This is part two of an article which describes the
important steps you need to take now to ensure
your financial health and long-term prosperity.
Here are the key aspects of your financial life
that you need to make sure are in order.
- Have proper insurance. One of the most frequent
causes of bankruptcy in this country is unexpected
major expense. Primary among these are major
medical expenses. It only takes one life threatening
illness in a family to run up tens of thousands of dollars
in bills. So of course it’s important to have heath
insurance. Ideally, you can buy this insurance through
your employer. If so it is usually subsidized by them, at
least in part. It is a given you should take advantage of
this. However, even if you don’t have coverage
through an employer, it’s important to get some form
of health coverage.
Even if you cannot afford the best plan with near full
coverage, low deductibles and low co-payments, it’s
important to get a policy that will cover most expenses
once these hurdles have been met. The lion’s share of
the expenses will be the charges over and above this,
especially for serious illness. It is not that you will incur
no expenses should you or your family members get
sick, it’s that you will avoid the back-breaking financial
burden that comes with serious health problems – one
that can crush your financial as much as your physical
health. I will publish an article in the near future on the
effects of the 2010 healthcare bill on this situation.
Also, see the Insurance section.
Next, you need to determine what other assets you
have that will be difficult to replace if they are lost or
destroyed. First will be your home. If you have a
mortgage your lender will require you to have an
insurance policy that will cover any damages
sustained. Remember, the policy needs to bring the
house up to its previous condition, so it needs to pay
replacement cost. Of course, you should have this
insurance in any case. Your home is likely to be your
biggest asset, with the most potential for expensive
repairs if it is damaged. The key is to have the right
policy, the one that extensively covers the spectrum of
possible damages, which may vary depending on
where you live (flood zone, etc.)
If you own a car you are mandated to have auto
insurance. Besides complying with the law, it is
important to have the right auto insurance. The
mistake some people make is not buying enough
protection to cover any extensive liability incurred in a
serious accident. You should buy enough liability
insurance to cover any worst-case scenario. Don’t
forget that you can be forced to pay with your personal
assets for any liability that the insurance company
does not pay. A typical minimum liability coverage
might be $50,000. It’s easy to see how damages and
medical expenses can exceed that, so purchase a
policy that will protect all of your assets should you get
into a serious accident.
- If you have a mortgage, determine if it is still optimal
for you. Given how low current interest rates are,
figure out if you can benefit from refinancing. While
there are many factors influencing whether it would be
worthwhile to refinance, a general rule is if you have a
mortgage with an interest rate of 1.5% over what you
would qualify for now, it may be worth to see what type
of mortgage deal you can get. As always, make sure
you consider closing costs when evaluating offers.
Also, see the Mortgages section.
- Plan your life events wisely. Do you have children?
They’ll need education, whether it’s college or other
school related expenses. For college you can open a
529 tax deferred account where you can accumulate
earnings to pay for school, all tax free, until your child
enrolls. This can play a significant part of your overall
tax deferred investment picture.
Other major life events such as marriage, whether
your own or your children’s, should be carefully
planned. Don’t be forced to borrow money when these
life events occur. Plan years in advance, and adjust
your savings plan to accommodate these major
expenses.
You need to plan for when you are gone – You need a
will. Regardless of how much money you have, you
should create a will. This will remove a lot of
uncertainty from your loved ones lives at a time of
grief, when they may be least able to make financial
decisions. At a bare minimum it will allow your family
to make arrangements and take care of your affairs in
an orderly manner. At most it can eliminate much
strife, financial loss and legal problems concerning
your estate.
- Get a financial advisor. Most of the financial issues
outlined in this article can be helped with the aide of a
good financial advisor. Of course they can help you
make the right investment and saving decisions. In
addition, a good advisor should also be able to help
you with general questions on mortgages, insurance,
budgeting and many other issues that will ultimately
have a financial impact on you. Find one that is able
to dedicate the time to answer all of your questions
relating to these issues.
- Lastly, keep records for your taxes. Make sure you
keep all of your records so you don’t miss any
financial benefit you should claim. You should have a
record for every itemized deduction you make. Make
sure you keep your records for at least seven years,
so you can answer any questions that come up by the
IRS or others after the fact. Also, see the Taxes
section.
Back to Top
_________________________________________
important steps you need to take now to ensure
your financial health and long-term prosperity.
Here are the key aspects of your financial life
that you need to make sure are in order.
- Have proper insurance. One of the most frequent
causes of bankruptcy in this country is unexpected
major expense. Primary among these are major
medical expenses. It only takes one life threatening
illness in a family to run up tens of thousands of dollars
in bills. So of course it’s important to have heath
insurance. Ideally, you can buy this insurance through
your employer. If so it is usually subsidized by them, at
least in part. It is a given you should take advantage of
this. However, even if you don’t have coverage
through an employer, it’s important to get some form
of health coverage.
Even if you cannot afford the best plan with near full
coverage, low deductibles and low co-payments, it’s
important to get a policy that will cover most expenses
once these hurdles have been met. The lion’s share of
the expenses will be the charges over and above this,
especially for serious illness. It is not that you will incur
no expenses should you or your family members get
sick, it’s that you will avoid the back-breaking financial
burden that comes with serious health problems – one
that can crush your financial as much as your physical
health. I will publish an article in the near future on the
effects of the 2010 healthcare bill on this situation.
Also, see the Insurance section.
Next, you need to determine what other assets you
have that will be difficult to replace if they are lost or
destroyed. First will be your home. If you have a
mortgage your lender will require you to have an
insurance policy that will cover any damages
sustained. Remember, the policy needs to bring the
house up to its previous condition, so it needs to pay
replacement cost. Of course, you should have this
insurance in any case. Your home is likely to be your
biggest asset, with the most potential for expensive
repairs if it is damaged. The key is to have the right
policy, the one that extensively covers the spectrum of
possible damages, which may vary depending on
where you live (flood zone, etc.)
If you own a car you are mandated to have auto
insurance. Besides complying with the law, it is
important to have the right auto insurance. The
mistake some people make is not buying enough
protection to cover any extensive liability incurred in a
serious accident. You should buy enough liability
insurance to cover any worst-case scenario. Don’t
forget that you can be forced to pay with your personal
assets for any liability that the insurance company
does not pay. A typical minimum liability coverage
might be $50,000. It’s easy to see how damages and
medical expenses can exceed that, so purchase a
policy that will protect all of your assets should you get
into a serious accident.
- If you have a mortgage, determine if it is still optimal
for you. Given how low current interest rates are,
figure out if you can benefit from refinancing. While
there are many factors influencing whether it would be
worthwhile to refinance, a general rule is if you have a
mortgage with an interest rate of 1.5% over what you
would qualify for now, it may be worth to see what type
of mortgage deal you can get. As always, make sure
you consider closing costs when evaluating offers.
Also, see the Mortgages section.
- Plan your life events wisely. Do you have children?
They’ll need education, whether it’s college or other
school related expenses. For college you can open a
529 tax deferred account where you can accumulate
earnings to pay for school, all tax free, until your child
enrolls. This can play a significant part of your overall
tax deferred investment picture.
Other major life events such as marriage, whether
your own or your children’s, should be carefully
planned. Don’t be forced to borrow money when these
life events occur. Plan years in advance, and adjust
your savings plan to accommodate these major
expenses.
You need to plan for when you are gone – You need a
will. Regardless of how much money you have, you
should create a will. This will remove a lot of
uncertainty from your loved ones lives at a time of
grief, when they may be least able to make financial
decisions. At a bare minimum it will allow your family
to make arrangements and take care of your affairs in
an orderly manner. At most it can eliminate much
strife, financial loss and legal problems concerning
your estate.
- Get a financial advisor. Most of the financial issues
outlined in this article can be helped with the aide of a
good financial advisor. Of course they can help you
make the right investment and saving decisions. In
addition, a good advisor should also be able to help
you with general questions on mortgages, insurance,
budgeting and many other issues that will ultimately
have a financial impact on you. Find one that is able
to dedicate the time to answer all of your questions
relating to these issues.
- Lastly, keep records for your taxes. Make sure you
keep all of your records so you don’t miss any
financial benefit you should claim. You should have a
record for every itemized deduction you make. Make
sure you keep your records for at least seven years,
so you can answer any questions that come up by the
IRS or others after the fact. Also, see the Taxes
section.
Back to Top
_________________________________________
| Your Financial Survival Guide. Things You Need To Do Now. Part Two. |
 |  |  |  |  |  |  |  |
Have Questions? Our consultants are available to help you
with any financial question. We can also provide in-depth
consultation concerning any financial issue facing you. We
can help. Please contact: Best-Financial-Advice.com
with any financial question. We can also provide in-depth
consultation concerning any financial issue facing you. We
can help. Please contact: Best-Financial-Advice.com
 |  |  |  |  |
Have Questions? Our consultants are available to help
in-depth consultation concerning any financial issue
facing you. We can help. Please contact:
Best-Financial-Advice.com
in-depth consultation concerning any financial issue
facing you. We can help. Please contact:
Best-Financial-Advice.com
Have Questions? Our consultants are available to help you
with any financial question. We can also provide in-depth
consultation concerning any financial issue facing you. We
can help. Please contact: Best-Financial-Advice.com
with any financial question. We can also provide in-depth
consultation concerning any financial issue facing you. We
can help. Please contact: Best-Financial-Advice.com
consultants are available to help you with any financialissue facing you. Contact Us. |
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