A recent article in Kiplinger’s Personal Finance mentioned a fairly new “Christmas Club” way of saving. Smarty Pig is a new FDIC insured savings program offered by Iowa’s West Bank. It allows you to set up multiple accounts (for free) with designated goals. So, you can have one for a down payment for a new home and one for Christmas gifts (plus many more). There is even a great tool that tells you how much to save. If you tell Smarty Pig that you need $20,000 for a down payment on a home in 4 years, it will calculate that amount that you need to save per month to reach that goal. You can link the accounts to a checking account of your choice and transfer money back and forth or have Smarty Pig do it automatically each month.

The great thing about Smarty Pig is that you can make your goals (and accounts) public. Since it is public, you can allow family members and friends help you reach your goal. That is, they can transfer money into your accounts! You can even place a link on sites such as Facebook, MySpace, blogs and websites to help you meet your goals faster!

Another great aspect of this account is that it is currently paying 3.9% APY! That is one of the highest out there right now. You can also redeem your savings for a gift card to different business with a bonus of up to 5%. So if one of your goals was for home improvement, you can then use that savings to get a Home Depot gift card with a bonus!

Have you had some experience with Smarty Pig? Feel free to share your thoughts on your experience or what you think of this idea in general. I think this is a great concept and should be offered everywhere!

• Move 2 Years Worth of Major Expenses to a Savings Account?
• Make the Most of Your FDIC Insurance Limits
• 10 Reasons Not to Pay for Your Kids College
• Health Insurance: Part 1 - Deductibles
• Avoid Your Banks Highest Rate Loan

Well as you probably know, it has been quite a long time since I posted a decent article. As my semester is winding down, I am hoping to jump back into writing about 2 good posts per week. After the semester ends, I want to go at it more aggressively.

Even though I am not posting, I am still reading some great blog posts from around the PF blogosphere. Here are some that I liked over the past week.

Andrea over at Wise Bread gives some great tips if you were thinking about getting a second job.

David at My Two Dollars gives some great tips for traveling this holiday season. Mrs Adam will be traveling down to Texas for Thanksgiving and I am sharing these great ideas with her. It will be our first Thanksgiving totally alone and cooking for each other!

Trent at The Simple Dollar lets us know how to have a cheaper Christmas this year. I am thinking that our Christmas may not be that extravagant this year. We want to get our financial lives started off on the right foot. Too many people go overboard at Christmas.

Pinyo at Moolanomy has 7 ideas to turbo charge your career today. Some of these will come in handy when I start my new career in a few months.

Lazy Man lists his 5 questions that he asks himself before he makes a purchase. I sometimes have a problem with overspending on high ticket items and I think this list will help me out in the long run.

• 10 Reasons Not to Pay for Your Kids College
• Savings Account for the 21st Century (at 3.9% APR)
• Saving for Retirement in College?

I typically enjoy reading Money Magazine. But this month’s edition of “The Crisis: What Do I Do Now” kind of upset me. This month’s editor’s note contradicts itself quite a bit. Eric Schurenberg gives his take on “What Not To Believe About the Crisis”. When he gets to the section about how the economy is “fundamentally strong” is where it gets kind of strange and out of whack. In that section he has this to say:

In times like this, phrases like “fundamentally strong” conjure images of Herbert Hoover, as John McCain now knows. Even so, I happen to agree - in the long run. For now, we have a lot of debt to work out. Housing prices have further to fall, and a recession is probably inevitable. But over the next several years, I believe you will be rewarded for acting calmly today. If you haven’t already, move what you need to cover major expenses for the next TWO YEARS into a bank account or money fund. But don’t bail out now, not when stocks are 30% less risky than they were a year ago. As Harold Evensky, the veteran financial planner, tells his clients, “Now is the worst time in the world not to be invested.” The reason you diversified was to get through times like this. Although it may not feel very pleasant right now, this was part of your plan. Stick to it.

I could not believe that he recommended that you put 2 years worth of expenses into a money fund! Are you kidding me? He then stated that you should stay invested! Now that is what I call contradiction!

What do you think about this recommendation? Am I right to be outraged by it or do I not see it as the rest of you do? Do any of you have TWO YEARS worth of expenses in a money fund?

• Savings Account for the 21st Century (at 3.9% APR)
• Saving for Retirement in College?
• What Are You Cutting Back On?
• Avoid Your Banks Highest Rate Loan
• Should You Manage Your Kids Money?

This week has been a crazy one for the stock market (by the way, I absolutely love this picture). Down 4% one day, up 4% the next. Many blog posts this week dealt with the market turmoil, buyouts, etc. I try not to worry about short-term market fluctuations because I am investing for the long haul. I know that the times are tough, but we have pressed through them before. Things will be better again soon! 

I know that I have not posted that frequently lately, but if you saw my work for school, you would know why! Since it is my last semester, everything is coming together. I also will be attending 3 professional conferences in the next few months. I will be heading to Schwab Impact next week in Atlanta, the Financial Planning Association annual conference in Boston in October, and the Association for Financial Counseling and Planning Education annual conference in Los Angeles in November. So, if my posting is sporadic, you know why!

Here are some articles that I found particularly interesting this week. As you see, there are none about this weeks financial news.

Paul over at Wise Bread tells us how he got some CEO’s to really listen to his complaints. I never really knew that CEO’s at companies really read complaint letters. I might try this next time I have some bad experiences. Actually, maybe I will have Mrs. Adam write some letter’s to some of the companies that have been ripping her off lately.

JD at Get Rich Slowly talks about the never-ending war against advertising.

Jim at Blueprint for Financial Prosperity gives some great tips on how to draft a basic financial savings plan.

Gather Little by Little gives some great advice on how to sell a used car. I have been reading Dave Ramsey’s Total Money Makeover and I have considered selling my car as he suggests (be a gazelle). I do not know if I will go through with it, but this article still has some great tips.

Single Guy Money wants to know if you are really ready to buy a home. Mrs. Adam and I have been talking about this recently. We know it is a GREAT time to buy a home in the area where we live (well, I won’t be living there until December). 

photo by azrainman

• Carnival of Personal Finance #167
• Savings Account for the 21st Century (at 3.9% APR)
• Make the Most of Your FDIC Insurance Limits
• Avoid Payday Lenders Like the Plague

Photo by pixel_bunny

It’s been quite awhile since I wrote the post Health Insurance: Part 1 - Deductibles. In that post I discussed the general idea of deductibles and how they work. In this post, I will be discussing co-insurance and stop-loss provisions and what they mean to you and your wallet.

Once your deductible has been met, many health insurance companies will pay for all of your medical expenses. On the other hand, many companies will pay for medical costs on a co-insurance basis. Many co-insurance provisions are stated in a percentage format such as 80/20, 70/30, etc. The first number is what the insurance company will pay after the deductible and the second number is what you will be responsible for. You will continue to pay that percentage (after the deductible) until you reach a stop-loss provision or out-of-pocket maximum.

The stop-loss provision is the point where the insurance company will begin to pay 100% of a claim. Once your out-of-pocket expenses reach that limit, the insurance company will pay the rest. Without a stop-loss provision, you could be responsible for the co-insurance of an indefinite amount. For example, if you have medical bills of $500,000, your co-insurance clause is 80/20 and you do not have a stop-loss provision, you would be responsible for $100,000 of that particular bill. Make sure that your health insurance has a stop-loss provision for this reason! The higher the stop-loss, the lower the premium.

Let’s look at a comprehensive example for clarification:

Assume that John has an insurance policy with a $1,000 deductible, 80/20 co-insurance and a $5,000 stop-loss provision. Let’s also assume he has a hospital bill for $2,000. How much is he responsible for?

He is responsible for the first $1,000 of the bill due to the deductible. He is then responsible for 20% of the remaining $1,000 bill or $200. His total out-of-pocket expenses for this bill are $1,200. 

Now let’s assume he has another bill for $25,000 (due to a surgery) in the same year. Since he has already paid his deductible, he will go straight to the co-insurance. He will be responsible for 20% of the bill or $5,000. However, he has a stop-loss provision of $5,000. Since he already paid $1,200 from a previous bill, he will only be responsible for $3,800 of the surgery bill. This is due to having met his $5,000 stop-loss. The insurance company will now pay any additional bills that come in during the same calendar year. Keep in mind that these provisions and deductibles are on a yearly basis and reset each year. So in this example, if John has the same bills next year, he will have to pay the same amounts again.

• Health Insurance: Part 1 - Deductibles
• HMO vs PPO: And The Winner Is…..
• Make the Most of Your FDIC Insurance Limits
• Saving for Retirement in College?
• 10 Reasons Not to Pay for Your Kids College

Walter Updegrave, senior editor of Money Magazine, answered a readers question recently. Here is the question:

My 20-year-old daughter works two jobs and is going back to school part-time. Her father takes her paychecks and doles out money to her as needed. He thinks he’s helping her by doing this, but I think he’s hurting her. I worry that if she doesn’t start to manage her own money, she will have trouble in the future knowing how to pay bills, etc. What is your opinion?

Walter tells the reader to give her husband some credit for having an interest in their daughter’s finances. However, he also tells her that it will end up hurting their daughter in the long run when she is out on her own. I whole-heartedly agree with him on that one! When this girl gets a full-time job and it is living on her own, will her dad keep on paying her bills and taking her paychecks? I certainly hope not. If he does, she will have a hard time adjusting to life financially and personally. They need to begin to incorporate their daughter into her finances and teach her the proper way to manage her money. This is almost the same thing as one partner in a marriage managing all of the money and the other partner couldn’t tell you where their checking account is held. 

I personally know someone who’s father is like this. Every since she has had a full-time job he has taken her paycheck and paid all of her bills for her. No matter what they were. I think this seriously hurts her because one day, he is no longer going to be around. What is she going to do then? She is even married and this still goes on! 

Do you know anyone who’s parents take care of ALL of their finances? Do you know a married couple where one person knows NOTHING about their financial situation? Please share your comments.

• Carnival of Money Stories #73
• 10 Reasons Not to Pay for Your Kids College
• Move 2 Years Worth of Major Expenses to a Savings Account?
• Saving for Retirement in College?
• HMO vs PPO: And The Winner Is…..

I’ve decided to share with you some articles that I enjoyed this past week (and every week from here on out). I am going to call it ‘Friday Feed Frenzy’, which sounds appropriate since I am getting the feeds from my reader. Sometimes it is a frenzy to read all of them!

Trent over at The Simple Dollar had a great article on creating things vs. just consuming things. It was by far my favorite of the week.

Five Cent Nickel gives some great tips on how to save money on prescription drugs.

Pinyo over at Moolanomy has some great tips on Asset Allocation and pretty much everything that you need to know about it.

Ben at Trees Full of Money has a great article on protecting your identity and credit rating. It is a must read!

The Frugal Duchess lets you know the best and the worst credit cards and how to avoid the credit pits.

Jim at Blueprint for Financial Prosperity has 5 reasons your should donate your car instead of selling it.

I am hoping to get some more posts up this weekend as I know that I promised them to you! This week has been rather difficult in terms of school and it has kept me occupied. Have a great weekend everyone!

• Carnival of Personal Finance #167
• Addicted to Cheap Airfares?
• Avoid Your Banks Highest Rate Loan
• Make the Most of Your FDIC Insurance Limits

In a recent article by CNN Money, they mention the raw deal that you get from a banks overdraft protection. Typically, banks offer you this ‘protection’ and automatically approve a transaction, even if you do not have the money in the account. The convenience or overdraft fee for this can range up to $40 or more. So if you overdraw on your account by $1, you are slapped with a $40 fee! I really don’t think that you made out to well on that loan from the bank! Obviously, the higher the amount of the overdraft, the less the fee hurts.

Some banks are now allowing you to opt out of overdraft protection, meaning that if you overdraw, they will just deny the purchase (which may get you in trouble other places). Check with your bank to see if they do this. Other banks, like my credit union, allow you to link your savings account to your checking account in case you overdraw. For example, let’s say you have $100 in your checking and $500 in your savings. You write a check for $200 thinking that you have that in your checking. When the bank cashes the check, the bank will take $100 from your savings and automatically deposit it into your checking to cover the amount. The only problem with this system is that you have to have money in your savings account to cover it, which I do not. Some banks even charge for this convenience. Chase charges $5 per occurrence.

Here Are Some Tips to Help You Avoid Overdraft Fees

1. Utilize Your Banks Overdraft Protection Plan

If your bank offers you to link your savings account to your checking account, do it. Even if it costs money to use it, it is still cheaper than the alternative. I certainly would rather pay $5 instead of $40.

2. If You Are Hit With the Fee, Call Your Bank and Explain

This has happened to me several times. I did something stupid and sure enough, I overdrew on my account. I called up my bank and explained what happened. They were rather understanding and decided that since it was my first offense, they would take the fee off as a favor. They said that it would be the only time that they did it. Well, it happened to me again several months later and I called and they did the same thing. I guess the don’t have very good record keeping! So, be persistent and chances are you will have the fee removed or lowered.

3. Keep Good Records

Almost half of all overdraft fees are due to debit cards. Well all think of them as a huge convenience, and they are. You just need to make sure that you record them properly in your checkbook register. This will help eliminate many overdrafts. If you are unaware of you balance, you may make several purchases that put you over your balance and you will be slapped with a fee on each one.

4. Opt Out of Your Banks Overdraft Protection

Many banks allow you to opt out of the convenience of overdraft protection. If you feel that you will always be on the edge of a $0 balance, you might want to opt out.

5. Get Email Alerts

Many banks now offer some type of email alert. You can set it up to let you know if you are within $100 of a zero balance. They also offer other convinient email subscribtions that might be beneficial. I know my bank offers e-mail alerts if I am over a certain limit in spending categories for the month. This makes it a great budgeting tool.

Does anyone else have some techniques that they use to help combat overdraft fees? Does anyone have a horror story that they would like to share in reference to these fees?

• Avoid Payday Lenders Like the Plague
• Make the Most of Your FDIC Insurance Limits
• Savings Account for the 21st Century (at 3.9% APR)
• Baggage Fees Keeping You Grounded?
• Move 2 Years Worth of Major Expenses to a Savings Account?