January 18, 2020

You Really Can Lower Your Car Insurance Cost

People who drive infrequently may want to consider usage-based insurance, which uses technology to monitor driving and can save about 3 percent, the report found.

For help in understanding coverage, try an online guide from the National Association of Insurance Commissioners.

Here are some questions and answers about car insurance:

Are some cars more expensive to insure than others?

Yes. Older cars, for instance, are generally cheaper to insure than new cars. The driver of a three-year-old Honda Accord would save about 12 percent on premiums compared with the cost of insuring a new model, the report found.

If you are shopping for a car and want to keep insurance rates down, consider a gently used, late-model car, Mr. Linkov said.

Am I required to insure my car?

All states except New Hampshire require minimum levels of liability coverage, which pays for another person’s property damage, medical care and other costs caused by you.

Other types of coverage are usually optional (although if you finance a car, your lender may require them). They include collision coverage, which pays for damage to your car if it hits another car or something else, like a tree or a wall; and comprehensive coverage, which covers damage to your car from most everything else, like fire, hail, flooding and theft.

If your car is aging and its value has declined substantially, you may want to consider dropping optional coverages, to lower your premium, said Mr. Hunter, the insurance expert.

Are driver discounts available?

In many states, yes, so ask your agent. Insurers may offer discounts for bundling auto coverage with other types of insurance, like homeowner or renter’s policies. There may be other discounts for having your premium payment automatically deducted from your bank account, or paying the full premium upfront, The Zebra found. Younger drivers may receive credit for maintaining good grades or taking a driver’s education course.

Article source: https://www.nytimes.com/2020/01/17/business/car-insurance-costs.html?emc=rss&partner=rss

A New Generation Seeks to Give It All Away Now

“When you look at foundations, it’s much like having a family business,” Mr. Grasso said. “Some businesses get handed down to the offspring, but with other businesses, the offspring don’t want to be part of the family business anymore.”

The Rockefeller report found three drivers for a spend-down foundation: to see the impact of the gift in the donor’s lifetime, to narrow the philanthropic focus and to send more money to urgent causes sooner rather than later. Those who opted to maintain a foundation in perpetuity were motivated to address continuing problems, strengthen their family’s values and purpose, and have an impact on beneficiaries over several generations.

One of the best-known spend-down foundations is the Atlantic Philanthropies, created by Chuck Feeney, who helped found Duty Free Shoppers. Through it, Mr. Feeney has given away an estimated $8 billion.

In 2002, he decided he wanted to give away all of his money in his lifetime, setting 2016 as the date for the last of it to be donated.

“This whole notion of limited life does concentrate the mind,” said Christopher G. Oechsli, president and chief executive of the Atlantic Philanthropies, told me in 2014. “It introduces a dimension of urgency.”

That sense of immediacy was common, the Rockefeller/Campden Wealth report found, particularly for foundations that changed to a spend-down model later.

The S.D. Bechtel Jr. Foundation, which was started in the 1950s by a grandson of the founder of the engineering firm Bechtel, had for decades been making grants focused on issues the family cared about. But in 2009, Mr. Bechtel decided he wanted the foundation to focus on what he felt were imminent concerns in California — integrated water management and STEM education for children.

Article source: https://www.nytimes.com/2020/01/17/your-money/philanthropy-family-foundations.html?emc=rss&partner=rss

Federal Workers Profit From Tobacco and Oil, Even If They Don’t Want To

I asked around at the surgeon general’s office and the Centers for Disease Control and Prevention about tobacco stocks. No one in a position of power would comment or return my calls or emails. But I did hear from two spokeswomen, who sent me identical one-sentence statements. They both pointed out the obvious (individuals in the T.S.P. can’t own individual stocks) and dodged my questions about overall employee sentiment about tobacco industry exposure.

There is another solution in the works for government employees: a mutual-fund window. This mechanism doesn’t replace any existing funds; instead, it allows plan participants onto an investment platform where they can choose from most any mutual fund, including hundreds of E.S.G. offerings.

Congress told the savings plan’s board in 2009 that it could offer a window, but progress soon stalled. “The stock market was in free fall, and everyone was scared witless,” said Kim Weaver, a T.S.P. spokeswoman.

The market rebounded in the first half of the 2010s, and federal employees and various advocacy groups started making their feelings known. By 2015, the Federal Retirement Thrift Investment Board’s executive director at the time, Greg Long, was ready to recommend a change. “As the clamor of the voices swell, it will be increasingly difficult to defend the core fund menu,” he wrote in a memo to his overseers.

They agreed with him. The beauty of a fund window is that it doesn’t take anything away from anyone. Moreover, the only thing its availability endorses is the idea of more choice. Federal employees can bet on energy stocks via a mutual fund or shun them as they wish, or just stick with the exposure to the stock indexes that is already part of the plan.

Even so, prying the mutual fund window open is taking quite a while. Congress has pushed several other big T.S.P. initiatives to the front of the line, and it will probably be at least two years before participants will get to climb through that window and see what the world of mutual funds looks like on the other side.

What remains to be seen is how many of them will actually climb through.

Many employers that work with Vanguard offer similar windows, and in 2017, only 1 percent of participants used them. Eight percent of the entities offering this option didn’t get a single employee taking them up on it. Fidelity reports similar figures: Just 2.7 percent of participants use the window.

Article source: https://www.nytimes.com/2020/01/17/your-money/thrift-savings-plan-esg-401k.html?emc=rss&partner=rss

New Law Expands Uses for 529 College Savings Accounts

The College Savings Plans Network says there are about 14 million open 529 accounts holding an average of $25,000 each.

The average student loan burden for college graduates with debt is about $30,000. So $10,000 from a 529 account by itself is not going to solve the student loan problem, said Carrie Warick, director of policy and advocacy for the National College Access Network, a nonprofit group that advocates on behalf of low-income students. “If you have significantly greater than $10,000 in loans,” she said, “it’s not a game-changer.”

Here are some questions and answers about the new 529 rules:

Can I use 529 money to repay private student loans, as well as federal loans?

The provision applies to federal and most private student loans.

Can I use 529 funds to pay an education loan I took out for my child?

The Secure Act’s provisions apply to student loans held by the 529 account’s beneficiary or the beneficiary’s siblings. But there is a workaround, Mr. Kantrowitz said. For example, a parent, as the owner of a 529 account with a child named as the beneficiary, could make a change and designate himself or herself as its beneficiary and take a $10,000 distribution to repay federal or private parent loans.

Depending on how much money was left in the account, the family could first use $10,000 to repay a child’s loans and another $10,000 for a sibling’s loans, before making the beneficiary change and taking a distribution to repay the parent loan, he said.

When do the new 529 rules take effect?

The new 529 rules are retroactive to the beginning of 2019. But account holders may want to be cautious and check with their own 529 plan before withdrawing funds. The new rules are in effect for federal tax purposes, but it’s possible that some state 529 programs will not follow along and recognize student loan payments or apprenticeship costs as eligible expenses. (That happened with the earlier change that allowed 529 funds to be used to pay for pre-college education costs.) Account holders in states that do not go along with the new federal rules may be subject to state income taxes and penalties, or possibly a repayment of state tax breaks. The various 529 plans are evaluating the new law, Mr. Frerichs said, and it could be weeks or months before the issue is settled in each state.

Article source: https://www.nytimes.com/2020/01/10/your-money/529-college-savings-accounts.html?emc=rss&partner=rss

How to Get Socially Conscious Funds Into Your 401(k)

Then, consider starting small, with a single request: Add a socially responsible fund that focuses on large American companies. Socially conscious funds have crept into the mainstream over the past couple of decades, and funds that focus on big American companies are a more mature area of socially conscious investing. (This makes sense; many investors prefer to invest in companies they know best, and companies in the United States disclose a decent amount about themselves.)

You don’t necessarily need to have a specific fund in mind. Many employers will have multiple outside parties helping run and shape their retirement plan, and those experts can help pick a fund.

But if you are inclined to make suggestions, Carole M. Laible, chief executive of the fund and investment manager Domini Impact Investments, suggested a few parameters. First, larger employers will often decline to consider funds that do not have three- or five-year track records. They may also want to see at least $150 million already in the fund, and they won’t want a big influx of money from their colleagues causing that employer’s plan to own more than 5 to 10 percent of the fund’s total shares.

All of this reluctance relates to that fiduciary duty requirement. Employers worry a fair bit about being sued for violating that duty if they make the wrong fund choices. It does happen: Jerome Schlichter has made a living helping employees sue everyone from Johns Hopkins University to Ameriprise. So I asked him how he’d suggest employers avoid getting sued while still embracing E.S.G. funds.

Mr. Schlichter suggested an augment-but-do-not-replace approach. Already have a bare-bones index fund of large American stocks in your plan? Carefully choose and then add a single E.S.G. fund covering that same sector, instead of swapping it into the plan and ditching the index fund. That way, you have neither limited anyone’s existing choices nor taken away an index fund that is likely to have very low fees.

Marla J. Kreindler, a benefits specialist and Chicago-based partner with the law firm Morgan, Lewis Bockius, offered another suggestion: Consider a brokerage window. This allows employees to, in effect, have their own investment account within their workplace retirement plan. There, they can choose from the whole universe of available mutual funds — social, antisocial or otherwise.

Still not getting anywhere? At that point, it may be tempting to resort to threats: “Worried about legal exposure? Large numbers of energy companies may go under or see their stocks underperform over a generation. You’ll be on record having blown me off in 2020 when I asked for a fund that excluded them.”

Article source: https://www.nytimes.com/2020/01/10/your-money/esg-funds-retirement-401k-plan.html?emc=rss&partner=rss

What to Do if You Overspent During the Holidays

In that case (and in keeping with the frosty theme), we recommend snowballing your debt payments. Rather than paying down the balance with the highest interest rate, attack your lowest balance first. The good cheer that comes from that accomplishment will give you the necessary positive momentum to go after your next-largest debt.

You should also call your issuers and request a lower interest rate. This tactic may seem a bit on the nose, but it can be surprisingly successful — a 2018 survey by CreditCards.com found that 56 percent of people who asked for a lower interest rate got one. However, only one in four cardholders even asked in the first place.

Long payoff: Big debts will require a bit more work. One clean solution, especially if you have multiple cards in the red, is to take out a personal loan. You’ll be able to consolidate your debt into one monthly payment, and you may be able to get an interest rate lower than what you’re currently paying on your credit cards (although personal loan interest rates can exceed 20 percent, depending on things like your credit history). Personal loans have become more popular, so shop around for rates before you commit.

Any of Wirecutter Money’s recommended balance transfer cards will give you a long period of zero percent A.P.R., during which time you can retire your debt interest-free — but in many cases, you’ll be charged a percentage of what you transfer as a one-time fee.

With that time comes freedom that may get you into trouble, though. A personal loan is repaid in fixed monthly payments over a set number of months, while a balance transfer leaves the business of repayment entirely up to you. Go the balance transfer route only if you’ve got the gumption to pay off your debt before interest kicks in.

Auditing your credit cards and consolidating your debt aren’t exactly “fun.” But that’s the price of going out over your skis. Use the time between now and next year’s holiday season to get ready.

You can look for a bank or credit union that offers a Christmas club account, something we’re particularly fond of, or you can get really creative: In 2018, NBC told the story of one woman who saved $40,000 over 13 years by stockpiling every $5 bill she received, while Wirecutter has previously reported on how starting a saving circle with a group of friends can be an easy way to accumulate cash.

Article source: https://www.nytimes.com/2020/01/06/smarter-living/wirecutter/what-to-do-if-you-overspent-during-the-holidays.html?emc=rss&partner=rss

Opening the Door to Unicorns Invites Risk for Average Investors

“It is difficult to perform a comprehensive marketwide analysis of investor gains and losses in exempt offerings given the significant limitations on the availability of data about the performance of these investments,” the commission wrote.

The opaque nature of the private market also increases the risk for fraud.

Ms. Seidt, the Ohio securities commissioner, told the S.E.C. Investor Advisory Committee in November that more than 100 state actions across the country had involved private offerings in the prior two years. Over a thousand investors had total losses of more than $100 million, she said. And that was only a partial snapshot.

“These private offerings have been and remain the most common source of state enforcement action,” she told the committee. Before adopting any rules, she said, the S.E.C. needs to produce research that illustrates how packaging private investments into a fund would be safe.

Even constructing such an investment vehicle would present challenges because private investments can take so long to pay off.

Some funds that are open to average investors already hold small stakes in private companies. Mutual funds are permitted to dedicate up to 15 percent of assets to illiquid securities, including private companies, but they often invest much less because those holdings cannot be easily sold — that’s a problem for funds because they must have enough flexibility to pay shareholders who cash out.

For example, the $44 billion Fidelity Growth Company Fund, which owns pieces of late-stage private companies like Allbirds, Peloton and Sweetgreen, had less than 3 percent of its assets in private holdings as of Oct. 31.

It would also be difficult — and expensive — for investors to properly diversify their holdings, said Elisabeth de Fontenay, a professor at the Duke University School of Law who specializes in corporate finance.

Article source: https://www.nytimes.com/2020/01/04/your-money/investing-private-market-startups.html?emc=rss&partner=rss

Tips for Paying Off Your Holiday Credit Card Debt

Often, Ms. Meyer said, people plan well for recurring monthly expenses but stumble when setting aside cash for known but “irregular” expenses, like holiday spending and vacations. She suggested adding up all of those anticipated costs and setting aside a fixed amount for them each pay period to reduce the need to carry a balance on credit cards.

“Think of these things as part of your monthly budget,” she said.

Online budgeting tools can help. Wirecutter, a New York Times affiliate, recommends You Need a Budget.

And rethink your holiday budget if it has become a burden. Relentless marketing pushes people to meet expectations they can’t afford, Mr. O’Brien said, leaving them stressed and in debt.

“It’s a ridiculously expensive season,” he said. “And it wasn’t always this way.” Planning for more reasonable gifts, he said, can help set you up for success next December.

Should I always pay off the card with the highest interest rate first?

Some people may prefer to pay down the costliest balance first, while making minimum payments on the other cards. Then, when the first card is paid off, extra payments are shifted to the card with the next highest interest rate, and so on, until all balances are paid off. This approach can save the most in interest charges.

Others, however, may prefer paying off the card with the smallest balance first, regardless of the interest rate. The idea is that seeing a balance paid off imparts a sense of accomplishment and encourages you to keep on paying off your debt.

“It really depends on what keeps you motivated,” said Madison Block, a spokeswoman for American Consumer Credit Counseling, which advises people on debt reduction.

What if I’m struggling to make minimum card payments?

If you can’t see a realistic way to pay down your debt, you may want to seek advice from a nonprofit credit counseling firm. The firms typically offer free budget counseling and can also help negotiate — for a fee — debt management plans with credit card companies, which will allow you to pay off your debt at a lower interest rate over several years. To find a reputable firm, start by checking the Justice Department’s list of firms authorized to provide mandatory bankruptcy counseling.

Article source: https://www.nytimes.com/2020/01/03/your-money/tips-for-paying-off-your-holiday-credit-card-debt.html?emc=rss&partner=rss

No Line to Board Private Jets, but There Is a Line to Buy Them

Mr. Papariella’s clients often look to buy used jets, some decades old, that still perform at a high level but cost less up front, he said. A Gulfstream G4 from 2002 might cost $3 million — far better than $60 million plus for the current G650. But that old Gulfstream still costs $1 million or more a year to operate, he said.

“Even if you’re very wealthy, you could still be shocked by a monthly bill,” he said. “We want to include the owner in how we make money. It’s for guys who are used to having information at their fingertips.”

Still, some buyers don’t want to share.

A lawyer who advises on jet purchases said the plane was just another asset for his billionaire clients. Many of them are happy for the plane to sit idle when they’re not using it, even if it entails paying for a crew to be at the ready.

Management companies like Executive Jet Management, a part of Berkshire Hathaway’s NetJets, and Solairus Aviation focus primarily on managing jets for the owners, which includes negotiating down fixed costs like fuel and pilot training but also ensuring compliance with flight and safety regulations.

“First and foremost, owning an aircraft is a very technical ownership experience,” said Brian Hirsh, president of Executive Jet Management. “Unlike real estate, there’s a lot of regulatory compliance factors to consider like pilot training, standards, certification, aircraft airworthiness. The role of the management company is to make it hassle free.”

EJM, as it is known, charges $5,000 to $20,000 a month for its management services. Additional costs like fuel, pilots and crew are passed through to owners but at discounts achieved by buying alongside NetJets.

“Collectively, we have 766 aircraft, which makes us the fifth-largest airline between United and Southwest,” he said. “We take those discounts and pass them through to owners.”

Article source: https://www.nytimes.com/2019/12/27/your-money/private-jets.html?emc=rss&partner=rss

Diane Terman Felenstein, 79, Dies; Financial Guru to Women

The book included anecdotal accounts of what could go wrong for women who don’t take financial control. Many of those were drawn from the real-life experiences of the women whom Ms. Terman Felenstein knew, her daughter said.

“Ignoring your financial safety can lead to disaster,” Ms. Terman Felenstein told The New York Times in 1997. “Learn the language. Assess what you have. Don’t sign papers unless you know what they are.”

She was born Diana Terman on Oct. 23, 1940, in Manhattan to Joseph and Pearl (Scharfman) Terman. Her mother was a real-estate broker, and her father worked in the garment industry.

Dropping out of New York University after one semester because of family financial pressures, Ms. Terman Felenstein worked a series of odd jobs before landing a position as a public relations representative for Audio Fidelity Records. She later set out on her own, founding Diane Terman Public Relations and running it for more than four decades.

The firm handled an eclectic range of clients, including the artist Salvador Dalí, the weight-loss guru Dr. Robert C. Atkins and the company SlimFast, as well as charities like United Cerebral Palsy and the Juvenile Diabetes Foundation, for which she helped organize telethons and fund-raising events.

In addition to her husband of 49 years and her daughter, who joined her mother’s company, Ms. Terman Felenstein is survived by a stepson, Brad Felenstein; a stepdaughter, Joy Pierson; a twin brother, David Terman; and four grandchildren. Her first marriage, to Robert Smiley, ended in divorce.

Personal finance remained a passion for her, and she built on the success of her book with other ventures like “Women and Wills,” a free lecture series she helped start for women over 50; and a financial guidance group, Grandparents for Grandparents.

Article source: https://www.nytimes.com/2019/12/26/business/diane-terman-felenstein-dead.html?emc=rss&partner=rss