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Messages - Nords

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I've posted a couple times in the past on a similar topic, but this post will be more comprehensive and hopefully can benefit other people who go through the same process with USAA (or even a good reference for any auto insurance evaluation). I will be finishing residency and moving form MI--> PA and just had a long conversation with a USAA representative after I found out I was eligible. FYI - if you are not directly in the military, only family member, you can't get USAA in MI (only state that's the case per the rep). I went through each of the options with the representative and I will offer what I am thinking and pose questions to the group where appropriate (bolded most important). I've also added numbers for each point to make responding easier. Background on me: 31yo, 31yo wife, 1 child, healthy, 400k net worth, 2016 owned CRV, 2016 leased CRV (will rectify that mistake shortly, long story, please don't judge). I certainly appreciate any/all feedback.
We might have swapped a thread about this on the MMM forum, but here are two posts about USAA’s business models for insurance (in general) and overall trends in vehicle insurance:
https://the-military-guide.com/usaa-answers-insurance-financial-questions/

https://the-military-guide.com/auto-insurance-premiums-rising-not-just/


-They said I can't buy an umbrella policy without having a homeowner's policy which I wasn't sure was true. I asked b/c if I had umbrella, then maybe I didn't need as high of coverages on some areas of auto as I will list below. Would be more ideal to have some lower auto options with one big umbrella on top (although I know they have certain minimums on every category in order to even purchase umbrella). If this is true, can you purchase umbrella with a different carrier?
First, I’d only insure yourself for your gross worth.  Juries don’t care about mortgages or other debt-- only about how much money they can award the plaintiff.  Right now you might be able to avoid an umbrella policy by taking higher limits on your vehicle policy.  You could juggle the coverage around in search of a sweet spot, but the USAA policy computer has probably already done that work.

Next, here’s the USAA info from their website:
https://www.usaa.com/inet/wc/insurance_home_umbrella
Click on the “See What’s Required To Qualify” link to see this text:
Quote
To purchase umbrella insurance you are required to maintain the following coverage and limits.
Automobile Insurance Bodily Injury   
$300,000 dollars limit per person
$500,000 dollars limit per accident
Automobile Insurance Property Damage   
$100,000 dollars limit per accident
Homeowners/Renters/Fire Liability   
$300,000 dollars limit per occurrence
Homeowners Insurance Personal Injury   
$300,000 dollars limit per occurrence
Watercraft Personal Liability (if applicable)   
$300,000 dollars limit per occurrence
Finally, if USAA won’t sell you an umbrella liability policy then you can certainly buy from another insurer.  Depending on your USAA eligibility you may also be eligible for membership at Armed Forces Insurance.  (AFI.org)  We’ve been with them for 30+ years, no complaints.

So for your questions #1-5, I’d try to pack all the coverage you need into your vehicle insurance policy and then add as little umbrella liability as you can.

You might also want to cover yourself for underinsured motorists and uninsured motorists.  (UM/UIM)  This was explained to me as providing a payout if a UM/UIM driver hit our car and inflicted a lifelong disability on our child.  Now that she’s grown up, we still keep UM/UIM because it’s cheap coverage for anyone in our vehicle.

6-Basic first party benefits (& Medical expense benefits): options 5k, 10k. Seems to pay for medical expenses, religious healing, etc... Required in PA. My thoughts are that if I have health insurance already, why pay more than I need to. Was going with 5k.

7-Added First Part Benefits:
a)Medical Expense: options - decline 25k, 50k, 100k. Not sure how this is different than medical expense under the first party benefits section (I guess it is optional coverage unlike the basic benefits). However, was going to take lowest option possible. I just don't see how this is important if you already have health insurance which inherently has an out of pocket max. Why do they even offer these options? Is it only for those that don't carry health insurance, or will it pay you for the Out of pocket max on your medical insurance?
b) Funeral expenses: options - decline, 1500, 2500. Plan to self insure here.
c) Accidental death benefits: options - decline, 5k, 10k, 25k. If I die, spouse gets a benefit. Was going to decline since both of us have individual life insurance already.
d) Work loss: options - decline, 5k per person/1kmonth, 15/1, 25/1.5, 50/2.5; begins after 5 working days lost. Planned on declining. Self-insure in short term (<90 days) & have disability insurance already.
Yep, those options are medical coverage for people who (for whatever reason) don’t have their own health insurance or who feel that they need more coverage when driving.

Your decisions there look good.

8-Other than Collision: options - decline, 50, 100, 150, 200, 250, 300, 500, 1k. As cars are relatively new, was going to opt for 1k here and self-insure up to that amount. When car values <10k, then will drop the coverage entirely.

9-Collision: same options and ultimate decision as "other than collision" section.

10-Car Replacement Assistance: options - decline, 20%. if vehicle is considered a total loss, they can pay you an additional 20% to help. For instance, 10k car gets totaled. They pay you 10k without the benefit or 12k with the benefit. Was going to decline and self insure.
Yep.

In general, the sooner you can drop collision & comprehensive insurance (or boost the deductibles way up) the happier you’ll be.  I realize that might not be an option with a leased vehicle, but CRVs seem to be very long-lived and resistant to collision damage.  If you don’t have to care about cosmetics then you can self-insure as much as possible and (here’s the important part) add the saved premiums to your vehicle replacement fund.

11-Accident Forgiveness: options - decline, accept. If you choose coverage, they will give you "one free pass" every five years for an accident without raising your rates. This is for the entire policy, not per individual. Forgot to ask how this applies if you are found NOT at fault vs AT fault. Not sure about adding this option or not and am curious other's thoughts. I think I'm a pretty good driver with lower commutes (as an attending), but I've been in 2 accidents in residency (I wasn't at fault in either and other parties received tickets so I think it was just bad luck).
This depends on whether PA is a no-fault state.  If this is only $20/year then you’d probably take the coverage, but if it’s $20/month then you’d probably decline.

And, of course, this is one more reason to commute by bicycle or foot where possible.  The majority of vehicle damage occurs within a few miles of home.

12-Rental reimbursement: options - decline, economy, standard, truck, large SUV. Plan to decline and self-insure and borrow family members vehicles if necessary.

13-Towing and Labor: options - decline or accept. I currently have AAA so will decline. However, not sure if I should decline AAA and go with this option. However, AAA does have other perks with discounts, etc...
Yep.

The only addition I have here is that you might be able to negotiate a better deal with AAA by sharing your USAA quotes with them.

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Bloggers Helping Bloggers / Re: Favorite tools for writing
« on: January 27, 2018, 01:36:23 PM »
I was wondering if you or Clackapedia had any suggestions on a good plugin for social media sharing?  It seems to me that social media is a more important presence to have nowadays than SEO. I would prefer something free as I am just trying to build an audience at this point, but if there is an inexpensive paid for plugin that is hands down the best, then I would go that route as well. Thanks in advance for any help you can provide.
Well, writing stuff that people want to read is more important than SEO or social media.  Social media gives you a chance to practice writing the stuff by surveying your readers and practicing answers to their questions.  SEO gives everyone else a fair chance of finding your compelling brilliance.

I use WordPress' Jetpack Publicize for social media.  When a blog post goes live, Publicize simultaneously puts out your customized announcement & link over Twitter, Facebook, Linkedin, and Google+.  (You can choose a lot more social media sites in the Publicize settings.)  I only use Google+ for the indexing & SEO because it's been a ghost town for discussing military financial independence.

I'd also recommend a free Buffer account for doing essentially the same thing with the rest of your week's social media.  If I put out a tweet, I want it to go out to FB and Linkedin as well.  If you like what Buffer does for you, a paid account will get you more than a nine-post buffer and a repeating scheduling calendar.

I also have my FB & Twitter accounts linked so that if I just use Twitter then a post will still go to FB.

Jetpack's default SEO is pretty good.  If you want to do a better job with keywords then you could use the Yoast plugin.  After seven years I've built enough of an audience (and enough credibility with search engines) that I can back away from the SEO and focus mainly on the 80% promotion/20% creation.

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Bloggers Helping Bloggers / Re: Favorite tools for writing
« on: January 18, 2018, 10:03:26 PM »
I'll have to check out LibreOffice to see if it would be an improvement than writing directly in WordPress as I do now.
One day WordPress will give you the 404 or the "server error" message on 2000 words of your best draft post ever...

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How to Become a Wealthy Accountant / Re: Apparently not?
« on: December 02, 2017, 11:32:10 AM »
Given the barren nature of this forum, is it not possible to become a wealthy accountant?  :)

Actually, I am curious, while far from a tax expert, it is clear to me that the vast majority of Americans have exceptionally simple tax returns and the Major Tax Preparers out there seem to charge an inordinate amount of money to prepare a simple return.  Has anyone else con sidered starting their own tax prep service?  Presumably there are some insurance requirements for Errors and Omissions, etc. but this appears to be an area with low barriers to entry, other than understanding the byzantine US tax code. 

Any others considering/doing this and emulating Keith?
My brother-in-law has over 30 years' experience as a tax CPA.  He reached FI several years ago and he's cut back to a day a week.  His biggest complaint over the decades has been the craziness during tax season (late Jan - late April) and the end of the fiscal year (September for most).  On the other side of that, we have a local CPA on Oahu who's in his late 60s and says he'll never retire.  When his friends retire (or die) he folds their businesses (and employees) into his. 

Accounting has value if you love it for the challenge & fulfillment.  But if you simply see it as a path to riches then I think burnout happens sooner rather than later.

Tax prep (the niche of accounting) is a commodity service with prices racing to zero.  Instead of trying to run one of those businesses, maybe it's better to be a contract worker or temp labor.

By the way, Philip Taylor (of FinCon and PTMoney) is also a CPA... but he seems a lot happier with his current entrepreneurial endeavors instead of accounting.

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Taxes / Reducing expense ratios and avoiding the dreaded IRMAA
« on: May 04, 2017, 09:01:56 PM »
It's been real quiet around here.  Now that everyone's recovered from tax season, let me start a new question.


As some of you know, I'm my father's conservator.  He first noticed his Alzheimer's symptoms in 2008, he's been in a care facility since early 2011, and this year he's entering late-stage.  The next five years are totally unpredictable. 

I've been handling his finances since 2011, under the benevolent supervision of the Denver probate court.  I've conservatively projected his investments out to 2025, well past most of the Alzheimer's survival bell curve, so I doubt that Medicaid will rear its ugly head.  Let's not turn this thread into a Medicaid tactics discussion.

I'm getting ready to mess with Dad's taxes, and I thought I'd talk through it here to make sure I understand it.  Feel free to poke holes in my plan.


Back in 2011 (when I started my fiduciary forensic financial analysis on his files) I learned that for at least 20 years he'd been living on less than half of his income from investment dividends/interest, a small pension, and Social Security.  His AGI was about $65K and he'd generally spend about $25K.  He was Mustachian before it was cool.

During that time he'd invested heavily in Fidelity mutual funds and by 2011 his asset allocation was over 85% equities.  Back then we were all still scared to death of the stock market's recovery and legislation was expiring for the low tax rates on capital gains.  In 2012 it seemed prudent to rebalance to 25% equities, 25% bond funds, and 50% CDs. 

Since then the capital-gains tax rates have been extended, Dad's long-term care insurance payout has finished, and he's slowly drawing down his assets.  His asset allocation has drifted up to 35/15/50 over the last five years, and I could let that continue to drift.

However his investment expenses are higher than they could be.  He's held some of his Fidelity shares since the early 1990s.  They're in actively-managed funds with expense ratios: 
0.86% Value Discovery
0.82% Blue Chip Growth
0.75% Capital & Income Fund
0.68% Contrafund

Meanwhile the Fidelity S&P500 index fund has an expense ratio of about 0.09%. 

Dad's current fund expenses aren't exactly highway robbery... well... among today's choices maybe they are.  Expenses could be reduced.

When Dad was receiving the payout from his long-term care insurance policy, that was considered untaxed reimbursement on his medical expenses.  He was paying the usual federal and Colorado taxes on his usual taxable income.  But now that Dad's long-term care insurance policy has completed its payout, his medical deductions are about $100K/year.  He paid zero taxes in 2016 and might never have a tax bill again.

Dad used to be in the 25% income-tax bracket, but now his medical deductions put him in the 0% bracket.  More significantly, those medical deductions mean that he could take a lot of capital gains at the 0% rate.  When I play around with MoneyChimp's calculator (http://www.moneychimp.com/features/capgain.htm), he could realize up to $37K of long-term capital gains at the 0% capital-gains tax rate and take an additional $34K in deductions & exemptions. 

But not so fast.

In 2012 when I drastically rebalanced Dad's portfolio, my blissful ignorance ran head-first into the Medicare "Income-Related Monthly Adjustment Amounts" rules.  IRMAA premium hikes cost an extra $2000 on that rebalancing, and I haven't sold any shares since then.
https://www.kitces.com/blog/income-thresholds-for-medicare-part-b-and-part-d-premiums-an-indirect-marginal-tax/
I'm going to avoid IRMAA issues this time around by keeping Dad's modified adjusted gross income just below $85,000. 

His mutual funds have a low cost basis, but I could use those AGI constraints to gradually replace the Value Discovery and Blue Chip Growth funds with a simple S&P500 index fund.  That would save about $150/year on expenses for each year that I took about $20K in cap gains.

If the markets continue to go up, Dad wins.  If the markets stall out, Dad wins.  If the markets go down, Dad has an opportunity for tax-loss harvesting of the S&P500 fund while ditching even more of the other funds with their high expense ratios.  I'd call that a win too. 

I'm still going to model this in Turbotax and make sure that I haven't overlooked something.  Has anyone else dealt with this sort of financial management?  Anything else I might be missing?

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Bloggers Helping Bloggers / Re: Favorite tools for writing
« on: March 27, 2017, 11:58:27 PM »
Sadly, the demo is only for Mac, as there's currently no way to be able to do trials in the iOS App Store. 

I'd recommend picking it up regardless but can understand not wanting to buy it blind.  I was lucky enough to get in a beta for the iOS version to see their new features, which let me essentially get a one month trial when that was happening.  Those don't come up that often sadly.

If you message me your App Store email address, I'd be happy to gift you a copy!
Thanks for the offer, my apologies for not posting sooner, but I've already paid & downloaded. 

I know I can outsource the ePub or MOBI formatting, but $25 is a cheap price to tinker with it on my own.

"Markdown" rings a bell.  Was that around in the late 1980s for Apples and Sun workstations while WordPerfect and WordStar were on PCs?  I was studying computer science for a graduate degree but most of my work was with Unix and LISP.  Or maybe I have it confused with markup languages for the big programs like XYWrite.

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Bloggers Helping Bloggers / Re: Favorite tools for writing
« on: March 25, 2017, 01:11:12 AM »
Also many more one-click export options such as EPUB...

They have a free demo on their site, gives you 10 hours of use, so you can really sink your teeth in and see if it works for you.  Only thing is its Mac/iOS only, don't know if you have a Mac or not.  If you do, go for it!

https://ulyssesapp.com
I do all right on my PC when I'm formatting a post on WordPress, but it's very tedious on my iPad.  I'll try the iOS demo and see how it travels.

I like this thread guys. Glad to see the Bloggers Helping Bloggers section with activity. Good post on writing, Nords. Great follow up, Kevin.
Thanks, I do a lot of mentoring on writing & blogging!

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Bloggers Helping Bloggers / Re: Favorite tools for writing
« on: March 23, 2017, 02:34:45 PM »
One of my favorite pieces of it, I can one click export my article to my Wordpress Blog as soon as I'm ready to load it!
I love that.  I compose offline (because WordPress doesn't always save) and I'd love to do less editing in the WordPress formatting screen.

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Bloggers Helping Bloggers / Favorite tools for writing
« on: March 23, 2017, 11:56:05 AM »
Keith is a hard-core voracious writer, so I thought I'd use his new forum as an excuse to write about writing.

-------------------

I'll keep it simple:  sit on your butt and hammer on a keyboard, or use an old-fashioned pen & paper.

Perhaps the most important tool in writing is having something to say.  Or, as my spouse puts it:  "Can't shut up".  (Followed by "Thank goodness he has readers and doesn't have to focus it all on me.")  If you don't have the urge to write then you're not a writer-- yet. 

When you do have the writing compulsion then write at a particular time of day, every day, for at least a few minutes.  In my case it's 20 minutes each morning with my first cup of green tea (even before breakfast, let alone coffee).  That way I get some writing done and I can go surfing for the rest of the day without feeling compelled to set aside writing time or having an unfilled obligation hanging over my head.  For extra-organized bonus points, every evening you could spend a minute jotting down the things you're going to work on tomorrow morning.  (Hint:  not e-mail or Facebook.) 

My next favorite tool:  a chapter outline. 

When I started blogging, I did it backwards.  I wrote the book, sold the manuscript to a publisher, and started the blog as a marketing tool.  I should've started the blog to market the book as I was writing the manuscript.

If I was starting a blog all over again, I'd begin with an outline for a book (and a shorter outline for a shorter version of the book).  Then I'd write the blog's posts for each topic in the outline.  (The first blog post would be the outline... and you'd ask for reader comments.)  It would be pleasing to write the blog posts in the order of the outline, or you could skip around to your favorite parts and fill in the details later. 

When you finish working that outline then you have the first draft of a manuscript.  You also have a free chapter (or the book's shorter version) to give away to people who sign up for your e-mail list.  Your e-mail list helps you create your book launch team.

Favorite writing software?  LibreOffice-- mainly because it's simple (and free).  Use whatever makes life easier for you.  If Shelby Foote and J.K. Rowling used pencils and legal pads and notebooks, and George R.R. Martin still uses WordStar (Google it, Millennials) then I'm not going to pretend that I need a particular writing tool to help me hone my craft.

Scrivener is also an intriguing and very powerful tool, although I haven't caught the bug yet.  Some (like Michael Hyatt) swear by its ease of reorganizing an outline, but I'm still stuck in the mode of "edit a printout with a pen".  I haven't screwed that up yet.

Favorite blogging tool?  WordPress.  Sure, Weebly & Wix will do it for free (or cheap) but a year later you'll be moving to WordPress anyway.  (If you're really a writer then a decade later you'll still be writing.)  If you're cheap now then start with WordPress.com's free sandbox.  (A year later you'll be doing the next step-->)  I recommend you invest the money to start with Bluehost hosting, install WordPress.ORG software, and then relax in the security that you're optimized for future growth.  Pick just about any ol' blog theme and run with it.  (You can always change it later.)  Pick just about any ol' site format (I recommend the defaults).  Jump in the muck with both feet and splash around-- just about everything has an "Undo" button.  As long as you stick to the WordPress dashboard and stay out of the hosting cpanel then you'll be fine.

If it bothers you to spend a few bucks on a website, then maybe that's all the incentive you'll need to keep writing.  I intensely dislike deadlines (especially self-imposed ones) but you could think of the blog's expenses as an advance on your royalties.  Eventually you'll monetize the blog, but that's a whole 'nother topic for a different post.

Now quit screwing around with your blog's page titles or layouts and get back to work on your posts.  You can write your "About me!" anytime.  (You'll revise it every 3-6 months anyway.)  Don't worry about how stuff looks for your audience-- you don't have one yet (not even search bots).  You're going to publish content on this site for a year before you feel as though you have traffic.  Maybe two years.

As far as the rest of the publishing process goes... outsource it.  Seriously. 

Crowdsource the manuscript's editing and copy editing.  We call these people "your future readers and reviewers".  (Some of them might even ask you to reciprocate by reading their manuscript.)  This crowdsourcing is by far the best product-validation tool I know of.  If you're writing about something and nobody cares, then you should write about something else.  If you write about something and everyone hates it-- or at least argues about making it better-- then their emotion is a signal that you have a best-seller on your hands. 

The beta readers who have angry stories of their own, or advice on a particular topic about which you're clearly ignorant:  we call those people "contributors", and their words make great sidebars to break up your text.  Today I'm still friends with the people who contributed stories & advice to my first book.

Outsource the rest of the publishing, too.  Ask for volunteer artists (or pay a freelancer), and pay someone to format the manuscript in a MOBI or ePub format.  (The tools are almost there to give you a LibreOffice button that says "Format MOBI".  Maybe for your second book.)  You could sell your manuscript to a publisher, but you're going to end up doing the marketing anyway so you might as well self-publish and have better marketing analytics.  Oh, and self-publishing means you'll usually end up with more money, too.

I've even sold my blog and all its revenue goes to a guy who runs the site-- he's totally motivated to keep it up and to attract more eyeballs (my future readers) for its advertising.  Part of our sales agreement is letting me market my book on the blog, but he also uses an Amazon affiliate link for his share of my sales.  (He's practically doing my marketing for me.)  He always needs more content so he's happy to have me putting up a post or two a month while I'm writing about the topics for my next book. 

You could take the more common approach of hiring someone to run your site for a monthly payment or a revenue share.  Frankly, I'm happy to have the entire site be somebody else's challenge.

Why outsource?  Because you're a writer.  Writing is more fun, and it's probably a better use of your time than tweaking blog plugins. 

Note that most of those outsourcing recommendations are one-time tasks that you'll earn back as soon as you stop fiddling with your manuscript and self-publish it. 

Because writers... write.

-------------------

The above text is my outline of the talk (or the e-mail) I give to writers & new bloggers.  Please let me know what else you'd like to see up there-- especially the things you wish you'd known before your first blog or book.

See what I did there?

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General Discussion / Re: Welcome to the Wealthy Accountant Forum
« on: March 23, 2017, 10:44:15 AM »
Whew, I'm glad I hustled over here before my poster name was registered by someone else!

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