The Insurance Doctor

Tag: finances

  • The Pros and Cons of Self Employment

    The Pros and Cons of Self Employment

    There is no doubt we are in unique times and uncharted territory!  To put this into context, over 47 million people voluntarily quit their jobs in 2021.  In total, 68.9 million either quit, were laid off, or were discharged.   According to the Bureau of Labor Statistics, in December 2021 alone, 4.3 million Americans quit their jobs, down slightly from the record 4.5 million quits in November 2021!

    While millions resigned for cash incentives, better pay or better benefits, many people also left the labor market to care for children or elderly relatives during the pandemic.  Many older workers either retired early or were forced out of the labor market because of age discrimination.

    Keep in mind that we have roughly 330 million residents in the United States, which includes underaged non-working children, and retirees.  68.9 million people leaving their jobs has created a huge workforce void in the restaurant, hospitality, trucking, and many other fields.  This is known as “The Great Resignation!”

    According to the Census Bureau, a record 5.4 million new business applications were filed in 2021.  What does this mean?  This means that there are millions of people that have gone from working for small, medium, and large corporations to being self-employed. 

    Having done this myself, I know this can be a difficult transition.  I went from working as an Agent for The Prudential Insurance Company of America, (The Industry Leader at the time) who recruited me while at Lehigh University, to the President and Founder of Intelisano & Associates, Inc. back in 1999. 

    As an employee of The Prudential, the company took care of many things for me such as office expenses, supplies, advertising, back-office support staff management, and W-2 employee tax record keeping, just to name a few. 

    As a newly self-employed fully independent Broker and S-Corporation business owner in February of 1999, I was then left to fend for myself in those areas, as well as to rethink how to acquire new clients and run my insurance agency and back office.

    An insurance “Agent” works for and represents an insurance company where they must place ALL or a significant majority of the agent’s business.  An independent “Broker” represents you, the client, and shops the market for the most suitable product available. Because I left Prudential, I was forced to leave ALL my clients and renewals with Prudential Insurance and start from scratch.  Many of the 5.4 million new business owners will now be in a similar situation. 

    Like anything else, there are pluses and minuses to running your own business.  The Pros include but are not limited to:

    1. Qualifying For Tax Deductions Traditional Employees Do not: If working from home, you are able to deduct a portion of your rent or mortgage payments as well as home office expenses such as phone, office supplies, and utilities.  You can deduct car expenses such as gas, maintenance, parking fees, tolls, and depreciation. 
    2. Job Security: You have the coolest boss (yourself), so you never have to worry about getting fired or getting your pay docked.
    3. Time Freedom: No more checking with your boss or putting in for time off when you want to book a family or personal vacation.
    4. Family Time: You can schedule your work around special occasions, proms, birthdays, plays, anniversaries, and sporting events.

    The Cons of Running Your Own Business Include:

    1. Submitting Two Tax Returns: When you are self-employed, you must file both a personal tax return (usually due on April 15th annually) and a corporate/business return (usually due March 15th annually). 
    2. Quarterly Tax Payments and a Higher Rate: Two of the biggest cons are that you must make estimated quarterly tax payments for the estimated taxes you owe and pay a higher tax rate.  Consult with your CPA first!
    3. Social Security and Medicare 15.3% Tax on Income: All workers are required to pay a 15.3% tax (up to the first $142,800) of net income.  As a W-2 employee (you work for an employer) you are responsible for only half the tax as your employer pays the other half.
    4. Health Insurance Sticker Shock: A large group (50-100+ employees) health insurance policy can cost between 20%-30% less than an individual health insurance policy for the same person.  Also, many employers subsidize a portion (often between 25%-50%) of your monthly health insurance premiums.  This results in what I call “sticker shock” when people see the “Actual” cost (which can be double) of staying on your former company’s health plan by going onto Cobra. 

    In certain situations, my firm can help with Con #4!  If you own your own business with an active employee identification (EIN) number and are working full-time, we have access to large company plans where we can link a smaller company or “SOLO-PRENEUR” to a larger company plan therefore, you will benefit from economies of scale.

    If you are feeling health insurance “sticker shock,” feel free to reach out to me at Rob@InsuranceDoctor.us.  To be added to our monthly e-newsletter list, email “Add Me” to the same email above.

  • Good Credit = More $$$$

    Good Credit = More $$$$

    Your credit score is one of the most important measures of your financial health! I have found that few advisors have a handle on how to coach their clients to improve their credit scores.

    There are ripple effects to having good or poor credit. The better your score, the easier you will find it to be approved for new loans and or lines of credit. A higher credit score can give you access to the lowest available interest rates when you decide to borrow. Good credit will improve your odds of getting approved for credit cards. There are employers that will run your credit score before deciding on hiring you. In addition, the higher your score, the less money you will pay for auto and homeowners insurance premiums!

    Regardless of your age or current credit situation, it is NEVER too late to improve and/or build your credit. It takes some time, effort, discipline, and in some cases, breaking bad habits. There are niche companies that charge thousands of dollars to help fix your credit. You will not need to hire them if you heed my 10 tips below:

    1.   Review Your Credit Reports: You must start somewhere, so review your current credit reports. This is free and easy to do. You can pull a copy of your credit report from each of the 3 national credit bureaus: Equifax, Experion and TransUnion. This can be done for free once per year at www.AnnualCreditReport.com. To improve your credit, it helps to know what is working against you or in your favor.

    2.   If Possible, Pay Off 100% of Your Balances Every Month:  Carrying over balances from month to month is a costly way of doing business. If this is an issue for you, I suggest enrolling into “auto-pay” online, one credit card at a time, so you can stabilize your finances. Payment history counts for about 35% of your credit score. 

    3.   Correct Inaccurate or Additional Personal Information: Almost 90% of credit reports have your credit or personal information on you that is either inaccurate or dated. 

    4.   Keep Credit Balances Below 30% of “Available Credit:” Credit card balances should be below 30% of your available credit ALL the time! If you need more credit, get another credit line.

    5.   Consolidate Student Loans:  There are banks that have special programs designed to consolidate existing student loans (usually for balances of $100,000 or more) into one loan at a lower interest rate, which can save you $100’s per month from day one.

    6.   Limit Credit Inquiries: You should have a maximum of 7 or less credit inquiries per year. Any more than that can negatively affect your score.

    7.   Consider Adding an Additional Authorized User: This is an excellent way for parents to help young adults start building credit with little effort. The parent adds their child as an eligible user which starts building a history for the youngster. The more years you have credit, the better your score!

    8.   Consider Joining a Local Credit Union: Many Credit Unions have good initial offers for new member-clients and more liberal rules than banks.

    9.   Keep Old Accounts Open and Deal with Delinquencies: Do NOT close old credit cards that you might not be currently using. One of their formulas is to measure the “average age” of all your cards. The older the better.

    10.Use Credit Monitoring to Track Your Progress: Credit monitoring services are an easy way to see and learn how your credit score changes over time. These services can also protect you from identity theft. The best credit monitoring services notify consumers about changes in their credit and the reasons why.

  • 5 Financial Moves to Make Now During COVID-19

    You do not need me to tell you these are crazy times!  They will be talking about 2020 for many years to come.  Although the last 6 COVID-19 pandemic-months have been long; in a way, blink your eyes and it is already the 4th quarter of 2020.

                What does this mean financially?  There are MAJOR OPPORTUNITIES AVAILABLE for ALL American’s to set up a better financial future NOW! Some of these opportunities need to be taken advantage of NOW, and over the next 60 days, since many laws and what I call “Covid-19 Special Rules” will be changing “sun-setting” on 12/31/2020. 

                These times are unique as we are in an historically low interest rate environment with low tax rates and a stock market near record highs!  In 2020, a married couple “filing jointly” can earn $325,000 (combined) and only be in the 24% tax bracket.  Our current level of spending is unsustainable, and most experts agree that taxes will be raised!

    September 30th closed our “fiscal year,” and our federal debt exceeds $23.4 Trillion.  It is estimated that this could grow another $13 Trillion by 2028.  Tax rates will likely go up and we/you can stay a step ahead by strongly considering these 5 financial moves NOW!

    1. Refinance Your Debt: Whether it is a home mortgage, business loan, and/or a student loan, there has never been a better time to refinance.  If you or your children have any loans over 4%, consider refinancing now.  Yes, interest rates should stay low next year; however, banks want to close new deals now to boost their 2020 year-end revenues. 
    2. Take Some Profit Off the Table:  Some advisors call this “tax harvesting.”  Remember, gains are only “paper gains” until you sell, and they are sitting in cash.  If you have doubled your money in an account, why not reposition half in cash and let the rest ride “on the house” so to speak?  With the upcoming election on the horizon, choppy waters lie ahead.  Double-check this with your investment professional and CPA.
    3. Consider Doing A Roth IRA Conversion: If you convert all or a portion of your IRA to a “ROTH IRA” in 2020, you are permitted to spread out the current tax burden over the next 3 years, your choice as to what percentage to declare each year.  Many people have less income this year, so you would be paying less tax this year in a lower tax bracket in 2020.  What is a little more pain for a big long-term gain?
    4. Consider Buying Life Insurance Now:  Consider buying before premiums go up (due to Covid-19 death rates) as many life-insurance companies have filed for rate increases with the state.  The NEW life insurance policies have “chronic Illness” riders that function similar to long-term care policies, allowing policyholders to tap into their death benefit while living, to pay current “qualified” ongoing chronic health issues and bills.  They are called “living benefits” which most OLD policies do not have.  There are 2 companies in New York State that include these critical riders FOR FREE on inexpensive term insurance policies which can now run to age 80.  Current cash-value life policies can be “rolled-over” into a new life insurance policy.  This is called a 1035 exchange, similar to a 1031 exchange in real estate.
    5. Revisit Your IRA’s, Trusts & Estate Plans NOW!: There are people sitting on their IRA’s, 401K’s (which can be converted to a self-directed IRA) thinking that they will pass the IRA down to multiple generations just like their parents did. 

    THINK AGAIN!  Beginning in the 2020 tax year, The 2020 SECURE ACT (Setting Every Community Up for Retirement Enhancement Act) made some positive changes such as the ability to make IRA contributions after age 70.5 (if you are still earning income) and deferring RMD’s (required minimum distributions) to age 72. 

    The 2020 “Secure Act” has eliminated the “Stretch Ira” also known as “Super Ira” or “Inherited Ira.”  Spouses can inherit this money then their heirs MUST TAKE IT ALL OVER 10 YEARS!  These changes will cost children and grandchildren dearly.  It also makes it a better idea to consider taking the IRA money now (with low current tax rates) and buying life insurance which goes TAX-FREE and LUMP SUM to named beneficiaries while bypassing probate.

    These tax changes can also render existing “Trusts” obsolete, so they should ALL be reviewed.   In addition, ALL existing wills and beneficiaries should be updated.  If this is the first you are hearing about the SECURE Act, perhaps it is time to change advisors.

    Feel Free to reach out to me at Rob@InsuranceDoctor.us for more information and to be added to our e-newsletter and briefing email list.

    Stay Safe and KEEP THE FAITH!

  • Thinking Clearly in the Middle of Chaos

    Thinking Clearly in the Middle of Chaos

    You don’t need me to tell you that this country is upside down right now.  There has never been a more important time to think clearly and adapt to the current situation.  With 40 million unemployed and another 10 million not seeking work, many are in a “financial” survival mode.  One in three Americans have yet to receive their unemployment checks!  Most advisors suggest keeping an “emergency fund” of 6 months income.  Even for those who have heeded the advice, the six-month fund is dwindling as New York City has been slow to reopen.

    The way unemployment is structured, with the Federal Government adding $600/week in addition to the state unemployment benefits, can be a deterrent to employees returning to work.  In New York State, the maximum is $504/week plus the $600= $1,104/week.  This could represent a raise for many, so why go back to work when you can stay home and possibly earn more money?  New Jersey caps out at $681/week, Connecticut at $649.  Florida has the lowest cap at $275; however, they have no city or state income tax.  The highest cap is Massachusetts, which has a range of $769-$1,220 depending upon the eligibility.  These numbers don’t mesh well with the Paycheck Protection Program (The Triple P), because business owners have to spend the money now over the next 8 weeks when their employees refuse to return to work.

    The public knows this “generosity” won’t last forever, so many are tightening up on their spending.  If you’re on a salary, you can’t increase revenues, only decrease expenses.  Here are a few tips to reduce expenses:

    1. Whole Life Insurance: If you have a traditional dividend-paying life insurance policy (the older the better), consider changing your dividend option to “reduce premiums.”  For example, you have an old $50,000 policy, the premium is $1,000/year and your dividend is currently $600.  You can change the $600 dividend to “reduce the premium” and now you would only have to pay the $400 difference, saving you 60%.
    2. Auto Insurance: Since many are self-quarantining, auto insurers are reducing prices.  Some are giving credits.  It’s a good time to shop the auto insurance market.
    3. Life Insurance Settlements: During the Covid-19 pandemic, “Life Insurance Settlements” can be a lifeline for seniors who could be struggling financially, and who own a life insurance policy in danger of lapsing.  These policies can hold significant re-sale value.  We have been able to sell policies with zero cash value for 20%-30% of the death benefit.  It’s important for seniors to realize they can sell their policy for a lump-sum of cash, instead of having to continue to pay premiums. We have 23 Funders who bid against each other in an auction, which ensures our clients will get the maximum lump-sum offer.

    Feel free to reach out to me to continue these conversations at Rob@InsuranceDoctor.us or www.InsuranceDoctor.us and complete our simple contact e-form.

    Be Safe and Wash those Hands!

  • Three Important Percentages To 
Remember When Buying A Home

    Request a FREE Consultation with the Insurance Doctor Here

    You just finished watching the latest installment of House Hunters on HGTV and begin to think to yourself why not me?   Purchasing your first home is not only the American Dream, for many young Americans it signifies a real transition into financial adulthood and responsibility taking on potentially the largest debt you will ever carry in your entire life.  If you are going to buy a new home, there are three financial rules you should consider before you sign on the dotted line.

    percentage-manThe 20% Rule
    I am a big fan of putting down 20% for two reasons.  One, by saving this 20% it will put you more into a forced habit of what you can save monthly which will likely indicate that you are ready to take on the new mortgage payment coming up with the home purchase.  Two, in most cases, you will avoid paying the Private Mortgage Insurance (PMI) which can make your monthly payment more expensive at the time you purchase the first home.  Far too often, new homebuyers stretch themselves by making a lower down payment, not recognizing how these extra costs will affect them.

    The 10% Rule
    It’s been my experience that when you purchase a new home you will tell yourself that you have your whole life to fix up the home.  However, after you start watching a few more HGTV shows and make a few trips to Home Depot, you’ll find yourself craving to make some renovations or buy some new furniture.  Beyond the down payment you need to save, plan that about 10% of the home value (i.e. a home at $300,000) will cost you an additional $30,000 in home improvements and furniture in the first year.

    The 1% Rule
    Beyond your mortgage payment, you should plan that if the home is valued at $300,000, you should set aside a kiddie of 1% to plan for the unexpected.  I couldn’t tell you today if it will be the roof, the water heater, or the A/C, but invariably there are going to be year to year blow ups that will cost you money from your savings.

  • 7 Smart Money Marriage Tips

    7 Smart Money Marriage Tips

    You just got married, but you may not have realized that your money did as well. One of you is a spender and one is a saver! How in the world will you make it work? Especially now that many people are getting married in their 30’s and 40’s for the first time, what should you be doing money wise? Here are 7 tips on money strategies for your new marriage.

    1. Create Separate Accounts And One Joint Account:

    To mingle or not to mingle your money is one of the most important decisions the two of you need to make regarding your finances. Having your own money that you can spend however you want can lessen arguments about money. We disagree that having separate joint accounts lessens the sense of unity in marriage and shows a lack of trust in one another.insurance, New York, financial planning

    2. Track How You Are Spending Money:

    Tracking your spending is not a way to point fingers at one another as to who is spending what. Tracking your spending is not having someone looking over your shoulder every time you buy something. Tracking your spending is critical to being financially secure. Unless you know where your money is going, it is impossible to set up a budget and set financial goals you are both comfortable with.

    3. Discuss Finances Together On A Regular Basis:

    Sure, talking about money isn’t easy because money can symbolize different things to each partner. One may view money as security and the other as power. If the topic of debt, bills, savings, and goals makes one or both of you uncomfortable or defensive, seek the help of a financial counselor or planner. It is important that both of you know where you stand financially and have common financial goals.

    4. Save 10% of Your Income:

    Couples living month-to-month often rationalize that they just don’t have enough money to save. Make the decision to save at least 10% of your income. After saving enough cash as an emergency fund, invest in a retirement account. The earlier the two of you start saving money for your retirement years, the easier it will be have a retirement lifestyle that you both hope for.

    5. Handle Debt As A Couple:

    Make a plan to pay off existing debt. Drawing a line in the sand and saying that your spouse’s debt isn’t your problem is not going to work because even if the debt existed before you married, your credit rating can be negatively impacted as well as the bottom line of how much money the two of you are paying monthly in interest charges.

    6. Decide On The Bill Paying Strategy:

    Maybe you had a house and your partner had one as well. You were both used to paying your own bills. Now that you are living together and your bills are combined, get clear as a couple on who will pay what bill and which bank account the money is going to come out of each month. This will absolutely
    reduce friction in your relationship over time by having clear expectations.

    7. Don’t Keep Big Financial Secrets:

    Not being honest about the cost of large financial purchases or keeping debts hidden is considered financial infidelity by many people. Such secrets can destroy your marriage.

    THE CONTENT IS DEVELOPED FROM SOURCES BELIEVED TO BE PROVIDING ACCURATE INFORMATION. THE INFORMATION IN THIS MATERIAL IS NOT INTENDED AS TAX OR LEGAL ADVICE. IT MAY NOT BE USED FOR THE PURPOSE OF AVOIDING ANY FEDERAL TAX PENALTIES. PLEASE CONSULT LEGAL OR TAX PROFESSIONALS FOR SPECIFIC INFORMATION REGARDING YOUR INDIVIDUAL SITUATION. THIS MATERIAL WAS DEVELOPED AND PRODUCED BY HELLO MY NAME IS, LLC TO PROVIDE INFORMATION ON A TOPIC THAT MAY BE ON INTEREST. THE OPINIONS EXPRESSED AND MATERIAL PROVIDED ARE FOR GENERAL INFORMATION, AND SHOULD NOT BE CONSIDERED A SOLICITATION FOR THE PURCHASE OR SALE OF ANY SECURITY. COPYRIGHT 2014 HELLO MY NAME IS, LLC

  • 5 Last Minute Year End Tax Tips

    5 Last Minute Year End Tax Tips

    Following these 5 tips can save you money in 2016!

    Whether you are an individual and/or business owner, the following 5 tips can save you money in 2016!tax savings year end strategies

    1. Maximize 401K deductions for 2016: Unlike IRA’s and SEP’s, 401K contributions can only be deducted in the tax year they are deposited. Taxpayers should check their pay stubs to make sure they are maximizing their 401k limit which is $18,000 for 2016. (higher if they are over age 50).
    2. Prepayment of State Taxes: Individuals can deduct taxes paid to state and local agencies on their schedule A. By paying before year end they can claim the deduction for 2016 instead of waiting to next year.
    3. Donation to Charity: Any donations to charity must be made by December 31st, 2016 to be considered a completed gift for the 2016 tax year.
    4. Deferral of Income until 2017: Individuals can request bonuses be deferred until January. Cash basis service businesses may consider delaying their November and/or December billings until January to minimize 4th quarter income and defer taxes on that income until 2017.
    5. Prepayment of personal/business expenses: Individuals and business owners may look to prepay expenses for supplies, materials and/or services to accelerate deductions for 2016 instead of 2017.Get your 2017 plan off to a good start by getting your FREE ‘financial check-up’ with Robert here today.
  • 6 Tips for your Financial New Year’s Resolutions

    6 Tips for your Financial New Year’s Resolutions

    Six out of ten American’s will make some type of financial based New Year’s resolution for 2016. Usually there’s a triggering event like receiving your December 2015 credit card bill or spousal pressure to name two. Follow these tips;2016-resolutions

    1. Consolidate Financial accounts: Close 1 or 2 existing financial accounts that you are not tracking or have insignificant monies in. This will save brain space, reduce statement clutter and avoid paying unnecessary fees.
    2. Increase your 401k/employer retirement contributions: Raise your contributions 1%/year minimum. You won’t feel the difference however over time it can make a major impact when entering retirement.
    1. Develop a budget and/or expense statement: Review credit card, bank and checkbook statements to get a handle on inflow and outflow of money. Start using a program like quick books or if old school draft a budget by hand and hang it up where you can see it. This can cause heavy emotional denial however better now than later.
    2. Set up a system to save systematic money: Either something informal like putting the $20 you are saving in gas on fill-ups in a jar. Formal ideas like buying a cash value life insurance policy or setting up an Eft thru your bank account.
    3. Protecting your health saves your wealth: We all know about the escalating cost of health insurance and health care in general. Renew that gym membership, yoga studio or dust off that treadmill in the garage.
    4. Bring balance to your life: Take that vacation you have been putting off. The rest and rejuvenation will impact you health. Statistics show that one who works 46 weeks/year will out produce a 52 week/year worker. It will give you something to look forward to and forces one to be very productive before leaving and when returning home. Use frequent flyer miles if need be.

    Contact Robert today to help achieve your New Year’s Financial Resolutions