Michelle Singletary
Thursday, May 11, 2006
11:03 AM
Got a basic financial question you need answering? Or did you think I was wrong to blast parents for overindulging their kids by buying them cell phones? In any case, please join me today online at noon ET. You can submit questions early here or if you miss the live chat, you can read the transcript any time.
Here are a couple of questions from my last chat that I didn't get a chance to answer:
Q: Who can I contact about getting renter's insurance?
Just about any insurance company. If you have a car, start with your auto insurer. You often can get a premium break if you buy various insurance from your current insurer. You might also check with your landlord for a recommendation. The landlord's insurance company might even have a special deal for tenants.
And in case you missed it, in a recent column ("Insuring Your Place in the Post-College World") I covered the need for renters to get renter's insurance. Often renters don't realize that the contents of their residences are not covered by their landlord.
As I reported in that column, landlords typically insure building structures, but not the contents or liability of individual tenants. Renter's insurance protects your personal possessions if your property gets damaged, destroyed or stolen. The policy also gives you liability coverage if someone gets injured at your house or apartment, even in the event you accidentally burn down your apartment and the landlord's insurance company sues you for damages, according to the Independent Insurance Agents & Brokers of America, based in Alexandria.
If you're renting and you don't have renters insurance get it. It's relatively inexpensive.
Q: This has been bugging me. On the Suze Orman show, someone called in who was single, no kids and approaching 50. She wanted to retire at 50 in a few years. She had $850,000 in savings and about $400,000 in IRAs/401Ks. Suzy said, no, that's not enough to retire on. My husband and I both thought she was wrong, that she COULD retire, especially if she took a part time job to fill in the cracks. She still had a few more years on a mortgage that was about $3,000 month. What do you think?
A: I think this couple is very smart. You CAN retire with less than millions in savings and investments.
I hate it when "experts" tell folks with that kind of money they aren't going to make it in retirement. If that's so, what about the millions of other retirees who don't have any where near that much money? What then? Just die? Come on, folks. My grandmother retired at 65 and lived well until she died at 82. She survived on a modest savings, Social Security and small pension check every month.
How? Big Mama retired without debt. I mean no debt at all. No house note. No care note. No credit card payments. If you pay off your mortgage, that's 30 to 40 percent of your monthly expenses right there. It can be done.
Don't Get Soaked
I do hope you read today's column on flood insurance.
I don't THINK many of us will soon forget last year's hurricane season and all the resulting flooding. Well, the Atlantic hurricane season begins June 1. So do you have flood insurance?
Not sure of your flood risk? Then go to this Web site, enter your home address and the National Flood Insurance Program will show you the relative flood risk to your property. You will also get a list of insurance agents in your area who sell flood insurance.
I tried this and found out my home had a moderate to low risk of flooding. However, I didn't know that 25 percent of flood-loss claims are filed in low- to moderate-risk areas.
Charge Me Once, Shame on You. Charge Me Twice, Shame on Me.
I hope you are carefully reading your credit card statements and most importantly discussing with your spouse or joint-credit card holder any charges you don't recognize. If not, you might be like the many victims Don Oldenburg talked to recently who found, in some cases for years, that they had been charged for products or services they hadn't authorized.
These consumers were victims of a sales technique called the "negative-option plan." The negative-option plan is when you are automatically charged for a product until you inform the company you don't want it.
Some of the people Oldenburg profiled may have ended up in these deals by clicking "yes" on pop-up ads on the Internet or it might have been part of a free trial- period product promotion.
Edward Johnson, president of the Greater Washington Area Better Business Bureau, told Oldenburg: "A negative-option offer that is attached to a free trial period inherently lends itself to potential problems -- like people not understanding that they signed up and the debits made to your account."
I hate negative-option buying. I learned the hard way to avoid it. I wrote about my experiences in a column last summer ("Mail-Order Book Clubs' Never-Ending Story," Aug. 11).
It never fails when I have signed up for one of these plans I inevitably forget to cancel and then get stuck paying for books, CDs or magazines I don't want.
Actually there are rules companies pushing negative-option plans have to follow. For more information on your rights go to the Federal Trade Commission's Web site.
There you will find that the companies have to tell you some things such as:
Personally, I say just reject negative option plans.
Time for a Raise
Have you been scared to ask for a raise?
Well some recent economic data might be just want you needed to get an income boost.
Neil Irwin recently reported ("In Demand and in Command: The Job Market's Latest Seesaw Pays Off for Applicants") that the market for U.S. workers is tightening. If this trend continues, it could lead to wage growth, which would be welcome news for workers who have seen scant raises in recent years.
"People with specialized skills in accounting, information technology or nursing can demand bigger raises," Gregory Netland, chief executive of staffing firm Vedior North America, told Irwin.
Ah, but "workers with fewer skills are seeing more modest raises," Netland said.
Too Much of a Good Thing
You've got the basics: a term-life policy, comprehensive health policy, disability coverage, and homeowners and auto insurance, but what about accidental-death insurance or identity-theft insurance? Don't you need more than the basics?
According to http://www.consumerreports.org/, the basics are all you need. Any more and you could end up paying way too much for something that could already be covered with one of your basic insurance policies.
That accidental-death insurance could run about $600 a year, but you're already covered if you have a term-life policy that will guarantee coverage regardless of the cause of debt.
To make sure you are not over-insured, check out "10 Insurance Policies You Don't Need."
Appearances
So many people have been asking whether on occasion I could include some of my national and local Washington-area appearances.
Of course I would be happy to do that. I'll also let you know when you can see me on television. The following are upcoming appearances:
Today, Thursday May 11:
Tune in tonight to Tavis Smiley's talk show, where I'll be talking about my latest book "Your Money and Your Man: How You and Prince Charming Can Spend Well and Live Rich."
Broadcast times vary for the program, so click here to find out which local public broadcasting station carries the program and exactly when.
Locally you can find the program on Maryland Public Television.WETA will air it at 12:30 p.m. on May 12. It will also air on Howard University's WHUT.
For more information about tonight's program go to http://www.pbs.org/kcet/tavissmiley/.
Saturday, May 13
I'll be speaking from 10 a.m. to noon at The Sanctuary at Kingdom Square, 9171 Central Ave., Capitol Heights, Md. The program is hosted by the Young Adult Ministry. For more information contact Penelope Knox at 301-333-9033
Thursday, May 25
I'll be speaking on behalf of the Young Adult Ministry at Greater Mount Calvary Holy Church, 610 Rhode Island Ave. NE in Washington. Again, I'll be reading from "Your Money and Your Man" on how to balance love and money.
The event starts 7:30 p.m. in the Kristal Room. For more information call 202-529-4547 ext. 216. You can also e-mail info@calvaryelect.org.
Money Myth
I came across an interesting list of myths when dealing with savings at http://www.savingadvice.com/. Here are a few myths that need disspelling, according to this site:
MYTH: If I buy something on sale, I'm saving money. If you purchase something on sale, you are paying less than if you purchased the same item when it was not on sale. This does not automatically equate to saving money. In order for the savings to take place, the item that you purchased on sale must be something that you would have purchased at some point at full price. Then the savings from the sale purchase must not be spent on something else. Since this is rarely the case except for those who have a system set up where the savings from sale items goes into a specified savings account, in most cases purchasing something on sale doesn't equate to saving money.
(Let me add one of my personal money mantras to this commentary: You never save when you spend. That's what I tell myself when I think I'm getting a great bargain. You might spend less, but you aren't saving when you have to save money.)
MYTH: If I made more money, it would be easy to save money. Merely making more money than you currently do does not equate into more savings. If you make more money and you don't increase your consumption after the raise, then you have the opportunity to save money. The truth is, however, that most people quickly increase their consumption with an increase in pay, not their savings. To increase your savings, you need to have a money saving plan already in place before the next raise occurs.
To read more myths, go to http://www.savingadvice.com/forums/showthread.php?t=4985
If you're wondering whether something you've heard is a financial fact or fiction, send me an e-mail at colorofmoney@washpost.com . Be sure to put "Money Myth" in the subject line. Comments from experts on financial myths you've helped dispel are most welcome.
You are welcome to e-mail comments and questions to singletarym@washpost.com. Please include your name and hometown; your comments may be used in a future column or newsletter unless otherwise requested.
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