Life Insurance is Serious Business

The most important financial safety net you can have in life often goes forgotten, or has very little importance placed upon it. Life insurance is the key to protecting yourself and your family from the unknown. The problem is that many people don’t realize just how important adequate life insurance is until it’s too late. Nobody relishes the thought of dying, but unfortunately there are time when the unexpected happens and your loved ones are forced to deal with both emotional and financial hardships. I believe there are many reasons why people go without proper insurance, and it’s based on the several life insurance myths that exist today.

One of the most perpetuated myths I have heard is that life insurance isn’t need for stay-at-home parents. They figure if they aren’t drawing an income then there isn’t a need for coverage. In reality, if the stay-at-home parent were to pass, then the working parent would need to hire someone to tend to the children. That is a very real and serious cost that many people don’t consider. The working parent can’t simply stay at home and quit their job. Yet, all those home responsibilities exist and remain.

Another myth that is too often mentioned is that if you have adequate savings then you don’t need to spend the money on life insurance. This couldn’t be more false. Consider the amount of money needed to support children into adulthood. Do you have enough saved to cover your children until they are 18 years old? Furthermore, do you intend to pay for their college? The cost of a 4 year degree is expected to be $400,000 by the time a child born today turns 18 years old. It’s a safe assumption that most people don’t have that kind of safety net in their bank accounts.

Lastly, and just as false as the previous two myths, many people think that if they have life insurance coverage through their employer that is enough. Often times the coverage is only 1 years worth of your salary, which would get eaten up by funeral costs and such.  Also, consider the implications if you were to laid off by your employer. The coverage usually goes away and isn’t transferable.

As you can see there are many reasons to take out a life insurance policy. It’s not very difficult to search out reputable companies like InsureChance who have an interactive and helpful site that will walk you through all of your insurance needs. Take some time from the comfort of your own home to research life insurance and to obtain an adequate and affordable policy.

Loan Calculator Explained

When you are considering getting a loan, you need to know how much it will cost you. There is a broad variety of reasons people opt for a loan. You might need to cover the cost of some home improvements, pay for a holiday or cover existing debts. Whatever your reason for wanting to borrow money, you need to figure out whether it is a viable option for you.

There is a multitude of things that you ought to consider. Your current financial situation will dictate whether a loan is suitable for you. You should not rush into a loan agreement, or you will regret it. Borrowing money can tie you into many clauses. You need to make sure that you have all the relevant information before you decide to apply for a loan. That way, you can make sure that you don’t cause yourself any financial hardship. Here is everything you ought to know before you make any large decisions.

Should you get a loan?

So, the first thing you need to consider is whether you need a loan. We live in a world where people are forever spending more than they earn. Debt is much easier to rack up than it is to pay off. You ought to remember that. Consider why you are getting a loan. Could you get by without it? If you are borrowing money to improve your home, will you see a large return on it? If you plan to use the money to pay for a holiday, could you save up for it instead? There is no point in getting into debt for no good reason.

Understanding interest rates

If you decide that you need a loan, you need to start researching the area. Interest rates might sound complicated, but they needn’t be. Don’t let the jargon baffle you. Usually, the lender will display the interest rate as an APR percentage. That is the interest you will pay on your loan over the course of a year. For example, if you borrow £3,000 at 10% APR and take a year to pay it back, you will pay £3,300. If you only take six months to pay it back, you will pay £3,150. That is because you will only pay half the amount of interest because you took half the time to pay off the loan. Simple? It should be.

What is a loan calculator?

Before you get a loan, you can check how much interest you will pay by using a loan calculator. There are many free-to-use online loan calculators you can use. In using one of these forms, you can work out how much any given loan will cost you over a specified period. So long as you stick to your repayments, you should have an accurate depiction of how much you will have to pay.

When people get loans, they need to know whether they can afford to repay them or not. You should consider whether your annual income can cover the cost of the loan itself. If you fail to do your research, you could end up in more debt than you are in right now. It is crucial to your financial stability that you follow the right procedures before opting to apply for a loan. If you borrow a large amount without a repayment plan, you will run into financial difficulty down the line.

Why would you use a calculator?

Much of the time, people use loan calculators because they find borrowing money confusing. There is a variety of things that can affect your loan repayments, and so you need all the information you can get. When you fill in a straightforward form, you can get all the information you need about the amount you hope to borrow. This step helps people to work out how much their loan will cost them and whether it is a good deal or not. If you are struggling to understand your finances, you might want to use a calculator to make things as simple as possible. Alternately, you could get some free loan advice from an expert.

How do you use a loan calculator?

  1. First, you need to find a free loan calculator online. Once you open the page, you should see a form. The first box you will have to fill in, will be the ‘loan amount’ (or the ‘base amount’) box. There you should insert the value of your total loan.
  1. Next, there will be an ‘interest rate’ box. Your lender should have already advised you on how much your interest will be. You should have checked with them to see whether that rate is subject to change over the course of your loan agreement. Put the rate in that box.
  1. You will also have to fill in the ‘loan term’ box – the form should specify whether it means months or years. You should be aware that if you pay off your loan faster than you expect to, you will pay less interest. That means that the loan will cost you less money than it otherwise would.
  1. The last box you have to fill in is the ‘monthly payment’ box. Here, you should insert the amount that you have agreed to repay on a monthly basis.

Sometimes, you will also have to include a ‘start date’ – that is the date you will make your first repayment.

When you press the ‘calculate’ button, it will take a moment to work out how much you will have to pay. There will be two values – the ‘principle’ (loan) value and the ‘interest’ value. If you add these two amounts together, you will find the total amount you will need to pay.

Other options available to you

If you don’t wish to use a calculator, you can always try to calculate the amount yourself. Failing that, you can speak directly to your lender about how much you will have to pay. If you ask the right questions, your lender should tell you how much money you will owe them over a specific period. Remember, you need all the facts so that you can understand your loan.

 

Where to Stash Your Emergency Fund

It’s common knowledge these days that everyone should have an emergency fund. Not only that, but it should be stocked with enough cash to keep you afloat for a minimum of six months in case you should come up against any immediate hardships. It’s amazing how few people plan for the worst, and when it comes around it can often have a devastating financial impact. Then there is debate on where you should keep your emergency fund stashed! Should it be in a bank account, if so, what kind? Perhaps you should invest it so it earns more interest. Or there is even a school of thought that you should freeze it in a block of ice in your freezer!

I’ve always thought the safest and most reliable place to store cash in your own personal account. A bank often yields a little interest while providing a virtually risk free environment to store your cash. It’s highly liquid, which means you can access it at the drop of a hat. This is precisely the characteristics that any emergency fund should have, after all, that’s why they call it an emergency…it’s quick and unexpected! Bank accounts are typically federally insured up to a certain amount, and most likely well above your emergency fund balance, so you don’t need to worry about losing the money to a failing bank.

There are some people out there who promote investing your emergency fund in an IRA account, or even an after-tax brokerage account. These options will certainly earn you a good deal of higher interest, but because you are investing the money they come with a much higher risk. Also, accessing funds from these types of accounts can come with fees and penalties, often making them more difficult and costly to access in case of an emergency. These accounts are a necessity in order to save for retirement, but not a vehicle in which to place your emergency funds.

Then there is the camp that is deathly afraid of even the most miniscule risk, and prefer to keep all of their cash under a mattress or in their freezer. The problem with this is that you earn zero interest, thus losing a great deal of your money to inflation. You also risk losing money to a house fire or theft. In fact, I would consider holding cash in your house as a great deal more risky than putting it into the bank.