Ask Karen Gibbs

Veteran business correspondent Karen Gibbs answers your personal money questions and addresses current topics that affect YOUR finances on a daily basis. Karen is the financial expert in your corner--no question is too basic or too small. Karen boils down the issues simply: here's what you need to know, and here's what you need to do. Send your money questions to and post your comments below.

fsaHi Karen, my employer still provides health insurance, but with a high deductible.  How can I lower my costs?
    Joanna, Hagerstown

Joanna, thanks for another example of smart thinking about your money.  As more employers look to save on health care costs, more employees are going to find themselves in a high-deductible health care plan.  The good news is that the premiums for those plans are a little lower, leaving you more money in your paycheck.  The drawback is the high deductible if you or a family member needs medical care.

Fortunately, you do have options.  Flexible Spending Accounts (FSA) and Health Spending Accounts (HSA) are ways to lower your healthcare costs and your taxes.

Both accounts are funded by pre-tax dollars and are available to those whose policies carry an annual deductible of at least $1,250 for an individual and $2,500 for family coverage.  These accounts can be used to pay for deductibles, co-pays, out-of-pocket medical ...

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debit cardKaren, can you explain the difference between a prepaid debit card, a bank issued debit card and a credit card? 
    Shondra, Baltimore

Shondra, a credit card is essentially and unsecured loan.  Based on your credit history, a credit card issuer (such as Visa or MasterCard) may approve you for a limited line of credit.  You can borrow on this line of credit at a rate of interest charged by the issuer.  If you pay off the entire balance within a certain amount of time, you can avoid interest charges.  You may be charged an annual fee for the card.  You cannot be charged for going over your credit limit unless you agreed or “opt-in”.

Credit cards can offer discounts, reward points or cash back on transactions.  Your liability for unauthorized transactions is limited to $50.  Many credit cards offer warranty protection for the purchased item over and above the manufacturer’s warranty.  Credit cards are better if you ...

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inheritance purseKaren, my husband and I are due to receive a five-figure inheritance.  He wants to spend it, I want to save it.  What do you suggest?
    Annette, Clarksville

Congratulations on your good fortune, Annette, and kudos to you two for having a discussion before you receive the windfall.  Being on the same page with regards to how you spend and save is a pillar of a stronger union.  Many times an unexpected windfall brings a rush of emotions that leads to poor choices.  Having some time to prepare can lessen the emotional impact of new found wealth. 

My first question; do you have an emergency fund?  The recent government shutdown and resultant employee furloughs underscore the need to have an emergency fund.  Most personal finance advisors recommend having at least six months of expenses on hand, just in case.  That may or may not be realistic in your situation, but I would suggest taking at least half of your new found wealth and placing ...

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car in shopping cart

Karen, I’ve never bought a car on my own.  Now, I need to replace my clunker.  Where do I start?
-    Diane, Bel Air

A timely question, Diane, as the 2014 models are starting to arrive at a dealership near you.  But before you get lost in all the bells and whistles, think carefully about what you need in terms of transportation.

Can you drive a stick-shift?  Manual transmissions are cheaper than automatic.  Do you have a family?  Kids that need transportation to soccer games, etc.?  Two-door, four-door or hatchback?  Are you into the hybrids, electric cars or diesel?  Two-wheel, four-wheel or all-wheel drive?

How much power do you want?  Will a four-cylinder work or is that 12-cylinder monster calling out your name?  Do you want to buy a new car or will a used car suffice?  If a used car is to your liking, how old and how many miles on it?  Most importantly, what’s your budget?

Are you comfortable ...

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October 1st brings the rollout of the Patient Protection and Affordable Care Act, also known as Obamacare.  Upheld by the Supreme Court of the United States, this law guarantees insurance that covers pre-existing conditions, offers access to standard preventative tests with no out-of-pocket costs, contraceptive coverage without co-pay and removes annual and lifetime benefit limits.  

If you have health insurance provided by your employer, or by Medicare, or if you’re one of the 15 million who purchase your own insurance, you don’t have to do anything.

If you’re one of the 34 million who need insurance, or if you’re having trouble paying your premium, you will be able to comparison shop and purchase insurance through an online health insurance exchange or marketplace.  You can choose between four levels of coverage:  Platinum where insurance picks up 90% of expected medical costs and you pay 10%, Gold with an 80/20 split, Silver with a 70/30 ...

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