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New Retirement Planning Strategy: Raise a Financially Literate Child

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New Retirement Planning Strategy: Raise a Financially Literate Child

Financial Planning SoftwareThe United States Department of Agriculture (USDA) estimates the average cost of raising a child to be around $234,900.  That staggering amount, of course, assumes you’ll be financially supporting your offspring only until they’re 18 years old.  In this day and age, that’s a bigger assumption than you might think, given the high unemployment rate for people under the age of 24 and how little young people know about responsible money management.  Therefore, if you want to avoid bleeding money during your golden years and having to convert the basement into a makeshift apartment, you should probably get to work teaching your son or daughter the do’s and don’ts of personal finance.

The financial difficulties that we’ve experienced in recent years should both reinforce the need for financial education and give you a sense of the exact types of skills you need to pass on to your child.  For example, the fact that US consumers continue to rack up credit card debt at record rates indicates a glaring need for budgeting skills as well as a reimagining of what actually constitutes a necessity.  Among the other important lessons learned from the downturn are:

  • It’s important to maintain an emergency fund:  This harkens back to the importance of budgeting, but even if you manage to live within your means, an unexpected expense or downturn in the economy could be financially crippling.  It’s therefore crucial that you impress upon your children the value of maintaining proper insurance and saving a certain amount of money each month.
  • Good credit pays off:  Consumers who managed to maintain excellent credit throughout the Great Recession are now reaping the spoils of their hard work in the form of initial rewards bonuses worth up to $500 and 0% introductory interest rate terms that last well over a year.
  • Beware hidden fees:  Aside from bailouts, one of the primary reasons folks have been so resentful toward banks in the wake of the recession is that financial institutions helped complicate many people’s financial situations during the economic turmoil by using bait-and-switch pricing tactics and burying costly fees in fine print.  Make sure that your child knows how important comparison shopping and carefully reading contracts are when it comes to financial products.

Of course, talk is cheap and your child is going to need practical experience if they are going to actually internalize any of your lessons.  That is why you should begin a personal finance training regimen where you give your child an allowance using a variety of different financial products and require that they pay for some of their own expenses.  The best course of action would be to begin the following process when your child enters high school:

  1. Load an allowance onto a prepaid card:  Prepaid cards are great starter financial products in light of the fact that they don’t affect your credit standing or allow you to overdraft your account.  They also provide online account management, which will enable you to review your child’s purchasing and ATM withdrawal habits with them.  So give your child an allowance every other week, designate certain expenses that will be their responsibility, and get to work.
  2. Raise the stakes & use a cash allowance:  Cash requires a bit more trust since you’ll have no way of tracking it (unless you work for law enforcement and use marked notes).  Graduating to a monthly cash allowance while adding to your child’s list of financial responsibilities will therefore be a good test.
  3. Switch to a checking account:  The risks are once again higher with a checking account since misuse can prevent your child from qualifying for another checking account in the future.  If your child is ready, though, checking account use will offer valuable experience writing checks, balancing a checkbook, and maintaining a sufficient account balance so as to avoid incurring unnecessary fees.
  4. Begin credit building:  You’ll want your child to have a student credit card by the time they head off to college, not only for emergency expenses but also so they can begin building credit.  One’s credit standing is a key determinant of future credit card and loan rates, job prospects, and their ability to lease a car or rent an apartment.  Just make sure your child knows to either make on-time purchases every month or never user their card at all (you build credit either way).

By the time your child graduates from this program, they will be way ahead of the curve when it comes to financial literacy.  The prospect of financial independence therefore won’t be scary any longer; many of the most important financial products will actually be familiar to them.  In other words, rather than having your child live in your basement until the age of 30, they’ll be able to house-sit once in a while during your now affordable extended vacations.

This article comes from our friends at Evolution Finance, a company that operates the credit card comparison website Card Hub and the personal finance social network Wallet Hub.

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Summer Utility Bills Got You Down? Find Another Way to Chill!

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Summer Utility Bills Got You Down? Find Another Way to Chill!

You probably already pay a lot for your utilities.  With electronics galore cluttering up your house, old appliances draining precious energy, and summer temperatures soaring (necessitating the dreaded switch to AC), you’re beginning to feel the crunch on your finances from summer utility bills.

However, there are a few simple tricks you can try to cut down on your utility bills through the hot summer months.

  1. ThermometerUpgrade to energy star. Trade in your old appliances for new energy-efficient models.  True, there is a hefty initial cost, but between government tax credits, rebates or cash back from utility companies, and a reduction of 25-30% in your monthly bill, they practically pay for themselves.  Along these lines, you can also consider low-flow toilets, tankless water heaters, and a more efficient AC unit and furnace.  Bonus: you’re making the planet a little greener.
  2. Stop leakage. Nobody likes a leaky…well, anything.  You certainly don’t want to let out the “bought air”, so think about hiring an auditor to come out and assess areas that may be leaking.  If an audit is out of your price range, you can try it on your own by running your hands along the edges of doors, windows, baseboards, outlets, etc. to determine potential problem areas.  Then you can simply fill them in with foam weather stripping or caulk (both can be obtained pretty cheaply at your local hardware store).
  3. Get smart strips. These work in much the same way as the sleep mode on your computer.  When electronics are not in use, the smart strip cuts off power to the devices plugged into it, relieving you of the burden of paying for idle current or alternately, the constant annoyance of unplugging everything in your house.  Most of these strips claim to pay for themselves within six weeks of usage.  Not too shabby.
  4. Use a grill. Summer cooking can overheat your house and put your AC on high alert.  So get outside and enjoy those nice evening breezes.  In addition to keeping your temperature cool and controlled indoors, cooking outside cuts down on electricity or gas needed to run your stove.  And BBQ is delicious!
  5. Plant a tree. Yeah, it’s for your tomorrow, but that doesn’t mean you shouldn’t think about it today.  Having leafy trees that soar above your rooftop will help keep your house cool throughout the summer, so even if it doesn’t get tall enough for a few years, it’s an inexpensive way to make your house more efficient in the long run and add a little natural beauty.

What else hav you tried in order to save money during the summer months? For more money saving tips, sign-up for Rabbit Funds’ RSS Feed!

Author Info: Thomas Warren is a content writer for Go College, one of the oldest and most trusted resources to guide students on how to finance and succeed in college.

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Benefits of an Online Multi-Carrier Brokerage Firm vs a Local Agent [guest post]

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Benefits of an Online Multi-Carrier Brokerage Firm vs a Local Agent [guest post]

In our current hectic and fast-paced lifestyle, technology has caught up with every industry, making businesses work better, faster and safer. The life insurance industry is no different.

Shopping for Insurance OnlineTechnology has simplified the process of applying for and buying life insurance so greatly that it is now possible to buy life insurance online with just a few clicks. Most new life insurance buyers in the market are therefore left wondering whether to stick to the traditional route of meeting with a local life insurance agent or buying online.

What is a multi-carrier brokerage firm?

A multi-carrier brokerage firm, also called an online life insurance agency, conducts its life insurance business through its website. It deals with hundreds of carriers and uses technology to link in real time to life insurance carriers’ computers. This means the information it offers to the end customer is up to date and accurate. These multi-carrier brokerage firms also offer life insurance-related resources to gain information, unbiased advice, use free tools like life insurance needs calculators, and request for free quotes.

Why is buying through an online multi-carrier brokerage firm better than buying through a local agent?

The traditional way of buying life insurance through a local agent is greatly challenged by the arrival of online life insurance agencies. Let’s see why buying online is better:

  • A local agent represents just a handful of life insurance companies and may recommend the wrong product to you
    Life insurance should be bought after shopping around. Since a local agent deals with just a few carriers, you only get the best of what’s in his portfolio. Sometimes, a biased agent will even sell you policies that don’t fit your needs, only because he or she gets a higher commission on it. On the other hand, when you buy online, you are assured that the quotes recommended to you are true, because they are picked up through a database consisting of thousands of life insurance policies. The process is automated and therefore, completely unbiased.
  • Online multi-carrier agencies are fast and safe
    When you buy through a local agent, the buying process takes time. The agent will need a few days to get the information he/she needs or will have to meet you several times, and you will likely take a few days to decide. When you buy online, you can make the process as fast as you want it to be, because quotes, as well as complete information about them, is given to you in minutes.
  • Buying through an agent can get uncomfortable because you need to divulge complete personal information
    Filling up a life insurance application form manually in the presence of an agent can get uncomfortable because the agent will need to ask you a few personal questions that can embarrass you. He will also need to know the details on your finances. Buying online is more comfortable because you are not face-to-face with the person asking you questions. All you need to do is fill in their form as truthfully as possible, and you are done.
  • Multi-carrier websites are a one-stop shop
    Life insurance is a very personal decision and an online agency not only gives you quotes but also gives you access to life insurance-related resources, online tools such as life insurance needs calculators, advice on how to get the best results on your physical exam, and complete financial information and comparison charts on the quotes you shortlist. With a local agent on the contrary, the information is more likely to be subjective because agents are also looking to maximize their incomes, and they earn better on some products than on others. Also, an agent may not have access to all the information you need off the cuff and may need to meet with you several times before you can make a decision.
  • Life insurance carriers have niche areas in their underwriting processes
    This means that a particular company may look more favorably on a particular health or lifestyle condition than others. So if you are a cancer survivor, Company X may look more favorably on you than other companies. These niche areas are constantly changing, and a local agent may never be able to be on top of the latest changes, because of his limitations. A multi-carrier online agency however, is directly connected to each carrier’s network, and its database is automatically updated to reveal the latest niche areas of each carrier. You are therefore more likely to get a better life insurance rate with an online multi-carrier life insurance agency.
  • Buying online is faster, cheaper and more reliable
    Because of the above points, when you buy online through a multi-carrier life insurance agency website, you will be offered the best rates, your needs are matched to the right policies and you are able to make a well-informed decision because you are provided with complete information on the policies you are considering.
  • Afraid of buying online?
    If you are worried about using your credit card online, you can still use the services of an online multi-carrier agency website. Once you are given the quotes, you can opt for someone from the agency to call you, follow up with you, or use an alternative way to pay for your life insurance. In other words, you don’t have to pay online if you receive quotes online.

Online life insurance agency websites provide an indispensable service

The intention of this article is not to discredit the services of local agents, some of who are extremely trustworthy and committed. However, today they just can’t compete with the technological advancements that online multi-carrier agencies have incorporated into their businesses. Accessing an online multi-carrier website is simply the smarter, more economical thing to do.

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Savings accounts are not the only option for Safe Saving [guest post]

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Savings accounts are not the only option for Safe Saving [guest post]

Everyone wants a safe place to save their money, but if safety was your only priority, you may be tempted to just start a stash under your bed.

Piggy BankInstead, we all want our savings to be safe from a bank collapse and financial disasters, and we want it to be safe from inflation and from being accidentally spent when we come across something we really want. However, while there are great offers on interest rates, fees and bonuses for high interest savings accounts, a savings account is not your only option if you are looking for a safe savings product.

To choose a safe savings product:

  • Make sure your safe savings option meets your spending and savings needs as you may need access to your funds and don’t want to be penalized. Plus, if you want the option to grow your savings, then you want to be able to make deposits to your funds.
  • Go for no-fee products when possible as even seemingly small fees can eat into your savings over time.
  • Look for ease of use as you want to remove all possible obstacles in the way of your savings goals.
  • Make sure your safe savings also make a reasonable return. Look for ways to grow your investment since long term savings can be eaten away by the costs such as inflation.

Safe Savings Options

You may have used savings accounts all your life to squirrel away extra funds, but a high interest savings account is no longer your only option to keep your savings safe, not to mention help them keep growing with a safe and guaranteed return. Other safe saving options open to you include:

Certificate of deposit (CD):

  • CDs give you a guaranteed return and interest rate. The interest you will earn on your savings in a CD is guaranteed and locked in for the life of the term from the moment you open the account. You can then plan on your returns and even use them to supplement your income while knowing your initial investment will never decrease.
  • The more you save the more you can earn. Putting as much of your savings into a safe certificate of deposit as possible ensures the best return as the highest interest rates are offered on the highest balances.
  • Restrict your access to help you save for long term goals. As with the highest balance attracting the highest interest rate, so too will a longer term allow you a higher CD rate. Plus, because your savings are locked away in a certificate of deposit account, you are not tempted to spend them, and they keep growing towards your goals and your future. If you do need to access your funds before the end of the term, then you will often be charged cancellation fees and suffer a reduced interest rate.

Money market deposit accounts:

  • Offer high yields. A money market deposit account can usually offer you a higher rate of interest on your savings than most CD or ordinary savings accounts.
  • Offer few withdrawals. This can often be a condition of the account to help you avoid fees, but it depends on the financial institution which holds the account as some will allow more transactions than others. Restricting your access also helps enforce your savings plan, encouraging you to keep your balance up. However, a money market deposit account is still more like a savings account than a CD as you can withdraw your funds without penalty in most cases.
  • Require a high minimum balance. If you do not meet the institution’s minimum balance requirement you will attract more fees on your money market deposit account.

Money market funds:

  • You’re investing where the banks invest. The money market is where government, banks and large businesses lend and borrow money for their short term cash needs. This makes a money market fund a safe place for your savings to be invested as you can do so through a well established and secure bank or financial institution.
  • You can earn a higher rate on your savings than in a traditional savings account. By investing in a money market fund with an investment company or bank, you can secure high returns on your savings with little risk as those borrowing from the money market usually have a high credit rating.
  • You can access your funds within days. There are generally no penalties for accessing the savings you have in a money market fund and the transfer can take a few days to be processed.

Choosing a Safe Savings Investment

High interest savings accounts – and certificate of deposits, money market deposits and money market funds – are all relatively low to no risk investments to help your savings grow until you need them. To help you choose which is the best safe savings option for you, make sure you consider:

  • Your savings and cash flow needs. If you think you may need access to some or all of your savings in the near future, choose a short term investment which will allow you access it when you need it, or choose an investment or savings account which does not penalise you for accessing your funds.
  • Shop around for the best deal on your savings and on your CDs. There are a range of CD accounts, money market deposits and fund investments available depending on the balance of your savings and the term for which you want to invest. Therefore, make sure you look at all the options available to you on your balance and for your needs because banks and investment institutions offer specials and bonuses to attract your business. So why not take advantage of those offers to help boost your savings safely?

About the Author: Alban is a personal finance writer. He offers advice on personal finance issues and helps people to compare credit cards online.

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Steps to getting discount auto insurance for students [guest post]

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Steps to getting discount auto insurance for students [guest post]

Juanita Martinez is associated with the AmPmInsure Community and has been offering her suggestion on insurance to the community since 2007. Further, she has also written contributory articles for various financial sites. Some of her articles include “˜Ho3 Policy: An open peril insurance’, “˜Insurance for fire damages’ and “˜Buying life insurance on someone without their consent’.

Young driverIf you’re a high school or a college student and just bought your first car, you are probably in the market for insurance to cover your vehicle against any sort of damage. Most of the insurance companies consider young drivers to be highly risky, so they charge a higher premium. To go easy on your pocket, you should look for companies which offer affordable auto insurance for students.

How to get low cost car insurance

You may qualify for affordable auto insurance if you meet the criteria outlined below:

  • Good grades: You need to have good grades to get a discount on your car insurance premium. Generally, the insurance company considers students with high grades as responsible drivers. You may get a discount of 10% to 15% if you have a GPA of 3.0, average grade of at least B and your name was on the Dean’s List of Honor Roll in the previous semester.
  • Use your parent’s policy: Most insurance companies offer discount on multiple vehicles. You may remain as a secondary driver in your parent’s policy and save money. However, this option may vary from one state to another. So you need to speak with your insurance company first.
  • Higher deductible: You can choose a higher deductible which in turn reduces your insurance premium amount. If your car is a few years old, going for higher deductible will lower your premium towards collision and comprehensive coverage. But, you have to make sure that you have the deductible amount ready with you, in case you have an accident.
  • Avoid high performance cars: You should avoid going for a high performance car, as it will increase your insurance premium amount. If you choose a standard car like a sedan, your premium will be lower.
  • Enroll in a driving course: You should get enrolled in a certified driving course to get a discount on your premiums.
  • Be a good driver: After driving safely for some days, if you have not met with any accident, haven’t got any ticket and have not violated any traffic rule, you can contact your insurance company to give you discount for being a good and safe driver.
  • Low mileage policy: You can ask for a low mileage policy if you drive your car only during the holidays. Insurance companies offer low premiums to students whose car remains on the driveway most of the time. If your school is far from your residence and you need to drive your car to commute to school, you can take a carpool buddy and ask for discount on premiums from your insurance company.
  • Have a good credit history: If you have a credit card, make sure to make regular payments so that you have a good credit score. You can also get your credit report from the credit bureaus prior to going to the insurance company, and make sure that all the information stated there is correct. If you find incorrect information, you should notify your creditors and have it corrected. A good credit score will lower your insurance premium.
  • Install safety features: You can lower your insurance premium by installing safety features in your car like an anti-theft system, airbags, anti-lock brakes, etc.

You need to be aware of the various types of policies, premiums and coverages offered by different insurance companies. You should also ask them about the discounts offered. Search the internet and choose the company which offers affordable auto insurance so that you don’t pay too much out of pocket.

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HOW TO: Invest for Retirement [guest post]

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HOW TO: Invest for Retirement [guest post]

Today’s article is written by Ricky at Qwoter.com. You may know Qwoter as a great source for stock news and stock spam reports. Enjoy today’s articles about creating an early retirement plan.

Discovering how to invest for retirement early in your career will help you save enough money for an affluent and well-to-do retirement. It’s important to remember though that the best method for early retirement planning and investment selection is not the same for every person. If you have the funds, exercise diligence when considering your investing options. This will help you acquire the most beneficial investments based on your short-term as well as long-term goals.

When looking for the best avenues for your money, you should first understand the significance of administering funds and assets based on your appetite for risk. In addition, consider the rules and regulations as well as the interest rates of your chosen investments. You should also keep yourself updated on the latest news and investing methods available.

Top Investment Options

  1. Employer-Sponsored Retirement Plan – In reality, retirement accounts not only endow long-term investing, but they grant a wide range of tax advantages as well. When investors choose an employer-sponsored 401(k) plan, the company that they work for may opt to match the employee’s investment. The money is contributed into the account without the owner incurring taxes. Since the funds stay in the plan, you benefit from compounding interest and growth until you make a withdrawal. Though, you will have to pay taxes at that point.
  2. IRA or Individual Retirement Account – If your employer does not furnish 401(k) accounts, you will want to learn how to invest for retirement through an IRA. There are different types to choose from; each made to meet specific needs. This type of retirement account offers you similar tax advantages that you enjoy from an employer-sponsored plan. A Roth Individual Retirement Account will permit you to make contributions with after-tax money. The money in the account compounds tax-free over time without additional taxes levied at the time of distribution. The traditional IRA on the other hand consents pre-tax money to be placed in the account, with taxes levied only at the time when the funds are withdrawn. Before investing into an IRA, make sure to check for the best IRA rates that are currently available to help you maximize your returns.
  3. Stocks – A stock or share is a part of ownership in a company or an enterprise. When the company performs well in the market, the stock will increase in price. Note that the stock market is not the best place to house your money into, particularly if you will need access to your account almost immediately. A skilled stock broker can help you select the best types of stocks.
  4. Bonds – Bonds are another good asset to place your money into. These are loans that are reimbursed by the government or business over a period of time. As an investor, you will receive interest payments, about twice a year. Bonds are also known as more secure and stable assets than stocks.

Becoming skilled at how to invest for retirement will also let you learn about investing in Certificates of Deposit (CDs), U.S. Treasury Notes, 529 investment accounts, as well as savings accounts. Before you invest in any of these, you need to set your financial objectives initially. This will ensure that you can prepare for your retirement with the right investments.

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Guest Post: Do You REALLY Need Debt Advice?

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Guest Post: Do You REALLY Need Debt Advice?

Credit Card Debt

This is a guest post by One Advice at oneadvice.co.uk. One Advice is one of the longest established debt solutions practices in the UK. They offer a full range of financial solutions all under one roof offering ethical debt advice and allowing clients to find a financial management plan which best suits their needs.

Seeking debt advice is no longer uncommon in today’s society, and the number of people who are seeking debt advice is growing more and more. This problem is worldwide as well; the average amount of debt owed by every UK adult now stands at a staggering £30,480 (including mortgages).

There are a number of debt management companies out there which are designed to help you with your debt. But do you really need debt advice or can you get back on the financial track alone?

Is it time for debt advice?

The credit crunch means that more people are under pressure from creditor demands due to increasing levels of personal debt. This is why there has been an increase in those who are seeking debt advice.

0% balance transfers: If you have multiple debts which you can’t seem to get rid of because of the interest and charges which are being added, you may want to think about a 0% balance transfer. Keep your eye out for offers as these are becoming rarer since the onset of the credit crunch and you will have to have a decent credit rating to be accepted. Also remember that the 0% interest is usually only for a promotional term, so think about whether or not you could afford to pay off this debt in this time scale.

Budgeting: One of the key reasons that many of us end up with unaffordable levels of debt is because of a lack of budgeting and spending more than their income. Getting a budget in place is a great way of understanding your true outgoings against your income and working your way to becoming debt free. It will allow you to cut back in the places where you are spending too much and rework your budget to use this money to pay off your debt.

If you find that your finances are in a mess and your debt repayments mean that you cannot afford to maintain a reasonable standard of living, perhaps you really do need to seek professional debt advice…

I REALLY Need Debt Advice

If you find it a struggle to deal with your debts and you feel as though professional debt advice is the only way forward, then you need to ensure that you get the right sort of debt advice so that you can work towards getting your finances back in order.

The internet can be a great place to start looking for debt advice. There is a wealth of debt advice available online (please be aware of the difference between debt advice from other countries, as the policies can vary).

One of the financial solutions which you may come across includes a debt management plan. A debt management plan is a debt solution for those who are struggling to repay their unsecured debt. This type of debt management allows you to consolidate debt without getting any further loans. You make a reduced payment to the debt management company based on what is affordable to you.

Remember that everyone’s financial circumstances differ, and even if you know someone who cleared debt through bankruptcy, this may not be the right solution to your debt problem. Always make sure that you get professional debt advice from a company who places its emphasis in giving ethical debt advice.


So what do you think? Would you recommend debt counseling?

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Guest Post on Nil2Million.com: Budgeting

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Guest Post on Nil2Million.com: Budgeting

Budgeting: That Illusive Other Category

Nash from Nil2Million.com was gracious enough to invite me to be a guest blogger this week. My post, titled Budgeting For Your Financial Goal: That Illusive “Other” Category, is currently up and running. The post is based on an experience that I had last week with my wife that helped me realize the need to better plan for infrequent purchases that aren’t emergencies. Meaning, purchases I don’t want to use savings for but don’t happen on a monthly basis.

Please check it out and poke around Nil2Million while you’re at it. Thanks!

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