Why You’ll Owe More in 2004

Make sure your wallet’s in shape because it’s likely to get more exercise next year in many parts of your life.

Here are just some areas (with possible relevance to your lawn care company) where there are likely to be price hikes on tap:

Car Insurance. The Insurance Information Institute (III) projects the average auto insurance premium will rise 6 percent to $898 a year, an increase of $51 per vehicle for the average car owner.

The III blames the rising cost of medical care, vehicle repair and the rise in jury awards in liability cases. Auto theft and insurance fraud also play a part.

Health Insurance. The cost of health insurance has been climbing for years, and 2003 proved no exception. Monthly premiums for employer-sponsored plans rose nearly 14 percent, the largest increase since 1990, according to a recent study by the Kaiser Family Foundation.

And when premiums and related costs rise (deductibles, co-payments, prescription costs), most employers pass the increases onto their employees. According to Kaiser, the average premium employees now pay for family coverage has now jumped nearly 50 percent over the past three years, to $2,412 from $1,619.

Expect more of the same in 2004. Many companies, particularly those with more than 200 employees, told Kaiser they are very likely or somewhat likely to increase employee contributions and cost-sharing in 2004.

Heating Costs. Digging for cash is one way you’ll find to keep warm this winter. The price of natural gas is expected to rise to $9.29 per 1,000cubic feet, up from $7.98, according to the Department of Energy. For Midwesterners trying to heat their homes, that jump could translate to an extra $50 a month in winter.

Electric heat users may also see higher bills, since some electric suppliers use natural gas for generation.

But what about the Northeast, where 82 percent of the nation’s heating oil is consumed? Since inventories have dropped 18 percent below last year, that is likely to keep the price of heating bills at or above last year’s average total of $1,084 in winter.

Interest Rates. Deficits and economic rebounds can cause interest rates to jump. Since the U.S. economy is experiencing both to different degrees, the likelihood that interest rates will rise in the next year are better than not.

And with the yield on the 10-year Treasury – the benchmark to which mortgage rates are most closely tied – at or near a one-year high, coupled with the fact that mortgage rates have climbed from record lows, it’s likely the new home you’ve been eying could cost you more in interest next year.

Source: CNN/Money