Archive for Nov, 2012

The US Economy Growing (GDP) at Good Rate, Is It Enough?

The Commerce Department announced Thursday that the Nation’s Gross Domestic Product (GDP) increased at an annual rate of 2.7%, for the third quarter. Is it time to celebrate that the economic recovery has arrived?

GDP tracks the size of our economy by calculating the total dollar value of all goods and services produced over a specific time period in comparison with the previous quarter. For 2012 GDP slumped to 2% in the first quarter, and 1.3% for the second, so the announcement of 2.7% for the third quarter is good news.

Is this a great indication you might ask? Well any increase is good, however this would only add up to 2.1% for 2012. Looking back at the most recent recessions, from a presidential term perspective, provides some challenging information.

  • Economic recovery under Ronald Reagan, GDP averaged 4.4% from 1995 – 2000, assuming you take out his first two years in office, where there was negative GDP, as it took some time for his policies to take affect.
  • Bill Clinton took office in weak economic times, but not nearly as bad as Reagan. Under Clinton, GDP averaged a decent rate of 3.1% from 1994 – 2000. This assumes you don’t take into consideration his 1st year in office, when there was negative GDP.
  • Under President Barack Obama it has averaged 2.1% if you don’t include his first year with negative GDP. How does this compare to those other Administration’s first few years in office? In Reagan’s first 3 good years GDP averaged 5.3%, and for Clinton it averaged 3.4% for his first 3 good years in office.

In conclusion: The economy is growing at a much slower rate that it needs to in order for it to lift unemployment, prevent more middle-class people from sliding into poverty, and to help those stuck there. Fiscal Cliff, Federal Debt, unemployment, and global economic crisis will continue to weigh down progress.


Budgeting For Extra Charitable Donations

Here is a cool idea, consider adding a new category to your monthly budget for ‘special giving.’ While doing some budget planning with the program we use; YNAB, or You Need a Budget, I noticed for some months throughout the year, we gave to various causes. This was in addition to our regular giving.

This got me thinking, wouldn’t it be really good if for every month, we made a special donation to groups or people that we saw in need. Doing our regular monthly tithe seems mundane, from the standpoint that it is just a regular habit. Don’t get me wrong, I actually get excited to do it, because I feel it is an honor and privilege to be able to give. But on the other hand, I don’t always get to see who it helps, or have a more direct effect on a single person or special cause I like.

I asked my wife if she wanted to carve out an extra amount each month for special giving, either to organizations, or people that we want to help. She said yes- she was all for it. We are starting out with a pretty small amount that we can afford. We have only been doing this for a couple of months. It has helped with my electronic budgeting too, because now we have a place already in our program to track it- I’m kind of a nerd, and I like the numbers to match up. This helped us give to a group feeding the poor last month, and a special offering to help families that can’t afford Christmas for their children this month.

The YNAB software program is really easy-to-use, and I can add extra categories, or sub-categories to accommodate this change to our budget. YNAB can be used on PC, Apple, iPhone or Android devices.

I’m not mentioning this to bring attention to myself, because that is a really bad thing to do I think, but to give you an idea to try. Giving this way is fun and freeing. It frees me from some money worries- strange how generosity does that. Givers usually are blessed more in return in the long run than they ever give, but that shouldn’t be the motivation, but it is a cool thing that seems to happen.

Do you think this is a good idea? Also, if you already do something like this, or if you try it, let me know how it goes.

How to Deal With Perceived Employment Age Discrimination

Is your age in the 50′s or 60′s, and you are looking for a new full-time or part-time job? Do you think you are unlikely to get hired because you are too old? Do you feel age discrimination is really big, and is a barrier when you go to an interview? Job applicants must learn how to deal with this before the interview, or their chances of getting hired will be very low. Bill Canonico, an employment specialist at CanoniCo and at Vineyard Columbus, recently shared with me some excellent advice he gives many people that are in their upper 40′s and older.

Many people come to him terrified that they won’t get hired, because they believe their age is a barrier.  They are convinced that hiring managers will always pick a younger person with less experience. Some older job applicants have a chip on their shoulder, thinking the younger person can be paid less, learn faster, work with more energy, and is more tech-savvy.

This negative attitude is displayed to the interviewer, but the interviewee doesn’t have any idea they are doing it. This alone may be the unintended barrier to getting hired.

Older workers have decades of experience dealing with many situations in life and the work environment. Often they are calmer in dealing with difficulty, and are more appreciative of the new job they get. Older workers are much more common today, and some employers recognize and appreciate the skills, experiences and maturity they bring to the workplace.  Often they aren’t as distracted, like younger workers, by their smart phones and Internet and worrying about the politics and stress of moving up – but are just happy to do a good job.

Shockingly, even though 15% of all working age people are unemployed, many employers have difficulty finding two things: a good work ethic and appropriate skills.

Work Ethic: Showing up to work on-time, working hard, good attendance and attitude, and high level of work quality are actually rare in the workplace, employers tell us.

Skills:  Employers are having difficulty finding potential employees with the needed skills they desperately want. Read this recent article in the Wall Street Journal for some interesting facts.

Bill tells me there are three types of employers: The first group doesn’t care about age, but about work ethic, skills, experience and the ability to listen and learn. The second group may care some, and will be on the lookout for vitality, good attitude, and a younger mindset. The last group does care about age, and they are going to discriminate – and there really isn’t much you can do about it. Bill says that you have a 2/3 chance of age not really coming into play, if you approach it with the right attitude…

Attitude: The older job searcher needs to convey the attitudes and ethics mentioned above. They might want to talk with a specialist like Bill about how to conduct an interview, dress, hair style and a few other cues, to make sure they convey the right image the employer is looking for.

Resume: Bill reviews resumes every day and all day. Most of the resumes he sees are not well put together and, because of that, most people never even get to interview for the job they want. Hiring managers and recruiters go through hundreds of resumes for each open position. The first thing they do is to look for a reason to not consider you. They are trying to quickly take a stack of several hundred resumes, and reduce it to about 10.

If the resume’s form isn’t simple and easy to read, which means they have to work to figure out your skills and experiences, or are distracted by being over-designed, you are out. Next, they are scanning it to see if your skills and experience match what they are looking for. If they can’t find what they are looking for easily, it is eliminated, because they don’t have the time to try to figure it out. Next, if they come across miss-spelled words or poor grammar, then into the garbage it goes.

Now that the list is down to a smaller number, they are looking for problems, such as employment gaps (not as big a deal given the long recession), reasons for leaving, or too many positions in short period. If your resume doesn’t deal with that professionally, then more than likely you are out of the running. If you made it this far, they are now trying to find the best skills and experience. The hiring manager will pay special attention to things that you did ‘above-and-beyond’: awards, and special projects and training: things that sets you apart. A professional like Bill can help you present the best you, even if you have a few blemishes.

Should I Buy an Ereader? And The Benefits of Waiting

I love to read, so a few weeks ago I had a burning desire to purchase an Ereader. I had a lot of reasons for purchasing one, and came up with a great list of my rationale:

  1. Ease of getting a book and reading it without the delay of going to the bookstore or library
  2. Ability to look up words in the dictionary with a simple touch, or references on the web
  3. Inventory quotes that I can later use for blogs articles I am working on, and for a book someday
  4. Portability, since I could have all the books I am currently reading, which is about 4 right now, and easily take them anywhere
  5. Read about book recommendations, and then quickly add them to my wish list on the device
  6. Less distractions, since when I am reading on the laptop, I get distracting checking email, Facebook, and Twitter

These reasons gave me excellent justification for the purchase. I had a few hundred extra dollars from a writing project, and a little gift money. Since I provide financial counsel to hundreds of people, I have to follow my advice to think long and hard about it.

I thought about it a lot, and compared products. I felt it was okay to purchase, with my initial allowance of $150. However that quickly expanded when I saw all of the products being offered. I could easily buy just a good Ereader, like the new Kindle Paperlight. All Kindle Ereader dedicated products have all the great tools for reading, weeks of battery life, and the great Amazon library and services. Then I started to wonder about the Kindle Fire products. They allow you to do much more (in color) in terms of Internet and email- since they are really mini tablet computers. These can be purchased from $150 – $200, I could stretch the budget a little.

If I was going to buy a mini-tablet, this expanded my choice of products. The Kindle Fire’s were somewhat limited in their application to computing, so I was looked at the ones from Samsung, and Google. Google Nexus 7 was newer than the Samsung 7 inch min-tablet, has a faster operating system and ran the latest Android Jellybean system. The 8 GB was $199, and 16 GB was $249. More memory was important, since the Nexus doesn’t have expansion slots (unlike Samsung’s). Now my budget stretched to $249, about $100 more than I started with.

However I felt compelled to wait, and not purchase. During this pause some interesting things happened. The Apple iPad Mini was introduced. iPads are amazing machines, however their price starts at $329 and goes all the way to $659 depending upon memory, WI-FI, and Cellular capability. Then there was talk that the other manufactures were lowering prices, expanding base memory, and offering new devices. More reasons to wait and think about it some more.

During the wait, I was given a few books to read. One was a free from a publisher, to review a theological tome on possessions. None of these were in digital format. A had a few books I wanted to read digitally, I was able to download them from my local library and read on my laptop. I downloaded the Kindle app and it works great. I also downloaded the newsreader and customized it for the periodicals I wanted to scan.

My burning desire to purchase an Ereader diminished. Although I would still like to have one, I am enjoying reading the various formats of books, magazines and newspapers, and the money is still in savings. I can still do everything I need to do for personal computing, entertainment, blogging and writing- quite nicely.

Waiting taught me a few things. One it is good just to wait and to refrain from purchasing things. It felt good to be in control. I used the devices I already have, and now I don’t have another one to maintain, or battery to charge. Having a Cell phone and laptop,and internet TV, I can do everything I need to do. I would like to have a smart-phone PDA, and either a tablet or mini-tablet, and in a couple of years I will need a new laptop. However with all the new things Microsoft is trying to do with Windows 8 to blur the lines and capability with smart phone’s app driven world, and touch screen capability- I think the wait will be good. With my next technology purchases, I am considering going all Apple, for the simplicity, ease of use, and less technological messes that Windows based systems seem to always have. The benefits of waiting mean I will get better technology in the future since they are constantly improving, or buy a good device used, while protecting my savings in the meantime.

If you are considering a purchase do your research, and take your time to wait. In the end you will probably decide better what you really want, while protecting your savings in case some emergency pops up.

Tax Planning: In Uncertain “Fiscal Cliff” Times & Year End Tax Planning

Kevin Koval, CPA, ABV, CFP and Roger C. Nagel, CPA, CMA of Nagel, CPAs*

With the completion of the presidential elections there has been much discussion focused on the so-called “fiscal cliff”. Many economic forecasts have stated that President Obama and Congress need to reach some agreement to avoid the fiscal cliff if the nation is to avoid another recession.  As you probably know, the Bush tax cuts are set to expire at the end of 2012 and there are many other tax changes set to take place in 2013, such as the implementation of the taxes from the Obamacare healthcare plan. Given the disagreements between the President and Congress, it is difficult to predict what will happen to all of the tax cuts that are set to expire at year-end and what the outcome will be.  Year-end tax planning is always a challenge, but many long-time tax practitioners have noted that this could be the most challenging environment that they have faced.

Whatever the outcome of the any agreements between Congress and the President, it is likely that at least some taxes will be increasing and it is almost certain that dividend and capital gains tax rates will not be going down in 2013.  Maximum long-term capital gains rates are set to increase, generally, from the current rate of 15% to 20%. Dividends will be taxed at ordinary income rates instead of the current capital gains rate of 15% in most cases.  The top marginal rate will increase from 35% to the “pre Bush rate” of 39.6% and the rates for other income brackets would increase as well. Regardless of the outcome of any agreements reached between the President and Congress regarding the expiring Bush tax rates, taxes on investment income will rise next year by at least 3.8 percent on taxpayers with higher investment income due to the funding provisions in the President’s healthcare plan. Beginning in 2013, an additional Medicare hospital insurance tax will apply to wages or self-employment of married individuals with earnings exceeding $250,000 or single individuals with earnings greater than $200.000.  There will also be a new 3.8% net investment income tax for individuals exceeding these same income thresholds.  If Congress and the President do not make changes, the combined effect could result in an average tax hike of around $3,500 per household for up to 90% of Americans, and much higher rate for upper-income taxpayers.

It is reasonably likely that rates will be going up for investors, small business owners, and high income individuals, traditional tax planning strategies to defer revenue and taxes may not be applicable this year.  Taxpayers should consider an approach that involves addressing many of the possible changes directly while also making use of all options for deductions and credits, or other tax-advantaged opportunities to lower their taxable income. Planning for these changes should begin now, since it may involve significant modifications in your tax strategy.

Since most advisors are confident that capital gains rates and rates on investment income will be higher next year, taxpayers may want to consider some of the following strategies concerning the potential for higher rates in 2013:

If your portfolio includes significant long-term capital gains, taxpayers should take advantage of the lower rates in 2012.  For upper-income taxpayers who will be facing rates of 20% (barring any changes) on capital gains and the additional 3.8% healthcare tax on investment income their top rate will rise to 23.8% versus the current capital gains rate of 15%.  It may pay to take advantage of the lower rates in 2012 by selling investments with potentially big profits.

While advisors often recommend that taxpayers offset their capital gains by selling investments with capital losses, it may be beneficial to hold off incurring losses to offset against potential gains in the following year that will be taxed at higher rates.

Consider various strategies to accelerate ordinary income into 2012. If you have flexibility on when you can receive payments of income before year end, consider that the income may be subject to lower taxes this year than in 2013. Again, this is counter to tax strategies that are often employed to defer taxable income. Similarly, taxpayers would normally look to increase deductions before year end; it could be beneficial to defer expenses such as charitable deductions until the following year when tax rates will likely be higher.

Another option may be to convert a traditional IRA to a Roth IRA this year, if a conversion otherwise makes sense.

You may want to move dividend paying equity investments into tax deferred or federally non-taxable investments like municipal bonds.

Many taxpayers are accelerating gifts under the current $5 million ceiling on lifetime giving. Not only is there a good chance that estate tax rates will rise (the scheduled Sunset provision is for rates to revert to 55%) but the exclusion amount for estates and gifts will revert to $1 million.

Some other acceleration strategies include exercising stock options, taking bonuses, foregoing 1031 elections, and electing out of installment sales.

The alternative minimum tax (AMT) will apply to 2012 income for many more Americans if not indexed for inflation. At the end of 2011, the AMT exemption was $74,450 for married taxpayers and $48,450 for singles. In 2012, the AMT exemption is $45,000 for joint filers and $33,750 for single filers. In making their estimated payments, taxpayers will need to consider that for 2012 they could be exposed to a higher AMT tax if Congress does not revise the exemption amount.  Additional care will need to be taken to help avoid potential AMT taxes.

Business owners will want to look at accelerating taxable income, but they will also need to evaluate the fact that the Section 179 deduction can be significantly reduced in 2013.  Under Section 179 of the tax code, small businesses can deduct the total cost of some qualifying property in the year it is placed in service, within certain limits, rather than depreciating it over time. The limit on the cost of property (including real property) that can be expensed is now $139,000 which will drop to $25,000 if no changes are made. The total value of the equipment purchased cannot be higher than $560,000. In 2010 and 2011, businesses were allowed to expense as much as $500,000 in equipment and property on one year’s tax return. Additionally, bonus depreciation which was 100% in 2010 and 50% in 2012 is set to expire in 2013.

Business owners need to evaluate the potential for immediate write-offs and 50% bonus depreciation for capital purchases made in 2012 versus being stuck with the longer term depreciation MACRS depreciation schedules for purchases made in 2013. It may pay to make planned purchases of equipment in the current year. On the other hand, faced with higher tax rates business may not want to elect Section 179 or bonus depreciation treatment to preserve more deductions for future years when the rates are scheduled to be higher at least for individual owners operating as Schedule C or as pass through entities.

Like so much in life, we can only plan ahead, confidently, based on what we know to be fact.  Today, we know that tax laws will change back to “pre-Bush tax cuts” on January 1, 2013.  Of course, Congress and the President can intervene, before year end, or even afterwards (and make new rules retroactive.)  This unprecedented level of uncertainty makes good decision making difficult. Consequently, seek tax advice about your specific circumstances.  If you have large, pending transactions, the timing of which you can control easily, then this is a good year to engage your advisors soon to harvest sizeable benefits.

*Kevin Koval, CPA, ABV, CFP and Roger C. Nagel, CPA, CMA of Nagel, CPAs. They can be reached at 505-898-2558 or email They are located at 2240 Grande Blvd SE Suite 103, Rio Rancho, NM 87124.

Time to Check Your Car’s Battery

Fall always seems to be the best time for me check my car’s battery. You might want to also, if you don’t want to get stuck somewhere without a good battery. This is especially true for folks driving through not-so-safe neighborhoods now that it is getting dark much earlier, or up north in our cold Winters. Most auto parts stores will check it for free. For about a week our 1998 Windstar Van’s battery was showing signs of weakness.

Finally yesterday, the battery went out- it just didn’t quite have enough juice to start it without a jump start. After my wife checked Quicken, we  determined that we bought the previous battery from Auto Zone 5 years ago. We quickly ruled out that we did not have any warranty left after that long, on a 60 month battery. While I called for prices of batteries from Auto Zone, O’Reilly’s and Advanced Auto Parts- chain part stores in our area, she went through the inventory of coupons. The only one she found actually came in the mail the same day, $20 off purchases of $100 or more at Advanced Auto Parts.

Since the Van is 14 years old, and over 150,000 miles on it, I just wanted the lowest cost battery. Calling Auto Zone, O’Reilly and Advanced the base battery was rated for 60 months but had a 2 year warranty. O’Reilly and Auto Zone tied at 99.99, and Advanced was $101.99. For a couple of bucks, I bought battery terminal grease and terminal fabric washers- both to help minimize corrosion you sometimes get since the batteries have highly corrosive sulfuric acid. After taxes, those extras and the $20 off coupon, my bill came to $90.34. That cost included a $12 credit for giving my battery to Advanced to recycle.

Had I not traded in the battery, what they call the battery’s ‘core,’ then the cost would have been $12 more. They call it the core, since the core part of the battery that is recycled is the battery’s lead core. The plastic and liquid chemicals are probably recycled too, but lead has commercial value. You can get $10 – $15 for most batteries, so if you have any old batteries laying around the garage from cars, lawn mowers, boats, RV’s or other equipment you can sell them for cash. Advanced Auto Parts will only give you $5 gift card for old ones, but the local Interstate Battery store gave me $12 last Spring for an old big Marine battery I had for a sump pump back-up system- shop around.

I was a little surprised by the battery’s cost. Gone are the days I remember when you could purchase a battery for $35 – $75 for most cars, now almost all decent batteries cost near or over $100. Low-cost or cheap batteries are a thing of the past.

The manager of the Advanced Auto Parts, Brent was very polite, and installed it for free in the company’s parking lot. He tested the old and new battery to make sure one was bad and the new one was good, since they sometimes come from the factory bad. I didn’t have to get my hands dirty, or fumble around popping in a new battery in the dark.

While you are checking your battery, you might want to also check the windshield washer fluid and wipers.

Financial Thanksgiving

With Thanksgiving only one week away, I thought it would be good to have a financial Thanksgiving post;

The attitude of being thankful is one of the foundational feelings we can have for helping us do well financially. When we are thankful for the things we have, we are content and are not in the “I’ll just be happy if I have…” mindset. Contentment and satisfaction are internal feelings; they can’t be obtained from external sources usually.

When I want something that is beyond my basic needs, I am telling myself that I will be more happy and satisfied when I have obtained it. We all know that after we have purchased something we desperately wanted, in a short while we will want something else again. It seems as if the cycle never ends. Emotions really come into play in this game, much more than logic (except of course when I want new tools :) ). Marketing firms know just how to craft ads to make us feel incomplete, and to suggest filling that gap with their products. We are emotional beings, and our emotions can often fool us.

If I had been a more thankful person, I would have avoided purchasing many things I have over the years, and I would have borrowed a whole lot less money. In the end I would have had more money in savings and investments, and I probably would have given more money away too- bringing more joy to others and myself. When I own fewer things, I love having more time on hand, since everything comes with a maintenance schedule. Thanksgiving might be the best American holiday, for it is a great reminder for us to be thankful for all the things we have. Being thankful and content with what we have makes us happier people, something we all want. It is really sad that the day after Thanksgiving is the largest shopping day of the year. In addition, it can be one of the worst times to buy things, since I reported earlier that prices go up on many items during the Holidays.

The most quoted Bible verse of all times is probably the 23rd Psalm, since it is read at almost all funerals, it starts out: “The Lord is my shepherd: I shall not want” (NKJV) and “The Lord is my shepherd, I lack nothing” (NIV). Most versions have worded it similarly to these two– Christianity and other religions talk about contentment, but when we don’t feel contented we often live a financial lifestyle we can’t afford, or are too materialistic. It has been said that materialism is to buy things we don’t need, with money we don don’t have to impress people we don’t like.

Recently my pastor in his monthly congregational email had a few interesting research factoids about the connection of thankfulness to happiness: One of the exercises that psychologists gave to people was a gratitude journal; taking time every day to write in a gratitude journal things for which they were thankful. What psychologists found was that if people took time to conscientiously count their blessings every day, life satisfaction markedly increased in just six weeks.

Martin Seligman, the Father of Positive Psychology, has tested similar practices at the University of Pennsylvania and in huge experiments that he’s conducted over the Internet. Seligman believes that the single most effective way to turbo-charge our joy is to make what he calls a “gratitude visit.” This means writing out a testimonial thanking a teacher, or a pastor, or a grandparent, or anyone to whom you owe a debt of gratitude. Then visit that person and read your letter of appreciation to him or her. Seligman said that the remarkable thing was that people were measurably happier a month after they paid a gratitude visit to the person to whom a debt of gratitude was owed. Saying thanks produces ongoing joy.

Seligman also recommends what he calls “three blessings,” taking time each day to write down three things that went well that day (in other words, counting your blessings), taking time to journal what’s going well and intentionally savoring good moments by journaling them. Why not consider creating a gratitude journal, paying a gratitude visit, or savoring good things in your life by journaling them?

It seems that thanksgiving is not only good for our finances, but our general overall well being. Happy Thanksgiving to you!

Please comment below, I would love to hear your comments, from any perspective that you have.

Annuity Guarantees and Trusting Insurance Companies

Hartford Financial is seeking ways to lower its exposure on some annuity contracts it sold. Stories like this make people wonder if they can trust insurance companies, and believe the annuity guarantees. I believe though, most insurance companies are very trustworthy, and the income guarantees are good, but consumers need to be careful.

Insurance is the bedrock of people’s financial plans; helping to avoid financial disaster in car accidents, home damage or theft. Insurance companies are there if a family’s breadwinner dies or becomes disabled. These companies have done a great job of insuring business’ property, and employee’s health. Policies help prevent financial disaster if businesses are interrupted due to fire, or the death of owners or key employees. With all of the bad press insurance companies get, in general they do a commendable job of pooling and transferring risk. However when a few insurance companies do things that are disadvantageous to consumers, we should take notice and learn from it. Case in point, Hartford Financial which I will get to more of in a few paragraphs.

When I sold insurance products for 12 years back in the 80′s and early 90′s, it was extremely difficult to combat competition. Why you might ask, wasn’t I good at selling?  I never made million-dollar round table, the ultimate sign of success in the insurance business. However we somehow managed to support a family of 4 in an nice neighborhood for a dozen years on straight commission. We were never late on mortgage payments, tithed 10%, and took some nice vacations.  We always employed a needs-based approach to selling insurance, annuities and mutual funds. Early in the morning I’d arrive to study for the professional designations I later earned: ChFC- Chartered Financial Consultant, and CLU- Chartered Life Underwriter, and come home late at night after appointments. My knowledge and skills helped me have few complaints, and retain over 90% of my clients.

Competition was fierce, I’d try to sell products to people who were shown something better from another company. It was very difficult to convince clients that my product was better even when mine paid an interest rate that was lower, had a higher premium, or not as fancy design features. I told prospective clients that yes my product didn’t ‘look’ as good, but it was good and my company will be around. They didn’t understand when I explained that the other company was taking on more risk when it made bigger promises. As I look back, the companies I represented are still around, and many of the ones making big promises back then have folded, been sold, or now going through what Hartford Financial is. Hartford is now attempting to relieve itself from the risk it has from the annuity guarantees it can’t support any more- in some of its annuities.

Don’t get me wrong, I like annuities, for the right person for the right reasons. They offer nice tax-deferment, and some guarantees on income and death that mutual funds cannot. The charges can be expensive- but you get what you pay for if you value those things. However on the other hand, you have to wonder if you can trust the insurance companies offering those guaranteed benefits, since purchasing an annuity is a long-term venture.

Times haven’t changed, about 10 years ago the universal life industry blew up, and many people ended up with worthless contracts, or faced to pay very high increased premiums. Some of the very companies I was trying to compete against. Today Hartford Financial is trying to get out of having to live up the promises they made to customers. They sold annuities with really good guarantees, but now are faced with the fact they don’t have enough assets to remain as financially solid if they don’t come up with a way lower their risk, read the article in the Wall Street Journal. They are applying to regulators to be able to offer clients cash if they trade in their income guarantees.

It has been said, you never shop for the lowest cost parachutes and surgery, so you shouldn’t with insurance. When you buy a product of any type from an insurance company, you have to ask yourself if you can trust them. Do the rating agencies like AM Best, Duff and Phelps, Moody’s, Fitch, and Standard & Poor’s, rate them well for financial stability. When looking for insurance, price is surely important, but trust is also up there. Will the the insurance company be able deliver on promises, including keeping my cost down for the long haul. I ask myself if they are trying to attract me with the best features and lowest cost- those are the ones I stay away from.  They can only usually do that if they are taking more than average risk, or doing it at the disadvantage to existing policy owners.

When Hartford was selling these very competitive insurance and annuity contracts, they had a great story, great ratings, and well trained great wholesalers. Often they led the industry on sales, partly because their contract designs were very aggressive, and at times their internal charges were very competitive. We can learn from this. If we are considering an insurance product we have to ask, how are they rated, do they have a history of always treating customers well- both new and old ones? Are they offering the best and most competitive contract features in the market, are they too good to be true? These things should give you some clues about who you can trust.

14 Ways to Save Gas

Gasoline prices have trickled down in the last few weeks, however they are still about double what they were 4 years ago, making it important to get the most mileage out of each gallon of gas as possible. Some of these tips come from “20 ways to save gas this summer” Popular Mechanics 7/2012 magazine. Here are are some of the top suggestions and a few of my own.

  1. Right turn only route: The other night on the way to a small group meeting, my wife wondered why I took a different route to get there versus coming home. The reason is I like right turns better. No I’m not OCD, well okay I am some but I am also impatient- I know I can make more right turns on red, and spend less time at traffic lights. This increases fuel economy 3% according to the article.
  2. Avoid traffic: Sitting in traffic for long stretches of time consumes a lot of fuel, so take a less congested route if it isn’t too far out of the way. Many people have GPS navigation systems, they are very helpful to people who aren’t street savvy, since they can help you find alternate routs.
  3. Avoid high ethanol fuels: Although most gasoline has some ethanol today, avoid the high E fuels since it has less energy, causing reduced mileage- 15% ethanol has 30% less energy.
  4. Inflate tires: Putting them at their proper level makes them wear better and produces better mileage, low air increases rolling resistance which is bad for gas mileage.
  5. Tune ups, oil changes and air filters: These simple maintenance items keep the car’s engine running more efficiently, follow your owners manual and visually inspect the items too.
  6. Eco versus sports tires: Sporty tires are designed primarily for handling, so if you don’t mind a little less cornering ability at higher speeds, look for tires that are designed for high gas mileage
  7. Close the tailgate if you have a pickup: This seems to go against logic- you would think without the tailgate open, air would flow more freely over the back. However, research indicates that most trucks get better mileage with the tailgate up. The flow of air reacts differently coming off of the big front area, and creates strange air currents if the gate is left down, as air flows towards the back of the truck. Or maybe this is just propaganda the truck makers put out, because they want you to see the manufacturers name advertised across the closed tailgate.
  8. Empty trunk: Stores tools, golf bags and other rarely used items in your home. Why pay to haul them around if the items are seldom needed?
  9. Windows up/windows down:  At lower speeds during the warmer months, shut the AC off and open windows to save gas. However at higher speeds, the open windows create drag- crank the windows closed, and turn the AC on.
  10. Driving the farthest distance first: Hot engines get better gas mileage, so if you are running a lot of errands, head to the farthest one way first, then work your way home. If grocery shopping we take blue ice and a big freezer bag (Costco sells a huge rugged one) to keep perishables fresh.
  11. Avoid short trips:  Package errands together, so you aren’t planning so many short trips. This is better for your car too, since short distances leave water condensation in exhaust systems, leading to rust.
  12. Remove van seats. Carrying around an extra hundred pounds or more costs gas. If you have an older van the seats are probably easy to remove, however if the kids are grown and you seldom take passengers, store the seats in the garage or basement. Watch your back, they can be heavy and clumsy- ask a neighbor to help you carry them. Most of the newer van’s seats retract into the floor and probably are not removable.
  13. Coast to traffic lights in gear: This uses less fuel than shifting into neutral. Don’t be overly annoying about doing this, it can induce road rage. But if it’s obvious that the light ahead is red- you can see cars are piled up and opposing traffic is in the intersection, chances are you can coast.
  14. Accelerate a little faster: This is the biggest shocker to me.  Popular mechanics proved in several tests that if you accelerate at double your cars fastest time to 60, then you are most efficient. The wives of slow frugal drivers can rejoice!  If your car can hit 60 in 7 or 8 seconds, then take about 15 seconds to get up to speed. However if getting on the highway, let-r-rip-, put the cell phone down, floor the baby, and check your mirrors, and glance over your shoulder to make sure no one is in your blind spot. Now you have a good excuse to grab a stop watch and find a lonely stretch of road to check your car’s 0 – 60 time, have fun!

Do We Appreciate Businesses Enough?

The presidential campaign had me wondering which presidential candidate would have been the most pro-business. Investors in business might not think Obama is great for business, when you consider the 313 point drop in the DOW yesterday. Let me say at the outset that I am not taking political sides in this article.

During the presidential campaigns business got a bad rap. In a society that has been relying more on entitlements, the wealthy (including many who are business owners) have sometimes been maligned. The anti-business rhetoric came from both sides as our economy suffered in part from Wall Street abuses. Some of the criticism was right on, but only a very small minority are to be blamed for the recession. Governor Romney was raked across the coals for what he did while at Bain Capital, but much of that criticism was not founded in facts. This and more has contributed to an anti-business sentiment at times, and this is wrong and bad. Business, especially big business and “big oil,” is often the scapegoat for whatever ails societies when we are look for something to blame. It is a natural human reaction to want to blame someone when something bad happens.

Businesses though, should be lifted up and esteemed by all of our institutions of government, religion, education, entertainment and society at large, because they have formed part of the backbone of most cultures for thousands of years. Businesses supply goods that people need worldwide. Businesses employ people, providing good jobs that people feel good about doing, and they provide funds so that people can care for themselves, for others and for their families. Businesses help fund health care and retirement plans. They provide resources to finance other businesses, and funds for people to buy and build homes. Businesses are creative outlets for people to do things they are passionate about have talent in. Businesses are communities of collaborative people, friends that become families. Modern culture couldn’t exist without businesses. They help people build wealth that can be used to help people in need and to help preserve culture.

Culture is that wonderful and colorful thing that makes up our great societies that we are blessed to enjoy. Businesses are part of the entire culture that includes art, entertainment, sports, ethnicities and more. Businesses are good–something to be celebrated, lifted up, supported, funded, taught, enjoyed and encouraged. Business is good, and I appreciate what they do!

Starting, owning and running businesses takes a lot of blood, sweat, and tears–requiring people to risk security, wealth, homes and lifestyles. It is hard work to keep employees and customers happy while battling ever-present competition. Global competition is fierce, requiring more new levels of expertise than ever before. Technology, benefits, taxes, accounting and cash flow management are extremely complex, making it difficult to relax for even a moment. We all depend on businesses, and more then ever they need our political, economic, emotional, spiritual and financial support, and much less criticism that is sometimes heaped their way. For in business growth, much of our economic ills can be relieved.


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