Search Results for “Clearing Up Social Debt in 3 Steps/a-budget-isnt-enough/subscribe-by-email/budget-lesson-part-2/3-things-you-need-to-know-about-homeowners-insurance”

Book Review: Social Nation

I recently had an opportunity to read Social Nation: How to harness the power of Social Media to attract customers, motivate employees & grow your business by Barry Libert. Heckuva title.

Libert is the the CEO at Mzinga, which is a company that connects other companies–and their customers–using social media to collaborate and communicate. Social media is, quite simply, using the internet to drive interactive communication. This includes Twitter, Facebook, and forums. Sometimes, it’s just discussion, sometimes, it’s sharing user-generated content.

Social Nation “will show you, as an employee, customer or partner, how to use new social technologies, make yourself heard, and produce better products and services.” It bills itself as a “complete toolbox” for social media. Does it match the hype? Let’s see.

The book is broken into three sections.

Part 1: The Future of Business is Social

Libert asserts that the future of business is social. That is obviously true, to a degree. A solid viral marketing campaign can drive more eyeball to a product than a full-page spread in the New York Time or a 30-second spot during Super Bowl halftime. However, there are a lot–possibly a majority–of business-to-business companies that will gain no value from a social media campaign. Would a regional supplier with an exclusive distributorship for a top-name line of faucets benefit from being on Twitter? No. On the other hand, 17% of our time online is spent on social applications and the fastest growing demographic on Facebook is 35 years old or older. There is certainly some value to be gained by have a social media presence in some markets.

This section(all of chapter 3!) also contains a link to a test to determine your social media skills. I haven’t taken the test, mainly because I don’t feel like registering for another site. This struck me as nothing more than lead generation, which is a shame. It could be a useful tool.

Part 2: Seven Principles for Building Your Social Nation

This section has seven chapters, containing 7 case studies that detail the 7 principle of social media, as defined by Libert and Mzinga.

The principles include:

Let the culture lead the way, as demonstrated by Zappos.com.
Involve your fans. The big takeaway from chapter 8 is that, when you create a community, your job is to facilitate involvement, not to control it. If you try to run it with an iron fist, it will choke and die.
Reward others and you will be rewarded. Apple lets developers keep 70% of the money they make in the app store. That encourages developers to develop, making everyone more money. Give. Karma will take care of the rest.
There are 4 other principles, but some are just common sense, and I don’t want to give away the contents of the book.

Part 3: Start Today and Create Your Own Social Nation

aka

Chapter 11: How to Get Started and 10 Pitfalls to Avoid

Section 3 has just one chapter, but it’s a good one. It explains the difference between followers and fans, the value of each and how to bond with each. The difference? Fans are actively involved. Followers are far more passive.

This section/chapter also goes into some things to avoid, like abandoning a social media strategy too early, failing to market your business, underestimating the power(positive and negative) of a social network.

Is it worth getting the book?

Social Nation bills itself as a complete social media toolbox, but it falls a bit short. The book tackles social media from a purely strategic point of view, ignoring the tactical concerns. It’s clearly geared toward helping a company plan its social media strategy from a 10,000 foot perch. For the people in the trenches, or anyone with a grasp of strategy that’s looking for the details on running a social media campaign, it’s not enough. That said, if you are trying to plan a social media strategy, or you have no idea where to start, this is a great book for you. It holds a lot of value, but stops some distance before “complete”. Definitely worth a read if you are involved is social media planning.

Giveaway

I’m giving away Social Nation. If you’d like to have a chance to get it, just leave a comment, telling me how you like to see companies use social media. Fair warning, this is the book I read, so it’s “used”. I take care of books, so you can’t tell that it’s used.

Publishers, Publicists, and Authors

If you have a book you’d like me to review, please contact me.

Clearing Up Social Debt in 3 Steps

Finance

Debt can be thought of as a disease–probably social. Most of the time, it was acquired through poor decision making, possibly while competing with your friends, occasionally after having a few too many, often as an ego boost. Unfortunately, you can’t make it go away with a simple shot of penicillin. It takes work, commitment and dedication. Here are three steps to treating this particular affliction.

1. Burn it, bash it, torch it, toss it, disinfect. Get rid of the things that enable you to accumulate debt. If you keep using debt as debt, you will never have it all paid off. That’s like only taking 3 days of a 10 day antibiotic. Do you really want that itchy rash bloodsucking debt rearing its ugly head when you’ve got an important destination for your money? Take steps to protect yourself. Wrap that debt up and keep it away.

2. Quit buying stuff. Chances are, you have enough stuff. Do you really need that Tusken Raider bobble-head or the brushed titanium spork? They may make you feel better in the short term, but after breakfast, what have you gained? A fleeting memory, a bit of cleanup, and an odd ache that you can’t quite explain to your friends. Only buy the stuff you need, and make it things you will keep forever. If you do need to indulge, hold off for 30 days to see if it’s really worthwhile. If it’s really worth having, you can scratch that itch in a month with far fewer regrets.

3. Spend less. This is the obvious one. The simple one. The one that makes breaking a heroin addiction look like a cake-walk(My apologies to recovering heroin addicts. If you’re to the point that personal finance is important to you, you’ve come a long way. Congratulations!). Cut your bills, increase your income. Do whatever it takes to lower your bottom line and raise your top line. Call your utilities. If they are going to take your money, make them work for it. If they can’t buy you drinks or lower your payments, get them out of your life. There’s almost always an alternative. Don’t be afraid to banish your toxic payments. Eliminate your debt payments. This page has a useful guide to debt and how to clear it off.

Update: This post has been included in the Festival of Frugality.

Money Problems: Day 9 – Health Insurance

Finance

Today, I am continuing the series, Money Problems: 30 Days to Perfect Finances. The series will consist of 30 things you can do in one setting to perfect your finances. It’s not a system to magically make your debt disappear. Instead, it is a path to understanding where you are, where you want to be, and–most importantly–how to bridge the gap.

I’m not running the series in 30 consecutive days. That’s not my schedule. Also, I think that talking about the same thing for 30 days straight will bore both of us. Instead, it will run roughly once a week. To make sure you don’t miss a post, please take a moment to subscribe, either by email or rss.

On this, Day 9, we’re going to talk about health insurance.

The first thing to understand is that there is a difference between health care and health insurance. Health care is what the doctors do. Health insurance is when the insurance companies pay for it. Or don’t. They are not the same thing. I won’t be addressing who should get care or who should be paying for insurance. That’s political and I try to avoid that here.

I won’t spend much time discussing health care as a “right”. It’s not. If a right requires somebody to actively do something for you, it’s not a right. It can’t be. The logical conclusion of requiring somebody to provide you care gets to be a intellectual exercise to be completed elsewhere. That, too, is political.

What I will discuss are the components of a health insurance plan is the U.S. and what to watch out for when planning your insurance coverage.

Premium

This is the amount you pay for your health insurance. For people with employer-sponsored insurance, this is usually paid out of each paycheck, deducted pre-tax. For those with an individual plan, it’s almost always a monthly payment. There generally isn’t much you can do to lower this much. Most employers offer, at most, 2-3 options, ranging from a good plan for a high premium to “we’ll mail you leeches if we think you’re dying” for a much smaller price.

Copay

This is a flat fee paid out of pocket when you get medical care. Depending on your plan and the type of visit, this could be $10-50 or higher. For example, with a plan I participated in recently, the copay was $15 for an office visit, $25 for urgent care, and $100 for an emergency room visit. The office visit and urgent care visit were billed the same amount to the insurance company, so the price difference was entirely arbitrary. Currently, all health insurance plans are required to pay preventative care visits at 100%, meaning there is no copay.

Coinsurance

This is the payment split between the insurance company and the insured. 80/20 is a common split for plans with coinsurance. That means the insurance company will pay just 80% of the bill, until the insured has paid the entire out-of-pocket maximum. After that, the coverage is 100%.

Deductible

This is the amount that an insurance company won’t pay. It has to be covered by the insured before the insurance company does anything. For example, if you have an insurance plan with a $25 copay, 80/20 coinsurance and a $100 deductible, and paying for an office visit costing $600 would look something like this: $25 for the copay, followed by $75 to max out the copay, leaving $500 to be split 80/20 or $400 paid by the insurance company and $100 paid by the insured. That office visit would cost $200 out-of-pocket. The next identical visit would be cheaper because the deductible is annual and doesn’t get paid per incident. That one would cost $115 out of pocket.

HSA

Health Savings Account. For people with a high-deductible plan–that is, a plan with a deductible of at least $1200 in 2011–they are eligible to open an HSA. This is a savings account dedicated to paying medical expenses, excluding OTC medication. It can be used for vision, dental, or medical care. Payroll contributions are taken pre-tax, which makes it a more affordable way to afford major medical expenses. Unfortunately, there are annual contribution limits. Currently $3050 for an individual account and $6150 for a family account. HSAs do not expire, so you can contribute now, and save the money for medical expenses after retirement.

FSA

Flexible Spending Account. This is similar to an HSA, but the contributed funds evaporate at the end of the year. It’s “use it or you’re screwed” plan.

Individual Plans

If you’re not getting health insurance through your employer or another group, you are on an individual plan. These cost more because they A) don’t benefit from the economy of scale presented by getting 50 or 100 or 1000 people on the same plan, and B) you don’t have an employer subsidizing your premium.

Employer-Sponsored Plans

If your employer provides health insurance, you have an employer-sponsored plan. Possibly the fastest way to correct problems with the health insurance industry would be to make individual plan premiums tax-deductible, while eliminating that deduction for employers and letting insurance companies work across state lines. That would eliminate the mutated pseudo-market we have right now, and force the insurance companies to compete for your business. Honest competition is the most sure way to increase efficiency and service while reducing costs. It beats “one payer” or “socialized” care which add overhead to the process and hide the premiums in increased taxes.

Open Enrollment

Most employer-sponsored plans only allow you to make changes at a specific time of the year, unless you have a “life changing event”, like marriage, divorce, death, or children.

Explanation of Benefits

After you use your health insurance, the company will send an EOB, showing you what was billed, what they paid, and what you’ll be responsible for. It’s fascinating to see the difference between what gets billed by the doctor and what the insurance company is willing to pay, by contract. You should read this, to at least understand what you are consuming and how much is getting paid for you.

Maximum Dollar Limit

If your insured care cost more than your maximum dollar limit, or maximum annual limit, the insurance company stops paying. this was supposed to be going away under the Patient Protection and Affordable Care ~~Fraud~~ Act. Unfortunately, if an insurance company offers a crap plan, they have been allowed to apply for waivers based on the fact that they offer a crap plan. The deciding factor in whether the waiver is granted seems to be the amount of the political contributions the insurance company has made to the correct political entities, but maybe I’m just bitter.

Out-Of-Pocket Maximum

This is the most you will have to pay directly with coinsurance. After you pay this amount, the insurance company will cover 100% of expenses, subject to the maximum limit.

COBRA

The Consolidated Omnibus Budget Reconciliation Act of 1985 is, in short, an opportunity to continue your employer-sponsored health plan–minus the subsidy–after you have left the employer. It’s expensive, but it keeps you covered, and will eliminate issue with pre-existing conditions when you get a new plan.

Catastrophic Health Insurance

This is an extremely-high-deductible plan, typically $10,000 or more. For the people who can’t afford coverage, this is insurance-treated-as-insurance. It’s coverage when you absolutely need it, not when you feel a bit ill. $10,000 isn’t a bankruptcy-level bill, while $100,000 usually is. This plan prevent medical bankruptcy for a small monthly fee. For the people who got screwed by a PPAACFA waiver, it bridges the gap between a plan that’s useful for minor things and protection when something goes really wrong.

Things to Watch Out For When Applying For Health Insurance

Now that we’ve looked at the terms you need to understand, we’re going to talk about some things to check before deciding what coverage is right for you.

Individual, Individual + 1, Individual + Family

Do you need coverage for yourself, or yourself and your family? If you and your spouse are both working, make sure to run the math for every possible combination that will cover everyone. Is it cheaper to have one of you cover yourself and the kids, while the other just gets an individual plan?

Maximum annual coverage

It’s really easy to blow through a $3000 annual maximum. If you’ve got a low annual max, look into a supplemental catastrophic plan.

Primary and Secondary Coverage

For years, my wife paid for insurance that covered herself and the kids, while I covered myself. When we were expecting brat #3, I added her to my insurance plan, without having her cancel hers. When the bill came, my insurance plan covered the coinsurance and deductible, which saved us thousands of dollars when the baby was born.

Pre-Existing Conditions

If you’ve got a pre-existing condition, it can be difficult to get insurance if you don’t already have coverage. This makes sense. It prevents someone from corrupting the idea of insurance by waiting until something goes really wrong before getting a plan. Without this, all of the insurance companies would be bankrupt in a year. This is one of the biggest benefits of COBRA. It’s a short-term bridge plan that eliminates the idea of a pre-exisiting condition deadbeat. If you’ve got insurance, you can transfer to a different plan. If you don’t, you can’t.

Homework

Your homework today is to get a copy of the details of your health insurance and look up all of the above terms and situations. How well are you covered? Did anything surprise you?

Money Problems – Day 8: Insurance

Finance

On this, Day 8, we’re going to talk about insurance.

What is insurance? Insurance is, quite simply a bet with your insurance company. You give them money on the assumption that something bad is going to happen to whatever you are insuring. After all, if you pay $10,000 for a life insurance policy and fail to die, the insurance company wins.

A more traditional definition would be something along the line of giving money to your insurance company so they will pay for any bad things that happen to your stuff. How do they make money paying to fix or replace anything that breaks, dies, or spontaneously combusts? Actuary tables. Huh? The insurance company sets a price for to insure—for example—your car. That price is based on the statistical likelihood of you mucking it up, based on your age, your gender, your driving history, and even the type of car you are insuring. What happens if a meteor falls on your car? That would shoot the actuary table to bits, but it doesn’t matter. They spread the risk across all of their customers and—statistically—the price is right.

What kinds of insurance should you get?

Homeowner’s Insurance

For most people, their home is, by far, the largest single purchase they will ever make. If your home is destroyed, by fire, tornado, or angry leprechauns, it’s gone, unless you have it insured. Without insurance, that $100, or 200, or 500 thousand dollars will be lost, and that’s not even counting the contents of your home.

Homeowner’s insurance can be expensive. One way to keep the cost down is to raise your deductible. If you’ve got a $1500 emergency fund, you can afford to have a $1000 deductible. That’s the part of your claim that the insurance company won’t cover. It also means that if you have less than $1000 worth of damage, the insurance company won’t pay anything.

You can get optional riders on your homeowner’s insurance, if you have special circumstances. You can get additional coverage for jewelry, firearms, computer equipment, furs, among other things. You base policy will cover some of this, but if you have a lot of any of that, you should look into the extra coverage.

Auto Insurance

Car insurance is required in most states. That’s because the kind caretakers in our governments, don’t want anyone able to hit you car without being able to pay for the damage they caused. To my mind, I think it would be more effective to just make whacking someone’s car without paying for it a felony. If someone is a careful driver or has the money to self-insure, more power to them.

Auto insurance comes with options like separate glass coverage, collision, total coverage (comprehensive), or just liability. Liability insurance is what you put on cheap, crappy cars. It will only pay for the damage you do to someone else.

Rental

I’ve never had rental insurance. The last time I rented, I could fit everything I owned in the back of a pickup truck with a small trailer, and it could all be replaced for $100. Heck, I had the couch I was conceived on. Err. Ignore that bit.

Almost everything you can get homeowner’s insurance to cover will also cover renter’s insurance, except for the building. It’s not your building, so it’s not your job to replace it.

Life Insurance

If you care about your family, you need life insurance. This is the money that will be used to replace your income if you die. I am insured to about 5 times my annual salary. If that money gets used to pay off the last of the debt, it will be enough to supplement my wife’s income and support my family almost until the kids are in college. You should be sure to have enough to cover any family debt, and bridge the gap between your surviving family’s income and their expenses. At a minimum. Better, you’ll have enough to pay for college and a comfortable living.

Life insurance comes in two varieties: whole and term. Whole life…sucks. It’s expensive and overrated. The sales-weasels pushing it will tell you that it builds value over time, but it’s usually only about 2%. It’s a lousy investment. You’re far better off to get a term life policy and sock the price difference in a mutual fund that’s earning a 5-6% return.

Term life is insurance that is only good for 5, 10, or 20 years, then the policy evaporates. If you live, the money was wasted at the end of the term. The fact that it’s a bad bet makes it far more affordable than whole life. It doesn’t pretend to be an investment; it’s just insurance. Pure and simple

Personal Liability Umbrella

An umbrella policy is lawsuit insurance. If someone trips and hurts themselves in your yard, and decides to sue, this will pay your legal bills. If you get sued for almost anything that was not deliberate(by you!) or business related, this policy can be used to cover the bill.

If you call your insurance company to get an umbrella policy, they will force you to raise the limits on your homeowner’s and auto insurance. Generally, those limits will be raised to $500,000, and the umbrella coverage will be there to pick up any costs beyond the new limit.

A little-known secret about umbrella policies: They set the practical limit of a lawsuit against you. Most ambulance chasers know better than to sue you for 10 million dollars if you only have a policy to cover 1 million. They will never see the other 9 million, so why bother? They’ll go for what they know they can get.

The flipside to that is that you should not talk about your umbrella policy. Having a million dollars in insurance is a sign of “deep pockets”. It’s a sign that it’s worthwhile to sue you. You don’t want to look extra sue-able, so keep it quiet.

Insurance is a great way to protect yourself if something bad happens. Today, you should take a look at your policies and see where you may have gaps in coverage, or where you may be paying too much.

Make a Budget

Finance

: Image by r.lovewell via Flickr

In the past, I’ve gone through a detailed series of budget lessons demonstrating how to make a budget and showing my personal budget spreadsheet template. If you weren’t here to see them develop, you probably haven’t seen them at all. I’ve never built an actual index for those posts.

This is the master index of my budget planning resources. As I develop more, this will grow.

Budget Lesson #1 – In this lesson, I go over how we handle discretionary income and I explain our modified envelope system. The discretionary budget contains things like our grocery bill, or the clothes we buy. We have near-total discretion over what is purchased, hence the name.

Budget Lesson #2 – Lesson #2 contains the details of our monthly bills. These are the ones that are consistent, predictable, and actually due each month. Most people take these for granted as the bills they have to pay, but it’s not true. You can get almost all of your regular bills reduced just by asking. You would also be surprised what you can do without, when properly motivated.

Budget Lesson #3 – This is where I explain how we deal with the non-monthly bills. That is, the bills that have to be paid, but are not due on a monthly basis. I also share the personal budget spreadsheet template I developed. I am working on a few sample templates to match various imaginary scenarios. If you’d like to be an anonymous case study, and get free help setting up a budget, let me know, please.

Budget Lesson #4 – In this lesson, I describe our “set-aside” funds for things that will need to be paid eventually, but not on a set schedule. Sometimes, they are never actually due. We set aside money for the parties we throw, for car repairs and for a number of other things. A few of these items are outright optional, but they are part of what makes life fun. You can’t make a budget without including some of the extras.

Budget Lesson #5 – This is the companion piece to lesson 2. Learn how I’ve reduced–or attempted to reduce–each of these bills. For the better part of two years, I called Dish Network every few months to ask for a discount. For almost 2 years, it was granted. Then one, day, they told me they were putting a note on our account to keep us from getting any more discounts, so I canceled. 100% discounts help us save more.

Budget Lesson #6 – This is the reduction companion to lesson 3. These bills are harder to reduce. Have you ever successfully gotten your property taxes lowered?

Budget Lesson #7 – This is the reduction companion to lesson 4. Notice a pattern, yet?

Budget Lesson #8 – Here, completely out of order, is the reduction companion to lesson 1. Watch as I magically reduce–or rationalize–our discretionary budget.

So, dear readers, what part of budgeting should I address next?

Money Problems: Day 10 – Debt Insurance

Finance

On this, Day 10, we’re going to talk about debt insurance.

Debt insurance is insurance you pay for that will pay your lender in the event of your death, dismemberment, disfigurement, disembowelment, or unemployment. Exactly what is covered varies by insurer, type of debt, and what you are willing to pay for.

Private Mortgage Insurance(PMI) is a common form of debt insurance. Generally, if you take out a mortgage with a down payment under 20%, you’ll be expected to pay for PMI. According to the Homeowners Protection Act of 1998, you have the right to request your PMI be cancelled after reducing your loan amount to 78% of the appraised value of the property. That ensures that the lender will be able to recoup their money by seizing the mortgaged property if you should happen to fall under a bus or get hit by a meteorite.

Another common form of debt insurance is for your credit cards. Card companies love it when you buy their insurance. If you buy their life insurance, your card is paid off when you die. Disability insurance pays it if your get hurt. Unemployment insurance…you get the idea.

Here’s the deal: Get life insurance and disability insurance separately. It’s cheaper than getting it through your credit card company and let’s you get enough to actually live on if something tragic happens. Unless, of course, you die. Then it will leave enough for your heirs to live on.

As far as unemployment insurance, build up your emergency fund instead. That’s money that gives you options. Credit card insurance is money flushed down the toilet. Many of these policies cost 1% of your balance. If you’ve got a $5,000 balance, that will mean you are paying $50 per month. By comparison, if you’ve got a 9.9% interest rate, you’ll be paying about $40 per month in interest.

Debt insurance is a bad idea, if you can possibly avoid it. A combination of life insurance, disability insurance, and an emergency fund provide better protection with more flexibility.

Your task for today is to review your credit card statements and mortgage agreement and see if you are paying debt insurance on any of it. If you are, cancel and set up the proper insurance policies to protect yourself and your family.

Search Results for: Clearing Up Social Debt in 3 Steps/a-budget-isnt-enough/subscribe-by-email/budget-lesson-part-2/3-things-you-need-to-know-about-homeowners-insurance

Part 1: The Future of Business is Social

Part 2: Seven Principles for Building Your Social Nation

Part 3: Start Today and Create Your Own Social Nation

Chapter 11: How to Get Started and 10 Pitfalls to Avoid

Is it worth getting the book?

Giveaway

Publishers, Publicists, and Authors

Premium

Copay

Coinsurance

Deductible

HSA

FSA

Individual Plans

Employer-Sponsored Plans

Open Enrollment

Explanation of Benefits

Maximum Dollar Limit

Out-Of-Pocket Maximum

COBRA

Catastrophic Health Insurance

Things to Watch Out For When Applying For Health Insurance

Individual, Individual + 1, Individual + Family

Maximum annual coverage

Primary and Secondary Coverage

Pre-Existing Conditions

Homework

Homeowner’s Insurance

Auto Insurance

Rental

Life Insurance

Personal Liability Umbrella