How To Reduce Car Insurance Costs In 5 Easy Steps.

Car insurance is one of those things people love to hate. It’s mandatory in many states, and most people think there isn’t much they can do about the cost other than shop around every few years. But there are some things that can cut costs even further, and a few that will help avoid unnecessary costs in some situations.

1. Can you drop collision insurance?

As your car gets older and depreciates (loses resale value) there comes a point in time where it’s worth less to replace than you would pay in collision coverage. Collision insurance exists to cover repair expenses due to a collision, but the insurance company will not pay more than the car is worth regardless of the repair costs. Once the resale value of the car drops below the amount you pay in your premium for collision, you’re better off dropping the collision coverage and putting that money into a high yield savings account for your next car (or repairs if you can’t afford a newer car).

To find your car’s current resale value, use the Get Your Car Value tool at Kelly Blue Book (kbb.com).

2. Buy used, or buy GAP.

As discussed in the point above, a new car depreciates the minute you drive it off the lot. Now consider what happens if you buy a brand new car for $25,000 and get into an accident a few weeks later. Say this particular car is now only worth $20,000 but you’ve got a loan for $25,000. The insurance company will only cover up to the current value of the auto, which is $5,000 less than you owe. This is where GAP insurance is a good idea because it covers the gap made by the difference in what you owe vs. what the car is worth.

GAP insurance is a good idea IF you buy new. A better idea is to buy slightly used.If you buy a car that’s 2-3 years old, you end up with a car that’s already experienced the bulk of its depreciation, but is still in very good shape. If you’re disciplined and plan ahead you can buy this new-to-you car with little if no financing. Either way, the chances are that whatever amount you end up taking out a loan for will be below the value of the car and so you can skip the GAP insurance and save even more money.

3. Keep your credit score in good order.

Head over to AnnualCreditReport.com and check your credit history. The report is truly free (not free with purchase of some other service, like the credit report site with the catchy commercials..) and you don’t need to buy your credit score, though you can. You basically just want to make sure all the items in your history are up to date and correct. Each agency has its own proprietary score that should give you a general idea of where you fall on the poor to excellent scale.

The idea here is to get to and stay in the excellent range because more and more insurance agencies are checking credit scores of prospective clients, and basing premiums on that score.

Don’t have an excellent credit score? No problem, just follow these tips to improve your credit score and over time you’ll be in excellent shape. After that, you can shop around for a lower rate.

4. Know your worth.

Well, know your car’s worth anyway. It’s a dirty little secret that many insurance companies offer incentives to claims adjusters to minimize the payout to customers when a claim is filed.

It is to your benefit that you be aware of this and don’t accept the first decision if you feel the agency is not meeting their obligation to pay the full amount of your claim.

Know how much your car is worth both as a trade-in and on the open market (again, use Kelly Blue Book’s Get Your Car Value tool) before entering into negotiations with the claims adjuster. If there is an injury involved, have a full understanding of the extent of the injury and speak to an attorney if necessary.

5. “I have this friend who…”

Some insurance companies may view a call as a claim and adjust rates accordingly, even if you’re only asking whether a specific incident is covered. Even worse, the claim may go in a comprehensive report that other insurers use when determining what rate to charge customers for premiums!

In other words, don’t call your insurance agent to ask if the mirror your son broke with his cave-man style baseball swing is enough to meet your deductible. This could be considered a claim by some agencies, as it pertains to an actual event. The better course of action is to be vague in your question. Only ask what your deductible is, or use the old “my friend” ploy. For example:

“I have a friend and his son broke the mirror on his car but his insurance company told him that it didn’t meet his deductible and he’d have to pay out of pocket. This got me wondering about my policy and what might happen to me if I were in his place..”

Keep any discussion as general as possible until you know what’s covered and what’s not and where you stand in the matter. Otherwise, you could end up paying more in the end.

Related Posts:

• When is it Ideal to Drop Collision Auto Insurance?
• When To Switch Car Insurance.
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• How to Find the Best Place To Put Your Savings.

Who are The Rich in America Today? Introducing The Frugal Rich.

Who are The Rich in America today?

Most of the wealthy in America are 1st generation wealthy, meaning they earned their wealth and didn’t inherit it.  So who are The Rich? They are mostly entrepreneurs and small business owners.

According to Thomas Stanley and William Danko, “Wealth is what you accumulate, not what you spend.”

Stanley and Danko are the authors of the fascinating book, The Millionaire Next Door (Surprising Secrets of America’s Wealthy), and they’ve made a study over the years of the habits of the wealthy in America.

What they learned about America’s wealthy is summed up in this quote from the book:

“It is seldom luck or inheritance or advanced degrees or even intelligence that enables people to amass fortunes, wealth is more often the result of a lifestyle of hard work, perseverance, planning, and, most of all, self discipline.”

There are many lessons in this book, and that quote touches on a few of them. The most important lesson is that you don’t need to be born into the right circumstances to become wealthy. It sometimes takes luck, but mostly takes self discipline and perseverance. In short, stop finding excuses – you too can become rich!

I know, that probably sounds a bit like an infomercial for some get rich quick scheme, but it’s not. They never say you can do it over night or that its something you can do on the weekends in your spare time. Quite the contrary. It takes years of planning and discipline, but that’s not to say it takes as much as a career or full time job. You just need to have a plan and keep at it.

OK, enough cheerleading about how you can do it… let’s answer a basic question: What is wealth?

The definition of wealth.

Wealth can be defined in many different ways, but in its most common use it equates to a person’s net worth. That is, the value of everything a person owns, minus what a person owes.

That’s overly simplistic, but you get the idea. Having a fancy Mercedes Benz in the driveway doesn’t make you any more wealthy if you owe more on the loan than the car is worth… or if you’re leasing it and don’t actually own it at all. That’s because the car is a liability, not an asset. An asset is something that either puts money in your pocket, or can be sold to generate cash. A liability is something that costs you money.

But there’s a difference in assets too. Some are liquid, and some are not. Stocks for instance are generally more liquid than real estate, since you can sell a shares of a stock much easier than you can a house.

How the wealthy view (and use) money.

The wealthy get rich by maximizing their return on investment. They may still spend big bucks on discretionary items, but they view those purchases as investments, not mere expenses. They are more apt to maximize quality and value, regardless of price. But that’s not the same as buying expensive name-brand merchandise for the sake of owning expensive name-brand merchandise. This has especially been true of the rich during the recession.

There are definitely plenty of people with money who act rich, but when their finances are viewed more closely it’s clear that they are only suffering from Affluenza (The All-Consuming Epidemic).

Don’t be one of them.

The rich and debt.

You may think that the wealthy eschew debt and pay only in cash, but that turns out not to be the case entirely. Stanley and Danko found that most American millionaires tend to pay for large ticket items like cars, homes and boats with cash and to the extent that they use debt it is for investment purposes. This is likely a big difference between the middle class wage earner and the millionaire, but if the wage earner can get to a point where he can buy those big ticket items without debt, then he’s well on the road to a more financially free lifestyle if not the road to riches.

Tips for increasing your wealth.

OK, enough about how we’re different from the rich. Here’s how to become more like them financially:

• Don’t look to debt to fund your lifestyle – this includes getting a college degree. Going $30,000 into debt for a degree and getting a job with an income ceiling of $30,000 probably isn’t worth it in the long run.
• Have cash on hand to cover your unexpected expenses (emergency fund).
• Live below your means – spend less than you earn and avoid Lifestyle Creep !
• Plan – plan for today, tomorrow and 30 years after retirement.
• Diversify – invest in mutual funds and bonds, not just cash. Add exposure to commodities and real estate.
• Don’t use credit for purchasing – unless you can (and do!) pay off the balance each month!

If I had to distill the lessons learned in The Millionaire Next Door into one simple concept it would be this:

Break out of the debt cycle; plan, save and work to avoid going into debt for any reason.

If you master that, you’ll have the tools and resources on hand to accumulate wealth instead of payments.

Source

Related Posts:

• Alternatives To Pet Insurance (Tips For Doing Without Pet Insurance).
• Want to Build Wealth, and be Secure? Focus on Learning Instead of Earning!
• How to Find the Best Place To Put Your Savings.
• How To Reduce Car Insurance Costs In 5 Easy Steps.
• How to Waste Your Money in 15 Easy Steps.

How to Waste Your Money in 15 Easy Steps.

I came across a Yahoo! finance post the other day that highlighted 25 different money leaks. Some were OK, some were pretty lame. I decided to pick some of the better ones and add some of my own for this list. These are 15 items I think most people probably waste at least a little bit on now and then. Mostly this list should get you thinking about were and how you waste money regularly, so that you can stop and pocket that money instead. This list is by no means meant to be one of items people should never spend money on. Rather, it is a collection of things we often spend on and may have never considered a cheaper alternative.

Here we go… 15 money wasting leaks.

1. Credit card debt. Carrying a balance – however small – in an excellent way to leak cash from what could otherwise be your savings. Even a modest credit card balance will cost you hundreds of dollars a year at a rate of 10% or more. Do what you can to Get out of credit card debt.
2. Excessive car maintenance. Premium gas, and unnecessary oil changes are just a couple of the car maintenance costs you can save money on .
3. Unhealthy habits. Cigarettes are costly, and spending the evening at the bar adds up quickly. You’ll not only save costs, but also save your health by cutting back if not quitting.
4. More cell phone than you need. Many people find themselves locked into a monthly cell phone contract costing the thousands. That’s all well and good if you really need those features and use the service, but many people simply do not. I was one of these people, and gave up my Verizon bill for a pay as you go Tracfone years ago and have been pocketing the savings ever since.
5. Buying name-brand instead of generic. Whether it’s clothes or groceries, many name brand products are identical to the generic, but you pay a lot more.
6. Not asking for a discount or cheaper alternative. Hey, it never hurts to ask. Right?
7. Not buying beverages in bulk. Soda is cheaper when you buy a 2-liter bottle than a 20oz. bottle. The same is true for many drinks. And snack food to come to that. If you like some chips with your brown-bag lunch, why not by the big bag and bring a few every day in a sandwich bag. You do bring your lunch to work instead of buying, don’t you?
8. Paying for something that’s ‘Free’. Why spend money when you don’t have to? You can get software for free and your credit report for free among other things, and yet millions continue to pay . Don’t be one of them.
9. Getting a tax refund. Loaning your hard earned money to the government for nothing in return is one of the most senseless money mistakes going. Yet every year we see stories about the millions who do, and what they’re going to do with their “extra money”. Do yourself and the country a favor – put that money in a saving account instead. You’ll earn interest on it and you’ll still have the money come tax time next year.
10. Stashing your savings in a low (no) interest checking account. While we’re on the topic of saving money, there are dozens of high yield savings accounts out there, pick one. I recommend ING and HSBC Direct , but there are many other options to choose from.
11. Paying late fees. This is just a result of poor planning. I know – I’ve done it! Get whatever system works for you in place so you don’t do it again. Either use personal finance software, or a cheap calendar to write due dates on, or get a planner. For Pete’s sake – do something!
12. Paying ATM fees. This is also because you didn’t think ahead. There is no other reason to pay ATM fees other than poor planning, plain and simple.
13. Shopping without a list. Be it grocery shopping, or clothes shopping. There’s a reason retailers love you to window shop – you spend more than you would have with a defined list of items. They love it because it’s money in their pocket. Keep money in your pocket instead. Use a list.
14. Paying for things you don’t use. Sometimes it’s poor or no planning that leads you to that splurge on that spur of the moment purchase. Other times it’s product packaging that forces you to buy more than you need. Case in point: Cable Television. Well, I cut my bill by $40 a month, and so can you! By the way, this is another example of “just asking” for the discount too, albeit there was a fair amount of negotiation with the asking.
15. Buying a new car, instead of a used one. I know a lot of people argue that a new car is worth the money for the peace of mind that comes from being free from repairs, but take it from me - buying a new car can be costly experience!

Feel free to leave any quick money savers you may have in the comment section!

Related Posts:

• How to Find the Best Place To Put Your Savings.
• 7 Tips for Cutting Spending and Putting Cash Back in your Pocket. (video)
• 5 Small Sacrifices to Save Big.
• Living on a Single Income: 7 Years and Counting.
• When Saving Money Can Cost You.

5 Small Sacrifices to Save Big.

With a few small sacrifices and some smart money decisions, it’s easy to start saving big. One of the best ways to save money is to first know where your money is being spent. Create a list of your spending in a week; it seems like a dull task, but at the end of the week, you should be able to see where costs can be cut or what things you can do without.

Here are 5 small sacrifices to save big:

1.On Food.

Cook at home whenever you can. This may be quite difficult for others who don’t eat together, but you can start out with the habit of cooking and eating together at home once a week and slowly increase the frequency. If cooking a meal is too time-consuming for your busy lifestyle, create a weekly plan of your meals.

Shop for all your grocery needs in one go, prepare the meals ahead of time, store them in separate containers, and freeze them. The next time you are too tired to prepare a meal, you can just pull out a container in the fridge and heat it up right away. If you always eat at work, consider taking a packed lunch.

You don’t have to do it every day so as not to isolate your coworkers. If the entire office is going out for lunch, go ahead and connect with them. But for other days, try to convince some of your colleagues to join you in brown-bagging lunches. You’ll never know they might also appreciate the idea of saving extra money from it.

If you just can’t seem to stop yourself from binging on food, carry some snacks in your purse, keep some in the car, or have a stash available in the office too. This way, you can avoid going to convenience stores or the vending machines whenever your hunger pangs strike.

If you are a coffee person, you may already know that the coffee you pick up every morning adds up to a significant amount of money. Even though it seems like a small indulgence, skipping designer coffee will turn into a lot of savings in the long run.

You don’t have to completely avoid drinking coffee, but as often as possible, make one yourself at home. If you need it on the go, invest in a reusable thermal travel cup, so you can take your homemade coffee with you. If you can, get into the habit of drinking water.

But avoid having to spend a lot of money on bottled water by investing in a tap filter or pitcher and filter. You can use a reusable bottle that you can refill and take anywhere with you so you’ll never have to buy bottled water again. Not only is this much cheaper, it’s also better for the environment.

2.On Energy.

Regulate the energy you consume at home. Switch off anything that runs on electricity when not in use. If you keep forgetting, invest in a motion detector so that the light switches off automatically when no one is in the room. Unplugging an appliance will help you save more than simply switching it off. Control the thermostat of your heating and air conditioning units as they consume a large amount of electricity than most appliances.

In the winter, layer your clothes so you can lower the temperature a little bit. During summer, use blinds or curtains in your windows to block the sunlight from coming in; but make sure that there are other windows, situated in cooler direction of the house, that are open so that air can circulate inside your home. Choose the most energy-efficient and eco-friendly models when buying new appliances or replacing your old ones.

3.On Bills

Seeing an overview of you budget might make you more conscious about your spending habits. So, spend some time to create a detailed and organized budget, and stick with it. If possible, automate all your payments to make sure that you do not overlook some of your bills, which can charge you extra fees for late payments. If not, when you receive your fund, immediately divide it to pay for all you financial obligations.

Use cash instead whenever you can – it’ll save you withdrawal fees to transferring fees, and other bank fees you may not be aware of. But when withdrawing cash from the ATMs, make sure that it will not charge you any transaction fees. If it does, then don’t use it and find another one which doesn’t or withdraw directly from your bank. If the money just isn’t there, don’t spend – it’s that simple. Using a credit card will force you to buy on debt and it may be hard to pay it off completely especially when the interest starts adding up.

4.On Leisure

Plan and book your vacations ahead of time; it will not only save your sanity but also give you enough time to look for inexpensive airfares, hotels, and other travel packages that will eventually save you a significant amount of money. If you are not really fond of traveling, consider your local tourist destinations and look for activities that you can do on your idle time.

Visit your local library. You might be surprised that you can get a wide selection of books and DVDs at very minimal cost. Usually, your library card can let you borrow them for free. This is a better option than buying them because there is a great possibility that you will only read a book once, and watch a movie once.

If you really like something, then that’s the time you purchase it. Better yet, buy used books at second-hand stores or online shops like EBay and Amazon. It may be a little scruffy, but considering that you can get them for almost as much as half the price of the new ones, it is a small price to pay. For DVDs, see if you can get a membership to the DVD stores for discounted prices.

5.On Transport

Avoid buying a new car if possible. A new car depreciates in value as soon as you drive it out of a dealership, and it is still more costly than getting a pre-owned vehicle or maintaining an old car. Compare the money spent on repair and maintenance of an old car against the monthly installment of a new car and see the difference.

Either you choose to spend some extra thousand dollars for a new one or you shell out just a few bucks in repair maintenance for a slightly used car with a low mileage on it. Whatever it is, your goal is to keep your car as long as possible. As long as the repair costs are low, lengthen its life by having a regular maintenance schedule.

If you can, choose walking or biking when going someplace, especially when the weather is great. And if it is hard to get by without using a car, share a ride with your spouse or colleague. Planning a carpool can save you hundreds of dollars a year and reduce your carbon footprint in our air. You are not only saving money this way, but also saving the environment.

Related Posts:

• Living on a Single Income: 7 Years and Counting.
• When is it Ideal to Drop Collision Auto Insurance?
• Minimalism vs. Simplicity – Are You Missing the Point?
• 7 Tips for Cutting Spending and Putting Cash Back in your Pocket. (video)
• How to Waste Your Money in 15 Easy Steps.