Is My Modded Ride Insurable?

Jeff’s Note: Personally, I think anything beyond gas & insurance is a waste of money for your car. Never throw money into a depreciating asset. 

The world of car enthusiasts is filled with true individuals who pride themselves on expressing their personalities through their distinctive and eye-catching vehicles. Some modify their cars for performance, others for aesthetics, but many drivers who make extensive modifications to their vehicles may wonder if their auto insurance policy even covers the monster their humble set of stock wheels has become.

Definitions

For insurance purposes, a “modified vehicle” is one that has undergone significant improvements in its manufacturer specified performance potential or structural alterations to the body of the vehicle that may impact the way it behaves on the road. Replica vehicles also fall under this standard, as they are not officially manufactured or endorsed by the automaker.

A premium custom paint job may also qualify as a significant modification is the value of the service totaled $10,000 or more, as the entire vehicle usually requires professional repainting if just one flaw develops.

Reporting

Most motorheads are totally unaware of their responsibility to report any substantial modifications to their insurance provider immediately. You can contact the HBF car insurance department directly on this link.

Failure to report modifications to your vehicle in a timely fashion could result in the voiding of the policy as a whole, as the insurer can justifiably claim that the vehicle involved in an incident is not the same as that insured by the policy. The vast majority of vehicles an insurance companies are standard factory products with reliable values and attributes, making it easy for them to determine your suitability for coverage.

In the case of modified vehicles, the practical effects of their uniqueness is far more difficult to quantify, and if there’s anything an insurance company cannot stand, it’s unpredictability. The fact is that most insurance companies are ill-equipped to address the needs of custom car enthusiasts, and typically do not respond well to being asked to do so unexpectedly.

For this reason, all modifications to your vehicle should be listed and submitted for the review of your insurer before the alterations take place if at all possible. This will allow you to determine whether a modification poses a risk to the validity of your current coverage, and if so, find an insurer more amenable to your automotive passions.

A custom car can be an unmistakable statement of personal style, but their total uniqueness can make finding effective insurance for these pieces of art a challenge. Check with your insurer to verify your current automotive coverage supports any planned modifications made to your vehicle and if your ride already features heavy modifications, be sure your insurance policy is made to be as one-of-a-kind as it is.

November 2014 Monthly Review

Hey All –

It has been a packed month. I’ve been very busy with side work and this site, and am hoping to launch the new site soon (Yes i’ve been saying that forever, but it’s going to be totally different and is a LOT of work). I’ve already removed about 400+ old posts that were not really worthwhile, and done quite a bit of other things related. I’ve also been working hard at building up income streams online, and I’m expecting to be able to reap those dividends sometime in 2015. I’m hoping that they all come through, and if they dont, I hope at least some will.

Once again, this was a month with out many updates on the blog, but again, I just dont know where the time goes. I’ve been working on getting back into this, but there always seems like there’s more to do.

Work on the house started (and is almost finished), so you’ll notice a rather large hit to our savings account – that was all planned, and it’s why we were saving the money in the first place. The wall is out, but the beam is not in yet, so there’s still temporary supports but already it looks a million times better. I’m going to be looking forward to working down there wiring and plumbing and doing other things once the contractor is finished up. I’m hoping the basement wont be as expensive as the upstairs, but I have a feeling we will still pay a bit of money.

Debt

House

Mortgage $ 105,466 6,337 (-$871) We set and end of 2014 goal for this at 97,500, and I dont think we are going to make it – we just didnt do enough on this front. The good news is that our health insurance squeeze lessened a bit, as my company switched providers and our premiums went from around 900 per month to around 600 per month. I took that $300 per month “raise” that I got from the health insurance change and set up $200 to go to the mortgage, bringing our total (extra) mortgage payments to $400. There’s going to be some real headway coming on this in 2015. I’m hoping that if all goes according to plan, this will be under 50k.

Total Debt: $105,466

We are down $871 from last month, which is to be expected. I’m excited that when I’m doing this update, I can simply move the mortgage down to the total debt line instead of adding in student loans, vehicle loans, credit cards and other debts. Having minimal debt has been HUGE to our savings and cash flow.

Savings

We have moved all of our savings over to vanguard, and instead of putting them in different accounts, we allocated the funds based on a hard number for our emergency fund and a percentage of what is left. Right now, we have our emergency fund in two places: Vanguard Money Market Fund (VMMXX) and Vanguards Total Bond Fund (VBMFX). There have been some suggestions to move a portion of that to a dividend fund, but I’m not too keen on that with the balances where they are at the moment.

House Fund  $0 – This has been drawn down to pay the contractor for the bulk of the work. We estimate that he’s got about 1 more day’s worth of work, which we will take from other savings.

Vacation fund $1,000 – A dip in this account was cause by our severe cash flow issue (wife’s employer messed up her paycheck last month, so she was paid much less this month), so we had to move a bit out of savings to cover it.

Emergency Fund $10,000 – just the boring old 10k in here. Going to leave it steady at this level for the foreseeable future.

I am also probably going to update this portion of the review as well. I’d like to share more information (given our goals have changed) but I need to run everything by my wife and see what she thinks. I’m erring on the side of sharing more, but again, it’s not just my decision anymore – not like it was back in 2009 anyway, when I was in a relationship and my finances were just mine.

6 Important Accounting Tips for Small Businesses

Jeff’s Note: Even though I enjoy running this micro business, there are a lot of things that need to get done behind the scenes that I dont really like doing, and one of them is accounting. I’ve been better about in the last 2 quarters of 2014 than I ever have (and I hope my taxes reflect that) but it’s still a huge chore for me. I thought I’d share some tips on how to get it done with a bit less pain.

Among the long list of essential items that occur naturally from managing your small business lies the fundamental issue of accounting. While having an advanced degree is definitely not a prerequisite for running a small business successfully, some fundamental accounting skills could save you considerable frustration and money.

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Even if you have the resources to employ an accountant, a lack of knowledge in accounting could permit fraud from an unscrupulous accountant. Many small businesses fail due to the lack of appropriate bookkeeping. One of the most essential elements shared by every successful business of whatever size is maintaining accurate records; this is also legally required.

An advanced course in Accounting 102 could equip you with the necessary skills. However, you would have to initially graduate from the accounting basics. Although this accounting task may prove monotonous or tedious, it is crucial to the success of your business. If you are seeking a way to improve your business management, these accounting tips will prove invaluable.

  1. Engage Professional Services

For a considerable period, accountants have been revered and respected allies to proprietors of small businesses. Their vast professional knowledge and familiarity with tax and finance laws will save you considerable money.

Although hiring an accountant is costly, it will give you a peace of mind. These professionals are likely to process fiscal data rapidly, keep abreast of tax law amendments, and answer your queries. While it is tempting to save money by performing this task on your own, it is almost never cost-effective.

A professional will usually discover more deductions while helping you avoid penalties. The suitable accountant could also become a trusted advisor to your business. You will have an opportunity to collaborate and consult on forecasting and budgeting, cash flow management, and business performance. Finding the appropriate accountant is vital for small businesses, which have fewer resources and complex needs.

Manage and Track Expenses

Tracking expenses is crucial to your business’s success and maintenance of accounts. You can accomplish this by recording payments and gathering receipts. The infrequent meal expenditures or traveling costs also require documentation and appropriate handling.

A failure to maintain accounts could prevent you from building a dependable financial statement or prepare reliable reports on tax returns. Furthermore, it becomes hard to monitor your business’s growth or expenses.

Keeping track of your expenses is crucial for tax purposes and enables adjustments during economic or market changes. Although most small business proprietors do not look forward to managing their expenses, staying on top of your accounting tasks is an excellent means of decreasing your stress when preparing your taxes.

Separate Personal and Business Finances

Numerous business owners mix their professional and personal finances. Open separate accounts and debit/credit cards that you will use exclusively for managing business expenses. For instance, it is easier to track business receipts if you do not use the same card to pay for office supplies and groceries.

If you need to locate a forgotten expense, you simply need to go through a single account instead of several. Maintaining separate credit card and bank accounts will save you hours of work and help track deductible expenses.

You should also maintain separate business records when using financial or accounting management software. You should consider using a program designed specifically for small businesses for instance QuickBooks or Mint.com.

Document Business Transactions

It is important you document every business transaction. If you record an amount for expenditures and fail to maintain receipts, you may not recall what the figure was about after a few months. Ensure you file receipts and documentation in an accessible manner.

Documentation is necessary for your business to operate effectively. Information is also necessary for accounting purposes to determine whether you are making losses or profits. Backup documentation is also important if you need to conduct research, have questions, or for audit purposes.

Reliable Accounting System

You should use a reliable system that you have previously tried. Accounting software, especially online software can revolutionize the functioning of your business. Numerous affordable options aim to simplify accounting tasks and maximize financial performance.

Accounting systems offer numerous benefits including accessibility and user friendly features. You can also examine real-time economic data at whatever time and location since the system stores information online. Online software can incorporate with numerous business applications. This implies that you can manage all your business’s aspects without performing manual data transfer.

Establish Payroll

Small business owners perform various roles. Completing payroll is one of the most essential tasks in operating a small business. Payroll affects all aspects of a business from your employees’ morale to your business’s financial stability.

Whether you have independent contractors or employees, they have to receive payment for their services. A payroll system will help streamline your capacity to stay on top of your regulatory and legal duties as an employer. Moreover, this system can also protect you against costly penalties.

Conclusion

Small businesses usually face accounting challenges since proprietors normally assume the role of bookkeepers. Nevertheless, these friendly Shopify tips will help you observe tax laws and place you in a better position to monitor your cash flow and finances.

October 2014 Monthly Review

Cart track in Upperaustria leads to the sky.

Hey everyone – it’s been a quick month of October, and I’m happy to report that everything here has been going well. The initial squeeze that was placed on our finances when switching jobs and seeing a 10x (!!!) increase in health insurance plus my wife beginning work 2/3rds time instead of full time put a fairly sizeable dent in our take home pay (on the order of -45%). The squeeze has lessened, as my company switched health insurance providers and our costs went down, and will go away in january when we move to my wife’s insurance plan (which is paid for mostly by her employer). That alone should put a sizeable amount of cash back into our accounts each month, and will do well once we begin transitioning full-on to the goals that I’ve alluded to previously.

As for the re-design of the new site, that is going swimmingly (yet slowly) and should be done soon. I’ve enlisted the help of a photographer to take a few pictures for the new site, as well as an editor for my free guide on how to cut cable TV. Once all those are back, I’ll make the move to the new site.

In house news, we have finally got a start date for demolition of the wall in our basement, and hopefully that will be wrapped up by thanksgiving. It’s going to be loud & noisy for a while, but I’m certain it will be worth it. I’ll also be able to start working on other projects in the basement once that’s done.

Now, on to the monthly review.

 

Debt

House

Mortgage $ 106,337 (-$869) Gone are they days where we are knocking this down by just $550 per month, and we are starting to see some real progress here. We had set a few goals related to this note, the super stretch goal would be to have it under 97k by the end of the calendar year, which is unfortunately probably out of the picture at this point. We still can meet our stretch goal of getting this below 100k by the end of the year though, as we should have funds to free up after the health insurance moves around and bonus season comes along. It’s going to be close – and it could happen in the first week of January, but considering we bought this house 2.5 years ago (in may 2012) I’m very happy with where we are at.

Total Debt: $106,337

We are down $869 from last month, which is to be expected. I’m excited that when I’m doing this update, I can simply move the mortgage down to the total debt line instead of adding in student loans, vehicle loans, credit cards and other debts.

Savings

We have moved all of our savings over to vanguard, and instead of putting them in different accounts, we allocated the funds based on a hard number for our emergency fund and a percentage of what is left. Right now, we have our emergency fund in two places: Vanguard Money Market Fund (VMMXX) and Vanguards Total Bond Fund (VBMFX). There have been some suggestions to move a portion of that to a dividend fund, but I’m not too keen on that with the balances where they are at the moment.

House Fund  $2,000 – This is lower too for the same reason as the vacation fund. Relying so much on cash flow is a pain, but these things happen. Good news is that we are pausing savings, not skipping on debt.

Vacation fund $1,000 – A dip in this account was cause by our severe cash flow issue (wife’s employer messed up her paycheck last month, so she was paid much less this month), so we had to move a bit out of savings to cover it.

Emergency Fund $10,000 – just the boring old 10k in here. Going to leave it steady at this level for the foreseeable future.

 Thanks for reading everyone! How was your October? Did everything go well for you?

Climate Change, and How it Affects You

You’re probably all tired of hearing about climate change and are wishing I’d just shut up about it… but I can’t and I won’t. If we stop talking about it, the problem isn’t just going to go away; it’s going to get worse and worse until we’ll have to swim to the local shops. Let me give you a telescopic view of the planet’s climate situation. Don’t believe the people who claim climate change is all hype and exaggeration; it’s not, and we can help slow it down.

Planet Earth

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Right, it’s statistic time. If these don’t inspire you to make a change, I don’t know what will.

Carbon Dioxide Levels

At this very moment our planet’s carbon dioxide level is at 398.5 parts per million. What does that mean? Well, we can tell from air trapped in Antarctic ice cores three quarters of a million years ago that this is the highest it has been for 650,000 years.

Global Temperature

Global temperature is up by 1.53 degrees Fahrenheit since 1880. Now, that may not seem like a lot, however when you consider that 9 out of 10 of the hottest years on record have occurred in the past 14 years, it gets a little bit scary.

Arctic Ice Levels

The arctic ice levels (situated right beneath that gaping hole in the ozone layer) have fallen by nearly 14% per decade. If they continue at this rate, soon they won’t be here and a lot of coastal areas will be under water. Sea levels have already risen 7 inches in the past century. If we continue on this path, low-lying island nations could be completely wiped out.

Europe

Let’s narrow our focus. I’ve picked out Europe as it has a very varied continental climate and geography, from the hot, subtropical Mediterranean to the icy cold of Scandinavia, via many islands and bodies of water. Residents of Europe are already noticing their weather becoming erratic and it’s going to get worse: we’re talking frequent, prolonged heat waves; dangerous river droughts; rising sea levels causing flooding in coastal areas during storms; the extinction of local flora and fauna; a failing in agriculture due to a lack of water.

Britain

Britain, as an island nation, is more at risk from rising sea levels, and, like Europe as a whole, has a colder, icier north and hotter more temperate south. The immediate effect of global warming on Britain is a change to its winters and summers. The winters will be wetter, but milder and the summers will hotter and drier. This leads to better summer holidays; however species that hibernate – like hedgehogs – are being wiped out because of the confusion to their routine.

Your House

This all sounds pretty grim, but we can all help to prevent further damage to the climate, just by making small changes in our own homes. There are obvious steps, like turning lights off when you leave a room or setting a schedule for your central heating, but there are other things you can do, like installing more efficient light bulbs or using appliances, like your dishwasher, more effectively. Here are some more really helpful tips for cutting down your carbon footprint and making a change for future generations of humans and animals on our planet.

Why Avoid Pre-Paying a Mortgage?

This is a guest post from Tali Wee of Zillow, and she’s talking about mortgage prepayment, something that I’ve struggled with in the past – and still am not sure I’m making the right decision about.

Buying a home is likely one of the most expensive purchases in an individual’s lifetime. Although some homebuyers purchase properties with all cash, most finance the transactions. Once the emotional process of shopping, bidding and closing on a home is complete, mortgaged homeowners commit to 15 or even 30 years of monthly costs. These payments include repayment of loans (principal), interest due to lenders for loaning capital, property taxes and homeowners insurance.

Many homeowners opt to pay down their mortgages ahead of their payment schedules to save on interest costs. Once completely repaid, homeowners only owe annual property taxes and homeowners insurance on one of life’s fundamental needs – a home. Some homeowners pre-pay their mortgages because they despise the burden of debt, while others prefer to pay more now to free-up future income for alternative financial goals.

Although these are all major advantages, numerous homeowners decide to pay their mortgages on schedule. Here are a several reasons to avoid pre-paying mortgages.

Tax Breaks

The interest paid on mortgages is tax deductible. Even though the monthly cost of the mortgage remains the same, the breakdown of principal and interest varies on an amortization schedule. Borrowers pay more interest than principal during the first half of their loan terms and more principal than interest in the second half. Some buyers value the tax break more than rapid principal reduction, especially during the preliminary, high-interest years of ownership.

Jeff’s note: For some, this just does not hold. My wife and I bought a modest house with a great interest rate, and our yearly interest does not even come close to being more than the standard deduction. We do live in a low cost of living area though.

Alternative Debts

Borrowers should always tackle their highest-interest debts first. If borrowers have credit card debt with 15 to 20 percent interest rates, they should focus surplus income to those debts. Student loans also have high-priced interest rates from 5 to 10 percent. These debts compound rapidly making them higher priorities than current mortgage rates of 4 percent.

Pre-Payment Fees

Not all lenders allow borrowers to reduce their interest profits, so they penalize borrowers for pre-payments. Additionally, bi-weekly payment programs that coordinate with standard employee payment schedules to pay down mortgages every two weeks come at a cost. Third-party programs charge activation fees ($150-$500) and bi-weekly fees with each payment ($5-$20). These penalties and charges defeat much of the cost benefits of pre-payment.

Vary Investments to Limit Risk

Borrowers diversify their investment portfolios for reduced risk. In the last seven years, real estate values have fluctuated dramatically. It’s risky to lock substantial funds into a single asset with potential for major depreciation. Many borrowers stay current on their mortgage payments while investing in higher-producing, more liquid assets and saving cash.

Higher-Return Investments

High-return, low-risk investments are more lucrative than fully paying off a low-interest loan. If borrowers’ employers offer 401k matching programs, retirement investing potentially doubles borrowers’ money. Although still risky, many borrowers opt to invest in stocks and bonds for high-return assets. Home equity is simply too low-producing compared to other investment options without diversified, high-return assets.

Emergency Funds

Before allocating all savings toward mortgage debt, borrowers should amass an emergency fund. Because emergencies require urgent funds, it’s important to have liquid assets. Emergency funds cover urgent home repairs, unexpected medical bills and job loss to prevent further debt or defaulted loan payments. Before pre-paying mortgages, many homeowners save three to 24 months in emergency savings.

Deep Savings

Beyond emergencies, many homeowners do not pre-pay their mortgages because of their alternative financial goals. Beyond mortgage payments, borrowers most often keep deep saving accounts for retirement, travel, emergencies, education, cars, pet funds, hobbies or start-up businesses. If all excess cash is tied up in mortgages, the lack of liquidity can affect borrowers’ quality of life. Homeowners must prioritize their lifestyles and needs before investing completely in their mortgages.

Underwater Loans

If homeowners are underwater on their loans, it’s beneficial to pursue refinancing options instead of investing completely in an overpriced property without potential for fair returns. Refinancing often results in smaller payments and less total cost to the borrower, depending on pre-payment penalties for the original loan. Refinanced mortgages are typically borrowed at reduced interest rates and terms are generally shorter, limiting total interest paid over the life of loans. In these cases, aggressively paying down underwater mortgages is cost prohibitive. Beyond, refinancing underwater homeowners might consider the benefits of short selling to offload the negative equity.

Ultimately, homeowners must evaluate their financial goals to decide whether mortgage pre-payment is right for them. Is carrying debt more of a stressor than lack of liquid assets? Are college funds for the kids a higher priority than early retirement? Can owners pre-pay their mortgages while saving for their goals and investing? Home equity doesn’t work as hard for owners as other investments, but outright ownership is still preferred by some. Homeowners should consider all of the advantages and drawbacks of mortgage pre-payment before fully investing.

So readers, what say you? Would you rather prepay (given todays rates in 2014) or invest?

September 2014 Monthly Review

Welcome back!

Monthly Review

There has been a pretty small number of posts here lately, as I have been working on a redesign for the site! It’s not quite ready yet, but I think it looks pretty good if I do say so myself. I had hoped it would be finished by early september, but that just didnt happen as I got sidetracked with other things and ended up not being able to work on it as much as I’d hoped. It’s almost finished now, I just need to put the finishing touches on some of the extra features and content for the site.

With the redesign, the focus of the site is going to shift a bit as well. When I started this site back in 2009, I was not in a good place financially. I had more debt (55k+) than I would earn from 2 years working at my job (before taxes) and had poor financial habits. I have since done a lot of things, like pay off all my debt, buy a house, get married and had a child. After many discussions with my wife, we’ve decided on a new goal to focus on (financially speaking), and I’ll be writing a bit more about that than I have in the past. Don’t worry though, I’ll still write about how to save money by going green, but I’ll stop writing about things like getting out of debt – because I’m (we are) not in debt anymore and there are TONS of other great get out of debt blogs around.

Debt

House

Mortgage $ 107,206 (-$767) This is the first full month we’ve been on our “accelerated” payment program, and things have been going fairly good. Unfortunately, the way our bank works is that they dont apply the extra $100 to the note right away, but hold the money until a full payments worth of funds have been applied to the account. What this means is that we pay our mortgage at the beginning of the month, and  there’s already $200 or so from the last month in there, waiting to be applied. Obviously not an ideal situation, but it is what it is. The solution is simple and automatic, and it will shave about a year off of our loan, bringing our remaining payments from 13 y ears down to 12, meaning that by the time our daughter is exiting elementary school, we should own our house free and clear.

As I mentioned last month, we hope to change this amount once January rolls around and we switch our insurance.

I’m working on a bigger post on the specifics on this issue, as the goals my wife and I have for our finances have changed since we’ve become debt free except the mortgage, and will be examining some options reflecting those changes.

Total Debt: $107,206

We are down $665 from last month, which is to be expected. We are waiting to make any drastic changes until we can increase our cash flow, but we have already lowered our spending in anticipation of our lowered incomes for 2015.

Savings

We have moved all of our savings over to vanguard, and instead of putting them in different accounts, we allocated the funds based on a hard number for our emergency fund and a percentage of what is left. Right now, we have our emergency fund in two places: Vanguard Money Market Fund (VMMXX) and Vanguards Total Bond Fund (VBMFX). There have been some suggestions to move a portion of that to a dividend fund, but I’m not too keen on that with the balances where they are at the moment. I forgot to turn on the automatic withdraws, so these didnt really grow much last month.

Child Fund $0 – This has all been moved into the baby’s 529 plan.

House Fund  $3,500 – We are upping this amount, and have finally found a contractor to do some work for us in the basement. This is a major project, so we expect the balance of this to go down quite a bit after the work is completed.

Vacation fund $1,300 – This account is slowly building, and we are looking for great places to go when we are overseas next year. Planning this vacation is going to be a lot of fun!

Emergency Fund $10,000 – just the boring old 10k in here. Going to leave it steady at this level for the foreseeable future.

 Thanks for reading everyone! How was your september? Did everything go well for you?