Last week I had some issues with my car and took it to my dealer initially to look at and they discovered that it was a minor repair but one that would cost me $xxx amount of repairs. I was shocked at the price tag.
My car is 7 years old so while it is under warranty it makes sense to take it to a dealer but for most of us, those warranties do not cover much or after the warranty period runs out, every little thing starts going wrong. We have been lucky with our Subaru but this time, with this type of repair and the quote I got on the work, it seemed like a lot. We had heard of a local car place near our house, called Independence Car Care that had a good reputation and did a good job for a friend so my hubby called them for a price comparison for the same work. We were quoted over the phone almost half the price the dealership was going to charge us so, we decided to give the new place that came recommended by a good friend a try. And we are quite glad we did! Call them at 303-431-1114 and ask for Doc and tell them I sent you!
This is my testimonial: In this day and age, it is hard to trust car repair places because sometimes they quote you too much, do more work than you asked for, or “find” other things wrong with your car when you go in for a simple oil change or tire balance/rotation. In any case, it is really important to be able to trust your car repair shop and the people you trust your car to. After all, your car is your freedom and it seems we cannot operate without a car in this town.
We took our car in to Independence Car Care and they even gave me a ride back to my house while I waited for the repairs. They completed the repairs and there was still something wrong with it when we test drove it, so they took it back and found the issue, repaired it, and on the snowiest day of the past five years in Denver, drove it back to our house, repaired and ready. Like their owners’ card states, Independence Car Care is about “Quality, Honesty, and Integrity.” Their customer service, communication, and their ability to get the job done right is unsurpassed. And as a testimonial, my husband and I will never take our cars anywhere else! He used to take his car all the way to Louisville to a place he had grown accustomed to while he lived there but no more- he was very impressed with everyone at Independence, their honest work, their reliability and their amazing customer service. In the Denver metro area, if you need a reliable car repair shop, I highly recommend Independence Car Care and definitely let them know that Ratna at Get Clued In sent you!
*This post was written as part of Financial Friday over at denverparent.net and posted at Denver Parent but re-posted here. Happy Friday to you all!
In my previous Financial Friday articles, I have talked about insurance, taxes, deductions, and how to save, and health savings plans. This is all great for the NOW but few of us like to think about what happens after we are gone. Few of us want to think about the unexpected but do you have a plan of who will raise your kids if something happens to you and your spouse? What about your money that you saved? What happens to that? Will your children be left with debt or assets in trust or in the hands of a good investor?
Few of us like to think about estate planning because it brings up a morbid thought- we are going to die. Yes, it is morbid and it is easier to put it off but take the example of Jim and Sue who had three young children (all under age 10). Jim and Sue took a trip without the kids and met with an unfortunate accident while overseas. They died leaving 2 homes (real property), over $500,000 in cash/money market/stocks/investments/pensions and the like; but no wills. The kids’ guardians were chosen by the court. Of course, Jim and Sue had no say in it. They were gone! The court appointed an executor to distribute assets and a trustee but again, Jim and Sue may not have wanted Sue’s sister to care for the kids. Jim and Sue may not have wanted Jim’s brother to manage the kids’ assets. And most of all, Jim and Sue did not want to pay the outrageous probate costs they could have avoided (paid out of their estate) all if they had just had a will.
This article outlines the basic facts of estate planning. In subsequent articles, I will get more in depth on some of these topics.
Myth #1- I do not need a will because I have no assets. Everyone has assets and net worth does not determine whether you need a will or not. Every individual should have a will to set out wishes, goals, and desires of how your personal and real property is distributed. In addition to a will, you should also consider other instruments like a will, powers of attorney (POAs), and a living will.
Myth #2- I already have a living will, that should be enough right? A living will is just one piece of the estate planning puzzle. A living will tells the healthcare provider only about whether you want life sustaining measures taken or not. A health care or durable power of attorney actually appoints someone to make health care decisions for you. Health care decisions include the power to consent, refuse consent or withdraw consent to any type of medical care, treatment, service or procedure. In the document you can give specific instructions regarding your health care which will require the agent to make decisions in accordance with your direction. Additionally, you can do a general power or special power of attorney for someone to manage your day to day affairs while you are incapacitated. That is separate from the estate planning puzzle but it is a good idea to include this power of attorney in case you need long-term care or cannot write checks/pay bills during your hospitalization.
Myth #3- I do not need a will because I am single without kids. Again, even if you are single and without children, it may still be a good idea to have a will so you can decide who gets your baseball card collection, your jewelry, or other items and home. Also it reduces the cost of probate if you have a will so the court does less work. When the court does less work, your heirs or beneficiaries pay less probate costs. Everything written in one place makes it easier to locate your heirs, your beneficiaries, and the people you designate to be the executor or trustees of your estate. That is why it is a good idea to put wish lists/names and phone numbers etc with your will as well. Just a smart idea.
But, before you run off and make these documents, you should make a plan for the care of your children, gather documents, and talk with the people you are thinking of appointing as well. Your assets include your real property (homes, condos) and also investments, retirement savings, insurance policies, and business interests, along with all your tangible property (Cars, jewelry, TVs, collectibles, etc.). The more of your items like insurance, retirement policies, and your bank accounts, etc., that can be joint accounts or name Payable on Death (POD) beneficiaries the better. You can avoid probate of those items by designating the PODs on the account itself. In any case, everyone should have a will and especially if you want to ensure your kids are cared for by the people you choose not who some court judge chooses.
Myth #4- It is too hard to do this work and I do not want to pay a lawyer. These days you may not have to pay a lawyer or go see one but it is a good idea to do so. Your individual circumstances differ from Jim and Sue’s above and you may need specialized assistance. You can certainly do a will or living will or trust using software or on-line help but it is a good idea to see someone with expertise in the field and it does not have to be a lawyer. There are estate planning experts out there to help you. And remember, you should do this leg work now because you do not want to wait until it is too late. There are lots of websites or resources to find lawyers near you. You can either use findlaw.com, google search, the phone book, and they are often listed by specialty. Most lawyers who work in this field do not charge exorbitant fees, and are quite reasonable . Call around and find out if initial consultation is free as well. You can also look at your State’s bar association website. For those in Colorado, the Colorado Bar Association is a good resource as well.
And finally, once you have all the documents mentioned above, do not make too many copies in case you make changes in the future because conflicting copies of wills and powers of attorney can result in disputes. Secondly, keep them in a safe place but not in a safe deposit box. A safe deposit box at a bank or financial institution is sealed and only opened as part of probate so if your will or other health care documents are in there, your heirs and beneficiaries will not be able to go retrieve them. Keep all your documents in safe, fireproof place at your home, easily accessible by your appointed executor(s) or guardian(s) and let them know where it is. Additionally, always let people know you are appointing them and make sure they are okay with it. The last thing you want is an unwilling executor, or agent in charge of health care decisions for you, OR WORSE, unwilling guardians for your young kids.
Next time we talk about Estate Planning as part of Financial Friday, I will talk about trusts and if they are right for you.
*Disclaimer: All parts of this series were written by the author in her personal capacity and not attributed to her profession, or any organizations, employers, or the like that author is affiliated with. The author is interested in these topics and blogs for recreational purposes and not for financial gain. All views and opinions are of the author and not attributable to any company and not meant as an endorsement to any company or organization. Most importantly, author is not a financial expert, tax or estates attorney, estate planner, or accountant, nor works in the financial planning field. This article is written solely for the purpose of sharing information and knowledge with the readers. All readers should consult with their own attorney, tax planner, financial or estate planner, and/or accountant prior to making investment decisions. The author is not liable and will be held harmless for any investment loss or risk undertaken as a result of opening any of the accounts aforementioned or preparing the documents there in.
I know, I know! It’s Financial Friday and It’s supposed to be about “finances” not liability and getting sued but sadly, if you have drivers in your home, whether under or over 25 years of age, the type of auto insurance and the amounts you carry can affect your overall financial health in the long run. Of course, we all hope and pray it does not happen and we do our best to be good, safe drivers but hoping, praying, and driving well yourself does not prevent some other reckless driver, in a split second, to possibly take away what you have worked a lifetime to built- your nest egg, your savings, and other liquid assets.
My recent minor fender bender got me researching and got my husband and I talking. I was not at fault and this was a very minor fender bender, but still something like this does get you to be more careful, and gets you thinking about the “what ifs.” While we have young toddlers in our household present day, we started talking about what we need to do as they become of driving age. Even if your kids are not driving your car, they can drive a friend’s car and be exposed to the same risks. If a dependent in your household (not emancipated), and one that is under your insurance or not, gets involved in a car accident, you (yes, you) can be held personally liable for anything over your liability coverage amounts. So, it’s not only important to know what type of coverage you need, but how much you need and these needs can change over time. In auto insurance, here are the different types of coverages and your company may offer varying amounts of coverage for different prices. The more coverage you get, the more you will pay, but peace of mind may be worth it.
1. Bodily Injury Liability Coverage protects you from damage you may cause in an accident. It consists of bodily injury liability and property damage liability. Bodily Injury Liability pays for losses if you are at fault in an accident, and are legally responsible for others’ injuries.Medical expenses fall under this type of coverage and this is the coverage that is key when you are deciding how much coverage is right. I have seen policies offerred up to $1 million/per person, per accident. You may think $1 million seems extreme but if you have four passengers in the other car, and there are medical conditions or injuries, you do not want a situation where you become responsible for medical expenses that exceed your coverage limit. So, for example, if you injure four people in an auto accident, and each person has $75,000 in medical costs and your coverage is limited to $100,000 per person, $300,000 per accident, you coverage limit would be adequate but the same scenario and if the medical costs exceed $300,000 for that accident, you may be sued for the remaining amount. When you are sued personally, keep in mind, it exposes you and your assets to risk if you cannot pay a court judgment against you.
2. Property Damage Liability– This is different than bodily liability in that it helps protect you from bills that can include-structural damage to homes, structures, and repair/replacement for vehicle or other objects. This is where everything else falls that affects “property” but not a “person.” A good rule of thumb here is to consider how much it would cost to repair multiple vehicles, a fence, a home, or structures if the accident is severe. Generally, speaking, most accidents do not see property damage exceed bodily injury and damage. It is generally the medical payments and personal liability which needs to be at higher amounts but still keep in mind that if you hit another vehicle and you are at fault, if the other car is a total loss at $40,000, and you only have $25,000 coverage, then you could personally be liable and sued for the remaining $15,000.
Keeping the above in mind, it is a good idea to assess and re-assess coverage limits as your life situation changes over time. When kids are young, you want to have enough coverage to cover any potential accidents and yourself. But as kids start driving, you may need to increase your liability in the Bodily Injury Liability coverage. As cost of living changes, cost of medical increases, the different coverages offerred may change as well so call your insurance company.
Next week, I will cover what you need to do in the meantime — we do not plan accidents and we certainly do not expect to get into one but if we do, it is too late to shuffle your money around at the last minute. So, it is good to plan for liability, lawsuits, and invest in a way that cuts down your liquid assets on hand as well. In the next article, I will also address bankruptcy.
*This post was featured on April 15, 2011, at denverparent.net. I am re-posting here on April 18, 2011 – this year’s tax deadline.
Flexible Savings Accounts
This week’s Financial Friday comes on the heels of a budget deal, a closely averted government shutdown, and today is April 18 but normally, tax day is on April 15th- a day when you are reminded of how much of your hard-earned money goes to the Government for lord knows what. All of this is what inspires this week’s Financial Friday article on saving your money. If you missed the previous articles, click here to view Saving for your Child’s Education, Part I,Part II, and Part III.
If you are like most Americans, both parents work outside the home, resulting in hefty child care expenses. For two kids under the age of 5, we pay over $1900 a month! That is almost $24,000 a year and this is considered middle of the road. If you go for a higher end daycare/learning center, including fees and tuition and food, you could be looking at almost $30,000 for two kids per year. It is no wonder that more and more families are choosing one parent to stay at home. If you have 3 or more kids, and a job that pays less than $60,000 a year, it is simply not worth it for both parents to work outside the home. It makes more sense for one parent (the one who earns less whether that be the mother or father) to stay at home. But, if you are both working, it is important to look into Dependent Care and Medical Expense Expense or Flexible Savings Accounts (FSA) through your employer. These are great tools to save some money while also cutting your tax burden. Ideally, when you set these up (usually during open season designated by your company’s plan), you designate a yearly amount up front and depending on the number of pay periods per year at your job, the money is taken out pre-tax. That’s right! These are pre-tax dollars which means you do not pay tax on them, and you get all the money back as well (assuming you spend it). So depending on your circumstances, it is a great way to prevent Uncle Sam from getting some of your hard earned money but alas, not all.
Dependent Care FSA
The first of these plans and the one I think parents are the most interested in is the dependent care spending account. The contribution limit of this plan is $5000 per family not per child. Dern! I wish it was per child because $5000 only covers 2-3 months for most families who have two or three kids attending a full-time day care program. It is important to note that this plan is not just for your dependent children but one that you can use for the care of your dependent parents or grandparents as well. This account is also useful for children who cannot care for themselves due to handicap or disabilities beyond the age limits specified for before school/after school care. But, keep in mind that the person or persons on whom the dependent care funds are spent must be able to be claimed as a dependent on the employee’s federal tax return and additionally, the money cannot be used for summer camps (other than “day camps”) or for long term care for parents who live elsewhere (such as in a nursing home).
Unlike medical FSAs (see below), dependent care FSAs are not “pre-funded” and employees cannot receive reimbursement for the full amount of the annual contribution on day one. Employees can only be reimbursed up to the amount they have had deducted during that plan year. So, you may not get your final payment on the full $5000 until after your final paycheck issues in December of the calendar/tax year. Something to keep in mind if your adjusted gross income (AGI) is under $35K, is that you may fare better to taking a deduction on your taxes under something called the Child and Dependent Care Credit rather than do the Dependent Care FSA. If you are dual income or have multiple kids in day care and make over this amount combined you get phased out as your income rises above $35K so by the time you count two incomes, if you make $100K or more AGI it is generally better to utilize the $5000 shelter of a Dependent FSA. Even if you spend $24K in one year on child care expenses, if your AGI is over $100K, you will only see about a $500-$200 tax credit on that entire $24K so better to get your $5K from Uncle Sam through the use of the dependent FSA.
Medical Expense FSA
The most popular however, of these plans, is a medical or health care flexible spending account. You should check the rules on these because they differ but the IRS in 2011 changed the rules for reimbursement for over the counter medicines (OTC) so check the rules before you decide how much contribute. You can read my previous article I wrote about flexible savings account and all the changes that took effect January 2011 on reimbursements. Under this plan, you get your prescriptions money back (the co-pays and out of pocket expenses), the deductible you pay on your health insurance can be paid back to you, and the cost of dental, and doctor’s visits and procedures. You can also submit your receipts for some OTC items but check the rules of your plan. The main thing for us parents is that we get our co-pays and deductibles back, and you know as parents of young kids, we are always taking them in to the doctor’s office or ER. Wellness visits are generally covered 100% by insurance but all those extra trips we make for the horrible croup-like cough, the fevers, and all the other fun stuff our kids go through as they build their immunity in school and day care is not always 100% covered so this is a good way to get your pre-tax dollars back tax-free! According to IRS section 125, benefits received from a health insurance plan are not considered taxable income. Also, unlike the Dependent Care FSAs these are pre-funded up front, meaning that if you made an election of $3000 for the whole year of 2011, on January 15 (after your first pay check) you could technically use all $3000 of it even though the money has not been funded yet (if you split it over 26 pay periods). So, if you were to lose your job in March or April, you still get to keep the whole $3000 without paying tax on it. There are provisions in place for the company to pay your remaining share that was not paid into the account yet.
The main disadvantage of these accounts is you lose the money if you do not use it but you get 15 months to use it- January 1 through March 15 (of the following year), so use it! There is currently no federal cap or contribution limits to the Medical FSA but individual companies may impose limits so make sure you estimate your costs properly and read the rules on your plan. It is your money, though, and you should keep as much of it as you can! Warning: The Health Care Reform that passed in 2010 does cap the FSA contribution limit to $2500 but those changes do not come into effect until 2013.
As we mourn the loss of anywhere from 15-35% of our income on this tax day, April 15, 2011, let’s not forget to consider all the tools at our disposal created by Congress and approved by our President to loop around the hefty tax burden we carry. Use those tools if they make sense for you and your situation: Health Care Flexible Spending Accounts, Dependent Care Spending Accounts, the tools previously discussed on Financial Fridays- the State 529 College Savings Accounts, Coverdell ESAs (to save for our kids’ education), Custodial Savings Accounts for our children and and let’s not forget to save for our retirements pre-tax through ROTH IRAs, and our 401Ks through our employers, and Traditional IRAs. These are all great ways to dodge the tax bullet just a little and make sure our families are taken care of as our federal budget dwindles, the deficit increases, and social programs like medicare, medicaid, social security, and such are on the decline. After all, we should all do what we can to become more fiscally responsible and teach our children the same.
Disclaimer: All parts of this series were written by the author in her personal capacity and not attributed to her profession, or any organizations, employers, or the like that author is affiliated with. The author is interested in these topics and blogs for recreational purposes and not for financial gain. All views and opinions are of the author and not attributable to any company and not meant as an endorsement to any company or organization. Most importantly, author is not a financial expert, tax attorney, estate planner, or accountant, nor works in the financial planning field. This article is written solely for the purpose of sharing information and knowledge with the readers. All readers should consult with their own attorney, tax planner, financial or estate planner, and/or accountant prior to making investment decisions. The author is not liable and will be held harmless for any investment loss or risk undertaken as a result of opening any of the accounts aforementioned.