How You May Be Paying Too Much in 2014

The New Year comes with scores of resolutions, many related to personal finance choices. Discretionary expenses such as dining out or fancy coffees are easy to identify. However, the savvy to look beyond obvious cuts further improves your personal balance sheet.

Certain items such as insurance are required and practical. Other costs may involve impractical sacrifice, such as living off dollar menus at fast food restaurants or giving up your car.

Low cost living needs planning but does not require excess compromise. This concept applies to areas outside of personal finance, as well. Elliott Broidy, a film financier, used cost effective methods through social media and crowd funding to help innovate movie marketing this past summer.

698567-old-leather-wallet-full-of-credit-cardsHere are common sources of overpayment to slash in 2014:

Cost of Car Ownership:

A sensibly priced car is easily justified as leverage, instead of debt. Your vehicle makes commuting to work easier, which saves time and increases productivity. Cars also open social outlets that have value beyond money. Instead of giving up on cars, try these options:

Adjust Auto Insurance:

As your car declines in value, raising the deductible is a practical choice. Major repairs may be impractical for older cars. Unfortunately, many drivers fail to raise deductibles to match their vehicle’s worth. The result is years of overpayments.

Even if you plan to keep a car, the monthly savings from raising auto deductibles can exceed out of pocket expenses for auto repairs.

Refinance Your Car Loan:

Interest rates are near record lows, which makes auto refinancing an attractive option. This particularly applies to those who bought their cars over a year ago. If credit issues previously limited your auto loan choices, on time payments may have opened new options.

Income Taxes:

Tax refunds do not utilize the time value of money, which states a dollar (or your currency) is more valuable today than in the future. In economics, money’s time value underlies inflation and other concepts.

For your everyday life, increased take home pay helps you start investing or finally put a dent in principal debt balances. The compounding effect of smaller, but more regular, investing or debt reduction provides better results than periodic lump sums, such as tax refunds.

Consider increasing your tax allowances to improve cash flow. Using an online tax calculator helps you increase deductions without owing money to the IRS. If you live outside the U.S., please choose a withholding calculator that is country specific.

Credit Card Balances:

Balance Transfers:

Aside from using compounding to reduce interest expense, balance transfers can accelerate debt payoff. If you have made timely payments for the past year or more, other credit cards may offer lower interest rates to transfer balances.

Be sure to understand the transfer terms. These include transfer fees and how long the lower interest rate applies.

Negotiate with your current card company:

Credit card companies rarely offer proactive rate reductions to current card holders. You could leverage an on time history to ask for a lower rate, especially by mentioning other cards are offering better incentive.

Home Insurance:

Identify Excess Coverage:

Some homeowners pay to cover their house and land. Unless your land is used to generate income, a fire or flood is unlikely to affect its use. By ensuring that only irreplaceable items are covered, your home insurance premiums will be slashed.

Raise Your Home Insurance Deductible:

How much is your home insurance deductible?

Many homeowners carry low deductibles that spike premiums. Upping your deductible by just $500 provides adequate coverage with improved cash flow. The money is disposable income that improves personal finances with little risk to your home.

Improve Your Cash Flow without Sacrifice:

Disposable income is often difficult to increase in the short term. By understanding how to meet legal and personal obligations with less overhead, your cash flow can quickly improve.

Insurance and Annuities: What’s the Difference?

Financial planning for your future can be difficult, especially when saving and enjoying your retirement. Majority of people also have families to take into consideration, you want to be sure that your family is well taken care of and will not be left with any of your financial burdens in the event of your death. There are two financial planning resources that you can take a look at: life insurance and annuities. These are both important options to consider when planning your finances.

Silver CascadeLife Insurance
The basic idea behind life insurance is that by having it your family will not be burdened by financial problems upon the death of a loved one. When you take out a life insurance policy, you are making a contract with your insurance company for a set amount of money to be provided to your beneficiary in the event of your death. You pay a premium to cover your policy, which has been chosen by you.The two main types of life insurance policies are a protection policy and an investment policy. A protection policy provides benefits in the case of death, often ad a lump sum. Protection policies are considered term policies; they do not accumulate value. An investment policy grows in value, it is often referred to as permanent life insurance. An investment policy stays active until it matures, it grows in value over time. This reduces the risk to the insurer and gives the policy holder the chance to access the funds.

Annuities

An annuity is an insurance product that is more commonly used by people who want to ensure that they will have a continuous income after retirement. Like life insurance, the policy holder will make payments towards an annuity but they also get the opportunity to decide for how long they will get the payments back. Contracts for annuities are usually provided by insurance companies. Like a savings account, an annuity will collect interest, but federal income taxes are deferred during the accumulation phase and will be due when you start collecting payments.

There are two types of annuities, a deferred annuity and an immediate annuity. A deferred annuity has a later payout date, like retirement for example. An immediate annuity begins paying you soon after you start investing. Both types of annuities can be fixed or variable, some will even allow you to name a beneficiary who can continue to receive payments after death.