ThomasGoodwin.com

It’s Saturday, and I’m being lazy. I want to post on my blog but I want to take a break from the various financial topics you see in the column to the right… the topics listed under the label Categories. So… Let’s explore the various people and websites on my Blogroll and learn who they are and how they got to be so lucky as to have a spot on my list of links. If you hover your mouse over the links in the Blogroll in the right column, a brief description will come up. You can click on any link regardless whether the brief description pops up or not.

You may have noticed the list is in alphabetical order; this is quite simply the best way to organize the Blogroll. As I reference these various websites, it will make them easier to find in my list of links… and it means I can hide any favoritism that I might have deep in my heart for any one of these websites.

Now when you view the list it’s like I love them all equally… just like your children and step-children, we all know it’s not true! Hey, you can tell it’s a Saturday, that last comment probably wasn’t even remotely PC for me to say. But it’s Saturday so I am straying from my normal, formal writing for a little more loose, personal writing. Let’s look at the list and please visit these pages, I wouldn’t list them if I didn’t think they were worth your time and I believe you will get some value out of them…

AaronForgue.com You don’t have to surf far on the Internet to find a web developer that has his head in the game. Ladies and gentlemen, may I present to you… Aaron Forgue. This guy knows his stuff. And he’s been doing it for a long time, dare I say since the near beginning of the Internet first became widespread. Ok, so maybe he wasn’t there when the Internet was just a cool Star Trek type gimmick in the development stages at a couple of universities (or maybe you should ask him… perhaps he WAS there for that!!!)… but regardless when he started, he has been developing websites and helping improve the way in which we surf for many years.

He created this website, and although I’m sure he has created far more sophisticated sites I like to think that this is as good as it gets! But I’m biased… a little… in this respect. Not only does Aaron know his web development and tools, he holds an MBA with a concentration in Entrepreneurship from Northern Kentucky University. He created the website Pin300.com, which we will discuss later in the Blogroll, and in the interest of full disclosure I should say that I am a proud partner in the Pin300 website.

AndrewTobias.com This gentleman needs no introduction in the world of personal finance. He’s had 3 New York Times Best Seller books, appeared on numerous tv shows and news programs, won too many awards to list and thanks to his hard work has helped pass auto insurance reform in California despite his failed initiatives on the ballot in March of 1996. Makes me wonder what his thoughts would be on my recent blog post regarding the diminished value of a vehicle after an auto accident.

Coldwell Banker - my real estate website. It’s just what it says it is. As many of you may know, or can learn by reading the About the Blogger page on my website, I am an Ohio Licensed Realtor. I have held my real estate license and been with Coldwell Banker since 2001. Assuming I remember to renew my license this year, I will be be licensed through 2009 in the state of Ohio, and I will continue to sell in the Cincinnati and Dayton, Ohio area markets. Please visit my real estate sales website if you are interested in learning more about buying or selling real estate - residential, commercial & investment, or land - in the southwest Ohio area.

Nathan Sawaya. Website is NathanBrickArtist.com I had the opportunity to see this guy’s work first hand at an insurance conference in downtown Cincinnati in 2006. Nathan builds some interesting things using Lego brand building blocks. On his website you can see his various creations and the many places he has been along the way.

OneStrayPea.com The nice young lady that runs this website is a personal friend of mine. Her website contains a pretty active blog that isn’t afraid to tackle any issue, from the local traffic in Cincinnati to the recent celebrity gossip or news hitting Hollywood.

You will find One Stray Pea to be a pretty entertaining piece of evolving literary work. It’s like an online soap opera. Once you become familiar with the characters and the ever-changing storyline, she’ll have you hooked. She can be quite sarcastic but she tells it like it is… and you will love the humor in that! She comes across as a Republican but I think she might be harboring some Democratic tendencies, so don’t hold her staunch political views against her… rather, click the link, read her blog and tell her what you think.

If you love her work, give her some rave reviews and pass along her website to your friends. If you absolutely hate what she has to say, I’m sure she won’t care… but you should tell her what you think. She needs to hear it. She thrives on feedback and you might even get to be featured in her blog if you can put her in her place! Oh, and sorry all you single men out there… she’s spoken for. She remains anonymous in her blog so I won’t say anymore… just do yourself a favor and hop off the financial blog for a bit and get yourself a quick dose of reality… served up in a heaping bowl of stray peas.

PJHile.com Like Aaron Forgue, PJ is an excellent web developer. In fact, Aaron and PJ have teamed up on numerous projects. PJ is also involved in the Pin300 venture, which you can read more about in the next paragraph. These two also went to school together… both high school (Moeller) and college (Miami University). Please take a moment to visit PJ’s website, then come back for more fun in financial blogging… or perhaps jump over to Pin300.com

Pin300.com This website is the creation of Aaron Forgue, with some help from PJ Hile, and was originally conceived as a place for bowlers to post and track their individual scores online. The three of us are now working on developing this website even further, to hopefully attract entire bowling leagues and bowling alleys to use the website and make it a much bigger bowling community online.

Check out the Pin300 website now and keep track of your own scores online. It’s free, it’s easy to do, and you can send us feedback and suggestions to help improve the website. Watch it evolve and grow over time. Regardless what your skill level, or even if you’ve never bowled a frame in your life, you will find this website easy to use and easy on the eyes. Thanks to Aaron and PJ for all their hard work in getting the website up and running. I’m looking forward to seeing this thing expand and improve over time! You will probably see more blog posts in the Entrepreneurship category for this venture.

SeekingAlpha.com Are you seeking alpha? Do you know what alpha is? Well, here’s a nice little investing website that is essentially a community of people who all have some vested interest in the stock market world… the visitors, members, and contributors on this website range from the novice investor, college student, and stay at home spouse, to full time day traders, Wall Street Professionals, Hedge Fund and Portfolio Managers, Academia, and so on.

So what is with the name you ask? Alpha, in the investing world is an abnormal return on your investment (most would focus on the abnormally high return of course)! There is a return on your investment that you can expect given a company’s balance sheet, company history, and the industry in which they operate in, the alpha is the edge that every investor is looking for to make that extra money… that higher return.

SoloSignal.com Here is yet another project of Aaron Forgue’s. Mr. Forgue has created a website for business people who need help understanding how the web works and how to make it work for their business. Aaron is building a community space online for entrepreneurs to gather and strive to improve their websites to meet their business needs. In the process this will help make the Internet a better place to do business and to serve more customers’ needs and expectations.

If you’re interested in learning how a website works behind the scenes, how the Internet has evolved and is evolving still, you owe it to yourself to check out Solo Signal and subscribe to the feed… it’s free and it’s informative. If you’re an entrepreneur, you are welcome to contribute and to provide feedback to the site, you will make the site a success and help grow your business in the process. Give it time to get going, it’s at the ground level right now. Check up on it frequently though… I fully expect it to take off in the near future.

I plan to keep adding more links as time goes on, but I don’t want to diminish the value of the links that I already have… creating too many links gives the appearance that the existing ones are cheap or of little value because there are so many. This could not be further from the truth, I will only add links that I find interesting and have some good content and value. The value may be educational (i.e. financial in nature) or may be for some entertainment (hey, we can all use a detour or pit stop on the road sometimes!)

New home sales (or perhaps better phrased sale of newly constructed homes) slid for the 4th month in 2007 with a 1.6% decrease in the number of new homes sold in May. While this may seem like a very small decrease in number of units sold, it follows the April report of a substantial 12.5% increase in the number of new homes sold. Thus, May reflects a huge pendulum swing back in the wrong direction for the homebuilders.

The one thing the real estate industry hates to see more than a decline is to have volatility added to that decline.

Bright spot or silver lining for those of us living here in the Midwest, i.e. Cincinnati and Dayton markets… sales in the midwest were up some 30.8%. Also, another positive comment to come out of this month’s report is that the supply of newly constructed homes currently completed and available for sale dipped 1.1%. This is rather mixed news though as the longer time it is taking to sell inventory is expected to add more homes to the current supply faster than the supply of homes can be reduced.

Here is the article from the Cincinnati Enquirer in Adobe PDF format:

New Home Sales Fall in May for 4th Month (in 2007)

As always, I appreciate your feedback and comments…

A blog on entrepreneurship AND insurance all at the same time?! You probably never thought it would (or should) happen… but I am posting this in hopes that it helps those of you out there that are currently in the early phases of starting your own business.

Much like you would insure your home and your car, you need insurance if you are going to operate a business, too! If your business uses a car you will most likely need a commercial auto policy. If you are responsible for insuring the building that your business occupies you will need property coverage. Regardless whether you operate your business out of your garage or in the penthouse of a tall office tower you will need some form of general liability insurance.

There are many types of exposures that you will want to consider insuring your business against. Many of these are things that you might not have thought of prior to owning your own business; like various types of crime coverage for instance. Unlike auto or property insurance that you are already familiar with on your personal insurance policies, crime policies are unique to businesses. Same with workers compensation insurance. Some of these insurance coverages you will be required by statute to carry, such as workers compensation coverage if you have employees that are not in one of the five monopolistic states. Many of these various business insurance coverages are combined into packages.

Below is a link to a document that I wrote in 2006 for a group of entrepreneurs that I had the opportunity to give a presentation to in Cincinnati, Ohio. This document hits briefly on several types of insurance. If you have questions or need clarification about anything you read in the document, please don’t hesitate to contact me.

More importantly, discuss your business venture with a licensed insurance agent that you trust, and then get a second opinion from another agent just to make sure you’re not overlooking anything or that you’re not being taken advantage of in any way. I have yet to have someone come up to me and say, “man, I wish I never had that second opinion” but I have certainly heard people say just the opposite, “if only I had gotten a second opinion!”

Protecting Your Business: Commercial Insurance - A Brief Introduction

As always, I welcome your comments and feedback…

Yet another article in the Cincinnati Enquirer newspaper (online edition of course!)… the number of homes sold in the Greater Cincinnati area fell once again in May compared to the same time last year in 2006. This continues the trend of more homes being listed for sale and staying on the market longer, thus leading to a bigger supply of homes available in the Greater Cincinnati area. Interesting enough to note that the average sale price has still increased. Perhaps sellers are offering enough added perks to deals to make buyers still feel comfortable paying more than this time last year. Here is an Adobe PDF copy of the article:

Home Sales Fall Again

I know in my own deals I have seen more seller-paid closing costs, home warranties being provided by sellers, and other incentives used by sellers to get the edge on other similar homes on the market.

I myself am not above resorting to incentives to sell property, as long as it is fully disclosed in the deal of course. I recently sold a condo (in May - same timeframe that the above newspaper article is referencing) that included the 55″ big screen HD TV with the deal. I’m guessing that is something that other comparable condos in the area did not have!

In looking at the real estate market nationwide, the macro level,… the news that came out today is more grim. We had price appreciation of 3.7% with 8% fewer homes sold (according the Enquirer article) here in the Cincinnati area. The following link to the Yahoo! Finance article indicates a 2.1% drop in average sale price nationwide and a 10.3% drop in number of homes sold since this time last year. The nationwide trend is fewer homes sold and a lower average sale price. Here in Cincinnati the results are rather mixed, fewer homes sold but at a higher average sale price. Even our drop in number of homes sold (8% less) is not as bad as the national average, although that is not too much to boast about considering it is still a substantial decrease. Here is the Yahoo! Finance article:

Home Sales Hit Slowest Pace in 4 Years

It will be interesting to see what the new home sales figures are that will be released tomorrow morning. If the existing home sales are any indication, I would expect to see worse results than the same time last year. As always, your feedback and comments are welcome…

On May 29th I posted a blog stating the local real estate market in Cincinnati and Dayton, Ohio had not seen the type of slowdown that many other parts of the country were seeing, or at least not to the same extent that other parts of the country were seeing. The following article was posted in the Cincinnati Enquirer newspaper’s online edition:

Home Not-so-Sweet Home?

This article, dated June 22nd, 2007, points out that “equity” in Greater Cincinnati and Northern Kentucky homes grew approximately 20% from 2000 to 2005.

My take on this is that even with a slowdown recently, most homeowners that have owned their homes for more than a year or two would still have some built-in market appreciation as equity if they went to sell their home now, despite the recent slowdown. The caveat to this is that those people would have to be willing to wait a little longer to find a buyer and these value changes assume that the property has been at the very least kept up, if not improved. People read about someone buying a house in 2000 or 1999 for $150,000 and getting $180,000 for it in 2005 need to remember that during that time period the owner may have done some work to it to keep the value on the upward movement… perhaps new carpeting or cabinets, added more storage space by building onto a garage or finishing the basement.

These reports that continually come out only discuss sale prices and do not reflect changes to consumer behavior. 10 to 12 years ago a new house being constructed probably would not be hard-wired for high-speed or wireless Internet connection unless it was a top of the line luxury home. Today, such “modern conveniences” are almost standard unless such tract housing is being built as rental property, and even then some nicer rental units come with these amenities standard. These added features have driven up construction costs along with increased costs of building materials following Hurricane Katrina in 2005 (and the storms that preceded it). With new homes costing more, existing homes in the same area are better able to compete and fetch more money than if construction costs had fallen and people could buy a new home for less than an exisiting home (or more likely pushing existing home prices downward with the decrease in construction costs).

I will continue to post updates on the local real estate market as I find them. One quick note about the picture above: this was taken by me as I was driving south on I-75/I-71 past downtown Cincinnati, Ohio. I was passing the Duke Energy Convention Center, which has a light display on the side spelling out the city name. Considering I took this myself while driving and I was able to get the city name and my face in the picture, I was quite impressed with myself and with how the picture turned out. It adds a nice touch to my blog about Cincinnati too I think!

As always, I welcome your feedback…

So you’re going into business (or you’ve gone into business) and like most small businesses you have a great deal of your personal wealth tied up in the success of your endeavor. Many entrepreneurs go into business with a great idea and a way to get the business up and running, but they often overlook details that are not related to their product or service or that don’t need to be taken care of in order to get the business started.

A good business plan will help serve as a road map for entrepreneurs when they face growing pains or when they decide it’s time to close up shop (i.e. an exit strategy). But what happens when two or more owners of a small business don’t agree on something? Or what happens when one person has more control than the other owner and acts in a manner that is good for his or her own personal benefit but to the detriment of the other owner or even the organization as a whole?!

When one owner that has more control acts in manner of self-interest to the detriment of the other owner or the entire organization, the concept of minority oppression comes into play. Minority oppression in a closely-held corporation is a topic that I have done some research on during my time at Xavier University while working on my MBA. I have found some interesting articles from law reviews and professional journals on the topic and have compiled them into a short (8 page + cover page) report on the topic. The body of law is primarily built around the Model Business Corporation Act (MBCA) passed by Congress, with various states passing their own laws that take the MBCA even farther. Depending on what state the closely-held corporation is domiciled in will determine the exact remedies to minority shareholder oppression and consequences for director/manager malfeasance.

One area where the statute is not exactly clear, especially from state to state, is in defining exactly what constitutes “oppressive behavior” or “oppression” in general. The various state legislatures have left it up to the courts to decide this on a case-by-case basis. Thus, it is still in the best interest of each organization to settle these matters between the owners without becoming litigious. Being litigious serves no one well except the attorneys that get to represent each side.

The following link is to my entire report that was compiled in November 2006. The file is in Microsoft Word, please right-click on the link and select save as to download this to your desktop for better viewing. In the future I will try to upload more of these documents in Adobe format for easier downloading and viewing. I apologize for any inconvenience. If you have trouble downloading or viewing this document, please email me at allthingsfinancial@yahoo.com

Here is the full report with explanation of the law, recourse or remedy, and citations and references for further reading or research that you might want to do:

Minority Shareholder’s Rights in a Closely Held Corporation

In the event you ever face such a situation, whether you are being accused of director malfeasance or oppression against another owner or feel that you have been oppressed yourself, it is HIGHLY recommended that you seek legal counsel. This blog entry in no way is to be considered an offering of legal advice. Your own unique situation should be carefully reviewed and considered by a licensed, practicing attorney in your respective state. This is merely a review of the topic from an academic, historical research viewpoint.

As always, your feedback is welcome…

Important news that is coming out this week:

6/25/07: Existing Home Sales (volume) reported by the National Association of Realtors(R).

6/26/07: New Home Sales reported by the U.S. Department of Commerce

Both of these are reported at 10:00am EST on their respective days.

Why are the above reported economic data important?

The housing industry has been getting a lot more attention in the latter part of 2006 and first half of 2007 as some parts of the country continually report weaker sales volumes and prices. Although there have not been signs of an entire industry collapsing, a.k.a. “The Bubble” bursting, the slowdown does cause concern if it continues over multiple quarters. This is because more and more homeowners have come to rely on their homes’ value to borrow against for purchases of new cars, take out loans for home improvement, paying off other forms of debt such as revolving (credit card), or to finance other big purchases such as boats, vacations, or to send Jr. to college. Of course, if the homes are decreasing in perceived market value - primarily through an increase in supply of homes on the market, this can create a domino effect of those same consumers not purchasing as much and therefore affecting other areas of the economy (such as consumer confidence, etc).

My personal prediction or expectations of these upcoming reports and their affect on the stock market in the coming week:

I fully expect Existing Home Sales to be on par with expectations and that this factor will not surprise the market. Seasonally adjusted sales should be in line with expectations because mortgage rates have remained stable over the past month.

New home sales may fall short of expectations and I think you would see a brief dip in most homebuilder stocks as a result. My experience and observations here in the Cincinnati & Dayton, Ohio real estate markets the past few months leads me to believe builders are having a hard time unloading newly constructed, completed, vacant houses right now. This belief is based on a few things:

1) I have seen increased incentives offered by builders to Realtors and buyers to sell “spec” homes, or homes that were built purely with the intent to sell upon completion and not to be used as model homes. Many homebuilders are throwing bonuses in the form of increased commission to Realtors or even offering cruises and trips to buyers or agents that refer homebuyers to them. Buyers are also receiving an increasing amount of “upgrades” in their new homes… things that they once had to pay extra for are now being advertised as included or “FREE” when they buy a new home through the builder… preferably one that is already built!

2) I have seen an increase in the number of builder representatives coming into the local Realtor offices to drop off sales literature, i.e. flyers, business cards, and floor plans on models, as well as bringing food, candy and pens with them. This signals that these builder representatives are not having many “walk-ins” in their Model Homes throughout their various subdivisions as they are spending more time developing relationships with local agents.

In addition to increased visits from builder representatives, there seems to be an increased number of mass-emails being sent out by builders to the entire local area Realtor membership base (through the contact list on the Multiple Listing Service) with attachments to these emails containing long lists of inventory available and their respective prices and sales incentives.

3) Finally, I visited the annual Cincinnati Homearama Tour of Homes Luxury Edition (in Montgomery, Ohio) on 6/12. This annual event is held to showcase new luxury homes by various builders as well as demonstrate the numerous products found in the homes. Normally these luxurious homes are already sold when you walk through them. This year I can only think of 1 or 2 out of the 10 homes in the showcase that were already sold. The remaining homes were still being marketed by local Realtors on behalf of the builders.

Overall thoughts on the stock market this week:

I fully expect that the major stock market indices (The Dow Jones Industrial Average - DJIA, the S&P 500, etc) will finish the week lower as investors, hedge funds, mutual funds, etc look to sell some equities and lock in some profits to close out the first half of this year. The Dow and the NASDAQ reached new record levels during the first half of 2007 and every portfolio manager that made a decent return will want to lock in those returns (converting them from paper gains to realized gains) in order to use those results in their marketing efforts to attract new investors to their funds during the second half of 2007.

Some smaller individual investors may want to lock in some returns and cash out some money from their investment accounts for the upcoming July 4th holiday, perhaps to pay for a vacation or to use on some home improvement project they have underway this summer.

Here’s looking forward to the week ahead! As always, your feedback and comments are welcome…

It seems there are little bits of economic news released about the economy every single week, and those announcements affect the stock market in varying degrees depending upon the importance of the data being released.

For instance, the unemployment rate is more likely to help or hurt stocks than say auto or truck sales in any given month. Since different economic indicators are released each month I thought it would be important to highlight some of these factors and how they might affect your investments.

Thus, we begin yet another new series of blog posts. I hope to post, at least on a somewhat frequent basis, a blog entitled “The Week Ahead” looking exclusively at the economic factors affecting the stock market. This blog will not be posted EVERY week as some weeks there are just not any significant pieces of economic data being released.

By the way, the monthly unemployment rate is announced by the U.S. Department of Labor, Bureau of Labor Statistics, on the first Friday of every month at 8:30am EST. This is one hour before the major stock exchanges open and should be considered required viewing/listening/reading for all investors. If you truly care about your investments and like to actively manage them to maximize your returns you will make sure you know the trend over the past few months to a year and that you pay attention that Friday when this data is released.

Now I mentioned that new car and truck sales are not as important; this would of course change entirely if you were heavily invested in Ford, GM, Toyota or any company that is involved in the manufacturing of cars and trucks. But for those of us that believe in a diversified portfolio, this factor would not be AS IMPORTANT as the unemployment rate. Oh, and just to be fair to the automakers, this data is released by each automaker that is publicly traded and usually done so on a monthly basis. Normally within the first 3 days of the month.

Look forward to seeing what The Week Ahead has in store for us! Both literally and in the Blog sense! As always your comments are welcome…

Odds are pretty good that you’ve been in an automobile accident, even if it was just a small fender bender, or that you probably will be in one at some point in your life if you drive or ride in a car on a regular basis (as most of us do).

When an accident occurs we rely on our auto insurance, or the insurance of the at-fault party if it’s not us, to make us whole again. This is quite simply to say that we rely on our insurance company to step in and make sure things get fixed properly so life continues just as it had before the accident occurred, or as close to normal as possible!

Auto insurance is a great tool for spreading the risk of financial loss due to an accident over several vehicles and drivers. But auto insurance has failed to make people whole in one respect that is getting more and more attention with the rise of the Internet and programs that let you track a vehicle’s history - such as CarFax reports.

When an insurance company agrees to repair your vehicle after an accident and pay your medical bills, etc. they fail to take into account that your repaired vehicle is no longer worth as much as it was before your auto accident. Yes, your 2002 Ford Explorer with 32,000 miles was in great shape before the accident - I mean, let’s face it, if this is 2007 and your car is a 2002, 32000 miles is well below the normal amount of 12,000 to 16,000 miles per year that most cars have on them. If your car had never been in an accident it would probably fetch a premium over similar year’s vehicles of the same model or comparable vehicles. But now that your vehicle has been in an accident, there is suddenly a paper trail attached to it that says this vehicle has been wrecked and repaired. Try taking the vehicle in to a dealership to trade it in on a new car. They will run a CarFax report most likely, and they will offer you less citing the accident. Why would they offer you less given the fact that your car has been repaired? Well, any savvy buyer who walks into the dealership to look at your used car will want to see a CarFax report as well, and other people won’t know about the quality of the repair job or what a great history the car has otherwise.

What we’re discussing here is referred to as diminished value. Quite simply, a vehicle can’t be worth the same amount after an accident as it was before because if your car was sitting in a used car lot next to an identical one that had never been in a wreck, your car would sell for less than the other one. Now, you don’t often see used car lots full of all the same type of car. But with the rise of the Internet, people are able to search a large radius to find a specific type, model, color, year, etc. of car that they want.

The law varies from state to state with regard to how insurance companies settle claims on diminished value. In Ohio, where I currently live, the insurance company is not required by law to pay you for the dimished value of your vehicle after an accident. We’re speaking only of partial losses by the way, if your car is totaled you have every right to try to negotiate with the insurance company to get the fair market value of your car before the accident. But in an accident where the car is repaired and returned to you, you still suffer a loss that you are not compensated for… the difference between your vehicle’s value BEFORE and AFTER the accident is your loss.

Now, we’ll probably never see states pass legislation requiring insurance companies to pay their insureds this diminished value because not everyone carries comprehensive and collision coverages (often referred to as comp & collision) on their policies. In fact, with insurance being a contract between you, the insured, and the insurance company, if they do not offer you the coverage you cannot force them to provide it. The only coverage they will be forced to offer you if you meet their criteria is the state minimum liability requirements to drive in your state.

Although it would be nearly impossible to REQUIRE insurance companies to offer diminished value coverage to their own policyholders, which would be similar to GAP coverage you can already buy to cover the difference between what you owe and what the vehicle is worth, perhaps the states can get their acts together and require the insurance companies to offer diminished value payments to third party claimants. These third parties do not have insurance coverage through the company that is paying them so they are not bound by a specific insurance policy’s covenants - rather, they should seek payment for as much of their loss as possible.

As I mentioned before, the law varies from state to state with regard to diminished value. And because there is nothing going through a legislature (that i know of anyway) it is up to the courts to decide whether diminished value has merit in settling an insurance/auto accident claim, at least it’s up to the court until the legislature gives us a framework or body of law to draw upon in this topic.

Here are some links to some interesting articles and companies that hope to prosper from diminished value claims:

Article from Bankrate.com giving a broad overview of the topic

I-Can This is a company that handles diminished value appraisals on behalf of claimants following an auto accident. This company also offers a nice review of the topic, with their own slant of course.

Sims vs. Allstate case. This case regarding diminished value follows similar court rulings in several states including Ohio, Mississippi, Delaware, Arizona, Texas and so on. This case was considered a setback to getting diminished value recognized by the various states.

Here’s a good article that counters the above Sims vs Allstate case. This article is from the AutoMuse website. This case is Allgood vs Meridian (insurance company). In a court decision that occurred a day before the decision was rendered in the Sims vs Allstate case, an Indiana court ruled that diminished value is of significance. This is a good read after the above article about Sims vs Allstate. The author of this article does a good job expressing concern over noting where a claim occurred and which state’s body of law is applied to the case in question.

Here’s an excellent link showing body of case law on a state by state basis for this topic. Kudos to Barry Zalma in compiling this information all in one place for everyone of us to easily search and review.

Editorial from the Akron (Ohio) Beacon Journal newspaper regarding auto insurance and hitting in parts on diminished value.

As always, your feedback is welcome…

If you died today, your family and friends would naturally be sad and devastated. So what could be worse than losing a loved one? Nothing. But when things are already so bad that they seem to not be able to get any worse the reality sinks in that there are still bills to pay. The surviving spouse probably still has a mortgage, car payments, credit card bills, not to mention if there are children then there will be billings for child care and so forth.

This is a deviation from my normal blog. Every so often I will post a random thought as the one above and we’ll call it a Financial Health Checkup for lack of a better term. I try not to get on my soapbox too often but it’s important for people to understand what role they play in supporting their family. That way, if you were not here to support your family you would know what it would take to make sure your loved ones were taken care of and able to maintain their livelihood - without losing the house to the bank or not be able to go to college, etc.

So how do you know if you’re adequately protecting your family? Well, there has traditionally been a rule of thumb that having a life insurance policy with a face value of some multiple over your salary is sufficient. I reject these multipliers as simple nonsense. They simply do not take into account the actual needs of the individual and his or her family; everyone’s situation is (at the very least slightly) different. One thing that the multiplier does not take into account is that with the more children under 18 that a surviving spouse is forced to raise on their own, the more the parent will face increased childcare expenses. The multiplier has historically been used to estimate the cost to pay off debt and free the surviving spouse’s income to tend to the day to day needs of providing for the family rather than paying the mortgage and car loan (which we will simply refer to as overhead - not to purposefully make a pun with the housing reference).

But beyond paying off the mortgage, car, and credit cards that so many of us have come to rely on, there is also the goals and future plans of the family that are interrupted when a family member unexpectedly dies. What about children that were planning on going to college (the ever so dreaded words “law school” or “med school” etc)! What about those annual vacations to Disney or the Grand Canyon. Ok, so the family doesn’t need to go on a trip EVERY year… but they also shouldn’t feel like they can’t do something just because the financial picture is tighter after losing a loved one. It’s bad enough that they had to endure the loss of a loved one, now you want to force them to eat microwave dinners and give up simple luxuries that they had before the unfortunate loss?! Life insurance is meant to keep a family able to enjoy life with one another and continue to pursue the dreams that they have. You can’t get a financial equation to devise a way to calculate that number, it’s unique to each family and situation.

What I’m NOT suggesting is being over insured. Let’s keep in mind that the unexpected and untimely death of a loved one is still a remote possibility in most of our lives. Over insuring only impairs the family’s finances by paying too much in insurance premium, money that could be used to pay down debt, save for college or retirement, and other goals of the family.

When the family knows what goals it wants to achieve and how much resources it will take to reach those goals, from there it becomes a matter of adequately protecting the family from the unlikely event of a death that could derail the goals from being achieved financially. 1. Set realistic goals, 2. determine what costs you would need to cover and if any of those costs would go up because you would not have the support of a lost wage earner. Do the kids spend more time in daycare because the one parent who got off work early is no longer there to pick them up from school? And so on. 3. Keep in mind inflation and the possibility that the lost family member may have received pay increases in future years (through promotions and cost of living adjustments in salary). You might only make $50,000 per year now, but 10 years from now would you be earning that same $50,000? Probably not. You might be making $60, 70, or even more. You owe it to your family to build in that increase over time to beat inflation.

Talk to a licensed agent. Gather the facts on what it would take to sustain your quality of life and provide for your family’s future. Then put a plan into action to solve those future goals and hurdles that the family would face if you weren’t there to help them. They will do the same for you. And while you will miss them if they die unexpectedly, you will be able to maintain your family’s existence and ultimately your sanity as you won’t feel defeated and crushed financially.

I will add more posts in the future about the various types of life insurance, for now, this was just a financial health check up. Enough of the soap box, as always I welcome your comments and feedback…