The Risks And Rewards of Buying Life Insurance

courtesy of www.healthysciencebuilding.com

Life insurance can be an important tool to pay for any expenses after your death and some expenses while living depending on your policy. Once you have the magic number for amount of coverage you want, seek out comparisons for monthly premium rates and plan benefits. Be sure to check the company’s reviews. Also, get to know the financial strength ratings from S&P, Moody’s, Fitch, or A.M. Best, this will show how stable the company is. 

There are many rewards for buying life insurance

                                              -Paying off debt and hospital expenses
                              -Leave less financial responsibility on your grieving family
                                                            -Covering funeral costs
                                          -Providing a cushion for your spouse and/or kids
                                                      -Creating wealth for your heirs
                                                           -Protect a small business`
                -Some policies offer cash reserve--additional source of supplemental income

courtesy of www.sentinelgroup.com

But there are also many risks to buying life insurance:

      -The purchase price for your coverage changes as you age

                  -Health conditions diagnosed prior to buying life insurance can limit the amount of coverage you can purchase

-The financial institution or the company holding your benefit can go under, making it impossible to pay your benefit 

-Purchasing too little insurance can leave a burden on your family and purchasing too much coverage can be a waste

-Purchasing life insurance with your employer is more cost effective but if you leave your employer the plan may not transfer to an individual policy

The most common types of life insurance is term, whole, and variable. Term life is the purchase of a death benefit based on a group of years usually in 5 or 10 year increments. It is usually a cheaper alternative with high coverage but if you do not pass away within that time then you have to purchase another term. Whole life is the purchase of death benefit for the remainder of your life, stays in effect from purchase date until death. This type of policy offers a cash reserve and it is invested by the insurance company until the benefit is paid. Variable life is not as commonly selected but operates like whole life insurance with changes throughout a term of years for investment on cash reserve. For example, you would personally choose where your cash reserve is invested every ten years.

Last words of advice—keep your contact information up to date and your policy information accessible for people to find upon your passing. Hopefully, we will all live a long, beautiful life. In meanwhile, this gives you a head start to a make a decision on what will be best for you. Feel free to comment or share below or on social media at Instagram @practicalwallet, Twitter @practicalwallet,  and Pinterest @practicalwallet.

The Dreaded Budget Talk

Catching back up with the beginning stages of the buyer process, we are gonna make the dreaded dive into the less infamous budget talk. Everyone knows what it is but not everyone sees the value. To justify my viewpoint, let me tell you about a story of person I'll call Cotton. Cotton was excited to start college. Everyone told Cotton this is what he has to do because its the next step after high school. But Cotton lost interest in just following the "trend" and took a break. A concerned counselor met with Cotton emphasizing the need to continue to build his knowledge and to use college as a tool to lifetime relationships and personal growth. Cotton found his own value in the message and returned to flourish in his studies.

Now I say all that to say that when we have responsibilities with our income, the next step is budgeting. But people give all kinds of reasons of why budgeting is dreaded but we have to find our own value in it. Some may say its too much work, there's no room for error, its a boring way to live, they aren't discipline enough to keep to the budget, or it makes their money feel small. But to all those reasons, I have one response--cater your budget to you. By doing so, you can allocate money for miscellaneous or error, reward yourself to make budgeting fun, develop habits to create the discipline, monitor your spending to see all the many places your money is used, and understand there is value in pre-arranging your money. So if your dreading the budget just consider this...

picture courtesy by www.hypable.com

Budgeting is as instrumental to our finances as sleeping is to our personal health. The average adult should maintain 7-9 hours of sleep per day. Too much or too little will have an impact on our body’s functions. Too much or too little budgeting will cause over usage of credit cards, under-utilization of income, or inability to meet bill payments. So for our future home buyers and savers, budgeting is going to be key to achieving our goals. If you are a future home buyer; give yourself some "curb appeal" by showing great payment history and discipline with debt. If you are a saver, we need to continue to grow our disposable income. 

The principal of budgeting is to add up the income and assign an allocation for each thing that you usually spend your income on. Everyone's budget will be different, you can be general or you can be very specific. It can be from daily to monthly monitoring. So I’ll give an example of a balanced budget—one that can include personal interests and responsibilities...

Pay check for 3/12/16:      $1800
Item	Budget
Rent	$900
Utilities	$100
Food	$175
Transportation	$50
Subscriptions: Netflix, Kindle	$20
Entertainment	$60
Hair	$45
Credit Card 1-Discover	$50
Tithe/Donation	$160
Savings 1-Retirement	$70
Savings 2-Miscellanous	$20
Savings 3-House	$150

I now entrust you, my readers, to start or continue to budget to find ways to maximize your income. Theoretically, the budget should be categorized by the following percentages: 50% to bills, 10% to savings, 10% to personal wants/needs, and 30% to insurance, food, travel/entertainment. Catch our next post on March 30th about how much life insurance is enough? Comment or share below or on social media at Instagram @practicalwallet, Twitter @practicalwallet,  and Pinterest @practicalwallet.

Please Don't Wake Me Up!!!

Oh hey, did we have the same dream? You know the one I'm talking about. The dream of when you reach under your seat to find an envelope taped to your chair. And inside of the envelope is a silver key. Then you look up from the key, into her big brown eyes and its Oprah grinning hard...YES I SAID OPRAH...she screams and points to you and the other audience members “YOU GET A HOME, YOU GET A HOME, EVERYONE GETS A HOME?"

via GIPHY

Okay okay, now maybe that was just my dream but please don't wake me up! Maybe I dream too hard or maybe I don’t dream hard enough. Only time will tell. What is real is my debt which is double my income and like most people I don’t qualify for any type of assistance so I just pray and plan. But like Les Brown says if “you fall, fall on your back. If you can look up, you can get up!”

 Sometimes it can feel like the our problems are the worst but things could and can get worst. Bottom line is our problems shouldn't handicap us, we have to imagine our problems on an obstacle course-we can go over, around or through but don’t just give up. Some of you may think as you read that I am an expert, financial wizard, or at least a previous home owner or maybe at least a child of a home owner.

The answer is no to all of the above instead the truth is I have been gathering resources and information and keeping notes everywhere, screen-shooting anything that I can use or benefit from, and everything is scattered. I started transferring my notes to my computer and realized that I can help more than just my family and friends. I can reach a lot of people in similar circumstances or people who just don’t know where to start; I can guide them based on what real experts are doing and share their success stories and paths.

Now I named this blog a very weird name and I realize it’s hard to put on a t-shirt and sell it but I’m not selling anything (in this moment) other than inspiration. If you were shopping in Macy’s for a “practical wallet” you would want a wallet that has lots of sleeves to put credit cards and IDs in and maybe some family pictures and then a convenient place for cash. This wallet would be nice on the eyes, maybe leather, if mines it would be pink and the right size.

Well this practical wallet is going to create enough sleeves to direct you in a practical path of home ownership, retiring financially secure, and building financial security for yourself and family. Like I said earlier, this is a platform to inspire people and help you recognize the tools to protect yourself and invest in yourself in the areas of home ownership, retirement, and personal finance. 

There is so much to take in so check back often and read my posts on the 5^th, 15^th, and 30^th of every month, use the information in your plan as you see fit, leave feedback, share my posts, and subscribe to stay in the loop. My next blog post will dive into a benefit comparison of home ownership versus renting on February 15th, 2016.

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