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Why Did My Car Insurance Go Up? 7 Things That Affect Your Car Insurance Rates

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Getting a good rate on car insurance can be really tricky. You have to fill out a bunch of online forms to get a quote. Then you need to compare all the plans and their coverage. By the time you finally choose a plan, you never want to think about your car insurance rates again.

So, there’s nothing worse than when you log in to pay your bill only to find out that your car insurance rate has gone up. If you’re angrily asking yourself, “Why did my car insurance go up?” here are some possible answers.

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Roth IRA for Your Teen

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The Roth IRA was created in 1997 and since has grown in popularity as a retirement savings vehicle, outside of employer-sponsored plans.

In this article, we’re going to discuss the characteristics of a Roth IRA and how it can be effectively used by teens for retirement savings.

How it’ll be structured

Since the children opening the account will be minors, the Roth IRA will be opened as a Custodial account.

The custodian (often a parent, grandparent, or guardian) will open the account for the benefit of the minor.

As the custodian, you are in control of the account until the minor reaches “the age of majority (18 or 21 depending on which state you reside). I live in Wisconsin. The age of majority is 18.

*The custodian can’t withdraw, remove, or transfer funds from the account under any circumstances.

Once of age, the child is able to do as they wish with the funds. With the correct guidance, these funds can accumulate and compound over several decades. 

The benefit

Adults can contribute by “matching” the teen’s earned income. The teen has to have earned income in order to open the account and make contributions.

For example, your teen earns $5,000 during the year. Theoretically, they could contribute all of it to their Roth. To encourage their money-saving habits and to show them the benefit, you tell them to save $2,500 and you match with an additional $2,500.

This provides an immediate reward/incentive to the teen and also helps illustrate how most employer-sponsored plans function.

Not only is this great for saving money, but it also instills the habit of saving. In my opinion, that’s even more important.

Additionally, if the minor can’t make a contribution (didn’t make enough, etc.) the custodian can still make contributions on their behalf.

Standard Roth Regulations

  • Contribution max (for 2019) is $6,000
  • Money grows tax-deferred
  • Money withdrawn is tax-free
  • 10% penalty if withdrawn prior to 59 ½, but there are exceptions
    • Medical expenses that exceed 10% of your adjusted gross income (AGI)
    • Health insurance
    • Disability
    • Qualified higher-education expenses
    • Death Distribution
    • First home purchase

For a more detailed list, click this link.

Comparing to other accounts

With regard to other custodial accounts, the Roth IRA is best for retirement savings. In terms of college savings, the 529 and the Coverdell ESA are far superior. If you’re looking for simplicity and flexibility, an UTMA/UGMA account will be your best bet.

Below is a brief explanation of each, followed by links to more detailed articles previously written.

  • 529 – A college savings plan that is exempt from federal taxes, if you use the funds to pay for qualified education-related expenses. Those expenses include tuition, books, room and board, computer equipment, and necessary supplies for students with special needs, as long as the student is attending at least half-time. (More on the 529)
  • Custodial IRA – Like the 529, the Coverdell ESA is an education savings vehicle for K-12 and secondary education. Coverdell ESA stands for Coverdell Education Savings Account. (More on the Coverdell ESA)
  • UTMA/UGMA – The UTMA and the UTMA are custodial accounts. An adult (the custodian) opens an account for the benefit of a minor. UTMA stands for Uniform Transfer to Minors Act. UGMA stands for Uniform Gift to Minors Act. The difference has to do with the age of majority, but more on that later. (More on UTMA/UGMA)

Conclusion

If you’re looking for an effective way to help your kids save for retirement, the Roth IRA is a great way to go. Please advise, that the child needs to have earned income in order to make contributions.

Related reading:

Why I Love the Roth IRA

How to Teach Your Kids About Money

Top 2020 Technology Trends That Will Dominate the Banking Industry

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The internet has changed every aspect of our society in the past ten years from the way we interact with our friends to the way we hail a taxi. Our entire lives can now be handled from the palm of our hand.

So what can we expect from 2020? We already know that 5G is rolling out and that will make the internet on our mobile phones even faster and better. But the one aspect of our lives that is about to change for good is the way we bank.

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Effective ways to earn money with Bitcoin

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If you want to start earning Bitcoin, you first need to open a Bitcoin wallet, which is used to send, receive and store your currency. There are several ways to make money on Bitcoin, with which you should definitely get aware with those who decided to make money in this way. Each of the methods is proven and can be successfully used to generate good income. Simply you can visit the site immediate-bitcoins.com and earn money. [Read more…]

Facing mortgage foreclosure? Can you avoid it?

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Foreclosure is imminent when you fail to pay your mortgage. The lender can use this legal mean to repose your house when you don’t pay them. If this happens, you lose your home. And if your house doesn’t worth enough to cover the mortgage, the lender will pursue a deficiency judgement. And when this happens, you not only lose your house, you also have to pay them an additional amount. And the worst part is that foreclosure and a deficiency judgement impact your credit score. So, the smartest solution is to find a way to avoid foreclosure. 

If you need guidance, this article can prove helpful. 

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How to Succeed this Year

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A New Year often brings lofty goals. I want to get in shape or I want to get that promotion, but how often are our yearly goals about our finances?

In this post, we’re going to talk about some of the things you can do to set yourself up for financial success this year.

Put your credit cards away

For the vast majority of people, credit cards hurt more than they help. If you’re financially responsible and pay off your balance right away, they’re an extraordinary tool. For everyone else, credit cards often come with financial pain.

Don’t close your credit card (more on that in this post, here). Take it/them out of your wallet and delete them from your “payment options” on Amazon and/or any other online retailers you frequently visit.

The easiest way to avoid temptation is to take it away. Avoid using your credit card(s) this year.

Pay yourself first

Before you spend a single dollar, set some money aside for yourself.

What you do with that savings will vary. Everyone should have an emergency fund. Ideally, 3-6 months’ worth of expenses.

At the very least, have $1,000 set aside for emergencies, and then build up from there.

Once the emergency fund is set, start building an account for short-medium term goals. A new car or a down payment, are two examples of short-medium term goals.

Last, but not least, you need to save for retirement. This should be its own line item on your budget (more on that below), but it’s something that requires intentional savings each month.

Savings

Your saving methodology, or how you save, deserves it’s own section because often times, we save after we spend.

We need to flip that around. You need to save BEFORE you spend. When you budget (make a spending plan), there are several line items.

What you pay, in order, should be necessities, savings, and then excess spending.

Additionally, your savings rate shouldn’t stay stagnant. It should constantly be adjusted. At the very least, on an annual basis.

Run the numbers. Do the math and figure out if you can spare another percentage of your salary, or another $5/month.

Invest in yourself

There’s no better way to improve your year than to improve yourself!

Put healthy habits into practice. Read, exercise, meditate, hang out with friends, go for a walk. The list is endless.

Some of those activities have compounding benefits. Walking is great exercise and is also meditative.

“An investment in knowledge pays the best interest” – Benjamin Franklin

Audit your spending

Figure out where all of your money is going. I typically look back three months, but Holiday shopping is there, so that will distort your spending a little.

If you can, audit October, November, and December, and remove any item that isn’t normal (i.e. gifts/presents).

Once you have a good grasp on how much you’re spending and where you can develop a budget.

Make a spending plan

My term for budget, as the word “budget” has negative connotations tied to it. Using your spending audit, create a spending plan.

  • List your necessary expenses – rent, utilities, groceries, travel, insurance, debt payments, savings
  • List discretionary spending – fun money. Give yourself an allowance here, but keep it reasonable.
  • Monthly income – What do you bring in each month.

Once you have these items listed (debits and credits, respectively) compare the two. The resulting number should be positive. Make adjustments accordingly.

A financial plan isn’t something that’s set in stone. It’s a living organism that’s constantly changing.

Be generous

If there’s one thing that’s been proven (time and again) it’s that helping other people makes you feel good. However, the reason for being generous shouldn’t be the dopamine rush that follows, it’s to help someone/something that needs it.

Whether that’s a stranger at the store or a cause that you strongly identify with, do what’s right. Live to serve.

Holiday Savings

Start saving now! December sneaks up quickly, and before you know it, you’re spending hundreds of dollars on things you didn’t budget for.

Save a little bit each day, week, or month. Whatever you’re comfortable. I encourage you to figure out what you think you’ll need for the Holidays and break it down.

Discern what is manageable for you and put it into practice.

Related Reading:

Holiday Spending and Saving

Your Go-To Budget Guide

How to Cut Your Spending

My Goals for 2020

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Now that we’ve turned the calendar to another year, another decade, it’s time to figure out what goals we would like to set.

Specifically, in this post, I’m going to go over the goals that I’m setting for myself, why I’m setting that goal, and how I’m going to put a system in place to achieve that goal.

What are my goals for 2020?

  • Get out of debt – Bought a house in 2019 and bit off more than I could chew. Other life events have also thrown a wrench in my financial planning.
  • Save for retirement – I’ve put my savings on hold for the time being due to poor financial decisions that led to the debt, etc.
  • Incorporate a meditation practice – I’ve harped on it and studies show how much it helps. I need to do this.
  • Journal every day – When I remember to journal, those are generally good days. I need to do this consistently.
  • Read every day – Reading can only help me, so why wouldn’t I do it more? I’ll learn something new and it’s shown to provide some meditative benefits.
  • Spend more dedicated time with my son – I’ve found myself over the last month or so having my phone out more than normal. I mean, I’ve had quite a lot going on with work and mentally, but that’s no excuse. He deserves better.
  • Exercise regularly – it’s good for my body and my mind. It’s a must.

Typically, when you’re setting goals, you should be very specific. You’ll notice, that I wasn’t. I get more granular with my goals in the systems section.

My systems

Getting out of debt and saving for retirement we can lump into one system, as they both revolve around finances and me reigning in my spending.

Until April, this will be incredibly challenging, as I am currently paying my mortgage on my house and the rent for my apartment.

So until I get my house rented (I have tenants set to move in, in April), I’m kind of stuck. Once that happens, however, I’ll have the debt repayment pedal down to the floor.

Simultaneously, I’ll contribute $20 per month to my retirement account, just to get in the habit of doing it again. Start small, enforce the habit, then increase the dollar amount.

Meditation

Of my goals, incorporating meditation practice should be relatively easy. I know my preferred style – I’m not one to sit pretzel-legged on a cushion. I lay down on the floor, on my back, which some relaxing music playing.

The hard part is a) making the time for it and b) doing it consistently. To start, I’m going to set my alarm for 5 minutes earlier than normal.

5 minutes might not seem like a lot, but if I wake up 5 minutes earlier, that gives me 5 minutes to meditate. If I do that consistently for the next, say three weeks, those extra 5 minutes won’t seem that, and I can scale it to 10 minutes.

As I noted in last week’s article, when forming a habit, you have to start small and then scale up.

Reading

Reading every day. This is a must-do for me. It’s good for my mind, it’s good for my soul, it’s good for everything. I have a great many books on my list, but they will all fall into a specific genre – finance, philosophy, religion, or biographies.

The first one will help with work. The last three will help with life.

Every day, before bed, I’m going to read for 15 minutes. That’s my starting point. Once I get into the habit, the amount of time I read will increase.

Spending time with my son

Spend more dedicated time with my son. This is an easy one. Just stay off my gosh darn phone.

Keep it in my room or in the kitchen. Not in my pocket, where I can easily access it. Put the ringer on and leave it alone.

If it’s an emergency, someone will call and I will hear it.

This will also eliminate a distraction, so if he goes to bed for the night, I can immediately pick up a book without getting sucked into the social media black hole.

Exercise

Exercising every day. I read recently in a book about the Dalai Lama that exercising your mind is more important than exercising your body, so I’ve put that on the back burner.

I have a pull-up bar in the doorway to my bathroom and I do 5 pull-ups every time I go in, but that’s not enough dedicated, consistent time for exercise.

I think doing it in the morning makes the most sense. I’m too tired in the evenings to exercise. The question is, do I do this before or after meditation?

Probably after, as I need my mind at ease when I meditate.

So instead of waking up 5 minutes earlier, I’ll start by waking up 20 minutes earlier. Dedicated 15 of those minutes to exercise and the remaining 5 for meditation.

Related reading:

A Systematic Approach to Goals

Worthy Goals for You to Set and Crush

How Do You Set Financial Goals?