Category Archives: Insurance

How to Reduce the Hidden Costs of Car Buying

It can be tempting to budget for your next vehicle based on the price of the car, but there are a lot of hidden costs of car buying. From maintenance fees to the costs of registration to more costly insurance, it can be surprising how much more you pay to keep those wheels on the road.

A large purchase like this can be a huge emotional process. It is only natural, after all, as this will be a big change for your life. A car can bring freedom or even more stress if it becomes a financial burden. With big purchases, it’s so easy to get tempted by only $50 or $100 more a month for the car of your dreams versus the one you can afford. Having a plan in place that factors in hidden costs will help keep your emotions in check and your head clear.

First, you have to remember that a car is not a good investment — a vehicle decreases in value the minute you drive it off the lot, sometimes by 10% to 30%. A car is a utility purchase, not an investment vehicle, which is why you should almost always buy a used car. Do not get caught in the thrill of owning a new car. Think of your vehicle as “new-to-you” instead.

Picking the right model is important. You may think that buying the cheapest car you can find will be the biggest money saver, but if that car is too old or the parts for the model are expensive and hard-to-find, maintenance may end up costing you much more money in the long run than the more expensive cars on the lot. Be sure to search the model you are considering for purchase online to see if you may run into any of these issues.

A vehicle decreases in value the minute you drive it off the lot.

Costs at Time of Purchase

When purchasing a car off the lot, you might run into several costs that you may not be anticipating, including:

  • Registration Fee - Each state charges a certain amount of money to have your vehicle registered under your name. This fee includes license plate costs, but be aware that some states separate the two.
  • Title Transfer - This cost is for the legal document that proves you are the owner of the vehicle and that the title has been transferred from the previous owner. In some states, the DMV may also charge you a lien recording fee to record your loan on the title.
  • Sales Tax - Be sure to look up the tax rate for your state, as well as that of city and county governments who may add their own sales tax to the bill.
  • Emissions and Inspection Fees - Depending on your state, you may need to get the vehicle tested to make sure it passes state regulations for carbon emissions. Other states will require the vehicle to be inspected in full to cover their specific regulations as well.
  • Down Payment = This is one cost you should be expecting: the down payment is simply the amount of money you pay at time of purchase, before loans and financing.

Because so many of these fees vary by state, you can use this chart to find all the listed fees for your state. A good rule of thumb is to abide by the 20/4/10 rule. This means to put at least 20% of the price of the car for down payment, keep financing to four years or less, and keep your total ongoing expenses on the car to under 10% of your income.

Several hidden costs of buying a car are registration, license plate, tittle transfer, emissions and inspection fees.

Costs You Will Pay After Purchase

The payments do not stop once you drive the car off the lot, however. Here’s what to look out for as far as long-term expenses:

  • Loan Payment - If you’re financing your vehicle, you will be agreeing to pay back a loan monthly for a definite amount of time with interest. It is best to keep this loan term under four years because of how quickly a car decreases in value; your accumulated interest can eclipse the actual value of the car if you’re not careful. Dealers often offer a 0% APR to qualified buyers. Definitions of “qualified” vary but expect to get that deal only if you have a credit score of least 700 - 740.
  • Registration - You will be required to pay to register your vehicle in some way every year, usually on the month of your birthday and varying by your state.
  • Insurance - You need to have insurance in place to drive your car off the lot and you will have to keep paying to keep the car insured for as long as you own it. It is possible to save hundreds of dollars over the years, depending on which insurance company you go with, so it is crucial that you compare quotes from different companies to get the best rate you can find.
  • Maintenance & Repairs - Keeping your car running smoothly may be the most costly and frustrating part of owning a vehicle. At the dealership, be sure to ask about the vehicle’s history to ensure it has been well-maintained with routine oil changes and tire rotations. You will also want to have an independent mechanic inspect the vehicle to make sure there is no hidden damage that could prove expensive to

Industry Insights

While COVID-19 has shown little sign of slowing in America in the past few months and the market remains volatile, one sector that has stayed relatively stable has been that of life insurance. High demand for coverage continues. Companies maintain social distancing standards by offering virtual applications. The most significant changes since our last update in March have been to the underwriting process, though these changes vary greatly by carrier provider. Here are some of the details:

DEMAND IS STILL HIGH FOR LIFE INSURANCE

The spike in policy demand that started in late February and early March has shown no sign of letting up in the months since. No matter where you turn, people are still looking to buy life insurance, as evidenced by a 25%­–50% increase in Google searches for the term compared to the past several years. This also indicates that many who already had coverage before the outbreak of COVID-19 are seeking to further understand their own policies as well.

This drive to understand and purchase life insurance has led to higher conversion rates, with term insurance appearing to have the largest increase in purchasing. Policies with living benefits or indexed products have also proven helpful at this time for emergency funds or protection against market downturn. Whatever your needs may be, now is more important than ever to make sure your family is protected, especially as healthy applicants have not seen too much rise in rates yet — something that may or may not change as more states adjust to reopening.

WEIGHING YOUR OPTIONS IS MORE IMPORTANT THAN EVER

In the past few months, some of the most significant changes have come from the underwriting process of various companies. For example, some carriers may restrict individuals who test positive for COVID-19 from purchasing coverage until they’ve tested negative again. Travel rules have also changed for some — certain companies have put a pause on applications from people who have traveled within the last 30 days. Additionally, it may be harder for people over 70 to get covered, with or without prior medical conditions.

Every company is different, and these changes in underwriting vary between carriers. Rates are also likely to fluctuate between separate insurance carriers, even for applicants with identical medical histories and other conditions. One company may dismiss your application while another gives you an incredible rate. There are some silver linings; for example, with the widespread adoption of virtual applications, some companies have forgone medical exams in order to adhere to social distancing rules for policies which previously required them. These policies can carry much lower rates, and this flexibility from these carriers can be a great benefit for customers.

With this type of variability between providers, independent brokers like FFS occupy a special position in the industry by letting customers shop between a variety of carriers and rates before committing to a policy. By allowing you to see and compare prices and products before buying, agents like ours give you the ability to find satisfactory coverage that meets most, if not all, of your needs.

How to File Taxes as an Independent Contractor

Filing taxes for independent contractors can be a very different process than filing for employees. Contractors must pay a self-employment tax as well as income tax. Here’s what you need to know to file as an independent contractor:

Follow the Guidelines for Filing as Self-Employed

For IRS Purposes, independent contractors file as Self-Employed, which makes their earnings subject to Self-Employment Tax. Contractors are typically required to pay their estimated tax quarterly along with filing an annual return.

Self-Employment (SE) tax is basically the contractor’s way of paying the Social Security and Medicare taxes that would be withheld from the pay of most workers by their employers. The term self-employment tax does not include any other tax such as standard income tax.

Determine your SE tax and income tax by figuring the net profit from your business first — subtract your business expenses from your income. If this net profit from self-employment was $400 or more, you have to file an annual return; if it was less than $400, you only have to file an income tax return if you meet another other filing requirement listed in the these IRS instructions (use Charts A, B, and C on pages 8–11).

Independent contractors are typically required to pay their estimated tax quarterly along with filing an annual return.

Making Payments and Filing Your Return

To make quarterly payments, use the estimated tax worksheet found on IRS Form 1040-ES (be sure to have your prior year’s annual tax return handy, as you’ll need it to fill out this form). This worksheet has step-by-step instructions to determine and pay your quarterly payments, including the amount due on each date and a space to keep track of each payment’s date and confirmation number (check, debit or credit card). See the Estimated Taxes page and Self-Employment Tax page for more information.

Your annual return is then used to report the total income or loss from your business and the SE and income taxes you paid during the year. When it comes time to file your annual return on July 15, use Schedule C to report your income, and Schedule SE to report your Social Security and Medicare taxes. Follow these instructions for the Schedule C and instructions for the Schedule SE for step-by-step guides to filling out these forms from the IRS.

Take Advantage of Deductions

As an independent contractor, the IRS allows you to deduct many of your business expenses — costs for computers, printers and other technology used at work, plus the cost of phone calls, supplies, and travel, as long as all expenses were work-related. Deductions also apply to the costs of renting an office or running a home office. Additionally, half of the Social Security and Medicare taxes you pay are deductible.

You can apply home office deductions if you regularly use part of your home exclusively for your business. You have two options for deducting if you qualify: a simplified option that deducts $5 for every square foot of your house that qualifies as part of your business, up to $1,500; or a standard method based on actual expenses, adding up portions of your rent, utilities, mortgage interest, property taxes and homeowners insurance.

The details of these deductions are too extensive to summarize in all forms here. More information about tax-deductible business expenses can be found at this IRS Form, the home-office deduction factsheetForm 8829 (Expenses for Business Use of Your Home), the Self-Employed Individuals Tax Center and the IRS Tax Guide for Small Business. Further reading can also be found at this Kiplinger’s guide to the Most Overlooked Tax Breaks for the Self-Employed.

As an independent contractor, you can apply home office deductions if you regularly use part of your home exclusively for your business.

COVID-19 Updates to Taxes in 2020

It would be an understatement to say that many self-employed workers have been hit hard by the COVID-19 outbreak. Luckily, relief provisions have been put into place by the IRS in the form of tax credits for sick and family leave. For example, if you were forced to take sick leave for either your health or for the care of a family member, you may be eligible for a refundable tax credit for up to ten days of sick pay. Additionally, there is a tax credit for qualified family leave if your child was unable to attend school or daycare due to closed facilities. These credits are refundable, so if you are claiming a credit with an amount more than the taxes you owe, you will receive a refund for the difference. For detail on these credits, visit this IRS Overview Page.

The IRS will require proof that you qualify to claim each of these credits as well, so be sure to save anything you receive related to COVID-19 testing, your family’s medical care, and closures of schools and daycares. Note that these credits

The Best Ways to Manage Student Loans in a Financial Crisis

As many Americans wonder how they can pay off their debts in the wake of COVID-19, this pandemic has highlighted the importance of educating ourselves on what happens to student loans in a financial crisis. With college’s ballooning costs, 14.4% of adults holding some form of college debt and 54% of current college attendees taking out loans to pay for school, it’s become increasingly important to have a plan for paying off your student loans as soon as possible.

If you are a student loan borrower and you’re wondering what relief is available in a financial crisis like this current national emergency, as well as under normal circumstances, we outline some of the resources you should be aware of below.

Payment for federal student loans are paused until Sept. 30, 2020.

Student Loan Relief for COVID-19

With $1.41 trillion in student debt across America, representatives in the federal government understand the importance of student loan relief while we all practice social distancing. Under the CARES Act passed on March 27, 2020, all federal student loan borrowers are granted the following provisions through September 30, 2020:

  • Pausing of all payments.
  • 0% interest accrual for certain loans (Direct Loans, FFEL Program loans, Federal Perkins Loans and defaulted HEAL loans).
  • No garnishment of wages or tax refunds.
  • Ability for your employer to pay up to $5,250 of your student loans tax free.

Outside of legislation passed for COVID relief, there are other actions to help you pay back your student loans that you can take at any time:

  • Refinancing your student loans, consolidating existing balances into a single loan with a lower interest rate.
  • Change your repayment plan to one of the eight options for federal student loans.
  • Visit studentaid.gov or call 1-800-4-FED-AID for information and advice on solutions for your particular loans.

These conditions will only apply to federally-held student loans, however. If your loans are commercially or privately held, you will have to contact your lender to see what measures they’re taking for their borrowers. Some lenders are offering to pause payments for up to 12 months, but it’s most likely that interest will still accrue during this forbearance. Be sure to contact your lender and familiarize yourself with the terms and conditions of your loan. When you’re negotiating, be sure to ask all the questions you can so you’re well-informed on the status of your debt.

Take advantage of the payment hiatus to pay whatever amount you can for now.

The Perfect Time to Keep Making Payments

Take advantage of this unique payment hiatus by making whatever payments you can afford to anyway. This could help you pay down your student loan balance faster, because the full amount of the payment will be applied to the principal balance instead of interest accrued. Ideally, you’re saving money on other expenses like gas, auto insurance, dining out and gym memberships during this time. If it’s within your means, a good idea is to funnel some of what you’re saving in these categories of your budget to pay down your student loans. Now is a unique time to be proactive — take advantage of these provisions while you can and keep your eye on the goal of a fully-paid student loan.


Read our other articles in the Focus on Your Money series to get tips on prioritizing debt in a crisis, saving more money with budgeting, and how to improve your credit score.

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Keeping Your Team Healthy: Mental Health Resources for Isolation

At FFS, we strive to bring peace of mind to families through financial security, but we also value peace of mind for our agents during uncertain times. For that, we’ve put together some mental resources for isolation. Naturally, stress and anxiety levels rose for almost everyone when social distancing began , but also there’s never a bad time to consider your emotional well-being and make steps toward a healthier mind. Luckily, many mental health care providers have responded to COVID-19 by offering teleconferencing for their appointments (also known as “teletherapy”). There’s also been an increase in apps that offer self-training in the art of mindfulness, tool kits for coping with stress, and meditation guides for better sleep and relaxation. We’ve put together a little information on each below so you can look into the ones you like and make sure you’re taking care of yourself.

Talk With Professionals Through Teletherapy Apps

Whether you’re without a mental health care provider, waiting in between therapy appointments, or just looking for some coping mechanisms to try out on your own, you can access one of the many subscription therapy apps out there that let you call or text a licensed therapist at all sorts of odd hours. Apps like Talkspace and BetterHelp have full confidentiality protocols in place and let you talk with professionals about everything from daily stress to anxiety, fear, and self-esteem. Don’t let social distancing keep you from talking to somebody who can help you cope with stress.

Practice Mindfulness With Self-Guided Exercises

One type of therapy is called Cognitive Behavioral Therapy, a type of psychotherapy that focuses on taking negative thought patterns about yourself and the world around you and challenging them to alter unwanted patterns of behavior. CBT is used by many self-help apps these days that can help teach and strengthen coping mechanisms and effective strategies to cope with everyday stresses as well as special circumstances like COVID-19. Apps like MoodKit and SAM (Self-help for Anxiety Management) use these methods to give you the tools to help you tackle anxiety, stress, loneliness, and other symptoms of social distancing.

Learn to Meditate With Guided Courses

Meditation is one of the primary coping mechanisms for promoting your emotional well-being. It is a great way to calm your mind, process intrusive thoughts, and make your day easier to handle. It can be hard to master, however, which is why apps like Headspace specialize in guiding people to good meditation practices. Headspace provides hundreds of guided meditation courses, as well as exercises promoting mindfulness and relaxation, helping you cope with everything from anxiety to sleep problems to trouble with focus.

Maintain a Healthy Sleep Cycle

Sleep is one of the most important aspects of our well-being, yet sadly one of the first to fall by the wayside in times of stress. Keeping up good sleep practices can make you happier, healthier, and more productive in your day-to-day life. One of the most important ways to ensure you don’t lose any sleep is to wake up at the same time every day. By waking up at the same time, you train your body to get tired at the same time every evening, which results in going to bed at the same time as well. To help solidify this habit, balance your morning with exposure to sunlight — this will activate your body and help you feel more awake. Also, try not to hit snooze on your alarm, as this interrupts the consistency of your wake-up time. If you need white noise or help falling asleep, Calm is an app that offers sleep stories and other sounds to help get uses into a deep sleep.

Don't be Afraid to Talk to Someone

Even if you’ve never thought about therapy before, there’s never any shame or harm in looking for ways to improve your mental health. You don’t have to have a diagnosed mental illness to get help, either — these methods are for everyone, and most conditions like anxiety can be brought on for a brief time and helped by seeking situational treatment. If you have a healthcare provider, ask for their teletherapy options. There’s nothing wrong with asking for a little help; it’s always important to maintain your mental health in isolation and to nurture your peace of mind.

For More Information

Each of the services mentioned in this piece have different subscription models and prices. We’ve collected some information on them below; please follow the links for more details on each.

Talkspace

Subscription | Pick from many plan options that suits your budget, starting at $65 per week.

BetterHelp

Subscription | $40 – $70 weekly; offers 50% off you first month during times of COVID-19.

MoodKit

App for iOS | $4.99 to download.

SAM (Self-help for Anxiety Management)

App for iOS and Android | Free to download.

Headspace

App for iOS and Android | $12.99 per month, or $69.99 for a full year.

Calm

App for iOS and Android | $14.99 per month, $69.99 for a full year, or $399.99 for a lifetime membership.

How to Prioritize Your Debt in a Crisis

Unfortunately, payments and bills are still due even if you’ve experienced financial hardship in the wake of COVID-19. Debt management looks a little different during a crisis, but the essentials are still there — avoid late payments, put down as much as you can afford, and focus on certain debts over others.

Crisis situations are the ultimate times to re-evaluate your “needs” and “wants.” You have to ask one question about new purchases and ongoing expenses right now: “Can I live without this?” Everyone’s answers are unique. Maybe you can do away with your streaming services if you can’t afford living expenses — there is always free streaming content, jigsaw puzzles, and books that can entertain you and your family while you’re getting back on your feet. It’s possible, though, that Disney+ is keeping you sane with children at home, or your wellness app is keeping you centered. Your well being and saving your credit score for the future are your top priorities in a crisis. In this post, we’re offering a guide for what to pay first and what you can do for relief.

Your most important goal is having a safe place to live.

Mortgage & Rent

Housing expenses should be your highest priority payments. Your most important goal is having a safe place to live and keeping a home in which to shelter. While many states have put eviction freezes in place, you’re not completely off the hook. Failing to pay rent or mortgage can still result in eventual foreclosure or eviction; the freeze only makes it so you can’t be evicted right away. You may end up having to pay all of the back-logged rent at once when this is over. Keep up with your payments if possible and work with your landlord or mortgage lender to come to a deal that won’t leave you stacked with late payments when the freezes are lifted.

Household Utilities

Stay up to date with your water, sewer, electric, and gas. You don’t want to accrue fees that might bar you from energy assistance programs or shut off your utilities entirely, making it that much harder to stay healthy at home. If you’re having trouble making payments, reach out to your utility providers — many have hardship assistance programs and deferred-bill options.

Car Payments

Your car payments should remain your highest priority after your home expenses. You’ll want to avoid a repossession at all costs — you need that car for essential errands and getting to work when life returns to normal. Luckily, most major auto brands are offering payment deferrals and waiving late fees. Contact your lender to discuss how you can keep your account in good standing. While it may be tempting to cancel auto insurance, doing so can raise your rates later and leaves you open to serious expenses if your car suffers storm damage or is stolen while parked. If you don’t own your car outright, cancelling insurance isn’t an option. Many auto insurance companies are offering refunds on premiums paid during COVID-19. You should be able to work with your insurance company to reduce your rates during this time.

Federally held student loans will stop accruing interest until at least Sept. 30, 2020.

Credit Cards & Other Debts

Your other debts shouldn’t have such a direct impact on your health and safety, and therefore can be renegotiated right now — medical bill and back taxes for example.

Thankfully, the government has mandated that all federally held student loans will stop accruing interest until at least September 30, 2020. You do not need to do anything to take advantage of the 0% interest. Do not pay anyone who offers to reduce your federal student loan interest rates for a fee. The 0% interest does not, however, apply to private student loans – negotiate with your loan officer for support.

As for credit cards, most major banks are letting their borrowers defer for now. Many are also refunding certain fees and altering minimum payments. For reference, there is a list of relief-options offered by different card carriers. You’ll have to call your specific lender to take advantage of these provisions, however. Ask them directly what they can offer in terms of deferment and other measures of assistance.

Stay on Track

Remember that ignoring your debt is never a good idea. If you can’t cover a bill, confront it — contact the lender or creditor and let them know the crisis has made it so you can’t make a payment. They’ll likely be willing and ready to make an arrangement with you due to the unprecedented nature of this crisis. You have options. Take a deep breath — with planning, you can prioritize your debts and keep your credit under control. For more information on paying off debt, check out our latest Focus on YOUR Money webinar here*.

Read our other articles in the Focus on Your Money series to get tips on saving, budgeting, and how to improve your credit score.

* Webinars are available to current FFS Agents.

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COVID-19 Resources – How to Adapt Your Business

For four weeks now, businesses and employees across the country have been doing their part to slow the spread of COVID-19 by social distancing. Employers have been forced to adapt quickly to this operational shift as people transition to meeting with clients virtually and working from home. FFS has put together a list of resources and reading materials so both workers and managers alike can adjust to the new world smoothly and with minimal stress. Below you’ll find CDC guidelines, information on the CARES Act, help from the Small Business Association, and tips on working from home.

Running Your Business from Home

Read these articles for advice on how to make your business work virtually:

How Working Remotely Can Work for Your Insurance Agency

Thankfully, working from home was already increasing by 173% since 2005 before social distancing became the norm. AgencyBloc has good news from those who have done this before.

Virtual Events are Essential Marketing Tools for the Short and Long Term

Multibriefs offers some best practices for marketing your business virtually — all tools that you can use when we end the social distancing too.

Coronavirus advice: Astronauts' tips to surviving self-isolation - 'Just like the ISS'

Who better to give advice on self-isolation than a woman who’s been to space?

Forbes’ 10 Tips for Working from Home & NPR’s 8 Tips to Make Working from Home Work for You

Almost every publication has their version of working from home tips. These two from Forbes and NPR are good places to start.

Institutional Information and Relief

These pages will help you stay well-informed on governmental relief efforts and how they may help your business:

CDC Guide for Businesses & How the Treasury Department is Taking Action

It’s important to stay up-to-date with what the CDC and Treasury Department have to say about coronavirus relief. Here, the CDC covers what businesses can do to stay safe and prepared while the Treasury Department summarizes what the U.S. government is doing to help those who are impacted by the spread of the virus.

NASE’s Summary of CARES Act & The Small Business Owner’s Guide to the CARES Act

The National Association for the Self-Employed has been putting out indispensable resources in the wake of COVID-19. One of these documents summarizes the Coronavirus Aid, Relief, and Economic Security (CARES) Act in its entirety, while the other outlines how it could help your small business — both are essential reads.

Small Business Administration Local Assistance

The Small Business Association offers local assistance for anyone who wants to speak to someone about what they can do to help their business adapt.

For our agents, FFS continues to offer as much support, technology, and marketing materials as we did before the pandemic; we are committed to keeping our Home Office operations as unchanged as possible. Our Agent Services Department remains open for any agents with questions or concerns about running their business in these changing times.