MONEYHACK #1 - HOMEOWNER'S INSURANCE

Heading into the holidays, we’re going to be throwing out some money saving tips for you. I asked a friend of mine, Colt Sampson, about how home owners can save on their insurance and he wrote a post for the blog! Colt is an honest insurance agent, and will go out of his way to help you, so listen to his advice and get a quote from him, just to see where you are in your insurance. Here is his post:

Your home is your sanctuary. It’s a place to relax, enjoy the simple things, and watch your family grow and thrive. The longer you live in your home, the more memories you’ll have—and the more equity you’ll build.

There are two main kinds of coverage that are included in a basicHomeowner’s Policy:

• Property: To protect your home and its contents.
• Liability: To protect yourself financially against costly claims and lawsuits.

It’s a good idea to review your policy annually to determine if you have enough coverage or in some cases too much coverage. Your Agent can help you customize your coverage to keep up with your changing needs and your budget.

The basic Homeowner’s policy can help protect your home and personal property against losses caused by:

• Fire or lightning
• Windstorm or hail
• Explosion
• Riot or civil commotion
• Impact by aircraft
• Impact by vehicle
• Smoke
• Vandalism or malicious mischief
• Theft
• Falling objects
• Weight of ice, snow, or sleet
• Sudden water discharge from plumbing or appliances
• Sudden tearing/bulging of heating or cooling systems
• Freezing of plumbing system
• Artificially generated electrical current (power surge)
• Breakage of glass

There are also endorsements that can be added to protect against earthquake, flood, and the loss of expensive personal items such as jewelry, guns, computers, etc.

Now for the good stuff, how to save money on your Homeowner’s…

One factor that determines your premium is the year of your home. Newer homes are less expensive to insure. Also the amount of claims you file will affect your premium. The higher the risk, the more the insurance company has to charge to cover it. Making small claims sometimes offset and you may be charged more by the insurance company in the long run. Working closely with an Agent in these situations to see how the claim will affect your policy will benefit you.

Another great way to save money is to have an adequate smoke alarm and in many instances a burglar alarm. The insurance companies look at homes protected with these items as lower risk and will reward you for it.

As a general rule, the best way to save money and know you have the right coverage in place is to have an active agent working on your behalf. They will review your coverage and situation, give you advice and recommendations that are in your best interest, and will go to bat for you when you need them most.

If you don’t have a great Agent that’s willing to do these things, I recommend you find one.

Best of luck protecting what matters most to you.

Colt Sampson, MBA, Financial Bodyguard

colt@coltsampson.com www.coltsampson.com 

How to control your spending - Part 3

Forecast Your Spending – Part 3

We are on to part 3 of how to control your spending completely. We have already learned how to Review our spending, then to Track it properly; now, we need to learn how to forecast what we are going to spend our money on before we ever spend it. This will give us the ultimate control over our spending.

Forecasting your spending simply means to sit down at the end of the month to plan out where each dollar is going to be spent in the coming month, meaning in which categories are you going to spend each dollar you earn? If you sit down on the 30th of the month and plan out for the next month, you will be able to calculate and predict accurately, from the data you already have in your reviewing and tracking, how much you are going to spend in each category. Be careful that you review and set a spending amount for each category. Many of your categories will be the same or close to the same amounts each month, but others will change. In the summertime there are more weddings so your gift category may go up; you may be expecting a car repair or an oil change that doesn’t happen each month; you might need dental work or some other expense that doesn’t recur each month, so plan those out.

Once you have given each dollar a job and allocated for them into categories you are ready to control your spending!

One note that is crucial to your success: one of your spending categories should be savings. If you treat savings as an expense that is fixed, you will move forward and be able to retire comfortably and choose when you work. In this economy many are tempted to give themselves an excuse to not save, claiming they can’t save or the bills won’t get paid. But remember this, it is all about PRIORITIES. If you prioritize savings as a fixed expense, you will save, no excuses. We have coached thousands of clients, and THERE IS NO EXCEPTION, every family can save money every month, if they prioritize it as a fixed expense and DECIDE to do it. This might require some sacrifices, albeit minor, but once it becomes a habit it becomes addicting and you learn to save more. I CHALLENGE YOU, save every month! You should be up to where you save 15% of your income each month; if you feel you can’t do that, start lower, but start now!

Here’s something to whet your whistle about savings. If you saved $300 a month (remember, our national average of savings are learning to RaTiFy your spending is $312 a month) for 30 years at a 6% interest (very doable), you would have $302,861.29 at the end of those 30 years! Does that give you some perspective? If you are 35 and start now, that’s an awesome way to augment your retirement! Done right, this could be saved tax-free, but we’ll address that in another post. If you simply add 10 years to that, starting at 25, it ends up being $600,434.46! Get going!

Excellent, we now know how to control our spending and why you should do it. The question is, will you do it? Yes! Your neighbors are doing it, your friends, your family are doing it, you can too! Controlling your spending is the mechanism to give you the freedom in later years to enjoy life comfortably. There is a quote that is attributed to Zig Ziglar, Robert Allen and many others, and it goes like this: the chief cause of failure and unhappiness is giving up what you want most for what you want in that moment. Live by that principle with your spending, set long term goals and go out and make a better life for yourself!

Remember, RaTiFy your spending!

• Review your spending
• Track your spending
• Forecast your spending

How to control your spending - Part 2

We are now on our second part of getting spending under control, which is tracking your spending. You’d be surprised at how many people simply fail at tracking their spending in any way, let alone even attempting to do it. Remember, when you TRACK your spending you CONTROL your spending. Controlling your spending is the key to freeing up money to pay off debt, pay less taxes and retire comfortably.

The important parts of tracking your spending properly are:

1. You need to track ALL of your spending. Many couples or people will hide spending by pulling out cash and not tracking it, putting overspending on things in wrong categories.
2. Your spending needs to be broken down into categories. BEFORE you spend your income, you need to know, which you will know if you followed step #1 and REVIEWED your spending, how you spend your money. Set up spending categories like this: groceries, dining out, gas, utilities, mortgage/rent, debt, etc. Line them up and alphabetize them for easy use.
3. You need to have a tracking system for you, whether on paper or on the computer. Money Mastery has an excellent paper tracking system that is designed to fit in your checkbook here:http://www.moneymastery.com/store/StoreDetail.aspx?id=X3JGJ0V1gZ8%3d. We also suggest Quicken for computer-savvy people.

When you track your spending you need to break it down into categories. It’s easy if you go to a gas station and buy gas because it’s only one category. But, what if you go to Wal-Mart and buy a large ticket and spend in 4 different categories on the same receipt? Watch this video for an explanation:

How to track your spending into categories when you spend in multiple categories at one store.

Now that we know how to track, we need to make sure we are on track to see how our spending is going during the month. BEFORE you start the month you should spend at least half an hour going over what your planned expenses in the month are and give yourself limits to spend in each category in your spending plan. That way, you know when you are about to overspend! This is true control. Then, you need to spend 15 minutes each week meeting about what you have spent so far and what you plan to spend in the upcoming week.

This is true control! Remember, we don’t do this for fun, we do this to free up money to pay off debt, ALL debt, in 9 years or less (yes, including your mortgage) which will allow you to plan for a very comfortable retirement. By simply tracking your spending this way, we guarantee the following:

1. You’ll find 1% of your annual income monthly that you are wasting. For example, if you make $50,000 a year, you’ll find $500 a month you are wasting. Yes, that’s true. We have wagered with many clients about this and have never lost. The average is to find $312 a month in simple waste spending.
2. You won’t fight with your spouse about money anymore.
3. You’ll feel more in control of your spending, which will spill over into other areas of your life, like your health, your mind and soul.

Remember, RaTiFy your spending!

• Review your spending
• Track your spending
• Forecast your spending

We have hit the “R” and the “T” in the RTF of spending; next week we’ll talk about the “F”, forecasting your spending!