Saving Money

Retirement Wisdom From An Expert

July 20, 2016 By Twila VanLeer

Expert advice for successful retirement.

If anyone knows how successful retirement works, it’s Warren Buffet. Over a lifetime he has become a hallmark of profitable market investment. A recent article in The AARP Magazine shares 10 keys to his success.

Keep A Cash Reserve

Keep a reserve of cash for emergencies and for unexpected opportunities. A rainy-day provision is essential, especially as retirement looms. The end of a regular paycheck means changes in cash needs. Now you must rely on Social Security and whatever other nest egg provisions you have made over your work career. Embellish your emergency fund to take care of any financial challenges. Tap the fund to respond to lucrative investment opportunities.

Invest In Companies That Provide Essentials

Boring companies don’t get any attention at parties, but you may find that there are great long-term returns from companies in more mundane industries. You may think, for instance, that toilet paper, baby diapers and soap are not exciting investments, but Buffett has successfully invested in Procter & Gamble, which has become a world leader in this market segment. Those who put $1,000 into P&G stock in 1986 and reinvested their returns would have more than $32,000 to show for it today. Boring companies who become tops in their industry niche often provide better rewards to shareholders than attention-grabbing upstarts.

How Effective Is The Brand?

Brand loyalty is something to look for in wise investments. Loyal customers will pay more for a product they like. Coca Cola is an example. The logo is known around the world, making it the third most valuable global brand in 2015. Its initial success as a soda drink has financed its expansion into other marketing areas. Invest in strong brands to get larger returns.

Look For Good Fund Managers

Good management is a keynote of successful businesses. Buffett notes that most companies eventually have to survive a bad manager, but when there is a great leader, the company prospers. He points to the outstanding examples of Bill Gates at Microsoft, Steve Jobs at Apple and Jeff Bezos at Amazon. A great manager and a strong business model is an unbeatable combination.

Learn From Your Mistakes

Avoid mistakes, but learn from them. Even Buffett admits to investing mistakes. He experienced a loss of about $450 million in a Tesco investment when the company fell afoul of accounting problems. When such things happen, the best way to recoup is to study what went wrong. Search out the warning signs, suck up the loss and use the information to avoid further market losses. Keep a record of mistakes and they’ll be a guide to better investing.

Stick With What You Know

Stick with what you know. The investment market is huge and intimidating, but Buffett believes you can succeed without being an expert. He avoided the technology revolution in the 1990s and so did not lose big in the tech bust that followed. If you are more familiar with particular areas of the market, put your money there.

Increase Your Buying Power

Look for what will increase your buying power over time. Investments that produce consistent income and steady growth are best. In 2011, Buffett looked at gold as an example of a non-income producing asset, overshadowed by such investment opportunities as croplands and petroleum companies. Retirees benefit in particular from income-producing investments that keep up or hopefully exceed inflation and that provide sustained purchasing power.

Buy At The Right Price

Don’t overpay. Even if a company is successful, a share price that is too high is a bad investment. Wait until an industry has settled before investing. Buffett waited on investing in energy companies until stock prices plunged after the decline in oil and natural gas prices. Make a watch list of interesting stocks and see if valuations fall to more suitable levels. Patience is a virtue in the world of investments.

Use A Buy-And-Hold Approach

Don’t make the same decision over and over again. When you are frequently trading, it increases the chances for missteps. The buy-and-hold approach puts more emphasis on what stocks you purchase in the first place. You may not want to hold a stock forever, but minimize the number of decisions you have to make. The more opportunities you allow yourself to make mistakes, the more mistakes you’ll make.

Look For The Spirit Of Innovation

Don’t avoid revolutionary investments. The business world is full of visionary individuals looking for ways to improve things. One for-instance is the forward momentum at General Electric, a long-time leader in world business. The company saw the opportunity for snapping up a leadership role in the wind energy and turbine business and became a pioneer in the renewable energy industry. Look for the spirit of innovation as an indicator of strong investment possibilities.

Emergency Savings Tips

July 7, 2016 By Twila VanLeer

Make sure you rebuild your emergency savings if you've had to use it. — Make sure you rebuild your fund if you’ve had to use it.

Using your emergency savings to pay off credit card debt may look like a good idea at first glance, but there are some things to consider, according to Jean Chatsky of Bankrate.com.

Size Of Debt

If the size of the fund meets or exceeds the amount of the debt, it may be all right, but you should then begin to rebuild the emergency cushion. Then if the emergency comes, you are still ready.

Use Fund Not Credit Card For Emergencies

Using the emergency stash is preferable to having to meet an emergency with a credit card, Chatsky says.

Rebuild Fund When Used

If for whatever reason, paying off debt or meeting an actual emergency, your cushion is depleted, start immediately to build it up again. Set a goal and faithfully infuse new funds into it. Think of three categories: minor emergencies such as small car or home repairs and health care deductibles. Major repairs and having to meet a health care max would fall into the second category. Job loss is the third unexpected calamity that might demand that you dip into the emergency fund.

Emergency Savings Calculator

The old goal of saving enough to pay expenses for six months is a rule of thumb, but you may want to assess your own situation and make an upward adjustment. HelloWallet has a calculator to guide you if you need help making an analysis. Bankrate also has an emergency savings calculator.

Automatic Transfers

If you use a calculator and the recommended savings seem beyond reach, begin with the small emergency category, then move up as you are able. Reaching small goals gives you incentive to work for a higher level. Automatic transfers from your bank account into your emergency fund is one way to alleviate some of the pain. Don’t give yourself the opportunity to spend what you intended to save. If you wait until the end of the month to cough up the emergency fund payment, it is less likely to happen.

Bottom line: An emergency account is essential to a healthy personal finance scheme. Give it some priority.

Save Money For Important Things

July 2, 2016 By Twila VanLeer

Save Money

Some say that saving money is difficult. You make personal finance choices every day, most likely without any conscious thought about the end result. Whatever you choose, it is going to use more of your money or less. If you begin to make conscious choices, you can take the steps that will put more money in your pocket.

The truth is that having more money means spending less.

Setting Money Goals

If you are determined to add to the asset side of your ledger, it is wise to choose a specific goal that requires more money. What you really want can be the motivator to put your dreams into action. And you’re the only one who knows the purpose that will be worth the effort.

Think of the possibilities: Retirement needs, starting a business, buying a home or car, making improvements to the home you have now, making provision for future medical needs, planning a special event for your family, building your emergency fund. Your money, your choice.

When you have narrowed the list to one specific goal, it’s time to begin.

Analyze Your Financial Situation

Begin at the beginning. Analyze your current income/outgo patterns. Sometimes as life goes along, it is easy to lose track of specifics. Look at last month. Were all your basic bills paid in full? Look at your bank statement closely. You can’t start setting money aside for your goal if you are already losing ground.

Even families with healthy financial practices can find themselves in debt and needing to save money. Not paying off credit card bills monthly will build a negative balance faster than you would suppose. Habitually spending more than you earn is fatal. Debt is not neutral. It costs. Sometimes it costs so much that you sacrifice your ability to work toward your chosen objective.

Create A Budget

Set up a budget that will take care of your main living expenses. If you are serious and there seems to be no wiggle room in your budget, consider how you can cut corners. Find a cheaper place to live, if necessary. Brown bag instead of eating out for lunch and eat at home for breakfast and dinner. Plan less expensive entertainment and more cheap outings. Avoid payday loans and tax refund anticipation loans. Live on what you have without mortgaging your future.

Start Saving Money Now

With a goal in mind and your finances under control, you’re ready for the next step.

Medicare Fraud Over $60 Billion

June 29, 2016 By Twila VanLeer

Medicare fraud caused over $60 billion in fraud every year. — Medicare loses over $60 billion in fraud every year.

Medicare Fraud Extensive

Medicare fraud is a huge problem. Thousands of older Americans depend on Medicare to help them meet medical expenses, but fraudsters are taking a big scoop from the federal funds before they get to legitimate health care providers, a recent article in the AARP Bulletin says.

Medicare Fraud Causes Multi-billion Dollar Losses

Medicare fraud is estimated to cause more than $60 billion per year. In one very infamous case, a Texas thief methodically siphoned some $375 million from the fund over a five-year period, using a variety of methods. That man now faces life in prison, but the heavy toll taken by unscrupulous people continues to scrape billions from the heath care program.

Fraud Tactics

Fraud and abuse involves such tactics as phantom outpatients, “ghost” clinics, undelivered services, over-billing and identity theft using Medicare information, the AARP reported. The problem is so large the program’s administrators don’t even have a reliable bottom line or a methodology for arriving at the fraud rate. Many experts believe the $60 billion estimate may be too low. They say that fraud could suck off up to 30 percent of the $600 billion per year the program spends.

Large Size Opens Door To Fraud

The problem lies partly in the sheer size of the program, according to Shantanu Agrawal, who is quoted in the AARP article, He is director of program integrity at the Centers for Medicare and Medicaid Services (CMS). He points out the number of claims made every day in the huge system – some 4.5 million. More than a billion dollars are paid out every day.

That volume inherently opens the door to fraud, he said. “We are larger than the largest private payers in the country.” In addition, Medicare is a much more open system than the majority of private payers. Laws required that Medicare admit providers who meet a base set of requirements. They are then allowed to treat patients and bill for those services.

Pre-paying

CMS is trying several methods to ferret out fraud. One approach is by making provider reviews on a pre-pay basis, withholding payment until the applicant has been approved. The agency has made tens of thousands of site visits over the past two years in an effort to close down “false storefronts.” Working with private payers by exchanging data that may identify irregularities has saved the program hundreds of millions, Agrawal said.

Identifying Fake Doctors

The agency also has been more successful in identifying fake doctors. New tools provided by the Affordable Care Act make inroads into the number of unlicensed fraudulent providers. Connections have been made among more than 100 different databases on the state and federal levels. More than 500,000 providers have been removed from the billing system through this effort, he said.

Effects On Medical Research

It is not only patients and legitimate health care providers who suffer from Medicare fraud, experts point out. Medical research that relies on billing data, hospital rankings and cancer studies can be skewed by fraudulent reporting. In some instances, patient deaths have been attributed to fraudulent care.

Legitimate providers are increasingly blowing the whistle on those that they are aware are scamming the system., but they take a risk of repercussions if a case goes against their charges.

Under pressure from critics, program administrators are tightening their oversight, but the challenge is huge and growing.

Budgets Should Include Savings

June 21, 2016 By Twila VanLeer

Recording every penny you spend lets you know how much goes to non-essentials. — Recording every penny you spend lets you know how much goes towards non-essentials.

Personal financial security almost always is built upon a foundation of creating and sticking to a budget. And a budget line dedicated to savings is extra insurance that you are on solid ground, no matter how much you make.

Tracking your spending is a necessary preliminary to creating that budget. Start by recording every penny you spend. And be prepared to be surprised at how much of your money is going into such things as movies, potato chips and other non-essentials.

Sticking To Your True Needs Leaves More For Savings

Once you have a true picture of how you are spending what you earn, the next step is to set a realistic budget that covers all your needs. That is needs, not wants. Needs vary from family to family, but for almost everyone, they include housing, food, water, shelter, clothing and education. The list of “wants” is long and variable, but often includes fast foods, meals out, expensive clothing, over-expensive cars, fancy cell phones and electronic gadgetry.

Engage Your Family In Setting The Budget

Let them help make up the shopping lists and then go through them to see what you can realistically do without. An occasional “fling” can be accommodated, but be sure they stay occasional and don’t become embedded in the budget by default.

Start A Savings Plan

Through your employment you may have access to a 401(k) account. Or set up an IRA (Individual Retirement Account), which is another way to enjoy tax benefits while you save. Keep retirement in mind. It comes sooner than you’d think. Save as much as you can and increase the amount as children grow up and leave home or as your earnings increase.

Consider What Is Practical In The Way Of Education

Too many Americans face retirement with student loans still weighing them down. It may be that you can achieve career goals without a four-year university degree. If you have to borrow to pay for higher education, keep these figures in mind: The typical monthly payment for loans escalates with the type of training you desire, from $54 for vocational school; $60 for an associate degree; $184 for a bachelor’s degree; $220 for a master’s degree; $280 for a college professor; $530 for a professional degree; and $840 for a physician.

Certainly don’t settle for less than you desire, but approach higher education with your eyes open. Start planning early, warn children they may have to work while they go to school, do your best to encourage them to perform well in high school as a springboard to scholarships and other support.