It reigns in the impulse spending and prevents overdraft fees.  We use You Need A Budget (YNAB for short) as our budgeting software.  It is super easy to use, has a free mobile app, great resources, forums, FB group, and even has a good looking interface!  I’ll be writing a formal review on it, soon.  But for now, download the free trial here.  If you want to buy it, save $6 by using this link.

    What money saving tips would you like to share?

     

    Disclosure: some of the links provided are for referral programs.  By clicking those links, I will receive an account credit or money.  You may also receive a credit from those same links.

  • My Confession To You

    My Confession To You

    I am not perfect

    No surprise, right?

    I am not perfect with money

    There, I said it. It’s true. Even though I’m a Financial Wellness Coach I am prone to making mistakes and not enjoying everything I have to do to succeed with money.

    Sometimes the only thing keeping me from raiding my emergency fund for new camera gear is my wife.

    Sometimes I don’t want to spend the time saving for something and get a credit card to get it now.

    Sometimes I forget to write my budget before the first of the month.

    Sometimes I get a credit card offer in the mail with a “great” points system and think that I could get free stuff and not develop bad spending habits.

    Sometimes I see Amazon.com’s offer of free money to sign up for their card and want to “take advantage” of the offer.

    Sometimes I overspend a budget category.

    Sometimes I forget to pull out cash to use for our grocery budget and use the debit card, hoping I don’t overspend the budget.

    Sometimes I want to not invest 15% of my income for the future and enjoy my hard work today.

    Sometimes I don’t want to act like an adult.

    But I am an adult

    And my wife & future child depend on me being responsible. Sometimes when I do what is right, its not because it’s fun, easy, or makes me feel good. It’s because as an adult I force myself to see beyond myself, beyond now, beyond how I feel.

    When I make a mistake, I look at the WHY. I try to learn the cause of it and change my behavior/habits to not make the same mistake twice.

    What keeps me on the straight and narrow, financially?

    My wife, first of all. She is my accountability partner and any mistakes I make will be known and addressed (with love and forgiveness).

    You all; Writing, teaching, and coaching about responsible personal financial actions & habits forces me to do the right thing. I know that the moment I sign up for a credit card or car loan, my credibility with you is lost, maybe forever! I would not trust a coach who acted opposite of the way he/she coached.

    What do you struggle with? How do you overcome those struggles?

  • 3 ways to keep Christmas from surprising you this year.

    3 ways to keep Christmas from surprising you this year.

    Yes, I know its only February, and you have 10 whole months till Santa comes down the chimney.  So, why think about it now?

    I’ll point you to my motto:

    “Have a Plan, Not a Payment”

    How would it feel to get through your Christmas shopping, knowing you didn’t blow your budget and still gave all the gifts you wanted to?

    Pretty good, right?

    Here are 3 simple things that can enable you to do just that!

    1. Determine who you will buy for, and how much you will spend

      This could take some thinking and discussion with your spouse; I’ll wait here till you figure it out. Surprised by how much you want to spend?  Hold on, it gets better!

      This is the first step of your plan, figuring out the end goal!

    2. Add up the total and divide by 9

      No, you didn’t loose a month; I’m assuming you will start saving in March and shop in November.

      Put this number under the “Christmas” category in your Cash Flow Plan.  Since you and your spouse agreed to the amount per person, this should go into the budget w/o much discussion, except where to cut the monthly amount from.

      I imagine that this number is much more manageable then the value determined in step 1.

    3. Each month put that amount aside in an envelope or separate savings account, earmarked for Christmas.

    There are a few unexpected advantages to this method:

    • No fighting over how much is spent on Black Friday
    • If you run across a great deal in July, you will have the money already to buy the gift; just make sure you hide it well!
    • When the bills come in January of 2016, there won’t be one for Christmas gifts!

    So, think you can do this?

  • 5 Ways to make your future self happy

    5 Ways to make your future self happy

    Have you ever wished you could write a letter to your younger self?  I know I have!

    What would you tell yourself?

    • Don’t date that girl
    • Jump on that opportunity
    • Eat more veggies and exercise more
    • Call your mom more often

    Turns out I’ve been talking to your future self and have been sent with some things that you should know now!

    5. Forget about the Joneses.  By trying to keep up with them, you will waste so much time and money; learn to be content with what you already have.

    4. Don’t take investment, tax, spending, or other advice from your friends (or strangers on the internet).  Invest in working with a professional with the heart of a teacher.  Professionals have spent years becoming an expert in their area; what makes you think your broke friends know as good or better?  Money spent in this category will pay dividends in increased wealth, avoided tax penalties, and better money control.

    3. Stay away from debt.  Sure its nice to get things now instead of waiting, but if you play with snakes, you will get bit!  Debt is the enemy of wealth; do you want to have some money at retirement or lots of nice stuff with payments?  Get out of debt now so you can build your retirement and enjoy the income you have!

    2. Grandma was right; it will rain!  Build up an emergency fund as soon as possible.  A rainy day fund will take the stress and crisis out of anything that comes up: car broke down? Fix it without worrying how you will pay for it.  Sick relative you need to visit?  Buy the plane ticket without worrying how you will pay for it.  Broken furnace in February?  Call the repair tech and not worry about how to pay him.  Get the point?  Bonus: when you have a 6-month emergency fund, you tend to make different decisions when an ’emergency’ happens, which can save you money.

    1. Start saving NOW!  The longer you wait to start saving for retirement, the less you will have.  Money invested now is much more valuable than money invested in 5 years.  Once you are debt free and the emergency fund is built, start taking advantage of employer matched 401k’s and ROTH IRAs.  You won’t regret saving that money instead of buying that new car in 20 years, but you just might regret buying that car!

    Now, will you listen to your future self?  Or if you are the “future self”, what do you think?  Anything different you would tell the younger generation? Post below:

  • The 5 ‘best’ reasons to buy a new car

    The 5 ‘best’ reasons to buy a new car

    Let’s face it; there’s nothing like driving off the lot in a brand new car!  The new-car smell, the fit & finish inside feel luxurious, no strange noises, and everyone is noticing you and your new ride!

    So, what are the 5 ‘best’ reasons to buy a new car?

    5. I’ll impress my friends and strangers with a new car.
    Have you ever seen a brand new Kia or Honda on the road and said to yourself, “Wow!  Someday I hope to be as successful as that person!”  Me either.  So, unless  you are buying a Ferrari, I probably won’t give your shiny new car a second look.  And do you really care what some stranger you’ll never see again thinks?  And if you want to impress your friend, buying them dinner or clearing the snow from their driveway will do a much better job!

    4. I’m always going to have a car payment, so why not get a nice, new car?I haven’t had a car payment since 2008; and the last two cars I bought were fully loaded cars in good shape and still very nice inside.  I’m not rich, nor did I have tens of thousands of dollars saved up; I paid under $4000 each; that’s only 8.5 car payments!  There are lots of reliable, nice cars out there that you can save up for in a reasonable time frame.

    3. I want to save money on gas, so I need a more fuel efficient car.
    Yes, new cars tend to be more fuel efficient than a comparable old one.  So, you could end up saving at the pump.  But that is where the savings end.  The average car payment in America is $471; will you be saving that much every month in fuel?  Unless you trade in your Mac truck for a Honda Civic, I doubt it.

    Maybe it’s not your savings, but you are trying to be more environmentally conscious  with your MPG boost.  Will you reduce greenhouse gasses enough to offset those created by manufacturing your new car (mining the metals, pumping the oil for the plastics, the heavy metals & toxic waste created because of the electronics)?

    2. We are having a baby, so we need a safe car.
    Really?  When your 10 year old car rolled off the assembly line it surpassed all the safety requirements and whoever bought it then didn’t think it was unsafe.  Has your car become un-safe over time?  If you think so, have a qualified mechanic inspect it and replace aging components.  It will be much less expensive than even 2 car payments!

    1. I need a reliable car; old cars break down all the time.
    Yes, old cars tend to have failures more often than new cars.  Parts wear out and fail over time.  But is it really that bad?  Suppose you just had to replace the transmission at $2000.  That is a LOT of money, I agree.  But how often have you actually had your car break down and leave you stranded?  And $2000 is only about 5 car payments, and is easily covered by your emergency fund.  And a rental car is only about $20-30 a day while your car is in the shop.  The key to a reliable car is not age, but keeping up with maintenance.  Replacing parts before they fail and performing routine maintenance will keep your car running for many more years.

    Now, it is possible that your car will need a very expensive repair (such as a transmission) and you are wondering if it is worth putting that much money back into your car.  Here is a simple way to determine if it’s time to upgrade: If the value of the car as-is (in it’s broken state) plus the cost of repairs is more than the value of the car repaired, it’s time to replace it.  Sell it for what you can get for it and buy a newer, used car, for cash.

    So, why am I so against new cars and car payments?

    • Cars are depreciable assets.  They lose 10% the moment you pull out of the lot, and over 60% in 5 years.  Let someone else take the big hit and buy a 2-5 year old car.
    • $471/month.  That equals almost $40,000 in 5 years if invested instead; Invest that for 5 years starting at age 20, and that’s $2.6 million at retirement!!!  Investing it monthly for your entire working career results in $7.2 million!  Is that new car smell really worth that much?
    • Contentment.  Yes, I like new stuff, new gadgets, cars, etc.  But driving an older car can help teach you to be content with what you have and not worry about what the Jones’s think.

    What reasons do you have to buy a new car?  Or not buy one?

  • 6 reasons why now is the perfect time to buy a home

    6 reasons why now is the perfect time to buy a home

    Its a new year.  Things are going to be different this year!  You have set goals for yourself, your family, and your career.  But there is one thing that is still bugging you.

    You feel like you are still throwing money away every time you write out that rent check.

    “I could be building equity in my own home, not having to live in this crowded apartment building, and not having to worry about the rent going up, again.”

    If this is you, now could be the perfect time to buy your first home!

    1. 2.93% APR
    Rates can’t drop much more than that for a 15 year fixed rate mortgage!  Many analysts think that the rates will be increasing in the next 3-12 months.  Why didn’t I quote the 30 year rate? Because you should stay away!  Not only is it a point higher, but you will end up paying a LOT more in interest charges over the life of the loan.  And besides, who wants to be in debt for 30 years?

    2. Weak housing market (at least in CT)
    Home prices are still down, but the market is improving!  This could be unlike any other time in history or the future for prepared homebuyers!  Opportunity favors the prepared!

    3. You’ve lived in the area you want to buy in for a while
    Learn from my mistakes, don’t pick an area to buy in until you know the area a bit.  Where will you be spending your time?  Are there areas you want to live at a distance from? Close to?  Where do you work and socialize?  If you live too far, you can end up feeling isolated, or end up spending more in fuel than you anticipated driving all over.

    4. You have a down payment saved
    After the housing debacle a few years ago, it’s almost impossible to get a 0% down loan (a few options, such as VA, are much more expensive than conventional loans); most banks require at least 10%, but 20% is still the magic number!

    5. You are debt free
    And I mean all debt (including so-called good debt)!  Becoming debt free is a much higher priority to reaching financial peace then owning a home.  Once your income is freed from the burden of debt, you can maximize it’s wealth-building capabilities, including building equity in a home.

    6. You have a fully funded emergency fund
    When you own a home, you are liable for ALL maintenance and repairs!  No landlord to call at 4 am when the heater quits in February!  You need to have that 3-6 month reserve to cover whatever Murphy throws at you.  Also, what happens if you lose your job?  You’ll still need to pay the mortgage!

    Bonus:
    Now how do you determine how much house you can afford?  It’s a very simple calculation; no need to find an online calculator.  Don’t spend more than 25% of your after-tax pay on a 15 year, fixed rate mortgage.  Being house poor is no fun, better to have a modest home and money to spend, invest, and give.

    Double Bonus:
    When figuring out your payment, don’t forget to include property tax and homeowners insurance!  Depending on where you live, those can add $400-600 a month to your payment!

    Not ready to buy yet?  Lets develop a plan and get you ready, together!