Wednesday, September 11, 2013

Is Your Home The Money Pit?

The Money Pit or Mr. Blandings Builds his Dream House

by Frances Rahaim, Ph.D.
aka "The Money Doctor"

This is the time of year when we begin to get excited about improving our domiciles, or at least doing much needed repairs. Good weather beckons, and visions of a fresh look and outside projects sooth our winter blahs.  Home improvement stores offer paint sales and home renovation ideas to compete for our dollars.

Secretly we tell ourselves that spending money on our home ‘doesn't count.’  We rationalize that we are building equity and that home improvements are not frivolous expenses. Even if we take on debt to complete them we feel it was worth it. We reinforce our decisions with mantras like “A King's home is his castle”, and “we don't spend money on other things.”

Not surprisingly, it can become dangerous when we use plastic to pay for the renovations, but perhaps for less than obvious reasons.  When we use plastic rather than cash, we may not realize that we have overextended ourselves until the minimum payments becomes untenable.  Oftentimes we are trying so hard to meet the minimum payments on credit cards and protect our credit rating, that we are left without enough money to pay for other expenditures.  Without proper budgeting, this can sneak up on us, and in extreme cases cause delinquencies on even a mortgage or car payment.

When you’re thinking, “I can make the low monthly payments,” notice how long you’ll be making them. Then, get your crystal ball out, and if you see possible changes in the future, which may require higher monthly outlay, you may want to rethink your plan. Perhaps a less expensive renovation might do the job, or maybe you delay while you save enough to complete the improvements in cash.

Remember that improving the equity in your home will only affect you financially if you plan to sell your home and recover more than the cost of the improvements, or if you plan to borrow against the equity.

Two Real Money Pits
1.     Telling yourself, “I never spend money on myself – only on the house.” This is a very common sentiment and somehow seems to translate in our minds as “this debt or payment is guilt free. It doesn’t count because it’s for the home.”
2.     Using zero percent credit cards which default to a higher rate if not paid within the “teaser rate” period.  If something happens where you cannot pay in full by the deadline, you may be charged interest retroactively, perhaps even doubling your effective interest rate.  Remember, a 20% off sale is not a sale if you’re paying 29% on your credit card to purchase it.

Favorite Money Doctor, Money Pit Tip

Remember to shop in bargain stores, and up-cycle items. Or… connect with a friend, and shop/swap in your own homes to get a fresh d├ęcor without spending a penny! 

For more information on managing finances visit

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Thursday, September 5, 2013

Dental Expenses Bite

Taking the Bite Out of Dental Expenses

by Frances Rahaim, Ph.D.
aka "The Money Doctor"

Dental insurance is most often deducted from your paycheck, but have you ever wondered what you get for that money?

Fear of a large expense is what causes people to feel the need to purchase dental insurance. However, the scheduled benefits that come with dental plans are often confusing, and have “warm and fuzzies” that make it appealing, such as free cleanings twice yearly.

So, if you’re not likely to use the insurance often, you may be paying for something you don’t need.

An increasingly popular option these days is the “dental discount plan.” This is not insurance, but offers large discounts on dental care, in some cases 50 to 80 percent, and is being accepted by an increasing number of dental offices.

But how do you know which alternative is better for you? It’s actually pretty simple. Go back and add up the total annual premiums for your dental insurance and compare it to what it actually saved you in years past. Remember that it only pays for a portion of fillings, crowns and other work in most cases, and not the whole cost.

Consider the level of dental work you or your family is likely to need, and how much the insurance will pay compared to the cost, and now you have the data you need regarding dental insurance.

Now compare that to a dental discount plan.

It may seem strange that a dentist would accept less for their services by taking part in a discount plan, but the system is really quite clever. Much like Hotwire or other discount travel plans are able to offer rooms or tickets for less, these dentists receive benefits for participating in the program, like reduced costs for dental supplies. Many plans also offer advertising for the dentist, and publish their information on web sites and pamphlets. But, most importantly, it helps the dentist gain new clients, which helps keep their schedules full.

Discount plans often cost less than $100 annually, and many have additional benefits, like vision and prescription discounts. You’ll want to do some checking before you decide to switch, and you may even ask your dentist if you could use both the insurance and the discount plan, although they may not allow it.

Check first to see if your dentist is on the plan you are considering, and if that isn’t the case, ask if they would consider the plan. If not, you may want to consider changing dentists if you feel the savings are worthwhile.

Once you decide to enroll in a plan, remember to discontinue your automatic payroll deductions should you choose to eliminate your dental insurance.

I have used and recommended dental discount plans for years, and have personally saved thousands of dollars. I recently went to the dentist and had work done that would have ordinarily cost $500, but with my discount plan, will cost just over $200. That means the plan paid for itself three times over in just one use.  You can search the web for a dental discount plan that suits you, ask your dentist, or check out the plan I personally use under the Links page at

For more information about managing medical and dental debt more effectively, visit

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