Buy Insurance-You Better Shop Around

February 29, 2012 By Leave a Comment

It’s a fact of life…you need insurance. Sure, you may be able to survive without it, but you would be putting yourself at so much risk that it would be foolish. But if you are looking to buy insurance, then there are some things that you should know.

We’ll start with the insurance companies. If you have ever seen an insurance commercial, then you know how much they try to show you how much they care. These companies want you to feel as though you will have no worries and that they really want to protect you as a customer. Wrong! The truth simply doesn’t line up with that perception.

So what do the insurance companies care about? Making money; that’s it. In fact, it’s quite common for insurance companies to pull your credit report before deciding how much to charge you, or if they will cover you at all. The reason is that they are only concerned about measuring their risk of having you as a policy holder. Regardless of the image they want to portray, you are nothing more than a series of statistics to them. The good news is that knowing this can help you whenever you buy insurance.

If you want to buy insurance from an agent, then always keep in mind who they are really looking out for. That being said, they can offer you a wide range of policies that fit your needs, but be careful that you aren’t swayed by their high pressure sales tactics. In fact, you can use the amount of pressure they use to determine how much any policy benefits them (instead of you). So, if they are trying really hard to sell you a whole life insurance policy, but you want term insurance, then that’s a good sign that the whole life policy will put more money in their pocket.

Another important thing to remember is that you can do things to decrease your statistical risk. For example, if you’re looking to buy insurance for your car then there is a base price, and then there are discounts. These discounts are offered in direct relation to your perceived risk. Having an enclosed garage, anti-lock brakes, living in the right neighborhood, having a clean driving record and not driving a lot of miles will all help to lower your risk, and thereby your premium. Always asking about various discounts is a good habit to get into. The insurance companies don’t mind; after all, they have the discounts in place for a reason.

You should take some time to shop around before you buy insurance. However, don’t automatically get the cheapest policy just because it’s the cheapest. You need to make sure that you are comparing similar policies; otherwise you may fall short in one area or another. One way some insurance companies keep their premiums low is by having a high deductible. There’s nothing wrong with that, especially if you can afford it, but be sure you understand all of the terms and conditions before you select any insurance policy.

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The Key Features of Peer to Peer Lending

February 28, 2012 By Leave a Comment

Peer to peer lending is often referred to as people to people lending. The lending occurs between two individuals instead of between an individual and a bank. Peer to Peer lending can be advantageous to both lenders and borrowers.

These loans are typically easier to qualify for than loans from a bank, though normally at higher interest rates. One main advantage to the lender is receiving a much better rate of return than they would get from simply depositing their money in a bank account.

Historically, peer to peer lending would take place between friends and members of one’s family. But you may have noticed several new opportunities that exist to borrow (or lend) money from (or to) other people just like yourself. There are a number of sites online that serve to introduce lenders and borrowers.

As borrowing from conventional sources continues to be challenging, it’s only natural that other avenues, like peer to peer lending, have developed to address the excess demand for borrowing.

Advantages of Peer to Peer Lending for Borrowers

1. Interest rate. While you should expect to pay slightly more than a bank would charge, the interest rates are usually quite good. Individual lenders don’t have the overhead that a company has to absorb.

2. Credit flexibility. While many individual lenders only want to deal with those with a high credit score, there is something for everyone. While every bank might turn you away, there is someone out there that is willing to lend money to you. Some things to consider about credit and peer to peer lending:

* Lenders may be willing to overlook your credit woes, especially if they’re due to circumstances outside of your control. But they’re far less likely to overlook the fact that you’re just lousy at paying your bills on time. Remember, these individuals are lending you their life savings; it’s really important that you make your payments on time.

* You’ll have less privacy than you would normally have when dealing with a bank. Much of your financial information will be made available to potential lenders, so they can make informed decisions.

Advantages of Peer to Peer Lending for Lenders

1. Interest rate. With banks paying less than 1% on savings accounts, individuals are finding that they can earn significantly more by lending to other people. While there is more risk and research required, many investors are finding that it’s worth it.

2. More personal. Many lenders enjoy knowing that they are helping someone. In fact, it is customary that the lender knows just about everything there is to know about potential borrowers. Many people find this more satisfying than buying a bank CD.

Special Considerations for Lenders

Typically, your funds are not insured when loaning under peer to peer circumstances. Be careful not to be taken in by a hardship story. It’s natural to want to help someone in need, but try to be objective and remember that your personal funds are at risk. As with any investment, you must analyze the amount of risk involved.

With the amount of work required to do an adequate job of screening loan seekers and making bids, a good index fund might do just as well over the long-term and require much less work.

Conclusion

It appears that peer to peer lending is here to stay. If you’re interested in becoming involved on either the borrowing or the lending side, there are many lending networks available on the Internet. Lending between individuals has been going on for thousands of years; the current version is simply a natural evolution of this historical practice.

Borrowers need to remember that they are borrowing money from an individual, and the failure to make payments on time affects that person directly. Lenders need to stay focused on making wise decisions with regard to risk management. Not everyone is a good risk.

When you follow these tips and precautions, you might find that peer to peer lending is just the solution you’ve been looking for!

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Business Debt Reduction

February 27, 2012 By Leave a Comment

Business debt reduction is something a lot of companies need to take seriously, and take action on. It’s one thing for a business owner to say they understand the importance of having less debt and a healthier bottom line, and quite another for them to actually take the steps needed to make it happen.

Let’s face it, a lot of businesses carry some debt; it’s almost impossible not to. However, if that debt gets out of control, or too much of it is being carried, then it can affect every aspect of business operations. For one thing, it can make you more of a credit risk, so any new debt you have to take on–no matter how temporary–will cost you that much more. To put it in its simplest terms, the less debt you have as a business, the better.

But what about using debt as a write off on your taxes? That’s a fair question, but the answer isn’t as easy as most people assume. Yes, you may be able to get a tax break if you have debt, but that’s only if you look at the smaller picture. Business debt reduction is about looking at the big picture, and that means figuring out all of the numbers.

You need to consider all of the ramifications of having business debt. How much will your business credit rating suffer? How much higher will your tax burden be if you do pay off your debt? For what else could you be using the money that’s currently tied up in debt? Could you invest that money in other ways and have a larger return? Will all of this be enough to offset any tax savings you may realize?

Now the truth is that it may be possible that your business could be one of those rare cases that come out further ahead if it has a certain level of debt. You should only make this decision after going over all of the numbers very carefully. However, chances are good that you will actually be among the majority that can benefit from business debt reduction.

You can start to reduce your business debt by contacting the people you owe money to. See if they are willing to reduce the amount you owe. Now, you should do everything you can to pay the principal, because the place you are in debt to is in business to make money, too. However, if there are any late fees, finance charges, or other penalties, then those are good points for negotiation.

The next step is to reduce unnecessary expenses. Keep in mind that you do have a business to run, so you need to be careful about how you trim costs. Marketing and advertising are the lifeblood of any business, so be especially cautious when cutting any expenses related to them. Of course, there could be overlapping costs, and those would be safe to get rid of. Look at all aspects of your operations and be smart about any business debt reduction you do.

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Best Mutual Fund Companies

February 27, 2012 By Leave a Comment

Looking for the best mutual fund companies? Well, if so, keep reading. There are some things that you can look for when evaluating the strengths of one company over another. But, at the end of the day, everyone is different and everyone has different needs so the best mutual fund for you is not necessarily going to be the best mutual fund for your friend, relative, etc.

Here are a few tips that you can keep in mind as you look through the various options for your investment needs:

1. First of all, and the most obvious thing to think about, is what are your needs, wants and goals? What do you hope to accomplish with your mutual fund? Are you saving for retirement, a college education, or a vacation home? Whatever it is, how long do you have before you need to have the money ready? If you are in your 20′s and are saving for retirement you have a long time and that will play a big part in the types of investments you choose.

The length of time you have will also be a component in how aggressively you invest. Everyone has their own risk tolerance. Some people like to play things close to the edge and are willing to take big risks in order to get big rewards. This is an easy strategy if you are young and you have a lot of time to recoup any potential losses.

Other’s simply can’t sleep at night if they think they are at too much risk of losing their investment. For them, a more conservative approach is the way to go. Many times older investors (those that have less time to recoup any possible losses) will choose a less aggressive approach to investing.

Just figure out which one of these categories you belong in and you can go from there. This one decision will really have a big impact on your investment strategies.

2. Once you’ve got your investment risk tolerance figured out you can start getting ideas of some potential best mutual fund companies to invest in. there are tons of websites online where you can go to find the information you need on mutual funds (you can also look in financial magazines to get some ideas). Don’t just check out one or two either, check out a dozen or two to really get a feel for what is available.

3. Narrow your list down to those funds that have a high performance rating over the last 3, 5 and 10 years. There is never a guarantee with an investment but the better the fund has performed over the last years, the higher the likelihood it will perform in a similar way if you were to invest in it.

If you are just starting out on your investing career, you have a lot of questions. The more knowledgeable you are the better your decisions and results will likely be. Use these tips to locate the best mutual fund companies you can find. Working with the best will help you get the best results… and that is the whole point, isn’t it?

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Best Debt Reduction Methods

February 26, 2012 By Leave a Comment

Let’s be blunt…debt sucks! While that word may not be the most professional, it certainly sums it up quite nicely. The sad part is that being in debt isn’t really your fault. You had every intention of paying what you owe, but then something happened. Perhaps you had a medical emergency or you lost your job. Whatever the case may be, you are now looking for the best debt reduction method for your situation.

That’s an important thing to keep in mind: it’s your situation. Therefore, what may have worked for somebody else may or may not work for you. Their level of debt may differ, they probably have a different financial profile, and their money habits most likely vary from yours in one way or another. Of course, their method could work, but you should consider it carefully before you jump into it.

That being said, just about any type of debt reduction has the ability to work. The only thing that differs is the person trying to follow it. With that in mind, here are a few options for you to consider.

1. Debt consolidation. This is where you combine all of your various debt into one large debt. On the surface that may sound like you are only creating one big problem for yourself, but there’s more to it. The reason consolidating debt is such an attractive option is that you can get a lower, overall rate, and you will also have one payment to deal with instead of several. The downside is that you have to be disciplined enough with your money that you don’t start running up your debt again. If you can keep from doing that, then this may be a good choice for you.

2. Balance transfers. If you have a lot of credit cards with high interest rates, then transferring the balances to lower rate cards could be your best debt reduction option. You need to be careful to read all of the fine print. Some credit cards will charge you a fee for making a transfer to their card. Others will charge a low introductory fee, which will go up after a set amount of time. That doesn’t mean the offers are bad, but it does mean you need to understand all of the terms and conditions before making a transfer.

3. Debt settlement. If you have fallen way behind on making payments and your debt is spiraling out of control, then debt settlement may make more sense for you. You can do this yourself or hire a qualified agency to do it for you. The idea is that you (or your representative) will deal directly with each of your creditors to get them to lower how much you owe. It’s typical to save 25% to 50%, and that really adds up. Again, this is the best debt reduction for those who are far behind on their payments, as your creditors are willing to take a small loss on what you owe if they think you would otherwise not be be able to pay anything at all.

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How Disability Insurance Can Protect You During Hard Times

February 25, 2012 By Leave a Comment

Most of us have insured our house, possessions, cars and our lives. However, have you insured something that might be even more important: your ability to consistently earn income? This may be the most important asset you have.

Consider the following: if you currently earn $50,000 a year and you’re 35 years old, from now until you’re 65 you’ll earn $1.5 million. That assumes your income never increases, which it almost certainly will.

Doesn’t that seem like it might be worth protecting? Is your house or car worth $1.5 million? Most of us don’t own any single object worth $1.5 million.

What Are the Chances of Actually Needing to Use Your Disability Insurance?

Disability insurance insures your ability to earn income. Many people hear the word “disability” and immediately think of an accident. But most long-term disabilities are the result of illness, such as heart disease or cancer. Every year, over 12% of adults in the United States have a long-term disability.

Not only that, but one out of seven employed residents of the United States will have a disability that lasts 5 years or longer before age 65. The odds of suffering a disability that lasts at least 3 months is over 50 percent. And the U.S. Department of Housing and Urban Development has estimated that 45 percent of foreclosures are due to disability.

What about social security? Social security does provide benefits, but qualifying is not always easy. The benefits provided are rather limited, even for the most frugal of people.

How to Get Disability Insurance

Large employers typically offer short-term and long-term disability insurance. This coverage is frequently affordable and will cover 50-60% of your salary. The total payout may also be capped.

If you prefer or need to go with an individual policy instead of through your employer, be aware that they can be quite expensive, but have far more flexibility to provide what you need. The cost of an individual policy can vary dramatically, but expect to annually pay 1%-3% of your salary to replace 60% of your salary.

Some factors that influence the premium include:

1. The monthly payout. Obviously, the more money you would receive in the event you suffer a disability, the more your policy will cost.

2. How “disability” is defined. Does it pay if you are unable to do your job? Or does it only pay if you are unable to do your job and any other job for which you’re qualified? What if you can work part of a day, but not the whole day? Be sure you know what you’re getting, and what you’re not getting.

3. How long is the waiting period before you start receiving your payments? The longer the waiting period, the less expensive the policy will be.

* This is a good reason to have that 4-6 month cash reserve you’re always hearing about. If you don’t currently have it set aside, get started today!

4. Your occupation. Some jobs are simply more hazardous than others. Everything else being equal, a construction worker should expect to pay more than an accountant.

5. Cost of living. Some policies cover cost of living increases. This can make a big difference, depending on the length of your disability.

6. Additional purchase option. Once you’re insured, this option would allow you to purchase additional coverage later on without having to submit to another physical.

Disability insurance is the insurance that everyone seems to forget about, especially those who are self-employed. But this may be the most important insurance you can purchase! Look into disability insurance today; your future and the future of your family may depend on it.

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Best Auto Insurance Rates-Not Always The Cheapest

February 25, 2012 By Leave a Comment

Accidents, by their very definition, are unpredictable. If we could predict them, then we could avoid them. We would be a lot safer and we would never have to worry about getting insurance. But this is the real world and accidents can happen at any time. The strange thing about insurance is that we often feel as though we don’t really need it. It feels like we’re paying for something we may never use. The truth is that you do need it, but that doesn’t mean you should pay more than you have to for it. Looking for the best auto insurance rates makes a lot of sense.

Notice that we are talking about the best rates, and not necessarily the cheapest. You have to be careful when shopping for affordable insurance because some companies keep their premiums low by having poor coverage. Sure, you may pay hardly anything every month, but it will only be wasted money if they don’t pay enough when you have an accident.

You need a policy that has enough coverage for the most common accidents. For example, you are far more likely to get into a fender bender than cause a multi-car pileup on the freeway. However, you never know what kind of car the other driver will have, and it could be an expensive new car. Anywhere from $25,000 to $50,000 should be enough to cover most vehicles on the road.

So far that only covers property, which has a clear-cut limit. That’s not the case with medical expenses. In fact, it’s the potential medical expenses that can really add up. One “minor” accident could bankrupt you if you don’t have enough insurance. Perhaps the injuries are legitimate, or maybe they are being trumped up by a money-hungry lawyer…but the truth is that it doesn’t matter because either way it could end up costing you a lot of money. Having medical coverage of $100,000 to $300,000 is a good start, though you could go higher if you can afford it. The best auto insurance rates take this into consideration and try to offer you value for the money.

You can save money on your auto insurance by seeing what discounts each provider offers. If you have a clean driving record, are female, over a certain age, have anti-lock brakes, have a high credit score, live in a safer neighborhood or already have another policy with the same company, then you may qualify for some serious savings. It’s worth checking into if it means you can save some money.

The other way to save money and get the best auto insurance rates is to have a higher deductible. This may be a bit of a gamble, but it’s an easy way to get the coverage you need at a price you can afford. Either way, having car insurance is a must (in some states it’s the law), but you can still get a good deal on it when you know what to do.

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