Posted: December 21st, 2007 | Author: Joe | Filed under: Insurance | Tags: How To, Insurance, Life Insurance, Tips | 2 Comments »
Choosing the right amount of life insurance is a daunting task. The most important thing to keep in mind about life insurance is this: the primary purpose of life insurance is to replace the income of the insured should the unthinkable happen.
The proper amount of life insurance is unique to each person’s financial situation. There are literally hundreds of insurance calculators on the web (a quick Google search for “life insurance calculator” returned 4,520,000 results!), but they’re only as good as the information you provide. So, figuring out just what expenses you’ll need to cover is crucial.
The first question you need to answer is: Who’s expenses am I covering by purchasing life insurance?
The most likely answer is your spouse and any children who are not yet grown. But in some cases, people just want to ensure that their debts or funeral expenses don’t burden other people in their life.
In the case of your spouse, you should be looking to cover your own income and any expenses you leave behind. The goal here isn’t really to ensure that your spouse never has to work again. This would be nice, but it can make the difference between affordable coverage and no coverage.
Here are some of the more common “big ticket” items to consider:
- Living expenses.
Determine how much money your family will need to maintain their standard of living. This includes groceries, taxes, gas and utilities, car payments, etc…. If you have a budget, then you’re all set, but be sure to subtract your spouse’s income. You will also want to figure out what your expenses are per year, and then multiply that out by the term (for example, 20 years).
- Funeral expenses.
Funeral expenses run, on average, from $4,000 – $10,000. This is a one-time expense.
- Mortgage and other loan payoffs.
The idea here is to provide enough so that your family can erase any debts you leave behind and start with a clean financial slate.
- College expenses.
Be sure to factor in sending your children to college. Again, it would be nice to provide junior a loan-free trip to a private school, but you don’t want to break the bank with this insurance premium. A Good rule of thumb is to provide at least what you expect to provide assuming you don’t die prematurely.
For example, if junior knows he’s looking at some assistance from the bank of mom and dad but he’ll have to take out loans to cover the difference, then that should be your goal with your coverage as well. The same thing goes for public vs. private school. Don’t factor private school into your insurance policy if you were only going to cover public school.
Of course, this is just to get a ballpark amount. If you find an agent you’re comfortable with and the difference in premiums between the amount to cover full tuition and partial tuition are small enough that you can live with it, then by all means go ahead.
You should only contact an Insurance Agent after you’ve done your homework. If you’ve done your homework well, then the number they provide should be in the ballpark of your own. On the other hand, he tries to steer you toward a significantly larger amount of insurance than what you determined you need and he can’t give a solid reason (you forgot to factor in your own student loans to be paid off), find a new agent.
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Posted: December 20th, 2007 | Author: Joe | Filed under: Saving | Tags: Banking, high Yield Savings, ING Direct, promo codes, referrals, Savings | 1 Comment »
Pay yourself first – and here’s $25.00 free!
By now you’ve probably heard of ING Direct and their orange savings account… Maybe you’ve seen their clever commercials with a person sitting on a park bench with the letters “ING” visible to their right. It looks like they’re obscuring the rest of the word, and a voice-over says something like: “Is it a beginning, or is it an ending?” Only it’s more clever than that, but you get the point.
Or maybe you’ve just seen their ugly orange banner ads on the interweb. I don’t know why they chose orange as their color, but it’s so well done that I find myself associating the color with saving money unconsciously. Unlike UPS’ “What can brown do for you?” which is about the stupidest marketing campaign I’ve seen in years – are they changing their name from United Parcel Service to Brown? But I digress…
ING direct offers a high interest savings account. The yield is about 3.40% APY (at the time of this post) and it is FDIC insured, unlike a Money Market Account. It’s not the highest rate around to be sure, but it is just about universally hailed as the best user interface in online banking. They make it so easy to set up an orange savings account or CD that many people keep multiple accounts for everything from yearly car insurance premiums to property tax to general savings to a “new car fund” – you name it! Literally. You just create an account, give it a name and fund it with a deposit.
They make paying yourself first a snap with scheduled automatic deposits. That’s why so many people make it their first serious savings haven when they’re building their emergency fund and starting out on the American dream of building wealth and financial freedom. Another great thing about ING is that they offer referrals.
Yup, that’s right, I refer you and you open an orange savings account then we both get a little extra $$. 
If you open this account with an initial deposit of at least $250, you will receive a $25 bonus and I will get a $10 thank you bonus. To qualify for this bonus, you must use one of the links below.
Rules of the game: Bonuses are only paid for accounts that are opened with an initial deposit of at least $250. Initial deposit does not include bonus. The $25 bonus is available only for new accounts with a new Customer as primary owner. Only one bonus will be provided per household. Bonus starts earning interest upon account opening, but is unavailable for withdrawal for 30 days.
ING Orange Savings Referral
ING Orange Savings Referral
ING Orange Savings Referral
ING Orange Savings Referral
(If the links no longer work, you can try http://simpledebtfreefinance.com/ing-referrals-free-25/)
Open an ING account and get $25! And of course, if you decide that you’d rather not begin building wealth for yourself and start down the path to freedom, that’s OK too. 
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Posted: December 13th, 2007 | Author: Joe | Filed under: Saving | No Comments »
I confess that I don’t read the newspaper. I just don’t see the purpose. With cable news and the Internet, newspapers are yesterday’s news.But, my wife and I do purchase the local Sunday paper. The reason? Coupons. My wife is such an industrious clipper and saver that she regularly saves $20-40 per week on our grocery bill.
But while she is busy perusing the week’s sales, my guilty pleasure is the USA Weekend insert.
I read the various “smart” sections:
- Money Smart
- Eat Smart
- Parent Smart
- Think Smart
Sometimes they’re interesting, but mostly they’re things I already know. But that’s OK, because it makes me feel smart.
But the July 1st edition had what is perhaps the most useless Money Smart section in my memory. The topic that week was “Let your house make money.”
Hmm… that sounds like a good topic, I thought. I figured it would be the standard information about home equity, or making extra payments on your mortgage to build up more equity, but alas I was wrong.
The entire section was about renting out your home for extra cash. To be clear about this, it is a great idea – if you happen to be in the less than 1% of the population who fits the scenario!
It wasn’t even about having a 2nd home to rent out for income. It’s about going on vacation and renting your home while you’re away.
I happen to live in a town that has a very busy track season. Every year, for about 4 or 5 weeks the town is mobbed by tourists coming to see horse races.
Many people in town do what the article suggests. In fact, it’s just about necessary to pay for the exorbitant mortgages, but that’s a different story.
My major problem with the article is that it’s utterly useless, not only for the majority of people in the country, but also for the majority of homeowners as well!
It’s things like this that make me realize why so many people remain financially ignorant in this society. The Sunday USA Weekend insert strikes me as a terrific opportunity to educate people on the basics of finance. Inform the population of the things they never learned in school; the things they never learned before they got a credit card!
Here’s a sample of something that would be a great topic for such an insert:
So, just to recap:
Useful
Useless
Got it? Good.
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Posted: December 11th, 2007 | Author: Joe | Filed under: Debt, spending | Tags: Debt, inheritance | No Comments »
I’m down to one magazine subscription. I used to get SmartMoney, but it was mostly investment ideas which I don’t need at this point. We don’t have enough cash to invest. We’ve eliminated most of our debt, and are focusing on building our savings. So, I let that subscription lapse for now.
This leaves us with Money magazine. It’s quite useful, for the most part. I find a lot of their advice is stuff that I’ve already come across on the web or read about someplace else. But there’s usually one or two items that prove informative.
But lately, I’ve been seeing more and more… well, filler I guess. At least, I hope it’s filler ’cause if it’s not, then it’s just plain stupid.
Case in point: A month or so ago, there was an article titled “Retire Rich” and they listed a number of Money Myths in the side bar. One of them was so insidiously stupid, I had to blog about it just to rid my self of the mental bafflement it caused.
The Myth: Everyone has debt.
Here’s the snippet:
For most people, during a time of economic growth and soaring markets, it’s easy to believe that income will keep rising faster than debt payments. But in retirement you can no longer count on that unlimited potential for better pay. “If you don’t cut your debt load while you’re still working”, says Marilyn Dimitroff, a financial adviser in Bloomfield Hills, Mich., “you will face the worst possible scenario: a retirement saddled with mounting debt and only a limited income to repay it.”
OK. So far, so good. It’s got the mandatory fear factor that anything in the media seems to require these days, but otherwise it’s off to a good start.
Mary and Martin Pearsall have lived frugally, saved regularly and invested wisely in their 30 years of marriage. They’ve also managed to avoid the kind of crippling debt that can spoil the best-laid retirement plans. They steered clear of credit cards by living within their means, and they’ve dutifully paid the mortgage on their $250,000 Colorado Springs house. They now owe just $64,000.
“We’ve been careful without being draconian,” Martin says. “We would never accumulate debt we couldn’t handle.”
Great! It starts with a nice message that hard work and determination can pay off over the long term.
But then I started to wonder what kind of a job Martin had. He must be a CEO of some blue chip company, right?
Martin worked as an Episcopal priest until last year, and Mary has been a personal trainer and a business consultant.
Hmmm.. that’s good news. If they could live debt free and save enough for retirement on those kinds of careers, then I might have a shot of doing likewise. Tell me more!
Now, with the help of a sizable inheritance from Martin’s mother, they have a portfolio worth over $1 million. With no major debt to hold them back, the Pearsalls plan to scale back their work lives soon and travel, as they’ve been hoping to do for ages.
WHAT?! “With the help of a sizable inheritance” ?! Sure, I could have a cool Million and no debt too, if I inherited it!
Now, I don’t know what the statistic is, but it’s got to be in the single digits the number of people who inherit their wealth. This kind of stuff just annoys the holy hell out of me. It’s stupid, dishonest, and a waste of my time to read!
What say you?
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