EURweb |
FOR THE LOVE OF MONEY: Stormy Weather
*Hurricane Katrina and the devastating impact that it continues to have on the residents of New Orleans, in particular those of color, is still a raw spot in our hearts and minds. But now that the cameras have stop rolling, and many of the stars and celebs have gone home, people are still struggling to get help and aid to start rebuilding
their lives.
According to a recent MSNBC report, Katrina victims are now suing for insurance monies. One New Orleans couple is suing Nationwide Mutual Insurance Company. Apparently, the hurricane insurance policy on their home only covered wind damage; it did not cover damage from flooding. When the couple asked if they needed flood coverage, they were told no by the insurance agent. The lawsuit alleges that the insurance agent didn't make a significant commission off of flood insurance. At issue is whether their hurricane insurance included the water damage that their house sustained. A win here could signify a potential insurance payout to thousands of Katrina victims, so we will monitor this case closely and report back to you.
Unfortunately tragedies will continue to be a part of our lives and we celebrate and fear Mother Nature at the same time, as reflected through our music, with songs like:
"Rain (down on me)" (SWV 1998)
"The Rain" (Oran Juice Jones, 1986)
"Candy Rain" (Soul 4 Real 1995)
"Rain On Me" (Ashanti 2003)
"House Quake" (Prince, 1988)
"Stormy Weather" (Lena Horne, 1943)
"Fire" (Ohio Players 1975)
"Quiet Storm" (Smokey Robinson, 1975)
"Through The Rain" (Tonya Blount, 1994)
"Wish It Would Rain" (Temptation, 1968)
"Can You Stand The Rain" (New Edition, 1988)
"Can You Stop The Rain" (Peabo Bryson, 1991)
"Here Comes The Rain Again" (Eurythmics, 1984)
"Blame It On The Rain" (Milli Vanilli, 1989)
Although nothing can replace the pain and sorrow felt due to a casualty, by taking advantage of pre-catastrophe planning efforts like, savings accounts and post-catastrophe benefits, like tax deductions, you may be able to recover some of your financial losses.
SAVE, SAVE, SAVE
You've heard it many times before - you need at least three months of savings in case of emergencies. But where are you going to get three months of savings when you're living paycheck to paycheck as it is? Let's be real, even those bringing in 6 figures or more find themselves also living without any type of savings. As I explained on a recent episode of the Style Network's Modern's Girl Guide ((Episode # 306, Living Large For a Little), follow these 5 steps for keeping your "champagne tastes" within your monthly expense budget:
1. TAKE STOCK: ”Write down your daily expenses every night for two weeks. Don't think about it, just do it. Knowing where your money is going is the first step toward financial responsibility.
2. WHAT WENT WHERE: ” Categorize your expenses (i.e., car, rent, utilities, Starbucks, etc.). Calculate the percentage each category represents of your total expenses. These expenses really add up. "I was surprised to see that I was wasting hundreds of dollars on small purchases like a cup of coffee everyday," explained Jess Zaino, one of the hosts of the Modern Girls Guide. Cutting these things out or dramatically reducing them could result in having a $1,000 or more for your nest egg by year end!
3. REALLOCATE: ”Come up with your new and improved expense percentage, starting with 15% off the top to cover any incidental or frivolous expenses that you like. Next, put 50% towards your rent/mortgage and car payment, followed by 15% for food and utilities. The remaining 20% goes towards paying off credit cards and other debts.
4. CLEAN UP TIME: ”Work on cleaning-up your credit! Get a copy of your credit report and make a date with a debt consolidation expert to develop a plan that will help you see positive changes on your credit score (often in as fast as 6 to 8 months).
5. TAKE STOCK AGAIN: “After 6 months, re-evaluate your plan and make any changes necessary, so that this will be a plan that you can stick with.
Follow this plan and before you know it you are well on your way to having 3 months of savings.
TAX BENEFITS
In addition, if you do have a property loss because of a natural disaster, you may be eligible for a tax deduction. As a general rule, your deduction is determined by an equation that compares your basis (i.e., how much you paid for the property), with the decrease in fair market value as a result of the casualty. You then take whichever
amount is smaller and subtract any insurance money, government payments or other reimbursements that you received, or expect to receive. Finally, you subtract $100 then reduce the amount by 10% of your adjusted gross income. The result is the amount of your deduction.
Luckily, you don't have to memorize this. Any of the popular tax software programs will do this for you. The point is not to forget that when you're in the middle of this despair and fighting an uphill battle for insurance monies, you still may have a tax deduction and with a little financial planning, you won't have to wait for others to come to your aide.
Shannon King Nash is the author of the award-winning book entitled, "For the Love ofMoney: The 411 to Taking Control of Your Taxes and Building Your NetWorth." She uses song lyrics and entertaining stories ripped from the headlines to teach readers how to manage their finances and taxes. Shannon is a CPA, Tax Attorney, and regular expert commentator on KJLH FM Radio in Los Angeles, and has appeared on national television. Contact the Nash Management Group at 818-986-2665 or visit
www.nashgroup-usa.com.
.jpg)
