Search Results for: life insurance

In a Car Accident? Should You Pay Out of Pocket for Repairs?

March 13, 2013 By MelissaB 11 Comments

Our Chicago winter this year has been a lot less like a Midwest winter–the snow storms have been few and far between. A few weeks ago we finally got hammered by a storm that dumped 10 inches over the city. At the height of the snow storm I had to pick up my son from school. As I waited at a stop sign, the driver behind me bumped into my bumper.

Luckily, the damage wasn’t bad. When I took it to a repair shop for an estimate, they thought it would cost between $580 and $1,200 to fix depending on if there was any damage inside the bumper when they take it off to repair it.

Surprisingly, the woman who hit me decided she wanted to pay out of pocket rather than go through insurance. When I told her that the repair would take 2 to 3 days and we’d need a rental car during that time, she agreed to cover that cost, too.

This is the second time I’ve been rear-ended in 5 years, and both times the repairs were less than $2,000. Both times the drivers opted to pay out of pocket.

If you’re in a minor fender bender, should you pay out of pocket rather than going through insurance?

Reasons You May Want to Pay Out Of Pocket

1. If you have a high deductible. If you have a deductible of $1,000, for example, paying out of pocket if the repair is just a few hundred dollars over that amount may make sense. You’ll save yourself from an increasing premium.

2. If your insurance premium will increase substantially. Each insurance company is different, but rest assured that if you cause an accident and file a claim, your insurance will increase. Some insurers increase your premium by 10% and others by 20%. You may be able to call your insurer and ask how much the premium will go up before you decide to pay a claim or not.

3. If this is your second accident. While you’ll pay an increased premium for one accident, if you file two claims within a few years of one another, the increase is substantial. For instance, State Farm generally charges a 10% increase in premium for the first claim, but that amount increases to 45% for the second claim. While it may hurt your budget to come up with a thousand or two to pay out of pocket for the repairs, that may be the better option if you’re facing a substantial increase that could last several years.

4. If your insurance doesn’t have an accident forgiveness clause. Some insurers offer an accident forgiveness clause, meaning, if you’ve been with the company for a certain number of years (usually 5 to 9) with no accidents, the insurance company won’t increase your premium on the first accident you file. Again, though, you may want to save this benefit for a more substantial accident that you can’t afford to pay out of pocket rather than when the repair is relatively minor.

If you cause an accident, don’t automatically file a claim. There are benefits to paying out of pocket. You just need to understand your insurance policy as well as know exactly how much the repairs will cost before making a decision.

If you’ve caused an accident, did you pay out of pocket rather than filing a claim?

Original img credit: Oops, by fortes on Flickr

The Debt Movement

January 2, 2013 By Shane Ede 7 Comments

I often get asked why I started this site. And my response is always that it was a great way for me to share some of the things that I was learning as my wife and I struggled with our debt. All of the things that we were learning through books, trial-and-error, and online that helped us, I tried to fold into some post here. My goal in sharing these things has always been two-fold. The first part is that I wanted someplace to record what I was learning. The second part, and the part that keeps me writing here, is that I wanted that information to help someone else. The more places it can be found online, the better. I’ve always felt that it has a bit more weight when it’s coming from someone who’s lived (lives) it. Nearly 5 years into the life of this site, we still struggle with debt sometimes. We still have lots to learn. Today, I’m going to share something that I think has the potential to change a lot of peoples lives. It’s called the Debt Movement.

The Debt Movement is the brain child of Jeff Rose. Last year, he brought us the Roth IRA Movement, and the Life Insurance Movement. Both of those were meant to bring the entire personal finance blog community together to talk about one subject on one day. I think both went very well. Jeff has raised the bar a bit this time around. The Debt Movement isn’t just about educating readers on a subject.

What is the Debt Movement?

It’s a 90 day challenge. Officially, it starts on February 1st, 2013 and will run for 90 days. Participants, like you and me, are challenged to aggressively reduce our debt over that 90 days. The goal is to help people payoff Ten Million dollars worth of debt in those 90 days. It’s a lofty goal, but I think it can be done!

In addition to the challenge, Jeff has rounded up a group of sponsors who are sponsoring a Debt Movement Scholarship. As of right now, the total is around $10,000 and is likely to grow as the movement gains speed and gathers new sponsors. There’s an application process, as well as a few rules, but certainly something to look into.

Jeff has also partnered up with Ready For Zero. Ready for Zero is a company that has created some pretty sweet tools for paying off debt. Once you’ve signed up, you can enter in all of your information, along with payments, interest rates, and balances, and their software magically (or mathematically, I can never keep them straight) puts together a debt payoff schedule for you.

What do you say? Will you come along on this journey? Let’s pay off some debt together!

3 Ways Young Homeowners Can Save $3745 (at least) Each Year

November 12, 2012 By Shane Ede

If you recently bought your first home let me congratulate you. This is possibly the very best time to buy real estate that you’ll ever see in your lifetime. You made a smart move. And because you are a smart real estate investor, I know you’ll be interested in taking advantage of the following 3 ways young homeowners can save even more “moolah”.

1. Home Warranty

I owned a home warranty program for years and it was a waste of money. Of course it felt great not to have to worry about running into major unexpected expenses, but the cost just didn’t justify it. First of all, you are stuck with any repair person the home protection company sends out. Next, the deductible you have to pay is often pretty close to the amount you’d have to pay to a contractor of your own choosing. Last, when you do have a major repair, you are stuck (again) with whoever the company sends out unless you are willing to go through a great deal of red tape.

You’re always responsible for upgrades, code changes and any problems associated with misuse or poor maintenance. I cancelled my home protection plan several years ago and it turned out to be a fantastic decision. If you follow my lead on this, you’ll save at least $600 a year.

2. Life Insurance

If you are a young homeowner you might have a young family or plan on having one. As a result, you definitely need life insurance. But when it comes to term life vs. whole life – play it smart. Term life is your best friend. It’s cheap and it does the job. It’s true that at some point (20 or 30 years down the road) your term insurance will expire. But by that time, you may not need life insurance anyway. Term life is so much cheaper than whole life that you can take that savings and invest it. This way probably you’ll have much more than the whole life promises.

One of the biggest problems with whole life (and I feel it’s criminal) is that agents sell you the whole life you can afford because it pays them a whole lot more commission. (Maybe that’s why they call it “whole” life.) And because it buys a great deal less insurance than term, people end up dangerously under-insured. You could save several thousands of dollars each year and have better coverage just by having term instead of whole life insurance. Look into this ASAP.

3. Good Credit Score

Because you are a young homeowner, you’ll be using your credit for a very long time. And you might have to lean on that plastic a lot right now to pay for all that new furniture and appliances. If you able to get even a slightly better credit score, you might end up savings a bundle every month. That’s because a higher credit score will help you get lower interest rates on credit cards and mortgages.

Find out what your score is and make sure there are no errors. If there are mistakes, fix them. You can easily do most of this without paying a cent. You can even get your credit score for free and sign up for services that provide updates whenever there is a change to your rating. This has helped me a great deal.

As a young homeowner you might be facing some pretty hefty expenses and that can be daunting. Take these 3 steps. Dump the home protection plan. Get rid of your whole life insurance and buy term instead. Finally make sure your credit score is as high as possible.

Will you save $3745? I don’t know. You could save a lot more. You’ll never know until you start taking action.

What are the biggest expenses you face as a young homeowner? What have you done to reduce those costs?

This was a guest post written by Neal Frankle. He is a Certified Financial Planner ® and owns Wealth Pilgrim – a great personal finance blog. He writes extensively about ways to help people make smart financial decisions. One of his most in-depth posts was his review of CIT Bank.