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Getting Ahead
4th Quarter 2012

In this issue:

When Seniors Need Financial Assistance

Budget Now for Holiday Spending

5 Refi Blunders to Avoid

When Seniors Need Financial Assistance

When the last national census was taken in 2010, 48 percent of the population was classified as poor or low-income (earning less than 200 percent of the poverty level). Anyone who's ever tried to live on a limited income knows how difficult it can be to make ends meet when cost increases for essentials like health care, housing, food and energy outpace their earnings. This can be especially challenging for seniors living on a fixed income.

The good news is there are literally thousands of federal, state and private assistance programs designed to help seniors and others cover their basic needs. Your challenge might be finding ones for which you're eligible. Here are a few suggestions:

The nonprofit National Council on Aging offers BenefitsCheckUp, a free, confidential Web-based service that helps seniors and their caregivers find financial assistance for health care, housing, food, utilities, in-home services and much more. After answering several questions, you're issued a personalized report describing programs and services for which you may be eligible, including links to their websites and applications.

Several government-sponsored programs help people with limited income and resources pay for medical coverage, including Medicaid and Medicare. For a good round-up of these programs, go to and click on "Get Financial Help."

Most pharmaceutical companies offer patient assistance programs (PAPs) that provide uninsured and low-income people access to prescription drugs they couldn't otherwise afford. Ask your doctor, pharmacist or health clinic for details. Other good resources include: Medicare's alphabetical list of drugs available through PAPs (; Partnership for Prescription Assistance (; RxAssist (; and NeedyMeds ( In addition, as a result of the Affordable Care Act, Medicare Part D participants who reach the so-called doughnut hole coverage gap now receive a 50 percent discount on brand-name prescription drugs and a 14 percent discount on generics. (These discounts will gradually increase until 2020 when the doughnut hole will disappear altogether.).

The IRS tax code includes several benefits that target seniors (and often, other lower-income taxpayers), including:

  • A higher standard deduction amount for most people who don't itemize deductions if they and/or their spouse are over 65 or blind.
  • An additional tax credit for limited-income people who are over 65 or disabled and file a 1040 or 1040A tax form. (For full details and eligibility, see IRS Publication 524 at
  • Free tax return preparation assistance and counseling from IRS-trained volunteers is available to people over age 60, as well as low-to-moderate income folks and military families.
  • IRS Publication 554 provides comprehensive help for seniors to prepare their tax returns.
Many government-sponsored benefits, grants and financial aid programs exist to help seniors, low-income families and others pay their bills, including:
  • LIHEAP (Low-Income Home Energy Assistance Program) provides grants to help pay utility bills. To see if you qualify, go to
  • SNAP (Supplemental Nutrition Assistance Program) helps millions of lower-income Americans buy nutritious food each month. Visit for qualification requirements.
  • Rental assistance for low-income families is available from several U.S. Department of Housing and Urban Development programs as well as other state and local agencies (see for details).
  • Go to for a comprehensive overview of additional aid programs.
And of course, don't forget to ask about senior discounts whenever you shop, travel or buy insurance - 10 percent here and there can really add up.

Article courtesy of Practical Money Matters

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Budget Now for Holiday Spending

It's tough sticking to your budget any time of year, but the holiday season presents special challenges with so many unexpected expenses and temptations. If you sometimes fall prey to holiday overspending, you might want to look for year-round small spending cuts in other areas of your life that, when added together, can result in big savings.

Personal finances:

  • If you have low- deductible homeowners, renters or auto insurance, ask how much your premiums would drop by raising the deductible to $500 or $1,000 - it could be 15 to 30 percent or more.
  • Cancel underutilized phone and cable services, magazine subscriptions, gym memberships and other "extras" you're not using.
  • Before shopping at chain stores, check with online gift card resellers like Plastic Jungle and CardWoo where you can buy gift cards at a discount. Combine the gift card with a coupon or discount code to save even more.
  • Kick bad habits. Smoking one six dollar pack of cigarettes a day costs about $2,200 a year, not to mention additional medical and lost-work costs.
In the home:
  • By lowering your thermostat 10°-15° for eight hours you can reduce your home heating bill by 10 percent or more. For a $400 monthly bill, that's $40 in savings.
  • Insulate your water heater and outgoing pipes to reduce heat loss and save four to nine percent in water-heating costs. Also, try lowering the temperature to 120° for additional savings.
  • Traditional incandescent light bulbs will begin phasing out (starting with 100 watt bulbs) in favor of more efficient models that use 25 to 80 percent less energy. By upgrading 15 bulbs, you could save about $50 a year on utilities.
In the car:
  • Aggressive driving (speeding, rapid acceleration and braking) wastes gas and can lower gas mileage by 33 percent on the highway. By driving sensibly, you could save about $1.20 for each $3.65 gallon of gas.
  • Fuel economy drops rapidly at higher speeds. For each five mph you exceed 60 mph, it's like paying an additional $0.29 per gallon of gas.
  • Avoid keeping unnecessary heavy items in your car - each extra 100 pounds reduces your mpg by up to two percent.
  • Use websites like (which has free Smartphone apps) and, where motorists share up-to-the-minute tips on where to find low-priced fuel.
Health care tips:
  • Consider generic vs. brand-name drugs; copayments are usually much lower. lets you search for generics by cost, by local zip code.
  • Ask whether your insurance offers quantity discounts for mail-order prescriptions. Often, the copayment for a 60- or 90-day supply is the same as a 30-day supply at a regular pharmacy.
  • Ask your doctor about pill-splitting. Many drugs come in double-dosage tablets that cost the same as a lower dosage. (Caution: Some pills should never be split, so always ask your doctor or pharmacist first.).
By trimming a few dollars here and there you're suddenly saving hundreds or thousands of dollars a year - enough to tide you through the holidays and start a vacation fund for next summer.

Article courtesy of Practical Money Matters

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5 Refi Blunders to Avoid

When interest rates are low, plenty of homeowners rush to refinance before evaluating the true consequences of their actions. A mortgage refinance can benefit some homeowners, particularly if they intend to stay in their home for the long term or if they can significantly reduce their interest rate. Sometimes, though, a mortgage refinance can be the wrong move.

Article courtesy of

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Here are five of the worst mistakes homeowners make when refinancing:

Not Comparing the Real Rate

Borrowers should shop around for a mortgage by comparing the APR (annual percentage rate) of each loan rather than the quoted interest rate. A lot of homeowners today find out that their home is worth less than they assumed when they have an appraisal.

Borrowers who have little or no equity may qualify for a refinance under the government's Home Affordable Refinance Program, or HARP, available to those with a current mortgage owned or guaranteed by Fannie Mae or Freddie Mac. The HARP program does not require an appraisal, so if you suspect you are underwater on your loan, this could be a good option...just make sure you compare the rate and fees to see if the new loan is worth the cost.

Choosing the Wrong Loan

The first step when deciding to refinance is to establish a clear objective. If you think you may lose your job but you have one now, your focus should be to lower your overall payment regardless of the length of the loan. If you want to be debt-free by a certain year, then you need to find a loan that meets that objective.

Sometimes, even with a lower interest rate, you could end up making higher monthly payments because wrapping in the closing costs has increased the size of your mortgage. Every borrower should look at the cost of refinancing along with the financial benefits before choosing a loan. Some borrowers forget that refinancing into another 30- year mortgage can add years of payments, especially if they have been paying on the current loan for a long time.

Not Shopping Around

While many borrowers compare loan offers from more than one lender, they can also shop for title services and save hundreds or sometimes thousands of dollars on their loan. Check at least three lenders and at least three title companies before choosing one. There can be an advantage to going to the same servicer that handles your loan now, because they may require less documentation, but also consulting with at least one other direct lender to compare rates and fees is a good idea. Ask the title company for a reissue rate on your owner's title insurance -- this can save as much as 35 percent on the premiums.

Refinancing When You Shouldn't

Refinancing can be a mistake if you don't plan to stay in your home for several years. The key is to make sure the refinance has a net tangible benefit to the homeowner.

Borrowers need to decide how long they intend to stay in the property and determine the break-even point when the savings outweigh the costs before choosing to refinance.

Not Keeping Up With Borrower Responsibilities

Homeowners must rely on a lender to refinance, but they have obligations of their own that, if not met, could derail the mortgage refinance. Borrowers must have good credit to refinance, with most lenders requiring a credit score of 640 and above even for a loan insured by the Federal Housing Administration.

Lenders can check the borrower's credit again just before the closing, so you need to maintain good credit and avoid taking on new debt even after the refi has been approved. Check the lock-in date for the interest rate on your new loan to make sure you can close before the rate expires. Be sure to turn in all your documentation as soon as it is requested, because a delay could mean that your closing date must be pushed back.