Car insurance is one of those necessary evils in life. No one wants to pay for it, but then no one wants to be without it either. And no matter what you think about it, it’s required by state law so you must have it. But just because you have to have it doesn’t mean you can’t make it as inexpensive as possible.
Like most other types of insurance this recurring cost pops up on a regular basis so cutting its costs means you’ll be saving money every time your policy is renewed. We’ve talked in the past about a few different ways you can save on car insurance, some are easier than others. Here’s another look at some strategies you can use to lower your car insurance rates, and it’s generally without increasing your liability in the process.
1.Ask About Discounts
Most of us know about common discounts, like good student driver discounts or discounts for driving certain types of cars that are deemed to be especially safe. But there are all kinds discounts available, and they can even vary from one auto insurance company to another.
For example, there can be discounts for having certain types of safety equipment on your car, and these can be extremely specific. There may also be discounts for employment in certain occupations. You can also get discounts for paying your premium in full, rather than in installments.
Ask your insurance company for a list of all of the potential discounts that they provide, and see if you qualify for any. It is highly likely that the company did not inform you of all the discounts they have at the time when you applied.
2. Bundle With Other Insurance Policies
This is a standard recommendation, so we won’t spend too much time on it. But you can often get discounts – sometimes substantial ones – by bundling your auto insurance with other policies that you have. Homeowners insurance is a common one, but it’s also possible that you can get a discount if you combine your auto insurance with a business insurance policy that you have.
You don’t want to go too far with this, since not all insurance companies offer every type of coverage you may need. You also don’t want to accept inferior coverage in another area just so that you can save money on your auto insurance.
3. Raise Your Deductible
This is another standard recommendation to lower your insurance premium, but it’s also a good one. Just by raising your deductible from $500 to $1,000 you can save a significant amount of money on your premium.
One way to raise your deductible without increasing your risk, is to simply have an amount equal to your deductible sitting in your emergency fund. As long as you have the money available, you’ll be covered in the event of an accident. And if you never have one, the savings will be yours to keep.
4. Watch Your Driving Habits
If the major reason why your auto insurance premiums are as high as they are is because you have a history of traffic violations and accidents, it’s time to clean up your act. Drive more carefully, obey traffic laws to the letter, and always watch out for the other guy – especially pedestrians.
Driving is never an area of life where you should throw caution to wind. If you tend to speed and disregard traffic signals because you’re perpetually late, get in the habit of leaving a little early so that you won’t feel the need to break traffic laws.
If you can keep your driving record clean for at least three years you should start to see your insurance premiums fall, at least in most states.
5. Take a Defensive Driving Course
Most of us only think about defensive driving courses when we’re getting our licenses. Auto insurance companies offer discounts if you complete such a course. You can actually take a defensive driving course at any point in your life, and it is strongly recommended if you’ve recently been in an accident that was your fault, or if you’ve been given a traffic citation.
Insurance companies will often waive surcharges if you complete a defensive driving course. The courses however are not free, so you’ll have to weigh the cost of the course versus the savings that will result in your insurance premiums.
6. Ask What You Can Cut That Would Have the Least Impact
I’ve actually done this very recently myself. My wife had a minor accident, judged to be her fault, and our premiums increased. I simply contacted my insurance company, and asked the agent “What would you do to lower the premium if it were you?” The agent quickly asked me if we have medical insurance – which of course we do. She then suggested that we can cut some of the medical insurance benefit on the car insurance, since it essentially represented duplicate coverage.
Reducing the coverage brought our premium back down to where they were originally, but it only increased our medical liability by $1,000 – and then only under the assumption that we were to cancel our medical insurance.
Anytime you’re unhappy with your insurance premium, or if you’re suddenly increased as a result of an accident of violation, try contacting your insurance company and asking that question. You may be pleasantly surprised what you find out.
7. Buy a Less Expensive Car
People often buy the best car they can afford, and with little regard to the impact that it will have on their car insurance. But it is a fact that a more expensive car, or certain models – particularly sports cars – result in higher auto insurance premiums, often much higher.
You certainly don’t want to sell your car if it’s one of the reasons why your car insurance premium is so high. But it is certainly something to keep in mind when the time comes to buy a new car. As a general rule, the less expensive and more conservative the car is, the lower your auto insurance premium will be.
No one likes his or her job all the time. Even if you have what you consider a “dream job,” chances are that there are some days that you just aren’t giving 100 percent, or days that you just don’t want to do the job. If you start to dwell on these downsides, you will eventually have a hard time sticking it out at work.
Happiness in your work is one of the things that can help you relieve stress, and feel better about life in general. As a result, it makes sense to do what you can to be mostly happy with your good job, and do what you can to make an “ok” job mostly bearable.
Here are 5 tips for staying happy at work:
1. Work Toward Making Yourself Indispensable
We all like to feel appreciated, and as though we are an integral part of the team. If you want to feel essential at work, though, you have to actually make yourself essential. This doesn’t mean that you take on a ton of responsibility leading to burnout. Instead, it means making yourself a solid part of the team. You should be reliable, and a problem solver. If you know that you would be hard to replace, you are more likely to be satisfied at work, and even improve your productivity.
2. Take Appropriate Breaks
Too often, we don’t take breaks at work. It starts to feel like a grind. If you want to enjoy your day a little better, take appropriate breaks. Don’t work through lunch. Take a five minute break to stretch your legs. If you have vacation days built up, find a good time when work is a little slower and take a vacation. Give yourself permission to step back, reset, and come back to the task refreshed and better focused.
3. Focus on the Good You Do
Look for the purpose in your work. If your company provides products that make life better for thousands of people, that’s something you can be proud to be a part of. Look for the good in what you do. Even if the good you find is the fact that your work puts food on the table and lets your family live a good life, that can be a reason to keep with it. Focus on the good things that come from your work, and you will be happier to do it.
4. Find a Good Friend at Work
Often, we feel better about whatever we are doing when there are people we like nearby. Look for a friend at work. This can be someone who you get along with, and who has similar interests to you. The good news is that you don’t even have to do a lot with your friend outside work. If you have someone that you can look to and trust at work, and someone you can hang out with at work parties and functions, it can make your job more enjoyable. Look for someone you can connect with as a friend, and your job will be happier.
5. Follow Your Industry
Get involved with your industry, and keep up with the latest developments. This makes you a valuable employee, but it can also help you feel a connection to what you do. When you are immersed in your industry during work, it feels like a part of your life, rather than being a drudgery that you try to escape. While you don’t want to focus on your industry to the exclusion of everything else, you can still derive satisfaction and a lot of benefit from staying up with the latest industry trends.
What are your best tips for staying happy at work?
It all began last summer when I ran the tryouts for my son’s youth soccer team. As part of my mission to live with no regrets I had agreed to be an assistant coach for his team in the upcoming Fall season. Little did I know what I was getting myself into!
As I threw myself into this new role it ended up turning into a side job (unpaid of course). I don’t know how many hours a week I spent on it but my wife was glad when the season finally ended : )
I had a lot of fun but it was definitely a learning experience. I’ve been a leader on a team of adults before but I’ve never been responsible for the development and success of a team of kids. While reflecting on what the boys learned last season I realized there are many lessons I observed/learned in coaching kids that can also be applied to your career.
Here they are, please feel free to add your own comments at the end:
1) Move Without the Ball
High level professional soccer players may only have the ball at their feet for a total of 1 or 2 minutes during an entire game. The rest of the time they spend anticipating the play, running to get open, or getting back on defense. This can be exhausting but making the right run can put you on the end of a great pass and could end up saving or scoring a goal.
Just like the hard work of making a run and getting open can make a goal look easy, doing the prep work in your job can make you look like a star. Anticipating potential problems, researching solutions, and proposing alternatives are all things you can do to help make your project a success.
Kids don’t like to make those runs because they don’t always get the ball. They may sprint down the sideline only to have their teammate pass to a different part of the field. It takes a while to learn that doing that “unrewarded” work is just part of the game.
If you watch a professional soccer game you’ll see many instances of players making runs to get open and have it lead to nothing. Yet they keep making those runs and eventually they’re in the right place at the right time and help the team with a goal or an assist.
Sometimes in your job you may do work that seems to go unnoticed. You may be tempted to only do your “assigned work”. This is fine if you’re not looking to advance but if you’d like to get ahead in your career then be sure to “move without the ball” at work.
Just like coaches notice players who are working to get open and make plays – your boss and co-workers will notice when you’re working hard to put out fires, squash bugs, prevent errors, please customers, add features, trump competitors, make more sales, or anything else that goes into making your team a success.
2) Find a Coach
When we’re kids it seems like we have a coach for everything – our teachers in school, coaches on the field, instructors in the arts, etc. We’re soaking it all in and learn a lot from various coaches – we look up to them and often look forward to our time spent learning from coaches.
Then we grow up and find ourselves thinking we’re too mature and experienced and worldly to need a coach. Since we’re adults we think we should be able to figure things out on our own. However, trying to go it alone can be counter-productive. Often a coach can often point out a few areas you can improve in, or even just best practices to use, that can result in big performance gains.
Your coach doesn’t have to be the world’s leading expert on your industry or career. As long as they’re knowledgeable about your topic then you stand to gain a great deal from tapping into their expertise. You don’t have to pay an arm and a leg for coaching. Technology has made it much easier and cheaper for experts to deliver coaching, checkout Google Helpouts as an example.
3) Be Self-Motivated
The kids who improve the most in youth sports are the ones who want to get better. Kids that are self-motivated to improve are the ones who listen (most of the time) and make the effort to do things the “right” way. They focus rather than complain. They’re open to hearing and trying out feedback.
They put in the extra effort to do drills outside of practice. They try to learn the bigger picture and how smaller skills and details work in tandem towards achieving a better result. It’s obvious to the coaches who these kids are. It’s likely just as it’s obvious to your boss who the achievers are in your group.
You have to be self-motivated to excel at work and in your career. If you don’t want to improve and don’t feel the need to get better then maybe it’s time to think about adjusting your job or career in a direction where you would feel more motivated.
4) Understand How to be Part of a Team
Coaches value kids who are mature enough to understand that sometimes the team comes before the player. Kids who fill the role where they’re needed even if they don’t particularly want to be in that role.
Coaches aren’t fans of players who throw a fit when things don’t go their way.
A coach will always cheer for a player who steps in to cover when a teammate makes a mistake. Coaches notice when players are kind and supportive to their teammates and when kids are positive and have good sportsmanship.
Many of these things can be said for your team at work and your boss. These are the types of things that aren’t going to directly earn you a bonus or a promotion but they’re noticed by your peers and superiors. This type of behavior adds up over time, negative or positive, and will have an impact on your career over the long term.
5) Communicate Effectively
Players who are good communicators make the team better.
For example, kids who speak up to say they don’t understand a drill or a new skill or tactic we’re learning.
They give the coach a chance to address the ambiguity or confusion in advance rather than during a game situation.
Kids who tell you where they want to play can be a little annoying when they ask over and over if they can play striker. However, if that’s where they excel and are most motivated to play hard, it’s good that they let the coach know where they think they can contribute best and are volunteering themselves for that job.
Players who communicate with their teammates in the heat of the action can help the team find the open player, get the extra pass made, get back on defense.
You can apply many of these things directly to your job. Let people know when things are unclear and need more detail or direction. Double check with people on your team to make sure they understand both expectations and the plan for meeting them. Let people know the areas you’re strong in so they can reach out to you when they need help. Keep your boss and team apprised of delays, roadblocks, and schedule changes.
6) Accept & Learn from Criticism
As part of any team you’ll eventually run into a situation where you make a mistake and it costs the team. In sports it might lose you the game, at work it might cause you to miss a deadline or even lose a client.
When a kid makes a mistake that results in a goal, we let him know right away what he did wrong. I’m sure it probably hurts his pride being called out in front of his team but we do it in the moment so they can learn from their mistake.
Whether in an email or a team meeting it sucks having your mistakes being pointed out in front of your co-workers and boss. Often our immediate reaction is to defend our actions and maybe even get dragged into an argument
The best way to shake off a mistake is to own it. Acknowledge your mistake, don’t make excuses or blame others. You may be tempted in the heat of the moment but it usually works out better if you just apologize for any mistakes and pay attention to the feedback on how to avoid it in the future.
7) Be Consistent
Being consistent is very important when you are part of a team if you hope to be a part of that team’s success.
We had kids who would play amazing one game then disappear for the next 1-2 games. Our players are only eight so we know that we can’t expect them all to be super consistent – however the ones that always show up ready to play definitely stand out.
It’s frustrating to your boss and your team members if they don’t know if they can count on you. I’d bet that many a boss/coworker would prefer to work with a consistently good performer over a superstar who only shows up 60% of the time.
Consistent results will be noticed by your team and your superiors. One of the main hurdles to achieving consistency is that it takes commitment and discipline. Whether in sports or in your career you have to make the decision to put in the work, even when you’re having a lousy day, week, or month.
Remember this, if your boss knows they can count on you they will likely give you the support and training you need to do your job even better. Just make sure that they don’t take advantage of your consistent performance and willingness to do the work.
8) Know Your Strengths/Weaknesses
I learned this season that I’m a much better assistant coach than head coach. I’m good at working one on one with players and coming up with ways to motivate them to improve and to build their confidence. I’m good at preparing them to play but I discovered that my weakness is running a game.
The first weekend the head coach was out of town I really struggled with game management. I was so caught up in coaching the game I lost track of the subs and who had played and who needed a sub.
You probably won’t be good at every part of your job so dealing with your weaknesses is an important part of your career. There are really two parts to it:
- recognizing those areas you need help
- adjusting your actions to account for your weaknesses.
In my situation I asked another parent to help manage the substituting so I could focus on coaching the players on the field. At work you can reach out to your boss or co-workers to ask for help in areas where you’re struggling. This isn’t always easy to do – it can be hard to admit that your skill or experience level isn’t where it needs to be for a task or project.
Most reasonable managers would rather have you acknowledge you need help so that the project can turn out a success, rather than you struggling in silence and having the project delivered with sub-standard quality or fail altogether.
Obviously, having others do part of your job for you isn’t really a long term solution. So once you recognize areas you need to work on you have some decisions to make. If those skills play a big role in your job and you don’t really want to do those things then maybe you need to look for a different job that requires many of the same skills you have but avoids the areas where you are lacking.
Alternatively you could get training to improve your skills in those areas. Some companies have documentation or a knowledge base on industry or company specific challenges that you can turn to for guidance. Keep in mind there are some things that you get better at mostly through experience. In those cases it helps to find a more senior professional to mentor you through those growing pains.
Remember that everyone always has more to learn. So be prepared to recognize and handle weaknesses as you come across them in your career.
9) Don’t be a Waste of Talent
Some kids on our team are naturally skilled at soccer and others have to work a lot harder at it.
When you see a kid who’s good but always goofing off it makes you wonder how much better they could be if they took it seriously and worked hard.
If you’re good at something in your career strive to be better at it, to be the best. Carve out a niche in that area and use your skills to your advantage.
10) Challenge Yourself
My son’s team sometimes chooses to “play up” against older kids who are bigger, stronger, and faster in order to challenge the boys. The challenge makes the kids work harder but it helps them get better.
They’re more likely to lose to an older team than if they played kids their own age but those tough games help make them better players.
The same is true in your career. Taking risks and challenging yourself is more likely to result in harder work and potentially more failures but you’ll be learning (and hopefully improving) along the way.
In many companies if you want a promotion you have to prove that you’re capable of handling that next level of responsibility. Often this is by doing the work of the job you want, not the one you have. You may be taking on work that feels out of your league but if you don’t challenge yourself you (and your boss) will never know what you’re capable of.
11) Set Yourself Up for Success
This point may seem to contradict the previous one so let me explain with another soccer example. Our soccer team challenges itself by “playing up” during season games and maybe finishing with a .500 record, or worse, for the season.
While it’s good to challenge yourself, it can be a confidence killer when you feel like you’re working hard but never coming out on top. So while we play up in league play, we enter all tournaments in our proper age group and are usually very competitive – often coming away with a confidence building 1st or 2nd place finish.
So while you want to challenge yourself in your career you also have to be realistic about your abilities and what tasks you can take on. One way to do this at work is to volunteer for tough tasks but to build in time for learning when you put together a schedule and offer estimates and commitments to your team and your superiors.
Another way to increase your chances of success is to negotiate the scope of the work on your project. If you’re tackling a tough problem try to break it down into smaller deliverables, focus on the first few, and see if you can push the other less critical aspects back a little.
12) Look for Teachable Moments
Mistakes are a perfect chance to teach, whether you’re working with 8 year old kids or middle aged cube workers. Often whether the offending party learns anything has to do with how you approach your critique.
If you make them feel foolish and put them on the defensive they’ll be more focused on denying/defending themselves than learning from what they did wrong. If someone on your team is making bad decisions or doing things the wrong way it’s often best to communicate with just that one person so it doesn’t look like you’re calling them out. For example, email just them rather than copying everyone on the team.
One strategy is to offer a suggestion on a better way to do it but make it seem like their idea.
You don’t even have to always point out their mistake. For example, with our boys we watch recordings of professional games and point out examples of mistakes the pros are making that are kids are making as well. We pause/rewind and talk about what went wrong and what they could have done differently. For many work problems you can find articles online about similar issues and use those as talking points.
Occasionally we’ll tape our game and review the recording for improvement. At work you can do something like that with post-project reviews or even smaller scale post-mortem on individual issues. Check out the 5 Why method.
13) Learn How to Motivate Others
I talked in an earlier point about being self-motivated. To do this you have to figure out what motivates you and what it takes to push those buttons. However, when you’re part of a team it also helps to know how to motivate the people you’re working with.
A former soccer teammate of mine (who now has some grey in his beard), went on to become a successful college soccer coach. Years back I asked him about how he transitioned from a player into such a good coach and he shared that it was because he figured out how to motivate each player to do their best. At first he wasn’t great at all the technical aspects of coaching but he was really good at getting each player to perform at or above their peak level.
You can use the same approach in projects you encounter in your career. The secret to learning how to motivate others is to listen to what your team members talk about in team and project meetings. What do they feel strongly about? What gets them fired up or what’s something they can talk about for hours? What do they take pride in?
Inevitably you’ll be faced with a tight deadline and you’ll be asked to do more than you can with less than you need. Times like those are when it really pays to know how to motivate others on your team.
These last two lessons are the most useful to people in a new job or career. As I watched young kids learn the technical aspects of soccer I saw that focusing on the fundamentals made them more comfortable on the field and gave them more confidence. Something similar can be said for a new job or skill. Don’t get ahead of yourself. Focus first on getting the basics figured out.
14) Building Confidence is Key
The young players who build confidence to call for the ball, attack the defense, and to make the runs up the field are the ones who will score the most goals.
The ones who are somewhat intimated and sit back and watch won’t see as much action.
In your career, having the confidence to tackle new assignments and to voice your ideas to your boss and team can help you build experience – and ultimately to advance.
What I learned from the scampering soccer youths is that using the right techniques to learn the fundamentals helps you pick them up more quickly and remember them more easily.
Rather than expecting yourself to figure everything out on your own when you start a new job – seek out training and mentorship. There are many online platforms that not only teach you the subject matter but also help keep track of your progress. As your skills improve so will your confidence in your ability to use them.
Part of this goes back to finding a mentor or “coach” as I mentioned earlier. There may be concepts or techniques that are difficult to conquer all at once in your job. More experienced experts in your company can help you break the problem down into smaller more manageable pieces and help you build confidence as you see small successes. This leads us to the final lesson.
15) Patience Young Grasshopper
Just as it’s hard to explain to 8 year olds why moving without the ball on the soccer field is important, it can also be tough to explain to a rookie programmer the importance of code that’s loosely coupled and has high cohesion. Pick your industry, there are always concepts that are difficult to fully grasp when you’re getting started. It takes time to understand the value of these concepts and incorporate them into your craft.
The trouble is some of these practices may seem inconvenient or a waste of time when you’re first starting out. If you find yourself questioning the value in the seemingly extra work just think about Mr. Miyagi and how he taught the Karate Kid to “wax on, wax off”. If you haven’t seen the movie, the idea is to train yourself by repeatedly using basic skills until they become second nature.
In sports it’s often referred to as building muscle memory. Experienced players who have practiced and used the fundamentals many times are able to subconsciously control the mechanics of their body movements and instead focus their brain on higher level tactical and strategic tasks.
So in the beginning of learning a new skill or career it really pays to focus on the fundamentals. Even if it feels like progress is slow, have patience while you build those skills. Eventually it will click.
Life After Your Job
I took my son to the NCAA DIII Championship games last weekend and as the final match came to a close I thought about the seniors on the losing team whose soccer careers effectively ended with the final whistle.
Although their 15 years of intense work and effort ended just short of winning the championship they came away with a lot more than a second place trophy. They take the lessons they learned about team work, perseverance, mental toughness, etc. into the next stage of their life.
Just the same, you can use the skills you pick up at work in your next job. I don’t know the exact statistics about how few youth athletes go on to get college scholarships and how even fewer become professional sports players. I do know that proportionately few workers will become CEO or a senior executive at their company. Chances are higher that you’ll be transferred, laid off, or maybe just change jobs.
So work hard but be purposeful about the skills you’re learning, relationships you’re building, and industries you’re entering. Remember it’s not all about the trophy (promotion, awards, pay raise). Chances are your current job isn’t forever so those things are temporary.
Don’t feel like you have to put it all on the line for the promotion. Be wary of working your fingers to the bone just for the promise of a pay raise. If you’re an at-will employee then job title and salary are temporary.
However, the skills you learn and the relationships you form can carry with you into your next job. Focus on building some of the career fundamentals we’ve talked about – being consistent, a team player, adaptable, driven, patient, a communicator, motivational and you’ll be in good shape when it comes time to move onto your next job.
Any more career tips you’ve learned through sports? Please feel free to share them below.
Have you ever heard the saying as the twig is bent, so grows the tree? That’s kind of how it is when it comes to money and finances. The money habits you develope in your 20s will help or hurt you for the rest of your life. What’s more, you have a very large degree of control over how it all turns out.
Like so many other decisions that you make early in life, the choices that you make when it comes to money in your 20s will have a huge impact on the rest of your life. Since financial situations develop over many years – often decades – the patterns that you set in your 20s will have a profound effect on your level of prosperity throughout your life.
Here are some of the major decisions that you will have to confront and settle shortly after graduating from college.
To save or not to save
The savings rate in the US is appallingly low. The majority of people seem have little or no savings, while the top 10% or 20% of households are perpetually flush with cash. You can and should make a decision on this while you’re in your 20s.
As much as anything else in life, like diet, exercise, and work style, saving money is a habit. If you get yourself into that habit early in life, you’ll generally find you will have money throughout your life. Even if you start saving a small amount, you’ll be setting a pattern that you will follow without much thought in the years ahead.
The impact of this kind of a decision will grow over time. Though your savings may be relatively small while you’re still in your 20s, they will begin to growth in your 30s, and by the time you hit your 40s you will have options that other people only dream of.
This is decision that you have to make right now – to save or not to save – over the course of your life. This is especially important because life has a way of getting more complicated as we get older. Though you may think that saving is a decision you can make “later”, your circumstances may not allow it. But if you’re already in the habit now, you’ll be likely to continue to do it even when those complications set in.
Investing as a life choice
Investing money is a natural extension of savings. It’s what you do with savings that are in excess of your immediate needs for cash. And just like saving, investing is a life choice.
Study after study have shown that the people with the largest investment portfolios are those who began investing early in life. This is because of the time value of money – the earlier you begin investing, the more time your money has to grow.
Get on the investing bandwagon early in life, and your portfolio will grow as you get older. And as it does, the options that you will have in life will steadily increase.
But like saving money, investing is a choice, one best made here and now.
Debt is not your friend – or maybe you think it is
Debt is almost the “B side” of investing. More particularly, those who choose not to invest usually have more than a fair amount of debt.
While this may have something to do with patterns of consumption – which we’ll deal with next – it’s probably more a function of not having savings and investments to pay for major purchases and expenses.
The person who has a sufficient amount of savings and investments, has a ready source of capital to draw on when they need to make a major purchase, such as a car or a vacation. The person who lacks financial assets is more likely to go into debt to pay for what they want but cannot afford.
Unfortunately, it’s very easy to get into debt. Many young people do it as a function of student loans. When they graduate college, and they’re beset with the startup expenses of life, they turn to credit once again. With each purchase, a decision is being made to go deeper into debt.
You can choose to break this pattern, and it’s best to do it early in life. Don’t buy anything that you can’t afford to pay for with cash. Plan to buy what you need secondhand – you can usually get it for pennies on the dollar. Don’t start trading up on your possessions until you have the income and assets to justify it. Those are habits you need to get into now.
Living large – or living on the down low
Your 20s are also a time in life when you’re making choices about how you want to live. Some young people – anxious to start living the good life – start patterning their lifestyles on free-spending friends, or even on people on TV. Delayed gratification isn’t in their vocabulary, they want it all now.
It’s fine to want to live well, but that’s also an expensive way to live. It’s the kind of mentality that creates debt, and a perpetual need to make more money. Because of income taxes and other fixed expenses, there’s never quite enough income available to pay for the lifestyle that you want to live. That’s where debt enters the picture.
Choose to go in the opposite direction. Delayed gratification has to be your mantra. You’re young, and you’re just starting out, so it’s perfectly okay to live on the down low. Keep your expenses low – rent an apartment with roommates, buy a secondhand car, and find ways to travel on the cheap. It’ll all work out with a stronger financial position later in life.
Hard assets vs. financial assets – stuff vs. money
This is a problem in our culture, and it starts in youth. It’s probably not a conscious decision, but we have to make a choice as to whether or not our money will flow into hard assets – stuff – or financial assets. Financial assets are the kind of assets that provide future income. Hard assets are the type of goods that provide some current use.
If too much of your money is going into hard assets, little will be available to go in a financial assets, which is to say that you won’t be able to invest.
This is another major choice and you have to make right now. Will you put your money into stuff, or will you invest it in financial assets? The quality of your future financial situation hangs in the balance on that decision.
As much is may be tempting to go for the good life while you’re in your 20s, recognize that life goes on for decades, not years. You’ll need to provide for yourself over the course of your life, and the more that you can do now to set yourself in the right direction, the easier the rest of your life be.
It will be based on a set of choices that you can make right now.
One of the things that many consumers are obsessed with today is a better credit score. After all, your credit score influences more than whether or not you qualify for a mortgage, or whether you get the best interest rate on an auto loan. Your credit score can also impact the insurance premium you pay, or what happens when you sign up for cell phone service.
There are all sorts of “tricks” out there for improving your credit score, but really it just boils down to a couple of basics:
- Manage your payment history
- Pay down credit card debt
If you make payments on time and pay down your credit card debt, you will likely have a decent enough credit score to accomplish just about anything you want.
Payment History and Your Credit Score
Most credit scoring models heavily weight your payment history. “Payment history accounts for 35 percent of a consumer’s FICO credit scores,” says Michelle Black, a credit expert at HOPE4USA.com, a credit education and restoration program.
This means that if you want to get off to a good start, you need to make your payments on time. If you make all of your loan payments on time, they will be reported positively to the credit bureaus. Missing a payment, or paying late, can mean a lower score. The longer you miss payments, or the more late payments you have, the bigger the effect on your score. One late payment isn’t going to be the end of the world, but there is a cumulative effect once you start piling up the late payments and missed payments.
Even your non-credit payments can impact your credit score. While making your utility payments on time won’t have a net benefit to your score, missing your payments can be negative. Your company can report the missed payments to the bureau, or turn your account over to collections, which is viewed negatively and can drag on your score.
Credit Card Debt
However, it’s important to note that the amount of your credit card debt can also have a big impact. Credit utilization accounts for about 30 percent of your FICO score, and if you have a high ratio of credit used to your available balance, it can mean a disappointing score, even if you make your payments on time.
“Paying down credit card debt is the single most actionable way for a consumer to see an improvement in their credit scores,” says Black.
Many credit experts suggest that you keep your revolving credit card utilization to less than 50 percent – and it’s ideal if you can keep it to less than 30 percent. This means that if you have available credit lines on your cards amounting to $5,000, you should try to keep the amount that you carry to $2,500 (50 percent), or to $1,500 (30 percent). If you want to see a solid improvement in your credit score, paying down high credit card balances can be one of the most effective ways to go about it.
In any case, maintaining a good credit score isn’t about sudden moves. Over time, you are likely to see the best results if you practice good financial habits, keeping your revolving credit balances relatively low, and making sure that you make your credit payments, and other bill payments, on time.
Do you need to improve your credit score? How are you going to go about doing so? Leave a comment!
If you’ve ever been involved in a real estate transaction before, you’re probably familiar with the term double closing. That’s an arrangement where you buy a new home on the very same day that you sell your old one. In a perfect world, you close on your old house in the morning, and then on the new house in the afternoon.
Sometimes that arrangement actually works. Other times it’s enormously stressful. If you’ve ever been involved in the stressful kind of double closing, then you know why it’s something to be avoided at all costs. If you have two closings scheduled for one day, and the first one doesn’t happen, the second one won’t either. And because of the lack of time separating the two closings, there won’t be an opportunity to fix whatever went wrong with the first closing in order to make the second one happen.
Close on the Old House First
Most people try to work a double closing because they need to sell the old house before they close on the new one. Typically, they need the proceeds from the first sale in order to pay for the purchase of the new home. In addition, the mortgage lender is probably requiring the sale of the first property in order for you to qualify for the mortgage on the new home.
Beyond these basic requirements, you probably would be thinking that if you could close on both properties on the same day, you would avoid the need to stay at a hotel and have your belongings in remote storage in between closings. But sometimes that’s exactly what you need to do.
If the purchase of your new home is contingent upon the sale of your current one – whether you need the proceeds for the down payment on a new one, or the lender is requiring the sale – you need to make a priority of selling your old home first. The purchase of the new home won’t happen if you don’t.
Selling a house is almost always more difficult than buying a new one. That’s because you are at the mercy of finding a willing buyer, and their timeframe after you find one. When you’re buying a home, you have more control of the timing factor.
If it’s at all possible, you should concentrate first on selling your current home. Once you do, you’ll know exactly how much cash you’ll have for the down payment, and you will have removed the old obligation, enabling you to more easily qualify for the mortgage on the new home.
In addition, trying to work two real estate transactions at the same time – and closing on the same day – is enormously stressful. A problem with one translates into an automatic issue with the other.
Take a Short-Term Lease on the Old House After Closing
Okay, you decide you’re going to sell your old house before buying a new one. What do you do in the meantime – and how much will it cost you?
One strategy that you can use to avoid a double move, is to sell your house and then lease it back from the buyers for the next 30 days or so.
You’ll have to pay an agreed upon monthly rent – but then if you still own the property you would have a house payment anyway. It’s a matter of paying rent, rather than your regular mortgage payment. Meanwhile, you won’t have to move your furniture into a storage unit anywhere.
Armed with the cash from the sale of the house, you’ll be in a position to more easily purchase a new one. Just as important, home sellers love when buyers don’t have the contingency of having to sell their current home.
In a real way, closing on your current home and renting it for time will make you a more attractive buyer for the home that you want to buy.
Take a Short-Term Lease on the New House After Closing on the Old House
This is reversing the situation described above. You close on your old home, then move into the new one – complete with your furniture – pending the closing at a later date. You’ll have to pay rent to the seller, but again this just replaces the payment you have on your old home.
This isn’t possible to do in all cases, but the seller may appreciate the fact that you are a “clean buyer,” by virtue of the fact that you have sold your old home, and are fully ready to close on the new one.
Naturally, you’ll want to make sure that you have a solid pre-approval on your new mortgage before getting into this type of arrangement. That, in addition to the fact your old home is been sold, will make you a very desirable candidate for this type of arrangement.
Stay at a Hotel for a Few Days While Your Stuff is at Either House
There’s a third way to do this that isn’t as pretty as the last two options, but it will get the job done.
You sell your house before closing on the new one, and then move into a hotel in the interim. Your furniture stays either in your old home, or is moved to the new one. And again, there may be a rental for this arrangement, but it’s likely to be far smaller than what you would pay for a remote storage facility.
If you are storing your belongings in your old home, you close on the property but get an agreement to leave your furniture in a specific part of the house, typically the garage or the basement. Once you close on the new house, you complete the move.
Alternatively, you can close on the old house, and set up an arrangement to move your belongings to the new one. Again there will be a monthly rental, but this will be easier to bring about because you sold your home and you have a mortgage pre-approval.
Selling one home and buying another is never easy. These methods of avoiding the double closing won’t be pretty, but they will help you to avoid the financial stress that comes with trying to close on two properties on the same day.
Have you ever tried these methods, or have you simply attempted the double closing? Leave a comment!
People who haven’t saved money for retirement often avoid even starting out of fear that their efforts now will be too little and too late to make a difference.
In truth, it’s never too late to start saving for retirement.
Even if the money you save will be inadequate to provide a full retirement, it still has enormous potential to improve your life when your retirement years come. Here’s how:
1. Any Retirement Savings is Better than Nothing
Think about the times in your life when you didn’t have enough money saved – when having just a few thousand dollars put away would have made all the difference in the world. Those situations won’t stop happening after you turn 65. You’ll still have emergencies, and times when money is just a little bit short. If you have some money put away you’ll be able to ride out those rough spots in relative comfort.
While it’s true that you no longer have the years that have passed, when you didn’t put any money away for retirement, you do have the present moment. The money that you save between now and the time you retire will go a long way toward improving your life, even if retirement is just a few years away.
2. You Can Take Advantage of Tax-Deferred Investment Income
There are plenty of options for saving for retirement, even if you don’t have an employer-sponsored plan. Virtually anyone – especially people without employer plans – can take advantage of having their own IRA. Just as is the case with an employer-sponsored 401(k) plan, the money that you put into an IRA is generally tax-deductible in the year you make the contribution. Best of all, income earned on those contributions will accumulate on a tax-deferred basis.
This is a powerful advantage, and one that you should be taking advantage of if you can. Let’s take a look at the power of tax-deferred savings.
Let’s say you decide to invest $5,000 each year in stocks in a non-tax sheltered investment account, earning an average of 10% per year for the next 15 years. Your combined federal and state income tax rate is 30%. Because of the tax bite, the 10% per year that you are earning on your stocks is effectively reduced to 7%.
After 15 years, the account has grown to $125,648. Not bad.
But let’s take the same numbers, but assume that you put the money into a tax-deferred IRA, giving you the full benefit of the 10% annual average investment return.
After 15 years, the account has grown to $158,867. You’ll be ahead by $33,219 just because of the tax-deferral.
A tax-deferred retirement account, such as an IRA, can give you that advantage. And for what it’s worth, in 2014 you can actually contribute $6,500 per year to an IRA if you are 50 or older.
3. Even a Small Cash Flow from Retirement Savings Can Make a Difference
Let’s use the IRA example that we used above. We’ll assume that you began saving in your IRA beginning at age 50, planning withdrawals to start at age 65. Assuming that you withdraw at a rate of 5% per year – leaving the remaining 5% in the account to grow for future use – you’d be able to withdraw $7,943 per year, or $662 per month.
Now, $662 may not seem like much of a monthly income, but if you add it to your Social Security income, and maybe an income from a part-time job, you may have enough money to live on. Even if you do nothing better than semi-retirement, that’s a lot better than not being able to retire at all.
4. It Will Help Prepare You for a Later Retirement
If you haven’t saved much for retirement, you always have the option to delay retirement, giving you an opportunity save even more money.
There are at least three advantages to doing this, and collectively they are huge:
It will give you more time to save money. Delaying your retirement from 65 to 70 could make a big difference in the amount of savings you have. Continuing our IRA example once again, if you delay retirement from 65 to 70, meaning that you will have 20 years to contribute to your IRA, rather than 15, your IRA nest egg will grow to $286,382. That’s an additional $127,515 just for waiting five years, and continuing to make yearly $5,000 contributions.
It will reduce the number of years you’ll have to withdraw funds. One of the big concerns for virtually all retirees is the prospect of outliving your money. By delaying your retirement for a few years, you reduce the prospect considerably. If at age 65 you expect to live to be 85, you’ll need to provide for yourself for 20 years. But if you delay retirement to age 70, you’ll only need to provide for yourself for 15 years. The need for savings will decline substantially.
It will increase your Social Security benefit. For most people who are close to retirement, the age of “normal retirement” is 66 or 67. Let’s say that in your case, it’s 66. If you delay your retirement to age 70, the Social Security Administration will increase your monthly benefit by 8% per year. Delaying for the full four years will increase your benefit by 32%. That’s a lot of additional income just for delaying by four years.
5. Retirement Savings Can Be Used as a Large Emergency Fund
In the financial media of today it’s popular to project the need for multimillion-dollar retirement portfolios. And maybe that’s what’s truly needed in a perfect world. But let’s say that there’s no chance you’ll ever have a seven-figure retirement portfolio. Let’s say that all you’ll have is $100,000.
That may not be enough to provide you with an income during retirement years, but it’s an extremely generous emergency fund. If you could manage to get by on Social Security income and a part-time job, you’ll have your emergency fund to pay for major expenses and to cover you in those months when cash is short.
It’s not a perfect outcome, but it’s a lot better than having no emergency fund of all.
Do you ever feel overwhelmed at the thought of saving money for retirement, to the point that you choose not to do it? Have you ever thought about the advantages listed above? Leave a comment!
One of the financial issues that seems to plague many consumers is debt. Getting out of debt can be a long, difficult road – especially if you have a lot of debt to get rid of. Before you try to pay off your debt, though, it’s important to understand that the single most important thing you can do is to stop debt spending.
Are You Really Changing Your Money Habits?
It’s a popular thing to power through your debt reduction. A dramatic debt reduction, by which you live like a pauper for a few months in order to get rid of your debt, can be an invigorating way to take care of your financial problems. Plus, you get to feel a sense of accomplishment.
While this approach can work for some consumers, the reality is that it doesn’t work for everyone. In fact, in some cases, by tackling just the debt and moving on, many people find themselves back in debt sooner than they expected. This is because, in some cases, just paying off debt doesn’t lead to a change in habits or long-term spending.
Once the debt is gone, it can be easy to fall back into original habits of debt spending. Instead of just taking care of the debt problem, it’s important to understand the underlying cause of your debt, and to stop the spending mentality that got you there in the first place.
Fixing Your Financial Outlook
In order to be truly successful in the long-term, you need to stop your debt spending. It seems obvious at first glance. However, many people go right back to the same habits they had before once the debt is paid off. This means that they have’t really changed their outlook on money. Within months, debt spending is being practiced again, and the emergency fund is being depleted.
Rather than tackling debt wholesale to begin with, the first step to long-term success at remaining debt-free is to change the way you view money and spend it. You need to stop digging the hole. Start cutting your budget, and earning more money. Get used to living a different lifestyle – one that you can maintain after you’ve paid off your debt.
Once you are used to your different lifestyle, and once you have stopped the debt spending, you can begin your debt reduction plan. By changing your financial habits before you start your debt reduction plan, you have a better chance of sticking to the changes when the debt is paid off.
It’s too tempting to view having your debt paid off as the end of the story, and as a sign of success. The reality is that long-term financial freedom requires that you get used to prioritizing and making choices about spending all the time, and not just when you are trying to pay off debt. Get used to this mindset before you start paying down debt, and you will be better able to stay out of debt once you get your loans paid off.
Are you ready to stop debt spending? Why or why not? Leave a comment!
Borrowing is never recommended after a layoff. But sometimes you have to do what you have to do.
There are a lot of not-so-smart ways to borrow money, particularly when you are in desperate need of funds.
Title loans certainly come to mind. But there’s a high risk of losing your car in the process, not the least of which because you don’t have a job to repay the loan.
You can also turn to credit cards. After all, you can use the credit lines without having to qualify based on your income or credit, so the whole process is pretty much effortless. The ease of accessing money for credit lines is also the built-in problem. Once you get started, when do you stop? Tapping credit cards for cash can create a vicious cycle that continues until you’re unable to repay the loans. Worse, cash advances on credit cards generally carry higher interest rates than for purchases.
Loan salvation these days is increasingly coming from peer-to-peer sites, that enable you to borrow money while bypassing the banks. The loans also typically come with both fixed rates and payments, making the repayment process totally predictable. Best of all, you may be able to arrange a loan from family or friends through a peer-to-peer lending site.
Borrowing should be avoided at all costs if you have been laid off from your job. But if you absolutely need a loan, peer-to-peer sites may be the best way to do it – even if the proceeds for the loan ultimately will come from family and friends.
When You Can’t Get a Loan from the Bank . . .
The inherent problem with getting a loan from a bank – other than existing credit lines – is that you can’t qualify because you don’t have a job. That limits your options, no matter where you want to borrow money.
But peer-to-peer lending sites offer the opportunity to match the lender with the borrower. If you need to borrow money, and a family member is prepared to lend it, you can meet on a peer-to-peer lending site and make it happen. The sites offer the opportunity to formalize the loan process, and that has a number of advantages to both parties.
Why You May Want to Formalize the Loan Process with Family or Friends
From a borrower standpoint, one of the biggest problems with getting direct loans from friends and family is that it can very easily lead to misunderstandings. You might borrow money with the intention that you’ll begin repayment once you regain employment. But the friend or family member making the loan might expect repayment to begin immediately.
In either case, any time expectations are not met in a loan situation between family and friends, misunderstandings can develop. And when you do business with family and friends, the potential damage from the fallout of a loan agreement can go well beyond money. You risk permanent damage to a very important relationship. Formalizing the loan arrangement can help prevent the type of misunderstandings that cause problems in the first place.
You and your “lender” can work out whatever terms are agreeable to all parties. There is no bank process to go through since the lenders – your family or friends – choose the terms that are acceptable to them. And once settled, there is an agreement with a repayment term that includes the interest rate and monthly payment.
Another advantage comes when you’re looking to borrow a single loan from several different friends or family members. A peer-to-peer lending site could enable you to create a single loan in which you are the lone borrower, but there is more than one friend or family member acting as lenders.
Why Friends and Family May Want to Formalize the Loan Process
Family and friends making loans face a double risk in doing so. Not only is there the same risk of permanently damaging an important relationship – just as you as the borrower would face – but they also risk the potential of losing some or all of the money that they provided for the loan.
For this reason, they may prefer formalizing the loan agreement through a third-party source, such as a peer-to-peer lending site. Sure, you could all sit down and hash out a formal loan agreement, using a standard loan agreement forms. But unless someone in the group is a lawyer, doing it that way may be completely un-enforceable in court.
Repayment of the loan through a peer-to-peer lending site does not guarantee that the loan will be paid, but it does create the proper framework that will prevent misunderstandings, and maximize the lender’s ability to be repaid their money with interest.
There is another reason why family and friends may prefer to use a peer-to-peer lending site to formalize making a loan to you. Under IRS regulations, the transfer of funds from one person to another exceeding $14,000 could be construed as a non-repayable gift. That could create a gift tax liability for the lender, particularly if you fail to repay the loan.
Setting up a loan through a peer-to-peer lending site would provide an acceptable paper trail that would prevent the IRS from re-classifying the loan as a taxable gift.
Using Peer-to-Peer Lending Sites
How do you use peer-to-peer lending sites to create a loan from family and friends? If you need to borrow money, you can go to a peer-to-peer lending site and create a loan listing on that site. This would establish the amount of money that you’re looking to borrow and the terms you’re willing to accept. The friend or family member could go to the site and accept the terms, or even propose modifications. Once you’re both in agreement, the loan can be created.
There are now dozens of peer-to-peer lending sites available. Some of the more popular ones include Prosper and Lending Club. One of the complications with Lending Club is that they run their loans through WebBank, so the process is likely to be more formal, though it’s still worth checking out.
If you’re looking to do a larger loan amount, particularly one that will be secured by your primary residence, you could also check out National Family Mortgage. As the name implies, they are in the business of creating peer-to-peer mortgages between family members.
Once again, if you have been laid off from your job, borrowing money should only be a last resort and only in case of emergency. Your first priority should be to create additional income sources in combination with lowering your living expenses. But failing that – and when borrowing is absolutely necessary – peer-to-peer lending sites could be the way to go.
What do you think about peer-to-peer lending sites? Are you going to try one? Leave a comment!
Next to the loss of your income, the biggest concern you’ll probably have following a layoff is the prospect of losing your health insurance.
This is a rational concern.
Not only will you not have sufficient income to deal with medical events, but the very fact that you’re unemployed can make you more vulnerable to accidents, injuries, and certain types of illnesses. For these reasons, you’ll want to do whatever you can to make sure you have at least some type of health insurance in place during your time of unemployment.
The most common form of health insurance following a layoff is through COBRA. This is an extension of health insurance coverage that large employers are required to make available to their employees following separation.
What is COBRA?
COBRA is a federal law passed in 1985. It stands for Consolidated Omnibus Reconciliation Act of 1985. It is a law that requires employers to offer health insurance coverage to former employees under certain circumstances – that includes layoffs.
COBRA covers employee and/or their dependents under the following circumstances:
- Death of the employee
- Separation/termination for any reason except gross misconduct
- Divorce or legal separation – benefits extended to an ex-spouse
- Continuation of coverage for dependent children who reach the age at which they’re no longer covered
Under COBRA, health insurance benefits under an employer’s group plan are made available to the employee and the employee’s family for a period of up to 18 months. However, if you are deemed to be disabled – by the Social Security Administration – the coverage can be extended up to 29 months. And in the event of divorce, or the death of the employee, coverage may continue for up to 36 months.
Why COBRA May Be a Good Option for You
There are solid reasons for accepting COBRA coverage in the event of a layoff. The continuation of your existing health insurance plan is one. It will provide you with complete continuity in regard to providers, at agreed-upon benefit levels even after your layoff. In effect, it will mean business as usual for you and your family, at least in regard to health insurance.
Along the same line, if you opt to take the COBRA plan, there’ll be no break in your health insurance coverage. That can be especially important if an illness or injury occurs shortly after your regular employer-sponsored health insurance terminates. That will be the last thing you will need on a greatly reduced income.
It will also avoid the necessity of shopping around for a new plan. And when you’re dealing with a layoff, you need to keep your time and your mind free to focus on the job search. Looking for the right health insurance plan can be a distraction that you don’t need right now.
Why You May Want to Pass on COBRA for Other Options
Unfortunately, COBRA is not necessarily the best deal you will get in regard to health insurance. Cost is probably the most prohibitive factor. While you’re an employee, it’s very likely that your employer paid a large amount of your monthly health insurance premium – they may have even paid most of it. But once you are separated, you’ll have to pay the entire monthly premium: your portion and the employer contribution.
In addition, the administrator of the COBRA plan can mark the premium up with an administrative fee, typically adding something on the order of 15% to the monthly premium. This is the primary reason why people opt out of COBRA – they simply can’t afford it following a layoff.
One of the basic limitations of COBRA is that it is a temporary health insurance plan. As stated above, the policy will only remain in force for up to 18 months in most cases. After that, you’ll either have to replace it with a new employer-sponsored plan or get a private policy.
If your future involves working for an employer that does not provide health insurance, or if you decide to become self-employed, you will need to find a replacement policy for your COBRA plan within 18 months. That can delay your problem without solving it on a permanent basis.
Going with Obamacare Instead
Since the passing of the Affordable Care Act (Obamacare), the options in regard to health insurance policies have slimmed considerably. Gone are the days when you could take a catastrophic health insurance plan, with high deductibles and low premiums, just to get you through a stretch of unemployment. You’ll have to fit into one of the Obamacare plans – Bronze, Silver, Gold or Platinum – with whatever premiums and limitations each has.
However, there may be advantages to having this option. One of the biggest reasons why people were forced into COBRA in the past was the presence of pre-existing conditions. Obamacare has done away with pre-existing conditions, which means you are virtually guaranteed approval and can not be charged higher premiums. The only factors that a health insurance company can adjust your premiums on are geographic location, your age, and whether or not you are a smoker.
With the elimination of pre-existing conditions, applying for a policy is also easier than it’s ever been. The application process can generally be completed on the phone, in not more than 10 or 15 minutes, and you’ll be asked no more than a half-dozen questions.
Since COBRA is generally offered to the separated employee several weeks after a layoff, you should investigate your options under Obamacare as soon as possible. Once you know what your premiums will be under that plan, you’ll be in a position to judge whether or not COBRA is the right plan for you.
What do you think about COBRA in light of recent changes to healthcare options? Leave a comment!