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This site is infrequently updated. In the mean time, I am writing bi-weekly about life & stuff & things via newsletter.
a girl lives in brooklyn
Metlife is an insurance company that also deals with life insurance policies. For beneficiaries, they offer a Total Control Account (TCA). This is a draft account to hold your policy pay out for you “while you go through this difficult time.”
To be clear, the Metlife TCA is not a bank account; it is not a checking account; it is not a savings account. It is not FDIC-insured; it may or may not offer a competitive savings rate; your funds are not as easily accessible as Metlife would like you to believe. Metlife is earning more on the interest of your money than you are.
Money is complicated because a lot of times it is tied to emotions. Death is also complicated and emotional. Unfortunately, the two often meet at a time in our lives when the last thing we want to think about is money. When a loved one dies, there are suddenly a lot of questions that you are expected to answer on the spot. These are things that we have done zero research on. And due to natural circumstances, there isn’t time to shop around. Also, when a loved one dies, your brain turns to mush and stops working. When it comes to these questions, you say a lot of, “I don’t care” and “What do you think?” because you can’t think about anything else other than missing this person who is now gone forever. Nothing will bring this person back so why bother thinking about it. Unfortunately, people and businesses know they can take advantage of this.
When my father died in 2014, all he left was a savings account with a small amount of money in it. Once the death certificate was processed, the bank mailed me check. Easy peasy. When my mother died in 2015, she left a life insurance policy where I was one of the beneficiaries. I didn’t realize this until I received a letter in the mail from Metlife about six months after her death. The letter included a beneficiary claims form that had to be completed. It was fairly straightforward and mainly asked identification questions. I did not need to attach a copy of the death certificate. I was not aware of this policy or that I would be a beneficiary, so all of this was a surprise. Also, receiving this six-months after the death brought up a lot of emotions again. So be prepared for that.
On the form, they ask how you would like to receive the policy benefits. Your options are: 1) Lump sum, or 2) Total Control Account (TCA).
Although a lump sum may sound overwhelming, beneficiary payouts aren’t (usually) taxed, so that is one less financial aspect to have to worry about.
The payout amount was not included on the form and I doubted they would tell me over the phone. With my two options, I decided to see what a Total Control Account is just in case it is the better option. From the get go I was planning on going with Lump Sum.
It was difficult to find any non-biased information on the Metlife Total Control Account, which is why I wanted to write about it. There are criticisms of it. In 2010, the company was taken to court because the account was then named Total Control Money Market Account. They were sued over the misleading “Money Market” name, where people were led to believe that it was a bank account when it’s not. The only positive information I could find was from Metlife itself.
I am being fairly objective here but, honestly, I don’t think it’s a good idea to keep large sums of money in a non-FDIC insured bank account.
Here’s a breakdown of the account. It is a draft account. I want to make it clear that this is not a saving account and not a checking account. To withdrawal funds, you are given a draft book from Metlife. They call it a checkbook, and call the papers checks, but it is actually a draft book and you are making drafts. You cannot deposit any money into the account, only withdrawal. In order to withdrawal your money, you have to write a draft to yourself then go to a bank (or check cashing facility) and cash it. However, there is a minimum withdrawal of $250.
These are not checks. You can’t write one to the grocery store, or the funeral home. You can only withdrawal your money when you have access to a place that can cash checks. This may require some planning and should never be used as an emergency fund.
On the plus side, you can write a draft to yourself for the full amount of your account, which will automatically close the account. Or you can save yourself all this headache and just take the Lump Sum.
What about interest rates? The Metlife TCA is insured by Metlife but not by the FDIC, as is the case with most bank accounts. According to Metlife, their interest rates are “competitive”. They state that some of their Metlife TCA accounts are earning 3% interest, though it is more likely you will earn less than one percent.
Of course Metlife earns interest on your money, too. Since they are the ones holding it. Seven years ago, Metlife made $10 Million in investment earnings on these accounts.
My main caveat with the Metlife TCA is it feels deceiving. Metlife’s literature claims that they are doing you a favor by offering you this account. They take the decisions off your hands during this emotional time so you have one less thing to worry about. You can keep your money in their Metlife TCA and worry about it later. Though, honestly, I’m not sure how that’s any easier than receiving the lump sum and immediately depositing it into your bank account to worry about it later.
Another issue with the account is, despite the catchy name, you really don’t have any control over your money. It is difficult to access and you aren’t choosing the best place for your money. By receiving the lump sum instead, you can choose to put it in a high interest savings account, a CD, or another type of investment. Again, you don’t have to do that right this second. This is an emotional decision. It is an emotional time. But if you have these benefits in one of your bank accounts, rather than a draft account, you have more options open to you down the road.
Remember, Metlife is an insurance company, not a bank.
If you are dealing with this currently, I am sorry you are going through this. Take your time with the decisions you can and don’t rush into anything. If you are not dealing with this right now, inevitably, you will. Learning about these issues will help you make smarter decisions in the unfortunate time that you will have to.
Click to play
This Disney short on capitalism covers a lot for a cartoon in song-form.
Here’s a breakdown:
Personal Budget (start-1:45)
Let’s say your income is like a pie, there’s a piece for everything you buy. Always remember to save a slice for yourself. After all, it’s your pie. And that’s how I became rich.
Without our taxes we would have no government at all.
Money shouldn’t be idle, it must be put to work you know. Money should never stagnate, but circulate.
Last December, I made some life goals for 2010. Even though I was laid off in the beginning of the year and ended a long-term relationship at the end of the year, I still was able to complete a majority of them.
Let’s see how I do in 2011:
Pay 10% of my monthly income as a student loan payment
Currently, my student loan payment (my only outstanding debt) makes up 6% of my income. If I continue at that rate, it will take me ten years to pay it off. If I increase that to 10%, it will take me five years. Hopefully by the following year, I can contribute even more.
Double my emergency fund
I will refocus and prioritize putting money into my emergency fund every month.
Track entertainment, clothing and misc expenses better
I have never quite specified what I consider “entertainment.” If I buy someone a birthday card, buy myself a new shirt, or bring wine to a friend’s house, I put all of that in my “entertainment” category even though it does not quite apply. Unfortunately, using such a broad category makes it difficult to track spending effectively. So, my 2011 budget will consist of a separate “clothing” and “misc” category. This is because I want to see just how much I actually spend on these items a month.
There are plenty of personal finance tools available online. When beginning a personal finance journey, you might start with finance-tailored tools, thinking that if they have to do with money and a budget, they will get you on the right track. I suggest starting even simpler.
If a budget is the key to maintaining personal finances, then setting goals is the keyhole. Having a budget will not get you far if you do not have a reason to stick to it!
My new roomate saw me in the kitchen the other day and said she was impressed with my cooking skills. When I asked if she cooked, she replied, “by necessity.”
“By necessity” is exactly how most of us learn to handle our finances. Very few people have been taken step-by-step through balancing a budget, reviewing a check book, tracking bills and managing a savings. Instead, we are expected to figure this out for ourselves. It is no wonder so many people fall into debt.
There are a plethora of cooking shows on tv. Every cuisine, style, and cook time is shown with complete details and visual instructions of how to prepare each dish. Then you have personal finance, which is rarely mentioned on television.
When money is shown in the media, it is often because someone won or lost a large amount of it. Sitcom couples are rarely shown balancing their budget or saying they cannot afford something (without it being the joke of the episode). In fact, the only time money is usually discussed on television is during a credit card commercial.
Society in general tends to hush conversation about money. Salaries are never to be mentioned among friends, budgets are a boring topic, and no one wants to be the one who “can’t afford it” in the group.
As a child, money is invisible. It is not until your first job that money becomes relative and even then, it is merely disposable income as most 16 year olds live at home without many bills.
Without being taught how to handle money or given real life examples of proper budgeting, along with being surrounded by credit card companies, it is no surprise that we make financial mistakes! (more…)
Back in December, I made some life goals for 2010. Since then I was laid off, unemployed for two months, found a new job and doubled my commuting costs (and time).
Amazingly, I have been able to cross some of the goals off my list! Let’s review:
So now that my car loan and credit card (both high interest) are paid off, I am re-allocating more funds for my student loan and my savings. I have mentally started a travel fund by increasing my savings goal. I will separate this out later.
I am not sure how I feel about having a stable side project at the moment. Right now, I am being fulfilled by my job (both mentally and logistically), so I do not feel it is that important to have an ongoing side project. I would prefer to put my time into increasing my sewing skills, which I have started more recently.
I will focus on friendships for the second half of this year now that the stress of my high interest debt is out of the way, I feel a bit more relaxed in terms of socialization.
I kicked off the new year with a polar bear swim. If that’s not “living life to the fullest” I am not sure what is! I have also learned how to indoor mountain climb, improved upon my ice skating, and started working in NYC. There are definitely some opportunities I have missed, but for now, I have a balance and am happy with the progress of this goal.
The year is already half over, how do you feel about your life, finances, mental health, what-have-you thus far? What is going well? What will you improve upon or change? Share in the comments below!