Adulting

Disclaimer: This article is not exactly about parenting. I will understand if you are not interested and want to skip this post!

We recently moved to a new city and my husband started a new job.  Previously he worked at the same place for 14 years, and we did not realize how many “adult” tasks would be involved in this move. It has been quite overwhelming, like a part-time job for me for the last four months.  I started to feel so burdened and stressed out by these tasks, which I do not enjoy very much, that I decided I needed a reframe.  I told myself that I was taking a class, Moving 101. Taking this class requires a lot of time, but I tell myself I chose to take the class because I wanted to learn more about all these varied grown-up situations. This class has been very hands-on! It required a lot of research and real-world experiences such as filling out forms, making difficult decisions, calling mortgage brokers, insurance agents and the like, initiating relationships, and sometimes breaking off those relationships later.

This class has been frustrating at times (and I’ve wondered why I signed up for it!) but I’ve learned so much. I am so much more knowledgeable and well-rounded. I decided to write about all that I have learned because it helps me appreciate the knowledge that I’ve gained and realize there’s a reason it’s been so hard.  Writing and sharing this article also helps me feel like my work can benefit others, and that makes it more worth it. This is my “term paper” for Moving 101.

In this class I have researched, learned about, and talked to professionals about the following topics, and I’d like to share my hard-earned knowledge with you. What follows is a short explanation about many aspects of adulting.  It is not intended to be comprehensive but more of a jumping off point.  When you have to call a professional about a certain topic (say, health insurance), it’s nice to know a few things about the topic and know what questions to ask.  Hopefully something here will be helpful as you “adult” throughout your life.

GETTING A REALTOR

Finding a realtor is simple with a google search. Browse the websites and find companies or individuals that appeal to you. Contact a few and see which get back to you.  I think it’s a good sign if they get back to you right away; this means they are available and responsive.

Before you can talk to a realtor about what’s important to you in a house, you have to do some introspection to figure that out.  Do you want to be close to work? in a family-oriented neighborhood? do you want lots of kids running around for your kids to be friends with? Do you like new developments or older neighborhoods? A fixer-upper house with charm or something newer? Once you know what you want you can talk with your realtor about those preferences and the area you’re moving to.  It’s best to find a realtor who lives in or knows your desired area as closely as possible.

BUILDING A HOUSE

I could do a whole post about building a house, but I just want to add a few notes. Most builders won’t carry the construction loan, you have to get that on your own.  Sometimes if a whole subdivision is being built the builder will let you put a certain amount down instead of having a construction loan, but that is not common.  When you find a lot you want to build on, make an offer on it and contact a bank to get a loan for that and the cost of building the house.  You have to have the house plans drawn up before getting approved for the loan, so the bank knows what they’re lending money for.

When you create the house plans with the builder, it’s good to specify whether this is a “cost-plus” or “contract” type of agreement.  In a cost-plus situation, the builder gets a percentage of whatever you spend, whether the costs go up or down.  You get an allowance for cabinets, flooring, etc., and if you go over the allowance you pay the extra plus the builder’s percentage.  This makes sense because you chose something more expensive.  But it gets trickier when certain aspects of building go over budget, like excavation or framing, things that you didn’t choose.  Those type of expenses can go up if the subcontractor has raised their prices or there is more work than they expected.  It’s good to discuss these situations with your builder in advance so you know who will be responsible for those costs.

As your house is being built you will be making decisions regarding counters, cabinets, flooring, etc.  You don’t want your decision making to hold up the building process, so be sure to look into these things and make timely decisions.  Our builder had an in-house designer that helped us choose colors and styles, which was very nice.  If your builder doesn’t have that it can be a little more overwhelming.

It’s not uncommon for builders to be behind schedule, and it’s not always their fault.  Weather and subcontractor delays can be frustrating, but if you’ve told yourself they will happen (prepare yourself mentally!) then you can stay calm.

A few mistakes we made and lessons we learned: on the bid from the flooring company, be sure each line item includes labor.  On ours, the carpet and wood included labor, but not the tile.  I thought I was within budget for the total flooring until months later when I found out that all tile labor costs would be on top of that bid!

It’s hard to think of every detail, and inevitably your house is going to have some shortcomings when you move in.  It’s common to notice the problems and imperfections more than the good, so give yourself some time to get used to the new house. Your enjoyment and appreciation of it will grow over time.  I think this is true of any new house.

Two items we overlooked and would have mentioned earlier if we could do it again are exterior lights and solid doors.  We assumed there would be lights under the eaves of the roofing, like so many homes of our size that we’d seen.  But it was never specified and when we moved in we realized they were missing.  There are some exterior lights, but not as many as we would have preferred.  Also, our designer talked us into hollow doors to save a little money, but we really wish we’d done solid core doors because they feel sturdier and nicer.  Other than that, we were very happy with how our house turned out!

CALL THOSE WORKERS BACK

Here’s another thing I learned from building a house that applies in many areas: don’t hesitate to have workers come back.  When we first moved in our air conditioning was coming out harder in some areas of the house than others and continued blowing below the set temperature.  I called the HVAC people and they came back to take a look.  The worker said that many things were set up wrong.  He spent about 2 hours fixing it and got everything straightened out.  Plus, he gave me a tutorial on the iPad-like tablet where we control the thermostat.  What if I hadn’t had him come back?!

After a few weeks of living in the house our wifi was giving us problems.  It was spotty and sometimes not existent.  We called Xfinity and they sent a worker over.  The same thing happened: he found multiple problems and spent a good while getting everything in order.  The wifi worked much better after that.

The tile in our shower had streaks of grout in various places.  It wasn’t totally noticeable because the grout was the same color as the tile, but as I was showering I would count the places that needed to be cleaned off (there were a lot).  Finally, we got our builder to send in a tile worker and he was able to get it all cleaned and perfect, like you would expect it should have been done the first time.

Lastly, we had a sprinkler system installed and it ran for a few weeks to water the sod.  When the weather turned cold and it came time turn them off, Bryan couldn’t quite remember how the landscape guy had explained to do that.  He tried a few things and ended up calling the guy.  It turned out that there was this very large tool needed to turn off the sprinklers beneath the ground.  The guy had forgotten to leave that tool and show Bryan how it worked!  Moral of the story: always call and ask or have the workers come back!

HEALTH INSURANCE

When you go to the doctor, you hand them your health insurance card and they copy down the information and bill your insurance.  You don’t really know what any of the costs are going to be until you get an “explanation of benefits,” either in paper or electronic form.  This form explains the different charges and what is covered by insurance and what is your responsibility.  Later (sometimes a month or more later) you will get the actual bill for your portion of the costs.  It seems like a lot of paperwork, but there is a reason for each document.

Here are some health insurance terms:

Premium: the amount you or your employer pays every month to continue your insurance.  Many professional jobs pay this premium as one of their benefits.

Deductible: the amount you pay out of pocket before the insurance pays for anything.  This amount can be very high, around $5,000 in many cases.  This means that every doctor visit or lab test will be paid by you until you reach that $5,000.  There are individual deductible limits and family limits as well.

Health Savings Account (HSA): an account where you can put pre-tax dollars to pay for any health care costs.  This money rolls over year to year, so it’s never lost.  It’s a great way to save on taxes and have money set aside for health costs.  You have to talk to you benefits administrator to set it up.

Copay: after your deductible is met, you still have to pay a portion of your office visit or hospital stay costs.  The amount is usually around $25 for an office visit and 20% of your costs for a hospital stay.

Out of pocket maximum: this is just what it sounds like, there is a maximum amount that you have to pay and once that is met the insurance company pays for everything else.  This is in addition to your deductible.  This would apply in situations of very serious accidents or disease with extended hospital stays.  If you have to pay 20% of all those costs it could bankrupt you.  So there is a maximum amount.

Knowing these terms gives you an idea of how health insurance works and what costs to expect.  When you talk to human resources or your benefits administrator, you’ll know what questions to ask and you’ll be able to understand the conversation better.

DENTAL INSURANCE

Most health insurance plans do not cover dental care.  But many professional jobs will include dental insurance as well as health insurance.  Dental insurance works the same as health insurance.

FINDING A DENTIST OR DOCTOR

When you have insurance, you have to go to a doctor or dentist that is approved by your insurance company.  This list is also known as the insurance “panel.” You can search on the insurance company’s website to find doctors and dentists who are on the panel.

FINANCIAL PLANNER

Whether or not to hire a financial planner can be a difficult and personal decision.  Here are some things to think about when making that decision.

If you have a lot of debt and you’re not sure the best way to pay it off or if you have trouble keeping track of your money or budget, it might be worth it to hire a financial planner. However, in my opinion, if you understand the basics of investing (start with pretax options—401k, IRA and HSA—and invest in index funds after that) and you can manage your own money adequately (meaning short term savings, budgeting, etc.), it might not be the best use of time and money to hire a financial planner. If and when you have substantial additional wealth to invest, beyond funding your 401k and IRA accounts, that would be the time to consider professional help to guide you through the options and decisions.

There are many different types of financial planners and different ways they are compensated.  I don’t know everything about the industry, but I can recommend one thing: be sure you know how they are paid. Here are some examples:

If they are paid every time you buy a product like life insurance or annuities, then they will be very enthusiastic about your need to buy those products!

If they are paid every time they move around your investments, then they will move them around more often.

If they are paid a flat fee no matter what happens to your stocks, they might be less motivated for your stocks to do well.

Some brokers and fund managers make money when they meet a quarterly goal.  Their decisions in regard to this goal may or may not be in your best interest.

Of course, you want to find an adviser that you trust and feel comfortable with, but any way they are paid comes with hidden incentives.  These incentives will always be there, but it’s important for you to know what and where they are.

Many financial advisers will take their fee directly out of your money that they manage.  But you should still know how much that is and when they take it out.

To read more about how financial planners are compensated, click here.

There are so many problems with this industry and many laws and regulations have been passed to try to protect consumers. You want to find an adviser that has a fiduciary obligation to you.  This means they are obligated by law to do what is in your favor (not theirs).  Other advisers are monitored by agencies such as FINRA or government entities, but those agencies are not able to control and govern every adviser.

One reason people want an adviser is to find out how much they will have in retirement according to the rate they are saving.  The calculations to estimate this are not too complex, but it’s nice to have someone sit down with you and say, “If you save at this same rate until you retire, and then take out this much a year, here’s how much you’ll have and how long it will last.”

You can find an adviser who will accept a flat fee or hourly rate to have this type of meeting.  Alternatively, if you have your retirement account with an investment firm (such as Fidelity), they have advisers who will meet with you once a year or so for free.  They will go over all your accounts and give you those types of estimates.  They may even give advice on how much and where else to invest in order to boost your savings.

Another place you can get this type of advice is from an accountant. If you hire an accountant to do your annual taxes, you can ask if they will also give advice on retirement savings and tax-advantageous ways to invest beyond retirement.

As you can see, it is a complicated industry.  Hopefully this advice will give you a head start in contemplating your need for a professional financial planner.

LIFE INSURANCE

One of the financial advisors we initially met with turned out to be basically an insurance salesman.  Because of his insistence that we needed whole (or permanent) life insurance, I looked into life insurance options quite a bit.

Whole (or permanent) life insurance

From my reading, the consensus is that whole life insurance is a good option IF you have funded all other retirement and some investment options AND you want to leave money to your children when you die. This is a good option for very wealthy people who need to utilize many more investment vehicles than most of us ever think about. We did not fall in that category.

Term life insurance

Term life insurance is the kind where you pay a fee every month and when you die your beneficiaries get the payout.  The fee increases as you get older and you should probably consider discontinuing it at some point.  As you get closer to retirement you need this life insurance less because your children are grown, and/or your spouse relies on your income less, and/or you have a lot of savings and money in retirement accounts (hopefully!).  So pay the term life insurance premiums monthly and stop when it makes sense to stop.  You may lose all that money you spent on premiums, but that means you lived a long life! It’s like car insurance: you may never use it, but you keep it for the peace of mind.

MORTGAGES

I don’t have any great advice on mortgages because I feel like we did everything the hard way.  We went with a large, established credit union (UCCU) for our construction loan, but the lady we worked with was flaky and unresponsive, so we had to look for other options.  Everyone had a suggestion for a lender, but it’s a pain to start these relationships, discuss your situation and turn over all your financial information.

When you call a mortgage broker they can tell you a little about what the options are, including their current rates, but to get a real quote you have to fill out an application and then upload an extensive number of documents (taxes, paystubs, bank account statements, retirement account statements, explanations for certain expenditures or credit checks, etc.), and often get an appraisal. It’s a lot of work, and we did that for three different banks/firms. We felt like it was very difficult to get accurate and reliable information (i.e., the people we were speaking with were confusing and said different things at different times).

One thing I do know is the process is much easier if you have 20% down.  Anything less than that requires special permission and a lot of, “we’ll see.”  Building a house makes things much more complicated.  We didn’t know if we’d for sure have 20% down because we didn’t know what the final cost of the house was (literally until about a month after we’d moved in!). Also, we had an additional appraisal after the house was built, and the value of the house had gone up, giving us instant equity.  We had no idea how much we’d need to bring to the closing until those two numbers were finalized.

We could move in before doing our final mortgage because our construction loan lasted for 12 months.  It was cheaper to just pay the interest on that construction loan anyway, so we continued with that while we moved in and waited for those numbers to come through.  Then we started talking to two different mortgage companies and finding out what they could offer.  It’s really hard to know if you’re getting a good deal or making the right decision. One difficult choice is between a 30-year fixed loan and an ARM (adjustable rate mortgage). The ARM was a lower interest rate, but it has some risk because after a certain number of years (7 in our case), the rate can be adjusted.  It’s a good idea to refinance before the 7 years is up, maybe getting into a 30-year fixed mortgage at that point, or even a 15-year fixed (which has great interest rates).  When you refinance you have to pay closing costs again, and you take the risk of higher rates. But, for us, the 7-year ARM made sense because it gave us a good rate right now and in 7 years our financial situation will be very different.  Bryan’s practice will be up and running and most of our kids will be out of the house.  So, we can afford the closing costs at that time, and we are hoping that rates stay the same or at least don’t go too crazy!

LUMP SUM PENSION ROLLOVER

Not many companies offer pensions anymore.  Pensions are also known as “defined benefit” retirement plans.  This means that you get a defined amount from the company when you retire, monthly until you die, as part of your benefit package.  The reason these went out of favor is because too many companies went bankrupt or mismanaged their pension funds and so retirees ended up not getting the promised money.

It is more common for companies to offer a “defined contribution” retirement plan, which means that you can contribute to a 401k (or 403b if you work for a nonprofit) which will hold and grow your own money. Your company may also contribute to the account, as part of your benefits.  If the company goes out of business, you still have your money, and if you move, you can take the money with you.

We had a pension at Mayo. When we left we were given the choice to keep it and acquire the money when Bryan retired, or roll it over into an IRA (Individual Retirement Account) and let it grow.  We consulted a few different professional opinions, and everyone agreed: it is more advantageous to roll it over to the IRA and let it grow with the market.  We were overwhelmed by this decision and process at the time, but now I realize it was not that big of a deal.  The decision was clear, and since Bryan already had an IRA account (through Vanguard), we just had to fill out the form with that account number.  We went through two different financial planners in part because we weren’t sure what and how to do this step.  The meetings with the planners were laborious, time consuming and stressful.  We ended up not going with either of them (for reasons outlined above), and just figured out the pension rollover on our own.

DISABILITY INSURANCE

For many professions, disability insurance is not necessary or warranted. It is expensive, and many jobs can still be done with a physical disability.  But most physicians have disability insurance because they make a high salary and any tremor or slight problem with their hands means they cannot do their job.  Here are some terms to get you started when you are considering disability insurance.

When you talk to an insurance agent he will ask questions about your income and your health, and then he will give you some options. You can ask right away that he send you an “illustration.” This is an 8-10-page document that explains all the policy features and optional riders (see below). It’s very helpful to see this illustration to start to get a sense of what is standard in disability policies and what is extra. After reviewing the illustration, you can speak with your agent again, ask him/her to explain the features more in depth, and fine tune which features you want to keep and which you want to discard.

Just for reference, disability insurance can range from $500-1000/month, depending on your age, health, and the chosen features.

Premium: same as in health insurance, the amount you pay per month for the insurance policy.  Often there is a discount if you pay for a whole year at once.

Elimination period: amount of time between the event that caused the disability and when the insurance payments start coming to you.  The shorter the elimination period, the more expensive the premiums for the insurance.

Total monthly benefit: the amount the insurance will pay you per month if you are disabled.

Own true occupation: a type of disability insurance that will pay you if you can’t do your own specialty, even if you could do another job.  Many disability insurances have small print that says if you can do any other job (consulting or teaching biology, for example) or you make money doing something totally different (start a business, write a book), then you won’t get the payments. If you get the “own true occupation” policy then this won’t happen.

Rider: an add-on provision to a basic insurance policy that provides additional benefits (usually at additional costs).

LICENSE PLATES/DRIVERS LICENSE

For some reason, finding out how to switch over our license plates and drivers licenses in Utah was very difficult. The online information was inadequate and it’s confusing to know which department and location to go to.  I finally figured out where to go and what to bring.  Here are some of the things I learned:

To get a license plate in a new state you have to take the title of your car and proof of registration in the old state.  If the car is leased, you also have to have a letter from the leasing company stating that you can register this car in a new state (sometimes this is a power of attorney letter). If the car is to be registered in your and your spouse’s names, you need both of your drivers license numbers. If you have a loan on the car, you might need other documentation, I’m not sure.

To get a new drivers licenses, most states require a test, but it is usually an open book test.  The lines at the DMV are shorter earlier in the day, so that’s when I’d recommend going. You have to take your old license and a piece of mail at your new (local) address.  You might as well bring your social security card, also, because you never know what they’ll need or ask for! And of course, there’s a fee, so bring your wallet.

One thought on “Adulting

  1. Marilyn Barr February 13, 2018 / 2:49 pm

    This was so informative. I’ve purchased three houses and overseen the building of two. This would have been a great reference while going through all of these things. Very concise and just what you need to know. Great term paper!! And one that many can benefit from. Thanks Lisa. .

    Like

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