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10 Term Life Insurance Facts

You know you need insurance.  Well, maybe you don’t know it , but most of you do need it.  The problem comes when you start listening to your brother-in-law, whom we will call Earl, tell you about what type of insurance to get.  It is really pretty simple.  Don’t listen to Earl! That is the first step.

Do you really need life insurance?  Most people who have a family do.  I say most people because if you live long enough and have a good retirement plan, a good Roth IRA, and no debt, then maybe you don’t need life insurance at that point.  But let’s just assume you haven’t reached that point in your life yet. Let’s assume you are married, have 2 kids, owe $200,000 on your home, and have a yearly income of $100,000.

Okay, you need life insurance!

Now, back to your good ole brother-in-law, Earl.  Earl gets his life insurance from a guy he plays golf with who is a ‘financial advisor’.  His golf buddy sells all sorts of financial things and seems to make good money doing it. This guy has a huge house and gold rings on each finger and so he “must know what is best for Earl”, so Earl listens and does what he says.

This is the wrong approach to life insurance.  9 times out of 10, Earl’s golf buddy will be selling some sort of Cash Value insurance. It goes by many names, such as “whole life”, “universal life”, “investment life”, you get the idea.  They all have the same thing going for them.  They cost up to 10 times the price of a good term policy and make the guy selling it able to afford his big house.

You may have gathered by now that I am totally against these types of policies.  There is almost NO REASON to buy them, yet so many people still do.  I will try to convince you that all you need is a level TERM Life Insurance policy.

I should first say that even within the margins of this article, or some ad within the text here may point you to something other than what I am describing.  I cannot control the advertisers here to the extent that only term life insurance advertisers will be here. Just beware.  I will provide a link to a company you can try, but there are many, many , term insurance providers and you should just shop around to get the best rate for your circumstances.

Some facts about Term Life Insurance.

1. It is about 10 times cheaper than Cash Value life insurance. More or less, but it is very inexpensive compared to cash value polices.

2. Term protects you same as cash value. There is no difference, as the cash value policy has an underlying ‘term’ policy to give you the protection amount.

3. Level term policies can be bought for 10, 15, or 20 years.  This means you can buy say a $500,000 term policy that has premiums that are level for the entire period.  This is the best value usually. Sure some will argue that the time value of money erodes your real protection level, and that is true. However, the premiums are also going ‘relative’ to the value of money also.  If this is too confusing, don’t worry about it.  It just means $500,000 dollars won’t buy the same thing 10 years from now as it will today.

4. Some say you should buy about 10 times the amount of your annual income.  I think that is a good number, but it really depends on your personal circumstances.  For me, my company provides a death benefit, in the form of an annuity, if I should die.  This sort of thing has to be factored in.

….to be continued..

In the mean time, you can click the banner ad below and compare a bunch of term insurance policies for free. Just fill out a few simple questions and submit. You will see what I am talking about regarding the low cost of term insurance.

low cost term life insurance

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This web site offers general information for managing personal finances and does not recommend specific financial actions. For financial advice tailored to your situation, please contact an expert such as a CPA or a personal financial advisor.

Alternative to Foreclosure, a Short Sale

Are you facing a foreclosure? Are you thinking that would be the best thing for you?  There are alternatives. 

Have you ever heard of a "short sale"?

This may be an alternative to a foreclosure.  A foreclosure will cause a lot of damage to your credit rating.  It can really affect your interest rates in the future and has a long-lasting effect on your credit score.  A short sale can reduce some of this damage.

A short sale happens when you sell your house
for less than the amount owed to the lender.

The best way to describe it is to give an example.  Let’s say you bought a house for $400,000 and you financed it 100% 5 years ago.  Let’s say you have been paying the monthly payments for 5 years and now the loan is down to $380,000.  At the same time house prices have went down and the house is only worth $340,000.  If we now find that we can’t make the payments and are considering just letting the mortgage company foreclose, the alternative is a short sale.  A short sale is where you find a buyer that will pay $340,000 for the property and then you get the mortgage company to agree to accept that instead of the $380,000 that you owe.

You may be asking yourself right now, "why would the mortgage company do that?"  Well there are a few advantages to this for the lender.  In a nutshell, the lender is not in the real estate business and they really don’t want to own your house.  Owning real estate just slows down the process of getting their money and actually causes many more problems for them.  There are legal problems to the actual foreclosure that cost them money, and the entire time spent is much longer than with a short sale.

You benefit from the short sale in a couple of ways as well.

Your credit history and credit rating are not as badly damaged as with a foreclosure.  It still hurts your credit to do a short sale, just not as bad as the alternative.

One key thing to get from your lender on a short sale is a "letter of non recourse".  This is a letter from your lender stating that the short sale completely satisfies your debt to them and they agree to not come after the balance.  Without this in writing, you may find that some lenders will try to get the difference after the sale and now you have another problem on your hands.

No one wants to have to go through this situation, but if you find yourself here, team up with a real estate agent that is familiar with short sales and has done a few. It is important for them to know what to say and do with your lender to help you the most.

See my post on  Debt Forgiveness May Not be Taxable in 2007 to see how this new tax law may affect you.  In the past, when you had debt forgiven, it was counted as a gain for you and you had to pay taxes on that gain.  This new law may help you in that regard on a short sale.  Be sure to check it out as it has many nuances that may change how it impacts your tax liability.

Lastly, try to relax.  This is a stressful time but you will get through it. 

Tough times never last but tough people do!

As with all my financial or tax advice, I am not advising as a professional and I give no professional legal or tax advice. If you need professional advice, please get that from a CPA or attorney.

Leave us a comment.  Do you have more information or tips on getting through this problem?  Please share them with us all!

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Seven Reasons Why You Did Not Get a Stimulus Check

This article pertains to the stimulus of 2008.

You may be one of the millions who didn’t get a stimulus check and you are wondering why.  Here are some reasons that may apply to you.  First of all, this is just a gift of our tax money from your Government, and they have made some rules that must be met to get the gift.  The problem is, people who paid no taxes are getting this. Did you know that many people who paid no taxes got a check?  That should tell you it is a gift, not a rebate.

Okay, so why didn’t you get the check? Here are some of the reasons a family or single person would not get the money.

1.  If you were counted as a dependent on someone else’s taxes, you don’t get the money.  This applies to many people in the age group from 18-25.  Most college kids don’t get anything because of this.

2.  You made too much money in 2007.  See my post titled Tax Rebate Stimulus Details Explained. In a nutshell, if you make over 150,000 as a couple or 75,000 as an individual, you get less.  Then following a formula, it gets reduced 5% for each dollar over those amounts.

3.  Do you have a Social Security Number? If not, no money.  This is to prevent giving this to illegal aliens, I believe.

4.  Did you file a tax return for 2007?  If not, you may not get the money.  This especially applies to senior citizens who may have a Social Security income, but don’t make enough to have to file taxes. If that is the case, file a return this year.

5.  Maybe yours will come later?  If you met all the requirements, but filed on April 15th because you owed money, your stimulus will likely be much later.  The check mailing tables were only for those who fell in some strict rules. If you requested an extension, you won’t get the stimulus until the taxes are filed.

6. If you owe taxes from a previous year, the IRS is not going to give you money.  They will take your stimulus and use it to pay against your back taxes.  At least, that is the way I understand it.

7.  Do you owe other money to the Federal Government, such as defaulted student loans? If you do, the Government may keep this money and apply it to those loans and late fees.. Again, this is my understanding.

Now it’s your turn.  Can you shed some light on other reasons why people wouldn’t get the stimulus?  Leave a comment here.

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This web site offers general information for managing personal finances and does not recommend specific financial actions. For financial advice tailored to your situation, please contact an expert such as a CPA or a personal financial advisor.

Make Money on a Leased Car – Facts

I know that most of you already know that leasing a car is not the smartest financial thing a person could do, but I was reading something the other day over at Edmunds.com that just made me laugh.  Apparently, the person who wrote the article, makes out on leased cars by just buying them at the end of the lease and reselling them for profit.  Who is he kidding?  I’d love to see the actual proof of this. Of course, there isn’t enough information in the article to verify any of it.

In a buyout, at the end of the lease, you may typically pay the residual value + some buyout fee. Unfortunately for most leasing customers, the residual values on their vehicles are much greater than the market values of their cars.  Now add the extra charges and you have a car that will cost you significantly more than the market price you could get if you were to sell it.

The reason residual values are almost always much higher than the real market value, is that many banks and financing companies boost up the residual values of leased vehicles. By establishing residuals that are higher than they should be, they can offer lower monthly payments, That is what attracts people to the lease in the first place.  People want to drive a car like the neighbors drive, regardless whether they can afford it.image

Another big reason you will lose money on leasing a car is that used car values are not constant. SUV prices of late have went down considerably due to the price of gas, yet who could have predicted that when you leased a car 3 years ago.  Now that leased Tahoe is worth a lot less than you thought.  Oh well, just turn it in and get another on lease.  Where does it end?

This is one way people get “upside down” on car loans.

The only way out of this mess is to stop right now.  Buy out your leased car, sell it for whatever you can get, borrow the money at your local credit union to pay the difference, then make a vow to never do that again. You can try to get rid of your lease at Swapalease.com.  There will always be people trying to justify that leasing is actually a good thing, but listen to them and be broke.

You can buy a car in the US for about $2000.00 that will get you around.  You really can!  Take the money you would have spent on the lease and either pay off those credit cards and school loans, or invest it in a Roth IRA.

Live on less than you make. Change your future and that of your kids. You can do it.

Get my free ebook on steps to buying a used car.  It’s really free, no strings attached, nothing to sign up for, no email to send.  Just download it.  You can also read the series online here at How to buy a used car.

You may also want to read an article I wrote a while back on getting out of a car lease . I am sorry to say it is difficult to get out of a lease.  There are some things to do that may help.

Leave a comment below.  I am sure someone will disagree that leasing is a bad idea, since so many people do it.  Let’s hear from you.  Why is it a smart thing to do, financially? Let me know.

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Philips Digital Picture Frame Review

Philips Digital Picture frames are the coolest and most functional gadget I have seen in a while.

If you explore my website, you’ll realize that I don’t do many “Product Reviews”. Other people do a good job at reviews, in general, and I usually don’t see the need. However, now and then, a product will jump out at me that I have to talk about. Philips digital picture frames are so cool. When I started looking into these frames a couple of years ago, they were just too expensive for me to consider. Recently, I decided that I would look again, because I thought it would be a neat gift for my aging mom, who lives a good distance away from me and doesn’t get to see her grandchildren often.. I thought if I could send her a memory card with the pictures on it, she could just plug it in to the digital picture frame and enjoy the photos. I could then send a new memory card periodically, so she always had new pictures to look at. It is working just like that. When she got her digital picture frame from me for mother’s day, she was very excited. I have since bought one for my father-in-law also.

So let me tell you about the Philips digital frame and why that is the one you should buy. There are many manufacturers of these frames now. Some even play MP3s. I don’t want my picture frame to play music. I wanted it to do one thing. Show me the pictures on the memory card and be very simple to operate. Philips digital frames met both those requirements. Why Philips? Because their screen resolution is about twice the competition. For example, the model I have in front of me is 7FF2FPA. There are many different sizes and models. This one is basically a 4 X 6 photo size. It looks awesome! The reason it looks so good is screen resolution. The resolution on this one is 720 x 480. If you look at some others, say the Coby DP- 758 , you will see that it is 480 X 240. It doesn’t take math major to understand that the resolution is about half. This is the same concept as “high definition” TV. The more information, in this case “pixels”, the better the picture looks.

Philips brand digital picture frames are the best I’ve seen and Amazon.com has probably the best info and selection. I do like Amazon.com because you can go there and get so much information on any particular item you may be interested in. Also, read the reviews on the Philips digital frames and you’ll find that most people are very happy with them.

With Father’s Day coming soon, it would make a great gift for a father! One reason we wanted to get this for my father-in-law, is that he takes a lot of digital photos, but doesn’t really know how to use the computer. Often, the photos just stay on the memory card, and no one gets to enjoy them. With this picture frame, he can just pop the memory card out of the camera, and put it in the frame. That’s it. The slideshow starts immediately! I love it!

Do you have a Philips digital picture frame? How do you like it? Have you used other brands? Leave a comment here and tell us all about it!


I am sure you know someone who would want this for a gift. Maybe even for you!

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