Posts tagged ‘money strategies’

July 21st, 2010

How To Curb Your Spending

The Federal Trade Commission (FTC) says, “If you or someone you know is in financial hot water, consider these options: realistic budgeting, credit counseling from a reputable organization, debt consolidation [debt negotiation], or bankruptcy. How do you know which will work best for you? It depends on your level of debt, your level of discipline, and your prospects for the future.”

The purpose of this article is to deal with a realistic Budget and offer ideas for curbing your expenses and spending.  However, I would encourage you to also look at the other options suggested by FTC.  The National Association of Certified Counselors and its Institute of Financial Counseling also endorse these same suggestions.

A Solid Spending Plan

Any hope of curbing your spending must begin with a realistic Budget or spending plan.  If you don’t know where you are going or where you have been, how can you possibly continue any journey?  Therefore mapping out how your money is spent and will be spent is a key ingredient.

  1. Begin by going to your last 12 months of check registers and categorizing all entries.
  2. Insure you have ALL your expenditures. If you always carry spare money in your wallet or purse, you need to record every dollar spent for a few weeks. I have yet to see someone do this exercise without a significant impact on his or her spending plan. This may be the most important step to getting to the facts. All non-cash purchases should be easier to track through checkbook registers or credit/debit receipts but be sure to use proper annotation. Just writing “miscellaneous” or “verseteller $20″ does little to gain facts.
  3. List your fixed expenses: Rent/mortgage, Utilities, Child care, Transportation, Insurance, Loan repayments, Allowances, Alimony or other legal issues, Savings, Other.
  4. List your variable expenses:  Food, Entertainment, Grooming, Babysitting, etc.
  5. Estimate your periodic expenses? List last years car repair, trips, medical, taxes, maintenance, gifts, etc. Now determine if this estimate is what you can expect in the future. Divide each item by 12 to have a monthly figure.

Once you are certain you have all annotations including non recurring expenses, start to adjust how much you will spend in each area to fit your particular needs. If you do not have enough to cover it all, you must either reduce expenses or find ways to increase income… it is that simple. The tough part is doing it.

Cutting Costs

Here are a number of ideas to curb your spending.

  1. There are so many resources on the Internet and in magazines for cost cutting tips, that it is impossible not to find an untold number that fit your needs.    On the Internet, use your favorite search engine and enter words such as “frugal”, “frugality”, “saving money” or similar key words.  You will be amazed at the resources available. There are always different ways to do the exact same thing and save money at the exact same time.  You simply have to locate and implement them.
  2. Call each of your creditors and ask for a reduction in interest rate.  Do not tell them your life history, but do offer a concise statement as to why it would be in their best interest to do so.
  3. Regardless of what type of debt (mortgage, car, credit card, etc.) view your monthly statement and look specifically at how much of your payment is going to interest and how much to principle.  This is a real eye opening experiences and motivates the individual to get that debt under control.
  4. Make it a habit to throw away credit offers before even opening the envelope.  Take existing credit cards and hide them or better yet, destroy them.
  5. Determine what are the “needs” in your life and separate these needs from “wants”.  Suspend ALL “wants” until debt is at least under control.
  6. Get assistance from such groups as Debtors Anonymous.  If there is a gambling or drinking problem, seek help from support groups.

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The truth is the average consumer can eliminate all debt including their mortgage with the money they currently earn in an average 7.5 years. I have been teaching people how to do this for years and you can see how it is done yourself by receiving the free Debt Freedom Mini-Course via email.

You might also want to know that that eliminating all debt is like getting a 40% Tax-free Salary Increase.  If you don’t believe me, read the blog about it.

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Posted in Debt Assistance | 2 Comments »

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June 4th, 2010

Money Strategies – Life Insurance

Life Insurance… how much and what kind?

This may not be the most cherished article by the insurance industry, but it is what I see and what I believe. It is also a way to avoid being talked into something that perhaps you just plain don’t need.

First off forget about leaving the kids and grand kids a life of ease.  That is not what insurance is about. The real purpose of insurance is about you - finding what is best for your situation. But to do so you must look at insurance from a very cold and matter of fact position.

You must view insurance as replacing the individual as a money machine. That is pretty cold… but it is honest. You must also view what other situations exist now or probably will exist when the insurance is needed. The difficult part is constantly reviewing these other situations because as they change your insurance needs may change. For example:

  • Are there other assets that can be tapped such as multiple incomes, savings, IRA, property income, etc.?
  • How many dependents are in need and for how long? Is it possible a spouse will remarry? How old are the children?
  • What is the current style of life and is it necessary or desired?
  • Are you debt free or plan to be or are you over your head in debt and cannot control spending?

These are exceptionally difficult questions which must first be dealt with before you can progress.

But once you have solid answers with all responsible parties, the rest is much less difficult because you now know where you are going and the rest is simply understanding the industry.

Types of Life Insurance

Though there are insurances labeled endowments and annuities (which are very good investments), the two basic types of insurance are whole life and term.

Whole Life – The appeal is that it builds cash value while offering insurance protection. But no other savings program I know of takes your money, puts it into an account for you, but does not allow you to see a dime for 2-3 years.

No other program has a negative cash value for years to come. And in future years, since this cash value is supposedly your money and you borrow it, how come you have to pay it back with interest?

The argument is, you have life protection while building cash value. OK. Why not spend a lot less and have term insurance and use the extra money in a better investment? Even a very safe mutual fund will yield a far greater return. Or perhaps even pay off debt with what you will save.

Is there a good side to whole life? Sure there is. First of all, if you take out a whole life as a youth, rates are very low. Whole life can also protect your future insurability. Rates will not change as you get older. A solid small amount of whole life to cover last expenses could be peaceful to the mind. Whole life is better able to stay up with inflation. But overall, I cannot in good conscience recommend it in most circumstances.

Term Insurance – Term insurance has limitations as suggested above. It builds no cash value but it is the least expensive form of insurance available. There are two types of term insurance: straight term and decreasing term.

Straight Term – as its name implies, straight term exists as is and for the full amount as long as you make payments. It does not increase or decrease the amount of coverage.

Decreasing Term – again as its name implies, decreasing term decreases as the length of time goes on. This type of insurance is most often used in association of a mortgage or car loan. But here is a major caution. You must insure the decrease does not exceed the payoff. For example. Decreasing term insurance for a 30 year mortgage will not keep pace with the mortgage itself. If the decreasing term insurance decreases over 30 years it is a straight line decrease. A mortgage, however, is not straight line because the majority of the interest is in the beginning. Possibly 75% of the mortgage will still be owed when 2/3 of the decreasing term insurance has passed.

There is one other caution I would suggest. Do not buy insurance from a commissioned retailer, car dealer, mortgagor, etc. Buy the insurance from someone who knows his trade – a licensed insurance agent. Additionally do not make insurance part of the retail sale unless you want to pay interest on top of the insurance.

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The truth is the average consumer can eliminate all debt including their mortgage with the money they currently earn in an average 7.5 years. I have been teaching people how to do this for years and you can see how it is done yourself by receiving the free Debt Freedom Mini-Course via email.

You might also want to know that that eliminating all debt is like getting a 40% Tax-free Salary Increase.  If you don’t believe me, read the blog about it.

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Posted in Debt Assistance | 2 Comments »

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May 31st, 2010

Money Strategies – Car Insurance

Here are 9 ways to save on car insurance right now!

Want to save  BIG on car insurance immediately?

You may not realize it, but the insurance rates you pay for your car can vary dramatically depending on the insurance company, agent or broker you choose, the auto coverage you request and the kind of car you drive. Thanks to some public information from our friends at Pueblo, other public domain sites, as well as my own articles, here are a number of things you can do right now to lower your car insurance costs.

  • Comparison Shop – Rates for the same car insurance can vary by hundreds of dollars, so it pays to shop around. Ask your friends, check the yellow pages or call your state insurance department. You can also check consumer guides, insurance agents or insurance companies.But don’t shop price alone. The insurer you select should offer both fair prices and excellent service. Quality personal service may cost a bit more, but provides added conveniences, so talk to a number of insurers to get a feeling for the quality of their service. Ask them what they would do to lower your costs. Check the financial ratings of the companies too. Then, when you’ve narrowed the field to three insurers, get price quotes.

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  • Ask for a higher deductible – Car insurance deductibles represent the amount of money you pay before you make a claim. By requesting higher deductibles on collision and comprehensive (fire and theft) coverage, you can lower your costs substantially. For example, increasing your deductible from $200 to $500 could reduce your collision cost by 15% to 30%.  I would not recommend this if you are accident prone.

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  • Drop collision and/or comprehension coverage on older cars – It may not be cost-effective to have collision or comprehensive auto coverage’s on cars worth less than $1000 because any claim you make would not substantially exceed annual cost and deductible amounts. Auto dealers and banks can tell you the worth of cars.

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  • Eliminate duplicate medical coverages – If you have adequate health insurance, you may be paying for duplicate medical coverage in your auto policy. In some states, eliminating this coverage could lower your personal injury protection (PIP) cost by up to 40%.

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  • Buy a “low profile” car- Before you buy a new or used car, check into insurance costs. Cars that are expensive to repair, or that are favorite targets for thieves, have much higher insurance costs. Write to the Insurance Institute for Highway Safety, 1005 North Glebe Road, Arlington, VA 22201 and ask for the Highway Loss Data Chart.

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  • Consider area insurance cost if you are making a move – Costs tend to be lowest in rural communities and highest in center cities where there is more traffic congestion.

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  • Take advantage of low mileage discounts – Some companies offer discounts to motorists who drive fewer than a predetermined number of miles a year.

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  • Find out about automatic seat belts or air bag discounts – You may be able to take advantage of discounts on some coverage’s if you have automatic seat belts and/or air bags.

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  • Inquire about other discounts – Some insurers offer discounts for more than one car, no accidents in three years, drivers over 50 years of age, driver training courses, anti-theft devices, anti-lock brakes and good grades for students.

SPECIAL NOTE: For more information and tips on auto insurance and all other types of insurance, call the National Insurance Consumer Helpline (NICH) at 1-800-942-4242

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The truth is the average consumer can eliminate all debt including their mortgage with the money they currently earn in an average 7.5 years. I have been teaching people how to do this for years and you can see how it is done yourself by receiving the free Debt Freedom Mini-Course via email.

You might also want to know that that eliminating all debt is like getting a 40% Tax-free Salary Increase.  If you don’t believe me, read the blog about it.

 

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Posted in Debt Assistance | 2 Comments »

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