Everything you wanted to know about Medicare

Do you think you know everything about Medicare? I don’t. I don’t use it now, but I should understand how it works so I can plan for my future.  There is a program called

“Seniors Out Speaking” developed by the Medicare Rights Center, a nonprofit counseling, advocacy and educational group based in New York. This group consists of volunteers that teach their peers about Medicare. There are articles called “Medicare Minutes” that address topics such as drug coverage under Medicare Parts B and D and programs that help pay Medicare costs. The group started in 2001 and has now expanded to Wisconsin.

The thinking behind SOS is simple, says Joe Baker, president of the Medicare Rights Center. “As the first baby boomers begin to turn 65, the need for clear, accurate Medicare information has never been greater.”

The statistics show that 47 million people already receive Medicare benefits. This year alone, more than 2.5 million people will reach age 65 and become eligible for their Medicare card.

One report called “Seniors Out Speaking: Peer-to-Peer ‘Medicare Minutes’ for Older Adults Nationwide” explains how SOS works, outlines the program’s benefits and discusses educational opportunities for volunteer speakers and their audiences.  The Medical Rights Center states: “The flexibility of the SOS model makes it easy for partner organizations to replicate it in new locations.”

 Click on the links above and see what you can learn.  Who knows, maybe you will turn around and help someone in your community.

The Money Mom

Is e-mail safe?

We use e-mail as a fast and efficient way to get our information to our employees, vendors, and friends. But how do we know that our e-mail will not be high jacked and the personal information used for fraud?   Bank Info Security has some tips for all of us regarding e-mail correspondence. (www.bankinfosecurity.com)

Send Only Secure e-mail. When sending correspondence to customers, include something only they would know, such as an image or some predetermined bit of information. Obviously, this would have to be an image or information that a hacker could not access if e-mail databases were compromised.

Urge Compartmentalization. Recommend that customers use different e-mail addresses for sensitive transactions related to work and tax-filing than they use when signing up for promotional offers online. Some people told me they have a Gmail or yahoo account for online offers and then only give out their local service e-mail to people they know.

Practice Transparency. Tell customers exactly how you plan to use the e-mail addresses you collect. Customers should know the names of every third-party you use for e-mail services, and they should understand how their e-mail addresses are stored and shared.

Use a Familiar Domain. Re-evaluate the common practice of relying on third parties to manage and send e-mails. When promotional e-mails go out to customers, the sending domains should not be unrecognizable.

Take Pains to Ensure Security. Any company that works with a third-party should ensure the security of all customer data. Understand how customer information is being stored and ensure it is protected on an internal basis.

Limit Access. Restrict internal access to customer files and databases. Only those who need access to certain bits of information should have access. That’s the best way to control these kinds of problems from reoccurring.

Educate, Educate, Educate. Be ever vigilant in the effort to educate customers about phishing and how not to answer suspicious e-mails. Organizations must consistently remind consumers that sharing personal data and information online should be limited if not eliminated.

I use zixmail at the bank.  It is encrypted and you must establish a password with me to open it.  Some companies (especially government entities) that I send to complain how time-consuming it is. But isn’t a little more time more important that having your private information used against you? Ah, if only everyone was honest and trustworthy.

The Money Mom

Ok the simple answer is to place money in that secret hiding place in your wallet and then forget it is there. But some how we always remember it is there!  Here are some other tips that might help more:

1. Track your money. Once you realize how much impulse buying and other indulgences cost you, it will be easier to tell yourself “NO!” 
2. Stay financially secure by using caution. Don’t give anyone your Social Security, credit card, or bank account numbers unless you know why they need them. Never give a pin number to anyone! Don’t leave bill payment envelopes at your mailbox. Drop them in a postal mailbox. Review credit card statements, bank statements, phone bills, etc. for unauthorized use.
3. Keep only one major credit card and use it sparingly. Set your own credit line and don’t charge more than you can comfortably repay. Just because you have a $2,000 credit line doesn’t mean you have to spend $2,000. Pay cash when you can and if you like the convenience of plastic, check into getting a bank debit card.
4. Keep a personal budget. Give yourself an allowance. Track your spending to find where your money goes and then choose between your wants and real needs. Budget for a month at a time but set aside some time to review your finances each week.

1. A budget is like a diet. Just because you broke it today, doesn’t mean you can’t start again tomorrow. If you go over budget this week, make sure to stay under budget next week.
2. Build an emergency fund. Save change in a piggy bank or jar. Deposit $5.00 a week from paychecks in a savings account when you cash your check.
3. Use a separate calendar for expenses so you are not late. Late charges can add up to hundreds of dollars. Any calendar with big windows with room to write in amounts will do. Or some of you have iPods with alerts. Use the calendar windows or iPod to note:
   • Due dates for payments
   • Upcoming expenses like the electric bill
   • Upcoming activities where you’ll need cash. (groceries, birthdays, etc.)
4. Ask for help when you need it. If you run into a financial disaster, call your financial planner or banker and let them know you’re in trouble. If an unexpected event changes your home financial situation, don’t give up. Maybe your budget just needs a tweek.

I use a Christmas Club savings account to deposit my change once a week.  If I don’t do it weekly, then I tend to need that money for something else. Believe it or not, but I end up with $600 annually doing this.  If you have other ideas, please share. 

The Money Mom

If at First You Don’t Succeed:
Everybody makes mistakes with their money. The important thing is to keep them to a minimum. The FDIC published a list of the top mistakes young people (and even many not-so-young people) make with their money, and what you can do to avoid these mistakes. For the entire list visit  http://www.fdic.gov/consumers/consumer/news/cnspr05/cvrstry.html

Buying items you don’t need. Every time you have an urge to do a little “impulse buying” and you use your credit card but you don’t pay in full by the due date, you could be paying interest on that purchase for months or years to come.

Research major purchases and comparison shop before you buy. Ask yourself if you really need the item. Even better, wait a day or two, or just a few hours, to think things over rather than making a quick and costly decision you may come to regret.

Getting too deep in debt. Being able to borrow allows us to buy clothes or computers, take a vacation or purchase a home or a car. But taking on too much debt can be a problem, and each year adults of all ages find themselves struggling to pay their loans, credit cards and other bills.

Learn to be a good money manager by using the suggestions in this report. Also recognize the warning signs of a serious debt problem. These may include borrowing money to make payments on loans you already have, deliberately paying bills late, and putting off doctor visits or other important activities because you think you don’t have enough money.

If you believe you’re experiencing debt overload, take corrective measures. For example, try to pay off your highest interest-rate loans (usually your credit cards) even if you have higher balances on other loans. For new purchases, instead of using your credit card, try paying with cash, a check or a debit card.

For more guidance on how to get out of debt safely or find a reputable credit counselor, go to Federal Trade Comm. (FTC) Web site at www.ftc.gov/bcp/conline/edcams/credit/coninfo_debt.

Paying bills late or otherwise tarnishing your reputation. Companies called credit bureaus prepare credit reports and produce scores for use by lenders, employers, insurance companies, landlords and others who need to know someone’s financial reliability, based largely on each person’s track record paying bills and debts.

While one or two late payments over a long period may not seriously damage your credit, making a habit of it will count against you. Over time you could be charged a higher interest rate on your credit card or a loan that you really want and need. You could be turned down for a job or an apartment. It could cost you extra when you apply for auto insurance. Your credit record will also be damaged by a bankruptcy filing or a court order to pay money as a result of a lawsuit.

So, pay your monthly bills on time. Also, periodically review your credit reports from the nation’s three major credit bureaus — Equifax, Experian and TransUnion — to make sure their information accurately reflects the accounts you have and your payment history. For more information go to www.ftc.gov/bcp/conline/pubs/credit/freereports.

Everyone makes mistakes. The important thing is to take action. Ignoring the problem will just make your lender not want to help you.  Work out a payment plan and put the blues songbook away!

The Money Mom

How to DE-motivate Your Employees

When you first hire an employee, they are so helpful and interested in learning.  In some companies, employees’ morale significantly drops off after their first six months on the job, according to a survey from Harvard Management Update. Enthusiasm is determined in part by work environment.  Are you, the boss, helping your employees to be their best? Employee motivation experts say the best way to keep employee enthusiasm moving forward is to “first, do no harm.”

Here are eight demotivators that the National Federation of Independent Business listed.

Public criticism. Pointing out a worker’s mistake in front of others rarely yields a good response. Though some managers think public reproach keeps everyone else from making the same mistake—it usually just makes everyone feel bad.

Failing to provide praise. If employees feel like their hard work goes unnoticed, they’ll start to wonder why they’re working so hard in the first place. Be sure to offer praise, both privately and publicly. Even small things, like a thank-you card or a “good job” email work. 

Not following up. Have you ever solicited ideas, asked what employees think about a policy, or asked your team to draft a proposal? If so, be sure to relay the results, even if the ideas or proposals don’t go anywhere. Asking employees for input without acknowledging it shows a lack of respect. 

Give unachievable goals or deadlines. Once employees realize they won’t be able to get something done, they’ll think, “What’s the point? I’m going to fail.” Provide goals and deadlines that are challenging, but not impossible. 

Not explaining your actions or sharing company data. Just because you hold the cards doesn’t mean you should hide them. Explaining the big management decisions will help employees understand your perspective—and they’ll respect you for it. Likewise, sharing key company data such as revenue and profits validates staff contributions.

Implied threats. If an employee is producing sub-par work, it’s OK to let them know your expectations. But it’s not OK to threaten their job—especially if you’re threatening the entire team in a public setting. A “do this or else” attitude often has the opposite effect when it comes to motivation.

Not honoring creative thinking and problem solving. When employees take initiative to improve something—a company process or an individual task, for instance—don’t blow it off. Instead, take a good, hard look at their suggestion. Don’t ignore it, or you risk losing that employee’s creativity in the future.

Micromanagement. Perhaps the worst demotivator is micromanaging. Employees need to feel trusted and valued to succeed—and micromanaging communicates the opposite.

I always thought that you shouldn’t have to prod employees to do their best.  But a little thank you here and there goes a long way in letting them know you appreciate their efforts.

 The Money Mom

I have tried to read through the Affordable Care Act and well, I need a flood chart!  You know, the kind that says if you do this, then go here.  I did find that the SIMPLE plan for small business is simple.

A SIMPLE (Savings Incentive Match Plan for Employees of Small Employers) IRA plan offers great advantages for businesses that meet two basic criteria. First, your business must have 100 or fewer employees (who earned $5,000 or more during the preceding calendar year). In addition, you cannot currently have another retirement plan.

You may be eligible for a tax credit of up to $500 per year for each of the first 3 years for the cost of starting a SIMPLE IRA plan. (IRS Form 8881, Credit for Small Employer Pension Plan Startup Costs).

Your choice of the employees covered will be set out in your selected plan document. You can choose to cover all employees without restriction. Alternatively, you can limit the employees covered to those who received at least $5,000 in compensation during any 2 years prior to the current calendar year and who are reasonably expected to receive at least $5,000 during the current calendar year.

ESTABLISHING THE PLAN

Step 1: Contact a retirement plan professional or a representative of a financial institution that offers retirement plans. Many financial institutions will probably have a pre-approved SIMPLE IRA plan form that you can review.

Step 2: Choosing a financial institution to maintain employees’ SIMPLE IRAs is one of the most important decisions you will make, since that entity becomes a trustee to the plan. (Alternatively, you can decide to let employees choose the financial institution that will receive their contributions.) Regardless of who makes the choice, only the following institutions can be designated as trustees of SIMPLE IRA plans: banks, mutual funds, insurance companies that issue annuity contracts, and certain other financial institutions that have been approved by the IRS. Trustees agree to receive and invest contributions, and provide the employer with a summary description of the plan features each year.

Step 3: Choose a model form or other plan document offered by your financial institution. If your financial institution offers a model SIMPLE IRA plan document, you will have a choice of two forms to use:

❑ IRS Form 5304-SIMPLE, Savings Incentive Match Plan for Employees of Small Employers (SIMPLE) — Not for Use With a Designated Financial Institution, or

❑ IRS Form 5305-SIMPLE, Savings Incentive Match Plan for Employees of Small Employers (SIMPLE) — for Use With a Designated Financial Institution.

I like the SIMPLE plan.  It helps me offer a benefit for my employees to help in retention and it is easy to administer.  You know, the simple stuff! For more information, go to www.irs.gov to publication 4334.

 The Money Mom

The Federal Reserve’s new rules for credit card companies mean new credit card protections for you. Here are some changes from your credit card company that began this year.

When they plan to increase your rate or other fees. Your credit card company must send you a notice 45 days before they can increase your interest rate; change certain fees (such as annual fees, cash advance fees, and late fees) that apply to your account; or make other significant changes to the terms of your card. So if the company does this, it must give you the option to cancel the card before certain fee increases take effect. If you take that option, however, your credit card company may close your account and increase your monthly payment, subject to certain limitations. For example, they can require you to pay the balance off in five years, or they can double the percentage of your balance used to calculate your minimum payment (which will result in faster repayment than under the terms of your account).

How long it will take to pay off your balance. Your monthly credit card bill includes information on how long it will take you to pay off your balance if you only make minimum payments. It also tells you how much you would need to pay each month in order to pay off your balance in three years.

No interest rate increases for the first year. Your credit card company cannot increase your rate for the first 12 months after you open an account. If your card has a variable interest rate tied to an index though; your rate can go up whenever the index goes up. If there is an introductory rate, it must be in place for at least 6 months; after that your rate can revert to the “go-to” rate the company disclosed when you got the card. If you are more than 60 days late in paying your bill, your rate can go up. If you are in a workout agreement and you don’t make your payments as agreed, your rate can go up.

Increased rates apply only to new charges. If your credit card company does raise your interest rate after the first year, the new rate will apply only to new charges you make. If you have a balance, your old interest rate will apply to that balance.

Over-the-limit transactions. You must tell your credit card company that you want it to allow transactions that will take you over your credit limit. Otherwise, if a transaction would take you over your limit, it may be turned down. If you opt-in to allowing transactions that take you over your credit limit, your credit card company can impose only one fee per billing cycle. You can revoke your opt-in at any time.

Caps on high-fee cards. If your credit card company requires you to pay fees (such as an annual fee or application fee), those fees cannot total more than 25% of the initial credit limit. Protections for underage consumers. If you are under 21, you will need to show that you are able to make payments, or you will need a cosigner, in order to open a credit card account. If you are under age 21 and have a card with a cosigner and want an increase in the credit limit, your cosigner must agree in writing to the increase.

Standard payment dates and times. You must get your credit card bill at least 21 days before your payment is due and your due date should be the same date each month. The payment cut-off time cannot be earlier than 5 p.m. on the due date. If your payment due date is on a weekend or holiday (when the company does not process payments), you will have until the following business day to pay

These new changes should help you manage your credit card balance and help you understand how to get these balances reduced. 

 The Money Mom

The first thing to know about the federal gift tax is that gift givers, not gift recipients, have to pay it. Thankfully, you won’t owe the tax until you’ve given away more than $1 million in cash or other assets during your lifetime. If you’re married, your spouse is entitled to a separate $1 million exemption. But you may still have to file gift tax returns even though you don’t owe any tax. So please keep reading.

 The annual exclusion allows you to give away up to $13,000 in 2010 to as many people as you wish without those gifts counting against your $1 million lifetime exemption. Say you give two children $20,000 each in 2010 and give another relative $10,000. The $20,000 gifts are called taxable gifts because they exceed the $13,000 annual exclusion. But you won’t actually owe any gift tax unless you’ve gifted your $1 million lifetime exemption. O if not, the two taxable gifts simply reduce your lifetime exemption by $14,000 [($20,000 - $13,000) x 2 = $14,000]. The $10,000 gift is ignored, because it’s below the $13,000 annual exclusion. If you started off 2010 with the full $1 million lifetime exemption, you’ll still have an exemption of $986,000 left at the end of the year ($1 million – $14,000 = $986,000).

Contributions to a 529 college savings plan are gifts to a future student. However, special rules allows you to make a lump-sum contribution and spread it over five years for gift tax purposes. For example, you can contribute $65,000 in 2010 to jump-start a 529 college savings account for your child. If you’re married, your spouse can do the same. You can spread the gift over 2010-2014 without incurring any gift tax and without reducing your $1 million lifetime gift tax exemption. Your spouse can spread his or her $65,000 gift over five years as well. The only caveat: You can’t make any additional gifts to the same recipient during those years without using part of your $1 million exemption.

Some types of gifts are exempt from the federal gift tax so you can make unlimited gifts in these categories without any gift tax or estate tax consequences and without having to file gift tax returns: Gifts to IRS-approved charities Gifts to your spouse (assuming he or she is a U.S. citizen) Gifts covering another person’s medical expenses and you make the payments directly to medical service providers Gifts covering another person’s tuition expenses, and you make payments directly to the school. (Payments for room and board, books, and supplies don’t qualify for this exception, but you can cover those costs by making a direct gift to the student under the annual exclusion.)

If you make a taxable gift (one in excess of the annual exclusion), you must file Form 709: U.S. Gift Tax Return. The return is required even if you don’t actually owe any gift tax because of the $1 million lifetime exemption. The return is due by April 15 of the year after you make the gift—the same deadline as Form 1040. If you extend your 1040 to October 15, the extended due date applies to your gift tax return too. For more information, see IRS Publication 950: Introduction to Estate and Gift Taxes. You can find these documents on the IRS website at www.irs.gov.

 The Money Mom

Don’t wait until April 2011 to start thinking of ways to save on your tax bill. What you do now could determine the kind of tax year you have in 2010. There are still various tax benefits, but they are set to expire this year. Turbo Tax has some great ideas for you to cut this year’s income tax bill.

1. Keep your W-4 up-to-date

The Making Work Pay tax credit is the credit you have been receiving in your paychecks through reduced withholding. Unless it’s renewed by Congress, the credit will expire on December 31, 2010.  Revisit your W-4s twice this year to ensure that the right amount of tax is withheld—once to increase your withholding and again at year’s end to reinstate prior withholding after the credit expires. Proper withholding will prevent you from being surprised by an unexpected tax bill come April 15.

2. Take advantage of all possible deductions

There are many deductions overlooked. People who don’t itemize their deductions often wrongly assume they don’t qualify for any. Actually, there are some deductions available even to people who take the standard deduction. The overlooked deductions are out-of-pocket expenses incurred while doing charity work, moving expenses for a new job (you don’t need to itemize to get this deduction), and the real estate tax deductions for taxpayers who don’t itemize their deductions. Now, some deductions will expire, like the $4,000 deduction for college tuition. Check the 2010 rules now to make sure the deduction you’re counting on is still available.

 3. Make your home energy-efficient

This is a good time to invest in energy-efficient upgrades. If you install approved water heaters, windows, roofing or heating and cooling systems that reduce energy use, you can get a tax credit of up to 30% of the costs, up to a maximum of $1,500. However, tax credits for some purchases are only available in 2010. If you just can’t pay for an upgrade this year, don’t worry. Tax credits for some additional energy-efficient improvements will still be available from 2011 to 2016.

6. Convert to a Roth IRA

There’s never been a better time to consider converting to a Roth IRA. New rules allow people with any amount of income to convert a traditional IRA, 401(k) or other plan to the popular tax-free retirement plan. It’s best if you have a source other than your retirement plan to pay the tax that will be due and sufficient years before you need to take withdrawals from the account. To encourage conversions, the IRS is offering a special incentive this year only. It will allow you to spread payment of the tax generated by the conversion over a 3-year period.

7. Consider taking some profits

Consider selling some of your stocks that show a profit. The rate reductions on long-term capital gains that went into effect in 2003 are set to expire in 2010.  The rates are currently 15% for the upper four tax brackets and will revert to their 2008 level of 20% after December 31. If you’re in the two lowest income brackets, your new rate will be 15%, up from the 0% it’s been since 2008. 

The best tip of all is to stay informed on the ever-changing tax laws. New credits and deductions are introduced all the time. For more information on these tax tips and to stay up to date on all of the latest tax laws, visit Turbotax – Tax Tips & Calculators page.

The Money Mom

Listen to me!!!

When my son was five someone asked him what his mother was like.  He said, “I can be her.”  Oh, go ahead, the person said.  He proceeded to walk around with his arms flailing and yelling, “Just a minute, just a minute!”  Right then I learned I must slow down and start listening. Are you a good listener? Listeners can be great leaders because they have gathered the information that no one else has bothered to notice.

Most of the time, listeners aren’t recognized because they are not standing in front of large groups of people making speeches. Instead, they are having intimate conversations with their friends, coworkers, and employees, asking them questions about what they know, and getting an understanding about their goals, problems, and dreams. It’s this information that is gathered and used to solve problems, spread ideas, and just get things done.

Here are some ways listeners get ahead:

Solve a problem. Because you have listened to others’ concerns and complaints, you have a great opportunity to weigh the pros and cons of a particular problem.  This may make it easier to sort through these dilemmas, recommend solutions, and have the background information to actually change or solve the problem.

Take on a project that no one else wants. The project might seem overwhelming, controversial, or just plain boring. Part of being a leader is choosing projects carefully. But just because no one else is interested doesn’t mean the project (or program or problem) isn’t worthy of your attention. If you’re trying to establish yourself as a leader and can’t get the right opportunities, then taking on a challenge can be a great way to earn recognition.

Match personnel to the right job. Learn about other people’s strengths and weaknesses by asking questions, listening to responses, and identifying preferences. This way you are not assigning people to random tasks; leaders who listen can easily locate and call on the right people for expertise, support, and cooperation. Make sure to open the discussions with everyone. Sometimes a quiet listener will come forward!

I find myself not wanting to take the time to listen to everyone’s ideas, but you must.  You just never know when that next great idea will come around.

The Money Mom