Category: Financial Clarity

Home Improvement Archives – Money Crashers
Source: moneycrashers.com
Tagged Financial Wize, FinancialWize, Home, Home Improvement, Money
How to Choose the Best Healthcare Plan for Your Budget
Healthcare expenses can take a huge chunk out of any familyâs budget so I want to break down how a family can weigh the pros and cons of a traditional health plan vs a high deductible one. Health Insurance Getting…
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The post How to Choose the Best Healthcare Plan for Your Budget appeared first on MintLife Blog.
Tagged budget, cons, Family, Family Finances, Financial GoalsHealthcare expenses can take a huge chunk out of any familyâs budget so I want to break down how a family can weigh the pros and cons of a traditional health plan vs a high deductible one.
Health Insurance Getting Too Expensive
If I asked you whatâs are your biggest expenses each month, what would you say? If youâre like most families, youâd probably mention rent (or mortgage), food, or transportation. And yes, those are huge expenses for the typical family.
However, one of the largest can be healthcare. The crazy thing is how much it can drain from your budget even if youâre a relatively healthy family.
We found out firsthand a few years ago when my husbandâs employer had open enrollment. Each year we review the health insurance options and it seemed to us that the costs kept rising. After having kids, we went with the âbasicâ family plan and the monthly premiums still rose pretty fast. Finally, we hit our limit.
With the latest update, our monthly premiums would pretty much be the same as our mortgage. Considering we only visit the doctors for the girlsâ annual well visits, we knew we needed to change things up. We know weâre not the only family dealing with this.
Right now for a family of four, the average monthly premium paid is $833 or $9,996 annually. Add in the costs of the average deductible and you can see what a huge chunk of money health insurance can be.
However, this year when you get ready to review your options during open-enrollment, you may want to look into whether a high deductible health plan is a practical and affordable solution for your family.
How High Deductible Health Plans Work
As the name suggests, a High Deductible Health Plan (HDHP) comes with a larger deductible than a typical health insurance plan. The appeal for employers and insurance companies to offer this is that youâre taking on more financial responsibility for your health care costs.
The upside for you is that you should see a drop in the monthly premiums. For us, we saw a difference of a few hundred dollars for each month for premiums. Using a $300/month in savings, thatâs like an extra $3,600/year that can be used for other financial goals that you may have.
Huge Tax Wins with a Health Savings Accounts
Another reason why a high deductible plan may be appealing for families is the ability to have a Health Savings Account (HSA). Itâs an extremely tax-advantaged account that you can use to pay for medical expenses.
If this sounds familiar, it may be because youâve heard of or used a Flexible Spending Account (FSA). Thatâs whatâs typically offered with the âmore standardâ health plans. Basically you put money in there before taxes.
We used an FSA for years and it helped us to pay for regular expenses like my glasses and contacts. The problem was making sure we calculated enough to go into the account because if we didnât use it by the end of the year, weâd lose it.
With a Health Savings Account, however, whatever you donât use you keep. It can then grow in the account over the years. After saving enough to cover things like the deductible, you may decide to invest a portion to improve growth over the long term.
Making it even better is the fact that your HSA contributions are tax-deductible. Depending on your employer, they may also offer contributions to your HSA. Thatâs a fantastic bonus!
What really sweetens the deal is that families can contribute up to $6,900 each year, that money grows tax-free, and if we use the money for qualified medical expenses, what we pull out is tax-free.
Sounds amazing, right?
Itâs enough to make you want to jump in and switch right now, but a high deductible and HSA may not be the best solution for your family.
The Pros and Cons of High Deductible Health Plans
A high deductible plan sounds great, but there are some costs to consider. With the higher deductible, you need to be aware of what your typical annual expenses would be to make sure youâre coming out ahead.
For example, if you have chronic health issues that require regular visits and perhaps medication, then youâd be paying a lot of money upfront before you hit your deductible and have your insurance cover their portion.
One way you can review your expenses is by using Mint to pull the numbers quickly. You can then easily see how much youâve paid out of pocket.
When we looked at a few years of expenses, it confirmed that our visits were pretty much limited to annual well-visits (which are covered by HDHP plans), meaning we can save a significant amount of money.
When I spoke to a certified financial planner about what families need to consider, he pointed out families should also be aware of their out of pocket maximums with the plan they are looking into.
You want to have enough stashed away (either with your general savings or with your HSA) to cover those expenses.
A relative of mine recently had a procedure done. Even with insurance, her portion came out to be $3,000!
Thankfully she has some savings she can tap into, but still, thatâs quite a bit of money.
So please run the numbers to make sure you could absorb a medical problem, especially during that first year of switching plans.
Choose the Best Plan for Your Family
So after weighing the costs and benefits, took the leap and switched over to a high deductible health plan and opened an HSA. Years later, we feel it was the best decision for our situation.
I hope you now have a better understanding of your options when it comes to health insurance. Having that knowledge can assist you in making the best decision for your family and finances.
Iâd love to hear from you – what plan are using now? Do you have any plans on switching?
The post How to Choose the Best Healthcare Plan for Your Budget appeared first on MintLife Blog.
Source: mint.intuit.com

Affording a Second Child: How to Make Your Budget Work
Having kids is anything but cheap. According to the USDA, families can expect to spend an average of $233,610 raising a child born in 2015 through age 17âand that’s not including the cost of college. The cost of raising a child has also increased since your parents were budgeting for kids. Between 2000 and 2010, for example, the cost of having children increased by 40 percent.
If you’ve had your first child, you understandâfrom diapers to day care to future extracurricular activities, you know how it all adds up. You’ve already learned how to adjust your budget for baby number one. How hard can it be repeating the process a second time?
While you may feel like a parenting pro, overlooking tips to prepare financially for a second child could be bad news for your bank account. Fortunately, affording a second child is more than doable with the right planning.
If your family is about to expand, consider these budgeting tips for a second child:
1. Think twice about upsizing
When asking yourself, “Can I afford to have a second child?”, consider whether your current home and car can accommodate your growing family.
Kimberly Palmer, personal finance expert at NerdWallet, says sharing bedrooms can be a major money-saver if you’re considering tips to prepare financially for a second child. Sharing might not be an option, however, if a second child would make an already small space feel even more cramped. Running the numbers through a mortgage affordability calculator can give you an idea of how much a bigger home might cost.
Swapping your current car out for something larger may also be on your mind if traveling with kids means doubling up on car seats and stowing a stroller and diaper bag onboard. But upgrading could mean adding an expensive car payment into your budget.
“Parents should first decide how much they can afford to spend on a car,” Palmer says.
Buying used can help stretch your budget when you’re trying to afford a second childâbut don’t cut corners on cost if it means sacrificing the safety features you want.
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Families can expect to spend an average of $233,610 raising a child born in 2015 through age 17âand that’s not including the cost of college.
– USDA
2. Be frugal about baby gear
It’s tempting to go out and buy all-new items for a second baby, but you may want to resist the urge. Palmer’s tips to prepare financially for a second child include reusing as much as you can from your first child. That might include clothes, furniture, blankets and toys.
Being frugal with family expenses can even extend past your own closet.
“If you live in a neighborhood with many children, you’ll often find other families giving away gently used items for free,” Palmer says. You may also want to scope out consignment shops and thrift stores for baby items, as well as online marketplaces and community forums. But similar to buying a used car, keep safety first when you’re using this budgeting tip for a second child.
“It’s important to check for recalls on items like strollers and cribs,” Palmer says. “You also want to make sure you have an up-to-date car seat that hasn’t been in any vehicle crashes.”
3. Weigh your childcare options
You may already realize how expensive day care can be for just one child, but that doesn’t mean affording a second child will be impossible.
Michael Gerstman, chartered financial consultant and CEO of Gerstman Financial Group, LLC in Fort Lauderdale, Florida, says parents should think about the trade-off between both parents working if it means paying more for daycare. If one parent’s income is going solely toward childcare, for example, it could make more sense for that parent to stay at home.
Even if this budgeting tip for a second child is appealing, you’ll also want to think about whether taking time away from work to care for kids could make it difficult to get ahead later in your career, Palmer adds.
“If you stay home with your child, then you’re also potentially sacrificing future earnings,” she says.
4. Watch out for sneaky expenses
There are two major budgeting tips for a second child that can sometimes be overlooked: review grocery and utility costs.
If you’re buying formula or other grocery items for a newborn, that can quickly add to your grocery budget. That grocery budget may continue to grow as your second child does and transitions to solid food. Having a new baby could also mean bigger utility bills if you’re doing laundry more often or running more air conditioning or heat to accommodate your family spending more time indoors with the little one.
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Gerstman recommends using a budgeting app as a tip to prepare financially for a second child because it can help you plan and track your spending. If possible, start tracking expenses before the baby arrives. You can anticipate how these may change once you welcome home baby number two, especially since you’ve already seen how your expenses increased with your first child. Then, compare that estimate to what you’re actually spending after the baby is born to see what may be costing you more (or less) than you thought each month. You can then start reworking your budget to reflect your new reality and help you afford a second child.
5. Prioritize financial goals in your new budget
Most tips to prepare financially for a second child focus on spending, but don’t neglect creating line items for saving in your budget.
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“An emergency fund is essential for a family,” Palmer says. “You want to make sure you can cover your bills even in the event of a job loss or unexpected expense.”
Paying off debt and saving for retirement should also be on your radar. You might even be thinking about starting to save for your children’s college.
Try your best to keep your own future in mind alongside your children’s. While it feels natural to put your children’s needs first, remember that your needs are also your family’sâand taking care of your future means taking care of theirs, too.
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“Putting money aside when you’re expecting can help offset the sticker shock that comes with a new member of the family.”
– Kimberly Palmer, personal finance expert at NerdWallet
The key to affording a second child
Remember, the earlier you begin planning, the easier affording a second child can be.
“Putting money aside when you’re expecting can help offset the sticker shock that comes with a new member of the family,” Palmer says. Plus, the more you plan ahead, the more time you’ll have to create priceless memories with your growing family.
The post Affording a Second Child: How to Make Your Budget Work appeared first on Discover Bank – Banking Topics Blog.
Source: discover.com

My Parents Can’t Afford College Anymore – What Should I Do?
When most parents offer to fund their childâs tuition, itâs with the expectation that their financial circumstances will remain relatively unchanged. Even with minor dips in income or temporary periods of unemployment, a solid plan will likely see the child…
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The post My Parents Can’t Afford College Anymore – What Should I Do? appeared first on MintLife Blog.
Tagged Coronavirus (COVID-19), Debt, Family Finances, federal student loans, Financial WizeWhen most parents offer to fund their childâs tuition, itâs with the expectation that their financial circumstances will remain relatively unchanged. Even with minor dips in income or temporary periods of unemployment, a solid plan will likely see the child through to graduation.
Unfortunately, what these plans donât tend to account for is a global pandemic wreaking havoc on the economy and job market.
Now, many parents of college-age children are finding themselves struggling to stay afloat – much less afford college tuition. This leaves their children who were previously planning to graduate college with little or no debt in an uncomfortable position.
So if youâre a student suddenly stuck with the bill for your college expenses, what can you do? Read below for some strategies to help you stay on track.
Contact the University
Your first step is to contact the university and let them know that your financial situation has changed. You may have to write something that explains how your parentâs income has decreased.
Many students think the federal government is responsible for doling out aid to students, but federal aid is actually distributed directly by the schools themselves. In other words, your university is the only institution with the authority to provide additional help. If they decide not to extend any more loans or grants, youâre out of luck.
Ask your advisor if there are any scholarships you can apply for. Make sure to ask both about general university scholarships and department-specific scholarships if youâve already declared a major. If you have a good relationship with a professor, contact them for suggestions on where to find more scholarship opportunities.
Some colleges also have emergency grants they provide to students. Contact the financial aid office and ask how to apply for these.
Try to Graduate Early
Graduating early can save you thousands or even tens of thousands in tuition and room and board expenses. Plus, the sooner you graduate, the sooner you can get a job and start repaying your student loans.
Ask your advisor if graduating early is possible for you. It may require taking more classes per semester than you planned on and being strategic about the courses you sign up for.
Fill out the FAFSA
If your parents have never filled out the Free Application for Federal Student Aid (FAFSA) because they paid for your college in full, now is the time for them to complete it. The FAFSA is what colleges use to determine eligibility for both need-based and merit-based aid. Most schools require the FAFSA to hand out scholarships and work-study assignments.
Because the FAFSA uses income information from a previous tax return, it wonât show if your parents have recently lost their jobs or been furloughed. However, once you file the FAFSA, you can send a note to your university explaining your current situation.
Make sure to explain this to your parents if they think filing the FAFSA is a waste of time. Some schools wonât even provide merit-based scholarships to students who havenât filled out the FAFSA.
Get a Job
If you donât already have a job, now is the time to get one. Look at online bulletin boards to see what opportunities are available around campus. Check on job listing sites like Monster, Indeed and LinkedIn. Make sure you have a well-crafted resume and cover letter.
Try to think outside the box. If youâre a talented graphic designer, start a freelance business and look for clients on sites like Upwork or Fiverr. If youâre a fluent Spanish speaker, start tutoring other students. Look for jobs where you can study when things are slow or that provide food while youâre working.
Ask anyone you know for suggestions, including former and current professors, older students and advisors. If you had a job back home, contact your old boss. Because so many people are working remotely these days, they may be willing to hire you even if youâre in a different city.
It may be too late to apply for a Resident Advisor (RA) position now but consider it as an option for next year. An RA lives in the dorms and receives free or discounted room and board in exchange for monitoring the students, answering their questions, conducting regular inspections and other duties.
Take Out Private Loans
If you still need more money after youâve maxed out your federal student loans and applied for more scholarships, private student loans may be the next best option.
Private student loans usually have higher interest rates and fewer repayment and forgiveness options than federal loans. In 2020, the interest rate for federal undergraduate student loans was 2.75% while the rate for private student loans varied from 3.53% to 14.50%.
Private lenders have higher loan limits than the federal government and will usually lend the cost of tuition minus any financial aid. For example, if your tuition costs $35,000 a year and federal loans and scholarships cover $10,000 a year, a private lender will offer you $25,000 annually.
Taking out private loans should be a last resort because the rates are so high, and thereâs little recourse if you graduate and canât find a job. Using private loans may be fine if you only have a semester or two left before you graduate, but freshmen should be hesitant about using this strategy.
Consider Transferring to a Less Expensive School
Before resorting to private student loans to fund your education, consider transferring to a less expensive university. The average tuition cost at a public in-state university was $10,440 for the 2019-2020 school year. The cost at an out-of-state public university was $26,820, and the cost at a private college was $36,880.
If you can transfer to a public college and move back home, you can save on both tuition and housing.
Switching to a different college may sound like a drastic step, but it might be necessary if the alternative is borrowing $100,000 in student loans. Remember, no one knows how long this pandemic and recession will last, so itâs better to be conservative.
The post My Parents Can’t Afford College Anymore – What Should I Do? appeared first on MintLife Blog.
Source: mint.intuit.com
Planning budget-friendly date nights can keep your relationship and your finances healthy.
The post 8 Ways to Save Money on Date Night appeared first on Discover Bank – Banking Topics Blog.