Love, Money + Real Estate #25

What goes up must revert to the mean

Spending money. Saving money. That’s what everyone’s thinking about now that we’re into January.

If you’ve got debt, your January Blues may be focused on your credit card bills, and the ever-escalating interest rate you’re paying on that debt. In cases where your underlying credit score is less than fabulous, you might be paying an APR as high as 29.99 percent. Or, something a bit higher.

How much debt are you carrying? According to the Federal Reserve Bank of New York, Americans had $1.079 trillion in credit card debt in Q3 2023. That’s the biggest number since 1999, when tracking credit card debt became a thing.

Are you carrying any debt? Let me know. I’ve got a few ideas on how you might be able to cut down that debt.

---

Real Estate Property Tax Bills

January is typically when the first installment of real estate tax bills come due. If you’re paying that bill monthly along with your mortgage, you’re probably seeing a spike in the monthly payments. If you’re writing that check yourself, it may come as a shock.

A year ago, Rocket Mortgage took WalletHub data and listed the most and least expensive states for real estate property taxes.

Cheapest property tax states:

• Hawaii

• Alabama

• Colorado

• Louisiana

• District of Colombia (D.C., not a state, I know, but categorized as such because they have their own system to tax property)

• South Carolina

• Delaware

Most expensive property tax states:

• New Jersey

• Illinois

• New Hampshire

• Connecticut

• Vermont

• Wisconsin

• Texas

But home prices have skyrocketed in most of these places, and pushing up the tax burden. So, if you haven’t received your tax notification for 2024 yet, watch out. And, start saving.

---

And, Insurance - If You Can Get It

In Monday’s Wall Street Journal, the CEO of Allstate lamented that there will be “insurance deserts,” as more insurance companies leave high-stakes areas like California, Florida and Louisiana.

In addition to climate change disasters in those states, insurance company executives are concerned about the wildfires in areas between Salt Lake City and Denver, and the Appalachian Mountains from Tennessee to New York. And, then there’s Texas. And the expanded FEMA flood maps. Climate change is causing billions of dollars of losses, which is making everyone up and down the insurance food chain nervous.

With good reason. Global insured losses due to extreme weather have been nearly $150 billion in the past two years. When 2023’s numbers come into focus shortly, it will be another year of massive losses in excess of $100 billion, according to a report from Gallagher Re and Swiss Re, two of the largest reinsurance companies.

The Wall Street Journal article noted that companies are “quiet quitting” certain areas of the country, discouraging people from applying for homeowners insurance or auto insurance coverage. They’re spending less on advertising. And if you do manage to call in, you may find yourself being asked for hard-to-find documentation in order to “qualify” for a policy.

But is anyone really surprised? Climate change has been causing ever-more-expensive catastrophes, from the wildfires of Canada last year to those in California during the pandemic. Crazy rainstorms that dump a foot or more of rain in places that are newly classified as flood zones (so new, you might not realize you’re living in one). Snow that piles up so high it causes roofs to collapse. Hail the size of grapefruit. Tornados as powerful as hurricanes. And, then, hurricanes, earthquakes, mudslides, all of which are becoming more prevalent as the world warms.

Think about it. Why should the ocean be as hot as your hot tub?

The bottom line is that homeowners and drivers are facing sharply rising premiums, less coverage and fewer, if any, choices of insurer. A friend who owns a single-family home in Florida (5+ miles inland) said his auto and homeowners insurance premiums have tripled in the last couple of years. He can afford it. But a lot of people can’t.

In some places, the only options are bare bones coverage or none at all. That can make homes worth less and harder to sell, and cars less affordable.

This is a big problem that isn’t going away. It’ll only get bigger. Anyone have a solution?

---

This week on ThinkGlink.com

Why did my credit score drop?

How to calculate the square footage of a home

Should I put inherited property in an LLC?

Is there a real estate or personal topic you’d like to see covered? Let me know. Or, send a question to Questions@thinkglink.com.

---

This week on Best Money Moves

Best Money Moves is my financial wellness company. We have built an easy-to-use platform that helps people make their best money moves every day. We work with companies that give us as an employee benefit or who build us into their platform to enhance their financial wellness offering. Soon we’ll introduce our first consumer version of the product, and later this year, our first major upgrade to the product in a few years. If you’re looking to help your employees improve their financial wellbeing, please reach out. I’d love to help.

In the meantime, here’s what we’ve recently published on Best Money Moves.

3 Impacts of Employee Student Debt in 2024

2024 Employee Benefits Trends: Focus on Employee Wellbeing

---

That’s it for now. Thanks for reading, and I’ll type to you again, soon.

Ilyce