Archive for January, 2010

Money Smartness – Do’s and Don’ts for any year

This year just started off and half of January is almost over now. Days are moving fast so you better focus on things you want to get accomplished.

Do a quick check on your goals or Resolutions for this year. Did you ever get started with any of them? If you did, how far along are you? Do you think you are moving along as planned or just dragging yourself, waiting to quit? If you never got started, you still got till 31st to do something about it so you can atleast brag that you started something new this year. If you are chucking along, good job and keep it going!!


Moving on to Money smartness, it is not only about making and saving money right. It is also about doing things which could help to manage and preserve the wealth you earned. It is about getting ready for emergency situations and planning for proper wealth distribution when you are gone. In this post, I like to share and remind few Don’t and Do’s which most of us take it for granted in our everyday busy life. We don’t consider them serious enough until it hits us hard.


Don’ts

Don’t lose your 401 (K) contributions


I called my friend who lives in East coast to wish him Happy newyear. During our conversation he was mentioning about his 401k from his previous employer. It has been almost 2 years, he still not moved his funds over to new account. He don’t know where to start because his previous company had gone through few mergers after he quit and don’t know how much the account worth now and where exactly the funds are held.

I strongly urged him to get on it, start working first thing otherwise he might lose his hard earned money. Many of us fail to roll over my 401 (K) when change jobs. We forget about it, while we struggle to find a new job. With some many job losses last year, I am sure money of you aren’t thinking about 401K accounts yet. If you get a chance, do take time and start working on rolling over to Roth IRA account or mutual fund.

Don’t be a Identify Theft/Scam/fraud Victim


Identity theft, Ponzi schemes and scams are the talks all over the internet last year. Many millions of people get affected by identify theft every year especially via phishing over Internet. Whether you use online banking to check your account or make your credit cart payment, be careful in protecting your identity by protecting your computer from getting hijacked by the hackers. There is more to avoiding a identify theft than just virus protecting your computer and will talk more about it in my later posts.

Avoid Impulse buying


Beware of persuasive or forceful sales pitches. If it seems too good to be true, it might very well be, so avoid taking action at the spur of the moment. Try to be wise by not paying more for what it’s worth and always do comparison shopping. There is a reason why Milk cans are stored way back in any grocery store! Try to always compare different offers whether you are on the street shopping for car or expensive items.

DO’s


Pay yourself First


That’s the mantra of many Money Guru these days. First take out some money from your pay check for yourself and put it away in a saving account before it disappears. Start small and stretch it out slowly. With automatic saving with online banking, you can do it easily in minutes. By saving periodically, you are also taking advantage of time to work for you. Magic of compounding is the be8th wonder invented by Einstein..  I like to say, Saving is an habit not an hobby, so start a habit this year. Once you get started with saving, you can expand to invest the savings for future purpose like kids education or retirement.


Plan to be Debt free


Are you debt free? I would be surprised if you were. Everybody has debt in  some sort or other whether it is home mortgage or just credit card debt. But you can plan to be debt free and try to get out deep debts avoid paying high interest rates charges.  Don’t let your revolving debt to shift as long time debt. That will reckon your financial wealth. If you are in deep credit card debt, try to contact national credit counseling agency and work out a plan to get out of debt and shift to revolving debt situation.


Prepare a WILL


Last but not the least item in the list, Estate planning. Do not think estate planning is only for wealthy individuals. Estate planning is all about preparing for unexpected. It is just about preparing Will/Testament or Trust for the benefit of your dependents.These paper works are very important especially if you are married and have kids. You can make a will in just few minutes using Willmaker by Quicken and execute according to your state law. It is a cost efficient solution compared to Trust but not cost saving solution if you have big estate. Consult your CFP for more details.

I hope these Do’s and Don’ts help you to start thinking about few things which are important always not just in a new year. I am planning to touch upon these topic in more elaborate manner in my future posts. Please check back periodically.

AVATAR – Is it worth spending millions?

 




20Century Fox





Avatar, the movie which has made headlines all over the globe, movie which has given another avatar to the Hollywood movie industry during this recession, and a movie which is the topic of many house hold dinning table talks. It has broken many records and making history in the world movie industry.


Before I talk about the main interest, here are some titbit’s you might be interested if you are not aware of them.


1. Producers spent around $300 in production cost and more for marketing.

2. It already raked up 1 Billion from all over world in just 2.4 weeks. According to Box Office Mojo it’s current box office total stands at $$1,018,811,000  million.


3. Opening Weekend:  $77,025,481
(#1 rank, 3,452 theaters, $22,313 average)
% of Total Gross:  21.9%  
Widest Release:  3,461 theaters 
In Release:  17 days / 2.4 weeks 
 


A movie which cannot stop making money and surely a movie to watch. After hearing  rave reviews and commentaries,especially setting itself apart from ther sequels like Lord of the Rings with Sanskrit title, I was intrigued to see it. I finally watched the movie yesterday and it surely didn’t fail to surprise with spectacular animation,  special effects and astonishing camera. I was totally blown away by the Himalayan effort put forth to bring this movie as a sensational entertainer with a great message for this time.


James Cameron proved himself again as the Best Director of all time by giving back to back hits. But, as an person born and bought from India, I felt that the story is old and many of my Indian friends agreed with me. I have seen similar kinda of movies when I was a kid in the Indian cinema with little special effects available at that time frame. Those movies had stories where person transfers from body to body too. I am talking about 20-30 years back. Except the special effects, graphics and animation, I  see the old story line in many aspects but with new scientific proofs which makes it believable. It has lot of connection and adaptation from Veda’s(Sanskrit literature) and many other Indian literatures. Even the character visualization and makeup’s can be related to many ancient Indian traditions and especially the body color can be related to Lord Krishna avatar deplicted below in the picture.



Being said all that, James Cameron not only just gave new look to the old story but a brand new planet creating a new paradigm for the many more avatars to come. As money examiner, I would say it surely money maker but do have couple of questions.

What was James Cameroon thinking?  While the nation is just recovering from recession, 300 million dollar spent in making a movie, doesn’t really makes sense? At the same time, it is giving people totally new experience in a new world and also bringing them to theaters to spend money during the holiday season helping the economy.


Share your thoughts about Avatar and money spent in making the money. Is it worth spending this much money or waste?

COBRA Subsidy and Interview with eHealth Insurance VP

ehealthInsurance.com, a health insurance portal which allows consumer to compare, apply and buy affordable health insurance in this high health cost days. I been using service for almost 3 years and all our health insurance are actually bought through their service.


I recently got in touch with the VP of the ehealthinsurance and had a nice chat about the company and especially about the Cobra subsidy provided by the government.


Read on the Interview with Sam Gibbs, eHealthInsurance



Vijai: Can you tell me about you role at eHealth?


Sam: I’m a Senior Vice President at eHealthInsurance.  I’ve been with the company since 2000. I’ve been involved in many parts of the business, from building our technology to working with consumers and small businesses.


Vijai: How does eHealthInsurance help people with their insurance needs?


Sam: Simply put, we show Americans their health insurance options and empower them to find the best health insurance products for their personal needs and budget.  Shoppers visit the eHealthInsurance.com website and with just a few clicks compare real-time health insurance quotes from a big selection of brand-name health insurance plans in their area.  They can read customer reviews, compare plans side by side, sort by their favorite doctors and get personal recommendations.  Then they can actually apply for coverage and buy online.  


We also have a Customer Care Center staffed with licensed agents as well as representatives who can provide help and unbiased advice by phone, email or online chat. 


eHealthInsurance sells individual and family policies, short-term coverage and small business group coverage, as well as dental and vision coverage and a number of other products.  We’re licensed to sell health insurance in all fifty states plus DC and we offer plans from over 180 health insurance companies nationwide.


Vijai: With more than a half million jobless people, what is the general situation when it comes to their insurance needs? Do you have stats showing how many people are actually using COBRA and individual insurance?


Sam: Actually, I think you’ll find there are a lot more than half a million unemployed people out there.  The October data from the Bureau of Labor Statistics put the overall unemployment rate at 10.2 percent, which works out to 15.7 million people.


Generally speaking, people out of work have three choices: 1) They can temporarily continue their employer coverage under COBRA with the help of the nine-month federal subsidy designed to make COBRA more affordable; 2) They can apply for individual or family coverage in the private market; or 3) They can go without coverage entirely and leave themselves at serious financial risk in case of an emergency.


Hewitt and Associates recently released data suggesting that there are about 14 million people currently eligible for COBRA coverage in the US.  Of those, the Hewitt study shows that about 38 percent are utilizing the 65% federal COBRA subsidy to help them make COBRA coverage more affordable.  That would put the number of Americans with COBRA coverage today at something over 5 million.


It’s difficult to say just how many of today’s unemployed are purchasing individual and family health insurance.  But according to a March 2009 US Census report, about 13 percent of the insured population in the US get coverage on their own rather than through an employer or organization.


Vijai: What can you tell us about your experience with the COBRA subsidy? Is it working and how confident are you for it being renewed again for a few more months?


Sam: The Hewitt study I mentioned indicates that thanks to the COBRA subsidy people are electing COBRA coverage at twice the rate they did before, so, yes, I think it’s working.  The point of the subsidy was to make COBRA coverage more affordable so that fewer people would be tempted to go without coverage.


When you go on COBRA coverage, you’re actually keeping your former employer’s health insurance plan, but at your own expense.  Since employers generally cover the bulk of an employee’s monthly health insurance premium, many laid off workers are surprised to find out how much COBRA is going to cost them.  The value of COBRA, however, is that it allows you to retain the coverage you’re used to, and you can’t be turned down based on your medical history.  The trouble with COBRA is that without the subsidy, it is so expensive that few people are able to actually afford it.  The federal subsidy covers 65% of the monthly COBRA health insurance premium, so it stands to reason that it would prove popular and keep more people covered through their former employer’s plan. 


Families USA recently released some interesting data showing that the national average cost of COBRA coverage for a family without the subsidy is $1,111 per month, which works out to be over 80% of the average unemployment check!  With the subsidy, however, that monthly COBRA premium comes down to a national average $389 per month.


Congress is approved the possible extension of the COBRA subsidy through the end of February, so people who are laid off in January and February will qualify. It also adds six months of subsidies, extending coverage assistance for a total of 15 months.  It was first made available in March of this year and that means that the first recipients of the subsidy faced tripling of their COBRA premium when it was about to end on the month of December. 


Vijai: Is it possible that individual insurance works out better than COBRA with the subsidy? How and when?


Sam: It may for some people.  COBRA is the best option for those with pre-existing medical conditions, since COBRA guarantees them coverage, if they can afford it.  But people who are healthy may actually find more affordable coverage by purchasing insurance on their own, even compared to their subsidized COBRA premiums.  For example, I mentioned that the national average monthly premium for subsidized COBRA coverage was $389?  Well, in a report that eHealthInsurance issued in August, we found that the national average monthly premium for family policies purchased through our website was slightly lower than that, $383.  The costs are comparable.


Once the subsidy expires and their monthly premiums triple, healthy people currently covered under COBRA may be able to save hundreds of dollars per month by purchasing an individual or family health insurance plan instead. 


Then you may have a scenario where one family member has a pre-existing medical condition while several others are healthy.  It may make sense for families in this kind of situation to continue COBRA for the one person with the medical history while purchasing affordable individual policies for the other family members.


Vijai: What is the part played by eHealthInsurance and how they are getting compensated?


Sam: eHealthInsurance is a licensed agent like your local agent down the street, but we have a bigger selection of plans and we do business online.  Since health insurance premiums are regulated by each state’s Department of Insurance, there’s no difference in health insurance prices whether you buy direct from the insurance company or through an agent.  Commissions are built into all health insurance premiums.  If you buy from the carrier, the carrier gets the commission portion of the premium.  If you buy from eHealthInsurance or a local agent, eHealthInsurance or the local agent gets it.


Vijai: What is your suggestion for people who have no other option than COBRA?  With the COBRA subsidy expiring by the Feb, what would you suggest?


Sam: I would ask first, are you sure you don’t have any other options?  Talk with a licensed agent to find out.  But don’t go without coverage in any case.  If you have a pre-existing medical condition, try to find some way to make it work.  If you have dependents who are healthy, try splitting the family up under multiple coverage options, like I suggested earlier.  But try to stay on COBRA if you have a medical condition that might prevent you from finding coverage elsewhere.  It’s a greater risk to go without coverage, since a single uninsured hospitalization could put you in bankruptcy.


If you have a pre-existing condition and unsubsidized COBRA premiums are simply too costly and there’s no way you can afford it, I’d suggest you contact the non-profit Foundation for Health Coverage Education at www.coverageforall.org to see what government-sponsored programs and high-risk pools are available in your area.


Vijai: With the Health reform bill just crossing the half way mark by passing the house, do you think it will have a great effect in many American’s lives?


Sam: That remains to be seen.  The majority of Americans currently get their coverage through employers and these people may not be very effected.  Obviously, mandating that all people have health insurance is a big change.  And for people with pre-existing medical conditions, the idea that they can never again be turned down for coverage based on their health history would be a big change too.


Vijai: Final words, what do you like to tell people about shopping for their insurance needs?


Sam: Know your options.  When it comes to health insurance, knowledge is power – and it can be savings too.  Work with a licensed agent that represents multiple companies in your area to get an idea of what’s really out there so that you can find the best match for your needs and budget.  And don’t wait for health reform.  Many provision of the health reform bill won’t phase in until 2013.  So if you’re uninsured, check into your options today.  When and if health reform does become law, you may be obliged to purchase coverage anyway.  Protect yourself in the meantime.


You can visit a special website designed to guide people who are getting out Cobra at cobralearning.com


References:


Bureau of Labor Statistics October Report on Unemployment:


http://www.bls.gov/news.release/empsit.nr0.htm


Hewitt and Associates Study on COBRA Subsidy Utilization:


http://www.hewittassociates.com/Intl/NA/en-US/AboutHewitt/Newsroom/PressReleaseDetail.aspx?cid=7133


Families USA:


http://www.familiesusa.org/assets/pdfs/expiration-of-cobra-subsidy.pdf



Feb 2009 eHealthInsurance data:


http://news.ehealthinsurance.com/pr/ehi/health-insurance-premiums-ehealth-102617.aspx


March 2009 US Census Data:


http://www.census.gov/hhes/www/cpstables/032009/health/h05_000.htm

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