Get Financially Fit!

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Do you know how safe the cosmetics, hair products, baby products, and skin lotions are that you use?  A non profit group called the Environmental Working Group reviews over 25,000 health care products at the site called Skin Deep  (Web site http://www.cosmeticsdatabase.com/)

One thing I really like about the site is that they rate each product as low hazard (0-2), moderate hazard (3-6), or high hazard (7-10).   It amazed me to learn that there can be quite a difference between two products that appear similar.  For example:

Colgate Cavity Protection Fluoride Toothpaste is safe (low hazard), while Colgate Luminous Toothpaste Crystal Clean Mint is moderate risk with ingredients that are linked to cancer.

As you look through the database you will quickly conclude that a consumer can significantly improve the safety of products with a little research.  I encourage you to start out first researching products that you use daily such as shampoos, toothpaste, and cosmetics.  In time you can improve the safety of the portfolio of products that you use.

Skin deep also does a great job of encouraging all of us to become safe cosmetics advocates.  Unfortunately the United States does not regulate the safety of products to the level that Europe and Japan does. 

 Here is a quick video that provides a quick tuturial for using the Skin Deep web site.

Follow your dreams, Achieve your goals! 

 Modern man drives a mortgaged car over a bond financed road on credit card gas
- Earl Wilson

I recently watched the documentary, Maxed out, which is about predatory practices of the credit card industry. 

I highly recommend that you watch the documentary if you use credit cards and especially if you carry a balance.  Once you see some of the agressive strategies that that credit card companies employ to prey on weak borrowers, you will be motivated to pay off your credit cards quickly.  I don’t want to give to much away incase you want to watch it. 

 Here is a preview to the documentary Maxed Out

What is your feedback on the documentary?


I was amused when I saw Jim Cramer’s view of Bear Stearns just prior to their spectacular stock price drop.

 

What is your view and opinion?

This is a guest post form Linda Bustos.  Linda is an editor for CreditorWeb, where you can learn about credit cards, and compare credit card offers. 

Credit card companies have masterminds behind many of their promotions and special offers. Credit card marketers play are “banking” that you’ll make uninformed decisions thinking you’re saving money, getting special treatment or even helping the environment. These decisions can cost you money. Please read on!

0% Balance Transfers

If you have a low interest line of credit (perhaps 5% or so), wouldn’t it make sense to transfer your balance to a new credit card with 0% interest? It might, but make sure you factor in the costs of the balance transfer. The balance transfer fee could be as high as 4% of your balance, leaving just a 1% difference. And if you make new purchases, you will pay the
high interest rate, and any payments you make will be applied to your new purchases first.

You also must pay down the debt within the given introductory period. If it’s only 3 months or 6 months, you may find yourself paying 15% interest or more after the introductory period ends, when you could be paying 5% if you just kept your line of credit.

Gold / Platinum Cards

Gold and Platinum sounds prestigious - but these names often are just clever marketing to cover up high interest rates and annual fees.

Lower Minimum Monthly Payments

5% of your statement balance used to be the going minimum payment for most credit cards until many lenders lowered that rate to 2%. Not only does this take much longer to pay off when you only make minimum payments, but the geniuses behind this tactic understand that people will spend more thinking they’re saving so much in minimum payments!

Skip-A-Payment

Some credit card companies send letters to their customers in January telling them they don’t have to make any payments this month (after all, Christmas probably left them penny-less!). The letter makes it sound like the credit card company is doing you a big favor just when you need it most. Similar letters come in the Spring explaining that you have been such a good customer and have earned a “vacation from your bills,” and then they encourage you to take a vacation - using your credit card, of course!

Don’t be fooled, the only one who benefits from skipped payments is your credit card company. Always pay the maximum you can afford each month.

Low Fixed Rate Cards

Why use a credit card with 18.99% interest when you can get one at 9.99%? If you carry high balances, low fixed rate cards usually save you money. But they often come with hidden costs like annual fees, shorter grace periods, higher late fees and even clauses in your terms and conditions that grant your credit card company permission to jack up your rate if you
are late on one payment.

Eco-Friendly Credit Cards

The worst plastic is the kind that claims to be environmentally friendly. It’s great to choose a rewards card that will donate your points towards environmental projects - every little bit helps. But often the 0.5% of your purchases that actually translate into rewards is so miniscule, if you really want to make a difference, donate some cash to a worthy cause
in lieu of a new CD or restaurant meal every once in a while.

About the guest author:

Linda Bustos is an editor for Creditor Web, a resource for information on
credit cards and credit card offers.

Linda does a great job writing about the risks of credit cards.  Here are additional articles by Linda. 
  Tricks The Banks Play To Make You Pay
  Stop Paying Late Fees
  Ten interest-saving tips your credit card company doesn’t want you to know

We make a living by what we get, but we make a life by what we give.
-Winston Churchill

While few of us want to think about the possibility of dying, none of us want to consider dying without a solid estate plan.  Imagine the fate of your children, pets, and wealth being decided by the courts.  According to the US government, half of Americans die without completing a will. My challenge to you this month is for you to either start or improve your estate plan.

Here are the essentials to establishing a solid estate plan:

1. Carry adequate life insurance for your survivors
2. Update your beneficiary information on your retirement and investment accounts.
3. Compete a will
4. Complete a medical directive and assign your healthcare proxy
5. Give while you are alive.

Let’s review these points one at a time.

Carry adequate life insurance for your survivors.
Inadequate life insurance is one of the most unfortunate scenarios for a surviving family. Not only do the survivors have to grieve the loss of a loved-one, but also face the long-term financial stress of making ends meet. It’s important to have the right amount of life insurance, the right type of life insurance, and to shop competitively.

Determine the amount of required life insurance by considering the money needed to pay off the house, pay for childcare, pay for college education, and replace missed wages. A general guideline is to buy 10 times your annual income.  This would mean that a person earning $50,000 per year would consider a $500,000 term policy. Also recognize that a life insurance policy on a non-working spouse makes sense to provide for care of children. The bottom line question is, how much money would the family need if there is an unexpected death of a parent?  If nobody is dependent on your income then life insurance is not needed.

I recommend the purchase of level term life insurance. Level term life insurance means that the death benefit remains the same during the life of the policy. A 40-year non-smoker male can purchase 20-year level policy with a $500,000 life insurance benefit for about $450 per year. The actual price will change with age, health, and the number of policy years. Avoid whole life insurance products that combine life insurance with investments. Whole life investment insurance is very expensive and aggressively sold by sales people seeking large commissions. Better to buy level term life insurance and do your own investing. Recognize that you won’t need life insurance once you achieve retirement security or financial independence. Good places to start your search are Insure.com and termassistant.com. These companies competitively shop among life insurance companies for you. Make sure to purchase from a life insurance company that is rated A or higher.

Update your beneficiary information in your retirement accounts.
Did you know that your beneficiary designations in your retirement accounts (401K, 403b, IRA, pension, etc) take priority over the wishes of your will? It’s therefore important to review and update your beneficiary information annually. Updating beneficiary information is quite easy today, especially with online accounts. I recommend that you take 30 minutes today and review your beneficiary designations.

Complete a will.
What happens if I don’t complete a will? The courts will appoint an executor who will assign guardianship for your children and distribute your wealth within the limits of the law. Therefore the most important reason to complete a will is to insure that your wishes are executed in a timely manner. Here are examples of important instructions that you can have within a will.
• Naming an executor who will carry out your wishes.
• Naming a guardian to care for your children
• Instructions for distribution of wealth and possessions.
• Instructions for care of your pets.

I recommend a two-step process to setup your will. First complete a will (one for each spouse if married) on your own using an Internet site or standardized legal forms. Completing a will online is easy and quick - the most difficult part is making decisions about your wishes. This will save you money since you will not be paying an attorney by the hour to ask you questions. In my search for a simple and inexpensive online will, I discovered Build A Will. Their process is intuitive and you can complete a will for any state for under $30. Once your will is complete, then have it reviewed by an attorney to both insure that you aren’t missing something significant and to insure that it’s legally binding.

You may also consider setting up a trust if you have significant wealth, have a complicated situation such as a blended family, or want to avoid the risk that your will may be challenged. A trust can’t be challenged as it avoids the court probate process. A trust is best created and maintained with the services of an attorney.

As you can imagine it’s important that a copy of your will is assessable to your attorney (if applicable), your executor, and other close family. It’s also a good idea to review your wishes with your executor to further insure your wishes are carried out.

Complete an advanced directive and identify your healthcare proxy
In addition to your financial wishes, it’s important that your medical wishes are followed. This is best done by completing an advanced directive and naming your healthcare proxy.

You can obtain an advanced directive application at the National Hospice and Palliative Care Organization (NHPCO).  After you have completed the forms it’s important provide a copy to your physician, spouse, close family, and friends. Also review your advanced directive with the person who you assign as your healthcare proxy.

It’s advisable to assign a healthcare proxy. This is also known as your durable medical power of attorney. Use a durable medical power of attorney form to identify the person who will make medical choices for you in the event that you cannot.

Give while you are alive
The title is self-explanatory. Giving while you are alive is great way to insure that your wishes are fulfilled. You may also choose to invest in your family legacy by investing in education for your children or grandchildren, contributing to your favorite charities, or creating memories for your heirs by taking them on a vacation.

One key advantage of giving while you are alive is that you can see first hand the benefits. Additionally you can adopt and modify your giving based on the results that you observe.

Life Application
Now is the time to start or improve you estate plan. Completing an estate plan will give you the peace of mind knowing that your wishes will be followed.