Are You Covered For Flood Damage?

Image via WikipediaHurricane Irene has finished it's work and is out to sea. In it's path of destruction we see not only damage caused by high wind but by flooding. Is it me or over the last decade has weather events resulted in more flooding than ever. Where I live we are in the middle of the hurricane season. Not since Katrina have we seen any visits by hurricanes. But hurricane season comes every year and more than four out of every five natural disasters nationwide involve flooding. Yet according to the Insurance Information Institute, less than a fifth of U.S. homeowners have a flood insurance policy that protects their property and belongings.

People tend to underestimate the risk of flooding but 90% of all natural disasters in the country involve flooding. During the first 6 months of 2011, the federal government declared 28 major flood disasters, putting it ahead of the pace of 2010, when there were only 50 for the entire year.

Most people think they are covered for flood damage by their homeowners insurance policy. This is not true in the past 10 years there has been $2.7 billion dollars in flood damage to American homes, according to the National Flood Insurance Program.

How Much does a Flood Insurance policy cost?

The average flood insurance policy in 2010 was $594 a year for $220,577 worth of coverage. The average flood insurance claim was $26,067 in 2010. To see if your home is at risk of being affected by a flood go to www.floodsmart.gov.

Do I need a Flood Insurance policy if I am not in a designated flood zone?

There are designated flood zones and there are Special Flood Hazard Areas. If you are in a low risk area, you still are at some risk. Flood insurance covers direct physical losses resulting from heavy or prolonged rain, melting snow, blocked storm drainage systems and levee dam failures. You just don't have to live in a flood plain to be affected by flood damage.

My home is in a designated flood area and I carry flood insurance, which is requires by my mortgage lender. I am glad I have it, even though where I live has never experienced a flood. I am also prepared for wind damage with hurricane shutters even though we went through Hurricane Andrew and suffered no damage. It just makes sense to be prepared with the proper flood insurance

New Credit Card Rules Effective August 22

Image via WikipediaLast week, new rules kicked in concerning the Credit Card Accountability, Responsibility, and Disclosure Act of 2009. These new rules, that the credit card companies are balking at, are finally here and you should be seeing them take affect on your next credit card bill.

New rules from the Federal Reserve mean more new credit card protections for you. Here are some key changes you should expect from your credit card company beginning on August 22, 2010:

Reasonable penalty fees

Let's say you are late making your minimum payment.

• Today: Your late payment fee may be as high as $39, and you likely pay the same fee whether you are late with a $20 minimum payment or a $100 minimum payment.
• Under the new rules: Your credit card company cannot charge you a fee of more than $25 unless:
• One of your last six payments was late, in which case your fee may be up to $35; or
• Your credit card company can show that the costs it incurs as a result of late payments justify a higher fee.

In addition, your credit card company cannot charge a late payment fee that is greater than your minimum payment. So, if your minimum payment is $20, your late payment fee can't be more than $20. Similarly, if you exceed your credit limit by $5, you can't be charged an over-the-limit fee of more than $5.


Additional fee protections

• No inactivity fees. Your credit card company can't charge you inactivity fees, such as fees for not using your card.
• One-fee limit. Your credit card company can't charge you more than one fee for a single event or transaction that violates your cardholder agreement. For example, you cannot be charged more than one fee for a single late payment.

Explanation of rate increase

• If your credit card company increases your card's Annual Percentage Rate (APR), it must tell you why.

Re-evaluation of recent rate increases

• Today: Your credit card company can increase your card's APR with no obligation to re-evaluate your rate increase.
• Under the new rules: If your credit card company increases your APR, it must re-evaluate that rate increase every six months. If appropriate, it must reduce your rate within 45 days after completing the evaluation.

These are simple changes that will streamline the rules across all credit card companies. There won't be different rules across different companies anymore. 

Debt and Marriage: When Do I Owe My Ex-Spouse's Debts?

Image via WikipediaWhile researching this article, I Googled the words "debt" and "divorce", I got over 14 million results. In our society, debt and divorce go hand in hand. With money problems the leading cause of divorce in our country I can see why. Even with many intact marriages money is a big point of contention. The bills are continually rising, it costs a lot to raise children and many other factors contribute to the problem. Sadly the strain, of money problems, can be devastating and many marriages end up in divorce.

In a divorce, the marriage you entered into with such high hopes, can be ended with the signature of a judge. The only problem is that debts are not eliminated so easily. If your in the pre-stages of divorce you may want to learn how the debts of the marriage are going to be looked at by the creditors. You may agree with your spouse or the judge may decide for you who is to pay the debts but your debtors don't look at it the same way you are.

With all forms of debt entered into you will find two ways the responsible parties are listed:

Individual Account:
Your income, assets, and credit history are considered by the creditor. Whether you are married or single, you alone are responsible for paying off the debt. The account will appear on your credit report, and may appear on the credit report of any "authorized" user. However, if you live in a community property state (Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, or Wisconsin), you and your spouse may be responsible for debts incurred during the marriage, and the individual debts of one spouse may appear on the credit report of the other.

Pro's and Con's:
If you're not employed outside the home, work part-time, or have a low-paying job, it may be difficult to demonstrate a strong financial picture without your spouse's income. But if you open an account in your name and are responsible, no one can negatively affect your credit record.

Joint Account:
Your income, financial assets, and credit history - and your spouse's - are considerations for a joint account. No matter who handles the household bills, you and your spouse are responsible for seeing that debts are paid. A creditor who reports the credit history of a joint account to credit bureaus must report it in both names (if the account was opened after June 1, 1977).

Pro's and Con's:
An application combining the financial resources of two people may present a stronger case to a creditor who is granting a loan or credit card. But because two people applied together for the credit, each is responsible for the debt. This is true even if a divorce decree assigns separate debt obligations to each spouse. Former spouses who run up bills and don't pay them can hurt their ex-partner's credit histories on jointly-held accounts.

Authorized Users:
If you open an individual account, you may authorize another person to use it. If you name your spouse as the authorized user, a creditor who reports the credit history to a credit bureau must report it in your spouse's name as well as in your's (if the account was opened after June 1, 1977). A creditor also may report the credit history in the name of any other authorized user.

Pro's and Con's:
User accounts often are opened for convenience. They benefit people who might not qualify for credit on their own, such as students or homemakers. While these people may use the account, you - not they - are contractually liable for paying the debt.

Action Plan:

• If you're considering divorce or separation, it's important to make regular payments so your credit record won't suffer. As long as there's an outstanding balance on a joint account, you and your spouse are responsible for it.
• If you divorce, you may want to close joint accounts or accounts in which your former spouse was an authorized user. Or ask the creditor to convert these accounts to individual accounts.

Failure to do this usually leads to one spouse paying for a while but later defaulting because of lack of income or out of spite. This results in the other spouse having a ding on their personal credit report or eventually being sued by the creditor for not paying.

In a joint mortgage, the only way to get your name off the document is to have the home refinanced. Just having a judges decree for one spouse to pay the debt is not recognized by the creditor. Divorce does a good job of separating you legally from your spouse but does a bad job divorcing you from your spouses debts. It's going to be your job to divorce yourself financially from your spouse.

The 15 Best Budget, Economic, and Retirement Financial Quotes

Quotes are a great way to learn a concept in a quick and dirty way. There is a lot a wisdom in quotes and their fun too. I have listed 15 quotes from 3 interesting subjects.

Budgets

The basic foundation of personal finance is the budget. Like Dave Ramsey says, " If you don't tell money where to go, it will just leave." Budgeting is the the hardest thing to do when you are just getting started and if you want to win in the money game, it's a skill you need to learn.

"Some couples go over their budgets very carefully every month; others just go over them."

-Sally Poplin

"A budget is just a method of worrying before you spend money, as well as afterward."
-Unknown

A budget tells us what we can't afford, but it doesn't keep us from buying it.
-William Feather

The amount of money you have has got nothing to do with what you earn. People earning a million dollars a year can have no money. People earning $35,000 a year can be quite well off. It's not what you earn, it's what you spend.
- Paul Clitheroe

Never spend your money before you have it.
- Thomas Jefferson


Economists

Another of my favorite financial subjects are economists. I have to admit that I admire these guys, you have to be very smart to understand all those theories and laws. Yet there is still disagreement by economists in differing theories. The fight between the Keynes theory and the Hayek theory of economics goes on. All the stimulus we are currently living with today comes from the Keynes theory of economics. Maybe we should try Hayek's theory?

An economist is an expert who will know tomorrow why the things he predicted yesterday didn't happen today.
-Laurence J. Peter

An economist's guess is liable to be as good as anybody else's.
-Will Rogers

Ask five economists and you'll get five different answers - six if one went to Harvard.
-Edgar R. Fiedler

Definition of a Statistician: A man who believes figures don't lie, but admits than under analysis some of them won't stand up either.
-Evan Esar

If all the economists were laid end to end, they'd never reach a conclusion.
-George Bernard Shaw

Retirement

This is both my favorite subject and goal. Retirement is a two part process. First the accumulation of retirement funds and assets. This part takes up the better part of our lives. Followed by the retirement part that fills hopefully the latter third of our life if we are lucky. It's like a house you take 50 years to build and that you have to live in another 25 years. The problem is you don't know if you did a good job until it's to late.

Don't simply retire from something; have something to retire to.
-Harry Emerson Fosdick

Retirement is wonderful if you have two essentials — much to live on and much to live for. – Author Unknown

Retirement means doing whatever I want to do. It means choice. 

– Dianne Nahirny

When a man retires, his wife gets twice the husband but only half the income.

– Chi Chi Rodriguez

Retirement is wonderful if you have two essentials — much to live on and much to live for. – Author Unknown