Posted in Budgeting for Everyone, Building Wealth, Financial Freedom, Quick Guide to Insurance, Winning with Your Money, You and Your Money

6 Types of Mandatory Insurance

health-insurance

In today’s insurance world, there are hundreds of types of insurances available.  This can be overwhelming at times – trying to decide what you should have and what is just a gimmick.  With so many gimmick insurances out there that sound good, I want to help you sort through them so that you have everything you need in case “life” happens to you.  Today, I want to share the 6 types of insurance policies everyone should have.

  1. Home/Renters – If you live on your own, you need some type of insurance to cover your belongings.  Home insurance is obvious and is required by mortgage companies to have.  But renters insurance is just as important.  If you are renting, you don’t need to replace the actual home/unit you live in.  However, your stuff is valuable and you would want something in place to cover if anything happens to it.  Renters insurance is extremely inexpensive.  Just like all insurance, don’t overbuy.  A $10,000 policy is enough in most cases.  Take an inventory and make sure you have enough to cover your valuables.
  2. Auto – Auto insurance is another mandatory insurance if you own a vehicle.  Make sure you have enough to cover the car you own and that you have the right coverage for the age of the vehicle.  Make sure your deductible is in line with your emergency fund.  If you have a good emergency fund, raise your deductible in order to save money.  Going from $500 to $1000 can save you hundreds a year.
  3. Health – At the moment health insurance is mandatory with a penalty if you don’t have it.  But many Americans have chosen to pay the penalty over having the insurance.  I know health insurance is crazy right now, but not having it can cost you way more than having it.  You may be young and healthy, but that can change in a moment.  Our son had his appendix removed a few years ago and without insurance it would have cost over $50,000.  Without some form of health insurance he would have been responsible for that and most 26 year olds don’t have that kind of cash laying around.  Shop around and find some form of health insurance even if the deductible is a little high.  $5,000 is easier to pay off than $50,000.
  4. Life – If you have a spouse, kids, a house, debt, you must have life insurance.  When you die, you don’t want to leave a burden for your spouse or family.  At the very least, get a term policy to cover your income and debt.  Ideal is to get 10 times your income and I highly recommend this, but so many people get no insurance because they think they can’t afford the ideal.  Start somewhere and add to it as you can.  Term is always better than life, but something is better than nothing.
  5. Long Term Care – If you are 60 or older, you need long term care insurance.  People are living longer and the price of elderly care is rising.  The younger you are when you get long term care insurance, the less expensive it is.  And if you all the sudden are diagnosed with something, you may not be able to get it.  Remember, this doesn’t just cover a nursing home – it covers in home care and many other items that health insurance won’t cover.
  6. Long Term Disability – What would happen to your finances if you were disabled or had a long term health condition?  This insurance will help relieve the stress of an already stressful situation.  Again, this is a relatively inexpensive insurance, but can change your world if needed.

There are a few other that may be good to have in your situation – umbrella policy, identity theft insurance, etc.  But you need to understand that many policies seem like a good idea, but are really just gimmick insurances.  2 examples come to mind right away – pet insurance and cancer insurance.  An emergency fund will cover any pet costs and your health insurance and long term disability will cover cancer cost.  If you run the numbers on this policies, you would see that if you take what the policy costs and save it, you will be covered if the emergency happens.

So now that you are ready to get your insurance portfolio up to date, where do you go?  I always recommend an independent agent who can shop the best policy and company for you among hundreds.  Your goal is to get exactly what you need at the best possible price.  You may be saying “I can’t afford all this insurance” but can you really afford to not have it?  Shop around and set a goal to have all six in place as soon as you can.  You won’t regret it!

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Posted in Quick Guide to Insurance, Saving for Your Future, Winning with Your Money

Being Prepared

A week ago, here in the Northeast, we were preparing for a rare direct hit from a hurricane.  Because of the false alarm from last year’s hurricane around this time, many people didn’t take the warning seriously and they were not as prepared as they should have been.  However, there are things you can do now and every year that make you prepared, no matter what the emergency.

The results from this storm are devastating and we pay attention because it happened to so many people at once.  However, disaster of this kind can strike at any time in many forms.  The key to handling any disaster, or life as I like to call it, is being prepared.  Here are some key ways to always be prepared:

  • Always have an emergency fund of 6 to 8 months – My husband did not go to work last week for 4 days due to a power outage at his office.  But we were able to look at it as a mini vacation instead of a tragedy because we were prepared, financially.  When you have this emergency fund in place, it gives you the peace you need when an emergency hits.
  • Make sure your insurance is right for you – You want to make sure that you have the best insurance for you at the best price.  You must have current auto insurance and either home owners or renters insurance, no matter what.  Once you have $1000 in your emergency fund, you should consider raising your deductible to $1000 in order to save money on your monthly premium.  If you have good coverage and an up-to-date policy, you should have no issues when an emergency arises.  You will be inconvenienced and you will have to deal with the adjusters, but in the end, everything will be taken care of and you can get back to normal right away.
  • Breathe and make wise decisions – We have a tendency as humans to panic first, which can lead to bad decisions, which will then lead to months of dealing with the consequences of those decisions.  When you are in an emergency situation, stop and breathe, if even for a moment.  Taking this moment can be just enough time to calm you down enough to see beyond the emergency.  I saw news reports this week where people were so panicked that they believed that they would die without power.  Yet many other people were without power just as long and were calm.  This was possibly due to that moment of breathing that led the calm person to control what they could control and let go of what they couldn’t.  When we take a moment to remove the drama of any situation, it positions us to make wise decisions with positive results.
  • Literally, be prepared – My daughter is a Girl Scout and is always learning how to be prepared.  You never know when the power could go out or your refrigerator could go out or your heater could die, so you should always be prepared with batteries, flashlights, candles and a plan of where you might be able to go if you need help.  Invest in a portable power booster that will help you get yourself organized in the first hour or two of a power outage.  Also, make sure that you share your emergency plans with your children so that they are also prepared and not scared should an emergency occur.

Your emergency fund prepares you for any emergency that may come your way just like having flashlights and candles always will prepare you for losing your power.  Being prepared is a huge step in maintaining peace in any situation.  Be a person who is proactive instead of reactive.

Posted in Budgeting for Everyone, Debt Free, Quick Guide to Insurance, Saving for Your Future, Winning with Your Money

The Savings Experiment – Part 1

By now, you know it is wise to do and maintain a monthly budget because if you don’t pay attention to your money, it will disappear right before your eyes.  However, some people don’t realize that they are in complete control of their budget and their expenses.  You choose what kind of shelter you have, what kind of car you drive, and how much electric you use.

Since you are the author of your own story, I would like to help you when it comes to savings.  There are possible savings in every category in a budget and you get to decide whether you want to save your hard-earned money or keep giving it away.  I always recommend a balance.  Figure out what is most important and keep those few items and save in other areas where it is a little less painful.  For me, it was the internet.  I just didn’t want to not have internet in my home, so I sacrificed in other areas to make it happen.

Here are some savings to consider in your fixed expenses:

Rent or Mortgage – How much house or apartment do you really need?  Living in a small apartment can save you $6000 – $9600 per year.  This doesn’t have to be a permanent living situation, but you could really make progress if you tried it for a year or two.

Insurances – Once you have a small emergency fund of at least $1000, change your deductibles on all of your insurances to $1000.  This can save you hundreds per year.

Cell Phone – There are plans out there now that are $50/month unlimited everything.  If you are under contract with a company, drop anything that you are not using or that is not necessary.  FYI – A teenager only needs a basic phone with, maybe, unlimited texting.  Added to a family plan, this is about $20/month.  If you have the internet at home, you may not need it on every phone in the house.  You don’t have to go bare bones if you don’t want to, but be wise with your costs.  You probably don’t need everything you have now.

Electric – Turn off and unplug items when they are not in use.  Turn up or down your thermostat when you are not home.  Open windows on beautiful days like today.  Wash your clothes in cold water.  Dry your clothes on the energy cycle and only for as long as is necessary.  Don’t leave computers and cell phone chargers plugged in when not in use.  Maintain your heating and air conditioning units.  Wash dishes by hand from time to time.

Cable – Try to find the best deal possible if you are going to keep cable.  If you want internet, as I did, you can usually bundle in cable and home phone for only $30 more than internet alone.  Search for the best deal and negotiate a 2 year contract or more to lock in the rates.  Don’t be afraid to change companies.

Credit Cards/Student Loans/Personal Loans – You must stop using credit cards for them to go away.  Use your extra savings per month and pay off your debt as quickly as you can.  Many people could free up from $200 – $1000 per month just by getting rid of credit cards and loan debt.  The only way to keep your money is to stop giving it to other people.

Car Loans – Either aggressively pay them off or sell the car, even if you lose money.  You can save $5400/year by getting rid of a car you couldn’t afford and getting one, with cash, that you can.  Use the extra money to get out of debt and build savings and then save for a newer car.

Remember, some of the major sacrifices you may choose to make are not permanent.  You get to choose how you live your life.  But think of all you could do with no debt and money in the bank.  I have found that I enjoy that life and have continued my savings even when I didn’t have to.  I like keeping my hard-earned money.  You should too.

 

Part 2 tomorrow – How to save with your controllable expenses