American Debt Project

Life insurance – when should you buy and what do you need to think about?

Life insurance is one of those things that we do not really want to think about, but know that we have to. Let’s face it; most of us have no idea when we are going to die, so it’s best to be prepared. There is no set age at which you need to buy life insurance. That being said, it is something that everyone needs to think about; the decisions you make will be based on your own personal circumstances.

We are going to examine what you need to take into consideration when you are deciding on the right age to get life insurance. We are also going to discuss what else you need to think about when investing in a policy.

What age is the right age for you to buy life insurance?

One of the first things you need to consider is that if you are young and healthy insurance premiums tend to be less. You can often lock in these lower premiums, so you end up paying less over the term of the policy. This does not necessarily mean that you should always get life insurance as soon as possible though.

The main aim of life insurance is to take care of your dependants should you die. If you do not have any dependants then do you need life insurance right at this moment? If you are young, you may also have other financial commitments, such as student debt to pay off. It may be a better financial decision to wait for a little while before you start paying insurance premiums so that you can improve your current financial situation.

What else do you need to think about?

If you decide that the time is right for you to buy life insurance, there are other things you need to think about. You need to decide how much insurance you need. Do not forget that your loved ones will need to survive without the benefit of your salary; the mortgage needs to be paid and the education of any children you have needs to be budgeted for.

You also need to decide whether term or whole life insurance is the best option. Whole life insurance covers you for your whole life, as the name suggests. It’s a way of investing money. However, premiums are generally high and you end up with a sum that is greatly reduced by the amount of money that you have to pay out. A term life insurance policy is generally the best option. This means that you pay premiums for a set period of time and you receive death benefit should you die within that period. The length of the term can vary and is likely to depend on your age when you buy the policy.

You are the best person to judge when the time is right for you to invest in life insurance; hopefully, we have provided you with information that will help. Once you have made the decision to buy, talk to State Farm and get the process started as soon as you can.

Trying to save more is a laudable goal. Financial advisors and commentators have advocated that, generally, more aggressive savings plans are a good thing. However, difficult as it may be to believe, there comes a point when over-saving does more harm than good. One can be too aggressive in trying to save money.

Cost Control – Generating Savings

When trying to save money, low-price products can cost more in the long run. For example, a discount pair of shoes may last one year, whereas a shoe selling for twice as much will endure for three years. In that kind of situation, the “cheaper” option ends up being more expensive because replacement costs add up more frequently. Saving aggressively means looking at aggregate costs. Line-item prices may be enticingly low because they ignore vital replacement or maintenance.

Savings – Liquidity and Cash

When trying to save, it is no vice to aim hard in gathering together an emergency fund. An emergency fund’s goal is to get someone through a rough patch or expense without undue hardship. An emergency fund should cover about six months of living expenses and be available at a moment’s notice. Liquidity and ease of access are primary concerns in an emergency fund. Interest that a fund may accrue is nice, but not a high priority.

Savings — Inflation

Inflation will eat away at real purchasing power of any funds that do not generate sufficient gains or interest, so be sure to augment nominal value of an emergency fund with something adjusted for inflation. Low risk or low/moderate risk securities go a long way with offsetting inflation-related losses. Increased risk tolerance and focus on capital gains should be a part of the tail end of an emergency fund. It is unlikely that a person will need the entirety of an emergency fund right away. If necessity demands, a saver will have enough warning to turn more ambitious investments like stocks into cash should the need arise.

Overall, an emergency fund should keep up with or slightly run ahead of inflation. Any stocks and bonds should be liquid, highly traded securities to enable quick conversion to cash if need be. Treasuries and low-spread defensive dividend stocks come to mind.

Investments – Ahead of Inflation

Someone saving too aggressively has the good problem of having more money than they know what to do with. Here is the domain of investing. If the emergency fund is filled to the brim and the bills are paid, an aggressive saver can invest for above-inflation gains that can be very rewarding. Small-cap stocks, high-yield bonds, even stock options and futures open up possibilities for an aggressive saver. At this point, capital gains are more important than immediate access to cash.

Speculative investments can generate returns many times the cost of credit. An ambitious saver may therefore hope to augment gains with borrowed funds. While trading with borrowed money can generate impressive gains, note that some types of credit such as a vehicle title loan are very expensive and place car ownership at potential peril.

Individual financial means and goals will vary. As such, prescribing a dollar amount or percentage that separates “enough” from “too much” in terms of savings is difficult. However, it is prudent to remind the reader of the key reasons as to why there is such a thing as being too aggressive in saving money:

1.The primary quality of savings is immediate access to cash and minimal risk of loss. This translates into increased purchasing power erosion and opportunity cost as more and more lucrative investment opportunities are passed up in favor of fool-proof savings accounts that yield trivial interest rates.

2.Overall, allocating funds to securities that have moderate appreciation potential will give greater results that can be funneled back into savings or other ventures.

Depending on the long-term plan for your home, there could be a number of “green” investments you should be considering as a cost-savings plan. Those looking to live in their house for just a few short months or years might not care about the maintenance costs as much, but they are very important to those who are looking to stay in their homes for the long run.

We have all been affected by the rise in the price of electricity, natural gas, water, and all of the other necessary utilities we pay for. However, instead of petitioning your local government leader, which more often than not is proved ineffective, take matters into your own hands. For years, environmentalists have been hard at work developing systems that save the planet by using less water, producing less electricity, and disturbing less natural habitat for mining and sourcing of other resources we often use in our homes without thinking. However, the time is nigh for us economists, (if we can call ourselves that) to get on board. Using less usually means paying less, am I right? On top of that, there are many financial incentives at the local and state level for embracing environmental retrofits in our homes.

Bingo!

Though some of these are better suited for large homes or institutions, many of these environmental solutions can be adapted to fit your home, and save you money over the years.

1. Solar Panels

Many rule off solar panels as expensive, however, due to their popularity and the growing market, the price of solar systems has gone down significantly over the last ten years. Today, many individuals can afford to install a couple of panels on their roofs, especially when you take into account government subsidies. Depending on the climate you are located in and the space you have on your property, you can virtually decrease your electricity bill by half, or in some cases, be completely self-sufficient and sell the extra electricity you produced back into the grid.

2. Hydronic Heating

Heating bills can get quite high in places with a harsh winter. Instead of paying for heating the air in your house, why not install a hydronic system which heats your home by circulating warm water under your floors. This gives the residents better control over the temperature of their house, as well as eliminating noise. Thanks to the fact that you are not pushing air around through a ventilation system, it’s also a cleaner and healthier alternative to traditional heating. Consult with plumbers specializing in hydronic heating system to have a better understanding of what this retrofit will mean for you financially. You’ll spend less money because you are getting a more efficient heating system, and the environmentalists in you will smile because fewer resources are being used and you still have the same result: a cozy home!

3. Roof Smart

We all know that roofs have a limited lifespan- especially the tar shingle ones which most people tend to use in North America. However, though the immediate cost might be greater, there is a solid range of high-quality options which will not just last you longer, but will make your home more energy efficient by reducing thermal transfer, reflecting solar rays, and therefore providing lower heating and cooling costs.

4. Low-Water Toilets

Have you ever really looked at a toilet and wondered why there was so much water in the bowl? Environmentalists certainly have! When you replace your regular toilet with a low water toilet, you literally stop flushing money away. And if you are worried about making sure that everything “goes down”, be comforted by knowing that for situations like that, there is an option for flushing with a fuller stream.

Staying green certainly pays off if you’re in it for the long run! If you are looking at shorter timelines, remember that these efficiencies are selling points for your home and add to its resale value, whether you continue to live where you are or not.

While those with a professional background in contracting, construction, or related trades are welcome to look away, this post is for those American who have, are, or will be attempting to complete home renovation projects alone.

Investing in your home by staying on top of updates and necessary renovations is an important part of being a responsible home owner. However, some want to add value so badly, that they are willing to complete these renos alone, even if they have never even attempted anything similar in the past. In some cases, this positive, get-to-it attitude gives great returns, however there are certain projects which only the trained and skilled should attempt. Trying to bypass hiring a professional can not only have the potential of backfiring, it can end in a total and complete disaster.

Here are some projects you should never take on unless you have the licensing to do it legally:

• Electrical Work

There are a few reasons while electricians are always in high demand. For one, even if you plan on trying to get the wiring done yourself after finding a video tutorial on YouTube, you still need to hire an electrician. Why? Because in order for you not to void your own home insurance, you need to have an electrician come and sign off on the work done. By doing so, they certify that everything is up to code and is deemed safe. If something is off, you’ll most likely end up paying him to fix it and then give his stamp of approval. Was it even worth you trying in that case? Most often the answer is no. Another reason why DIY is not the best option for electrical work is because the risks created by doing it wrong are huge. Electrical fires are a common cause for home destruction in America, and if the insurance company finds out that it was due to your “fiddling”, you’ll get no help at all.

• Plumbing

Plumbing is heavy-duty work which requires a lot of specialized equipment and tools. However, sometimes eager DIY advocates have no problem renting the equipment and getting down to work. The problem is that there is a lot more to plumbing than putting in tubes. Like an electrician, it’s a specialized trade with a specific code which the plumber uses to make sure that you and your family are safe in your home. There are a lot of risks involved with pressure and such, so if you do end up trying to manage it yourself, be prepared to get messy and risk ruining other aspects of your house, like floors, ceilings, walls, and more. Having a good relationship with a qualified and honest plumbing service is never a bad thing. That way you have access to qualified technicians for all types of emergencies regarding your plumbing problems, no worrying or waiting for parts to get in.

• Gas Work

Installing or modifying the natural gas in your home is probably a game that you should not play. Not only is having a gas leak a big possibility with even bigger repercussions, you also need a professional’s stamp of approval, very similarly as what you need from an electrician for electrical work. The safety of your family, and that of your home insurance policy, rests in this rule.

• Structural Work

If you are looking to add value to your home with the smallest financial investment on your end, the last thing you would want to happen is to have your home sink or collapse. However, this is a real possibility for those who attempt to do structural work without a full understanding of what it entails. Putting up additions, moving walls, or opening a space should all be approved and overseen by a qualified professional. Of course, you can jump in and do the dry walling and the painting, however let the engineers calculate the bearing loads of walls and beams while you calculate the returns on your home renovation investment.

Adding value to your home through renovations can be a great way to boost your investment portfolio. However, it’s never worth it if it’s not done correctly. Always look for good quality and thoroughness when hiring a contractor to work on your home, and if you are going to do it yourself, get a second opinion on your work.