Nov 19 2013

3 Things to Consider When Purchasing Life Insurance

By |November 19th, 2013|Blog, Personal Finance Tips|4 Comments|

I have a confession to make: I have probably searched for life insurance quotes at least 5 or 6 times in my life, but I’ve never pulled the trigger.

The reason I have never decided to purchase a policy is because I’m having a really hard time determining how much insurance I actually need. There is no right answer, but there are definitely things to consider.

First of all, you obviously have to consider the price. It’s good to get quotes from a lot of different companies and to make sure you get the best price. I’ve looked at places like State Farm, GEICO, Liberty Mutual and others. If you live in Australia you might look at Lifebroker or other Australian companies.

As I am thinking about life insurance to protect my fiancee financially if I were to pass away, here are a few considerations I’ve been throwing around.

Does Your Employer Offer Life Insurance?

One of the benefits at my job is a life insurance policy equal to one year of my current salary. Let’s pretend I make $60,000 a year. In that case, if I pass away my fiancee would get a $60,000 check from my work.

family

photo credit: andrewmalone

While I would eventually like to raise this to a higher number, it is nice to have this fallback option that doesn’t cost me a dime. As long as I stay with this company, I have a fairly decent life insurance policy already.

It’s important to remember that this is only available to me as long as I remain employed with this company, so it’s not something I can necessarily count on in the future. They could fire me at any time, or I could quit if I find a new job.

The main benefit of this policy is that it allows me to wait until I finish my research and settle on a policy, while still having a little bit of insurance to fall back on.

What Will Your Family Look Like in a Few Years?

At first I thought, I can just get a small policy that my fiancee could use to pay off our house and all her student loans. That would be more than enough to give her a comfortable life. Then I remembered that it won’t just be me and her for long.

When you are looking at a term life insurance policy for 10, 20, or 30 years, it’s important to buy a policy that will support any family you may have over that time period. If you are going to have or adopt children, the amount of insurance you purchase will need to go up, especially if you are planning to pay for your kids’ college.

What Do You Want for Your Surviving Family?

Finally you have to ask yourself the most important question: what do you want for your family if you pass away. I’ve thought about this quite a bit and this is what I’m starting to settle on:

  • Enough money to pay off all debts, including our mortgage. This is about $200,000 at the moment, but this isn’t our forever home. Our next home will probably more expensive, so I should probably look at about $300,000.
  • $100,000 for my fiancee as a cushion to help her transition to life without me. She could use this money to go back to school if she wanted, or she could just use it to supplement the income she gets from her job. Her expenses will be lower because the mortgage and all debts would be paid off, so this should last a long time. It could also help pay for a nanny or daycare so she can work without worrying about caring for our kids (that we hope to have one day).
  • Another $100,000 to put in a trust for my kids. I’d probably have to set up some rules that restrict them from accessing the money until they reach a certain age and/or meet certain conditions. I haven’t put much thought into this yet, but I could basically just trust my fiancee to decide when the kids deserve to withdraw from the account.

Based on this assessment, it looks like I’d need a $500,000 policy. I’d probably look at a 20 or 30 year term, because in the next 20 or 30 years I expect to have a net worth over $500,000 and at that point I would have enough money saved up where I wouldn’t need an insurance payment to provide for my family.

Readers: Do you have life insurance? How did you determine how much you needed?

Nov 18 2013

Simple Ways for Small Businesses to Cut their Media Costs

By |November 18th, 2013|General Personal Finance|Comments Off|

In today’s global economic climate, staying in touch with clients, suppliers, and contacts is extremely important for a business of any size. As a small business owner, your network may be spread far and wide, particularly if you work in new media or run an online business. The cost of international phone calls and high speed internet to reach this network can really add up over time. ¬†If you’re looking for a way to cut your communication costs both at home and abroad, you’ll want to keep the following tips in mind.

Bundle your Services

Do you have separate bills for your business’s mobile phones, landlines, and internet service? Not only does this create a bigger headache for the accounting department, but it also might mean that you’re overpaying for your media services. Using a single provider and bundling your services into one package may yield you a greater discount. Shop around and ask about media packages to find the best carrier for your small business’s needs.

Use Communication Apps

Using technology can save small businesses a great deal of money, whether it’s through paperless banking, open source software, or teleconference services. Another way to use technology to cut costs is by downloading today’s top communication apps. You may already use tools like Skype on your computer to save money on teleconferencing, but services like these are also available in an app form that allows you to place lower cost international calls to your overseas contacts. Some of these will allow you to place free calls within the same network, while others will charge subscription costs or a per-minute fee. In addition to Skype, you’ll find that WhatsApp, Rebtel, and Viber are a few of the top choices.

Get Rid of your Landline

Is your business still using a landline? For retail operations this may be necessary, but if you work from a variety of locations or don’t handle a heavy volume of calls each day there might be better solutions that could eliminate the cost of a landline entirely. Virtual phones, mobile phones, and VoIP services might be more suited to your business model.

Explore Prepaid Phones for Employees

If you find yourself paying overage fees or that you don’t even come close to using all of the minutes in your wireless plan, you might want to consider purchasing prepaid phones or SIM cards instead. A SIM card with Lebara or other similar providers can be loaded up with minutes and then used in your phone, allowing you to control your media budget more effectively. Some options require you to use a monthly minimum, while others can simply be paid in advance. Prepaid options can also be used to cut costs when travelling. For example, if your employees are travelling on a business trip, you could give them a prepaid global SIM card allowing them to make cheap calls with Lebara back home to check in. This helps your business avoid costly roaming fees.

Many businesses are paying far too much for their media bills. By exploring these alternative options, you can whittle down your monthly media costs and save money to invest back into your business. Be sure to compare terms and conditions carefully and shop around to benefit from the best rates.

Nov 11 2013

Minimum Car Insurance Requirements Aren’t Always Enough

By |November 11th, 2013|General Personal Finance|1 Comment|

There are many instances where there is a government requirement to purchase some amount of car insurance. Minimum insurance requirements can vary based on where you live and what insurance you are considering.

For example, most states in the USA require some level of car insurance, but New Hampshire does not require auto insurance for all citizens. In New South Wales, Australia drivers are required to purchase a Green Slip, or compulsory third party (CTP) insurance.

However, the minimum required insurance may not cover enough to protect your financial interests. A green slip only covers compensation for people killed or injured in an accident; it does not cover damage to any vehicle in an accident.

If your vehicle insurance does not cover damages to your vehicle or other people’s vehicles, then every time you get into your car you are potentially risking tens of thousands of dollars.

Imagine if you find yourself in an accident with someone driving a BMW M6. That car costs over $100,000 and y0u could be liable for buying the owner a new one if you are at fault in the accident.

A $100,000 debt can wipe out years or even decades of savings, and it’s simply not worth it to take a chance on ruining years of savings just to save a few bucks on your monthly insurance premiums.

How Much Insurance is Enough?

The most important thing to make sure car insurance costs is medical costs for all injured parties. There are very few cars that cost more than $75,000, but medical costs can be well into the hundreds of thousands or even millions depending on how many people are hurt and what injuries they have.

There is no rule that can tell you how much insurance you should buy, but it is important to consider that the more money you have, you more you have to lose. In America, if you have little to nothing saved, you have the option to declare bankruptcy if a debt is too big for you to pay, but that will wipe out your savings. The more you have saved, the more insurance you need to protect those assets.

It is important consider how much insurance is right for you, and then get multiple quotes to make sure you find the best deal on the insurance you need. There are many websites that compare car insurance quotes in America and Green Slips in Australia.

Oct 28 2013

How to Get a Great Performance Review

By |October 28th, 2013|Blog, Personal Finance Tips|4 Comments|

As we start to approach the end of the year, many of us who are employed are about to go through performance reviews. These performance reviews can have a big impact on whether or not you get a raise, a year end bonus, and even if you get a promotion in the future.

You don’t need to get an economics degree in London to know that bonuses, raises, and promotions are good for your financial situation, so it’s important that your year end review goes well.

Here are a few actionable steps you can take to make sure your review is great.

Be a Great Worker

The first and most important thing is that you have to be a great worker. You aren’t going to be able to convince your boss that you had a great year if you didn’t. First thing’s first: be someone worthy of a bonus or a raise.

Unfortunately, that isn’t always enough. Once you’ve put in the work you may have to take a few more steps.

Give Your Boss a List of Your Accomplishments

Sometimes as an employee you can feel like your boss should know everything you’ve done off the top of his or her head. The reality is that your boss probably does a lot more than just manage you all year. My boss has about 10 different employees, and I know he’s too busy to keep all of my accomplishments at the front of his mind.

boss

photo credit: Victor1558

As you prepare to have your year end performance review, make a list of everything you’ve done. It doesn’t matter how small it is; put it on the list. When your boss sees all the extra stuff you’ve done and sees a full list of everything you’ve accomplished, he or she will probably be pretty impressed.

Make sure you have a session where you can review this list with your boss in person or over the phone.

The reality is your boss probably forgot half the stuff you and the rest of your peers did. If you remind him and your co-workers don’t, your boss will start to think you did more than anyone else. Even if that’s not true, it’s good for you if your boss thinks it’s true.

Always Be Closing

Now that you’ve told your boss how great you are, you might want to ask for a bonus or a raise. This will depend on your relationship with your boss, how strong you’ve actually performed in the last year, and your company policy towards bonuses and raises.

If you feel like you’re not being paid for the hard work you do, it’s important to ask for the sale. In this case, that means asking for a bonus or a raise. You’ve already proven that you’ve earned it with your list of accomplishments, but asking for a bonus or raise is important.

If you truly deserve a raise, hopefully your boss will make it happen. If he doesn’t, then it might be time to look for a new job.

Readers: How do you ensure you get a great performance review?

Oct 22 2013

Obamacare Makes Being Uninsured a Viable Insurance Plan

By |October 22nd, 2013|Blog, Economics / Politics, Personal Finance Tips|12 Comments|

Now that Obamacare is going into full effect in 2014, people need to make a decision: should I try to get health insurance (if the Obamacare website ever starts working) or should I just pay the fine for not having insurance?

If you are young and healthy, it might make sense to just pay the fine.

Let me clarify. I’m getting health insurance because my employer subsidizes the cost and it’s actually cheaper for me to have health insurance than it is to pay the fine. If this is an option for you then it’s pretty much a no-brainer.

But say your employer doesn’t subsidize your insurance costs, or maybe you are self employed or unemployed. Should you pay for health insurance?

The answer is different for everyone, but Obamacare actually makes it very appealing to go without insurance.

Health Care Becomes Very Expensive for the Young and Healthy

There’s one thing I doubt anyone will disagree with: health care for young healthy people is going to get more expensive. Here is an article suggesting it could rise an average of 260 percent. I don’t know if that number is accurate, but it makes sense.

If you want to insure more people (the uninsured and the expensive people who used to be denied due to pre-existing conditions), you need more money. To get more money, you have to raise prices.

But you can’t raise prices on sick people. That’s illegal now. Insurance companies cannot charge different rates based on health status or gender.

Hence, people who are sick or have a history of poor health will likely see price drops, which are being paid for by price increases on the healthy people.

Cost Comparison: Health Insurance vs. Uninsured Penalty

Let’s look at the cost comparison for health insurance in 2014.

hospital bed

photo credit: Parker Knight

If you don’t get coverage in 2014 you have to pay 1% of annual income or $95, whichever is greater. If you make $50k a year, your penalty will be $500.

Compare that to monthly insurance costs of about $187 a month, or $2,244 a year, and it’s obvious that the penalty is cheaper.

Of course, you’ll have to check the premiums yourself. As a 28 year old male in Dallas, I can get a plan at $158.39 a month, or $1,900 a year. This plan has a $6,000 deductible, so basically I’d have to spend $7,900 of my own money on my health care before this plan covers anything. Also, this is over twice as expensive as my penalty would be.

But the penalty doesn’t give you health insurance. So what happens if you get sick?

Sign up for Health Insurance After you Get Sick

Before Obamacare became law, an insurance company could refuse to insure you based on your medical history or current medical conditions. Not anymore.

If you are uninsured and get diagnosed with cancer, don’t worry. Go find some private health insurance company and sign up for coverage tomorrow. Pick the coverage option that is best for someone with cancer, and in the next 1-15 business days, you’ll have health insurance to cover your expenses.

They can’t deny you (thanks to Obamacare) and they can’t charge you more than anyone else because of the cancer (thanks to Obamacare).

Not only have you avoided paying expensive insurance premiums up until this point, but you’ve also given yourself the opportunity to sign up for the best plan to address your cancer treatment costs. Thanks to Obamacare being uninsured has never been more appealing.

Understand the Risks of the 1-15 Day Waiting Period

There is one issue with waiting to get health insurance: the waiting period. You can wait 15 days to start your cancer treatment in most cases. However, you can’t wait 15 days when you’ve gotten in a car accident, chopped off your finger while using a saw, or need an emergency appendectomy.

If you aren’t insured and you need immediate, emergency medical treatment, it can absolutely destroy your personal finance situation. You can’t get insured fast enough to cover the costs and will either have to drain your savings, pay off the debt over many years, or declare bankruptcy.

Secondly, you can get private insurance any day of the year but the Obamacare marketplace is only open between October 1, 2013 and March 31, 2014. It is possible that plans in this marketplace are cheaper since they are supposed to be subsidized for some people, but you’ll never know unless the federal government fixes the website and you can sign up to see prices. There is a risk you might pay too much by not using the marketplace.

Being Uninsured is Less Risky Thanks to Obamacare

Before Obamacare, any expensive medical issue could bankrupt and uninsured individual. Now, only emergency medical treatment can bankrupt an uninsured individual.

The individual mandate (a penalty for not getting insurance) was supposed to make everyone sign up. However, the additional provisions of Obamacare (companies can’t adjust pricing or deny coverage based on health history or current health status) have made going uninsured much less risky than before.

In the end, it’s up to you if you feel more financially secure with or without health insurance. However, don’t just buy it because Obamacare tells you to. Paying the penalty could be your best option.

Readers: Are you getting insurance or paying the penalty in 2014?

Oct 22 2013

Crowdfunding Your Start-up: 7 Sites to Get it Off the Ground

By |October 22nd, 2013|General Personal Finance|Comments Off|

It can be difficult to find the funding you need for a start-up. You’ve maxed out your credit cards, you’ve emptied your bank accounts, and yet you still need more money. Have you tried letting your customers foot the bill? Crowdsourcing has become an increasingly popular source of funding. Here are a few crowdfunding sites to help get your start-up off of the ground.

Fundable

Fundable is a crowdfunding site that funds businesses from various industries, including health and beauty, fitness, technology, and food and beverage. The site has garnered a lot of attention from such companies like Forbes, The Wall Street Journal, TechCrunch, and Bloomberg television. Contributors are asked to donate money to the cause and, in return, will get a reward.

libraires

Image via Flickr by Feggy Art

The rewards are tiered and stated on each campaign’s page. It’s free to get started, but it’s $100 to start a fundraising campaign. There are no percentage fees once the campaign is over. Once the goal is met, some companies offer “stretch goals”. If these goals are met, the company will offer an extra reward to all of their backers.

That seed money can be used for all of the things required to get a start-up off of the ground, such as bills, equipment such as computers, and workflow software for those computers, which will help your start-up run like a well-oiled machine.

Small Knot

Small Knot, similar to Fundable, allows people to host campaigns for their business and offer rewards. They hope that investors and customers will want to help businesses in the community. They currently have campaigns in seven states. The campaigns are for a dance studio, a comic shop, a food truck, a wine cellar and a basketball academy.

Small Knot takes a three percent commission for any campaign that’s successful, and the payment processor grabs a nearly three percent cut as well. If your campaign isn’t successful, you don’t owe anything.

SoMoLend

SoMoLend is a bit different from Fundable and Small Knot. This site asks you to fill out a loan application and create a profile on the site. Investors then approach entrepreneurs and business owners to find out more information about them. The investors and businesses can negotiate terms of their loan, and then businesses repay the investors with interest. SoMoLend partners with banks to provide loans to small businesses.

Fund Anything

Fund Anything isn’t dedicated specifically to funding start-ups, and, as the name suggests, you can fund anything. There’s a nine percent fee on contributions, and if the full amount is raised, you only owe five percent. The payment processing company takes a three percent cut.

Similar to other crowdfunding sites, businesses offer rewards to those that donate money, and you have the option to implement stretch goals as well. Fund Anything has recently captured the attention of Donald Trump, who is offering a million dollars to the person that comes up with the best idea.

CircleUp

This crowdfunding site is a bit different from the rest. CrowdUp is aimed at companies that are looking for money in exchange for an equity stake. This site is open only to accredited investors and only deals with consumer product businesses that have at least a million dollars in revenue.

CircleUp states that by only allowing accredited investors, they hope to give companies seeking funding a better chance of success meeting their goals, as well as in the future. In order to keep the money that they raise on the site, companies must reach their financing goal. If the goal is not met, like most crowdfunding sites, the money is returned.

CrowdFunder

CrowdFunder isn’t just about raising money for entrepreneurs and those just getting their business off of the ground. It also has a network of companies, investors and entrepreneurs, which makes it easy for businesses to raise money in exchange for rewards. Both individuals and businesses are eligible to set up their own campaign on Crowdfunder.

Seederella

This site is unique in that it pools data from multiple crowdfunding websites, such as Kickstarter, Rockethub, Kiva, Crowdcube, and more. You can also filter the projects by whether or not the project is close to being funded, how many days a certain campaign has, and how long the campaign has been active. You can also search and identify rewards, equity, lending and donation projects.

If you’ve got an idea that you think might work, or you’re in the process of turning that idea into a business, look into these sites, start a campaign, and let the people decide whether or not your business will be successful!

Author Bio:

Jane Miller is a freelance writer who loves to write about anything from tech to mommy stuff. She is featured in many blogs as a guest writer, and can write with authority on any niche or subject.