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

 

 

Posted in Quick Guide to Insurance

Life Insurance 101

Question:  My husband and I are in our late 30’s with 2 kids and are looking at life insurance options.  I noticed that whole life is much more expensive, but the agent is telling me that whole life has a savings plan included that we can borrow against if we need to.  Is whole life or term insurance better?

Answer:  Thank you so much for this question.  I love any opportunity to help people understand about life insurance and to squash the myth about whole life.  First of all, let me address who should have life insurance.  Any adult should have life insurance.  But it is imperative to have life insurance if you have kids or a spouse depending on your income to survive.  The next most important question is how much should I have?  You will want to get about 10 times your annual income on yourself.  If you are a homemaker and do not have an income, you will want to get about $400,000 (equal to $40,000/year income – the cost to hire someone to do what you do).  If based on your age and health, you can get more for very little money, that is ok too.  10 times is the minimum. 

Now the big question.  What kind to I get – term or whole?  The answer is 97% term ( I will explain the 3% in a moment).  Let me explain how whole life works and this should clear it up for you.  You are going to pay at least 10 times more a month for the premium on whole life for less coverage.  The main selling point they have is the savings plan you mentioned.  But it is not a savings plan at all.  It will, as the years go by, build up a cash value in the policy that you can borrow against.  However, when you die, your beneficiary does not receive the savings.  They will only receive the original amount of the policy.  So, therefore, you have wasted the extra money you paid for the policy.  What you want to do is buy 15-25 year (based on your age and the age of your kids) term life insurance.  This is always your best buy.  The 3%, mentioned above, is for people who cannot get term life insurance.  Sometimes, people are uninsurable due to health reasons.  You need some kind of life insurance, so only then do I say get whole or guaranteed life insurance, whatever you can get.

You will want to shop around and find the best rate on term life insurance.  The rates are very low and very competitive right now.  Thank you for your question and thank you for taking care of business.  If you need anything further, contact me at www.debbiking.com.