Business, Finance, Insurance, Lifestyle

How to Save Money on Auto Insurance

by Benjamin Roussey|Posted on | 3 minute read | Advertiser notice

The amount you pay for your auto insurance premium varies by a few hundred dollars. This principally depends on the type of vehicle you own and who your insurer is. However, you can certainly increase you savings when paying your auto insurance in the following ways.

Before buying the car, study insurance costs:  Before you buy a used or new car, check out its insurance cost. The premium will be based on the vehicle’s price, costs of repair, its overall past safety record, and its likelihood of getting stolen. And if you live in San Francisco, that could be even higher since that city leads the country in property crimes and it seems the people there do not even care but this is another topic!

You may also get discounts from insurers for any special feature that the vehicle has to reduce the risk of injury or theft. Safety rankings for certain models may be checked using the rating tool for top safety picks of the IIHS or Insurance Institute for Highway Safety.

Look before you leap: That in other words means shop around. Premiums vary from insurer to insurer, so make a comparative study, getting at least four price quotes. Searching online is the best way to do it as you get all the quotes on a single Excel sheet and making a choice becomes easier and faster. Or else, call insurers directly or even the insurance department of your state which may give you some comparative premiums payable to the major auto insurers.

Prices, however, shouldn’t be your only deciding factor. Consult relatives and friends and take their advice, too. Working with an insurance agent or professional dealing in auto insurance will also get you the answers to all your questions.

Older cars can do with lesser coverage: Make sure to thoroughly review the total coverage you receive during the insurance renewal time to ensure that your insurance is in perfect sync with your specific and total requirements. For instance, if your vehicle’s worth is less than ten times the payable premium, turning the ignition (pun intended) for such coverage is not a sensible thing to do. In such cases, simply do away with comprehensive and/or collision coverage. The value of your vehicle is easily calculable online through various free sites such as Kelley, NADA, and TrueCar.

They will not count those nice rims on your car or the new paint job so these numbers may not be the full truth.

Higher deductibles lead to lower premiums: You pay a deductible before the insurance policy becomes officially operational. When you choose an enhanced deductible, you stand to lower costs significantly. However, if you select a higher deductible, be sure to keep enough cash aside to pay it out should a claim arise.

Reliable credit history: Anyone with a decent credit history gets many benefits, and this includes reduced insurance costs. The bulk of insurers uses your credit information to price their auto insurance premiums. Research, in fact, reveals that those who manage their personal credit levels effectively, also make fewer claims. To ensure that you get the deserved good credit, check your personal credit record regularly to be absolutely sure that all information contained therein is accurate.

If you are that rare cash payer and do not play the credit game, then do not worry about this aspect on saving money on auto insurance.

Let there be one insurer for your home and car: You could obtain a discount on the premium when you combine your home and auto insurance together or get more than one car insured with the same insurer. This multi-policy offer comes from many insurers for loyal customers and shopping around for such deals makes sense. Even if you buy from different insurers, these discounts may be available. So look around by all means.

You do not need to look around to see a movie when a Transformers movie is out though, they are all awesome!

Group insurance: Certain major insurers also offer premiums at reduced rates to drivers who take out insurance by way of a group plan, usually from their employers, business, professional, and alumni groups or any such associations. If you can get a group to take out a common insurance policy, you stand to gain yourself on this based on economies of scale.

Discounts pertaining to low mileage: Some insurers offer special premium discounts to vehicle owners whose total annual driving is less than the annual average miles driven per year. Such discounts for low mileage is also available for these types of drivers. So if you are one such carpooler, look around for these types of opportunities.

Look for other discounts: As a policyholder, you may also get special discounts when you have never been in any accidents (or an accident that was pinned on you) or have faced charges of moving violations for a specified period; drive less annually as compared to other average motorists, or have undergone a defensive driving course.

The critical aspect to remember, however, is that discounts are not the main key to your savings. Rather, the final net price is. That’s why any company offering fewer discounts may have a lower overall price still compared to its counterparts.

Business, Finance, Insurance, Lifestyle, Tax

First Time Home Buyers Guide

by Benjamin Roussey|Posted on | 3 minute read | Advertiser notice

It’s your dream come true. A permanent roof over your head, an asset for life and you very, very own – the first house that you buy. A home that allows you the unparalleled and sheer freedom to live the way you want to.

However, do keep in mind that buying the first home of your life is a somewhat time consuming and tedious process and takes about a year from the time you think of buying one to finally closing the deal and taking possession. The first time home buyer’s guide will tell you how to sidestep mistakes, such as paying excessive interest on your home loan or picking the wrong home.

Your personal credit score needs checking: Most of us buy our first home on a loan. That’s why our credit reports matter. Moreover, it’s also seen that almost 25% of credit reports contain errors, which could possibly lead to your paying higher interest rates on the loan you take. Thus, take ample time to check your score before you take out a loan. Also ensure that the credit report is absolutely error free unlike the movies Meet the Parents II and III which were horrendous and prone with all sorts of errors but this is another topic.

Budget: Your final selection of your first house will obviously depend on your budget. That’s why you need to take a hard look at what you can actually afford. A lender will usually consider a full debt load of a maximum of 43% of the gross income per month and will also include all future mortgages, car & student loans, or credit card outstanding debts.

Therefore, first work out what is affordable to you and reduce your debt-income ratio to the furthest extent possible. Making a down payment of at least 20% will also reduce your loan cost substantially, also getting you a lower interest rate. Additionally, try and keep stable funds in your personal bank account for sixty to ninety days before you apply for the loan. This will increase the banker’s confidence in you.

Prioritize: Every first time home owner has certain expectations from his new home. Therefore you need to very clearly ask yourself what you need from it most. Is it a closer proximity to the workplace or a large backyard that you want to develop as a garden later?

Do you want it designed on open floor planning? Do you prefer a quiet neighborhood? Once you’ve prioritized these demands, it’ll be much easier for you to start short listing. Another vital issue is to know beforehand what trade-offs you can make.

Research: Based on your shortlist, start visiting neighborhoods and prospective open houses or even start gathering information about them. You can use sites that list properties so that you get some idea of the neighborhood and public transport available. Visits to open houses will give you some ideas about homes within your affordable price range and the neighborhoods that appeal to you strongly. This will also help you reduce your debts & save for the down payment.

Budget for home acquiring expenses: When you buy a house, you also have to pay for certain miscellaneous expenses upfront. These could be for title search, home inspection, and property surveys as also home insurance. Costs may vary according to where you live, but a couple of hundred dollars is almost certain. So start saving for that if you haven’t already.

Start organizing the paperwork for your loan: Banks are indeed most particular about mortgage loans and demand all sorts of documentation. These would include W-2 forms or tax returns over the preceding 2-3 years; recent pay slips; credit card statements; recent statements for brokerage accounts; personal bank statements; all past addresses; and statements pertaining to retirement accounts. Start organizing all of this paperwork. You do not want to have your paperwork tossed around in your closet like Peter Le Fleur from Dodgeball did.

Consult a buyer’s agent: The buyer’s agent’s job is to get you the appropriate property, negotiate the deal with the agent of the seller while also guiding you during the deal closing time. Even mortgage brokers will secure for you a more competitive rate on your loan.

Start home hunting: Once the pre-approval on your loan comes through, start visiting prospective properties with your buyer’s agent so that you don’t waste time on unaffordable houses. Once the selection is finally made, put in your formal offer. If accepted, employ a home inspector to look into the property’s physical conditions and drawbacks, if any.

Closing the deal: Keep all financial documents and down payment amount in perfect order before closing. Make an objective review of all mortgage documents and get home insurance, which should be secure before closing. You may pay off the buyer through a cashier’s check or wire transfer, so keep this ready too. Sign on the dotted line of the property transfer form, hand over the money, and be the proud owner of your first home!

And hopefully you get along better with your neighbor than Mike and Phil did in the average comedy Kicking and Screaming!

Business, Finance, Insurance, Tax

What is an emergency fund?

by Benjamin Roussey|Posted on | 3 minute read | Advertiser notice

An emergency fund is essentially the money that you’ve been setting aside to take care of unexpected expenses arising out of unforeseen events in life such as when a politician like Barney Frank passes laws that devastates your home’s value. When this happens, and it did too many people on a colossal scale in and around 2008, you want to have some money set aside.

You can call this a rainy day fund too!

An emergency fund allows you to survive at least for a few months just in case you suddenly receive the pink slip (job growth will soon be picking up with lower taxes and less regulations but sometimes companies still lay people off regardless) or get into an accident that prevents you from earning for a substantial period of time.

It could also be a leaking roof or a major car breakdown that needs immediate attention. In other words, it’s like an insurance policy, where instead of paying premiums to your insurer, you’re setting aside some money to be used later should any of the following circumstances suddenly arise:

  • Emergency medical bills
  • Mortgage payments
  • Credit card bills
  • Pending taxes
  • Emergency home repairs (we have all seen Transformers 4; some robot called Lockdown may blow up your home!)
  • Unexpected car damage and repairs

The whole objective is not to borrow for these expenses thereby increasing your debts.

Creating an Emergency Fund

The amount that should be kept as an emergency fund depends on your income and status; thus differing from person to person (you may not need as much money as Katy Perry who lives in her bubble land!). The thumb rule is to save about 3 to 6 months’ worth of funds that are required for all non-discretionary expenses. This fund will help you manage any financial crunch if you suddenly find yourself unemployed. With the aid of this fund, you should still be able to pay your household bills till you find employment again.

You may have to find a job though that is different than what you were doing before. You have to be able to pivot in life.

So how much money there should be in an emergency fund? It will vary. For instance, for a couple with kids, around six months of income is sufficient for an emergency fund. If you are single, have a mortgage, auto loan, and no school going children, you may only need three months since single people tend to be able to relocate easier and they do not have children to clothe and feed.

Automate the Process

One of the best methods for creating an emergency fund is a 401(k); buying a new Lexus is not part of this plan! Do not take financial advice from your neighbor unless they are credible! And if your neighbor is Charlie or Alan Harper, do not do what they say! If your employer offers you a 401(k) plan, sign up for it so that the money you earn is automatically funneled out of your paycheck into a separate account. These contributions are pre-tax and you will soon realize you do not have to sacrifice much to make this financial decision.

For instance, if your yearly earnings are $60,000, increasing your 401k contribution from 2% to 5% will reduce your weekly paycheck by $27. That is it! Also make sure to contribute enough to equal your employer’s “match,” because leaving “free money” on the table is unwise.

You can schedule when you want the money taken out of your pay check as well.

Also, a majority of 401(k) plans come with an auto-escalation feature. This enables you to automatically increase the savings rate by any amount of your choice, which is usually between 1 to 3% every year. For external accounts, create your personal semi-automatic-escalation system: keep a calendar alert that reminds you to spike up contributions by one percentage point or two on an annual basis, maybe every time you get a pay increase or on your birthday.

Pay yourself!

What to do After You Reach the Goal?

If you have accumulated the amount that is suitable for you, you can then pat yourself on the back. Now that you are in control of your finances, you can start investing. The point is, you need to keep on investing a part of your income and create another source of income from it. For instance, if you invest in stocks, every year you will earn some money in the form of dividends. But be careful, stock prices can go down.

You can read about the tech bubble during the turn of the century and know all about that!

In conclusion, having an emergency fund is having extra security. You might have life insurance coverage, health insurance, auto insurance, home insurance, dental insurance, and critical illness insurance to cover you in case you experience some sort of calamity. But none of these will help you if you lose your job. Well, just not as easily has having a 401(k) or a savings account with money saved away for a rainy day.

Life and critical illness insurance are for most people a waste of time and money but that is another topic!

Business, Finance, Lifestyle, Tax, Uncategorized

Here are 9 States that will Save You Thousands if You Relocate

by Benjamin Roussey|Posted on | 4 minute read | Advertiser notice

Is your state taxing you too much? If you live in California and New York, it is most likely a yes then, and certainly if you work in the private sector in either of those punishing states.

Here are nine states that will save you thousands of dollars in cost of living expenses if you are thinking of relocating. For each state, you will see an index list which means a normalized average cost of a given class of goods or services. 100 is the normalized average cost, or national average, and the lower the score the better. You can have a score higher than 100. For instance, if a state is 20% more expensive than the score of 100, that state would have a score of 120.

This information was derived from Wikipedia, USA Today, CheatSheet, and Investopedia.

Let’s begin!

Mississippi

This southern state is the most affordable state in the US which is 14 percent cheaper than the national average. Here are some facts:

  • Cost of living: 86
  • Housing index: 68.4
  • Grocery index: 94.1
  • Utilities index: 89.6
  • Health index: 89.9
  • Transportation index: 93.1
  • Miscellaneous: 93.2

The homes are 30 percent cheaper than the national average and we all know how expensive owning a house can be. The median value of a house is around $112,000 while the median rent is around $1,050. Transportation is 6.9 percent cheaper while groceries are 5.4 percent cheaper.

Apart from this, Mississippi is exempt from military, federal, and in-state pension burdens. People pay the least amount of property taxes. All retirement related income, including 401k and IRA earnings, is exempt.

On top of this, there are probably more murders in one weekend in Chicago than the entire state of Mississippi for the entire year.

Indiana

The rent is slightly cheaper in Indiana at $1,000 while the median cost of a house in the state is $139,000. Transportation in the country is 8.4 percent cheaper while groceries are 7.6 percent cheaper.

Here is a look at the index:

  • Cost of living: 87.9
  • Housing index: 75.8
  • Grocery index: 92.4
  • Utilities index: 91.1
  • Health index: 94.9
  • Transportation index: 91.6
  • Miscellaneous: 92.9

Michigan

The third spot goes to Michigan. It is particularly cheap when it comes to groceries at 10.4 percent lower than the average, however, housing is also comparatively cheap here. The median listed price is about $147,000 while the rent is $1,000. Michigan is also exempt from military, federal, and in-state pension burdens. Here is the index:

  • Cost of living: 88.2
  • Housing index: 77.1
  • Grocery index: 89.6
  • Utilities index: 95.5
  • Health index: 93.3
  • Transportation index: 97.6
  • Miscellaneous: 91

Just be careful about some parts of Detroit you go into. You may want to avoid them. The fantastic movies Four Brothers and 8 Mile have warned us about this.

Arkansas

Arkansas is particularly cheap in the area of transportation and health bills. The median housing price is $150,000 while the rent is $1,000. Groceries are 7.3 percent cheaper while transportation is 10.9 percent. Here is the index:

  • Cost of living: 88.5
  • Housing index: 77.7
  • Grocery index: 92.7
  • Utilities index: 97.1
  • Health index: 87.8
  • Transportation index: 89.1
  • Miscellaneous: 92.8

Oklahoma

Consumers are paying up to 23 percent less for their houses here than the national average with the median home value being at $114,800 and average rent being $995.

Transportation when compared to the national average is 11.9 percent cheaper and groceries are seven percent. Experts on the other hand believe that the cost is going to increase in the near future (problem because this is an energy rich state). Here is the index:

  • Cost of living: 88.6
  • Housing index: 76.7
  • Grocery index: 93
  • Utilities index: 94.9
  • Health index: 93.6
  • Transportation index: 88.1
  • Miscellaneous: 94.1

As just mentioned, Oklahoma is going wild in oil shale which is bringing high paying and more jobs to this outstanding state. This means less money going to the Middle East and more money remains in America to do the same: allow us to have access to the energy we need. Unlike California and New York which have some of highest numbers of unemployment and people on welfare, Oklahoma does not shirk its responsibility by keeping its energy offline.

Idaho

While the prices of houses are on the rise, Idaho is still one of the cheapest states to live in with several categories that are less than 10 percent of the national average. Groceries are 14.6 percent cheaper while transportation is 6.1 percent. The median home value is $249,000. Here is the index:

  • Cost of living: 89.6
  • Housing index: 77.8
  • Grocery index: 85.4
  • Utilities index: 89.0
  • Health index: 101.9
  • Transportation index: 106.1
  • Miscellaneous: 94.8

Idaho is loaded with fresh crisp air as well. If you love the outdoors, it is hard to beat this state.

Tennessee

Tennessee, also known as the Volunteer State, has the lowest housing index in the country at 77.5. Transportation facilities and health care is also less costly compared to the national average. Groceries are 7.3 percent cheaper while transportation is 10.1 percent.

The median listing for house is $175,000 while the rent is $1,195. Local and state tax is about 7.6 percent which is the sixth lowest in the country. There is no income tax but only interest income and tax dividend.

  • Cost of living: 89.8
  • Housing index: 77.5
  • Grocery index: 92.7
  • Utilities index: 91.8
  • Health index: 90
  • Transportation index: 89.9
  • Miscellaneous: 97.5

Kansas

Kansas is another state where the median cost is about 10 percent below the national average making it a favorable destination for people looking to settle there. Media rent is about $1,050 while the houses are priced at $124,400. Groceries are 6.4 percent cheaper while transportation is 7.5 percent. Here is the index:

  • Cost of living: 90.4
  • Housing index: 77.4
  • Grocery index: 93.6
  • Utilities index: 97.3
  • Health index: 97.1
  • Transportation index: 92.5
  • Miscellaneous: 96.1

Yes, these states may not be as glamorous as living in San Francisco, LA, or New York but you will also not have to worry as much about seeing homeless people defecate in public which is what happens in San Francisco all the time. If you want to be accosted by a homeless person and smell urine all the time all the while spending massive amounts of money on living costs and taxes, San Francisco is your place.

San Francisco is also in the midst of a properties crimes epidemic. LA and NYC are violent, expensive, and chaotic. Perhaps nice places to visit once in a while but not to live. You may see someone get mugged or shot though. If that is the environment you want to live in while being mistreated by the tax policies in those cities, it is your decision.

Business, Finance, Tax

Why are Mutual Funds better than Stocks for Low-Risk Appetite Investors?

by Benjamin Roussey|Posted on | 3 minute read | Advertiser notice

Investing a certain portion of your earnings enables you to build wealth over a period of time. Though the investment market is full of investment products, stocks and mutual funds are most widely known and preferred by retail and small time investors.

However, considering the fact that stocks are extremely volatile, you should consider investing in mutual funds rather than investing directly in stocks. Here are few reasons you should consider investing in mutual funds rather than in stocks if you have a low-risk appetite.

No Need to Pick Stocks

Picking the right stock at the right price is one of the critically important factors that determine its success. In the case of mutual funds, a fund manager does this for you. If you are investing directly in stocks, you have to keep track of them, ensure you sell them at the right time and make appropriate allocation in different sectors. This is time-consuming and knowledge intensive exercise. And even if your stock does well, such as Apple or Ford for instance, the stock price could still go down if their future guidance is not right.

That is very frustrating!

Many instances have been found amongst Baby Boomers who invested their money into stocks and never tracked them. Most companies in which money was invested no longer exist. A mutual fund manager, on the other hand, keeps track of all the assets in mutual fund avoiding such situations.

Do not worry, your mutual fund manager will not be Napoleon Dynamite. This person will be a professional and not keep tater tots in his pant’s pockets! That type of behavior does not inspire confidence!

Distributed Costs

As an individual investor, you pay brokerage charges for buying and selling the stocks, which might be in the range of 0.5-1%. However, a mutual fund or the Asset Management Company that manages the mutual fund, due to economies of scale, pays a minuscule brokerage for trading the stocks. The management fee is all inclusive thus your overall costs of churning the portfolio are barely noticeable.

Low-Cost Investing

If you buy and sell stocks within a year, you will be liable to pay short-term capital gains tax which might wipe out profits. Of course, the same situation may be applicable in the case of mutual funds, but there is a difference. For instance, you might have to sell the stock within a short span to book the profits.

So apart from brokerage for trading stocks, you will also end up paying short-term capital gains tax and even with Trump getting the job done and doing things that are long overdue, such as cutting taxes, you still have some taxes to pay. Any time you can save money via taxes is something you should take serious.

A mutual fund, on the other hand, will incur just the trading charges (which are very low), and since your money stays invested in the asset management company, you do not have to pay any capital gains tax. Only if you exit the mutual fund within a year, you will have to pay capital gains tax on the profits made.

Optimized Asset Allocation

A concrete portfolio consists of 25-30 stocks spanning different industries. This requires a significant amount of time and stamina. You should be checking your stocks every day as well; you really do not have to do that with a mutual fund since they own a hundred companies or so and so a mutual fund is not as volatile since the risk is not tied up with one stock but many of them. You may not be in a position to invest that amount of money or time into this craft.

Moreover, it requires in-depth knowledge of stocks to pick the right ones. As you buy units of mutual funds depending on your budget, every unit is equally diversified. This significantly reduces the risk to your portfolio.

However, as the underlying asset for equity-based mutual funds is equities, if the entire market declines, your investment too will decline. A balanced mutual fund which has a mix of stocks and bonds, however, will offer better protection against market volatility as already mentioned. If you are extremely averse to risk, it is also possible to invest in debt mutual funds that offer low but assured returns.

As indicated earlier, you can lose your entire investment in a single stock. That rarely happens in the case of mutual funds since your mutual fund manager is looking after these companies making changes to the asset allocation as per the market conditions and new laws being voted into existence or even ending. He or she will not make the terrible investment decision we saw the main characters make in Horrible Bosses II. Not impressive!

Mutual funds moreover are tightly governed by the SEC. Thus, if you are new to investing, have low risk appetite, and are patient with your investments, mutual fund is the best investment vehicle that suits your profile. It does not mean you should not invest in stocks directly. Do that only if you have the market know-how, can dedicate time towards it, and do not mind taking losses.

Business, Finance, Insurance, Lifestyle, Tax

4 Finance Tips for New Homeowners

by Benjamin Roussey|Posted on | 3 minute read | Advertiser notice

Here is an interesting fact. According to recent research, about 40% of Americans do not own their own homes, but the remaining 60% are enjoying the benefits of ownership. However, there is also a downside of owning your own home which is the cost of an acquisition. It is not only the down payment that you have to manage; there are other expenses that you will have to pay for.

Here are some tips for you if you are a new homeowner:

Always have a budget

It is a known fact that your monthly mortgage payment will always differ, if only ever so slightly, from your rent payment. Most tenants feel that they only have to adjust their budget slightly when they choose to buy but they couldn’t be more wrong. Most buyers, when they are home hunting, they usually go for a home that is larger and more spacious than the one they are currently living in. This increases their cost of living.

They forget to factor in other expenses such as heating and electricity expenses, maintenance cost and so on. Now you have a lawn which needs time and money to maintain and since you are the owner, this is your responsibility. You do not want to end up with a lawn that looks like Dick Harper’s (Jim Carrey) in Fun with Dick and Jane. You also do not want your lawn to be repossessed!

What you need to do is to budget for all the potential expenses that you will have to bear so you know what it would be like to own a home. Then you can keep track of these costs and be able to evaluate the situation. This will help you come up with a budget to work with it, and help you understand the actual cost of relocating and actually owning a home.

Repairs and maintenance

As long as there are homes, there will be repairs and maintenance. There is no escaping this fact and the sooner you account for it, the better it will be. While most home owners do consider the cost of repairs and maintenance, they often underestimate it.

A suitable rule of thumb is that you are going to spend anywhere between one to four percent of your home’s value on repairs and maintenance every year. So for example, if you own a home that is worth $400,000, you must be prepared to spend anywhere from $4,000 to $16,000 every year to maintain it.

There are also these unexpected financial hits that will smack you every once in a while. For example, getting a new roof or replacing your heating or cooling system. This is why you should have some money saved. An appropriate rule of thumb is to save up to six months of expenses in advance.

Rising property taxes

Property taxes are determined based on local taxes and the assessed value of your home. Take these factors into account before you decide to buy that 2,000-square-foot house, for instance.

At the time of buying a new home, you will be notified of your new tax liability, but it is important that you understand this – property taxes have a cruel tendency to shoot for the north side of your graph which means that it is going to increase in the future. It doesn’t matter whether the value of your home has decreased, property tax might still see an increase.

For example, in the year 2000, about $247 billion was collected in property taxes, and by the time 2010 was here, the number doubled to $476 billion. This happened irrespective of the property bubble burst the US markets saw in the later years of that decade which was caused by Barney Frank but that is another topic.

Depending on the locality that you are residing in, you might have to reassess your property tax every few years. Once again, you will have to make some room in your budget for these hikes. Well, unless you vote for someone who lowers your taxes!

Escrow system

It is possible to merge your property tax and insurance into your mortgage payments using the escrow system. If you are unsure, here is how it works.

The lender will charge you a fixed amount every month which will be above your mortgage payment amount. The access money will be put in an escrow account and this will be used to pay your property taxes as well as homeowners’ insurance amount.

This is not true for all mortgages and you will have to talk to an expert to understand your particular situation. Some will just ask you to pay the exact mortgage amount while being responsible for property taxes and insurance.

If you belong to the second category, once again, you will have to budget accordingly. An average US homeowner spends about $2,127 in property taxes per year. It varies from state to state.

So now that you know how vital a budget is, and the different types of expenses that you will have to deal with once you buy your new home, you can plan accordingly.

Just do not mess up like Dick Harper did! And don’t rob convenience stores!

Business, Insurance, Lifestyle

Most Common Types of Insurance – Part 2

by Benjamin Roussey|Posted on | 3 minute read | Advertiser notice

To overcome financial difficulties caused by injuries, accidents, illness, for you or for your dependents, you would need to buy the right insurance policies. Some of the common types of insurance policies available to you are discussed below.

Health insurance 

Health insurance is one of the major types of insurance that you must subscribe to, to prevent financial difficulties in the event of an illness. Usually, you can receive health insurance as part of employment benefits. This is pivotal because health insurance premiums are often very high, and you might find it difficult to afford this type of insurance if you do not receive employer funded insurance coverage.

If your employer does not offer insurance benefits, or you are self-employed or you find individual health insurance too expensive, you can try to get group health insurance. This is often offered to members of professional organizations and other trade associations. Hopefully they treat you better than the VA treated military veterans in 2011 and 2012 and so on but this is another topic!

Disability insurance

This type of insurance covers what health insurance does not – the daily expenses and other expenses that arise when you are not able to work for long periods of time due to some kind of disability. Health insurance will pay the hospital costs, costs of surgery, cost for buying medicines and similar medical expenses.

However, to cover for long term expenses that arise when you cannot earn a livelihood, disability insurance would be your best option. There are many people in the USA currently who are unable to earn a livelihood because of disability. You don’t want to wait until disaster strikes to choose this type of insurance.

If your employer does not offer disability insurance, you can choose for private insurance. One of the most pivotal factors to consider is the payout offered should you need to claim benefits. The payout should replace most, if not, all of your income. This will help you tide through difficult times when you cannot work to earn a living yet have bills to pay.

You can choose short term disability insurance, or choose long term coverage. The latter is a preferred option because it keeps you covered for a longer period of time.

Car insurance

If you own a vehicle of any kind, getting it insured is mandatory by law. Auto insurance offers compensation should you or another person suffer an injury in an accident. Since car accidents are not, unfortunately, uncommon, you need to be prepared for unforeseen situations. Car accidents can cause any number of difficulties. A damaged car is just one of the problems you are likely to face, and this is something your vehicle insurance will cover. However, the major reason to buy auto insurance is to pay medical bills, should you or another party your vehicle collides with is injured.

If you are held liable for an accident, and the other party successfully sues you for damages, then the damages would be paid from your car insurance. Keeping in mind the need for long-term medical care and rehabilitation costs that accident victims need, an auto insurance is one of the most critical types of insurance you must subscribe to. If you have to pay car insurance rather than spend your money to watch any Star Wars or Jurassic World movies, do not worry, you are not missing anything!

Home insurance

Many people overlook this type of insurance; however, this is very crucial to protecting your assets. Your home is one of the most valuable properties you own. As such, it is critical to protect it with the right insurance coverage. Particularly if you live in areas that are prone to natural disasters such as earthquakes, storms and floods, then you need to insure your home for possible disasters.

Home insurance will protect your fixed property, such as your house and also the assets you have inside your house. When purchasing home insurance, you would need to keep in mind factors such as type of damage covered by the insurance. Does your home need protection in the event of a fire or a storm?

Does the insurance policy cover this type of damage? What about thefts and break ins, should you be living in a crime prone area? Your home might be located in a place where severe blizzards and snow is common, and your home can take a lot of damage when piled up under snow for weeks. This is why choosing the right type of home insurance is important, to offer protection against different types of damages to your home.

Protecting yourself, your assets through the right insurance helps you get through difficult times caused by illness, accidents, damage to your property, and any liability that might be yours in the event of an injury caused to another person. Insurance is vital. You can see this in the movie Along Came Polly with Reuben Feffer (Ben Stiller) and Leland Van Lew (Bryan Brown)! You will not have to spend as much on insurance though as Leland did though unless you live a crazy life like him!

Business, Insurance, Lifestyle

Most Common Types of Insurance – Part 1

by Benjamin Roussey|Posted on | 3 minute read | Advertiser notice
different types of insurance

When you are planning to secure your future financially, one of the things you must prioritize is insurance. Insurance offers protection against unexpected difficulties you might face in the event of an accident, illness, injury, or other serious situations where you would need plenty of financial resources to get back on your feet.

Insurance also protects your loved ones and family against financial storms should some calamity fall on you. This is why you need to subscribe to the right type of insurance plans, to insure your financial future. Discussed below are some of the types of insurance all individuals should subscribe to.

Life insurance 

Life insurance protects your family and dependents should something happen to you. This is important because you want to secure the future of your family, and if they are relying on you for financial support, you want to ensure that they are not left bereft financially in the event of an unfortunate situation.

The life insurance that you hold should ideally offer a substantial amount of payout in the event that a claim is made on it. This payment would help your dependents get life back on track, and pay for expenses including daily expenses while they begin to recover from the shock and start becoming financial independent.

When looking for the best plans for life insurance, you would need to consider the payout. The payout should be based on expected expenses that your dependents would incur if you were not around to pay the bills and other expenses. These would include funeral expenses, bills, credit card payments, debt such as home loans and even education costs for minor children. No, how much money you spend at Taco Bell is not considered here!

Life insurance can be divided into term insurance and whole life insurance policy.

Whole life insurance

This type of life insurance is offered to the policy holder for their lifetime. This means there is no age limit at which you stop being covered by the insurance.

Upon the death of the policy holder, whatever their age, the payout of the insurance is made to the beneficiaries. The second advantage offered by this type of insurance is that the insurance holder’s account can concurrently be used for investment which helps acquire more financial resources.

A variation of the whole life insurance is adjustable life insurance. As the name suggests, this type of insurance offers more flexibility in terms of premium, coverage, and age limit. This type of insurance brings with the same investment related benefits as with regular whole life insurance.

For those who want to turn their life insurance account into a tool for investment, a variable life insurance policy might be a poignant option. That said, the risk involved must also be taken into account. Unlike a whole life insurance policy, a variable life insurance policy does not guarantee a set amount of payout on the death of the policy holder.

Since the amount paid into the account can be used for elaborate investments such as stocks and bonds, the payout to beneficiaries would depend on how well the investment portfolio performed. That said, should the portfolio perform well, then the beneficiaries stand to gain a decent financial support.

Term life insurance

Among the more common types of insurance would be term life insurance where the period of coverage is limited. The policy can be renewed once the coverage ends. This type of insurance offers a fixed payout if the policy holder dies before the coverage expires.

This type of insurance does not provide for investment options, which is why the amount of payout to beneficiaries is fixed. You would also have to be careful about not letting the policy lapse, as this could mean that there would be no payout to your dependents, in the event of an unfortunate circumstance.

Term life insurance offers limited payouts, in contrast to other types of life insurance, and is best used for offering emergency funds to beneficiaries. Also, the payout may not be sufficient enough to cover a lot of expenses, so this type of policy is ideal for people who need a payout to support beneficiaries through a relatively small duration of time.

Understanding your insurance needs is key to helping you plan for financial emergencies and crises where you or your dependents would need plenty of financial resources to tide over difficult times.

Business, Tax

The Critical Nature of Tax Planning

by Benjamin Roussey|Posted on | 3 minute read | Advertiser notice
The Critical Nature of Tax Planning

Although people use the term “tax planning” frequently, many do not necessarily understand what it really means. Tax planning is the art of organizing your affairs using methods that avoid or delay taxes. When you use effective tax planning strategies, you can have more money to spend or more money to save and invest, or both – it is all up to you.

In other words, tax planning means to defer or flat out avoid taxes by taking advantage of beneficial provisions of tax laws, accelerating and increasing tax credits and tax deductions and in general, making maximum use of all applicable breaks that are available under the Internal Revenue Code. And under Trump, taxes will be lowered for everyone which is a fantastic aspect to all of this but it is another topic.

Although the federal income tax rules nowadays are more complicated than ever, astute tax planning gives you benefits that are more valuable than ever before. Of course, this does not mean that you should make changes in your financial behavior just to avoid taxes, your name is not John Kerry or Al Sharpton is it?! Tax planning strategies that are truly effective are those that allow you to do what you want while helping you lower your tax bills along the way.

The Connection between Tax Planning and Financial Planning

Financial planning is the art of using strategies that aid you in reaching your financial goals, both short- and long-term. This sounds pretty straightforward, right? However, if executing these strategies were actually simple, there would be many more rich people.

Tax planning and financial planning have a close connection. This is due to the fact that taxes are an extremely large expense item that is present throughout your life. Taxes will likely be your single largest long-term expense if you become very successful. Therefore, planning to lower taxes is a critical part of the overall process of financial planning.

Tax experts say that a large number of people do not get the message about tax planning, at least not until they make a huge mistake that costs them a large sum of money in taxes that are otherwise avoidable. This is sort of like watching Jurassic World since that movie was terrible; many people wish they avoided spending money on that! Moreover, then only they finally understand the tax planning message. The trick is to make sure that you do not have to learn this lesson the hard way. Here is an example to illustrate the point:

Example: Tanya is a 45-year-old professional who is not married. She thinks she is quite savvy when it comes to finances. However, she does not know much about taxes. One day, she meets John and they eventually get married.

Due to the excitement of a whole new life, she decides to sell her house on an impulse shortly before the marriage. Her property is in a prime location and has appreciated by $500,000 since she purchased it 15 years ago. Her intention is to move into John’s home, which is not the best property. But Tanya is a remodeling genius and plans to work her magic on John’s property.

Result without Tax Planning: Tanya has a $250,000 gain on her home’s sale for federal income tax purposes. This is $500,000 profit with a deduction of the $250,000 home sale gain exclusion that is allowed to unmarried property sellers.

Result with Tax Planning: If Tanya had kept her home and lived there with John for 2 years before selling it, the larger $500,000 home sale gain exclusion allowed to married joint-fillers would have been available to her and she could have permanently avoided the $250,000 of taxable gain. They could have sold John’s home instead if necessary. Alternatively, John’s property could have been retained and they could have remodeled it while living in her house for the requisite 2 years.

By selling her home without thinking about the tax-smart alternative, Tanya cost herself $62,500 in taxes – which is the completely avoidable gain of $250,000 that is taxed at an assumed combined 25% state and federal rate. This is not just a timing difference, but a permanent one. The point is that you cannot ignore taxes. If you do, there can be unappealing consequences, even with a seemingly simple and intelligent transaction.

The Bottom Line

It is always important that you plan any transaction with taxes in mind and do not make any impulsive moves. You should seek professional tax advice before you make any significant transactions – you will find that this is money and time well spent.