My Personal Finance Blog

For numerous families a controversial subject is family financial planning, as on many occasions it seems as if the money coming in is never equivalent to the money going out. It always seems that there is more money being spent than what is actually being gained by the family. Every family needs to take control of their finances by effectively planning and eliminating poor spending techniques.

A good technique is to use the services of an expert financial advisor to help with the family’s financial goals, as leaving your finances unsupervised could result in your finances getting out of control. The financial advisor should help you by ensuring that you have a family budget and that you eliminate wasteful spending, decrease high interest debts and transform your debts into wealth.

Another Technique to enhance your family’s financial standing is to devise a strategic plan geared towards reducing your debt exposure and consolidating the family’s debt into one lower interest loan. For example with increasing problems associated with credit cards, it is recommended that you destroy all the credit cards except one, so as to avoid the additionally debts.

To effectively plan and maintain good finances, your family will need to undertake more money saving programs and less spending, thus focusing more on long-term goals rather than short term spending. It’s a good idea to get your family involved in long term financial viable investment schemes and programs.

Your family should engage in cost containment practices for a better financial future like distinguishing between wants and needs when shopping, saving on electricity and other utilities and buying grocery and food items in bulk. These cost saving techniques and many others will ensure that money is not being squandered or wasted.

Family financial planning techniques should be employed to secure your family’s future and well being, as you will definitely not want to find yourself in a position where you fear retirement or those college tuition fees, because of a lack of financial preparation.

When you look around your neighborhoods, it’s hard to find any good news. Friends and neighbors may have lost their jobs or be on short-time. There are foreclosed properties on every street. Shops and businesses have been closing down with increasing frequency. These are the signs of a real recession where unemployment and poverty stalk the land. The cause of all this pain is not hard to find. We have all been living beyond our means. When the banks and credit card companies offered us more money to borrow, we just took it. Why bother to save when the value of our homes only goes up? Let’s plan for our retirement by borrowing cheap money and buying stocks and other more risky investments. No-one ever loses if they follow the advice of the credit rating agencies. Well, we know better now. What goes up can also come down. What is given a triple A rating can be junk tomorrow.

In the midst of all this chaos, the credit card operators have been cutting back on the borrowing limits. This has forced pain on us for two reasons. Firstly, finding the money to pay down our debts more quickly means redesigning the family budget. Sacrifices have to be made. Secondly, the way the credit score is calculated depends in part on the extent to which we use the credit cards we have. If the limits are reduced, we look like bad risks because the amount borrowed is closer to the limit. We have less money available to borrow and cut down on card usage so we can repay faster. Put the two together and the score falls. This is a direct criticism of the methods used to calculate the scores. It produces a fundamentally unfair result during a recession.

This would not be a problem if the credit score was only used by banks and credit card operators. But it’s also used by companies to help decide whether to employ you, by landlords deciding whether to rent to you and by insurance companies deciding whether you are a responsible person. National figures show more than half all insurance companies use credit scores as a key factor in deciding your premium rate. This is extraordinary. There is only one possible effect of being in debt when it comes to the way in which you drive. If you cannot afford to repair your vehicle, you drive defensively to reduce the risk of an accident.

Some states like California and Massachusetts have banned the use of credit score for this purpose, but they are a minority. They cite discrimination as a reason for the ban. The majority of the population without access to banking services and credit cards fall into minority racial groups. When they do not have a credit score, they are forced to pay a higher premium simply because of who they are, not how they drive. So, when you are looking for affordable cover, get the maximum possible number of car insurance quotes to find the best policies. If you live in a state which refuses the regulation of the car insurance market, contact your local government representatives and tell them how much pain you are suffering because of this unfair use of credit scores.

It should be a big surprise to anyone that young drivers have higher insurance rates than older car owners. There is a set of reasons behind such a state of affairs and parents unwilling to pay high premium rates for their teenage drivers shouldn’t think about dropping the coverage altogether. Instead, there are effective ways your teen driver can opt for lower insurance rates and save you some buck from the family budget. Here are some tips on how to do that:

1. Learn the offers at the market.

Shop around and see what local insurance companies have to offer. There are providers that specialize in high risk drivers (and teens also make part of this group), however there is also a small number of companies that work exclusively with teenage car owners and offer preferential rates. If you are able to find such a company in your area that would be the best option for you. Otherwise, compare the rates with different companies and choose the one that is more liberal towards young car owners.

2. Be a good student.

Good students can usually opt for special discounts with the majority of car insurance providers. This is because the statistics have proven that good students are safer and less risky drivers and thus can have lower rates. However, you should ask the insurance company what are the requirements and will be ready to provide proof with your current

3. Encourage the teen to pay a part of the premium.

Nothing encourages better saving and hard work when financial interest, so when you make the teen pay a part of the insurance premium you will instantly see how he or she tries to minimize these costs. This can be a good push for better grades and research on other insurance options. But be realistic about it, if your teen can’t manage to pay the premium in whole don’t put the burden and make him pay only the part he can.

4. Raise the deductibles.

Deductibles are the amount of money you have to pay upfront from your wallet before receiving the insurance benefits. And they are reverse-related to the insurance premiums, meaning that the higher is your deductible the lower premiums you will pay each year. So if your policy carries the smallest deductible, it’s better to raise it to the amount you can really pay out of pocket if something happens. This will cut your premiums for about 10-20%

5. Buy a vehicle that will give you low car insurance quotes.

It shouldn’t be a revelation to most of you that the car you drive strongly influences the rates you pay for insurance. And finding an insurance-friendly auto for your teen will really help cut the costs. Try searching car insurance quotes online to see what autos offer you the best saving opportunities and cost less to insure.

6. See if you can include the teen into your policy.

Some auto insurance companies allow parents to include teens into their insurance policies and sometimes it will help you in saving on insurance rates compared to having a separate policy for the young driver. Ask your insurance agent about your possibilities and if has any financial sense and provides some money saving options then write your teen in.

Do you take the safety and insurance costs of the car when shopping for a new ride? If no, you definitely should consider it, because the costs associated with auto insurance can be a burden to your family budget if you choose the wrong car. And it could turn out that a relatively cheap car will cost you way more in auto insurance premiums over the years compared to a more expensive auto with low auto insurance quotes. The Highway Loss Data Institute compiles and analyzes the information regarding insurance costs of all car makes and models available on the market today and many insurance companies base their rates on the data provided with this institute’s reports.

But besides the HLDI reports every insurance company runs its own statistics regarding insurance costs of all autos on the road, which strongly influence the final car insurance quotes you will get when shopping around. Insurers analyze the costs of repair, theft, maintenance, damage, injuries and the overall claim history of a particular car model before giving our a rate. And sometimes these factors can make your premiums differ in times for two same-priced cars. Why is that? Because some cars are more likely to be stolen than others, some cars have better safety features and cost less to repair, and some cars just can’t leave the top spots of insurance claim ratings.

So before you decide to buy a car, make sure it doesn’t make part of the most frequently stolen list:

• Honda Accord
• Toyota Camry
• Ford F-150
• Acura Integra
• Nissan Sentra
• Toyota Corolla
• Toyota Pickups

Or the most expensive theft claim list:

• Cadillac Escalade
• Chevrolet Corvette Convertible
• Lincoln Navigator

Cars that are known to cause serious injuries to their drivers or passengers frequently will also cost more to insure than safer car models. So think twice before buying one of the following cars, because your rates will be more expensive:

• Suzuki Esteem
• Kia Rio
• Mitsubishi Mirage
• Kia Spectra

Collision coverage and cost is also analyzed thoroughly and cars having the lowest ratings here will likely have lower insurance rates. So pay attention to the following cars, having the least expensive collision costs if you want your premiums low:

• Ford Excursion
• GMC 2500
• GMC Safari
• GMC Yukon XL

Speaking in general, be cautious when buying sports cars and big engine vehicles as they always have high auto insurance quotes. This is because fast and powerful cars are more risky and usually have high damage and injury cost as well as frequent insurance claims. Luxury cars also have high auto insurance premiums due to the high repair costs and infamous popularity among car thieves. Big SUVs can also turn out to be costly to insure due to high damage costs they are known for.

If you want a car that will be cheap to insure think of a medium sized car that has many safety features installed and just enough power to drive safely without the temptation to race on the highway. For a more detailed information on the car makes and models, visit he HLDI site. Or try getting auto insurance quotes on different models and comparing them online, as it is a very popular and accessible option today. And remember that different companies will have different rates for the same car, so if you have firmly decided on a particular auto, maybe it’s better to see what other insurers have to offer first.

Looking around the US economy right now. Homes have been foreclosed, bankruptcy looms on private debts and the retirement 401ks have taken a serious hit. Life as we knew it has been turned upside down without anything in place to catch us as we fell. So how did we get into this mess? The economists tell us we have been living beyond our means. Credit was cheap and, with banks and credit card companies raising their borrowing limits, there seemed to be nothing we could not afford. There was no need for savings. Everything could be charged. If the limit was reached, the housing equity could be released as cash. Over a period of about twenty years, we switched from a country that saves to a country that spends on credit. In the period just after World War II, we had “prudence”. People mostly paid cash for what they wanted and, if they did not have enough, they saved. It was a revolution when, suddenly, everything could be paid for in affordable monthly instalments. In one sense, this is the easiest way to get into serious debt without noticing. When you only pay a few hundred dollars every month, it hardly registers the total debt is tens of thousands.

Insurance companies were the last of the hold-outs. For years, they insisted everyone should pay them a lump sum once a year. Then, slowly, there was a cave. First it slipped to every six months, then quarterly. Now almost every company across the nation accepts monthly. What’s the problem for the insurance companies? Well, they estimate the likely total cost of the claims they will have to pay over the next twelve months and divide that amount between all the policy holders as the premium. If the company has done its sums properly and everyone pays once a year, the company always has the cash in the bank to pay out on all the claims. If people pay monthly, they can easily change to another insurer. They can miss one month’s payment when the family budget is under pressure. That means the insurer may not have enough money to pay the claims. So, to encourage all you people with some savings (or some slack on your credit cards), they offer discounts if you agree to pay every six or twelve months. It gives them more security and saves you some money. Paying monthly costs you the most.

That said, paying monthly gives you flexibility. You can use the online search engines to find auto insurance quotes at the lowest price. Then for just one month’s premium, you can be driving. In effect, this becomes a monthly policy. You can keep shopping around for new premium offers from different insurers. If you find a better monthly rate, you can transfer at the end of the month. But if you pay once or twice a year, the insurer will hit you with high cancellation charges to lock you in. Whatever you might save disappears. Worse, if you change the make and model of your vehicle during the longer policy term, it can be too expensive to move the policy to a cheaper company. You end up paying the higher premium until the six or twelve months end. So make a wise decision. Auto insurance is never cheap. Avoid making it too expensive.