Entries Tagged 'Insurance' ↓

The honeymoon is officially over. The hubby and I have settled into our new married life together and our financial union is still a little confusing to say the least. We have a joint checking account now and we are paying our bills through that account, but it really feels like our expenses have gone up because I never used to see how much the hubby spent. It makes me wonder if marriage would make our costs go up or go down. I asked a few married coworkers this question and all of them said that after they got married they are spending a lot more than before. However, all of these coworkers are men and one of them has a wife that’s still going to school so he has to support her. So I decided to make a comparison of our current expenditures with our former expenditures here and see what would happen.

Here are the areas where we’re saving money:

1. Utilities — The hubby used to pay for all of the utilities at his apartment even though he had a roommate. I shared the utility bills with my roommates but it still came out to be $50 to $70 a month. Currently, our cable tv, water, and garbage are included in the rent so that’s also a big plus. Before we got married the hubby was paying for water and garbage also. I estimate that the utitlies savings would add up to approximately $1500 to $2000 a year just because we now live together.

2. Eating Out — We haven’t been eating out as often, but cooking isn’t as cheap as I thought. The only spare time we have to cook is on the weekends so the hubby tries to make a lot of food that lasts for a few days. Our food bills aren’t significantly lowered because we also hosted a couple dinners during the weekends. Hopefully we will save more in the future by eating out less. I estimate that we should be able to save $1000 to $2000 a year on food.

3. Gas – We’re no longer driving back and forth between our apartments. The hubby is also now ten miles closer to work so he’s saving much more on gas everyday. I am about four miles farther from work but it works out that our total mileage driven is still reduced. Our gas bill for the past month has been very small and I hope it stays that way. Our estimated savings for gas is about $400 to $600 a year.

4. Car Insurance — I wrote about car insurance a couple months ago when the insurance company raised the hubby’s rates. Now that we’re married the new insurance company gave the hubby a discounted six months rate that is about $360 lower! I’m pretty happy about that and our next insurance rate reduction will be the 25 year old discount. That’s coming up soon for the hubby and we should be able to shave some more dollars off.

So far, it sounds like marriage is great and we’re saving thousands of dollars, but here are the areas where we’re spending more:

1. Taxes — The marriage penalty is going to hit us this year and I’m not quite sure how much more we would be paying. If we weren’t married we would both be in the 25% marginal tax bracket since we both contribute a fairly good amount of our salaries to our 401ks. However marriage pushes us to the next bracket. The extra taxes we pay will probably wipe out all the savings we receive from living together. I’m not quite sure what the point of the marriage penalty is besides keeping families living on one income. From my point of view it seems to be such an anti-marriage and anti-women tax policy. However, one thing that could mitigate our taxes is our charitable contributions. It is possible that we may still remain in the 25% tax bracket, but it’s pretty unlikely.

2. Rent — Originally we both had roommates that shared the rent. Now we are roommates with each other so our rent seems like such a large number. In actuality it’s only $160 more a month than our combined rents previously. This basically negates the utilities savings.

We don’t have kids yet, but many people have already told me that children will increase our expenditures by quite a bit. So, my current analysis of our expenses is still sort of inconclusive because we are saving quite a bit, and yet it seems like we’re spending more. So to my single readers, do you think that you’ll save more money after you get married? And to my married readers, do you spend more or less now that you’re married? Where are the savings from and where is the extra money going? I haven’t really asked a woman this question yet because most of my coworkers and friends are men and pretty much all of them think that women are expensive. So, feel free to give me your input!

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So, the wedding is in seventeen days, and most of our premarital preparations are done. I’ve been reading about what we must do financially after we officially tie the knot and I learned quite a bit. This is a checklist to remind myself what needs to be done in order to combine and protect our assets, and hopefully this list is helpful to you too.

• Add Spouse to List of Retirement Beneficiaries – On Desperate Housewives, Mr. McClusky forgot to add his wife to his pension plan as a beneficiary, and when he died, Mrs. McClusky kept his body in the freezer to keep collecting the pension. Don’t let this happen to your loved one. I will add the fubby to my 401k and Roth IRA accounts as a beneficiary. I don’t really count on getting Social Security, but a retired surviving spouse is automatically a beneficiary in that system.
• Draft a Will — We are still pretty young and don’t have much assets right now, but we do need to prepare for the inevitable. A good will should resolve a lot of conflicts within the family if a death occurs. As long as we write a good will and divide up the assets in percentages then it would need minimal maintenance as our estate grows.
• Give Spouse Information on Financial and Billing Accounts — I’m sure not all couples do this, but I will give the fubby information on all my financial accounts since he will be letting me invest his money. It’s only fair that he knows where it’s going. Also, he should give me the information on his accounts too so we can track our bills together.
• Get a Safety Deposit Box – I’ve been meaning to get a safety deposit box for important documents such as marriage certificate,stock certificates, and immigration documents. It also could be storage for precious metals and other things that we don’t want burned down.
• Get Additional Term Life Insurance — Term life insurance would be really important when we do have a child. We both have some life insurance from work, but they only pay for a couple times of our salary, which is not enough to take care of kids for 18 years if something happens to us.
• Add More to College Savings Plan — I already opened a 529 account for college savings and have been putting in about $30 a month. I really don’t even feel this deduction right now since it’s so small. Over two years the account now has about $1000 in it since the investments have been growing. I don’t yet have a kid, but the rate of $30 a month isn’t going to be enough in 20 years for a college education, so I plan to increase the contributions with my fubby.

There are also some things that I don’t plan to do right away:

• Change My Name – Chinese women generally don’t change their last names, and it’s not a good idea to go through this process while I am still a Chinese citizen. I would have mismatched names on my passport and green card, and that would be bad for traveling and identification purposes.
• Change Exemptions on W2 Form — Usually people tell you to change your exemption to 2 & married on the W2, but that might cause us to pay less taxes than we should. So I will have to wait and see how this year’s tax filing works out and fill in the appropriate amounts next year. I am not too pleased that we will be paying more taxes on the same income, but that’s entirely another topic.

That is all I can think of now, hopefully these items will be implemented after marriage.

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Today I arrived at the fubby’s place and he was on the phone with someone, and sounded reasonable upset. It turned out to be his car insurance company. He made a simple call to update his address, and the customer service representative increased his insurance rate by almost 100%, even after removing some coverage, the insurance rate still went up more than 50%. The reasoning was that now he drives longer to work. The fact is, we are moving less than 10 miles away from his old apartment, and he is actually closer to work now than he was before. The problem is that, he also changed jobs last year and did not feel like it needed to be reported to the insurance company. So from the perspective of the insurance company, fubby’s commute length changed from 5 miles to 20 miles, and more driving means more risk. From our perspective, my fubby just moved 10 miles closer to work. Honestly, we did not know that moving could affect the car insurance rate that much. So we proceeded to shop on the internet for cheaper insurance, and along the way, I learned a few things.

• Being single increases your insurance — since we’re getting married in less than a month, at first we input “married” as a marital status. Then we thought about it, and wondered if “single” is the correct status since he is technically not yet married. Well, it seems that married people are considered more safe, because the six months quote for “married” was around 21.5% cheaper than the “single” quote.
• Being young increases your insurance — Apparently 25 is the magic number for the auto insurance industry. The quote difference between a 24 year old and a 25 year old is approximately 10%. My fubby is 24.5, so he has the higher rate. Auto insurance is the main reason why many people under 25 have to pay a higher rate to rent a car.
• Even tickets negated by driving school can increase your insurance — on one of the quote forms we filled out, they actually asked for if we’ve gotten tickets that weren’t recorded because of driving school. What is the point of driving school if that information is collected by insurance companies? Not quite sure how much this increases your insurance exactly, but the mere fact that they asked for this information means that they use it somehow, otherwise, it would not fit into their business logic.
• Getting in accidents increases you insurance — I think everyone knows this one, but it seems that different companies assess this very differently, and the difference in quotes is sometimes thousands of dollars. It definitely pays to shop around.

So finally, we settled on Progressive Direct because their forms were the easiest to use and the rate was reasonable. The new policy actually covers more than fubby’s old policy, and once he gets married they said they will adjust his rate down 20%. Anyway, insurance companies all use some sort of proprietary formula to calculate how risky a person is, and some things they do are plain bizarre. I guess we all live and learn.

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