Apr 232015

How to Prep Your Car for a Long Road Trip

By |April 23rd, 2015|General Personal Finance|Comments Off on How to Prep Your Car for a Long Road Trip

0dde0c54f50541e09fbcb0a1c539db8eWhen you’re heading off for a long road trip, make sure the vehicle you’re going to be driving is up for the task. There’s nothing worse than having car trouble out in the middle of nowhere. The potential of getting stuck is real, so it’s always better to be prepared for anything.

Preventive Maintenance

A month before going on your road trip, take your car to the shop and have it looked at by a professional mechanic. Tell him you’re setting off on a long trip and would like to know the status of the car’s oil, filters, brakes, suspension, heating/cooling, tires, battery charge and belts. If anything is worn out, leaking or needs to be changed, have the mechanic perform all the necessary repairs in one go. This will save you time and maintenance costs, not to mention the hassle of having something blow-up on you while travelling.

Murphy’s Law

Take an emergency kit and a bug-out bag with you. Emergency kits must have emergency medical supplies such as pain killers, anti-diarrhea medicine, Tums, rehydration salts, anti-inflammatory meds, gauze/bandages, antiseptic, small scissors and burn medication.

Your bug-out bag should have supplies that will keep you and members of your group alive for three days. This includes water, food, water purification tablets, a flashlight, a knife, extra batteries, a multi-tool, flares, a reflective vest, stormproof matches, a compass and a map.

Check your trunk for the jack, early warning device, tool set and spare tire. Be sure the spare tire is in good working condition and is properly inflated. Bring extra water for the radiator and a car fire-extinguisher. Check the manual. If you’re driving an import or exotic and the manual is in another language, download an English version or hire an automotive translation service. I know this is a lot, but if something does go wrong, these steps can save your hide.

Eyeball your Vehicle

Now that you have all you need to survive a mishap, make sure you don’t get into one in the first place! Two weeks after having your car checked by a professional mechanic, eyeball her for any physical issues. Check the tire pressure and wear. Check all the lights and electrical components like blinkers, sound system, GPS, etc to see if something isn’t working. Check the wiper blades for issues with visibility and change them if needed.

Drive your vehicle and be on the lookout for any leaks and weird noises. If the engine is revving more than it should during idling, have it checked ASAP. If you feel that it lacks the power to pass other vehicles or if it’s struggling and put-puttering, bring it back to the shop. If you’re all over the place when you’re going fast, the steering is off-center and needs to be fixed. If you veer either to the left or right, it’s an alignment problem.

Loading Up

Be sure to take only what you need with you. You won’t need snow chains and ice skates on a trip to Florida, so take it out of the trunk. Balance your luggage and passengers so that both sides of the car will have more or less the exact same load. Never load up the vehicle and passengers more than what is indicated on the manual. When in doubt, check the side of the door. Newer vehicles will have information regarding tire pressure and load capacity stamped on the side.

Happy Trails!

Wherever you’re headed, make sure you follow the steps I outlined here so you can avoid any road problems and have a safe, fun trip. Just in case you do run into some trouble, being prepared and having the emergency kit, bug-out bag and extra supplies with you can save your life and the lives of your loved ones. Drive safe!



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Apr 222015

ABLE Accounts: Coming to a State Near You

By |April 22nd, 2015|Blog|Comments Off on ABLE Accounts: Coming to a State Near You

Having a child changed my whole world, in ways massive and small – most of which are beyond the scope of this blog. One of the most profound changes I experienced can be summed up in one, innocuous-sounding word: worry. The sheer number of options for a parent to worry about is astonishing.

One of the things I worry about is her future. I would like her to have the opportunity to attend college, but I worry about sending her off into the world with massive amounts of debt. Consequently, I put a fair amount of time and money into giving her an unencumbered start so that she can have the best chance to thrive, financially and otherwise.

When saving for college isn’t enough

I’m sure there are quite a few parents out there who can relate. Planning for our children’s future while taking care of their needs today is a balancing act that many of us are all too familiar with. But for a few close friends of mine, there is an extra layer of concern.

Parents of children with disabilities often find themselves in an untenable position. In many cases, the cost of care for a child with a disability places tremendous financial pressure on the entire family. While it’s true that government programs can – and do – pay a significant portion of these costs, often the family is still on the hook for a daunting amount. Even if parents are able to scrape together funds to save for college for their children without disabilities, there is little that can be done to save for children with disabilities that doesn’t disqualify the child from the federal programs necessary to pay for his or her care.

A solution…sort of

Until recently, the answer to this dilemma was a special needs trust, which is an irrevocable trust set up to provide for the needs of a disabled individual without impacting eligibility for public assistance. But creating a trust is an involved process involving an accountant, attorney and usually, a great deal of money. Furthermore, assets in a trust can be subject to significant tax liability, and any distributions are taxable to the recipient.

A better solution

Enter the 529 ABLE account, created late last year. (ABLE stands for Achieving a Better Life Experience.) ABLE accounts will allow up to $14,000 per year in contributions (the current gift tax exclusion), tax-free growth, and qualified distributions that are excluded from gross income for the beneficiary. Funds up to $100,000 held in an ABLE account will be exempt from the $2,000 limit that determines eligibility for Medicaid and SSI.

ABLE accounts will not have quite as much latitude as special needs trusts when it comes to qualified distributions, but the definition is still fairly broad. Distributions can be used to cover, among other things, education, housing, health care, employment training and management, financial management, and funeral expenses. Additionally, any funds left in an ABLE account after the death of the beneficiary will be used first to repay any Medicaid or SSI benefits received by the beneficiary after the account was opened.

There are also notable differences between ABLE accounts and Section 529 plans. While account size limits will be the limit already set by the states for 529 plans, the contribution limit for a given year will be equal to the gift tax exclusion for that year. The accelerated gifting provision for 529 plans will not apply to ABLE accounts.

Other differences apply to beneficiary designation. The account owner and beneficiary for an ABLE account must be the same person, and assets placed in the account are deemed an irrevocable gift to the beneficiary. Also, while there is no limit on the number of 529 plans that can be opened for a single beneficiary, ABLE accounts are restricted to one account in one state for each individual.

Next steps for ABLE accounts

While the legislation that created ABLE accounts is federal, the accounts will not be available until the states set them up. There is no clear timeline for this process.

Additionally, there are many areas in the legislation creating ABLE accounts that will require some guidance and clarification as the plans are implemented. But ABLE accounts are a big step in allowing the families of individuals with disabilities to put aside money to help give them a brighter future.

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Apr 212015

How I Fell Into $40,000 of Debt and Eventually Got Out

By |April 21st, 2015|Personal Finance Tips|1 Comment

I write about personal finances for a living, but that doesn’t mean I’ve always managed my own money like an expert. In fact, it’s some of the difficult growing pains I faced that lead directly to my self-education on financial management. And, having overcome those difficulties is why I do what I do today.

When I’d reached rock bottom, I held roughly $40,000 worth of debt. Here’s the story of how that happened, and, more importantly, what I did to get out of it.

When I'd reached rock bottom, I held roughly $40,000 worth of debt. Here's the story of how that happened, and, more importantly, what I did to get out of it.

How I Fell Into $40,000 Worth of Debt

Shortly after I started my college career many years ago, I received a credit card offer in the mail. My parents rarely used plastic, and frankly I didn’t understand the rules very well. After I filled out the application and sent it in, my shiny, new card arrived in the mail. From there, I didn’t waste much time.

I started eating out at nice restaurants, picking up bar tabs with friends, and I never missed a local sporting event or major musical concert that hit town. My credit limit was only $1,000, and from the get-go I only ever made the minimum payment each billing cycle. After about six months, my limit was raised to $3,000 and I also signed up for two more cards. Thinking that my minimum payment strategy was going well, I got a taste for nice clothes and started upgrading my wardrobe. I took a few vacations over the following years, as well.

When it came to my college education, my parents paid the tuition, books, and all other expenses, with the agreement that I would pay them back when I graduated. I didn’t find work right away, though, and even after I did – a full-time gig at a restaurant – I still wasn’t making all that much money. Eventually, I started going over my limits, and keeping up with the minimum monthly payments was getting tougher.

At this point I had about $25,000 in credit card debt and I owed roughly $15,000 to my parents. I was living with them at the time, and they started getting a little suspicious when I fell behind on my payments to them. My mother got hold of my credit card statements, and when she saw what a financial mess I was in she gave me an ultimatum: Do something about it or she would take over my finances. I certainly didn’t want that, so it was exactly the wake-up call I needed.

How I Got Out of It

When I finally got serious about my debts, I wanted them off the books as quickly as possible. Here’s what I did.

Started Budgeting
Back then, there was no Internet, so I wrote my budget out on paper (today I would use a site like Mint or PearBudget, or maybe even a Microsoft Excel spreadsheet). I created categories for rent, utility bills, and transportation, and I estimated my food and clothing costs as best I could. I worked my numbers out down to the penny, giving myself a wide berth for any non-fixed expenses. I wasn’t going to play fast and loose with money anymore.

Reduced Monthly Bills
I managed my thermostat by setting it at 68 degrees in the winter and 78 in the summer. I cut back on my cable TV plan, eliminating three paid movie channels and reducing my overall channel package. I also took shorter showers and hardly ever used my air conditioner. I cut coupons from the Sunday paper to save on groceries, and rented a studio apartment for dirt cheap housing.

Halted Personal Spending
I quit buying new clothes, stopped eating out entirely, and swore off sporting events and concerts. Instead of going out to bars with friends, I invited them over on weekends to watch movies or play board games. From time to time, I would fill up my car with gas and my fridge with food and see how many days I could go without spending any money at all. The only time I would allow myself a modest personal purchase was when I reached one of the benchmarks I set for myself concerning my level of debt.

Excelled at Work
By this time I’d secured a restaurant management position, making about $35,000 per year. I put my heart and soul into my job and garnered close to a $1,500 bonus check each and every month – when my counterparts weren’t seeing bonuses half that. Since that was money I hadn’t factored into my budget, it all went either to my credit card debts or to my parents for those college bills.

All along, I kept a keen eye on my credit card balances and watched the pay-down plan progress. I did the same for the debt I owed my parents. After approximately three years of uber-frugal living, I erased my credit card totals and got a glorious letter in the mail – just around the same time my parents told me I no longer owed them any money.

Final Thoughts

The moral of the story is simple. It doesn’t matter if you have $10,000 in debt or $50,000, you can do something about it. The biggest obstacle is committing to a debt-free life. Once you do, employ the above tips, persevere through the tough times, and you’re sure to find yourself debt-free one day, too. When you do, you just might be stunned at how light your spirit is, and how full your checking account is.

Are you currently in significant debt? If so, when are you going to do something about it?


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Apr 202015

Using ETFs for Stock Market Investing

By |April 20th, 2015|Blog, Personal Finance Tips|Comments Off on Using ETFs for Stock Market Investing

So you want to invest in an equity ETF. But how to go about choosing? Knowing that ETFs are generally index funds, you’ll want to pick an index. And hands down, the most recognized index among US investors is the S&P 500. (I have no scientific evidence for this. But ask any novice investor to name an index and you’ll generally get the same answer.)

So let’s look at how an investor might use ETFs to invest in the stock market. Because of its aforementioned familiarity, we’ll start with the S&P 500. One of the first funds you’ll likely run into in this category is the SPDR S&P 500 (ARCX), simply because it is the most heavily traded. Purchasing shares of the SPDR S&P 500 – or any other ETF that tracks the S&P 500 – will spread your exposure to the US large cap equity market across its (roughly) 500 largest companies – a broad target, indeed.

Look beyond the S&P 500 to use ETFs for a diversified US equity portfolio. Here's how to use ETFs for stock market investing.

But there are other approaches to equity investing. If you wish to be more selective in your exposure, to emphasize a specific market segment, or to gain exposure to the bottom 30% of US companies by market capitalization, you’ll want to do a little more digging. If you’re looking to diversify your equity holdings, here are a few funds to consider that go beyond the S&P 500.

Vanguard Dividend Appreciation ETF (VIG)

Who doesn’t love Vanguard? This ETF focuses on dividend-paying large cap stocks – essentially a subset of the S&P 500 – and comes with Vanguard’s signature low expense structure. Although both the Vanguard fund and the SPDR S&P 500 are classified as large blend funds, meaning they contain both growth and value stocks, the Vanguard fund’s more specific investment objective – dividend-paying stocks – brings significant differences in holdings and sector weightings. (I don’t mean to suggest by comparing to the SPDR ETF that Vanguard doesn’t have an S&P 500 ETF – they do. And it’s a good one. Check it out – VOO.)

iShares Core S&P Midcap (IJH) and iShares Core S&P Small Cap (IJR)

Two indexes that don’t get as much press as the S&P 500, but represent about 1,000 companies between them, are the S&P Midcap 400 and the Small Cap 600. Investing in funds representing these indexes is a way to broaden your equity exposure to smaller companies whose market capitalization is in the bottom 30% or so of US companies. While volatility tends to increase as market cap goes down, over time historical data suggest that the addition of mid- and small cap stocks to a large cap portfolio could increase return without adding risk.

Vanguard Total Stock Market ETF (VTI)

If your motto is “go big or go home,” this fund might be right up your alley. The Vanguard Total Stock Market ETF is exactly what it sounds like – a fund that seeks to cover the entirety of the US equity market. As one of the most broadly-invested funds out there, this is the opposite of specializing. If you like the idea of (really) broad equity exposure, but lack the interest, know-how, or capital to build such a portfolio yourself, take a second look at this one.

The take-away

Keep in mind, these are only suggestions meant to give you ideas for investing in US stocks beyond the S&P 500. Proper asset allocation requires exposure to multiple asset classes. It is prudent to first determine what market segments you should be targeting, and make your choice as to specific investments from there.

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Apr 172015

Reevaluating Risk Evaluation

By |April 17th, 2015|Blog, Life, Personal Finance Tips|Comments Off on Reevaluating Risk Evaluation

Risk is a tricky thing. Most of us consider ourselves competent – or even superior – evaluators of risk, yet the world is full of people who take shockingly foolish chances, as well as those who worry needlessly about every outcome, no matter how remote its chances. This indisputable fact does not suggest that we see our risk-assessing capabilities accurately.

What many of us fail to realize – or more likely, conveniently forget – is that these judgments are subjective. Others are foolhardy or fearful relative to our own perspective; what looks like caution to one person can appear reckless to another.

Lately, I’ve had the occasion to ponder the value of appropriate risk assessment. In our daily lives, we seldom take the time to calculate the risk potential of every decision we make – such a practice would be absurdly impractical, if not impossible. But with investments, quantifying risk serves a purpose, and understanding the nature of risk can help us in both worlds.

risk evaluation

A different perspective

Investors tend to think of risk as a negative – the inconvenient price we pay for higher return. While this school of thought isn’t technically incorrect, it does play into our tendency to let our emotions determine what level of risk is acceptable. And with investing, emotion should be eyed with caution.

Consider the issue without value judgments: risk measures volatility, which is essentially return potential – both positive and negative. Seeking higher returns while attempting to avoid risk is problematic, like trying to run toward something and away from it at the same time. It is more productive – and more accurate – to think of risk and return as two sides of the volatility coin. (By return, of course, I mean positive return.)

Perspectives on risk

Investing is a relative world – we often use one asset class as a benchmark to describe another. Stocks offer higher return potential than bonds, for example. The concept of diversification is built on this method of assessment – we seek investments that are different than those we already own or others we are considering. And many of us simply leave it at that. But the concept of relative risk has limited utility without the fixed object of absolute risk.

Absolute risk helps illustrate the interconnectedness of risk and return. Absolute risk should be thought of as overall volatility, or the range that returns can be reasonably expected to fall into at any given time over the course of the investment.

Evaluating investments this way helps investors manage the ups and downs of the market. Take, for example, an investment with an annual return of 10% over the past 20 years, with less risk than its benchmark index. If you don’t look any further than annualized return or relative risk, you may be surprised when your investment loses 20% one year. But if a look at the normal distribution of past returns tells you that the return at any particular time can reasonably be expected to fall between negative 25% and 25%, you’re more likely to stay the course since your 20% loss is well within the historical norm.

Why reevaluate risk?

So why talk about this? What value is there in changing our perspective on risk? Viewing risk as a negative puts the focus on one side of the volatility picture.  Judicious risk assessment is about looking at the whole picture, positive and negative.

(Obviously, the theoretical will take us only so far. Metrics for measuring risk are a topic for another day, as is using this information to assess your own personal risk profile.)

I don’t mean to suggest that the psychological factors influencing risk tolerance should be ignored – quite the opposite. But failing to understand the nature of investment risk leaves us with only the psychological, and no empirical evidence to support our choices. Furthermore, understanding how risk is quantified helps keep our emotional sides in check as our investments rise and fall over time.

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Apr 162015

Living Large – Enjoy Las Vegas and Go Home with Money in Your Pocket

By |April 16th, 2015|General Personal Finance|Comments Off on Living Large – Enjoy Las Vegas and Go Home with Money in Your Pocket

If you were asked to name a budget-friendly location where you might expect to go home with some cash left in your pocket, Las Vegas is not likely to be the first place you think of.

Most of us associate sin city as the ultimate destination for entertainment with all the casinos, five-star hotels and dazzling entertainment on offer, but you can have it both ways and have a wild time on a budget, as long as you follow a few tips on how to do it.


The view is free

The first thing to say is that just wandering the strip is a lot of fun in itself and of course, absolutely free.

Watching the gondoliers wandering around the Vegas version of Venice or taking in the pyramids of Luxor won’t cost you a dime and neither will the botanical gardens at the Bellagio. There are also free attractions inside some of the casinos, like massive tropical aquarium at the Silverton Casino or the wildlife gardens at Flamingo’s.

The idea behind these visual treats is to tempt you in to the casinos of course, but at least you won’t be paying to enjoy the view if you can keep some of that cash in your wallet for a bit longer.

Finding a hotel

Unless you are a high-roller and going to get a suite in return for spending large in the casinos, which rules out most of us who actually have a budget to work with, you are going to need somewhere to stay at a price that won’t leave you short before you start your trip.

Las Vegas hotels are world-famous, with so many outrageously large and opulent palaces to choose from and prices that have a few too many zeros added to them, unless you are a bit savvy with your booking plans.

Most of the hotels are often cheaper mid-week, so a bit of luxury should cost you less if your trip is before the weekend rush. Also search the Las Vegas convention calendar to see if there are any events that are on when you plan to visit, as this will drive prices up due to high demand for rooms.

Seeing a show

Shows are big business in Vegas and are probably more popular than the casinos these days, which means that there are plenty to choose from and a wide range of prices that you might be asked to pay.

You will find that a lot of show tickets are cheaper online, so if you have decided on a particular show you really want to see as part of your Las Vegas experience, go online before you go and see if you can take advantage of any discount offer or reduced prices.

Big names mean big prices, but there are some fantastic shows that will probably only cost you around $40 and will justify the tag that Vegas is the entertainment capital of the world, without busting your budget.

There are even some free shows in town if you know where to look. The Bellagio fountains run every 15 minutes in the evenings and are pretty spectacular and Circus Circus is a venue that lives up to its name, with a free circus show running every half hour at peak times.

Watch the extras

We all like surprises, as long as they are pleasant ones, but if you are not careful your hotel will deliver an unpleasant one at the end of your stay.

You may have negotiated a great deal on your room rate and been careful with your spending out and about in Vegas, but you could soon blow your budget on hotel extras.

Many hotels will charge you for wireless internet connections or to use the spa, so watch out for these and ask yourself if you really need any of these extras while you are there. You can also find that some hotels charge a resort fee, which can be up to $20 per day and includes “free” drinks and access to amenities. These very rarely turn out to be great value and can soon add a heavy toll to your bill at checkout, so watch out for this.

Follow some of these tips and tricks and you should be able to enjoy Vegas without emptying your bank account.

John Capone is a busy athletic recruiter. He loves to write about his experiences online. His articles can be found on many travel, sports and business websites.

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