Beware the insurance adjuster

Dear Dave,

A tree fell on our house yesterday and did quite a bit of damage. We’re talking with the insurance company now. Is there anything we should watch out for where they are concerned?

Ian

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Dear Ian,

For openers, the insurance adjuster is not your pal. He works for a huge company that got that way by paying as little as possible. You have lots of rights under your policy, and you should insist on all of them. Let them know that you expect your house to be put back in exactly the same shape it was before the accident, and that you expect the work to be completed in a professional manner and as quickly as humanly possible, by contractors whom you get to approve. This is your home we’re talking about! You’ve paid premiums for years, and now it’s time for the company to make good on their promise to protect you.

Adjusters are loyal to the company that pays them. There’s nothing wrong with that. Will some of them lie? You bet! Will some of them give you bad advice or send you down the wrong path? Oh, yeah! Certainly there are honorable adjusters, but there are some that will stretch the truth and more. Don’t be combative, but don’t be a wimp, either. And don’t sign a release until both your head and your heart know that you have been treated fairly.

Dave

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Ugh – another 6-figure bonus

Dear Dave,

My husband always gets a bonus at work around the first of the year. The problem is that his company never takes enough out in taxes, and we get clobbered at tax time. He makes $150,000 a year, and this time his bonus was $105,000. They withheld 18 percent, but that’s not enough. What should we do?

Karen

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Dear Karen,

If you guys make $150,000 a year, that puts you in the 33 percent tax bracket – with or without the bonus. That means 33 to 38 percent of his bonus money will end up in Washington.

If I woke up in your shoes, I wouldn’t leave it up to the government or the company to get it right. I’d put about 22 percent of the bonus amount into a money market account just to be safe. I’d just let it sit there and be ready when tax time rolls around. That way you’ll be fine if you owe money, and you’ll have some extra savings if you don’t!

Dave

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Buying back from the military

Dear Dave,

My husband served four years in the military before becoming a state trooper. He now has the chance to buy back his four years from the military. This would enable him to retire four years sooner. The problem is that the buyback cost is $10,000 a year. Do you think it’s worth it?

Amy

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Dear Amy,

Mathematically it’s a bad idea. You’d be better off investing the money. Now, if there’s a happiness factor involved – if he hates his job, or something like that – it might warrant some additional consideration. Otherwise, you’re basically pouring money into a pension fund that dies when he dies. Even if there’s a survivor’s benefit for you, it just disappears when both of you are gone. You can’t take it with you!

There are three things you can do with money. You can spend it, you can save it, and you can give it away. I want you to make smart decisions and live like no one else, so that later you can live like no one else! If the money just disappears, you’ll have no chance to change your family tree or make a huge positive impact on your community through giving.

Dave