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Rental Cars: Should You Buy Insurance?

rental car insurance

 

One of my pet peeves when traveling is the hard sell for insurance products at the rental car counter sometimes. Often my negative response is countered with the reasons I should buy it; even though I already declined. There’s a reason for that.

Insurance is a profitable product. Collecting $9 or more a day for coverage that the vast majority of renters will never use generates a great deal of revenue. But is there a hard and fast rule about rental car insurance?

No to Rental Car Insurance

You may already have rental car coverage and not realize. it. Many credit card companies include this feature so be sure to check out the benefits of your card and use it when picking up the vehicle.

Organization memberships often offer travel benefits including coverage for rental car damage. My AARP membership has a maximum cap on damages if I decline the offered coverage.

Another reason to turn down additional insurance at the counter is that your own insurance plan may already provide coverage. Many comprehensive policies extend to cars you’ve rented.

Yes to Rental Car Insurance

Times when you should strongly consider signing up for the optional coverage is if you don’t have insurance through any other means. Let’s say you don’t own a car or belong to any organizations that provides this benefit. It’s better to pay the daily fee than risk being on the hook to replace a fairly new car.

A time when even I consider rental car insurance is when renting in foreign countries. Like health insurance, your car insurance policy probably doesn’t provide coverage out of the country.

Conversely, the other country may not recognize your coverage provider. Most Southern Californians are used to buying Mexican insurance as part of their car trip across the border. If you have an accident without this policy, it’s directly to jail until you can come up with the money to pay damages.

 

Before your next trip involving a rental car, do some research. Read your insurance policy and/or check with your agent on existing coverage. Find out if your credit card or any memberships offer protection. If you’re going out of country, understand the local laws regarding driving and insurance.

By preparing, you can make an informed decision and be confident when you answer the question about optional insurance. Do you have any rental car tips?

Photo : Some rights reserved by kevinspencer

Maximizing Your Flexible Spending Account (FSA)

flexible spending account expenses

As part of our goal to keep baby expenses in check, we’re looking at possible ways to save with upcoming bills. Something that we’re examining is the Flexible Spending Account offered at my husband’s job. It may help with our taxes and save us some money.

What is a Flexible Spending Account?

According to the IRS, a flexible spending account is defined as:

A health flexible spending arrangement (FSA) allows employees to be reimbursed for medical expenses. FSAs are usually funded through voluntary salary reduction agreements with your employer. No employment or federal income taxes are deducted from your contribution. The employer may also contribute

Benefits of a Flexible Spending Account

A big tax benefit with FSAs is that any funds you contribute are pre-tax. That means you can lower your tax obligation while getting your medical expenses paid. You have the entire calender year to use your account to cover your medical expenses.

Be Careful with FSAs

FSAs have a downside of  expiring at the end of the year, meaning if you don’t use it, you’ll lose it. As of 2011, there has been a number of changes to what can be covered with your FSA. According to the IRS’ announcement:

The Affordable Care Act, enacted in March, established a new uniform standard that, effective Jan. 1, 2011, applies to FSAs and health reimbursement arrangements (HRAs). Under the new standard, the cost of an over-the-counter medicine or drug cannot be reimbursed from the account unless a prescription is obtained. The change does not affect insulin, even if purchased without a prescription, or other health care expenses such as medical devices, eye glasses, contact lenses, co-pays and deductibles. The new standard applies only to purchases made on or after Jan. 1, 2011…

That means that you should start calculating carefully what you’ll most likely need for next year so you won’t have some of your money wasted.

Calculating How Much to Save in Your Flexible Spending Account

The best way to approach it is by planning ahead, before your open enrollment deadline and estimated what you’ll need to save for the next year.

Look at Upcoming Eligible Expenses

Looking over the IRS’ list of eligible expenses, I noticed a few that could apply to our family:

  • Contact Lens: I have pretty bad vision since I was a kid. I have a heard time seeing the giant “E” on the chart without help. I perfer to use contacts, so I will be purchasing some this upcoming year.
  • Eyeglasses: As a back up every few years I get a pair of eyeglasses. It’s about time to replace the ones that I got. I’ll shop around to get an idea of what to expect. Since my vision is bad, it costs extra to thin the lens down.
  • Laboratory Expenses: If your doctor refers you to get lab tests done, you can include that as an eligible medical expense.
  • Lactation Expenses: A recent change in law allows you to deduct your breast pump and other location supplies.
  • Medicines: If prescribed by your doctor, OTC and pharmacy medicines are included for your FSA.
  • Physical Examinations: Your annual physical exam is an eligible medical expense according to the IRS.

For us, we’re estimating the biggest expenses health wise will be for the baby’s well visits. While lactation expenses would be great to use the flexible spendung account on,we’ll be purchasing this year, not next year when we’ll try the FSA.

My next step is to look at reasonable prices for the above items and then discuss with each other how to allocate his FSA contributions accordingly.

Thoughts on Flexible Spending Accounts

How many of you have a FSA offered at your job? How many of you take advantage of that?

Photo Credit: quinn.anya

Net Worth Review: July 2011

net worth update

It’s the beginning of the month, which means it’s time to examine last month’s finances and see how it’s affected our net worth. It’s a great exercise to help us see where we’re doing well and what we can improve on.

Our Spending Habits in July

I guess the heatwave gave us a silver lining – we spent less than usual for the month. Staying indoors with the air conditioning seemed more appealing to us. It was big savings, but we shopped less and spent a little less on gasoline.

Here are our 3 biggest expenses last month:

  • Home (Mortgages, Extra Payments, HOA Fees, etc): $1,238.85
  • Bills/Utilities: $347.54
  • Food (Groceries, Restaurants, Etc): $345.76

It’s looking good and I feel great that we’re keeping an eye on spending. Having her arrive so late in the month didn’t affect our finances. I definitely expect to see next month’s food expenses to go up a bit.

However, there’s no telling how the next few months will go with that with the baby. Guess we’ll be keeping a close eye on baby expenses and our budget.

Checking & Savings

It’s been pretty stable this month as we’ve pretty much have been resting up for the baby’s debut. My husband also received a bonus from work which is being saved until we figure out the car situation.

One expected expense for next month is the hospital bill for when the baby arrives. We received an estimate from the OB/GYN for their costs and we got an estimate for the hospital portion. Supposedly we’ll pay the hospital and doctor and my husband will get a large portion of that reimbursed.

According to our estimates, our baby fund should be enough to cover everything.

Retirement Accounts

We’re still not planning on making any changes to our retirement contributions this year. We really want to focus on more immediate goals of getting ready for the baby. I can’t anticipate the future, but I believe once we have some idea of how we’re going to handle our finances as parents, we’ll look at our retirement accounts and contributions.

My husband’s 401(k) has steadily been going up and it’s bumped up our assets a bit this month. We need to consolidate his accounts, though, and move over some money into a Roth IRA for him some time in the next couple of months. Unfortunately internal inertia is slowing that process. My goal is to have it done by the end of September. It would make it so much easier to track his accounts and it would give him more control with how he invests his retirement money.

Our Cars Expenses

This was an issue this month with my husband’s Toyota. In case you missed it, here’s a summary of the repairs needed:

Here’s a rundown of the mechanic’s diagnostic:

  • New A/C Compressor and Clutch Need
  • Replace Serpentine Belt
  • Replace Radiator
  • Replace Head Gasket

Total estimated cost for parts is about $3,500 with labor.

What’s making it a bit easier to go down to a one car family is the heatwave. I’m staying indoors as much as possible, so my husband drives the Jetta on those days, minimizing the use of his Celica.

Student Loans

We have one student loan between us. Right now we’re continuing with the automatic monthly withdrawals for the student loan payments. This gives us a slight discount on the interest rate as an added bonus. It’s been relatively easy to keep up with them; we just confirm payments have been made each month from our joint checking.

If we have any savings in December after reaching our other financial goals for the year, we’re hoping to pay it down. Since this is a reach goal, I’m shooting for $2,000. If we don’t make it we won’t be disappointed, but if we do, it’ll be icing on the cake.

House and Mortgage

The mortgage payments are chugging along. As part of our usual routine, our automated extra principal payment (now $175) was sent in on the 15th of the month. When deciding on how much we were going to send in to our lender, our main focus was creating something sustainable and had some impact with the mortgage.

Here’s where we stand today with the mortgage:

  • Total Loan Amount: $110,138.69
  • Interest Rate: 5.00%
  • Loan Term: 30 years, fixed rate

Our goal is to pay off our mortgage years before we retire.  Right now our timeline is about 15 years, instead of the 30 years we signed up for. We wanted some wiggle room in case we ever hot a financial speed bump. Once our mortgage payoff is accomplished, we’d love to be able to direct that money into other interests and goals of ours down the road.

Monthly Summary

Here’s our net worth from the spreadsheet:

Net Worth (as of July 31, 2011): $60,805.80 (+$4,174.99)

Your Net Worth Update

I shared my progress; now I’d love to hear from you. How are you doing with your finances? How are you doing in 2011 so far?

Photo Credit: TechnoHippyBiker

 

 

 

 

 

 

Our Baby Girl is Here!

baby girl cm

She’s Here!

Last Sunday my husband and I met and welcomed our baby girl. It was something we were looking forward to and tried our best to prepare for, but nothing can prepare you for the actual moment. We’re happy to report that she’s in great shape and she’s already growing up so quickly.

To say it’s been a busy week would be a huge understatement. We’re so grateful and happy to have friends and family helping us make this big transition, but it’s still exciting/exhausting/joyful.

I’ll have posts up on Couple Money, but the schedule will be a lighter than usual for the next week or two. I’m just wrapped up with getting to know our daughter :)

Congrats to the Living Large Winner

This week I hosted a contest for Clark Howard’s new book Living Large in Lean Times. It’s a great book and I was happy to be given an opportunity to pick a Couple Money reader to get a free copy. Congrats to College Investor for winning!

Personal Finance Posts to Catch Up On

If you have some free time this weekend and want some tips and information for your finances, be sure to read some of these wonderful posts.

I hope you enjoy reading them as much as I did. I also recommend checking out my blogroll to pick up some great personal finance blogs to follow. Please also let me know what are some of your favorite blogs that you enjoy reading on a regular basis.

Have fun this weekend with your family and try to stay cool!

 

 

5 Alternatives to Gym Membership

gym alternatives

One of the ways I’ve wasted money is with gym memberships. I’ve belonged to about half a dozen different gyms over the years and it all ended the same way. I’d go for a month or two and then gradually stop.

Meanwhile, the monthly fee would be drafted from my account until the required period was met. I know I’m not the only one. One of my friends renews his membership every year because it’s so cheap yet he never goes. This has gone on for years (so is it really cheap?).

Here are some ways you can exercise at your convenience without paying a monthly fee.

1. Home Gym: Invest in your favorite gym equipment and work out at home. You can buy pre-owned equipment for a good price on Craigslist. Putting a TV in the workout area might keep your interest while getting exercise at the same time plus there’s no travel time.

2. Day Passes: If you are a sporadic gym rat, then you should think about buying day passes. It seems expensive paying per visit, but be realistic. If you go a handful of times per month, it’s cheaper to pay per visit.

Some gyms or fitness businesses offer value packs to save more. Instead of paying a monthly fee to go to the occasional yoga or dance classes at the gym, pay for each class at a dance or yoga studio. You’ll probably have a better experience too.

3. Community Centers: The community we live in has a center which includes tennis courts, a basketball court, two pools and a small gym. We pay for this in our homeowner’s assessment whether it’s used or not.

Take advantage of the exercise options you pay for already with your home or apartment or make friends with someone who does.

4. City Recreation Centers: Many cities have gyms, pools, tennis courts, basketball courts and more options for exercise. Take advantage of the free or low-cost offerings available to you. For the services with fees, there may be waivers for low-income residents.

5. Schools: Check the exercise options available at your local educational institutions. University and colleges may offer access to the recreational facilities for alumni or community members. Our local community college offers low-cost classes as part of the no-credit adult education program.

The local school system also offers adult education offerings. A couple of years ago I signed up for a 10 week series of yoga classes for free. (Don’t ask me if I went.)

Gym memberships can be a great deal for those that use them. For irregular exercisers, try one of these alternative ways to exercise and save money. Where do you go to exercise?

Photo: Some rights reserved by SashaW