Tag: Financial planning

Selecting an Insurance Plan

Published on by JesseLeave a comment

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.

Public Service Loan Forgiveness: Temporary Waiver and an Oct. 31 Deadline

Published on by DorothyLeave a comment

As the “Breathing Room” name implies, this blog is intended to offer you a break from life’s deadlines, stressors, and workloads, and give you a chance to take a breath, focus on yourself, and enjoy.  But, if you….

  1. Have federal student loans
  2. Are employed by any type of government or nonprofit organization
  3. Want to qualify for loan forgiveness under the Public Service Loan Forgiveness (PSLF) program, and
  4. Want to make sure you receive maximum credit for your participation,

don’t take a break quite yet.  Now is the time act before the October 31, dare we say it, deadline.

The Public Service Loan Forgiveness Program (PSLF), was created to increase the applicant pool for government and nonprofit jobs. PSLF is a federal program designed to provide an incentive to attract job seekers to employment in much needed, but often lower paying, service work. A component of the 2007 bipartisan College Cost Reduction and Access Act, PSLF promised to forgive the outstanding federal student loan debt for qualifying workers once they have made 120 monthly payments. However, the program was created without a clear, long term plan for implementation. With legislative and executive branch turnover, problems arose.

Public Service Loan Forgiveness had strict qualification requirements (which you can read about here,) and required specific action steps (which you can read about here,) to maintain that qualification.  However, once eligibility began in 2017, many individuals had their PSLF application rejected because of missed requirements, poor guidance, and misunderstandings. Many fixes were implemented over the ensuing years.

PSLF Waiver. In late 2021, the US Department of Education announced a short term PSLF Limited Waiver. As the name implies, the Waiver, which is set to expire on October 31, 2022, waives many of the original qualifying requirements. For a limited time, payments made under the wrong loan type, payments made late, and payments made prior to a new consolidation all count.  Additionally, educators who receive teacher loan forgiveness can count their qualifying time towards PSLF, and active-duty service members can count months of deferral or forbearance toward their 120 qualifying payments.

What, specifically, has changed for the Temporary Waiver until October 31? Here are a few of the major items:

Consolidated loans. Previously, consolidating student loans restarted the 120 payment count. Under the Waiver, payments made prior to the new consolidation loans now count.

Loan type. Under normal PSLF requirements, only payments for Direct Loans counted. Through the Waiver, borrowers receive credit for payments made on FFEL or Perkins loans as well. But, they MUST be consolidated into a direct loan before the October 31 deadline.

Teacher Loan Forgiveness. Teachers have their own loan forgiveness plan which provides limited dollar forgiveness after five years. Normally, outstanding loan balances would then also be eligible for PSLF after another 120 months. The Waiver allows those two time periods to run concurrently, and payments made during the teacher forgiveness window now count toward the 120 PSLF months.

Payment Plan. Payments made under graduated or extended payment plans are now accepted under the Temporary Waiver, but the loans must be consolidated into an income-driven payment plan prior to the October 31 deadline.  

Late and Partial Payments. Previously not counted toward the required 120, late and partial payments are now being retroactively added to the total needed to qualify. This should be done automatically, but borrowers should check. Similarly, certain periods of forbearance or deferment now count. This is a particular benefit to active duty military members.

This post is not a comprehensive list of changes under the Temporary Waiver. Check with your servicer, read through the government-provided information at StudentAid.Gov, complete the required forms and other actions by the October 31 deadline.

Then, breathe!

Dealing With Inflation!

Published on by JesseLeave a comment

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?

Published on by JesseLeave a comment

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. 

Resilience — Rooted in the Land

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Farming is more than a job—it’s an identity that adds meaning to life. It is often a calling.

Farming is a frequently a multigenerational enterprise on land passed down through the generations. Farming adds a weight of responsibility and pressure to meet expectations of previous generations and not fail the next — to not lose the family’s cultural heritage. This drive to survive and thrive can be both a source of stress and a source of resilience.

Farming ranks in the top 10 most stressful occupations in the U.S. Farm and farm family stress, more accurately, distress, is brought on by pressures within individuals and families, farming systems and the farm as a business.

If you are in the business of farming, or working with someone who is, you know that along with the ordinary stress of life, farming has added sources of stress. Extreme weather, changing markets and commodity prices, episodes of animal and plant diseases and other events all bring added pressures and threats.

So how is it that you and your family can face multiple stressors and keep on farming? Research says it’s by being resilient.

I farm because it’s in my blood. You get done planting a field and you turn around and the sun’s setting over the pattern of the crops that you’ve just planted, and it’s a pretty rewarding experience to see all the hard work pan out and know that you’re helping to feed families throughout the Mid-Atlantic.

Mike Harrison of Woodbine, Md.

Resilience

Resilience is an asset that enables you adapt to meet challenges and changes of the times. According to the American Psychological Association, resilience is “the process of adapting well in the face of adversity, trauma, tragedy, threats or significant sources of stress such as family and relationship problems, serious health problems, or workplace and financial stressors. Resilience means ‘bouncing back’ from difficult experiences.”

Most farmers and farm families are optimistic. They draw on their values to get them through challenges. When life’s events are really hard, deeply held values become the motivation to draw on resilience to bounce back or bounce forward after recovering from the initial set back.

So ask yourself:

  • Do you draw on resilience resources like managerial skills, self-control, self-compassion, optimism and hardiness to prevent and deal with stress?
  • Have you drawn on the value of hardiness to get through?
  • Do you recall other challenges and how you, your family and past generations were able to get by?
  • Are you motivated to succeed for the next generation?

How critical is the value of resilience, of adapting to conditions to survive and thrive? It’s imperative and for farmers, driven by generational heritage. Multi-generational farms exist because farmers adapted to change. In the past three years, Maryland farmers, and other farmers, have experienced multiple challenges.

Those who are best able to adapt quickly are those most likely to withstand tests of their ability to survive and thrive. They are those who are resilient are most likely to succeed because they get great satisfaction from what they do. Farming is in their blood. They draw on resilience from being are rooted to the land.

Find resilience-building resources:

Farm Stress Management – University of Maryland Extension

Managing Farm and Farm Family Challenges Resiliently: A Worksheet to Explore Resilient Thinking and Doing – University of Maryland Extension and University of Delaware Cooperative Extension

The Road to Resilience – American Psychological Association

This blog was written by special guest blogger Bonnie Braun, Professor Emerita, Extension Family Health Policy specialist and professor in the Department of Family Science in the School of Public Health at the University of Maryland.

Investing Basics: Buy Nikes, or Buy Nike? 

Published on by DorothyLeave a comment

Which would you prefer to own: a pair of Nike Air Jordan Deluxe Year of the Dragon™ shoes, or some of Nike Corporation? There could be many reasons to select the shoes. Clothing is a necessity, and if you play a sport, having the right footwear can help performance and protect from injury. Shoes might be desirable for the image they project or the way they look you wear them. Nike shoes could even be considered a collector’s item. But if you have an investing mindset, you might consider owning a piece of Nike Corporation instead. 

Let’s discuss what that means.

Investing is buying something with the expectation that it will make money for you, usually by increasing in value.  You won’t have the actual money to spend until you sell your investment. Investing is different than saving money. Saving is setting aside money instead of spending it, so it can be used for something later. Savings are usually safe and available when you need money to spend.

How can someone who is not a billionaire buy Nike Corporation? The answer is to buy Nike stock. Most large corporations are publicly owned, meaning individuals can buy and sell pieces of ownership in them. The ownership is represented by shares of stock.

Companies need money to grow. One way to raise this money by issuing and selling shares of stock.  They use the money to build new factories, develop new technology, hire more workers, and buy more resources for making products. Stocks in large companies, such as Nike, are traded on the stock market.  Anyone can open an account with an investment company and request to buy and sell stocks. 

Now let’s compare buying Nike shoes to buying Nike stock. The Air Jordan Deluxe Year of the Dragon was introduced around February 15, 2012. Depending on the seller, the shoes could be purchased at an average of approximately $290. The shares of stock were selling that same day for $23.70, so 12 ¼ shares could be purchased for the cost of the shoes.  Ten years later, the same shoes new could be sold for $200, but the stock was worth $1,777! 

ChoiceMoney Spent February 15, 2012Value February 15, 2022 (average)
Buy Nike Air Jordan Deluxe Year of the Dragon™ shoes$290$200
Buy Shares of Nike Stock Instead (12 ¼ shares)$290$1,777

It is important to know that buying stock can be risky, and shares can decrease in value. Shares can even become worthless. It is important to research and select stock purchases carefully. Nike was used in this example because it is a product that people like to buy. That is a good consideration when choosing an investment. 

Wise investors understand the company that they are buying, as well as their products or services.