Monthly Archives: September 2013

Young Business Start Ups

With the current job market, many students have asked me about how to start their own businesses. While being your own boss may sound like a good idea, there are many things to consider – first and foremost is whether you have the personality and drive to be a business owner.

Ask yourself:

  • Am I willing to work odd/long hours, holidays, weekends?
  • Do I always strive to do things better?
  • Can I work without supervision?
  • Am I an action-oriented person?
  • Am I driven to achieve results?
  • Am I incredibly persistent?

If you said “No” to any of those questions, then being a business owner may not be for you. But, if your answer was a resounding “Yes!” to ALL those questions, then here are some links to get you going:

Remember, it is a shark tank out there and it will take a lot of effort not to get eaten alive but with hard work, patience, and creativity you can survive and thrive!

Discount Plan or Health Insurance?

The following information is from the Federal Trade Commission, http://www.ftc.gov

Looking for health insurance? Make sure that’s what you’re buying, or you could find yourself on the hook for big medical bills with no way to pay them. That’s because what sounds like affordable health insurance may be a medical discount plan instead. Medical discount plans can be a way for some people to save money on their health care costs, but discount plans aren’t health insurance.

The Federal Trade Commission, the nation’s consumer protection agency, wants you to know that although some medical discount plans provide legitimate discounts, others take people’s money and offer very little in return. The FTC and its state law enforcement partners also have found that dishonest marketers selling these plans have tried to make people think they’re selling health insurance, or have lied about what their plans really offer.

Why Does It Matter?
If you buy a health insurance plan, it generally covers a broad range of services, and pays you or your health care provider for a portion of your medical bills. If you buy a medical discount plan, you generally are paying for a list of providers and sellers who may be willing to offer “discounts” on some of their services, products or procedures. Medical discount plans don’t pay your health care costs.

Question Discounts of “Up To”
“Discounts of up to 70%!” — but how often will you save that much? Savings with discount plans typically are a lot less. When you consider a discount plan’s monthly premiums and enrollment fees, there may be no “discount” at all. What’s more, if you have major health problems or an emergency, you will have to cover most, or all, of the bills if you don’t have health insurance.

Look at the Details
Medical discount plans aren’t a substitute for health insurance — nor are they the same as health insurance. Nevertheless, if you are interested in a discount plan, check whether the doctors you use participate. Call your providers, as well as others on the plan’s list, before you enroll or pay any fees. Some plan promoters may tell you that particular local doctors participate when they don’t, or they might send you outdated lists. Check out every claim, and get the details of any discount plan in writing before you sign up.

You Can Afford to Miss Out
Legitimate plans should be willing to point you to written information before you enroll. Pressure to sign up quickly or miss out on a “special deal” is your cue to say, “no thanks.”

Some Pitches Are After Your Information
Unfortunately, identity thieves also use pitches for medical discount plans and insurance to get your personal information. Don’t give out your financial information to someone who calls you out of the blue, or whose reputation you haven’t checked out. Check them out first at http://www.bbb.org, or the Texas Department of Insurance at http://www.tdi.texas.gov.

In 2005, the Texas State Attorney took action against a company for misleading people about these types of plans.  Check out the outcome of the lawsuit: www.oag.state.tx.us/oagnews/release.php?id=1088

Resources Are Available
The Texas Department of Insurance can provide a number of resources related to all types of insurance coverage in Texas. Visit their website at http://www.tdi.texas.gov. To learn more about medical discount plans at ftc.gov/health.

Toolkit Helps Teachers and Other Public Servants Tackle Student Debt

The Consumer Financial Protection Bureau estimates that more than 25 percent of the U.S. labor force is in public service. This includes teachers, librarians, firefighters, military personnel, law enforcement, first responders, nurses, and social workers. There are a number of special loan programs to assist these workers. For example, in 2007, Congress created the Public Service Loan Forgiveness program for public servants who pay their federal loans on time for ten years. People working at a nonprofit or those working for a federal, state, or local government are eligible for the program.

Many public service fields face major workforce shortages in the coming years. For many new employees in these professions, low starting salaries and low wage growth make repaying student debt a daunting obstacle. For example:

•Teachers: The United States will need more than 425,000 new teachers by the end of this decade to make up for the wave of retiring baby boomers, according to the National Center for Education Statistics. The average starting salary for a teacher is $35,672, according to the National Education Association.

•Nurses and other healthcare workers: The Health Resources and Services Administration projected that the nation’s nursing shortage would grow to more than one million nurses by 2020. The demand for nurse practitioners and other advanced practice nurses –professions that typically require graduate degrees – is projected to outpace supply by more than 25 percent by 2025.

•Police officers: Prior to the start of the recession, starting salaries for entry-level local police officers were as low as $26,600 per year in the smallest jurisdictions and the average overall salary was $40,500, according to the Bureau of Justice Statistics. Since 2008, state and local budget cuts have led to staffing reductions in law enforcement agencies across the country, contributing to the financial strain for new and aspiring police officers with student debt.

•Social workers: As baby boomers get older, the demand for social workers is expected to increase, requiring 161,000 new positions by 2020, according to the Bureau of Labor Statistics. Because social workers often have advanced degrees, the prospect of rising student debt may be particularly challenging. Recipients of graduate degrees in social work graduated with an average of $35,516 in student loan debt, according to the National Center for Education Statistics, pursuing an occupation with an average starting salary of just $32,000.

•Firefighters, EMTs, and paramedics: As a growing share of new firefighters enter the workforce with post-secondary education, the median salary for firefighters and other protective service workers is $29,205 and $31,900 for EMTs and paramedics, according to the U.S. Census Bureau.

•Servicemembers: The average cumulative amount of student loan debt for active-duty servicemembers graduating from college in 2008 was $25,566, according to the National Center for Education Statistics. There are approximately 1.4 million people on active duty in the armed forces, according to the Department of Defense.

A Toolkit to Help
To help employers provide information about loan forgiveness programs to their employees, the CFPB is unveiling a toolkit – the Employer’s Guide to Assisting Employees with Student Loan Repayment. The toolkit offers practical advice to public sector employers and employees, advising that an early start can make the difference of thousands of dollars. It includes:

•An action guide for employers that details the steps they should take in providing information to their employees, such as helping employees certify and checking in with them annually about their repayments;

•An action guide for borrowers that tells them how to qualify for benefits, what their options are, and important things they should consider;

•A sample letter from public service employers to employees that says they are a qualified employer under the federal Public Service Loan Forgiveness program; and

•A set of frequently asked questions, like how an employer can help his workers know whether they are in the best repayment plan.

Tips that the toolkit mentions:
•Taking advantage of the Income-Based Repayment plan, a federal student loan program that allows all federal loan borrowers to set their monthly payments at a fixed percentage of their income;

•Checking out Repay Student Debt, a web tool that can help borrowers understand all of their repayment options for both private and federal loans; and

•Including student loan forgiveness programs in benefits packages when employees commence work, during open season for benefits enrollment, and when sending out IRS W-2 forms.

The toolkit is available at: http://files.consumerfinance.gov/f/201308_cfpb_public-service-toolkit.pdf

An action guide for employees is at: http://files.consumerfinance.gov/f/201308_cfpb_pledge-action-guide-for-employees.pdf

Understanding Annuities

by Barbara Parrott McGinity, LMSW

We all get the postcards offering us a free lunch or dinner to come and learn how to invest for retirement. And in today’s environment where 401K plans and investment accounts have taken a hit, many folks who are already retired are worried their money will not last. Often times, the individuals offering the free food are insurance agents selling annuities. It is important to remember that free food comes with a hard sell, and more often than not, it is an investment product such as an annuity which may not be the best product for an older adult.
An annuity is a type of financial insurance contract that can accumulate value and provide a steady stream of income over a long period of time. For this reason, annuities are typically used to build retirement savings, although they can also be a tool to save for a child’s education, create a trust fund, or provide for a surviving spouse or heirs. Because annuity earnings may grow tax-deferred, people who are primarily concerned with limiting their taxes also frequently purchase them.
Annuities are not right for everyone. They typically take several years to become profitable. Therefore, they are not a good financial option for people with a short-term financial goal. If you’re considering purchasing an annuity, it’s a good idea to consult an accountant, attorney, or trusted financial adviser.
The following scenarios illustrate when an annuity might be – and might not be – a good investment:
• If you are already retired, an annuity is probably not a good option because it can take many years for the contract to become profitable. Annuities are generally best used to provide for retirement when purchased at least five to10 years before you retire.
• If you do not have any other investments or savings accounts, an annuity is probably not a good place to start. It is generally a good idea for investors to have at least some investments that can be quickly converted to cash in case of an emergency or sudden need. You may have to pay a substantial surrender charge – which can be as high as 25 percent – if you withdraw your money within a certain number of years of purchasing an annuity.
• If your financial goal is to generate a guaranteed income stream for retirement, certain types of annuities that make fixed monthly payments for the remainder of your lifetime can be a good option.
• If you have the financial discipline to accumulate and maintain your contract for the long term, an annuity can be a good option. Cashing in an annuity in the short term can result in significant surrender charges and could increase your tax obligations.
• If you’re currently in a high-income tax bracket, but expect to be in a lower tax bracket in the future, such as in retirement, an annuity can be a good choice because earnings are tax-deferred. This means an annuity’s earnings aren’t taxed while they grow, only when you actually make a withdrawal or receive a payment from the contract. If you contribute to an annuity while you’re in a high tax bracket and receive payments while you’re in a lower one, you will probably pay less in taxes than you would with other types of financial options.
• It is also important for you to consider your other debts, i.e., student loans, home equity loans, before purchasing an annuity.

New Credit Card May Help Protect Seniors from Scams

by Barbara Parrott McGinity, LMSW

This past week, I received an email about a new company offering a special, prepaid credit card designed to help protect older adults from losing money to scams and disreputable charity requests. At first glance, I was skeptical and thought the card itself could be a scam. But further research shows it might actually have value. Called the True Link Card, it can provide a layer of protection and help family members protect the vulnerable seniors in their lives.

How does it work? You register for a card online, then put money on the card through a bank account. The senior then uses this card to purchase items or make contributions to charities. How does this protect someone? Through the website, the family can actually block giving to particular companies or charities and they also receive notices of large expenditures for approval.
Where can this card be used? Anywhere Visa cards are taken.  Why do this? These are heartbreaking and, unfortunately, very common stories we hear on a weekly basis: 1) an elderly woman receives a phone call from someone claiming to be her grandchild asking for money and she wires money to help her out of a jam; 2) a late night infomercial offers a deep discount on dishware without mentioning the hundreds of dollars in nonrefundable shipping fees; 3) a senior is confused about being the winner of a lottery and wires thousands of dollars overseas; 4) someone calls them about the poor starving children and please give money and we will send you a picture of the child you are saving.

Besides the phone calls and internet scams, there are the unscrupulous repair people who charge alot of money for work that was not necessary and poorly executed. Or the magazine subscription people going door to door. If you take the check book away and replace it with this card, the seniors will be unable to be victimized by door to door crooks.

The owner of True Link came up with the idea as a direct result of dealing with his grandmother who was writing up to 75 checks a month to organizations posing as charities. Monitoring her finances was taking up a lot of time, and they were looking for a way to protect her assets while at the same time providing her independence.

And that brings us to the most difficult issue, taking away a person’s financial independence. The True Link card may be the answer to helping protect a senior’s nest egg from a distance, while at the same time giving them continued independence with some constraints. If you are interested in reading more about the True Link, you can go to http://www.truelink.com and determine if this is something that would be good for you or someone in your family.   Just remember, there can be just as many cons as pros, so think hard before going this route.