Money Management 101 part 9

Simple Money Management

simple money management

Addressing simple money management with our continuing series.  As we start part 8 on protecting your assets, we’ll address the use of insurance to achieve that goal.  If you missed any part of the preceding articles in the series, you can catch up here.

Insurance

Save thousands of dollars on auto, life and homeowners insurance. Do you need long term care or disability insurance?

Insurance is for the unforeseen troubles that can happen in life. Learn how to minimize your insurance bill.  What insurance is necessary and which are just a waste of money?  Most people should be concerned only about health, homeowners, car, life and disability insurance.  You should get other kinds of insurance such as cancer coverage or long tern care insurance only if you have trouble sleeping at night without them.

You should carry life insurance if you have dependents.  You should carry 5 to 10 times your annual income.  Term is usually the best value for life insurance.

If you’re carrying term insurance and you’re in good health, go shopping.  Another company may be offering lower rates – saving you $100/month or more.  Ask your agent for something cheaper.

Mark on your calendar when your auto insurance is scheduled to expired.  About a month before that date call your independent insurance broker or check online at 2Insure4Less.com for easy cost comparison of many different insurance types: auto, home, life, disability. You should bundle auto, home and umbrella insurance to get the cheapest rates.

You should carry disability insurance if you are single or your family is dependent upon your income.  A policy should pay out at least 60 percent of your annual salary.  Disability income is usually not taxed.  Your policy should guarantee income until you return to your same occupation that you had before disability or 65 which ever comes first.

Do a checkup on your homeowners policy.  Have you really protected yourself in case of fire?  Do you live in a flood or earthquake prone area?  These kinds of insurance are additions to your basic home owners insurance policy.  Have you included them in your policy?  Walk through your home with video camera or camcorder, recording not only your furniture, jewelry and rugs, but also the contents of your drawers and closet. Mention how much special objects cost.  Without these you’ll have a hard time proving to your insurer what you lost.  Keep your documentation in your safe deposit box or some other off site location.

Take a driver’s safety class to lower your auto insurance premiums. Insurance companies will often have special classes for teens and drivers over 55.  Class attendees then qualify for additional discounts on their insurance.

Raise the deductible on your auto and home insurance to lower your yearly premium amount. Do NOT get just the minimum property and medical coverage on your policy, but actually raise it, as if you are the cause of a multiple car accident that causes damage in excess of your coverage, you personally will be responsible for the damage and medical costs.

Drop collision insurance on older cars.  Check Kelley blue book (www.kbb.com) to see how much your car is worth before you drop your coverage.  Drop collision if the value of your car is less than ten times the annual premium payment.  Drop the collision though, only if have enough in your emergency fund to cover the difference for car value minus your deductible, as that the amount the insurance company will settle with you for if you are carrying collision.

Sign up for pay-as-you-drive car insurance. Install a device in your car that monitors mileage and your driving habits. Car insurance companies such as Progressive offer discounts of up to 30 percent on premiums if you limit your mileage and demonstrate safe driving.

We will finish up our series with Preparing for Your Heirs – Part 10

6 Comments

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