Month : June 2016

Insurance

The 5 Must-Have Kinds of Insurance

There’s a lot of insurance out there, from the extended service package on your newest iGadget to whole life policies with complex value schemes. Whether or not any given type of insurance is right for you depends on a variety of factors. However, financial experts consistently identify five kinds of insurance that most established families will need. 

Term Life 

Losing a family member is hard enough without adding financial hardship to the situation. Term life insurance pays out to help make up for the lost income and associated expenses. Unlike whole life insurance, which covers a person for the length of her life, term life policies can be bought for the length of your working life – making it enough less expensive that even middle-earning families can replace five or ten years’ worth of income. 

Only skip this if you have no dependents or other people relying on your income.

Homeowners/Renters

If you have a mortgage, your contract probably requires you to carry a homeowners policy. Even if you own your home free and clear, it’s a good idea to protect the largest investment of your life. If you don’t yet own a home, renters insurance is an inexpensive option for protecting your possessions against accidents, vandalism and theft. 

Only skip this if you don’t own a home, and have sufficient cash reserves to replace your belongings.

Auto 

In the US, if you have a car you’re supposed to carry this in order to protect other drivers from damage you might do – but it’s often worthwhile to carry enough comprehensive coverage to replace your car if you accidentally damage it yourself. In most families, the car is the second largest investment they make.

You’re not legally allowed to skip this one at all. Skip the comprehensive coverage only if you can afford to buy a new car out of pocket.

Disability

Consider this life insurance’s little brother. An injury or illness can take a person out of the earning pool for months or even years – a situation that’s little different from death in terms of the family finances. Long-term disability insurance protects for those longer periods of recovery, while short-term disability will help out during problems that last only a few weeks. 

Don’t skip long-term disability if you have any dependents, or if somebody could become liable for your medical bills. Skip short-term if you can weather one to two months without a paycheck. 

Disaster 

Homeowner’s insurance in areas where certain kinds of disasters are common expressly do not pay out for damage due to that sort of disaster. For example, if you live on a flood plain, your homeowners insurance won’t pay for flood damage. If you live in such an area, you might be able to find (often government-run) insurance coverage specifically for those natural catastrophes. 

Never skip on disaster insurance if you live in an area with frequent natural disasters.

Home Ownership

What Is Your House Worth To You?

Gingerbreadhouse Let me just paint you a picture. You have a two income family with two children and a lovely house. Your mortgage payment is around $1200 a month plus taxes and insurance. It’s not too bad and hovers around 30% of your income, so you’re sittin pretty.

Bam!! One of you loses your job, and your mortgage payment is now 60% of your income. In order to pay the mortgage you have to pay your other bills with credit cards in hopes that you get a new job soon. But the economy sucks, your cards are maxed out, and you’re passed due on the mortgage, so the bank is foreclosing on your home.

You finally decide that bankruptcy is the best option. So you go through bankruptcy and you say to yourself “I’ll get a modification on my mortgage and keep my home. Even though they’ll only bring it down to $1000 a month I’m sure I’m bound to get a job soon.”

Why?

Why would you put yourself through that again? Why would you want the sleepless nights and all of that stress weighing you down to pay a mortgage you can’t afford? Why would you put yourself into that cycle?

Am I missing something? Is it because I haven’t owned a home before so I don’t know the feeling? Maybe it’s a good thing this is happening to people every day. Kids will get to be on the outside looking in as their parents stress out over a house.

I know that if I was in that position I would have tried to do whatever I could to get rid of the house. Maybe try renting it out if you owe more than it’s worth. You don’t need to make a profit, just rent it for whatever covers your cost. I know that would be good for you and I’m sure some family would love to rent a home from you because it will be cheaper than renting from someone trying to make a profit.

If anything, and I was forced to bankruptcy, I would absolutely not keep my house. My family’s well-being is much more important than some drywall.

What do you think?

 

Money Management

Another deliberate own-goal from the governor

The imagination of journalists is not what it might be when it comes to visualising the size of places and things. Large vehicles or vessels are “as heavy as ten London buses”. The asteroid that will skim the atmosphere of Earth this evening is “the size of an Olympic swimming pool”. Forest fires or floods always seem to affect an area “the size of Wales” (but never Wales itself). And Germany’s -0.6% economic contraction in the fourth quarter of 2012 was “twice the size of Britain’s”. 

Except they didn’t put it that way. Rather, they discussed the brighter outlook for Germany. They also pointed out that the gross domestic product (GDP) of Euroland’s economic locomotive had grown in calendar 2012 without mentioning that the expansion was “twice as small as a cocktail frankfurter” (0.1% to be precise; infinitely more than Britain’s 0.0%). 

The negative German GDP figure was just one of a longish list of Q4 economic shrinkages in the eurozone. It was left to the likes of Romania and Bulgaria to come up with positive numbers but their contribution was not enough to prevent the euro area as a whole from registering a quarterly contraction of -0.6%. The effect of the news was to send the euro lower, though not by much. It lost half a cent to the pound, three quarters of a US cent and one and a half yen. 

With the focus on Euroland, sterling was very much the bystander on Thursday. It was all but unchanged against the US, Canadian and Australian dollars, a touch lower against the New Zealand dollar and slightly higher against the Scandinavian crowns. 

Beyond the eurozone GDP data and Greece’s 27% unemployment rate yesterday’s only other figures were for US jobless claims, which were slightly lower than forecast. Overnight, stronger-than-expected New Zealand retail sales helped the Kiwi dollar ahead and increased Japanese industrial production had no effect on the yen. 

Having managed to stay out of the spotlight yesterday sterling will find it harder to do so today, because the UK retail sales figures for January are by far the highest profile ecostats this morning. The expectation is for positive numbers; anything with a minus in front of it would be deleterious to the pound in money transfer

Other than Spanish inflation and the Euroland balance of trade there is almost nothing from continental Europe this morning. The afternoon brings Canadian manufacturing shipments and, from the States, international investment flows, industrial production, the New York Fed’s manufacturing index and the University of Michigan’s provisional consumer confidence reading. Of these, the Michigan confidence number is the one to watch. 

Unless the retail sales data get in its way, sterling might be able to creep to the back door of the week without being picked on by the bullies. This might be a good time to use Moneycorp send money online service. 

Money Management

Why do people borrow money?

Most people will borrow money at some point in their lives.  It is almost unavoidable.  Borrowing money to buy a house is obviously a large, long term, borrowing commitment.  Other kinds of borrowing are likely to be shorter term – on credit cards, store cards or borrowing from friends or family.    

So why do people borrow money?  People obviously borrow money because they need or want something they can’t afford out right. Some people borrow money to buy a luxury, like an expensive holiday, others borrow because of an emergency, like medical treatment or an essential household item breaking down, others borrow money in the hope that from it they can make more money – for instance to set up a new business.   

Borrowing money is not therefore always a bad thing.  Yes, it would be nice if we all had enough savings to buy what we wanted when we wanted it.   However, borrowing money simply needs to be managed by the borrower.   It is when the borrowing becomes unaffordable that it becomes undesireable. 

Mortgages are used to buy property.  Mortgages generally are large long term loans but in many countries such loans are viewed as a necessity by most people who want to own a house or other property.  Many different types of mortgage exist. Interest rates may be fixed (where the interest rate is the same for a period of time) or may be floating (which adjusts up and down depending on the market).  Generally mortgages last for 25 or 30 years.  Different types of repayment schemes are available – Commonly regular payments are made to reduce the capital and the interest over the set term. 

Credit cards are a common way people incur debt.   The cards are generally issued by bank after an application by the borrower is approved.  A credit limit will be set by the card issuer.  Cardholders then use the card to pay for goods or services or to get a cash advance.    The cardholder is then sent a statement monthly setting out how much is owed to the card issuer.  At least a minimum amount set by the card issuer must be paid by a due date.  Interest is charged on any balance which is left unpaid.  A fee may be charged if the borrower is late in making the minimum payment. 

Another form of borrowing is via a pay day loan via a lender like wonga.co.za who has recently entered the South African market.    Pay day loans are typically used for an emergency – they provide money quickly to applicants on a short term basis.   These types of loan they typically carry high rates of interest because they carry high risk to the lender are for short term borrowing and are usually available to people regardless of their credit history. This type of loan can however be a useful source of money if caught short and if you need quick access to cash. 

Whatever form of loan you are dealing with – huge or small, long term or short term, they all need to be entered into knowing what you can afford and in full knowledge of the repayment terms.   Sometimes taking out a loan can be very worthwhile are and can actually improve a borrower’s quality of life. 

Insurance

7 Reasons Why You Need Renters’ Insurance

Author Bio: This article is written by Charles Henry of http://www.rentersinsurance.net/

If you are entering into a new property rental lease, or perhaps have been renting for a while without insurance, you may think that getting a renters’ insurance policy is unnecessary for you, or at least a very low financial priority. Perhaps you don’t consider your possessions to be all that valuable, and aren’t sure it is worth paying a monthly premium just in case anything happens to them. However, renters’ insurance can be highly beneficial to just about all people renting houses or apartments, and doesn’t just cover the contents of your home. Here we take a look at seven reasons why you need renters’ insurance: 

1 – Replacing even your essentials after an emergency can run to a lot of money 

While you may not think you have anything especially valuable, could you afford to buy all new furniture, a new computer, a new TV, new kitchenware and a new wardrobe all at once? While you may not own anything all that expensive on its own, if an emergency wiped out all of your stuff, leaving you with nothing, in an uninsured situation that is what you would be looking at. 

2 – Insurance can cover even minor losses 

Insurance doesn’t just have to come into play if you lose a lot of the things you own in a major incident like a fire or flood – it can also help with more minor losses. Say a problem causes your freezer to stop working and all of the food you had stored in there became unusable – certain policies will cover this. 

3 – Most people have at least a few valuables 

How a valuable is defined is different for everybody. Sure, you may not have a bunch of diamond tiaras or priceless works of art, but in line with your standard of living, something like a games console, a designer purse or even your widescreen TV can be a valuable to you, and you will definitely want to know it is protected. 

4 – It can protect you from unscrupulous landlords 

If your landlord claims damage has been done to the property, and tries to take this out of your security deposit, your insurance may protect you. Accidents can happen and wear and tear on the property and its inventory are inevitable, but if you are insured you don’t need to worry about these things costing you dearly when you move out. 

5 – It can cover your liability if anything happens to a third party on the premises 

In certain legal situations, you may be considered liable if something happens to somebody while they are on the premises you are renting. As you might imagine, this can end up being extremely expensive, as you may have to pay compensation including hospital bills and more. Renters’ insurance will cover your liability. 

6 – It can cover your belongings even when they aren’t in your home 

Some policies will cover your belongings even when they aren’t at the insured address. This means that if you get mugged on the street, or items belonging to you get damaged while traveling, for example, you can still claim on your insurance. 

7 – If you need to stay in a hotel because your home is uninhabitable, your insurer will pay 

Another thing your insurance will cover is accommodation for you if your home becomes uninhabitable, for example after an emergency, or because of other problems with the building. Even if you just need somewhere to stay for a few days for building fumigation, this can end up being an expensive, unplanned cost, so this is one area where insurance can save you a lot of money.