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.