Author: Jesse

Dr. Jesse M. Ketterman, Jr. works as an Extension Educator for University of Maryland serving Allegany, Garrett, and Washington counties focusing on financial and health insurance literacy. He began his career in the University System of Maryland in 1999 working in student affairs leading wellness related initiatives and transitioned to Extension in 2016. Dr. Ketterman earned a PhD in Educational Leadership from Touro University International, Masters’ degrees in Business Administration and Education from Frostburg State University, and a Bachelor’s Degree from West Virginia Wesleyan. He is an Accredited Financial Counselor.

Selecting an Insurance Plan

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Open Enrollment for Marketplace Health Insurance plans is right around the corner. In fact, this year it runs from November 1, 2022 through January 15, 2023. For information about Marketplace plans visit Healthcare.gov. For this blog, I want to discuss items to consider when selecting a health insurance plan. The Smart Choice workbook provides guided steps to selecting an insurance plan.

One of the first items to consider when selecting a health insurance plan is how you are currently using your health insurance. Do you have a primary care provider? Are there specialists that you work with? Sometimes we are connected to the medical professionals we currently visit. If that is the case, when selecting a new plan you want to know if those providers are in the new plan’s network.

You should also consider how you plan to use the insurance in the coming year. For instance, are you planning a surgery or considering expanding your family (having a baby)? If so, you want to review the Summary of Benefits document provided by the insurance company, which explains what, and how much is covered. This information can be found on the health insurance company’s website.

Another item to consider is the costs. Plans will have monthly costs (known as premiums), out of pocket costs, deductibles, and out of pocket maximums. Typically, lower monthly costs mean a higher deductible. Just make sure you pay attention to the overall costs, not just how much it will cost you monthly. Keep in mind that if you have the higher deductible, you need to have money set aside to cover it. I just shared a few items to consider and there is much more. The Smart Choice workbook can walk you through the process of selecting an insurance plan to meet your specific needs. The fillable workbook asks important questions that assist you in comparing insurance plans. It includes definitions of terms used with health insurance that can be confusing. The workbook is one of many tools offered by the Health Insurance Literacy Initiative (HILI). Additional resources are available on the HILI website. There will also be a fall series with workshops on choosing a health insurance plan, understanding your health insurance plan benefits, and healthcare options in your senior years.

Ready, Set, Go Tax Free Week!

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People are starting to wind up their family vacations. With that comes returning to school. One of the pros of this time period is that many states offer a tax free week or weekend (that is if your state charges a state sales tax). So why should you care? It saves you money. People are finding it more and more difficult during this time period to make ends meet. Shopping during tax free week or weekend is one of those strategies you can use to save a little money.

Think about this. In Maryland, the sales tax is 6%. This means for every item of clothing you buy; you pay a 6% sales tax. For example, if I bought a shirt for $50, I would pay a state sales tax of $3. So let’s say, I bought $500 worth of clothes for my family during tax free week. I just saved myself $30. Some of you may think “that’s not much” but every little bit helps.

Now each state has its own set of rules when it comes to tax free week or weekend. In Maryland, it is a tax-free week that begins on the second Sunday of August. This year it begins on August 14th and end on August 20th at midnight. It applies to qualifying clothing and footwear under $100. It also applies to the first $40 of a backpack or book bag. If you are looking for a good summary, you may find this information sheet helpful. For detailed information about Maryland’s tax free week, visit the Maryland Comptroller’s website.

So, I mentioned that not all states offer a tax exempt week. That led me to look around on the internet to find out which states offered the incentive. I found two websites containing interesting information about state taxes. I am not endorsing either site. I am just sharing what I found. I encourage you to visit each state’s website for specific information. With that said, this website provides a list of states that offer tax exempt weekends or weeks. The other website I found interesting includes information about sales taxes for each state.

Well that’s my tip for the month. Enjoy the rest of the summer. Take advantages of the time now before you start your busy fall schedule.

Dealing With Inflation!

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How do we deal with inflation? The cost of goods has increased around 8% over the past year. The income for most has remained constant or only slightly higher during that time. If you are not careful, you will find yourself spending more than your income. Unfortunately, many people don’t notice as they use their credit card to make up the difference or don’t notice until they receive their credit card statement. I want to share a few simple strategies to offset some of the increase.

The price of gas is one of those areas with the largest increase and therefore the first tip is to drive less. This is accomplished by planning your trips. We like the convenience of getting items when we want them. Consolidating trips can reduce the amount of gas used as well as the wear and tear on your car.

Have you ever used coupons? Maybe now is the time to start. Using coupons can reduce cost and in some cases provide you with free items. Look around coupons are out there. A simple search on the internet can provide you with a list of sources. You also get them in the mail or newspaper.

Use your merchandise cards. The gas station I use has a merchandise card. I scan the card and instantly get 3 cents off my gasoline. It also provides me with a free doughnut and coffee on occasion. Many grocery stores offer them as well.

If you are purchasing large items like a refrigerator or even a car, think about delaying those items for a few months. When it is time to purchase, compare prices. The recommendation is to compare prices at three different locations. You would be surprised how stores mark up prices on certain items to reduce prices on others. Their goal is to get you in the store. Your goal is to save money!

Think about a household audit. You don’t realize how many items you have drawing power that you are not using. Unplug it! What about those lights? Turn them off when you leave the room. Now your thermostat, adjust it a little higher in the summer and a little lower in the winter. Remember, little things add up.

I also need to emphasize the importance of a spending plan. You need to know where your money is going. Analyzing your spending plan will inform you of the habits you developed like buying coffee every morning. It may not seem like much, but every trip costs you $2-$10. 

These strategies may seem simple, but little things add up. Be savvy and save!

Making Sense of Cents

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With the start of summer, I thought I would share some resources available for youth about money. Teaching youth about money is like building a strong foundation for a house. The strong foundation will last a lifetime and support everything that is built on top of it. For example, early discussions about the difference between wants and needs is a simple concept that youth can understand. An individual needs to eat, but they don’t need the candy bar at the check-out line. This blog will focus on resources, especially books, that teach youth about money.

So let us begin with the Money as You Grow materials available by the Consumer Financial Protection Bureau (CFPB). The site contains materials for all ages of youth, but for this blog I will focus on resources for younger youth. There is a list of books suggested that focus on money skills which can be found at Build your child’s money skills while you read. There is also information on ideas to keep reading fun and a guide for parents.

Another great resource is the Federal Reserve Bank system. Each regional office has a host of financial resources. The two that I primarily use are the Federal Reserve Bank of Cleveland and the Federal Reserve Bank of Richmond. There include both online games as well as printed materials. I like to use the Great Minds Think: A New Guide to Money and My Money. Both are workbooks that can be ordered or downloaded which include several activities that promote personal finance.

If you would like a broader search you can use the Jump$tart coalition. There are over 100 organizations and state coalitions that make up the coalition that focuses on advancing youth financial literacy. Their site includes a list of resources. A quick search of children and money found 162 resources available.

I would also invite you to check out my Extension colleagues in 4-H and Family and Consumer Sciences. There are local offices in every county, in every state in the U.S. A resource available to you from 4-H is Reading Makes Cents. This booklet includes 53 activities focused on saving, spending, sharing, earning, and borrowing.

I encourage you to take a step forward and teach your youth about finances. As you are aware, this is a topic youth will deal with throughout their lifetime. With that said, start your youth on a solid foundation.

Should You Use an FSA?

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My sister asked me the other day if she should set up a Flexible Spending Account (FSA). Of course, my answer was yes! You’re able to set aside money for healthcare or childcare/dependent expenses on a pre-tax basis when you create an FSA. In her case, she was asking this question because she is in the re-enrollment period for her company-sponsored health insurance. Many of us are in the same boat, that have healthcare plans that begin July 1st.

A flexible spending account is a great, tax-advantaged tool that can help you save for health and dependent care expenses. Tax-advantaged means you can automatically transfer money from your paycheck into the FSA, prior to taxes being taken out. It is a win-win. You save money on taxes and have money set aside for eligible healthcare and dependent care expenses.

Tax-advantaged or pre-tax dollars means that the money is set aside before taxes (Federal, FICA, and State) are taken out of your paycheck. Setting money aside in this way, before taxes, has two benefits: (1) Setting this money aside before taxes lowers your end-of-year tax bill. When the money is set aside, prior to taxes, it is though that money never existed. (2) Because the money is going into the FSA account before taxes are taken from it, you get a little extra – because the taxes were not deducted.

The draw-back to an FSA account is that it’s a “use it or lose it” account; you either use your money by the end of the year or forfeit it. Calculating how much you want to put into the FSA account is very important and if this is your first year using one, I suggest that you underestimate. Although, there is some flexibility as you roll into the next year, and you can reassess your needs during your open enrollment period. For more information, read the factsheet that I co-wrote on Flexible Spending Accounts. 

Dealing with Debt

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If you have been keeping up with my blog articles, I wrote two blogs about inflation. That is because I am concerned – between the economic stimulus money, the advanced child tax credit, and increased prices, people are over-spending. Additionally, there are individuals that count on their tax refund check and may not be getting it, so I want to provide you with 3 tips for dealing with debt. 

Step 1: Know what debt you have

A good starting point is gathering information on the debts that you have. This may come from loan agreements in your files or statements you received in the mail. Another source of gathering this information is your credit report, which can be obtained from AnnualCreditReport.com. The Your Money Your Goals toolkit contains a Debt Log tool to make it easy to assemble the information in one place or you could gather all the information on a piece of paper. Information needed includes the name of the debt, payment due, total amount left to pay, and interest rate. 

Step 2: Develop a plan

You have all the information, now what is your plan? There are two strategies to tackle debt, the snowball method or the highest interest method. There are pros and cons to both. The debt snowball focuses on getting rid of the smallest debt. Once it is paid off, you can apply the money going towards that debt to the next lowest debt. The other strategy is to focus your efforts on paying the debt that will cost you the most money (the highest interest). You can determine what will work best for you and your situation. What’s more important to me is that you have a plan and develop a SMART goal. Here is a good tool to develop SMART goals.

My Extension colleagues from Utah State University developed a program that can assist in developing an approach to tackle paying off your debt. It is called PowerPay.org. You can enter information about your debts and explore scenarios to customize your strategy.

Step 3: Assess along the way

It would be nice if life was perfect, but it is not. You may run into bumps along the way such as an unexpected car repair, broken appliance, perhaps you had to change jobs – don’t worry, life happens. As you try to figure it out, return to the basics. Are my purchases addressing my wants or needs? You know the answer to that question. Small decisions add up quickly, such as eating out less and choosing lower cost options. As your situation stabilizes, go back to step 2 and revise your plan. 

Now I could add a step 4, but will use this one as my closing. Believe in yourself. No one knows you better than you do. Sometimes it can be difficult to see the light at the end of the tunnel. Remember, you can do it! Stick to your plan and you will get there.

Inflation – What is it?

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One thing that we all know for sure is that the price of goods is going up. A gallon of milk in 2020 cost $3.32. Over the past year it increased by 6.9% to $3.55 per gallon. The increase in the cost is referred to as inflation. The Bureau of Labor Statistics (BLS) defines inflation as the overall upward price movement of goods and services in an economy. 

Often referred to when we discuss inflation is the Consumer Price Index (CPI). This is the change overtime in the prices paid for a basket of consumer goods and services. Those items fall into eight major groups; food and beverages, housing, apparel, transportation, medical care, recreation, education and communication, and other goods and services.

There are a lot of factors that impact the costs of goods. Simple things like the increase in cost of labor and materials make the price go up. If the workers are paid more than the price will increase to offset the increased expense or the price of gas to transport, will increase price. Then there are more complicated issues like interest rates, government policy, and supply vs. demand. In general, an inflation rate of 2% would be considered average. Right now, the inflation rate in the United States is around 7% to 8%. For most of us, our salaries have not increased at the same rate, meaning we have less money. This is why it is important to start tracking your money.

Now I could go down the road that you need to create a budget, but I am not going to do that. Instead, I will respond with a question. When the cost of goods you typically buy (like gas and groceries) go up, where will you get the money to pay for those goods? 

The answer is you will need to increase income (money you make) or decrease expenses (buy less). Unfortunately, you’re not likely to get a raise at work that will cover the increased costs. Your other income options include getting a new job that pays more, getting a side job, or selling goods you no longer need or use. Options to decrease expenses often involve a change in habits. Some good habits include being a frugal shopper by looking for deals, eating out less, consolidating trips, and evaluating your wants vs. needs. Some not-so-good habits include not tracking your expenses, using credit cards, paying your bills from your savings, and reducing your savings. 

At this point, you may consider making some changes to your personal finances. There are lots of good materials out there. One source that I like to share is the Your Money Your Goals toolkit, by the CFPB. The toolkit includes tools and handouts to set goals, track income, pay expenses, and plan your spending.

America Saves Week – *Special Report*

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Did you know that this week — February 21-25, 2022 — is America Saves Week? Do you even know what it is? America Saves Week or ASW is a call for Americans to commit to saving. Organizations sign up as partners to promote and facilitate programs that are occurring throughout the week.

This year’s theme is Building Financial Resilience. What an important topic as the price of goods has increased over the past months. Money you had last year, will not go as far today.

For ASW each day will have a theme:

  • Save Automatically – Monday
  • Save for the Unexpected – Tuesday
  • Save for Retirement – Wednesday
  • Save by Reducing Debt – Thursday
  • Save as a Family – Friday

Visit the website to find out what is being offered on each day.

Now that we have introduced the topic of savings, let’s talk details. You need a starting point and direction when it comes to savings. There are lots of financial tools out there, but I will share the Your Money Your Goals (YMYG) toolkit by the Consumer Financial Protection Bureau. You need to start with a financial assessment and goals. This is like driving a car. You need to know where you are at and where you are trying to go. Along the way you need to track your income, pay your bills, and deal with debt. The toolkit has worksheets on all of these topics.

So now you know about America Saves Week. The next step is to get involved in activities promoted. Then start your own financial journal using the tools in the YMYG toolkit. Along the way if you have questions, find your local Extension Educator that focuses on financial literacy. If you are not sure where to start, just reach out to me.