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VISIONS FA M I LY, HEALTH a n d W E A LT H

Get that loan What the bank wants you to know

ALSO COMING UP SHORT? Secrets of a successful monthly budget WHERE TO SAVE: The insurance you can’t go without DAY TRADERS: What stocks to watch in 2011

Saturday | February 26 | 2011 A Publication of


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VISIONS... Family, Health and Wealth

Saturday, February 26, 2011


Saturday, February 26, 2011

VISIONS FA M I LY, HEALTH & WEALT H

CORNIN G, NY

CONTACT US Phone: 607.936.4651 Fax: 607.962.0782 PUBLISHER Dennis Bruen dbruen@the-leader.com ADVERTISING DIRECTOR Kurt Bartenstein kbartenstein@the-leader.com ONLINE www.the-leader.com Visions (BOOMERS) is created monthly by GateHouse Media, Inc., The Leader’s parent company, and is distributed with various GateHouse papers across the country. Reproduction in whole or in part without prior written permission is strictly prohibited. Opinions expressed in the publication are those of the authors and do not necessarily represent those of the management of the publication. Cover photo by stock.xchng ©2011 GATEHOUSE MEDIA ALL RIGHTS RESERVED

VISIONS... Family, Health and Wealth

You can If you haven’t yet started saving, now’s the time By Karen Sorensen GateHouse News Service

W

ant to get a fright? Check out an online retirement calculator and see just how close you are to having enough saved for your golden years. If the answer’s not nearly enough, don’t panic — it’s not too late to start planning now.

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Retire

PHOTO BY STOCK.XCHNG


VISIONS... Family, Health and Wealth

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Saturday, February 26, 2011

Time to save... AGE: 20

AGE: 30

AGE: 40

AGE: 50

In your 20s: Contemplating the end of

In your 30s: Nine out of 10 people in their

In your 40s: If you’ve been saving money

In your 50s: If you’ve reached this point

your career when you’re just starting may

30s are in debt, the highest proportion of

for the past 10 or 20 years, this is a good

and haven’t started planning, this is really

seem crazy, but counting on Social Security

any age decade, according to the Federal

point at which to determine whether you

your last chance to start, investment

to be there 20 years from now, let alone 40

Reserve’s Survey of Consumer Finances.

need to readjust your plan, experts advise.

experts say. Presumably, people in this

or 50, may be a fool’s risk.

Now’s the time to take a serious look at

If you haven’t, don’t wait any longer,

bracket may be close to paying off their

The reality is, retirement planning needs to

credit card debt and to start living within a

because there are only 20 to 25 years left to

mortgage, have gotten their children

begin as early as possible, advises money-

budget, writes Liz Pulliam Weston, a finan-

start socking cash away.

through college and may now have money

zine.com, an online financial planning

cial writer for MSN Money and author of

“With all the other claims on your pay-

to sink into a plan.

guide.

“Your Credit Score: Your Money & What’s

checks, it can be tempting to skimp here,”

“You’re also close enough to the finish line

That said, setting retirement goals now

at Stake.”

writes Pulliam Weston. “But every dollar

now that you should begin to make definite

may not be realistic, especially with student

It’s important to realize that money invest-

you fail to put aside now could mean $10

plans about where you’ll live, what you’ll

loans to pay off and the potential for mar-

ed in this period will work twice as hard as

less in retirement income.”

do and how much money you’ll spend” in

riage and mortgages on the horizon. In lieu

money invested when you’re in your 50s,

Things to consider: Don’t put yourself in

retirement, Pulliam Weston writes.

of that, experts say, the best bet is to sink as

experts say.

huge debt paying college tuition bills, and

much money as you can into employer-

pay down as much debt as possible,

sponsored 401(k) and 403(b) plans, partic-

Pulliam Weston writes.

ularly if the company offers a match. If that’s not an option, set up an Individual Retirement Account.


Saturday, February 26, 2011

VISIONS... Family, Health and Wealth

Stock picks for

2011 What won’t pay off “Sell stocks if they’re fully valued,” Katsenelson says. He emphasizes that now is a time to consider investment risks carefully. Magyer advises investors to forget about buying gold. “Bulls will say there’s more room to run, but investors are already more than a little late to this party.”

What to buy If you stick with the blue chip dividend payers, Magyer says, “you’ll do just fine with much less risk.” He recommends Walmart, Berkshire Hathaway and Google. These offer “attractive valuations, balance sheets and excellent long-term prospects.” Katsenelson agrees that investors should buy stock in quality companies, “companies that produce products.” Johnson & Johnson, he says, should still perform if the economy stutters.

What will go public Amid much buzz about certain companies that plan go public this year, not everyone is excited. Katsenelson doesn’t recommend buying stocks on initial public offering at all — they’re priced for the sellers and insiders, he says, noting that there are no IPOs during market crashes. Magyer’s take? “Even Crumbs Bake Shop is lining up an IPO, which pretty well speaks to how frothy an IPO market we’re looking at for 2011. That, and the cupcake bubble is probably about to burst.”

Top advisers’ do’s and don’ts for another wild market year By Carolyn Sperry GateHouse News Service

W

hat’s an investor to do these days? Last year was a wild ride. And in 2011, we’re faced with what economist David Rosenberg has termed a “Wile E. Coyote market.” Everywhere we turn, we’re waiting for a bubble to burst or the explosion of a “debt bomb.” Or for an anvil to drop on our heads. So what’s a solid pick this year? Read on for investment tips from two pros. Joe Magyer is an inside value adviser at The Motley Fool. Vitaliy Katsenelson is CIO at Investment Management Associates in Denver and the author of “The Little Book of Sideways Markets.”

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Saturday, February 26, 2011

things you need to know about your 2010 income tax returns

You don’t have to file on April 15 – this year: Kathy Pickering, executive director of the Tax Institute at H&R Block, reminds filers that they don’t have to mail in their federal income tax returns until April 18, three days later than usual. The reason for this is a fairly arcane one: Emancipation Day. It’s a legal holiday in Washington, D.C., commemorating Abraham Lincoln’s freeing of slaves in the District of Columbia. It also triggers an IRS exception: The government agency doesn’t require taxpayers to file their income taxes on legal holidays. Because Emancipation Day falls on a Friday, and because the IRS also doesn’t require taxpayers to file returns on weekends, the official filing deadline falls all the way back to Monday, April 18.

By Dan Rafter

2

|

O

GateHouse News Service

Don’t file too early, if you itemize: If you itemize your deductions on your federal tax returns, the IRS is asking you for a favor: They don’t want you to file your taxes too early in the year. Jeff Staley, managing partner of Freedom Tax Relief in San Mateo, Calif., says the IRS is still reprogramming its systems to handle new tax breaks included in the 2010 Tax Relief Act that President Obama signed into law late last year.

3

If you’re out of work, you still must file: Pickering said that even those taxpayers who were unemployed for all of 2010 must file tax returns. Even less appealing for these filers: This year, the federal government is taxing all unemployment benefits. This is a change from 2009, when the first $2,400 of unemployment benefits was tax-free, Pickering said.

According to Staley, if you itemize your deductions, the IRS is requesting that you not file your federal taxes until at least the middle of February. PHOTO ILLUSTRATION BY GATEHOUSE NEWS SERVICE | IMAGE SOURCE: IRS


Saturday, February 26, 2011

VISIONS... Family, Health and Wealth

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When Dealing With Money...

Don't Break the Law!

O

ftentimes businesses or individuals break the law when it comes to money habits, without even knowing what is being done is wrong. Certain practices are illegal and can lead to bad credit or even prosecution. Counterfeiting and forgery seem something right out of a best-selling crime novel, but many regular folks engage in these activities -- among others -- every day. What's more, they may not even know they're doing something illegal. To avoid trouble, it's best to be aware of dealings with money that could land one in hot water. Here are just a few samples... Forgery:

Signing

someone

else's name to a check is forgery, even if this person is a spouse, elderly family member who needs help or a boss who has authorized a check to be signed. The proper legal procedures should be taken to give one power of attorney to sign checks in another person's name. Otherwise, an individual could be asking for trouble. Counterfeiting: Few people are running currency through the home printer to pass off as actual bills. Although, advancements in technology can enable the "regular Joe" to produce print-outs that are very realistic. However, oftentimes checks or currency are photocopied to serve as a receipt or record. This can constitute as counterfeiting in the U.S. unless the bills are copied 75 percent larger than actual size. If a color copy is

made, only one side of the bill can be copied. Insufficient funds: Writing checks knowingly with inadequate funds in an account to cover the check is breaking the law. Some people do get prosecuted for writing "bad" checks. At the minimum, a business or individual may no longer be trusted to issue checks, or could find their credit rating suffers as a result of poor money management. Defacing currency: Purposely cutting, taping, gluing, or writing on currency is considered defacing legal tender and could land individuals in hot water. If the bill will be rendered unusable by the marking, it's probably against the law. Before a person tries to mend a torn bill, take it to a bank to see if it can be exchanged.

Signing a check for another person, such as an elderly relative, is considered forgery.


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VISIONS... Family, Health and Wealth

Saturday, February 26, 2011

Get debt-free in 2011

I

t seems like every day I get an email or a call in to the radio show telling me it is impossible to save any money, dump debt or invest using the money one brings home each month. WRONG! The problem is, most people don’t know where their money is going every month. The money came in, and the money went out, and only the names were changed to protect the innocent. Changing how you handle money isn’t easy, but the problem isn’t the money. The problem is the person you see in the mirror every morning. If you’re going to be “The Millionaire Next Door,” you have to put your money to work for you, not put you to work for your money. Every month you must spend every dollar on paper before the month begins. If you’re married, make sure your spouse is on the same page with you. Start by adding up your monthly income, then list all of your monthly bills and subtract the total from your income. Be sure to include a monthly payment to funds for your non-monthly items such as car insurance, taxes and Christmas (it happens at the same time every year, so plan ahead and pay cash). The amount left after the bills are paid is your disposable money to use for eliminating the student loan you’ve had around so long you think it’s a pet, and that MasterCard bill that has mastered you. “But Dave, there isn’t anything left over!” Well, then you need to look at your bills. Are you making payments on a car that’s $36,000 when your annual household income is $30,000?

DAVE RAMSEY Find syndicated columnist Dave Ramsey online at daveramsey.com. You can also see him at 8 p.m. EST weekdays on Fox Business and hear his radio show weekday afternoons.

Americans spend a ton of money each year on their cars just to impress people they don’t know. You may have too much car. Sell the car, sell the car, SELL THE CAR! Buy a used car that gets you around until you’ve had time to get out of debt, and save money so you can pay cash for your next vehicle. After you’ve sold the car, start selling other stuff. Sell so much stuff that the kids think they’re next! Use the money from selling your stuff to pay your bills and start saving. When you have your monthly budget, get out your envelopes. Label them for the expenses you pay monthly with cash — entertainment, groceries, eating out, etc. Put the amount of cash in individual envelopes that you budgeted for each item for that month. When the money in the eating out envelope is gone, you stop eating out. It’s that simple. Don’t be discouraged if your first budget isn’t perfect. It typically takes a few months.

R W m w i t C C s r W s a R h c l b h t I a p c r F g s W o n i p s w a I r a a m b W a F c d F r o 3 y y 1 v s u d u r p


Saturday, February 26, 2011

Renting in 2011 With a still-sputtering housing market, many people are left wondering where renting fits into the overall real estate picture. Rich Ayers, owner/broker at Crescent Lake Realty Inc. in Chicago’s western suburbs, shares his expert opinion on renting in 2011. Who does renting make sense for in today’s market and why? Renting only makes sense if you have a short-term need or if your credit is too low to qualify for a loan. The majority of folks will be better off financially if they buy a house within their means and take advantage of the tax benefits. If one has good credit and the ability to make the required down payment, it makes sense to purchase. Home prices and interest rates are at all-time lows. For those who rent, are there guidelines for what they should pay? When we analyze applicants in our property management business, we look to see if their income is 2.5 times the proposed rent or more. It is a good starting point to determine whether they can rent the home and continue living comfortably It isn’t just rent-price-to-income ratio, though. You have to look at your fixed payments like cars and student loans. Those could make a bigger dent in your budget. What can renters do to achieve homeownership? First and foremost, work on your credit score. Then, save for a down payment. Currently, the Federal Housing Administration requires a minimum credit score of 580 in order to put down a 3.5 percent down payment. If your credit score is 500 to 579, you will be required to put down 10 percent. If you go the conventional route, your credit score requirements vary, but it usually has to be 650 or higher depending on the lender’s underwriting requirements. That route also likely will require 5 percent to 10 percent down.

VISIONS... Family, Health and Wealth

Getting real

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Experts see few upsides to this year’s housing market; managing expectations is key By Molly Logan Anderson GateHouse News Service

PHOTO BY STOCK.XCHNG

With 2011 the fourth year in a row expected to bring disappointing national real estate numbers, consumers question the probability of a turnaround in the foreseeable future. Families, careers and hopes are pinned on the improvement of home values, even with few indicators that it will happen anytime soon.

National outlook

Market

Expectations

Rumor of market upticks and good news seems to be scant, with most reports showing results still historically low. But there is some positivity in the mix: According to the Pending Home Sales Index, the National Association of Realtors’ forward-looking indicator for the housing sector, pending sales of existing homes rose 3.5 percent in Nov. 2010.

turnaround

“I still think the public needs to get over the notion of the house as an asset that appreciates so rapidly it becomes a de facto piggy bank,” says Hewings, who sees having realistic expectations about homeownership as a necessary component of enjoying it.

In a December 2010 NAR press release, Lawrence Yun, NAR chief economist, indicated that historically high housing affordability is boosting sales activity. “In addition to exceptional affordability conditions, steady improvements in the economy are helping bring buyers into the market,” said Yun.

Still clinging to inflated values seen years ago, most consumers are feeling quite impatient about a market turnaround. “The problem with a ‘turnaround’ is that it implies the market in 2006-07 was to some extent in equilibrium; it was not,” says Geoffrey Hewings, director of regional economics applications at the University of Illinois. “Many homeowners were already under water, and even with continued appreciation, many of them would have ended up defaulting on their mortgages.”

NAR projections include an 8 percent rise in existing home sales this year and a 0.6 percent rise in median existing home prices to $173,700 in 2011 from $172,700 in 2010. New-home sales are estimated to rise 24 percent to 392,000, which is still well below historic averages.

Hewings does believe that home prices will eventually stop falling because of the combination of population growth and the decrease in the rate of construction of new homes. “But whether prices will return to 2007 levels is unclear,” said Hewings.

Historically, homeownership offered participants short- and long-term benefits, according to Hewings, who explains that in the short term, a homeowner benefits from occupancy and in the long run, appreciation. “In the recent bubble, ‘flipping’ houses was seen in the same light as stock options,” Hewings says. “The public basically ignored the current use of the asset as a benefit and focused almost exclusively on appreciation.” Bringing the focus back to realistic long-term appreciation will make homeownership a much more pleasing experience, he says.


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Saturday, February 26, 2011


Saturday, February 26, 2011

VISIONS... Family, Health and Wealth

The budget puzzle

Monthly planner

By Dan Rafter

ince Cardullo doesn’t care how much money your household pulls in each year: He wants you to make a family budget. If you don’t, you’ll run the risk of spending more than you earn each month. Or you’ll never manage to set aside any savings. You won’t know what you can and can’t afford.” The good news is that budgets don’t have to be complicated. Families only need to write out all their estimated expenses for the month, including money set aside for eating out, going to the movies and other forms of entertainment. They then need to chart their sources of income,

Salary

$

Mortgage payment or rent

$

Alimony, child support

$

Groceries

$

Dividends from investments

$

Utilities

$

Interest (savings accounts, CDs, etc.)

$

Entertainment, recreation and dining

$

Social Security benefits

$

Insurance

$

Retirement plan/pension income

$

Medical (not covered by insurance)

$

Other income

$

TOTAL

Education

$

$ Vacation

$

Gifts

$

Cash flow

GateHouse News Service

“Whether you make $25,000 a year or $25 million a year, you need to have a budget,” said Cardullo, a certified financial planner and president of The Tax & Financial Center in Lindenhurst, N.Y. “If you don’t budget, you won’t be able to answer the important questions. You won’t know whether you can afford that next purchase.

Expenses

Income

Everyone needs a budget — here’s how to start

V

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whether this comes from their full-time job, Social Security benefits or as dividends from investments. The goal is to have some money left over every month for savings. “Your budget doesn’t have to be complex,” Cardullo said. “But it’s so important to create a budget. I can’t stress enough the importance of creating a budget.”

Total income

$

Loan payments (auto, student, etc.)

$

Total expenses

$

Auto (gas, maintenance, etc.)

$

Available cash flow

$

Credit card payment

$

Clothing

$

Dues and subscriptions

$

Home improvement

$

Charitable contributions

$

Federal taxes

$

State taxes

$

FICA (Social Security)

$

Other taxes

$

Other expenses

$

TOTAL

$

Your net cash flow is the amount of money left after paying all your bills. How much of your net cash flow are you currently investing for the future?

SOURCE: WATERSTONE FINANCIAL GROUP


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Paying for college

Why it’s important to explore your options early

University of Washington PHOTO BY STOCK.XCHNG

By Kathryn Sucich GateHouse News Service

1

Y

our child’s college education is one of the most expensive purchases you’ll make in your lifetime. According to College Board, public four-year institutions cost an average of $7,605 a year in tuition and fees for instate students. Private four-year colleges cost an average of $27,293 a year in tuition and fees. For many parents, the cost of college is too overwhelming to pay for through savings. This is where student loans and scholarships can help out. In fact, according to College Board, more than

$154 billion in financial aid was distributed to students last year. That’s an average of $11,500 per student, more than half of which was scholarship money.

Here are some great ways to help pay for college.

2 3 4

FEDERAL AID: Use the Free Application for Federal Student Aid to apply for federal loans. Federal student loans generally have low interest rates and flexible repayment options. They also usually don’t have to be paid back until a student is no longer enrolled in college. Loan limits range from $5,500 to $12,500 a year. There are various federal, state and college deadlines in the months before your child attends school. You can find out more at www.fafsa.gov.

PRIVATE STUDENT LOANS: If you need more aid than you receive from federal aid, you can get private loans through many financial institutions. Sometimes the private loan process is also less time-consuming than the federal aid process. However, these loans usually have higher interest rates, have variable rates depending on your credit history and usually require repayment to begin immediately.

SCHOLARSHIPS: Many schools give out grants or scholarships that do not need to be repaid. Schools generally use the FAFSA to determine aid eligibility. There are also many private scholarships you can apply for, and many search engines on the Web can help you locate funds.

OTHER OPTIONS: Open a 529 plan as early as possible, which lets you save money for college with special tax advantages. Explore pre-paid tuition plans, which are state plans that let you lock in current tuition rates for in-state schools. Also consider federal work-study programs, community service programs or military service programs that will help pay tuition.


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Saturday, February 26, 2011

Savings Bonds Are a Safe Investment Choice Savings bonds are a governmentissued means of saving and investing that are generally secure and offer a decent rate of return. Depending on the bond purchased, maturity rate of the bond and the interest earned can vary. Series EE and I bonds for individuals are the ones most commonly offered in the U.S. Series I bonds are also known as inflation-linked and are issued by the U.S. Treasury. Ibonds' interest rates are protected against inflation because their interest rate adjusts with the rate of inflation. Series I bonds can be purchased in increments of $25. Series EE bonds are purchased at half of face value if paper certificates are bought, meaning a $100 bond is purchased for $50. Electronic Series EE bonds are bought at face value. There is a maximum purchase of $5,000 for these bonds per social security number. Series EE bonds purchased after May 1, 2005 earn a fixed rate of return. Earlier EEbonds are based on 5-year Treasury security yields and earn a variable market-based rate of return. It can take up to 20 years for Series EE to mature. The maturity is based on the issue date.

Bonds are considered very safe investments because they are backed by the government. They offer very little risk and are an ideal way for the conservative investor to earn some return on his or her investment. Bonds offer a small interest rate, which investors often accept in return for the security of the investment. To purchase a bond, an individual can either go to a financial institution like a bank or purchase them online electronically through the U.S. Treasury (www.TreasuryDirect.gov). They can be redeemed in the same fashion. Individuals who redeem bonds earlier than maturity may have to pay an interest penalty. There are many other bond series and specially issued bonds that can no longer be purchased but may be in one's possession. They can be cashed in or potentially turned into a more recent series of savings bond. Savings bonds can be good gifts for young children. They serve as a stable form of savings, and upon maturity -- and the child's maturity -- they can be cashed in to pay for schooling, a car or other items a young adult would desire.

People can look to savings bonds as a safe way to earn money on an investment in lieu of other savings plans.


Saturday, February 26, 2011

VISIONS... Family, Health and Wealth

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e

On the money Books offer prudent advice for tough times By Paul Eisenberg GateHouse News Service

Money is in the news, on our minds and, hopefully, in our pocketbooks. In an age when the financial rules seem to have been reset, even some older advice can still apply.

BOOK “Aftershock: The Next Economy and America’s Future,”

PRICE

DESCRIPTION

$25

Is the economy in a slow recovery or still teetering on the edge of another major collapse? Reich tackles what might be the most important financial questions of our time and offers a prognosis for a better future, both for individuals and the nation.

“Think and Grow Rich Success Journal,” by Napoleon Hill with Joel Fotinos and August Gold

$17.94

The nation was still recovering from the worst economic calamity it had ever experienced when Napoleon Hill first published this classic of financial planning in 1937. Things may not have been as bad this time around as the Great Depression, but many of the strategies Hill promotes remain relevant today. What’s more, they’ve been updated by Fotinos and Gold to address today’s concerns directly.

“Super Freakonomics: The Super-Deluxe, Super-Illustrated Edition,” by Steven D. Levitt and Stephen J. Dubner

$40

How does one make a book on personal economics, even one of the most popular tomes on the subject of all time, more palatable and less … financial? Include a variety of fun and, believe it or not, relevant pictures and graphics. The authors who originally made economics fun have outdone themselves with visual quizzes and more.

“Warren Buffett and the Art of Stock Arbitrage,” by Mary Buffett and David Clark

$25

For a while there, it looked like the stock market was a sure thing. Throw some money into it, and soon you’d have even more money. Of course, that’s not how things really work. Find out how they do from one of the masters of market, and one of the few who escaped the financial meltdown with his fortune and reputation intact.

$24.95

Don’t be fooled by its comic book cover. Quiggin tackles some serious business, albeit in a fun way. Some investing ideas refuse to die, even if they will eventually lead those who employ them to their financial graves. In this new age, what strategies are still viable, and which will doom investors? Zombies have the answer.

by Robert B. Reich

“Zombie Economics: How Dead Ideas Still Walk Among Us,” by John Quiggin


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VISIONS... Family, Health and Wealth

Saturday, February 26, 2011

Rest insured

Save on insurance and keep decent coverage with these tips

By Erika Rose GateHouse News Service

D

umping some insurance coverage has been in vogue in recent months as Americans have tightened their belts, but letting your new bare bones policies carry on indefinitely might leave you at risk.

Instead, heed the experts’ advice on the coverage that is really worth it and what you might be able to nix. Amy Danise, senior managing editor of Insure.com, an information resource on auto, health, home and life insurance, offers the following tips.

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Money-saving tips Brad Cooper, senior vice president of operations for InsWeb.com, an online insurance comparison provider, says, “There is no such thing as the lowest-price auto insurance” because of stiff competition in the market. Amy Danise of Insure.com agrees, saying annual auto insurance premiums can differ by hundreds of dollars. Premiums vary greatly in life insurance as well, she says, because of the range of possible premiums for the same person. Cooper advises first looking to deductibles before dropping any coverage, and raise them as high as you are comfortable with. Keep in mind, experts say, that in most states, your credit history can affect your rates, so if you’ve improved your credit, that’s a good time to shop around.

Auto

Life

Home

Health

At minimum, drivers need liability coverage. This is what covers damage to others, often the source of lawsuits. While there is a minimum required by law, often it is not enough. Danise recommends at least $100,000 per person and $300,000 per accident. When it comes to comprehensive and collision, the need for this on older cars is questionable. “It depends on your vehicle, but once the car hits 5 years old, I would start looking at how much am I paying versus how much I would get back in the event the car is totaled,” she says. Nadaguides.com is a good place to find your car’s worth. You may also want to consider ditching perks like towing, roadside assistance and rental car coverage.

Life insurance is a must for anyone with dependents who rely on your income. At minimum, Danise advises term life insurance to cover your income and mortgage payment for a certain amount of time Online calculators are great tools to help determine a sufficient safety net for your family, but don’t be scared off by the final number. Instead, buy something now and add supplemental policies later. Group life insurance through work serves as a nice supplement but remember, it is only as permanent as your job. Skip life insurance on children, as they do not have debt or income to replace, as well as policies whose cash value is tied to investments.

Insure only for the local construction cost of replacing your home and not its market value, which is a common mistake. Agents can help you determine this figure. Don’t skimp on that number or the percentage of the home value that is reserved for liability claims. Individual line items that detail the maximum claim for certain losses are built in to the policy, so there isn’t room to cut back there. However, you could eliminate any riders you’ve added to cover certain expensive pieces.

While most are insured through their employers, those who must get health insurance on their own could limit coverage to major medical or catastrophic coverage, which will pay for hospitalizations and surgery but exclude routine exams. Still, raising your deductible or the percentage of your share is a safer way to skimp considering the high number of people in medical bankruptcy.

PHOTOS BY STOCK.XHCNG


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Saturday, February 26, 2011

Think like a banker By Melissa Erickson GateHouse News Service

E

conomic times are tough. To be successful in getting a loan, it’s best to do your homework and find out what bankers need to know before you arrive in hat in hand asking for cold, hard cash. “It’s hard to get both kinds of loans these days,” said Carol Kaplan, senior public relations director of the American Bankers Association, referring to home and business loans. “Many people don’t have enough equity in their homes anymore to refinance or get equity of out them because of the housing crisis, the devaluation of homes.” So what’s your best strategy? Banks are looking for you to answer these questions before green-lighting a loan for the home or business:

PHOTO BY STOCK.XCHNG


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Need a loan? Plan your strategy. Know your income, said Michael Eisenberg, CPA and personal finance specialist with Michael Eisenberg Financial Advisors of Potomac, Md. “Lenders want to feel comfortable lending money to you. Know where you stand. How is your cash flow? What are your expenses?,” Eisenberg said. “You need to show the banker that you will be able to pay the money back at the end of the loan period,” added Jonathan Cox, senior manager media relations for the American Institute of CPAs. The same holds true for a home loan. Know what you can afford. Know your credit rating, and have three to five years of financial statements available.

Have a unique approach, said Robert C. Seiwert, senior vice president of American Bankers Association Center for Commercial Lending and Business Banking, Washington, D.C. “Depending on what market you want to serve, the lending institution will look very hard at what level of experience you have in the industry. Is it like other businesses? Do you have a unique approach? It’s a tough time to open a business, but if you have something unique, you can be successful.”

Choose the right bank. Not all banks lend to new businesses or are right for a second mortgage. “Find a bank that is SBA (Small Business Association)-approved,” said Seiwert. The same holds true for home loans. “The key ingredient is building trust between the banker and loan applicant,” said Eisenberg. “Start at your local bank where you have a personal contact. Find someone you’re comfortable with and confident in that they will give you good advice. Don’t get discouraged if you get turned down the first time. Try two or three times if necessary.”

Character counts, added Seiwert. “What do you bring to the table? Your resume should be concise and speak to your experience as it relates to your business venture. Bankers will assess your character first, then look at your business plan.”


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VISIONS... Family, Health and Wealth

Saturday, February 26, 2011

Caregiving costs How to find money to pay for parents’ elder care

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By Karen Caffarini GateHouse News Service

ew families want to discuss what would happen with Mom and Dad if they can no longer live on their own, especially when they are still fairly young and healthy. But that is exactly when the discussion should take place so the family can prepare for what could be future exorbitant costs, elder care and insurance experts say. A Genworth Financial report says nearly two-thirds of people older than 65 will end up in some type of assisted living facility, with costs as high as $100,000 a year for nursing home care in Massachusetts. The average stay in a nursing

home is 835 days and about half the residents pay their costs out of their own savings, the report says. Some 83 percent of U.S. residents will be responsible for at least a portion of a loved one’s elder care costs, adds Wendy Boglioli, national spokeswoman for Genworth. Many figure Medicaid will kick in, but it will only after the parent has paid down most of their assets and is staying in a Medicaid-approved facility, she says. So what does a family do to pay for quality care for their elderly parents? Some options:

So what does a family do to pay for quality care for their elderly parents? Here are some options.

Adult children can take out health, life or long-term care insurance policies on their parents or pay the premiums on their parents’ policy if their parents can’t afford them, says Dr. Robert Pokorski, chief medical strategist for The Hartford insurance company. Peter Ross, CEO of Senior Helpers national in-home care providers, adds that parents have to agree to having an adult child take out a policy for them and must be of sound mind because they have to fill out their own forms. He recommends having the discussion when parents are in their 50s or 60s.

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Pokorski says there are hybrid life insurance policies that allow the policyholder to access the death benefit via a rider if there’s a need for chronic care. He says The Hartford has a LifeAccess rider that, unlike long-term care products and other hybrids, will pay for the family to care for the parent at home as long as the parent exhibits the need for help in at least two daily activities, such as dressing and eating. Unlike long-term care policies, this not “use it or lose it.”

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Boglioli says adult children could use their 401(k) polices to help pay their parents’ expenses, but if they are younger than 59 ?, they will have to pay a penalty.

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Reverse mortgages allow seniors to stay in their homes and use that equity cash to pay for in-home care, Ross says.

The Veterans Administration has a little-known policy called Aid in Attendance that will pay up to $1,900 a month for at-home care for veterans, their spouses or dependents at no cost, Ross says. Applicants need to prove they need care, and the process is lengthy — 26 pages — and could take six months before the VA makes a decision on whether you should get the benefit. “The good news is, if you get the aid, it is retroactive from when you applied,” Ross says.


Saturday, February 26, 2011

VISIONS... Family, Health and Wealth

PAGE 23


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VISIONS... Family, Health and Wealth

Saturday, February 26, 2011

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