What Are Interstitials, and Are They Hurting Your SEO?

A lot of people seem to think SEO is dead.

People have been saying “SEO is dead” every since SEO started. But this time, could it be different?

Look at what’s happened recently. Google unleashed RankBrain, a machine learning algorithm shift. Keyword research seems to be going the way of the Model T. Artificial intelligence is overtaking the world of SEO.

And yet, SEO is not dead. But it is changing in dramatic ways.

In Google’s never-ending quest to provide its users with the best possible search results, it will be executing yet another algorithm update in the near future.

According to the Google Webmaster Central Blog, “to improve the mobile search experience, after January 10, 2017, pages where content is not easily accessible to a user on the transition from the mobile search results may not rank as highly.”

If you’re not an SEO nerd, this basically means that sites with mobile popups—or what Google calls “interstitials”—may be penalized.

Any sort of potential penalty obviously doesn’t bode well for your website, so it’s important to understand the details of this impending update and whether you’re likely to be affected.

Here is what you need to know to make sure you’re not adversely impacted.

What are interstitials?

First things first. Just what is Google talking about when it refers to interstitials?

The formal definition from Tech Target is this:

“An interstitial (something ‘in between’) is a page that is inserted in the normal flow of editorial content structure on a website for the purpose of advertising or promotion.”

You’ve seen these before, right? You’re tap-tapping along, and then boom!—a popup.

Unlike other types of ads, e.g., banner ads, interstitials require the user to manually click/tap on the ad or click/tap on the “x” (close) button.

You’re basically prevented from exploring a website until you comply and click on a link or “x.”

This is obviously disruptive, and many people (including Google) feel that it detracts from the overall user experience.

Here are three different examples Google specifically mentions that make content less accessible:

Google also provides some examples of techniques that make content less accessible to a user:

• “Showing a popup that covers the main content, either immediately after the user navigates to a page from the search results, or while they are looking through the page.”
• “Displaying a standalone interstitial that the user has to dismiss before accessing the main content.”
• “Using a layout where the above-the-fold portion of the page appears similar to a standalone interstitial, but the original content has been inlined underneath the fold.”

Not everything that seems like an interstitial is actually an interstitial. Cookie permissions, age verification, and small banners are all okay in Google’s eyes.

A mixed reaction

I think it’s fair to say most of search engine users will be happy about this update. They’ll encounter fewer annoyances when they access content.

But as can be expected, not everyone is thrilled.

As you might imagine, there are plenty of publishers who feel that this will negatively impact their conversion rates on products/services/offers.

Here’s a tweet from Skift CEO, Rafat Ali, voicing his dismay:

But regardless of what public opinion may be, this update will happen on January 10, 2017.

Love it or hate it, you’ll need to be aware of the potential repercussions of having interstitials on your website.

Google’s logic behind this move

As you probably already know, Google has been placing an emphasis on mobile friendliness for some time.

And it’s easy to see why.

With 80 percent of Internet users owning smartphones and 47 percent owning tablets, Google most definitely needs to cater to these users if it wants to remain the global juggernaut it is today.

It’s got to stay ahead of the game.

Because mobile use actually surpassed desktop use in 2015, Google has been putting an increasing priority on optimizing the mobile experience.

Google’s first major mobile-friendly update (also known as “Mobilegeddon”) occurred on April 21, 2015, and there’s been no looking back.

They even created the mobile-friendly test, where you can determine whether your pages conform to the new standard and where you can receive input on how you can improve in this area.

Since then, they’ve steadily cracked down on websites that fail to provide a favorable experience to mobile users, and this next update is just another part of this progression.

And I get it.

How many times have you attempted to explore a site on your smartphone only to be interrupted by intrusive popups?

It happens to me a lot. They take up most or all of the screen and are really annoying.

What might be only a slight inconvenience on a desktop or laptop is a monumental distraction on a smartphone.

That’s why I definitely understand Google’s decision.

Are interstitials hurting your SEO?

Here’s the deal.

Up until January 10, 2017, having interstitials on your website shouldn’t have any impact on your rankings.

It’s business as usual for the time being.

But once that day rolls around, all bets are off.

While it remains to be seen just how big of an impact this update will be, it’s safe to say it’s not going to do your SEO any favors if you’re still using interstitials.

I think this update is somewhat of a wake-up call, telling us we need to focus more on the user and find ways to promote our offers without being disruptive.

What do I need to do to prevent penalties?

In my opinion, it’s best to err on the side of caution in situations like these.

The last thing you want is for your rankings to take a major hit because of interstitials.

I would recommend removing any popups or intrusive ads at least for the time being until the dust settles.

If using interstitials has been a key piece of your revenue model, I would suggest considering alternative options.

What are the alternatives?

Your best bet would be replacing a popup with a banner ad.

According to Google, one technique that won’t be affected by the new signal is “banners that use a reasonable amount of screen space and are easily dismissible. For example, the app install banners provided by Safari and Chrome are examples of banners that use a reasonable amount of screen space.”

Usually, the ideal positioning for a banner ad is at the top of the screen, where it’s very noticeable but doesn’t detract from the user experience.

You can still use a considerable amount of screen space to grab the attention of visitors as long as it’s not overly intrusive.

When done correctly, a well-placed banner ad should still generate a good number of clicks and ensure that visitors are aware of your offers.

Another possibility is a stationary sidebar ad. These tend to work well because they’re still noticeable even after a visitor scrolls down your site.

Even when it’s below the fold, a sidebar ad will continue to appear, increasing your chances of getting clicks.

But what if I absolutely have to use popups?

If you feel like skipping popups altogether is going to kill your conversions, there is a third option: the time-driven popup.

Such a popup ad will only appear after a visitor has been on your site for a certain amount of time and explored your content to some extent.

Unlike a regular popup, where a visitor is hit instantaneously after arriving on your site, this delayed popup ensures they have at least some level of interest and be more open to an offer.

However, I would still exercise caution with this technique because there is the potential for penalties.

A final note

It’s important to note that there are certain legal-centric interstitials that won’t be adversely affected.

For example, an age verification popup won’t be impacted:

Google also makes one important point in relation to the new algorithm update:

“Remember, this new signal is just one of hundreds of signals that are used in ranking. The intent of the search query is still a very strong signal, so a page may still rank highly if it has great, relevant content.”

Translation: if you’ve got epic content that’s highly relevant to what the user is searching for, you probably won’t take that big of a hit even if your site has interstitials.

Conclusion

This upcoming update from Google is a double-edged sword.

On the one hand, it should create a better overall user experience (UX) so that search engine users can explore a site’s content without being barraged with intrusive popup ads. A better UX is always a good thing.

On the other hand, this can really hurt conversion rates of some businesses.

If one of your primary ways of getting clicks and driving revenue has been through interstitials, this can put you in a difficult position.

In this case, you’ll need to come up with another strategy for funneling traffic to the desired location.

Let me level with you here. I love using popups. I get a lot of flak for this, but here’s the truth: popups work.

When I use popups, my conversion rates increase, readership soars, and revenue goes up. Besides, in my user research, I consistently hear people say “I’m glad I filled out my email address on that popup because ____.” I see that I’m giving value, and that’s fulfilling to me.

Yes, I’m a fan of popups. Honestly, I’m not too sure what to think about the interstitial algorithm. I guess we’ll have to see what happens.

As I’ve learned time and time again, adaptability is one of the most important traits of a savvy marketer. You need to be able to roll with the punches and adapt on the fly in order to achieve sustained success.

By making the appropriate changes and striving to create a streamlined, distraction-free user experience, you can avoid penalties and keep the leads coming in.

That’s what I plan to do.

Are you a fan of this Google update or not?

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Here’s How to Get Started Ghostwriting (and What No One Tells You About It)

Ghostwriting sounds mysterious, doesn’t it?

If it doesn’t make you think of clandestine meetings with famous authors, maybe the word makes you remember one of the best PBS shows in the history of television.

Sadly, most ghostwriters don’t have much time to solve mysteries with a band of neighborhood children.

And clandestine meetings? They’re totally overrated.

Instead, ghostwriters usually only keep one secret: The identity of the person they work for.

But this lucrative freelance-writing field comes with plenty of challenges.  

If you want to make money telling other people’s stories on the sly, you’ll have to be a good listener, a good researcher and a good writer. If you can do all that, though, you could make a living from this type of freelance work.

What Is a Ghostwriter Anyway?

Ghostwriters help others produce everything from books to memos to social media posts. Usually, the ghostwriter’s name is not disclosed, although some books are “co-authored” to give the ghostwriter public credit.  

People hire ghostwriters for a variety of reasons.

Some professionals have compelling stories, but want help telling them. Some don’t see themselves as natural writers and want to work with someone who has experience. Some are adept at writing, but just don’t have time to do it.

And because the reasons for hiring a ghostwriter vary widely, so can the specifics of each job.

Many ghostwriters specialize in full-length books, frequently nonfiction titles like memoirs and how-to guides.

My ghostwriting specialty is content marketing — like blog posts, white papers and research analysis. I’ve written and edited blog posts by business owners and high-level employees on many different topics, many of which I had little to no experience in.

The challenge to constantly deliver engaging content that matches not only an industry, but also the voice of the author? Sometimes it’s a little bit thrilling.

Ghostwriting short content may involve a 10-minute conversation as your client dashes between meetings. Then it’s up to you to do some research and deliver a draft.

For blog posts of about 500-1,000 words, one conversation and one round of edits from the author may be all you need to get the job done. You may also turn this content around on a regular schedule for a client who has a retainer agreement.

If you’re working on a longer project — such as a book — expect to spend many hours with your client. Rather than approaching your sessions like question-and-answer interviews, think of it more like a conversation between friends.

Recording your conversations is highly advised, not only for accuracy but for reviewing your subject’s speech patterns and expressions that will help bring their energy to your writing.

How to Become a Ghostwriter

Networking is essential for success as a ghostwriter.

Marcia Layton Turner has ghostwritten more than 20 nonfiction books, and is the founder and operator of the Association of Ghostwriters. Her first ghostwriting gig came through her agent for her own writing. That agent knew a well-known person who had gotten a book deal, but was too busy to write.

Turner took the person’s outline, interviewed them, and drafted chapters. After her first project, she networked with publishing acquisitions editors to build her ghostwriting portfolio.  

Jodi Lipper recalls a similar experience. She first considered ghostwriting after working at a publishing house and also writing her own book series.

“At a networking event I met an editor who knew an agent that was looking for writers and made the introduction. I met with the agent and a few days later she called me with a crazy opportunity to rewrite an entire manuscript for a publisher in three weeks,” she says.

The deadline was far from ideal, especially because Lipper had a newborn and a toddler at home.

“But I saw it as a way of proving myself, so I took the job,” she says.

Lipper has worked with the same editor again, and that agent still represents her, years later.

But you don’t need to socialize with publishing industry big wigs to start finding ghostwriting gigs. Emailing editors or agents who are familiar with your work can help, Turner notes.

So can making sure it’s easy to find you.

“That could be as simple as updating your bio on sites where potential clients might go in search of a ghostwriter,” Turner says. “Or updating your professional website to be sure that your ghostwriting experience is highlighted.

“Since it’s difficult to identify potential clients who may be considering authoring a book, it’s best to be sure your name comes up in searches when someone goes on the hunt for a professional ghost.”

My first ghostwriting jobs came through people I already knew. A freelancer friend asked for help ghostwriting posts for a business’s blog while she was on maternity leave, and that one short assignment was enough to be able to list “ghostwriting” as a skill on my website.

Another long-running client came through an organization I’d freelanced for, managing its social media accounts for several years. The client knew I didn’t want to work in social media anymore, but had an immediate need for drafting blog posts and other documents in the communications department.

Since I was comfortable discussing the job specifics with both contacts, it was easier to talk through pricing my initial projects.

How Much Do Ghostwriters Make?

So, what can you earn as a ghostwriter? Unfortunately, this is where it gets fuzzy.

The Editorial Freelancer’s Association estimates rates for ghostwriters to be between $50 and $60 per hour, or about 25-50 cents per word.

For the most part, though, ghostwriters set their own rates based on their experience, the client’s budget and the type of work.

“Ghosts who routinely work on [New York Times] bestsellers or with celebrities often can charge more for their work and clients are happy to pay it,” Turner notes. “Other ghosts may have the same number of years of experience but charge half that because that is the sweet spot for them — the rate at which they can earn a profit and that most clients are willing to pay.”

Some authors continue lasting relationships with ghostwriters. It’s beneficial for both: The author has a rapport and trusts the ghostwriter, and the ghostwriter is familiar with the author’s voice, making it possible to quickly complete work.

“Surprisingly, some of the best opportunities to raise my rates have been with repeat clients,” Lipper says. “Once I have proven my worth, they are often willing to pay more for the second or third book we do together.”

If you work on projects shorter than books, you can still set project-based rates. I determine a project’s rate based on my ideal hourly rate, multiplied by how many hours I think the project will take.

If you’re making this calculation in your head right now, don’t forget to include time spent in meetings or answering emails toward your total time estimate.

Since every project is different, the hourly equivalent of my ghostwriting earnings can be anywhere between $56 and $125 per hour.

Meanwhile, ghostwriters working on full-length books may charge $20,000 to $50,000.

Your earning potential sometimes depends on how well you can multitask.

“I think every ghost has a maximum number of book projects they know they can take on and still provide a quality product,” Turner says. “For some, that’s one. They’ll take one project and work on it until it’s done before taking on another. Others, like me, often juggle multiple projects as long as they are in different stages of production.”

Other Important Stuff No One Really Tells You

Ghostwriting is far from a solitary practice. And when you’re working with other personalities (some of them larger than life), managing your ghostwriting career can be frustrating.

“The mistakes I see ghostwriters make have to do with how they manage their businesses, rather than anything to do with writing,” Turner says. “For example, not using a contract to spell out everyone’s responsibilities, not billing up front before starting, and not walking away when a project becomes unmanageable or very different from the original description — which costs time and money and often doesn’t end well.”

And then there’s actually getting the material to work with — it doesn’t appear magically. The research and interview portion of the job can be tiring.

“[Some ghosts think] their job is just to do the writing,” Lipper says. “That’s only half the job. The other half, which is arguably more important, is getting the material out of the author. This is where the listening skills come into play. Some ghosts ask, ‘What’s your story?’ and expect the author to narrate a book. It doesn’t work that way. A good ghostwriter is part therapist, part journalist, and part friend that can get the full story and then turn it into a book.”

Hustle always helps.

“I wish I’d known that sometimes it’s up to the ghostwriter to get the book done, even if that means stepping up and taking on additional work that isn’t necessarily in the job description,” Lipper admits.

But if you’re a team player, ghostwriting may be your freelance-writing sweet spot.

You may not get the limelight, but if you plan well, the money can help you find time to work on your own writing projects, too.

Your Turn: Would you ever work as a ghostwriter? Who would you love to write for?

Lisa Rowan is a writer and producer at The Penny Hoarder.

The post Here’s How to Get Started Ghostwriting (and What No One Tells You About It) appeared first on The Penny Hoarder.

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"Triple lock pension should be scrapped"

Marina Gerner

triple-pension-lock.jpg

The state pension triple lock will worsen an economy already heavily 'skewed' towards baby boomers and against millennials, and therefore it should be scrapped, the Commons Work and Pensions Committee announced.

The state pension triple lock will worsen an economy already heavily 'skewed' towards baby boomers and against millennials, and therefore it should be scrapped, the Commons Work and Pensions Committee announced.

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Fraudsters hit 20,000 Tesco Bank accounts: what you need to know

Tom Wilson

Tesco-bank-front.jpg

Tesco Bank has blocked all online current account transactions after some 20,000 people had money fraudulently taken from their accounts this weekend.

Tesco Bank has blocked all online current account transactions after some 20,000 people had money fraudulently taken from their accounts this weekend.

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This One Money Mistake Might Be Sabotaging Your Finances — and Your Dreams

Although my DSLR has long been collecting dust in the corner, I reminded myself a few months ago of my one-time ambition to become a real photographer — someone who might actually get paid for taking photos.

But instead of (carefully) dusting off my lenses and setting aside some weekend time to work on my equally-dusty photog skills, I took what Break the Twitch’s Anthony Ongaro calls the “false first step.”

I opened up my laptop, headed to an online photo supply store and scoped out some fancy new equipment.

Obviously, I needed a fisheye lens to get on that real photographer level.

A spiffy new camera strap wouldn’t hurt, either. I typed in my credit card info, hit submit and got the goods days later.

A few months have passed, and how much money do you think I’ve made off my new photography side gig? Heck, how many new photos do you think I’ve taken?

Yup: A big, fat zero.

How This Mistake Can Cost You Money… and Sabotage Your Goals

Chances are, you’ve made similar mistakes.

You remember a goal of yours — one you’ve been meaning to achieve for a while — and are suddenly struck with a twinge of guilt.

You’ve been saying you’re going to get this done for so long, and you’ve made zero progress.

But this time, it’s different.

This time, you’re finally, really going to lose that last 20 pounds. Or quit smoking. This time, you’re going to buckle down and get that freelance business of yours started in earnest.

But first, you need a fancy fitness tracker to measure your daily steps. Or a new pair of sneakers. Or (another) new theme for your website, complete with its $40 price tag.

So you grab your wallet and make the purchase, pleased with yourself for making tangible progress toward your goal.

Only one problem: It’s not actually progress. It’s stuff.

You haven’t actually done anything, you’ve just bought something.

And since that purchase satisfied the itch of your guilty ambition, chances are you won’t do anything after it arrives, either.

This is Ongaro’s “false first step,” which he writes about at Break the Twitch, a blog about minimalism, decluttering and “aligning daily action with values.”

It’s that impulse buy you use to briefly allay the guilt surrounding your unfulfilled aspirations — the “twitch.”

And although your motivation might last a week or two after your new pair of yoga pants or acoustic guitar arrives, buying something new really isn’t necessarily enough to keep you committed.

In fact, it might actually weaken your commitment by making you feel like you’ve made real progress… when you haven’t.

Worse yet, it’s super low-barrier-to-entry: With resources like Amazon Prime, anything you want is, as Ongaro writes, just “a click and two days away.” Often, it’ll cost you $50 or less, so it seems like an affordable way to measurably invest in your desires.

But if you just pat yourself on the back for taking the “false first step,” and let that guitar gather dust, it’s actually a waste of money…

… and it can really add up. Ongaro started the blog after he realized he’d spent $12,000 on Amazon in just four years making these kinds of impulse buys.  

“I was trying to become a better version of myself without doing any real work,” he admits. “I thought I was taking action when all I was really doing was taking out my credit card.”

I hadn’t been buying things – I had been trying to buy a better version of myself.

Meanwhile, the only kind of marathon you’re wearing those yoga pants for is the movie-watching kind — and both your bank account and goals are suffering.

How to Achieve Your Goals — Instead of Taking the “False First Step”

So, what should you do instead of buying what amounts (admit it) to yet another new toy?

It’s simple, but not easy: You’ve got to actually do the thing.

Yup, the difficult thing you’re avoiding by making purchases, the thing you’ve been stalling on for years on end.

“There are a million ways to avoid it,” Ongaro writes.

“But the only way to move forward is to do the difficult thing, do the work, make the call, do the stretches, or hit the publish button.”

So if you’re ready to finally let go of your excuses, stop wasting money and get to (actual) work, here are some of Ongaro’s suggestions.

Use What You Have

“If you haven’t even tried to accomplish something using the resources you already have, slow down and assess the situation,” Ongaro suggests.

Think about it: Do you really need a new pair of sneakers, or are you just trying to avoid going on a run?

“Many times, you’ll find that you didn’t actually need the thing at all. You just need yourself.”

Rent or Borrow What You (Might) Need

Sometimes, you actually do need something to get started on a goal. It’s pretty tough to be a photographer if you don’t have a camera.

But rather than running out and buying the equipment for your new hobby or business, borrow what you want first — or even rent it.

It’s not just about saving money. You’ll also feel a “sense of urgency” that forces you to actually pick up the equipment and give it a whirl, since you’ll need to return the goods.

Then, you can decide if you’re serious enough to make the investment — or if you even need that gizmo at all — with some hard evidence to guide you.

Some of this advice might leave Penny Hoarders scratching their heads. Isn’t it a waste to spend money on renting something you might end up buying anyway?

“Consider the expense of buying a brand new item that eventually goes unused,” writes Ongaro, “or the hassle of having to resell something that didn’t work as you wished.

“Renting first will save you time and money overall.”

Spend Money Later

Instead of wasting money by frontloading expenses, make do with what you’ve got now, and only spend money once you’ve proven your commitment to yourself.

Want to be a better writer? Sit down and write.

Sure, an online course might help… but if you don’t make the time to write, you won’t get better, no matter how much instruction you take.

Want to lose 10 pounds? Eat less and move more.

No need to go out and buy a giant jar of protein powder or even to get an expensive gym membership. It’ll be way more fun to buy new gym clothes when they fit the way you want!

Read Ongaro’s full explanation of the “false first step” and the “twitch” that makes you take it here — and check out the rest of his blog, too.

Meanwhile, get busy doing the difficult thing you’re avoiding. Because while it might be scary and hard, Ongaro’s completely right when he says:

“It is on the other side of that thing that the real magic happens.”

Your Turn: What dream have you been stalling on by taking false first steps?

Jamie Cattanach is a staff writer at The Penny Hoarder who’s made a storage closet worth of false first steps in her time. Her writing has also been featured at The Write Life, Word Riot, Nashville Review and elsewhere. Find @JamieCattanach on Twitter to wave hello.

The post This One Money Mistake Might Be Sabotaging Your Finances — and Your Dreams appeared first on The Penny Hoarder.

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Can You Use Life Insurance as a Retirement Investment?

At some point in your life you will almost certainly be pitched the idea of life insurance as an investment.

The pitch will sound good. It will sound like you’re getting a guaranteed return, with little to no downside risk, and that the money will be available for just about anything you want at any time.

Well, I’m here to tell you that things are not always what they seem, and that with a few rare exceptions you should avoid life insurance as an investment. Here’s why.

First, a Quick Primer on Life Insurance

Before getting into all the reasons why life insurance is not a good investment, let’s step back and look quickly at the two main types of life insurance:

1. Term life insurance: Term life insurance is a set amount of coverage that lasts for a set amount of time, often 10 to 30 years. It’s inexpensive and there is no investment component to it. It’s pure financial protection against early death.
2. Permanent life insurance: Permanent life insurance comes in many different shapes and sizes, but essentially it provides coverage that lasts for your entire life AND it has a savings component that can be used like an investment account. You’ll also hear it called whole life, universal life, variable life, and even equity-indexed life. Those are all different types of permanent life insurance.

There’s an entire discussion to be had about term life insurance vs. permanent life insurance from an insurance perspective, but that’s the subject of another post. (Hint: Most people only ever need term life insurance.)

Here we’ll focus on the savings component of permanent life insurance that’s often pitched as a fantastic investment opportunity.

Here are seven reasons why life insurance is almost never a good investment.

1. The Guaranteed Return Is Not What It Seems

One of the big stated benefits of whole life insurance is that you get a guaranteed minimum return, which is often said to be around 4% per year.

That sounds amazing, right? That’s far more than you’ll get from any savings account these days, and that’s just the minimum return. There is, of course, the opportunity for it to be better.

The problem is that you’re not actually getting a 4% return, no matter what they say. A whole life projection I reviewed recently, one that “guaranteed” a 4% return, actually only showed a 0.30% return when I ran the numbers. That’s much less than what you’d get from a simple online savings account, even in this low-interest-rate environment.

I’m honestly not sure why they’re allowed to guarantee a return that you don’t actually receive, but I assume that the return IS 4% …before all kinds of fees are factored into the equation.

No matter what, though, YOU are not getting anywhere near the return they’re promising.

2. You’ll Be Negative for a While

Just above I said that the guaranteed return on that policy turned out to be only 0.30%. Well, that was only if the policyholder waited 30 years before taking any money out. The return was much lower, and often negative, for all the years before that.

See, when you pay into a whole life insurance policy, most of your initial premiums go to fees. There’s the cost of the insurance itself, other administrative costs, and of course the large commission that needs to be paid to the agent who sells you the policy.

What that means is that it takes a long time, often 10 years or more, just to break even on your investment. Before that, your guaranteed return is negative. And even after that, it takes a long time before the return starts to approach something reasonable.

Do you like the idea of investing in something that’s likely to produce a negative return for the next decade or more?

3. It’s Expensive

Whole life insurance is expensive in two big ways:

1. The premiums are MUCH higher than term life insurance for the same amount of coverage. It’s often as much as 10 times more expensive.
2. There are a lot of ongoing fees, most of which are hidden and undisclosed.

Remember that cost is the single best predictor of future investment returns. The lower the cost, the higher the likelihood of out-performance.

Typically, whole life insurance is one of the most expensive investments out there.

4. The Tax Savings Are Overstated

One of the stated benefits of whole life insurance is that it’s another tax-advantaged account. And that’s true to an extent:

1. Your investment account grows tax-free.
2. You can “withdraw” money tax-free.

Both of those have some big catches though.

First, while your money does grow tax-free, your contributions are NOT tax-deductible. In that sense, it’s kind of like a non-deductible IRA, without the full benefits of either a Roth IRA or a traditional IRA.

Second, the claim of tax-free withdrawals is incredibly misleading. What you’re actually doing when you withdraw money from your life insurance policy is lending money to yourself. You’re taking out a loan, and that loan is accumulating interest for as long as you don’t pay it back into your policy.

So no, you aren’t taxed on those withdrawals, but…

1. You are charged interest, which essentially replaces the tax cost (though it may be more or less).
2. In some cases you can withdraw too much money, in which case you would have to put money back into the policy (probably not part of your retirement budget) or allow the policy to lapse.

These kinds of complications come up all the time with policies like this, and are rarely explained up front.

5. It’s Undiversified

Diversification is a key characteristic of a good investment strategy. Essentially, it involves spreading your money out over a number of different investments so that you get the benefit of each without any one particular part of your investment portfolio being able to sink you.

Whole life insurance is inherently undiversified. You’re investing a significant amount of money with a single company and relying on both their investment skill and their goodwill to produce returns for you.

They have to be good enough active investment managers to outperform the market (unlikely). And they have to decide to credit enough of those returns to you, after accounting for all of the costs of both managing the investments and managing their insurance obligations.

That’s a lot of your eggs in one basket.

6. It Lacks Flexibility

Saving money on a consistent basis is the single most important part of investment success. So ideally you’ll be able to set up your monthly savings and continue them indefinitely, or even increase them over time.

But life happens, and flexibility is helpful when it does.

Let’s say that you lose your job. Or maybe you want to go back to school. Or maybe you receive an inheritance that means you no longer have to save as much.

If you’re contributing to something like a 401(k) or IRA, you can simply pause or decrease your regular contributions to free up some cash flow. In the meantime, the money you’ve already saved will continue to grow, and you can turn your contributions back on at any time.

You don’t have that flexibility with life insurance. If you don’t keep paying your premiums, the savings you’ve accumulated will be used to pay them for you. And when that money runs out, your policy will lapse.

Which means that any change in financial circumstances could mean you lose all of the progress you’ve made with a whole life insurance policy. There’s not much flexibility there to tread water until things get back to normal.

7. You Have Better Options!

If you ask just about any financial planner who doesn’t have a stake in selling whole life insurance, they will almost always recommend maxing out all other tax-advantaged retirement accounts before even considering life insurance as an investment, simply because they offer better tax breaks, more control over your investments, and often lower fees.

That means maxing out your 401(k), IRAs, health savings accounts, and self-employed retirement accounts first. And, even after that, considering things like a 529 plan or even a regular old taxable investment account.

If you’re not already taking full advantage of those other retirement accounts, using life insurance as an investment should be the last thing on your mind.

When Does Permanent Life Insurance Makes Sense?

For most people, life insurance will never make sense as an investment. But that doesn’t mean that permanent life insurance is useless.

Here are a few situations in which it can make sense:

1. You have a child with special needs and want to ensure that he or she will always have plenty of financial resources, no matter what.
2. You have millions of dollars potentially subject to estate taxes and you want to use life insurance as a way to preserve that money when it’s passed on to your family.
3. You’re already maxing out ALL other tax-advantaged accounts, you want to save more for retirement, and your income is high enough that the tax benefits offered by life insurance are attractive.

In all three of those cases, you’d want to work with a specialist who could design a policy to meet your specific needs, minimize fees, and maximize the amount of money that stays in your pocket. The whole life insurance policies most agents offer will not meet those criteria.

‘Too Good to Be True’ Usually Is

The whole life insurance pitch sounds good. Guaranteed returns, tax-free growth, tax-free withdrawals, and money available for any need at any time.

Who says no to that?

Of course, when something sounds too good to be true, it usually is, and this is no exception. Life insurance is typically not a good investment and in most cases you’ll be better off avoiding it.

Matt Becker is a fee-only financial planner and the founder of Mom and Dad Money, where he helps new parents take control of their money so they can take care of their families. His free book, The New Family Financial Road Map, guides parents through the all most important financial decisions that come with starting a family.

Related Articles

• How to Choose the Right Retirement Account
• Whole, Universal, and Term Life Insurance: What’s the Difference, and What Do I Actually Need? 
• 10 Things You Need to Do Before You Start Investing

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Prepare Your Business for the Happy Holidays

Sponsored by The UPS Store The holidays can be the happiest but also the busiest time of year. For small business owners, especially solopreneurs, and those who work at home, it’s no easy task to keep up with the increased demand and pace of the holiday season. Luckily, there are a few ways to take […]

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Former commissioner McCool pens her memoirs

Suzanne McCool is her family’s historian, unofficially. Sitting in her antique-laden Stroudsburg living room and sifting through grayed, framed photos, McCool describes herself as a mixture of organized and sentimental.But even if she was neither, her family’s history is easy to recall. In ways, it correlates with the nation’s history.McCool remembers her mother’s stories at the dinner table about Scranton during the Great Depression. She remembers [...]

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Ethnic Beauty Store gets investment to grow

Skin care, cosmetics, hair, bath and body, and even such products for the little ones in the home are all part of a new Enchanted Life e-commerce website which this week received a $65,000 investment from Ben Franklin Technology Partners of Northeastern Pennsylvania.EnchantedLife.com is the e-commerce platform launched by Ethnic Beauty Store LLC of East Stroudsburg, which features personal care and wellness brands that target multicultural customers.The investment by Ben [...]

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Monroe County gives $50,000 for train study

The long awaited train from the Pocono area to New York is still picking up steam.Monroe and Lackawanna counties have put a supplemental investment into the intermittent Rail Service Restoration Project under the Pennsylvania Northeast Regional Rail Authority.Monroe County Commissioners approved a funding request at their Tuesday morning meeting to grant the authority $50,000 for a feasibility study into the costs of a restored rail service from Scranton to New York. The [...]

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PPL power generation rates to drop for residential customers

PPL Electric Utilities residential customers who elect not to shop around for better rates will pay slightly less for electricity this winter.Households that rely on PPL to purchase electric supply on their behalf will see the rate drop to 7.44 cents per kilowatt hour, down from the current rate of 7.49 cents per kwh, the utility announced Wednesday.The outlook is less rosy for small businesses.The rate for the power generation portion of small business customers’ [...]

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The Dead Minivan Experiment: How We’re Trying to Become a One-Car Family

A few weeks ago, my 2007 periwinkle blue minivan lay unworkable in the driveway. With jumper cables in hand, my husband tried to bring her back, but to no avail.

Most people would probably be upset if their car died, but I couldn’t care less. To be honest, I’m not really a car person, nor do I drive that much anyway. Plus, I’ve been angling to become a one-car family for a while now – mainly because my older model van is starting to require pricey maintenance and repairs.

Yeah, I could have upgraded my old, bright blue minivan – with its zip tie on the bumper – a few years ago, but why? I work at home, so I have little need to drive anywhere. And my van has been great for those times I do need it – running the kids around town and random trips to the grocery store.

I’ve always had the option to buy something pricey and new, but again, why? I abhor car payments – so much so that I would probably drive a skateboard before I financed another automobile. We’ve saved up enough to pay cash for a nicer model, but I don’t see why we would.

• Related: Five Things You Could Afford if You Didn’t Buy a New Car

The Benefits of Being a One-Car Family

My van would probably come back to life with a new battery, but it has other problems, too – squeaky brakes, an engine that smokes when you drive too much, windows that don’t work. I could fix it if I wanted, but I probably won’t.

To be honest, my minivan dying seems like a good excuse to conduct a one-car experiment. Before we sink any money into reviving my van, we can “try out” the one-car experience to see how it goes. And really, there is so much to gain if we can pull it off.

For starters, we won’t have to continue pouring money into a car that’s worth almost nothing. Within the last year, I paid $600 for new tires and a few hundred more dollars to get the brake pads replaced. I’ve also paid for gas and oil changes along with new wiper blades not once, but twice. If we sold this car or got rid of it somehow, I would no longer be responsible for keeping it workable and in good shape – nor would I have to pay for the labor each time it breaks down.

But there are other reasons having one car might make our lives easier (and cheaper). We’d no longer have to pay for car insurance on my van, which currently adds about $400 per year to our policy. We could also stop paying for registrations and upgraded license plate tags.

• Related: How Much Does Car Insurance Cost?

Altogether, getting rid of my minivan would save us at least $700 per year in insurance, license plates, and oil changes. And if you add on the cost of the repairs we’d need to make just to get it running again, it could easily save us $1,000 or more this year and a lot more in the future.

Lastly, we would fix a problem we can’t seem to find the answer to: Should we park the van in the driveway or the garage? In the garage, my nearly worthless van takes up half our usable space for no reason at all. But in the driveway, it’s an eyesore. By getting rid of it altogether, we would gain precious usable space either way.

The Downsides of Having One Car

Savings and benefits aside, having only one car does present some challenges in our household. Not only that, but we anticipate even more scheduling conflicts down the road. Here are a few hurdles we’ll need to overcome:

• Juggling schedules when kids need to be two places at once: Since our kids are ages 5 and 7 now, there have been very few instances where we need to be two places at once. Occasionally, however, a day comes along where we have a birthday party and gymnastics lessons during the same hour – or we have a kids activity but I also need to go to the grocery store. With one car, my husband and I will have to plan these days out so we can juggle more than one activity at the same time.
• Figuring out transportation when one of us travels: Right after my van died, I went on a work-related trip to visit beautiful Mazatlan, Mexico. With two cars, this wouldn’t be a challenge at all – I’d just drive to the airport. But since we only had one, I had to take an Uber to and from the airport.
• Deciding what to do when our car needs maintenance: Having two cars makes it easier when one of them inevitably needs maintenance or repairs. Whenever we’ve had belts replaced or repairs made, we just shared our second car for a day or two. With just one car, we’ll have to figure out how to get around when our remaining vehicle breaks down or needs an update.
• Moving large items: My minivan has been a lifesaver when we’ve had to drive more than four people around, and it’s also come in handy for moving large items. Since the seats fold into the floor, you can easily transport small furniture, folding chairs, gardening supplies, and bags of mulch. Without my van to use for these chores and only the small trunk in my husband’s Toyota Prius, we’ll have to figure something else out in the future.

I don’t think any of these issues are deal-breakers – especially while our kids are young and their schedules aren’t packed with activities. I tend to believe we’ll do fine if we plan a little better and talk out our transportation needs ahead of time. With two cars and two kids, we rarely have to sync our calendars or discuss our plans ahead of time — but with one car, that will need to change.

The Bottom Line

As my minivan continues to languish in the driveway, we’re conducting a little experiment. If we can get by without a second car until winter without too much hassle or inconvenience, I think it’s reasonable for us to become a one-car family for the foreseeable future.

Not only will having just one car save us money, but it will simplify our lives in some ways, too. With just one car, we’ll have one less thing to keep up with, fewer bills, and a lot more room in our garage and driveway.

Just like many other decisions we’ve made, this one is about compromise. When my husband wanted to cancel cable television many years ago, I was initially stressed over the decision. But now, years later, I hardly remember what it’s like to watch Bravo for several hours each night.

Sharing a car will probably leave us feeling the same way after a while. Once a few months tick by and you relax into your new routine, the sacrifice you’ve made becomes normal and you learn to be happy with what you have.

Related Articles:

• 31 Days to Financial Independence, Day 9: Trim Your Transportation Costs
• Three Ways to Make Money from a Tired Old Car
• Commuting by Car, Uber, Bike, Train, or Walking: Which Saves the Most Time and Money?
• Try Eliminating One of Your Cars Entirely

Have you ever shared a car with someone? Do you still share a car? Please share your story below.

Holly Johnson is an award-winning personal finance writer who is obsessed with frugality, budgeting, and travel. She blogs at ClubThrifty.com and teaches others how to write online at EarnMoreWriting.com.

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Is Fancy Salt Worth the Cost for Cooking at Home?

Deeds Done, Sunday, Nov. 6, 2016

Chestnuthill TownshipRichard E. and Tracey McAllister to Jeffrey P. and Lindsay S. Dudzick, Lot 207, Section IV, Birches West, $210,000James and Paula A. Greer to Thomas E. Jr. and Tracy A. Creed, Lot 11, The Meadows at Pleasant Valley, $500,000Percudani House III LP (By Gen Partner) Percudani, Gene P. (Gen Partner) to Jimbar Investments LLC, Tract 1, Final Minor Subdivision for Bridge Associates of Brodheadsville LLC, Tax ID 2/2/1/10-3, $412, [...]

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Inspiration from Alan Watts, Henry David Thoreau, Stutterer, and More

Once a month (or so), I share a dozen things that have inspired me to greater personal, professional, and financial success in my life. I hope they bring similar success to your life.

1. Alan Watts on change

“You’re under no obligation to be the same person you were 5 minutes ago.” – Alan Watts

Part of the reason that change seems so challenging is that we feel restricted by the patterns we’ve already established in life. While there might be aspects of ourselves that we want to change, we’re also often comfortable with the patterns that we’ve established. On some level, we’re comfortable with who we are, or at least more comfortable with that than the prospect of change.

The thing is, our lives really are whatever we make of it. The person we were yesterday doesn’t have to be the person we are today. We can always strive to be better. We can always improve our lives.

Don’t commit yourself to a painful future just because of the mistakes made in the past. You don’t live in the past. You live in the present, and your present self can always change your future. It starts with making good choices today.

2. Jim Hemerling on five ways to lead in an era of constant change

From the description:

Who says change needs to be hard? Organizational change expert Jim Hemerling thinks adapting your business in today’s constantly-evolving world can be invigorating instead of exhausting. He outlines five imperatives, centered around putting people first, for turning company reorganization into an empowering, energizing task for all.

During the last decade of my life (well, actually, the last two decades, to an extent), I’ve wound up in more leadership positions than I would have ever expected earlier on in my life. I’ve wound up as the president of a charity, the defacto leader of a research project, the head of an internet business… sheesh.

The thing is, I don’t actually like leading. I don’t feel that I’m very good at it, so I mostly rely on everyone else on the team as a crutch. I have no idea what I’m doing, so I just go around to everyone and ask what they’re doing and just try to see where it fits together and what I can do to help it fit better.

The thing is, I think that’s really the key. A leader is just the person who tries to help everyone fit together, and you do that by listening, by putting things in place to help people fit together better, and occasionally pull out a piece that isn’t working or put in a new piece that’s needed. That’s it. The key is listening and then trying to do something about it.

If you’re ever stuck leading something, just do that. Ask everyone what they’re doing and what their personal vision is and what they want to be doing, and do your best to make all of that work together. If everyone’s happy, they’re going to try to make the project succeed and the best way to make people happy is to just listen without interruption and then try to help and try to make things fit.

3. Dale Carnegie on dealing with others

“When dealing with people, let us remember we are not dealing with creatures of logic. We are dealing with creatures of emotion, creatures bristling with prejudices and motivated by pride and vanity.” – Dale Carnegie

This somewhat overlaps with the above video. People might be logical when solving some problems, but most of the time, everyone operates out of a sense of pride and pre-existing opinions. People want to feel important and appreciated.

Over the years, I’ve figured out one thing that has really, really helped me every time I’ve had to work with other people: give an overabundance of credit to others. Whenever someone compliments you, give credit to people who have helped you. When you present something, find ways to single out others for credit.

The thing is, doing that takes nothing away from you, but it gives a lot to the people that helped you. People still know and respect that you put forth a lot of effort, even when you dish tons of credit to others, but then people know that there are a lot of additional people that helped. They also know that you’re a team player, so if anything it actually helps you a little.

Every single reasonable time you can, give credit to others. Feed their pride a little, their vanity a little. There’s no drawback to it, only benefit.

4. Darebee

I am a huge fan of bodyweight exercises – in other words, exercises you can do at home without any additional equipment that pushes both your strength and cardio health. Think jumping jacks and sit-ups and push-ups.

For many years, I used something called the “Lifetime Fitness Ladder,” which is basically just a routine of simple bodyweight exercises. The goal of the ladder was to work through the same loop of exercises every day, adding more reps over time. While it did a great job of pushing cardio health, I found that it didn’t do as great of a job at strengthening lots of muscle groups. It mostly just worked the same few muscle groups.

I tried a lot of different approaches for fixing that problem, but in the last month or so, I’ve really found the best solution for me: Darebee. It’s simply a daily bodyweight fitness routine with three different challenge levels. Each day, the challenge is far different, but it always mixes cardio exercise (meaning it gets you breathing hard and gets your heart racing) along with exercises that challenge different muscle groups each day.

All of the stuff at Darebee is free. It’s fun. It offers variety. It helps get you into shape. It requires no additional equipment. It’s really easy to just pop over there and check out today’s exercise routine.

I love it. I hope you will, too.

5. Abraham Maslow on growth

“In any given moment we have two options: to step forward into growth or to step back into safety.” ― Abraham Maslow

Dozens of times throughout the day, we have a choice. We can do something a little harder that builds to a better future, or we can slack off and do the easy thing.

It’s hard to consistently make the better of the two choices. It’s hard to not just kick back on the couch after a busy day. It’s hard to push yourself to grow. On the other hand, it’s easy to just slack off. It’s easy to just browse social media or some website. It’s easy to burn a weekend binge-watching a TV show or swimming in sports.

No one is ever going to make the tough choice to step forward into growth every time. That’s not going to happen. It’s not realistic. Instead, the best way to become a better person is to simply make the tough choice a little more often and to keep it in mind when you’re making choices.

6. Isaac Lidsky on the reality you’re creating for yourself

From the description:

Reality isn’t something you perceive; it’s something you create in your mind. Isaac Lidsky learned this profound lesson firsthand, when unexpected life circumstances yielded valuable insights. In this introspective, personal talk, he challenges us to let go of excuses, assumptions and fears, and accept the awesome responsibility of being the creators of our own reality.

Every single person perceives the world differently. Some people see a hilltop as an adventure. Others see it as a challenge. Still others see it as something to fear.

The thing is, I want to perceive as much of life as possible as challenges and adventures, things that are joyful to overcome. However, it’s up to me to perceive the things life hands me as a challenge to relish, not something to fear.

If there’s something out there that scares you and overwhelms you, that feeling is yours and yours alone. You choose to interpret the world as you want to interpret it – as something to fear or as something to relish.

I want to relish all of it: the mundane, the challenging, even the frightening.

7. Walt Whitman, I Hear America Singing

I hear America singing, the varied carols I hear,
Those of mechanics, each one singing his as it should be blithe and strong,
The carpenter singing his as he measures his plank or beam,
The mason singing his as he makes ready for work, or leaves off work,
The boatman singing what belongs to him in his boat, the deckhand singing on the steamboat deck,
The shoemaker singing as he sits on his bench, the hatter singing as he stands,
The wood-cutter’s song, the ploughboy’s on his way in the morning, or at noon intermission or at sundown,
The delicious singing of the mother, or of the young wife at work, or of the girl sewing or washing,
Each singing what belongs to him or her and to none else,
The day what belongs to the day–at night the party of young fellows, robust, friendly,
Singing with open mouths their strong melodious songs.

The measure of our success as a nation has been our hard work and our willingness to work toward a common goal, to share that song. Voices high and low have come together to blend their voices, to make it special.

Where is that song? We need this now, more than ever. It’s so easy to just blame someone else for not carrying that tune, but when we’re blaming, we’re not singing. We’re not contributing to that American song.

8. J.D. Vance on America’s forgotten working class

From the description:

J.D. Vance grew up in a small, poor city in the Rust Belt of southern Ohio, where he had a front-row seat to many of the social ills plaguing America: a heroin epidemic, failing schools, families torn apart by divorce and sometimes violence. In a searching talk that will echo throughout the country’s working-class towns, the author details what the loss of the American Dream feels like and raises an important question that everyone from community leaders to policy makers needs to ask: How can we help kids from America’s forgotten places break free from hopelessness and live better lives?

Hillbilly Elegy by J.D. Vance is far and away the best book I’ve read this year. It’s an incredibly insightful look at the consequences of economic inequality and how it begins to create a cultural shift over time. It’s personal, beautiful, and insightful – a trifecta that’s hard to pull off.

The thing is, there are no easy answers to the questions he’s asking, but simply paying attention to the questions and reflecting on the domino effects of globalism can bring about a lot of understanding.

I grew up in a situation not too different than J.D.’s experience. While my parents were very good people, I was surrounded by families who had gone through things much like what is described in this book and in this speech. It’s very, very easy to make a snap judgment and decide that people who make poor personal choices are somehow “bad” or personally flawed, but such outcomes are often the result of extremely uninvolved and abusive parents and a community that does very little to foster hope for a great future.

How do we fix it? I don’t know. I’m just glad that this guy is out there making it clear that cultural divides often aren’t what they seem to be.

It’s harder to put ourselves in someone else’s shoes than we like to think that it is.

9. Winston Churchill on making a point

“If you have an important point to make, don’t try to be subtle or clever. Use a pile driver. Hit the point once. Then come back and hit it again. Then hit it a third time – a tremendous whack.” – Winston Churchill

This is something that I take to heart when I’m writing about personal finance or some other aspect of self-improvement. If I come across a principle that really works, something that benefits my life and/or my financial progress, I’m going to want to share it. I’m going to want to do everything I can to make sure that you hear about it and understand it.

To an extent, that means repeating it. A truly important point – which, in my case, means a principle or a tactic that has really made a difference for me – is something that I don’t want to be subtle or clever about. I want to drive it home. That means hitting it home as obviously as possible, then hitting it again, then again.

10. Rachel Barton Pine – Tiny Desk Concert

From the description:

The music of Johann Sebastian Bach is essential, like air and water, for many classical musicians. Pianist András Schiff starts every day with Bach — sometimes before breakfast. “It’s like taking care of your inner hygiene. There’s something very pure about it,” he says. Cellist Matt Haimovitz notes that he’s been playing and thinking about the Bach Cello Suites for more than 30 years. He even plays them in bars.

Violinist Rachel Barton Pine began playing Bach in church at age 4. Ever since, she’s been mastering and re-mastering Bach’s set of six Sonatas and Partitas—more than two hours of solo violin music that looms like a proverbial Mount Everest for any serious fiddler. The trick is getting the details down. Bach left us with the notes but not much else. Pine recently analyzed every measure of these works, and prepared a new edition of the music with her own dynamic markings, phrasing indications, bowings and fingerings.

For this performance, Pine chose three contrasting movements from the set and plays them on her Guarneri del Gesu violin, which was built in 1742 — eight years before Bach died. She highlights the spirit of the dance in the “Tempo di Borea” (a Bourée from the First Partita). She unfolds a serene melody, just lightly accompanied, in the “Largo” (from the Third Sonata), and she closes with the intertwining “Fuga” (from the First Sonata), which sounds like three violinists in deep discussion.

Although the Sonatas and Partitas brim with technical demands, Pine says that every time she plays them, it’s as if she’s “conversing with the very best of friends.”

Turn this on and then go about your day. Play it when you’re doing ordinary chores (that’s when I like listening to classical music). It’s really good.

11. Henry David Thoreau on the price of anything

“The price of anything is the amount of life you exchange for it.” – Henry David Thoreau

More and more, I’ve come to realize that this simple statement underlies so many of the decisions I have to make in my life. I’m left wondering what exactly is worth it – and what isn’t.

If I spend $5 on something, is it worth it? Every $5 I spend adds a little bit to the amount of time in my life that I’m going to have to spend working.

If I spend an hour on something, is it worth it? That’s an hour less of my life that I can spend on things that are truly important to me.

In the end, it’s all the same decision. What’s important? How can I spend as much time as possible on that? How can I spend as little money and time as possible on everything else that isn’t important? Can I keep distinguishing between the handful of things that really are important and the other things that are not?

That’s the daily challenge. Sometimes I succeed, and that’s a good day. Sometimes I fail… and that’s a shame.

12. Stutterer

Note: this would probably be rated PG-13 purely for language because of a couple of choice words. There’s nothing overly offensive (one internal thought and then a few words uttered by an angry man), but don’t watch it at the office or with younger children unless you want them to be repeating a choice word or two.

Like any great film, it gave me that emotional punch in the gut that art can really deliver, and managed to do it about four times in thirteen minutes. It won the 2016 Academy Award for Best Live Action Short Film and The New Yorker is essentially making it available for free via Youtube. Here’s their article on it:

Our new Screening Room short, “Stutterer,” won the Academy Award for Best Live Action Short Film this year. It’s a thirteen-minute movie about a young London typographer named Greenwood (Matthew Needham). Greenwood stutters, to the extent that verbal conversation is difficult. When he tries to resolve an issue with a service representative over the phone, he can’t get the words out; the operator, gruff and impatient, hangs up. (For surliness, she rivals the operator in the old Yaz song.) When a woman approaches Greenwood on the street, he uses sign language to avoid talking. But in his thoughts, which we hear, he does not stutter. And when he chats online with a woman named Ellie (Chloe Pirrie) he can express himself freely, and is casual, charming, and content. When Ellie writes that she’s coming to London, he panics. How he navigates her visit provides the film’s narrative and emotional suspense.

Watch it. You won’t regret it.

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Repossession: When the Bank Bites Back

“Repossession” is probably the scariest word in the financial lexicon this side of “bankruptcy.” Basically, if you bought something with a bank loan and they have a lien on it, and you stop making payments, the bank can take it back.

That means your car or your house might not be your car or your house for much longer if you fall behind. However, you’ll have more than ample warning when it comes to repossession. Here’s your guide to what repossession is, how to avoid it, and what to expect if it’s about to happen to you.

Why Was Your Property Repossessed?

If you haven’t been making payments, well, there’s your answer. In some cases, however, it might not be quite that obvious.

For example, in some states, if you fail to maintain adequate insurance on your car, that can be grounds for repossessing the vehicle. This is especially true if you car is loaned or leased rather than owned in tandem with the bank.

If you’ve been making regular payments, the first thing you should do is call up your lender to ask why they’ve repossessed your property. Then go from there.

Can You Get It Back?

In most cases, yes, you can get it back. However, there are a number of stipulations to this “yes” that might turn the answer into a “no.”

For example, let’s continue talking about cars. If you have had your car repossessed, you’re going to need to pay back any missed and late payments before you get the car back. You’ll also have to pay fees and costs associated with the repossession, which likely cost your lender a pretty penny. And, in may cases, the repossession will remain on your credit report.

Before you even start negotiating with your creditor to get your property back, you need to ask yourself some hard questions about why you had your property repossessed in the first place.

If you get your property back, can you actually afford it? In the case of a car, this means not just the payment, but also the insurance, the gas, the upkeep, and everything else associated with car ownership. If the answer is no, then you’re just going to end up back where you were before. In this case, there’s not much point in trying to get your property back. You should look into other options, like public transportation or carpooling.

Another question to ask yourself is if you’re going to declare bankruptcy. Because, oddly, if you are, then it does make sense to get your car back. This is because you’ll be restructuring your debts, so you might be able to afford the car once you’ve done that. Your lender might also work with you during bankruptcy to change your payment plan to something more manageable.

You Have Rights

Your lender can repossess a vehicle, but they can’t keep your other property that’s inside of it. You’re allowed to get all of your stuff out. They can’t sell your possessions to make up for what you owe them. This protection does not apply to things you’ve installed in the car, like nice rims or a world-class stereo system. In some states, the repossessing company has a duty to furnish you with a list of items in the car and the procedure to get them back. In other states, you have to ask.

What’s more, a repo agent can’t destroy your property to get your property. That means if you have the car garaged, they’re not allowed to break in for the purpose of repossessing your property. That’s against the law, and if they do so, it’s time for you to contact a consumer protection attorney and seek damages.

What Happens After Repossession?

After repossession, you might still owe money on the car. And, of course, your credit rating is going to take a serious hit either way. But it’s going to take an even bigger hit if you owe money and don’t repay it.

Here’s how it works: You owe another $10,000 on the car, which sells at auction for $7,000. Guess where the lender is going to come looking for the $3,000 it lost?

The best advice is to stay on top of the terms of your loan. Then you won’t have to worry about seeing the repo man.

Related Articles

• Should You Ever Refinance a Car Loan?
• Debt Diaries: Real-Life Stories of Debt, Bankruptcy, and Recovery
• Should I Consolidate My Debt?
• Using the HARP Program to Refinance an Underwater Mortgage

The post Repossession: When the Bank Bites Back appeared first on The Simple Dollar.

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Her Baby’s Socks Wouldn’t Stay Up — So She Started Her Own Business

GFC 073: Long Term Care Insurance Quotes: How Much Do You Need?

Most people won’t object to paying for most types of insurance: homeowners, health, life, auto, etc.

While most people see a need for long term care insurance, once they receive a quote and see how much it actually costs, they are immediately turned off.

But should the rate of long term care insurance be such a deterrent?

The scary reality is that there is an overwhelming likelihood that you and I will both need some sort of long term care in our lifetime.

How much of a chance?   According to the U.S. Administration of Aging, over a 70% chance.

That means you have a greater chance of needing long term care than Shaquille O’neal has of making a free throw.  How scary is that?

The purpose of this post is two-fold. First, to give you a sense of how much long term care may cost in the future. Secondly, to give some real life long term insurance quotes to help illustrate how much it may cost you.

How Much is Long Term Care?

That’s the million dollar question.  MetLife did a survey in 2009 of estimated long term care costs.  Based on their findings the average annual cost of nursing home care is now $79,935 or $219 per day. That’s up 3.3% from 2008. The average nursing home stay is about 2.5 years, which means you would need roughly $200,000 to pay those bills.  That’s a little more than your DirecTV bill, huh?

What if you had to pay the entire long term care cost of pocket?  Would your retirement nest egg withstand such a huge blow?  Medicaid may help, but that’s only when everything is depleted.  The clear solution is long term care insurance.

How expensive is Long Term Care Coverage?

Annually, it typically costs about as much as a cheap used car. According to the  MetLife survey: in 2009, a 52-year-old federal employee could pay $1,524 annually for an LTC policy with a $200-per-day benefit for three years and a maximum lifetime benefit of about $200,000.

Does $1,500 or $1,800 or $2,100 annually (just to throw out a few numbers) sound expensive? These premiums are certainly inexpensive compared to the staggering bills you may face if the need for LTC enters your life. Yes, there is a chance that you may never need LTC coverage. However, with advances in medicine and healthcare, we may live much longer than we anticipate before we leave this world.

If you’ve ever had an experience where a loved one needed long term care then the cost is not an issue.  A client of mine shared his story where long term care insurance saved his family from financial and emotional heartache.

Elder Law Attorney’s View

Suggesting how much long term care insurance one might need is tough because there are a lot of factors at work here.   Much depends on the state you reside.  Other factors include you current health, family medical history, and how much in investable assets you have.  In addition to that, there are other variables to consider. The are four primary variables that must be considered when building an Long Term Care Insurance policy:

• daily benefit amount
• benefit period
• elimination period
• inflation protection

I decided to the seek the counsel of Tiffanny Sievers of S.I. Elder Law who advises her clients on elder issues. Here’s what Tiffanny had to say:

I typically suggest people get at least a 5 year pay out because the look back period for transfers is moving to 5 years. Although right now it is 3 years, it is going to be moving to 5 years, very soon in Illinois.

How Much of a Daily Benefit Do You Recommend For a Long Term Care Insurance Policy?

In Southern Illinois Nursing Home expenses range from $90 a day to $180 a day.  Therefore I would say that the daily benefit should be no less than $100 a day and probably better somewhere around $120 a day.

How Long of an Elimination Period?

I would say 90-100 day elimination period.  The reason for this is because Medicare will usually pay for the first 100 days and you want to your long term care insurance to kick in right after Medicare runs out.

How Much of a Total Payout Should One Consider When Purchasing Long Term Care Insurance?

Of course, the best plan would have no limits but something reasonable would be $200,000-$250,000 maximum payout.  Like a term certain annuity, a good idea might be to make sure that your plan will pay the maximium daily benefit for 5 years.

For the most part, if you have a decent long term care insurance policy, you will not have to worry about loosing all of your assets to assisted living and or the nursing home.  I recomend to all of my clients that are under age 70 that they at least try to get some coverage.  You have a greater chance of becoming disabled than actually dying.

As you can see, there are many considerations that go into purchasing a long term care insurance policy.  Thanks to Tiffanny for sharing her expertise!

Long Term Insurance Quotes

Long term care insurance is available through most of the best insurance companies that offer life insurance.  So I started with the most popular among the well known providers.

While the MetLife survey provided some good general info on the actual cost of Long Term Care Insurance, I decided to contact one of the leading providers and request an actual quote on a long term care insurance policy.   The Long Term Insurance quotes I requested were for a 50, 55, and 60 year old, respectively- all assuming to be in excellent health with no benefit for a spouse.  As the below chart indicates the three constants were daily benefit amount, benefit period, elimination period, and policy limit.  Let’s see what the results show:

Age	50 Year Old	55 Year Old	60 Year Old
Risk Class	Select	Select	Select
LTC Benefit Amount	$100 Daily	$100 Daily	$100 Daily
Benefit Period	3 Years	3 Years	3 Years
Policy Limit	$109,500	$109,500	$109,500
Elimination Period	90 Days	90 Days	90 Days
Inflation Option	5% Compound	5% Compound	5% Compound
Stay At Home Benefit	$3,000	$3,000	$3,000
Total Annual Premium	$1,078.65	$1,198.50	$1,462.17

Sample of Long Term Insurance Quotes for 50 year olds on up to 60 year olds.

Long Term Insurance Quote Findings

Based on the findings we can derive some interesting information.   First, that the total price on the annual premium increases by 11% by waiting to age 55 instead of 50.   Second, the percentage increase from 55 to 60 is 22%.   Thirdly, by postponing from age 50 to 60, there is a 35.6% in premium.  Many baby boomers always wonder what the potential increase in premium might be by waiting, this should give some insight.

Disclaimer: You should not base these numbers as a true representation of long term care insurance premiums.  This is just to be used as an example and you should consult a qualified licensed professional to give you an accurate quote based on your situation.

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