365 Ways to Live Cheap (21 page)
249. B
UY
T
ERM
L
IFE
I
NSURANCE
For life insurance, your long-term concern should be that your family is taken care of in the event of your passing. Buy a term life insurance policy with enough value that if you do pass on, your family is financially in good shape. Beyond that, however, avoid other bells and whistles. Don’t pay extra to turn your life insurance into a mediocre investment. Instead, use that extra money to keep yourself and your family on a strong financial path.
250. B
UY A
L
ONGER
-T
ERM
P
OLICY
When you buy term life insurance, you’ll often be given several options with different terms. A shorter-term policy may have lower payments now, but over the long haul, a longer-term policy is a much better deal. Why? In ten years, when the short-term policy runs out, you’ll have to get term insurance again, and then you’ll be ten years older with the possibility of some health issues that may have arisen between then and now. Buying a policy then, no matter what the length, will be more expensive than buying one now. You’re much better off buying a long-term policy now and making slightly higher payments than saving a few bucks now only to pay a lot more later on. The cheap method is to go for the long term.
251. C
ONSIDER
L
ONG
-T
ERM
D
ISABILITY AND
L
ONG
-T
ERM
C
ARE
I
NSURANCE
Similar to the logic behind life insurance, take a serious look at long-term disability and long-term care insurance, particularly if your family relies on you as a wage earner. This insurance will protect you in the event that you’re injured and left unable to perform your previous job. Look into an appropriate long-term disability policy to help replace lost income in the event of such an accident, and match that with a long-term care policy that will pay for any long-term care that you might need if you have medical conditions that require long-term medical care. This insurance covers an unlikely situation, but if something should happen to you, you’ll be extremely glad you have this coverage. This is one case where it’s often cheaper to spend a little more, just in case.
252. D
ROP
C
OLLISION AND
C
OMPREHENSIVE
C
OVERAGE ON
V
ERY
O
LD
V
EHICLES
If you’re driving a very old vehicle, particularly one you’re only keeping for emergencies or for future trade-in value, drop comprehensive and collision insurance on that vehicle, keeping only liability coverage. The cost of just a couple years’ worth of collision and comprehensive coverage will usually be more than an old car is worth. Making this change will save you money each month that’s not being put toward insurance that you almost certainly won’t use. With just liability insurance, your car will not be covered if you get into an accident or it needs repairs, but if the car is already near the end of its useful life with many small, impending problems, this isn’t a major concern. Save money—go with only liability insurance on very old cars.
253. S
HOP
A
ROUND FOR
A
UTOMOBILE AND
H
OMEOWNERS
’ I
NSURANCE
When you first got your insurance, you may have been getting the best deal around, but is that still true today? It’s useful to shop around for rates once every few years just to see if you can save money through another insurance company. Get quotes from several different companies, and use resources like
Consumer Reports
to evaluate their customer service. Remember, though, that if your current insurance company has treated you well so far, it’s worth a small premium to stick with them, because a combative insurance company can cause you a great deal of financial hardship.
254. K
NOW
Y
OUR
D
ISCOUNTS
When you sign up for insurance, there are often many discounts that you may be eligible for that are stated in the fine print of the policy. Do the research and find all of these discounts and make sure you’re getting the ones you’re eligible for. Common discounts include a good student discount, a safe driving record (without tickets or accidents), and so on. If you’ve met the criteria for these, call your insurer and ask for a discount.
255. T
RY
B
UNDLING
Y
OUR
P
OLICIES FOR A
D
ISCOUNT
Many insurance companies offer many different types of insurance— homeowners’ insurance, auto insurance, disability insurance, and more all tend to be sold by the same group. Because of this, many insurance companies will offer you a discount if you sign up for multiple types of policies through their organization. Consider doing this, particularly if your current insurer won’t offer a bundled package. Any time you need new insurance is a great time to shop around for your existing insurance packages, too, so that you can take advantage of bundled discounts in your calculations.
256. I
NCREASE
Y
OUR
D
EDUCTIBLE
Tired of paying high premiums all the time, particularly if you’re a safe driver? Look into increasing your deductible—the amount you’ll have to pay out of pocket if you do make an insurance claim. Even a slight increase can make a big difference in your premiums. If you don’t drive much, consider raising your deductible significantly, as your chances of having severe issues with your car are much lower than if you’re a frequent driver.
257. P
AY
A
LL OF
Y
OUR
B
ILLS ON
T
IME
Insurance bills are incredibly important to keep on top of. Don’t be late on a single payment or else a domino effect of negative ramifications may occur: An increase in your premiums, a gap in your coverage, and potential penalties from driving uninsured can all occur, as can a true disaster if you’re in an accident or have a breakdown while your insurance has lapsed. Many insurance policies have a grace period for late payments, but don’t even push that, as it may still have a negative effect on the premiums that you pay. Don’t let your insurance bills get behind or else you’ll put yourself at significant risk and also potentially raise your premiums as well.
258. D
RIVE
C
AREFULLY
Defensive driving is important because it keeps you and your passengers safe, but it has the added benefit of keeping your wallet safe as well. Defensive driving can help you avoid accidents, helping you save on repair costs and potential traffic tickets and fines, and also keeps your driving record clean, which helps with insurance costs. Keep your eyes on the road when you’re out and about. Avoiding the huge expenses that you can incur by making a mistake pays for the attention you give to driving.
259. K
NOW
W
HAT
Y
OUR
R
EAL
R
EBUILDING
C
OSTS
A
RE AND
P
ROVIDE
P
ROOF
Have a good idea of the total cost to replace everything that would be destroyed in the event of a disaster. How much is your property worth and how much would it cost to replace it? Make sure you’ve figured this up with plenty of breathing room before you purchase your policy, and make sure that the amount listed on the policy covers it.
Another tip:
Make a detailed list of all of the contents of your house, with specific descriptions and serial numbers when needed, and keep this in a safe place. You might also want to take a walkthrough video so that other things are captured as well, so you can demonstrate the property that was damaged and needs to be replaced. A bit of preparation now can save you a huge amount of financial heartache later.
260. M
AKE
Y
OUR
H
OME
M
ORE
D
ISASTER
R
ESISTANT
Take some simple steps to decrease the likelihood of devastating disaster in your home, such as adding storm shutters, installing fire alarms, or updating your plumbing and electrical systems. These simple steps will each reduce the likelihood of disaster befalling your home. You can also earn some direct value from actions like these by obtaining a list of disaster resistance tactics from your home insurer along with an estimate on premium reductions you might earn by following these tactics. If you can make a few simple changes to your home to both make it safer and reduce your homeowners’ insurance costs, that’s a double financial benefit.
261. C
OMBINE
H
EALTH
I
NSURANCE WITH
Y
OUR
S
POUSE
If you’re recently married, look into the possibility of combining your health insurance policy with the one held by your spouse. You might find that your partner has a better policy with smaller copays, plus it may be more cost-effective to have both of you served on the same policy. Similarly, when you add a new member to your family through birth or adoption, look at the various insurance options available to you, including family plans. You may find that a family plan will save your family a substantial amount over individual plans.
262. B
YPASS
A
GENTS AND
B
UY
P
OLICIES
D
IRECTLY
F
ROM THE
C
OMPANIES
If you’re looking to buy your own insurance policies of any kind (life, health, homeowners’, auto, and so on), try contacting the insurance company directly via their website instead of dealing with a local agent. Quite often, you can get a much better deal by bypassing the agent and his referral fees, though the process for signing up may take longer. Use the Internet to your advantage and shop around for different rates directly from the insurance companies themselves, then sign up for that insurance directly.
263. R
AISE
Y
OUR
C
REDIT
S
CORE
One major factor in determining how much you pay for your insurance premiums is your credit score, which insurance companies will use to estimate how reliable and trustworthy you are. Thus, one quick and effective way to reduce the premiums on your various policies is to raise your credit score. Get a copy of your credit report, review it carefully, and eliminate any problems. Pay all of your bills on time. Keep your credit card debt under control and don’t sign up for new cards all the time. Following basic steps for personal finance success will not only help you manage your money better, but it can also result in a nice deduction in your insurance premiums.
264. U
SE A
P
AYMENT
O
PTION
T
HAT
L
ETS
Y
OU
P
AY THE
L
EAST
A
MOUNT
T
OTAL
O
VER A
Y
EAR
Most insurance providers give you many ways to pay for this insurance: Monthly payments, quarterly payments, and annual payments are among the common offerings. Don’t pay any attention to the option that gives you the smallest individual payments. What’s really important is the option that enables you to pay the least amount per year. Multiply the annual payment by twelve, the quarterly payment by four, and the semiannual payment by two in order to make a fair comparison among them, and sign up for the plan that makes you pay the least each year. If you’re worried about bills sneaking up on you, start saving automatically for that future bill, taking enough out of your checking each month to make sure you can easily cover that bill when it comes due. The less you pay annually, the less you have to take out of your account each month.
C
HEAP
T
ACTIC
$
FOR
L
OVE AND
M
ARRIAGE
271 Find Areas of Mutual Interest That Don’t Involve Spending Money
272 Build a Financially Equal Relationship from the Start
273 Get on the Same Page Financially
274 Plan a Wedding Centered Around Loved Ones, Not Stuff
275 Plan a Romantic Honeymoon, Not an Expensive One
276 Don’t Get Married if You’re Still Having Doubts
277 Give Your Marriage the Care and Feeding It Needs
278 Realize Money Doesn’t Heal a Marital Problem
279 Be Completely Honest with Your Partner about Money Issues
280 Have Regular Talks about Your Financial Situation
281 Encourage Your Partner’s Frugality
282 Show Your Love Frequently Instead of Something Big Once in a While
283 Make Sure That You’re Both on the Same Page When It Comes to Children
265. D
ON
’T S
PEND TO
I
MPRESS
Many people tend to want to shell out the cash in order to impress a date right off the bat. That’s fine, but if you’re spending money solely to impress your date, particularly beyond the first date or two, you’re creating an image of yourself that will be difficult to live up to over the long haul. Look for sincere and authentic ways to show your interest that don’t involve throwing cash around and creating bogus expectations. Instead of going to the most expensive restaurant in town, ask around and find a great undiscovered place with much more reasonable prices. Instead of just picking something impressive, pay attention to what you know about him or her (and ask friends) to find out what your date genuinely enjoys and focus on doing something related to that. Be real and authentic. Don’t let your wallet do the impressing or else you’ll make an expensive impression you won’t be able to live up to.
