money really matters

It has been 4 months since Mr.Obama signed The Stimulus bill and made American Recovery and Reinvestment Act of 2009 in Feb 17, 2009. The It encapsulates number of tax incentives, extension of unemployment benefits and more bail out options. Many of those incentives and benefits are still not properly adapted and implemented by the concerned parties due to the lack clearity in the process. 

Like Home Mortgage Modification plan, many lenders are hesitant to signup to help borrowers because of complex process creating borrower anxiety. COBRA subsidy also falls under the same category where a streamlined process is not in place. Employers are still looking for more instructions the government to implement.

When  announced, it was meant to help unemployed workers by reducing their burden of paying health insurance upto 65%. Is it really helping? That's a question to be answered by Obama office and we won't go there. I did some research and collected details on COBRA subsidy to post this blog with facts and figures.

What is COBRA?

If you are laid off, you should be aware of COBRA. Employers are required to offer COBRA by federal law to let the employee keep their health insurance plan when they lay off. If you aren't aware and don't remember employer offering this option, please contact your employer immediately. The coverage typically is available for 18 months but employee will end up paying the full insurance premiume(with no employer discount) plus 2% admin fee.

It is an expensive coverage but helps in great extent for individuals who may not be able to obtain new coverage due to preexisting conditions. If you paid for $300 as an health premium for your family, you will end up paying $1000 + 2% fee apx when accept the COBRA coverage after you are laid off.

COBRA Subsidy

Under the new ARRA 2009 act, the subsidy will cover 65 percent of premiums for nine months. There are some caveats as usual.The subsidy will apply to premiums paid for periods of COBRA coverage beginning on or after February 17, 2009. It doesn't do any good for self employed who has their own individual health insurance plans.

For more details, check it out at irs.org

Does it really helps?

Many people are just getting by an average unemployment weekly benefit of merely $300- $350. With COBRA, people need to pay 100% of premium + 2% fee, cost comes around $900-$1200 per month for a reasonable plan. Under the new bill considering the subsidy, they're still looking at spending close to $400 - $500 a month out of their pocket. It helps but not to a great extent. People are going to have to think long and hard about whether they can afford to extend their coverage under COBRA.

Loop Holes and Hassles

After reading comments from people on different sites, I summarized this section to bring to attention about some holes and hassles which is creating lot of frustration.

1. You might end up paying 35% of the premium from the day when you are laid off or lost your medical coverage not when you sign up for COBRA. If you lost the job in March and signed up COBRA in Jun 2009 because of process delay or any reasons. You still end up paying premium from the day you lost your medical coverage.

2. It can take months until you get information about COBRA subsidy from your employer. Be prepared to shell out 100% premium for those months which can be refunded or credit back as soon subsidy kicks in.

Help Available

I also found these information for people who are waiting for COBRA to kick in. If you don't have COBRA yet, during emergency, a county hospital will take you in. You will get a bill, but once the subsidy comes in, you can submit the claim to your COBRA carrier to get it refunded. 

For prescription, You can try PPA - Partnership for Prescription Assistance. Go to their website, see if your Rx is on their formulary, if they are, download and fill out the form, have your Doctor complete the rest and mail it in to the address on the form. You should get an answer within 30-days for free or low-cost Rx drugs until you get your insurance.

Check out the lastest update about the COBRA subsidy posted on  U.S. Department of Labor website. For more questions, you can also call their hotline at 866.444.3272(no charge).

Families USA, a non-profit healthcare advocacy group, has posted a page with detailed information about the subsidy.

More Resources

8 questions about COBRA Subsidy
www.retirementrevised.com

Last week, I started a blog series to share  few real life stories to get back the dollars I truly deserve for my money management.  In the previous blog post, I wrote how I was able to get credit card financial charges refunded back to my account. This blog post, I am going to share an interesting story on how I got stuck in string of cross product sales during my hunt to find a good business banking service.

Bank Account -A Search for Free Business Banking

Large bank chains have a habit of throwing a small fly at you to lure you in for a big catch. They entice customers advertising free offers with free cash bonus. To be charged later with big account service fees and maintenance charges. Once you step inside their door, customer reps will try to sell products with all attractive free add-on services, valid only for limited period.  In my case, the bank was Bank of America(BOA) and add-on service was Payroll processing service. Here comes the story.

I needed  payroll processing service for my consulting company. As a bargain hunter, I was looking for an affordable service. Charges from many payroll servicers in the market,  start with minimum $20/month for just simple service. I felt $20 was bit on the higher side to process just my paycheck. 

At that time, I was referred by a CPA to check on BOA's free payroll processing service. Obviously, thats was a good deal. I can save $20/month which is $240/year. So I decided to stopby at nearby BOA branch to check it out. After talking to the Customer Rep, I found out there are lot of strings attached to this free offer. First, I needed to start a business checking account in order to use their payroll processing service. (1st catch) That I expected.  It didn't stop there. 

Payroll processing is only free if the salaires of company employees  get deposited dierctly to their BOA checking account. If the employees don't have BOA checking account, they needed to open new one. That is practically impossible for any small business asking their employee to open new checking accounts. (2nd catch).  Since I don't have any employees, they needed me to open a personal checking for myself in order to get the business checking free. (3rd catch) They went still further. I also need to make my paychecks direct deposited to my personal checking account. (4th catch). It was too many strings but  I am getting what I wanted except few new accounts to maintain than I realized. I signed up without any second thought, hoping to save some money.

What happened next?

Six months passed, I found out that I don't need to process my payroll. I was doing it wrongly to start with. So I immediately stopped using BOA payroll service. As I soon as I stopped processing payroll and direct deposits to my checking account, BOA started charging $5 as account maintenance fee to my personal checking account from the next month. I visited the branch and asked, how can I maintain my business and personal checking accounts without payroll service. They said, I needed some form of direct deposit to my personal account to both accounts free. Otherwise the fee will be charged as per terms.

I am self employed for my own LLC, I don't get any other income to direct deposit. I asked for any other option but they couldn't find anything to suit my need. They didn't want to lose me as a customer as well, so they gave me 3 months of fee waiver until new offers arrives at later time. I also got the fees for 2 months refunded to my account. After 3 months, they started charging again.  I called and talked to the same rep one more time. She found a different offer this time. That 2nd offer, I need to use my check card to make atleast one purchase a month. I don't purchase regularly for my business. I can't avail that offer. So she gave me 3 more months of fee waiver. I was living in the grace of the rep with just fee waivers and don't like to call every 3months. Next time fee waiver elapsed, I just went ahead and closed the accounts to avoid future trouble.

No Free lunch

My CFP Certification course has taught me clearly, there is no concept of free lunch. There is always cost associated in making even the so called free lunch. It is not actually free even if they offer it free. Similarly, there is always an opportunity cost associated with any free service. You either pay for the service as fee upfront or pay by giving them business. You are keeping your money in their bank which is similar to lending your money. They are using your money for their business. Either way, they are winning. You better find the common ground to make the best of the situation to get something you wanted which is well worth your time.

I like to conclude with few lessons to learn from my story:

1. Avoid opting for offers with too many strings attached.  It will work only if your situation stays constant. That is not always the case in our ever changing lives. Always try to open accounts or signup  for services without too many obligations or limitations.

2. Special deals are not always best for all situations. Try negotiating if your situation changes to get most out and reduce your cost. If it doesn't work out, just get out as soon you can find a way out.

3. Finally, not all free offers are real deals. Avoid your impulse purchase or signup's on accounts if you even get $100 bonus credit. It always comes with strings attached in fine prints, we often overlook.  

You time is also a very valuable commodity. Go for bargains if it worth your time and money without too many strings.

Happy and Careful Bargaining !!! More stories to come...

Many times we end up paying financial charges or late fees on our credit card and utility bills, even after being extra careful in paying them on time. It may be an one time affair and rare mistake from our part. Still we feel hesitant to ask for credit. Because, we don't want to embrass ourself to hear the answer "NO" since it's our mistake.

"Only crying baby gets the milk"  - Author unknown

Did you ever heard of this saying? It is a more common phrase used back in my native place(south India).   Babies cry when they are hungry to get the attention of care giver, so they are feed them milk. But not all babies are smart enough to cry out of milk. Some babies just don't cry or cry enough to catch the attention of care giver who assume the baby is alright.

I want to use this phase for adults to make some money sense.  Being human, we all are prone to make mistakes. If it's one time thing or rare one, I feel the mistake should be forgiven and charges should be voided. I sure, No company will do unless you ask for it.

You need be expressive enough to request or ask for credit when you are charged with fees  by your service providers after being loyal to them.  I don't mean to literaly cry out like baby instead express your concern in words. Just try to ask for credit in a good way and you will get money back most of the time. If you hesitate to ask at first place, you are going to miss out on those dollars wasted on fees and charges. 

Let me share few of my real stories on how I "Cried like a baby" asking for credit when I really deserve.

Credit card Financial charges
Usually I pay my bills on time and never charged with any financial charges. I always like to walk my talk. As I money mentor, I better follow my own advice and be an example first. In many years, I didn't pay a penny as fees/charges. That's the big reason for my FICO score to be in upper 700's.

I guess there is always an end to any pride. My proudest moment came to an end last month. I was slacking on paying bills because of my unplanned trip to India in March. When I got back, I wasn't paying attention messing up my payment schedule. 

First on the list was my credit card bill. I paid my credit card bill wrongly. Instead of March amount due, I paid the Feb amount due. I didn't notice until I got my April month bill with a financial charge of $9.32. (Below is my original statement)



Always call the bank/service provider

I wasn't sure why I was charged the financial charge. I wanted to email rather decided to call. It is always better to have personal conversation either by phone or going to the bank if you need any credit back. Emails doesn't work well because it doesn't express your emotions properly.  So I called my credit union and seeked for explanation. Customer rep checked my accounts and came back to sayg, "You paid the amount less than amount due for Mar bill". I was surprised because I never paid less amount and always paid full.  I myself checked the statements and found that I made the mistake. I did confused with amount due from March and Feb. 

Accept your fault if any

I realized my fault and I accepted it. I told her, it was the first time it ever happened. I asked her to check  my account history. Afterwards I kindly requested her, "Is there any way possible to get the credit of the financial charges? if I pay the balance". She took her time to check my account history and said, "Yes, you do have a good history of paying on time full. So we are going to give your credit of the financial charges. Just go ahead pay the next month bill full. You will see the credit month after next bill". I was happy and Thank'ed her for the kindness.

Do your job right

Next month, I paid my full bill including the financial charges since its added to the bill to avoid any more charges for not paying amount due. The month after next(May), financial charge was credit in my bill as shown below.





You sure worth more than you think. You deserve, what you are worth. It is always good to pay bills on time whether you are paying minimum or full amount. It builds a rapport with your service provider which helps at times to negotiate deals or requesting for credits. 

It is always good to cry means ask for help instead of expecting things to happen on its own. It is nothing to be embrassed when it comes to money.

More stories to come on your way...

These are tough times to many families and individuals. Millions of jobs have been lost in the past year or so leaving many people depend just on their unemployement insurance to support their families. I know how hard it is without a job if only one person brings home the bread. I have experienced myself. It gets even tougher for self employed who can't even claim the unemployment insurance. 

Some what of a good news is , it has slowed down quite a bit in the past month or so. Obviously, it has to slow down because companies can't throw out every body otherwise they cannot survive. Also slowing of layoff's doesn't means jobs are getting created.  It just companies reached a saturation point stripping down so much and they cannot do anymore job cuts. 

Many youngsters who never faced this kinda recession is facing tough times handling this current situation. First off, it is really hard to take it in when you get laid off after working  your butt off(excuse my language) for the company.

You tend to think, they will call you back again. No, they are not going atleast for a year. They just moved on without you so you should consider moving on too.  It sucks practicaly but you shouldn't loose hope and lose heart. Things change and you should change as well and continue your path to persue your dreams.

This blog might seem bit late but it is not. I intentionally want to wait and weigh in on the options so I can give some useful pointers from my experience. It is easy to just make a blog copying from other websites but I don't want to do that(I never do that) because Jobloss is a tough one and I want to share the same feelings when I talk about it.

So here go my 5 good Survival tips which might help you.

1. Unemployement Insurance - If you previous employed (not self employed), you are eligible for unemployment insurance from your state. If you havn't claimed it, go ahead and do it. You are wasting the money you are eligible to get since your employer paid for it. Sorry self employed folks, we don't have this liberty and I know it sucks.

2. Cut all your unwanted expenses. Whether you used to go to movies every week or restaurant for family dinner, just think about cutting it for a while. It will help to survive with your funds for longer time until you find a good job.

3. Just say to yourself "I can't afford at this time" if you and impulse buyer. These strong words will help you stay away from things which you really don't need to survive at this moment.

4. Don't dip into your credit card and make things worse. Use your emergency funds which is especially meant to tackle this situation. Especially self employed like me, you should have atleast 6 months of built up funds to take care of this jobless period.

5. Exercise and Hobbies - Try not to keep thinking about the lost job. It will let you down and you won't be able to attend interviews propertly. Add a positive attitude and go to Gym to catch up on your work out schedule. Try to spend time on your hobbies or passion to invent yourself and reenergize your thoughts. It will sure come handy during interviews.


Here is my 5 Success Tips which might help you to get out of the loss.

1. Leave no stone unturned. Always open to meet people. Attend Job Fairs, call your recruiter and friends to check on the job openings and opportunities.

2. Don't hesitate to follow up and stay on top of your contacts. Everybody got their own priorities. For you, getting a job is the first priority but it might not be the case of your recruiter or contact. So try to call them up for any updates or latest job openings. Don't feel embraced to keep calling. Perseverance pays off over time.

3. Always Stay connnected - Use LinkedIn, Facebook or Myspace to stay in touch with your previous coworkers, friends, college mates, chruck groups or religious groups. A lead can come from anywhere. By staying connected with as many as possible helps you get as many leads as possible. In this bad job market, Staying connected with many people is very important.

4. Take a temporary contract job or consultant position if you are not getting permanent job offers. I know many don't like to go this route but it helps to pay bills and at same time you are not sitting idle. It might even turn out to be a good project you never know. No harm in trying.

5. Revaluate yourself  - This might be a better time to revaluate yourself and do something different if you are forced in this career. I have seen real examples from people who got laid changed their career from IT consultant to Entreprenuer or small business owner. If its too late and want to stick with same career. Try to Brush up your skills and take up some petty projects during the downtime from sites like getFreelancer.com, 99design.com. It helps to keep your skills shining instead of getting rusty.

These are some of my own practical tips. I also came across an interesting and optimistic writeup by a job loser. It's a  "Thank you for layoff" note to the employer by the laid off employee. Check it out. It might add a different perspective to your thoughts.

Never ever give up and Keep trying!!

You hear this slogan very often these days in many websites and blogs. The matra is strong and clear, "PACK YOUR LUNCH". I am a full supporter of this saving money strategy and the idea works great to save good amount money of your money which can help fund for your kids education over the years.

Are you jealous of Indian collegues who works with you bringing lunches from home everyday? Let me reveal the truth behind it. First, their wife don't work so they cook very good food. Secondly, they are money conscious folks who like to save and finally they are used to carrying lunch packs from their school days. It becomes a habit over time so they don't like to eat outside very much.  If you can try packing lunch frequently, it can become a habit which is good for your health and as well for your pocket.

What do you exactly mean  by "Pack your Lunch"?

Packing your lunch doesn't have to be a time consuming task. Many of you think packing lunch means preparing the lunch in the morning and pack when you are trying to hurry and get to work on time. It is surely not going to happen and you eventually loose the interest of packing lunch.

No, you don't have to prepare and pack the lunch fresh all the time. It not about preparing fresh food for lunch which is just one motive. Pack your lunch just means bring lunch from home saving the expense of spending outside. It can be a healthy frozen food which you bought from grocery stores, home made leftovers, freshly made salad or quick sandwich. It can be anything which makes you savior and satisfy your hunger during lunch time. If it doesn't satisfy you, you will again go towards searching for junk food.

How do I start?

You can start by doing few days a week so you don't miss out on your restaurant or fast food. By starting slow, you are making a smooth transition helping your body to get used to this new habit. This way, you avoid any upset effect to your body. Just start with leftovers  2 days a week like Monday and Wednesday. Then add one day per month until you are satified with your arrangement to have 5 days from home or keep friday as a going out lunch day.

I bring lunch 3 days a week - 3 day left overs, 1 day frozen food and 1 day submay 6 inch sandwich. Once a month, I go out with friends on friday.

Why many don't like to pack their lunch?

Many people think that packing their lunch is a shame and crime. They don't want to heat up or make their food for lunch. They just want to be fed. They also think, it shows your are frugal. Let me tell, there is nothing wrong being frugal. You only should avoid being cheap. There is a lot of difference between being frugal and cheap. According to dictionary.com, frugal means  “prudently saving or sparing; not wasteful.”  cheap is defined as “stingy; miserly.”

I know its more wordy explanation. To be simple in my terms, frugal people spend rightly(for needs), save wisely(for wants) and give graciously. But cheap people, they don't like to spend even for their needy things. Even if they spend, they tried to save money buying cheap items. They also don't

So being frugal is not a bad thing at all. Don't give silly excuses like others here in the website.

Is it really worth packing my lunch?

Yes. It is really worth saving time, money and your health. You save time atleast an hour going out which can be spend efficiently. It helps you to eat healthy and good. Finally the important factor, saves you money. Even if you go out for lunching in cheap chinese buffet, you end up paying min. $10 with tips. For 5 days, its 5 * 10 = $50/week * 4 weeks = $200/ month * 12 = $2400 a year. Thats apx 3-5% of your gross yearly income.

If just reduce to start going out only once a week, it will only cost you $40/month and $480 a year which is a saving of $1920. Thats a good amount to be save up for your kids education or put away for retirement. You can check out how much you can save by packing lunch using our calculator.

If you are bored of getting lunch everyday, you can try going to sandwich place like Subway  once a week. Subway now offers $5 foot long. You can save $2 by bringing your own chips and drinks by buying it bulk from Walmart or wholesale stores.  

If you a reasonably family of 3 or 4, you can consider becoming a member in wholesale clubs like SAMS or COSTCO. Costco is my favorite because of its Quality products and reasonable price range. You might have to pay the membership of $50 but you will sure end saving 2-3 times of the membership cost or even more every year by buying things in patties, sandwich buns and so forth. Be careful and don't get tempted to buy new items introduced every week in these clubs. 

Food is an important entity in our life which we tend to spend money every day. So it is easy to spend wisely and rightly and see quick savings at this tough times, helping to keep more money in your bank account. 


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Need more budget advice? Visit this moneyreallymatters.com approved friendly website: www.GivingGrinch.com

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Today, I just heared over the news, there is a new scam emerged out of the Swine flu epidemic. Scammers are selling fake medicine/pills as cure for swine flu or H1N1 virus even there is no current cure available according to medical experts.

What a shame? But for Scammers, there is no shame and they don't care about others. They always look out for opportunities to make money by implementing their trick and tactics to lure common people taking advantage of  their fear and need.

Scams History

Scams  go way back in history to 16th and 17th centuries. We only know few scams which happened in the past few decades like Barry Minkow,ZZZZ Best carpet cleaning company become $200 million dollar giant in 1980s. MCI Worlcomm, Enron in 1990's. Samuel Israel III, the founder of Bayou hedge fund who pleaded guilty running a $400 million fraud at the Bayou Group, Bernie Madoff Ponzi scheme caught for $50 billion fraud, India's Satyam founder Raju for $80 billion accounting fraud and Allen Stanford CD fraud in recent years. 

Psychologist Stephen Greenspan who specializies in guillability research unveils a much longer history of scams and ponzi scheme in his interesting article. He also noted lot of interesting resumblences of today's scams to the past ones.

How can it actually spreads?

People are always greedy to make more money of small amount. May be some are not really greedy but they just want to get more and grow the money better instead of putting in the  bank savings account or in away to avoids stocks but still want to make money. Thats why they go to hedge funds, financial advisors and investments firms to help them out.

Not everyone is smart when it comes to money and sometimes we all do mistakes without knowing it.  So the hedge fund managers and investment advisor take this as an advantage and go on a ride playing their bets. These scams works and penetrates the trust worthy groups like chruch groups, local community groups by word of mouth. One person get into it and finds its reasonably trust worthy for a while. He spreads the word to others in the group and slowly everybody gets in the scheme in no time.

In his article, Greenspan also talks about four important factors on why we keep falling for financial scams. They are Situation, Cognition, Personality and Emotions. You can read more about his analysis at my post in the Jan news section.


What can you do to avoid?

1. If it is too good to be true, it is too good to be true. If somebody promises to sell land in Houston where the temparature will never go up above 70 anytime in summer. That's what you should suspicious. Similarly if somebody promises in an informercial you can lose weight by just sitting in your couch and doing some jingles. You shouldn't dump enough to believe it. You should out right know that is not going to work. If you not knowledgeable, try to gather information from internet and other friends who knows better. Don't go alone.

2. Find the right financial advisor.

There are different kinds of Financial advisors. One who get paid as fees for investment advise, one who gets paid commission for the selling the investment product and last one who gets both.  These days product selling comes first than advice. So find an independent advisor who has knowledge of all products and not just one and only sheds light and advise you to take action instead of selling the product. Choose an advisor who gives importance to giving you advice first and look out for the betterment of your asset.  You can find the certified advisors at cfp.net

3. Not all CD's are made equal.

I still see in papers that many CD's(Certificate of Deposit) who promises to return 4-5% when banks can afford to give 2% for 1 year. That is still comparable and achievable thru other instruments but be careful who promises 8-10%. Also try to check on the investment companies whom you are investing and whether its insured or not. Try to ask their FDIC insuranced before you put lot of your money.

4. Avoid Costly Mistakes

Don't go overboard in putting all your money with one bank or single advisor investment portfolio. Try to distribute it. CDARS is another safe heaven to distrubute your savings in many banks so you don't end up in one bank if its get  screwed. It is insured as per FDIC regulations in each banks.

5. Finally, you are the right person to manage your money.

As I always say, its your money and you are the best person to look after it. You worked hard enough to earn every dollar and you know the worth of each dollar. It is good get some valuable advice but you are the single most credible person to manage your money and grow for your bright future.

I hope you learned some good learns out of this bad scammer episode. Every walk of our life has some thing to teach us. Watch closely and learn to be wise.  Please do share your thoughts and comments.