Insurance is a big expense item in the family budget. Here are some ways to reduce insurance costs:
- Your homeowner’s or renter’s insurance. Increase deductibles if you can afford it in the event of a loss.
- Your aging car. Increase deductibles; eliminate nonessential coverage for newer cars like towing and substitute transportation. If you have an old car – worth under $5,000 – eliminate collision and comprehensive coverage.
- Your aging life insurance policies. Life insurance needs often decline as you age and might be able to be eliminated; replace a term insurance policy if cheaper coverage can be obtained.
- Private mortgage insurance. Cancel PMI, which is often required when you take out a mortgage, if you have at least 20% equity in your home. You’re legally entitled to do so in most instances.
- Changes in your financial or family situation. Review policies to make sure they reflect your current situation. For example, if you have children away at school who aren’t driving, you may be able to remove them temporarily from your auto policy during school terms.
- Earn discounts by purchasing insurance coverage from one company. Many insurance companies offer discounts to customers who purchase multiple policies such as automobile, homeowners, and umbrella liability from them.
- Inquire about discounts. Many insurers offer discounts for homeowners who take protective measures against fire and burglary. You may also qualify for discounts from your automobile insurer, but you need to inquire.
- Comparison-shop for coverage. Ask your insurance agent to shop for lower cost coverage or do it yourself. The Internet may be of use to compare premiums and locate coverage.
Smart Money Tips
- Keeping money on the sidelines can cost you thousands. Do you have money sitting in your bank or credit union account that you’re not likely to need soon? Benign neglect can be costly. Here’s how much investment income you’ll sacrifice by letting $5,000 languish in a no- or low-yield account rather than earning an assumed 7% return by investing it:
Investment
Years Growth Sacrificed
5 $ 2,000
10 $ 5,000
20 $14,000
30 $33,000
40 $70,000
- Enabling adult children can be hazardous to your financial health. You probably know some families in this predicament. An adult child seems to go from one financial emergency to another. Understandably, the parents or other older generation family members want to help. That’s okay if this is a one-time or rare occurrence. But all too often, occasional help turns into ongoing help, at ever-increasing levels once the child starts to get comfortable with the parental support. For some families, this can go on for years, if not decades. If the parents are of modest financial means, their retirement security may be jeopardized. Sadly, this doesn’t seem to bother many of the children who have become very satisfied with the status quo. We wish there were an easy solution to this problem, but the longer it persists, the more difficult it becomes to end or reduce the support.
Food for Thought
It is often hard to distinguish between the hard knocks in life and those of opportunity.
-Frederick Philips
Money Can Be Funny
If you owe the bank $100, that’s your problem. If you owe the bank $100 million, that’s the bank’s problem.
-J. Paul Getty
Word of the Week
inficete (in-fuh-SEET) – Not funny or witty; humorless.
Origin: From the Latin prefix in- meaning “not” and facetus – “clever, witty, or whimsical.” The word facetious comes from the same root.
He is the most vulgar and inficete comedian I’ve ever had the misfortune to watch.