Archives for December 2017

Lemonade Insurance Review: Home & Renters Insurance With No Incentive To Deny Your Claim?

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lemon_logoUpdated July 2018. Lemonade continues its rollout – see map above. Get a free quote from Lemonade and see if they are cheaper than your current homeowner’s or renter’s insurance policy. Feel free to leave a comment about whether they were more or less expensive at the same coverage and deductible level.

Right or wrong, many people view insurance companies with suspicion. Even though you pay them money every month for protection, you worry if you’ll actually get paid when you experience a problem. The problem is that with most insurance companies, every dollar they don’t pay you ends up in their pocket. The incentives are not aligned. Will they find a reason to deny your claim? Will they make it such a pain that you’ll just give up? Recall the Insuricare scene from the movie The Incredibles.

Lemonade is a new insurance company that takes a flat cut upfront, and the rest is put aside to payout claims. They are starting out with homeowner’s and renter’s insurance. The specific breakdown is below.

  • 20% to Lemonade.
  • 40% into a pool to pay out for claims (or charity).
  • 40% to reinsurance in case that pool is exhausted (catastrophic cases).

Reinsurance is basically what is sounds like – insurance for insurance companies. This provides additional safety that there will be money to pay out your claim in cases of catastrophic losses (i.e. certain natural disasters). Examples of reinsurance companies are Lloyd’s of London and Berkshire Hathaway.

If there are fewer claims than expected, Lemonade will donate the money to a charity of your choice. Therefore, they have no direct incentive to deny a valid claim. In turn, hopefully their customers will also not make false claims because they will only be taking money away from charities and not the big bad insurance company. When signing up, you even take a “honesty pledge”. Here’s how behavioral economist Dan Ariely, who is their “Chief Behavioral Officer”, puts it:

Knowing that every dollar denied to you in claims is a dollar more to your insurer, brings out the worst in us all… Since we don’t pocket unclaimed money, we can be trusted to pay claims fast and hassle-free. As for our customers, knowing fraud harms a cause they believe in, rather than an insurance company they don’t, brings out their better nature too. Everyone wins.

Lemonade is also structured as a Public Benefit Corporation (B-Corp), which makes it the “World’s Only Public Benefit Insurance Company”.

Update: In July 2017, TechCrunch reported that Lemonade made its first annual donation of $53,174 or 10.2% of first year revenues. So that’s 10% out of the 40% pool reserved for claims (or charity).

Lemonade also saves money with tech start-up tricks. No human salespeople. No brokers. No physical branches. Apply online. File your claim online. You can do nearly everything via smartphone app (iOS and Android) with a chat-based AI interface. (Fewer adjusters and customer service reps.) If you have to file a claim, you can take a video of the damage using their app and explain the situation.

It remains to be seen if they can truly disrupt the industry. In the meantime, they need competitive premiums. Uber would not be so successful if they weren’t also cheaper than traditional taxis.

Live Policy and Zero-deductible option. In September 2017, Lemonade rolled out a new option with a zero deductible. If you pick this option, you won’t have to pay any deductible and thus get the full value of even a smaller claim like a $250 bike or smartphone. Importantly, Lemonade also promises not to hike your premium after making a claim (you are limited to two claims per year). You can preview how much this option changes your premium with their “Live Policy” system where you can make changes to your policy instantly via the Lemonade app.

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As of July 2018, Lemonade offers renters, condo and/or homeowners insurance in Arkansas, Arizona, California, Connecticut, District Of Columbia, Georgia, Iowa, Illinois, Maryland, Michigan, New Jersey, New Mexico, Nevada, New York, Ohio, Oregon, Pennsylvania, Rhode Island, Texas, Wisconsin. Get a free online quote from Lemonade and compare with what you have now. Prices start at $35 $25 a month for homeowner’s insurance and $5 a month for renter’s insurance.

Also see: I asked for more clarification on how Lemonade differs from mutual insurance.

qara.info has partnered with CardRatings for selected credit cards, and may receive a commission from card issuers. All opinions expressed are the author’s alone, and has not been provided nor approved by any of the companies mentioned. MyMoneyBlog.com is also a member of the Amazon Associate Program, and if you click through to Amazon and make a purchase, I may earn a small commission. Thank you for your support.

Free Limited-Edition Gund Teddy Bear with $100 Amazon Gift Card

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Each holiday season, Amazon teams up with Gund to create a limited-edition teddy bear. Gund is known for their quality stuffed animals and they do everything from Elmo to Curious George to Boo the Dog.

Amazon Prime customers can now get a free 10″ 2017 Gund Teddy Bear with the purchase of $100 Amazon gift card. It’s a nice little bonus that you can either give together or separate the gift card and give the teddy bear to a child. (You could also just do it and collect cute bears.) If it goes out of stock, it is also available in $150, $200, and $250 gift cards. You can also check back later as they usually come back in stock a few times. However they do eventually sell out every year.

Not Prime yet? In addition to the Amazon Prime 30-Day free trial, there is also Amazon Family which includes the 30-day free trial Amazon Prime 20% off diapers and special discounts. Amazon Prime Student includes a 6-month free trial + 50% off afterward.

Stack another 5% back on Amazon. If you have Amazon Prime, you can get 5% back at Amazon.com all year long with the Amazon Prime Rewards Visa Signature Card. Discover it card also has Amazon.com as a 5% cashback category for Q4 2017.

qara.info has partnered with CardRatings for selected credit cards, and may receive a commission from card issuers. All opinions expressed are the author’s alone, and has not been provided nor approved by any of the companies mentioned. MyMoneyBlog.com is also a member of the Amazon Associate Program, and if you click through to Amazon and make a purchase, I may earn a small commission. Thank you for your support.

Best Interest Rates on Cash – December 2017

qara.info has partnered with CardRatings for selected credit cards, and may receive a commission from card issuers. All opinions expressed are the author’s alone, and has not been provided nor approved by any of the companies mentioned. Thank you for your support.

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Short-term interest rates are rising. Don’t let a megabank pay you nothing for your idle cash. Here is my monthly roundup of the best safe rates available, roughly sorted from shortest to longest maturities. You could also use this information to make a bank CD ladder to replace bonds. I focus on rates that are nationally available to everyone (not restricted to certain geographic areas or specific groups). Rates checked as of 12/1/17.

High-yield savings accounts
While the huge brick-and-mortar banks rarely offer good yields, there are many online savings accounts offering competitive rates clustered around 1.1%-1.3% APY. Keep in mind that with savings accounts, the interest rates can change at any time.

  • Top rates: Incredible Bank at 1.55% APY (minimum $25,000). DollarSavingsDirect, SalemFiveDirect, and Redneck Bank/All America Bank (max balance $35k) all paying 1.50% APY.
  • More rates from banks with solid history of competitive rates: CIT Bank at 1.35% APY up to $250k. Synchrony Bank and GS Bank are at 1.30% APY.
  • I’ve experienced the “bait-and-switch” of moving to a new savings account only to have the rate lowered quickly afterward. Until the rate difference is huge, I’m sticking with a Ally Bank Savings + Checking combo due to their history of competitive rates (including CDs), 1-day interbank transfers, and overall user experience. (I will jump on CDs as the rate is locked in.) I also like the free overdraft transfers from savings that let’s me keep my checking balance at a minimum. Ally Savings is at 1.25% APY.

Money market mutual funds + Ultra-short bond ETFs
If you like to keep cash in a brokerage account, you should know that money market and short-term Treasury rates have been rising. It may be worth the effort to move your idle cash into a higher-yielding money market fund or ultrashort-term bond ETF. The following bond funds are not FDIC-insured, but if you want to keep “standby money” in your brokerage account and have cheap/free commissions, it may be worth a look.

  • Vanguard Prime Money Market Fund currently pays an 1.20% SEC yield. The default sweep option is the Vanguard Federal Money Market Fund, which has an SEC yield of 1.07%. You can manually move the money over to Prime if you meet the $3,000 minimum investment.
  • Vanguard Ultra-Short-Term Bond Fund currently pays 1.71% SEC Yield ($3,000 min) and 1.82% SEC Yield ($50,000 min). The average duration is 1 year.
  • The PIMCO Enhanced Short Maturity Active Bond ETF (MINT) has a 1.59% SEC yield and the iShares Short Maturity Bond ETF (NEAR) has a 1.68% SEC yield while holding a portfolio of investment-grade bonds with an average duration of ~6 months. More info here.

Short-term guaranteed rates (1 year and under)
I am often asked what to do with a big wad of cash that you’re waiting to deploy shortly (just sold your house, just sold your business, legal settlement, inheritance). My standard advice is to keep things simple. If not a savings account, then put it in a short-term CD under the FDIC limits until you have a plan.

  • CIT Bank 11-Month No-Penalty CD is at 1.55% APY with a $1,000 minimum deposit and no withdrawal penalty seven days or later after funds have been received. The lack of early withdrawal penalty means that your interest rate can never go down for 11 months, but you can always jump ship if rates rise. You can even jump ship to another 11-month CD (details).
  • Ally Bank No-Penalty 11-Month CD is paying 1.50% APY for $25,000+ balances and 1.25% APY for $5,000+ balances. If you want a full-featured bank with checking/savings/etc.
  • GS Bank has a 12-month CD is at 1.65% APY with a low $500 minimum. For sizeable balances, Advancial Federal Credit Union has a 6-month CD at 1.75% APY ($50k min) and a 12-month CD at 1.90% APY ($50k min). If you don’t otherwise qualify, you can join with a $5 fee to Connex Professional Network and maintaining $5 in a Share savings account.

US Savings Bonds
Series I Savings Bonds offer rates that are linked to inflation and backed by the US government. You must hold them for at least a year. There are annual purchase limits. If you redeem them within 5 years there is a penalty of the last 3 months of interest.

  • “I Bonds” bought between November 2017 and April 2018 will earn a 2.58% rate for the first six months. The rate of the subsequent 6-month period will be based on inflation again. At the very minimum, the total yield after 12 months will be 1.29% with additional upside potential. More info here.
  • In mid-April 2018, the CPI will be announced and you will have a short period where you will have a very close estimate of the rate for the next 12 months. I will have another post up at that time.

Prepaid Cards with Attached Savings Accounts
A small subset of prepaid debit cards have an “attached” FDIC-insured savings account with high interest rates. The negatives are that balances are capped, and there are many fees that you must be careful to avoid (lest they eat up your interest). The other catch is that these good features may be killed off without much notice. My NetSpend card now only has an eligible balance up to $1,000.

  • Insight Card is one of the best remaining cards with 5% APY on up to $5,000 as of this writing. Fees to avoid include the $1 per purchase fee, $2.50 for each ATM withdrawal, and the $3.95 inactivity fee if there is no activity within 90 days. If you can navigate it carefully (basically only use ACH transfers and keep up your activity regularly) you can still end up with more interest than other options. Earning 4% extra interest on $5,000 is $200 a year.

Rewards checking accounts
These unique checking accounts pay above-average interest rates, but with some risk. You have to jump through certain hoops, and if you make a mistake you won’t earn any interest for that month. Rates can also drop quickly, leaving a “bait-and-switch” feeling. But the rates can be high while they last.

  • Consumers Credit Union offers up to 4.59% APY on up to a $20k balance, although getting 3.09% APY on a $10k balance has a much shorter list of requirements. The 4.59% APY requires you to apply for a credit card through them (other credit cards offer $500+ in sign-up bonuses). Keep your 12 debit purchases small as well, as for every $500 in monthly purchases you may be losing out on 2% cashback (or $10 a month after-tax). Find a local rewards checking account at DepositAccounts.
  • Note: Northpointe Bank, mentioned previously, no longer has their Rewards Checking account on their website and is not accepting new applications. Unclear how long existing accountholders will be grandfathered. That’s just how it goes with these types of accounts.

Certificates of deposit (greater than 1 year)
You might have larger balances, either because you are using CDs instead of bonds or you simply want a large cash cushion. Buying finding a bank CD with a reasonable early withdrawal penalty, you can enjoy higher rates but maintain access in a true emergency. Alternatively, consider a custom CD ladder of different maturity lengths such that you have access to part of the ladder each year, but your blended interest rate is higher than a savings account.

  • Advancial Federal Credit Union (see above) has their 18-month CD at 2.01% APY ($50k min) and a 24-month CD at 2.10% APY ($50k min). The early withdrawal penalty is 180 days of interest.
  • Ally Bank has a 5-year CD at 2.25% APY (no minimum) with a relatively short 150-day early withdrawal penalty and no credit union membership hoops. For example, if you closed this CD after 18-months you’d still get an 1.64% effective APY even after accounting for the penalty.
  • Hanscom Federal Credit Union is offering a 4-year Share Certificate at 2.50% APY (180-day early withdrawal penalty) if you also have Premier Checking (no monthly fee if you keep $6,000 in total balances or $2,000 in checking). HFCU also offers a 3% APY CU Thrive “starter” savings account with balance caps. HFCU membership is open to active/retired military or anyone who makes a one-time $35 donation to the Nashua River Watershed Association.
  • Mountain America Credit Union has a 5-year Term Deposit CD at 2.80% APY ($500 minimum) with a 365-day early withdrawal penalty. They also offer the same rate on a “Term Deposit Plus” certificate which allows you to add more money later, but also requires a monthly $10 auto-deposit. Anyone can join this credit union via partner organization American Consumer Council for a one-time $5 fee.

Longer-term Instruments
I’d use these with caution, but I still track them to see the rest of the current yield curve.

  • Willing to lock up your money for 10+ years? You can buy certificates of deposit via the bond desks of Vanguard and Fidelity. These “brokered CDs” offer the same FDIC-insurance. As of this writing, Vanguard is showing a 10-year non-callable CD at 2.65% APY (Watch out for higher rates from callable CDs from Fidelity.) Unfortunately, current long-term CD rates do not rise much higher even as you extend beyond a 5-year maturity.
  • How about two decades!? Series EE Savings Bonds are not indexed to inflation, but they have a guarantee that the value will double in value in 20 years, which equals a guaranteed return of 3.5% a year. However, if you don’t hold for that long, you’ll be stuck with the normal rate which is quite low (currently a sad 0.10% rate). You could view as a huge early withdrawal penalty. You could also view it as long-term bond and thus a hedge against deflation, but only if you can hold on for 20 years. Too long for me.

All rates were checked as of 12/1/17.

qara.info has partnered with CardRatings for selected credit cards, and may receive a commission from card issuers. All opinions expressed are the author’s alone, and has not been provided nor approved by any of the companies mentioned. MyMoneyBlog.com is also a member of the Amazon Associate Program, and if you click through to Amazon and make a purchase, I may earn a small commission. Thank you for your support.

Buy It Nice or Buy It Twice: Kitchen Tools and Cookware (Extended Edition)

qara.info has partnered with CardRatings for selected credit cards, and may receive a commission from card issuers. All opinions expressed are the author’s alone, and has not been provided nor approved by any of the companies mentioned. Thank you for your support.

rubber200 (Added some items.) When buying kitchen items, I am firmly in the “pay for quality” camp. Reader Chris sent in the following question (edited for clarity):

I read in your website about cast iron pans and KitchenAid mixers. I want to buy a small home and have nothing. What are some must-have kitchen items that will last a long time and be used most often? So they are an “investment”.

For me, it all started when filling out our wedding registry (now 13 years ago, ack!). Getting married meant I had to stop buying Hungry Man frozen dinners and really learn to cook at home. This led me to develop an appreciation for well-made kitchen items. When you “go cheap” on certain things, you not only have to replace it down the road, but you also feel a bit of annoyance and regret every time you use the inferior tool. In the words of Marie Kondo, owning high-quality tools “bring me joy”.

Here’s (an extended) list of high-quality items that are used weekly if not daily in my kitchen. I am not a professional chef, just someone who cooks at home often enough to suffer from cheap stuff. Some cost a few bucks. Some cost hundreds.

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Rubbermaid Premier Food Storage Containers
Cooking at home means lots of leftovers. One of the best decisions we made was to throw away the mishmash of cheap containers and lids to start fresh with these Rubbermaid Premier storage containers (not the other Rubbermaid types). They are thicker, sturdier, and have leakproof lids. They don’t stain or retain odors. They are a good example of designing something to be high-quality and reusable instead of cheap and disposable. They changed up the lid design recently but the grey lids are backward compatible with the original red lids. Warning: You might start out with a 30-piece set but it will include a lot of smaller containers. Add more of the larger ones specifically.

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Lodge Pre-Seasoned Cast Iron Skillet
With over 8,000 reviews (!) and a 4.5 out of 5 star average rating, I know I’m not the only fan of these heavy-duty beasts. Great for searing and pan-frying, oven-safe, no worrying about scratches or dings. They will outlive you. Got a rusty one? They are easy to resurrect; here’s a quick video on how to season your cast iron.

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Le Creuset Enameled Cast-Iron Dutch Oven
I cook multiple times a week with our Staub and Le Creuset enameled cast-iron dutch ovens. Cast iron isn’t a lot of maintenance, but you do have to keep it dry after each use to prevent rusting (and seasoning it again takes time). With enameling, you can just wash and leave it wet. The dutch oven shape also makes it perfect for braises, stews, and soups. (They also look nicer at dinner parties.) They do run $200-$300 but spread out over 30+ years of use it’s not that bad. But I’ll be honest, I don’t know how much better they are than this Lodge Enameled Dutch Oven which regularly runs under $80.

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KitchenAid Artisan Stand Mixer
We’ve used this machine regularly without any issues for over 10 years across multiple apartments, studios, and houses. We use it to beat eggs and knead dough for pizza, pasta, cookies, and bread. I don’t know what kind of motor is inside, but it is durable. The bowl has some small dings and there is a little rust on the exterior but nothing that prevents good operation. I notice a ton of different versions now, but I think the Artisan is the classic version. Pick a color you like because you’ll be stuck with it for a while…

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All-Clad Stainless Steel Fry or Saute Pan
I first heard about this brand when they kept winning comparisons by America’s Test Kitchen. However, they are quite expensive. Now, you don’t need All-Clad everything, but do I think a large stainless steel fry pan or saute pan from All-Clad is an important kitchen addition that will pretty much last you forever. (I’d skip the non-stick All-Clad and go with T-Fal for best non-stick value.) My advice is to keep your eyes open because they do rotate on sale. Right now the saute pan is on sale for $99, but at other times you can get the fry pans on sale.

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Nordic Ware Aluminum Commercial Sheet Pan
It’s big, thick, and aluminum so it won’t rust. I must have roasted vegetables hundreds of times on this thing. Only about $10 and much better than whatever cheap, thin stuff is at sold at the grocery store. Buy 2 now so they stack and save space.

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Microplane 40020 Classic Zester/Grater
The classic Microplane. I remember thinking it was expensive when I bought it over a decade ago, but I’ve never had to replace it since. Considering how many little thin holes this thing has, I have no idea how it hasn’t rusted away in over 10 years. This thing still works great to shave fine curls of parmesan and zest lemons and limes.

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Kuhn Rikon Original Swiss Peeler
These may not last forever, but they have lasted a lot longer than my previous peelers and I’m still on my first one. (I also have a serrated version that I don’t use as often.) I bought these after seeing them recommended by America’s Test Kitchen and they peel much more easily and comfortably. Note: I see some Amazon reviews that say “I love my old Kuhn Rikon peeler but this one I just bought from Amazon is horrible.” My thought? Counterfeits. I would only buy these “Ships from and sold by Amazon.com”, even if it costs a few cents more. You’re still getting the best peeler out there for under 5 bucks.

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Wusthof Classic Knifes
I remember wondering if Wusthof and Henckels were worth the price as I zapped them onto our wedding registry. Then someone actually bought us a set of Wusthof Classic knives and we proceeded to use them nearly every day for over a decade. They have been professionally sharpened a couple of times (less often than recommended), but they still work perfectly with no chips or rust spots. I bought a $40 Asian cleaver from a shop in Chinatown a couple years ago, and it only lasted a few months before large rust spots appeared. My mom told me I didn’t treat it right. Probably. I told her I’d rather spend $80 on a knife and have it last decades even after not treating it right. So I bought this one.

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J.A. Henckels Steak Knife Set
We also got a set of Henckels steak knives as a wedding gift. They’ve also lasted over a decade as our family’s only set of steak knives. They still cut great. Yes, they cost about double the price of the AmazonBasics steak knives set, but I wonder if I’ll ever have to buy steak knives again.

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ZYLISS Lock N’ Lift Can Opener
I’ve probably gone through 5 different can openers in the last 5 years. I guess I open a lot of cans? I’ve bought the cheap and popular one, but it rusted quite quickly. I’ve bought the battery-powered ones, but they got wet and stopped working. I liked the smooth edge opener, but two of them became dull and unusable after under 6 months. If I could go back, I would just buy this ZYLISS Lock N’ Lift Can Opener. Most of it is plastic, so it hasn’t shown rust yet. It’s got a good grip and is easy to use.

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Zeroll 1020 Original Ice Cream Scoop
Didn’t see this coming, huh? This is the best ice cream scoop, period. Once you try it, you will wonder why all the other ice cream scoops in the world are so bad in comparison. If you walk into an ice cream shop, this is probably the brand that they use. It has conductive fluid that makes it easier to get through rock-hard ice cream. It creates the perfect ball shape for placing on cones. The 2-ounce size makes a small/medium-sized ball, but other sizes are available. Why not own the best ice cream scoop in the world for about $15?

I’m sure I’m forgetting a few things. There are also many other items I on my wish list that I haven’t bought yet. What high-quality kitchen items would you consider a good “investment”?

qara.info has partnered with CardRatings for selected credit cards, and may receive a commission from card issuers. All opinions expressed are the author’s alone, and has not been provided nor approved by any of the companies mentioned. MyMoneyBlog.com is also a member of the Amazon Associate Program, and if you click through to Amazon and make a purchase, I may earn a small commission. Thank you for your support.

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