Your Insurance Coverage - Is It Adequate?

Many folks don't realize how much money they spend on insurance premiums. Car, life, home, contents insurance, and extended warranties can be costly. Insurance is risk assessment and coverage. It deals with the future, so, like all decisions, we need to go to Jesus for guidance. Only He knows the future.

Every time we consider insurance we must answer three questions, which I will look at briefly, using life insurance for a family, Robert, Paula and five-year-old daughter Sarah. Robert works outside the home, Paula works at home managing the household, Robert, and Sarah.

Insurance Questions An Individual Should Answer

1. Is there an exposure to a risk that I should cover?
2. How much coverage do I need?
3. How should I cover the risk?

Risk To Cover

What life insurance risks for Robert, Paula, and Sarah need to be covered? Paula and Sarah depend on Robert's income. And so, if Robert dies, his income stops. Paula would need funds to pay funeral expenses and provide for other needed, future living expenses. That's the exposure or risk that might need covering.

But if Paula died before Robert, the risk is different. Robert would not lose direct income. However, household expenses might rise for daycare and other related expenses to look after Sarah while he works full-time. Robert and Paula might wish to cover this exposure, too.

Coverage Needed

Before moving to the next question-how much coverage they need-Robert and Paula must decide if they accept there are risks to cover.

If they accept, and decide to cover the risk on Robert's death, how much insurance coverage does Robert need on his life? Robert and Paula would like this amount to cover a realistic future standard of living for Paula and Sarah based on today's knowledge. This could be today's value of Robert's future income and Sarah's future education, and other expenses. Computing this amount is not difficult if you work with a knowledgeable independent financial adviser.

Most important, Robert and Paula need to turn to Jesus because He alone knows the future. Besides, they must understand that insurance coverage does not secure the future, or remove risks; rather, it provides income if a specific event happens. Prophet Isaiah reminds us in Isaiah 26:4: Trust in the LORD forever, for the LORD, the LORD, is the Rock eternal.

Does trusting God mean we should have no insurance coverage? No, it means we should understand that nothing we do will secure the future, so we must seek God's will for our insurance coverage. After all, He might say no!

How To Cover Identified Risks

After deciding their insurance coverage, probably with an independent financial adviser's help, Robert and Paula must look at the third question: how to cover the risk. Think about life insurance coverage in two classes: renting or temporary, and owning or permanent. The insurance industry calls the renting class, term insurance. With term insurance, Robert would pay an amount, called a premium, for a fixed time, after which coverage stops. If he didn't die when the term expired, Robert and Paula would need to answer the same three questions later. Then, their condition might have improved; they might have income that could allow them to lower or even stop life insurance.

Whole Life and Universal Life are examples of the owning or permanent class. Think of this insurance class as term insurance plus. It includes your basic term insurance coverage and something else, such as "savings." Insurance companies like to tell you this is a great idea because you could "borrow" from the "savings!" Don't go there!

If Robert chose this class, he would pay a premium for more than his basic insurance needs. That's why it is important to understand this insurance class as it is more expensive, and greater than your basic insurance needs. Extras above term insurance coverage will cost you, for non-life insurance benefits.

As with all decisions, Robert and Paula should get insurance facts from an independent financial adviser who does not benefit from his advice, and seek God's direction.

Copyright (c) 2011, Michel A. Bell

Michel A. Bell is a Christian, an author, speaker, founder and president of http://managinggodsmoney.com a mission devoted to providing free Christian financial advice. For more on insurance, read pages 263-274 of http://www.managinggodsmoney.com/mgm/books.php#1

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Megabanks Moving to Reduce Borrowers' Negative Equity

Since the housing bubble burst three years ago, banks of all sizes have seen their ledgers bleed red as many of their costumers,' with their houses in tow (or was it the other way around?), went 'underwater." As a result, and in an effort to stem the loss of further capital, banks are quietly contacting borrowers and offering them generous loan modification or refinancing options-in some cases,borrowers reported debt forgiveness or nullification that was as much as 50% off of their original mortgage agreements. Many of these newly relieved borrowers pay on time, too. However, their houses are 'underwater,' meaning what they paid for the house or what they still owe is more than their property is worth.

In the midst of the 2008 financial collapse, megabanks like Chase and Bank of America bought, more fittingly, inherited, billions of dollars of junk mortgages. These mortgages were made available to borrowers with little or no credit at ultra-low interest rates. In an effort to offload this lion's share of bad equity, banks are choosing to unburden the borrower through generous loan modification initiatives.

Debt Forgiveness

If large-scale debt forgiveness appears counter intuitive and unusual for banks, that's because it is. But it makes sense. Having a borrower/consumer trapped under onerous debt is stressful for all parties involved-the bank, the borrower, the borrower's family, and, significantly, the future client.

If you consider consumer confidence a measure of their purchasing power today against what they perceive is their ability to purchase tomorrow, someone stuck with an underwater mortgage doesn't lack spending confidence alone. They potentially are rendered anemic, one-time costumers to their banks and other credit services.

Take this phenomenon a step further: for banks, people are the capital they are likely to generate in their lifetimes. Having a million or so costumers go belly-up because of foreclosure and subsequent bad credit would result in systemic, large-scale bad credit on the side of the bank or lending institution (i.e. the US Government). The more junk mortgage banks can wipe from their ledgers, the better. Or so goes the thinking.

Banks Aren't So Bad

It is significant that banks are accepting a larger role as stewards of the US financial system. Ultimately, though, the debt has to go somewhere. The idea that banks relieve the borrower to empower future consumers has significant pitfalls-namely, what if it doesn't work? If banks are forgiving up to half of a borrower's mortgage debt, doesn't that mean they see the borrower's earning/spending power as halved? Remember-these are people who are frightfully good with numbers.

At the moment, loan modification may be the only tenable option for getting banks and their costumers out from under loads of bad debt. It is still approximate treading water in a country where the unemployment rate hovers around 10 percent. If, by design, it is meant to unburden the consumer, clear banks' ledgers and get back to making money through improved consumer confidence, it may just work because financial institutions-with their armies of highly educated, financially prudent workers-- are, arguably, more fit to tread water in the long-term. Let's hope it pays off.

The Lee Law Firm's foreclosure lawyers have many years of experience in all aspects of mortgage modification. They have extensive knowledge of foreclosure laws and aim to provide their Dallas foreclosure clients with a plan to keep their home and obtain a solid financial future.

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Personal Budget - What Your Bank Thinks

Last week I watched a "personal budget" YouTube video of a CIBC executive espousing one of the key benefits and absolute necessity of personal household budgeting. "Tracking your spending will show where you're leaking money". I was clapping like a seal... truer words have not been spoken. Then in her example she cited that your lattes may be costing you a fortune. I eagerly waited for her to continue, but that's where the diatribe seemed to end. I had to laugh. Leave it to the bank to have you focus your attentions on the $5 daily treat that sits in one of your variable expense cost centres.

How bout we focus our attention on the biggest fixed cost centre in our monthly statement: the MORTGAGE!! Here are some cold hard numbers for you. The 5yr mortgage interest CIBC has posted on its website today is 5.39%. The first year of a $400K mortgage will have you paying approximately $53 per day. First year daily interest on

$450K = $62 per day
$500K = $70 per day
$550K = $78 per day
$600K = $87 per day... that works out to over $610 after tax dollars each and every week (and that is based on 7 days a week... even when you're not working) and a whopping $31K per year.

You can punch your mortgage into our total cost of ownership calculator to see your daily interest for yourself.

Don't get me wrong. If you're spending a thousand dollars per year on lattes (roughly $5 per work day) and you're struggling with consumer debt, you should absolutely scale it back and apply some of that money to that debt. That is what managing a personal budget is all about. The same is true for shoes, your car payment, and your entertainment expenses. Developing a household budget is absolutely crucial and it is the only real way to manage your salary effectively. But, that spending management applies to ALL your cost centres, not just the ones you can change with a simple coffee shop by-pass. It applies to your fixed cost centres and especially your mortgage.

If you're spending $31,000 a year on mortgage interest and you add in your principal, property taxes, maintenance fees and everything else it costs for house upkeep and your property value is not growing at the same annual overall rate, why the heck would you sign up for their ridiculous mortgage contract?

Visit our discussion forum to read more at http://www.wakeupordiepoor.com/board/thread/45/household-budgeting-what-your-bank-thi/?page=1#post-45.

Learn about the Quinn-CO method and how effective CFOs approach each and every purchase they make. Turn your disposable income into valuable revenue with our personal finance book, personal budgeting software and advice. Get out of debt. Get control. Get ready.

Visit us at http://www.wakeupordiepoor.com because we're all running a business. Who's managing yours?

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5 Ways to Economize at Home During Economic Hard Times

The local newspaper last week reported a substantial increase in sales of sewing machines. The owner of the business attributed this to the current economic downturn and its effects on households struggling to meet mortgage and credit card repayments. She is not the only retailer noticing a change in consumer habits. Kitchen appliance outlets have seen an upsurge of interest in the old-fashioned pressure cooker and butchers are being asked more often for the cheap cuts of meat and large joints. These require longer cooking times but can be bulked up with root vegetables to provide more meals from one cooking session.

Anyone whose parents or grandparents lived through previous global Depressions of the 1930s or 1890s can tell you that wives and mothers hold the key to their family's survival. Here are 5 simple bits of wisdom handed down through the generations.

1. Manage the money you now have.

A 'no-brainer' is to pay off your debts in whatever amounts you can manage but on a regular basis. Along with that, you simply do not buy anything new that you can do without. The new mantra is 'need, not greed.' Form a regular habit of putting aside something 'For a Rainy Day.' It may be only a two dollar coin per day - saved from a canned soft drink you did not buy - but at the end of a month it is enough to pay for a visit to the specialist, if one of the family falls ill.

2. Don't pay for anything you can do or make yourself.

With the obvious exception of electrical or plumbing work that must be carried out by professionals, house maintenance is usually within the capacity of any fit person. Advice is often available from friends, family or neighbours. If you have an Internet connection, use it to find websites offering free How To articles and videos. With your computer and printer you can send lovingly homemade greetings cards for birthdays and Christmas.

3. Grow some of your food and cook it at home.

Until you start growing vegetables, you'll never know how much pleasure comes from eating a tomato or lettuce you planted, nurtured and harvested from your own garden patch. Advice abounds in your local library or online at gardening or nursery sites. Cooking in your own kitchen is a pleasure and it can even help you to maintain your waistline and boost your overall health. The reason is that in enjoying the colours of fresh produce and inhaling their fragrances, your brain receives signals that equate to the satisfaction of eating before you've taken even a bite. Also, the more you handle fresh food in its whole forms - for instance,an orange rather than a jar of marmalade - the more interest you'll take in learning about nutrition.

4. Sew some of your own clothes.

If you don't already own a sewing machine, then this is one time to break my 'don't buy anything new' rule. You will quickly become competent. I did it - and in a time before the brilliant modern versions - so the proverbial Drover's Dog could do it now. You can even teach yourself to draft paper patterns and save even more cash, especially on children's clothes.

5. Entertain friends and family at home.

The house you live in is the biggest investment you are ever likely to make and you've no doubt put a lot of effort, time and money into enhancing it. So why not consider it as what it really is: your own Day Spa, vacation Resort, intimate restaurant, cinema, Botanical gardens or whatever is fitting for the environment you have created or dream of making out of what already exists. Your teenagers may want a nightlife scene that's beyond your capacity to provide and probably beyond your capacity to endure if it could be inserted into your home. If so, what's wrong with letting the kids earn the cash to take them into these nightspots?

Here is an Extra Bonus Point.

If you've read any of the Tips above and thought 'Too Hard. I could never do that' then let me tell you a Secret. Success in all of these areas comes mainly from seat-of-the-pants experience, so don't let yourself be put off by the bucket loads of expert opinion. The experts all got there the same way you will: by trial and error.

Here is a Footnote for those interested in the historical overview.

The invention of the sewing machine is attributed to a London cabinet maker in 1790 but the first patent for a sewing machine was taken out by an American, Elias Lowe, in 1846. By 1850, another American, Isaac Merrit Singer, had completed his design for 'Singer's Perpendicular Action Sewing Machine' and patented it in August 1851. Technically, this was an industrial model, but by 1856 the advent of 'hire purchase' made the invention available to professional dressmakers. As always, this technological advance was to have an impact few people could foresee. When male tailors in Sydney went out on strike for thirteen weeks over the rates for piece-work, the David Jones emporium replaced them all with ( lower-paid ) women operating the new machines.C Dorothy Gauvin

Discover a treasure trove of little-known characters and events from Australia's colourful past in an action-packed novel by Dorothy Gauvin at http://www.gauvin.com.au

Dorothy Gauvin is the author of Conlan's Luck, An Epic Story of the Shearers' War. This little-known uprising of the 1890s has been called a 'Secret Civil War.' Scholarly texts have been published about this seminal and colourful period of Australian history, but Conlan's Luck seems to be the only novel yet published on the subject. See more about the novel at http://www.bestbooksfor.com/

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It's a Record! - Your Art Business Records

My father often told me that being able to make art is a Gift meant to be shared. In order to share it, artists have to put their work out on the open market. Once you do this, and achieve sales, you realise that your vocation has become a business. To run it successfully, you need to keep records.

Of prime importance is the record of the paintings you have produced. First, you need a pictorial record of them. Just as necessary is the record of their specifications. For this, I recommend using a hard-cover Journal with multiple columns. In these, you will enter such information as: Media (e.g. "Oils on Canvas"), Dimensions (unframed), Date Completed,Date Sold,Venue (e.g. 'XYZ Gallery'), Buyer's name and contact details, (*if these are available from the gallery), Framing style**(You can fix a code for this to save space.)

*Few if any galleries will give you this information when you start out. They have to protect their business against the possibility that you might contact a buyer direct, to offer a discounted price on your work. Never do this! Not only will you get yourself black-listed by all the galleries in your town, but contrary to what some young artists believe, it does not work. You see, the majority of buyers enjoy a bit of a 'haggle' over the price, but feel uncomfortable about doing this with the artist. (It is a major obstacle to be overcome by artists who go on to run their own galleries.) **This item helps you to quickly calculate your real before-tax income from a sale. Even when you make a gift of a painting to relatives or friends, or donate one to a charity, or even have to destroy one - record this in the journal.

A great help in finding info quickly, is to organise your output into Categories and enter these on a Contents page at the front of your Journal. You might list by subject matter, date of completion, or by Series, whatever is relevant to how you work. Simply entering them as they happen causes confusion after your body of work reaches into the hundreds.

Of course, both types of record above are ideally suited to being filed on a rewritable CD or DVD. Your investment in a second disk drive will repay you handsomely in the savings on space - fewer filing cabinets in your studio office,and in time - no more searching through piles of trannies or invoices. After all, you would rather be painting. You may like to use a CD or DVD burner to make a record that cannot be changed or lost by accident. But a rewritable record allows you quick access to your images when you need to reformat them for various purposes. And you will need to do that. Please do not underestimate the value of filing all correspondence between you and your galleries, your collectors, and your suppliers. Absolutely vital is to get any contracts and agreements in writing from galleries representing you or from collectors commissioning a work directly. Be sure both parties understand exactly what is being promised before you sign, then file the papers away safely. Attach to them any notes or letters from the other party, and memos of any related phone calls. Friendships in business can last a lifetime, but can quickly founder on misunderstandings. Best not to just assume that you, or the other party, has fully understood. Get it in writing!

You are no doubt aware that the graphic images of your paintings have a monetary value in themselves. They can extend the reach of your work by being produced as Prints or as book Illustrations, greeting cards and calendars and so on. They need to be kept safe from: Fire. Keep a second set of trannies or CDs in a building separate from the studio. Moisture. Keep trannies in a Dry Box (electrically regulated de-humidifier) to prevent the growth of destructive moulds and fungi. I keep my cameras here too. Scratches and bending. Frequent searching of over-stuffed folders to find that one image you need, usually in a hurry, can damage the film. Make sure you use a pair of plastic tweezers not fingers,when removing trannies from their keepers.

Best of all, put everything on disk and store a copy in your bank Safe Deposit box. Then, you will sleep like a baby log, free of worries about your precious records. You may even shift some filing cabinets out of your studio and use the space for a new music system, a goldfish tank, or some other heart's desire. (c) Dorothy Gauvin

Dorothy Gauvin is an internationally acclaimed Australian painter in oils who specialises in an epic theme of Australia's pioneers. See images of her 'Life-Story' portraits, an ABC of homemade tools for painters with arthritis, plus tips and advice for aspiring artists and collectors on her website at http://www.artgallerygauvin.com/

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