Beating Broke

The Life Insurance Movement

August 22, 2012 By Shane Ede 9 Comments

Much like the Roth IRA movement that I participated in a while back, Jeff from Good Financial Cents is spearheading a Life Insurance movement today. The movement is designed to help educate people on the different types of life insurance, the ways to go about getting life insurance, and on how life insurance works, in general.

I’m sure we’ll see lots and lots of excellent articles to help educate the community. If you want to check them out, Jeff has compiled a list of all the participants and posted them on the Life Insurance Movement homepage.

Where do I stand on life insurance?

I used to be on the fence. On the one hand, there is a very strong argument for it. On the other hand, it can be pretty draining on your finances, for something you don’t use (hopefully).

For a young person, struggling with debt and bills, that extra $50-$60 a month to cover my wife and I is a not insignificant chunk of money. Neither of us is very old, and our probability of dying is pretty small. So, why spend that money on something that we have no plan on using when it could just as easily go towards paying off some bill? Maybe when we’re older, we thought, we’ll get ourselves some life insurance. You know, when we can “afford” it. I know there are quite a few of you out there who agree with that statement.

But, here’s the thing. I buy car insurance to help pay for damages to my car should I get in an accident. I’ve used that car insurance. My wife and I are good drivers, and neither of us has been in an accident that has been directly our fault. The few accidents we have been in have always been someone else’s fault. We had very little control over whether we got into that accident or not.

Life insurance isn’t all that much unlike car insurance. If car insurance only paid out if you were at fault in the accident, I’d never buy it. After all, I have never been in an accident that was my fault. Likewise, if life insurance only paid out if you died of natural causes, it wouldn’t make much sense, statistically, to purchase any before you were at least 45 years old. But, we all know that people don’t just die of natural causes. They die in all manner of accidents too. And those accidents don’t just happen to people of a certain age. So, it’s really the accidental, not-your-fault sort of death that you are insuring against. And you have no control over that. And, should you die as a result of one of those accidents, will your spouse and family be able to pay the bills? Or, will they be forced to sell the house to pay for the funeral? Do you really want them to have to make that decision if you die?

What kind of Life Insurance should I get?

There are basically two kinds of life insurance. Term life, and whole life. The difference is in how long the term of the insurance is, and how much the premiums are for the coverage level. A whole life insurance policy is good for your whole life. Because it’s good for your whole life, the premiums are usually higher for the coverages. A term life insurance policy is only good for a set term. It might be a 10-year term life policy, and be valid for 10 years from the purchase date. At the end of the 10 years, you have to purchase a new plan. When you are young, the term life policies have much cheaper premiums because, statistically, you aren’t very likely to die young, and so, the chances of having to pay out on the plan is pretty small. When you renew after the 10 years, the new plan would be based on your age at the time, and would be slightly more expensive because of a higher probability of death.

I can’t really tell you which is the best for you, though. It’s something that you, and maybe a good financial planner, should look very hard at. You need to educate yourself on the different types too! Really do your research, and don’t be misled by Colonial Penn’s “affordable” insurance, for example, look for a reputable life insurance company, that offers everything you and your family might need. I encourage you to click that link above, take a look at all the articles that are part of the life insurance movement, and find out as much as you can about life insurance. Being educated on the subject will make it easier for you to spot bad policies, and find one that will fit your financial needs.

How much life insurance do I need?

Clearly, we’d all like to have a life insurance policy of several million dollars. Some amount that would set our family up to never have to worry about money again should we die. In reality, that just isn’t usually possible. As the amount of the policy goes up, so do the premiums you pay to keep the policy. What you really want is a policy that will pay out enough to make the transition from a two person led household, to a one person led household.

If you’re single, a policy that would pay off your debt, and pay for the funeral is likely enough.
If you’re married, with no children, a policy that can pay off the debt, the funeral, and replace your salary for a couple of years is a good policy.
If you’re married, with children, a policy that can pay off the debt, the funeral, and replace 5-10 years of your salary with some left over is an excellent idea.

Obviously, all of that is partially determined by what size policy you can afford. By “afford”, I don’t mean afford in the way you likely do. I don’t mean, after you’ve eaten out several times in the month, how much money is left over to buy life insurance. I mean, it should be included in your budget, just like car insurance, your mortgage, and your utility bills. When all of that, plus your life insurance premium is paid, you still need to be able to keep your bills current, and buy food to stock the refrigerator. That kind of “afford”.

In the end, when you go and read all the other articles that are part of the life insurance movement, you’ll likely find several viewpoints that clash with mine. You’ll find people who think that whole life insurance is better than term life insurance. You’ll even find people who don’t think you need life insurance at all. I think the important part is that you think about life insurance, learn about life insurance, and then make the decision yourself (preferably with help) on whether you want life insurance, what kind of life insurance you want, and how much you want the policy to be.

Tip: Check with your employer. Some companies are offering life insurance to their employees.

For me, I think that life insurance of some sort should be mandatory, just like car insurance. There should be state required minimums that you have to carry. Far too many people are leaving behind families without any sort of coverage at all. Even if it’s a small policy that can cover funeral expenses, that’s better than nothing at all, and you can increase it later too!

Take an Off Season Fall Vacation and Save Big

August 20, 2012 By MelissaB 6 Comments

The summer is rapidly drawing to a close, and you may think that your summer vacation window is closing. However, if you are looking to take a trip on the cheap, now is the perfect time to take a late summer vacation and save some serious money.

For many destinations, the summer is the top vacation season. Families pack up and take road trips to a variety of locations. Once school begins, tourism drops off significantly. In fact, “The Travel Industry Association says that 38 percent of trips are taken during the summer; the number drops sharply to 23 percent in fall” (MSNBC.com).

You can take advantage of this drop off by scoring better rates and benefiting from thinning crowds. Here are some trips you may want to consider:

Take a trip to the beach—in September. This isn’t possible for everyone, but if you don’t yet have children or you home-school, September may be the perfect time to hit the beach. It is still warm, but the crowds have left and you benefit from discounted rates. Great destinations include beaches on the coast of North Carolina or even Key West, where the prime tourist season doesn’t ramp up until November and December.

Visit Mickey—Take a trip to Disneyland. Disneyland can be very expensive, but if you plan a trip in the fall, you will benefit from reduced rates and shorter to no lines for rides. The trade off is that the park closes earlier and that there may not be as many shows being performed. However, I will take that trade off if it means I will save a few hundred dollars on accommodations and will save time not waiting in line!

Take a trip to the big city—Cities also experience a drop in tourism after the crisp fall weather sets in. While New York City, Chicago and Miami may be prohibitively expensive in the summer months, hotels often discount their rates in the fall, making a trip to the city a bit more affordable. Most of the big city locales, regardless of location around the country, still have relatively comfortable weather. In Chicago and New York City, you don’t generally have to worry about biting cold weather and snow at least until November, leaving you the entire fall to enjoy.

Go big guns and visit Europe—I made the mistake of traveling in Europe in August, and it was packed and expensive. Unbeknownst to me, many Europeans have August off and vacation with their families in addition to all of the travelers who come from outside Europe. Save yourself money and the need to fight the crowds by traveling to Europe in the fall. The only drawback? You may have to deal with some rain (or sometimes a lot of rain), especially if you are traveling to a Mediterranean country. You can defeat this drawback in part by scheduling museum days and other indoor attractions for the rainy days.

While the dog days of summer may be past us, there is still plenty of warmth left. Take advantage of the lovely fall weather to take an off season vacation and save some serious money.

_{img credit: librarygroover, on Flickr.}

Saving On Eyeglasses

August 17, 2012 By Shane Ede 2 Comments

If you’re one of the people who needs them, eyeglasses can be one of the most expensive medically necessary things you will have. Unless you need some other fancy piece of equipment, your eyeglasses can cost several hundred dollars up to a thousand dollars or more if you decide to go with the name brand fashion designer frames. (If you’re reading this blog, I fully expect you wouldn’t, but we all know there are those that do!) Before I go much further, I must admit to not being one of those people who needs eyeglasses. (yet.) I have, so far, been blessed with good vision and very few problems as far as my eyes go. My wife, on the other hand, is not so lucky. And, if either of the kids takes after her in the vision department, we’ll be looking at some not-so-fun expenses in the future.

Some people will go to the optometrist, get their prescription, and then order their lenses right on the spot. And, most of those people will spend a whole lot more for their lenses and frames than they really should. Depending on how often your prescription, and thus your lenses, changes, you might be buying new lenses and frames on a pretty regular basis. Add it all up, and the expense can be enough to make you actually consider cutting off the bottoms of coke bottles and super-gluing them to some bent coat hanger wire. Attractive image, no?

What should you do to save some money on your eyeglasses?

Start by shopping around. Just because your optometrist is your eye doctor doesn’t mean you need to purchase all of your eye related devices there. The doctor already has gotten paid for the visit. No other compensation for their time and the visit are necessary. Most towns will have at least two optometrists, and bigger cities will likely have 10-20 or more. Bigger cities may also have at least one of the new discount eyeglasses stores that have been popping up recently. Take your prescription home, then call a few of them and ask about prices for the eyeglasses you need.

Take your business online. If you know what style of frames you want, there are several places where you can purchase prescription glasses online. Places like Glasses.com (run by the same company that runs 1-800-Contacts), can offer discount prices on eyeglasses because they don’t have as much overhead as many physical retail stores have with employees. Also, because they aren’t in a physical location, they can tap into the wider customer base of the internet and get bulk discounts on the glasses that they pass along to the customers.

One last place to look that many people forget about are warehouse and membership stores. Places like Costco and Sam’s Club usually will offer discounted glasses to their members. Even some Walmart supercenters have vision centers in the building and can offer a better price on glasses because of their size and purchasing power.

Eyeglasses are an important, and often necessary, thing that many people will use over their lifetime. As your prescriptions and tastes change, you’ll want or need to pick up new pairs of glasses. Shopping around, both locally at other optometrists and at warehouse stores, and online has the potential to save you hundreds of dollars on your next pair of glasses, and thousands over your lifetime.

Use the money you saved to help pay off a credit card or some other debt!

What other tricks, tips, and hints to you have for saving on eyeglasses?

_{img credit: NCBrian, on Flickr}