The Finance Blogger

For years now we have been renting vacation homes in various countries in North and South America. However the majority of experience has been in California. Also in Arizona were most Canadians and northern US residents spend their time during the cold winter months. The question we have always asked ourselves is whether it is better to rent or to actually go and purchase a vacation home. We decided some time ago that it was better to rent vacation homes. We like to try different places and travel around to various states.

Vacation Home Prices Dropping

But recently with the price of homes coming down so much we are wondering if it is better to own a place. Next year we are going to rent a condo for three months. It is going to cost us $8000 for the three months which is quite a bit. Now this is a nice place with three pools, hot tubs and  tennis courts. Also underground parking and within walking distance to many restaurants and bars. We are pretty happy with the unit as well since we rent it every year. However this will be the first time we take it for three months.

The Costs Can Add Up for a Vacation Home

When you add taxes, condo fees, utility fees and insurance we wondering if the cost begins to approach this $8000 number. Would we better off with something we owned. Right now the condo we rent is worth approximately $250k, so taxes should be around the $4000 a year range. We are told that condo fees are approximately $300 a month or $3600 which includes water. That leaves insurance, electricity, heating and maintenance while we are not there.  With this quick analysis we are over the $8000 number and then some. So it probably does not make sense to buy a vacation home unless we were going to rent it out.

The problem with renting it out is that if you rent it to people who are trying to get away from the cold weather up north. They want the same time we want the unit. So renting it does not seem to work very well in a situation like that. If we decided to purchase the condo, we would want to use it as much as possible. Which just adds to our travel cost. Based on the numbers I think we will continue renting vacation homes.

We wrote a post two weeks ago entitled, “Should we purchase a vacation home” and based our analysis more on emotional issues instead of financial ones. it is good to see that not only did we make the right decision emotionally we made the right decision for us financially as well.

Problems Renting Vacation Homes

Many people buy a vacation home because they have had problems with rentals being badly equipped, or being very dirty and needing cleaning. We have not had this problem , although we did get to preview a unit before we decided and choose one that was clean. We have been renting the same unit for the past 10 years in California. Other condos that we rented have had some problems such as being dirty and needing a thorough cleaning. One unit we rented, we had to go an purchases glasses and towels to dry the dishes. We were able to get  our money back, but really if the condo is well run, this should not be a problem.

We have heard of horror stores when it comes to renting vacation homes so it pays to do your home work, talk to previous tenants, get references and so on. If you do not you risk the chance that you will be disappointed or face a lot of work cleaning up someone else’s mess.

We are interested in hearing what other people have to say about their experiences renting vacation homes. Good well written comments about this subject will be approved, while anything less than that will be picked up by our spam filter.

Our last reader sent us a post about Home Equity Loans and whether they were taking the right approach to applying for a Home Equity Loan and if in fact they can be approved for loan.

In summary, they both have full time jobs which they have been at for over five years. Combined they make $3500 a month. They claim to have an excellent credit rating, zero balance on their credit cards. They also have a small car loan which they make monthly payments on. This auto loan has less than two years to run before the car is fully paid for. They also have $20,000 to put towards a down payment on the home they wish to purchase. Which is a good number depending on the value of the home they wish to purchase.

Home Equity Loans Strategy

The best part of their strategy in terms of purchasing a home is that they do not want to overextend themselves. They lived through the economic downturn in 2008 and spent 6 months on layoff from their jobs as the economy and the auto industry went downhill. They really want to place themselves in a situation were they will not lose their home under any circumstances.

The other key fact is that they recognize that homes in almost every state are at or near the bottom of their value and this is probably one of the best times to make a purchase. They have positioned themselves to take advantage of the current market and are ready to make a purchase.

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We wanted to call this Baby boomer life assurance, but it turns out this is not something people search for. They are looking for over 50’s life assurance which roughly amounts to the same thing. We are going to focus on the baby boomers. We need to ask ourselves whether they really need to have life insurance or not.

In our previous post, “Do I need life insurance”, we listed some of the reasons why the average person may need to have life insurance. These same questions apply to people over 50. Also to baby boomers who are slightly older as a rule. The answers may be quite different since the 50’s are those transition years. This is when the children have finished school and are supporting themselves and unfortunately our parents have passed away.

Over 50’s Life Assurance

For example your only dependent may be your spouse, there are no education requirements and your mortgage is fully paid up. The only thing  you really need to be concerned about is making sure that your spouse has enough money to live comfortably after you are gone.

• How many dependents do you have
• How long will you need to support those dependents
• What about education requirements
• How much debt do you have
• What income level will remain from pensions, savings etc
• What will your burial costs be
• How long will your dependents live e.g. your spouse
• Will your estate owe substantial taxes
• How quickly will your assets be turned over to your dependents

Life Assurance for over 50 or over 60?

At 50 years of age, you probably still have kids in school since people had their children later in life as a rule and so they are dependents for a longer period of time. We all are living longer on average and we need to make sure that we have support for a spouse for a longer period of time. But once you reach 60 years of age, there are many changes in your lifestyle on average. We listed a few that will have an impact on your life assurance decision:

• You may be retired
• You and your spouse have a retirement income
• Your kids are now self-sufficient
• Hopefully you have few debts and have a mortgage free home, car etc
• Your dependents really only consist of yourself and your spouse

Do You Need Life Assurance

Depending on your answers to these statement, you may no longer need to have a lot of life assurance coverage whether you are 50 or 60 years of age.  The life assurance companies would like to sell you some of their products, but why do you really need to carry life insurance at this age when you have no dependents, you have sufficient savings and you have little debt.

The only thing you really need to be prepared for from an estate perspective is :

• Sufficient funds for your burial
• Enough funds for any debts that you may have
• Sufficient funds to support your surviving spouse

Other than that any proceeds from a life assurance package you purchase is just going to the estate and your heirs.

Support for Your Spouse

There is one huge item that we have yet to discuss. Canadians will know that their medical bills are taken care of by the government. They may have to pay for time in a nursing home and these costs can add up to large amounts. American on the other hand who do not have some form of medical coverage could find themselves with huge medical bills which could make life very difficult for a surviving spouse. this is were having both health insurance and life insurance may be something to consider.

If you want to make sure that your spouse gets some assistance in paying the medical bills and nursing home care, then life insurance to cover these kinds of bills is definitely worth while.

We would like to hear your comments on this issue and your thoughts about life assurance over 50 and whether you feel it is needed or not. Even the experts are welcome, since this question is very much of interest to millions of people who are over 50 or even in the class of people considered baby boomers!

Many people ask themselves this question every day, Do I need Life Insurance and if so how much. Then there is what kind of life insurance and how expensive is it. As I dig into this more and more, I am finding that it is a very personal decision based on your own circumstances. What do we mean by circumstances? Well here is a list of factors that a consumer may want to consider as part of their decision process.

• How many dependents do you have
• How long will you need to support those dependents
• What about education requirements
• How much debt do you have
• What income level will remain from pensions, savings etc
• What will your burial costs be
• How long will your dependents live e.g. your spouse
• Will your estate owe substantial taxes
• How quickly will your assets be turned over to your dependents

There may be other questions, but these are some of the big ones that many people try to take into account as they try to decide how much insurance they need or if they even need any life insurance. We will tackle a few of these issues in this post  about, Do I need Life Insurance. Several future posts as we try to figure this out for ourselves as well as trying to give our readers a different perspective on life insurance.

When Do I need Life Insurance

I guess that if you did not have any dependents. If you did not care if your estate could pay any outstanding debts or not. Or if you had enough to pay for a burial service then you would not need to consider purchasing any  life insurance.

Most people want to make sure that their debts are paid for and that there is enough money to pay for a decent burial service. This could be life insurance as low as $5000 for a burial with a no debt situation to the sky is the limit if there are a lot of debts. Where it really gets complicated is when there are dependents who depend on you for their quality of life. No one wants to think about their dependents suffering after you are gone. Who are the dependents?

Well they can be:

• Your spouse
• Your children
• Elderly parents you are looking after
• Children that are disabled

These are people who depend on you to be there and to pay for housing, food on the table, clothes, education and special needs that run the gamete from nursing homes to special equipment. Each has their special needs. We all should give some thought as to how much life insurance we need to make sure these dependents have enough to live on after we are gone.

Baby Boomers – Do they Need Life Insurance

Again this is a personal situation that depends on pensions, savings and retirement savings. Can your spouse live on what you have and will have after you are gone? This is the question you really need to answer for yourself.

Do you atill need insurance? Once your house is paid off, the car is paid for and you have sufficient income to pay for the daily expenses?  It can get actually quite complex even for baby boomers.

Young Couples with Children

You are busy trying to make a living and looking after your kids. You really do not have a lot of time to think about something like life insurance and perhaps not a lot of extra money to pay for life insurance.

But what would happen if one or both of you passed away with no life insurance. How would your spouse and children survive? Who would look after them? Who would pay for the basics such as food, clothing and shelter let alone getting an education?

These are the types of questions all parents need to ask themselves and the answers vary depending on the age of the children, the savings that you have and your aspirations for your kids and your spouse.

As we explore this subject in more detail we will discuss what baby  boomers need to think about concerning life insurance. Also what young parents need to consider in subsequent posts. If you have comments or would like to contribute a post please let us know. All helpful comments are welcome.

For years now we have been vacationing in the Palm Springs area of California. We have always rented a motel room. Or in the past few years we have rented a condo for one or two months. We have watched the prices decline significantly since 2008 and have wondered if we should purchase a vacation home or condo. There are all kinds of issues both for and against in terms of purchasing a vacation home. We have agonized over this for some time, especially when we see a place that we really like and imagine being able to visit anytime without needing to arrange to rent a place. Some of these places even come furnished and all we would have to do is move in!

We have spent a lot of time thinking about this issue of should we purchase a vacation home and decided to share some of our thinking with our readers. If you have gone through some of the same analysis and wish to share these comments with us please do. Also we believe that it is a very personal decision, so what works for us will not work for someone else.

Criteria re Should We Purchase a Vacation Home

We considered the following issues as part of our decision to not purchase a vacation home. You may have other reasons and you may say so what, let’s purchase a home anyway:

• Will the home appreciate in value
• What is the financial cash flow – mortgage, taxes, utilities, redecoration
• Would we rent it out when we are not using it
• Who would look after it while we were not there
• How often would we use it
• Would we go to other locations for vacation
• Will the family come to visit
• Rental facilities sometimes do not live up to the advertisement
• Rental facilities can be messy or tired and not very appealing
• It is someone else’s place

We went back and forth many times regarding whether we should purchase or not and in the end we decided not to purchase a vacation home in Palm Springs. Initially when we made this decision, it was prior to 2008 when real estate prices were booming and homes were increasing in price all over. We decided that buying a vacation home for us was not in the cards because we wanted to try different places and felt that owning a vacation home would hold us back from doing this. If you own a place you feel that you have to use it!

Prices of Vacation Homes have Really Gone Down

Since 2008, the prices of homes and vacation homes in particular have declined a great deal.  Once again we had thoughts about whether we should purchase a vacation home or condo. The prices had decline by more than 50% in some cases ( thank goodness we did not buy prior to 2008) and here we were again assessing whether we should buy a vacation home.

We had been to Mexico and really enjoy our vacation there as well we have visited a number of other locations around the US and always seem to come back to Palm Springs as our go to vacation location. We went through the list of criteria we had set up for ourselves and decided again that purchasing a vacation home was not the right decision for us. Although this time the decision was based on a different reason. Although we still go to other locations and do not want to feel guilty when we are not using our vacation home, we had another reason for not buying a home.

We simply do not want the bother and trouble that owning two homes would present to us. When we rent, we have no issues other than making the decision of whether we are going to rent or not and is the place clean etc. When we are ready we leave and do not have to worry about closing the place up for a long term absence or arranging for someone to look after it for us. It is a no worry vacation. So once again we decided not to buy a vacation home.

What About Long Term Real Estate Investments

Most people buy vacation homes for a place to take a vacation and appreciation is secondary. The long term real estate market in California is still in trouble and although homes have started to come back a bit, they have a long way to go. We could easily have another recession and for us it is not worth the risk of buying real estate unless I planned to hold onto the home for more than 10 or 15 years.

After all was said and done, our decision is to continue to renting and not purchase a vacation rental decision. If you have arrived at the same decision or are following a different direction, we would be interested in your comments and reasoning. Our readers will enjoy learning some of the ideas that went into your decision.

We received a question about home equity loans in Akron, Ohio from a reader and will answer his questions in our next post about Home Equity Loans. This client has provided a good deal of information, but we are not sure what their question really is. Perhaps they are asking how to avoid a repeat of the housing disaster in 2008 were many people lost their homes and a great deal of money. Many not only lost their homes, they also lost all of the contents of the homes, including furniture and any clothing they had left in the place.

Question to Debt Counselor about Home Equity Loan::

We live in Akron , Ohio and are planning to purchase a home in the near future. Housing prices are at the lowest we have ever seen and we think that it is time to purchase a home. We have saved up a down payment for the purchase and have steady jobs that pay well. We both work in the auto industry which as you know has rebounded significantly in the last two years. This is the best time for us to purchase a home since we also want to start a family.

Do you currently have a mortgage? :: No, we currently rent a home

Home/Mortgage Loan Amount :: the house we plan to purchase is ;listed at $150,000 and we have a down payment of $20,000 so we need a home equity loan of $130,000

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Are boomers downsizing to a bungalow to save money or avoid stairs and can they save money when the make this transitions? Many baby boomers are retiring and thinking about whether they should stay in the home they have raised their children in or should they move to a small home with no stairs to climb, i.e. a bungalow! This is a huge step for many people with a lot of issues to be considered.

For most there is a huge emotional issue to consider. After all they have many fond memories of raising their families, great neighbors and comfortable surroundings. Some people must move for financial reasons or perhaps they do not have the positive memories that we mentioned earlier and cannot wait to move away. On the other hand many consumers cannot wait to move. They may not have had the positive experiences that we mentioned earlier and want to try another neighborhood.

Boomers Downsizing to a Bungalow

Stress Associated with Moving

It is a difficult and troubling time for those people that must move, especially if they would prefer to stay where they are. When boomers are downsizing to a bungalow, they are motivated by finances, or by health issues. Sometimes it is a change of scenery or just to be closer to the family. We have gone through the same analysis ourselves. Although we have been thinking about this issue for more than 5 years, we still have not made a decision. I guess we like our home and neighborhood too much and there is nothing urgent that would force us to make a decision.

The other big issue about downsizing to a bungalow is that you really do not save that much money. We have found that bungalows today are priced high because they are in high demand. Compare the cost per square foot for a bungalow against a normal two story house and you will probably find that the costs are much higher for the bungalow. We think that builders are trying to take advantage of the baby boomers who are trying to downsize and save a little money. The prices are high and you may not save that much money! Bungalows are also in demand since many people would prefer a bungalow and this drives the price up.

An Example of Some of the Issues

A friend of mind downsized to a bungalow and had to pay $1000 just for installation of his appliances by the builder. I asked him why he did not do it himself since he is quite capable of doing his own installation. The answer was that the builder would not honor the warranty if he were to do his own installation! So he was left with no choice but to pay the $1000. How many other things are like that, which add a lot of extra cost to the overall price of downsizing?

Many baby boomers are pretty handy when it comes to doing their own repairs. This includes the associated installation of new appliances as mentioned above. What happens though as we age and cannot perform some of these tasks any longer? Is it time to downsize to a bungalow or move into a condo, were everything is done for you? We think that it is cheaper or less expensive to stay right where we are. Even if we have to pay the extra costs to have someone do the work for us. The money we save from not having to pay legal fees, real estate fees and moving costs will pay for the services we need for many years.

Save Your Money

The money you would spend moving, paying for legal and real estate costs can all be invested into your current home. Avoid the hassle of having to move, of having to throw a lot of things out. No need spending money on a lot of new furniture. The old furniture will not fit the smaller space or will not complement the décor. For my money we are going to stay right where we are.

Another factor that comes to mind is that sometimes the kids come home after being away for many years. Downsizing might prevent that, but then keeping that large home means you can help them out as well.

Your comments on boomers downsizing to a bungalow would be appreciated. Are you planning to downsize? For more ideas about downsizing your home, click here.

Our last question came from a reader in Lorain , Ohio. They are trying to understand why they cannot get pre-approved  for Home Equity Mortgage Loans. The information they provided can be summarized as follows – income is $65,000, mortgage equity request – $150,000, credit card debt is $0 and they are in stable jobs.  They currently rent and have 10 credit cards between them. they also have $10,000 as a down payment. They would like to know what the best plan would be for them, given this situation.

 Home Equity Mortgage Loans

To begin with a $150,000 over a 25 year period at prevailing interest rates is going to cost approximately $800 per month. Adding property taxes to this number assuming $2400 a year for taxes brings the monthly payment up to $1000 / month. This is of course an estimate since the actual tax amount will depend on the home that is purchased.  This level of monthly payment places then at the high end of what is normally considered by many banks.  The ratio of principal , interest and taxes should not exceed 40% and most banks are looking for a lower number.

With only $10,000 to use as a down payment, they are looking for what is called a high ratio  mortgage which usually attracts a higher interest rate driving their monthly costs even higher. Typically lenders are looking for a minimum of 15% of the cost of the home as a down payment. they should have closer to $23,000 as a down payment to meet the minimum down payment criteria.

They both hold stable jobs and have been at their jobs for a period of 5 years which is definitely in their favor.

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In previous posts we wrote about the times to  negotiate your health bills and we felt that some more detail behind each suggestion was warranted. The first one was Negotiate while you’re still healthy!  The others included – At the time you get a big bill; If you are suffering the results of a medical error; When you are caught between doctor and health plan; and Planning an elective procedure. We will discuss these in more detail in future posts as well. Remember – Negotiate Your Health Bills

Negotiate Your Health Bills – Planning an elective procedure

Are you planning an elective procedure of any kind? It usually means that you are going to pay for the full cost of the procedure. Most insurance companies will not cover cosmetic  surgeons or plastic surgeons charges. Unless it is due to an accident in which case the auto insurance for example may pay the fees.  It is also a very emotional time for most people. You are possibly planning to make some changes to your body. Hopefully this procedure will improve your looks and how you feel about yourself.

It is very difficult to negotiate anything when emotions are involved. It is just impossible to be objective about what you are discussing. Reviewing the changes a plastic surgeon is going to make or minor cosmetic surgery is about as emotional as you can get.  When is a good time to negotiate and when is it not a good time? Many people ask themselves that question every day. They also sometimes take advantage of what they think is a great deal, only to find out that the surgeon is not skilled in what they do and botches the job!

In our next post we will discuss the next area of when it is time to negotiate your health bills. At the time you get a big bill; If you are suffering the results of a medical error; When you are caught between doctor and health plan; and Planning an elective procedure.

Cosmetic Surgery

Approach the decision in a business like manner. You can sometimes make the transition from an emotional decision to one that is objective. Ask a friend or family member to go along with you to take notes and listen to what the surgeon is saying. You can review these notes afterwords to make sure that you really understand what is being proposed. Also what the risks are and what the detailed cost will be.

It is unlikely that you are going to negotiate a cheaper rate with a cosmetic surgeon or plastic surgeon, however you can make a decision about what procedure is done, how much is done and what if any areas that you may wan to defer or not do at all. Discussing these options with the surgeon will give you the input to make the decision as to what should be done and how much it is going to cost.

Whatever you do, if you feel uncomfortable about the situation, go somewhere else. Trust your instincts, there have been just too many bad jobs done, even on famous people who were just truing to save a buck. Getting a second opinion is not a bad thing either . If nothing else it will make you more comfortable about the work that the cosmetic or plastic surgeon is going to do and how much you will be paying for this work!

We would really like to hear from readers who have had cosmetic surgery completed or have been to a plastic surgeon. Your comments will be helpful to our readers. We will approve all constructive and helpful comments and even a link back to your site for quality comments.

Baby boomers all over the world are thinking about what they should do with regards to their current home and whether they should downsize or not. This post is going to address some of the issues associated with what you should think about when downsizing to a condo! There are many different issues and it really depends on your personal situation. Some of the items we will mention in this post will not really matter to you since you do not think they are important to you with your life style or situation in life. While others might make you step back a moment and really think about whether it is the right decision for you. Personally we want to downsize to a condo, but have not found the right condo that makes sense for us.

Downsizing to a Condo – Major Considerations

The major areas that we think you should consider as best we can determine are the following:

• Life style
• Expenses
• Cost of Moving
• Finances
• Family
• Health
• Climate
• Dreams

We will discuss each one in a little more detail to give you some insight regarding the the things to think about when downsizing to a condo.

Life style

For some people it is a pure lifestyle decision which is independent of many of the other thoughts we will discuss later. It is freedom to lock the door and take off, knowing that the grounds and the building will be maintained while you are away. It is not having to cut the grass or do home maintenance, at least outside. Some one else will do it for you, all be it at a cost! It is also location. Many condo’s are located in or near city center’s in close proximity shopping and restaurants. It might even be about being closer to neighbors who form a community which you can spend time with instead of having to leave the property. Many condo’s oriented to seniors are this way.

Expenses

Many people are worried about being able to deal with the expense of maintaining a home. They would rather pay a monthly condo fee which is fixed and will pay for all day to day expenses as well as some of the longer term significant issues such as windows, parking and the roof. While this is great in concept, many people get sticker shock when they hear what the actual condo fee’s are and how high they are.

Condo fees are high for a couple of reasons: first a study should have been completed which is designed to make sure that you have money in the condo accounts to pay for things as they mature; secondly, you are paying top $ for everything including those things that you would normally do yourself around the home and last, someone is making a profit, usually the condo management company you have hired to manage the affairs of the condo.

best approach is to create your own budget comparison to compare all of your day to day expenses as well as long term expenses to see which is the best approach for you.

Finances

The last statement is a great into  into our next topic. Many people are looking to reduce the monthly expenses they have for their current home and move to a condo. Unfortunately for many, this just does not work out this way. When you take into account the cost of moving, legal fee’s , redecoration fees etc, many homeowners decide to stay right were they are instead of moving. Create a budget that shows your current expenses and compare them to what it will be with your new home. This is the only way to tell if you will really save money or not. don’t forget to include heat, electricity and taxes in your expense comparison.

Cost of Moving

We mentioned the cost of moving above. These include real estate fees, legal fees, taxes if ay, actual moving costs, and redecoration costs in your new home. You may be surprised when you add all of this up!

Family

How much support will get you get from the family? Are they close by or will you move closer to them to hopefully gain the support you will need. It is a trade off between being close to family and being close to good close friends. Many people have to depend on professional support which can get very expensive. this is another item that you will want to factor into your decision.

Health

Can you continue to look after your own home and for how long? Can you climb the stairs or should you install a stair lift. Installing a stair lift is much preferable by many people compared to moving. Health can become a huge issue for many and it is tough to decide when the time is right.

Climate

Many baby boomers are trading cold climates for the warm south. This may be part of a life style decision as well. Some will maintain two homes, while others will just move to a new home, condo or otherwise for the warm weather.

Dreams

Fulfilling a dream can be another reason to think about moving to a condo. You just have to watch international house hunters to understand how many people will move to attain a dream they have always had about living in a different culture or climate. There is nothing wrong with attaining a dream, as long as you recognize that this is the real reason for downsizing to a condo in another city or climate or country! Most people do not follow their dreams.

Your thoughts on additional things to think about when downsizing to a condo are welcome. Our readers will enjoy hearing about more ideas of this sort.

For more thoughts and ideas about down sizing from your current home, click here.

We received a question about  Home Equity Mortgage Loans from a reader and will answer his questions in our next post about  Home Equity Mortgage Loans. Many consumers have questions like these and we try to answer them as best we can. Everyone’s situation is a bit different. As a result we always encourage readers to obtain independent advice about their specific situation. We suggest that you talk to several people to get the best answer. Then make up your mind as to what you should do.

Question to Debt Counselor re – Home Equity Mortgage Loans::

We are looking for a  Home Equity Mortgage Loan and live in Lorain , Ohio. My wife and I have been married for 3 years and we both have jobs that give us a combined income of $65,000. We have been at the same employers for the past 5 years as well and have good stable jobs.

As far as we know our credit rating is good, yet we cannot seemed to get pre-approved for a  Home Equity Mortgage Loan for a home we want to purchase. Can you help us understand what our problem is, since the loan managers will not give us any information.

Do you currently have a mortgage? :: No, we currently rent

Home/Mortgage Loan Amount :: $150,000

Other Loans, Including Credit Cards:: We have a zero balance on all of our credit cards. We have between us 10 different credit cards.

Are you employed and for how long:: yes, for 5 years

Your credit rating to be – excellent, fair, or bad? :: Excellent as far as we know

Gross Amount Per Paycheck :: $2500 every two weeks combined

Do you agree to have this information published online, without your PRIVATE information of course? :: yes

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In a previous post we wrote about the best times to  negotiate your health bills. We felt that some more detail behind each suggestion was warranted. The first one was Negotiate while you’re still healthy!  The others included – At the time you get a big bill; If you are suffering the results of a medical error; When you are caught between doctor and health plan; and Planning an elective procedure. Always negotiate or at least attempt to. You never know how much you will save in your health costs for whatever procedure that you are having. We will discuss these in in more detail in future posts as well.

Negotiate Your Health Bills When you are caught between doctor and health plan

One of the reasons we are writing about this subject is that it happened to us. Fortunately it was not a large amount, however it really took a lot of time. I finally had to intervene to get the issue going. The collection process had stalled. The doctor had referred his bill to a collection agency. We were beginning to get harassing calls from a collection agency.

In brief what occurred was that we visited a hospital. I had several tests and was seen by a doctor. All of the health information was provided upon check in to the emergency clinic. We were assured that there would be no billing issues. We would not need to pay any upfront charges. The clerk failed to pass this information onto the x-ay technician’s office which operates as a separate agency within the hospital. When he was not being paid, he routinely referred the collection of the payment he was due to a collection agency. It went downhill from there. The entire problem began because of a lack of communications within the hospital.

They were not talking to the health insurance company who was more than willing to pay the fee. When I provided  the information to the collections agency after several nasty calls, they refused to speak to the health insurance company. The health insurance company also refused to talk to the collection agency siting information privacy issues.

Resolving Your Health Bill

The only way out this was for me to persuade both parties to come on the phone with me at the same time in a conference call. I introduced them to each other and verbally give them permission to exchange information and tell them to solve the problem. Once this was done the collection agency was willing to provide copies of the invoice to the health insurance company. They could verify the bill and confirm they had not already paid the invoice. I guess there is also a lot of fraud and both parties needed to make sure that there was no fraud involved and that my private information was also protected.

Six months later, after we had visited the hospital, this bill finally got paid after a lot of discussion and lost time. Also the health insurance company negotiated a reduction. The collection agency took it’s share and the doctor might have been paid 30 cents on the dollar. All because the hospital administration failed to provide the correct information to the company who provides x-ray services to the hospital!

By the way, the amount of the invoice was only $178! Can you believe it, all that lost time for a paltry $178! All parties lost money on this issue just due to the time that was spent on collection and clarifying the matter.

In our next post we will discuss the next area of when it is time to negotiate your health bills and planning an elective procedure. Readers are encouraged to provide comments. Well written comments that are informational and helpful to our readers will be approved including links back to your own site.

Most people want to be debt free by the time they retire and most aim for this objective, however surveys are increasingly showing that most people are not achieving this aggressive objective nor are they coming even close to meeting it. When Will You Be Debt Free? Retirement with a nice nest egg seems to be a dream that many people are just not achieving.

Respondents to one survey projected they would be debt-free by 55, on average. A key finding of the poll shows that across all age groups, consumers tend to believe they will be debt-free within approximately 10 to 15 years of their current age. The reality is that many will not be owe money even into retirement. The poll found:

• Consumers aged 18-24 believe they will be debt-free by age 32, on average
• Consumers aged 25-34 believe they will be debt-free by age 44, on average
• Also Consumers aged 35-44 believe they will be debt-free by age 54, on average
• Consumers aged 45-54 believe they will be debt-free by age 60, on average
• Consumers aged 55-64 believe they will be debt-free by age 65, on average

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Our latest reader has posted a question about new home construction loans in general and is also asking why he may not be eligible for a loan. He and his wife make a relatively good income. They have stable jobs which they have been at for 10 years and they have an excellent credit rating. They also have $30,000 to place as a down payment on the property and they already own the land. they have the plans, but have not proceeded with obtaining building permits or hiring a contractor as of yet. He wants to know why it is so difficult to obtain a new home construction loan and what he can do to improve his chances?

New Home Construction Loans

New home construction loans are much more difficult to obtain even when you have everything lined up, a great reputation from a credit perspective and also from a builder perspective. Individuals usually lack in the latter category and many banks will just shy away from them, thinking there is just too much risk associated with this type of loan. There can be a lot of risk in terms of the builder completing the home as well as schedule issues that many banks are just not willing to take on.

Factors in the favor of this particular couple include:

• They already have the land
• Their credit rating is excellent
• They have $30,000 saved for a down payment
• The plans have been drawn up by an architect and
• They have stable jobs and income.

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Many seniors are in a dilemma these days about what to do! Should they stay in the home they have raised their kids in  and were they have many great memories of family life? Or should they sell their home and move into another place, that perhaps is on one level so there are no stairs to climb and costs less to maintain and operate? Or should they rent a place until they figure out what to do? These are just some of the questions many people are asking themselves and the answers are probably different for everyone depending on their personal situation, their finances and their health? We will try to explore some of these issues in this latest post.

Seniors Sell Rent or Stay

Staying in Your Home

By far the majority of seniors want to stay in the home that they have spent raising their families and the home that has great memories. A few will move, because their spouse has passed away and others because of bad neighbors etc. Familiarity is the key here and the older we get the less we want to deal with change. We like things to be the same and routine, which may sound boring, but that is just the way it is. Also it takes a lot of work to move , it is expensive and you probably have to throw a lot of stuff out that also has fond memories.

However there are some issues that you must be able to deal with if you are going to stay were you are. Maintenance on your home is one item that is very important if you are going to be comfortable and maintain the value of your home. Either you do it yourself or pay someone to do it.  The cost of maintenance can be difficult for seniors on a fixed income. If you have a larger home, it will take more energy to heat and cool it, as well as deal with the homes daily expenses. Build a budget and confirm that you can continue living were you are in the comfort that is acceptable to you!

Downsizing to a Smaller Single Story Home

Many seniors will downsize from a large home to a smaller one with the idea of saving money on taxes, on utility costs and the cost of maintaining the home. I have run a number of comparisons taking into account real estate costs, legal fees, moving costs and redecorating costs and for us it just does not make sense financially to down size! Compare the these costs for your situation and complete your own assessment before you make a decision to move to a smaller home!

Some times the decision to downsize is related to health issues. Perhaps you find it difficult to climb the stairs and are looking for a home that is on a single floor. Many people opt for bungalows, but then are faced with all of the extra costs mentioned above. For some installing a lift on the stairs would be a better cheaper option than moving! Evaluate this decision carefully before you make a decision.

Selling Your Home and Renting

One couple we know has sold their home and have decided to rent a town house. They claim that they just were not sure were to move to so they are going to rent for a while before buying another home. I think they decided to take the money they got from selling their home, have invested it and are using this income to augment their life style. They are on a fixed income and have been retired for many years. Their pensions are not indexed and with inflation are probably struggling to meet all of their expenses.

This could be a great way to live and have a a little more income to help you maintain a lifestyle that you enjoy. The danger here is the temptation to spend some of the capital and not just the income. Secondly, is the income you are generating from the sale of your home sufficient. Is there enough to pay the rent and still have some left over. Renting can be expensive too depending on were you live and how much you pay for rent. Again you need to do the math and determine if this option makes sense for you on a financial basis.

We would love to hear your comments and thoughts about these options. Perhaps there are other points that we did not identify that our readers would find interesting.

We just read an article that fully 33% of Canadians nearing or in retirement still have loans and mortgage debt that they are paying monthly payments on. For some this is quite serious. Since they are still paying a mortgage and have limited income remaining to live on. Pay Down Your Debts Now! These folks are also on a fixed income from pensions and government income. They cannot afford to pay down the debt all at once.

For a limited few consumers, it is merely a manner or re balancing their portfolios to eliminate the debt and live debt free while they are in their retirement. If you are in your 40’s now is the time to focus on paying off all of your debt so that when it comes time to retire, your income is free to spend on whatever you wish! Imagine the freedom.

This same survey indicated that more than 50% identify it as an important issue to save, to pay down the debt they have and to have a plan to pay down their debt. This is the baby boomer group which is retiring or about to retire. Many are not prepared and are not good at meeting their plans if they have them. This survey caught our attention since it really brought home the fact that people in this age group may have to adjust to a lower level of living than what they are used to when they retire.

This may be a tough adjustment for people who are used to working, having a good pay check and then faced with living on a fixed income at a lower level than they are used to. They can easily build up their debt levels even further by not adjusting their living standards and reducing their expenditures.

Plan for your Retirement Now to Gain Some Kind of Financial Freedom

Most do not have plans and have no idea what they are in for when they retire. Here are a couple of steps that you can follow that will begin to help you get ready for retirement and also organize your finances:

• List all of your monthly expenses
• List your income
• Identify income that will grow as time goes on
• Identify your debt, the monthly payments and the maturity date
• Review your income after retirement
• Identify any income gaps
• Prepare a budget
• Develop a plan to reduce expenses if needed to balance your income vs. expenses
• Meet with a financial adviser for help to assess your retirement situation
• You will need a list of all of your assets and debts now, and at retirement
• You may want to meet with several financial advisers and compare recommendations
• Develop your own plan based on all of this data and recommendations.
• Adjust your savings plan and your debt plan to meet your goals for retirement

Pay down Debt

If even one person reads this post and takes some action about paying down their debts, then we will feel it has been worth it to have written this post. Even if we find that people are thinking about saving and paying down debt, we will have made some headway. The best advice we can give to young people is to save 10% of their income towards retirement starting from the time they begin work until they retire.

Unfortunately for us, we fall into the group that still has debt but we do have a plan to get out of debt and be debt free by a specific age. Whether we get there or not is going to depend on the markets, the housing prices and how long we continue working. We would really like to be debt free, but we are not quite there yet.

If you have similar issues or have points you think our readers would appreciate, please leave us a comment.

Back in August we wrote a post about reverse mortgage loans describing what they are and how some people can use them. We tried to be as factual as possible and we tried to describe the overall process. We are not in the business of providing reverse mortgage loans of any kind. As a result we decided to do another post about the subject, this time titled Reverse Mortgage issues for Seniors. It should also be mentioned that as a writer we are against reverse mortgages. Especially when they are arranged by many of the companies that we found on the internet. I am sure that there are many reputable companies out there, but you must also be very careful.

Reverse Mortgage issues for Seniors – Sales and Marketing

The first thing that everyone should remember is that all of these names are just marketing names. The goal is to put you in the right frame of mind when you are dealing with a lender. For example what is the difference between a loan that let’s you draw on it whenever you need cash and pay it off whenever you have cash vs. a reverse mortgage? These type of loans sometimes go by the name Powerline Loans.

Reverse mortgages and powerline loans are much the same. Except in the case of the powerline , the customer is in control of how much they borrow. In the other it is all automated and set up for you.  Personally I like to be in control of my finances. Not some institution which I can only talk to via the phone. Even then I get a person in a call center that is hundreds or thousands of miles away.  I have everything automated and do all banking electronically. But I still like to be able to go to a solid brick and mortar type bank to discuss any issues that I have.

A Payment Every Month

Back to reverse mortgage loans. These loans typically send you a payment each month. The interest is calculated monthly which is added to your balance. Both the interest and the monthly payments can add up quickly so you need to plan carefully before choosing this option. While they say you will never be forced to sell your home. They certainly do want the loan amount owing when you do sell or move to another location. If you pass away while participating in a reverse mortgage, your estate will have to sell the home. The estate will have to repay the balance owing at that time.

As a senior,  having this monthly income can be very helpful to pay bills and augment your total income. It may mean the difference between living extremely frugally and a comfortable retirement or having to move to some other place which you are not comfortable with. It is difficult as a senior to deal with moving homes and dealing with finances that seem to get increasingly complicated. There are a large number of very fast talking sales people who may put pressure on you to take the deal. Never take it on the first meeting and always take someone you trust with you to take notes and help with the decision making.

Important Decisions

This is a really important decision to make financially as well as life style. Do you stay in your own home and build up debt or do you move to another place and buy a less expensive home or do you pay rent? We will discuss some of these options in our next post – Seniors – Sell, Rent or Stay

If you have been dealing with a reverse mortgage and have comments about them either way, please leave a comment. I am sure our readers will be interested in what you have to say about them!

Questions about New Home Construction Loans. We get questions all of the time about different kinds of loans and financial situations. If you have a question about new home construction loans or any other type of loan, why not write us a comment with your question and we will try to answer it in our next post. There are no questions that are not important or too silly. Getting the right answer can save you a great deal of money, however as most people realize, your situation will be different from everyone else and you need to fully research your situation to make sure that you make the right decisions for yourself.

We received a question about new home construction loans from a reader and will answer his questions in our next post about home construction loans.

Question – New Home Construction Loans:

We are planning to build our own home using a number of contractors to help us. We are having trouble finding financing for construction of our home. Also we are wondering what we are doing wrong since many of the banks are unwilling to provide financing.
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Home loans for people with bad credit is always an interesting subject and our next question from one of our readers is exactly on this subject concerns getting a home loan when you have a bad credit rating.  To summarize, our readers  credit rating is below 500 and their  debt to income level is only .3.  They had some trouble a while back with a company so they refused to pay them and they sent a notice to the credit agencies which caused their credit rating to nosedive.

They indicate that they never missed a payment and now have this bad credit rating and want to get a home loan. This is really an unfortunate situation for the people who sent in this question.

Home Loans for People With Bad Credit

This is what happened and let it be a lesson to many other people as well. They received a product from a less than reputable company who did not take returns. The couple was not satisfied with the product and wanted to return it and not complete all of their payments. The company referred to their policy of no returns and tried to collect the remaining money from their customer.

When they refused to pay, two things happened. One it went to small claims court and the couple eventually won their case. Secondly the company in the process of collection also filed a report to the credit agency and as a result this couple who previously had a stellar rating now have a bad credit rating.
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This is a second post on the subject of upgrading your home. This time we will discuss the relative scenarios regarding upgrading or replace your driveway. Many new homes are built with a paved driveway which lasts for a number of years and then begins to crack and crumble depending on the environment that exists in your area. A home with a bad looking driveway does not sell well!

Hot sun will dry out and crack driveways, while cold winters will do the same with the ice and snow getting in cracks to expand them and crumble your driveway in the spring when the frost comes out.

When people retire, they want to have items such as this upgraded and or replaced with new asphalt of interlocking brick. Get it done before you retire so you do not have the expense afterwords while living on a fixed income.

Replace your Driveway – Alternatives

There are alternatives to consider when it comes to financial issues. With the idea of avoiding spending money when it is not necessary, what can you do to ensure that your driveway lasts a long time?

• Seal your Driveway Every year
• Patch Cracks and fill any holes that appear
• Replace with Interlock

Like anything else, looking after your homes maintenance in a timely manner will save you money in the long run. It does take some work and this can be a problem for many people, so they either get some one to do the work or they just ignore it until they have to replace their driveway because it just gets so bad.

Seal your Driveway Every year

An asphalt driveway can last for many years if it is properly looked after.  Sealing cracks before they get too large and sealing the entire driveway at least once every couple of years will ensure that your driveway will last more than 20 years in any kind of climate.  Without sealing, we have seen driveways that needed replacement after 10 years. A $50 can of sealant applied with a paint roller is an easy job for an afternoon for many do it your self hand men.

That is all it takes to maintain your driveway. Be careful of the people who knock on your door offering to seal your driveway. They do not always use the best sealant and will do a quick job that looks good for a month. Always use good quality sealant.

Patch Cracks and fill any holes that appear

If you have major cracks or small pot holes in your driveway always fill these first and then seal your driveway. Use a good quality tar based mix and seal all holes and cracks before applying the liquid sealant to your driveway.

Replace with Interlock

This is by far the most expensive. If asphalt costs $3000 to pave your driveway, then interlock stone is going to cost at least twice that much. Even interlock needs to be repaired from time to time, so make sure you keep extra stones around to replace those that crack in the middle of your driveway.

Design is important both for look and feel, however fancy designs can really drive the cost of the driveway replacement up as well. Take the time to review the alternatives before you make the plunge.

Replace your Driveway – Summary

• Seal your Driveway Every year
  • %50 to $100 a year to maintain your driveway and keep it looking fresh for many years
• Patch Cracks and fill any holes that appear
  • Add another $100 for patching and sealing, still pretty inexpensive
• Replace with Interlock or Asphalt
  • Anywhere from $3000 to the sky is the limit depending on size, design and style.

For my money I would rather spend a few hundred dollars every year and seal my driveway to avoid spending significantly more on the driveway. for more info about home improvement loans, click here.