So you’ve probably noticed that there was a sponsored post yesterday. The decision to run that wasn’t made lightly. We literally get hundreds of requests to do this type of thing, mostly from companies that we’ve never heard of or whom we wouldn’t want to do business with.

When we originally received the email propsal, I was going to trash it. But then I noticed that 21st Century Insurance was owned by Farmer’s Insurance Group, the insurance company who provides our rental and automobile insurance. We’ve had nothing but great experiences in our six years of being with them. It was that reason alone that we decided to run the post.

We understand that we haven’t been the most active bloggers around. Our "relaunch" fizzled out and we just didn’t have enough motivation to keep it going. So what’s going on?

Well, finanaces just aren’t our primary goal. As we have better built our financial foundation, we’ve loosened up a bit and have spent more time away from the computer, and that of course means time away from blogging as well. Of course finances are still important to us, but we’re just not interested in the gazelle intensity (thanks, Dave Ramsey for that term) that we had when we were much deeper in debt.

However, it does seem that over the past few years we have garnered quite the audience, and I’m surprised and flattered that many of you actually care about what we’ve been up to. Her and I are going to have some discussions on the future of this blog. To be clear, we’d never shut it down, but may change the focus of it. We’ll let you know as soon as we get a plan.

Thanks for reading, we hope to be back soon.

This sponsor post is brought to you by 21st Century Insurance. The views expressed here are solely those of the sponsor and do not necessarily represent the views of Make Love, Not Debt.

Many drivers spend a lot of time shopping for lower car insurance rates. Once you find a low rate, you’ll want to keep it that way. Here are a few tips for avoiding a premium increase.

1. Avoid traffic violations.
Speeding tickets and other moving violations can automatically result in an automobile insurance rate increase. Follow the letter of the law to avoid getting a ticket in the first place. If you do get a citation, some states will erase it if you attend traffic school. See if your state is one of them.

2. Drive carefully.
Exercise extreme caution whenever you drive. You can expect your rate to increase if you’re involved in accident for which you are held responsible. The industry standard is to increase your premium by 40% of your base rate after your first at-fault accident. Be sure to look carefully at the next insurance bill you receive after an accident. You shouldn’t be penalized for accidents that weren’t your fault. If you think your rates have been increased unfairly, contact your insurance company.

3. Lend your car sparingly.
If you lend your car to a friend who gets in an accident, you’ll be responsible for any deductibles incurred. There’s also a good chance your rates will increase as the result of any claims filed.

4. Don’t get your license suspended.
Too many driving violations or a DUI can result in your losing your license. Once that happens, you may find your auto insurance rates increase by as much as 35-40%… or that you may not be able to get coverage at all.

5. Keep your car locked … in the garage, if possible.
It doesn’t seem fair, but a stolen car can result in an increased auto insurance policy. Always lock your vehicle and park in the safest place possible. If you have a garage, use it.

6. Choose the car you drive carefully.
When shopping for a new vehicle, choose a safe, low-risk model. If you have a few makes and models in mind, call your insurance company and ask will cost more to insure.

7. Pay your bills on time.
Many car insurance companies look at credit reports to determine the amount of your premium. The belief is that drivers with higher credit scores are more responsible behind the wheel. A poor credit score could result in a higher auto insurance rate.

This is a post from Make Love, Not Debt staff writer, Stacy Cowley.

(photo: lionheartphotography)

“A lot of people wonder how you know you’re in love. Just ask yourself this one question: ‘Would I mind being financially destroyed by this person?’”

I first came across that quote hanging on my friend John’s fridge, soon after he started dating fellow friend Fahmi. Since Fahmi was on the verge of trading in her lucrative IT consulting job to head back to grad school, it wasn’t an idle question.

Happily, Fahmi got her degree, John and Fahmi got married, and they’re now cheerfully bonded and financially stable.

But for an illustrative example of just how literally that quote should be taken, there’s the tale of Dawn vs. The Leech. 

Dawn (not her real name) has been one of my best friends for a decade. About five years ago, comfortably before the housing boom’s peak, she and her live-in boyfriend decided to buy a house together. It was a pretty good deal: a recently foreclosed, two-bedroom place in a Western city for a tad over $100,000. Dawn had a stable job and could comfortably manage the monthly mortgage payment; her boyfriend, aka The Leech, was a contractor who could handle the house’s badly needed renovations. They bought the house on an ARM, planning to finish the upgrades and refinance the house before it reset.

You see where this is going.

Over the next few years, Dawn and The Leech got married and worked on the house, but the renovations never quite got done. Time management is not one of Leech’s strong suits. To finance the renovations, they tapped a home-equity credit line, which added a second mortgage to the house’s debt load.

Then the economy tanked. The Leech wasn’t getting contract work the way he used to. At the same time, the ARM on the house reset, and the interest rate zoomed past 11%. Once-affordable payments were suddenly a big struggle. Like millions of other Americans, my friends were being bankrupted by their house. Somewhere in here a third home-equity credit line snuck into the mix.

It’s easy to point fingers ("An ARM — what were they thinking!?"; "Never buy a house unless you have enough money saved to make the payments for uppitygazillion years without an income"; etc etc.), but as they say, hindsight is 20/20.

Here’s where the situation gets really sticky. Dawn came up with a clever solution to the ugly financial math: move. She’d worked in NYC before moving out West, and had a job offer that would pay about twice what her local job did. With that extra cash, she could afford to keep up the house payments and also get a rental in NYC. So, after extensive discussions with Leech, she moved back East. The plan was that he would stick around for a few months, finish the house and rent it out, then join her in New York.

It was a pretty cool plan. One that got blown to smithereens a month later when Leech moved his new girlfriend into the house. (Here’s the part I like best: He didn’t want to get divorced. He was pretty happy to stay married to Dawn, keep her on the mortgage … and live with the new chick. Logical thinking is *also* not one of Leech’s strong suits.)

Now, all of this still could have worked out if Leech had the income to support the house he wanted to stay put in. But he doesn’t.

Dawn — who was far nicer to him than I would have been — took a fair stab at weaning him off her financial support. They drew up an agreement under which she would keep paying into the mortgages for most of a year, while he got his act together. Which she did.

A year later, shock of shocks, Leech was still broke. He promptly fell behind on the mortgages, obliterating his already-shaky credit rating and Dawn’s excellent one.

So Dawn is now caught in an epically nasty situation: She’s getting divorced but is still on the mortgages for an underwater house she isn’t living in and can’t sell without the consent of the house’s co-owner, Leech. The full face value of the loans on the house sits at around $200,000. The house’s market value is maybe 75% of that.

This has to be a pretty common situation these days, but all the researching Dawn and various lawyers have done turns up basically no good way of dealing with it.

No lender will refinance the house notes into Leech’s name alone; it’s underwater and his credit is shot to %@$!. The best option is to sell the house, but a) that requires Leech’s consent, and b) it’s probably going to be a short sale, which won’t fetch enough to clear all the notes. The second and third lienholders have little incentive to agree to that — and even if they do, they could then still pursue a deficency judgment for the shortfall.

So for now, Dawn is stuck taking a credit hit every month that Leech fails to make payments, and remains on the hook for a life-destroyinging giant sum of money. She’s been waiting for more than a year for one of the three lenders to finally get fed up and foreclose, but every time that seems imminent, Leech chucks the lender a small payment and manages to stave it off a bit longer.

I know the advice, before you co-sign a whopping loan with anyone, is always to be really, really sure you know what you’re getting into. But how can you? Very few people get married expecting to get divorced, and yet, almost half of us do. Neuroscientists keep pointing out that we’re hardwired to be overly optimistic, make irrational choices, and stay in bad relationships.

So on top of all the many, many ways we now know that buying a house can turn into a debacle, add this one: That mortgage can be more like a marriage. You might end up bound to the ball and chain till death — or something else equally unpleasant — do you part.

(photo: The Doctr)

Way back in the day when we were just newlyweds (or 18 months ago if you prefer), we came up with a list of things that we thought would be good to do since we’re now married. Surprisingly enough we managed to accomplish most of those things on the list. One task we decided to pursue almost immediately after we were married was to get life insurance.

We did the responsible thing and reserached our options and talked to a bunch of different agents and got some quotes. We decided that we would get a 30-year term life insurnace plan for $750,000 for each of us. Whether you think we’re over-insured or should have gone with a whole-life plan, that’s not the point of this post.

The point of this post is to tell you that my genes and medical history suck, especially when it comes to how they have affected my life insurance premiums.

Life insurance premiums can vary depending on how you are classified. These classificications range from feel-good terms like "Premium-plus" or "premium" to the mediocre "standard" and finally the dreaded "Schedule __", where a letter goes into the blank. Your classification depends on how (un)healthly you are at the time that you are purchasing the insurance and your overall medical history.

I’ve been candid about writing about my health on this blog - everything from losing weight, battles with depression, knee surgery, and high blood pressure. Apparanelty the insurance companies don’t like to see that I’ve been in the doctor’s office as much as I have been for my various ailments. In addition, a family history of diabetes and heart disease doesn’t bode well for me, either.

As if my medical history wasn’t bad enough, I also get white coat hypertension, meaning that I get anxious when I get into a doctor’s office or when I know I’m going to get a medical check up, causing me to have temporary high blood pressure. So when the insurance company sent a person to do the at-home medical exam, my blood pressure was through the roof. Not good.

The ironic part about all of this is that even though all of that was on my medical record, in the 2 years prior I had done the prudent thing and actually got treated for everything, and was the healthiest I’d ever been.

At the end of this process, Her was classified as Premium-plus. Unfortunately, I had been classified as Schedule D. This means that we have the privelage of paying about $220 per month for health insurance. OUCH!

I learned that I can get re-evaluated after 3 years, which I’m definitely going to do. Unfortunately, it doesn’t look like I can do anything about my past.

This is a post from Make Love, Not Debt staff writer, Stacy Cowley.

photo: theogeo

When I posted a few weeks back about my cat’s sudden spate of vet bills, several people responded with questions about pet insurance. Is it worth it?

Rarely. Here’s why.

Matthew Amster-Burton just posted an excellent column at Mint explaining why some types of insurance are worth carrying and most aren’t. The short version: Insurance is a hedge against a gamble you can’t afford to lose. You need to insure your health, your house, your actions behind the wheel of a car, and — if you have others dependant on your income — your life.

With almost everything else, the hit you’ll take if something goes wrong is manageable. Highly annoying, as I can attest from having our big-splurge LCD TV die the week after its standard warranty expired, but not financially devastating. You’ll do better over the long run socking away the money you would have spent on extended warranties, insurance, and the like and using that cash to cover the occasional debacles.

But pet insurance is in a special category of rip-off, because the "coverage" you’re offered is almost always heavily stacked in the insurers’ favor.

Here’s an example case. I checked the numbers on PurinaCare to insure Kea, our four-year-old American shorthair (and now toothless) mutt cat. You can pick your coverage level, so I ran the two most extreme scenarios: all-in coverage and catastrophe-only coverage.

A plan covering only serious care (hospitalizations, surgery, illness and medications) with a $1,000 deductible would cost $18.49 per month in my state. Adding coverage for preventative care (annual exams, dental issues and vaccinations) would take the bill to $20.94 per month.  So, the lowest-cost case is $221.88 a year.

Dropping the deducible to the lowest offered, $250, takes the monthly bill for the plan to $40. That’s a $480 annual bill.

But then you hit the fine print. These policies carry a 20% co-insurance rate, meaning you’re still on the hook for 20% of any bill incurred. All pre-existing conditions are excluded. And then comes the big whammy, buried in the contract fine print:

"Annual maximum - maximum allowable payment under this ‘Policy’ for all combined claims is limited to $20,000 per year."

I loathe back-end caps on insurance plans. To me, they instill a false sense of security: You’re covered, but only if things don’t get too catastrophic.

Now, to be fair to Purina, $20,000 is at least a respectable sum. I haven’t heard of many vet bills getting that high. But it still means you’re not really insuring against all expenses: You’re covering yourself for 80% of the amount above your deductible and below $20,000.

Kea’s bills for his dental adventure totaled $650. That wouldn’t have topped his deductible unless I’d picked the lowest deductible, *and* picked the plan that covers preventative care. If I had, Purina would pay $320, leaving me with a $330 bill.

… but I’d also be paying $480 for the year for the insurance, meaning my total outlay would be $810, vs. the $650 I ended up paying. And I’d be paying that $480 every year, meaning my total insurance-premium outlay for a 15-year lifespan would be $7,200. Add in the deductible, and Kea’s total lifetime vet bills would have to exceed $11,000 for me to come out ahead.

I checked the numbers on VPI Pet Insurance as well, another popular option. There, the annual cap is $9,000, unless you pay extra for the VPI Superior Plan, which caps at $14,000 annually. Adding "CareGuard" for routine coverage costs extra, and so does added cancer care; with those, I’d be looking at an annual bill of $429 — for a plan that excludes "hereditary conditions" (ie, "all the things most likely to mess up Fido") and came with so many other caveats and exclusions I totally lost track.

Pet insurance can pay off, of course. Sometimes the dice comes up all sixes.
A friend of mine got whopped with a $10,000 vet bill last year for his two-year-old cat’s sudden kidney crisis; a plan like Purina’s would have offset a bit chunk of that.

But most people with pets don’t have just one; David and I have had three cats in the decade we’ve been together. (One we lost last year, heartbreakingly young, to a sudden lung cancer. Total vet bills incurred in her nine-year life, including the final round: about $2,500.) Any one of our critters could suffer a nasty and expensive health crisis. But the odds are good that I’m better off skipping the $960 a year it would cost to insure my two current cats and instead absorbing the occasional, larger bill.

You can make that argument about most forms of insurance, of course. I’ve been paying $1,500 or so a year for health insurance for 12 years now, and in that time I’ve never used $1,500 worth of medical services within the year. So why am I happy to keep paying my premiums each month instead of socking away an $18,000 buffer against future catastrophe?

Because if my cat gets cancer, I’m looking at a $2,000 to $15,000 bill. If *I* get cancer, I’m looking at a bill that could easily pass half a million dollars. 

That’s why I buy insurance for me and David, and skip it for the feline family members.