Ready or Not, Here Comes Round No. 2 of Obamacare

by Gerri Willis

Ready or not, here comes Round No. 2 of Obamacare. And, as much as I’d like to start this blog with an analysis of costs, details such as premiums for Obamacare 2015 policies won’t be made public until open enrollment starts Nov. 15, conveniently after the election. So forget getting your arms around price tags. At least for now.

To be sure, though, some details are already out. First off, there is a new website where you’ll go to enroll for the first time. Given the original healthcare.gov website’s glitch-plagued rollout a year ago, this could be a good thing. But, again, we don’t know because this website is still being tested. (Want to know how the testing is going? Again, forget it. That information isn’t being shared.) To their credit, the website designers have managed to shorten the number of screens in the online application from 76 on the original site to just 16 on the new site.

Unfortunately, if you bought Obamacare coverage last year, you’re stuck with the old website which is famously unreliable. Some of our sources maintain the backend of the website still isn’t complete a year after launch. And, re-enrollers will face a time crunch. They’ll have just one month – until Dec. 15 – to get on the site and update their financial information – a move that is required to have coverage beginning Jan. 1, 2015. You’ll want to have handy a 14-character identifier number to keep any current insurance policy. If you don’t re-enroll, you may be reassigned to your old plan, but you’ll also get this year’s subsidy amount, which may be smaller than they would be entitled to for 2015.

On top of all of this, it’s possible that several hundred thousand people across the country may face cancelled health insurance policies because those policies are not in compliance with Obamacare. Initially these policies were granted a reprieve, but break time is over. Thirteen states and the District of Columbia plan to cancel policies that don’t offer the level of services required by the Affordable Care Act. Federal law requires a 60-day notice of plan changes, so if you’re getting bad news in the mail, it will probably come no later than Nov. 1 (right before midterm elections.) 

So, truth be told, Obamacare Year 2 remains a mystery, though Health and Human Services Secretary Sylvia Burwell has already said that it won’t be perfect. That’s reassuring.

Don’t miss our User’s Guide to Choosing the Best Health Insurance all next week 5pmET on FOX Business         

 

How To Avoid The Flu This Season

by Gerri Willis

We are closing in on flu season. The Center for Disease Control says that prime time for flu is between December and February. With all the hysteria about Ebola and enterovirus, it's easy to overlook the fact that seasonal flu kills anywhere from 3,000 to 49,000 people every year.  With that in mind, The Willis Report set out to track where you are most likely to pick up the germs that could land you in the doctor’s office.

Turns out, humans are veritable petri dishes carrying some 500 difference species of bacteria at any time. Harmful bacteria, the kind that makes you sick, gets passed by touching surfaces. And, if you work in an office, everyday exposure is as easy as walking in the front door. Just one door contaminated with a virus spreads the germ to about half the surfaces and about half of employees within only four hours, according to a University of Arizona study.

Working with Dr. Kelly Arehart, a scientist at Kimberly-Clark, we swabbed and tested break rooms, copiers, candy machines, computers, phones, elevator keypads and escalator handles. We found the surfaces most likely to be infested with germs may surprise you. First, forget the bathroom. Those surfaces are cleaned regularly. Much more problematic are smart phones, break room surfaces like buttons on a microwave and common area computers, especially keyboards. The trouble typically resides on surfaces and in areas which are not routinely cleaned. Water fountains and coffee stations are typically places where bad bugs hang out. And, keep in mind, most common respiratory viruses can survive on a surface for a maximum of two to four days.

The good news is that it is cheap and easy to keep yourself healthy. Just because you are exposed to a virus, doesn't mean you will get sick. Experts say washing your hands regularly is the most effective way to stay healthy, According to the CDC, 20 seconds of scrubbing with soap, or about the time it takes to hum the song "Happy Birthday to You" twice, should do the job. And, getting a flu shot, well, of course, is a good idea too.

How to Fire Your Financial Advisor

by Gerri Willis

Deciding to fire your financial advisor is no easy thing. Sure, the financial crisis of 2008-2009 was used as a catalyst by many to change advisors. But even in good times, problem advisors surface. Last year, the Financial Industry Regulatory Authority received more than 2,300 complaints from investors and suspended 670 individuals.  Consumers would do well to consider whether they are getting good service before the inevitable market meltdown.

Setting aside for a moment that your advisor is not the next Bernie Madoff. You did check him out at http://brokercheck.finra.org/ before hiring him, right? There are some behaviors that will not serve you well that you should be aware of. Questions to consider are these: Is your advisor capable of explaining the investments he’s promoting in a clear way, and helping you understand their risks? Is he accessible and does he listen to you? Has he provided you a written road map that describes your goals and how he intends to get you there?

If you answer no to any or all of these questions, it may be time to consider making a change. Before you do, decide where your money will go next.  Are you hiring another advisor? Minding your money yourself?  Either way, your money will need a new home. Ed Butowsky says the process is straightforward. “It’s very easy to fire your advisor,” says the Chapwood Investments managing partner. “Simply write an email, and say as of this date please stop any buying or selling in my account. I am transferring my assets to another firm.” Butowsky advises copying the firm’s compliance officer and office manager to make sure everyone knows you are leaving.

Even if you are frustrated, be nice. Even if you are ending the advisor’s relationship managing your money, you will still have to rely on the firm’s office to provide tax information.

PIMCO: What You Should Know

by Gerri Willis

Chances are that Bill Gross’ exit from PIMCO, the mutual fund company he founded 43 years ago, may have barely raised an eyebrow in your household. But this is one fund industry story you’d be wise to pay attention to. The idiosyncratic Gross ran the planet’s largest bond mutual fund with $222 billion in assets. His PIMCO Total Return Bond fund has been the plain vanilla of the ice cream mutual fund parlor. It is everywhere. More than half of nation’s 401(K)s offer the fund. In short, PIMCO Total Return is nearly as likely to appear in your 401(K) as an S&P 500 index fund.

Got your attention? Today’s question is this: Should you follow the herd of institutional investors who are dumping shares of the fund today?

Here’s what I think: You don’t have to do anything. Not right away. Look, PIMCO appointed fund managers that are top notch and were, frankly, already doing a lot of the day to day work of the fund. Mark Keisel was voted Morningstar’s Fixed Income Manager of 2012.

True, a lot of institutional investors have already pulled their money. Estimates of those lost assets range from $10 billion to 25 times that. But a bond fund isn’t a stock; you don’t lose value because investors are selling. The cautious strategy is to sit back and watch for six months and make sure that the fund performs as well as rivals.

If you’re not the cautious sort, you might consider flipping your bond investments into a bond index fund. All the major fund companies, like Vanguard and Fidelity, have a fund that mimics the index. The good news: You keep your costs low. Fees and expenses are low on index funds. The bad news is that if the Federal Reserve decides to raise rates, you are stuck in a fund that will suffer as the bond market suffers.

My suggestion is to take a look at your 401(K) statement from 2013 – a really stinky year for bond funds. If any of the bond funds you invested in recorded a positive return for the year, you might consider putting your new bond investment dollars into that fund. Chances are that fund is going to be what they call multi-sector, flexible or strategic. That means that the fund manager has the freedom to move around to different asset classes, government bonds, global bonds, etc., depending on where he finds returns.

Ultimately, you’re going to want to find a place you are comfortable, because the next few years could provide some serious change to the bond world as the Federal Reserve considers changing its easy money policies.

How to Pay for Your Second Home

by Gerri Willis

All things being equal, we’d all pay cash for our second homes. No muss, no fuss. But in reality, many of us will finance at least a portion of the costs of a second home.

And, naturally, as a second-time buyer, you’ll find the process pretty similar to when you got the mortgage for your primary home. The lender will require the same information on your income, W-2s, checking and savings account statements. Plus, the lender will gauge your ability to repay by checking your credit scores and evaluating your total debt levels. That’s where all the similarities to the process of your first mortgage ends.

In fact, you may be surprised how different the process is. You’ll be required to have a higher down payment, as much as 20 percent or maybe more to buy that second home. You’ll face higher rates of interest and that means higher mortgage payments. The reason for these escalating costs is that if you are buying a vacation home, which is to say a property you won’t be living in fulltime, the lender assumes your commitment to paying that mortgage will be a lower priority. By putting down more, you demonstrate your commitment to buying the house and paying it off. Interest rates are higher as well, as much as a quarter to a half point, and for much of the same reason.

The good news is you’ll find lots of different options for financing. Traditional mortgages, 30-year fixed rate loans, are popular for second buyers, but if you can put down 50 percent or more of the purchase price when you buy, you should consider a 15-year mortgage. Paying your debt faster means your interest rate costs will plummet. Adjustable-rate mortgages are still available as well, but with rates near lows, you might as well lock in today’s interest levels, unless you plan to quickly flip the house.

Some folks opt to add a second mortgage, either a home equity line of credit or a home equity loan, onto the mortgage for their primary home to pay for the second house. Understand that doing this puts both of your properties at risk if you were to default. Some seniors use reverse mortgages to tap their home equity but this strategy, too, has problems because you essentially are handing over your primary home to the bank. Soon-to-be retirees are well advised to consider buying that retirement home while they are still working since lenders will calculate your credit worthiness on your pre-retirement income.

In short, there are plenty of options for second home buyers and the good news is that rates remain relatively low.

 

User's Guide to Buying a Beach House

by Gerri Willis

Owning a home on the water is a dream for many of us. Whether your vision is to buy a family destination or an oasis that you occasionally rent out, the good news is that prices in many coastal markets have never recovered from the 2007-2008 crash. When you add into the mix that interest rates are still cheap on a relative basis, well, it’s clear the stars may have aligned to help you accomplish your goal.

The devil, though, is always in the details. Tom Kraeutler, host of the nationally syndicated radio show, The Money Pit, advises buyers to understand the requirements for insurance before signing on the dotted line. Federal flood maps have been redrawn and more properties are required to have federal flood coverage. Add in the fact that insurers have been besieged with claims over the last few years, and you may well be shocked at the amount of coverage you may be required to have.  Average flood insurance claims run tens of thousands of dollars, so it is smart to make sure you have a safety net. Plus, in flood zones the law will require you to have coverage if you have a mortgage.

Other factors to consider: Know whether your beachfront dream has mold or water damage. If major remediation was done to a home, the owners may have filed a building permit. You can check local records to see if that is the case. Otherwise, a good home inspector can help you check for telltale signs of damage. Kraeutler also advises making sure you  know whether local codes require that homes meet wind resistance or flood elevation rules.

And, there are other kinds of issues to consider as you search. If you’re new to the market, you may be surprised at the number of beds packed into houses. Antonia van der Meer, editor-in-chief of Coastal Living magazine, says that it’s not unusual to find even small homes that sleep 20, “Bunk beds are a huge trend and four beds to a room is not uncommon,” she says.

That’s great for big families who want to vacation together, but even if you don’t have a large entourage, you may also appreciate it when it comes time to resell. Beach houses with direct water access and large, bright open spaces typically command the highest premiums.

Getting the best deal means acting decisively and knowing what you want from the start.

 

College Towns, Cities Are Retirement Hot Spots

by Gerri Willis

Like everything else they’ve touched, baby boomers promise to reinvent retirement. And, with 8,000 boomers retiring every day over the next 15 years, they are bound to reshape the second home market. Forget the armchair and the rockers, more and more boomers are opting to retire in cities and college towns where they can have access to museums, free classes, restaurants and a faster pace of living. Plus, many want to downsize and trade in their home and yard for a condo or townhouse.

Pied-a-terre which literally means “foot on the ground” in French is typically a small or undersized apartment capable of doubling as a retirement location. As cities have become safer, boomers have been lured back to metropolitan areas largely because of their entertainment attractions, but also because dwellers can walk their neighborhood and enjoy public transportation. Plus, many parents find they may be closer to the children. Because retirees don’t care about school districts buying in town can be affordable. Buyers should keep in mind that most co-ops try to restrict pied-a-terre purchases.

Another popular option for boomers is buying in a college town because prices are typically low and benefits are high.  Home prices are typically near the median national average price of $212,400 or below and real estate taxes tend to be low. What’s more, many colleges allow seniors to audit courses at no or low cost and attend college sporting events at bargain prices, too. Some developers build retirement communities affiliated with universities in college towns. Kendal Corp., for example, is building such communities in Ithaca, N.Y., home of Cornell University and Hanover, N.H., home of Dartmouth University.

Florida and Arizona may have been traditional retiree havens, but boomers are changing all that, opening up new locations that fit their wallets.    

User's Guide To Buying a Second Home: What To Know Before You Buy

by Gerri Willis

If you've always dreamed of owning a second home, there are two good reasons to think the time may be right to buy now: Interest rates are still relatively low and property prices, while they have climbed, aren't in the stratosphere. In other words, the stars may be aligned for a purchase, but you'll want to do some considerable analysis before taking the plunge.

First, the facts. According to the National Association of Realtors, the market was on fire this year, with purchases up 29.7 percent as buyers benefitted from a rising stock market. The median vacation home price was $168,700 in 2013, up 12.5 percent from the year before. Buyers who considered their purchases an investment paid $130,000, up 13 percent from the previous year. 

So, if it's a roaring market, why should you consider buying now? Well, for one thing, the vacation home market is still well below its peak of 2006. And, the market is a tiny slice of the overall housing market. Even so, it makes sense to do the math before you shop. 

Many second homeowners complain they didn't foresee the costs of having a second home. Sure, there's the monthly mortgage, but ongoing expenses can add up, like, upkeep, insurance and possibly hiring a management company or just a trusted caretaker to look in on the property since you won't be there every day. Flood insurance costs need to be taken into consideration for beach and lakefront buyers, and a redrawing of flood maps by the Government may mean higher costs for some.

Also, consider this: If you aren't paying all cash, financial requirements are higher for second homes than first homes. Typically, you'll need to put down a considerable down payment to buy. Some lenders require borrowers put down 25 percent of the purchase price before writing a mortgage for the balance and the median down payment in 2013 was 26 percent. Keep in mind that, 38 percent of second-home buyers will pay all cash. Among investors, that proportion paying all cash was 46 percent.

I also think it makes sense to decide why you are buying the property in the first place. Is this a vacation only getaway for friends and family? An eventual retirement location? Or, do you plan to rent it out, or even buy it, upgrade and sell? Determining your own motivation in buying will help you pick the right location, and ultimately, the right property.

Every day this week, The Willis Report will be covering some aspect of second home ownership, helping you make the right calculations about where and when to buy and how much to pay. 

How To Make Money Dumping Your Old iPhone

by Gerri Willis

If you are eagerly awaiting Apple’s announcement of the new iPhone 6 tomorrow but are still have an older iPhone model, you’re not alone. Plenty of folks are in the same boat and many will trade up. According to a survey by comScore, nearly a quarter of iPhone 5s owners plan to upgrade.

Fortunately, there are websites that can help you do that. Gazelle, Next Worth and Glyde offer cash to people interested in trading in. Even Apple has a trade-in program. Plenty of people will also sell on sites like eBay and Craigslist.

As long as your phone is in good working order with no broken parts, Gazelle, for example, will offer your hundreds for your old phone. In fact, Alyssa Voorhis, Senior Tech Analyst for Gazelle, says her company has launched its most aggressive price-lock promotion ever: up to $350 for an old iPhone if you lock in a price quote before tomorrow’s announcement. You have until Oct. 10 to send your phone in.

When it comes to trading in, earlier is better than later. Trade-in values typically drop 20 percent in the 60 days surrounding the introduction of a new model.

My advice? Just don’t forget to tell your carrier what you’re doing. The last thing you want to do is continue to pay for service you aren’t using.

The Dirty Little Secret Of The Drug Industry

by Gerri Willis

It’s the dirty little secret of the drug industry: That expiration date on your prescription or over the counter medications may be virtually meaningless.

An expiration date is required by the Federal Government and some states but drug experts say there is very little science to prove that these drugs are dangerous or even less effective if used beyond their expiration date. In fact, most drugs aren’t even tested for shelf life. One of the rare studies conducted found that 88 percent of drugs tested could be used past the expiration date for a period of 66 months or five and a half years! Some drugs can last even longer. According to the FDA, users of Amoxicillin, Ciprofloxacin, Diphenhydramine, and Morphine Sulfate injection can extend the life of their drugs anywhere from one year to 15 years.

The one exception experts told us about was Tetracycline. According to Lisa Gill of Consumer Reports, the antibiotic can become toxic if used after its expiration date. But even Gill says that for virtually every other drug it’s okay to keep them past their expiration date by as much as a year.

To extend the life of your drug, move it out of the medicine cabinet where humidity can hurt effectiveness. If you’re still nervous, stick to sell by dates on drugs you must absolutely have, like an Epi-pen, or heart medications and keep the Aspirin on the shelf longer than the label advises.

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