Money Savvy
Financial Finds
Earn More on Your Savings
To earn more, you have to take the giant step from saver to investor. But
before you can invest, you must build a base and protect what you have. Here
are five steps for creating that protection:
$$ Cover your risks. You need health and disability
insurance to protect your income if you can't work. You also need property
and liability insurance to protect your home, car, and other possessions.
And you need life insurance if you have dependents.
$$ Contribute to your retirement plan at work. This is your
best first investment. The money you contribute is deducted from income
before you pay taxes on it. And these dollars continue to accumulate without
a bite for taxes until you begin to use them.
$$ Pay off your credit card debt. The average American pays
$450 a year to carry a balance of $2,500 on two to three credit cards.
Paying this off yields a risk-free return of your interest rate.
$$ Set up an emergency fund of three months worth of basic living
expenses. This money should be in a bank or credit union where you
can tap it immediately for unplanned expenses, like brakes for the car.
$$ Think about your goals and time horizon. These are the
two most important factors in deciding how to set up an investment program.
Keeping the Family Home
Mortgage insurance policies can offer peace of mind--but are they worth the
cost? Despite its high cost, experts generally agree that mortgage insurance
can be appropriate if you don't have enough regular life insurance to pay
off the mortgage and take care of your family's immediate needs.
Mortgage insurance is actually a type of term life insurance that will pay
off your mortgage balance if you die.
Keep these things in mind when deciding whether to purchase a policy:
$$ Mortgage life insurance has a "declining benefit,"
which means that its value decreases over the years, as the pay-off amount
of the mortgage decreases.
$$ With a mortgage life policy, the insurance benefit must go to
pay off the mortgage.
$$ The policy ends when you sell your home. If you take out a new
policy on your next home, you'll be older and your premium may be higher.
$$ Don't automatically buy the mortgage insurance that your lender
offers--shop around. |
