Posted on Wed, Apr 07, 2010
Northwestern Mutual’s Optimism Barometer Suggests Americans Have Adjusted to the Near-Term Challenges of the ‘New Normal,’ and are Increasingly Optimistic About their Long-Term Prospects
The latest results collected from
Northwestern Mutual’s Optimism Barometer – an online measurement tool– indicate a distinct upward trend in positive outlooks among Americans, despite the near-term challenges of the current economic climate. Most notably, recent data has revealed a 60% year-over-year jump in people who scored at the highest end of the optimism scale.
These results suggest that Americans are, in increasing numbers, accepting the reality of the ‘New Normal’ while also being able to see beyond the immediate challenges of the current economic cycle and remain optimistic about their long-term prospects, said Northwestern Mutual. “We find it encouraging that Americans appear to be widening their time horizons and bringing a long-term approach to how they pursue their goals. It’s something at the very core of what we believe in, and aim to deliver through our process; and it’s a strategy that also has broad applications beyond finances in people’s lives.”
The Optimism Barometer consists of six short questions that take less than a minute to complete. The questions were culled from The American Reality Study, which was commissioned in 2009 by Northwestern Mutual to help provide insight into how Americans are handling the economic, political, and social changes taking place in the United States; and to gain valuable perspectives on the way people view their lives and their future.
In the first quarter of 2009, only 25 percent of Americans scored between 8-10 (out of 10) on the optimism scale. Today, nearly 40 percent (39.7%) scored between 8-10, representing a 60% year-over-year increase in people at the highest end of the scale.
Additionally, it is not only the most optimistic among us that saw increases. Optimism shifted up in all categories, leaving only 2.4 percent of total respondents in the “least optimistic” category (0-4 on the optimism scale) versus 19 percent last year.
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Posted on Tue, Feb 23, 2010
Is there a good time and a “less than good” time to bid farewell to a life insurance policy that has accumulated cash value?
A recent case covered in the New Jersey press offers an illustrative example.
A 62 year old man had held a whole life insurance policy with a $125,000 death benefit since January of 1992. He had accumulated $14,667 in dividends earning about 5.5 percent, and cash value of $33,736. His annual premium is $2,416. His wife is 60, and the couple are both healthy and working.
The question?: If he forfeited this policy (to pay off a mortgage), would he owe income taxes? Should he keep the policy and pay the premium out of the dividends?
While the answer could be complicated depending on the couple’s overall financial picture, a simple answer is as follows:
If a life insurance policy that has accumulated cash value is surrendered, the amount of cash received from the cash value that exceeds the basis (above the premiums paid to date) is taxed as ordinary income. Your insurance company can provide an in-force illustration to determine your basis.
An insurance policy dividend, unlike a stock dividend, is generally considered a return of premium. As such, it is not taxable income unless the total amount of dividends received exceeds the total amount of premiums paid — the basis.
If dividends are left to accumulate and earn interest, the interest credited each year is taxable income.
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Posted on Fri, Jan 29, 2010
As we prepare to turn the January calendar page of a pivotal new year, and a promising new decade, the Web rings out with the sound of financial resolve and reform, not only for government and institutions, but for families and individuals. In the Internet age, the best financial advice for the months ahead springs not only from a well of good people and word-of-mouth but a rich trove of Blogs and Websites.
Here are some of the New Year’s most respected financial guides, scouts and trailfinders on the best paths to follow in 2010 (including their Twitter handles):
Enemy of Debt ( @EnemyofDebt)
Nothing provides financial security like having an emergency fund in place. This fund is very important to us because having this it will mean that we can move on to two other very important financial goals we have—which will be to fund our retirement with gazelle intensity and fund our children’s college funds. One goal leads to another.
Out of Your Rut ( @OutofYourRut)
Reducing expenses, building savings and paying off debt. We don’t have much in the way of debt, but even a little is irritating (or worse!)
Bible Money Matters ( @MoneyMatters)
My financial resolution for 2010 is to get my financial life a bit more organized, and to practice what I preach on my blog. Within the past couple months my wife and I found out that we are expecting our first child, and that has really made me realize that I need to practice what I’ve been writing about when it comes to getting life insurance, setting up investment accounts now that we’ve fully funded our 8 month emergency fund, and putting together a set of instructions for my wife in case I were to die or become incapacitated. Now that we are no longer going to be a dual income with no kids family, it’s time to get organized and motivate!
Green Panda Treehouse ( @Green_Panda)
My goal for 2010 is invest at least $3k into my Roth IRA.
Debt Free Adventure ( @MattJabs)
My top New Year’s Resolution is to pay off all high interest debt and build my Emergency Fund up to $20,000. While doing this I also hope to accomplish my move to full-time PF blogger before 12/31/2010.
Miranda Marquit – Freelance PF Writer ( @MMarquit)
Refinance the house. Rates are low and we could [get] a 15 year mortgage for a little more than we are paying now, saving us big $$$!
Deliver Away Debt ( @DeliverAwayDebt)
Pay off my 2nd mortgage which totals $24,000. I want to pay it off next in my Snowball because I’m paying 12.75% on the dang thing. That is the highest interest rate of all my debts.
I’m going to follow the 75/25 rule (by Matt Jabs). The 75/25 rule says that 75% of all available debt snowball funds will be put toward the debt snowball. The extra 25% will be used to fund (with CASH) other savings goals. I want to double my Emergency Fund to $2,000, Fund a $1,000 vacation fund, and begin my Wife’s new used car fund.
One Money Design ( @OneMoneyDesign)
This coming year is an exciting one for us. We will become debt free except our mortgage by paying off our final car loan. We are already living out how paying off debt can free up additional money to meet financial goals such as snowballing debt and growing an emergency fund. It has also provided extra resources to allow us to give more when we feel called to do so.
The emergency fund has been a difficult area for our family over the past few years. It seems each year something comes up that uses up much of it. We are grateful this system works as without our emergency savings we’d be facing credit card debt. So in general, the next goal will be building the emergency fund more to the point of further protection.
Change Jar Saving ( @ChangeJarSaving)
Pay off the credit cards! And have no more bills hanging over my head.
Upper Valley Mom ( @UpperValleyMom)
Move to a envelope system and budget that husband and I can both work with, in order to get some traction.
Being Frugal ( @Lynnae)
Pay off my student loan, because that’s the last of my debt, besides the house.
Ducks and Dollars ( @skduck2003)
Pay off 4 loans (1 auto, 3 student) & increase savings in an effort to reach financial freedom!
Financial Highway ( @MoneyHighway)
We are just changing priorities from saving to paying off Student loan so main goal is to reduce student debt (only debt we have) by 40-45%.
Thrifty App ( @ThriftyApp)
Try something frugal each month that I haven’t been able to bring myself to do. January=handkerchiefs. We’ll see…
Fiscal Fizzle ( @FiscalFizzle)
At the top for 2010 is getting serious about retirement. It’s been on the backburner for too long and I’m losing time.
Credit Goddess ( @CreditGoddess)
Start a home improvement fund. Bought a house in 2009 & want to make some changes.
Centsible Life ( @CentsibleLife)
My top resolution is to continue to increase our earnings every month. More money=out of debt faster!
Small Steps For Big Change ( @SS4BC)
To be debt free? Why? Well shouldn’t that be evident? =)
Rainy Day Saver ( @RainyDaySaver)
To finish paying off our credit card debt and add extra principal payments to the mortgage.
Kingdom First Mom ( @KingdomFirstMom)
To practice what I preach (use coupons effectively, pay off debt, build savings)
My Money Power ( @myMoneyPower)
My PF Res is to Be Happy. A positive outlook can make a big impact in your finances. There are studies showing depression leads to spending.
Financial Samurai ( @FinancialSamura)
1) Earn $1 million bucks, 2) Win a minor tournament like the SF Tennis Open, and 3) Meet 36 new people, or 3 a month!
Money Help For Christians ( @MH4C)
This year are goal to save enough extra money each month so we can pay off our mortgage 12 years early.
What Are Your Top Financial Resolution for 2010?
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Term Life Insurance Quote or Research how to
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Posted on Tue, Dec 01, 2009
Interested in a fast, easy-to-absorb guide to personal financial news and information you can “eyeball” literally at a glance.
Mint.com (
www.mint.com), a leading online personal finance service from Intuit, Inc., has condensed it down to a salvo of messages in bite size Twitter chunks of just 40 characters each.
The new “Money Tweets” service deliver news and advice from from across the Twittersphere, and synthesizes it in a single, streamlined platform at www.mint.com/twitter.
Money Tweets includes five categories, allowing people to home in on whatever content most interests them:
- Topics – Collects information relating to budgets, saving, investment, loans, and retirement feeds. Sources range from industry leaders, such as Morningstar (@morningstarinc.) and the Wall Street Journal (@WSJ), to bloggers with cult following and specific expertise, including Wisebread (@wisebread), Stocktwits (@stocktwits) and Budgets are Sexy (@budgetsaresexy).
- Tweets about Mint.com – Tracks, in real-time, what people are saying about Mint.com.
- Tweets from Mint.com - Updates followers on the latest from Mint.com -product upgrades, new blog content, economic indices and awards or speaking opportunities. This tab helps people keep up with what the company is doing, and shows the interaction between the Mint.com team and customers that happens in the Twittersphere.
- Questions – A question of the day – based on spending patterns, budgeting tips or other relevant topics – helps users learn from each other and crowd sources fun and useful tips and tricks.
- Popular – Keeps followers on top of hot financial topics, anything from the bailout, interest rates or Bernie Madoff. Money Tweet tracks and reports on volume and trending patterns over a selected period of time.How has Twitter influenced the way you manage your money? Could you benefit from financial advice in short message bursts?
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Term Life Insurance Quote or Research how to
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Posted on Thu, Oct 15, 2009
When thinking about life insurance coverage, a central question for parents is “How much does it cost to raise a child?” The U.S. government has answers.
Middle-income U.S. parents of a child born in 2008 can expect to spend $291,570 for food, shelter, and other necessities to raise that child over the next seventeen years, up from the 1960 low-low price tag of $25,230, and $204,060 in 2007, according to a report from the U.S. Department of Agriculture (USDA).
According to the USDA’s report, Expenditures on Children by Families, providing housing represents the largest expenditure in raising a child, averaging $69,660 or 32 percent of the total cost over the seventeen year period. Food and child care/education were the next largest expenditures, averaging 16 percent of the total cost. Transportation — driving the kids here-and-there — accounted for 14 percent of the cost.
USDA notes that the cost estimates in the 2008 report did not include the medical costs associated with childbirth, and that some of the highest modern-day costs, such as child care were “negligible” in 1960.
The More you Have, the More you will Spend
The report also notes that total family income affects the cost of raising a child. A family earning less than $56,870 per year can expect to spend a total of $159,870 on a child from birth through high school. Similarly, middle-income parents with an income between $56,870 and $98,470 can expect to spend $221,190; and a family earning more than $98,470 can expect to spend $366,660. Keep these costs in mind when you shop for the best rates in life insurance.
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Term Life Insurance Quote or Research how to
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Posted on Wed, Jun 10, 2009
At Efinancialblog we keep a watchful eye on all things financial, especially the insurance industry.
The recent federal intervention in the financial services industry is well known when it comes to banks. An underreported fact is that, as of last month, the Treasury Department has also extended bailout funds to help bolster America’s insurance companies. While federal bailout funds were originally approved to help banks alleviate toxic loans, the Treasury Department has used such funds to help industries such as the auto industry and now the insurance industry significantly strengthen their financial status.
One such insurance company is The Hartford Financial Services Group Inc. Hartford announced that the Treasury Department determined they were eligible for $3.4 billion from the Troubled Asset Relief Program. Additionally, Allstate Corp., Ameriprise Financial Inc., Principal Financial Group Inc. and Prudential Financial Inc were also determined to be eligible for bailout money, though the amounts have not yet been disclosed.
Some insurance companies are reporting surpluses, such as MetLife, and have declared that they are not going to ask for bailout money.
While they are not banks, insurance companies have been negatively affected by the financial crisis. Stock portfolios for many institutional investors have decreased significantly in value and life insurers own roughly 18% of all corporate bonds in America. Moreover, life insurers have seen their own stocks drop dramatically, so there was reason to be concerned they could fall below federal requirements for liquid assets. These are the factors that made the insurance companies eligible for bailout money.
Treasury Secretary Timothy Geithner told a congressional oversight panel recently that the TARP fund Congress approved last October now has $110 billion left in the fund that has not been committed.
Do you think bailout money should be used for insurance companies? How should the Treasury spend the last 110 billion dollars? As always, your comments are welcome!
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Term Life Insurance Quote or Research how to
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Posted on Sat, Feb 14, 2009
The Chinese New Year has begun with fireworks and celebration. This year marks “The Year of the Ox.” People born in the “Year of the Ox” are said to be patient, speak softly, and inspire confidence in others. Perhaps the children of this “Year of the Ox” will acquire those characteristics, qualities which are so important to turning the corner in our national economic recovery.
We hope for the strength and patience that are necessary to pull together as a people and create a renewed sense of purpose. Indeed, without the patience to withstand economic adversity, we risk losing the resolve and commitment to see our way through the challenges we face and press forward to the dawn of a new day, and a new era, in our nation’s economic revival.
“The Year of the Ox” symbolizes the inner strength and power to engender progress and create confidence. It is confidence that is needed to generate the momentum needed for recovery.
In this “Year of the Ox,” will our elected politicians be able to truly speak less and listen more? Will they plow ahead with the quiet determination of the Ox? A new commitment in this new year is the way towards the future. Let us “speed the plow” and harvest what we sow together. Tell us, what does “The Year of the Ox” symbolize to you?
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Posted on Sun, Jan 25, 2009
With retirement cushions beginning to look more like throw pillows – many families are wondering: “How can we recoup some of our losses?”
Bloomberg commentator John F. Wasik spelled out five ways any household can save and use their money prudently even in a bad year.
One, keep investing, but do it in yoursellf! Continue to contribute to your 401(k) plan. Keep in mind that taking your employer’s matching contribution, if you have one, is still a 100 percent initial return on investment. If you don’t feel comfortable investing, save up cash and put it in money-market funds, I-bonds or certificates of deposit.
Two, appeal your property taxes. Do this every year by reviewing your home’s assessed valuation. If it’s too high compared with similar properties, talk to your local assessor or appeal it on the county level. If you win the argument, you can usually freeze or lower your real-estate tax bill.
Shop Around for Insurance
Three, yes, shop around for insurance. Everything from increasing your deductible, or out-of-pocket expense, to lowering premiums across the board on life, health, homeowner’s and other policies. [Efinancial can help in this department. - Ed.]
Four, reduce risk. This should be your most powerful theme this year. Buy bonds or mutual and exchange-traded funds to lower the percentage of stocks in your portfolio. If you are in an adjustable-rate mortgage, cut your interest-rate risk by refinancing into a fixed-rate loan. Pay down your credit cards.
Five, beat inflation. If you have decades before you want to retire, you should have some portion of your holdings in Treasury Inflation-Protected Securities and dividend-paying stocks.
Will the rebound begin this year or will there be another year or two of pain? Wasik says he can’t answer that burning question, although he remains optimistic – while wincing at his retirement-plan statement.
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Posted on Mon, Dec 15, 2008
Throughout history, nations have relied upon and gone to war over, the resources they need to run their economies. These resources have evolved from water, to farmable land, to the ever more volatile resource of oil. Energy is the life force of a modern economy. In the current equation, oil adds up to both convertible heat in a building furnace or combustion in an automotive engine to drive transportation.
Like all finite resources, our oil supply is subject to the market forces of supply and demand. The commodity is on a trajectory to skyrocket in price, be it in the short term or long, and must be weighed against more economical alternatives.
Just as important as the economic impacts are the environmental benefits. The right energy policy can spark the dynamism of our economy through long-term investment in renewable energy. We can create potentially millions of jobs, starting with a 21st- century economic recovery plan that puts Americans to work building wind farms, solar panels, and fuel-efficient cars. At the same time, we can reduce the carbon emissions that threaten to warm the planet through the creation of greenhouse gases in the ozone layer.
Shifting from an oil based economy would also cut our dependence upon foreign entities for our economic survival. Imagine all the money Americans would have saved this summer if gas was less than $4 a gallon. If we do not need as much gas, the money saved could be funneled into our national economy, increasing our economic strength. Energy = economy if you do the math.
How do you think America’s energy policy has affected our economy? How could new energy sources transform the economic landscape? Energize us with your ideas!
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Posted on Wed, Nov 05, 2008
Yesterday, Barack Obama was elected to become the 44th President of the United States, with at least 349 electoral votes and about 52% of the population. Given the protracted length of the political campaign season, the American people have at least some idea of the policies that will shape the economic landscape over the next four years. Clearly, with change as a mandate, it is safe to say there will be some fundamental shifts ahead in our economic outlook. At the same time, new initiatives will be constrained by a large national deficit.
The expectation of greater cohesiveness in political circles and the notion of heightened government regulation may instill the necessary confidence to stimulate the lending and spending of money in the current economic environment. The steps a government takes are also reassuring to outside investors such as the refuge international investors have found in a strengthening U.S. dollar.
Will the Obama presidency be able to turn around the economy, and how quickly? Will investments in a national transportation infrastructure and alternative energy programs be part of the greening of America? And how might the U.S. government and president Obama buttress the automotive industry to save energy, jobs and the economy? What’s your view?
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